Exhibit 10.1

EXECUTION VERSION

 

 

 

Published CUSIP Number:             

AMENDED AND RESTATED CREDIT AGREEMENT

Dated as of December 14, 2012

among

PARKER DRILLING COMPANY,

as the Borrower,

BANK OF AMERICA, N.A.,

as Administrative Agent and L/C Issuer,

THE ROYAL BANK OF SCOTLAND plc,

as Syndication Agent

NATIXIS, NEW YORK BRANCH, WELLS FARGO BANK, N.A. and WHITNEY BANK,

as Co-Documentation Agents,

and

The Other Lenders Party Hereto

 

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated,

as

Sole Lead Arranger and Book Manager

 

 

 

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TABLE OF CONTENTS

 

          Page      ARTICLE I       DEFINITIONS AND ACCOUNTING TERMS   

Section 1.01

   Defined Terms      1   

Section 1.02

   Other Interpretive Provisions      42   

Section 1.03

   Accounting Terms      43   

Section 1.04

   Rounding      44   

Section 1.05

   Exchange Rates; Currency Equivalents      44   

Section 1.06

   Alternative Currencies      44   

Section 1.07

   Change of Currency      45   

Section 1.08

   Times of Day      45       ARTICLE II       THE COMMITMENTS AND CREDIT
EXTENSIONS   

Section 2.01

   The Loans      45   

Section 2.02

   Borrowings, Conversions and Continuations of Loans      46   

Section 2.03

   Letters of Credit      48   

Section 2.04

   Borrowing Base Calculations; Inclusion of Assets in Borrowing Base      58   

Section 2.05

   Prepayments      59   

Section 2.06

   Termination or Reduction of Commitments      60   

Section 2.07

   Repayment of Loans      61   

Section 2.08

   Interest      62   

Section 2.09

   Fees      62   

Section 2.10

   Computation of Interest and Fees; Retroactive Adjustments of Applicable Rate
     63   

Section 2.11

   Evidence of Debt      64   

Section 2.12

   Payments Generally; Administrative Agent’s Clawback      64   

Section 2.13

   Sharing of Payments by Lenders      66   

Section 2.14

   Increase in Revolving Credit Facility      67   

Section 2.15

   Increase in Term Loan Facility      69   

Section 2.16

   Defaulting Lenders      70       ARTICLE III       TAXES, YIELD PROTECTION
AND ILLEGALITY   

Section 3.01

   Taxes      72   

Section 3.02

   Illegality      77   

 

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Section 3.03

   Inability to Determine Rates      77   

Section 3.04

   Increased Costs      78   

Section 3.05

   Compensation for Losses      79   

Section 3.06

   Mitigation Obligations; Replacement of Lenders      80   

Section 3.07

   Survival      81       ARTICLE IV       CONDITIONS PRECEDENT TO CREDIT
EXTENSIONS   

Section 4.01

   Conditions of Initial Credit Extension      81   

Section 4.02

   Conditions to all Credit Extensions      84       ARTICLE V      
REPRESENTATIONS AND WARRANTIES   

Section 5.01

   Existence; Compliance with Law      85   

Section 5.02

   Power; Authorization; Enforceable Obligations      86   

Section 5.03

   No Legal Bar      86   

Section 5.04

   No Material Litigation      86   

Section 5.05

   Financial Statements; No Material Adverse Effect      87   

Section 5.06

   No Default      88   

Section 5.07

   Ownership of Property; Liens      88   

Section 5.08

   Intellectual Property      88   

Section 5.09

   Taxes      88   

Section 5.10

   Federal Regulations      88   

Section 5.11

   Labor Matters      89   

Section 5.12

   ERISA Compliance      89   

Section 5.13

   Investment Company Act; Other Regulations      90   

Section 5.14

   Subsidiaries      90   

Section 5.15

   Use of Proceeds      90   

Section 5.16

   Environmental Matters      90   

Section 5.17

   Accuracy of Information, etc      91   

Section 5.18

   Collateral Documents      92   

Section 5.19

   Solvency      92   

Section 5.20

   Insurance      92   

Section 5.21

   OFAC      92       ARTICLE VI       AFFIRMATIVE COVENANTS   

Section 6.01

   Financial Statements      93   

Section 6.02

   Certificates; Other Information      93   

Section 6.03

   Notices      95   

 

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Section 6.04

   Conduct of Business and Maintenance of Existence, etc      96   

Section 6.05

   Maintenance of Property; Insurance      96   

Section 6.06

   Inspection of Property; Books and Records; Discussions      97   

Section 6.07

   Environmental Laws      97   

Section 6.08

   Payment of Obligations      97   

Section 6.09

   Additional Collateral, etc      98   

Section 6.10

   Borrowing Base Certificate      98   

Section 6.11

   Cash Management Systems      99   

Section 6.12

   Inspection of Collateral      100   

Section 6.13

   Casualty and Condemnation      100   

Section 6.14

   Further Assurances      100       ARTICLE VII       NEGATIVE COVENANTS   

Section 7.01

   Liens      101   

Section 7.02

   Financial Condition Covenants      104   

Section 7.03

   Indebtedness      104   

Section 7.04

   Fundamental Changes      105   

Section 7.05

   Disposition of Property      107   

Section 7.06

   Restricted Payments      107   

Section 7.07

   Modifications of Debt Instruments, etc      110   

Section 7.08

   Transactions with Affiliates      110   

Section 7.09

   Changes in Fiscal Periods      111   

Section 7.10

   Negative Pledge Clauses      111   

Section 7.11

   Restrictions on Subsidiary Distributions      111   

Section 7.12

   Lines of Business      112   

Section 7.13

   Hedge Agreements      112       ARTICLE VIII       EVENTS OF DEFAULT AND
REMEDIES   

Section 8.01

   Events of Default      112   

Section 8.02

   Remedies Upon Event of Default      115   

Section 8.03

   Application of Funds      115       ARTICLE IX       ADMINISTRATIVE AGENT   

Section 9.01

   Appointment and Authority      117   

Section 9.02

   Rights as a Lender      117   

Section 9.03

   Exculpatory Provisions      118   

Section 9.04

   Reliance by Administrative Agent      119   

Section 9.05

   Delegation of Duties      119   

 

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Section 9.06

   Resignation of Administrative Agent      119   

Section 9.07

   Non-Reliance on Administrative Agent and Other Lenders      121   

Section 9.08

   No Other Duties, Etc      121   

Section 9.09

   Administrative Agent May File Proofs of Claim      121   

Section 9.10

   Collateral and Guaranty Matters      122   

Section 9.11

   Secured Cash Management Agreements and Secured Hedge Agreements      123   

Section 9.12

   United States Citizen      123       ARTICLE X       MISCELLANEOUS   

Section 10.01

   Amendments, Etc      124   

Section 10.02

   Notices; Effectiveness; Electronic Communication      126   

Section 10.03

   No Waiver; Cumulative Remedies; Enforcement      128   

Section 10.04

   Expenses; Indemnity; Damage Waiver      129   

Section 10.05

   Payments Set Aside      131   

Section 10.06

   Successors and Assigns      131   

Section 10.07

   Treatment of Certain Information; Confidentiality      135   

Section 10.08

   Right of Setoff      136   

Section 10.09

   Interest Rate Limitation      137   

Section 10.10

   Counterparts; Integration; Effectiveness      137   

Section 10.11

   Survival of Representations and Warranties      137   

Section 10.12

   Severability      138   

Section 10.13

   Replacement of Lenders      138   

Section 10.14

   Governing Law; Jurisdiction; Etc      139   

Section 10.15

   Waiver of Jury Trial      140   

Section 10.16

   No Advisory or Fiduciary Responsibility      140   

Section 10.17

   Electronic Execution of Assignments and Certain Other Documents      140   

Section 10.18

   USA PATRIOT Act      141   

Section 10.19

   Judgment Currency      141   

Section 10.20

   Assignment and Reallocation of Commitments, Etc      141   

Section 10.21

   ENTIRE AGREEMENT      142   

SIGNATURES

     S-1   

 

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SCHEDULES

 

I    Existing Collateral Documents 1.01(a)    Existing Letters of Credit 1.01(b)
   Account Debtors 1.01(c)    Existing Term Loans 2.01    Commitments and
Applicable Percentages 5.02    Consents, Authorizations, Filings and Notices
5.04    Litigation 5.07    Specified Rigs 5.14    Subsidiaries; Other Equity
Investments 5.16    Environmental Matters 5.18    UCC Filing Jurisdiction;
United States Coast Guard Filing 5.21    OFAC 7.01(f)    Existing Liens 7.03(d)
   Existing Indebtedness 7.05(j)    Permitted Dispositions 10.02   
Administrative Agent’s Office; Certain Addresses for Notices

EXHIBITS

 

Form of A    Committed Loan Notice B    Borrowing Base Certificate C-1    Term
Note C-2    Revolving Credit Note D    Compliance Certificate E-1    Assignment
and Assumption E-2    Administrative Questionnaire F    Subsidiary Guaranty G   
Irrevocable Proxy, Pledge and Security Agreement H    First Preferred Fleet
Mortgage I-1    Form of Opinion – Counsel to Loan Parties I-2    Form of Opinion
– General Counsel to Loan Parties

 

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AMENDED AND RESTATED CREDIT AGREEMENT

This AMENDED AND RESTATED CREDIT AGREEMENT (“Agreement”) is entered into as of
December 14, 2012, among PARKER DRILLING COMPANY, a Delaware corporation (the
“Borrower”), each lender from time to time party hereto (collectively, the
“Lenders” and individually, a “Lender”), BANK OF AMERICA, N.A., as
Administrative Agent and L/C Issuer, THE ROYAL BANK OF SCOTLAND plc, as
Syndication Agent, and NATIXIS, NEW YORK BRANCH, WELLS FARGO BANK, N.A. and
WHITNEY BANK, as Co-Documentation Agents.

PRELIMINARY STATEMENTS:

The Borrower entered into the Credit Agreement dated as of May 15, 2008, by and
among the Borrower, the Administrative Agent, the lenders party thereto (the
“Existing Lenders”), Bank of America, N.A. as L/C Issuer, the Documentation
Agent and the Joint Lead Arrangers and Book Managers, as amended by the
Amendment dated as of June 30, 2008, the Second Amendment dated as of
January 15, 2010, the Third Amendment dated as of April 1, 2011 and the Fourth
Amendment dated as of April 9, 2012 (herein as so amended and from time to time
amended, modified or supplemented, the “Existing Credit Agreement”).

The “Obligations” (as defined in the Existing Credit Agreement) of the Loan
Parties under the Existing Credit Agreement are secured by certain mortgages,
guaranties, security agreements and other documents heretofore executed
(specifically those agreements and documents listed in Schedule I, the “Existing
Collateral Documents”).

The parties hereto have agreed to enter into this Agreement to amend, restate,
extend, renew and continue, but not to extinguish, terminate or novate, the
Loans and the Letters of Credit under the Existing Credit Agreement.

In consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby amend and restate the Existing Credit Agreement in its
entirety as follows:

ARTICLE I

DEFINITIONS AND ACCOUNTING TERMS

Section 1.01 Defined Terms. As used in this Agreement, the following terms shall
have the meanings set forth below:

“Accounts” means accounts receivable of the Borrower or any of its Subsidiaries
arising out of the sales or leasing of goods or services made by the Borrower or
any of its Subsidiaries in the ordinary course of business.

“Administrative Agent” means Bank of America in its capacity as administrative
agent under any of the Loan Documents, or any successor administrative agent.

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“Administrative Agent’s Office” means the Administrative Agent’s address and, as
appropriate, account as set forth on Schedule 10.02, or such other address or
account as the Administrative Agent may from time to time notify to the Borrower
and the Lenders.

“Administrative Questionnaire” means an Administrative Questionnaire in
substantially the form of Exhibit E-2 or any other form approved by the
Administrative Agent.

“Advance Rate” means at any time, the applicable percentage set forth in
clause (a)(i), (a)(ii) or (a)(iii) of the definition of “Borrowing Base” or such
other percentage as may become effective in lieu of such applicable percentage
in accordance with paragraph (b) or (c) of such definition.

“Affiliate” means, with respect to any Person, another Person that directly, or
indirectly through one or more intermediaries, Controls or is Controlled by or
is under common Control with the Person specified.

“Agents” means, collectively, the Administrative Agent, the Syndication Agent,
and the Co-Documentation Agents.

“Aggregate Commitments” means the Commitments of all the Lenders.

“Agreement” means this Amended and Restated Credit Agreement.

“Alternative Currency” means each currency (other than Dollars) that is approved
in accordance with Section 1.06.

“Alternative Currency Equivalent” means, at any time, with respect to any amount
denominated in Dollars, the equivalent amount thereof in the applicable
Alternative Currency as determined by the Administrative Agent or an L/C Issuer,
as the case may be, at such time on the basis of the Spot Rate (determined in
respect of the most recent Revaluation Date) for the purchase of such
Alternative Currency with Dollars.

“Applicable Fee Rate” means, at any time, in respect of the Revolving Credit
Facility and the Term Loan Facility, 0.50% per annum.

“Applicable Percentage” means (a) in respect or the Term Loan Facility, with
respect to any Term Loan Lender at any time, the percentage (carried out to the
ninth decimal place) of the Term Loan Facility represented by (i) at any time
during the Availability Period in respect of such Facility, such Term Loan
Lender’s Term Loan Commitment at such time and (ii) thereafter, the principal
amount of such Term Loan Lender’s Term Loans at such time and (b) in respect of
the Revolving Credit Facility, with respect to any Revolving Credit Lender at
any time, the percentage (carried out the ninth decimal place) of the Revolving
Credit Facility represented by such Revolving Credit Lender’s Revolving Credit
Commitment at such time. If the commitment of each Lender to make Loans and the
obligation of the L/C Issuers to make L/C Credit Extensions have been terminated
pursuant to Section 8.02 or if the Commitments have expired, then the Applicable
Percentage of each Lender in respect of the such Facility shall be determined
based on the Applicable Percentage of such Lender in respect of such Facility
most recently in effect, giving effect to any subsequent assignments. The
initial Applicable

 

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Percentage of each Lender in respect of each Facility is set forth opposite the
name of such Lender on Schedule 2.01 or in the Assignment and Assumption
pursuant to which such Lender becomes a party hereto, as applicable.

“Applicable Rate” means (a) in respect of the Term Loan Facility, 2.00% per
annum for Base Rate Loans and 3.00% per annum for Eurodollar Rate Loans, and
(b) in respect of the Revolving Credit Facility, (i) from the Closing Date to
the date on which the Administrative Agent receives a Compliance Certificate
pursuant to Section 6.02(b) for the fiscal quarter ending December 31, 2012,
1.50% per annum for Base Rate Loans and 2.50% per annum for Eurodollar Rate
Loans, and (ii) thereafter, the applicable percentage per annum set forth below
determined by reference to the Consolidated Leverage Ratio as set forth in the
most recent Compliance Certificate received by the Administrative Agent pursuant
to Section 6.02(b):

 

Applicable Rate

Pricing Level

   Consolidated Leverage
Ratio    Eurodollar Rate
Loans and
Letters of Credit   Base Rate
Loans

1

   < 2.50:1    2.50%   1.50%

2

   ³ 2.50:1 but < 3.50:1    2.75%   1.75%

3

   ³ 3.50:1    3.00%   2.00%

Any increase or decrease in the Applicable Rate resulting from a change in the
Consolidated Leverage Ratio shall become effective as of the first Business Day
immediately following the date a Compliance Certificate is delivered pursuant to
Section 6.02(b); provided, however, that if a Compliance Certificate is not
delivered when due in accordance with such Section, then, upon the request of
the Required Lenders, Pricing Level 3 shall apply as of the first Business Day
after the date on which such Compliance Certificate was required to have been
delivered and shall remain in effect until the date on which such Compliance
Certificate is delivered.

Notwithstanding anything to the contrary contained in this definition, the
determination of the Applicable Rate for any period shall be subject to the
provisions of Section 2.10(b).

“Applicable Time” means, with respect to any payments in any Alternative
Currency, the local time in the place of settlement for such Alternative
Currency as may be determined by the Administrative Agent or the applicable L/C
Issuer, as the case may be, to be necessary for timely settlement on the
relevant date in accordance with normal banking procedures in the place of
payment.

“Applicable Revolving Credit Percentage” means with respect to any Revolving
Credit Lender at any time, such Revolving Credit Lender’s Applicable Percentage
in respect of the Revolving Credit Facility at such time.

“Appropriate Lender” means, at any time, (a) with respect to any of the
Term Loan Facility or the Revolving Credit Facility, a Lender that has a
Commitment with respect to such Facility or holds a Term Loan or a Revolving
Credit Loan, respectively, at such time and (b) with respect to the Letter of
Credit Sublimit, (i) the L/C Issuers and (ii) if any Letters of Credit have been
issued pursuant to Section 2.03(a), the Revolving Credit Lenders.

 

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“Approved Fund” means any Fund that is administered or managed by (a) a Lender,
(b) an Affiliate of a Lender or (c) an entity or an Affiliate of an entity that
administers or manages a Lender.

“Arranger” means Merrill Lynch, Pierce, Fenner & Smith Incorporated, in its
capacity as a sole lead arranger and sole book manager.

“Assignee Group” means two or more Eligible Assignees that are Affiliates of one
another or two or more Approved Funds managed by the same investment advisor.

“Assignment and Assumption” means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is
required by Section 10.06(b)), and accepted by the Administrative Agent, in
substantially the form of Exhibit E-1 or any other form approved by the
Administrative Agent.

“Attributable Indebtedness” means, on any date, (a) in respect of any
Capitalized Lease of any Person, the capitalized amount thereof that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP, (b) in respect of any Synthetic Lease Obligation, the capitalized
amount of the remaining lease or similar payments under the relevant lease or
other applicable agreement or instrument that would appear on a balance sheet of
such Person prepared as of such date in accordance with GAAP if such lease or
other agreement or instrument were accounted for as a Capitalized Lease and
(c) all Synthetic Debt of such Person.

“Audited Financial Statements” means the audited consolidated balance sheet of
the Borrower and its Subsidiaries for each of the fiscal years ended on
December 31, 2010 and December 31, 2011, and the related consolidated statements
of income or operations, shareholders’ equity and cash flows for such fiscal
years of the Borrower and its Subsidiaries, including the notes thereto.

“Availability Period” means (a) in respect of the Revolving Credit Facility, the
period from and including the Closing Date to the earliest of (i) the Maturity
Date for the Revolving Credit Facility, (ii) the date of termination of the
Revolving Credit Commitments pursuant to Section 2.06, and (iii) the date of
termination of the commitment of each Revolving Lender to make Revolving Credit
Loans and of the obligation of the L/C Issuers to make L/C Credit Extensions
pursuant to Section 8.02 and (b) in respect of the Term Loan Facility, the
period from and including the Closing Date to the earliest of (i) the date that
falls six months after the Closing Date, (ii) the Maturity Date for the Term
Loan Facility, and (iii) the date of termination of the commitments of the
respective Term Loan Lenders to make Term Loans pursuant to Section 8.02.

“Bank of America” means Bank of America, N.A. and its successors.

“Bank Products Reserves” means at any time, reserves in respect of Secured Hedge
Agreements and Secured Cash Management Agreements then provided and outstanding,
including, without limitation, the reserves established by the Administrative
Agent pursuant to Section 2.04(b).

 

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“Base Rate” means for any day a fluctuating rate per annum equal to the higher
of (a) the Federal Funds Rate plus 1/2 of 1%, (b) the rate of interest in effect
for such day as publicly announced from time to time by Bank of America as its
“prime rate”, and (c) the Eurodollar Rate plus 1.00%. The “prime rate” is a rate
set by Bank of America based upon various factors including Bank of America’s
costs and desired return, general economic conditions and other factors, and is
used as a reference point for pricing some loans, which may be priced at, above,
or below such announced rate. Any change in such rate announced by Bank of
America shall take effect at the opening of business on the day specified in the
public announcement of such change.

“Base Rate Loan” means a Revolving Credit Loan or Term Loan that bears interest
based on the Base Rate.

“Borrower” has the meaning specified in the introductory paragraph hereto.

“Borrower Materials” has the meaning specified in Section 6.02.

“Borrowing” means a Revolving Credit Borrowing or a Term Loan Borrowing, as the
context may require.

“Borrowing Base” means (a) Subject to paragraphs (b) and (c) below, at any time,
the amount equal at such time to:

(i) eighty-five percent (85%) of the aggregate Net Amount of Eligible Accounts
Receivable, plus

(ii) the Net Book Value of the Eligible Rental Equipment multiplied by the
lesser of (A) the Equipment OLV Percentage and (B) one hundred percent (100%),
plus

(iii) fifty percent (50%) of the Net Specified Rigs OLV, minus

(iv) the amount of any reserves established by the Administrative Agent pursuant
to paragraph (b) below.

Notwithstanding the foregoing, in no event shall more than eighty percent
(80%) of the amount of the Borrowing Base consist of Eligible Rental Equipment
and Eligible Specified Rigs in reliance on clauses (a)(ii) and (a)(iii) above.

(b) The Administrative Agent at any time in the exercise of its Permitted
Discretion shall be entitled to (i) establish and increase or decrease reserves
against Eligible Accounts Receivable, Eligible Rental Equipment, and Eligible
Specified Rigs, (ii) establish and increase or decrease Bank Products Reserves,
(iii) reduce the Advance Rates to be applied under clauses (a)(i), (a)(ii) and
(a)(iii) above to a level below the rates stated therein or (following any such

 

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reduction or following any increase in such Advance Rates pursuant to
paragraph (c) below) restore such Advance Rates to any level equal to or below
the Advance Rates stated in clauses (a)(i), (a)(ii) and (a)(iii) above,
(iv) impose additional restrictions (or eliminate any such additional
restrictions) to the standards of eligibility set forth in the respective
definitions of “Eligible Accounts Receivable”, “Eligible Rental Equipment” and
“Eligible Specified Rigs,” (v) establish and increase or decrease a reserve in
the amount of interest payable by the Borrower under the Agreement on Loans and
drawings under Letters of Credit, including, without limitation, in order to
protect each L/C Issuer issuing Letters of Credit in an Alternative Currency
against the results of exchange rate fluctuations arising with respect to such
Letters of Credit and (vi) adjust the Borrowing Base upon the occurrence of
Casualty Events in accordance with Section 2.04(c).

(c) The Administrative Agent at any time in the exercise of its Permitted
Discretion shall be entitled, with the consent of all Lenders, to increase the
Advance Rates to a level above the rates stated in clauses (a)(i), (a)(ii) and
(a)(iii) above.

“Borrowing Base Certificate” means a certificate duly executed by a Responsible
Officer of the Borrower substantially in the form of Exhibit B.

“Borrowing Base Collateral” means the Accounts, Quail Rental Assets and the
Specified Rigs.

“Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the Laws of, or are in fact
closed in, New York or the state where the Administrative Agent’s Office is
located and, if such day relates to any Eurodollar Rate Loan, means any such day
on which dealings in Dollar deposits are conducted by and between banks in the
London interbank eurodollar market.

“Capitalized Leases” means all leases that have been or should be, in accordance
with GAAP, recorded as capitalized leases.

“Cash Collateralize” has the meaning specified in Section 2.03(g).

“Cash Equivalents” means any of the following types of Investments:

(a) readily marketable obligations issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
having maturities of not more than 360 days from the date of acquisition
thereof; provided that the full faith and credit of the United States of America
is pledged in support thereof;

(b) time deposits, Euro time deposits or overnight bank deposits with, or
insured certificates of deposit or bankers’ acceptances of, any commercial bank
that (i) (A) is a Lender or (B) is organized under the laws of the United States
of America, any state thereof or the District of Columbia or is the principal
banking

 

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subsidiary of a bank holding company organized under the laws of the United
States of America, any state thereof or the District of Columbia, and is a
member of the Federal Reserve System, (ii) issues (or the parent of which
issues) commercial paper rated as described in clause (c) of this definition and
(iii) has combined capital and surplus of at least $500,000,000, in each case
with maturities of not more than 180 days from the date of acquisition thereof;

(c) commercial paper issued by any Person organized under the laws of any state
of the United States of America and rated at least “Prime-2” (or the then
equivalent grade) by Moody’s or at least “A-2” (or the then equivalent grade) by
S&P, in each case with maturities of not more than 180 days from the date of
acquisition thereof;

(d) repurchase obligations of any Lender or of any commercial bank satisfying
the requirements of clause (b) of this definition, having a term of not more
than 30 days with respect to securities issued or fully guaranteed or insured by
the United States government;

(e) securities with maturities of one year or less from the date of acquisition
issued or fully guaranteed by any state, commonwealth or territory of the United
States, by any political subdivision or taxing authority of any such state,
commonwealth or territory or by any foreign government, the securities of which
state, commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A by
Moody’s;

(f) securities with maturities of 180 days or less from the date of acquisition
backed by standby letters of credit issued by any Lender or any commercial bank
satisfying the requirements of clause (b) of this definition;

(g) Investments, classified in accordance with GAAP as current assets of the
Borrower or any of its Subsidiaries, in money market investment programs which
are administered by financial institutions that have the highest rating
obtainable from either Moody’s or S&P, and the portfolios of which are limited
solely to Investments of the character, quality and maturity described in
clauses (a) through (f) of this definition; and

(h) shares of the Columbia Cash Reserves fund for which an affiliate of Bank of
America, N.A. provides investment advisory services.

“Cash Management Agreement” means any agreement to provide cash management
services, including treasury, depository, overdraft, credit or debit card,
electronic funds transfer and other cash management arrangements.

“Cash Management Bank” means (a) any Person that, at the time it enters into a
Cash Management Agreement, is a Lender or an Affiliate of a Lender, in its
capacity as a party to such Cash Management Agreement and (b) any Lender or
Affiliate of a Lender that is party to a Cash Management Agreement with the
Borrower or one of its Subsidiaries as of the Closing Date or the date that such
Person or such Person’s Affiliate becomes a Lender hereunder.

 

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“Casualty Event” means any loss, casualty or other insured damage to, or any
taking under power of eminent domain or by condemnation or similar proceeding
of, any Property or asset of the Borrower or any of its Material Subsidiaries in
which the fair market value of the loss of such Property shall be in excess of
$10,000,000 (or its equivalent in other currencies).

“CERCLA” means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980.

“Change in Law” means the occurrence, after the date of this Agreement, of any
of the following: (a) the adoption or taking effect of any law, rule, regulation
or treaty, (b) any change in any law, rule, regulation or treaty or in the
administration, interpretation or application thereof by any Governmental
Authority or (c) the making or issuance of any request, guideline or directive
(whether or not having the force of law) by any Governmental Authority; provided
that notwithstanding anything herein 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 or foreign regulatory authorities, in
each case pursuant to Basel III, shall in each case be deemed to be a “Change in
Law”, regardless of the date enacted, adopted or issued.

“Change of Control” means an event or series of events by which:

(a) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, but excluding any employee benefit plan
of such person or its subsidiaries, and any person or entity acting in its
capacity as trustee, agent or other fiduciary or administrator of any such plan)
becomes the “beneficial owner” (as defined in Rules 13d-3 and 13d-5 under the
Securities Exchange Act of 1934, except that a person or group shall be deemed
to have “beneficial ownership” of all securities that such person or group has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time (such right, an “option right”)), directly or
indirectly, of 35% or more of the equity securities of the Borrower entitled to
vote for members of the board of directors or equivalent governing body of the
Borrower on a fully-diluted basis (and taking into account all such securities
that such person or group has the right to acquire pursuant to any option
right);

(b) a majority of the members of the board of directors or other equivalent
governing body of the Borrower cease to be composed of individuals (i) who were
members of that board or equivalent governing body on the Closing Date,
(ii) whose election or nomination to that board or equivalent governing body was
approved by individuals referred to in clause (i) above constituting at the time
of such election or nomination at least a majority of that board or

 

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equivalent governing body or (iii) whose election or nomination to that board or
other equivalent governing body was approved by individuals referred to in
clauses (i) and (ii) above constituting at the time of such election or
nomination at least a majority of that board or equivalent governing body
(excluding, in the case of both clause (ii) and clause (iii), any individual
whose initial nomination for, or assumption of office as, a member of that board
or equivalent governing body occurs as a result of an actual or threatened
solicitation of proxies or consents for the election or removal of one or more
directors by any person or group other than a solicitation for the election of
one or more directors by or on behalf of the board of directors); or

(c) a “Change of Control”, or like event, as defined in any of the Indentures,
shall have occurred.

“Closing Date” means the first date all the conditions precedent in Section 4.01
are satisfied or waived in accordance with Section 10.01.

“Co-Documentation Agent” means Natixis, New York Branch, Wells Fargo Bank, N.A.
and Whitney Bank, each in its capacity as documentation agent under any of the
Loan Documents, or any successor documentation agent.

“Code” means the Internal Revenue Code of 1986.

“Collateral” means all of the “Collateral” and “Vessels” referred to in the
Collateral Documents and all of the other Property of the Loan Parties, now
owned or hereafter acquired, that is or is intended under the terms of the
Collateral Documents to be subject to Liens in favor of the Administrative Agent
for the benefit of the Secured Parties.

“Collateral Documents” means, collectively, the Security Agreement, the
Mortgages, each of the supplements to any of the foregoing, the Lockbox
Agreements, the Control Agreements, mortgages, collateral assignments, Security
Agreement Supplements, security agreements, pledge agreements or other similar
agreements delivered to the Administrative Agent pursuant to Section 6.09, and
each of the other agreements, instruments or documents that creates or purports
to create a Lien in favor of the Administrative Agent for the benefit of the
Secured Parties.

“Commitment” means a Term Loan Commitment or a Revolving Credit Commitment, as
the context may require.

“Committed Loan Notice” means a notice of (a) a Term Loan Borrowing, (b) a
Revolving Credit Borrowing, (c) a conversion of Loans from one Type to the
other, or (d) a continuation of Eurodollar Rate Loans, pursuant to
Section 2.02(a), which, if in writing, shall be substantially in the form of
Exhibit A.

“Compliance Certificate” means a certificate duly executed by a Responsible
Officer of the Borrower substantially in the form of Exhibit D.

 

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“Concentration Account” means one or more bank accounts maintained by the
Administrative Agent, over which the Administrative Agent shall have sole
dominion and control, into which proceeds of Collateral shall be transferred
from other accounts maintained by the Borrower and the Subsidiary Guarantors, in
the event that the Administrative Agent requires such transfer during the
existence of an Event of Default.

“Consolidated EBITDA” means, at any date of determination, for any period, an
amount equal to Consolidated Net Income of the Borrower and its Subsidiaries on
a consolidated basis for such period plus (a) the following to the extent
deducted in calculating such Consolidated Net Income: (i) Consolidated Interest
Charges, amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts, and other fees and charges associated with Indebtedness
for such period, (ii) the provision for Federal, state, local and foreign income
taxes payable by the Borrower and its Subsidiaries for such period,
(iii) depreciation and amortization expense, (iv) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, (v) other
extraordinary, unusual or non-recurring expenses or losses of the Borrower and
its Subsidiaries reducing such Consolidated Net Income (including, whether or
not otherwise includable as a separate item in the statement of Consolidated Net
Income for such period, losses on sales of assets outside of the ordinary course
of business), to the extent such additions are found to be acceptable by the
Administrative Agent, acting reasonably, and (vi) other non-cash charges and
minus (b) the following to the extent included in calculating such Consolidated
Net Income: (i) Federal, state, local and foreign income tax credits of the
Borrower and its Subsidiaries for such period, (ii) any extraordinary, unusual
or non-recurring income or gains (including, whether or not otherwise includable
as a separate item in the statement of such Consolidated Net Income for such
period, gains on the sales of assets outside of the ordinary course of
business), to the extent such deductions are found to be acceptable by the
Administrative Agent, acting reasonably, (iii) any other non-cash income, all as
determined on a consolidated basis and (iv) the amount of any cash expenditures
during such period in respect of items that were added as non-cash charges in
determining Consolidated EBITDA for a prior period.

“Consolidated Interest Charges” means, for any period, for the Borrower and its
Subsidiaries on a consolidated basis, the sum of total interest expense
(including that attributable under Capitalized Leases) for such period with
respect to all outstanding Indebtedness of the Borrower and its Subsidiaries
(including, without limitation, all commissions, discounts and other fees and
charges owed by the Borrower or its Subsidiaries with respect to letters of
credit and bankers’ acceptance financing and net costs under Hedge Agreements in
respect of interest rates to the extent such net costs are allocable to such
period in accordance with GAAP).

“Consolidated Interest Coverage Ratio” means, as of any date of determination,
the ratio of (a) Consolidated EBITDA for the period of the four prior fiscal
quarters ending on such date to (b) Consolidated Interest Charges for such
period.

“Consolidated Leverage Ratio” means, as of the last day of any period of four
consecutive fiscal quarters, the ratio of (a) Consolidated Total Debt as of such
date to (b) Consolidated EBITDA for the period of the four fiscal quarters most
recently ended; provided that for purposes of calculating Consolidated EBITDA of
the Borrower and its Subsidiaries for any period, (i) the Consolidated EBITDA of
any Person acquired by the

 

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Borrower or its Subsidiaries during such period shall be included on a pro forma
basis for such period (assuming the consummation of such acquisition and the
incurrence or assumption of any Indebtedness in connection therewith occurred on
the first day of such period) if the consolidated balance sheet of such acquired
Person and its consolidated Subsidiaries as at the end of the period preceding
the acquisition of such Person and the related consolidated statements of income
and stockholders’ equity and of cash flows for the period in respect of which
Consolidated EBITDA is to be calculated (x) have been previously provided to the
Administrative Agent and the Lenders and (y) either (1) have been reported on
without a qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized standing or (2) have been
found acceptable by the Administrative Agent and (ii) the Consolidated EBITDA of
any Person Disposed of by the Borrower or its Subsidiaries during such period
shall be excluded for such period (assuming the consummation of such Disposition
and the repayment of any Indebtedness in connection therewith occurred on the
first day of such period).

“Consolidated Net Income” means, for any period, for the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP, the
consolidated net income (or loss) of the Borrower and its Subsidiaries for that
period; provided, that in calculating Consolidated Net Income of the Borrower
and its consolidated Subsidiaries for any period, there shall be excluded
(a) the income (or deficit) of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the Borrower
or any of its Subsidiaries, (b) the income (or deficit) of any Person (other
than a Subsidiary of the Borrower) in which the Borrower or any of its
Subsidiaries has an ownership interest, except to the extent that any such
income is actually received by the Borrower or such Subsidiary in the form of
cash dividends or similar cash distributions and (c) the undistributed earnings
of any Subsidiary of the Borrower to the extent that the declaration or payment
of dividends or similar distributions by such Subsidiary is not at the time
permitted by the terms of any Contractual Obligation (other than under any Loan
Document) or Requirement of Law applicable to such Subsidiary.

“Consolidated Senior Secured Debt” means all Consolidated Total Debt that is
secured by a Lien on any Property.

“Consolidated Senior Secured Leverage Ratio” means, as of the last day of any
period of four consecutive fiscal quarters, the ratio of (a) Consolidated Senior
Secured Debt as of such date to (b) Consolidated EBITDA for the period of the
four fiscal quarters most recently ended; provided that for purposes of
calculating Consolidated EBITDA of the Borrower and its Subsidiaries for any
period, the Consolidated EBITDA of any Person acquired by the Borrower or its
Subsidiaries during such period and the Consolidated EBITDA of any Person
Disposed of by the Borrower or its Subsidiaries during such period shall be
included or excluded, as applicable, as provided in the proviso set forth in the
definition of Consolidated Leverage Ratio.

“Consolidated Tangible Assets” means, with respect to any Person as of any date,
the amount which, in accordance with GAAP, would be set forth under the caption
“Total Assets” (or any like caption) on a consolidated balance sheet of such
Person and its Subsidiaries, less all goodwill, patents, tradenames, trademarks,
copyrights, franchises, experimental expenses, organization expenses and any
other amounts classified as intangible assets in accordance with GAAP.

 

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“Consolidated Total Debt” means, as of any date of determination, for the
Borrower and its Subsidiaries on a consolidated basis, the aggregate principal
amount of all Indebtedness of the Borrower and its Subsidiaries as of such date
(other than Indebtedness of the type described in clause (f) of the definition
of “Indebtedness”), determined on a consolidated basis in accordance with GAAP.

“Contractual Obligation” means, as to any Person, any provision of any security
issued by such Person or of any agreement, instrument or other undertaking to
which such Person is a party or by which it or any of its Property is bound.

“Control” means the possession, directly or indirectly, of the power to direct
or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.

“Control Agreement” means in respect of each deposit account, securities
account, lockbox account, concentration account, collection account or
disbursement account, in each case other than any Immaterial Account or Excluded
Account, in the United States existing and maintained for any Loan Party as of
the Closing Date and each account identified to the Administrative Agent
pursuant to Section 6.11(a), a Control Agreement, in form and substance
reasonably satisfactory to the Administrative Agent and the Borrower, pursuant
to which (a) the Borrower or the Subsidiary Guarantor, as the case may be, that
is the owner of such account irrevocably instructs the bank or securities
intermediary that maintains such account that such bank or securities
intermediary shall follow the instructions or entitlement orders, as the case
may be, of the Administrative Agent without further consent of the Borrower or
such Subsidiary Guarantor and (b) the Administrative Agent agrees that it will
not give any instructions or entitlement orders, as the case may be, in respect
of such account unless an Event of Default has occurred and is continuing. Each
Control Agreement shall contain such other terms as shall be customary for
agreements of such type.

“Convertible Debt” means any convertible subordinated debentures or note
created, issued or assumed by the Borrower which have all of the following
characteristics:

(a) an initial final maturity or due date in respect of repayment of principal
extending beyond the latest Maturity Date of any Lender under this Agreement in
effect at the time such debentures or notes are created, issued or assumed;

(b) no scheduled or mandatory payment or repurchase of principal thereunder
(other than acceleration following any event of default in regard thereto or
payment which can be satisfied by the delivery of shares as contemplated in
paragraph (f) of this definition and other than on a change of control of the
Borrower where a Change of Control also occurs under this Agreement) prior to
the latest Maturity Date of any Lender under this Agreement in effect at the
time such debentures or notes are created, issued or assumed;

 

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(c) upon and during the continuance of a Default, an Event of Default or
acceleration of the time for repayment of any Obligations which has not been
rescinded, (i) all amounts payable in respect of principal, premium (if any) or
interest under such debentures or notes are subordinate and junior in right of
payment to the Obligations and (ii) no enforcement steps or enforcement
proceedings may be commenced in respect of such debentures or notes;

(d) such debentures or notes shall be unsecured and shall provide that upon
distribution of the assets of the Borrower on any dissolution, winding up, total
liquidation or reorganization of the Borrower (whether in bankruptcy, insolvency
or receivership proceedings or upon an assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of such person, or
otherwise), all Obligations shall first be paid in full in cash, or provisions
made for such payment, before any payment is made on account of principal,
premium (if any) or interest payable in regard to such debentures or notes;

(e) the occurrence of a Default or Event of Default under this Agreement or the
acceleration of the time for repayment of any of the Obligations or enforcement
of the rights and remedies of the Administrative Agent and the Secured Parties
hereunder or under any other Loan Document shall not in and of themselves:

(i) cause a default or event of default (with the passage of time or otherwise)
under such debentures or notes or the indenture governing the same; or

(ii) cause or permit the obligations under such debentures or notes to be due
and payable prior to the stated maturity thereof; and

(f) payments of interest or principal due and payable under such debentures or
notes can be satisfied, at the option of the Borrower, by delivering shares of
the Borrower (or cash in lieu of fractional shares) in accordance with the
indenture or agreement governing such debentures or notes (whether such shares
are received by the holders of such debentures or notes as payment or are sold
by a trustee or representative under such indenture or agreement to provide cash
for payment to holders of such debentures or notes).

“Cost” means in respect of any Quail Rental Assets, the net cost of such Quail
Rental Assets to Quail Tools after all cash and other discounts or other
allowances which may be allowed or taken by Quail Tools against the purchase
price of such Quail Rental Assets.

“Credit Extension” means each of the following: (a) a Borrowing and (b) an L/C
Credit Extension.

“Debtor Relief Laws” means the Bankruptcy Code of the United States, and all
other liquidation, conservatorship, bankruptcy, assignment for the benefit of
creditors, moratorium, rearrangement, receivership, insolvency, reorganization,
or similar debtor relief Laws of the United States or other applicable
jurisdictions from time to time in effect and affecting the rights of creditors
generally.

 

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“Default” means any event or condition that constitutes an Event of Default or
that, with the giving of any notice, the passage of time, or both, would be an
Event of Default.

“Default Rate” means (a) when used with respect to Obligations other than Letter
of Credit Fees, an interest rate equal to (i) the Base Rate plus (ii) the
Applicable Rate, if any, applicable to Base Rate Loans under the Term Loan
Facility plus (iii) 2% per annum; provided, however, that with respect to a
Eurodollar Rate Loan, the Default Rate shall be an interest rate equal to the
interest rate (including any Applicable Rate) otherwise applicable to such Loan
plus 2% per annum, and (b) when used with respect to Letter of Credit Fees, a
rate equal to the Applicable Rate plus 2% per annum.

“Defaulting Lender” means, subject to Section 2.18(b), any Lender that (a) has
failed to (i) fund all or any portion of its Loans within two Business Days of
the date such Loans were required to be funded hereunder unless such Lender
notifies the Administrative Agent and the Borrower in writing that such failure
is the result of such Lender’s determination that one or more conditions
precedent to funding (each of which conditions precedent, together with any
applicable default, shall be specifically identified in such writing) has not
been satisfied, or (ii) pay to the Administrative Agent, the L/C Issuer or any
Lender any other amount required to be paid by it hereunder (including in
respect of its participation in Letters of Credit) within two Business Days of
the date when due, (b) has notified the Borrower, the Administrative Agent or
the L/C Issuer in writing that it does not intend to comply with its funding
obligations hereunder, or has made a public statement to that effect (unless
such writing or public statement relates to such Lender’s obligation to fund a
Loan hereunder and states that such position is based on such Lender’s
determination that a condition precedent to funding (which condition precedent,
together with any applicable default, shall be specifically identified in such
writing or public statement) cannot be satisfied), (c) has failed, within three
Business Days after written request by the Administrative Agent or the Borrower,
to confirm in writing to the Administrative Agent and the Borrower that it will
comply with its prospective funding obligations hereunder (provided that such
Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon
receipt of such written confirmation by the Administrative Agent and the
Borrower), or (d) has, or has a direct or indirect parent company that has,
(i) become the subject of a proceeding under any Debtor Relief Law, or (ii) had
appointed for it a receiver, custodian, conservator, trustee, administrator,
assignee for the benefit of creditors or similar Person charged with
reorganization or liquidation of its business or assets, including the Federal
Deposit Insurance Corporation or any other state or federal regulatory authority
acting in such a capacity; provided that a Lender shall not be a Defaulting
Lender solely by virtue of the ownership or acquisition of any Equity Interest
in that Lender or any direct or indirect parent company thereof by a
Governmental Authority so long as such ownership interest does not result in or
provide such Lender with immunity from the jurisdiction of courts within the
United States or from the enforcement of judgments or writs of attachment on its
assets or permit such Lender (or such Governmental Authority) to reject,
repudiate, disavow or disaffirm any contracts or agreements made with such
Lender. Any determination by the Administrative Agent that a Lender is a
Defaulting Lender under any one or more of clauses (a) through (d) above, and of
the effective date of such status, shall be conclusive and binding absent
manifest error, and such Lender shall be deemed to be a Defaulting Lender
(subject to Section 2.18(b)) as of the date established therefor by the
Administrative Agent in a written notice of such determination, which shall be
delivered by the Administrative Agent to the Borrower, the L/C Issuer, the Swing
Line Lender and each other Lender promptly following such determination.

 

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“Derivatives Counterparty” has the meaning specified in Section 7.06.

“Designated Jurisdiction” means any country or territory to the extent that such
country or territory itself is the subject of any Sanction.

“Disposition” or “Dispose” means the sale, transfer, license, lease or other
disposition (including any sale and leaseback transaction) of any Property by
any Person, including any sale, assignment, transfer or other disposal, with or
without recourse, of any notes or accounts receivable or any rights and claims
associated therewith.

“Disqualified Stock” means any Equity Interests that, by its terms (or by the
terms of any security into which it is convertible, or for which it is
exchangeable, in each case at the option of the holder of the Equity Interests),
or upon the happening of any event, matures or is mandatorily redeemable,
pursuant to a sinking fund obligation or otherwise, or is redeemable at the
option of the holder of the Equity Interests, in whole or in part, in each case,
on or prior to the date that is 91 days after the date (a) which is the latest
Maturity Date of any Lender or (b) on which there are no Obligations
outstanding; provided that only the portion of Equity Interests which 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, that if such Equity
Interests is issued to any employee or to any plan for the benefit of employees
of the Borrower or its Subsidiaries or by any such plan to such employees, such
Equity Interests shall not constitute Disqualified Stock solely because it may
be required to be repurchased by the Borrower in order to satisfy applicable
statutory or regulatory obligations or as a result of such employee’s
termination, death or disability; provided, further, that any class of Equity
Interests of such Person that by its terms authorizes such Person to satisfy its
obligations thereunder by delivery of Equity Interests that is not Disqualified
Stock shall not be deemed to be Disqualified Stock. Notwithstanding the
preceding sentence, any Equity Interests that would constitute Disqualified
Stock solely because the holders of the Equity Interests have the right to
require the Borrower to repurchase such Equity Interests upon the occurrence of
a change of control or an asset sale shall not constitute Disqualified Stock if
the terms of such Equity Interests provide that the Borrower may not repurchase
or redeem any such Equity Interests pursuant to such provisions prior to
obtaining any waiver or amendment to this Agreement required to permit such
repurchase or redemption.

“Dollar” and “$” mean lawful money of the United States.

“Dollar Equivalent” means, at any time, (a) with respect to any amount
denominated in Dollars, such amount, and (b) with respect to any amount
denominated in any Alternative Currency, the equivalent amount thereof in
Dollars as determined by the Administrative Agent or the applicable L/C Issuer,
as the case may be, at such time on the basis of the Spot Rate (determined in
respect of the most recent Revaluation Date) for the purchase of Dollars with
such Alternative Currency.

 

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“Domestic Subsidiary” means any Subsidiary that is organized under the laws of
any political subdivision of the United States.

“Eligible Assignee” means any Person that meets the requirements to be an
assignee under Section 10.06(b)(iii), (v) and (vi) (subject to such consents, if
any, as may be required under Section 10.06(b)(iii)).

“Eligible Accounts Receivable” means Accounts of the Borrower and the Subsidiary
Guarantors payable in Dollars. In determining the amount to be so included, the
face amount of such Accounts shall exclude any such Accounts that the
Administrative Agent determines to be ineligible pursuant to the definition of
the term “Borrowing Base”. Unless otherwise approved in writing by the
Administrative Agent, no Account of the Borrower or its Subsidiaries shall be
deemed to be an Eligible Account Receivable if:

(a) it arises out of a sale made by such Borrower or any of its Subsidiaries to
an Affiliate; or

(b) (i) in the case of any Account due to the Borrower or any Subsidiary
Guarantor from an account debtor other than a Qualified Account Debtor, the
Account is unpaid more than (A) 60 days after the original payment due date
and/or (B) 90 days after the original invoice date and (ii) in the case of
Accounts due to the Borrower or any Subsidiary Guarantor from account debtors
whose long-term unsecured debt obligations are rated at least A by Moody’s or A2
by S&P (each, a “Qualified Account Debtor”), the Account is unpaid more than
(A) 90 days after the original payment due date and/or (B) 120 days after the
original invoice date; or

(c) it is from the same account debtor (or any Affiliate thereof) and fifty
percent (50%) or more, in face amount, of all Accounts from such account debtor
(and any Affiliate thereof) due to the Borrower and the Subsidiary Guarantors
are ineligible pursuant to clause (b) above; or

(d) the Account due to the Borrower or any Subsidiary Guarantor, when aggregated
with all other Accounts of such account debtor (and any Affiliate thereof) due
to the Borrower and the Subsidiary Guarantors, exceeds fifteen percent (15%) in
face value of all Eligible Accounts of the Borrower and its Subsidiary
Guarantors combined then outstanding, to the extent of such excess, provided, to
the extent that such Accounts are otherwise deemed to be an Eligible Account
Receivable, that (i) Accounts supported or secured by an irrevocable letter of
credit in form and substance satisfactory to the Administrative Agent, issued or
confirmed by a financial institution satisfactory to the Administrative Agent,
and duly transferred to the Administrative Agent (together with sufficient
documentation to permit direct draws by the Administrative Agent) shall be
excluded to the extent of the face amount of such letter of credit for the
purposes of such calculation; and (ii) with respect to the account debtors
listed on Schedule 1.01(b) attached hereto (and any Affiliate thereof), the
percentage referred to above shall be deemed to be the percentage set forth on
such Schedule opposite the name of such account debtor; or

 

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(e) (i) the account debtor is also a creditor of the Borrower or such Subsidiary
Guarantor, (ii) the account debtor has disputed its liability on, or the account
debtor has made any claim with respect to, such Account or any other Account due
from such account debtor to the Borrower or such Subsidiary Guarantor, which has
not been resolved or (iii) the Account otherwise is or may reasonably be
expected to become subject to any right of setoff by the account debtor or with
respect to which any other claim, counterclaim, chargeback, rebate, allowance or
offset has been asserted; provided that any Account deemed ineligible pursuant
to this clause (e) shall only be ineligible to the extent of the amount owed by
the Borrower or such Subsidiary Guarantor to the account debtor, the amount of
such dispute or claim, or the amount of such setoff, other claim, counterclaim,
chargeback, rebate, allowance or offset, as applicable; provided, further, that
the portion of any Account that would otherwise be deemed ineligible pursuant to
this clause (e) shall not be deemed ineligible pursuant to this clause (e) to
the extent (i) supported or secured by an irrevocable letter of credit in form
and substance satisfactory to the Administrative Agent, issued or confirmed by a
financial institution satisfactory to the Administrative Agent, and duly
transferred to the Administrative Agent (together with sufficient documentation
to permit direct draws by the Administrative Agent) or (ii) subject to a
no-offset letter in form and substance satisfactory to the Administrative Agent;
or

(f) the account debtor has commenced a voluntary case under any Debtor Relief
Law, as now constituted or hereafter amended, or made an assignment for the
benefit of creditors, or if a decree or order for relief has been entered by a
court having jurisdiction over the account debtor in an involuntary case under
any Debtor Relief Law, as now constituted or hereafter amended, or if any other
petition or other application for relief under any Debtor Relief Law has been
filed by or against the account debtor, or if the account debtor has filed a
certificate of dissolution under applicable state law or shall be liquidated,
dissolved or wound-up, or shall authorize or commence any action or proceeding
for dissolution, winding-up or liquidation, or if the account debtor has failed,
suspended business, declared itself to be insolvent, is generally not paying its
debts as they become due or has consented to or suffered a receiver, trustee,
liquidator or custodian to be appointed for it or for all or a significant
portion of its assets or affairs (any such act or event an “Act of Bankruptcy”),
unless (i) the payment of Accounts from such account debtor is secured by assets
of, or guaranteed by, in either case in a manner satisfactory to the
Administrative Agent, a Person with respect to which an Act of Bankruptcy has
not occurred and that is acceptable to the Administrative Agent; (ii) if the
Account from such account debtor arises subsequent to a decree or order for
relief with respect to such account debtor under any Debtor Relief Law, as now
or hereafter in effect, the Administrative Agent shall have determined that the
timely payment and collection of such Account will not be impaired; or (iii) the
payment of such Account is supported or secured by an irrevocable letter of
credit in form and

 

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substance satisfactory to the Administrative Agent, issued or confirmed by a
financial institution satisfactory to the Administrative Agent, and duly
transferred to the Administrative Agent (together with sufficient documentation
to permit direct draws by the Administrative Agent); or

(g) the sale is to an account debtor outside of the United States, Canada or
Puerto Rico, unless (i) such account debtor has supplied the Borrower or such
Subsidiary Guarantor with an irrevocable letter of credit in form and substance
satisfactory to the Administrative Agent, issued or confirmed by a financial
institution satisfactory to the Administrative Agent and which has been duly
transferred to the Administrative Agent (together with sufficient documentation
to permit direct draws by the Administrative Agent); or (ii) such Account is
fully insured by credit insurance satisfactory to the Administrative Agent; or

(h) the sale to the account debtor is on a bill-and-hold, guarantied sale,
sale-and-return, sale on approval or consignment basis or made pursuant to any
other written agreement providing for repurchase or return; or

(i) the Administrative Agent determines in its Permitted Discretion that
collection of such Account is insecure or that such Account may not be paid by
reason of the account debtor’s financial inability to pay; or

(j) the account debtor is the United States of America, any State or any
political subdivision, department, agency or instrumentality thereof, unless the
Borrower or such Subsidiary Guarantor duly assigns its rights to payment of such
Account to the Agent pursuant to the Collateral Assignment of Claims Act of 1940
(31 U.S.C. § 3727 et seq.) or complies with any similar State or local law as
Agent shall require; or

(k) the goods giving rise to such Account have not been shipped and delivered to
and accepted by the account debtor or the services giving rise to such Account
have not been performed by the Borrower or such Subsidiary Guarantor and
accepted by the account debtor or the Account otherwise does not represent a
final sale (except to the extent that such Account arises from a leasing
transaction); or

(l) any documentation relating to the Account does not comply with all
applicable legal requirements, including, where applicable, the Federal Consumer
Credit Protection Act, the Federal Truth in Lending Act and Regulation Z of the
Board of Governors of the Federal Reserve System; or

(m) the Administrative Agent does not have a valid and perfected first priority
security interest in such Account (other than Permitted Liens) or the Account
does not otherwise conform to the representations and warranties contained in
the Credit Agreement, any Collateral Document or any of the other Loan
Documents; or

 

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(n) the Accounts are subject to any adverse security deposit, progress payment
or other similar advance made by or for the benefit of the applicable account
debtor; provided, that any Account deemed ineligible pursuant to this clause (n)
shall only be ineligible to the extent of the amount of any such deposit,
payment or other similar advance; or

(o) the Accounts are evidenced by or arise under any instrument or chattel paper
unless such instruments or chattel paper have been pledged to the Administrative
Agent containing such endorsement as the Administrative Agent shall require; or

(p) the account debtor has a presence in a State requiring the filing of Notice
of Business Activities Report or similar report in order to permit the Borrower
or such Subsidiary to seek judicial enforcement in such State of payment of such
Account unless the Borrower or such Subsidiary Guarantor has qualified to do
business in such State or has filed a Notice of Business Activities Report or
equivalent report for the then current year or such failure to file and
inability to seek judicial enforcement is capable of being remedied without any
material delay or material cost; or

(q) the Account arises from progress billings or other billing arrangements such
that the obligation of the account debtor with respect to such Account is
conditioned upon the Borrower’s or such Subsidiary Guarantor’s satisfactory
completion of any further performance under the agreement giving rise thereto;
or

(r) the Account is deemed by the Administrative Agent in its Permitted
Discretion to be otherwise ineligible for inclusion in the calculation of the
Borrowing Base.

