**EXHIBIT 10.11** $100,000,000CREDIT AGREEMENTamongSUPERIOR OFFSHORE INTERNATIONAL, INC.,as Borrower,FORTIS CAPITAL CORP.,as Collateral Agent,The Several Lenders from Time to Time Parties Hereto,andFORTIS CAPITAL CORP.,as Administrative Agent, Lead Arranger and Sole BookrunnerDated as of June 19, 2007 
 

 
TABLE OF CONTENTS       PageSECTION 1. DEFINITIONS  1      1.1 Defined Terms  1 1.2 Other Definitional Provisions  18      SECTION 2. AMOUNT AND TERMS OF COMMITMENTS  18      2.1 Term Commitments  18 2.2 Increase of Aggregate Commitment  18 2.3 Procedure for Term Loan Borrowing  20 2.4 Repayment of Term Loans  21 2.5 Fees, etc  21 2.6 Optional Prepayments  21 2.7 Mandatory Prepayments  22 2.8 Conversion and Continuation Options  23 2.9 Limitations on Eurodollar Tranches  23 2.10 Interest Rates and Payment Dates  24 2.11 Computation of Interest and Fees  24 2.12 Inability to Determine Interest Rate  24 2.13 Pro Rata Treatment and Payments  25 2.14 Requirements of Law  26 2.15 Taxes  27 2.16 Indemnity  29 2.17 Change of Lending Office  30 2.18 Replacement of Lenders  30 2.19 Loan Account and Accounting  30      SECTION 3. REPRESENTATIONS AND WARRANTIES  31      3.1 Financial Condition  31 3.2 No Change  31 3.3 Existence; Compliance with Law  31 3.4 Power; Authorization; Enforceable Obligations  32 3.5 No Legal Bar  32 3.6 Litigation  32 3.7 No Default  32 3.8 Ownership of Property; Liens  32 3.9 Intellectual Property  33 3.10 Taxes  33 3.11 Federal Regulations  33 3.12 Labor Matters  33 3.13 ERISA  33 3.14 Investment Company Act; Other Regulations  34 
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       Page3.15 Subsidiaries  34 3.16 Use of Proceeds  34 3.17 Environmental Matters  34 3.18 Accuracy of Information, etc  35 3.19 Security Documents  35 3.20 Indebtedness  36 3.21 Capitalization of Borrower  36 3.22 Concerning the Vessels  36 3.23 Citizenship  36 3.24 Vessel Classification  37 3.25 Scheduled Collateral  37 3.26 Solvency  37      SECTION 4. CONDITIONS PRECEDENT  37      4.1 Conditions to Initial Extension of Credit  37 4.2 Conditions to Each Extension of Credit  39      SECTION 5. AFFIRMATIVE COVENANTS  40      5.1 Financial Statements  40 5.2 Certificates; Other Information  41 5.3 Payment of Obligations  42 5.4 Acknowledgements  42 5.5 Maintenance of Existence; Compliance  42 5.6 Maintenance of Property; Insurance  42 5.7 Inspection of Property; Books and Records; Discussions  43 5.8 Notices  43 5.9 Environmental Laws  43 5.10 Annual Appraisal; Vessel Utilization  44 5.11 Additional Collateral, etc  44 5.12 Interest Rate Hedge Agreements  44 5.13 Commitment Fee  44 5.14 Perfection  44      SECTION 6. NEGATIVE COVENANTS  47      6.1 Financial Condition Covenants  47 6.2 Indebtedness  47 6.3 Liens  48 6.4 Fundamental Changes  50 6.5 Disposition of Property  50 6.6 Restricted Payments  50 6.7 Capital Expenditures  51 6.8 Investments  51 6.9 Transactions with Affiliates  52 6.10 Sales and Leasebacks  52 
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       Page6.11 Swap Agreements  52 6.12 Changes in Fiscal Periods  53 6.13 Negative Pledge Clauses  53 6.14 Clauses Restricting Subsidiary Distributions  53 6.15 Lines of Business  53 6.16 Coastwise Citizenship  53 6.17 Modifications  53      SECTION 7. EVENTS OF DEFAULT  53      SECTION 8. THE AGENTS  56      8.1 Appointment  56 8.2 Delegation of Duties  57 8.3 Exculpatory Provisions  57 8.4 Reliance by Agents  57 8.5 Notice of Default  58 8.6 Non-Reliance on Agents and Other Lenders  58 8.7 Indemnification  58 8.8 Agent in Its Individual Capacity  59 8.9 Successor Agents  59 8.10 Collateral Matters, Collateral Agent’s Duties  59 8.11 Execution of Credit Documents  60      SECTION 9. MISCELLANEOUS  60      9.1 Amendments and Waivers  60 9.2 Notices  61 9.3 No Waiver; Cumulative Remedies  62 9.4 Survival of Representations and Warranties  63 9.5 Payment of Expenses and Taxes  63 9.6 Successors and Assigns; Participations and Assignments  64 9.7 Adjustments; Set-off  66 9.8 Counterparts  67 9.9 Severability  67 9.10 Integration  67 9.11 GOVERNING LAW  67 9.12 Submission To Jurisdiction; Waivers  68 9.13 Acknowledgements  68 9.14 Releases of Guarantees and Liens  68 9.15 Confidentiality  69 9.16 WAIVERS OF JURY TRIAL  70 
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SCHEDULES:   1.1A Commitments1.1B Mortgaged Vessels3.4 Consents, Authorizations, Filings and Notices3.15 Subsidiaries3.19(a) UCC Filing Jurisdictions3.19(b) Vessel Mortgage Filing Jurisdictions3.22 Vessels3.24 Vessel Classification3.25 Scheduled Collateral6.2(d) Existing Indebtedness6.3(f) Existing LiensEXHIBITS:   A Form of Guarantee and Collateral AgreementB Form of Compliance CertificateC Form of Closing CertificateD Form of Vessel MortgageE Form of Assignment and AcceptanceF-1 Form of Legal Opinion of Bracewell & Giuliani LLPF-2 Form of Legal Opinion of R. Joshua KochG Form of Exemption CertificateH Form of Intercreditor AgreementI Form of Commitment and AcceptanceJ Form of Notice of Borrowing/Conversion/Continuation
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          CREDIT AGREEMENT (this “Agreement”), dated as of June 19, 2007, among SUPERIOROFFSHORE INTERNATIONAL, INC., a Delaware corporation (the “Borrower”), the several banksand other financial institutions or entities from time to time parties to this Agreement (the“Lenders”), and FORTIS CAPITAL CORP., as administrative agent (the “AdministrativeAgent”), and FORTIS CAPITAL CORP., as collateral agent (the “Collateral Agent”).          The parties hereto hereby agree as follows:SECTION 1. DEFINITIONS          1.1 Defined Terms. As used in this Agreement, the terms listed in this Section 1.1shall have the respective meanings set forth in this Section 1.1.          “ABL Revolving Credit Agreement”: the Credit Agreement, dated as of February 27, 2007,as amended by First Amendment dated as of June 19, 2007, among the Borrower, the lenders partythereto and JPMorgan Chase Bank, N.A., as administrative agent.          “ABL Revolving Credit Documentation”: collectively, the ABL Revolving CreditAgreement and the other “Loan Documents” (as defined in the ABL Revolving Credit Agreement).          “ABR”: for any day, a rate per annum (rounded upwards, if necessary, to the next 1/16of 1%) equal to the greater of (a) the Prime Rate in effect on such day and (b) the Federal FundsEffective Rate in effect on such day plus 1/2 of 1%. Any change in the ABR due to a change in thePrime Rate or the Federal Funds Effective Rate shall be effective as of the opening of business onthe effective day of such change in the Prime Rate or the Federal Funds Effective Rate,respectively.          “ABR Loans”: Loans the rate of interest applicable to which is based upon the ABR.          “Administrative Agent”: Fortis Capital Corp., together with its affiliates, as thearranger of the Commitments and as the administrative agent for the Lenders under this Agreementand the other Loan Documents, together with any of its successors.          “Affiliate”: as to any Person, any other Person that, directly or indirectly, is incontrol of, is controlled by, or is under common control with, such Person. For purposes of thisdefinition, “control” of a Person means the power, directly or indirectly, either to (a) vote 10%or more of the securities having ordinary voting power for the election of directors (or personsperforming similar functions) of such Person or (b) direct or cause the direction of the managementand policies of such Person, whether by contract or otherwise.          “Agents”: the collective reference to the Administrative Agent and the CollateralAgent.
 

 
          “Aggregate Exposure”: with respect to any Lender at any time, an amount equal to thesum of (a) such Lender’s Unutilized Commitments at such time and (b) the aggregate unpaidprincipal amount of such Lender’s Term Loans at such time.          “Aggregate Exposure Percentage”: with respect to any Lender at any time, the fraction(expressed as a percentage) of such Lender’s Aggregate Exposure at such time to the AggregateExposure of all Lenders at such time.          “Agreement”: as defined in the preamble hereto.          “Applicable Margin”: (a) 1.0% per annum for ABR Loans and (b) 3.25% per annum forEurodollar Loans.          “Appraised FMV”: the sum of (i) fair market value “FMV Appraisal” of the MortgagedVessels as calculated by a recognized appraisal firm reasonably acceptable to the AdministrativeAgent plus (ii) the agreed to value of the Scheduled Collateral as set forth in Schedule 3.26.          “Approved Jurisdiction”: means the United States of America, Vanuatu, or any otherjurisdiction approved in writing by the Administrative Agent where a Vessel subject to thisAgreement can be registered.          “Approved Fund”: as defined in Section 9.6(b).          “Asset Sale”: any Disposition of property or series of related Dispositions ofproperty (excluding any such Disposition permitted by clause (a), (b), (c) (d) or (e) of Section6.4) that yields Net Cash Proceeds to any Group Member (other than any Foreign Subsidiary) inexcess of $500,000.          “Assignee”: as defined in Section 9.6(b).          “Assignment and Acceptance”: an Assignment and Acceptance, substantially in the formof Exhibit E.          “Benefitted Lender”: as defined in Section 9.7(a).          “Board”: the Board of Governors of the Federal Reserve System of the United States(or any successor).          “Borrower”: as defined in the preamble hereto.          “Borrowing Date”: any Business Day specified by the Borrower as a date on which theBorrower requests the relevant Lenders to make Loans hereunder.          “Business”: as defined in Section 3.17(b).          “Business Day”: a day other than a Saturday, Sunday or other day on which commercialbanks in New York City are authorized or required by law to close, provided, that
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with respect to notices and determinations in connection with, and payments of principal andinterest on, Eurodollar Loans, such day is also a day for trading by and between banks in Dollardeposits in the interbank eurodollar market.          “Capital Expenditures”: for any period, with respect to any Person, the aggregate ofall expenditures by such Person and its Subsidiaries for the acquisition or leasing (pursuant to acapital lease) of fixed or capital assets or additions to equipment (including replacements,capitalized repairs, improvements and maintenance and mandatory dry docking during such period)that should be capitalized under GAAP on a consolidated balance sheet of such Person and itsSubsidiaries.          “Capital Lease Obligations”: as to any Person, the obligations of such Person to payrent or other amounts under any lease of (or other arrangement conveying the right to use) real orpersonal property, or a combination thereof, which obligations are required to be classified andaccounted for as capital leases on a balance sheet of such Person under GAAP and, for the purposesof this Agreement, the amount of such obligations at any time shall be the capitalized amountthereof at such time determined in accordance with GAAP.          “Capital Stock”: any and all shares, interests, participations or other equivalents(however designated) of capital stock of a corporation, any and all equivalent ownership interestsin a Person (other than a corporation) and any and all warrants, rights or options to purchase anyof the foregoing.          “Cash Equivalents”: (a) marketable direct obligations issued by, or unconditionallyguaranteed by, the United States Government or issued by any agency thereof and backed by the fullfaith and credit of the United States, in each case maturing within one year from the date ofacquisition; (b) certificates of deposit, time deposits, eurodollar time deposits or overnight bankdeposits having maturities of six months or less from the date of acquisition issued by any Lenderor by any commercial bank organized under the laws of the United States or any state thereof havingcombined capital and surplus of not less than $500,000,000; (c) commercial paper of an issuer ratedat least A-1 by Standard & Poor’s Ratings Services (“S&P”) or P-1 by Moody’s InvestorsService, Inc. (“Moody’s”), or carrying an equivalent rating by a nationally recognizedrating agency, if both of the two named rating agencies cease publishing ratings of commercialpaper issuers generally, and maturing within six months from the date of acquisition; (d)repurchase obligations of any Lender or of any commercial bank satisfying the requirements ofclause (b) of this definition, having a term of not more than 30 days, with respect to securitiesissued or fully guaranteed or insured by the United States government; (e) securities withmaturities of one year or less from the date of acquisition issued or fully guaranteed by anystate, commonwealth or territory of the United States, by any political subdivision or taxingauthority of any such state, commonwealth or territory or by any foreign government, the securitiesof which state, commonwealth, territory, political subdivision, taxing authority or foreigngovernment (as the case may be) are rated at least A by S&P or A by Moody’s; (f) securities withmaturities of six months or less from the date of acquisition backed by standby letters of creditissued by any Lender or any commercial bank satisfying the requirements of clause (b) of thisdefinition; (g) money market mutual or similar funds that invest exclusively in assets satisfyingthe requirements of clauses (a) through (f) of this definition; or (h) money market funds that (i)comply with the criteria set forth in SEC Rule 2a-7
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under the Investment Company Act of 1940, as amended, (ii) are rated AAA by S&P and Aaa byMoody’s and (iii) have portfolio assets of at least $5,000,000,000.          “Charter Obligations”: all obligations (other than obligations backed by acash-secured letter of credit) of the Borrower and its Domestic Subsidiaries with respect topotential liquidated damages, fees or other liabilities incurred in connection with the terminationor breach of charters or similar contractual arrangements entered into with respect to the charteror lease of vessels, in each case calculated on a probable loss basis in accordance with GAAP.          “Closing Date”: the date on which the conditions precedent set forth in Section 4.1shall have been satisfied, which date is June 20, 2007.          “Code”: the Internal Revenue Code of 1986, as amended from time to time.          “Collateral”: all property of the Loan Parties, now owned or hereafter acquired, uponwhich a Lien is purported to be created by any Security Document including without limitation theMortgaged Vessels and the Scheduled Collateral.          “Collateral Agent”: Fortis Capital Corp. or any other financial institution thenacting as Collateral Agent under the Loan Documents.          “Collateral Assignment of Guarantee”: the Collateral Assignment of Guarantee, dated asof June 19, 2007, executed by the Borrower, in favor of the Collateral Agent, as agent for theLenders.          “Collateral Assignment of Shipbuilding Contract”: the Collateral Assignment ofShipbuilding Contract, dated as of June 19, 2007, executed by the Borrower, in favor of CollateralAgent, as agent for the Lenders.          “Collateral Assignments”: the Collateral Assignment of Shipbuilding Contract and theCollateral Assignment of Guarantee.          “Commitment”: as to any Lender, the obligation of such Lender, if any, to make a TermLoan to the Borrower in a principal amount not to exceed the amount set forth under the heading“Commitment” opposite such Lender’s name on Schedule 1.1A. The original aggregate amount of theCommitments is $60,000,000. Such Commitments may be increased up to $100,000,000 as provided inSection 2.2 hereof.          “Commitment and Acceptance”: (as defined in Section 2.2).          “Commitment Fee”: 0.75%.          “Commitment Increase Notice”: (as defined in Section 2.2).          “Commonly Controlled Entity”: an entity, whether or not incorporated, that is undercommon control with the Borrower within the meaning of Section 4001 of ERISA or is part of a groupthat includes the Borrower and that is treated as a single employer under Section 414 of the Code.
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          “Compliance Certificate”: a certificate duly executed by a Responsible Officersubstantially in the form of Exhibit B.          “Consolidated Current Assets”: at any date, all amounts (other than cash and CashEquivalents) that would, in conformity with GAAP, be set forth opposite the caption “total currentassets” (or any like caption) on a consolidated balance sheet of the Borrower and its DomesticSubsidiaries at such date.          “Consolidated Current Liabilities”: at any date, all amounts that would, inconformity with GAAP, be set forth opposite the caption “total current liabilities” (or any likecaption) on a consolidated balance sheet of the Borrower and its Domestic Subsidiaries at suchdate, but excluding the current portion of any Funded Debt of the Borrower and its DomesticSubsidiaries.          “Consolidated EBITDA”: for any period, Consolidated Net Income for such periodplus, without duplication and to the extent reflected as a charge in the statement of suchConsolidated Net Income for such period, the sum of (a) income tax expense, (b) interest expense,amortization or writeoff of debt discount and debt issuance costs and commissions, discounts andother fees and charges associated with Indebtedness (including the Loans), (c) depreciation andamortization expense, (d) amortization of intangibles (including, but not limited to, goodwill) andorganization costs and (e) any extraordinary non-cash expenses or losses (including, whether or nototherwise includable as a separate item in the statement of such Consolidated Net Income for suchperiod, non-cash losses on sales of assets outside of the ordinary course of business), andminus, (a) to the extent included in the statement of such Consolidated Net Income for suchperiod, the sum of (i) interest income, (ii) any extraordinary or non-recurring non-cash income orgains (including, whether or not otherwise includable as a separate item in the statement of suchConsolidated Net Income for such period, gains on the sales of assets outside of the ordinarycourse of business), (iii) income tax credits (to the extent not netted from income tax expense)and (iv) any other non-cash income and (b) any cash payments made during such period in respect ofitems described in clause (e) above subsequent to the fiscal quarter in which the relevant non-cashexpenses or losses were reflected as a charge in the statement of Consolidated Net Income, all asdetermined on a consolidated basis.          “Consolidated Interest Coverage Ratio”: for any period, the ratio of (a) ConsolidatedEBITDA for such period to (b) Consolidated Interest Expense for such period.          “Consolidated Interest Expense”: for any period, total cash interest expense(including that attributable to Capital Lease Obligations) of the Borrower and its DomesticSubsidiaries for such period with respect to all outstanding Indebtedness of the Borrower and itsDomestic Subsidiaries (including all commissions, discounts and other fees and charges owed withrespect to letters of credit and bankers’ acceptance financing and net costs under Swap Agreementsin respect of interest rates to the extent such net costs are allocable to such period inaccordance with GAAP).          “Consolidated Leverage Ratio”: as at the last day of any period, the ratio of (a)Consolidated Total Debt on such day to (b) Consolidated EBITDA for such period.
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          “Consolidated Net Income”: for any period, the consolidated net income (or loss) ofthe Borrower and its Domestic Subsidiaries, determined on a consolidated basis in accordance withGAAP; provided that there shall be excluded (a) the income (or deficit) of any Personaccrued prior to the date it becomes a Domestic Subsidiary of the Borrower or is merged into orconsolidated with the Borrower or any of its Domestic Subsidiaries, (b) the income (or deficit) ofany Person (other than a Domestic Subsidiary of the Borrower) in which the Borrower or any of itsDomestic Subsidiaries has an ownership interest, except to the extent that any such income isactually received by the Borrower or such Domestic Subsidiary in the form of dividends or similardistributions and (c) the undistributed earnings of any Domestic Subsidiary of the Borrower to theextent that the declaration or payment of dividends or similar distributions by such DomesticSubsidiary is not at the time permitted by the terms of any Contractual Obligation (other thanunder any Loan Document) or Requirement of Law applicable to such Domestic Subsidiary.          “Consolidated Total Debt”: at any date, the aggregate principal amount of allIndebtedness of the Borrower and its Domestic Subsidiaries at such date, determined on aconsolidated basis in accordance with GAAP.          “Consolidated Working Capital”: at any date, the excess of Consolidated CurrentAssets on such date over Consolidated Current Liabilities on such date.          “Continuing Directors”: the directors of the Borrower, on the Closing Date and eachother director, if, in each case, such other director’s nomination for election to the board ofdirectors of the Borrower is recommended by at least a majority of the then Continuing Directors.          “Contractual Obligation”: as to any Person, any provision of any security issued bysuch Person or of any agreement, instrument or other undertaking to which such Person is a party orby which it or any of its property is bound, including vessel charters, vessel managementagreements and vessel service contracts.          “Default”: any of the events specified in Section 7, whether or not any requirementfor the giving of notice, the lapse of time, or both, has been satisfied.          “Disposition”: with respect to any property, any sale, lease, sale and leaseback,assignment, conveyance, transfer or other disposition thereof. The terms “Dispose” and“Disposed of” shall have correlative meanings.          “Dollars” and “$”: dollars in lawful currency of the United States.          “Domestic Subsidiary”: any Subsidiary of the Borrower organized under the laws of anyjurisdiction within the United States.          “Effective Commitment Amount”: (as defined in Section 2.2).          “Environmental Laws”: any and all foreign, Federal, state, local or municipal laws,rules, orders, regulations, statutes, ordinances, codes, decrees, requirements of any GovernmentalAuthority or other Requirements of Law (including common law) regulating,
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relating to or imposing liability or standards of conduct concerning protection of humanhealth or the environment, as now or may at any time hereafter be in effect.          “ERISA”: the Employee Retirement Income Security Act of 1974, as amended from time totime.          “Eurocurrency Reserve Requirements”: for any day as applied to a Eurodollar Loan, theaggregate (without duplication) of the maximum rates (expressed as a decimal fraction) of reserverequirements in effect on such day (including basic, supplemental, marginal and emergency reserves)under any regulations of the Board or other Governmental Authority having jurisdiction with respectthereto dealing with reserve requirements prescribed for eurocurrency funding (currently referredto as “Eurocurrency Liabilities” in Regulation D of the Board) maintained by a member bank of theFederal Reserve System.          “Eurodollar ABR”: with respect to each day during each Interest Period pertaining toa Eurodollar Loan, the rate per annum determined on the basis of the rate for deposits in Dollarsfor a period equal to such Interest Period commencing on the first day of such Interest Periodappearing on Reuters Screen Libor 01 Page as of 11:00 A.M., London time, two Business Days prior tothe beginning of such Interest Period. In the event that such rate does not appear on ReutersScreen Libor 01 Page (or otherwise on such screen), the “Eurodollar ABR” shall bedetermined by reference to such other comparable publicly available service for displayingeurodollar rates as may be selected by the Administrative Agent or, in the absence of suchavailability, by reference to the rate at which the Administrative Agent is offered Dollar depositsat or about 11:00 A.M., New York City time, two Business Days prior to the beginning of suchInterest Period in the interbank eurodollar market where its eurodollar and foreign currency andexchange operations are then being conducted for delivery on the first day of such Interest Periodfor the number of days comprised therein.          “Eurodollar Loans”: Loans the rate of interest applicable to which is based upon theEurodollar Rate.          “Eurodollar Rate”: with respect to each day during each Interest Period pertaining toa Eurodollar Loan, a rate per annum determined for such day in accordance with the followingformula (rounded upward to the nearest 1/100th of 1%):       Eurodollar ABR 1.00 − Eurocurrency Reserve Requirements            “Eurodollar Tranche”: the collective reference to Eurodollar Loans the then currentInterest Periods with respect to all of which begin on the same date and end on the same later date(whether or not such Loans shall originally have been made on the same day).          “Event of Default”: any of the events specified in Section 7, provided thatany requirement for the giving of notice, the lapse of time, or both, has been satisfied.          “Excess Cash Flow”: for any fiscal quarter of the Borrower, the difference, ifpositive, of (a) the sum, without duplication, of (i) Consolidated Net Income for such quarter,(ii)
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the amount of all non-cash charges (including depreciation and amortization) deducted inarriving at such Consolidated Net Income, (iii) decreases in Consolidated Working Capital for suchfiscal quarter, and (iv) the aggregate net amount of non-cash loss on the Disposition of propertyby the Borrower and its Domestic Subsidiaries during such fiscal quarter (other than sales ofinventory in the ordinary course of business), to the extent deducted in arriving at suchConsolidated Net Income minus (b) the sum, without duplication, of (i) the amount of allnon-cash credits included in arriving at such Consolidated Net Income, (ii) the aggregate amountactually (y) paid by the Borrower and its Domestic Subsidiaries in cash during such fiscal year onaccount of Capital Expenditures or Investments pursuant to Section 6.7 or Section 6.8 and (z)deposited by the Borrower into a capital construction fund for the purpose of making CapitalExpenditures, in an aggregate amount not to exceed $10,000,000 for such fiscal year (excluding theprincipal amount of Indebtedness incurred in connection with such expenditures or Investments andany such expenditures financed with the proceeds of any Reinvestment Deferred Amount or with fundsfrom such capital construction fund, to the extent previously deducted above), (iii) all optionalprepayments of the Term Loans or other term Indebtedness not prohibited hereunder during suchfiscal quarter, (iv) the aggregate amount of all regularly scheduled principal payments ofIndebtedness (including the Term Loans) of the Borrower and its Domestic Subsidiaries made duringsuch fiscal quarter (other than in respect of any revolving credit facility to the extent there isnot an equivalent permanent reduction in commitments thereunder), (v) increases in ConsolidatedWorking Capital for such fiscal quarter and (vi) the aggregate net amount of non-cash gain on theDisposition of property by the Borrower and its Domestic Subsidiaries during such fiscal quarter(other than sales of inventory in the ordinary course of business), to the extent included inarriving at such Consolidated Net Income; provided, however upon the occurrence of an Event ofDefault Excess Cash Flow shall, for each month during which such Event of Default is continuing, becalculated on a monthly basis using the same criteria provided above.          “Excess Cash Flow Application Date”: as defined in Section 2.7(c).          “Excess Cash Flow Percentage”: 35.0%.          “Federal Funds Effective Rate”: for any day, the weighted average of the rates onovernight federal funds transactions with members of the Federal Reserve System arranged by federalfunds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of NewYork, or, if such rate is not so published for any day that is a Business Day, the average of thequotations for the day of such transactions received by the Agents from three federal funds brokersof recognized standing selected by it.          “FMV Appraisal”: as defined in the definition of Appraised FMV.          “Foreign Subsidiary”: any Subsidiary of the Borrower that is not a DomesticSubsidiary.          “Funded Debt”: as to any Person, all Indebtedness of such Person that matures morethan one year from the date of its creation or matures within one year from such date but isrenewable or extendible, at the option of such Person, to a date more than one year from such dateor arises under a revolving credit or similar agreement that obligates the lender or lenders to
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extend credit during a period of more than one year from such date, including all currentmaturities and current sinking fund payments in respect of such Indebtedness whether or notrequired to be paid within one year from the date of its creation and, in the case of the Borrower,Indebtedness in respect of the Loans and the ABL Revolving Credit Agreement.          “Funding Office”: the office of the Administrative Agent specified in Section 9.2 orsuch other office as may be specified from time to time by the Administrative Agent as its fundingoffice by written notice to the Borrower and the Lenders.          “GAAP”: generally accepted accounting principles in the United States as in effectfrom time to time, except that for purposes of Section 6.1, GAAP shall be determined on the basisof such principles in effect on the date hereof and consistent with those used in the preparationof the most recent audited financial statements referred to in Section 3.1(b). In the event thatany “Accounting Change” (as defined below) shall occur and such change results in a change in themethod of calculation of financial covenants, standards or terms in this Agreement, then theBorrower and the Administrative Agent agree to enter into negotiations in order to amend suchprovisions of this Agreement so as to reflect equitably such Accounting Changes with the desiredresult that the criteria for evaluating the Borrower’s financial condition shall be the same aftersuch Accounting Changes as if such Accounting Changes had not been made. Until such time as suchan amendment shall have been executed and delivered by the Borrower, the Administrative Agent andthe Required Lenders, all financial covenants, standards and terms in this Agreement shall continueto be calculated or construed as if such Accounting Changes had not occurred. “Accounting Changes”refers to changes in accounting principles required by the promulgation of any rule, regulation,pronouncement or opinion by the Financial Accounting Standards Board of the American Institute ofCertified Public Accountants or, if applicable, the SEC.          “Governmental Authority”: any nation or government, any state or other politicalsubdivision thereof, any agency, authority, instrumentality, regulatory body, court, central bankor other entity exercising executive, legislative, judicial, taxing, regulatory or administrativefunctions of or pertaining to government, any securities exchange and any self-regulatoryorganization (including the National Association of Insurance Commissioners).          “Group Members”: the collective reference to the Borrower and its Subsidiaries.          “Guarantee and Collateral Agreement”: the Guarantee and Collateral Agreement to beexecuted and delivered by the Borrower and each Subsidiary Guarantor, substantially in the form ofExhibit A.          “Guarantee Obligation”: as to any Person (the “guaranteeing person”), anyobligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeingPerson that guarantees or in effect guarantees, or which is given to induce the creation of aseparate obligation by another Person (including any bank under any letter of credit) thatguarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the“primary obligations”) of any other third Person (the “primary obligor”) in anymanner, whether directly or indirectly, including any obligation of the guaranteeing person,whether or not contingent, (i) to purchase any such primary obligation or any property