“Eligible Rental Equipment” means the Rental Equipment of Quail Tools. Unless
otherwise approved in writing by the Administrative Agent, no Rental Equipment
shall be Eligible Rental Equipment unless: (i) it is owned solely by Quail Tools
and Quail Tools has good, valid and marketable title thereto; (ii) it is at all
times subject to the Administrative Agent’s valid and duly perfected first
priority security interest granted pursuant to the Security Agreement and no
other Lien (other than (x) any Permitted Liens referred to in Section 7.01(a) or
(y) any landlord’s Lien unless a rent reserve with respect to the relevant
leased property has been deducted from the Borrowing Base in accordance with
clause (ii) of the following sentence); (iii) Quail Tools shall at all times
have title to such Rental Equipment and shall have the ability to direct the
disposition thereof (subject only to the rights of any lessee under any lease in
effect with respect to such Rental Equipment) and it is not located outside the
continental United States, the Gulf of Mexico waters subject to state or Federal
jurisdiction and Canada; (iv) it is not obsolete, unmerchantable or slow moving,
as determined by the Administrative Agent in its reasonable credit judgment; and
(v) it conforms in all respects to the warranties and representations set forth
in the Credit Agreement. In no event shall (i) any Rental Equipment held under a
Vendor Lease, (ii) any Rental Equipment held at a leased property (other than
Rental Equipment on active lease located at customer locations in the ordinary
course of

 

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business) unless a landlord lien waiver satisfactory in all respects to the
Administrative Agent has been obtained with respect thereto (or, if no landlord
lien waiver has been obtained, a rent reserve equal to three months rent on such
leased property has, if elected by the Administrative Agent in its sole
discretion, been deducted from the Borrowing Base) and (iii) any Rental
Equipment otherwise deemed ineligible by the Administrative Agent in its
Permitted Discretion, constitute Eligible Rental Equipment.

“Eligible Specified Rigs” means the Specified Rigs of the Borrower and
Subsidiary Guarantors. Unless otherwise approved in writing by the
Administrative Agent, no Specified Rigs shall be an Eligible Specified Rig
unless: (i) it is owned solely by the Borrower or another Loan Party and such
Loan Party has good, valid and marketable title thereto; (ii) it is at all times
subject to the Administrative Agent’s valid and duly perfected first priority
Lien granted pursuant to the Mortgages and no other Lien (other than any
Permitted Liens referred to in Section 7.01(a), (b), (v) or Section 7.01(z);
(iii) a Loan Party shall at all times have title to such Specified Rig and shall
have the ability to direct the disposition thereof (subject only to the rights
of any charteree under any charter in effect with respect to such Specified Rig)
and it is not located outside the continental United States or the Gulf of
Mexico waters subject to state or Federal jurisdiction; (iv) it is not obsolete,
as determined by the Administrative Agent in its reasonable credit judgment; and
(v) it conforms in all respects to the warranties and representations set forth
in the Credit Agreement and applicable Mortgage and is fully insured in the
manner required by the Credit Agreement and applicable Mortgage. In no event
shall any Specified Rig otherwise deemed ineligible by the Administrative Agent
in its Permitted Discretion, constitute Eligible Specified Rigs.

“EMU Legislation” means the legislative measures of the European Council for the
introduction of, changeover to or operation of a single or unified European
currency.

“Environmental Laws” means any and all Federal, state, local, and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or governmental
restrictions relating to pollution and the protection of the environment or the
release of any materials into the environment, including those related to
hazardous substances or wastes, air emissions and discharges to waste or public
systems.

“Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any other Loan Party or any of their
respective Subsidiaries directly or indirectly resulting from or based upon
(a) violation of any Environmental Law, (b) the generation, use, handling,
transportation, storage, treatment or disposal of any Hazardous Materials,
(c) exposure to any Hazardous Materials, (d) the release or threatened release
of any Hazardous Materials into the environment or (e) any contract, agreement
or other consensual arrangement pursuant to which liability is assumed or
imposed with respect to any of the foregoing.

“Environmental Permit” means any permit, approval, identification number,
license or other authorization required under any Environmental Law.

 

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“Equipment OLV Percentage” means at any time, the percentage equal to (i) the
Net Equipment OLV of the Quail Rental Assets as of the date of the then most
recent appraisal of the Quail Rental Assets divided by the Net Book Value of the
Quail Rental Assets as of such date, multiplied by (ii) 50%.

“Equity Interests” means, with respect to any Person, all of the shares of
capital stock of (or other ownership or profit interests in) such Person, all of
the warrants, options or other rights for the purchase or acquisition from such
Person of shares of capital stock of (or other ownership or profit interests in)
such Person, and all of the other ownership or profit interests in such Person
(including partnership, member or trust interests therein), whether voting or
nonvoting, and whether or not such shares, warrants, options, rights or other
interests are outstanding on any date of determination.

“ERISA” means the Employee Retirement Income Security Act of 1974.

“ERISA Affiliate” means any trade or business (whether or not incorporated)
under common control with the Borrower within the meaning of Section 414(b) or
(c) of the Code (and Sections 414(m) and (o) of the Code for purposes of
provisions relating to Section 412 of the Code).

“ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to
Section 4063 of ERISA during a plan year in which it was a substantial employer
(as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is
treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or
partial withdrawal by the Borrower or any ERISA Affiliate from a Multiemployer
Plan or notification that a Multiemployer Plan is in reorganization; (d) the
filing of a notice of intent to terminate, the treatment of a Plan amendment as
a termination under Section 4041 or 4041A of ERISA, or the commencement of
proceedings by the PBGC to terminate a Pension Plan or Multiemployer Plan;
(e) an event or condition which constitutes grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than for PBGC premiums due but not delinquent under
Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.

“Euro” and “EUR” mean the lawful currency of the Participating Member States
introduced in accordance with the EMU Legislation.

“Eurodollar Base Rate” means:

(a) for any Interest Period with respect to a Eurodollar Rate Loan, the rate per
annum equal to (i) the British Bankers Association LIBOR Rate or the successor
thereto if the British Bankers Association is no longer making a LIBOR rate
available (“LIBOR”), as published by Reuters (or such other commercially
available source providing quotations of LIBOR as may be designated by the
Administrative Agent from time to time) at approximately 11:00 a.m., London
time, two Business Days prior to the commencement of such Interest Period, for
deposits in the relevant currency (for delivery on the first day of such
Interest Period) with a term equivalent to such Interest Period or,

 

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(ii) if such rate is not available at such time for any reason, the rate per
annum determined by the Administrative Agent to be the rate at which deposits in
the relevant currency for delivery on the first day of such Interest Period in
same day funds in the approximate amount of the Eurodollar Rate Loan being made,
continued or converted and with a term equivalent to such Interest Period would
be offered by Bank of America’s London Branch (or other Bank of America branch
or Affiliate) to major banks in the London or other offshore interbank market
for such currency at their request at approximately 11:00 a.m. (London time) two
Business Days prior to the commencement of such Interest Period; and

(b) for any interest calculation with respect to a Base Rate Loan on any date,
the rate per annum equal to (i) LIBOR, at approximately 11:00 a.m., London time
determined two Business Days prior to such date for Dollar deposits being
delivered in the London interbank market for a term of one month commencing that
day or (ii) if such published rate is not available at such time for any reason,
the rate per annum determined by the Administrative Agent to be the rate at
which deposits in Dollars for delivery on the date of determination in same day
funds in the approximate amount of the Base Rate Loan being made or maintained
and with a term equal to one month would be offered by Bank of America’s London
Branch to major banks in the London interbank Eurodollar market at their request
at the date and time of determination.

“Eurodollar Rate” means for any Interest Period with respect to a Eurodollar
Rate Loan, or a Base Rate Loan the interest rate on which is determined by
reference to the Eurodollar Rate component of the Base Rate, a rate per annum
determined by the Administrative Agent pursuant to the following formula:

 

LOGO [g455478g94w45.jpg]

“Eurodollar Reserve Percentage” means, for any day during any Interest Period,
the reserve percentage (expressed as a decimal, carried out to five decimal
places) in effect on such day, whether or not applicable to any Lender, under
regulations issued from time to time by the FRB for determining the maximum
reserve requirement (including any emergency, supplemental or other marginal
reserve requirement) with respect to Eurocurrency funding (currently referred to
as “Eurocurrency liabilities”). The Eurodollar Rate for each outstanding
Eurodollar Rate Loan shall be adjusted automatically as of the effective date of
any change in the Eurodollar Reserve Percentage.

“Eurodollar Rate Loan” means a Revolving Credit Loan or Term Loan that bears
interest at a rate based on the Eurodollar Rate.

“Event of Default” has the meaning specified in Section 8.01.

“Excluded Account” means (i) any deposit account, securities account or
commodities account exclusively used for payroll, payroll taxes and other
employee wage and benefit payment to or for the benefit of the Borrower’s or any
Subsidiary’s salaried employees in each case as long as such account remains a
zero-balance account or, with respect to any such account maintained in
Louisiana, constitutes an Immaterial Account on each Business Day other

 

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that the Business Day immediately preceding the payment of payroll and (ii) any
deposit accounts, trust accounts, escrow accounts or security deposits
established pursuant to statutory obligations or for the payment of taxes or
holding funds in trust for third parties not affiliated with the Borrower in the
ordinary course of business of business or in connection with acquisitions,
investments or dispositions permitted under this Agreement, deposits in the
ordinary course of business in connection with workers’ unemployment insurance
and other types of social security, reserve accounts, and escrow accounts
established pursuant to contractual obligations to third parties not affiliated
with the Borrower for casualty payments and insurance proceeds.

“Excluded Subsidiaries” means: (a) Parker Drilling Investment Company, an
Oklahoma corporation, (b) PKD Sales Corporation, an Oklahoma corporation,
(c) any Foreign Subsidiary, (d) any Domestic Subsidiary owned by any Foreign
Subsidiary, (e) any Domestic Subsidiary designated by the Borrower by written
notice to the Administrative Agent as an “Excluded Subsidiary” and certified by
a Responsible Officer of the Borrower to the Administrative Agent that (i) such
Domestic Subsidiary has no material assets other than Equity Interests of one or
more other Excluded Subsidiaries or (ii) substantially all of such Domestic
Subsidiary’s revenues for the fiscal year most recently ended were generated
(or, in the case of a newly-formed or acquired Subsidiary, are intended by the
Borrower to be generated in the current fiscal year) from assets, including rigs
and equipment, located outside of the United States (including located outside
the territorial waters of the United States) and/or contracts performed
primarily outside of the United States (including performed outside of the
territorial waters of the United States); provided, that a Subsidiary shall
cease to be an Excluded Subsidiary if (and for so long as) either (x) it
provides a guaranty of the obligations under any Indenture, (y) ceases to
satisfy the requirements set forth in clause (e)(i) or (ii) above, or (z) in the
case of each of Parker Drilling Investment Company and PKD Sales Corporation, it
ceases to be an “Unrestricted Subsidiary” under the Indentures, (f) Parker USA
Resources, LLC; provided that such Subsidiary shall cease to be an Excluded
Subsidiary if it has not been dissolved on or prior to December 31, 2012, (g) PD
Management Resources, LP; provided that such Subsidiary shall cease to be an
Excluded Subsidiary if it has not been dissolved on or prior to
December 31, 2012 and (h) Parker Offshore Resources, L.P.; provided that such
Subsidiary shall cease to be an Excluded Subsidiary if it has not been dissolved
on or prior to December 31, 2012.

“Excluded Taxes” means, with respect to the Administrative Agent, any Lender,
any L/C Issuer or any other recipient of any payment to be made by or on account
of any obligation of the Borrower hereunder, (a) taxes imposed on or measured by
its overall net income (however denominated), and franchise taxes imposed on it
(in lieu of net income taxes), by the jurisdiction (or any political subdivision
thereof) under the Laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable Lending Office is located, (b) any branch profits taxes imposed by
the United States or any similar tax imposed by any other jurisdiction in which
the Borrower is located, (c) any backup withholding tax that is required by the
Code to be withheld from amounts payable to a Lender that has failed to comply
with clause (A) of Section 3.01(e)(ii), or has so complied but is otherwise
subject to backup withholding, (d) in the case of a Foreign Lender (other than
an assignee pursuant to a request by the Borrower under Section 10.13), any
United States withholding tax that (i) is required to be imposed on amounts
payable to such Foreign Lender pursuant to the Laws in force at the time such
Foreign Lender becomes a party hereto (or

 

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designates a new Lending Office) or (ii) is attributable to such Foreign
Lender’s failure or inability (other than as a result of a Change in Law) to
comply with clause (B) of Section 3.01(e)(ii), except to the extent that such
Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 3.01(a)(ii) or (iii) and (e) any Taxes imposed by FATCA.

“Existing Collateral Documents” has the meaning set forth in the introductory
paragraph hereof.

“Existing Credit Agreement” has the meaning set forth in the introductory
paragraph hereof.

“Existing L/C Issuer” means each issuer of the Existing Letters of Credit.

“Existing Lenders” has the meaning set forth in the introductory paragraph
hereof.

“Existing Letters of Credit” means each letter of credit described in
Schedule 1.01(a) attached hereto.

“Existing Term Loan” means as to any Term Loan Lender on the Closing Date the
aggregate Term Loan held by such Lender under the Existing Credit Agreement
(after giving effect to Section 10.20 hereof but before giving effect to any
Term Loan made pursuant to Section 2.01(a) of this Agreement) set forth opposite
such Lender’s name in Schedule 1.01(c) hereto.

“Existing Revolving Loans” has the meaning specified in Section 2.01(a).

“Facility” means the Term Loan Facility or the Revolving Credit Facility, as the
context may require.

“FATCA” means Sections 1471 through 1474 of the Code, as of the date of this
Agreement (or any amended or successor version that is substantively comparable
and not materially more onerous to comply with), any current or future
regulations or official interpretations thereof and any agreements entered into
pursuant to Section 1471(b)(1) of the Code.

“Federal Funds Rate” means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) if such day is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such transactions on
the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business
Day, the Federal Funds Rate for such day shall be the average rate (rounded
upward, if necessary, to a whole multiple of 1/100 of 1%) charged to Bank of
America on such day on such transactions as determined by the Administrative
Agent.

 

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“Fee Letter” means the letter agreement, dated November 27, 2012, among the
Borrower, the Administrative Agent and Merrill Lynch, Pierce, Fenner & Smith
Incorporated.

“Foreign Government Scheme or Arrangement” has the meaning specified in
Section 5.12(d).

“Foreign Lender” means, with respect to the Borrower, any Lender that is
organized under the Laws of a jurisdiction other than that in which the Borrower
is resident for tax purposes (including such a Lender when acting in the
capacity of an L/C Issuer). For purposes of this definition, the United States,
each State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.

“Foreign Plan” has the meaning specified in Section 5.12(d).

“Foreign Subsidiary” means any Subsidiary that is organized under the laws of a
jurisdiction other than the United States, a State thereof or the District of
Columbia.

“FRB” means the Board of Governors of the Federal Reserve System of the United
States.

“Fronting Exposure” means, at any time there is a Defaulting Lender, with
respect to the L/C Issuer, such Defaulting Lender’s Applicable Revolving Credit
Percentage of the Outstanding Amount of all outstanding L/C Obligations other
than L/C Obligations as to which such Defaulting Lender’s participation
obligation has been reallocated to other Lenders or Cash Collateralized in
accordance with the terms hereof.

“Fund” means any Person (other than a natural person) that is (or will be)
engaged in making, purchasing, holding or otherwise investing in commercial
loans and similar extensions of credit in the ordinary course of its activities.

“GAAP” means generally accepted accounting principles in the United States set
forth in the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or such other
principles as may be approved by a significant segment of the accounting
profession in the United States, that are applicable to the circumstances as of
the date of determination, consistently applied.

“Governmental Authority” means the government of the United States or any other
nation, or of any political subdivision thereof, whether state or local, and any
agency, authority, instrumentality, regulatory body, court, central bank or
other entity exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government (including any
supra-national bodies such as the European Union or the European Central Bank).

“Guarantee” means, as to any Person, any (a) obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation payable or performable by
another Person (the “primary obligor”) in any manner, whether directly or
indirectly, and including any obligation of such Person, direct or

 

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indirect, (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation, (ii) to purchase or lease
property, securities or services for the purpose of assuring the obligee in
respect of such Indebtedness or other obligation of the payment or performance
of such Indebtedness or other obligation, (iii) to maintain working capital,
equity capital or any other financial statement condition or liquidity or level
of income or cash flow of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation, or (iv) entered into for
the purpose of assuring in any other manner the obligee in respect of such
Indebtedness or other obligation of the payment or performance thereof or to
protect such obligee against loss in respect thereof (in whole or in part), or
(b) Lien on any assets of such Person securing any Indebtedness or other
obligation of any other Person, whether or not such Indebtedness or other
obligation is assumed by such Person (or any right, contingent or otherwise, of
any holder of such Indebtedness to obtain any such Lien); provided, however,
that the term Guarantee shall not include endorsements of instruments for
deposit or collection in the ordinary course of business. The amount of any
Guarantee shall be deemed to be an amount equal to the stated or determinable
amount of the related primary obligation, or portion thereof, in respect of
which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a
corresponding meaning.

“Hazardous Materials” means all explosive or radioactive substances or wastes
and all hazardous or toxic substances, wastes or other pollutants, including
petroleum or petroleum distillates, asbestos or asbestos-containing materials,
polychlorinated biphenyls, radon gas, infectious or medical wastes and all other
substances or wastes of any nature regulated pursuant to, or could give rise to
liability under, any Environmental Law.

“Hedge Bank” means (a) any Person that, at the time it enters into a Swap
Contract permitted under Article VI or VII, is a Lender or an Affiliate of a
Lender, in its capacity as a party to such Swap Contract and (b) any Lender or
Affiliate of a Lender that is party to a Swap Contract with the Borrower or one
of its Subsidiaries as of the Closing Date or the date that such Person or such
Person’s Affiliate becomes a Lender hereunder.

“High Strikes Agreements” has the meaning specified in Schedule 5.14.

“Immaterial Account” means any account in which the aggregate amount on deposit
(or, in the case of any securities account, the total fair market value of all
securities held in such account) does not at any time exceed $25,000.

“Immaterial Subsidiary” means any Subsidiary designated by the Borrower, by
written notice to the Administrative Agent, as an “Immaterial Subsidiary”;
provided, that (a) no Subsidiary may be so designated unless such Subsidiary
(i) had assets having an aggregate book value, as of the end of the fiscal year
most recently ended, not exceeding $5,000,000 and (ii) had net income not
exceeding $1,000,000 for such fiscal year and (b) any Subsidiary shall
automatically cease to be an Immaterial Subsidiary if at the end of any
subsequent fiscal year such Subsidiary would not meet the requirements set forth
in the foregoing clause (a).

 

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“Indebtedness” means, as to any Person at a particular time, without
duplication, all of the following, whether or not included as indebtedness or
liabilities in accordance with GAAP:

(a) all obligations of such Person for borrowed money;

(b) all obligations of such Person for the deferred purchase price of Property
or services (other than (i) trade payables incurred in the ordinary course of
such Person’s business, and (ii) any earn-out obligation until such obligation
becomes a liability on the balance sheet or such Person in accordance with GAAP
and if not paid after becoming due and payable);

(c) all obligations of such Person evidenced by bonds, debentures, notes, or
other similar instruments;

(d) all indebtedness created or arising under any conditional sale or other
title retention agreement with respect to Property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such Property);

(e) all Attributable Indebtedness in respect of Capitalized Leases and Synthetic
Lease Obligations of such Person and all Synthetic Debt of such Person;

(f) the maximum amount of all obligations of such Person, contingent or
otherwise, as an account party or applicant under acceptance, letter of credit
or similar facilities;

(g) all obligations of such Person, contingent or otherwise, to purchase,
redeem, retire, defease or otherwise acquire for value (other than through the
issuance of common stock of such Person) any Equity Interest in such Person or
any other Person, other than any such obligations the payment of which would be
permitted by Section 7.06(c) or (d); provided that such obligations to acquire
Equity Interests after 91 days after the latest Maturity Date of any Lender
shall not be Indebtedness for purposes of this clause (g);

(h) all Guarantees of such Person in respect of any of the foregoing;

(i) all obligations of the kind referred to in clauses (a) through (h) above
secured by (or for which the holder of such obligation has an existing right,
contingent or otherwise, to be secured by) any Lien on Property (including,
without limitation, accounts and contract rights) owned by such Person (other
than a Lien of the type described in Section 7.01(t)), whether or not such
Person has assumed or become liable for the payment of such obligation;
provided, however, if such Indebtedness is limited in recourse solely to such
Property, then the amount of such Indebtedness for purposes of this Agreement
will not exceed the fair market value of such Property; and

 

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(j) for purposes of Section 8.01(e) only, net obligations of such Person under
any Swap Contract.

For all purposes hereof, the Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture (other than a joint venture
that is itself a corporation or limited liability company) in which such Person
is a general partner or a joint venturer, unless such Indebtedness is expressly
made non-recourse to such Person. The amount of any net obligation under any
Swap Contract on any date shall be deemed to be the Swap Termination Value
thereof as of such date. Notwithstanding the foregoing, Indebtedness shall not
include any indebtedness which has been defeased in accordance with GAAP or
defeased pursuant to the deposit of cash or Cash Equivalents (in an amount
sufficient to satisfy all such indebtedness obligations at maturity or
redemption, as applicable, and all payments of interest and premium, if any) in
a trust or account created or pledged for the sole benefit of the holders of
such indebtedness, and subject to no other Liens, or as to which the proceeds of
Refinancing Debt have been deposited in a designated account in compliance with
the definition thereof.

“Indemnified Taxes” means Taxes other than Excluded Taxes.

“Indemnitees” has the meaning specified in Section 10.04(b).

“Indentures” means the Senior Notes Indenture, the indenture or other similar
instrument then governing any Refinancing Debt incurred with respect to the
Senior Notes or any Refinancing Debt with respect thereto, respectively.

“Information” has the meaning specified in Section 10.07.

“Initial Appraisal Report” means, collectively, that certain appraisal report,
dated as of November 6, 2012, on (13) Inland Drilling Barge Rigs Owned by Parker
USA Drilling Company and that certain appraisal report, dated as of November 6,
2012, on Quail Tools LLC.

“Initial Projections” has the meaning specified in Section 4.01(a)(xii).

“Intellectual Property” means the collective reference to all rights, priorities
and privileges relating to intellectual property, whether arising under United
States, multinational or foreign laws or otherwise, including, without
limitation, copyrights, copyright licenses, patents, patent licenses,
trademarks, trademark licenses, technology, know-how and processes, and all
rights to sue at law or in equity for any infringement or other impairment
thereof, including the right to receive all proceeds and damages therefrom.

“Interest Payment Date” means, (a) as to any Eurodollar Rate Loan, the last day
of each Interest Period applicable to such Loan and the Maturity Date of the
Facility under which such Loan was made; provided, however, that if any Interest
Period for a Eurodollar Rate Loan exceeds three months, the respective dates
that fall every three months after the beginning of such Interest Period shall
also be Interest Payment Dates; and (b) as to any Base Rate Loan, the last
Business Day of each March, June, September and December and the Maturity Date
of the Facility under which such Loan was made.

 

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“Interest Period” means, as to each Eurodollar Rate Loan, the period commencing
on the date such Eurodollar Rate Loan is disbursed or converted to or continued
as a Eurodollar Rate Loan and ending on the date one, two, three or six months
thereafter, as selected by the Borrower in its Committed Loan Notice; provided
that:

(i) any Interest Period that would otherwise end on a day that is not a Business
Day shall be extended to the next succeeding Business Day unless such Business
Day falls in another calendar month, in which case such Interest Period shall
end on the next preceding Business Day;

(ii) any Interest Period that begins on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on the last
Business Day of the calendar month at the end of such Interest Period; and

(iii) no Interest Period shall extend beyond the Maturity Date of the Facility
under which such Loan was made.

“Investment” means, as to any Person, any direct or indirect acquisition or
investment by such Person, whether by means of (a) the purchase or other
acquisition of Equity Interests of another Person, (b) a loan, advance or
capital contribution to, Guarantee or assumption of debt of, or purchase or
other acquisition of any other debt or interest in, another Person (including by
way of Guarantee or otherwise), or (c) the purchase or other acquisition (in one
transaction or a series of transactions) of assets of another Person that
constitute a business unit or all or a substantial part of the business of, such
Person.

“IRS” means the United States Internal Revenue Service.

“ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law &
Practice, Inc. (or such later version thereof as may be in effect at the time of
issuance).

“Issuer Documents” means with respect to any Letter of Credit, the Letter of
Credit Application, and any other document, agreement and instrument entered
into by the applicable L/C Issuer and the Borrower (or any Subsidiary) or in
favor of such L/C Issuer and relating to such Letter of Credit.

“Laws” means, collectively, all international, foreign, Federal, state and local
statutes, treaties, rules, guidelines, regulations, ordinances, codes and
administrative or judicial precedents or authorities, including the
interpretation or administration thereof by any Governmental Authority charged
with the enforcement, interpretation or administration thereof, and all
applicable administrative orders, directed duties, requests, licenses,
authorizations and permits of, and agreements with, any Governmental Authority,
in each case whether or not having the force of law.

“L/C Advance” means, with respect to each Revolving Credit Lender, such Lender’s
funding of its participation in any L/C Borrowing in accordance with its
Applicable Revolving Credit Percentage. All L/C Advances shall be denominated in
Dollars.

 

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“L/C Borrowing” means an extension of credit resulting from a drawing under any
Letter of Credit which has not been reimbursed on the date when made or
refinanced as a Revolving Credit Borrowing. All L/C Borrowings shall be
denominated in Dollars.

“L/C Credit Extension” means, with respect to any Letter of Credit, the issuance
thereof or extension of the expiry date thereof, or the increase of the amount
thereof.

“L/C Issuer” means (a) in respect of the Existing Letters of Credit only, each
Existing L/C Issuer; (b) in respect of each Letter of Credit issued hereunder on
or after the Closing Date, Bank of America in its capacity as issuer of Letters
of Credit hereunder, (c) any Lender from time to time designated by the Borrower
as an L/C Issuer with the consent of such Lender and the Administrative Agent,
or (d) any successor issuer of Letters of Credit hereunder.

“L/C Obligations” means, as at any date of determination, the aggregate amount
available to be drawn under all outstanding Letters of Credit plus the aggregate
of all Unreimbursed Amounts, including all L/C Borrowings. For purposes of
computing the amount available to be drawn under any Letter of Credit, the
amount of such Letter of Credit shall be determined in accordance with
Section 1.09. For all purposes of this Agreement, if on any date of
determination a Letter of Credit has expired by its terms but any amount may
still be drawn thereunder by reason of the operation of Rule 3.14 of the ISP,
such Letter of Credit shall be deemed to be “outstanding” in the amount so
remaining available to be drawn.

“Lender” has the meaning specified in the introductory paragraph hereto.

“Lending Office” means, as to any Lender, the office or offices of such Lender
described as such in such Lender’s Administrative Questionnaire, or such other
office or offices as a Lender may from time to time notify the Borrower and the
Administrative Agent.

“Letter of Credit” means any letter of credit issued hereunder and shall be
deemed to include the Existing Letters of Credit. A Letter of Credit maybe a
standby letter of credit or a commercial letter of credit payable upon
presentation of appropriate supporting documentation. Letters of Credit may be
issued in Dollars or in an Alternative Currency.

“Letter of Credit Application” means an application and agreement for the
issuance or amendment of a Letter of Credit in the form from time to time in use
by the relevant L/C Issuer.

“Letter of Credit Expiration Date” means the day that is seven days prior to the
Maturity Date then in effect for the Revolving Credit Facility (or, if such day
is not a Business Day, the next preceding Business Day).

“Letter of Credit Fee” has the meaning specified in Section 2.03(i).

“Letter of Credit Sublimit” means an amount equal to $50,000,000. The Letter of
Credit Sublimit is part of, and not in addition to, the Revolving Credit
Facility.

 

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“Lien” means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge, or other security
interest or preferential arrangement in the nature of a security interest of any
kind or nature whatsoever (including any conditional sale or other title
retention agreement, any easement, right of way or other encumbrance on title to
real property, and any financing lease having substantially the same economic
effect as any of the foregoing).

“Loan” means an extension of credit by a Lender to the Borrower under Article II
in the form of a Term Loan or a Revolving Credit Loan.

“Loan Documents” means, collectively, this Agreement, the Notes, the Subsidiary
Guaranty, the Collateral Documents, the Fee Letter and each Issuer Document.

“Loan Parties” means, collectively, the Borrower and each Subsidiary Guarantor.

“Lockbox Agreement” means in respect of each lockbox account, and related
lockbox and collection account, an agreement, in form and substance reasonably
satisfactory to the Administrative Agent and the Borrower, pursuant to which the
bank that maintains such account and the Borrower or the Subsidiary Guarantor,
as the case may be, that is the named owner of such account shall agree with the
Administrative Agent (a) that such lockbox and accounts shall be used solely for
the collection and deposit of proceeds of Collateral, (b) that, upon notice from
the Administrative Agent, such bank shall transfer at the end of each business
day all collected funds in any such account to a Concentration Account and
(c) the Administrative Agent agrees that it will not give the notice described
in the foregoing clause (b) unless an Event of Default has occurred and is
continuing. Each Lockbox Agreement shall contain such other terms as shall be
customary for agreements of such type.

“Material Adverse Effect” means any event, development or circumstance that has
had or could reasonably be expected to have (a) a material adverse effect upon
the business, assets, properties or financial condition of the Borrower and its
Subsidiaries taken as a whole; (b) a material impairment of the rights and
remedies of the Administrative Agent or any Lender under any Loan Document or of
the ability of any Loan Party to perform its obligations under any Loan Document
to which it is a party; or (c) a material adverse effect upon the legality,
validity or enforceability against any Loan Party of any material provision of
any Loan Document to which it is a party.

“Material Subsidiary” means each Domestic Subsidiary that is not an Immaterial
Subsidiary.

“Maturity Date” means with respect to each Facility, December 14, 2017;
provided, however, that if such date is not a Business Day, the Maturity Date
shall be the next preceding Business Day.

“Moody’s” means Moody’s Investors Service, Inc. and any successor thereto.

“Mortgage” has the meaning specified in Section 4.01(a)(iv).

“Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes
or is obligated to make contributions, or during the preceding five plan years,
has made or been obligated to make contributions.

 

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“Net Amount” means with respect to any Account at any time, the face amount of
such Account on any date less (to the extent not otherwise deducted pursuant to
the definition of “Eligible Account”) any and all returns, rebates, discounts
(which may, at the Administrative Agent’s option, be calculated on shortest
terms), credits, allowances or taxes (including any sales, excise or other
taxes) at any time issued, owing, claimed by any account debtor, granted,
outstanding or payable in connection with, or any interest accrued on the amount
of, such Account at such time.

“Net Book Value” means (i) Cost minus (ii) accumulated depreciation calculated
(A) in accordance with GAAP and (B) consistently with the Quail Tools’
accounting practices as of the Closing Date.

“Net Cash Proceeds” means, in connection with any issuance or sale of debt
securities or instruments or the incurrence of loans, the cash proceeds received
from such issuance or incurrence, net of attorneys’ fees, investment banking
fees, accountants’ fees, underwriting discounts and commissions and other
customary fees and expenses actually incurred in connection therewith.

“Net Equipment OLV” means, as reasonably determined by the Administrative Agent
in good faith based on the Initial Appraisal Report or the most recent appraisal
conducted pursuant to Section 6.12, the Value of the Eligible Rental Equipment
that is estimated to be recoverable in an orderly liquidation of such Equipment
(less applicable freight and duty charges, if any), net of liquidation expenses.

“Net Loss Proceeds” means, in connection with any Casualty Event, all insurance
proceeds or other amounts actually received, less any deductibles applied or to
be paid and any costs and expenses incurred in the collection thereof.

“Net Specified Rigs OLV” means as reasonably determined by the Administrative
Agent in good faith based upon the Initial Appraisal Report or the most recent
appraisal conducted pursuant to Section 6.12, as applicable, the value of the
Eligible Specified Rigs that is estimated to be recoverable in an orderly
liquidation of such Eligible Specified Rigs (less applicable freight and duty
charges, if any), net of estimated liquidation expenses.

“Non-Consenting Lender” has the meaning set forth in Section 10.01.

“Non-Defaulting Lender” means, at any time, each Lender that is not a Defaulting
Lender at such time.

“Non-Increasing Lender” means any Lender that does not consent to the increase
of the Revolving Credit Facility or the Term Loan Facility pursuant to
Section 2.14 or 2.15, respectively.

 

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“Non-Recourse Debt” means Indebtedness and other obligations of the Borrower or
any Subsidiary incurred for the purpose of financing all or any part of the
purchase price or cost of construction, design, repair, replacement,
installation, or improvement of property, plant or equipment used in the
business of the Borrower or such Subsidiary with respect to which:

(a) the holders of such Indebtedness and other obligations agree that they will
look solely to the property so acquired or constructed and securing such
Indebtedness (plus improvements, accessions, proceeds or distributions and
directly related general intangibles) and other obligations, and neither the
Borrower nor any Subsidiary (i) provides any direct or indirect credit support,
including any undertaking, agreement or instrument that would constitute
Indebtedness or (ii) is otherwise directly or indirectly liable for such
Indebtedness; and

(b) no default with respect to such Indebtedness or obligations would cause, or
permit (after notice or passage of time or otherwise), according to the terms
thereof, any holder (or any representative of any such holder) of any other
Indebtedness of the Borrower or such Subsidiary equal to or in excess of the
Threshold Amount to declare a default on such Indebtedness or cause the payment,
repurchase, redemption, defeasance or other acquisition or retirement for value
thereof to be accelerated or payable prior to any scheduled principal payment,
scheduled sinking fund or scheduled maturity.

“Note” means a Term Note or a Revolving Credit Note, as the context may require.

“Obligations” means all advances to, and debts, liabilities, obligations,
covenants and duties of, any Loan Party arising under any Loan Document or
otherwise with respect to any Loan, Letter of Credit, Secured Cash Management
Agreement or Secured Hedge Agreement, whether direct or indirect (including
those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after
the commencement by or against any Loan Party or any Affiliate thereof of any
proceeding under any Debtor Relief Laws naming such Person as the debtor in such
proceeding, regardless of whether such interest and fees are allowed claims in
such proceeding; provided, that (a) obligations of the Borrower or any
Subsidiary under any Secured Cash Management Agreement or Secured Hedge
Agreement shall be secured and guaranteed pursuant to the Collateral Documents
only to the extent that, and for so long as, the other Obligations are so
secured and guaranteed and (b) any release of Collateral or Subsidiary
Guarantors effected in the manner permitted by this Agreement shall not require
the consent of holders of obligations under the Secured Cash Management
Agreements and Secured Hedge Agreements.

“OFAC” means the Office of Foreign Assets Control of the United States
Department of the Treasury.

“Ordinary Course of Business” means with respect to any transaction involving
any Person, the ordinary course of such Person’s business, as conducted by such
Person in accordance with past practices and undertaken by such Person in good
faith and not for the purpose of evading any covenant or restriction in any Loan
Document.

 

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“Organization Documents” means, (a) with respect to any corporation, the
certificate or articles of incorporation and the bylaws (or equivalent or
comparable constitutive documents with respect to any non-U.S. jurisdiction);
(b) with respect to any limited liability company, the certificate or articles
of formation or organization and operating agreement; and (c) with respect to
any partnership, joint venture, trust or other form of business entity, the
partnership, joint venture or other applicable agreement of formation or
organization and any agreement, instrument, filing or notice with respect
thereto filed in connection with its formation or organization with the
applicable Governmental Authority in the jurisdiction of its formation or
organization and, if applicable, any certificate or articles of formation or
organization of such entity.

“Other Taxes” means all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made hereunder or under any other Loan Document or from the execution,
delivery or enforcement of, or otherwise with respect to, this Agreement or any
other Loan Document.

“Outstanding Amount” means (a) with respect to Term Loans and Revolving Loans on
any date, the aggregate outstanding principal amount thereof after giving effect
to any borrowings and prepayments or repayments of such Term Loans and Revolving
Loans, as the case may be, occurring on such date; (b) with respect to any L/C
Obligations on any date, the Dollar Equivalent of the amount of such L/C
Obligations on such date after giving effect to any L/C Credit Extension
occurring on such date and any other changes in the aggregate amount of the L/C
Obligations as of such date, including as a result of any reimbursements by the
Borrower of Unreimbursed Amounts or any reductions in the maximum amount
available for drawing under Letters of Credit taking effect on such date.

“Participant” has the meaning specified in Section 10.06(d).

“Participating Member State” means each state so described in any EMU
Legislation.

“Paying Subsidiary” has the meaning specified in Section 7.06(a).

“PBGC” means the Pension Benefit Guaranty Corporation.

“Pension Plan” means any “employee pension benefit plan” (as such term is
defined in Section 3(2) of ERISA), other than a Multiemployer Plan, that is
subject to Title IV of ERISA and is sponsored or maintained by the Borrower or
any ERISA Affiliate or to which the Borrower or any ERISA Affiliate contributes
or has an obligation to contribute, or in the case of a multiple employer or
other plan described in Section 4064(a) of ERISA, has made contributions at any
time during the immediately preceding five plan years.

“Permitted Discretion” means the Administrative Agent’s judgment exercised in
good faith based upon its consideration of any factor which the Administrative
Agent believes in good faith: (a) will or reasonably could be expected to
adversely affect the value of the Borrowing Base Collateral, the enforceability
or priority of the Administrative Agent’s Liens thereon or the amount which the
Administrative Agent, the Lenders or any L/C Issuer would be likely to receive
(after giving consideration to delays in payment and costs of enforcement) in
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liquidation of such Collateral; (b) suggests that any collateral report of
financial information delivered to the Administrative Agent by any Person, with
respect to the Borrowing Base Collateral is incomplete, inaccurate or misleading
in any material respect; (c) materially increases the likelihood of a
bankruptcy, reorganization or other insolvency proceeding involving the Borrower
or any Subsidiary of the Borrower or any of the Borrowing Base Collateral; or
(d) creates or reasonably could be expected to create a Default or Event of
Default. In exercising such judgment, the Administrative Agent may consider such
factors already included in or tested by the definition of Eligible Accounts
Receivable, Eligible Rental Equipment or Eligible Specified Rigs, as well as any
of the following: (i) the changes in collection history and dilution with
respect to the Accounts; (ii) changes in demand for, pricing of, or product mix
of Rental Equipment or Specified Rigs; (iii) changes in any concentration of
risk with respect to the Borrower’s or any of its Subsidiaries’ Accounts, Rental
Equipment or Specified Rigs; and (iv) any other factors that change in any
material respect the credit risk of lending to the Borrower on the security of
the Borrower’s or any of its Subsidiaries Accounts, Rental Equipment or
Specified Rigs. The burden of establishing lack of good faith hereunder shall be
on the Borrower.

“Permitted Liens” means any Liens permitted by subsections (a), (b), (c), (d),
(e), (k) and (v) of Section 7.01.

“Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.

“Plan” means any “employee benefit plan” (as such term is defined in
Section 3(3) of ERISA) established by the Borrower or, with respect to any such
plan that is subject to Section 412 of the Code or Title IV of ERISA, any ERISA
Affiliate.

“Platform” has the meaning specified in Section 6.02.

“Pledged Debt” has the meaning specified in the Security Agreement.

“Pledged Equity” has the meaning specified in the Security Agreement.

“Project Finance Subsidiary” means a Subsidiary that is a special-purpose entity
created solely to (i) construct or acquire any asset or project that will be or
is financed solely with Project Financing for such asset or project and related
equity investments in, loans to, or capital contributions in, such Subsidiary
that are not prohibited hereby and/or (ii) own an interest in any such asset or
project.

“Project Financing” means Indebtedness and other obligations that (a) are
incurred by a Project Finance Subsidiary, (b) are secured by a Lien of the type
permitted under Section 7.01(g) and (c) constitute Non-Recourse Debt (other than
recourse to the assets of, and Equity Interests in, such Project Finance
Subsidiary).

“Projections” has the meaning specified in Section 6.02(c) and includes the
Initial Projections.

 

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“Property” means any right or interest in or to property of any kind whatsoever,
whether real, personal or mixed and whether tangible or intangible, including,
without limitation, Equity Interests.

“Public Lender” has the meaning specified in Section 6.02.

“Quail Rental Assets” means all Rental Equipment owned by Quail Tools.

“Quail Tools” means Quail Tools, L.P. an Oklahoma limited partnership.

“Refinanced Indebtedness” has the meaning specified in Section 7.03(g).

“Refinancing Debt” has the meaning specified in Section 7.03(g).

“Register” has the meaning specified in Section 10.06(c).

“Related Parties” means, with respect to any Person, such Person’s Affiliates
and the partners, directors, officers, employees, agents, trustees and advisors
of such Person and of such Person’s Affiliates.

“Removal Effective Date” has the meaning specified in Section 9.06.

“Rental Equipment” means Inventory (as defined in the UCC) which is of a type
offered for lease in the Ordinary Course of Business as conducted on the Closing
Date.

“Reportable Event” means any of the events set forth in Section 4043(c) of
ERISA, other than events for which the 30 day notice period has been waived.

“Request for Credit Extension” means (a) with respect to a Borrowing, conversion
or continuation of Term Loans or Revolving Credit Loans, a Committed Loan
Notice, and (b) with respect to an L/C Credit Extension, a Letter of Credit
Application.

“Required Lenders” means, as of any date of determination, Lenders holding more
than 50% of the sum of the (a) Total Outstandings (with the aggregate amount of
each Revolving Credit Lender’s risk participation and funded participation in
L/C Obligations being deemed “held” by such Revolving Credit Lender for purposes
of this definition) and (b) aggregate unused Revolving Credit Commitments;
provided that the unused Revolving Credit Commitment of, and the portion of the
Total Outstandings held or deemed held by, any Defaulting Lender shall be
excluded for purposes of making a determination of Required Lenders.

“Required Revolving Lenders” means, as of any date of determination, Revolving
Credit Lenders holding more than 50% of the sum of the (a) Total Revolving
Credit Outstandings (with the aggregate amount of each Revolving Credit Lender’s
risk participation and funded participation in L/C Obligations being deemed
“held” by such Revolving Credit Lender for purposes of this definition) and
(b) aggregate unused Revolving Credit Commitments; provided that the unused
Revolving Credit Commitment of, and the portion of the Total Revolving Credit
Outstandings held or deemed held by, any Defaulting Lender shall be excluded for
purposes of making a determination of Required Revolving Lenders.

 

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“Required Term Loan Lenders” means, as of any date of determination, Term Loan
Lenders holding more than 50% of the Term Loan Facility on such date; provided
that the portion of the Term Loan Facility held by any Defaulting Lender shall
be excluded for purposes of making a determination of Required Term Loan
Lenders.

“Requirement of Law” means as to any Person, the Organization Documents of such
Person, and any Law or determination of an arbitrator, in each case applicable
to or binding upon such Person or any of its Property or to which such Person or
any of its Property is subject.

“Resignation Effective Date” has the meaning specified in Section 9.06.

“Responsible Officer” means the chief executive officer, president, chief
financial officer, treasurer, or controller of a Loan Party, but in any event,
with respect to financial matters, the chief financial officer of such Loan
Party and, in the case of Compliance Certificates, the chief financial officer,
controller or the treasurer of such Loan Party. Any document delivered hereunder
that is signed by a Responsible Officer of a Loan Party shall be conclusively
presumed to have been authorized by all necessary corporate, partnership and/or
other action on the part of such Loan Party and such Responsible Officer shall
be conclusively presumed to have acted on behalf of such Loan Party.

“Restricted Payment” has the meaning specified in Section 7.06.

“Revaluation Date” means with respect to any Letter of Credit, each of the
following: (a) each date of issuance of a Letter of Credit denominated in an
Alternative Currency, (b) each date of an amendment of any such Letter of Credit
having the effect of increasing the amount thereof (solely with respect to the
increased amount), (c) each date of any payment by the applicable L/C Issuer
under any Letter of Credit denominated in an Alternative Currency, and (d) such
additional dates as the Administrative Agent or the applicable L/C Issuer shall
determine or the Required Lenders shall require.

“Revolving Credit Borrowing” means a borrowing consisting of simultaneous
Revolving Credit Loans of the same Type and, in the case of Eurodollar Rate
Loans, having the same Interest Period made by each of the Revolving Credit
Lenders pursuant to Section 2.01(b).

“Revolving Credit Commitment” means, as to each Revolving Credit Lender, its
obligation to (a) make Revolving Credit Loans to the Borrower pursuant to
Section 2.01(b), and (b) purchase participations in L/C Obligations, in an
aggregate principal amount at any one time outstanding not to exceed the amount
set forth opposite such Lender’s name on Schedule 2.01 under the caption
“Revolving Credit Commitment” or opposite such caption in the Assignment and
Assumption pursuant to which such Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.

“Revolving Credit Facility” means, at any time, the aggregate amount of the
Revolving Credit Lenders’ Revolving Credit Commitments at such time.

 

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“Revolving Credit Lender” means, at any time, any Lender that has a Revolving
Credit Commitment at such time.

“Revolving Credit Loan” has the meaning specified in Section 2.01(c).

“Revolving Credit Note” means a promissory note made by the Borrower in favor of
a Revolving Credit Lender evidencing Revolving Credit Loans made by such
Revolving Credit Lender, substantially in the form of Exhibit C-2.

“S&P” means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc. and any successor thereto.

“Sanction(s)” means any international economic sanction administered or enforced
by OFAC, the United Nations Security Council, the European Union, Her Majesty’s
Treasury or other relevant sanctions authority.

“SEC” means the Securities and Exchange Commission, or any Governmental
Authority succeeding to any of its principal functions.

“Secured Cash Management Agreement” means any Cash Management Agreement that is
entered into by and between any Loan Party and any Cash Management Bank.

“Secured Hedge Agreement” means any Swap Contract permitted under Article VI or
VII that is entered into by and between any Loan Party and any Hedge Bank.

“Secured Parties” means, collectively, the Administrative Agent, each other
Agent, the Lenders, the L/C Issuers, the Hedge Banks, the Cash Management Banks,
each co-agent or sub-agent appointed by the Administrative Agent from time to
time pursuant to Section 9.05, and the other Persons the Obligations owing to
which are or are purported to be secured by the Collateral under the terms of
the Collateral Documents.

“Security Agreement” has the meaning specified in Section 4.01(a)(iii).

“Security Agreement Supplement” has the meaning specified in the Security
Agreement.

“Senior Notes” means the $425,000,000 aggregate principal amount of senior
unsecured notes of the Borrower issued pursuant to the Senior Notes Indenture.

“Senior Notes Indenture” means that certain Indenture, dated as of October 10,
2003, in respect of the Senior Notes, together with all instruments and other
agreements entered into by the Borrower or such Subsidiaries in connection
therewith, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with Section 7.07.

“Solvent” and “Solvency” mean, with respect to any Person on any date of
determination, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person is not less than the amount that will be required to pay

 

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the probable liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that it will,
incur debts or liabilities beyond such Person’s ability to pay such debts and
liabilities as they mature, (d) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person’s property would constitute an unreasonably small capital, and
(e) such Person is able to pay its debts and liabilities, contingent obligations
and other commitments as they mature in the ordinary course of business. 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.

“Specified Personal Property” means any Property of a type in which a Lien is
purported to be granted pursuant to the Security Agreement or Mortgage.

“Specified Rigs” means each of the barge rigs, other than workover rigs and
those that are not capable of drilling to depths of 13,000 feet or more, as
located and operating in the continental United States or the Gulf of Mexico
waters subject to state or Federal jurisdiction, and owned by the Borrower or
any Subsidiary Guarantor described in Schedule 5.07 and each such other barge
rig acquired after the Closing Date and made subject to a Mortgage pursuant to
Section 6.09.

“Spot Rate” for a currency means the rate determined by the Administrative Agent
or the relevant L/C Issuer, as applicable, to be the rate quoted by the Person
acting in such capacity as the spot rate for the purchase by such Person of such
currency with another currency through its principal foreign exchange trading
office at approximately 11:00 a.m. on the date two Business Days prior to the
date as of which the foreign exchange computation is made; provided that the
Administrative Agent or the relevant L/C Issuer may obtain such spot rate from
another financial institution designated by the Administrative Agent or the
relevant L/C Issuer if the Person acting in such capacity does not have as of
the date of determination a spot buying rate for any such currency; and provided
further that the relevant L/C Issuer may use such spot rate quoted on the date
as of which the foreign exchange computation is made in the case of any Letter
of Credit denominated in an Alternative Currency.

“Subordinated Debt” means Indebtedness of the Borrower or any Subsidiary which
meets all the requirements of the definition of “Convertible Debt” other than
clause (f) of the definition thereof.

“Subsidiary” of a Person means a corporation, partnership, joint venture,
limited liability company or other business entity of which a majority of the
shares of securities or other interests having ordinary voting power for the
election of directors or other governing body (other than securities or
interests having such power only by reason of the happening of a contingency)
are at the time beneficially owned, or the management of which is otherwise
controlled, directly, or indirectly through one or more intermediaries, or both,
by such Person. Unless otherwise specified, all references herein to a
“Subsidiary” or to “Subsidiaries” shall refer to a Subsidiary or Subsidiaries of
the Borrower.

 

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“Subsidiary Guarantors” means, collectively, (a) each Material Subsidiary of the
Borrower other than any Excluded Subsidiary or Project Finance Subsidiary,
(b) Quail USA, LLC, and (c) Anachoreta, Inc. and Parker-VSE, LLC.

“Subsidiary Guaranty” means the Subsidiary Guaranty made by the Subsidiary
Guarantors in favor of the Administrative Agent and the Lenders, substantially
in the form of Exhibit F, together with each other guaranty and guaranty
supplement delivered pursuant to Section 6.09.

“Swap Contract” means (a) any and all rate swap transactions, basis swaps,
credit derivative transactions, forward rate transactions, commodity swaps,
commodity options, forward commodity contracts, equity or equity index swaps or
options, bond or bond price or bond index swaps or options or forward bond or
forward bond price or forward bond index transactions, interest rate options,
forward foreign exchange transactions, cap transactions, floor transactions,
collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar
transactions or any combination of any of the foregoing (including any options
to enter into any of the foregoing), whether or not any such transaction is
governed by or subject to any master agreement, and (b) any and all transactions
of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the
International Swaps and Derivatives Association, Inc., any International Foreign
Exchange Master Agreement, or any other master agreement (any such master
agreement, together with any related schedules, a “Master Agreement”), including
any such obligations or liabilities under any Master Agreement.

“Swap Termination Value” means, in respect of any one or more Swap Contracts,
after taking into account the effect of any legally enforceable netting
agreement relating to such Swap Contracts, (a) for any date on or after the date
such Swap Contracts have been closed out and termination value(s) determined in
accordance therewith, such termination value(s), and (b) for any date prior to
the date referenced in clause (a), the amount(s) determined as the
mark-to-market value(s) for such Swap Contracts, as determined based upon one or
more mid-market or other readily available quotations provided by any recognized
dealer in such Swap Contracts (which may include a Lender or any Affiliate of a
Lender).

“Syndication Agent” means The Royal Bank of Scotland plc, in its capacity as
syndication agent under any of the Loan Documents, or any successor syndication
agent.

“Synthetic Debt” means, with respect to any Person as of any date of
determination thereof, all obligations of such Person in respect of transactions
entered into by such Person that are intended to function primarily as a
borrowing of funds but are not otherwise included in the definition of
“Indebtedness” or as a liability on the consolidated balance sheet of such
Person and its Subsidiaries in accordance with GAAP.

“Synthetic Lease Obligation” means the monetary obligation of a Person under
(a) a so-called synthetic, off-balance sheet or tax retention lease, or (b) an
agreement for the use or possession of property (including sale and leaseback
transactions), in each case, creating obligations that do not appear on the
balance sheet of such Person but which, upon the application of any Debtor
Relief Laws to such Person, would be characterized as the indebtedness of such
Person (without regard to accounting treatment).

 

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“Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings (including backup withholding), assessments, fees or other charges
imposed by any Governmental Authority, including any interest, additions to tax
or penalties applicable thereto.

“Term Loan” means an advance made by any Term Loan Lender under the Term Loan
Facility.

“Term Loan Borrowing” means a borrowing consisting of simultaneous Term Loans of
the same Type and, in the case of Eurodollar Rate Loans, having the same
Interest Period made by each of the Term Loan Lenders pursuant to
Section 2.01(a).

“Term Loan Commitment” means, as to each Term Loan Lender, its obligation to
make a Term Loan to the Borrower pursuant to Section 2.01(a) in an aggregate
principal amount at any one time outstanding not to exceed the amount set forth
opposite such Term Loan Lender’s name on Schedule 2.01 under the caption “Term
Loan Commitment” or opposite such caption in the Assignment and Assumption
pursuant to which such Term Loan Lender becomes a party hereto, as applicable,
as such amount may be adjusted from time to time in accordance with this
Agreement.

“Term Loan Facility” means, at any time, (a) at any time during the Availability
Period in respect of such Facility, the sum of (i) the aggregate amount of the
Term Loan Commitments at such time and (ii) the aggregate principal amount of
the Term Loans of all Term Loan Lenders outstanding at such time and
(b) thereafter, the aggregate principal amount of the Term Loans of all
Term Loan Lenders outstanding at such time.

“Term Loan Lender” means (a) at any time on or prior to the Closing Date, any
Lender that has a Term Loan Commitment at such time and (b) at any time after
the Closing Date, any Lender that holds Term Loans at such time.

“Term Note” means a promissory note made by the Borrower in favor of a Term Loan
Lender evidencing Term Loans made by such Term Loan Lender, substantially in the
form of Exhibit C-1.

“Threshold Amount” means $20,000,000.

“Total Revolving Credit Outstandings” means the aggregate Outstanding Amount of
all Revolving Credit Loans and L/C Obligations.

“Total Outstandings” means the aggregate Outstanding Amount of all Loans and all
L/C Obligations.

“Type” means, with respect to a Loan, its character as a Base Rate Loan or a
Eurodollar Rate Loan.

 

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“UCC” means the Uniform Commercial Code as in effect in the State of New York;
provided that, if perfection or the effect of perfection or non-perfection or
the priority of any security interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State of
New York, “UCC” means the Uniform Commercial Code as in effect from time to time
in such other jurisdiction for purposes of the provisions hereof relating to
such perfection, effect of perfection or non-perfection or priority.

“Unfunded Pension Liability” means the excess of a Pension Plan’s benefit
liabilities under Section 4001(a)(16) of ERISA, over the current value of that
Pension Plan’s assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.

“United States” and “U.S.” mean the United States of America.

“Unreimbursed Amount” has the meaning specified in Section 2.03(c)(i).

“Value” means with reference to the value of the Rental Equipment, value
determined on the basis of the lower of cost or market of such Rental Equipment
in accordance with GAAP, with the cost thereof calculated on a first-in,
first-out basis determined in accordance with GAAP.

“Vendor Lease” means a lease pursuant to which Goods (as defined in the UCC) are
leased from a Vendor Lessor, whether or not such lease constitutes an operating
or a capital lease under GAAP and whether or not such lease constitutes a true
lease or a secured transaction under the UCC or any other Requirement of Law.

“Vendor Lessor” means a Person who leases Goods (as defined in the UCC) to
another Person pursuant to a Vendor Lease.

“Wholly Owned Subsidiary” means, as to any Person, any other Person all of the
Equity Interests of which (other than directors’ qualifying shares required by
law) is owned by such Person directly and/or through other Wholly Owned
Subsidiaries.

“Wholly Owned Subsidiary Guarantor” means any Subsidiary Guarantor that is a
Wholly Owned Subsidiary of the Borrower.

Section 1.02 Other Interpretive Provisions. With reference to this Agreement and
each other Loan Document, unless otherwise specified herein or in such other
Loan Document:

(a) The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” The word “will” shall be construed to have the same
meaning and effect as the word “shall.” Unless the context requires otherwise,
(i) any definition of or reference to any agreement, instrument or other
document (including any Organization Document) shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or

 

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otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein or in any other Loan Document), (ii) any
reference herein to any Person shall be construed to include such Person’s
successors and assigns, (iii) the words “herein,” “hereof” and “hereunder,” and
words of similar import when used in any Loan Document, shall be construed to
refer to such Loan Document in its entirety and not to any particular provision
thereof, (iv) all references in a Loan Document to Articles, Sections,
Preliminary Statements, Exhibits and Schedules shall be construed to refer to
Articles and Sections of, and Preliminary Statements, Exhibits and Schedules to,
the Loan Document in which such references appear, (v) any reference to any law
shall include all statutory and regulatory provisions consolidating, amending,
replacing or interpreting such law and any reference to any law or regulation
shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time, and (vi) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer
to any and all tangible and intangible assets and properties, including cash,
securities, accounts and contract rights.