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constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for thepurchase or payment of any such primary obligation or (2) to maintain working capital or equitycapital of the primary obligor or otherwise to maintain the net worth or solvency of the primaryobligor, (iii) to purchase property, securities or services primarily for the purpose of assuringthe owner of any such primary obligation of the ability of the primary obligor to make payment ofsuch primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primaryobligation against loss in respect thereof; provided, however, that the termGuarantee Obligation shall not include endorsements of instruments for deposit or collection in theordinary course of business. The amount of any Guarantee Obligation of any guaranteeing personshall be deemed to be the lower of (a) an amount equal to the stated or determinable amount of theprimary obligation in respect of which such Guarantee Obligation is made and (b) the maximum amountfor which such guaranteeing person may be liable pursuant to the terms of the instrument embodyingsuch Guarantee Obligation, unless such primary obligation and the maximum amount for which suchguaranteeing person may be liable are not stated or determinable, in which case the amount of suchGuarantee Obligation shall be such guaranteeing person’s maximum reasonably anticipated liabilityin respect thereof as determined by the Borrower in good faith.          “Indebtedness”: of any Person at any date, without duplication, (a) all indebtednessof such Person for borrowed money, (b) all obligations of such Person for the deferred purchaseprice of property or services (other than current trade payables incurred in the ordinary course ofsuch Person’s business), (c) all obligations of such Person evidenced by notes, bonds, debenturesor other similar instruments, (d) all indebtedness created or arising under any conditional sale orother title retention agreement with respect to property acquired by such Person (even though therights and remedies of the seller or lender under such agreement in the event of default arelimited to repossession or sale of such property), (e) all Capital Lease Obligations of suchPerson, (f) all obligations of such Person, contingent or otherwise, as an account party orapplicant under or in respect of acceptances, letters of credit (except to the extent secured bycash collateral), surety bonds or similar arrangements, (g) the liquidation value of all redeemablepreferred Capital Stock of such Person, (h) all Charter Obligations of such Person, (i) allGuarantee Obligations of such Person in respect of obligations of the kind referred to in clauses(a) through (h) above, (j) all obligations of the kind referred to in clauses (a) through (i) abovesecured by (or for which the holder of such obligation has an existing right, contingent orotherwise, to be secured by) any Lien on property (including accounts and contract rights) owned bysuch Person, whether or not such Person has assumed or become liable for the payment of suchobligation, and (k) for the purposes of Section 7(e) only, the net obligations of such Person inrespect of Swap Agreements. The Indebtedness of any Person shall include the Indebtedness of anyother entity (including any partnership in which such Person is a general partner) to the extentsuch Person is liable therefor as a result of such Person’s ownership interest in or otherrelationship with such entity, except to the extent the terms of such Indebtedness expresslyprovide that such Person is not liable therefor.          “Insolvency”: with respect to any Multiemployer Plan, the condition that such Plan isinsolvent within the meaning of Section 4245 of ERISA.          “Insolvent”: pertaining to a condition of Insolvency.
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          “Intellectual Property”: the collective reference to all rights, priorities andprivileges relating to intellectual property, whether arising under United States, multinational orforeign laws or otherwise, including copyrights, copyright licenses, patents, patent licenses,trademarks, trademark licenses, technology, know-how and processes.          “Intercreditor Agreement”: the Intercreditor Agreement, substantially in the form ofExhibit H, among the Borrower, the Collateral Agent and the administrative agent under the ABLRevolving Credit Agreement.          “Interest Payment Date”: (a) as to any ABR Loan, the last day of each March, June,September and December (or, if an Event of Default is in existence, the last day of each calendarmonth) to occur while such Loan is outstanding and the final maturity date of such Loan, (b) as toany Eurodollar Loan having an Interest Period of three months or less, the last day of suchInterest Period, (c) as to any Eurodollar Loan having an Interest Period longer than three months,each day that is three months, or a whole multiple thereof, after the first day of such InterestPeriod and the last day of such Interest Period and (d) as to any Loan, the date of any repaymentor prepayment made in respect thereof.          “Interest Period”: as to any Eurodollar Loan, (a) initially, the period commencing onthe borrowing or conversion date, as the case may be, with respect to such Eurodollar Loan andending one, two, three or six months thereafter, as selected by the Borrower in its notice ofborrowing or notice of conversion (as set forth in Exhibit J), as the case may be, given withrespect thereto; and (b) thereafter, each period commencing on the last day of the next precedingInterest Period applicable to such Eurodollar Loan and ending one, two, three or six monthsthereafter, as selected by the Borrower by irrevocable notice to the Administrative Agent not laterthan 11:00 A.M., New York City time, on the date that is three Business Days prior to the last dayof the then current Interest Period with respect thereto; provided that, all of theforegoing provisions relating to Interest Periods are subject to the following:          (i) if any Interest Period would otherwise end on a day that is not a Business Day,such Interest Period shall be extended to the next succeeding Business Day unless the resultof such extension would be to carry such Interest Period into another calendar month inwhich event such Interest Period shall end on the immediately preceding Business Day;          (ii) the Borrower may not select an Interest Period that would extend beyond the datefinal payment is due on the Term Loans;          (iii) any Interest Period that begins on the last Business Day of a calendar month (oron a day for which there is no numerically corresponding day in the calendar month at theend of such Interest Period) shall end on the last Business Day of a calendar month; and          (iv) the Borrower shall select Interest Periods so as not to require a payment orprepayment of any Eurodollar Loan during an Interest Period for such Loan.          “Interest Rate Hedge Agreement”: as defined in Section 5.12.
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          “Investments”: as defined in Section 6.8.          “Lenders”: as defined in the preamble hereto.          “Lender Increase Notice”: (as defined in Section 2.2).          “Lien”: any mortgage, pledge, hypothecation, assignment, deposit arrangement,encumbrance, lien (statutory or other), charge or other security interest or any preference,priority or other security agreement or preferential arrangement of any kind or nature whatsoever(including any conditional sale or other title retention agreement and any capital lease havingsubstantially the same economic effect as any of the foregoing).          “Loan”: any loan made by any Lender pursuant to this Agreement.          “Loan Account”: as set forth in Section 2.19.          “Loan Documents”: this Agreement, the Security Documents, the IntercreditorAgreement, the Notes and any amendment, waiver, supplement or other modification to any of theforegoing.          “Loan Parties”: each Group Member that is a party to a Loan Document.          “Mandate Letter”: Letter Agreement dated May 16, 2007 from Fortis Capital Corp. to theBorrower and accepted by the Borrower on May 18, 2007 as to fees and expenses of the transactioncontemplated by this Agreement.          “Material Adverse Effect”: a material adverse effect on (a) the business, property,operations, condition (financial or otherwise) or prospects of the Borrower and its Subsidiariestaken as a whole or (b) the validity or enforceability of this Agreement or any of the other LoanDocuments or the rights or remedies of the Administrative Agent or the Lenders hereunder orthereunder.          “Materials of Environmental Concern”: any gasoline or petroleum (including crude oilor any fraction thereof) or petroleum products or any hazardous or toxic substances, materials orwastes, defined or regulated as such in or under any Environmental Law, including asbestos,polychlorinated biphenyls and urea-formaldehyde insulation.          “Maturity Date”: December 31, 2013.          “Minimum Value Ratio”: as set forth in Section 6.1(c).          “Mortgaged Vessels”: the vessels listed on Schedule 1.1B, as to which the CollateralAgent for its benefit and the benefit of the Administrative Agent and the Lenders shall be granteda Lien pursuant to the Vessel Mortgages.          “Multiemployer Plan”: a Plan that is a multiemployer plan as defined in Section4001(a)(3) of ERISA.
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          “Net Cash Proceeds”: (a) in connection with any Asset Sale, any Recovery Event or anysale of Subtech, the proceeds thereof in the form of cash and Cash Equivalents (including any suchproceeds received by way of deferred payment of principal pursuant to a note or installmentreceivable or purchase price adjustment receivable or otherwise, but only as and when received),net of attorneys’ fees, accountants’ fees, investment banking fees, amounts required to be appliedto the repayment of Indebtedness secured by a Lien on any asset that is the subject of such AssetSale, Recovery Event or sale (other than any Lien pursuant to a Security Document) or otherwisesubject to mandatory prepayment as a result of such event and other customary fees and expensesactually incurred in connection therewith and net of taxes paid or reasonably estimated to bepayable as a result thereof (after taking into account any available tax credits or deductions andany tax sharing arrangements) and (b) in connection with any issuance or sale of Capital Stock orany incurrence of Indebtedness, the cash proceeds received from such issuance or incurrence, net ofattorneys’ fees, investment banking fees, accountants’ fees, underwriting discounts and commissionsand other customary fees and expenses actually incurred in connection therewith.          “Non-Excluded Taxes”: as defined in Section 2.14(a).          “Non-U.S. Lender”: as defined in Section 2.14(d).          “Notes”: the collective reference to any promissory note evidencing Loans.          “Notice of Borrowing”: as defined in Section 2.3.          “Obligations”: the unpaid principal of and interest on (including interest accruingafter the maturity of the Loans and interest accruing after the filing of any petition inbankruptcy, or the commencement of any insolvency, reorganization or like proceeding, relating tothe Borrower, whether or not a claim for post-filing or post-petition interest is allowed in suchproceeding) the Loans and all other obligations and liabilities of the Borrower to the Agents or toany Lender, whether direct or indirect, absolute or contingent, due or to become due, or nowexisting or hereafter incurred, which may arise under, out of, or in connection with, thisAgreement, any other Loan Document, any Interest Rate Hedge Agreement or any other document made,delivered or given in connection herewith or therewith, whether on account of principal, interest,reimbursement obligations, fees, indemnities, costs, expenses (including all fees, charges anddisbursements of counsel to the Agents or to any Lender that are required to be paid by theBorrower pursuant hereto) or otherwise.          “Other Taxes”: any and all present or future stamp or documentary taxes or any otherexcise or property taxes, charges or similar levies arising from any payment made hereunder or fromthe execution, delivery or enforcement of, or otherwise with respect to, this Agreement or anyother Loan Document.          “Participant”: as defined in Section 9.6(c).          “PBGC”: the Pension Benefit Guaranty Corporation established pursuant to Subtitle Aof Title IV of ERISA (or any successor).
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          “Person”: an individual, partnership, corporation, limited liability company,business trust, joint stock company, trust, unincorporated association, joint venture, GovernmentalAuthority or other entity of whatever nature.          “Plan”: at a particular time, any employee benefit plan that is covered by ERISA andin respect of which the Borrower or a Commonly Controlled Entity is (or, if such plan wereterminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” asdefined in Section 3(5) of ERISA.          “Prime Rate”: the rate of interest per annum publicly announced from time to time inthe Wall Street Journal as the prime rate.          “Projections”: as defined in Section 5.2(c).          “Properties”: as defined in Section 3.17(a).          “Proposed New Lender”: (as defined in Section 2.2).          “Prospectus”: the Prospectus of Superior Offshore International, Inc. (the “Parent”)dated April 19, 2007 used in connection with the offering of 10,166,667 of Capital Stock of theParent.          “Quarter”: Three consecutive months of any year.          “Quarterly Calendar Period”: each calendar quarter consisting of 3 calendar monthscommencing on the first day of January, April, July and October of each calendar year.          “Real Property Mortgages”: any real property mortgage or deed of trust made by anyLoan Party in favor of, or for the benefit of, the Collateral Agent for its benefit and the benefitof the Administrative Agent and the Lenders, in form and substance satisfactory to theAdministrative Agent.          “Recovery Event”: any settlement of or payment in respect of any property or casualtyinsurance claim or any condemnation proceeding relating to any asset of any Group Member (otherthan any Foreign Subsidiary) that yields Net Cash Proceeds in excess of $500,000.          “Register”: as defined in Section 9.6(b).          “Regulation U”: Regulation U of the Board as in effect from time to time.          “Reinvestment Deferred Amount”: with respect to any Reinvestment Event, the aggregateNet Cash Proceeds received by any Group Member (other than any Foreign Subsidiary) in connectiontherewith that are not applied to prepay the Term Loans pursuant to Section 2.7(b) as a result ofthe delivery of a Reinvestment Notice.          “Reinvestment Event”: any Asset Sale or Recovery Event in respect of which theBorrower has delivered a Reinvestment Notice.
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          “Reinvestment Notice”: a written notice executed by a Responsible Officer statingthat no Event of Default has occurred and is continuing and that the Borrower (directly orindirectly through a Subsidiary that is a Loan Party) intends and expects to use all or a specifiedportion of the Net Cash Proceeds of an Asset Sale or Recovery Event to acquire or repair assetsuseful in its business.          “Reinvestment Prepayment Amount”: with respect to any Reinvestment Event, theReinvestment Deferred Amount relating thereto less any amount expended prior to the relevantReinvestment Prepayment Date to acquire or repair assets useful in the Borrower’s business.          “Reinvestment Prepayment Date”: with respect to any Reinvestment Event, the earlierof (a) the date occurring twelve months after such Reinvestment Event or, provided that theBorrower or any Subsidiary has entered into a binding contract within twelve months after suchReinvestment Event to acquire assets useful in its business and/or to repair the affected asset, asapplicable, the date occurring eighteen months after such Reinvestment Event and (b) the date onwhich the Borrower shall have determined not to, or shall have otherwise ceased to, acquire orrepair assets useful in the Borrower’s business with all or any portion of the relevantReinvestment Deferred Amount.          “Reorganization”: with respect to any Multiemployer Plan, the condition that suchplan is in reorganization within the meaning of Section 4241 of ERISA.          “Reportable Event”: any of the events set forth in Section 4043(c) of ERISA, otherthan those events as to which the thirty day notice period is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of PBGC Reg. § 4043.          “Required Lenders”: at any time, the holders of more than 50% of (a) until the TermOut Date, the Unutilized Commitments then in effect plus the aggregate unpaid principal amount ofthe Term Loans then outstanding and (b) thereafter, the aggregate unpaid principal amount of theTerm Loans then outstanding.          “Requirement of Law”: as to any Person, the Certificate of Incorporation and By-Lawsor other organizational or governing documents of such Person, and any law, treaty, rule orregulation or determination of an arbitrator or a court or other Governmental Authority, in eachcase applicable to or binding upon such Person or any of its property or to which such Person orany of its property is subject.          “Responsible Officer”: the chief executive officer, president or chief financialofficer of the Borrower, but in any event, with respect to financial matters, the chief financialofficer of the Borrower.          “Restricted Payments”: as defined in Section 6.6.          “Scheduled Collateral”: items of Collateral set forth on Schedule 3.25.          “SEC”: the Securities and Exchange Commission, any successor thereto and anyanalogous Governmental Authority.
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          “Security Documents”: the collective reference to the Guarantee and CollateralAgreement, the Real Property Mortgages, if any, the Vessel Mortgages and all other securitydocuments hereafter delivered to the Administrative Agent or the Collateral Agent granting a Lienon any property of any Person to secure the obligations and liabilities of any Loan Party under anyLoan Document.          “Single Employer Plan”: any Plan that is covered by Title IV of ERISA, but that isnot a Multiemployer Plan.          “Solvent”: when used with respect to any Person, means that, as of any date ofdetermination, (a) the amount of the “present fair saleable value” of the assets of such Personwill, as of such date, exceed the amount of all “liabilities of such Person, contingent orotherwise”, as of such date, as such quoted terms are determined in accordance with applicablefederal and state laws governing determinations of the insolvency of debtors, (b) the present fairsaleable value of the assets of such Person will, as of such date, be greater than the amount thatwill be required to pay the liability of such Person on its debts as such debts become absolute andmatured, (c) such Person will not have, as of such date, an unreasonably small amount of capitalwith which to conduct its business, and (d) such Person will be able to pay its debts as theymature. For purposes of this definition, (i) “debt” means liability on a “claim”, and (ii) “claim”means any (x) right to payment, whether or not such a right is reduced to judgment, liquidated,unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable,secured or unsecured or (y) right to an equitable remedy for breach of performance if such breachgives rise to a right to payment, whether or not such right to an equitable remedy is reduced tojudgment, fixed, contingent, matured or unmatured, disputed, undisputed, secured or unsecured.          “Subordinated Debt”: means any indebtedness of any Group Member consented to inwriting by the Administrative Agent and subordinated to the Obligations in a manner and formsatisfactory to the Administrative Agent and Lenders in their sole discretion as to right and timeof payment and as to any other rights and remedies thereunder.          “Subsidiary”: as to any Person, a corporation, partnership, limited liability companyor other entity of which shares of stock or other ownership interests having ordinary voting power(other than stock or such other ownership interests having such power only by reason of thehappening of a contingency) to elect a majority of the board of directors or other managers of suchcorporation, partnership or other entity are at the time owned, or the management of which isotherwise controlled, directly or indirectly through one or more intermediaries, or both, by suchPerson. Unless otherwise qualified, all references to a “Subsidiary” or to “Subsidiaries” in thisAgreement shall refer to a Subsidiary or Subsidiaries of the Borrower.          “Subsidiary Guarantor”: each Subsidiary of the Borrower other than any ForeignSubsidiary.          “Subtech”: Subtech Offshore Ltd.
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          “Superior Achiever”: DP III multipurpose vessel currently under construction at theMerwede Shipyard Nieuwbouw BV (the “Shipyard”) in The Netherlands, under a Shipbuilding ContractYN-714, dated as of September 21, 2006, as amended (the “Shipbuilding Contract”), whichShipbuilding Contract is subject to various Guarantees (the “Refund Guarantees”) issued byCommerzbank AG Kantoor Amsterdam (the “Refund Guarantor”).          “Swap Agreement”: any agreement with respect to any swap, forward, future orderivative transaction or option or similar agreement involving, or settled by reference to, one ormore rates, currencies, commodities, equity or debt instruments or securities, or economic,financial or pricing indices or measures of economic, financial or pricing risk or value or anysimilar transaction or any combination of these transactions; provided that no phantomstock or similar plan providing for payments only on account of services provided by current orformer directors, officers, employees or consultants of the Borrower or any of its Subsidiariesshall be a “Swap Agreement”.          “Term Lenders”: each Lender that has a Commitment or that holds a Term Loan.          “Term Loans”: as defined in Section 2.1.          “Term Out Date”: December 31, 2008.          “Term Percentage”: as to any Lender at any time, the percentage which such Lender’sCommitment then constitutes of the aggregate Commitments (or, at any time after the Closing Date,the percentage which the aggregate principal amount of such Lender’s Term Loans then outstandingconstitutes of the aggregate principal amount of the Term Loans then outstanding).          “Transferee”: any Assignee or Participant.          “Type”: as to any Loan, its nature as an ABR Loan or a Eurodollar Loan.          “United States”: the United States of America.          “Unutilized Commitment”: As to any Lender, at any time means the Commitment of suchLender at such time minus the aggregate amount of Term Loans made by such Lender.          “Value Ratio”: At any date, the ratio of (a) Appraised FMV as most recentlydetermined in accordance with the provisions of this Agreement to (b) the aggregate principalamount of Term Loans outstanding as of such date.          “Vessel Mortgages”: each of the first preferred ship mortgages made by any Loan Partyin favor of, or for the benefit of, the Collateral Agent for its benefit and the benefit of theAdministrative Agent and the Lenders, substantially in the form of Exhibit D, together with anyproceeds thereof (with such changes thereto as shall be advisable under the law of the jurisdictionin which such mortgage or deed of trust is to be recorded).
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          “Wholly Owned Subsidiary”: as to any Person, any other Person all of the CapitalStock of which (other than directors’ qualifying shares required by law) is owned by such Persondirectly and/or through other Wholly Owned Subsidiaries.          “Wholly Owned Subsidiary Guarantor”: any Subsidiary Guarantor that is a Wholly OwnedSubsidiary of the Borrower.          1.2 Other Definitional Provisions. (a) Unless otherwise specified therein, all termsdefined in this Agreement shall have the defined meanings when used in the other Loan Documents orany certificate or other document made or delivered pursuant hereto or thereto.          (b) As used herein and in the other Loan Documents, and any certificate or other document madeor delivered pursuant hereto or thereto, (i) accounting terms relating to any Group Member notdefined in Section 1.1 and accounting terms partly defined in Section 1.1, to the extent notdefined, shall have the respective meanings given to them under GAAP, (ii) the words “include”,“includes” and “including” shall be deemed to be followed by the phrase “without limitation”, (iii)the word “incur” shall be construed to mean incur, create, issue, assume, become liable in respectof or suffer to exist (and the words “incurred” and “incurrence” shall have correlative meanings),(iv) the words “asset” and “property” shall be construed to have the same meaning and effect and torefer to any and all tangible and intangible assets and properties, including cash, Capital Stock,securities, revenues, accounts, leasehold interests and contract rights, and (v) references toagreements or other Contractual Obligations shall, unless otherwise specified, be deemed to referto such agreements or Contractual Obligations as amended, supplemented, restated or otherwisemodified from time to time.          (c) The words “hereof”, “herein” and “hereunder” and words of similar import, when used inthis Agreement, shall refer to this Agreement as a whole and not to any particular provision ofthis Agreement, and Section, Schedule and Exhibit references are to this Agreement unless otherwisespecified.          (d) The meanings given to terms defined herein shall be equally applicable to both thesingular and plural forms of such terms.SECTION 2. AMOUNT AND TERMS OF COMMITMENTS          2.1 Term Commitments. Subject to the terms and conditions hereof, (a) each TermLender severally agrees to make a term loan (a “Term Loan”) to the Borrower on the ClosingDate and on each Borrowing Date in an aggregate amount not to exceed the amount of the Commitmentof such Lender, as such Commitment may be increased pursuant to Section 2.2. The Term Loans mayfrom time to time be Eurodollar Loans or ABR Loans, as determined by the Borrower and notified tothe Administrative Agent in accordance with Sections 2.3 and 2.8.          2.2 Increase of Aggregate Commitment. (a) At any time prior to the Term Out Date, solong as no Default or Event of Default shall then have occurred and be continuing, the Borrower mayrequest (in consultation with the Administrative Agent) that the aggregate Commitment be increasedby up to $40,000,000 provided that, without the prior written consent of all of the Lenders, (i)the aggregate Commitment shall at no time exceed $100,000,000; (ii) the Borrower shall notpreviously have reduced the aggregate Commitment; and (iii) the
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Borrower shall not be entitled to more than one such increase. Such request shall be made ina written notice given to the Agent and the Lenders by the Borrower not less than twenty (20)Business Days prior to the proposed effective date of such increase, which notice (a “*CommitmentIncrease Notice*”) shall specify the amount of the proposed increase in the aggregate Commitment andthe proposed effective date of such increase. In the event of such Commitment Increase Notice,each of the Lenders shall be given the opportunity to participate in the requested increase ratablyin the proportions that their respective Commitments bear to aggregate Commitment. No Lender shallhave any obligation to increase its Commitment pursuant to a Commitment Increase Notice. On orprior to the date that is fifteen (15) Business Days after receipt of the Commitment IncreaseNotice, each Lender shall submit to the Agent a notice indicating the maximum amount by which it iswilling to increase its Commitment in connection with such Commitment Increase Notice (any suchnotice to the Agent being herein a “*Lender Increase Notice*”). Any Lender which does not submit aLender Increase Notice to the Agent prior to the expiration of such fifteen (15) Business Dayperiod shall be deemed to have denied any increase in its Commitment. In the event that theaggregate increases of Commitments set forth in the Lender Increase Notices exceeds the amountrequested by the Borrower in the Commitment Increase Notice, the Agent shall have the right, inconsultation with the Borrower, to allocate the amount of increases necessary to meet theBorrower’s Commitment Increase Notice. In the event that the Lender Increase Notices in theaggregate are less than the amount requested by the Borrower, not later than three (3) BusinessDays prior to the proposed effective date the Borrower may notify the Administrative Agent of anyfinancial institution that shall have agreed to become a *“Lender”*party hereto (a *“Proposed NewLender”)*in connection with the Commitment Increase Notice. Any Proposed New Lender shall besubject to the consent of the Administrative Agent (which consent shall not be unreasonablywithheld). If the Borrower shall not have arranged any Proposed New Lender(s) to commit to theshortfall from the Lender Increase Notices, then the Borrower shall be deemed to have reduced theamount of the Commitment Increase Notice to the aggregate amount set forth in the Lender IncreaseNotices. Based upon the Lender Increase Notices, any allocations made in connection therewith andany notice regarding any Proposed New Lender, if applicable, the Administrative Agent shall notifythe Borrower and the Lenders on or before the Business Day immediately prior to the proposedeffective date of the amount of each Lender’s and Proposed New Lender’s Commitment (the “EffectiveCommitment Amount”) and the amount of the aggregate Commitment, which amount shall be effective onthe following Business Day. Any increase in the aggregate Commitment shall be subject to thefollowing conditions:          (a) The Borrower shall have entered into a hell or high water noncancellable time charter onthe Superior Achiever having (i) terms and conditions reasonably acceptable to the AdministrativeAgent, (ii) a minimum term of 36 months, (iii) a charter party reasonably acceptable to theAdministrative Agent, (iv) minimum charter hire of $165,000 per day, and (v) minimum number ofcharter days per year of 300.          (b) The Borrower shall have obtained the consent thereto of each Guarantor and any otherguarantor of the Obligations and its reaffirmation of the Loan Document(s), if any, executed by it,which consent and reaffirmation shall be in writing and in form and substance reasonablysatisfactory to the Administrative Agent,