(b) In the computation of periods of time from a specified date to a later
specified date, the word “from” means “from and including;” the words “to” and
“until” each mean “to but excluding;” and the word “through” means “to and
including.”

(c) Section headings herein and in the other Loan Documents are included for
convenience of reference only and shall not affect the interpretation of this
Agreement or any other Loan Document.

Section 1.03 Accounting Terms.

(a) Generally. All accounting terms not specifically or completely defined
herein shall be construed in conformity with, and all financial data (including
financial ratios and other financial calculations) required to be submitted
pursuant to this Agreement shall be prepared in conformity with, GAAP applied on
a consistent basis, as in effect from time to time, applied in a manner
consistent with that used in preparing the Audited Financial Statements, except
as otherwise specifically prescribed herein.

(b) Changes in GAAP. If at any time any change in GAAP would affect the
computation of any financial ratio or requirement set forth in any Loan
Document, and either the Borrower or the Required Lenders shall so request, the
Administrative Agent, the Lenders and the Borrower shall negotiate in good faith
to amend such ratio or requirement to preserve the original intent thereof in
light of such change in GAAP (subject to the approval of the Required Lenders);
provided that, until so amended, (i) such ratio or requirement shall continue to
be computed in accordance with GAAP prior to such change therein and (ii) the
Borrower shall provide to the Administrative Agent and the Lenders financial
statements and other documents required under this Agreement or as reasonably
requested hereunder setting forth a reconciliation between calculations of such
ratio or requirement made before and after giving effect to such change in GAAP.

 

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Section 1.04 Rounding.Any financial ratios required to be maintained by the
Borrower pursuant to this Agreement shall be calculated by dividing the
appropriate component by the other component, carrying the result to one place
more than the number of places by which such ratio is expressed herein and
rounding the result up or down to the nearest number (with a rounding-up if
there is no nearest number).

Section 1.05 Exchange Rates; Currency Equivalents. (a) The Administrative Agent
or the relevant L/C Issuer, as applicable, shall determine the Spot Rates as of
each Revaluation Date to be used for calculating Dollar Equivalent amounts of
L/C Credit Extensions and Outstanding Amounts denominated in Alternative
Currencies. Such Spot Rates shall become effective as of such Revaluation Date
and shall be the Spot Rates employed in converting any amounts between the
applicable currencies until the next Revaluation Date to occur. Except for
purposes of financial statements delivered by Loan Parties hereunder or
calculating financial covenants hereunder or except as otherwise provided
herein, the applicable amount of any currency (other than Dollars) for purposes
of the Loan Documents shall be such Dollar Equivalent amount as so determined by
the Administrative Agent or the relevant L/C Issuer, as applicable.

(b) Wherever in this Agreement in connection with the issuance, amendment or
extension of a Letter of Credit, an amount, such as a required minimum or
multiple amount, is expressed in Dollars, but such Letter of Credit is
denominated in an Alternative Currency, such amount shall be the relevant
Alternative Currency Equivalent of such Dollar amount (rounded to the nearest
unit of such Alternative Currency, with 0.5 of a unit being rounded upward), as
determined by the Administrative Agent or the relevant L/C Issuer, as the case
may be.

Section 1.06 Alternative Currencies. (a) The Borrower may from time to time
request that Letters of Credit be issued in a currency other than Dollars;
provided that such requested currency is a lawful currency (other than Dollars)
that is readily available and freely transferable and convertible into Dollars.
In the case of any such request with respect to the issuance of Letters of
Credit, such request shall be subject to the approval of the Administrative
Agent and the L/C Issuers.

(b) Any such request shall be made to the Administrative Agent not later than
10:00 a.m., 20 Business Days prior to the date of the desired L/C Credit
Extension (or such other time or date as may be agreed by the Administrative
Agent and the L/C Issuers, in their sole discretion). In the case of any such
request pertaining to Letters of Credit, the Administrative Agent shall promptly
notify each L/C Issuer thereof. Each L/C Issuer shall notify the Administrative
Agent, not later than 10:00 a.m., ten Business Days after receipt of such
request whether it consents, in its sole discretion, to the issuance of Letters
of Credit in such requested currency.

(c) Any failure by an L/C Issuer to respond to such request within the time
period specified in the preceding sentence shall be deemed to be a refusal by
such L/C Issuer to permit Letters of Credit to be issued in such requested
currency. If the Administrative Agent and any L/C Issuer consent to the issuance
of Letters of Credit in such requested currency, the Administrative Agent shall
so notify the Borrower and such currency shall thereupon be deemed for all
purposes to be an Alternative Currency hereunder for purposes of any Letter of
Credit issuances. If the Administrative Agent shall fail to obtain consent to
any request for an additional currency under this Section 1.06, the
Administrative Agent shall promptly so notify the Borrower.

 

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Section 1.07 Change of Currency. (a) Each obligation of the Borrower to make a
payment denominated in the national currency unit of any member state of the
European Union that adopts the Euro as its lawful currency after the date hereof
shall be redenominated into Euro at the time of such adoption (in accordance
with the EMU Legislation). If, in relation to the currency of any such member
state, the basis of accrual of interest expressed in this Agreement in respect
of that currency shall be inconsistent with any convention or practice in the
London interbank market for the basis of accrual of interest in respect of the
Euro, such expressed basis shall be replaced by such convention or practice with
effect from the date on which such member state adopts the Euro as its lawful
currency.

(b) Each provision of this Agreement shall be subject to such reasonable changes
of construction as the Administrative Agent may from time to time specify to be
appropriate to reflect the adoption of the Euro by any member state of the
European Union and any relevant market conventions or practices relating to the
Euro.

(c) Each provision of this Agreement also shall be subject to such reasonable
changes of construction as the Administrative Agent may from time to time
specify to be appropriate to reflect a change in currency of any other country
and any relevant market conventions or practices relating to the change in
currency.

Section 1.08 Times of Day. Unless otherwise specified, all references herein to
times of day shall be references to Central time (daylight or standard, as
applicable).

Section 1.09 Letter of Credit Amounts. Unless otherwise specified herein, the
amount of a Letter of Credit at any time shall be deemed to be the Dollar
Equivalent of the stated amount of such Letter of Credit in effect at such time;
provided, however, that with respect to any Letter of Credit that, by its terms
or the terms of any Issuer Document related thereto, provides for one or more
automatic increases in the stated amount thereof, the amount of such Letter of
Credit shall be deemed to be the Dollar Equivalent of the maximum stated amount
of such Letter of Credit after giving effect to all such increases, whether or
not such maximum stated amount is in effect at such time.

ARTICLE II

THE COMMITMENTS AND CREDIT EXTENSIONS

Section 2.01 The Loans.

(a) The Term Loan Borrowing. Subject to the terms and conditions set forth
herein, each Term Loan Lender severally agrees to make a loan to the Borrower
from time to time, on any Business Day during the Availability Period for the
Term Loan Facility, in an aggregate amount such that after giving effect to such
Term Loan and the aggregate of Existing Term Loans held by such Lender after
giving effect to the provisions of Section 10.20, such Lender’s Term Loans do
not exceed such Term Loan Lender’s Term Loan Commitment;

 

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provided, however, that after giving effect to the Term Loan Borrowing, the
Total Outstandings shall not exceed the Borrowing Base then in effect. Each Term
Loan Borrowing shall consist of Term Loans made simultaneously by the Term Loan
Lenders in accordance with their respective Applicable Percentage of the Term
Loan Facility. Amounts borrowed under this Section 2.01(a) and repaid or prepaid
may not be reborrowed. Term Loans may be Base Rate Loans or Eurodollar Rate
Loans, as further provided herein. Notwithstanding the foregoing, the parties
hereto acknowledge and agree that (i) as of the Closing Date after giving effect
to Section 10.20 of this Agreement, the Existing Lenders had outstanding to the
Borrower under the Existing Credit Agreement Term Loans (as defined in the
Existing Credit Agreement) in the principal amount of $43,000,000, (ii) such
Existing Term Loans are hereby deemed extended, continued and advanced as Term
Loans hereunder and held by the Lenders hereunder, (iii) from and after the
Closing Date, such Existing Term Loans shall be subject to and governed by the
terms and conditions of this Agreement as Term Loans, (iv) as of the Closing
Date, the Term Loan Lenders have each acquired their Applicable Percentage of
the Existing Term Loans.

(b) The Revolving Credit Borrowing. Subject to the terms and conditions set
forth herein, each Revolving Credit Lender severally agrees to make loans (each
such loan, a “Revolving Credit Loan”) to the Borrower in Dollars from time to
time, on any Business Day during the Availability Period for the Revolving
Credit Facility, in an aggregate amount not to exceed at any time outstanding
the amount of such Lender’s Revolving Credit Commitment; provided, however, that
after giving effect to any Revolving Credit Borrowing, (i) the Total Revolving
Credit Outstandings shall not exceed the Revolving Credit Facility, (ii) the
aggregate Outstanding Amount of the Revolving Credit Loans of any Lender, plus
such Revolving Credit Lender’s Applicable Revolving Credit Percentage of the
Outstanding Amount of all L/C Obligations shall not exceed such Revolving Credit
Lender’s Revolving Credit Commitment; and (iii) the Total Outstandings shall not
exceed the Borrowing Base then in effect. Within the limits of each Revolving
Credit Lender’s Revolving Credit Commitment, and subject to the other terms and
conditions hereof, the Borrower may borrow under this Section 2.01(b), prepay
under Section 2.05, and reborrow under this Section 2.01(b). Revolving Credit
Loans may be Base Rate Loans or Eurodollar Rate Loans, as further provided
herein. Notwithstanding the foregoing, the parties hereto acknowledge and agree
that (i) as of the Closing Date, after giving effect to Section 10.20 of this
Agreement, the Existing Lenders had outstanding to the Borrower under the
Existing Credit Agreement Revolving Loans (as defined in the Existing Credit
Agreement) in the principal amount of $0.00 (the “Existing Revolving Loans”),
(ii) such Existing Revolving Loans are hereby deemed extended, continued and
advanced as Revolving Loans hereunder and held by the Lenders hereunder,
(iii) from and after the Closing Date, such Existing Revolving Loans shall be
subject to and governed by the terms and conditions of this Agreement as Loans,
(iv) as of the Closing Date, the Revolving Loan Lenders have each acquired their
ratable share of the Existing Revolving Loans.

Section 2.02 Borrowings, Conversions and Continuations of Loans. (a) Each Term
Loan Borrowing, each Revolving Credit Borrowing, each conversion of Term Loans
or Revolving Credit Loans from one Type to the other, and each continuation of
Eurodollar Rate Loans shall be made upon the Borrower’s irrevocable notice to
the Administrative Agent, which may be given by telephone. Each such notice must
be received by the Administrative Agent not later than 11:00 a.m. (i) three
Business Days prior to the requested date of any Borrowing of, conversion to or
continuation of Eurodollar Rate Loans or of any conversion of Eurodollar Rate

 

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Loans to Base Rate Loans and (ii) on the requested date of any Borrowing of Base
Rate Loans. Each telephonic notice by the Borrower pursuant to this
Section 2.02(a) must be confirmed promptly by delivery to the Administrative
Agent of a written Committed Loan Notice, appropriately completed and signed by
a Responsible Officer of the Borrower. Each Borrowing of, conversion to or
continuation of Eurodollar Rate Loans shall be in a principal amount of
$5,000,000 or a whole multiple of $1,000,000 in excess thereof. Except as
provided in Sections 2.03(c), each Borrowing of or conversion to Base Rate Loans
shall be in a principal amount of $500,000 or a whole multiple of $100,000 in
excess thereof. Each Committed Loan Notice (whether telephonic or written) shall
specify (i) whether the Borrower is requesting a Term Loan Borrowing, a
Revolving Credit Borrowing, a conversion of Term Loans or Revolving Credit Loans
from one Type to the other, or a continuation of Eurodollar Rate Loans, (ii) the
requested date of the Borrowing, conversion or continuation, as the case may be
(which shall be a Business Day), (iii) the principal amount of Loans to be
borrowed, converted or continued, (iv) the Type of Loans to be borrowed or to
which existing Term Loans or Revolving Credit Loans are to be converted, and
(v) if applicable, the duration of the Interest Period with respect thereto. If
the Borrower fails to specify a Type of Loan in a Committed Loan Notice or if
the Borrower fails to give a timely notice requesting a conversion or
continuation, then the applicable Term Loans or Revolving Credit Loans shall be
made as, or converted to, Base Rate Loans. Any such automatic conversion to Base
Rate Loans shall be effective as of the last day of the Interest Period then in
effect with respect to the applicable Eurodollar Rate Loans. If the Borrower
requests a Borrowing of, conversion to, or continuation of Eurodollar Rate Loans
in any such Committed Loan Notice, but fails to specify an Interest Period, it
will be deemed to have specified an Interest Period of one month.

(b) Following receipt of a Committed Loan Notice, the Administrative Agent shall
promptly notify each Lender of the amount of its Applicable Percentage under the
applicable Facility of the applicable Term Loans or Revolving Credit Loans, and
if no timely notice of a conversion or continuation is provided by the Borrower,
the Administrative Agent shall notify each Lender of the details of any
automatic conversion to Base Rate Loans as described in the preceding
subsection. In the case of a Term Loan Borrowing or Revolving Credit Borrowing,
each Appropriate Lender shall make the amount of its Loan available to the
Administrative Agent in immediately available funds at the Administrative
Agent’s Office not later than 2:00 p.m. on the Business Day specified in the
applicable Committed Loan Notice. Upon satisfaction of the applicable conditions
set forth in Section 4.02 (and, if such Borrowing is the initial Credit
Extension, Section 4.01), the Administrative Agent shall make all funds so
received available to the Borrower in like funds as received by the
Administrative Agent either by (i) crediting the account of the Borrower on the
books of Bank of America with the amount of such funds or (ii) wire transfer of
such funds, in each case in accordance with instructions provided to (and
reasonably acceptable to) the Administrative Agent by the Borrower; provided,
however, that if, on the date a Committed Loan Notice with respect to a
Revolving Credit Borrowing is given by the Borrower, there are L/C Borrowings
outstanding, then the proceeds of such Revolving Credit Borrowing, first, shall
be applied to the payment in full of any such L/C Borrowings, and, second, shall
be made available to the Borrower as provided above.

(c) Except as otherwise provided herein, a Eurodollar Rate Loan may be continued
or converted only on the last day of an Interest Period for such Eurodollar Rate
Loan. During the existence of an Event of Default, no Term Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Term Loan Lenders, and no Revolving Credit Loans may be
requested as, converted to or continued as Eurodollar Rate Loans without the
consent of the Required Revolving Lenders.

 

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(d) The Administrative Agent shall promptly notify the Borrower and the Lenders
of the interest rate applicable to any Interest Period for Eurodollar Rate Loans
upon determination of such interest rate. At any time that Base Rate Loans are
outstanding, the Administrative Agent shall notify the Borrower and the Lenders
of any change in Bank of America’s prime rate used in determining the Base Rate
promptly following the public announcement of such change.

After giving effect to all Term Loan Borrowings, all conversions of Term Loans
from one Type to the other, and all continuations of Term Loans as the same
Type, there shall not be more than five Interest Periods in effect with respect
to Term Loans. After giving effect to all Revolving Credit Borrowings, all
conversions of Revolving Credit Loans from one Type to the other, and all
continuations of Revolving Credit Loans as the same Type, there shall not be
more than five Interest Periods in effect in respect of the Revolving Credit
Facility.

Section 2.03 Letters of Credit.

(a) The Letter of Credit Commitment. (i) Subject to the terms and conditions set
forth herein, (A) each L/C Issuer agrees, in reliance upon the agreements of the
Revolving Credit Lenders set forth in this Section 2.03, (1) from time to time
on any Business Day during the period from the Closing Date until the Letter of
Credit Expiration Date, to issue Letters of Credit denominated in Dollars or in
one or more Alternative Currencies for the account of the Borrower or its
Subsidiaries, and to amend or extend Letters of Credit previously issued by it,
in accordance with Section 2.03(b), and (2) to honor drawings under the Letters
of Credit; and (B) the Revolving Credit Lenders severally agree to participate
in Letters of Credit issued for the account of the Borrower or its Subsidiaries
and any drawings thereunder; provided that after giving effect to any L/C Credit
Extension with respect to any Letter of Credit, (w) the Total Revolving Credit
Outstandings shall not exceed the Revolving Credit Facility, (x) the aggregate
Outstanding Amount of the Revolving Credit Loans of any Revolving Credit Lender,
plus such Lender’s Applicable Revolving Credit Percentage of the Outstanding
Amount of all L/C Obligations, (y) the Outstanding Amount of the L/C Obligations
shall not exceed the Letter of Credit Sublimit, and (z) the Total Outstandings
shall not exceed the Borrowing Base then in effect. Each request by the Borrower
for the issuance or amendment of a Letter of Credit shall be deemed to be a
representation by the Borrower that the L/C Credit Extension so requested
complies with the conditions set forth in the proviso to the preceding sentence.
Within the foregoing limits, and subject to the terms and conditions hereof, the
Borrower’s ability to obtain Letters of Credit shall be fully revolving, and
accordingly the Borrower may, during the foregoing period, obtain Letters of
Credit to replace Letters of Credit that have expired or that have been drawn
upon and reimbursed. All Existing Letters of Credit shall be deemed to have been
issued pursuant hereto, and from and after the Closing Date shall be subject to
and governed by the terms and conditions hereof.

 

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(ii) No L/C Issuer shall issue any Letter of Credit if:

(A) subject to Section 2.03(b)(iii), the expiry date of such requested Letter of
Credit would occur more than twelve months after the date of issuance or last
extension, unless the Required Revolving Lenders have approved such expiry date;
or

(B) the expiry date of such requested Letter of Credit would occur after the
Letter of Credit Expiration Date, unless all the Revolving Credit Lenders have
approved such expiry date.

(iii) No L/C Issuer shall be under any obligation to issue any Letter of Credit
if:

(A) any order, judgment or decree of any Governmental Authority or arbitrator
shall by its terms purport to enjoin or restrain such L/C Issuer from issuing
such Letter of Credit, or any Law applicable to such L/C Issuer or any request
or directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over such L/C Issuer shall prohibit, or request that
such L/C Issuer refrain from, the issuance of letters of credit generally or
such Letter of Credit in particular or shall impose upon such L/C Issuer with
respect to such Letter of Credit any restriction, reserve or capital requirement
(for which such L/C Issuer is not otherwise compensated hereunder) not in effect
on the Closing Date, or shall impose upon such L/C Issuer any unreimbursed loss,
cost or expense which was not applicable on the Closing Date and which such L/C
Issuer in good faith deems material to it;

(B) the issuance of such Letter of Credit would violate one or more policies of
such L/C Issuer applicable to letters of credit generally;

(C) except as otherwise agreed by the Administrative Agent and such L/C Issuer,
such Letter of Credit is in an initial stated amount less than $25,000, in the
case of a commercial Letter of Credit ,or $25,000, in the case of a standby
Letter of Credit;

(D) except as otherwise agreed by the Administrative Agent and such L/C Issuer,
such Letter of Credit is to be denominated in a currency other than Dollars or
an Alternative Currency;

(E) such L/C Issuer does not as of the issuance date of such requested Letter of
Credit issue Letters of Credit in the requested currency;

(F) such Letter of Credit contains any provisions for automatic reinstatement of
the stated amount after any drawing thereunder; or

(G) a default of any Lender’s obligations to fund under Section 2.03(c) exists
or any Lender is at such time a Defaulting Lender hereunder, unless the
applicable L/C Issuer has entered into satisfactory arrangements with the
Borrower of such Lender to eliminate such L/C Issuer’s risk with respect to such
Lender.

 

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(iv) No L/C Issuer shall amend any Letter of Credit if such L/C Issuer would not
be permitted at such time to issue such Letter of Credit in its amended form
under the terms hereof.

(v) No L/C Issuer shall be under any obligation to amend any Letter of Credit if
(A) such L/C Issuer would have no obligation at such time to issue such Letter
of Credit in its amended form under the terms hereof, or (B) the beneficiary of
such Letter of Credit does not accept the proposed amendment to such Letter of
Credit.

(vi) Each L/C Issuer shall act on behalf of the Revolving Credit Lenders with
respect to any Letters of Credit issued by it and the documents associated
therewith, and each L/C Issuer shall have all of the benefits and immunities
(A) provided to the Administrative Agent in Article IX with respect to any acts
taken or omissions suffered by such L/C Issuer in connection with Letters of
Credit issued by it or proposed to be issued by it and Issuer Documents
pertaining to such Letters of Credit as fully as if the term “Administrative
Agent” as used in Article IX included such L/C Issuer with respect to such acts
or omissions, and (B) as additionally provided herein with respect to each L/C
Issuer.

(b) Procedures for Issuance and Amendment of Letters of Credit; Auto-Extension
Letters of Credit.

(i) Each Letter of Credit shall be issued or amended, as the case may be, upon
the request of the Borrower delivered to the applicable L/C Issuer (with a copy
to the Administrative Agent) in the form of a Letter of Credit Application,
appropriately completed and signed by a Responsible Officer of the Borrower.
Such Letter of Credit Application must be received by the applicable L/C Issuer
and the Administrative Agent not later than 10:00 a.m. at least two Business
Days (or such later date and time as the Administrative Agent and such L/C
Issuer may agree in a particular instance in their sole discretion) prior to the
proposed issuance date or date of amendment, as the case may be. In the case of
a request for an initial issuance of a Letter of Credit, such Letter of Credit
Application shall specify in form and detail reasonably satisfactory to the
applicable L/C Issuer: (A) the proposed issuance date of the requested Letter of
Credit (which shall be a Business Day); (B) the amount and currency thereof;
(C) the expiry date thereof; (D) the name and address of the beneficiary
thereof; (E) the documents to be presented by such beneficiary in case of any
drawing thereunder; (F) the full text of any certificate to be presented by such
beneficiary in case of any drawing thereunder; (G) the purpose and nature of the
requested Letter of Credit; and (H) such other matters as the applicable L/C
Issuer may reasonably require. In the case of a request for an amendment of any
outstanding Letter of Credit, such Letter of Credit Application shall specify in
form and detail reasonably satisfactory to the applicable L/C Issuer (1) the
Letter of Credit to be amended; (2) the proposed date of amendment thereof
(which shall be a Business Day); (3) the nature of the proposed amendment; and
(4) such other matters as such L/C Issuer may reasonably require. Additionally,
the Borrower shall furnish to the applicable L/C Issuer and the Administrative
Agent such other documents and information pertaining to such requested Letter
of Credit issuance or amendment, including any Issuer Documents, as such L/C
Issuer or the Administrative Agent may reasonably require.

 

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(ii) Promptly after receipt of any Letter of Credit Application, the applicable
L/C Issuer will confirm with the Administrative Agent (by telephone or in
writing) that the Administrative Agent has received a copy of such Letter of
Credit Application from the Borrower and, if not, such L/C Issuer will provide
the Administrative Agent with a copy thereof. Unless such L/C Issuer has
received written notice from any Revolving Credit Lender, the Administrative
Agent or any Loan Party, at least one Business Day prior to the requested date
of issuance or amendment of the applicable Letter of Credit, that one or more
applicable conditions contained in Article IV shall not then be satisfied, then,
subject to the terms and conditions hereof, such L/C Issuer shall, on the
requested date, issue a Letter of Credit for the account of the Borrower (or the
applicable Subsidiary) or enter into the applicable amendment, as the case may
be, in each case in accordance with such L/C Issuer’s usual and customary
business practices. Immediately upon the issuance of each Letter of Credit, each
Revolving Credit Lender shall be deemed to, and hereby irrevocably and
unconditionally agrees to, purchase from the applicable L/C Issuer a risk
participation in such Letter of Credit in an amount equal to the product of such
Revolving Credit Lender’s Applicable Revolving Credit Percentage times the
amount of such Letter of Credit.

(iii) If the Borrower so requests in any applicable Letter of Credit
Application, the applicable L/C Issuer may, in its sole and absolute discretion,
agree to issue a Letter of Credit that has automatic extension provisions (each,
an “Auto-Extension Letter of Credit”); provided that any such Auto-Extension
Letter of Credit must permit such L/C Issuer to prevent any such extension at
least once in each twelve-month period (commencing with the date of issuance of
such Letter of Credit) by giving prior notice to the beneficiary thereof not
later than a day (the “Non-Extension Notice Date”) in each such twelve-month
period to be agreed upon at the time such Letter of Credit is issued. Unless
otherwise directed by the applicable L/C Issuer, the Borrower shall not be
required to make a specific request to such L/C Issuer for any such extension.
Once an Auto-Extension Letter of Credit has been issued, the Revolving Credit
Lenders shall be deemed to have authorized (but may not require) the applicable
L/C Issuer to permit the extension of such Letter of Credit at any time to an
expiry date not later than the Letter of Credit Expiration Date; provided,
however, that the applicable L/C Issuer shall not permit any such extension if
(A) such L/C Issuer has determined that it would not be permitted, or would have
no obligation, at such time to issue such Letter of Credit in its revised form
(as extended) under the terms hereof (by reason of the provisions of clause (ii)
or (iii) of Section 2.03(a) or otherwise), or (B) it has received notice (which
may be by telephone or in writing) on or before the day that is seven Business
Days before the Non-Extension Notice Date (1) from the Administrative Agent that
the Required Revolving Lenders have elected not to permit such extension or
(2) from the Administrative Agent, any Revolving Credit Lender or the Borrower
that one or more of the applicable conditions specified in Section 4.02 is not
then satisfied, and in each such case directing such L/C Issuer not to permit
such extension.

 

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(iv) Promptly after its delivery of any Letter of Credit or any amendment to a
Letter of Credit to an advising bank with respect thereto or to the beneficiary
thereof, the L/C Issuer will also deliver to the applicable Borrower and the
Administrative Agent a true and complete copy of such Letter of Credit or
amendment. On a monthly basis, the L/C Issuer shall deliver to the
Administrative Agent a complete list of all outstanding Letters of Credit issued
by the L/C Issuer as provided in Section 2.03(f).

(c) Drawings and Reimbursements; Funding of Participations.

(i) Upon receipt from the beneficiary of any Letter of Credit of any notice of a
drawing under such Letter of Credit, the applicable L/C Issuer shall notify the
Borrower and the Administrative Agent thereof. In the case of a Letter of Credit
denominated in an Alternative Currency, the Borrower shall reimburse the
applicable L/C Issuer in such Alternative Currency, unless (A) such L/C Issuer
(at its option) shall have specified in such notice that it will require
reimbursement in Dollars, or (B) in the absence of any such requirement for
reimbursement in Dollars, the Borrower shall have notified such L/C Issuer
promptly following receipt of the notice of drawing that the Borrower will
reimburse such L/C Issuer in Dollars. In the case of any such reimbursement in
Dollars of a drawing under a Letter of Credit denominated in an Alternative
Currency, the applicable L/C Issuer shall notify the Borrower of the Dollar
Equivalent of the amount of the drawing promptly following the determination
thereof. Not later than 10:00 a.m. on the date of any payment by any L/C Issuer
under a Letter of Credit to be reimbursed in Dollars, or the Applicable Time on
the date of any payment by any L/C Issuer under a Letter of Credit to be
reimbursed in an Alternative Currency (each such date, an “Honor Date”), the
Borrower shall reimburse the applicable L/C Issuer in an amount equal to the
amount of such drawing and in the applicable currency. If the Borrower fails to
so reimburse the applicable L/C Issuer by such time, such L/C Issuer shall
promptly notify the Administrative Agent, who shall then promptly notify each
Revolving Credit Lender, of the Honor Date, the amount of the unreimbursed
drawing (expressed in Dollars in the amount of the Dollar Equivalent thereof in
the case of a Letter of Credit denominated in an Alternative Currency) (the
“Unreimbursed Amount”), and the amount of such Revolving Credit Lender’s
Applicable Revolving Credit Percentage thereof. In such event, the Borrower
shall be deemed to have requested a Revolving Credit Borrowing of Base Rate
Loans to be disbursed on the Honor Date in an amount equal to the Unreimbursed
Amount, without regard to the minimum and multiples specified in Section 2.02
for the principal amount of Base Rate Loans, but subject to the amount of the
unutilized portion of the Revolving Credit Commitments and the conditions set
forth in Section 4.02 (other than the delivery of a Committed Loan Notice). Any
notice given by an L/C Issuer or the Administrative Agent pursuant to this
Section 2.03(c)(i) may be given by telephone if immediately confirmed in
writing; provided that the lack of such an immediate confirmation shall not
affect the conclusiveness or binding effect of such notice.

(ii) Each Revolving Credit Lender shall upon any notice pursuant to
Section 2.03(c)(i) make funds available to the Administrative Agent for the
account of the applicable L/C Issuer, in Dollars, at the Administrative Agent’s
Office in an amount equal to its Applicable Revolving Credit Percentage of the
Unreimbursed Amount not

 

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later than 12:00 noon on the Business Day specified in such notice by the
Administrative Agent, whereupon, subject to the provisions of
Section 2.03(c)(iii), each Revolving Credit Lender that so makes funds available
shall be deemed to have made a Base Rate Loan to the Borrower in such amount.
The Administrative Agent shall remit the funds so received to the applicable L/C
Issuer in Dollars.

(iii) With respect to any Unreimbursed Amount that is not fully refinanced by a
Revolving Credit Borrowing of Base Rate Loans because the conditions set forth
in Section 4.02 cannot be satisfied or for any other reason, the Borrower shall
be deemed to have incurred from the applicable L/C Issuer an L/C Borrowing in
the amount of the Unreimbursed Amount that is not so refinanced, which L/C
Borrowing shall be due and payable on demand (together with interest) and shall
bear interest at the Default Rate. In such event, each Revolving Credit Lender’s
payment to the Administrative Agent for the account of the applicable L/C Issuer
pursuant to Section 2.03(c)(ii) shall be deemed payment in respect of its
participation in such L/C Borrowing and shall constitute an L/C Advance from
such Lender in satisfaction of its participation obligation under this
Section 2.03.

(iv) Until each Revolving Credit Lender funds its Revolving Credit Loan or L/C
Advance pursuant to this Section 2.03(c) to reimburse the applicable L/C Issuer
for any amount drawn under any Letter of Credit, interest in respect of such
Revolving Credit Lender’s Applicable Revolving Credit Percentage of such amount
shall be solely for the account of such L/C Issuer.

(v) Each Revolving Credit Lender’s obligation to make Revolving Credit Loans or
L/C Advances to reimburse each L/C Issuer for amounts drawn under Letters of
Credit, as contemplated by this Section 2.03(c), shall be absolute and
unconditional and shall not be affected by any circumstance, including (A) any
setoff, counterclaim, recoupment, defense or other right which such Lender may
have against any L/C Issuer, the Borrower, any Subsidiary or any other Person
for any reason whatsoever; (B) the occurrence or continuance of a Default, or
(C) any other occurrence, event or condition, whether or not similar to any of
the foregoing; provided, however, that each Revolving Credit Lender’s obligation
to make Revolving Credit Loans pursuant to this Section 2.03(c) is subject to
the conditions set forth in Section 4.02 (other than delivery by the Borrower of
a Committed Loan Notice). No such making of an L/C Advance shall relieve or
otherwise impair the obligation of the Borrower to reimburse each L/C Issuer for
the amount of any payment made by such L/C Issuer under any Letter of Credit,
together with interest as provided herein.

(vi) If any Revolving Credit Lender fails to make available to the
Administrative Agent for the account of the applicable L/C Issuer any amount
required to be paid by such Revolving Credit Lender pursuant to the foregoing
provisions of this Section 2.03(c) by the time specified in Section 2.03(c)(ii),
such L/C Issuer shall be entitled to recover from such Lender (acting through
the Administrative Agent), on demand, such amount with interest thereon for the
period from the date such payment is required to the date on which such payment
is immediately available to such L/C Issuer at a rate per annum equal to the
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by such L/C Issuer in accordance with banking industry rules on interbank
compensation, plus any administrative, processing or similar fees customarily
charged by such L/C Issuer in connection with the foregoing. If such Revolving
Credit Lender pays such amount (with interest and fees as aforesaid), the amount
so paid shall constitute such Lender’s Revolving Credit Loan included in the
relevant Borrowing or L/C Advance in respect of the relevant L/C Borrowing, as
the case may be. A certificate of the relevant L/C Issuer submitted to any
Revolving Credit Lender (through the Administrative Agent) with respect to any
amounts owing under this Section 2.03(c)(vi) shall be conclusive absent manifest
error.

(d) Repayment of Participations.

(i) At any time after any L/C Issuer has made a payment under any Letter of
Credit and has received from any Revolving Credit Lender such Lender’s L/C
Advance in respect of such payment in accordance with Section 2.03(c), if the
Administrative Agent receives for the account of any L/C Issuer any payment in
respect of the related Unreimbursed Amount or interest thereon (whether directly
from the Borrower or otherwise, including proceeds of Cash Collateral applied
thereto by the Administrative Agent), the Administrative Agent will distribute
to such Lender its Applicable Revolving Credit Percentage thereof in Dollars and
in the same funds as those received by the Administrative Agent.

(ii) If any payment received by the Administrative Agent for the account of any
L/C Issuer pursuant to Section 2.03(c)(i) is required to be returned under any
of the circumstances described in Section 10.05 (including pursuant to any
settlement entered into by such L/C Issuer in its discretion), each Revolving
Credit Lender shall pay to the Revolving Credit Administrative Agent for the
account of the applicable L/C Issuer its Applicable Revolving Credit Percentage
thereof on demand of the Administrative Agent, plus interest thereon from the
date of such demand to the date such amount is returned by such Lender, at a
rate per annum equal to the Federal Funds Rate from time to time in effect. The
obligations of the Revolving Credit Lenders under this clause shall survive the
payment in full of the Obligations and the termination of this Agreement.

(e) Obligations Absolute. The obligation of the Borrower to reimburse each L/C
Issuer for each drawing under each Letter of Credit and to repay each L/C
Borrowing shall be absolute, unconditional and irrevocable, and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances,
including the following:

(i) any lack of validity or enforceability of such Letter of Credit, this
Agreement, or any other Loan Document;

(ii) the existence of any claim, counterclaim, setoff, defense or other right
that the Borrower or any Subsidiary may have at any time against any beneficiary
or any transferee of such Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), any L/C Issuer or any other
Person, whether in connection with this Agreement, the transactions contemplated
hereby or by such Letter of Credit or any agreement or instrument relating
thereto, or any unrelated transaction;

 

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(iii) any draft, demand, certificate or other document presented under such
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;
or any loss or delay in the transmission or otherwise of any document required
in order to make a drawing under such Letter of Credit;

(iv) any payment by the applicable L/C Issuer under such Letter of Credit
against presentation of a draft or certificate that does not strictly comply
with the terms of such Letter of Credit; or any payment made by such L/C Issuer
under such Letter of Credit to any Person purporting to be a trustee in
bankruptcy, debtor-in-possession, assignee for the benefit of creditors,
liquidator, receiver or other representative of or successor to any beneficiary
or any transferee of such Letter of Credit, including any arising in connection
with any proceeding under any Debtor Relief Law;

(v) any adverse change in the relevant exchange rates or in the availability of
the relevant Alternative Currency to the Borrower or any Subsidiary or in the
relevant currency markets generally; or

(vi) any other circumstance or happening whatsoever, whether or not similar to
any of the foregoing, including any other circumstance that might otherwise
constitute a defense available to, or a discharge of, the Borrower or any
Subsidiary.

The Borrower shall promptly examine a copy of each Letter of Credit and each
amendment thereto that is delivered to it and, in the event of any claim of
noncompliance with the Borrower’s instructions or other irregularity, the
Borrower will promptly, but in an any event, within 48 hours of receipt of such
copy, notify the applicable L/C Issuer. The Borrower shall be conclusively
deemed to have waived any such claim against such L/C Issuer and its
correspondents unless such notice is given as aforesaid.

(f) Role of the L/C Issuers. Each Lender and the Borrower agree that, in paying
any drawing under a Letter of Credit, the L/C Issuers shall not have any
responsibility to obtain any document (other than any sight draft, certificates
and documents expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. None of the L/C Issuers,
the Administrative Agent, any of their respective Related Parties nor any
correspondent, participant or assignee of any L/C Issuer shall be liable to any
Lender for (i) any action taken or omitted in connection herewith at the request
or with the approval of the Revolving Credit Lenders or the Required Revolving
Lenders, as applicable; (ii) any action taken or omitted in the absence of gross
negligence or willful misconduct; or (iii) the due execution, effectiveness,
validity or enforceability of any document or instrument related to any Letter
of Credit or Issuer Document. The Borrower hereby assumes all risks of the acts
or omissions of any beneficiary or transferee with respect to its use of any
Letter of Credit; provided, however, that this assumption is not intended to,
and shall not, preclude the Borrower’s pursuing such rights and remedies as it
may have against the beneficiary or transferee at law or under any other
agreement. None of the L/C Issuers, the Administrative Agent, any of their
respective Related Parties nor any correspondent, participant or assignee of any
L/C Issuer shall be liable or responsible for any of the matters described in
clauses (i) through (v) of Section 2.03(e);

 

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provided, however, that anything in such clauses to the contrary
notwithstanding, the Borrower may have a claim against the applicable L/C
Issuer, and the applicable L/C Issuer may be liable to the Borrower, to the
extent, but only to the extent, of any direct, as opposed to consequential or
exemplary, damages suffered by the Borrower which the Borrower proves were
caused by such L/C Issuer’s willful misconduct or gross negligence or such L/C
Issuer’s willful failure to pay under any Letter of Credit after the
presentation to it by the beneficiary of a sight draft and certificate(s)
strictly complying with the terms and conditions of a Letter of Credit. In
furtherance and not in limitation of the foregoing, each L/C Issuer may accept
documents that appear on their face to be in order, without responsibility for
further investigation, regardless of any notice or information to the contrary,
and no L/C Issuer shall be responsible for the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign a
Letter of Credit or the rights or benefits thereunder or proceeds thereof, in
whole or in part, which may prove to be invalid or ineffective for any reason.

(g) Cash Collateral.

(i) Upon the request of the Administrative Agent, (A) if any L/C Issuer has
honored any full or partial drawing request under any Letter of Credit and such
drawing has resulted in an L/C Borrowing, (B) if, as of the Letter of Credit
Expiration Date, any L/C Obligation for any reason remains outstanding, or
(C) if there shall exist a Defaulting Lender, the Borrower shall, in each case,
immediately Cash Collateralize the then Outstanding Amount of all L/C
Obligations.

(ii) The Administrative Agent may, with respect to outstanding Letters of Credit
issued in an Alternative Currency, at any time and from time to time after the
initial deposit of Cash Collateral, request that additional Cash Collateral be
provided in order to protect against the results of exchange rate fluctuations.

(iii) Sections 2.05 and 8.02(c) set forth certain additional requirements to
deliver Cash Collateral hereunder. For purposes of this Section 2.03,
Section 2.05 and Section 8.02(c), “Cash Collateralize” means to pledge and
deposit with or deliver to the Administrative Agent, for the benefit of the L/C
Issuers and the Lenders, as collateral for the L/C Obligations, cash or deposit
account balances pursuant to documentation in form and substance satisfactory to
the Administrative Agent and the L/C Issuers (which documents are hereby
consented to by the Lenders). Derivatives of such term have corresponding
meanings. The Borrower hereby grants to the Administrative Agent, for the
benefit of the L/C Issuers and the Lenders, a security interest in all such
cash, deposit accounts and all balances therein and all proceeds of the
foregoing. Cash Collateral shall be maintained in blocked deposit accounts at
Bank of America. Reasonable interest shall accrue on any such cash deposit,
which accrued interest shall be for the account of the Borrower, subject to this
Agreement. If at any time the Administrative Agent determines that any funds
held as Cash Collateral are subject to any right or claim of any Person other
than the Administrative Agent or that the total amount of such funds is less
than the aggregate Outstanding Amount of all L/C Obligations, the Borrower will,
forthwith upon demand by the Administrative Agent, pay to the Administrative
Agent, as additional funds to be deposited as Cash Collateral, an amount equal
to the excess of (x) such aggregate Outstanding Amount over (y) the total amount
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Cash Collateral that the Administrative Agent determines to be free and clear of
any such right and claim. Upon the drawing of any Letter of Credit for which
funds are on deposit as Cash Collateral, such funds shall be applied, to the
extent permitted under applicable Laws, to reimburse the applicable L/C Issuer.

(h) Applicability of ISP and UCP. Unless otherwise expressly agreed by the
applicable L/C Issuer and the Borrower when a Letter of Credit is issued
(including any such agreement applicable to an Existing Letter of Credit),
(i) the rules of the ISP shall apply to each standby Letter of Credit, and
(ii) the rules of the Uniform Customs and Practice for Documentary Credits, as
most recently published by the International Chamber of Commerce at the time of
issuance shall apply to each commercial Letter of Credit.

(i) Letter of Credit Fees. The Borrower shall pay to the Administrative Agent
for the account of each Revolving Credit Lender in accordance with its
Applicable Revolving Credit Percentage, in Dollars, a Letter of Credit fee (the
“Letter of Credit Fee”) (i) for each commercial Letter of Credit equal to 0.125
of 1% times the Dollar Equivalent of the daily amount available to be drawn
under such Letter of Credit and (ii) for each standby Letter of Credit equal to
the Applicable Rate times the Dollar Equivalent of the daily amount available to
be drawn under such Letter of Credit. For purposes of computing the daily amount
available to be drawn under any Letter of Credit, the amount of such Letter of
Credit shall be determined in accordance with Section 1.09. Letter of Credit
Fees shall be (A) due and payable on the first Business Day after the end of
each March, June, September and December, commencing with the first such date to
occur after the issuance of such Letter of Credit, on the Letter of Credit
Expiration Date and thereafter on demand and (B) computed on a quarterly basis
in arrears. If there is any change in the Applicable Rate during any quarter,
the daily amount available to be drawn under each standby Letter of Credit shall
be computed and multiplied by the Applicable Rate separately for each period
during such quarter that such Applicable Rate was in effect. Notwithstanding
anything to the contrary contained herein, while any Letter of Credit Fee is not
paid when due, all such overdue Letter of Credit Fees shall accrue at the
Default Rate.

(j) Fronting Fee and Documentary and Processing Charges Payable to L/C Issuer.
The Borrower shall pay directly to the applicable L/C Issuer for its own
account, in Dollars, a fronting fee (i) with respect to each commercial Letter
of Credit or any amendment of a commercial Letter of Credit increasing the
amount of such Letter of Credit, at a rate and on terms separately agreed
between the Borrower and the applicable L/C Issuer (including, without
limitation, as to the time of payment of such fee), and (ii) with respect to
each standby Letter of Credit, at the rate per annum agreed upon from time to
time between the Borrower and such L/C Issuer (which in the case of Bank of
America as L/C Issuer shall be the rate specified in the Fee Letter), computed
on the Dollar Equivalent of the daily amount available to be drawn under such
Letter of Credit on a quarterly basis in arrears. Such fronting fee for each
standby Letter of Credit shall be due and payable on the last Business Day of
each March, June, September and December in respect of the most recently-ended
quarterly period (or portion thereof, in the case of the first payment),
commencing with the first such date to occur after the issuance of such Letter
of Credit, on the Letter of Credit Expiration Date and thereafter on demand. For
purposes of computing the daily amount available to be drawn under any Letter of
Credit, the amount of such Letter of Credit shall be determined in accordance
with Section 1.09. In addition, the Borrower shall pay directly to each L/C
Issuer for its own account, in Dollars, the customary

 

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issuance, presentation, amendment and other processing fees, and other standard
costs and charges, of such L/C Issuer relating to letters of credit as from time
to time in effect. Such customary fees and standard costs and charges are due
and payable on demand and are nonrefundable.

(k) Conflict with Issuer Documents. In the event of any conflict between the
terms hereof and the terms of any Issuer Document, the terms hereof shall
control.

(l) Letters of Credit Issued for Subsidiaries. Notwithstanding that a Letter of
Credit issued or outstanding hereunder is in support of any obligations of, or
is for the account of, a Subsidiary, the Borrower shall be obligated to
reimburse the applicable L/C Issuer hereunder for any and all drawings under
such Letter of Credit. The Borrower hereby acknowledges that the issuance of
Letters of Credit for the account of Subsidiaries inures to the benefit of the
Borrower, and that the Borrower’s business derives substantial benefits from the
businesses of such Subsidiaries.

Section 2.04 Borrowing Base Calculations; Inclusion of Assets in Borrowing Base.
(a) At any time when the Total Outstandings equal or exceed $50,000,000, based
on the most recent Borrowing Base Certificate delivered by the Borrower to the
Administrative Agent, the Administrative Agent shall in its good faith credit
judgment determine which Accounts, Rental Equipment and Specified Rigs shall be
“Eligible Accounts”, “Eligible Rental Equipment,” and “Eligible Specified Rigs”,
respectively, for purposes of this Agreement, utilizing the criteria set forth
in the definitions for such terms set forth in Section 1.01.

(b) Concurrently with delivery by the Borrower to the Administrative Agent of
(i) any notice designating any Swap Contract as a “Secured Hedge Agreement” and
(ii) any Borrowing Base Certificate, the Borrower will deliver to the
Administrative Agent a report from the relevant counterparty setting forth the
Swap Termination Value of such Swap Contract, determined in accordance with
procedures customary in the relevant market. The Administrative Agent will
calculate from time to time the net amount of the Swap Termination Values of all
Secured Hedge Agreements on the basis of such counterparty report, and if such
net amount is unfavorable to the Borrower (i.e., the Borrower would owe a net
amount under all Secured Hedge Agreements if all Specified Hedge Agreements were
terminated on such date), the Administrative Agent may, and at the request of
the Required Lenders, will, establish a reserve for purposes of calculating the
Borrowing Base pursuant to the definition thereof set forth in Section 1.01 in
an amount equal to such net unfavorable amount, and will maintain such reserve
until the next determination by the Administrative Agent pursuant to this
paragraph.

(c) During any period when the Applicable Rate is Pricing Level 3, in the event
that a Casualty Event has occurred related to any Borrowing Base Collateral, to
the extent the Net Loss Proceeds received by the Borrower or any Loan Party with
respect to such Casualty Event exceed $5,000,000 and have not been applied or
budgeted to be applied to repair, restore or replace the Property affected by
such Casualty Event within the earlier of 90 days after the occurrence thereof
and 30 days after the receipt of such Net Loss Proceeds, the Administrative
Agent, in the exercise of its Permitted Discretion may, and at the request of
the Required Lenders shall, reduce the Borrowing Base based upon its review of
such Casualty Event; provided that the Borrowing Base shall not be reduced by an
amount greater than (i) the lesser of (A) 100% of

 

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such Net Loss Proceeds and (B) the Net Specified Rigs OLV or Net Book Value, as
applicable, for the affected Borrowing Base Collateral, or (ii) in the case of a
total loss or taking of such Collateral, the Net Specified Rigs OLV or Net Book
Value, as applicable, for the affected Borrowing Base Collateral (in either
case, the “Casualty Adjustment Amount”); and provided further that if the
Borrowing Base is reduced pursuant to this section, the Borrowing Base shall be
increased by the corresponding Casualty Adjustment Amount or other applicable
amount determined in accordance with the definition of “Borrowing Base” upon the
repair or replacement of such Borrowing Base Collateral through the application
of such Net Loss Proceeds (or an equivalent amount of other funds).

Section 2.05 Prepayments.

(a) Optional. Subject to the last sentence of this Section 2.05(a), the Borrower
may, upon notice to the Administrative Agent, at any time or from time to time
voluntarily prepay Term Loans and Revolving Credit Loans in whole or in part
without premium or penalty; provided that (i) such notice must be received by
the Administrative Agent not later than 11:00 a.m. (A) three Business Days prior
to any date of prepayment of Eurodollar Rate Loans and (B) on the date of
prepayment of Base Rate Loans; (ii) any prepayment of Eurodollar Rate Loans
shall be in a principal amount of $1,000,000 or a whole multiple of $1,000,000
in excess thereof; and (iii) any prepayment of Base Rate Loans shall be in a
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
or, in each case, if less, the entire principal amount thereof then outstanding.
Each such notice shall specify the date and amount of such prepayment and the
Type(s) of Loans to be prepaid and, if Eurodollar Rate Loans are to be prepaid,
the Interest Period(s) of such Loans. The Administrative Agent will promptly
notify each Lender of its receipt of each such notice, and of the amount of such
Lender’s ratable portion of such prepayment (based on such Lender’s Applicable
Percentage in respect of the relevant Facility). If such notice is given by the
Borrower, the Borrower shall make such prepayment and the payment amount
specified in such notice shall be due and payable on the date specified therein.
Any prepayment of a Eurodollar Rate Loan shall be accompanied by all accrued
interest on the amount prepaid, together with any additional amounts required
pursuant to Section 3.05. Each prepayment of the outstanding Term Loans pursuant
to this Section 2.05(a) shall be applied to the principal repayment installments
thereof on a pro-rata basis, and each such prepayment shall be paid to the
Lenders in accordance with their respective Applicable Percentages in respect of
each of the relevant Facilities. Notwithstanding anything to the contrary
contained herein, the Borrower shall not be permitted to prepay the Term Loan
Facility pursuant to this Section 2.05(a) during the period from the Closing
Date through the date ten Business Days thereafter.

(b) Mandatory.

(i) If for any reason the Total Outstandings at any time exceed the lesser of
the Borrowing Base at such time and the Aggregate Commitments at such time, the
Borrower shall immediately prepay Loans and/or Cash Collateralize the L/C
Obligations (other than the L/C Borrowings) in an aggregate amount equal to such
excess. If such Borrowing Base deficiency occurs as a result of a reduction in
the Borrowing Base pursuant to Section 2.04(c) as a result of a Casualty Event,
the Borrower shall utilize the Net Loss Proceeds of such Casualty Event, when
received, to take the action described in

 

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the preceding sentence. The Administrative Agent may, at any time and from time
to time after the initial deposit of such Cash Collateral, request that
additional Cash Collateral be provided in order to protect against the results
of further exchange rate fluctuations.

(ii) Each prepayment of Loans pursuant to the foregoing Section 2.05(b)(i) shall
be applied, first, ratably to the principal repayment installments of the Term
Loan Facility on a pro-rata basis and, second, to the Revolving Credit Facility
in the following manner: first, ratably to the L/C Borrowings, second, ratably
to the outstanding Revolving Credit Loans, and, third, to Cash Collateralize the
remaining L/C Obligations. Upon the drawing of any Letter of Credit that has
been Cash Collateralized, the funds held as Cash Collateral shall be applied
(without any further action by or notice to or from the Borrower or any other
Loan Party) to reimburse the relevant L/C Issuer or the Revolving Credit
Lenders, as applicable.

Section 2.06 Termination or Reduction of Commitments.

(a) Optional. The Borrower may, upon notice to the Administrative Agent,
terminate the Revolving Credit Facility or Letter of Credit Sublimit, or from
time to time permanently reduce the Revolving Credit Facility or the Letter of
Credit Sublimit; provided that (i) any such notice shall be received by the
Administrative Agent not later than 10:00 a.m. three Business Days prior to the
date of termination or reduction, (ii) any such partial reduction shall be in an
aggregate amount of $5,000,000 or any whole multiple of $1,000,000 in excess
thereof, (iii) the Borrower shall not terminate or reduce (A) the Revolving
Credit Facility if, after giving effect thereto and to any concurrent
prepayments hereunder, the Total Revolving Credit Outstandings would exceed the
Revolving Credit Facility, (B) the Letter of Credit Sublimit if, after giving
effect thereto, the Outstanding Amount of L/C Obligations not fully Cash
collateralized hereunder would exceed the Letter of Credit Sublimit, and
(iv) if, after giving effect to any reduction of the Revolving Credit Facility,
the Letter of Credit Sublimit exceeds the amount of the Revolving Credit
Facility, the Letter of Credit Sublimit shall be automatically reduced by the
amount of such excess.

(b) Mandatory. The aggregate Term Loan Commitments shall be automatically and
permanently reduced to zero on the last day of the Availability Period for the
Term Loan Facility.

(c) Application of Commitment Reductions; Payment of Fees.

(i) The Administrative Agent will promptly notify the Lenders of any termination
or reduction of the Letter of Credit Sublimit or the Revolving Credit
Commitments under this Section 2.06. Upon any reduction of the Revolving Credit
Commitments, the Revolving Credit Commitment of each Revolving Credit Lender
shall be reduced by such Lender’s Applicable Revolving Credit Percentage of such
reduction amount. All fees in respect of the Revolving Credit Facility accrued
until the effective date of any termination of the Revolving Credit Facility
shall be paid on the effective date of such termination.

 

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(ii) The Administrative Agent will promptly notify the Lenders of any
termination or reduction of the unused portion of the aggregate Term Loan
Commitments under this Section 2.06. Upon any reduction of the unused portion of
the aggregate Term Loan Commitments, the Term Loan Commitment of each Term Loan
Lender shall be reduced by such Lender’s ratable portion of such reduction
amount. All fees in respect of the Term Loan Facility accrued until the
effective date of any termination of the Term Loan Facility shall be paid on the
effective date of such termination.

Section 2.07 Repayment of Loans.

(a) Term Loans. The Borrower shall repay to the Term Loan Lenders the aggregate
principal amount of all Term Loans outstanding on the following dates in the
respective amounts set forth opposite such dates (which amounts shall be reduced
as a result of the application of prepayments in accordance with the order of
priority set forth in Section 2.06):

 

Date

   Amount  

March 31, 2013

   $ 2,500,000   

June 30, 2013

   $ 2,500,000   

September 30, 2013

   $ 2,500,000   

December 31, 2013

   $ 2,500,000   

March 31, 2014

   $ 2,500,000   

June 30, 2014

   $ 2,500,000   

September 30, 2014

   $ 2,500,000   

December 31, 2014

   $ 2,500,000   

March 31, 2015

   $ 2,500,000   

June 30, 2015

   $ 2,500,000   

September 30, 2015

   $ 2,500,000   

December 31, 2015

   $ 2,500,000   

March 31, 2016

   $ 2,500,000   

June 30, 2016

   $ 2,500,000   

September 30, 2016

   $ 2,500,000   

December 31, 2016

   $ 2,500,000   

March 31, 2017

   $ 2,500,000   

June 30, 2017

   $ 2,500,000   

September 30, 2017

   $ 2,500,000   

provided, however, that the final principal repayment installment of the Term
Loans shall be repaid on the Maturity Date for the Term Loan Facility and in any
event shall be in an amount equal to the aggregate principal amount of all Term
Loans outstanding on such date.

(b) Revolving Credit Loans. The Borrower shall repay to the Revolving Credit
Lenders on the Maturity Date for the Revolving Credit Facility the aggregate
principal amount of all Revolving Credit Loans outstanding on such date.

 

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Section 2.08 Interest. (a) Subject to the provisions of Section 2.08(b),
(i) each Eurodollar Rate Loan under a Facility shall bear interest on the
outstanding principal amount thereof for each Interest Period at a rate per
annum equal to the Eurodollar Rate for such Interest Period plus the Applicable
Rate for such Facility; and (ii) each Base Rate Loan under a Facility shall bear
interest on the outstanding principal amount thereof from the applicable
borrowing date at a rate per annum equal to the Base Rate plus the Applicable
Rate for such Facility.

(b) (i) If any amount of principal of any Loan or L/C Borrowing is not paid when
due (without regard to any applicable grace periods), whether at stated
maturity, by acceleration or otherwise, all outstanding Loans and L/C Borrowings
(whether or not overdue) shall thereafter bear interest at a fluctuating
interest rate per annum at all times equal to the Default Rate to the fullest
extent permitted by applicable Laws until such amount is paid in full (after as
well as before judgment).