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          (c) As of the date of the Commitment Increase Notice and as of the proposed effective date ofthe increase in the aggregate Commitment, all representations and warranties made by any Loan Partyin or pursuant to the Loan Documents shall be true and correct in all material respects as thoughmade on such date and no event shall have occurred and then be continuing which constitutes aDefault or Event of Default          (d) The Borrower, the Administrative Agent and each Proposed New Lender or Lenders that shallhave agreed to provide a “*commitment*” in support of such increase in the Aggregate Commitment shallhave executed and delivered a “*Commitment and Acceptance*” substantially in the form of ExhibitI hereto,          (e) Counsel for the Borrower and for the Guarantors shall have provided to the AdministrativeAgent supplemental opinions in form and substance reasonably satisfactory to the AdministrativeAgent, and          (f) The Borrower and Proposed New Lender(s) shall otherwise have executed and delivered suchother instruments and documents as may be required under Section 2 or that the Administrative Agentshall have reasonably requested in connection with such increase. If any fee shall be charged bythe Proposed New Lender(s) or Lender(s) that shall have agreed to provide a *Commitment*in supportof such increase in the aggregate Commitment in connection with any such increase, such fee shallbe in accordance with then prevailing market conditions, which market conditions shall have beenreasonably documented by the Administrative Agent to the Borrower. Upon satisfaction of theconditions precedent to any increase in the aggregate Commitment, the Administrative Agent shallpromptly advise the Borrower and each Lender of the effective date of such increase. Upon theeffective date of any increase in the aggregate Commitment that is provided by a Proposed NewLender, such Proposed New Lender shall be a party to this Agreement as a Lender and shall have therights and obligations of a Lender hereunder. Nothing contained herein shall constitute, orotherwise be deemed to be, a commitment on the part of any Lender to increase its Commitmenthereunder at any time.          2.3 Procedure for Term Loan Borrowing. The Borrower shall give the AdministrativeAgent irrevocable notice (which notice must be received by the Administrative Agent prior to 11:00A.M., New York City time, one Business Day prior to the Closing Date and any anticipated BorrowingDate) requesting that the Term Lenders make the Term Loans on the relevant Borrowing Date andspecifying the amount to be borrowed (the “Notice of Borrowing”). Each such Notice of Borrowingmust be executed by either the chief financial officer or the treasurer of the Borrower as well asby any one of the following officers of the Borrower: chairman of the board, chief executiveofficer, president, senior vice president or corporate secretary. Each such Notice of Borrowingshall be substantially in the form of Exhibit J. The Minimum Amount of any Loan on the ClosingDate and any Borrowing Date shall be $5,000,000. Any Term Loan made on the Closing Date must be anABR Loan. Upon receipt of such notice the Administrative Agent shall promptly notify each TermLender thereof. Not later than 12:00 Noon, New York City time, on the relevant Borrowing Date eachTerm Lender shall make available to the Administrative Agent at the Funding Office an amount inimmediately available funds equal to the Term Loan or Term Loans to be made by such Lender. TheAdministrative Agent shall credit the account of the Borrower on the books of such office of theAdministrative Agent with the aggregate of the amounts made available to the Administrative
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Agent by the Term Lenders in immediately available funds. Notwithstanding any other provisionof this Agreement the Borrower shall not be entitled to deliver a Notice to the Term Lenders as toany Term Loan after the Term Out Date.          2.4 Repayment of Term Loans. The Term Loan of each Lender shall mature in consecutivequarterly installments commencing three months after the Term Out Date, each of which shall be inan amount equal to such Lender’s Term Percentage multiplied by the amount set forth below oppositesuch installment:           **$60,000,000**  **$100,000,000**   **Principal**  **Principal** **Installment** **Amount****(1)**  **Amount****(1)** March 31, 2009 $2,250,000.00  $3,750,000.00 June 30, 2009 $2,250,000.00  $3,750,000.00 September 30, 2009 $2,250,000.00  $3,750,000.00 December 31, 2009 $2,250,000.00  $3,750,000.00 March 31, 2010 $2,250,000.00  $3,750,000.00 June 30, 2010 $2,250,000.00  $3,750,000.00 September 30, 2010 $2,250,000.00  $3,750,000.00 December 31, 2010 $2,250,000.00  $3,750,000.00 March 31, 2011 $2,250,000.00  $3,750,000.00 June 30, 2011 $2,250,000.00  $3,750,000.00 September 30, 2011 $2,250,000.00  $3,750,000.00 December 31, 2011 $2,250,000.00  $3,750,000.00 March 31, 2012 $2,250,000.00  $3,750,000.00 June 30, 2012 $2,250,000.00  $3,750,000.00 September 30, 2012 $2,250,000.00  $3,750,000.00 December 31, 2012 $2,250,000.00  $3,750,000.00 March 31, 2013 $2,250,000.00  $3,750,000.00 June 30, 2013 $2,250,000.00  $3,750,000.00 September 30, 2013 $2,250,000.00  $3,750,000.00          Maturity Date $17,250,000.00  $28,750,000.00         **(1)** **3.75% of the Principal Amount Outstanding**          2.5 Fees, etc. The Borrower agrees to pay to the Administrative Agent the fees in theamounts and on the dates as set forth in the Mandate Letter between the Borrower and theAdministrative Agent and to perform any other obligations contained therein.          2.6 Optional Prepayments. (a) The Borrower may at any time and from time to timeprepay the Loans, without premium or penalty (except as set forth in clause (b) below), in whole orin part, upon irrevocable notice delivered to the Administrative Agent no later than 11:00 A.M.,New York City time, three Business Days prior thereto, in the case of Eurodollar Loans, and nolater than 11:00 A.M., New York City time, one Business Day prior thereto, in the case of ABRLoans, which notice shall specify the date and amount of prepayment and whether
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the prepayment is of Eurodollar Loans or ABR Loans; provided, that if a EurodollarLoan is prepaid on any day other than the last day of the Interest Period applicable thereto, theBorrower shall also pay any amounts owing pursuant to Section 2.16. Upon receipt of any suchnotice the Administrative Agent shall promptly notify each relevant Lender thereof. If any suchnotice is given, the amount specified in such notice shall be due and payable on the date specifiedtherein, together with accrued interest to such date on the amount prepaid. Partial prepayments ofTerm Loans shall be in an aggregate principal amount of $1,000,000 or a whole multiple thereof.          (b) Each optional prepayment of the Term Loans made on or prior to the second anniversary ofthe Closing Date shall be accompanied by a prepayment premium equal to 1% of the principal amountof such prepayment.          2.7 Mandatory Prepayments. (a) If any Capital Stock shall be issued by the Borrowerother than issuance(s) with cash proceeds in an aggregate amount not to exceed $5,000,000 in anyfiscal year, (i) under the Superior Offshore International, Inc. 2007 Stock Incentive Plan (asamended, modified, or replaced from time to time) or any other stock incentive plan adopted fromtime to time (as amended, modified, or replaced from time to time) and (ii) to directors, officers,or employees or any Indebtedness shall be incurred by any Group Member (other than any ForeignSubsidiary) (excluding any Indebtedness incurred in accordance with Section 6.2), an amount equalto 100% of the Net Cash Proceeds thereof shall be applied on the date of receipt thereof toward theprepayment of the Term Loans as set forth in Section 2.7(e).          (b) (i) If on any date any Group Member (other than any Foreign Subsidiary) shall receive NetCash Proceeds from any Asset Sale (other than a sale of Subtech) or Recovery Event then, unless aReinvestment Notice shall be delivered in respect thereof, such Net Cash Proceeds shall be appliedon such date toward the prepayment of the Term Loans as set forth in Section 2.7(e);provided, that, notwithstanding the foregoing, on each Reinvestment Prepayment Date, anamount equal to the Reinvestment Prepayment Amount with respect to the relevant Reinvestment Eventshall be applied toward the prepayment of the Term Loans as set forth in Section 2.7(e).          (ii) If on any date any Group Member shall receive Net Cash Proceeds in excess of$8,000,000 from the sale of Subtech, then such excess Net Cash Proceeds shall be applied onsuch date toward the prepayment of the Term Loans as set forth in Section 2.7(e);provided, that, notwithstanding the foregoing, the aggregate Net Cash Proceeds thatshall be required to be so applied pursuant to this clause (ii) shall not exceed $3,000,000.          (c) If, for any Quarterly Calendar Period of the Borrower commencing with the first QuarterlyCalendar Period occurring after the Term Out Date, there shall be Excess Cash Flow, the Borrowershall, on the relevant Excess Cash Flow Application Date, apply the Excess Cash Flow Percentage ofsuch Excess Cash Flow toward the prepayment of the Term Loans as set forth in Section 2.7(e). Eachsuch prepayment shall be made on a date (an “Excess Cash Flow Application Date”) whichshall be the last day of the Quarterly Calendar Period immediately following the Quarterly CalendarPeriod for which Excess Cash Flow was determined. The Borrower shall deliver to the AdministrativeAgent, within 45 days after the
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end of each Quarterly Calendar Period, a written report (the “Excess Cash Flow Report”),setting forth the data and calculations used in determining the Excess Cash Flow for such QuarterlyCalendar Period, certified by the chief financial officer of the Borrower.          (d) Reserved.          (e) Amounts to be applied in connection with prepayments made pursuant to Section 2.6 shall beapplied to the prepayment of the Term Loans in accordance with Section 2.13(b). The application ofany prepayment pursuant to Section 2.7 shall be made, first, to ABR Loans and,second, to Eurodollar Loans. Each prepayment of the Term Loans under Section 2.7 shall beaccompanied by accrued interest to the date of such prepayment on the amount prepaid. Eachprepayment of the Term Loans under Section 2.7 (a) or (b) made on or prior to the 2ndanniversary of the Closing Date shall be accompanied by a prepayment premium equal to 1% of theprincipal amount of such prepayment.          2.8 Conversion and Continuation Options. (a) The Borrower may elect from time to timeto convert Eurodollar Loans to ABR Loans by giving the Administrative Agent prior irrevocablenotice of such election no later than 11:00 A.M., New York City time, on the Business Day precedingthe proposed conversion date, provided that any such conversion of Eurodollar Loans mayonly be made on the last day of an Interest Period with respect thereto. The Borrower may electfrom time to time to convert ABR Loans to Eurodollar Loans by giving the Administrative Agent priorirrevocable notice of such election no later than 11:00 A.M., New York City time, on the thirdBusiness Day preceding the proposed conversion date (which notice shall specify the length of theinitial Interest Period therefor), provided that no ABR Loan may be converted into aEurodollar Loan when any Event of Default has occurred and is continuing. and the AdministrativeAgent or the Required Lenders have determined in its or their sole discretion not to permit suchconversions. Upon receipt of any such notice the Administrative Agent shall promptly notify eachrelevant Lender thereof.          (b) Any Eurodollar Loan may be continued as such upon the expiration of the then currentInterest Period with respect thereto by the Borrower giving irrevocable notice to theAdministrative Agent, in accordance with the applicable provisions of the term “Interest Period”set forth in Section 1.1, of the length of the next Interest Period to be applicable to such Loans,provided that no Eurodollar Loan may be continued as such when any Event of Default hasoccurred and is continuing and the Administrative Agent has or the Required Lenders have determinedin its or their sole discretion not to permit such continuations, and provided,further, that if the Borrower shall fail to give any required notice as described above inthis paragraph or if such continuation is not permitted pursuant to the preceding proviso suchLoans shall be automatically converted to ABR Loans on the last day of such then expiring InterestPeriod. Upon receipt of any such notice the Administrative Agent shall promptly notify eachrelevant Lender thereof.          2.9 Limitations on Eurodollar Tranches. Notwithstanding anything to the contrary inthis Agreement, all borrowings, conversions and continuations of Eurodollar Loans and allselections of Interest Periods shall be in such amounts and be made pursuant to such elections sothat, (a) after giving effect thereto, the aggregate principal amount of the Eurodollar Loanscomprising each Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of
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$1,000,000 in excess thereof and (b) no more than ten Eurodollar Tranches shall be outstandingat any one time.          2.10 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear interestfor each day during each Interest Period with respect thereto at a rate per annum equal to theEurodollar Rate determined for such day plus the Applicable Margin.          (b) Each ABR Loan shall bear interest at a rate per annum equal to the ABR plus the ApplicableMargin.          (c) (i) If all or a portion of the principal amount of any Loan shall not be paid when due(whether at the stated maturity, by acceleration or otherwise), all outstanding Loans (whether ornot overdue) shall bear interest at a rate per annum equal to the rate that would otherwise beapplicable thereto pursuant to the foregoing provisions of this Section plus 2%, and (ii)if all or a portion of any interest payable on any Loan or other amount payable hereunder shall notbe paid when due (whether at the stated maturity, by acceleration or otherwise), such overdueamount shall bear interest at a rate per annum equal to the rate then applicable to ABR Loans orEurodollar Loans plus 2%, in each case, with respect to clauses (i) and (ii) above, fromthe date of such non-payment until such amount is paid in full (as well after as before judgment).          (d) Interest shall be payable in arrears on each Interest Payment Date, provided thatinterest accruing pursuant to paragraph (c) of this Section shall be payable from time to time ondemand.          2.11 Computation of Interest and Fees. (a) Interest and fees payable pursuant heretoshall be calculated on the basis of a 360-day year for the actual days elapsed except that, withrespect to ABR Loans the rate of interest on which is calculated on the basis of the Prime Rate,the interest thereon shall be calculated on the basis of a 365 (or 366, as the case may be) dayyear for the actual days elapsed. The Administrative Agent shall as soon as practicable notify theBorrower and the relevant Lenders of each determination of a Eurodollar Rate. Any change in theinterest rate on a Loan resulting from a change in the ABR or the Eurocurrency Reserve Requirementsshall become effective as of the opening of business on the day on which such change becomeseffective. The Administrative Agent shall as soon as practicable notify the Borrower and therelevant Lenders of the effective date and the amount of each such change in interest rate.          (b) Each determination of an interest rate by the Administrative Agent pursuant to anyprovision of this Agreement shall be conclusive and binding on the Borrower and the Lenders in theabsence of manifest error. The Administrative Agent shall, at the request of the Borrower, deliverto the Borrower a statement showing the quotations used by the Administrative Agent in determiningany interest rate pursuant to Section 2.10(a).          2.12 Inability to Determine Interest Rate. If prior to the first day of any InterestPeriod:     (a) the Administrative Agent shall have determined (which determination shall beconclusive and binding upon the Borrower) that, by reason of circumstances
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affecting the relevant market, adequate and reasonable means do not exist forascertaining the Eurodollar Rate for such Interest Period, or     (b) the Administrative Agent shall have received notice from the Required Lenders thatthe Eurodollar Rate determined or to be determined for such Interest Period will notadequately and fairly reflect the cost to such Lenders (as conclusively certified by suchLenders) of making or maintaining their affected Loans during such Interest Period,the Administrative Agent shall give telecopy or telephonic notice thereof to the Borrower and therelevant Lenders as soon as practicable thereafter. If such notice is given (x) any EurodollarLoans requested to be made on the first day of such Interest Period shall be made as ABR Loans, (y)any Loans that were to have been converted on the first day of such Interest Period to EurodollarLoans shall be continued as ABR Loans and (z) any outstanding Eurodollar Loans shall be converted,on the last day of the then-current Interest Period, to ABR Loans. Until such notice has beenwithdrawn by the Administrative Agent, no further Eurodollar Loans shall be made or continued assuch, nor shall the Borrower have the right to convert Loans to Eurodollar Loans.          2.13 Pro Rata Treatment and Payments. (a) Each borrowing by the Borrower from theLenders hereunder shall be made prorata according to the respective TermPercentages of the Lenders.          (b) Each payment (including each prepayment) by the Borrower on account of principal of andinterest on the Term Loans shall be made prorata according to the respectiveoutstanding principal amounts of the Term Loans then held by the Term Lenders. The amount of eachprincipal prepayment of the Term Loans shall be applied to reduce the then remaining installmentsof the Term Loans prorata based upon the then remaining principal amounts thereof.Amounts prepaid on account of the Term Loans may not be reborrowed.          (c) All payments (including prepayments) to be made by the Borrower hereunder, whether onaccount of principal, interest, fees or otherwise, shall be made without setoff or counterclaim andshall be made prior to 12:00 Noon, New York City time, on the due date thereof to theAdministrative Agent, for the account of the Lenders, at the Funding Office, in Dollars and inimmediately available funds. The Administrative Agent shall distribute such payments to eachrelevant Lender promptly upon receipt in like funds as received, net of any amounts owing by suchLender pursuant to Section 8.7. If any payment hereunder (other than payments on the EurodollarLoans) becomes due and payable on a day other than a Business Day, such payment shall be extendedto the next succeeding Business Day. If any payment on a Eurodollar Loan becomes due and payableon a day other than a Business Day, the maturity thereof shall be extended to the next succeedingBusiness Day unless the result of such extension would be to extend such payment into anothercalendar month, in which event such payment shall be made on the immediately preceding BusinessDay. In the case of any extension of any payment of principal pursuant to the preceding twosentences, interest thereon shall be payable at the then applicable rate during such extension.
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          (d) Unless the Administrative Agent shall have been notified in writing by any Lender prior toa borrowing that such Lender will not make the amount that would constitute its share of suchborrowing available to the Administrative Agent, the Administrative Agent may assume that suchLender is making such amount available to the Administrative Agent, and the Administrative Agentmay, in reliance upon such assumption, make available to the Borrower a corresponding amount. Ifsuch amount is not made available to the Administrative Agent by the required time on the BorrowingDate therefor, such Lender shall pay to the Administrative Agent, on demand, such amount withinterest thereon, at a rate equal to the greater of (i) the Federal Funds Effective Rate and (ii) arate determined by the Administrative Agent in accordance with banking industry rules on interbankcompensation, for the period until such Lender makes such amount immediately available to theAdministrative Agent. A certificate of the Administrative Agent submitted to any Lender withrespect to any amounts owing under this paragraph shall be conclusive in the absence of manifesterror. If such Lender’s share of such borrowing is not made available to the Administrative Agentby such Lender within three Business Days after such Borrowing Date, the Administrative Agent shallalso be entitled to recover such amount with interest thereon at the rate per annum applicable toABR Loans, on demand, from the Borrower.          (e) Unless the Administrative Agent shall have been notified in writing by the Borrower priorto the date of any payment due to be made by the Borrower hereunder that the Borrower will not makesuch payment to the Administrative Agent, the Administrative Agent may assume that the Borrower ismaking such payment, and the Administrative Agent may, but shall not be required to, in relianceupon such assumption, make available to the Lenders their respective proratashares of a corresponding amount. If such payment is not made to the Administrative Agent by theBorrower within three Business Days after such due date, the Administrative Agent shall be entitledto recover, on demand, from each Lender to which any amount which was made available pursuant tothe preceding sentence, such amount with interest thereon at the rate per annum equal to the dailyaverage Federal Funds Effective Rate. Nothing herein shall be deemed to limit the rights of theAdministrative Agent or any Lender against the Borrower.     2.14 Requirements of Law. (a) If the adoption of or any change in any Requirement ofLaw or in the interpretation or application thereof or compliance by any Lender with any request ordirective (whether or not having the force of law) from any central bank or other GovernmentalAuthority made subsequent to the date hereof:          (i) shall subject any Lender to any tax of any kind whatsoever with respect to thisAgreement or any Eurodollar Loan made by it, or change the basis of taxation of payments tosuch Lender in respect thereof (except for Non-Excluded Taxes covered by Section 2.15 andchanges in the rate of tax on the overall net income of such Lender);          (ii) shall impose, modify or hold applicable any reserve, special deposit, compulsoryloan or similar requirement against assets held by, deposits or other liabilities in or forthe account of, advances, loans or other extensions of credit by, or any other acquisitionof funds by, any office of such Lender that is not otherwise included in the determinationof the Eurodollar Rate; or
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          (iii) shall impose on such Lender any other condition;and the result of any of the foregoing is to increase the cost to such Lender, by an amount thatsuch Lender deems to be material, of making, converting into, continuing or maintaining EurodollarLoans, or to reduce any amount receivable hereunder in respect thereof, then, in any such case, theBorrower shall promptly pay such Lender, upon its demand, any additional amounts necessary tocompensate such Lender for such increased cost or reduced amount receivable. If any Lender becomesentitled to claim any additional amounts pursuant to this paragraph, it shall promptly notify theBorrower (with a copy to the Administrative Agent) of the event by reason of which it has become soentitled.          (b) If any Lender shall have determined that the adoption of or any change in any Requirementof Law regarding capital adequacy or in the interpretation or application thereof or compliance bysuch Lender or any corporation controlling such Lender with any request or directive regardingcapital adequacy (whether or not having the force of law) from any Governmental Authority madesubsequent to the date hereof shall have the effect of reducing the rate of return on such Lender’sor such corporation’s capital as a consequence of its obligations hereunder to a level below thatwhich such Lender or such corporation could have achieved but for such adoption, change orcompliance (taking into consideration such Lender’s or such corporation’s policies with respect tocapital adequacy) by an amount deemed by such Lender to be material, then from time to time, aftersubmission by such Lender to the Borrower (with a copy to the Administrative Agent) of a writtenrequest therefor, the Borrower shall pay to such Lender such additional amount or amounts as willcompensate such Lender or such corporation for such reduction.          (c) A certificate as to any additional amounts payable pursuant to this Section submitted byany Lender to the Borrower (with a copy to the Administrative Agent) shall be conclusive in theabsence of manifest error. Notwithstanding anything to the contrary in this Section, the Borrowershall not be required to compensate a Lender pursuant to this Section for any amounts incurred morethan nine months prior to the date that such Lender notifies the Borrower of such Lender’sintention to claim compensation therefor; provided that, if the circumstances giving riseto such claim have a retroactive effect, then such nine-month period shall be extended to includethe period of such retroactive effect. The obligations of the Borrower pursuant to this Sectionshall survive the termination of this Agreement and the payment of the Loans and all other amountspayable hereunder.          2.15 Taxes. (a) All payments made by the Borrower under this Agreement shall be madefree and clear of, and without deduction or withholding for or on account of, any present or futureincome, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or withholdings,now or hereafter imposed, levied, collected, withheld or assessed by any Governmental Authority,excluding net income taxes and franchise taxes (imposed in lieu of net income taxes) imposed on theAdministrative Agent or any Lender as a result of a present or former connection between theAdministrative Agent or such Lender and the jurisdiction of the Governmental Authority imposingsuch tax or any political subdivision or taxing authority thereof or therein (other than any suchconnection arising solely from the Administrative Agent or such Lender having executed, deliveredor performed its obligations or received a payment under, or enforced, this Agreement or any otherLoan Document). If any such non-excluded
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taxes, levies, imposts, duties, charges, fees, deductions or withholdings (“Non-ExcludedTaxes”) or Other Taxes are required to be withheld from any amounts payable to theAdministrative Agent or any Lender hereunder, the amounts so payable to the Administrative Agent orsuch Lender shall be increased to the extent necessary to yield to the Administrative Agent or suchLender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amountspayable hereunder at the rates or in the amounts specified in this Agreement, provided,however, that the Borrower shall not be required to increase any such amounts payable toany Lender with respect to any Non-Excluded Taxes (i) that are attributable to such Lender’sfailure to comply with the requirements of paragraph (d) or (e) of this Section or (ii) that areUnited States withholding taxes imposed on amounts payable to such Lender at the time such Lenderbecomes a party to this Agreement, except to the extent that such Lender’s assignor (if any) wasentitled, at the time of assignment, to receive additional amounts from the Borrower with respectto such Non-Excluded Taxes pursuant to this paragraph.          (b) In addition, the Borrower shall pay any Other Taxes to the relevant Governmental Authorityin accordance with applicable law.          (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Borrower, as promptly aspossible thereafter the Borrower shall send to the Administrative Agent for its own account or forthe account of the relevant Lender, as the case may be, a certified copy of an original officialreceipt received by the Borrower showing payment thereof. If the Borrower fails to pay anyNon-Excluded Taxes or Other Taxes when due to the appropriate taxing authority or fails to remit tothe Administrative Agent the required receipts or other required documentary evidence, the Borrowershall indemnify the Administrative Agent and the Lenders for any incremental taxes, interest orpenalties that may become payable by the Administrative Agent or any Lender as a result of any suchfailure.          (d) Each Lender (or Transferee) that is not a “U.S. Person” as defined in Section 7701(a)(30)of the Code (a “Non-U.S. Lender”) shall deliver to the Borrower and the AdministrativeAgent (or, in the case of a Participant, to the Lender from which the related participation shallhave been purchased) two copies of either U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI,or, in the case of a Non-U.S. Lender claiming exemption from U.S. federal withholding tax underSection 871(h) or 881(c) of the Code with respect to payments of “portfolio interest”, a statementsubstantially in the form of Exhibit G and a Form W-8BEN, or any subsequent versions thereof orsuccessors thereto, properly completed and duly executed by such Non-U.S. Lender claiming completeexemption from, or a reduced rate of, U.S. federal withholding tax on all payments by the Borrowerunder this Agreement and the other Loan Documents. Such forms shall be delivered by each Non-U.S.Lender on or before the date it becomes a party to this Agreement (or, in the case of anyParticipant, on or before the date such Participant purchases the related participation). Inaddition, each Non-U.S. Lender shall deliver such forms promptly upon the obsolescence orinvalidity of any form previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shallpromptly notify the Borrower at any time it determines that it is no longer in a position toprovide any previously delivered certificate to the Borrower (or any other form of certificationadopted by the U.S. taxing authorities for such purpose). Notwithstanding any other provision ofthis paragraph, a Non-U.S. Lender shall not be required to deliver any form pursuant to thisparagraph that such Non-U.S. Lender is not legally able to deliver.