(ii) If any amount (other than principal of any Loan or L/C Borrowing) payable
by the Borrower under any Loan Document is not paid when due (without regard to
any applicable grace periods), whether at stated maturity, by acceleration or
otherwise, then such overdue amount shall thereafter bear interest at a
fluctuating interest rate per annum at all times equal to the Default Rate to
the fullest extent permitted by applicable Laws until such amount is paid in
full (after as well as before judgment).

(iii) Accrued and unpaid interest on past due amounts (including interest on
past due interest) shall be due and payable upon demand.

(c) Interest on each Loan shall be due and payable in arrears on each Interest
Payment Date applicable thereto and at such other times as may be specified
herein. Interest hereunder shall be due and payable in accordance with the terms
hereof before and after judgment, and before and after the commencement of any
proceeding under any Debtor Relief Law.

Section 2.09 Fees. In addition to certain fees described in Sections 2.03(i) and
(j):

(a) Commitment Fee. The Borrower shall pay to the Administrative Agent for the
account of each Revolving Credit Lender in accordance with its Applicable
Revolving Credit Percentage, a commitment fee equal to the Applicable Fee Rate
times the actual daily amount by which the Revolving Credit Facility exceeds the
sum of (i) the Outstanding Amount of Revolving Credit Loans and (ii) the
Outstanding Amount of L/C Obligations. In addition, the Borrower shall pay to
the Administrative Agent for the account of each Term Loan Lender in accordance
with its Applicable Percentage of the Term Loan Facility, a commitment fee equal
to the Applicable Fee Rate times the actual daily amount by which the aggregate
Term Loan Commitments exceed the Outstanding Amount of Term Loans. The
commitment fee shall accrue at all times during the relevant Availability
Period, including at any time during which one or more of the conditions in
Article IV is not met, and shall be due and payable quarterly in arrears on the
last Business Day of each March, June, September and December, commencing with
the first such date to occur after the Closing Date, and, in the case of the
commitment fee with respect to the Revolving Credit Facility, on the last day of
the Availability Period for the Revolving Credit Facility or, in the case of the
commitment fee with respect to the Term Loan

 

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Facility, on the last day of the Availability Period for the Term Loan Facility.
The commitment fee shall be calculated quarterly in arrears, and if there is any
change in the Applicable Fee Rate during any quarter, the actual daily amount
shall be computed and multiplied by the Applicable Fee Rate separately for each
period during such quarter that such Applicable Fee Rate was in effect.

(b) Other Fees.

(i) The Borrower shall pay to the Arranger and the Administrative Agent for
their own respective accounts, in Dollars, fees in the amounts and at the times
specified in the Fee Letter. Such fees shall be fully earned when paid and shall
not be refundable for any reason whatsoever.

(ii) The Borrower shall pay to the Lenders, in Dollars, such fees as shall have
been separately agreed upon in writing in the amounts and at the times so
specified. Such fees shall be fully earned when paid and shall not be refundable
for any reason whatsoever.

Section 2.10 Computation of Interest and Fees; Retroactive Adjustments of
Applicable Rate. (a) All computations of interest for Base Rate Loans (including
Base Rate Loans determined by reference to the Eurodollar Rate) shall be made on
the basis of a year of 365 or 366 days, as the case may be, and actual days
elapsed. All other computations of fees and interest shall be made on the basis
of a 360-day year and actual days elapsed (which results in more fees or
interest, as applicable, being paid than if computed on the basis of a 365-day
year) or, in the case of interest in respect of Loans denominated in Alternative
Currencies as to which market practice differs from the foregoing, in accordance
with such market practice. Interest shall accrue on each Loan for the day on
which the Loan is made, and shall not accrue on a Loan, or any portion thereof,
for the day on which the Loan or such portion is paid, provided that any Loan
that is repaid on the same day on which it is made shall, subject to
Section 2.12(a), bear interest for one day. Each determination by the
Administrative Agent of an interest rate or fee hereunder shall be conclusive
and binding for all purposes, absent manifest error.

(b) If, as a result of any restatement of or other adjustment to the financial
statements of the Borrower or for any other reason, the Borrower or the Lenders
determine that (i) the Consolidated Leverage Ratio as calculated by the Borrower
as of any applicable date was inaccurate and (ii) a proper calculation of the
Consolidated Leverage Ratio would have resulted in higher pricing for such
period, the Borrower shall immediately and retroactively be obligated to pay to
the Administrative Agent for the account of the applicable Lenders or the L/C
Issuers, as the case may be, promptly on demand by the Administrative Agent (or,
after the occurrence of an actual or deemed entry of an order for relief with
respect to the Borrower under the Bankruptcy Code of the United States,
automatically and without further action by the Administrative Agent, any Lender
or any L/C Issuer), an amount equal to the excess of the amount of interest and
fees that should have been paid for such period over the amount of interest and
fees actually paid for such period. This paragraph shall not limit the rights of
the Administrative Agent, any Lender or any L/C Issuer, as the case may be,
under Section 2.03(c)(iii), 2.03(i) or 2.08(b) or under Article VIII. The
Borrower’s obligations under this paragraph shall survive the termination of the
Aggregate Commitments and the repayment of all other Obligations hereunder.

 

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Section 2.11 Evidence of Debt. (a) The Credit Extensions made by each Lender
shall be evidenced by one or more accounts or records maintained by such Lender
and by the Administrative Agent in the ordinary course of business. The accounts
or records maintained by the Administrative Agent and each Lender shall be
conclusive absent manifest error of the amount of the Credit Extensions made by
the Lenders to the Borrower and the interest and payments thereon. Any failure
to so record or any error in doing so shall not, however, limit or otherwise
affect the obligation of the Borrower hereunder to pay any amount owing with
respect to the Obligations. In the event of any conflict between the accounts
and records maintained by any Lender and the accounts and records of the
Administrative Agent in respect of such matters, the accounts and records of the
Administrative Agent shall control in the absence of manifest error. Upon the
request of any Lender made through the Administrative Agent, the Borrower shall
execute and deliver to such Lender (through the Administrative Agent) a Note,
which shall evidence such Lender’s Loans in addition to such accounts or
records. Each Lender may attach schedules to its Note and endorse thereon the
date, Type (if applicable), amount, and maturity of its Loans and payments with
respect thereto.

(b) In addition to the accounts and records referred to in Section 2.11(a), each
Lender and the Administrative Agent shall maintain in accordance with its usual
practice accounts or records evidencing the purchases and sales by such Lender
of participations in Letters of Credit. In the event of any conflict between the
accounts and records maintained by the Administrative Agent and the accounts and
records of any Lender in respect of such matters, the accounts and records of
the Administrative Agent shall control in the absence of manifest error.

Section 2.12 Payments Generally; Administrative Agent’s Clawback.

(a) General. All payments to be made by the Borrower shall be made without
condition or deduction for any counterclaim, defense, recoupment or setoff.
Except as otherwise expressly provided herein, all payments by the Borrower
hereunder shall be made to the Administrative Agent, for the account of the
respective Lenders to which such payment is owed, at the Administrative Agent’s
Office in Dollars and in immediately available funds not later than 2:00 p.m. on
the date specified herein. If, for any reason, the Borrower is prohibited by any
Law from making any required payment hereunder in an Alternative Currency, the
Borrower shall make such payment in Dollars in the Dollar Equivalent of the
Alternative Currency payment amount. The Administrative Agent will promptly
distribute to each Lender its Applicable Percentage in respect of the relevant
Facility (or other applicable share as provided herein) of such payment in like
funds as received by wire transfer to such Lender’s Lending Office. All payments
received by the Administrative Agent (i) after 2:00 p.m., in the case of
payments in Dollars, or (ii) after the Applicable Time specified by the
Administrative Agent in the case of payments in an Alternative Currency, shall
in each case be deemed received on the next succeeding Business Day and any
applicable interest or fee shall continue to accrue. If any payment to be made
by the Borrower shall come due on a day other than a Business Day, payment shall
be made on the next following Business Day, and such extension of time shall be
reflected in computing interest or fees, as the case may be. The Borrower agrees
that, if an Event

 

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of Default shall have occurred and is continuing, the Administrative Agent may
(and the Administrative Agent hereby agrees that it shall) (A) cause each bank
that maintains any account subject to a Control Agreement or a Lockbox Agreement
to transfer, on a daily basis, all collected funds in any such account to a
Concentration Account and (B) apply any amounts on deposit in a Concentration
Account to repay Loans whenever any Loans are outstanding.

(b) (i) Funding by Lenders; Presumption by Administrative Agent. Unless the
Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing of Eurodollar Rate Loans (or, in the case of any
Borrowing of Base Rate Loans, prior to 12:00 noon on the date of such Borrowing)
that such Lender will not make available to the Administrative Agent such
Lender’s share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with
Section 2.02 (or, in the case of a Borrowing of Base Rate Loans, that such
Lender has made such share available in accordance with and at the time required
by Section 2.02) and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount in
immediately available funds with interest thereon, for each day from and
including the date such amount is made available to the Borrower to but
excluding the date of payment to the Administrative Agent, at (A) in the case of
a payment to be made by such Lender, the greater of the Federal Funds Rate and a
rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation, plus any administrative, processing or similar
fees customarily charged by the Administrative Agent in connection with the
foregoing, and (B) in the case of a payment to be made by the Borrower, the
interest rate applicable to Base Rate Loans. If the Borrower and such Lender
shall pay such interest to the Administrative Agent for the same or an
overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If
such Lender pays its share of the applicable Borrowing to the Administrative
Agent, then the amount so paid shall constitute such Lender’s Loan included in
such Borrowing. Any payment by the Borrower shall be without prejudice to any
claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

(ii) Payments by Borrower; Presumptions by Administrative Agent. Unless the
Administrative Agent shall have received notice from the Borrower prior to the
time at which any payment is due to the Administrative Agent for the account of
the Lenders or the L/C Issuers hereunder that the Borrower will not make such
payment, the Administrative Agent may assume that the Borrower has made such
payment on such date in accordance herewith and may, in reliance upon such
assumption, distribute to the Appropriate Lenders or L/C Issuers, as the case
may be, the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Appropriate Lenders or L/C Issuers, as the case may
be, severally agrees to repay to the Administrative Agent forthwith on demand
the amount so distributed to such Lender or such L/C Issuer, in immediately
available funds with interest thereon, for each day from and including the date
such amount is distributed to it to but excluding the date of payment to the
Administrative Agent, at the greater of the Federal Funds Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules
on interbank compensation.

 

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A notice of the Administrative Agent to any Lender or the Borrower with respect
to any amount owing under this subsection (b) shall be conclusive, absent
manifest error.

(c) Failure to Satisfy Conditions Precedent. If any Lender makes available to
the Administrative Agent funds for any Loan to be made by such Lender to the
Borrower as provided in the foregoing provisions of this Article II, and such
funds are not made available to the Borrower by the Administrative Agent because
the conditions to the applicable Credit Extension set forth in Article IV are
not satisfied or waived in accordance with the terms hereof, the Administrative
Agent shall return such funds (in like funds as received from such Lender) to
such Lender, without interest.

(d) Obligations of Lenders Several. The obligations of the Lenders hereunder to
make Term Loans and Revolving Credit Loans, to fund participations in Letters of
Credit and to make payments pursuant to Section 10.04(c) are several and not
joint. The failure of any Lender to make any Loan, to fund any such
participation or to make any payment under Section 10.04(c) on any date required
hereunder shall not relieve any other Lender of its corresponding obligation to
do so on such date, and no Lender shall be responsible for the failure of any
other Lender to so make its Loan, to purchase its participation or to make its
payment under Section 10.04(c).

(e) Funding Source. Nothing herein shall be deemed to obligate any Lender to
obtain the funds for any Loan in any particular place or manner or to constitute
a representation by any Lender that it has obtained or will obtain the funds for
any Loan in any particular place or manner.

(f) Insufficient Funds. If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal, L/C
Borrowings, interest and fees then due hereunder, such funds shall be applied
(i) first, toward payment of interest and fees then due hereunder, ratably among
the parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, toward payment of principal and L/C
Borrowings then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and L/C Borrowings then due to such
parties.

Section 2.13 Sharing of Payments by Lenders. If any Lender shall, by exercising
any right of setoff or counterclaim or otherwise, obtain payment in respect of
(a) Obligations in respect of any the Facilities due and payable to such Lender
hereunder and under the other Loan Documents at such time in excess of its
ratable share (according to the proportion of (i) the amount of such Obligations
due and payable to such Lender at such time to (ii) the aggregate amount of the
Obligations in respect of the Facilities due and payable to all Lenders
hereunder and under the other Loan Documents at such time) of payments on
account of the Obligations in respect of the Facilities due and payable to all
Lenders hereunder and under the other Loan Documents at such time obtained by
all the Lenders at such time or (b) Obligations in respect of any of the
Facilities owing (but not due and payable) to such Lender hereunder and under
the other Loan Documents at such time in excess of its ratable share

 

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(according to the proportion of (i) the amount of such Obligations owing (but
not due and payable) to such Lender at such time to (ii) the aggregate amount of
the Obligations in respect of the Facilities owing (but not due and payable) to
all Lenders hereunder and under the other Loan Parties at such time) of payment
on account of the Obligations in respect of the Facilities owing (but not due
and payable) to all Lenders hereunder and under the other Loan Documents at such
time obtained by all of the Lenders at such time then the Lender receiving such
greater proportion shall (a) notify the Administrative Agent of such fact, and
(b) purchase (for cash at face value) participations in the Loans and
subparticipations in L/C Obligations of the other Lenders, or make such other
adjustments as shall be equitable, so that the benefit of all such payments
shall be shared by the Lenders ratably in accordance with the aggregate amount
of Obligations in respect of the Facilities then due and payable to the Lenders
or owing (but not due and payable) to the Lenders, as the case may be, provided
that:

(i) if any such participations or subparticipations are purchased and all or any
portion of the payment giving rise thereto is recovered, such participations or
subparticipations shall be rescinded and the purchase price restored to the
extent of such recovery, without interest; and

(ii) the provisions of this Section shall not be construed to apply to (A) any
payment made by the Borrower pursuant to and in accordance with the express
terms of this Agreement (including the application of funds arising from the
existence of a Defaulting Lender) or (B) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its
Loans or subparticipations in L/C Obligations to any assignee or participant,
other than to the Borrower or any Subsidiary thereof (as to which the provisions
of this Section shall apply).

The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of setoff and counterclaim with respect to such participation as
fully as if such Lender were a direct creditor of the Borrower in the amount of
such participation.

Section 2.14 Increase in Revolving Credit Facility.

(a) Request for Increase. Provided no Event of Default has occurred and is
continuing, upon notice to the Administrative Agent (which shall promptly notify
the Revolving Credit Lenders), the Borrower may from time to time (including on
the Closing Date), request an increase in the Revolving Credit Facility by an
amount (for all such requests) not exceeding $50,000,000; provided, however,
that (i) any such request for an increase shall be in a minimum amount of
$10,000,000, (ii) the Borrower may make a maximum of three such requests, and
(iii) after giving effect to such increase, the Aggregate Commitments shall not
be in excess of $180,000,000. At the time of sending such notice, the Borrower
(in consultation with the Administrative Agent) shall specify the time period
within which each Revolving Credit Lender is requested to respond (which shall
in no event be less than ten Business Days from the date of delivery of such
notice to the Revolving Credit Lenders).

 

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(b) Lender Elections to Increase. Each Revolving Credit Lender shall notify the
Administrative Agent within such time period whether or not it agrees to
increase its Revolving Credit Commitment and, if so, whether by an amount equal
to, greater than, or less than its Applicable Revolving Credit Percentage of
such requested increase. Any Revolving Credit Lender not responding within such
time period shall be deemed to have declined to increase its Revolving Credit
Commitment.

(c) Notification by Administrative Agent; Additional Revolving Credit Lenders.
The Administrative Agent shall notify the Borrower and each Revolving Credit
Lender of the Revolving Credit Lenders’ responses to each request made
hereunder. To achieve the full amount of a requested increase, and subject to
the approval of the Administrative Agent and the L/C Issuers (which approvals
shall not be unreasonably withheld), the Borrower may also invite additional
Eligible Assignees to become Revolving Credit Lenders pursuant to a joinder
agreement in form and substance satisfactory to the Administrative Agent and its
counsel.

(d) Effective Date and Allocations. If the Revolving Credit Facility is
increased in accordance with this Section, the Administrative Agent and the
Borrower shall determine the effective date (the “Revolving Credit Increase
Effective Date”) and the final allocation of such increase. The Administrative
Agent shall promptly notify the Borrower and the Revolving Credit Lenders of the
final allocation of such increase and the Revolving Credit Increase Effective
Date.

(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate
of each Loan Party dated as of the Revolving Credit Increase Effective Date (in
sufficient copies for each Lender) signed by a Responsible Officer of such Loan
Party (i) certifying and attaching the resolutions adopted by such Loan Party
approving or consenting to such increase, and (ii) in the case of the Borrower,
certifying that, before and after giving effect to such increase, (A) the
representations and warranties contained in Article V and the other Loan
Documents are true and correct in all material respects on and as of the
Revolving Credit Increase Effective Date, except to the extent that such
representations and warranties specifically refer to an earlier date, in which
case they are true and correct as of such earlier date, and except that for
purposes of this Section 2.14, the representations and warranties contained in
subsections (a) and (b) of Section 5.05 shall be deemed to refer to the most
recent statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01, and (B) no Event of Default has occurred or is continuing. The
Borrower shall prepay any Revolving Credit Loans outstanding on the Revolving
Credit Increase Effective Date (and pay any additional amounts required pursuant
to Section 3.05) to the extent necessary to keep the outstanding Revolving
Credit Loans ratable with any revised Applicable Revolving Credit Percentages
arising from any nonratable increase in the Revolving Credit Commitments under
this Section.

(f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.13 or 10.01 to the contrary.

 

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Section 2.15 Increase in Term Loan Facility.

(a) Request for Increase. Provided no Event of Default has occurred and is
continuing, upon notice to the Administrative Agent (which shall promptly notify
the Term Loan Lenders), the Borrower may from time to time (including on the
Closing Date), request an increase in the Term Loans by an amount (for all such
requests) not exceeding $50,000,000; provided, however, that (i) any such
request for an increase shall be in a minimum amount of $10,000,000, (ii) the
Borrower may make a maximum of three such requests, and (iii) after giving
effect to such increase, the Aggregate Commitments shall not be in excess of
$180,000,000. At the time of sending such notice, the Borrower (in consultation
with the Administrative Agent) shall specify the time period within which each
Term Loan Lender is requested to respond (which shall in no event be less than
ten Business Days from the date of delivery of such notice to the Term Loan
Lenders).

(b) Lender Elections to Increase. Each Term Loan Lender shall notify the
Administrative Agent within such time period whether or not it agrees to
increase its Term Loans and, if so, whether by an amount equal to, greater than,
or less than its ratable portion (base on such Term Loan Lender’s Applicable
Percentage in respect of the Term Loan Facility) of such requested increase. Any
Term Loan Lender not responding within such time period shall be deemed to have
declined to increase its Term Loans.

(c) Notification by Administrative Agent; Additional Term Loan Lenders. The
Administrative Agent shall notify the Borrower and each Term Loan Lender of the
Term Lon Lenders’ responses to each request made hereunder. To achieve the full
amount of a requested increase and subject to the approval of the Administrative
Agent (which approval shall not be unreasonably withheld), the Borrower may also
invite additional Eligible Assignees to become Term Loan Lenders pursuant to a
joinder agreement in form and substance satisfactory to the Administrative Agent
and its counsel.

(d) Effective Date and Allocations. If the Term Loans are increased in
accordance with this Section, the Administrative Agent and the Borrower shall
determine the effective date (the “Term Loan Increase Effective Date”) and the
final allocation of such increase. The Administrative Agent shall promptly
notify the Borrower and the Term Loan Lenders of the final allocation of such
increase and the Term Loan Increase Effective Date. As of the Term Loan Increase
Effective Date, the amortization schedule for the Term Loans set forth in
Section 2.07(a) shall be amended to increase the then-remaining unpaid
installments of principal by an aggregate amount equal to the additional Term
Loans being made on such date, such aggregate amount to be applied to increase
such installments ratably in accordance with the amounts in effect immediately
prior to the Term Loan Increase Effective Date. Such amendment may be signed by
the Administrative Agent on behalf of the Lenders.

(e) Conditions to Effectiveness of Increase. As a condition precedent to such
increase, the Borrower shall deliver to the Administrative Agent a certificate
of each Loan Party dated as of the Term Loan Increase Effective Date (in
sufficient copies for each Lender) signed by a Responsible Officer of such Loan
Party (i) certifying and attaching the resolutions adopted by such Loan Party
approving or consenting to such increase, and (ii) in the case of the Borrower,
certifying that, before and after giving effect to such increase, (A) the
representations

 

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and warranties contained in Article V and the other Loan Documents are true and
correct in all material respects on and as of the Term Loan Increase Effective
Date, except to the extent that such representations and warranties specifically
refer to an earlier date, in which case they are true and correct as of such
earlier date, and except that for purposes of this Section 2.15, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01, and (B) no Event
of Default has occurred or is continuing. The additional Term Loans shall be
made by the Term Loan Lenders participating therein pursuant to the procedures
set forth in Section 2.02.

(f) Conflicting Provisions. This Section shall supersede any provisions in
Section 2.13 or 10.01 to the contrary.

Section 2.16 Defaulting Lenders.

(a) Amendments. Notwithstanding anything to the contrary contained in this
Agreement, if any Lender becomes a Defaulting Lender, then, until such time as
that Lender is no longer a Defaulting Lender, to the extent permitted by
applicable Law:

(i) Waivers and Amendments. Such Defaulting Lender’s right to approve or
disapprove any amendment, waiver or consent with respect to this Agreement shall
be restricted as set forth in the definition of “Required Lenders” and
Section 10.01.

(ii) Defaulting Lender Waterfall. Any payment of principal, interest, fees or
other amounts received by the Administrative Agent for the account of such
Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to
Article VIII or otherwise) or received by the Administrative Agent from a
Defaulting Lender pursuant to Section 10.08 shall be applied at such time or
times as may be determined by the Administrative Agent as follows: first, to the
payments of any amounts owing by such Defaulting Lender to the Administrative
Agent hereunder; second, to the payment on a pro rata basis of any amounts owing
by such Defaulting Lender to the L/C Issuer hereunder; third, to Cash
Collateralize the L/C Issuer’s Fronting Exposure with respect to such Defaulting
Lender in accordance with Section 2.03(g), fourth, as the Borrower may request
(so long as no Default exists), to the funding of any Loan in respect of which
such Defaulting Lender has failed to fund its portion thereof as required by
this Agreement, as determined by the Administrative Agent; fifth, if so
determined by the Administrative Agent and the Borrower, to be held in a deposit
account and released pro rata in order to (A) satisfy such Defaulting Lender’s
potential future funding obligations with respect to Loans under this Agreement
and (B) Cash Collateralize the L/C Issuer’s future Fronting Exposure with
respect to such Defaulting Lender with respect to future Letters of Credit
issued under this Agreement, in accordance with Section 2.03(g), sixth, to the
payment of any amounts owing to the Lenders, or the L/C Issuer as a result of
any final and nonappealable judgment of a court of competent jurisdiction
obtained by any Lender or the L/C Issuer against such Defaulting Lender as a
result of such Defaulting Lender’s breach of its obligations under this
Agreement; seventh, so long as no Default exists, to the payment of any amounts
owing to the Borrower as a result of any final and nonappealable judgment of a
court of competent jurisdiction obtained by the Borrower

 

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against such Defaulting Lender as a result of such Defaulting Lender’s breach of
its obligations under this Agreement; and eighth, to such Defaulting Lender or
as otherwise directed by a court of competent jurisdiction; provided that if
(x) such payment is a payment of the principal amount of any Loans or L/C
Borrowings in respect of which such Defaulting Lender has not fully funded its
appropriate share, and (y) such Loans were made or the related Letters of Credit
were issued at a time when the conditions set forth in Section 4.02 were
satisfied or waived, such payment shall be applied solely to pay the Loans of,
and L/C Obligations owed to, all Non-Defaulting Lenders on a pro rata basis
prior to being applied to the payment of any Loans of, or L/C Obligations owed
to, such Defaulting Lender until such time as all Loans and funded and unfunded
participations in L/C Obligations are held by the Lenders pro rata in accordance
with the Commitments hereunder without giving effect to Section 2.16(a)(iv). Any
payments, prepayments or other amounts paid or payable to a Defaulting Lender
that are applied (or held) to pay amounts owed by a Defaulting Lender or to post
Cash Collateral pursuant to this Section 2.16(a)(ii) shall be deemed paid to and
redirected by such Defaulting Lender, and each Lender irrevocably consents
hereto.

(iii) Certain Fees.

(A) No Defaulting Lender shall be entitled to receive any fee payable under
Section 2.09(a) for any period during which that Lender is a Defaulting Lender
(and the Borrower shall not be required to pay any such fee that otherwise would
have been required to have been paid to that Defaulting Lender).

(B) Each Defaulting Lender shall be entitled to receive Letter of Credit Fees
for any period during which that Lender is a Defaulting Lender only to the
extent allocable to its Applicable Percentage of the stated amount of Letters of
Credit for which it has provided Cash Collateral pursuant to Section 2.03.

(C) With respect to any fee payable under Section 2.09 or any Letter of Credit
Fee not required to be paid to any Defaulting Lender pursuant to clause (A) or
(B) above, the Borrower shall (I) pay to each Non-Defaulting Lender that portion
of any such fee otherwise payable to such Defaulting Lender with respect to such
Defaulting Lender’s participation in L/C Obligations that has been reallocated
to such Non-Defaulting Lender pursuant to clause (iv) below, (II) pay to the L/C
Issuer the amount of any such fee otherwise payable to such Defaulting Lender to
the extent allocable to such L/C Issuer’s Fronting Exposure to such Defaulting
Lender, and (III) not be required to pay the remaining amount of any such fee.

(iv) Reallocation of Applicable Percentages to Reduce Fronting Exposure. All or
any part of such Defaulting Lender’s participation in L/C Obligations shall be
reallocated among the Non-Defaulting Lenders in accordance with their respective
Applicable Percentages (calculated without regard to such Defaulting Lender’s
Commitment) but only to the extent that (A) the conditions set forth in
Section 4.02 are satisfied at the time of such reallocation (and, unless the
Borrower shall have otherwise notified the Administrative Agent at such time,
the Borrower shall be deemed to have

 

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represented and warranted that such conditions are satisfied at such time), and
(B) such reallocation does not cause the aggregate Total Revolving Credit
outstanding of any Non-Defaulting Lender to exceed such Non-Defaulting Lender’s
Revolving Credit Commitment. No reallocation hereunder shall constitute a waiver
or release of any claim of any party hereunder against a Defaulting Lender
arising from that Lender’s having become a Defaulting Lender, including any
claim of a Non-Defaulting Lender as a result of such Non-Defaulting Lender’s
increased exposure following such reallocation.

(v) Cash Collateral. If the reallocation described in clause (a)(iv) above
cannot, or can only partially, be effected, the Borrower shall, without
prejudice to any right or remedy available to it hereunder or under applicable
Law, Cash Collateralize the L/C Issuer’s Fronting Exposure in accordance with
the procedures set forth in Section 2.03(g).

(b) Defaulting Lender Cure. If the Borrower, the Administrative Agent and the
L/C Issuer agree in writing that a Lender is no longer a Defaulting Lender, the
Administrative Agent will so notify the parties hereto, whereupon as of the
effective date specified in such notice and subject to any conditions set forth
therein (which may include arrangements with respect to any Cash Collateral),
that Lender will, to the extent applicable, purchase at par that portion of
outstanding Revolving Credit Loans of the other Lender or take such other
actions as the Administrative Agent may determine to be necessary to cause the
Revolving Credit Loans and funded and unfunded participations in Letters of
Credit to be held on a pro rata basis by the Revolving Credit Lenders in
accordance with their Revolving Credit Commitments (without giving effect to
Section 2.18(a)(iv)), whereupon such Lender will cease to be a Defaulting
Lender; provided that no adjustments will be made retroactively with respect to
fees accrued or payments made by or on behalf of the Borrower while that Lender
was a Defaulting Lender; and provided, further, that except to the extent
otherwise expressly agreed by the affected parties, no change hereunder from
Defaulting Lender to Lender will constitute a waiver or release of any claim of
any party hereunder arising from that Lender’s having been a Defaulting Lender.

ARTICLE III

TAXES, YIELD PROTECTION AND ILLEGALITY

Section 3.01 Taxes.

(a) Payments Free of Taxes; Obligation to Withhold; Payments on Account of
Taxes.

(i) Any and all payments by or on account of any obligation of the Borrower
hereunder or under any other Loan Document shall to the extent permitted by
applicable Laws be made free and clear of and without reduction or withholding
for any Taxes. If, however, applicable Laws require the Borrower or the
Administrative Agent to withhold or deduct any Tax, such Tax shall be withheld
or deducted in accordance with such Laws as determined by the Borrower or the
Administrative Agent, as the case may be, upon the basis of the information and
documentation to be delivered pursuant to subsection (e) below.

 

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(ii) If the Borrower or the Administrative Agent shall be required by the Code
to withhold or deduct any Taxes, including both United States Federal backup
withholding and withholding taxes, from any payment, then (A) the Administrative
Agent shall withhold or make such deductions as are determined by the
Administrative Agent to be required based upon the information and documentation
it has received pursuant to subsection (e) below, (B) the Administrative Agent
shall timely pay the full amount withheld or deducted to the relevant
Governmental Authority in accordance with the Code, and (C) to the extent that
the withholding or deduction is made on account of Indemnified Taxes or Other
Taxes, the sum payable by the Borrower shall be increased as necessary so that
after any required withholding or the making of all required deductions
(including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or L/C Issuer, as the case may be, receives an
amount equal to the sum it would have received had no such withholding or
deduction been made.

(iii) If the Borrower or the Administrative Agent shall be required by any
applicable Laws other than the Code to withhold or deduct any Taxes from any
payment, then (A) the Borrower or the Administrative Agent, as required by such
Laws, shall withhold or make such deductions as are determined by it to be
required based upon the information and documentation it has received pursuant
to subsection (e) below, (B) the Borrower or the Administrative Agent, to the
extent required by such Laws, shall timely pay the full amount so withheld or
deducted by it to the relevant Governmental Authority in accordance with such
Laws, and (C) to the extent that the withholding or deduction is made on account
of Indemnified Taxes or Other Taxes, the sum payable by the Borrower shall be
increased as necessary so that after any required withholding or the making of
all required deductions (including deductions applicable to additional sums
payable under this Section) the Administrative Agent, Lender or L/C Issuer, as
the case may be, receives an amount equal to the sum it would have received had
no such withholding or deduction been made.

(b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable Laws.

(c) Tax Indemnifications.

(i) Without limiting the provisions of subsection (a) or (b) above, the Borrower
shall, and does hereby, indemnify the Administrative Agent, each Lender and each
L/C Issuer, and shall make payment in respect thereof within 10 days after
demand therefor, for the full amount of any Indemnified Taxes or Other Taxes
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) withheld or deducted by the
Borrower or the Administrative Agent or paid by the Administrative Agent, such
Lender or such L/C Issuer, as the case may be, and any penalties, interest and
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respect thereto, whether or not such Indemnified Taxes or Other Taxes were
correctly or legally imposed or asserted by the relevant Governmental Authority.
The Borrower shall also, and does hereby, indemnify the Administrative Agent,
and shall make payment in respect thereof within 10 days after demand therefor,
for any amount which a Lender or L/C Issuer for any reason fails to pay
indefeasibly to the Administrative Agent as required by clause (ii) of this
subsection. A certificate as to the amount of any such payment or liability
delivered to the Borrower by a Lender or L/C Issuer (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender or L/C Issuer, shall be conclusive absent manifest error.

(ii) Without limiting the provisions of subsection (a) or (b) above, each Lender
and L/C Issuer shall, and does hereby, severally indemnify, and shall make
payment in respect thereof within 10 days after demand therefor, (A) the
Administrative Agent, against any and all Taxes and any and all related losses,
claims, liabilities, penalties, interest and expenses (including the fees,
charges and disbursements of any counsel) incurred by or asserted against the
Administrative Agent by any Governmental Authority as a result of the failure by
such Lender or such L/C Issuer, as the case may be, to deliver, or as a result
of the inaccuracy, inadequacy or deficiency of, any documentation required to be
delivered by such Lender or such L/C Issuer, as the case may be, to the
Administrative Agent pursuant to subsection (e) and (B) the Borrower against any
Taxes and any and all related losses, claims, liabilities, penalties, interest
and expenses (including the fees, charges and disbursements of any counsel)
attributable to such Lender’s failure to comply with the provisions of
Section 10.06(d) relating to the maintenance of a Participant Register. A
certificate as to the amount of such payment or liability delivered to any
Lender by the Administrative Agent or the Borrower, as relevant, shall be
conclusive absent manifest error. Each Lender and each L/C Issuer hereby
authorizes the Administrative Agent to set off and apply any and all amounts at
any time owing to such Lender or such L/C Issuer, as the case may be, under this
Agreement or any other Loan Document against any amount due to the
Administrative Agent under this clause (ii). The agreements in this clause (ii)
shall survive the resignation and/or replacement of the Administrative Agent,
any assignment of rights by, or the replacement of, a Lender or any L/C Issuer,
the termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all other Obligations.

(d) Evidence of Payments. Upon request by the Borrower or the Administrative
Agent, as the case may be, after any payment of Taxes by the Borrower or the
Administrative Agent to a Governmental Authority as provided in this
Section 3.01, the Borrower shall deliver to the Administrative Agent or the
Administrative Agent shall deliver to the Borrower, as the case may be, the
original or a certified copy of a receipt issued by such Governmental Authority
evidencing such payment, a copy of any return required by Laws to report such
payment or other evidence of such payment reasonably satisfactory to the
Borrower or the Administrative Agent, as the case may be.

(e) Status of Lenders; Tax Documentation. (i) Each Lender shall deliver to the
Borrower and to the Administrative Agent, at the time or times prescribed by
applicable Laws or when reasonably requested by the Borrower or the
Administrative Agent, such properly completed and executed documentation
prescribed by applicable Laws or by the taxing

 

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authorities of any jurisdiction and such other reasonably requested information
as will permit the Borrower or the Administrative Agent, as the case may be, to
determine (A) whether or not payments made by the Borrower hereunder or under
any other Loan Document are subject to Taxes, (B) if applicable, the required
rate of withholding or deduction, and (C) such Lender’s entitlement to any
available exemption from, or reduction of, applicable Taxes in respect of all
payments to be made to such Lender by the Borrower pursuant to this Agreement or
otherwise to establish such Lender’s status for withholding tax purposes in the
applicable jurisdictions.

(ii) Without limiting the generality of the foregoing, if the Borrower is
resident for tax purposes in the United States,

(A) any Lender that is a “United States person” within the meaning of
Section 7701(a)(30) of the Code shall deliver to the Borrower and the
Administrative Agent executed originals of Internal Revenue Service Form W-9 or
such other documentation or information prescribed by applicable Laws or
reasonably requested by the Borrower or the Administrative Agent as will enable
the Borrower or the Administrative Agent, as the case may be, to determine
whether or not such Lender is subject to backup withholding or information
reporting requirements; and

(B) each Foreign Lender that is entitled under the Code or any applicable treaty
to an exemption from or reduction of withholding tax with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrower and the
Administrative Agent (in such number of copies as shall be requested by the
recipient) on or prior to the date on which such Foreign Lender becomes a Lender
under this Agreement (and from time to time thereafter upon the request of the
Borrower or the Administrative Agent, but only if such Foreign Lender is legally
entitled to do so), whichever of the following is applicable:

(I) executed originals of Internal Revenue Service Form W-8BEN claiming
eligibility for benefits of an income tax treaty to which the United States is a
party,

(II) executed originals of Internal Revenue Service Form W-8ECI,

(III) executed originals of Internal Revenue Service Form W-8IMY and all
required supporting documentation,

(IV) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the
effect that such Foreign Lender is not (A) a “bank” within the meaning of
section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Borrower
within the meaning of section 881(c)(3)(B) of the Code, or (C) a “controlled
foreign corporation” described in section 881(c)(3)(C) of the Code and
(y) executed originals of Internal Revenue Service Form W-8BEN, or

 

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(V) executed originals of any other form prescribed by applicable Laws as a
basis for claiming exemption from or a reduction in United States Federal
withholding tax together with such supplementary documentation as may be
prescribed by applicable Laws to permit the Borrower or the Administrative Agent
to determine the withholding or deduction required to be made.

(iii) Each Lender shall promptly (A) notify the Borrower and the Administrative
Agent of any change in circumstances which would modify or render invalid any
claimed exemption or reduction, and (B) take such steps as shall not be
materially disadvantageous to it, in the reasonable judgment of such Lender, and
as may be reasonably necessary (including the re-designation of its Lending
Office) to avoid any requirement of applicable Laws of any jurisdiction that the
Borrower or the Administrative Agent make any withholding or deduction for taxes
from amounts payable to such Lender.

(iv) The Borrower shall promptly deliver to the Administrative Agent or any
Lender, as the Administrative Agent or such Lender shall reasonably request, on
or prior to the Closing Date, and in a timely fashion thereafter, such documents
and forms required by any relevant taxing authorities under the Laws of any
jurisdiction, duly executed and completed by the Borrower, as are required to be
furnished by such Lender or the Administrative Agent under such Laws in
connection with any payment by the Administrative Agent or any Lender of Taxes
or Other Taxes, or otherwise in connection with the Loan Documents, with respect
to such jurisdiction.

(v) If a payment made to a Lender under any Loan Document would be subject to
U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to
comply with the applicable reporting requirements of FATCA (including those
contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender
shall deliver to the Borrower and the Administrative Agent at the time or times
prescribed by law and at such time or time reasonably requested by the Borrower
or the Administrative Agent such documentation prescribed by applicable law
(including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such
additional documentation reasonably requested by the Borrower or the
Administrative Agent as may be necessary for the Borrower and the Administrative
Agent to comply with their obligations under FATCA and to determine that such
Lender has complied with such Lender’s obligations under FATCA or to determine
the amount to deduct and withhold from such payment. Solely for purposes of this
clause (iii), “FATCA” shall include any amendments made to FATCA after the date
of this Agreement.

(f) Treatment of Certain Refunds. Unless required by applicable Laws, at no time
shall the Administrative Agent have any obligation to file for or otherwise
pursue on behalf of a Lender or an L/C Issuer, or have any obligation to pay to
any Lender or any L/C Issuer, any refund of Taxes withheld or deducted from
funds paid for the account of such Lender or such L/C Issuer, as the case may
be. If the Administrative Agent, any Lender or any L/C Issuer determines, in its
sole discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid

 

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additional amounts pursuant to this Section, it shall pay to the Borrower an
amount equal to such refund (but only to the extent of indemnity payments made,
or additional amounts paid, by the Borrower under this Section with respect to
the Taxes or Other Taxes giving rise to such refund), net of all out-of-pocket
expenses and net of any loss or gain realized in the conversion of such funds
from or to another currency incurred by the Administrative Agent, such Lender or
any L/C Issuer, as the case may be, and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund), provided that the Borrower, upon the request of the Administrative
Agent, such Lender or such L/C Issuer, agrees to repay the amount paid over to
the Borrower (plus any penalties, interest or other charges imposed by the
relevant Governmental Authority) to the Administrative Agent, such Lender or
such L/C Issuer in the event the Administrative Agent, such Lender or such L/C
Issuer is required to repay such refund to such Governmental Authority. This
subsection shall not be construed to require the Administrative Agent, any
Lender or any L/C Issuer to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to the Borrower or
any other Person.

(g) Survival. Each party’s obligations under this Section 3.01 shall survive the
resignation or replacement of the Administrative Agent or any assignment of
rights by, or the replacement of, a Lender or the L/C Issuer, the termination of
the Commitments and the repayment, satisfaction or discharge of all other
Obligations.

Section 3.02 Illegality. If any Lender determines that any Law has made it
unlawful, or that any Governmental Authority has asserted that it is unlawful,
for any Lender or its applicable Lending Office to make, maintain or fund
Eurodollar Rate Loans, or to determine or charge interest rates based upon the
Eurodollar Rate, or any Governmental Authority has imposed material restrictions
on the authority of such Lender to purchase or sell, or to take deposits of,
Dollars in the London interbank market, then, on notice thereof by such Lender
to the Borrower through the Administrative Agent, any obligation of such Lender
to make or continue Eurodollar Rate Loans or to convert Base Rate Loans to
Eurodollar Rate Loans, shall be suspended until such Lender notifies the
Administrative Agent and the Borrower that the circumstances giving rise to such
determination no longer exist. Upon receipt of such notice, the Borrower shall,
upon demand from such Lender (with a copy to the Administrative Agent), prepay
or, if applicable, convert all such Eurodollar Rate Loans of such Lender to Base
Rate Loans, either on the last day of the Interest Period therefor, if such
Lender may lawfully continue to maintain such Eurodollar Rate Loans to such day,
or immediately, if such Lender may not lawfully continue to maintain such
Eurodollar Rate Loans. Upon any such prepayment or conversion, the Borrower
shall also pay accrued interest on the amount so prepaid or converted.

Section 3.03 Inability to Determine Rates. If the Required Lenders determine
that for any reason in connection with any request for a Eurodollar Rate Loan or
a conversion to or continuation thereof that (a) Dollar deposits are not being
offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Rate Loan, (b) adequate and
reasonable means do not exist for determining the Eurodollar Rate for any
requested Interest Period with respect to a proposed Eurodollar Rate Loan, or
(c) the Eurodollar Rate for any requested Interest Period with respect to a
proposed Eurodollar Rate Loan does not adequately and fairly reflect the cost to
such Lenders of funding such Loan, the Administrative Agent will promptly so
notify the Borrower and each Lender. Thereafter, the

 

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obligation of the Lenders to make or maintain Eurodollar Rate Loans shall be
suspended until the Administrative Agent (upon the instruction of the Required
Lenders) revokes such notice. Upon receipt of such notice, the Borrower may
revoke any pending request for a Borrowing of, conversion to or continuation of
Eurodollar Rate Loans or, failing that, will be deemed to have converted such
request into a request for a Borrowing of Base Rate Loans in the amount
specified therein.

Section 3.04 Increased Costs.

(a) Increased Costs Generally. If any Change in Law shall:

(i) impose, modify or deem applicable any reserve, special deposit, compulsory
loan, insurance charge or similar requirement against assets of, deposits with
or for the account of, or credit extended or participated in by, any Lender
(except any reserve requirement reflected in the Eurodollar Rate) or any L/C
Issuer;

(ii) subject any Lender or any L/C Issuer to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter
of Credit or any Eurodollar Rate Loan made by it, or change the basis of
taxation of payments to such Lender or such L/C Issuer in respect thereof
(except for Indemnified Taxes or Other Taxes covered by Section 3.01 and the
imposition of, or any change in the rate of, any Excluded Tax payable by such
Lender or such L/C Issuer); or

(iii) impose on any Lender or any L/C Issuer or the London interbank market any
other condition, cost or expense affecting this Agreement or Eurodollar Rate
Loans made by such Lender or any Letter of Credit or participation therein;

and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Rate Loan (or of maintaining its
obligation to make any such Loan), or to increase the cost to such Lender or
such L/C Issuer of participating in, issuing or maintaining any Letter of Credit
(or of maintaining its obligation to participate in or to issue any Letter of
Credit), or to reduce the amount of any sum received or receivable by such
Lender or such L/C Issuer hereunder (whether of principal, interest or any other
amount) then, upon request of such Lender or such L/C Issuer, the Borrower will
pay to such Lender or such L/C Issuer, as the case may be, such additional
amount or amounts as will compensate such Lender or such L/C Issuer, as the case
may be, for such additional costs incurred or reduction suffered.

(b) Capital Requirements. If any Lender or any L/C Issuer determines that any
Change in Law affecting such Lender or such L/C Issuer or any Lending Office of
such Lender or such Lender’s or such L/C Issuer’s holding company, if any,
regarding capital or liquidity requirements has or would have the effect of
reducing the rate of return on such Lender’s or such L/C Issuer’s capital or on
the capital of such Lender’s or such L/C Issuer’s holding company, if any, as a
consequence of this Agreement, the Commitments of such Lender or the Loans made
by, or participations in Letters of Credit held by, such Lender, or the Letters
of Credit issued by such L/C Issuer, to a level below that which such Lender or
such L/C Issuer or such Lender’s or such L/C Issuer’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s or
such L/C Issuer’s policies and the

 

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policies of such Lender’s or such L/C Issuer’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
or such L/C Issuer, as the case may be, such additional amount or amounts as
will compensate such Lender or such L/C Issuer or such Lender’s or such L/C
Issuer’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement. A certificate of a Lender or L/C Issuer
setting forth the amount or amounts necessary to compensate such Lender or such
L/C Issuer or its holding company, as the case may be, as specified in
subsection (a) or (b) of this Section and delivered to the Borrower shall be
conclusive absent manifest error. The Borrower shall pay such Lender or such L/C
Issuer, as the case may be, the amount shown as due on any such certificate
within 10 days after receipt thereof.

(d) Delay in Requests. Failure or delay on the part of any Lender or any L/C
Issuer to demand compensation pursuant to the foregoing provisions of this
Section shall not constitute a waiver of such Lender’s or such L/C Issuer’s
right to demand such compensation, provided that no Borrower shall be required
to compensate a Lender or L/C Issuer pursuant to the foregoing provisions of
this Section for any increased costs incurred or reductions suffered more than
nine months prior to the date that such Lender or such L/C Issuer, as the case
may be, notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender’s or such L/C Issuer’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the nine-month period
referred to above shall be extended to include the period of retroactive effect
thereof).

Section 3.05 Compensation for Losses. Upon demand of any Lender (with a copy to
the Administrative Agent) from time to time, the Borrower shall promptly
compensate such Lender for and hold such Lender harmless from any loss, cost or
expense incurred by it as a result of:

(a) any continuation, conversion, payment or prepayment of any Loan other than a
Base Rate Loan on a day other than the last day of the Interest Period for such
Loan (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise);

(b) any failure by the Borrower (for a reason other than the failure of such
Lender to make a Loan) to prepay, borrow, continue or convert any Loan other
than a Base Rate Loan on the date or in the amount notified by the Borrower;

(c) any failure by the Borrower to make payment of drawing under any Letter of
Credit (or interest due thereon) denominated in an Alternative Currency on its
scheduled due date or any payment thereof in a different currency; or

(d) any assignment of a Eurodollar Rate Loan on a day other than the last day of
the Interest Period therefor as a result of a request by the Borrower pursuant
to Section 10.13;

excluding any loss of anticipated profits, but including any foreign exchange
losses and any loss or expense arising from the liquidation or reemployment of
funds obtained by it to maintain such Loan, from fees payable to terminate the
deposits from which such funds were obtained or from the performance of any
foreign exchange contract. The Borrower shall also pay any customary
administrative fees charged by such Lender in connection with the foregoing.

 

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For purposes of calculating amounts payable by the Borrower to the Lenders under
this Section 3.05, each Lender shall be deemed to have funded each Eurodollar
Rate Loan made by it at the Eurodollar Base Rate used in determining the
Eurodollar Rate for such Loan by a matching deposit or other borrowing in the
London interbank eurodollar market for a comparable amount and for a comparable
period, whether or not such Eurodollar Rate Loan was in fact so funded.

Section 3.06 Mitigation Obligations; Replacement of Lenders.

(a) Designation of a Different Lending Office. If any Lender requests
compensation under Section 3.04, or the Borrower is required to pay any
additional amount to any Lender, any L/C Issuer, or any Governmental Authority
for the account of any Lender or any L/C Issuer pursuant to Section 3.01, or if
any Lender gives a notice pursuant to Section 3.02, then, at the request of
Borrower, such Lender or such L/C Issuer shall, as applicable, use reasonable
efforts to designate a different Lending Office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the judgment of such Lender or such L/C
Issuer, such designation or assignment (i) would eliminate or reduce amounts
payable pursuant to Section 3.01 or 3.04, as the case may be, in the future, or
eliminate the need for the notice pursuant to Section 3.02, as applicable, and
(ii) in each case, would not subject such Lender or such L/C Issuer, as the case
may be, to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender or such L/C Issuer, as the case may be. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any
Lender or any L/C Issuer in connection with any such designation or assignment.

(b) Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, or if any Lender is a Non-Consenting Lender or a Defaulting
Lender, the Borrower may replace such Lender in accordance with Section 10.13.

 

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Section 3.07 Survival. All of the Borrower’s obligations under this Article III
shall survive termination of the Aggregate Commitments, repayment of all other
Obligations hereunder, and resignation of the Administrative Agent.

ARTICLE IV

CONDITIONS PRECEDENT TO CREDIT EXTENSIONS

Section 4.01 Conditions of Initial Credit Extension. The obligation of each L/C
Issuer and each Lender to make its initial Credit Extension hereunder is subject
to satisfaction of the following conditions precedent:

(a) The Administrative Agent’s receipt of the following, each of which shall be
originals or telecopies (followed promptly by originals) unless otherwise
specified, each properly executed by a Responsible Officer of the signing Loan
Party, each dated the Closing Date (or, in the case of certificates of
governmental officials, a recent date before the Closing Date) and each in form
and substance satisfactory to the Administrative Agent and each of the Lenders:

(i) executed counterparts of this Agreement and Subsidiary Guaranty (or
amendment thereto), sufficient in number for distribution to the Administrative
Agent, each Lender and the Borrower;

(ii) a Note executed by the Borrower in favor of each Lender requesting a Note;

(iii) an irrevocable proxy, pledge and security agreement, in substantially the
form of Exhibit G (together with each other irrevocable proxy, pledge and
security agreement and irrevocable proxy, pledge and security agreement
supplement delivered pursuant to Section 6.09, in each case as amended, the
“Security Agreement” or an amendment to the Security Agreement), duly executed
by each Loan Party, together with:

(A) certificates representing the Pledged Equity referred to therein accompanied
by undated transfer powers executed in blank or, if any of the Pledged Equity
shall be uncertificated securities, confirmation and evidence satisfactory to
the Administrative Agent that the security interest in such uncertificated
securities has been transferred to and perfected by the Administrative Agent for
the benefit of the Secured Parties in accordance with Section 9-106 of the
Uniform Commercial Code, and instruments evidencing the Pledged Debt indorsed in
blank,

(B) proper Financing Statements in form appropriate for filing under the Uniform
Commercial Code of all jurisdictions that the Administrative Agent may deem
necessary or desirable in order to perfect the Liens created under the Security
Agreement, covering the Collateral described in the Security Agreement,

 

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(C) completed requests for information, dated on or before the date of the
initial Credit Extension, listing all effective financing statements filed in
the jurisdictions referred to in clause (B) above that name any Loan Party as
debtor, together with copies of such other financing statements,

(D) (reserved),

(E) the Control Agreements (or amendments thereto, to the extent deemed
necessary by the Administrative Agent) duly executed by the appropriate parties,
and

(F) evidence that all other action, recordings and filings that the
Administrative Agent may deem necessary or desirable in order to perfect the
Liens created under the Security Agreement has been taken (including receipt of
duly executed payoff letters, UCC-3 termination statements and consent
agreements) or arrangements therefor satisfactory to the Administrative Agent
shall have been made;

(iv) a first preferred fleet mortgage, in substantially the form of Exhibit H
(with such changes as may be satisfactory to the Administrative Agent and its
counsel to account for local law matters or, as appropriate, an amendment to an
existing first preferred fleet mortgage) and covering each of the Specified Rigs
listed on Schedule 5.07 (together with each other mortgage and mortgage
supplement or amendment delivered pursuant to Section 6.09, in each case as
amended, the “Mortgages”), duly executed by the appropriate Loan Party, together
with:

(A) evidence that counterparts of the Mortgages have been duly executed,
acknowledged and delivered and are in form suitable for filing or recording with
the United States Coast Guard and all other filing or recording offices that the
Administrative Agent may deem necessary or desirable in order to create a valid
first and subsisting Lien on the “vessels” described therein in favor of the
Administrative Agent for the benefit of the Secured Parties and that all filing,
documentary, stamp, intangible and recording taxes and fees have been paid (or
arrangements for such payment satisfactory to the Administrative Agent shall
have been made),

(B) evidence of the insurance required by the terms of the Mortgages, and

(C) evidence that all other action that the Administrative Agent may deem
necessary or desirable in order to create valid first and subsisting Liens on
the property described in the Mortgages has been taken, including delivery of an
abstract of title, certificate of ownership, copy of certificate of
documentation, and copy of certificate of financial responsibility (for each
jurisdiction where applicable) with respect to each Specified Rig;

 

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(v) such certificates of resolutions or other action, incumbency certificates
and/or other certificates of Responsible Officers of each Loan Party as the
Administrative Agent may require evidencing the identity, authority and capacity
of each Responsible Officer thereof authorized to act as a Responsible Officer
in connection with this Agreement and the other Loan Documents to which such
Loan Party is a party or is to be a party;

(vi) such documents and certifications as the Administrative Agent may
reasonably require to evidence that each Loan Party is duly organized or formed,
and that each of the Borrower and each Subsidiary Guarantor is validly existing,
in good standing and qualified to engage in business in each jurisdiction where
its ownership, lease or operation of properties or the conduct of its business
requires such qualification, except to the extent that failure to do so could
not reasonably be expected to have a Material Adverse Effect;

(vii) a favorable opinion of Baker Botts L.L.P., counsel to the Loan Parties,
addressed to the Administrative Agent and each Lender, in substantially the form
of Exhibit I-1 and such other matters concerning the Loan Parties and the Loan
Documents as the Required Lenders may reasonably request;

(viii) a favorable opinion of J. Edward Menger, associate general counsel to the
Loan Parties, addressed to the Administrative Agent and each Lender, in
substantially the form of Exhibit I-2 and such other matters concerning the Loan
Parties and the Loan Documents as the Required Lenders may reasonably request;

(ix) a certificate of a Responsible Officer of each Loan Party either
(A) attaching copies of all consents, licenses and approvals required in
connection with the execution, delivery and performance by such Loan Party and
the validity against such Loan Party of the Loan Documents to which it is a
party, and such consents, licenses and approvals shall be in full force and
effect, or (B) stating that no such consents, licenses or approvals are so
required;

(x) a certificate signed by a Responsible Officer of the Borrower certifying
(A) that the conditions specified in Sections 4.02(a) and (b) have been
satisfied, and (B) that there has been no event or circumstance since the date
of the most recent Audited Financial Statements that has had or could be
reasonably expected to have, either individually or in the aggregate, a Material
Adverse Effect;

(xi) copies of the Audited Financial Statements and unaudited interim
consolidated financial statements of the Borrower and its consolidated
Subsidiaries for each fiscal quarterly period ended subsequent to December 31,
2011 as to which such financial statements are available, accompanied by a
certificate of a Responsible Officer of the Borrower;

(xii) the consolidated balance sheet, and statements of earnings and cash flows
of the Borrower, prepared on a pro forma basis, and projections of the revenues,
expenses, and cash flows of the Borrower covering the period from the Closing
Date through December 31, 2012, prepared on a quarterly basis for each fiscal
year ending on December 31, 2013 and December 31, 2014 and an annual basis for
each fiscal year

 

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December 31, 2015, December 31, 2016, and December 31, 2017 (the “Initial
Projections”), prepared by a Responsible Officer of the Borrower having
responsibility over financial matters, all in form and substance satisfactory to
the Administrative Agent;

(xiii) the Initial Appraisal Report;

(xiv) if the initial Credit Extension shall be in an aggregate principal amount
equal to or greater than $50,000,000, a Borrowing Base Certificate duly
certified by the chief executive officer, chief financial officer, treasurer or
controller of the Borrower relating to the initial Credit Extension;

(xv) certificates of insurance, naming the Administrative Agent, on behalf of
the Secured Parties, as an additional insured or loss payee, as the case may be,
under all insurance policies maintained with respect to the assets and
properties of the Loan Parties that constitutes Collateral;

(xvi) a duly completed Compliance Certificate as of the last day of the fiscal
quarter of the Borrower ended September 30, 2012, signed by the chief financial
officer of the Borrower; and

(xvii) such other assurances, certificates, documents (including “know your
customer” requirements), consents or opinions as the Administrative Agent, the
L/C Issuers, or any Lender reasonably may require.

(b) The Administrative Agent, Lenders and Arranger shall have received all fees
and other amounts due and payable on or prior to the Closing Date, including, to
the extent invoiced prior to the Closing Date, reimbursement or payment of all
out-of-pocket expenses required to be reimbursed or paid by the Borrower
hereunder (including all such reasonable fees, charges and disbursements of
counsel to the Administrative Agent, paid directly to such counsel if requested
by the Administrative Agent).

Without limiting the generality of the provisions of the last paragraph of
Section 9.03, for purposes of determining compliance with the conditions
specified in this Section 4.01, each Lender that has signed this Agreement shall
be deemed to have consented to, approved or accepted or to be satisfied with,
each document (a draft of which such Lender has reviewed) or other matter
required thereunder to be consented to or approved by or acceptable or
satisfactory to a Lender unless the Administrative Agent shall have received
notice from such Lender prior to the proposed Closing Date specifying its
objection thereto.

Section 4.02 Conditions to all Credit Extensions. The obligation of each Lender
to honor any Request for Credit Extension (other than a Committed Loan Notice
requesting only a conversion of Loans to the other Type, or a continuation of
Eurodollar Rate Loans) is subject to the following conditions precedent:

(a) The representations and warranties of the Borrower and each other Loan Party
contained in Article V or any other Loan Document or which are contained in any
document furnished at any time under or in connection herewith or therewith,
shall be true and correct in all material respects on and as of the date of such
Credit Extension, except to the

 

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extent that such representations and warranties specifically refer to an earlier
date, in which case they shall be true and correct in all material respects as
of such earlier date, and except that for purposes of this Section 4.02, the
representations and warranties contained in subsections (a) and (b) of
Section 5.05 shall be deemed to refer to the most recent statements furnished
pursuant to clauses (a) and (b), respectively, of Section 6.01.

(b) No Default shall exist, or would result from such proposed Credit Extension
or the application of the proceeds thereof.

(c) The Administrative Agent and, if applicable, one of the L/C Issuers shall
have received a Request for Credit Extension in accordance with the requirements
hereof.

(d) At any time when the Total Outstandings equal or exceed $50,000,000, the
Administrative Agent shall be satisfied that the Borrowing Base exceeds the
Outstanding Amount of the Term Loans, Revolving Credit Loans and L/C Obligations
at such time, after giving effect to such Credit Extension.

(e) In the case of a Credit Extension in the form of any Letter of Credit to be
denominated in an Alternative Currency, there shall not have occurred any change
in national or international financial, political or economic conditions or
currency exchange rates or exchange controls which in the reasonable opinion of
the Administrative Agent or the applicable L/C Issuer would make it
impracticable for such Credit Extension to be denominated in the relevant
Alternative Currency.

Each Request for Credit Extension (other than a Committed Loan Notice requesting
only a conversion of Loans to the other Type or a continuation of Eurodollar
Rate Loans) submitted by the Borrower shall be deemed to be a representation and
warranty that the conditions specified in Sections 4.02(a) and (b) have been
satisfied on and as of the date of the applicable Credit Extension.

ARTICLE V

REPRESENTATIONS AND WARRANTIES

The Borrower represents and warrants to the Administrative Agent and the Lenders
that:

Section 5.01 Existence; Compliance with Law. Each Loan Party (a) is duly
organized or formed, validly existing and, as applicable, in good standing under
the laws of the jurisdiction of its organization or formation, (b) has the
requisite power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified and licensed
and, as applicable, in good standing under the laws of each jurisdiction where
its ownership, lease or operation of Property or the conduct of its business
requires such qualification except to the extent that the failure to be so
qualified could not reasonably be expected to have a Material Adverse Effect and
(d) is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.

 

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Section 5.02 Power; Authorization; Enforceable Obligations. Each Loan Party has
the requisite power and authority, and the legal right, to make, deliver and
perform the Loan Documents to which it is a party and, in the case of the
Borrower, to borrow hereunder. Each Loan Party has taken all necessary corporate
or other action to authorize the execution, delivery and performance of the Loan
Documents to which it is a party and, in the case of the Borrower, to authorize
the borrowings on the terms and conditions of this Agreement. No consent or
authorization of, filing with, notice to or other act by or in respect of, any
Governmental Authority or any other Person is required in connection with
(a) the borrowings hereunder, (b) the execution, delivery, performance, validity
or enforceability against any Loan Party of this Agreement or any of the other
Loan Documents, (c) the grant by any Loan Party of the Liens granted by it
pursuant to the Collateral Documents, (d) the perfection or maintenance of the
Liens created under the Collateral Documents (including the first priority
nature thereof), or (e) the exercise by the Administrative Agent or any Lender
of its rights under the Loan Documents or the remedies in respect of the
Collateral pursuant to the Collateral Documents, except (i) consents,
authorizations, filings and notices described in Schedule 5.02, which consents,
authorizations, filings and notices have been obtained or made and are in full
force and effect (except as noted on Schedule 5.18), (ii) the filings referred
to in Section 5.18, (iii) in the case of any authorization, approval, action,
notice or filing from or with a Person other than a Governmental Authority, the
failure to have could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect and (iv) for matters that may be
required after the Closing Date in the ordinary course of conducting the
business of the Borrower or any Subsidiary thereof. Each Loan Document has been
duly executed and delivered on behalf of each Loan Party that is a party
thereto. This Agreement constitutes, and each other Loan Document upon execution
will constitute, a legal, valid and binding obligation of each Loan Party that
is a party thereto, enforceable against each such Loan Party in accordance with
its terms, except as enforceability may be limited by applicable Debtor Relief
Laws and by general equitable principles (whether enforcement is sought by
proceedings in equity or at law).

Section 5.03 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Loan Documents, the issuance of Letters of Credit, the
borrowings hereunder and the use of the proceeds thereof will not violate any
Requirement of Law nor any material Contractual Obligation of the Borrower or
any of its Subsidiaries, including, without limitation, arising under any of the
Indentures, and will not result in, or require, the creation or imposition of
any Lien on any of their respective properties or revenues pursuant to any
Requirement of Law or any such Contractual Obligation (other than the Liens
created by the Collateral Documents). No Requirement of Law or Contractual
Obligation applicable to the Borrower or any of its Subsidiaries could, either
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.

Section 5.04 No Material Litigation. No litigation, investigation, claim or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Borrower after due and diligent investigation,
threatened by or against the Borrower or any of its Subsidiaries or against any
of their respective properties or revenues that (a) purport to affect or pertain
to this Agreement or any other Loan Document or any of the

 

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transactions contemplated hereby or thereby, or (b) except as specifically
disclosed in Schedule 5.04, individually or in the aggregate, could reasonably
be expected to have a Material Adverse Effect, and there has been no adverse
change in the status, or financial effect on any Loan Party or any Subsidiary
thereof, of the matters described in Schedule 5.04.

Section 5.05 Financial Statements; No Material Adverse Effect. (a) The Audited
Financial Statements, reported on by and accompanied by an unqualified report
from an independent certified public accounting firm of national reputation,
present fairly in all material respects the consolidated financial condition of
the Borrower and its Subsidiaries as at December 31, 2010 and December 31, 2011,
as applicable, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended.

(b) The unaudited consolidated balance sheet of the Borrower and its
Subsidiaries at September 30, 2012, and the related unaudited consolidated
statements of income and cash flows for the period ended on such date, present
fairly in all material respects the consolidated financial condition of the
Borrower and its Subsidiaries as at such date, and the consolidated results of
its operations and its consolidated cash flows for the quarterly period then
ended (subject to the absence of footnotes and normal year-end audit
adjustments).

(c) All such financial statements described in subsections (a) and (b) of this
Section, including the related schedules and notes thereto, have been prepared
in accordance with GAAP applied consistently throughout the periods involved
(except as approved by the applicable accounting firm and disclosed therein). As
of the Closing Date, the Borrower and its Subsidiaries do not have any material
Guarantees, contingent liabilities and liabilities for taxes (except for any
such tax liabilities to taxing authorities outside of the United States which
are not, in the aggregate, material to the Borrower and its Subsidiaries taken
as a whole) or any long-term leases or unusual forward or long-term commitments,
including, without limitation, any interest rate or foreign currency swap or
exchange transaction or other obligation in respect of derivatives, that are not
reflected in the unaudited consolidated balance sheet of the Borrower and its
Subsidiaries at September 30, 2012, and the related unaudited consolidated
statements of income and cash flows for the period ended on such date, and which
should be so reflected in accordance with GAAP. During the period from
December 31, 2011 to and including the Closing Date, there has been no
Disposition by the Borrower or any of its Subsidiaries of any material part of
its business or Property, except as reflected in the financial statements
described in subsections (a) and (b) of this Section which were delivered prior
to the Closing Date.

(d) Since December 31, 2011, there has been no event or circumstance, either
individually or in the aggregate, that has had or could reasonably be expected
to have a Material Adverse Effect.

(e) The Projections of the Borrower and its consolidated Subsidiaries, copies of
which have heretofore been furnished to the Lenders, have been prepared in good
faith under the direction of a Responsible Officer of the Borrower having
responsibility for financial matters, and in accordance with GAAP based upon
good faith estimates and assumptions believed by management of the Borrower to
be reasonable at the time made. The Borrower has no reason to believe that as of
the date of delivery thereof such Projections are materially misleading in any
material respect in light of the circumstances under which made, or omit to
state any material

 

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fact which would render them misleading in any material respect, it being
recognized by the Lenders that such financial information as it relates to
future events is not to be viewed as fact and that actual results during the
period or periods covered by such financial information may differ from the
projected results set forth therein by a material amount.

Section 5.06 No Default. Neither any Loan Party nor any Subsidiary thereof is in
default under or with respect to any of its Contractual Obligations in any
respect that could, either individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. No Default or Event of Default has
occurred and is continuing or would result from the consummation of the
transactions contemplated by this Agreement or any other Loan Document.

Section 5.07 Ownership of Property; Liens. Each Loan Party has good record and
marketable title in fee simple to, or a valid leasehold interest in, all its
material real property, and good title to, or a valid leasehold interest in, all
its other material Property, except for such defects in title as could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, and none of such Property is subject to any Lien except Liens
permitted by Section 7.01. Schedule 5.07 sets forth a complete and accurate
list, as of the Closing Date, of all barge rigs located and operating in the
continental United States or Gulf of Mexico waters subject to state or Federal
jurisdiction owned by each Loan Party and each of its Subsidiaries, showing as
of the Closing Date the record owner and registration number as contained in the
official records of the National Vessel Documentation Center of the United
States Coast Guard.

Section 5.08 Intellectual Property. Each Loan Party owns, or is licensed to use,
all material Intellectual Property necessary for the conduct of its business as
currently conducted; no material claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does the
Borrower know of any valid basis for any such claim; and the use of such
Intellectual Property by the Borrower and its Subsidiaries does not infringe on
the rights of any Person in any material respect.

Section 5.09 Taxes. Each of the Borrower and each of its Subsidiaries has filed
or caused to be filed all material Federal, state and other tax returns and
reports that are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
Property and all other material taxes, fees or other charges imposed on it or
any of its Property by any Governmental Authority (other than any the amount or
validity of which are currently being contested in good faith by appropriate
proceedings diligently conducted in each case, with respect to which reserves in
conformity with GAAP have been provided on the books of the Borrower or its
Subsidiaries, as the case may be); and no tax Lien has been filed (except as
permitted by Section 7.01(a)), and, to the knowledge of the Borrower, no claim
is being asserted, with respect to any such tax, fee or other charge (other than
any such Liens and claims in favor of taxing authorities outside of the United
States which are not, in the aggregate, material to the Borrower and its
Subsidiaries taken as a whole). Neither the Borrower nor any Subsidiary thereof
is party to any tax sharing agreement.

Section 5.10 Federal Regulations. No part of the proceeds of any Loans will be
used in violation of Regulation U issued by the FRB as now and from time to time
hereafter in effect or for any purpose that violates the provisions of the
regulations of the FRB.

 

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Section 5.11 Labor Matters. There are no strikes or other labor disputes against
the Borrower or any of its Subsidiaries pending or, to the knowledge of the
Borrower, threatened that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. Hours worked by and payment made to
employees of the Borrower and its Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable Requirement of Law dealing with
such matters that (individually or in the aggregate) could reasonably be
expected to have a Material Adverse Effect. All payments due from the Borrower
or any of its Subsidiaries on account of employee health and welfare insurance
that (individually or in the aggregate) could reasonably be expected to have a
Material Adverse Effect if not paid have been paid or accrued as a liability on
the books of the Borrower or the relevant Subsidiary.

Section 5.12 ERISA Compliance. (a) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and other Federal or
state Laws, except where such non-compliance has not had and could not
reasonably be expected to have a Material Adverse Effect. Each Plan that is
intended to qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS or an application for such a letter is
currently being processed by the IRS with respect thereto and, to the best
knowledge of the Borrower, nothing has occurred which would prevent, or cause
the loss of, such qualification. Except to the extent the failure to do so could
not reasonably be expected to have a Material Adverse Effect, the Borrower and
each ERISA Affiliate have made all required contributions to each Plan subject
to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has
been made with respect to any Plan.

(b) There are no pending or, to the best knowledge of the Borrower, threatened
claims, actions or lawsuits, or action by any Governmental Authority, with
respect to any Plan that could reasonably be expected to have a Material Adverse
Effect. There has been no prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan that has resulted or could
reasonably be expected to result in a Material Adverse Effect.

(c) Except to the extent such event could not reasonably be expected to have a
Material Adverse Effect: (i) No ERISA Event has occurred or is reasonably
expected to occur; (ii) no Pension Plan has any Unfunded Pension Liability;
(iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any
Pension Plan (other than premiums due and not delinquent under Section 4007 of
ERISA); (iv) neither the Borrower nor any ERISA Affiliate has incurred, or
reasonably expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Section 4201 or 4243 of ERISA with respect to a Multiemployer
Plan; and (v) neither the Borrower nor any ERISA Affiliate has engaged in a
transaction that could be subject to Section 4069 or 4212(c) of ERISA.

(d) With respect to each scheme or arrangement mandated by a government other
than the United States (a “Foreign Government Scheme or Arrangement”) and with
respect to each employee benefit plan maintained or contributed to by any Loan
Party or any Subsidiary of any Loan Party that is not subject to United States
law (a “Foreign Plan”), each Foreign Plan is in compliance in all material
respects with the provisions of the applicable law or terms of the applicable
Foreign Government Scheme or Arrangement, except where such non-compliance has
not had and could not reasonably be expected to have a Material Adverse Effect.

 

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Section 5.13 Investment Company Act; Other Regulations. No Loan Party is an
“investment company”, or a company “controlled” by an “investment company”,
within the meaning of the Investment Company Act of 1940, as amended. No Loan
Party is subject to regulation under any Requirement of Law (other than
Regulation X of the FRB) which limits its ability to incur Indebtedness.

Section 5.14 Subsidiaries. (a) The Subsidiaries listed on Schedule 5.14
constitute all of the Subsidiaries of the Borrower at the Closing Date.
Schedule 5.14 sets forth as of the Closing Date the name and jurisdiction of
incorporation and, in the case of each Loan Party, the U.S. taxpayer
identification number of each such Subsidiary and, as to each, the percentage of
each class of Equity Interest owned by each Loan Party. All of the outstanding
Equity Interests in such Subsidiaries have been validly issued, and fully paid
and non-assessable (except to the extent after the Closing Date any such
Subsidiary is Disposed or liquidated in compliance with this Agreement) and,
with respect to Equity Interests that are Collateral, are owned free and clear
of all Liens except those created under the Collateral Documents. As of the
Closing Date, the Borrower has no Investments in any other corporation or entity
other than those specifically disclosed in Schedule 5.14. Schedule 5.14
identifies as of the Closing Date each Material Subsidiary, Immaterial
Subsidiary, Project Finance Subsidiary and Excluded Subsidiary.

(b) As of the Closing Date, there are no outstanding subscriptions, options,
warrants, calls, rights or other agreements or commitments (other than Equity
Interests granted to employees and/or directors) of any nature relating to any
Equity Interests of the Borrower or any Subsidiary, except as disclosed on
Schedule 5.14.

Section 5.15 Use of Proceeds. The proceeds of the Loans, and the Letters of
Credit, shall be used for the general corporate purposes of the Borrower and its
Subsidiaries not in contravention of any Law or any Loan Document, including to
repay the Indebtedness under the Existing Credit Agreement and to fund
acquisitions and capital expenditures.

Section 5.16 Environmental Matters. Other than as set forth on Schedule 5.16 and
exceptions to any of the following that could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect:

(a) The Borrower and its Subsidiaries: (i) are, and within the period of all
applicable statutes of limitation have been, in compliance with all applicable
Environmental Laws; (ii) hold all Environmental Permits (each of which is in
full force and effect) required for any of their current or intended operations
or for any property owned, leased, or otherwise operated by any of them;
(iii) are, and within the period of all applicable statutes of limitation have
been, in compliance with all of their Environmental Permits; and (iv) reasonably
believe that: each of their Environmental Permits will be timely renewed and
complied with, without material expense; any additional Environmental Permits
that may be required of any of them will be timely obtained and complied with,
without material expense; and compliance with any Environmental Law that is or
is expected to become applicable to any of them will be timely attained and
maintained, without material expense.

 

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(b) Hazardous Materials are not present at, on, under, in, or about any real
property now or formerly owned, leased or operated by the Borrower or any of its
Subsidiaries, or at any other location (including, without limitation, any
location to which Hazardous Materials have been sent for re-use or recycling or
for treatment, storage, or disposal) which could reasonably be expected to
(i) give rise to liability of the Borrower or any of its Subsidiaries under any
applicable Environmental Law or otherwise result in costs to the Borrower or any
of its Subsidiaries, or (ii) interfere with the Borrower’s or any of its
Subsidiaries’ continued operations, or (iii) impair the fair saleable value of
any real property owned or leased by the Borrower or any of its Subsidiaries.

(c) There is no judicial, administrative, or arbitral proceeding (including any
notice of violation or alleged violation) under or relating to any Environmental
Law to which the Borrower or any of its Subsidiaries is, or to the knowledge of
the Borrower or any of its Subsidiaries will be, named as a party that is
pending or, to the knowledge of the Borrower or any of its Subsidiaries,
threatened.

(d) Neither the Borrower nor any of its Subsidiaries has received any written
request for information, or been notified that it is a potentially responsible
party under or relating to the CERCLA or any similar Environmental Law, or with
respect to any Hazardous Material.

(e) Neither the Borrower nor any of its Subsidiaries has entered into or agreed
to any consent decree, order, or settlement or other agreement, or is subject to
any judgment, decree, or order or other agreement, in any judicial,
administrative, arbitral, or other forum for dispute resolution, relating to
compliance with or liability under any Environmental Law.

(f) Neither the Borrower nor any of its Subsidiaries has assumed or retained, by
contract or operation of law, any liabilities of any kind, fixed or contingent,
known or unknown, under any Environmental Law or with respect to any Hazardous
Material other than indemnity obligations in the ordinary course of business.

Section 5.17 Accuracy of Information, etc. No written statement or information
contained in this Agreement, any other Loan Document or any other document,
certificate or written statement furnished to the Administrative Agent or the
Lenders or any of them, by or on behalf of any Loan Party for use in connection
with the transactions contemplated hereby and the negotiation of this Agreement
or the other Loan Documents or delivered hereunder or under any other Loan
Document (in each case, as modified or supplemented by other information so
furnished), contained as of the date such statement, information, document or
certificate was so furnished, any untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements contained
herein or therein, taken as a whole, not materially misleading in light of the
circumstances under which made; provided that with respect to the Projections,
the Borrower only makes the representation and warranty set forth in
Section 5.05(e).

 

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Section 5.18 Collateral Documents. The provisions of the Collateral Documents
are effective to create in favor of the Administrative Agent, for the benefit of
the Secured Parties, a legal, valid and enforceable Lien on all right, title and
interest of the respective Loan Parties in the Collateral described therein and
proceeds thereof. When financing statements in appropriate form are filed in the
offices specified on Schedule 5.18, the Security Agreement shall constitute a
fully perfected Lien on, and security interest in, all right, title and interest
of the Loan Parties in such Collateral (other than the Specified Rigs) and the
proceeds thereof, as security for the Secured Obligations (as defined in the
Security Agreement), in each case prior and superior in right to any other
Person (except Liens permitted by Section 7.01), to the extent such security
interest can be perfected by any filing of UCC financing statements. When the
Mortgage is filed for recording in the National Vessel Documentation Center of
the United States Coast Guard located in Falling Waters, West Virginia, the
Mortgage shall constitute a fully perfected Lien on, and security interest in,
all right, title and interest of the Loan Parties in the Specified Rigs and such
other Collateral described therein and the proceeds thereof, as security for the
Secured Obligations (as defined in the Mortgage), in each case prior and
superior in right to any other Person (except Liens permitted by Section 7.01).

Section 5.19 Solvency. As of the Closing Date, each of the Borrower and each
Loan Party that is a Material Subsidiary is, and after giving effect to the
incurrence of all Indebtedness and obligations being incurred in connection
herewith and therewith will be and will continue to be, Solvent.

Section 5.20 Insurance. The properties of the Borrower and its Subsidiaries are
insured with financially sound and reputable insurance companies not Affiliates
of the Borrower, in such amounts with such deductibles and covering such risks
as are customarily carried by companies engaged in similar businesses and owning
similar properties in localities where the Borrower or the applicable Subsidiary
operates, except to the extent that reasonable self-insurance meeting the same
standards is maintained with respect to such risks, and which insurance meets
the requirements of the Mortgages.

Section 5.21 OFAC. Except as described on Schedule 5.21, no Loan Party, nor, to
the knowledge of any Loan Party, any Related Party, (i) is currently the subject
of any Sanctions, (ii) is located, organized or residing in any Designated
Jurisdiction, or (iii) is or has been (within the previous five years) engaged
in any transaction with any Person who is now or was then the subject of
Sanctions or who is located, organized or residing in any Designated
Jurisdiction. No Loan or Letter of Credit, nor the proceeds from any Loan or
Letter of Credit, has been used, directly or indirectly, to lend, contribute,
provide or has otherwise made available to fund any activity or business in any
Designated Jurisdiction or to fund any activity or business of any Person
located, organized or residing in any Designated Jurisdiction or who is the
subject of any Sanctions, or in any other manner that will result in any
violation by any Person (including any Lender, the Arranger, the Administrative
Agent or the L/C Issuer) of Sanctions.

 

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ARTICLE VI

AFFIRMATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Borrower shall, and shall (except in the case of
the covenants set forth in Sections 6.01, 6.02, and 6.03) cause each Subsidiary
(other than any Immaterial Subsidiary) to:

Section 6.01 Financial Statements. Deliver to the Administrative Agent (which
shall promptly furnish to each Lender), in form and detail reasonably
satisfactory to the Administrative Agent and the Required Lenders:

(a) as soon as available, but in any event within 90 days after the end of each
fiscal year of the Borrower, a copy of the audited consolidated balance sheet of
the Borrower and its consolidated Subsidiaries as at the end of such year and
the related audited consolidated statements of income and of cash flows for such
year, setting forth in each case in comparative form the figures as of the end
of and for the previous year, reported on without a “going concern” or like
qualification or exception, or qualification arising out of the scope of the
audit, by independent certified public accountants of nationally recognized
standing; and

(b) as soon as available, but in any event not later than 45 days after the end
of each of the first three quarterly periods of each fiscal year of the
Borrower, the unaudited consolidated balance sheet of the Borrower and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such quarter
and the portion of the fiscal year through the end of such quarter, setting
forth in each case in comparative form the figures as of the end of and for the
corresponding period in the previous year, certified by a Responsible Officer as
being fairly stated in all material respects (subject to normal year-end audit
adjustments and the absence of footnotes);

all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).

As to any information contained in materials furnished pursuant to
Section 6.02(e), the Borrower shall not be separately required to furnish such
information under clause (a) or (b) above, but the foregoing shall not be in
derogation of the obligation of the Borrower to furnish the information and
materials described in Section 6.01(a) and (b) above at the times specified
therein.

Section 6.02 Certificates; Other Information. Deliver to the Administrative
Agent (which shall promptly furnish to each Lender), or, in the case of
clause (f), to the relevant Lender, in form and detail reasonably satisfactory
to the Administrative Agent and the Required Lenders:

 

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(a) concurrently with the delivery of the financial statements referred to in
Section 6.01(a), a certificate of the independent certified public accountants
reporting on such financial statements stating that in making the examination
necessary therefor no knowledge was obtained of any Default or Event of Default,
except as specified in such certificate (it being understood that such
certificate shall be limited to the items that independent certified public
accountants are permitted to cover in such certificates pursuant to their
professional standards and customs of the profession);

(b) concurrently with the delivery of any financial statements pursuant to
Section 6.01, (i) a certificate of a Responsible Officer stating that, to the
best of such Responsible Officer’s knowledge, each Loan Party during such period
has observed or performed all of its covenants and other agreements, and
satisfied every condition, contained in this Agreement and the other Loan
Documents to which it is a party to be observed, performed or satisfied by it,
in each case to the extent any failure to do so would constitute a Default or
Event of Default hereunder, and that such Responsible Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate and (ii) in the case of quarterly or annual financial statements,
(x) a Compliance Certificate containing all information and calculations
necessary for determining compliance by the Borrower and its Subsidiaries with
the provisions of this Agreement referred to therein as of the last day of the
fiscal quarter or fiscal year of the Borrower, as the case may be, and (y) any
UCC financing statements or other filings or recordings specified in such
Compliance Certificate as being required to be delivered therewith;

(c) as soon as available, and in any event no later than 45 days after the end
of each fiscal year of the Borrower, a detailed consolidated budget for the
following fiscal year (including a projected consolidated balance sheet of the
Borrower and its Subsidiaries as of the end of the following fiscal year, and
the related consolidated statements of projected cash flow, projected changes in
financial position and projected income), and, as soon as available, significant
revisions, if any, of such budget and projections with respect to such fiscal
year (collectively and together with the Initial Projections, the
“Projections”), which Projections shall in each case be accompanied by a
certificate of a Responsible Officer stating that such Projections comply with
the representations set forth in Section 5.05(e);

(d) no later than 10 Business Days prior to the effectiveness thereof, copies of
substantially final drafts of any proposed amendment, supplement, waiver or
other modification with respect to the Indentures;

(e) within five days after the same are sent, copies of all financial statements
and reports that the Borrower sends to the holders of any class of its debt
securities or public equity securities and, within five days after the same are
filed, copies of all financial statements and reports that the Borrower may make
to, or file with, the SEC; and

(f) promptly, such additional financial and other information as any Lender
through the Administrative Agent may from time to time reasonably request.

Documents required to be delivered pursuant to Section 6.01(a) or (b) or
Section 6.02(e) (to the extent any such documents are included in materials
otherwise filed with the SEC) may be delivered electronically and if so
delivered, shall be deemed to have been delivered on the date (i) on which the
Borrower posts such documents, or provides a link thereto

 

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on the Borrower’s website on the Internet at the website address listed on
Schedule 10.02; or (ii) on which such documents are posted on the Borrower’s
behalf on an Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent); provided that: (i) the Borrower
shall deliver paper copies of such documents to the Administrative Agent or any
Lender that requests the Borrower to deliver such paper copies until a written
request to cease delivering paper copies is given by the Administrative Agent or
such Lender and (ii) the Borrower shall notify the Administrative Agent and each
Lender (by telecopier or electronic mail) of the posting of any such documents
and provide to the Administrative Agent by electronic mail electronic versions
(i.e., soft copies) of such documents. Notwithstanding anything contained
herein, in every instance the Borrower shall be required to provide paper copies
of the Compliance Certificates required by Section 6.02(b) to the Administrative
Agent. Except for such Compliance Certificates, the Administrative Agent shall
have no obligation to request the delivery or to maintain copies of the
documents referred to above, and in any event shall have no responsibility to
monitor compliance by the Borrower with any such request for delivery, and each
Lender shall be solely responsible for requesting delivery to it or maintaining
its copies of such documents.

The Borrower hereby acknowledges that (a) the Administrative Agent and/or the
Arranger will make available to the Lenders and the L/C Issuers materials and/or
information provided by or on behalf of the Borrower hereunder (collectively,
“Borrower Materials”) by posting the Borrower Materials on IntraLinks or another
similar electronic system (the “Platform”) and (b) certain of the Lenders (each,
a “Public Lender”) may have personnel who do not wish to receive material
non-public information with respect to any of the Borrower or its respective
Affiliates, or the respective securities of any of the foregoing, and who may be
engaged in investment and other market-related activities with respect to such
Persons’ securities. The Borrower hereby agrees that it will use commercially
reasonable efforts to identify that portion of the Borrower Materials that may
be distributed to the Public Lenders and that (w) all such Borrower Materials
that are to be made available to Public Lenders shall be clearly and
conspicuously marked “PUBLIC” which, at a minimum, shall mean that the word
“PUBLIC” shall appear prominently on the first page thereof; (x) by marking
Borrower Materials “PUBLIC,” the Borrowers shall be deemed to have authorized
the Administrative Agent, the Arranger, the L/C Issuers and the Lenders to treat
the Borrower Materials as not containing any material non-public information
(although it may be sensitive and proprietary) with respect to the Borrowers or
their respective securities for purposes of United States Federal and state
securities laws (provided, however, that to the extent the Borrower Materials
constitute Information, they shall be treated as set forth in Section 10.07);
(y) all Borrower Materials marked “PUBLIC” are permitted to be made available
through a portion of the Platform designated “Public Side Information;” and
(z) the Administrative Agent and the Arranger shall be entitled to treat the
Borrower Materials that are not marked “PUBLIC” as being suitable only for
posting on a portion of the Platform not designated “Public Side Information.”

Section 6.03 Notices. Promptly notify the Administrative Agent (which shall
promptly furnish such notice to each Lender) of:

(a) the occurrence of any Default or Event of Default;

 

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(b) any (i) default or event of default under any Contractual Obligation of the
Borrower or any of its Subsidiaries that could reasonably be expected to have a
Material Adverse Effect or (ii) litigation, investigation or proceeding which
may exist at any time between the Borrower or any of its Subsidiaries and any
Governmental Authority that, if adversely determined, could reasonably be
expected to have a Material Adverse Effect;

(c) any litigation or proceeding affecting the Borrower or any of its
Subsidiaries (i) in which the amount involved is $10,000,000 or more and not
covered by insurance or (ii) in which injunctive or similar relief is sought
which, if granted, could reasonably be expected to have a Material Adverse
Effect;

(d) as soon as possible and in any event within 10 days after the Borrower knows
or has reason to know of the occurrence of any ERISA Event that has had or could
reasonably be expected to have a Material Adverse Effect; and

(e) any development or event that has had or could reasonably be expected to
have a Material Adverse Effect.

Each notice pursuant to this Section 6.03 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower or relevant Subsidiary
has taken and proposes to take with respect thereto. Each notice pursuant to
Section 6.03(a) shall describe with particularity any and all provisions of this
Agreement and any other Loan Document that have been breached.

Section 6.04 Conduct of Business and Maintenance of Existence, etc. (a)
(i) Preserve, renew and keep in full force and effect its corporate or other
existence and (ii) take all reasonable action to maintain all rights, privileges
and franchises useful and necessary in the normal conduct of its business,
except, in each case, as otherwise permitted by Section 7.04 and except, in the
case of the foregoing clause (ii), to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect; and (b) comply with
all Contractual Obligations and Requirements of Law, except to the extent that
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Effect.

Section 6.05 Maintenance of Property; Insurance. (a) Keep all material Property
and systems useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain with financially
sound and reputable insurance companies insurance on all its Property in at
least such amounts and against at least such risks (but including in any event
public liability, product liability and business interruption) as are usually
insured against in the same general area by companies engaged in the same or a
similar business. The Borrower shall furnish certificates, policies or
endorsements to Administrative Agent as Administrative Agent shall require as
proof of such insurance, and, if the Borrower fails to do so, Administrative
Agent is authorized, but not required, to obtain such insurance at the expense
of the Borrower. All policies shall provide for at least thirty (30) days prior
written notice to Administrative Agent of any cancellation or reduction of
coverage and that Administrative Agent may act as attorney for the Borrower in
obtaining, and at any time an Event of Default exists or has occurred and is
continuing, adjusting, settling, amending and canceling such insurance. The
Borrower shall cause Administrative Agent to be named as a loss

 

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payee and an additional insured (but without any liability for any premiums)
under such insurance policies and the Borrower shall obtain non-contributory
lender’s loss payable endorsements to all insurance policies in form and
substance satisfactory to Administrative Agent. Such lender’s loss payable
endorsements shall specify that the proceeds of such insurance shall be payable
to Administrative Agent, for the ratable benefit of the Secured Parties, as its
interests may appear and further specify that Administrative Agent shall be paid
regardless of any act or omission by the Borrower or any of its Affiliates. The
Administrative Agent, at its option, may apply any insurance proceeds received
by Administrative Agent at any time while any Event of Default shall have
occurred and be continuing to the cost of repairs or replacement of Collateral
and/or, to payment of the Obligations, whether or not then due, in any order and
in such manner as Administrative Agent may determine or hold such proceeds as
cash collateral for the Obligations.

Section 6.06 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities and (b) permit any
Lender (accompanied by any other Lender that so elects) to visit and inspect any
of its properties and examine and make abstracts from any of its books and
records at any reasonable time, upon reasonable prior notice, and to discuss the
business, operations, properties and financial and other condition of the
Borrower and its Subsidiaries with officers and employees of the Borrower and
its Subsidiaries and with its independent certified public accountants (it being
understood that all such notices shall be given through the Administrative Agent
and shall be coordinated with any other such notices to the extent reasonably
possible), in each case no more often than twice in any calendar year in the
aggregate for all Lenders unless an Event of Default shall have occurred and be
continuing.

Section 6.07 Environmental Laws. Comply in all respects with, and take all
reasonable action to ensure compliance in all respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws, and obtain and
comply in all respects with and maintain, and take all reasonable action to
ensure that all tenants and subtenants obtain and comply in all respects with
and maintain, any and all licenses, approvals, notifications, registrations or
permits required by applicable Environmental Laws, except to the extent that any
failures to so comply or maintain could not, in the aggregate, reasonably be
expected to result in a Material Adverse Effect.

Section 6.08 Payment of Obligations. Pay and discharge as the same shall become
due and payable, all its obligations and liabilities, including (a) all material
tax liabilities, assessments and governmental charges or levies upon it or its
properties or assets, unless the same are being contested in good faith by
appropriate proceedings diligently conducted and adequate reserves in accordance
with GAAP are being maintained by the Borrower or such Subsidiary; (b) all other
lawful claims which, if unpaid, would by law become a Lien upon its property;
and (c) all Indebtedness, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing
such Indebtedness, in each case, where non-payment thereof could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect.

 

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Section 6.09 Additional Collateral, etc. (a) With respect to any Specified
Personal Property acquired after the Closing Date by the Borrower or any
Subsidiary Guarantor (other than any Property subject to a Lien expressly
permitted by Section 7.01(g) or 7.01(j) or 7.01(r)), including without
limitation, any barge rig located or operating in the continental United States
or waters of the Gulf of Mexico subject to state or Federal jurisdiction, not
listed on Schedule 5.07, as to which the Administrative Agent, for the benefit
of the Secured Parties, does not have a perfected Lien, promptly (i) execute and
deliver to the Administrative Agent such amendments or supplements to the
Security Agreement or Mortgages or such other documents as the Administrative
Agent reasonably deems necessary to grant to the Administrative Agent, for the
benefit of the Secured Parties, a Lien in such Property and (ii) take all
actions necessary or advisable to grant to the Administrative Agent, for the
benefit of the Secured Parties, a perfected first priority Lien in such
Property, subject to Permitted Liens, including without limitation, the filing
of Uniform Commercial Code financing statements in such jurisdictions as may be
required by the Security Agreement or by law or as may be requested by the
Administrative Agent and the recording of such amendment or supplement with the
United States Coast Guard.

(b) With respect to any new Material Subsidiary (other than an Excluded
Subsidiary or a Project Finance Subsidiary) created or acquired after the
Closing Date (which, for the purposes of this paragraph, shall include any
existing Material Subsidiary that ceases to be an Excluded Subsidiary and any
existing Domestic Subsidiary that ceases to be an Immaterial Subsidiary), by the
Borrower or any of the Subsidiary Guarantors, promptly (i) cause such new
Subsidiary (A) to become a party to the Subsidiary Guaranty and the Security
Agreement, (B) in the case of any such Subsidiary owning a barge rig located or
operating in the continental United States or waters of the Gulf of Mexico
subject to state or Federal jurisdiction, to execute and deliver a Mortgage
covering such rig, and (C) in the case of any Domestic Subsidiary, to take such
actions necessary or advisable to grant to the Administrative Agent, for the
benefit of the Secured Parties, a perfected first priority Lien in the
Collateral described in the Security Agreement or Mortgage with respect to such
new Subsidiary (subject to Permitted Liens), including, without limitation, the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by the Security Agreement or by law or as may be reasonably
requested by the Administrative Agent and the recording of such Mortgage with
the United States Coast Guard, and (ii) if reasonably requested by the
Administrative Agent deliver to the Administrative Agent legal opinions relating
to the matters described above, which opinions shall be in form and substance,
and from counsel, reasonably satisfactory to the Administrative Agent.

Section 6.10 Borrowing Base Certificate. In the case of the Borrower, at any
time when the Total Outstandings equal or exceed $50,000,000, deliver or cause
to be delivered, at the Borrower’s expense, the following:

(a) to the Administrative Agent, the following documents in a form satisfactory
to it:

(i) on a monthly basis and in no event later than 25 days after the end of each
such month or, if an Event of Default shall exist, more frequently as the
Administrative Agent may reasonably request (but in no event more often than
weekly) or as the Borrower shall elect, a Borrowing Base Certificate,
accompanied by such supporting

 

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detail and documentation as is contemplated by the Borrowing Base Certificate
and/or as shall be requested by the Administrative Agent in its reasonable
discretion (in a form and detail satisfactory to the Administrative Agent);

(ii) on a monthly basis and in no event later than 25 days after the end of each
such month or, if an Event of Default shall exist, more frequently as the
Administrative Agent may in good faith request (but in no event more often than
weekly), detailed agings of Accounts and a detailed listing of the inventory of
Quail Tools (together with a reconciliation to its general ledger); and

(iii) upon the Administrative Agent’s request in good faith (but in no event
more often than (x) monthly so long as no Event of Default shall exist or
(y) weekly if an Event of Default shall exist), (A) copies of customer
statements and credit memos, remittance advices and reports, and copies of
deposit slips and bank statements, and (B) a statement of the outstanding loans
and payments made, and Accounts owing to, Affiliates as of the last day of the
immediately preceding month.

(b) To the Administrative Agent such other reports, statements and
reconciliations with respect to the Borrowing Base or the Collateral as it shall
from time to time request in its reasonable discretion.

Section 6.11 Cash Management Systems. (a) Within 30 days after the opening by
the Borrower or any Subsidiary Guarantor of any deposit account, securities
account, lockbox account, concentration account, collection account or
disbursement account, in each case other than any Immaterial Account or Excluded
Account, in the United States, deliver to the Administrative Agent a schedule (a
“Supplemental Account Identification Schedule”) which provides, in respect of
each such account opened since the Closing Date (i) the name and location of
each bank and securities intermediary at which the Borrower or such Subsidiary
Guarantor maintains a deposit account, securities account, lockbox account,
concentration account, collection account or disbursement account in the United
States and (ii) the account number and account name or other relevant
descriptive data with respect to each such account and such other information
with respect to each such account as the Administrative Agent shall reasonably
request.

(b) On or before the date which is 30 days after the delivery of any
Supplemental Account Identification Schedule, or such longer period as agreed to
by the Administrative Agent, cause to be delivered to the Administrative Agent a
Control Agreement and/or a Lockbox Agreement with respect to each account
described in such Supplemental Account Identification Schedule which the
Administrative Agent reasonably requires to be subject to such an agreement, in
each case duly executed and delivered by the Borrower or the relevant Subsidiary
Guarantor and by the bank or securities intermediary that maintains such
account.

(c) Cause all proceeds of any Collateral in every form, including, without
limitation, cash, checks, wire transfers and other forms of receipts, to be
deposited promptly in a collection account or lockbox account (i) in respect of
which a Control Agreement and/or Lockbox Agreement, as appropriate, is in effect
and (ii) which, at any time after an Event of Default has occurred and is
continuing, is used solely for the purpose of receiving proceeds of Collateral.

 

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Section 6.12 Inspection of Collateral. The Borrower agrees that the
Administrative Agent or its agents may, as the Administrative Agent shall deem
necessary or appropriate in the exercise of its sole discretion, enter upon the
premises of the Borrower or any Subsidiary Guarantor at any time and from time
to time, during normal business hours and upon reasonable notice under the
circumstances, and at any time whatsoever on and after the occurrence of a
Default or Event of Default, for the purposes of conducting field examinations
and appraisals and inspecting, evaluating and verifying the Collateral, all of
the above to be at the Borrower’s expense during the existence of an Event of
Default and at the Lenders’ expense if no Event of Default exists.
Notwithstanding the foregoing, at any time, the Administrative Agent may, and at
the request of any Lender will, require an appraisal of the Borrowing Base
Collateral at the Borrower’s expense with such appraisal to be prepared by a
third-party collateral appraiser selected by the Administrative Agent in its
sole reasonable discretion; provided that no such appraisal shall be required
prior to September 30, 2014, and thereafter no more than one such appraisal
shall be required in any 24 month period.

Section 6.13 Casualty and Condemnation. The Borrower (a) will furnish to the
Administrative Agent written notice promptly, and in any event within five
(5) Business Days of the occurrence, of any Casualty Event to any Borrowing Base
Collateral reasonably expected by the Borrower to result in Net Loss Proceeds in
excess of $5,000,000 and (b) will ensure that the Net Loss Proceeds of any such
event (whether in the form of insurance proceeds or otherwise) are collected and
applied in accordance with the applicable provisions of the Loan Documents.

Section 6.14 Further Assurances. From time to time execute and deliver, or cause
to be executed and delivered, such additional instruments, certificates or
documents, and take such actions, as the Administrative Agent may reasonably
request for the purposes of implementing or effectuating the provisions of this
Agreement and the other Loan Documents, or of more fully perfecting or renewing
the rights of the Administrative Agent and the Lenders with respect to the
Collateral (or with respect to any additions thereto or replacements or proceeds
thereof or with respect to any other property or assets hereafter acquired by
the Borrower or any Subsidiary which may be deemed to be part of the Collateral)
pursuant hereto or thereto. The Borrower agrees to execute, deliver and cause to
be recorded such amendments to the Mortgages as the Hedge Banks or Cash
Managements Banks may reasonably request to secure the Obligations under the
Secured Hedge Agreements and Secured Cash Management Agreements, respectively,
by the Mortgages. Upon the exercise by the Administrative Agent or any Lender of
any power, right, privilege or remedy pursuant to this Agreement or the other
Loan Documents which requires any consent, approval, recording, qualification or
authorization of any Governmental Authority, the Borrower will execute and
deliver, or will cause the execution and delivery of, all applications,
certifications, instruments and other documents and papers that the
Administrative Agent or such Lender may be required to obtain from the Borrower
or any of its Subsidiaries for such governmental consent, approval, recording,
qualification or authorization.

 

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ARTICLE VII

NEGATIVE COVENANTS

So long as any Lender shall have any Commitment hereunder, any Loan or other
Obligation hereunder shall remain unpaid or unsatisfied, or any Letter of Credit
shall remain outstanding, the Borrower shall not, nor shall it permit any
Subsidiary (other than any Immaterial Subsidiary) to, directly or indirectly:

Section 7.01 Liens. Create, incur, assume or suffer to exist any Lien upon any
of its Property, assets or revenues, whether now owned or hereafter acquired,
other than the following:

(a) Liens for taxes, assessments or governmental charges or claims not yet due
or which are being contested in good faith by appropriate proceedings, provided
that adequate reserves with respect thereto are maintained on the books of the
Borrower or its Subsidiaries, as the case may be, in conformity with GAAP;

(b) Landlords’, carriers’, warehousemen’s, mechanics’, repairmen’s, laborers’,
seamen’s, preferred maritime and materialmen’s liens or other like Liens arising
in the ordinary course of business which are not overdue for a period of more
than 30 days or that are being contested in good faith by appropriate
proceedings;

(c) pledges or deposits in connection with workers’ compensation, unemployment
insurance and other social security legislation;

(d) deposits to secure the payment or performance of bids, tenders, government
contracts, trade contracts (other than for borrowed money), leases, statutory or
regulatory obligations, surety and appeal bonds, performance bonds, insurance
obligations and other obligations of a like nature incurred in the ordinary
course of business;

(e) easements, rights-of-way, restrictions and other similar encumbrances
incurred in the ordinary course of business that, in the aggregate, are not
substantial in amount and which do not in any case materially detract from the
value of the Property subject thereto or materially interfere with the ordinary
conduct of the business of the Borrower or any of its Subsidiaries;

(f) Liens in existence on the date hereof listed on Schedule 7.01(f), securing
Indebtedness permitted by Section 7.03(d), provided that no such Lien is spread
to cover any additional Property after the Closing Date other than all or part
of the same property or assets (plus improvements, accessions, proceeds or
distributions and directly related general intangibles in respect thereof) that
secured or, under the written arrangements under which the original Lien arose,
could secure the Indebtedness;

(g) Liens securing Indebtedness of the Borrower or any other Subsidiary incurred
pursuant to Section 7.03(c) incurred for the purpose of financing all or any
part of the acquisition purchase price or cost of construction, design, repair,
replacement, installation, or improvement of property, plant or equipment used
in the business of the Borrower or such

 

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Subsidiary (whether through the direct purchase of such assets or the Equity
Interests of the Person owning such assets (but no other material assets)),
provided that (i) such Liens shall be created prior to or within 120 days after
such acquisition, construction or other event, (ii) such Liens do not at any
time encumber any Property other than the Property financed by such Indebtedness
(plus improvements, accessions, proceeds or distributions and directly related
general intangibles in respect thereof) and (iii) the amount of Indebtedness
secured thereby is not increased;

(h) Liens created pursuant to the Collateral Documents;

(i) any interest or title of a lessor under any lease entered into by the
Borrower or any other Subsidiary in the ordinary course of its business and
covering only the assets so leased;

(j) Liens not otherwise permitted by this Section 7.01 so long as the aggregate
outstanding principal amount of the obligations secured thereby does not exceed
(as to the Borrower and all Subsidiaries) $20,000,000 at any one time; provided
that no such Lien shall extend to or cover any Borrowing Base Collateral or
Equity Interests comprising Collateral;

(k) judgment Liens not giving rise to an Event of Default under Section 8.01(h)
so long as any appropriate legal proceedings which may have been duly initiated
for the review of such judgment shall not have been finally terminated or the
period within which such proceedings may be initiated shall not have expired;

(l) Liens upon specific items of inventory or other goods of the Borrower or any
Subsidiary securing such Person’s obligations in respect of bankers acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment, or storage of such inventory or other goods;

(m) Liens securing reimbursement obligations with respect to commercial letters
of credit that encumber documents and other property or assets relating to such
letters of credit and products and proceeds thereof;

(n) Liens on assets of Excluded Subsidiaries to secure Indebtedness and related
obligations of such Excluded Subsidiary; provided that the Indebtedness is
permitted by the terms of Section 7.03(c), (d), (f) or (g) of this Agreement to
be incurred by such Excluded Subsidiary;

(o) Liens on Property of a Person existing at the time such Person is merged
with or into or consolidated with the Borrower or any Subsidiary of the Borrower
or otherwise becomes a Subsidiary of the Borrower; provided that such Liens were
in existence prior to the contemplation of such merger or consolidation or such
Person becoming a Subsidiary of the Borrower and do not extend to any assets
other than those of such Person;

(p) Liens on Property existing at the time of acquisition of the Property by the
Borrower or any Subsidiary of the Borrower; provided that such Liens were in
existence prior to the contemplation of such acquisition and do not extend to
any assets other than such acquired property (plus improvements, accessions,
proceeds or distributions and directly related general intangibles in respect
thereof);

 

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(q) Liens securing Refinancing Debt incurred to refinance Indebtedness that was
previously so secured; provided that (i) no such Lien is on Collateral and
(ii) any such Lien is limited to all or part of the same property or assets
(plus improvements, accessions, proceeds or distributions and related general
intangibles in respect thereof) that secured the Indebtedness being refinanced;

(r) Liens that secure Non-Recourse Debt that encumber the Property financed by
such Indebtedness (plus improvements, accessions, proceeds or distributions and
directly related general intangibles in respect thereof);

(s) Liens on the assets of any Project Finance Subsidiary;

(t) Liens on and pledges of the Equity Interests of any joint venture or Project
Finance Subsidiary owned by the Borrower or any Subsidiary of the Borrower to
the extent securing Indebtedness or other obligations of such joint venture or
Project Finance Subsidiary;

(u) Liens arising from the deposit of funds or securities in trust for the
purpose of defeasing Indebtedness;

(v) Liens permitted under the Mortgages;

(w) Liens on Property or assets under construction (and related rights) in favor
of the contractor or developer;

(x) Liens arising under the Senior Notes Indenture in favor of the trustee for
its own benefit and similar Liens in favor of other trustees, agents and
representatives arising under instruments governing Indebtedness permitted to be
incurred under this Agreement, provided that such Liens are solely for the
benefit of the trustees, agents or representatives in their capacities as such
and not for the benefit of the holders of such Indebtedness;

(y) bankers’ Liens, rights of setoff and other similar Liens existing solely
with respect to cash and Cash Equivalents on deposit in one or more accounts
maintained by the Borrower or any Subsidiary, in each case granted in the
ordinary course of business in favor of the bank or banks with which such
accounts are maintained, securing amounts owing to such bank with respect to
cash management and operating account arrangements, including those involving
pooled accounts and netting arrangements; provided that, unless such Liens are
non-consensual and arise by operation of law, in no case shall any such Liens
secure (either directly or indirectly) the repayment of any Indebtedness; and

(z) maritime liens for crew wages or for salvage and general average and similar
liens, each of which is in respect of obligations that are not delinquent for a
period of more than 30 days or are being contested in good faith by appropriate
proceedings.

 

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Section 7.02 Financial Condition Covenants.

(a) Consolidated Leverage Ratio. Permit the Consolidated Leverage Ratio as at
the last day of any period of four consecutive fiscal quarters of the Borrower
to exceed 4.00:1.00.

(b) Consolidated Interest Coverage Ratio. Permit the Consolidated Interest
Coverage Ratio for any period of four consecutive fiscal quarters of the
Borrower to be less than 2.50:1.00.

(c) Consolidated Senior Secured Leverage Ratio. Permit the Consolidated Senior
Secured Leverage Ratio as at the last day of any period of four consecutive
fiscal quarters of the Borrower to exceed 1.50:1.00.

Section 7.03 Indebtedness. Create, incur, assume or suffer to exist any
Indebtedness, except:

(a) Indebtedness of any Loan Party pursuant to any Loan Document;

(b) Indebtedness (i) of the Borrower to any Subsidiary (other than an Excluded
Subsidiary or a Project Finance Subsidiary) and of any Subsidiary Guarantor to
the Borrower or any other Subsidiary (other than an Excluded Subsidiary or a
Project Finance Subsidiary) and (ii) of any Subsidiary to any Loan Party or
other Subsidiary;

(c) Indebtedness (including, without limitation, in respect of Capitalized
Leases and Synthetic Lease Obligations) secured by Liens permitted by
Section 7.01(g), (i) of the Borrower or any of its Subsidiaries (excluding
Foreign Subsidiaries and Project Finance Subsidiaries) in an aggregate principal
amount not to exceed the greater of $50,000,000 and 5.00% of Consolidated
Tangible Assets at any one time outstanding and (ii) of any Foreign Subsidiaries
(excluding Project Finance Subsidiaries), in an aggregate principal amount not
to exceed $150,000,000 at any time outstanding; provided that, with respect to
this clause (ii), as of the date of incurrence of such Indebtedness and
immediately after giving effect thereto, the Consolidated Senior Secured
Leveraged Ratio calculated for the four consecutive fiscal periods most recently
ended would not exceed 1.00:1.00;

(d) Indebtedness outstanding on the date hereof and listed on Schedule 7.03(d);

(e) Guarantees of the Borrower or any Subsidiary in respect of Indebtedness
permitted under this Section 7.03 (excluding (A) Guarantees of Indebtedness
permitted under Section 7.03(h) and (i) and (B) Guarantees by the Borrower or
any Subsidiary Guarantor of Indebtedness permitted by Section 7.03(c)(ii));

(f) Indebtedness represented by agreements of the Borrower or any Subsidiary
providing for indemnification, adjustment of purchase price, or similar
obligations, in each case, incurred or assumed in connection with the
Disposition of any business, assets, or Equity Interests of the Borrower or any
Subsidiary; provided that the maximum aggregate liability in respect of all such
Indebtedness shall at no time exceed the gross proceeds actually received by the
Borrower and its Subsidiaries in connection with such Disposition;

 

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(g) any Indebtedness (the “Refinancing Debt”) the Net Cash Proceeds of which are
to be used (A) to redeem, refinance, replace, defease, discharge, refund, renew,
extend or otherwise retire for value any Indebtedness referred to in clauses (c)
or (d) or any Term Loans or Refinancing Debt incurred pursuant to this
Section 7.03(g), without any shortening of the maturity of any principal amount
of the Indebtedness refinanced (the “Refinanced Indebtedness”) or (B) to pay
premiums, fees or expenses payable in connection with any such refinancing,
refunding, renewal or extension. The proceeds of the Refinancing Debt shall be
used substantially concurrently with the incurrence thereof to redeem,
refinance, replace, defease, discharge, renew, extend, refund or otherwise
retire for value the Refinanced Indebtedness, unless the Refinanced Indebtedness
is not then due and is not redeemable or prepayable at the option of the obligor
thereof or is redeemable or prepayable only with notice, in which case such
proceeds shall be held in a segregated account of the obligor of the Refinanced
Indebtedness until the Refinanced Indebtedness becomes due or redeemable or
prepayable or such notice period lapses and then shall be used to refinance the
Refinanced Indebtedness;

(h) Non-Recourse Debt;

(i) Project Financing incurred by Project Finance Subsidiaries;

(j) Subordinated Debt, provided that, as of the date of incurrence of such
Indebtedness and immediately after giving effect thereto, the Consolidated
Leverage Ratio calculated for the four consecutive fiscal periods most recently
ended would not exceed 3.00:1.00;

(k) Convertible Debt, provided that, as of the date of incurrence of such
Indebtedness and immediately after giving effect thereto, the Consolidated
Leverage Ratio calculated for the four consecutive fiscal periods most recently
ended would not exceed 3.00:1.00; and

(l) additional unsecured Indebtedness of the Borrower or any of its Subsidiaries
(other than Immaterial Subsidiaries) in an aggregate principal amount (for the
Borrower and all Subsidiaries) not to exceed $125,000,000 at any one time
outstanding; as long such Indebtedness: (i) has a scheduled maturity occurring
after the latest Maturity Date of any Lender, (ii) contains terms (including
covenants and events of default) no more restrictive, taken as a whole, to the
Borrower and its Subsidiaries than those contained in this Agreement, and
(iii) has no scheduled amortization occurring prior to the latest Maturity Date
of any Lender.