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          (e) A Lender that is entitled to an exemption from or reduction of non-U.S. withholding taxunder the law of the jurisdiction in which the Borrower is located, or any treaty to which suchjurisdiction is a party, with respect to payments under this Agreement shall deliver to theBorrower (with a copy to the Administrative Agent), at the time or times prescribed by applicablelaw or reasonably requested by the Borrower, such properly completed and executed documentationprescribed by applicable law as will permit such payments to be made without withholding or at areduced rate, provided that such Lender is legally entitled to complete, execute anddeliver such documentation and in such Lender’s judgment such completion, execution or submissionwould not materially prejudice the legal position of such Lender.          (f) If the Administrative Agent or any Lender determines, in its sole discretion, that it hasreceived a refund of any Non-Excluded Taxes or Other Taxes as to which it has been indemnified bythe Borrower or with respect to which the Borrower has paid additional amounts pursuant to thisSection 2.15, it shall pay over such refund to the Borrower (but only to the extent of indemnitypayments made, or additional amounts paid, by the Borrower under this Section 2.15 with respect tothe Non-Excluded Taxes or Other Taxes giving rise to such refund), net of all out-of-pocketexpenses of the Administrative Agent or such Lender and without interest (other than any interestpaid by the relevant Governmental Authority with respect to such refund); provided, thatthe Borrower, upon the request of the Administrative Agent or such Lender, agrees to repay theamount paid over to the Borrower (plus any penalties, interest or other charges imposed by therelevant Governmental Authority) to the Administrative Agent or such Lender in the event theAdministrative Agent or such Lender is required to repay such refund to such GovernmentalAuthority. This paragraph shall not be construed to require the Administrative Agent or any Lenderto make available its tax returns (or any other information relating to its taxes which it deemsconfidential) to the Borrower or any other Person.          (g) The agreements in this Section shall survive the termination of this Agreement and thepayment of the Loans and all other amounts payable hereunder.          2.16 Indemnity. The Borrower agrees to indemnify each Lender for, and to hold eachLender harmless from, any loss or expense that such Lender may sustain or incur as a consequence of(a) default by the Borrower in making a borrowing of, conversion into or continuation of EurodollarLoans after the Borrower has given a notice requesting the same in accordance with the provisionsof this Agreement, (b) default by the Borrower in making any prepayment of or conversion fromEurodollar Loans after the Borrower has given a notice thereof in accordance with the provisions ofthis Agreement or (c) the making of a prepayment of Eurodollar Loans on a day that is not the lastday of an Interest Period with respect thereto. Such indemnification may include an amount equalto the excess, if any, of (i) the amount of interest that would have accrued on the amount soprepaid, or not so borrowed, converted or continued, for the period from the date of suchprepayment or of such failure to borrow, convert or continue to the last day of such InterestPeriod (or, in the case of a failure to borrow, convert or continue, the Interest Period that wouldhave commenced on the date of such failure) in each case at the applicable rate of interest forsuch Loans provided for herein (excluding, however, the Applicable Margin included therein, if any)over (ii) the amount of interest (as reasonably determined by such Lender) that would haveaccrued to such Lender on such amount by placing such amount on deposit for a comparable periodwith leading banks in the interbank eurodollar market. A certificate as to any amounts payablepursuant to this Section submitted to the
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Borrower by any Lender shall be conclusive in the absence of manifest error. This covenantshall survive the termination of this Agreement and the payment of the Loans and all other amountspayable hereunder.          2.17 Change of Lending Office. Each Lender agrees that, upon the occurrence of anyevent giving rise to the operation of Section 2.18 or 2.19(a) with respect to such Lender, it will,if requested by the Borrower, use reasonable efforts (subject to overall policy considerations ofsuch Lender) to designate another lending office for any Loans affected by such event with theobject of avoiding the consequences of such event; provided, that such designation is madeon terms that, in the sole judgment of such Lender, cause such Lender and its lending office(s) tosuffer no economic, legal or regulatory disadvantage, and provided, further, thatnothing in this Section shall affect or postpone any of the obligations of the Borrower or therights of any Lender pursuant to Section 2.14 or 2.15(a).          2.18 Replacement of Lenders. The Borrower shall be permitted to replace any Lenderthat (a) requests reimbursement for amounts owing pursuant to Section 2.14 or 2.15(a) or (b)defaults in its obligation to make Loans hereunder, with a replacement financial institution;provided that (i) such replacement does not conflict with any Requirement of Law, (ii) noEvent of Default shall have occurred and be continuing at the time of such replacement, (iii) priorto any such replacement, such Lender shall have taken no action under Section 2.17 so as toeliminate the continued need for payment of amounts owing pursuant to Section 2.14 or 2.15(a), (iv)the replacement financial institution shall purchase, at par, all Loans and other amounts owing tosuch replaced Lender on or prior to the date of replacement, (v) the Borrower shall be liable tosuch replaced Lender under Section 2.16 if any Eurodollar Loan owing to such replaced Lender shallbe purchased other than on the last day of the Interest Period relating thereto, (vi) thereplacement financial institution shall be reasonably satisfactory to the Administrative Agent,(vii) the replaced Lender shall be obligated to make such replacement in accordance with theprovisions of Section 9.6 (provided that the Borrower shall be obligated to pay the registrationand processing fee referred to therein), (viii) until such time as such replacement shall beconsummated, the Borrower shall pay all additional amounts (if any) required pursuant to Section2.14 or 2.15(a), as the case may be, and (ix) any such replacement shall not be deemed to be awaiver of any rights that the Borrower, the Administrative Agent or any other Lender shall haveagainst the replaced Lender.          2.19 Term Loan Account and Accounting. The Administrative Agent shall maintain a loanaccount (the “Loan Account”) on its books to record all Term Loans of each Lender,comprising the Term Loan (indicating, with respect to each Term Loan, the Eurodollar Loans and theABR Loans), all payments made by Borrowers, and all other debits and credits as provided in thisAgreement with respect to the Term Loan or any other Obligations. All entries in the Loan Accountshall be made in accordance with the Administrative Agent’s customary accounting practices as ineffect from time to time. The balance in the Loan Account, as recorded on the AdministrativeAgent’s most recent printout or other written statement, shall, absent manifest error, bepresumptive evidence of the amounts due and owing to the Administrative Agent and Lenders by theBorrower; provided, that any failure to so record or any error in so recording shall notlimit or otherwise affect the Borrower’s duty to pay the Obligations. Borrower may request a copyof the Loan Account from time to time. Unless the Borrower notifies the Administrative Agent inwriting of any objection to any Loan Account
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(specifically describing the basis for such objection), within 60 days after receipt byBorrower of such Loan Account, such Loan Account shall be presumptive evidence of all mattersreflected therein. Only those items expressly objected to in such notice shall be deemed to bedisputed by Borrowers. Notwithstanding any provision herein contained to the contrary, any Lendermay elect (which election may be revoked) to dispense with the issuance of Notes to that Lender andmay rely on the Loan Account as evidence of the amount of Obligations from time to time owing toit.SECTION 3. REPRESENTATIONS AND WARRANTIES          To induce the Agents and the Lenders to enter into this Agreement and the Lenders to make theLoans, the Borrower hereby represents and warrants to the Agents and each Lender that:          3.1 Financial Condition. The audited consolidated balance sheets of the Borrower asat December 31, 2005 and December 31, 2006 and the related consolidated statements of income and ofcash flows for the fiscal years ended on such dates, reported on by and accompanied by anunqualified report from KPMG LLP, present fairly the consolidated financial condition of theBorrower as at such date, and the consolidated results of its operations and its consolidated cashflows for the respective fiscal years then ended. The unaudited consolidated balance sheet of theBorrower as at March 31, 2007, and the related unaudited consolidated statements of income and cashflows for the three-month period ended on such date, present fairly the consolidated financialcondition of the Borrower as at such date, and the consolidated results of its operations and itsconsolidated cash flows for the three-month period then ended (subject to normal year-end auditadjustments). All such financial statements, 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 aforementioned firm of accountants and disclosed therein). No GroupMember has any material Guarantee Obligations, contingent liabilities and liabilities for taxes, orany long-term leases or unusual forward or long-term commitments, including any interest rate orforeign currency swap or exchange transaction or other obligation in respect of derivatives, thatare not reflected in the most recent financial statements referred to in this paragraph. Duringthe period from March 31, 2007 to and including the date hereof there has been no Disposition byany Group Member of any material part of its business or property.          3.2 No Change. Since December 31, 2006, there has been no development or event thathas had or could reasonably be expected to have a Material Adverse Effect.          3.3 Existence; Compliance with Law. Each Group Member (a) is duly organized, validlyexisting and in good standing under the laws of the jurisdiction of its organization, (b) has thepower and authority, and the legal right, to own and operate its property, to lease the property itoperates as lessee and to conduct the business in which it is currently engaged, (c) is dulyqualified as a foreign corporation or other organization and in good standing under the laws ofeach jurisdiction where its ownership, lease or operation of property or the conduct of itsbusiness requires such qualification and (d) is in compliance with all Requirements of Law except,in the case of clauses (b), (c) and (d), to the extent that the failure to do so or
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comply therewith could not, in the aggregate, reasonably be expected to have a MaterialAdverse Effect.          3.4 Power; Authorization; Enforceable Obligations. Each Loan Party has the power andauthority, and the legal right, to make, deliver and perform the Loan Documents to which it is aparty and, in the case of the Borrower, to obtain extensions of credit hereunder. Each Loan Partyhas taken all necessary organizational action to authorize the execution, delivery and performanceof the Loan Documents to which it is a party and, in the case of the Borrower, to authorize theextensions of credit on the terms and conditions of this Agreement. No consent or authorizationof, filing with, notice to or other act by or in respect of, any Governmental Authority or anyother Person is required in connection with the extensions of credit hereunder or with theexecution, delivery, performance, validity or enforceability of this Agreement or any of the LoanDocuments, except (i) consents, authorizations, filings and notices described in Schedule 3.4,which consents, authorizations, filings and notices have been obtained or made and are in fullforce and effect and (ii) the filings referred to in Section 3.19. Each Loan Document has beenduly executed and delivered on behalf of each Loan Party party thereto. This Agreementconstitutes, and each other Loan Document upon execution will constitute, a legal, valid andbinding obligation of each Loan Party party thereto, enforceable against each such Loan Party inaccordance with its terms, except as enforceability may be limited by applicable bankruptcy,insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’rights generally and by general equitable principles (whether enforcement is sought by proceedingsin equity or at law).          3.5 No Legal Bar. The execution, delivery and performance of this Agreement and theother Loan Documents, the borrowings hereunder and the use of the proceeds thereof will not violateany Requirement of Law or any Contractual Obligation of any Group Member and will not result in, orrequire, the creation or imposition of any Lien on any of their respective properties or revenuespursuant to any Requirement of Law or any such Contractual Obligation (other than the Liens createdby the Security Documents). No Requirement of Law or Contractual Obligation applicable to theBorrower or any of its Subsidiaries could reasonably be expected to have a Material Adverse Effect.          3.6 Litigation. No litigation, investigation or proceeding of or before anyarbitrator or Governmental Authority is pending or, to the knowledge of the Borrower, threatened byor against any Group Member or against any of their respective properties or revenues (a) withrespect to any of the Loan Documents or any of the transactions contemplated hereby or thereby, or(b) that could reasonably be expected to have a Material Adverse Effect.          3.7 No Default. No Group Member is in default under or with respect to any of itsContractual Obligations in any respect that could reasonably be expected to have a Material AdverseEffect. No Default or Event of Default has occurred and is continuing.          3.8 Ownership of Property; Liens. Each Group Member has title in fee simple to, or avalid leasehold interest in, all its real property, and good title to, or a valid leaseholdinterest in, all its other property, and none of such property is subject to any Lien except aspermitted by Section 6.3.