Section 7.04 Fundamental Changes. Enter into any merger, consolidation or
amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or Dispose of all or substantially all of its
Property or business, except that:

(a) any Subsidiary of the Borrower may be merged or consolidated with or into
the Borrower (provided that the Borrower shall be the continuing or surviving
corporation) or with or into any Subsidiary Guarantor (provided that (i) the
Subsidiary Guarantor shall be the

 

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continuing or surviving corporation or (ii) simultaneously with such
transaction, the continuing or surviving corporation shall become a Subsidiary
Guarantor and the Borrower shall comply with Section 6.09 in connection
therewith);

(b) any Subsidiary may merge with any other Subsidiary (or any Person that
becomes a Subsidiary contemporaneously with such merger) so long as, in the case
of any merger involving a Subsidiary Guarantor, the surviving Person shall be
(or shall contemporaneously become) a Subsidiary Guarantor and such merger could
not reasonably be expected to have a material adverse effect on the business,
assets, property or financial condition of the surviving Subsidiary;

(c) any Subsidiary of the Borrower may Dispose of any or all of its assets (upon
voluntary liquidation or otherwise) to the Borrower or any Subsidiary (so long
as, in the case of any such Disposition by a Subsidiary Guarantor, the
Subsidiary to whom such assets are disposed of is a Subsidiary Guarantor) and
may be dissolved following such Disposition;

(d) any Excluded Subsidiary or Immaterial Subsidiary may Dispose of any or all
of its assets and may be dissolved following such Disposition;

(e) the Equity Interests of any Excluded Subsidiary or Immaterial Subsidiary may
be Disposed of or issued to any other Person; and

(f) the Borrower and any Subsidiary may merge or consolidate with any other
Person (other than the Borrower or any Subsidiary) provided that, with respect
to each merger or consolidation made pursuant to this Section 7.04(f):

(i) no Default exists and the merger or consolidation could not reasonably be
expected to cause a Default;

(ii) the merger or consolidation is not hostile;

(iii) the lines of business of the Person to be (or the property of which is to
be) so purchased or otherwise acquired shall be substantially the same lines of
business as one or more of the principal businesses of the Borrower and its
Subsidiaries in the ordinary course;

(iv) the requirements of Section 6.09 are satisfied;

(v) the Borrower or such Subsidiary shall be the survivor; and

(vi) the Borrower shall have delivered to the Administrative Agent, at least
five Business Days prior to the date on which any such merger or consolidation
is to be consummated, a certificate of a Responsible Officer, in form and
substance reasonably satisfactory to the Administrative Agent, certifying that
all of the requirements set forth in this Section 7.04(f) have been satisfied or
will be satisfied on or prior to the date on which such merger or consolidation
is consummated; provided, further, that, for avoidance of doubt, any such merger
or consolidation that would result in a Change of Control shall cause a Default
under Section 8.01(k).

 

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Section 7.05 Disposition of Property. Dispose of (i) any Eligible Specified Rig,
(ii) any Eligible Accounts Receivable or (iii) any Eligible Rental Equipment, in
each case whether now owned or hereafter acquired, or issue or Dispose of any
Equity Interest of any Person that directly or indirectly owns any of the
foregoing, except:

(a) Dispositions permitted by Section 7.04;

(b) the Disposition of obsolete or worn out property, or property that is no
longer used or useful in such Person’s business, in the ordinary course of
business;

(c) the Disposition of inventory or other assets in the ordinary course of
business or consistent with past practice;

(d) Dispositions of cash or Cash Equivalents;

(e) the sale or issuance of any Subsidiary’s Equity Interests to the Borrower or
any Subsidiary Guarantor;

(f) transfers of assets between or among the Borrower and the Subsidiary
Guarantors;

(g) any Dispositions constituted by the granting of Liens permitted by
Section 7.01;

(h) any lease of drill pipe by Quail Tools to a customer located outside of the
United States and any subsequent sale to such customer of any such drill pipe;

(i) any sale by the Borrower or any Subsidiary to its customers of drill pipe,
tools, and associated drilling equipment utilized in connection with a drilling
contract for the employment of a drilling rig in the ordinary course of business
and consistent with past practice; and

(j) Dispositions of Property described on Schedule 7.05(j).

Section 7.06 Restricted Payments. (i) Declare or pay any dividend on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any Equity Interests of the Borrower or any Subsidiary, whether now or
hereafter outstanding, or make any other distribution in respect thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary, or enter into any derivatives or other transaction
with any financial institution, commodities or stock exchange or clearinghouse
(a “Derivatives Counterparty”) obligating the Borrower or any Subsidiary to make
payments to such Derivatives Counterparty as a result of any change in market
value of any such Equity Interests or (ii) Invest in Project Finance
Subsidiaries (collectively, “Restricted Payments”), except that:

 

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(a) any Subsidiary may make Restricted Payments to the holders of its Equity
Interests on a pro rata basis;

(b) the Borrower may make Restricted Payments in the form of common stock of the
Borrower;

(c) the Borrower may make Restricted Payments in the form of Equity Interests
(other than Disqualified Stock) in connection with (i) the conversion,
redemption, or repurchase of the Convertible Debt, and in connection therewith
may make payment in cash in lieu of fractional shares and (ii) the High Strikes
Agreements;

(d) so long as no Event of Default has occurred and is continuing or would be
caused thereby, the Borrower or any Subsidiary may repurchase, redeem, or
otherwise acquire or retire any Equity Interests of the Borrower or any
Subsidiary held by any existing or former director, officer or employee of the
Borrower or any Subsidiary (or their transferees, estates or beneficiaries)
pursuant to any employment agreement, equity subscription agreement, stock
option agreement, or similar agreement, provided, that the aggregate amount of
payments under this paragraph subsequent to the date hereof (net of any proceeds
received by the Borrower subsequent to the date hereof in connection with
resales of any common stock or common stock options so purchased) shall not
exceed $5,000,000 in any 12 month period;

(e) the Borrower may acquire Equity Interests in connection with the exercise of
stock options or stock appreciation rights by way of cashless exercise or in
connection with the satisfaction of withholding tax obligations;

(f) the Borrower may make any Restricted Payment in exchange for, or in an
amount not to exceed the net cash proceeds of a substantially concurrent sale
(other than to a Subsidiary of the Borrower) of, Equity Interests of the
Borrower (other than Disqualified Stock), or from the substantially concurrent
contribution of common equity capital to the Borrower, with a sale and
contribution being deemed substantially concurrent if such Restricted Payment
occurs not more than 120 days after such sale or contribution; provided that the
amount of any such net cash proceeds that are utilized for any such Restricted
Payment shall be excluded from clause (B) of Section 7.06(h)(iii)(B);

(g) the Borrower or any Subsidiary may make any defeasance, redemption,
repurchase or other acquisition of Disqualified Stock of the Borrower or any
Subsidiary in an amount not to exceed the net cash proceeds from a substantially
concurrent incurrence of, or exchange for, Refinancing Debt;

(h) the Borrower may make Restricted Payments provided that:

(i) no Default or Event of Default shall have occurred and be continuing or
would occur as a consequence thereof; and

(ii) the Borrower would, at the time of such Restricted Payment and after giving
pro forma effect thereto as if such Restricted Payment had been made at the
beginning of the applicable four-quarter period, have been permitted to incur at
least $1.00 of additional Indebtedness pursuant to the Consolidated Interest
Coverage Ratio test set forth in Section 7.02(b); and

 

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(iii) such Restricted Payment, together with the aggregate amount of all other
Restricted Payments made by the Borrower and its Subsidiaries after the Closing
Date pursuant to this Section 7.06(h) is less than, at the date of
determination, the sum, without duplication, of

(A) 50% of the Consolidated Net Income of the Borrower for the period (taken as
one accounting period) from October 1, 2012 to the end of the Borrower’s most
recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit, less 100% of such deficit), plus

(B) 100% of the aggregate net cash proceeds (or the fair market value of any
Equity Interests of Persons or assets to the extent acquired in consideration of
Equity Interests (other than Disqualified Stock) of the Borrower) received by
the Borrower or its Subsidiaries since the Closing Date as a contribution to its
common equity capital or from the issue or sale of Equity Interests after the
Closing Date of the Borrower (other than Disqualified Stock) or from the issue
or sale after the Closing Date of convertible or exchangeable Disqualified Stock
or convertible or exchangeable debt securities of the Borrower or its
Subsidiaries that have been converted into or exchanged for such Equity
Interests (other than Equity Interests (or Disqualified Stock or debt
securities) sold to a Subsidiary of the Borrower), or received upon the exercise
of any options, warrants or rights to purchase Equity Interests (other than
Disqualified Stock) of the Borrower, plus

(C) the amount by which Indebtedness or Disqualified Stock of the Borrower or
its Subsidiaries is reduced on the Borrower’s balance sheet upon the conversion
or exchange (other than by a Subsidiary of the Borrower) subsequent to the
Closing Date of any Indebtedness or Disqualified Stock of the Borrower or its
Subsidiaries convertible into or exchangeable for Equity Interests of the
Borrower (other than Disqualified Stock) (less the amount of cash, or the fair
market value of any other property, distributed by the Borrower upon such
conversion or exchange); and

(i) the Borrower may make the payment of any dividend or consummate any
irrevocable redemption within 60 days after the date of declaration of the
dividend or giving of the redemption notice, as the case may be, if at the date
of declaration or notice, the dividend or redemption payment would have complied
with the provisions of this Agreement;

(j) Investments in Project Finance Subsidiaries not to exceed $25,000,000
outstanding in the aggregate for all such Investments on or after the date
hereof, it being understood that if such Project Finance Subsidiary repays such
Investment in full in cash or if the Borrower shall sell such Project Finance
Subsidiary in full for cash, such Investment will no longer be outstanding for
purposes hereof to the extent of such cash received; and

 

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(k) other Restricted Payments not to exceed $35,000,000 in the aggregate on or
after the date hereof so long as no Default or Event of Default shall have
occurred and be continuing or shall result therefrom.

Section 7.07 Modifications of Debt Instruments, etc. (a) amend, modify or
otherwise change, or consent or agree to any amendment, modification, waiver or
other change to, any of the terms of the Convertible Debt, the Senior Notes or
any Refinancing Debt to the extent that any such amendment, modification, waiver
or other change would shorten the maturity or increase the amount of any payment
of principal thereof, increase the rate or shorten the date for payment of
interest thereon or make any covenant or other restriction applicable to the
Borrower or any of its Subsidiaries materially more restrictive or (b) amend its
Organization Documents in any manner adverse to the Administrative Agent or the
Lenders.

Section 7.08 Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of
Property, the rendering of any service or the payment of any management,
advisory or similar fees, with any Affiliate (other than (i) the Borrower or any
Subsidiary Guarantor or (ii) in the case of any Excluded Subsidiary, any other
Excluded Subsidiary) unless such transaction is (a) otherwise permitted under
this Agreement, (b) in the ordinary course of business of the Borrower or such
Subsidiary, as the case may be, and (c) upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm’s length transaction with a Person that is not an
Affiliate, except for transactions permitted by the following sentence. This
Section 7.08 shall not apply to the following transactions: (i) any employment
agreement entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business and consistent with past practices, (ii) payment of
reasonable directors’ fees to Persons who are not otherwise Affiliates of the
Borrower, (iii) sales of Equity Interests of the Borrower to Affiliates of the
Borrower, (iv) any Restricted Payment otherwise permitted under Section 7.06 or
any Investment, (v) indemnification agreements with, and payments made, to
officers, directors, and employees of the Borrower or any Subsidiary pursuant to
charter, bylaw, statutory, or contractual provisions, (vi) the performance of
obligations of the Borrower or any Subsidiary under the terms of any agreement
to which the Borrower or any Subsidiary is a party as of the date of this
Agreement, and any amendments, modifications, supplements, extensions, or
renewals of such agreements; provided that any such amendments, modifications,
supplements, extensions, or renewals of such agreements are not materially more
disadvantageous, taken as a whole, to the Administrative Agent and the Lenders
than the terms of such agreements as in effect on the date of this Agreement,
(vii) any issuance of securities, or other payments, awards or grants in cash,
securities or otherwise pursuant to, or the funding of, employment arrangements
or stock option or stock ownership plans approved by the board of directors of
the Borrower, (viii) loans or advances to employees in the ordinary course of
business and consistent with past practices, but in any event not to exceed $2.0
million in the aggregate outstanding at any one time, (ix) transactions entered
into by a Person prior to the time such Person becomes a Subsidiary or is merged
or consolidated into the Borrower or a Subsidiary (provided such transaction is
not entered into in contemplation of such event), (x) any transaction in which
the Borrower or any of its Subsidiaries, as the case may be, delivers to the
trustee a letter from an accounting, appraisal or investment banking firm of
national standing stating that such transaction is fair to the Borrower or such
Subsidiary from a financial point of view or that such transaction meets the
requirements of the first sentence of this paragraph, (xi) dividends and
distributions to the

 

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Borrower and its Subsidiaries by any Affiliate, (xii) (a) guarantees of
performance by the Borrower and its Subsidiaries of Subsidiaries in the ordinary
course of business, except for guarantees of Indebtedness; (xiii) any
transaction where the only consideration paid by the Borrower or Subsidiary is
Equity Interests of the Borrower (other than Disqualified Stock); and
(xiv) transactions between the Borrower or any Subsidiary and any Person, a
director of which is also a director of the Borrower or any direct or indirect
parent company of the Borrower, and such director is the sole cause for such
Person to be deemed an Affiliate of the Borrower or any Subsidiary; provided,
however, that such director shall abstain from voting as a director of the
Borrower or such direct or indirect parent company, as the case may be, on any
matter involving such other Person.

Section 7.09 Changes in Fiscal Periods. Permit the fiscal year of the Borrower
to end on a day other than December 31 or change the Borrower’s method of
determining fiscal quarters.

Section 7.10 Negative Pledge Clauses. Enter into or suffer to exist or become
effective any agreement that prohibits or limits the ability of the Borrower or
any of its Subsidiaries (other than Excluded Subsidiaries) to create, incur,
assume or suffer to exist any Lien upon any of its Property or revenues, whether
now owned or hereafter acquired, to secure the Obligations or, in the case of
any guarantor, its obligations under the Subsidiary Guaranty, other than
(a) this Agreement and the other Loan Documents, (b) the Indentures or any
indenture or similar instrument governing any Refinancing Debt, (c) any
agreements governing any purchase money Liens or Capitalized Leases or other
secured Indebtedness otherwise permitted hereby (in which case, any prohibition
or limitation shall only be effective against the assets financed thereby or
securing such Indebtedness), (d) customary non assignment provisions in any
contract or lease entered into in the ordinary course of business and consistent
with past practices, (e) applicable law or any applicable rule, regulation, or
order of any Governmental Authority, (f) provisions with respect to the
disposition or distribution of assets or property in joint venture agreements,
asset sale agreements, stock sale agreements, and other similar agreements
entered into in the ordinary course of business, (g) restrictions on cash or
other deposits or net worth imposed by customers under contracts entered into in
the ordinary course of business, (h) any agreement in effect at the time such
Subsidiary becomes a Subsidiary of Borrower, so long as such agreement was not
entered into in connection with or in contemplation of such Person becoming a
Subsidiary of Borrower and is not applicable to any Person, or the properties or
assets of any Person, other than such Subsidiary or such Subsidiary’s properties
and assets, and (i) any instrument governing Indebtedness assumed in connection
with any acquisition of any Person or asset and not incurred in contemplation of
such acquisition, which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person or the
properties or assets of the Person so acquired.

Section 7.11 Restrictions on Subsidiary Distributions. Enter into or suffer to
exist or become effective any consensual encumbrance or restriction on the
ability of any Subsidiary (other than Excluded Subsidiaries) to (a) make
Restricted Payments in respect of any Equity Interests of such Subsidiary held
by, or pay any Indebtedness owed to, the Borrower or any other Subsidiary (it
being understood that (i) the priority of any preferred equity in receiving
dividends or liquidating distributions prior to dividends or liquidating
distributions being paid on common equity shall not be deemed a restriction on
the ability to make distributions on Equity

 

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Interests and (ii) the subordination of loans or advances made to the Borrower
or any Subsidiary to other Indebtedness incurred by the Borrower or any
Subsidiary shall not be deemed a restriction on the ability to pay loans or
advances), (b) make Investments in the Borrower or any Subsidiary Guarantor or
(c) transfer any of its assets to the Borrower or any Subsidiary Guarantor,
except for such encumbrances or restrictions existing under or by reason of
(i) any restrictions existing under the Loan Documents, (ii) any restrictions
with respect to a Subsidiary imposed pursuant to an agreement that has been
entered into in connection with the Disposition of all or substantially all of
the Equity Interests or assets of such Subsidiary, (iii) any restrictions
imposed pursuant to agreements governing any purchase money Liens or Capitalized
Leases or other secured Indebtedness otherwise permitted hereby (in which case,
any prohibition or limitation shall only be effective as to transfers of the
assets financed thereby or securing such Indebtedness), (iv) customary non
assignment provisions in any contract or lease entered into in the ordinary
course of business and consistent with past practices, (v) applicable law or any
applicable rule, regulation, or order of any Governmental Authority,
(vi) provisions with respect to the disposition or distribution of assets or
property in joint venture agreements, asset sale agreements, stock sale
agreements, and other similar agreements entered into in the ordinary course of
business, provided that such provisions apply only to the assets subject to such
agreements, (vii) restrictions on cash or other deposits or net worth imposed by
customers under contracts entered into in the ordinary course of business,
(viii) any agreement in effect at the time such Subsidiary becomes a Subsidiary
of Borrower, so long as such agreement was not entered into in connection with
or in contemplation of such Person becoming a Subsidiary of Borrower and is not
applicable to any Person, or the properties or assets of any Person, other than
such Subsidiary or such Subsidiary’s properties and assets, and (vix) any
instrument governing Indebtedness assumed in connection with any acquisition of
any Person or asset and not incurred in contemplation of such acquisition, which
encumbrance or restriction is not applicable to any Person, or the properties or
assets of any Person, other than the Person or the properties or assets of the
Person so acquired.

Section 7.12 Lines of Business. Enter into any material business except for
those businesses directly relating to the oil services industry in which the
Borrower and its Subsidiaries have previously engaged or are engaged on the
Closing Date or that are incidental or reasonably related thereto or that are a
reasonable extension thereof, as determined in good faith by the Borrower or
applicable Subsidiary.

Section 7.13 Hedge Agreements. Enter into any Swap Contract other than Swap
Contracts entered into in the ordinary course of business, and not for
speculative purposes, to protect against changes in interest rates or foreign
exchange rates.

ARTICLE VIII

EVENTS OF DEFAULT AND REMEDIES

Section 8.01 Events of Default. Any of the following shall constitute an Event
of Default:

(a) Non-Payment. The Borrower or any other Loan Party fails to (i) pay when and
as required to be paid herein, and in the currency required hereunder, any
amount of principal of any Loan or any L/C Obligation or deposit any funds as
Cash Collateral in respect of L/C Obligations, or (ii) pay within three Business
Days after the same becomes due, any interest on any Loan or on any L/C
Obligation, any fee due hereunder, or any other amount payable hereunder or
under any other Loan Document; or

 

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(b) Specific Covenants. (i) Any Loan Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section 6.04(a)
(with respect to the Borrower only), Section 6.03(a) or Article VII, or in
Article IV of the Security Agreement or (ii) any Loan Party shall default in the
observance or performance of any agreement contained in Section 6.01,
Section 6.09(a)(i), Section 6.09(c) or Section 6.10(a)(i) and such default shall
continue unremedied for a period of 10 days; or

(c) Other Defaults. Any Loan Party fails to perform or observe any other
covenant or agreement (not specified in Sections 8.01(a) or (b) above or
(d) below) contained in any Loan Document on its part to be performed or
observed and such failure continues for 30 days after the earlier to occur of
(i) written notice thereof from the Administrative Agent to the Borrower (which
notice may be given by the Administrative Agent and will be given at the request
of the Required Lenders) or (ii) a Responsible Officer of the Borrower or any
Subsidiary Guarantor otherwise becoming aware of such default or any “Event of
Default” under any Loan Document (other than this Agreement) shall occur and
continue to exist beyond any applicable grace period set forth in such Loan
Document; or

(d) Representations and Warranties. Any representation, warranty, certification
or statement of fact made or deemed made by or on behalf of the Borrower or any
other Loan Party herein, in any other Loan Document, or in any document
delivered in connection herewith or therewith shall be incorrect or misleading
in any material respect when made or deemed made; or

(e) Cross-Default. (i) The Borrower or any Subsidiary (A) fails to make any
payment when due (whether by scheduled maturity, required prepayment,
acceleration, demand, or otherwise) in respect of any Indebtedness or Guarantee
(other than Indebtedness hereunder and Indebtedness under Swap Contracts) having
an aggregate principal amount (including undrawn committed or available amounts
and including amounts owing to all creditors under any combined or syndicated
credit arrangement) of more than the Threshold Amount, or (B) fails to observe
or perform any other agreement or condition relating to any such Indebtedness or
Guarantee or contained in any instrument or agreement evidencing, securing or
relating thereto, or any other event occurs, the effect of which default or
other event is to cause, or to permit the holder or holders of such Indebtedness
or the beneficiary or beneficiaries of such Guarantee (or a trustee or agent on
behalf of such holder or holders or beneficiary or beneficiaries) to cause, with
the giving of notice if required, such Indebtedness to be demanded or to become
due or to be repurchased, prepaid, defeased or redeemed (automatically or
otherwise), or an offer to repurchase, prepay, defease or redeem such
Indebtedness to be made, prior to its stated maturity, or such Guarantee to
become payable or cash collateral in respect thereof to be demanded; or
(ii) there occurs under any Swap Contract an Early Termination Date (as defined
in such Swap Contract) resulting from (A) any event of default under such Swap
Contract as to which the Borrower or any Subsidiary is the Defaulting Party (as
defined in such Swap Contract) or (B) any Termination Event (as so defined)
under such Swap Contract as to which the Borrower or any Subsidiary is an
Affected Party (as so defined) and, in either event, the Swap Termination

 

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Value owed by the Borrower or such Subsidiary as a result thereof is greater
than the Threshold Amount; provided, however, this clause (e) shall not apply to
(i) voluntary prepayments and redemptions, (ii) the conversion of Convertible
Debt or the payment thereof pursuant to clause (f) of the definition thereof,
and (iii) any Non-Recourse Debt or Project Financing; or

(f) Insolvency Proceedings, Etc. Any Loan Party or any of its Subsidiaries
(other than any Immaterial Subsidiary) institutes or consents to the institution
of any proceeding under any Debtor Relief Law, or makes an assignment for the
benefit of creditors; or applies for or consents to the appointment of any
receiver, trustee, custodian, conservator, liquidator, rehabilitator or similar
officer for it or for all or any material part of its property; or any receiver,
trustee, custodian, conservator, liquidator, rehabilitator or similar officer is
appointed without the application or consent of such Person and the appointment
continues undischarged or unstayed for 60 calendar days; or any proceeding under
any Debtor Relief Law relating to any such Person or to all or any material part
of its property is instituted without the consent of such Person and continues
undismissed or unstayed for 60 calendar days, or an order for relief is entered
in any such proceeding; or

(g) Inability to Pay Debts; Attachment. (i) The Borrower or any Subsidiary
(other than any Immaterial Subsidiary) becomes unable or admits in writing its
inability or fails generally to pay its debts as they become due, or (ii) any
writ or warrant of attachment or execution or similar process is issued or
levied against all or any material part of the property of any such Person and
is not released, vacated or fully bonded within 60 days after its issue or levy;
or

(h) Judgments. One or more judgments or decrees shall be entered against the
Borrower or any of its Subsidiaries involving, for the Borrower and its
Subsidiaries taken as a whole, a liability (not paid or fully covered by
independent third party insurance as to which the relevant insurance company has
acknowledged coverage) in an aggregate amount in excess of the Threshold Amount,
and all such judgments or decrees shall not have been paid, vacated, discharged,
stayed or bonded pending appeal by the earlier of (i) the date which 60 days
from the entry thereof and (ii) the date on which the relevant judgment
creditor(s) has begun to enforce such judgment(s) or decree(s); or

(i) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or
Multiemployer Plan which has resulted or could reasonably be expected to result
in liability of the Borrower under Title IV of ERISA to the Pension Plan,
Multiemployer Plan or the PBGC in an aggregate amount that could reasonably be
expected to have a Material Adverse Effect, or (ii) the Borrower or any ERISA
Affiliate fails to pay when due, after the expiration of any applicable grace
period, any installment payment with respect to its withdrawal liability under
Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount that
could reasonably be expected to have a Material Adverse Effect; or

(j) Invalidity of Loan Documents. Any Loan Document, at any time after its
execution and delivery and for any reason other than as expressly permitted
hereunder or thereunder or satisfaction in full of all the Obligations, ceases
to be in full force and effect; or any Loan Party or any other Person contests
in any manner the validity or enforceability of any Loan Document; or any Loan
Party denies that it has any or further liability or obligation under any Loan
Document, or purports to revoke, terminate or rescind any Loan Document; or

 

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(k) Change of Control. There occurs any Change of Control; or

(l) Collateral Documents. Any Collateral Document after delivery thereof
pursuant to Section 4.01 or 6.09 shall for any reason (other than pursuant to
the terms thereof) cease to create a valid and perfected first priority Lien
(subject to Liens permitted by Section 7.01) on the Collateral purported to be
covered thereby having a fair market value in excess of $5,000,000 that is
purported to be covered thereby unless such occurrence results solely from
action of the Administrative Agent or any Lender and involves no Default by the
Borrower or any Guarantor hereunder or under any Collateral Document.

Section 8.02 Remedies Upon Event of Default. If any Event of Default occurs and
is continuing, the Administrative Agent shall, at the request of, or may, with
the consent of, the Required Lenders, take any or all of the following actions:

(a) declare the commitment of each Lender to make Loans and any obligation of
each L/C Issuer to make L/C Credit Extensions to be terminated, whereupon such
commitments and obligation shall be terminated;

(b) declare the unpaid principal amount of all outstanding Loans, all interest
accrued and unpaid thereon, and all other amounts owing or payable hereunder or
under any other Loan Document to be immediately due and payable, without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrower;

(c) require that the Borrower Cash Collateralize the L/C Obligations (in an
amount equal to the then Outstanding Amount thereof; provided, however, that the
Administrative Agent or applicable L/C Issuer may, at any time and from time to
time after the initial deposit of Cash Collateral, request that additional Cash
Collateral be provided in order to protect against the results of exchange rate
fluctuations and the Borrower shall deposit such additional Cash Collateral);
and

(d) exercise on behalf of itself, the Lenders and the L/C Issuers all rights and
remedies available to it, the Lenders and the L/C Issuers under the Loan
Documents;

provided, however, that upon the occurrence of an actual or deemed entry of an
order for relief with respect to the Borrower under the Bankruptcy Code of the
United States, the obligation of each Lender to make Loans and any obligation of
each L/C Issuer to make L/C Credit Extensions shall automatically terminate, the
unpaid principal amount of all outstanding Loans and all interest and other
amounts as aforesaid shall automatically become due and payable, and the
obligation of the Borrower to Cash Collateralize the L/C Obligations as
aforesaid shall automatically become effective, in each case without further act
of the Administrative Agent or any Lender.

Section 8.03 Application of Funds. After the exercise of remedies provided for
in Section 8.02 (or after the Loans have automatically become immediately due
and payable and the L/C Obligations have automatically been required to be Cash
Collateralized as set forth in the proviso to Section 8.02), any amounts
received on account of the Obligations shall be applied by the Administrative
Agent in the following order:

 

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First, to payment of that portion of the Obligations constituting fees,
indemnities, expenses and other amounts (including fees, charges and
disbursements of counsel to the Administrative Agent and amounts payable under
Article III but excluding any principal, interest and Letter of Credit Fees)
payable to the Administrative Agent in its capacity as such;

Second, to payment of that portion of the Obligations constituting fees,
indemnities and other amounts (other than principal, interest and Letter of
Credit Fees) payable to the Lenders and the L/C Issuers (including fees, charges
and disbursements of counsel to the respective Lenders and the L/C Issuers
(including fees and time charges for attorneys who may be employees of any
Lender or any L/C Issuer) arising under the Loan Documents and amounts payable
under Article III), ratably among them in proportion to the respective amounts
described in this clause Second payable to them;

Third, to payment of that portion of the Obligations constituting accrued and
unpaid Letter of Credit Fees and interest on the Loans, L/C Borrowings and other
Obligations arising under the Loan Documents, ratably among the Lenders and the
L/C Issuers in proportion to the respective amounts described in this clause
Third payable to them;

Fourth, to payment of that portion of the Obligations constituting unpaid
principal of the Loans, L/C Borrowings and Obligations then owing under Secured
Hedge Agreements and Secured Cash Management Agreements, ratably among the
Lenders, the L/C Issuers, the Hedge Banks and the Cash Management Banks in
proportion to the respective amounts described in this clause Fourth held by
them;

Fifth, to the Administrative Agent for the account of the L/C Issuers, to Cash
Collateralize that portion of L/C Obligations comprised of the aggregate undrawn
amount of Letters of Credit; and

Last, the balance, if any, after all of the Obligations have been indefeasibly
paid in full, to the Borrower or as otherwise required by Law.

Subject to Section 2.03(c), amounts used to Cash Collateralize the aggregate
undrawn amount of Letters of Credit pursuant to clause Fifth above shall be
applied to satisfy drawings under such Letters of Credit as they occur. If any
amount remains on deposit as Cash Collateral after all Letters of Credit have
either been fully drawn or expired, such remaining amount shall be applied to
the other Obligations, if any, in the order set forth above.

Notwithstanding the foregoing, Obligations arising under Secured Cash Management
Agreements and Secured Hedge Agreements shall be excluded from the application
described above if the Administrative Agent has not received written notice
thereof, together with such supporting documentation as the Administrative Agent
may request, from the applicable Cash Management Bank or Hedge Bank, as the case
may be. Each Cash Management Bank or Hedge Bank not a party to the Credit
Agreement that has given the notice contemplated by the preceding sentence
shall, by such notice, be deemed to have acknowledged and accepted the
appointment of the Administrative Agent pursuant to the terms of Article IX
hereof for itself and its Affiliates as if a “Lender” party hereto.

 

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ARTICLE IX

ADMINISTRATIVE AGENT

Section 9.01 Appointment and Authority. (a) Each of the Lenders and the L/C
Issuers hereby irrevocably appoints Bank of America to act on its behalf as the
Administrative Agent hereunder and under the other Loan Documents and authorizes
the Administrative Agent to take such actions on its behalf and to exercise such
powers as are delegated to the Administrative Agent by the terms hereof or
thereof, together with such actions and powers as are reasonably incidental
thereto. The provisions of this Article, other than the final sentence of
Section 9.10, are solely for the benefit of the Administrative Agent, the
Lenders and the L/C Issuers, and the Borrower shall not have rights as a third
party beneficiary of any of such provisions.

(b) The Administrative Agent shall also act as the “collateral agent” under the
Loan Documents, and each of the Lenders (including in its capacities as a
potential Hedge Bank and a potential Cash Management Bank) and each L/C Issuer
hereby irrevocably appoints and authorizes the Administrative Agent to act as
the agent of such Lender and such L/C Issuer for purposes of acquiring, holding
and enforcing any and all Liens on Collateral granted by any of the Loan Parties
to secure any of the Obligations, together with such powers and discretion as
are reasonably incidental thereto. In furtherance thereon, each of the Lenders
(including in its capacities as a potential Hedge Bank and a potential Cash
Management Bank) and each L/C Issuer hereby irrevocably appoints and authorizes
the Administrative Agent (or any sub-agent of the Administrative Agent appointed
pursuant to Section 9.05), as “collateral agent” to act as trustee on their
behalf solely for the purpose of acting as mortgagee under Mortgages and holding
the first preferred mortgage interest in each Specified Rig granted to the
Administrative Agent, as “collateral agent”, as trustee pursuant to the
respective Mortgage. The Administrative Agent hereby accepts such trust and
declares that, as trustee, it will hold each Mortgage for the sole use and
benefit of the Lenders and each L/C Issuer and shall, on behalf of the trust
created hereby, perform its obligations hereunder, but only upon the terms and
conditions of this Agreement. In connection with all of the foregoing, the
Administrative Agent, as “collateral agent” and any co-agents, sub-agents and
attorneys-in-fact appointed by the Administrative Agent pursuant to Section 9.05
for purposes of holding or enforcing any Lien on the Collateral (or any portion
thereof) granted under the Collateral Documents, or for exercising any rights
and remedies thereunder at the direction of the Administrative Agent), shall be
entitled to the benefits of all provisions of this Article IX and Article X
(including Section 10.04(c), as though such co-agents, sub-agents and
attorneys-in-fact were the “collateral agent” under the Loan Documents) as if
set forth in full herein with respect thereto.

Section 9.02 Rights as a Lender. The Person serving as the Administrative Agent,
Syndication Agent or a Co-Documentation Agent, as applicable, hereunder shall
have the same rights and powers in its capacity as a Lender as any other Lender
and may exercise the same as though it were not the Administrative Agent,
Syndication Agent or a Co-Documentation Agent, as applicable, and the term
“Lender” or “Lenders” shall, unless otherwise expressly

 

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indicated or unless the context otherwise requires, include the Person serving
as the Administrative Agent, Syndication Agent or Co-Documentation Agent, as
applicable, hereunder in its individual capacity. Such Person and its Affiliates
may accept deposits from, lend money to, act as the financial advisor or in any
other advisory capacity for and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if such Person were
not the Administrative Agent, Syndication Agent or Co-Documentation Agent, as
applicable, hereunder and without any duty to account therefor to the Lenders.

Section 9.03 Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other
Loan Documents. Without limiting the generality of the foregoing, the
Administrative Agent:

(a) shall not be subject to any fiduciary or other implied duties, regardless of
whether a Default has occurred and is continuing;

(b) shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby or by the other Loan Documents that the Administrative Agent
is required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be expressly provided for
herein or in the other Loan Documents), provided that the Administrative Agent
shall not be required to take any action that, in its opinion or the opinion of
its counsel, may expose the Administrative Agent to liability or that is
contrary to any Loan Document or applicable law; and

(c) shall not, except as expressly set forth herein and in the other Loan
Documents, have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the 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.

The Administrative Agent shall not be liable for any action taken or not taken
by it (i) with the consent or at the request of the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary, or as the
Administrative Agent shall believe in good faith shall be necessary, under the
circumstances as provided in Sections 10.01 and 8.02) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
be deemed not to have knowledge of any Default unless and until notice
describing such Default is given to the Administrative Agent by the Borrower, a
Lender or an L/C Issuer.

The Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement or any other Loan Document, (ii) the
contents of any certificate, report or other document delivered hereunder or
thereunder or in connection herewith or therewith, (iii) the performance or
observance of any of the covenants, agreements or other terms or conditions set
forth herein or therein or the occurrence of any Default, (iv) the validity,
enforceability, effectiveness or genuineness of this Agreement, any other Loan
Document or any other agreement, instrument or document, or the creation,
perfection or priority of any Lien purported to be created by the Collateral
Documents, (v) the value or the sufficiency of any Collateral, or (vi) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm receipt of items expressly required to be delivered to the
Administrative Agent.

 

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Section 9.04 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any
notice, request, certificate, consent, statement, instrument, document or other
writing (including any electronic message, Internet or intranet website posting
or other distribution) believed by it to be genuine and to have been signed,
sent or otherwise authenticated by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to have been made by the proper Person, and shall not incur any liability
for relying thereon. In determining compliance with any condition hereunder to
the making of a Loan, or the issuance of a Letter of Credit, that by its terms
must be fulfilled to the satisfaction of a Lender or the applicable L/C Issuer,
the Administrative Agent may presume that such condition is satisfactory to such
Lender or such L/C Issuer unless the Administrative Agent shall have received
notice to the contrary from such Lender or such L/C Issuer prior to the making
of such Loan or the issuance of such Letter of Credit. The Administrative Agent
may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

Section 9.05 Delegation of Duties. The Administrative Agent may perform any and
all of its duties and exercise its rights and powers hereunder or under any
other Loan Document by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all of its duties and exercise its rights and powers by or
through their respective Related Parties. The exculpatory provisions of this
Article shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.

Section 9.06 Resignation of Administrative Agent.

(a) The Administrative Agent may at any time give notice of its resignation to
the Lenders, the L/C Issuer and the Borrower. Upon receipt of any such notice of
resignation, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor, which shall be a bank with an office in the
United States, or an Affiliate of any such bank with an office in the United
States. If no such successor shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent gives notice of its resignation (or such earlier
day as shall be agreed by the Required Lenders) (the “Resignation Effective
Date”), then the retiring Administrative Agent may (but shall not be obligated
to) on behalf of the Lenders and the L/C Issuer, appoint a successor
Administrative Agent meeting the qualifications set forth above. Whether or not
a successor has been appointed, such resignation shall become effective in
accordance with such notice on the Resignation Effective Date (except that in
the case of any collateral security held by the Administrative Agent on behalf
of the Lenders or the L/C Issuer under any of the Loan Documents, the retiring
or removed Administrative Agent shall continue to hold such collateral security
until such time as a successor Administrative Agent is appointed).

 

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(b) If the Person serving as Administrative Agent is a Defaulting Lender
pursuant to clause (d) of the definition thereof, the Required Lenders may, to
the extent permitted by applicable law, by notice in writing to the Borrower and
such Person remove such Person as Administrative Agent and, in consultation with
the Borrower, appoint a successor. If no such successor shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within 30 days (or such earlier day as shall be agreed by the Required Lenders)
(the “Removal Effective Date”), then such removal shall nonetheless become
effective in accordance with such notice on the Removal Effective Date (except
that in the case of any collateral security held by the Administrative Agent on
behalf of the Lenders or the L/C Issuer under any of the Loan Documents, the
retiring or removed Administrative Agent shall continue to hold such collateral
security until such time as a successor Administrative Agent is appointed).

(c) With effect from the Resignation Effective Date or the Removal Effective
Date (as applicable) (1) the retiring or removed Administrative Agent shall be
discharged from its duties and obligations hereunder and under the other Loan
Documents (except that in the case of any collateral security held by the
Administrative Agent on behalf of the Lenders or the L/C Issuer under any of the
Loan Documents, the retiring or removed Administrative Agent shall continue to
hold such collateral security until such time as a successor Administrative
Agent is appointed) and (2) except for any indemnity payments or other amounts
then owed to the retiring or removed Administrative Agent, all payments,
communications and determinations provided to be made by, to or through the
Administrative Agent shall instead be made by or to each Lender and the L/C
Issuer directly, until such time, if any, as the Required Lenders appoint a
successor Administrative Agent as provided for above. Upon the acceptance of a
successor’s appointment as Administrative Agent hereunder, such successor shall
succeed to and become vested with all of the rights, powers, privileges and
duties of the retiring (or removed) Administrative Agent (other than as provided
in Section 3.01(g) and other than any rights to indemnity payments or other
amounts owed to the retiring or removed Administrative Agent as of the
Resignation Effective Date or the Removal Effective Date, as applicable), and
the retiring or removed Administrative Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not
already discharged therefrom as provided above in this Section) . The fees
payable by the Borrower to a successor Administrative Agent shall be the same as
those payable to its predecessor unless otherwise agreed between the Borrower
and such successor. After the retiring or removed Administrative Agent’s
resignation or removal hereunder and under the other Loan Documents, the
provisions of this Article and Section 10.04 shall continue in effect for the
benefit of such retiring or removed Administrative Agent, its sub agents and
their respective Related Parties in respect of any actions taken or omitted to
be taken by any of them while the retiring or removed Administrative Agent was
acting as Administrative Agent.

(d) Any resignation by Bank of America as Administrative Agent pursuant to this
Section shall also constitute its resignation as L/C Issuer. If Bank of America
resigns as an L/C Issuer, it shall retain all the rights, powers, privileges and
duties of the L/C Issuer hereunder with respect to all Letters of Credit
outstanding as of the effective date of its resignation as L/C Issuer and all
L/C Obligations with respect thereto, including the right to require the Lenders
to make Base Rate Loans or fund risk participations in Unreimbursed Amounts
pursuant to Section 2.03(c). Upon the appointment by the Borrower of a successor
L/C Issuer hereunder (which successor shall in all cases be a Lender other than
a Defaulting Lender) and the

 

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acceptance by such successor L/C Issuer of the rights, duties and obligations of
such capacity hereunder, (a) such successor shall succeed to and become vested
with all of the rights, powers, privileges and duties of the retiring L/C
Issuer, (b) the retiring L/C Issuer shall be discharged from all of its duties
and obligations hereunder or under the other Loan Documents, and (c) the
successor L/C Issuer shall issue letters of credit in substitution for the
Letters of Credit, if any, outstanding at the time of such succession or make
other arrangements satisfactory to Bank of America to effectively assume the
obligations of Bank of America with respect to such Letters of Credit.

Section 9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
and each L/C Issuer acknowledges that it has, independently and without reliance
upon the Administrative Agent, any other Agent or any other Lender or any of
their Related Parties and based on such documents and information as it has
deemed appropriate, made its own credit analysis and decision to enter into this
Agreement. Each Lender and each L/C Issuer also acknowledges that it will,
independently and without reliance upon the Administrative Agent, any other
Agent or any other Lender or any of their Related Parties and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any
document furnished hereunder or thereunder.

Section 9.08 No Other Duties, Etc. Anything herein to the contrary
notwithstanding, none of the “Bookrunners” or “Arranger” or the Agents listed on
the cover page hereof shall have any powers, duties or responsibilities under
this Agreement or any of the other Loan Documents, except in its capacity, as
applicable, as the Administrative Agent, a Lender or an L/C Issuer hereunder.

Section 9.09 Administrative Agent May File Proofs of Claim. In case of the
pendency of any proceeding under any Debtor Relief Law or any other judicial
proceeding relative to any Loan Party, the Administrative Agent (irrespective of
whether the principal of any Loan or L/C Obligation shall then be due and
payable as herein expressed or by declaration or otherwise and irrespective of
whether the Administrative Agent shall have made any demand on the Borrower)
shall be entitled and empowered, by intervention in such proceeding or
otherwise.

(a) to file and prove a claim for the whole amount of the principal and interest
owing and unpaid in respect of the Loans, L/C Obligations and all other
Obligations that are owing and unpaid and to file such other documents as may be
necessary or advisable in order to have the claims of the Lenders, the L/C
Issuers and the Administrative Agent (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Lenders, the L/C
Issuers and the Administrative Agent and their respective agents and counsel and
all other amounts due the Lenders, the L/C Issuers and the Administrative Agent
under Sections 2.03(i) and (j), 2.09 and 10.04) allowed in such judicial
proceeding; and

(b) to collect and receive any monies or other property payable or deliverable
on any such claims and to distribute the same;

 

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and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Lender and each L/C Issuer to make such payments to the Administrative
Agent and, in the event that the Administrative Agent shall consent to the
making of such payments directly to the Lenders and the L/C Issuers, to pay to
the Administrative Agent any amount due for the reasonable compensation,
expenses, disbursements and advances of the Administrative Agent and its agents
and counsel, and any other amounts due the Administrative Agent under
Sections 2.09 and 10.04.

Nothing contained herein shall be deemed to authorize the Administrative Agent
to authorize or consent to or accept or adopt on behalf of any Lender or any L/C
Issuer any plan of reorganization, arrangement, adjustment or composition
affecting the Obligations or the rights of any Lender or any L/C Issuer to
authorize the Administrative Agent to vote in respect of the claim of any Lender
or any L/C Issuer or in any such proceeding. The Administrative Agent is not
authorized hereunder to credit bid any Obligation held by any Lender or any L/C
Issuer in any proceeding under any Debtor Relief Law without the prior consent
of such Lender or such L/C Issuer.

Section 9.10 Collateral and Guaranty Matters. Each of the Lenders (including in
its capacities as a potential Cash Management Bank and a potential Hedge Bank)
and each L/C Issuer irrevocably authorize the Administrative Agent, at its
option and in its discretion,

(a) to release any Lien on any property granted to or held by the Administrative
Agent under any Loan Document (i) upon termination of the Aggregate Commitments
and payment in full of all Obligations (other than (A) contingent
indemnification obligations and (B) obligations and liabilities under Secured
Cash Management Agreements and Secured Hedge Agreements) and the expiration or
termination of all Letters of Credit (other than Letters of Credit as to which
other arrangements satisfactory to the Administrative Agent and the L/C Issuers
shall have been made), (ii) that is sold or to be sold as part of or in
connection with any sale permitted hereunder or under any other Loan Document,
or (iii) if approved, authorized or ratified in writing in accordance with
Section 10.01;

(b) to subordinate any Lien on any property granted to or held by the
Administrative Agent under any Loan Document to the holder of any Lien on such
property that is permitted by Section 7.01(g), (r) or (t);

(c) to release any Subsidiary Guarantor from its obligations under the
Subsidiary Guaranty and Collateral Documents (i) if such Person ceases to be a
Subsidiary, (ii) in the case of each Subsidiary Guarantor that is a guarantor of
obligations under any Indenture but would otherwise qualify as an “Excluded
Subsidiary”, if such Person ceases to be a guarantor of the obligations under
any Indenture so that such Person qualifies as an “Excluded Subsidiary”, or
(iii) if such Subsidiary Guarantor is designated and certified as an “Excluded
Subsidiary” in accordance with the requirements set forth in clause (e) of such
definition after the date hereof, or (iv) if such Subsidiary Guarantor ceases to
be a Material Subsidiary as a result of a Disposition permitted by Section 7.05,
in each case (with respect to the foregoing clauses (i), (ii) and (iii)), as a
result of a transaction permitted hereunder or otherwise in accordance with the
terms hereof; and

 

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(d) to enter into any amendments of the Collateral Documents dated on and as of
even date herewith deemed reasonably necessary or appropriate by the
Administrative Agent in order to evidence the amendment and restatement of the
Existing Credit Agreement, the extension, renewal and continuation of the
Obligations secured by such Collateral Documents and for any other related
purpose.

Upon request by the Administrative Agent at any time, the Required Lenders will
confirm in writing the Administrative Agent’s authority to release or
subordinate its interest in particular types or items of property, or to release
any Subsidiary Guarantor from its obligations under the Subsidiary Guaranty
pursuant to this Section 9.10. In each case as specified in this Section 9.10,
(i) the Borrower shall notify the Administrative Agent and the Lenders in
writing of any request for the release or subordination of any Collateral or
Subsidiary Guaranty, such writing to set forth in reasonable detail a
description of such Collateral or Subsidiary Guaranty requested to be released
and (ii) the Administrative Agent will, at the Borrower’s expense, execute and
deliver to the applicable Loan Party such documents as such Loan Party may
reasonably request to evidence the release of such item of Collateral from the
assignment and security interest granted under the Collateral Documents or to
subordinate its interest in such item, or to release such Subsidiary Guarantor
from its obligations under the Subsidiary Guaranty, in each case in accordance
with the terms of the Loan Documents and this Section 9.10. The Administrative
Agent shall not be responsible for or have a duty to ascertain or inquire into
any representation or warranty regarding the existence, value or collectability
of the Collateral, the existence, priority or perfection of the Administrative
Agent’s Lien thereon, or any certificate prepared by any Loan Party in
connection therewith, nor shall the Administrative Agent be responsible or
liable to the Lenders for any failure to monitor or maintain any portion of the
Collateral.

Section 9.11 Secured Cash Management Agreements and Secured Hedge Agreements. No
Cash Management Bank or Hedge Bank that obtains the benefits of Section 8.03,
the Subsidiary Guaranty or any Collateral by virtue of the provisions hereof or
of the Subsidiary Guaranty or any Collateral Document shall have any right to
notice of any action or to consent to, direct or object to any action hereunder
or under any other Loan Document or otherwise in respect of the Collateral
(including the release or impairment of any Collateral) other than in its
capacity as a Lender and, in such case, only to the extent expressly provided in
the Loan Documents. Notwithstanding any other provision of this Article IX to
the contrary, the Administrative Agent shall not be required to verify the
payment of, or that other satisfactory arrangements have been made with respect
to, Obligations arising under Secured Cash Management Agreements and Secured
Hedge Agreements unless the Administrative Agent has received written notice of
such Obligations, together with such supporting documentation as the
Administrative Agent may request, from the applicable Cash Management Bank or
Hedge Bank, as the case may be.

Section 9.12 United States Citizen. Notwithstanding any right, power or remedy
granted to the Administrative Agent herein or pursuant to any other Loan
Document, or at law, in equity, admiralty or otherwise, the Administrative Agent
will not take any action that causes a violation of Section 2 or Section 9 of
the Shipping Act of 1916, as amended (the “Shipping Act”). The Administrative
Agent represents and warrants to the Borrower and to each Secured Party that it
is a “United States Citizen” within the meaning of Section 2 of the Shipping Act
until the Obligations have been paid in full. The Administrative Agent agrees
that it will promptly prepare and deliver any affidavits or other similar
documents evidencing its

 

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compliance with the Shipping Act as may be required in connection with the
documentation, operation, chartering or mortgaging of the Specified Rigs. If at
any time prior to the termination of the Security Agreement or the Mortgages
with respect to the Specified Rigs, the Administrative Agent ceases to comply
with Section 2 of the Shipping Act, the Administrative Agent shall notify the
Borrower and the Lenders of such fact and take all necessary actions to resign
as the “collateral agent” under the Collateral Documents in accordance with the
provisions of this Agreement and the other Loan Documents.

ARTICLE X

MISCELLANEOUS

Section 10.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document, and no consent to any departure by the
Borrower or any other Loan Party therefrom, shall be effective unless in writing
signed by the Required Lenders and the Borrower or the applicable Loan Party, as
the case may be, and acknowledged by the Administrative Agent, and each such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall:

(a) waive any condition set forth in Section 4.01 (other than Section 4.01(b)),
or, in the case of the initial Credit Extension, Section 4.02, without the
written consent of each Lender;

(b) without limiting the generality of clause (a) above, waive any condition set
forth in Section 4.02 as to any Credit Extension under a particular Facility
without the written consent of the Required Revolving Lenders or the Required
Term Loan Lenders, as the case may be;

(c) extend or increase the Commitment of any Lender (or reinstate any Commitment
terminated pursuant to Section 8.02) without the written consent of such Lender;

(d) postpone any date fixed by this Agreement or any other Loan Document for
(i) any payment (excluding mandatory prepayments) of principal, interest, fees
or other amounts due to the Lenders (or any of them) hereunder or under such
other Loan Document without the written consent of each Lender entitled to such
payment or (ii) any scheduled reduction of any Facility hereunder or under any
other Loan Document without the written consent of each Appropriate Lender;

(e) reduce or forgive the principal of, or the rate of interest specified herein
on, any Loan or L/C Borrowing, or (subject to clause (iii) of the second proviso
to this Section 10.01) any fees or other amounts payable hereunder or under any
other Loan Document without the written consent of each Lender directly affected
thereby; provided, however, that only the consent of the Required Lenders shall
be necessary (i) to amend the definition of “Default Rate” or to waive any
obligation of the Borrower to pay interest or Letter of Credit Fees at the
Default Rate or (ii) to change the manner of computation of any financial ratio
(including any change in any applicable defined term) used in determining the
Applicable Rate even if the effect of such amendment would be to reduce the
interest rate on any Loan or L/C Borrowing or to reduce any fee payable
hereunder;

 

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(f) change (i) the definition of “Applicable Percentage”, Section 2.12(a),
Section 2.12(f), Section 2.13 or Section 8.03 in a manner that would alter the
pro rata sharing of payments required thereby without the written consent of
each Lender affected thereby or (ii) the order of application of any reduction
in the Commitments or any prepayment of Loans among the Facilities from the
application thereof set forth in the applicable provisions of Section 2.05(b) or
2.06(b), respectively, in any manner that materially and adversely affects the
Lenders under a Facility without the written consent of (i) if such Facility is
the Term Loan Facility, the Required Term Loan Lenders, and (ii) if such
Facility is the Revolving Credit Facility, the Required Revolving Lenders;

(g) amend Section 1.06 or the definition of “Alternative Currency” without the
written consent of each L/C Issuer;

(h) change (i) any provision of this Section 10.01 or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to amend, waive or otherwise modify any rights
hereunder (other than the definitions specified in clause (ii) of this
Section 10.01(h)), without the written consent of each Lender or (ii) the
definition of “Required Revolving Lenders” or “Required Term Loan Lenders”
without the written consent of each Lender under the applicable Facility;

(i) release all or substantially all of the Collateral in any transaction or
series of related transactions, without the written consent of each Lender;

(j) release all or substantially all of the value of the Subsidiary Guaranty
without the written consent of each Lender, except to the extent the release of
any Subsidiary Guarantor from the Subsidiary Guaranty is permitted pursuant to
Section 9.10 (in which case such release may be made by the Administrative Agent
acting alone);

(k) impose any greater restriction on the ability of any Lender under a Facility
to assign any of its rights or obligations hereunder without the written consent
of (i) if such Facility is the Term Loan Facility, the Required Term Loan
Lenders and (ii) if such Facility is the Revolving Credit Facility, the Required
Revolving Lenders;

(l) increase the Advance Rates under the Borrowing Base without the written
consent of each Lender;

(m) amend, modify or waive any provision of (i) the definition of “Borrowing
Base” or (ii) any of the capitalized terms used in such definition, in each
case, without the consent of Lenders holding at least 75% of the sum of the
(a) Total Outstandings (with the aggregate amount of each Revolving Credit
Lender’s risk participation and funded participation in L/C Obligations being
deemed “held by such Revolving Credit Lender for such purpose) and (b) aggregate
unused Revolving Credit Commitments but excluding the unused Revolving Credit
Commitment of, and the portion of the Total Outstandings held or deemed held by,
any Defaulting Lender; or

 

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(n) amend the last sentence of Section 9.09 without the written consent of each
Lender;

and, provided further, that (i) no amendment, waiver or consent shall, unless in
writing and signed by each L/C Issuer in addition to the Lenders required above,
affect the rights or duties of the L/C Issuers under this Agreement or any
Issuer Document relating to any Letter of Credit issued or to be issued by it;
(ii) no amendment, waiver or consent shall, unless in writing and signed by the
Administrative Agent in addition to the Lenders required above, affect the
rights or duties of the Administrative Agent under this Agreement or any other
Loan Document and (iii) the Fee Letter may be amended, or rights or privileges
thereunder waived, in a writing executed only by the parties thereto.
Notwithstanding anything to the contrary herein, no Defaulting Lender shall have
any right to approve or disapprove any amendment, waiver or consent hereunder,
except that (x) the Commitment of such Lender may not be increased or extended,
nor the principal owed to such Lender reduced or the final maturity thereof
extended, without the consent of such Lender and (y) any waiver, amendment or
modification requiring the consent of all Lenders or each affected Lender that
by its terms affects any Defaulting Lender more adversely than other affected
Lenders shall require the consent of such Defaulting Lender.

If any Lender does not consent to a proposed amendment, waiver, consent or
release with respect to any Loan Document that requires the consent of each
Lender and that has been approved by the Required Lenders (excluding any
increase pursuant to Section 2.14 or 2.15) (a “Non-Consenting Lender”), the
Borrower may replace such Non-Consenting Lender in accordance with
Section 10.13; provided that such amendment, waiver, consent or release can be
effected as a result of the assignment contemplated by such Section (together
with all other such assignments required by the Borrower to be made pursuant to
this paragraph).

Section 10.02 Notices; Effectiveness; Electronic Communication.

(a) Notices Generally. Except in the case of notices and other communications
expressly permitted to be given by telephone (and except as provided in
subsection (b) below), all notices and other communications provided for herein
shall be in writing and shall be delivered by hand or overnight courier service,
mailed by certified or registered mail or sent by telecopier as follows, and all
notices and other communications expressly permitted hereunder to be given by
telephone shall be made to the applicable telephone number, as follows:

(i) if to the Borrower, the Administrative Agent, or Bank of America as an L/C
Issuer, to the address, telecopier number, electronic mail address or telephone
number specified for such Person on Schedule 10.02; and

(ii) if to any other Lender or L/C Issuer, to the address, telecopier number,
electronic mail address or telephone number specified in its Administrative
Questionnaire.

Notices and other communications sent by hand or overnight courier service, or
mailed by certified or registered mail, shall be deemed to have been given when
received; notices and other communications sent by telecopier shall be deemed to
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not given during normal business hours for the recipient, shall be deemed to
have been given at the opening of business on the next business day for the
recipient). Notices and other communications delivered through electronic
communications to the extent provided in subsection (b) below, shall be
effective as provided in such subsection (b).

(b) Electronic Communications. Notices and other communications to the Lenders
and the L/C Issuers hereunder may be delivered or furnished by electronic
communication (including e-mail and Internet or intranet websites) pursuant to
procedures approved by the Administrative Agent, provided that the foregoing
shall not apply to notices to any Lender or any L/C Issuer pursuant to
Article II if such Lender or such L/C Issuer, as applicable, has notified the
Administrative Agent that it is incapable of receiving notices under such
Article by electronic communication. The Administrative Agent or the Borrower
may, in its discretion, agree to accept notices and other communications to it
hereunder by electronic communications pursuant to procedures approved by it,
provided that approval of such procedures may be limited to particular notices
or communications.

Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an e-mail address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its e-mail address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.

(c) The Platform. THE PLATFORM IS PROVIDED “AS IS” AND “AS AVAILABLE.” THE AGENT
PARTIES (AS DEFINED BELOW) DO NOT WARRANT THE ACCURACY OR COMPLETENESS OF THE
BORROWER MATERIALS OR THE ADEQUACY OF THE PLATFORM, AND EXPRESSLY DISCLAIM
LIABILITY FOR ERRORS IN OR OMISSIONS FROM THE BORROWER MATERIALS. NO WARRANTY OF
ANY KIND, EXPRESS, IMPLIED OR STATUTORY, INCLUDING ANY WARRANTY OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NON-INFRINGEMENT OF THIRD
PARTY RIGHTS OR FREEDOM FROM VIRUSES OR OTHER CODE DEFECTS, IS MADE BY ANY AGENT
PARTY IN CONNECTION WITH THE BORROWER MATERIALS OR THE PLATFORM. In no event
shall the Administrative Agent or any of its Related Parties (collectively, the
“Agent Parties”) have any liability to the Borrower, any Lender, any L/C Issuer
or any other Person for losses, claims, damages, liabilities or expenses of any
kind (whether in tort, contract or otherwise) arising out of the Borrower’s or
the Administrative Agent’s transmission of Borrower Materials through the
Internet, except to the extent that such losses, claims, damages, liabilities or
expenses are determined by a court of competent jurisdiction by a final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Agent Party; provided, however, that in no event shall any
Agent Party have any liability to the Borrower, any Lender, any L/C Issuer or
any other Person for indirect, special, incidental, consequential or punitive
damages (as opposed to direct or actual damages).

 

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(d) Change of Address, Etc. Each of the Borrower, the Administrative Agent and
Bank of America as an L/C Issuer may change its address, telecopier or telephone
number for notices and other communications hereunder by notice to the other
parties hereto. Each other Lender or L/C Issuer may change its address,
telecopier or telephone number for notices and other communications hereunder by
notice to the Borrower, the Administrative Agent and the other L/C Issuers. In
addition, each Lender and each L/C Issuer (other than Bank of America) agrees to
notify the Administrative Agent from time to time to ensure that the
Administrative Agent has on record (i) an effective address, contact name,
telephone number, telecopier number and electronic mail address to which notices
and other communications may be sent and (ii) accurate wire instructions for
such Lender. Furthermore, each Public Lender agrees to cause at least one
individual at or on behalf of such Public Lender to at all times have selected
the “Private Side Information” or similar designation on the content declaration
screen of the Platform in order to enable such Public Lender or its delegate, in
accordance with such Public Lender’s compliance procedures and applicable Law,
including United States Federal and state securities Laws, to make reference to
Borrower Materials that are not made available through the “Public Side
Information” portion of the Platform and that may contain material non-public
information with respect to the Borrower or its securities for purposes of
United States Federal or state securities laws.

(e) Reliance by Administrative Agent, L/C Issuers and Lenders. The
Administrative Agent, the L/C Issuers and the Lenders shall be entitled to rely
and act upon any notices (including telephonic Committed Loan Notices)
purportedly given by or on behalf of the Borrower even if (i) such notices were
not made in a manner specified herein, were incomplete or were not preceded or
followed by any other form of notice specified herein, or (ii) the terms
thereof, as understood by the recipient, varied from any confirmation thereof.
The Borrower shall indemnify the Administrative Agent, each L/C Issuer, each
Lender and the Related Parties of each of them from all losses, costs, expenses
and liabilities resulting from the reliance by such Person on each notice
purportedly given by or on behalf of the Borrower. All telephonic notices to and
other telephonic communications with the Administrative Agent may be recorded by
the Administrative Agent, and each of the parties hereto hereby consents to such
recording.

Section 10.03 No Waiver; Cumulative Remedies; Enforcement. No failure by any
Lender, any L/C Issuer or the Administrative Agent to exercise, and no delay by
any such Person in exercising, any right, remedy, power or privilege hereunder
or under any other Loan Document shall operate as a waiver thereof; nor shall
any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided, and provided under each other Loan Document, are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.

Notwithstanding anything to the contrary contained herein or in any other Loan
Document, the authority to enforce rights and remedies hereunder and under the
other Loan Documents against the Loan Parties or any of them shall be vested
exclusively in, and all actions and proceedings at law in connection with such
enforcement shall be instituted and maintained exclusively by, the
Administrative Agent in accordance with Section 8.02 for the benefit of all the
Lenders and the L/C Issuers; provided, however, that the foregoing shall not
prohibit (a) the Administrative Agent from exercising on its own behalf the
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benefit (solely in its capacity as Administrative Agent) hereunder and under the
other Loan Documents, (b) each L/C Issuer from exercising the rights and
remedies that inure to its benefit (solely in its capacity as an L/C Issuer)
hereunder and under the other Loan Documents, (c) any Lender from exercising
setoff rights in accordance with Section 10.08 (subject to the terms of
Section 2.13), or (d) any Lender from filing proofs of claim or appearing and
filing pleadings on its own behalf during the pendency of a proceeding relative
to any Loan Party under any Debtor Relief Law; and provided, further, that if at
any time there is no Person acting as Administrative Agent hereunder and under
the other Loan Documents, then (i) the Required Lenders shall have the rights
otherwise ascribed to the Administrative Agent pursuant to Section 8.02 and
(ii) in addition to the matters set forth in clauses (b), (c) and (d) of the
preceding proviso and subject to Section 2.13, any Lender may, with the consent
of the Required Lenders, enforce any rights and remedies available to it and as
authorized by the Required Lenders.

Section 10.04 Expenses; Indemnity; Damage Waiver.

(a) Costs and Expenses. The Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Administrative Agent and its Affiliates (including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent), in connection with the syndication of the credit facilities provided for
herein, the preparation, negotiation, execution, delivery and administration of
this Agreement and the other Loan Documents or any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
contemplated hereby or thereby shall be consummated), (ii) all reasonable
out-of-pocket expenses incurred by each L/C Issuer in connection with the
issuance, amendment, renewal or extension of any Letter of Credit or any demand
for payment thereunder and (iii) all out-of-pocket expenses incurred by the
Administrative Agent, any Lender or any L/C Issuer (including the fees, charges
and disbursements of any counsel for the Administrative Agent, any Lender or any
L/C Issuer), and shall pay all fees and time charges for attorneys who may be
employees of the Administrative Agent, any Lender or any L/C Issuer, in
connection with the enforcement or protection of its rights (A) in connection
with this Agreement and the other Loan Documents, including its rights under
this Section, or (B) in connection with Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.

(b) Indemnification by the Borrower. The Borrower shall indemnify the
Administrative Agent (and any sub-agent thereof), each other Agent, each Lender
and each L/C Issuer, and each Related Party of any of the foregoing Persons
(each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses (including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee), and shall indemnify and hold harmless each
Indemnitee from all fees and time charges and disbursements for attorneys who
may be employees of any Indemnitee, incurred by any Indemnitee or asserted
against any Indemnitee by any third party or by the Borrower or any other Loan
Party arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement, any other Loan Document or any agreement or
instrument contemplated hereby or thereby, the performance by the parties hereto
of their respective obligations hereunder or thereunder, or the consummation of
the transactions contemplated hereby or thereby, or, in the case of the
Administrative Agent (and any sub-agent thereof) and its Related Parties only,
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Documents (including in respect of any matters addressed in Section 3.01),
(ii) any Loan or Letter of Credit or the use or proposed use of the proceeds
therefrom (including any refusal by any L/C Issuer to honor a demand for payment
under a Letter of Credit if the documents presented in connection with such
demand do not strictly comply with the terms of such Letter of Credit),
(iii) any actual or alleged presence or release of Hazardous Materials on or
from any property owned or operated by the Borrower or any of its Subsidiaries,
or any Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory, whether brought by a third party or by the Borrower or any
other Loan Party or any of the Borrower’s or such Loan Party’s directors,
shareholders or creditors, and regardless of whether any Indemnitee is a party
thereto, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART,
OUT OF THE COMPARATIVE, CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such losses, claims, damages, liabilities or related expenses
(x) are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful
misconduct of such Indemnitee or (y) result from a claim brought by the Borrower
or any other Loan Party against an Indemnitee for breach in bad faith of such
Indemnitee’s obligations hereunder or under any other Loan Document, if the
Borrower or such other Loan Party has obtained a final and nonappealable
judgment in its favor on such claim as determined by a court of competent
jurisdiction.

(c) Reimbursement by Lenders. To the extent that the Borrower for any reason
fails to indefeasibly pay any amount required under subsection (a) or (b) of
this Section to be paid by it to the Administrative Agent (or any sub-agent
thereof), each other Agent, any L/C Issuer or any Related Party of any of the
foregoing (and without limiting the Borrower’s obligation to do so), each Lender
severally agrees to pay to the Administrative Agent (or any such sub-agent),
such other Agent, such L/C Issuer or such Related Party, as the case may be,
such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount, provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent (or any such sub-agent), any other
Agent or any L/C Issuer in its capacity as such, or against any Related Party of
any of the foregoing acting for the Administrative Agent (or any such
sub-agent), any other Agent or any L/C Issuer in connection with such capacity;
and provided further that the obligation to indemnify the L/C Issuers hereunder
shall be limited solely to the Revolving Credit Lenders. The obligations of the
Lenders under this subsection (c) are subject to the provisions of
Section 2.12(d).

(d) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Borrower shall not assert, and hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement, any other
Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the
use of the proceeds thereof. No Indemnitee referred to in subsection (b) above
shall be liable for any damages arising from the use by unintended recipients of
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distributed to such unintended recipients by such Indemnitee through
telecommunications, electronic or other information transmission systems in
connection with this Agreement or the other Loan Documents or the transactions
contemplated hereby or thereby other than for direct or actual damages resulting
from the gross negligence or willful misconduct of such Indemnitee as determined
by a final and nonappealable judgment of a court of competent jurisdiction.

(e) Payments. All amounts due under this Section shall be payable not later than
thirty days after written demand therefor.

(f) Survival. The agreements in this Section shall survive the resignation of
the Administrative Agent and each L/C Issuer, the replacement of any Lender, the
termination of the Aggregate Commitments and the repayment, satisfaction or
discharge of all the other Obligations.

Section 10.05 Payments Set Aside. To the extent that any payment by or on behalf
of the Borrower is made to the Administrative Agent, any L/C Issuer or any
Lender, or the Administrative Agent, any L/C Issuer or any Lender exercises its
right of setoff, and such payment or the proceeds of such setoff or any part
thereof is subsequently invalidated, declared to be fraudulent or preferential,
set aside or required (including pursuant to any settlement entered into by the
Administrative Agent, such L/C Issuer or such Lender in its discretion) to be
repaid to a trustee, receiver or any other party, in connection with any
proceeding under any Debtor Relief Law or otherwise, then (a) to the extent of
such recovery, the obligation or part thereof originally intended to be
satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such setoff had not occurred, and (b) each Lender
and each L/C Issuer severally agrees to pay to the Administrative Agent upon
demand its applicable share (without duplication) of any amount so recovered
from or repaid by the Administrative Agent, plus interest thereon from the date
of such demand to the date such payment is made at a rate per annum equal to the
Federal Funds Rate from time to time in effect, in the applicable currency of
such recovery or payment. The obligations of the Lenders and the L/C Issuers
under clause (b) of the preceding sentence shall survive the payment in full of
the Obligations and the termination of this Agreement.

Section 10.06 Successors and Assigns.

(a) Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that the Borrower may not assign
or otherwise transfer any of its rights or obligations hereunder without the
prior written consent of the Administrative Agent and each Lender and no Lender
may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an assignee in accordance with the provisions of subsection (b) of
this Section, (ii) by way of participation in accordance with the provisions of
subsection (d) of this Section or (iii) by way of pledge or assignment of a
security interest subject to the restrictions of subsection (f) of this Section
(and any other attempted assignment or transfer by any party hereto shall be
null and void). Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent
provided in subsection (d) of this Section and, to the extent expressly
contemplated hereby, the Related Parties of each of the Administrative Agent,
the L/C Issuers and the Lenders) any legal or equitable right, remedy or claim
under or by reason of this Agreement.

 

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(b) Assignments by Lenders. Any Lender may at any time assign to one or more
assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitments and the Loans (including for
purposes of this subsection (b), participations in L/C Obligations) at the time
owing to it); provided that any such assignment shall be subject to the
following conditions:

(i) Minimum Amounts.

(A) in the case of an assignment of the entire remaining amount of the assigning
Lender’s Commitment under any Facility and the Loans at the time owing to it
under such Facility or in the case of an assignment to a Lender, an Affiliate of
a Lender or an Approved Fund, no minimum amount need be assigned; and

(B) in any case not described in subsection (b)(i)(A) of this Section, the
aggregate amount of the Commitment (which for this purpose includes Loans
outstanding thereunder) or, if the Commitment is not then in effect, the
principal outstanding balance of the Loans of the assigning Lender subject to
each such assignment, determined as of the date the Assignment and Assumption
with respect to such assignment is delivered to the Administrative Agent or, if
“Trade Date” is specified in the Assignment and Assumption, as of the Trade
Date, shall not be less than $2,500,000, in the case of any assignment in
respect of the Revolving Credit Facility, or $1,000,000, in the case of any
assignment in respect of the Term Loan Facility, unless each of the
Administrative Agent and, so long as no Event of Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to be
unreasonably withheld or delayed); provided, however, that concurrent
assignments to members of an Assignee Group and concurrent assignments from
members of an Assignee Group to a single Eligible Assignee (or to an Eligible
Assignee and members of its Assignee Group) will be treated as a single
assignment for purposes of determining whether such minimum amount has been met.

(ii) Proportionate Amounts. Each partial assignment shall be made as an
assignment of a proportionate part of all the assigning Lender’s rights and
obligations under this Agreement with respect to the Loans or the Commitment
assigned, except that this clause (ii) shall not prohibit any Lender from
assigning all or a portion of its rights and obligations among separate
Facilities on a non-pro rata basis;

(iii) Required Consents. No consent shall be required for any assignment except
to the extent required by subsection (b)(i)(B) of this Section and, in addition:

(A) the consent of the Borrower (such consent not to be unreasonably withheld or
delayed) shall be required unless (1) an Event of Default has occurred and is
continuing at the time of such assignment or (2) such assignment is to a

 

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Lender, an Affiliate of a Lender or an Approved Fund; provided that the Borrower
shall be deemed to have consented to any such assignment unless it shall object
thereto by written notice to the Administrative Agent within 10 Business Days
after having received notice thereof;

(B) the consent of the Administrative Agent (such consent not to be unreasonably
withheld or delayed) shall be required for assignments in respect of (1) any
Term Loan Commitment or Revolving Credit Commitment if such assignment is to a
Person that is not a Lender with a Commitment in respect of the applicable
Facility, an Affiliate of such Lender or an Approved Fund with respect to such
Lender or (2) any Term Loan to a Person that is not a Lender, an Affiliate of a
Lender or an Approved Fund; and

(C) the consent of each L/C Issuer (such consent not to be unreasonably withheld
or delayed) shall be required for any assignment that increases the obligation
of the assignee to participate in exposure under one or more Letters of Credit
(whether or not then outstanding).

(iv) Assignment and Assumption. The parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Assumption, together with
a processing and recordation fee in the amount of $3,500; provided, however,
that the Administrative Agent may, in its sole discretion, elect to waive such
processing and recordation fee in the case of any assignment. The assignee, if
it is not a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire.

(v) No Assignment to Borrower or Defaulting Lender. No such assignment shall be
made to the Borrower or any of the Borrower’s Affiliates or Subsidiaries or to
any Defaulting Lender or any of a Defaulting Lender’s Affiliates or
Subsidiaries.

(vi) No Assignment to Natural Persons. No such assignment shall be made to a
natural person.

Subject to acceptance and recording thereof by the Administrative Agent pursuant
to subsection (c) of this Section, from and after the effective date specified
in each Assignment and Assumption, the assignee thereunder shall be a party to
this Agreement and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this
Agreement, and the assigning Lender thereunder shall, to the extent of the
interest assigned by such Assignment and Assumption, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under
this Agreement, such Lender shall cease to be a party hereto) but shall continue
to be entitled to the benefits of Sections 3.01, 3.04, 3.05, and 10.04 with
respect to facts and circumstances occurring prior to the effective date of such
assignment. Upon request, the Borrower (at its expense) shall execute and
deliver a Note to the assignee Lender. Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
subsection shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.

 

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(c) Register. The Administrative Agent, acting solely for this purpose as an
agent of the Borrower, shall maintain at the Administrative Agent’s Office a
copy (or the equivalent thereof in electronic form) of each Assignment and
Assumption delivered to it and a register for the recordation of the names and
addresses of the Lenders, and the Commitments of, and principal amounts of the
Loans and L/C Obligations owing to, each Lender pursuant to the terms hereof
from time to time (the “Register”). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.

(d) Participations. Any Lender may at any time, without the consent of, or
notice to, the Borrower or the Administrative Agent, sell participations to any
Person (other than a natural person or the Borrower or any of the Borrower’s
Affiliates or Subsidiaries or to any Defaulting Lender or any of a Defaulting
Lender’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion
of such Lender’s rights and/or obligations under this Agreement (including all
or a portion of its Commitment and/or the Loans (including such Lender’s
participations in L/C Obligations) owing to it); provided that (i) such Lender’s
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrower, the Administrative Agent, the Lenders
and the L/C Issuers shall continue to deal solely and directly with such Lender
in connection with such Lender’s rights and obligations under this Agreement.
Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, waiver or other modification described in the first proviso to
Section 10.01 that affects such Participant. Subject to subsection (e) of this
Section, the Borrower agrees that each Participant shall be entitled to the
benefits of Sections 3.01, 3.04 and 3.05 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to subsection (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.13 as though it were a
Lender. Each Lender that sells a participation shall, acting solely for this
purpose as a nonfiduciary agent of the Borrower, maintain a register on which it
enters the name and address of each Participant and the principal amounts (and
stated interest) of each Participant’s interest in the Loans or other
obligations under the Loan Documents (the “Participant Register”); provided that
no Lender shall have any obligation to disclose all or any portion of the
Participant Register to any Person (including the identity of any Participant or
any information relating to a Participant’s interest in any commitments, loans,
letters of credit or its other obligations under any Loan Document) except to
the extent that such disclosure is necessary to establish that such commitment,
loan, letter of credit or other obligation is in registered form under
Section 5f.103-1(c) of the United States Treasury Regulations. The entries in
the Participant Register shall be conclusive absent manifest error, and such
Lender shall treat each Person whose name is recorded in the Participant
Register as the owner of such participation for all purposes of this Agreement
notwithstanding any notice to the contrary.

 

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(e) Limitations upon Participant Rights. A Participant shall not be entitled to
receive any greater payment under Section 3.01 or 3.04 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 3.01 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 3.01(e) as though it were a Lender.

(f) Certain Pledges. Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement (including
under its Note, if any) to secure obligations of such Lender, including any
pledge or assignment to secure obligations to a Federal Reserve Bank or other
central bank having jurisdiction over such Lender; provided that no such pledge
or assignment shall release such Lender from any of its obligations hereunder or
substitute any such pledgee or assignee for such Lender as a party hereto.

(g) Resignation as L/C Issuer after Assignment. Notwithstanding anything to the
contrary contained herein, if at any time Bank of America acting as an L/C
Issuer or other Lender that has issued a then-outstanding Letter of Credit
assigns all of its Revolving Credit Commitment and Revolving Credit Loans
pursuant to subsection (b) above, Bank of America or such other Lender, as
applicable, may, (i) upon 30 days’ notice to the Borrower and the Lenders,
resign as an L/C Issuer. In the event of any such resignation as L/C Issuer, the
Borrower shall be entitled to appoint from among the Lenders a successor L/C
Issuer hereunder; provided, however, that no failure by the Borrower to appoint
any such successor shall affect the resignation of Bank of America or such other
assigning Lender as L/C Issuer, as the case may be. If Bank of America or such
other assigning Lender resigns as an L/C Issuer, it shall retain all the rights,
powers, privileges and duties of an L/C Issuer hereunder with respect to all
Letters of Credit outstanding as of the effective date of its resignation as an
L/C Issuer and all L/C Obligations with respect thereto (including the right to
require the Lenders to make Base Rate Loans or fund risk participations in
Unreimbursed Amounts pursuant to Section 2.03(c)). Upon the appointment of a
successor L/C Issuer, (a) such successor shall succeed to and become vested with
all of the rights, powers, privileges and duties of the retiring L/C Issuer, and
(b) the successor L/C Issuer shall issue letters of credit in substitution for
the Letters of Credit, if any, outstanding at the time of such succession or
make other arrangements satisfactory to Bank of America or such other retiring
L/C Issuer, as the case may be, to effectively assume the obligations of Bank of
America or such other retiring L/C Issuer, as the case may be, with respect to
such Letters of Credit.

Section 10.07 Treatment of Certain Information; Confidentiality. Each of the
Administrative Agent, the other Agents, the Lenders and the L/C Issuers agrees
to maintain the confidentiality of the Information (as defined below), except
that Information may be disclosed (a) to its Affiliates and to its and its
Affiliates’ respective partners, directors, officers, employees, agents,
trustees, advisors and representatives (it being understood that the Persons to
whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the
extent requested by any regulatory authority purporting to have jurisdiction
over it (including any self-regulatory authority, such as the National
Association of Insurance Commissioners), (c) to the extent required by
applicable laws

 

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or regulations or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with the exercise of any remedies hereunder or
under any other Loan Document or any action or proceeding relating to this
Agreement or any other Loan Document or the enforcement of rights hereunder or
thereunder, (f) subject to an agreement containing provisions substantially the
same as those of this Section, to (i) any assignee of or Participant in, or any
prospective assignee of or Participant in, any of its rights or obligations
under this Agreement or any Eligible Assignee invited to be a Lender pursuant to
Section 2.14(c) or Section 2.15(c) or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Borrower and its obligations, (g) with the consent of the Borrower or (h) to
the extent such Information (i) becomes publicly available other than as a
result of a breach of this Section or (ii) becomes available to the
Administrative Agent, any other Agent, any Lender, any L/C Issuer or any of
their respective Affiliates on a nonconfidential basis from a source other than
the Borrower.

For purposes of this Section, “Information” means all information received from
any Loan Party or any Subsidiary thereof relating to any Loan Party or any
Subsidiary thereof or any of their respective businesses, other than any such
information that is available to the Administrative Agent, any other Agent, any
Lender or any L/C Issuer on a nonconfidential basis prior to disclosure by any
Loan Party or any Subsidiary thereof, provided that, in the case of information
received from a Loan Party or any such Subsidiary after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.

Each of the Administrative Agent, the other Agents, the Lenders and the L/C
Issuers acknowledges that (a) the Information may include material non-public
information concerning the Borrower or a Subsidiary, as the case may be, (b) it
has developed compliance procedures regarding the use of material non-public
information and (c) it will handle such material non-public information in
accordance with applicable Law, including United States Federal and state
securities Laws.

Section 10.08 Right of Setoff. If an Event of Default shall have occurred and be
continuing, each Lender, each L/C Issuer and each of their respective Affiliates
is hereby authorized at any time and from time to time, to the fullest extent
permitted by applicable law, to set off and apply any and all deposits (general
or special, time or demand, provisional or final, in whatever currency) at any
time held and other obligations (in whatever currency) at any time owing by such
Lender, such L/C Issuer or any such Affiliate to or for the credit or the
account of the Borrower against any and all of the obligations of the Borrower
now or hereafter existing under this Agreement or any other Loan Document to
such Lender or such L/C Issuer, irrespective of whether or not such Lender or
such L/C Issuer shall have made any demand under this Agreement or any other
Loan Document and although such obligations of the Borrower may be contingent or
unmatured or are owed to a branch or office of such Lender or such L/C Issuer
different from the branch or office holding such deposit or obligated on such
indebtedness; provided, that in the event that any Defaulting Lender shall
exercise any such right of setoff hereunder, (i) all amounts so set off shall be
paid over immediately to the Administrative Agent

 

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for further application in accordance with the provisions of Section 2.16 and,
pending such payment, shall be segregated by such Defaulting Lender from its
other funds and deemed held in trust for the benefit of the Administrative
Agent, the L/C Issuer and the Lenders, and (y) the Defaulting Lender shall
provide promptly to the Administrative Agent a statement describing in
reasonable detail the Obligations owing to such Defaulting Lender as to which it
exercised such right of setoff. The rights of each Lender, such L/C Issuer and
their respective Affiliates under this Section are in addition to other rights
and remedies (including other rights of setoff) that such Lender, such L/C
Issuer or their respective Affiliates may have. Each Lender and each L/C Issuer
agrees to notify the Borrower and the Administrative Agent promptly after any
such setoff and application, provided that the failure to give such notice shall
not affect the validity of such setoff and application.

Section 10.09 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the
Loan Documents shall not exceed the maximum rate of non-usurious interest
permitted by applicable Law (the “Maximum Rate”). If the Administrative Agent or
any Lender shall receive interest in an amount that exceeds the Maximum Rate,
the excess interest shall be applied to the principal of the Loans or, if it
exceeds such unpaid principal, refunded to the Borrower. In determining whether
the interest contracted for, charged, or received by the Administrative Agent or
a Lender exceeds the Maximum Rate, such Person may, to the extent permitted by
applicable Law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments
and the effects thereof, and (c) amortize, prorate, allocate, and spread in
equal or unequal parts the total amount of interest throughout the contemplated
term of the Obligations hereunder.

Section 10.10 Counterparts; Integration; Effectiveness. This Agreement may be
executed in counterparts (and by different parties hereto in different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and the other
Loan Documents constitute the entire contract among the parties relating to the
subject matter hereof and supersede any and all previous agreements and
understandings, oral or written, relating to the subject matter hereof. Except
as provided in Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof that, when taken together, bear the
signatures of each of the other parties hereto. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy or other
electronic imaging means shall be effective as delivery of a manually executed
counterpart of this Agreement.

Section 10.11 Survival of Representations and Warranties. All representations
and warranties made hereunder and in any other Loan Document or other document
delivered pursuant hereto or thereto or in connection herewith or therewith
shall survive the execution and delivery hereof and thereof. Such
representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by
the Administrative Agent or any Lender or on their behalf and notwithstanding
that the Administrative Agent or any Lender may have had notice or knowledge of
any Default at the time of any Credit Extension, and shall continue in full
force and effect as long as any Loan or any other Obligation hereunder shall
remain unpaid or unsatisfied or any Letter of Credit shall remain outstanding.

 

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Section 10.12 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality,
validity and enforceability of the remaining provisions of this Agreement and
the other Loan Documents shall not be affected or impaired thereby and (b) the
parties shall endeavor in good faith negotiations to replace the illegal,
invalid or unenforceable provisions with valid provisions the economic effect of
which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.

Section 10.13 Replacement of Lenders. If any Lender requests compensation under
Section 3.04, or if the Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 3.01, if any Lender is a Non-Consenting Lender or a Defaulting Lender,
or if any other circumstance exists hereunder that gives the Borrower the right
to replace a Lender as a party hereto, then the Borrower may, at its sole
expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with
and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this
Agreement and the related Loan Documents to an assignee that shall assume such
obligations (which assignee may be another Lender, if a Lender accepts such
assignment), provided that:

(a) the Borrower shall have paid to the Administrative Agent the assignment fee
specified in Section 10.06(b);

(b) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans and L/C Advances, accrued interest thereon,
accrued fees and all other amounts payable to it hereunder and under the other
Loan Documents (including any amounts under Section 3.05) from the assignee (to
the extent of such outstanding principal and accrued interest and fees) or the
Borrower (in the case of all other amounts);

(c) in the case of any such assignment resulting from a claim for compensation
under Section 3.04 or payments required to be made pursuant to Section 3.01,
such assignment will result in a reduction in such compensation or payments
thereafter;

(d) such assignment does not conflict with applicable Laws; and

(e) in connection with any such replacement, if any such Non-Consenting Lender
or Defaulting Lender does not execute and deliver to the Administrative Agent a
duly executed Assignment and Assumption reflecting such replacement within five
(5) Business Days of the date on which the assignee Lender executes and delivers
such Assignment and Assumption to such Non-Consenting Lender or Defaulting
Lender, then such Non-Consenting Lender or Defaulting Lender shall be deemed to
have executed and delivered such Assignment and Assumption without any action on
the part of the Non-Consenting Lender or Defaulting Lender.

 

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A Lender shall not be required to make any such assignment or delegation if,
prior thereto, as a result of a waiver by such Lender or otherwise, the
circumstances entitling the Borrower to require such assignment and delegation
cease to apply.

Section 10.14 Governing Law; Jurisdiction; Etc.

(a) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

(b) SUBMISSION TO JURISDICTION. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY
SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE AND COUNTY OF NEW YORK AND OF THE UNITED STATES DISTRICT
COURT OF THE SOUTHERN DISTRICT OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY
JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES
THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A
FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE
ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER
PROVIDED BY LAW. NOTHING IN THIS AGREEMENT OR IN ANY OTHER LOAN DOCUMENT SHALL
AFFECT ANY RIGHT THAT THE ADMINISTRATIVE AGENT, ANY LENDER OR ANY L/C ISSUER MAY
OTHERWISE HAVE TO BRING ANY ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT AGAINST THE BORROWER OR ITS PROPERTIES IN THE COURTS OF
ANY JURISDICTION.

(c) WAIVER OF VENUE. THE BORROWER IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED
TO IN PARAGRAPH (B) OF THIS SECTION. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE
DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING
IN ANY SUCH COURT.

(d) SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF
PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.02. NOTHING IN THIS
AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY APPLICABLE LAW.

 

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Section 10.15 Waiver of Jury Trial. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH
OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

Section 10.16 No Advisory or Fiduciary Responsibility. In connection with all
aspects of each transaction contemplated hereby (including in connection with
any amendment, waiver or other modification hereof or of any other Loan
Document), the Borrower acknowledges and agrees, and acknowledges its
Affiliates’ understanding, that: (i) (A) the arranging and other services
regarding this Agreement provided by the Administrative Agent and the Arranger
are arm’s-length commercial transactions between the Borrower and its
Affiliates, on the one hand, and the Administrative Agent and the Arranger, on
the other hand, (B) the Borrower has consulted its own legal, accounting,
regulatory and tax advisors to the extent it has deemed appropriate, and (C) the
Borrower is capable of evaluating, and understands and accepts, the terms, risks
and conditions of the transactions contemplated hereby and by the other Loan
Documents; (ii) (A) the Administrative Agent and the Arranger each is and has
been acting solely as a principal and, except as expressly agreed in writing by
the relevant parties, has not been, is not, and will not be acting as an
advisor, agent or fiduciary for the Borrower or any of its Affiliates, or any
other Person and (B) neither the Administrative Agent nor the Arranger has any
obligation to the Borrower or any of its Affiliates with respect to the
transactions contemplated hereby except those obligations expressly set forth
herein and in the other Loan Documents; and (iii) the Administrative Agent and
the Arranger and their respective Affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Borrower and
its Affiliates, and neither the Administrative Agent nor the Arranger has any
obligation to disclose any of such interests to the Borrower or its Affiliates.
To the fullest extent permitted by law, the Borrower hereby waives and releases
any claims that it may have against the Administrative Agent and the Arranger
with respect to any breach or alleged breach of agency or fiduciary duty in
connection with any aspect of any transaction contemplated hereby.

Section 10.17 Electronic Execution of Assignments and Certain Other Documents.
The words “execution,” “signed,” “signature,” and words of like import in any
Assignment and Assumption or in any amendment or other modification hereof
(including waivers and consents) shall be deemed to include electronic
signatures or the keeping of records in electronic form, each of which shall be
of the same legal effect, validity or enforceability as a manually executed
signature or the use of a paper-based recordkeeping system, as the case may be,
to the extent and as provided for in any applicable law, including the Federal
Electronic Signatures in Global and National Commerce Act, the New York State
Electronic Signatures and Records Act, or any other similar state laws based on
the Uniform Electronic Transactions Act.

 

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Section 10.18 USA PATRIOT Act. Each Lender that is subject to the Act (as
hereinafter defined) and the Administrative Agent (for itself and not on behalf
of any Lender) hereby notifies the Borrower and each other Loan Party that
pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L. 107-56
(signed into law October 26, 2001)) (the “Act”), it is required to obtain,
verify and record information that identifies the Borrower and each other Loan
Party, which information includes the name and address of each Loan Party and
other information that will allow such Lender or the Administrative Agent, as
applicable, to identify each Loan Party in accordance with the Act. The Borrower
shall, promptly following a request by the Administrative Agent or any Lender,
provide all documentation and other information that the Administrative Agent or
such Lender requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and regulations,
including the Act.

Section 10.19 Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due hereunder or any other Loan
Document in one currency into another currency, the rate of exchange used shall
be that at which in accordance with normal banking procedures the Administrative
Agent could purchase the first currency with such other currency on the Business
Day preceding that on which final judgment is given. The obligation of the
Borrower in respect of any such sum due from it to the Administrative Agent or
any Lender hereunder or under the other Loan Documents shall, notwithstanding
any judgment in a currency (the “Judgment Currency”) other than that in which
such sum is denominated in accordance with the applicable provisions of this
Agreement (the “Agreement Currency”), be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent or such Lender,
as the case may be, of any sum adjudged to be so due in the Judgment Currency,
the Administrative Agent or such Lender, as the case may be, may in accordance
with normal banking procedures purchase the Agreement Currency with the Judgment
Currency. If the amount of the Agreement Currency so purchased is less than the
sum originally due to the Administrative Agent or any Lender from the Borrower
in the Agreement Currency, the Borrower agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Administrative Agent or such
Lender, as the case may be, against such loss. If the amount of the Agreement
Currency so purchased is greater than the sum originally due to the
Administrative Agent or any Lender in such currency, the Administrative Agent or
such Lender, as the case may be, agrees to return the amount of any excess to
the Borrower (or to any other Person who may be entitled thereto under
applicable law).

Section 10.20 Assignment and Reallocation of Commitments, Etc. On the Closing
Date, each of the Existing Lenders under the Existing Credit Agreement hereby
sells, assigns, transfers and conveys to the Lenders hereunder, and each of the
Lenders hereunder hereby purchases and accepts, so much of the aggregate
commitments under, and loans and participations in letters of credit outstanding
under, the Existing Credit Agreement such that, immediately after giving effect
to the effectiveness of this Agreement (including any increase of the
commitments effectuated hereby), the relevant Commitments of each Lender, shall
be as set forth on Schedule 2.01 hereto (it being understood that if any Letters
of Credit are outstanding under the Existing Credit Agreement as of the Closing
Date, then each of the Revolving Credit

 

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Lenders shall have purchased and accepted from the Existing Lenders, a
participation in such outstanding Letters of Credit based on its respective
Applicable Revolving Credit Percentage). The foregoing assignments, transfers
and conveyances are without recourse to any Existing Lender and without any
warranties whatsoever by the Administrative Agent, the L/C Issuer or any
Existing Lender as to title, enforceability, collectability, documentation or
freedom from liens or encumbrances, in whole or in part, other than that the
warranty of any such Existing Lender that it has not previously sold,
transferred, conveyed or encumbered such interests. The Existing Lenders and the
Lenders shall, if appropriate, make all appropriate adjustments in payments
under the Existing Credit Agreement, the “Notes” and the other “Loan Documents”
thereunder for periods prior to the adjustment date among themselves, but in no
event shall any such adjustment of Eurodollar Rate Loans (a) constitute a
payment or prepayment of all or a portion of any Eurodollar Rate Loans or
(b) entitle any Lender to any reimbursement under Section 3.05 hereof.

Section 10.21 ENTIRE AGREEMENT. THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

(Signature pages begin on following page)

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.

 

PARKER DRILLING COMPANY By:   /s/ W. Kirk Brassfield Name: W. Kirk Brassfield

Title: Senior Vice President & Chief Financial

          Officer

 

-Signature Page to Credit Agreement-

 

S-1

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

BANK OF AMERICA, N.A., as

Administrative Agent

By:   /s/ Alan Tapley Name: Alan Tapley Title: Assistant Vice President

 

-Signature Page to Credit Agreement-

 

S-2

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

BANK OF AMERICA, N.A., as a Lender and an

L/C Issuer

By:   /s/ Joseph F. Scott Name: Joseph F. Scott Title:   Director

 

-Signature Page to Credit Agreement-

 

S-3

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

(Page intentionally left blank)

 

-Signature Page to Credit Agreement-

 

S-4

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NATIXIS, NEW YORK BRANCH, as a Co-Documentation Agent and a Lender By:   /s/
Louis P. Laville, III Name: Louis P. Laville, III Title: Managing Director By:  
/s/ Kenyatta B. Gibbs Name: Kenyatta B. Gibbs Title: Director

 

-Signature Page to Credit Agreement-

 

S-5

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WELLS FARGO BANK, N.A., as a Co-Documentation Agent and a Lender By:   /s/
Corbin Womac Name: Corbin Womac Title: Vice President

 

-Signature Page to Credit Agreement-

 

S-6

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WHITNEY BANK, as a Co-Documentation Agent and a Lender By:   /s/ Paul Cole Name:
Paul Cole Title: Senior Vice President

 

-Signature Page to Credit Agreement-

 

S-7

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

THE ROYAL BANK OF SCOTLAND plc, as a Lender By:   /s/ Todd Vaubel Name: Todd
Vaubel Title: Authorised Signatory

 

-Signature Page to Credit Agreement-

 

S-8

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

BARCLAYS BANK PLC, as a Lender By:   /s/ Vanessa A. Kurbatskiy Name: Vanessa A.
Kurbatskiy Title: Vice President

 

-Signature Page to Credit Agreement-

 

S-9

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CATERPILLAR FINANCIAL SERVICES CORPORATION, as a Lender By:   /s/ Charles C.
Shupe III Name: Charles C. Shupe III Title: Credit Manager

 

-Signature Page to Credit Agreement-

 

S-10

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HSBC BANK USA, NATIONAL ASSOCIATION, as a Lender By:   /s/ Koby West Name: Koby
West Title: Assistant Vice President

 

-Signature Page to Credit Agreement-

 

S-11

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NORTHRIM BANK, as a Lender By:   /s/ Joseph M. Beedle Name: Joseph M. Beedle
Title: President

 

-Signature Page to Credit Agreement-

 

S-12

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

DEUTSCHE BANK AG NEW YORK BRANCH, as a Lender By:   /s/ Michael Getz Name:
Michael Getz Title: Vice President By:   /s/ Marcus M. Tarkington Name: Marcus
M. Tarkington Title: Director

 

-Signature Page to Credit Agreement-

 

S-13

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

SCHEDULE I

EXISTING COLLATERAL DOCUMENTS

 

1. UCC-1 Financing Statement re: all of Debtor’s personal property naming the
indicated Debtors and Bank of America, N.A., as Administrative Agent, filed as
follows:

 

Debtor

  

Jurisdiction

   File No.      File Date  

Anachoreta, Inc.

   Nevada      2008018962-6         6/16/08   

Pardril, Inc.

   Oklahoma Co., OK      2008005729538         5/19/08   

Parker Aviation, Inc.

   Oklahoma Co., OK      2008005729942         5/19/08   

Parker Drilling Arctic Operating, Inc.

   Delaware      2008-1704673         5/16/08   

Parker Drilling Company

   Delaware      2008-1704152         5/16/08   

Parker Drilling Company North America, Inc.

   Nevada      2008018961-4         6/16/08   

Parker Drilling Company of Niger

   Oklahoma Co., OK      2008006975542         6/18/08   

Parker Drilling Company of Oklahoma, Incorporated

   Oklahoma Co., OK      2008006975441         6/18/08   

Parker Drilling Company of South America, Inc.

   Oklahoma Co., OK      2008006975340         6/18/08   

Parker Drilling Management Services, Inc.

   Nevada      2008016146-4         5/20/08   

Parker Drilling Offshore Corporation

   Nevada      2008016147-6         5/20/08   

Parker Drilling Offshore USA, L.L.C.

   Oklahoma Co., OK      2008005729841         5/19/08   

Parker North America Operations, Inc.

   Nevada      2008016148-8         5/20/08   

Parker Technology, Inc.

   Oklahoma Co., OK      2008005729740         5/19/08   

Parker Technology, L.L.C.

   Iberia Parish, LA      23-08-2050         6/17/08   

Parker Tools, LLC

   Oklahoma Co., OK      2008005729639         5/19/08   

Parker USA Resources, LLC

   Oklahoma Co., OK      2008005730025         5/19/08   

Parker-VSE, Inc.

   Nevada      2008018963-8         6/16/08   

Parker-VSE, LLC

   Nevada      2010029401-6         11/19/10   

PD Management Resources, LP

   Oklahoma Co., OK      2008005730126         5/19/08   

Quail Tools, L.P.

   Oklahoma Co., OK      2008005730227         5/19/08   

Quail USA, LLC

   Oklahoma Co., OK      2008005730328         5/19/08   

 

2.

First Preferred Fleet Mortgage by Parker Drilling Offshore USA, L.L.C. in favor
of Bank of America, N.A., as Administrative Agent for the Secured Parties, as
Trustee, under the Credit Agreement dated as of May 15, 2008, as amended by that
certain Amendment to

 

Schedule I to Credit Agreement

-1-

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

  First Preferred Fleet Mortgage dated as of June 10, 2010, from Parker Drilling
Offshore USA, L.L.C. in favor of Bank of America, N.A., as Administrative Agent,
as further amended by that certain Amendment to First Preferred Fleet Mortgage
dated as of April 27, 2012, from Parker Drilling Offshore USA, L.L.C. in favor
of Bank of America, N.A., as Administrative Agent, filed as follows:

 

               First    First    Second    Second      Initial File    Initial
   Amendment    Amendment    Amendment    Amendment

Jurisdiction

   No.    File Date    File No.    File Date    File No.    File Date

U.S. Coast

   Batch    5/19/08    Batch    6/14/2010    Batch    6/4/12 at

Guard,

   Number:       Number:       Number:    10:46 am

National Vessel

   639879,       750671,       870281,   

Documentation

   Document       Document       Document   

Center

   ID: 8911423       ID: 12159811       ID: 15251568   

 

3. Subsidiary Guaranty, dated as of May 15, 2008, by each of the Subsidiary
Guarantors in favor of the Administrative Agent, for its benefit and the ratable
benefit of each other Secured Party, as the same may have been amended,
supplemented or otherwise modified.

 

4. Irrevocable Proxy, Pledge and Security Agreement, dated as of May 15, 2008,
by each Loan Party in favor of the Administrative Agent, for its benefit and the
ratable benefit of each other Secured Party, as the same may have been amended,
supplemented or otherwise modified.

 

5. Deposit Account Control Agreement, dated as of May 15, 2008, among the
Borrower, the Administrative Agent and Bank of America, N.A., as the “Bank”,
regarding the deposit account identified by 2865065521, as the same may have
been amended, supplemented or otherwise modified.

 

6. Deposit Account Control Agreement, dated as of May 15, 2008, among the
Borrower, the Administrative Agent and Bank of America, N.A., as the “Bank”,
regarding the deposit accounts identified by 2863596694 and 2863596704, as the
same may have been amended, supplemented or otherwise modified.

 

7. Deposit Account Control Agreement, dated as of May 15, 2008, among Parker
Drilling Pacific Rim, Inc., the Administrative Agent and Bank of America, N.A.,
as the “Bank”, regarding the deposit account identified by 2867563597, as the
same may have been amended, supplemented or otherwise modified.

 

8. Deposit Account Control Agreement, dated as of May 15, 2008, among Parker
Drilling Eurasia, Inc., the Administrative Agent and Bank of America, N.A., as
the “Bank”, regarding the deposit account identified by 2867563607, as the same
may have been amended, supplemented or otherwise modified.

 

Schedule I to Credit Agreement

-2-

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

9. Collateral Account Control Agreement, dated as of May 15, 2008, among the
Borrower, the Administrative Agent and Banc of America Securities LLC, as the
“Securities Intermediary”, regarding the deposit account identified by 24901042,
as the same may have been amended, supplemented or otherwise modified.

 

10. Collateral Account Control Agreement, dated as of May 15, 2008, among Parker
Drilling Offshore Corporation, the Administrative Agent and Banc of America
Securities LLC, as the “Securities Intermediary”, regarding the deposit account
identified by 24901043, as the same may have been amended, supplemented or
otherwise modified.

 

11. Collateral Account Control Agreement, dated as of May 15, 2008, among Quail
Tools, L.P., the Administrative Agent and Regions Bank, as the “Bank”, regarding
the deposit accounts identified by 4701209190 and 4701209190 001, as the same
may have been amended, supplemented or otherwise modified

(End of Schedule I)

 

Schedule I to Credit Agreement

-3-

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

SCHEDULE 1.01(a)

EXISTING LETTERS OF CREDIT

 

Letter of
Credit
Number     

Beneficiary

   Amount      Expiration
Date     

L/C Issuer

  44164       Insurance Company of North America      463,000.00         5/07/13
      Bank of America, N.A.   457641       National Union Fire Insurance     
85,150.00         5/07/13       Bank of America, N.A.   3048897       Insurance
Company of North America      395,670.00         5/07/13       Bank of America,
N.A.   3086642       Port of Iberia      25,000.00         5/07/13       Bank of
America, N.A.   3086740       Bank of America      1,708,020.00         5/07/13
      Bank of America, N.A.   3118204       ACE American Insurance     
150,000.00         5/07/13       Bank of America, N.A.   3126215      
OilTechnoGroup LLP      1,700,000.00         1/15/13       Bank of America, N.A.
     

 

 

                   TOTAL    $ 4,526,840.00               

 

 

       

 

Schedule 1.01(a) to Credit Agreement

-1-

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

SCHEDULE 1.01(b)

ACCOUNT DEBTORS

None

 

Schedule 1.01(b) to Credit Agreement

-1-

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

SCHEDULE 1.01(c)

EXISTING TERM LOANS

 

LENDER

   AMOUNT  

Bank of America, N.A.

   $ 5,874,294.09   

Barclays Bank PLC

   $ 5,443,037.98   

Caterpillar Financial Services Corporation

   $ 1,699,902.60   

Deutsche Bank AG New York Branch

   $ 3,119,279.46   

HSBC Bank USA, National Association

   $ 1,214,216.20   

Natixis, New York Branch (after giving effect to the assignments from Liberty
Island Funding 2011-1 LTD pursuant to Section 10.20 of the Credit Agreement)

   $ 5,237,877.26   

Northrim Bank

   $ 3,935,735.16   

The Royal Bank of Scotland plc

   $ 5,874,294.09   

Wells Fargo Bank, N.A.

   $ 4,421,421.56   

Whitney Bank

   $ 4,965,725.40      

 

 

 

TOTAL:

   $ 43,000,000.00      

 

 

 

 

Schedule 1.01(c) to Credit Agreement

-1-

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

SCHEDULE 2.01

COMMITMENTS

AND APPLICABLE PERCENTAGES

 

Lender

   Revolving
Credit
Commitment      Term Loan
Commitment      Revolving Credit
Applicable
Percentage     Term Loan
Applicable
Percentage  

Bank of America, N.A.

   $ 10,500,000.02       $ 7,499,999.98         13.1250000250 %     
14.9999999600 % 

The Royal Bank of Scotland plc

     9,916,666.67         7,083,333.33         12.3958333375 %     
14.1666666600 % 

Natixis, New York Branch

     9,333,333.33         6,666,666.67         11.6666666625 %     
13.3333333400 % 

Wells Fargo Bank, N.A.

     9,333,333.33         6,666,666.67         11.6666666625 %     
13.3333333400 % 

Whitney Bank

     9,333,333.33         6,666,666.67         11.6666666625 %     
13.3333333400 % 

Barclays Bank PLC

     10,000,000.00         —           12.5000000000 %      0.0000000000 % 

Caterpillar Financial Services Corporation

     5,833,333.33         4,166,666.67         7.2916666625 %      8.3333333400
% 

HSBC Bank USA, National Association

     5,833,333.33         4,166,666.67         7.2916666625 %      8.3333333400
% 

Northrim Bank

     5,833,333.33         4,166,666.67         7.2916666625 %      8.3333333400
% 

Deutsche Bank AG New York Branch

     4,083,333.33         2,916,666.67         5.1041666625 %      5.8333333400
%    

 

 

    

 

 

    

 

 

   

 

 

 

Total

   $ 80,000,000.00       $ 50,000,000.00         100.000000000 %     
100.000000000 %    

 

 

    

 

 

    

 

 

   

 

 

 

 

Schedule 2.01 to Credit Agreement

-1-

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

SCHEDULE 5.02

CONSENTS, AUTHORIZATIONS, FILINGS AND NOTICES

Consents of the partners of the following limited partnerships with respect to
pledge of any partnership interests in such limited partnerships, which have
been obtained:

Quail Tools, L.P.

 

Schedule 5.02 to Credit Agreement

-1-

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

SCHEDULE 5.04

LITIGATION

The Borrower received requests from the United States Department of Justice
(DOJ) in July 2007 and the United States Securities and Exchange Commission
(SEC) in January 2008 relating to the Borrower’s utilization of the services of
a customs agent. In particular, the DOJ and the SEC are investigating certain of
the Borrower’s operations relating to countries in which it currently operate or
formerly operated, including Kazakhstan and Nigeria. The Borrower is fully
cooperating with the DOJ and SEC investigations and conducted an internal
investigation into potential customs and other issues in Kazakhstan and Nigeria.
The internal investigation has identified issues relating to potential
non-compliance with applicable laws and regulations, including the FCPA, with
respect to operations in Kazakhstan and Nigeria. At this point, the Borrower is
unable to predict the duration, scope or result of the DOJ or the SEC
investigation or whether either agency will commence any legal action. The
Borrower is currently in continuing discussions with the DOJ and SEC regarding a
potential settlement of this matter, but no agreement has been reached with
either agency.

The DOJ and the SEC have a broad range of civil and criminal sanctions under the
FCPA and other laws and regulations, which they may seek to impose against
corporations and individuals in appropriate circumstances including, but not
limited to, injunctive relief, disgorgement, fines, penalties and modifications
to business practices and compliance programs. In addition, corporations may
have to end or modify existing business relationships. Any of these remedial
measures, if applicable to the Borrower, could have a material adverse impact on
our business, results of operations, financial condition and liquidity.

 

Schedule 5.04 to Credit Agreement

-1-

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

SCHEDULE 5.07

SPECIFIED RIGS

 

Owner

  

Vessel Name

   Official
Number      Flagged
Jurisdiction

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 8-B      598345       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 12-B      617093       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 15-B      599619       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 20-B      634630       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 21-B      616392       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 50-B      640365       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 51-B      640959       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 54-B      628668       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 55-B      643082       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 56-B      612937       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 72      642929       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 76-B      594111       U.S.

Parker Drilling Offshore USA, L.L.C.

   Parker Drilling 77-B      600135       U.S.

 

Schedule 5.07 to Credit Agreement

-1-

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

SCHEDULE 5.14

SUBSIDIARIES, AND

OTHER EQUITY INVESTMENTS

 

(a). Subsidiaries.