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          3.9 Intellectual Property. Each Group Member owns, or is licensed to use, allIntellectual Property necessary for the conduct of its business as currently conducted. Nomaterial claim has been asserted and is pending or, to the knowledge of the Borrower, isthreatened, by any Person challenging or questioning the use of any Intellectual Property or thevalidity or effectiveness of any Intellectual Property. The use of Intellectual Property by eachGroup Member does not infringe on the rights of any Person in any material respect.          3.10 Taxes. Each Group Member has filed or caused to be filed all Federal, state andother material tax returns that are required to be filed and has paid all taxes shown to be due andpayable on said returns or on any assessments made against it or any of its property and all othertaxes, 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 byappropriate proceedings and with respect to which reserves in conformity with GAAP have beenprovided on the books of the relevant Group Member); no tax Lien has been filed, and, to theknowledge of the Borrower, no claim is being asserted, with respect to any such tax, fee or othercharge.          3.11 Federal Regulations. No part of the proceeds of any Loans, and no otherextensions of credit hereunder, will be used (a) for “buying” or “carrying” any “margin stock”within the respective meanings of each of the quoted terms under Regulation U as now and from timeto time hereafter in effect for any purpose that violates the provisions of the Regulations of theBoard or (b) for any purpose that violates the provisions of the Regulations of the Board. Ifrequested by any Lender or the Administrative Agent, the Borrower will furnish to theAdministrative Agent and each Lender a statement to the foregoing effect in conformity with therequirements of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.          3.12 Labor Matters. Except as, in the aggregate, could not reasonably be expected tohave a Material Adverse Effect: (a) there are no strikes or other labor disputes against any GroupMember pending or, to the knowledge of the Borrower, threatened; (b) hours worked by and paymentmade to employees of each Group Member have not been in violation of the Fair Labor Standards Actor any other applicable Requirement of Law dealing with such matters; and (c) all payments due fromany Group Member on account of employee health and welfare insurance have been paid or accrued as aliability on the books of the relevant Group Member.          3.13 ERISA. Neither a Reportable Event nor an “accumulated funding deficiency”(within the meaning of Section 412 of the Code or Section 302 of ERISA) has occurred during thefive-year period prior to the date on which this representation is made or deemed made with respectto any Plan, and each Plan has complied in all material respects with the applicable provisions ofERISA and the Code. No termination of a Single Employer Plan has occurred, and no Lien in favor ofthe PBGC or a Plan has arisen, during such five-year period. The present value of all accruedbenefits under each Single Employer Plan (based on those assumptions used to fund such Plans) didnot, as of the last annual valuation date prior to the date on which this representation is made ordeemed made, exceed the value of the assets of such Plan allocable to such accrued benefits by amaterial amount. Neither the Borrower nor any Commonly Controlled Entity has had a complete orpartial withdrawal from any Multiemployer Plan that has resulted or could reasonably be expected toresult in a material liability under
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ERISA, and neither the Borrower nor any Commonly Controlled Entity would become subject to anymaterial liability under ERISA if the Borrower or any such Commonly Controlled Entity were towithdraw completely from all Multiemployer Plans as of the valuation date most closely precedingthe date on which this representation is made or deemed made. No such Multiemployer Plan is inReorganization or Insolvent.          3.14 Investment Company Act; Other Regulations. No Loan Party is an “investmentcompany”, or a company “controlled” by an “investment company”, within the meaning of theInvestment Company Act of 1940, as amended. No Loan Party is subject to regulation under anyRequirement of Law (other than Regulation X of the Board) that limits its ability to incurIndebtedness.          3.15 Subsidiaries. Except as disclosed to the Administrative Agent by the Borrower inwriting from time to time after the Closing Date, (a) Schedule 3.15 sets forth the name andjurisdiction of incorporation of each Subsidiary and, as to each such Subsidiary, the percentage ofeach class of Capital Stock owned by any Loan Party and (b) there are no outstanding subscriptions,options, warrants, calls, rights or other agreements or commitments (other than stock optionsgranted to employees or directors and directors’ qualifying shares) of any nature relating to anyCapital Stock of the Borrower or any Subsidiary, except as created by the Loan Documents.          3.16 Use of Proceeds. The proceeds of the Term Loans shall be used for (a) generalcorporate purposes including vessel refurbishment and acquisitions, (b) construction of theSuperior Achiever including the purchase of certain owner furnished equipment and (c) payment ofrelated fees and expenses.          3.17 Environmental Matters. Except as, in the aggregate, could not reasonably beexpected to have a Material Adverse Effect:     (a) the facilities and properties owned, leased or operated by any Group Member (the“Properties”) do not contain, and have not previously contained, any Materials ofEnvironmental Concern in amounts or concentrations or under circumstances that constitute orconstituted a violation of, or could give rise to liability under, any Environmental Law;     (b) no Group Member has received or is aware of any notice of violation, allegedviolation, non-compliance, liability or potential liability regarding environmental mattersor compliance with Environmental Laws with regard to any of the Properties or the businessoperated by any Group Member (the “Business”), nor does the Borrower have knowledgeor reason to believe that any such notice will be received or is being threatened;     (c) Materials of Environmental Concern have not been transported or disposed of fromthe Properties in violation of, or in a manner or to a location that could give rise toliability under, any Environmental Law, nor have any Materials of Environmental Concern beengenerated, treated, stored or disposed of at, on or under any
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of the Properties in violation of, or in a manner that could give rise to liabilityunder, any applicable Environmental Law;     (d) no judicial proceeding or governmental or administrative action is pending or, tothe knowledge of the Borrower, threatened, under any Environmental Law to which any GroupMember is or will be named as a party with respect to the Properties or the Business, norare there any consent decrees or other decrees, consent orders, administrative orders orother orders, or other administrative or judicial requirements outstanding under anyEnvironmental Law with respect to the Properties or the Business;     (e) there has been no release or threat of release of Materials of EnvironmentalConcern at or from the Properties, or arising from or related to the operations of any GroupMember in connection with the Properties or otherwise in connection with the Business, inviolation of or in amounts or in a manner that could give rise to liability underEnvironmental Laws;     (f) the Properties and all operations at the Properties are in compliance, and have inthe last five years been in compliance, with all applicable Environmental Laws, and there isno contamination at, under or about the Properties or violation of any Environmental Lawwith respect to the Properties or the Business; and     (g) no Group Member has assumed any liability of any other Person under EnvironmentalLaws.          3.18 Accuracy of Information, etc. No statement or information contained in thisAgreement, any other Loan Document, Prospectus or any other document, certificate or statementfurnished by or on behalf of any Loan Party to the Agents or the Lenders, or any of them, for usein connection with the transactions contemplated by this Agreement or the other Loan Documents,contained as of the date such statement, information, document or certificate was so furnished, anymaterial misstatement of fact or omitted to state a material fact necessary to make the statementscontained herein or therein, in light of the circumstances under which they were made, notmisleading. The projections and proforma financial information contained in thematerials referenced above are based upon good faith estimates and assumptions believed bymanagement of the Borrower to be reasonable at the time made, it being recognized by the Lendersthat such financial information as it relates to future events is not to be viewed as fact and thatactual results during the period or periods covered by such financial information may differ fromthe projected results set forth therein by a material amount. There is no fact known to any LoanParty that could reasonably be expected to have a Material Adverse Effect that has not beenexpressly disclosed herein, in the other Loan Documents, in the Prospectus or in any otherdocuments, certificates and statements furnished to the Agents and the Lenders for use inconnection with the transactions contemplated hereby and by the other Loan Documents.          3.19 Security Documents. (a) The Guarantee and Collateral Agreement is effective tocreate in favor of the Collateral Agent, for its benefit and the benefit of the AdministrativeAgent and the Lenders, a legal, valid and enforceable security interest in the Collateral describedtherein and proceeds thereof. In the case of the Pledged Stock described in the Guarantee andCollateral Agreement, when stock certificates representing such Pledged
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Stock are delivered to the Collateral Agent, and in the case of the other Collateral describedin the Guarantee and Collateral Agreement, when financing statements and other filings specified onSchedule 3.19(a) in appropriate form are filed in the offices specified on Schedule 3.19(a), theGuarantee and Collateral Agreement shall constitute a fully perfected Lien on, and securityinterest in, all right, title and interest of the Loan Parties in such Collateral and the proceedsthereof, as security for the Obligations (as defined in the Guarantee and Collateral Agreement), ineach case prior and superior in right to any other Person (except, in the case of Collateral otherthan Pledged Stock, Liens permitted by Section 6.3).          (b) Each of the Vessel Mortgages is effective to create in favor of the Collateral Agent, forits benefit and the benefit of the Administrative Agent and the Lenders, a legal, valid andenforceable Lien on the Mortgaged Vessels described therein and proceeds thereof, and when theVessel Mortgages are filed in the offices specified on Schedule 3.19(b), each such Vessel Mortgageshall constitute a fully perfected Lien on, and security interest in, all right, title and interestof the Loan Parties in the Mortgaged Vessels and the proceeds thereof, as security for the SecuredObligations (as defined in the relevant Vessel Mortgage), in each case prior and superior in rightto any other Person. Schedule 1.1B lists, as of the Closing Date, each vessel owned by theBorrower or any of its Subsidiaries.          3.20 Indebtedness. Schedule 6.2(d) sets forth a true and complete list of all (i)Indebtedness for borrowed money of the Borrower and each of its Subsidiaries outstanding as of theClosing Date and (ii) agreements existing on the Closing Date pursuant to which the Borrower or anyof its Subsidiaries are entitled to incur Indebtedness, in each case showing the aggregateprincipal amount thereof and the name of the borrower and any other entity which directly orindirectly guaranteed such debt.          3.21 Capitalization of Borrower. On and as of the Closing Date, the authorizedcapital stock of the Borrower shall consist of 200,000,000 shares of common stock, 25,765,001shares of which shall be issued and outstanding and 50,000,000 shares of preferred stock, none ofwhich shall be issued or outstanding. All such outstanding shares of common stock are duly andvalidly issued and fully paid and non-assessable.          3.22 Concerning the Vessels. The name, official number, registered owner, andjurisdiction of registration of each Mortgaged Vessel on and as of the Closing Date is set forth onSchedule 3.22 hereto. Except as set forth on Schedule 3.22 (which includes a list of vesselsdesignated as laid-up), and except as pertains to any Mortgaged Vessel laid-up hereafter, eachMortgaged Vessel is operated in material compliance with all applicable maritime rules andregulations, including, without limitation, with respect to each Mortgaged Vessel operated in thecoastwise trade of the United States of America, the Shipping Act of 1916, as amended and ineffect, and the regulations promulgated thereunder. Each Mortgaged Vessel not designated aslaid-up on Schedule 3.22 or laid-up hereafter is maintained and operated in material compliancewith all applicable Environmental Laws.          3.23 Citizenship. The Borrower and each Subsidiary Guarantor which owns or operatesone or more Mortgaged Vessels is qualified to own and operate such Mortgaged Vessels under the lawsof the Approved Jurisdiction.
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          3.24 Vessel Classification. Except (a) as permitted by the laws and/or regulations ofthe relevant flag state or (b) with respect to a Mortgaged Vessel that has been laid-up, eachMortgaged Vessel is classified at the appropriate and customary classification and rating forvessels of the same age and type with the respective classification society set forth in Schedule3.24, without any conditions or recommendations affecting class other than those for which the timeprescribed for curing the condition or recommendation has not passed.          3.25 Scheduled Collateral. The equipment listed on Schedule 3.25 will be included inAppraised FMV based on its appraised value, or in the case of such equipment that has not beenappraised, its invoiced cost.          3.26 Solvency. Each Group Member is, and after giving effect to the incurrence of allIndebtedness and obligations being incurred in connection herewith and therewith will be and willcontinue to be, Solvent.SECTION 4. CONDITIONS PRECEDENT          4.1 Conditions to Initial Extension of Credit. The agreement of each Lender to makethe initial extension of credit requested to be made by it is subject to the satisfaction, prior toor concurrently with the making of such extension of credit on the Closing Date, of the followingconditions precedent:     (a) Credit Agreement; Guarantee and Collateral Agreement. The AdministrativeAgent shall have received (i) this Agreement, executed and delivered by the AdministrativeAgent, the Collateral Agent, the Borrower and each Person listed on Schedule 1.1A, (ii) theGuarantee and Collateral Agreement, executed and delivered by the Borrower and eachSubsidiary Guarantor, (iii) an Acknowledgement and Consent in the form attached to theGuarantee and Collateral Agreement, executed and delivered by each Issuer (as definedtherein), if any, that is not a Loan Party and (iv) the Intercreditor Agreement, executedand delivered by the Borrower, the Collateral Agent and the administrative agent under theABL Revolving Credit Agreement.     (b) Collateral Assignments. The Administrative Agent shall have received theCollateral Assignments, executed and delivered by the Borrower in favor of the CollateralAgent.     (c) Financial Statements. The Lenders shall have received (i) auditedconsolidated financial statements of the Borrower for the 2004, 2005 and 2006 fiscal yearsand (iii) unaudited interim consolidated financial statements of the Borrower for eachfiscal month and quarter ended after the date of the latest applicable financial statementsdelivered pursuant to clause (ii) of this paragraph as to which such financial statementsare available, and such financial statements shall not, in the reasonable judgment of theLenders, reflect any material adverse change in the consolidated financial condition of theBorrower, as reflected in the financial statements or projections that have been provided tothe Administrative Agent since December 31, 2006.     (d) Projections. The Borrower and the Administrative Agent shall have noreason to believe that the Projections delivered by the Borrower to the Administrative
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Agent prior to the Closing Date shall have become incorrect or misleading in anymaterial respect as of the Closing Date.     (e) Approvals. All governmental and third party approvals necessary inconnection with the continuing operations of the Group Members and the transactionscontemplated hereby shall have been obtained and be in full force and effect, and allapplicable waiting periods shall have expired without any action being taken or threatenedby any competent authority that would restrain, prevent or otherwise impose adverseconditions on the financing contemplated hereby.     (f) Lien Searches. The Administrative Agent shall have received the results ofa recent lien search in each of the jurisdictions where assets of the Loan Parties arelocated, and such search shall reveal no liens on any of the assets of the Loan Partiesexcept for liens permitted by Section 6.3 or discharged on or prior to the Closing Datepursuant to documentation satisfactory to the Administrative Agent.     (g) Fees. The Lenders and each Administrative Agent shall have received allfees required to be paid, and all expenses for which invoices have been presented (includingthe reasonable fees and expenses of legal counsel), on or before the Closing Date, as setforth in the Mandate Letter. All such amounts will be paid with proceeds of Loans made onthe Closing Date and will be reflected in the funding instructions given by the Borrower tothe Administrative Agent on or before the Closing Date.     (h) Closing Certificate; Certified Certificate of Incorporation; Good StandingCertificates. The Administrative Agent shall have received (i) a certificate of eachLoan Party, dated the Closing Date, substantially in the form of Exhibit C, with appropriateinsertions and attachments, including the certificate of incorporation of each Loan Partythat is a corporation certified by the relevant authority of the jurisdiction oforganization of such Loan Party, and (ii) a long form good standing certificate for eachLoan Party from its jurisdiction of organization.     (i) Legal Opinions. The Administrative Agent shall have received the followingexecuted legal opinions:     (i) the legal opinion of Bracewell & Giuliani LLP, counsel to the Borrower andits Subsidiaries, substantially in the form of