Part (i)

 

                    

Type*

(M=Material;

I=Immaterial;

     Jurisdiction         %     E=Excluded;      of         Ownership    
P=Project

Subsidiary

   Formation   

Owner

   Interest     Finance) Anachoreta, Inc.    Nevada    Parker Drilling Company
     100 %    M AralParker CJSC    Kazakhstan    Parker Drilling (Kazakstan),
LLC      100 %    E Canadian Rig Leasing, Inc.    Oklahoma    Parker Drilling
Company      100 %    I Casuarina Ltd.    Bermuda    Parker Drilling Company   
  100 %    E Choctaw International Rig Corp.    Nevada    Parker Drilling
Domestic Holding Company, LLC      100 %    E Creek International Rig Corp.   
Nevada    Parker Drilling Domestic Holding Company, LLC      100 %    E DGH,
Inc.    Texas    Parker Drilling Company      100 %    E Indocorp of Oklahoma,
Inc.    Oklahoma    Parker Drilling Company      100 %    I KDN Drilling Limited
   Nigeria    Parker Drilling Offshore International, Inc.      100 %    E
Mallard Argentine Holdings, Ltd.    Cayman Islands    Parker Drilling Offshore
Corporation      100 %    E Mallard Drilling of South America, Inc.    Cayman
Islands    Parker Drilling Offshore Corporation      100 %    E Mallard Drilling
of Venezuela, Inc.    Cayman Islands    Parker Drilling Offshore Corporation   
  100 %    E Pardril, Inc.    Oklahoma    Parker Drilling Company      100 %   
I Parker 3source, LLC    Delaware    PD Offshore Holdings CV      100 %    E
Parker 5272, LLC    Delaware    PD International Holdings CV      100 %    E
Parker Aviation, Inc.    Oklahoma    Parker Drilling Company      100 %    M
Parker Central Europe Rig Holdings Limited Liability Company    Hungary   
Parker Drilling (Kazakstan), LLC      100 %    E Parker Drillex, LLC    Delaware
   PD Selective Holdings CV      100 %    E Parker Drilling Arctic Operating
Inc.    Delaware    Parker Drilling Company      100 %    M Parker Drilling Asia
Pacific, LLC    Delaware    Parker Drilling Company      100 %    E

 

Schedule 5.14 to Credit Agreement

-1-

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

                    

Type*

(M=Material;

I=Immaterial;

     Jurisdiction         %     E=Excluded;      of         Ownership    
P=Project

Subsidiary

   Formation   

Owner

   Interest     Finance) Parker Drilling AME Limited    Cayman Islands    PD
Selective Holdings CV      100 %    E Parker Drilling Company (Bolivia) S.A.   
Bolivia    Parker Drilling Company      100 %    E Parker Drilling Company
Eastern Hemisphere, Ltd.    Oklahoma    Parker Drilling Eurasia, Inc.      100
%    E Parker Drilling Company International LLC    Delaware    PD Dutch
Holdings CV      100 %    E Parker Drilling Company International Limited   
Nevada    Parker Drilling Eurasia, Inc.      100 %    E Parker Drilling Company
Kuwait Limited    Bahamas    PD Selective Holdings CV      99 %    E Parker
Drilling Company Limited (Bahamas)    Bahamas    Parker-VSE, LLC      100 %    E
Parker Drilling Company Limited LLC    Delaware    Parker Drilling Company     
100 %    I Parker Drilling Company North America, Inc.    Nevada    Parker North
America Operations, Inc.      100 %    I Parker Drilling Company of Argentina,
Inc.    Nevada    Parker Drilling Domestic Holding Company, LLC      100 %    I
Parker Drilling Company of Bolivia, Inc.    Oklahoma    Parker Drilling Company
     100 %    I Parker Drilling Company of Mexico, LLC    Nevada    Parker
Drilling Offshore USA, L.L.C.      100 %    I Parker Drilling Company of New
Guinea, LLC    Delaware    PD Selective Holdings CV      100 %    E Parker
Drilling Company of New Zealand    New Zealand    PD Dutch Holdings CV      100
%    E Parker Drilling Company of Niger    Oklahoma    Parker Drilling Company
     100 %    I Parker Drilling Company of Oklahoma, Incorporated    Oklahoma   
Parker Drilling Company      100 %    M Parker Drilling Company of Sakhalin   
Russia    PD Selective Holdings CV      100 %    E Parker Drilling Company of
Singapore, LLC    Delaware    PD Selective Holdings CV      100 %    E

 

Schedule 5.14 to Credit Agreement

-2-

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

                    

Type*

(M=Material;

I=Immaterial;

     Jurisdiction         %     E=Excluded;      of         Ownership    
P=Project

Subsidiary

   Formation   

Owner

   Interest     Finance) Parker Drilling Company of South America, Inc.   
Oklahoma    Parker Drilling Company      100 %    I Parker Drilling de Mexico,
S. de R.L. de C.V.    Mexico    Parker Drilling Offshore Corporation      2 %   
E       Parker Drilling Offshore USA, L.L.C.      98 %    Parker Drilling
Domestic Holding Company, LLC    Delaware    Parker Drilling Company      100 % 
  E Parker Drilling Dutch BV    Netherlands    PD Dutch Holdings CV      100 % 
  E Parker Drilling Eurasia, Inc.    Delaware    Parker Drilling Offshore
Corporation      35.22 %    E       Parker Drilling International Holding
Company, LLC      64.78 %    Parker Drilling International BV    Netherlands   
Parker Drilling Netherlands BV      100 %    E Parker Drilling International
Holding Company, LLC    Delaware    Parker Drilling Company      100 %    E
Parker Drilling International of New Zealand Limited    New Zealand    PD Dutch
Holdings CV      100 %    E Parker Drilling Investment Company    Oklahoma   
Parker Drilling Company      100 %    E Parker Drilling (Kazakhstan), LLC   
Delaware    PD Dutch Holdings CV      100 %    E Parker Drilling Kazakhstan BV
   Netherlands    Parker Drilling Netherlands BV      100 %    E Parker Drilling
Management Services, Inc.    Nevada    Parker Drilling Company      100 %    M
Parker Drilling (Nigeria), Limited    Nigeria    Parker Drilling Offshore
International, Inc.      100 %    E Parker Drilling Netherlands BV   
Netherlands    PD Selective Holdings CV      100 %    E Parker Drilling Offshore
BV    Netherlands    Parker Drilling Dutch BV      100 %    E Parker Drilling
Offshore Corporation    Nevada    Parker North America Operations, Inc.      100
%    M Parker Drilling Offshore International, Inc.    Cayman Islands    Parker
Drilling Offshore Corporation      100 %    E Parker Drilling Offshore USA,
L.L.C.    Oklahoma    Parker Drilling Offshore Corporation      100 %    M

 

Schedule 5.14 to Credit Agreement

-3-

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

                    

Type*

(M=Material;

I=Immaterial;

     Jurisdiction         %     E=Excluded;      of         Ownership    
P=Project

Subsidiary

   Formation   

Owner

   Interest     Finance) Parker Drilling Overseas BV    Netherlands    Parker
Drilling Netherlands BV      100 %    E Parker Drilling Pacific Rim, Inc.   
Delaware    Parker Drilling Offshore Corporation      26 %    E       Parker
Drilling Domestic Holding Company, LLC      74 %    Parker Drilling Russia BV   
Netherlands    Parker Drilling Netherlands BV      100 %    E Parker Drilling
Spain Rig Services, S.L.    Spain    Parker Hungary Rig Holdings LLC      100 % 
  E Parker Drilling Tengiz, Ltd.    Kazakhstan    Parker Drilling Company     
99 %    E Parker Drillserv, LLC    Delaware    Parker Drilling Eurasia, Inc.   
  100 %    E Parker Drillsource, LLC    Delaware    PD Selective Holdings CV   
  100 %    E Parker Drilltech, LLC    Delaware    Parker Drilling Eurasia, Inc.
     100 %    E Parker Enex, LLC    Delaware    Parker Drilling Offshore USA
L.L.C.      100 %    I Parker Hungary Rig Holdings LLC    Hungary    Parker
Drillsource, LLC      100 %    E Parker Intex, LLC    Delaware    Parker
Drilling Company      100 %    I Parker North America Operations, Inc.    Nevada
   Parker Drilling Company      100 %    M Parker Rigsource, LLC    Delaware   
Parker Drilling Pacific Rim, Inc.      100 %    I Parker Technology, Inc.   
Oklahoma    Parker Drilling Company      100 %    M Parker Technology, L.L.C.   
Louisiana    Parker Drilling Offshore Corporation      100 %    I Parker Tools,
LLC    Oklahoma    Parker Drilling Offshore Corporation      100 %    M Parker
USA Drilling Company    Nevada    Parker North America Operations, Inc.      100
%    I Parker-VSE, LLC    Nevada    Parker Drilling Company      100 %    I PD
Dutch Holdings CV    Netherlands   

PD International Holdings

CV

     99.96 %    E       Parker 5272, LLC      .04 %   

 

Schedule 5.14 to Credit Agreement

-4-

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

                    

Type*

(M=Material;

I=Immaterial;

     Jurisdiction         %     E=Excluded;      of         Ownership    
P=Project

Subsidiary

   Formation   

Owner

   Interest     Finance) PD International Holdings CV    Netherlands    Parker
Drilling Company      .04 %    E       Parker Drilling Pacific Rim, Inc.     
99.88 %          Parker Intex      .04 %          Parker Rigsource      .04 %   
PD Personnel Services, Ltd.    Cayman Islands    PD Selective Holdings CV     
100 %    E PD Labor Sourcing, Ltd.    Cayman Islands    PD Selective Holdings CV
     100 %    E PD Offshore Holdings CV    Netherlands    Parker Drilling
Eurasia, Inc.      99.96 %    E       Parker Drillserv, LLC      0.02 %         
Parker Drilltech, LLC      0.02 %    PD Selective Holdings CV    Netherlands   
PD Offshore Holdings CV      99.97 %    E       Parker 3source. LLC      0.03 % 
  PD Servicios Integrales, S. de R.L. de C.V.    Mexico    Parker Drilling
Offshore Corporation      98 %    E       Parker Drilling Offshore USA, L.L.C.
     2 %    PKD Sales Corporation    Oklahoma    Parker Drilling Company     
100 %    E Quail Tools, L.P.    Oklahoma    General partner: Quail USA, LLC     
1 %    M       Limited partner: Parker Tools, LLC      99 %    Quail USA, LLC   
Oklahoma    Parker Drilling Offshore Corporation      100 %    M Selective
Drilling Corporation    Oklahoma    Parker Drilling Company      100 %    E
Universal Rig Service LLC    Delaware    Parker Drilling Company      100 %    E

NOTE: Effective December 31, 2012, PD Management Resources, L.P., Parker
Offshore Resources, L.P., and Parker USA Resources, LLC will merge with and into
Parker Drilling Management Services, Inc., with Parker Drilling Management
Services, Inc. being the surviving entity. Consequently, only Parker Drilling
Management Services, Inc. is listed above as a subsidiary.

NOTE: As of the date of this Agreement, there are not any Project Finance
Subsidiaries.

 

Schedule 5.14 to Credit Agreement

-5-

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

Part (ii) Other Equity Investments.

 

     Jurisdiction of    Parker Entity    Ownership      

Name

  

Formation

  

Owner

   Percentage    

Other Owner(s)

Primorsky Drill Rig Services B.V.    Netherlands    Parker Drilling Netherlands
B.V.      50 %    Vladivostok Development Corporation SaiPar Drilling Company BV
   Netherlands    Parker Drilling Dutch BV      50 %    Saipem International BV
Parker SMNG Drilling LLC    Russia    Parker Drilling Company International LLC
     50 %    JSC Sakhalinmorneftemontaz

 

(b). OUTSTANDING SUBSCRIPTIONS, OPTIONS, WARRANTS, CALLS, RIGHTS, OR OTHER
AGREEMENTS OR COMMITMENTS

Those entered into in connection with the Convertible Notes pursuant to the
following agreements (collectively, the “High Strikes Agreements”):

1. Confirmation of Issuer Warrant Transaction dated as of June 28, 2007, by and
between Parker Drilling Company and Bank of America, N.A.

2. Amendment to Confirmation of Issuer Warrant Transaction, dated as of June 29,
2007, by and between Parker Drilling Company and Bank of America, N.A.

3. Confirmation of Issuer Warrant Transaction, dated as of June 28, 2007, by and
between Parker Drilling Company and Deutsche Bank AG, London Branch.

4. Amendment to Confirmation of Issuer Warrant Transaction, dated as of June 29,
2007, by and between Parker Drilling Company and Deutsche Bank AG, London
Branch.

5. Confirmation of Issuer Warrant Transaction dated as of June 28, 2007, by and
between Parker Drilling Company and Lehman Brothers OTC Derivatives Inc.

6. Amendment to Confirmation of Issuer Warrant Transaction, dated as of June 29,
2007, by and between Parker Drilling Company and Lehman Brothers OTC Derivatives
Inc. together with all instruments and other agreements entered into by the
Borrower or its Subsidiaries in connection therewith, as the same may be
amended, supplemented or otherwise modified from time to time.

 

Schedule 5.14 to Credit Agreement

-6-

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

SCHEDULE 5.16

ENVIRONMENTAL MATTERS

In 2003, the Borrower received an information request under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA) designating
Parker Drilling Offshore Corporation, a subsidiary of the Borrower, as a
potentially responsible party with respect to the Gulfco Marine Maintenance,
Inc. Superfund Site in Freeport, Texas (EPA No. TX 055144539). The Borrower
responded to this request and in January 2008 received an administrative order
to participate in an investigation of the site and a study of the remediation
needs and alternatives. The EPA alleges that the subsidiary is a successor to a
party who owned the Gulfco site during the time when chemical releases took
place there. In December 2010, the Borrower entered into an agreement with two
other potentially responsible parties, pursuant to which we agreed to pay 20
percent of past and future costs to study and remediate the site. To date, the
Borrower believes that all required activity for removal and remediation has
been completed, except for ongoing monitoring costs, and is awaiting a Notice of
Completion from the EPA. The EPA has issued notice letters to several other
parties who may also participate in funding the site remediation costs. As of
September 30, 2012, the Borrower had made certain participating payments and had
accrued $0.6 million for its portion of certain unreimbursed past costs and the
estimated future cost of remediation.

 

Schedule 5.16 to Credit Agreement

-1-

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

SCHEDULE 5.18

UCC FILING JURISDICTION;

UNITED STATES COAST GUARD FILING

UCC FILING JURISDICTIONS:

 

Loan Party

  

Filing Office

  

Filing Required

Anachoreta, Inc.

   Nevada    UCC-3 Continuation

Pardril, Inc.

   Oklahoma    UCC-3 Continuation

Parker Aviation, Inc.

   Oklahoma    UCC-3 Continuation

Parker Drilling Arctic Operating, Inc.

   Delaware    UCC-3 Continuation

Parker Drilling Company

   Delaware    UCC-3 Continuation

Parker Drilling Company North America, Inc.

   Nevada    UCC-3 Continuation

Parker Drilling Company of Niger

   Oklahoma    UCC-3 Continuation

Parker Drilling Company of Oklahoma, Incorporated

   Oklahoma    UCC-3 Continuation

Parker Drilling Company of South America, Inc.

   Oklahoma    UCC-3 Continuation

Parker Drilling Management Services, Inc.

   Nevada    UCC-3 Continuation

Parker Drilling Offshore Corporation

   Nevada    UCC-3 Continuation

Parker Drilling Offshore USA, L.L.C.

   Oklahoma    UCC-3 Continuation

Parker North America Operations, Inc.

   Nevada    UCC-3 Continuation

Parker Technology, Inc.

   Oklahoma    UCC-3 Continuation

Parker Technology, L.L.C.

   Louisiana (Iberia Parish)    UCC-3 Continuation

Parker Tools, LLC

   Oklahoma    UCC-3 Continuation

Parker-VSE, LLC

   Nevada    UCC-3 Continuation

Parker-VSE, LLC (formerly Parker-VSE, Inc.)

   Nevada    UCC-3 Amendment regarding name change

Quail Tools, L.P.

   Oklahoma    UCC-3 Continuation

Quail USA, LLC

   Oklahoma    UCC-3 Continuation

Parker USA Resources, LLC

   Oklahoma    UCC-3 Amendment regarding name change, after merger consummated

PD Management Resources, L.P.

   Oklahoma    UCC-3 Amendment regarding name change, after merger consummated

 

Schedule 5.18 to Credit Agreement

-1-

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

UNITED STATES COAST GUARD FILING:

The Third Amendment to First Preferred Fleet Mortgage is filed with the National
Vessel Documentation Center of the United States Coast Guard in Falling Waters,
West Virginia.

 

Schedule 5.18 to Credit Agreement

-2-

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

SCHEDULE 5.21

OFAC MATTERS

In 2008, the Borrower identified certain shipments of equipment and supplies
that were routed through Iran as well as other activities that may have violated
applicable U.S. laws and regulations. In addition, the Borrower engaged in
drilling wells in the Korpedje Field in Turkmenistan, from where natural gas may
be exported by pipeline to Iran. Upon completion of its internal review, the
Borrower provided the results of its review to the U.S. government. The U.S.
Treasury Department’s Office of Foreign Assets Control has since provided a
final response to our disclosure through the issuance of a cautionary letter,
which stated that these shipments appear to have violated the regulations that
it administers. No civil or criminal penalties were assessed in connection with
this matter.

 

Schedule 5.21 to Credit Agreement

-1-

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

SCHEDULE 7.01(f)

EXISTING LIENS

Secured Parties: Bank Direct Capital Finance and IPFS Corporation

Collateral: Lien on all sums payable to Parker Drilling Company with reference
to applicable insurance policies, securing indebtedness listed on Schedule
7.03(d) owed to Secured Party with respect to insurance premium financings.

 

Schedule 7.01(f) to Credit Agreement

-1-

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

SCHEDULE 7.03(d)

EXISTING INDEBTEDNESS

Notes and Loans:

 

9.125% Senior Notes due 2018 (2010 Indenture)

   $ 425,000,000   

Term Loan issued under 2008 Credit Agreement *

   $ 43,000,000   

Bank Direct Capital Finance - Insurance Premiums**

   $ 2,316,018   

IPFS Corporation - Insurance Premiums**

   $ 3,598,502   

* Term Loan to be repaid at closing of 2012 Credit Agreement

* Balances as of 12/07/12

 

Schedule 7.03(d) to Credit Agreement

-1-

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

SCHEDULE 7.05(j)

PERMITTED DISPOSITIONS

US Barge Rig 56B

 

Schedule 7.05(j) to Credit Agreement

-1-

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

SCHEDULE 10.02

ADMINISTRATIVE AGENT’S OFFICE;

CERTAIN ADDRESSES FOR NOTICES

PARKER DRILLING COMPANY:

Parker Drilling Company

Five Greenway Plaza

Suite 100

Houston, Texas 77046

Attention: Kirk Brassfield

Telephone: 281-406-2330

Telecopier: 281-406-2331

Electronic Mail: kirk.brassfield@parkerdrilling.com

Website Address: www.parkerdrilling.com

U.S. Taxpayer Identification Number(s): 73-0618660

ADMINISTRATIVE AGENT:

Administrative Agent’s Office

(for payments and Requests for Credit Extensions):

Bank of America, N.A.

901 Main Street

Mail Code: TX1-492-14-04

Dallas, Texas 75202-3714

Attention: Jackie Jones

Telephone: 972-338-3765

Telecopier: 214-290-9439

Electronic Mail: jacqueline.r.jones@baml.com

Account No.: 1292000883

Ref: Parker Drilling Company

ABA# 026-009-593

Other Notices as Administrative Agent:

Bank of America, N.A.

Agency Management

901 Main Street

Mail Code: TX1-492-14-11

Dallas, Texas 75202-3714

Attention: Alan Tapley

Telephone: 214-209-4125

Telecopier: 214-290-9507

Electronic Mail: alan.tapley@baml.com

 

Schedule 10.02 to Credit Agreement

-1-

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

BANK OF AMERICA AS AN L/C ISSUER:

Bank of America, N.A.

Trade Operations

1 Fleet Way

Mail Code: PA6-580-02-30

Scranton, PA 18507

Attention: Mary J. Cooper

Telephone: 570-330-4235

Telecopier: 570-330-4186

Electronic Mail: mary.j.cooper@baml.com

 

Schedule 10.02 to Credit Agreement

-2-

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

EXHIBIT A

FORM OF COMMITTED LOAN NOTICE

Date:                     ,         

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of [December         , 2012] (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among Parker Drilling
Company, a Delaware corporation (the “Borrower”), the Lenders from time to time
party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer,
and the other Persons from time to time party thereto.

The Borrower hereby requests (select one):

 

¨ A Borrowing of [Revolving Credit][Term] Loans

 

¨ A conversion or continuation of [Revolving Credit] [Term] Loans

 

  1. On                                                    (a Business Day).

 

  2. In the amount of $            

 

  3. Comprised of                                     

                                             [Type of Loan requested]

 

  4. For Eurodollar Rate Loans: with an Interest Period of              months.

[The Term Loan Borrowing requested herein complies with the proviso in the first
sentence of Section 2.01(a) of the Agreement.]1 [The Revolving Credit Borrowing
requested herein complies with the proviso in the first sentence of
Section 2.01(b) of the Agreement.]2

The Borrower hereby represents and warrants that the conditions specified in
Sections 4.02(a), (b) and (d) shall be satisfied on and as of the date of the
applicable Credit Extension.

 

PARKER DRILLING COMPANY By:     Name:     Title:    

 

1  Include this sentence in the case of a Term Loan Borrowing.

2  Include this sentence in the case of a Revolving Credit Borrowing

 

  A-1   Credit Agreement   Form of Committed Loan Notice  

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

EXHIBIT B

FORM OF BORROWING BASE CERTIFICATE

Date:                     ,         

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

 

(1)    Total Borrowing Base               (from Schedule I)         

 

(2)    Revolving Credit Facility         

 

(3)    Aggregate Outstanding Amount of the Revolving Credit Loans         

 

(4)    Aggregate Outstanding Amount of the L/C Obligations         

 

(5)    Aggregate Outstanding Amount of the Term Loans         

 

(6)    Aggregate unused Term Loan Commitments         

 

(7)    Borrowing Availability (Borrowing Base Deficiency)               (A) the
lesser of (1) and the sum of (2) plus (5) plus (6) minus               (B) the
sum of (3) plus (4) plus (5)         

 

This report (this “Certificate”) is submitted pursuant to Section 6.10(a) of the
Amended and Restated Credit Agreement, dated as of [December         , 2012] (as
amended, restated, extended, supplemented or otherwise modified in writing from
time to time, the “Credit Agreement”), among Parker Drilling Company, a Delaware
corporation (the “Borrower”), the Lenders from time to time party thereto, Bank
of America, N.A., as Administrative Agent and L/C Issuer, and the other Persons
from time to time party thereto. Pursuant to the Collateral Documents, the
Administrative Agent has been granted a security interest in all of the
Collateral referred to in this Certificate and has a valid perfected first
priority security interest in the Eligible Collateral, subject to the Liens
permitted under Section 7.01 of the Credit Agreement. Unless otherwise
indicated, capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Credit Agreement.

 

  B-1   Credit Agreement   Form of Borrowing Base Certificate  

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

The undersigned hereby certifies, as of the date first written above, that
(a) the amounts and calculations herein and in Schedule I accurately reflect the
Accounts, Eligible Accounts, Rental Equipment, Eligible Rental Equipment,
Specified Rigs, Eligible Specified Rigs and Outstanding Amounts and (b) no
Default or Event of Default has occurred or is continuing.

 

PARKER DRILLING COMPANY By:     Name:     Title:    

 

  B-2   Credit Agreement   Form of Borrowing Base Certificate  

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

SCHEDULE I

to Borrowing Base Certificate

Parker Drilling Company Borrowing Base Certificate for the Month Ending:
                    , 20        

 

ITEM

  

Amount

I. Accounts

   Initial deductions (pursuant to definition of Net Amount):    (Returns,
rebates, discounts, credits, allowances, taxes)    Deductions for ineligible
accounts (pursuant to definition of Eligible Accounts Receivable:    Accounts
arising out of sales to an Affiliate (paragraph (a))    Accounts more than 60
days overdue after original payment due date or more than 90 days overdue after
original invoice date or, in the case of Accounts from Qualified Account
Debtors, Accounts more than 90 days overdue after the original payment due date
or 120 days overdue after the original invoice date (paragraph (b))    Accounts
of debtors 50% or more of whose Accounts are ineligible pursuant to overdue
provision (paragraph (c))    Accounts of debtor exceeding 15% of all Accounts of
Borrower and the Subsidiary Guarantors combined or, for certain debtors, the
threshold determined in Schedule 1.01(b) (paragraph (d))    Accounts of debtor
who is creditor of Borrower or Subsidiary Guarantor; Accounts of debtor who has
disputed liability or has made claims with respect to any Accounts; Accounts
subject to any right of set-off by debtor or with respect to which any other
claim, counterclaim, chargeback, rebate, allowance or offset has been asserted
(paragraph (e))   

The amount set forth in this row shall be reduced by the portion of any Account
that would otherwise be included in this row to the extent (i) supported or
secured by an irrevocable letter of credit that has been duly transferred to the
Administrative Agent or (ii) subject to a no offset letter, all subject to the
further qualifications and limitations set forth in the definition of Eligible
Accounts Receivable (paragraph (e) proviso)

   Accounts of bankrupt debtors (paragraph (f))    Accounts of debtors outside
of the United States, Canada or Puerto Rico, unless letter of credit has been
issued (paragraph (g))    Bill-and-hold, guaranteed sale, sale-and return, sale
on approval or consignment basis or pursuant to written agreement providing for
the repurchase or return (paragraph (h))    Accounts for which the
Administrative Agent determines (in its Permitted Discretion) that collection is
insecure or that it may not be paid by reason of financial inability to pay
(paragraph (i))   

 

  B-3   Credit Agreement   Form of Borrowing Base Certificate  

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

Government Accounts (paragraph (j))    Accounts requiring additional services or
obligation or otherwise not representing final sale (paragraph (k))   
Documentation relating to the Accounts does not comply with all legal
requirements (paragraph (1))    Accounts as to which representations and
warranties are breached (paragraph (m))    Accounts subject to adverse security
deposit, progress payment or similar advance (to the extent thereof) (paragraph
(n))    Accounts relating to any instrument or chattel paper that have not been
pledged to the Administrative Agent (o))    Accounts of debtor in State
requiring filing of Notice of Business Activity Report if Borrower and
Subsidiary Guarantor have not qualified to do business or obtained such filing
(paragraph (p))    Accounts arising from progress billing or is otherwise
conditioned upon Borrower’s or Subsidiary Guarantor’s performance (paragraph
(q))    Accounts deemed ineligible by Administrative Agent (in its Permitted
Discretion) (paragraph (r))    Total ineligibles:    Eligible Accounts
Receivables:    Advance Rate:    85% Accounts availability:    II. Rental
Equipment    Net Orderly Liquidation Value:    Net Book Value:    Deductions for
ineligible rental equipment (pursuant to definition of Eligible Rental
Equipment):    Rental Equipment not solely owned by Quail Rental Tools (section
(i))    Rental Equipment not subject to Administrative Agent’s first priority
security interest (section (ii))    Rental Equipment for which Quail Rental
Tools does not have title or which is located outside continental United States,
the Gulf of Mexico and Canada (section (iii))    Rental Equipment which is
obsolete, unmerchantable or slow moving (section (iv))    Rental Equipment which
does not conform to representations and warranties in Credit Agreement (section
(v))    Rental Equipment held under Vendor Lease (section (i))   

 

  B-4   Credit Agreement   Form of Borrowing Base Certificate  

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

Rental Equipment held at leased property (unless satisfactory landlord lien
waiver has been obtained or rent reserve equal to 3 months rent on such property
has been deducted from Borrowing Base) (Section (ii))    Rental Equipment
otherwise deemed ineligible by Administrative Agent in its Permitted Discretion
(section (iii))    Total ineligibles:    Eligible Rental Equipment:    Equipment
OLV Percentage:    Advance Rate:    Rental Equipment availability:    III.
Specified Rigs    Net Orderly Liquidation Value of Specified Rigs:    Deductions
for ineligible Specified Rigs (pursuant to the definition of Eligible Specified
Rigs):    Specified Rig not solely owned by a Loan Party (section (i))   
Specified Rig not subject to Administrative Agent’s first priority Lien (section
(ii))    Specified Rig for which a Loan Party does not have title or which is
located outside continental United States or Gulf of Mexico waters subject to
state or Federal jurisdiction (section (iii))    Specified Rig which is obsolete
(section (iv))    Specified Rig which does not conform to representations and
warranties in Credit Agreement or applicable Mortgage or is not insured (section
(v))    Specified Rigs otherwise deemed ineligible by Administrative Agent in
its Permitted Discretion    Total ineligibles:    Eligible Specified Rigs:   
Net Specified Rigs OLV:    Advance Rate:    50% Specified Rigs availability:   
IV. Net Borrowing Availability    Total Borrowing Base [(i) Accounts
availability plus (ii)    Rental Equipment availability plus (iii) Specified
Rigs availability]:    Minimum Percentage of Total Borrowing Base   

attributable to Eligible Accounts Receivable:

Current Eligible Accounts Receivable as a percentage of

   20% Total Borrowing Base:    Maximum Borrowing Base Availability   

 

  B-5   Credit Agreement   Form of Borrowing Base Certificate  

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

(based on 20% minimum for Eligible Accounts Receivable):    Aggregate
Commitments under Revolving Credit Facility    plus Term Loan Facility:    Total
Borrowing Base:    Less: amounts outstanding under Revolving Credit Facility:   
Less: amounts outstanding under Letters of Credit:    Less: amounts outstanding
under Term Loan Facility:   

Less: any reserves established by the Administrative Agent pursuant to paragraph
(b) of definition of Borrowing Base and/or the second clause (ii) of the
definition of “Eligible Rental Equipment” and/or Section

2.04(b):

   Net borrowing availability:   

 

  B-6   Credit Agreement   Form of Borrowing Base Certificate  

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

EXHIBIT C-1

FORM OF TERM NOTE

 

                         

FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to
                    or registered assigns (the “Lender”), in accordance with the
provisions of the Agreement (as hereinafter defined), the principal amount of
each Term Loan from time to time made by the Lender to the Borrower under that
certain Amended and Restated Credit Agreement, dated as of [December          ,
2012] (as amended, restated, extended, supplemented or otherwise modified in
writing from time to time, the “Agreement;” the terms defined therein being used
herein as therein defined), among the Borrower, the Lenders from time to time
party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer,
and the other Persons from time to time party thereto.

The Borrower promises to pay interest on the unpaid principal amount of each
Term Loan made by the Lender from the date of such Loan until such principal
amount is paid in full, at such interest rates and at such times as provided in
the Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Term Note is one of the Term Notes referred to in the Agreement, is
entitled to the benefits thereof and may be prepaid in whole or in part subject
to the terms and conditions provided therein. This Term Note is also entitled to
the benefits of the Subsidiary Guaranty and is secured by the Collateral. Upon
the occurrence and continuation of one or more of the Events of Default
specified in the Agreement, all amounts then remaining unpaid on this Term Note
shall become, or may be declared to be, immediately due and payable all as
provided in the Agreement. Each Term Loan made by the Lender shall be evidenced
by one or more loan accounts or records maintained by the Lender in the ordinary
course of business. The Lender may also attach schedules to this Term Note and
endorse thereon the date, amount and maturity of its Loans and payments with
respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Term Note.

 

  C-1-1   Credit Agreement   Form of Term Note  

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

PARKER DRILLING COMPANY

By:

   

Name:

   

Title:

   

 

  C-1-2   Credit Agreement   Form of Term Note  

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date  

Type

of Loan

Made

 

Amount

of Loan

Made

  

End of

Interest

Period

  

Amount of
Principal

or Interest

Paid This

Date

  

Outstanding

Principal

Balance

This Date

  

Notation

Made By

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

 

  C-1-3   Credit Agreement   Form of Term Note  

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

EXHIBIT C-2

FORM OF REVOLVING CREDIT NOTE

 

                    

FOR VALUE RECEIVED, the undersigned (the “Borrower”) hereby promises to pay to
                        or registered assigns (the “Lender”), in accordance with
the provisions of the Agreement (as hereinafter defined), the principal amount
of each Revolving Credit Loan from time to time made by the Lender to the
Borrower under that certain Amended and Restated Credit Agreement, dated as of
[December         , 2012] (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among the Borrower, the
Lenders from time to time party thereto, Bank of America, N.A., as
Administrative Agent and L/C Issuer, and the other Persons from time to time
party thereto.

The Borrower promises to pay interest on the unpaid principal amount of each
Revolving Credit Loan from the date of such Loan until such principal amount is
paid in full, at such interest rates and at such times as provided in the
Agreement. All payments of principal and interest shall be made to the
Administrative Agent for the account of the Lender in Dollars in immediately
available funds at the Administrative Agent’s Office. If any amount is not paid
in full when due hereunder, such unpaid amount shall bear interest, to be paid
upon demand, from the due date thereof until the date of actual payment (and
before as well as after judgment) computed at the per annum rate set forth in
the Agreement.

This Revolving Credit Note is one of the Revolving Credit Notes referred to in
the Agreement, is entitled to the benefits thereof and may be prepaid in whole
or in part subject to the terms and conditions provided therein. This Revolving
Credit Note is also entitled to the benefits of the Subsidiary Guaranty and is
secured by the Collateral. Upon the occurrence and continuation of one or more
of the Events of Default specified in the Agreement, all amounts then remaining
unpaid on this Revolving Credit Note shall become, or may be declared to be,
immediately due and payable all as provided in the Agreement. Revolving Credit
Loans made by the Lender shall be evidenced by one or more loan accounts or
records maintained by the Lender in the ordinary course of business. The Lender
may also attach schedules to this Revolving Credit Note and endorse thereon the
date, amount and maturity of its Revolving Credit Loans and payments with
respect thereto.

The Borrower, for itself, its successors and assigns, hereby waives diligence,
presentment, protest and demand and notice of protest, demand, dishonor and
non-payment of this Revolving Credit Note.

 

  C-2-1   Credit Agreement   Form of Revolving Credit Note  

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

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.

 

PARKER DRILLING COMPANY

By:

   

Name:

   

Title:

   

 

  C-2-2   Credit Agreement   Form of Revolving Credit Note  

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

LOANS AND PAYMENTS WITH RESPECT THERETO

 

Date  

Type

of Loan

Made

 

Amount

of Loan

Made

  

End of

Interest

Period

  

Amount of
Principal

or Interest

Paid This

Date

  

Outstanding

Principal

Balance

This Date

  

Notation

Made By

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

               

 

 

 

 

 

  

 

  

 

  

 

  

 

 

  C-2-3   Credit Agreement   Form of Revolving Credit Note  

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

EXHIBIT D

FORM OF COMPLIANCE CERTIFICATE

Financial Statement Date:                         ,

 

To: Bank of America, N.A., as Administrative Agent

Ladies and Gentlemen:

Reference is made to that certain Amended and Restated Credit Agreement, dated
as of [December         , 2012] (as amended, restated, extended, supplemented or
otherwise modified in writing from time to time, the “Agreement;” the terms
defined therein being used herein as therein defined), among Parker Drilling
Company, a Delaware corporation (the “Borrower”), the Lenders from time to time
party thereto, Bank of America, N.A., as Administrative Agent and L/C Issuer,
and the other Persons from time to time party thereto.

The undersigned Responsible Officer1 hereby certifies as of the date hereof that
he/she is the                      of the Borrower, and that, as such, he/she is
authorized to execute and deliver this Certificate to the Administrative Agent
on the behalf of the Borrower, and that:

[Use following paragraph 1 for fiscal year-end financial statements]

1. The Borrower has delivered the year-end audited financial statements required
by Section 6.01(a) of the Agreement for the fiscal year of the Borrower ended as
of the above date, together with the report and opinion of an independent
certified public accountant required by Section 6.02(a). In addition, the
Borrower has delivered the Projections for the immediately succeeding fiscal
year and such Projections are based upon good faith estimates, information and
assumptions believed by management of the Borrower to be reasonable at the time
made and the undersigned has no reason to believe, as of the date hereof, that
such Projections are misleading in any material respect in light of the
circumstances under which made, or omit to state any material fact which would
render them misleading in any material respect, it being recognized by the
Lenders that such financial information as it relates to future events is not to
be viewed as fact and that actual results during the period or periods covered
by such financial information may differ from the projected results set forth
therein by a material amount.

[Use following paragraph 1 for fiscal quarter-end financial statements]

1. The Borrower has delivered the unaudited financial statements required by
Section 6.01(b) of the Agreement for the fiscal quarter of the Borrower ended as
of the above date. Such consolidated financial statements fairly state in all
material respects the financial condition, results of operations and cash flows
of the Borrower and its Subsidiaries in accordance with GAAP as at such date and
for such period, subject only to normal year-end audit adjustments and the
absence of footnotes.

 

1 

This certificate should be from the chief financial officer of the Borrower,
except in the case of each certificate delivered with monthly financial
statements other than fiscal quarter year-end which should be from the chief
financial officer, treasurer or controller.

 

  D-1   Credit Agreement   Form of Compliance Certificate  

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

2. The undersigned has reviewed and is familiar with the terms of the Agreement
and has made, or has caused to be made under his/her supervision, a detailed
review of the transactions and condition (financial or otherwise) of the
Borrower during the accounting period covered by such financial statements.

3. A review of the activities of the Borrower during such fiscal period has been
made under the supervision of the undersigned with a view to determining whether
during such fiscal period the Borrower performed and observed all its
Obligations under the Loan Documents, and

[select one:]

[to the best knowledge of the undersigned, during such fiscal period each Loan
Party performed and observed each covenant and condition of the Loan Documents
applicable to it, and no Default or Event of Default has occurred and is
continuing.]

—or—

[to the best knowledge of the undersigned, the following covenants or conditions
have not been performed or observed and the following is a list of each such
Default or Event of Default and its nature and status:]

4. The representations and warranties of the Borrower contained in Article V of
the Agreement and all representations and warranties of any Loan Party that are
contained in any document furnished at any time under or in connection with the
Loan Documents, are true and correct in all material respects on and as of the
date hereof, except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct
as of such earlier date, and except that for purposes of this Compliance
Certificate, the representations and warranties contained in subsections (a) and
(b) of Section 5.05 of the Agreement shall be deemed to refer to the most recent
statements furnished pursuant to clauses (a) and (b), respectively, of
Section 6.01 of the Agreement, including the statements in connection with which
this Compliance Certificate is delivered.

5. The financial covenant analyses and information set forth on Schedules 1 and
2 attached hereto are true and accurate on and as of the date of this
Certificate.

(Signature on following page)

 

  D-2   Credit Agreement   Form of Compliance Certificate  

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

IN WITNESS WHEREOF, the undersigned has executed this Certificate as of
                    ,         .

 

PARKER DRILLING COMPANY

By:

   

Name:

   

Title:

   

 

  D-3   Credit Agreement   Form of Compliance Certificate  

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

For the Quarter/Year ended                          (“Statement Date”)

SCHEDULE 1

to the Compliance Certificate

($ in 000’s)

 

I.   Section 7.02(a) – Consolidated Leverage Ratio.   A.    Consolidated Total
Debt at Statement Date    $               B.    Consolidated EBITDA for Subject
Period (from Schedule 2):    $               C.    Consolidated Leverage Ratio
(Line I.A ÷ Line I.B):             to 1

 

Maximum permitted:       Minimum Consolidated Leverage Four Fiscal Quarters
Ending    Ratio each fiscal quarter    4:00 to 1

 

II.   Section 7.02(b) – Consolidated Interest Coverage Ratio.   A.   
Consolidated EBITDA for measurement period ending on above date (“Subject
Period”) (from Schedule 2):    $            
  B.    Consolidated Interest Charges for Subject Period:    $               C.
   Consolidated Interest Coverage Ratio (Line II. A ÷ Line II.B):   
         to 1     

                             Minimum required:

                                                                   
                                                           Minimum Consolidated
Interest

    

                    Four Fiscal Quarters
Ending                                        
                                Coverage Ratio

                             each fiscal quarter
                                         
                                            2.50 to 1

III.   Section 7.02(c) – Consolidated Senior Secured Leverage Ratio.   A.   
Consolidated Senior Secured Debt at Statement Date    $               B.   
Consolidated EBITDA for Subject Period (from Schedule 2):    $               C.
   Consolidated Senior Secured Leverage Ratio (Line III. A ÷ Line III.B):   
         to 1

 

Maximum permitted:       Consolidated Senior Four Fiscal Quarters Ending   
Minimum Secured Leverage Ratio each fiscal quarter    1.50 to 1

 

  D-4   Credit Agreement   Form of Compliance Certificate  

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

For the Quarter/Year ended                      (“Statement Date”)

SCHEDULE 2

to the Compliance Certificate

($ in 000’s)

Consolidated EBITDA

(in accordance with the definition of Consolidated EBITDA

as set forth in the Agreement)

 

Consolidated EBITDA

   Quarter
Ended    Quarter
Ended    Quarter
Ended    Quarter
Ended    Twelve
Months
Ended

Consolidated Net Income

              

+ Consolidated Interest Charges

              

+ income taxes

              

+ depreciation expense

              

+ amortization expense

              

+ amortization of intangibles and organization cost

              

- non-recurring expenses

              

- other non-cash charges

              

- income tax credits

              

- non-recurring income or gains

              

- non-cash income

              

- cash expenditures added as non-cash charges in prior period

              

= Consolidated EBITDA

              

 

  D-5   Credit Agreement   Form of Compliance Certificate  

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

EXHIBIT E-1

ASSIGNMENT AND ASSUMPTION

This Assignment and Assumption (this “Assignment and Assumption”) is dated as of
the Effective Date set forth below and is entered into by and between
[the][each]1 Assignor identified in item 1 below ([the][each, an]2 “Assignor”)
and [the][each] Assignee identified in item 2 below ([the][each, an]
“Assignee”). [It is understood and agreed that the rights and obligations of
[the Assignors][the Assignees]3 hereunder are several and not joint.] 4
Capitalized terms used but not defined herein shall have the meanings given to
them in the Credit Agreement identified below (the “Credit Agreement”), receipt
of a copy of which is hereby acknowledged by the Assignee. The Standard Terms
and Conditions set forth in Annex 1 attached hereto are hereby agreed to and
incorporated herein by reference and made a part of this Assignment and
Assumption as if set forth herein in full.

For an agreed consideration, [the][each] Assignor hereby irrevocably sells and
assigns to [the Assignee][the respective Assignees], and [the][each] Assignee
hereby irrevocably purchases and assumes from [the Assignor][the respective
Assignors], subject to and in accordance with the Standard Terms and Conditions
and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the
respective Assignors’] rights and obligations in [its capacity as a
Lender][their respective capacities as Lenders] under the Credit Agreement and
any other documents or instruments delivered pursuant thereto to the extent
related to the amount and percentage interest identified below of all of such
outstanding rights and obligations of [the Assignor][the respective Assignors]
under the respective facilities identified below (including, without limitation,
the Letters of Credit included in such facilities5) and (ii) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of [the Assignor (in its capacity as a Lender)][the
respective Assignors (in their respective capacities as Lenders)] against any
Person, whether known or unknown, arising under or in connection with the Credit
Agreement, any other documents or instruments delivered pursuant thereto or the
loan transactions governed thereby or in any way based on or related to any of
the foregoing, including, but not limited to, contract claims, tort claims,
malpractice claims, statutory claims and all other claims at law or in equity
related to the rights and obligations sold and assigned pursuant to clause
(i) above (the rights and obligations sold and assigned by [the][any] Assignor
to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to
herein collectively as [the][an] “Assigned Interest”). Each such sale and
assignment is without recourse to [the][any] Assignor and, except as expressly
provided in this Assignment and Assumption, without representation or warranty
by [the][any] Assignor.

 

1.    Assignor[s]:   

 

        

 

   2.    Assignee[s]:   

 

        

 

  

 

 

1 

For bracketed language here and elsewhere in this form relating to the
Assignor(s), if the assignment is from a single Assignor, choose the first
bracketed language. If the assignment is from multiple Assignors, choose the
second bracketed language.

2 

For bracketed language here and elsewhere in this form relating to the
Assignee(s), if the assignment is to a single Assignee, choose the first
bracketed language. If the assignment is to multiple Assignees, choose the
second bracketed language.

3 

Select as appropriate.

4 

Include bracketed language if there are either multiple Assignors or multiple
Assignees.

5 

Include all applicable subfacilities.

 

  E-1-1   Credit Agreement   Form of Assignment and Assumption  

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

[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]

 

3. Borrower: Parker Drilling Company, a Delaware corporation

 

4. Administrative Agent: Bank of America, N.A., as the administrative agent
under the Credit Agreement

 

5. Credit Agreement: Amended and Restated Credit Agreement, dated as of
[December         , 2012], among Parker Drilling Company, as Borrower, the
Lenders from time to time party thereto, Bank of America, N.A., as
Administrative Agent and L/C Issuer, and the other Persons from time to time
party thereto

 

6. Assigned Interest:

 

                 Aggregate             Percentage                         Amount
of      Amount of      Assigned of                  Facility     
Commitment/Loans      Commitment/      Commitment/      CUSIP

Assignor[s]6

  

Assignee[s]7

   Assigned8      for all Lenders9      Loans Assigned      Loans10      Number
                                     $                            
$                                                 %              
                             $                             $                    
                            %                                           
$                             $                            
                    %      

 

[7.

Trade Date:                                          ]11

Effective Date:                         , 20__ [TO BE INSERTED BY ADMINISTRATIVE
AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE
REGISTER THEREFOR.]

 

 

6 

List each Assignor, as appropriate.

7 

List each Assignee, as appropriate.

8 

Fill in the appropriate terminology for the types of facilities under the Credit
Agreement that are being assigned under this Assignment (e.g. “Revolving Credit
Commitment”, “Term Loan Commitment”, etc.).

9 

Amounts in this column and in the column immediately to the right to be adjusted
by the counterparties to take into account any payments or prepayments made
between the Trade Date and the Effective Date.

10 

Set forth, to at least 9 decimals, as a percentage of the Commitment/Loans of
all Lenders thereunder.

11 

To be completed if the Assignor and the Assignee intend that the minimum
assignment amount is to be determined as of the Trade Date.

 

  E-1-2   Credit Agreement   Form of Assignment and Assumption  

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

The terms set forth in this Assignment and Assumption are hereby agreed to:

 

ASSIGNOR

[NAME OF ASSIGNOR]

By:     Title:  

 

ASSIGNEE

[NAME OF ASSIGNEE]

By:     Title:  

[Consented to and]12 Accepted:

 

BANK OF AMERICA, N.A., as

Administrative Agent

By:     Title:   [Consented to:]13 [COMPANY] By:     Title:  

 

 

12 

To be added only if the consent of the Administrative Agent is required by the
terms of the Credit Agreement.

13 

To be added only if the consent of the Borrower and/or other parties (e.g. L/C
Issuers) is required by the terms of the Credit Agreement.

 

  E-1-3   Credit Agreement   Form of Assignment and Assumption  

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

ANNEX 1 TO ASSIGNMENT AND ASSUMPTION

[                                                     ]14

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

1. Representations and Warranties.

1.1. Assignor. [The][Each] Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of [the][[the relevant] Assigned Interest,
(ii) [the][such] Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Assignment and Assumption and to
consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations
made in or in connection with the Credit Agreement or any other Loan Document,
(ii) the execution, legality, validity, enforceability, genuineness, sufficiency
or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other
Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates or any other
Person of any of their respective obligations under any Loan Document.

1.2. Assignee. [The][Each] Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
meets all the requirements to be an assignee under Section 10.06(b)(iii), (v),
and (vi) of the Credit Agreement (subject to such consents, if any, as may be
required under Section 10.06(b)(iii) of the Credit Agreement), (iii) from and
after the Effective Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of [the][the relevant]
Assigned Interest, shall have the obligations of a Lender thereunder, (iv) it is
sophisticated with respect to decisions to acquire assets of the type
represented by [the][such] Assigned Interest and either it, or the Person
exercising discretion in making its decision to acquire [the][such] Assigned
Interest, is experienced in acquiring assets of such type, (v) it has received a
copy of the Credit Agreement, and has received or has been accorded the
opportunity to receive copies of the most recent financial statements delivered
pursuant to Section 6.01 thereof, as applicable, and such other documents and
information as it deems appropriate to make its own credit analysis and decision
to enter into this Assignment and Assumption and to purchase [the][such]
Assigned Interest, (vi) it has, independently and without reliance upon the
Administrative Agent, any other Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Assignment and Assumption and to
purchase [the][such] Assigned Interest, and (vii) if it is a Foreign Lender,
attached hereto is any documentation required to be delivered by it pursuant to
the terms of the Credit Agreement, duly completed and executed by [the][such]
Assignee; and (b) agrees that (i) it will, independently and without reliance
upon the Administrative Agent, [the][any] Assignor or any other Lender, and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit

 

 

14 

Describe Credit Agreement at option of Administrative Agent.

 

  E-1-4   Credit Agreement   Form of Assignment and Assumption  

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

decisions in taking or not taking action under the Loan Documents, and (ii) it
will perform in accordance with their terms all of the obligations which by the
terms of the Loan Documents are required to be performed by it as a Lender.

2. Payments. From and after the Effective Date, the Administrative Agent shall
make all payments in respect of [the][each] Assigned Interest (including
payments of principal, interest, fees and other amounts) to [the][the relevant]
Assignor for amounts which have accrued to but excluding the Effective Date and
to [the][the relevant] Assignee for amounts which have accrued from and after
the Effective Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and
inure to the benefit of, the parties hereto and their respective successors and
assigns. This Assignment and Assumption may be executed in any number of
counterparts, which together shall constitute one instrument. Delivery of an
executed counterpart of a signature page of this Assignment and Assumption by
telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

 

  E-1-5   Credit Agreement   Form of Assignment and Assumption  

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

EXHIBIT E-2

FORM OF ADMINISTRATIVE QUESTIONNAIRE

(Attached hereto)

 

  E-2-1   Credit Agreement   Form of Administrative Questionnaire  

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

   LOGO [g455478g29y65.jpg]

ADMINISTRATIVE DETAILS REPLY FORM – (US DOLLAR ONLY)

CONFIDENTIAL

 

1. Borrower or Deal Name Parker Drilling Company

E-mail this document with your commitment letter to: John Howard and Alan Tapley

E-mail address of recipient: jhoward5@baml.com and alan.tapley@baml.com

 

2. Legal Name of Lender of Record for Signature Page:
                                         
                                                                      

Markit Entity Identifier (MEI) #                                          
                                         
                                                                     

Fund Manager Name (if applicable)                                          
                                         
                                                               

Legal Address from Tax Document of Lender of Record:

Country                                          
                                         
                                         
                                                                      

Address                                          
                                         
                                         
                                                                  

City                                                   State/Province
                                              Country
                                                                 

 

3.      Domestic Funding Address:

   4. Eurodollar Funding Address: Street Address
                                                             Street Address
                                                                          Suite/
Mail Code                                                              Suite/
Mail Code                                          
                                City                                      State
                                        City
                                     State
                                         Postal Code
                             Country                                 Postal Code
                             Country                                 

 

5. Credit Contact Information:

Syndicate level information (which may contain material non-public information
about the Borrower and its related parties or their respective securities will
be made available to the Credit Contact(s). The Credit Contacts identified must
be able to receive such information in accordance with his/her institution’s
compliance procedures and applicable laws, including Federal and State
securities laws.

 

Primary Credit Contact: First Name   

 

Middle Name   

 

Last Name   

 

Title   

 

Street Address   

 

Suite/Mail Code   

 

City   

 

State   

 

Postal Code   

 

Country   

 

Office Telephone #   

 

Office Facsimile #   

 

Work E-Mail Address   

 

IntraLinks/SyndTrak    E-Mail Address   

 

Secondary Credit Contact: First Name   

 

Middle Name   

 

Last Name   

 

Title   

 

Street Address   

 

Suite/Mail Code   

 

City   

 

State   

 

Postal Code   

 

Country   

 

Office Telephone #   

 

Office Facsimile #   

 

Work E-Mail Address   

 

IntraLinks/SyndTrak    E-Mail Address   

 

 

  E-2-2   Credit Agreement   Form of Administrative Questionnaire  

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

   LOGO [g455478g29y65.jpg]

ADMINISTRATIVE DETAILS REPLY FORM – (US DOLLAR ONLY)

CONFIDENTIAL

 

Primary Operations Contact:    Secondary Operations Contact: First
                             MI          Last                                
First                              MI          Last
                                 Title                                          
                   Title                                          
                Street Address                                          
                   Street Address                                          
                Suite/ Mail Code                                          
                   Suite/ Mail Code                                          
                City                              State
                                City                              State
                             Postal Code                              Country
                                Postal Code                              Country
                             Telephone                              Facsimile
                                Telephone                              Facsimile
                             E-Mail Address
                                                             E-Mail Address
                                                          IntraLinks/SyndTrak
E-Mail    IntraLinks/SyndTrak E-Mail Address
                                                             Address
                                                          Does Secondary
Operations Contact need copy of notices? ___YES ___ NO Letter of Credit Contact:
   Draft Documentation Contact or Legal Counsel: First
                             MI          Last                                
First                              MI          Last
                                 Title                                          
                   Title                                          
                Street Address                                          
                   Street Address                                          
                Suite/ Mail Code                                          
                   Suite/ Mail Code                                          
                City                              State
                                City                              State
                             Postal Code                              Country
                                Postal Code                              Country
                             Telephone                              Facsimile
                                Telephone                              Facsimile
                             E-Mail Address
                                                             E-Mail Address
                                                         

 

6. Lender’s Fed Wire Payment Instructions:

Pay to:

Bank Name                                          
                                         
                                                   

ABA #                                          
                                         
                                                   

City                                                                   State
                                                                 

Account #                                          
                                         
                                                   

Account Name                                          
                                         
                                                   

Attention                                          
                                         
                                                   

 

7. Lender’s Standby Letter of Credit, Commercial Letter of Credit, and Bankers’
Acceptance Fed Wire Payment Instructions (if applicable):

Pay to:

Bank Name                                          
                                         
                                                   

ABA #                                          
                                         
                                                   

City                                                                   State
                                                                 

Account #                                          
                                         
                                                   

Account Name                                          
                                         
                                                   

Attention                                          
                                         
                                                   

Can the Lender’s Fed Wire Payment Instructions in Section 6 be used? ___ YES ___
NO

 

  E-2-3   Credit Agreement   Form of Administrative Questionnaire  

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

   LOGO [g455478g29y65.jpg]

ADMINISTRATIVE DETAILS REPLY FORM – (US DOLLAR ONLY)

CONFIDENTIAL

 

8. Lender’s Organizational Structure and Tax Status

Please refer to the enclosed withholding tax instructions below and then
complete this section accordingly:

Lender Taxpayer Identification Number (TIN):                   -         
                                            

Tax Withholding Form Delivered to Bank of America (check applicable one):

         W-9              W-8BEN              W-8ECI              W-8EXP    
         W-8IMY

Tax Contact:

First                          MI          Last
                                                 

Title                                          
                                                        

Street Address                                          
                                       

Suite/ Mail Code                                          
                                   

City                                      State
                                        

Postal Code                                          Country
                                

Telephone                                          Facsimile
                                

E-Mail Address                                          
                                       

NON-U.S. LENDER INSTITUTIONS

1. Corporations:

If your institution is incorporated outside of the United States for U.S.
federal income tax purposes, and is the beneficial owner of the interest and
other income it receives, you must complete one of the following three tax
forms, as applicable to your institution: a.) Form W-8BEN (Certificate of
Foreign Status of Beneficial Owner), b.) Form W-8ECI (Income Effectively
Connected to a U.S. Trade or Business), or c.) Form W-8EXP (Certificate of
Foreign Government or Governmental Agency).

A U.S. taxpayer identification number is required for any institution submitting
a Form W-8 ECI. It is also required on Form W-8BEN for certain institutions
claiming the benefits of a tax treaty with the U.S. Please refer to the
instructions when completing the form applicable to your institution. In
addition, please be advised that U.S. tax regulations do not permit the
acceptance of faxed forms. An original tax form must be submitted.

2. Flow-Through Entities:

If your institution is organized outside the U.S., and is classified for U.S.
federal income tax purposes as either a Partnership, Trust, Qualified or
Non-Qualified Intermediary, or other non-U.S. flow-through entity, an original
Form W-8IMY (Certificate of Foreign Intermediary, Foreign Flow-Through Entity,
or Certain U.S. branches for United States Tax Withholding) must be completed by
the intermediary together with a withholding statement. Flow-through entities
other than Qualified Intermediaries are required to include tax forms for each
of the underlying beneficial owners.

Please refer to the instructions when completing this form. In addition, please
be advised that U.S. tax regulations do not permit the acceptance of faxed
forms. Original tax form(s) must be submitted.

U.S. LENDER INSTITUTIONS:

If your institution is incorporated or organized within the United States, you
must complete and return Form W-9 (Request for Taxpayer Identification Number
and Certification). Please be advised that we require an original form W-9.

Pursuant to the language contained in the tax section of the Credit Agreement,
the applicable tax form for your institution must be completed and returned on
or prior to the date on which your institution becomes a lender under this
Credit Agreement. Failure to provide the proper tax form when requested will
subject your institution to U.S. tax withholding.

 

  E-2-4   Credit Agreement   Form of Administrative Questionnaire  

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ADMINISTRATIVE DETAILS REPLY FORM – (US DOLLAR ONLY)

CONFIDENTIAL

 

*Additional guidance and instructions as to where to submit this documentation
can be found at this link:

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9. Bank of America’s Payment Instructions:

 

Pay to: Bank of America, N.A.

ABA # 026009593

New York, NY

Account # 1292000883

Attn: Corporate Credit Services

Ref: Parker Drilling Company

 

  E-2-5   Credit Agreement   Form of Administrative Questionnaire  

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

EXHIBIT F

FORM OF SUBSIDIARY GUARANTY

See that certain Subsidiary Guaranty, dated as of May 15, 2008, by each of the
Subsidiary Guarantors in favor of the Administrative Agent, for its benefit and
the ratable benefit of each other Secured Party, as the same may have been or
may be amended, supplemented or otherwise modified.

 

  F-1   Credit Agreement   Form of Subsidiary Guaranty  

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

EXHIBIT G

FORM OF IRREVOCABLE PROXY, PLEDGE AND SECURITY AGREEMENT

See that certain Irrevocable Proxy, Pledge and Security Agreement, dated as of
May 15, 2008, by each Loan Party in favor of the Administrative Agent, for its
benefit and the ratable benefit of each other Secured Party, as the same may
have been or may be amended, supplemented or otherwise modified.

 

  G-1   Credit Agreement Form of Irrevocable Proxy, Pledge and Security
Agreement

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

EXHIBIT H

FORM OF FIRST PREFERRED FLEET MORTGAGE

See that certain First Preferred Fleet Mortgage by Parker Drilling Offshore USA,
L.L.C. in favor of Bank of America, N.A., as Administrative Agent for the
Secured Parties, as Trustee, under the Credit Agreement dated as of May 15,
2008, as the same may have been or may be amended, supplemented or otherwise
modified.

 

  H-1   Credit Agreement   Form of First Preferred Fleet Mortgage  

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

EXHIBIT I-1

OPINION MATTERS

Form of Opinion of Counsel to Loan Parties

[attached]

 

  I-1-1   Credit Agreement Opinion of Special Counsel to Loan Parties

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

EXHIBIT I-2

OPINION MATTERS

Form of Opinion of General Counsel

[attached]

 

  I-2-1   Credit Agreement   Opinion of General Counsel