##### 



Exhibit 10.3
  To:
    
    Parker Drilling Company1401 Enclave Parkway, Suite 600Houston, Texas 77077Attn: General CounselTelephone: (281) 406-2000Facsimile: (281) 406-2001From:
    
    Lehman Brothers Inc., acting as AgentLehman Brothers OTC Derivatives Inc., acting as Principalc/o Lehman Brothers745 Seventh AvenueNew York, NY 10019Attn: Andrew Yare  Transaction Management GroupFacsimile:           646-885-9546 (United States of America)Telephone:           212-526-9986Re:
    
    Convertible Bond Hedge Transaction(Transaction Reference Number:)
  Confirmation Transaction Lehman Counterparty LBI Lehman Brothers OTC Derivatives
Inc. is not a member of the Securities Investor Protection Corporation.
 2000 Definitions Equity Definitions Definitions ISDA Indenture Convertible Securities
 Agreement ISDA
Form




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##### 



Agent:
    
    LBI is acting as agent on behalf of Lehman and Issuer for the Transaction. LBI has no obligations, by guarantee, endorsement or otherwise, with respect to
the performance of the Transaction by either party.Trade Date:
    
    June 28, 2007Effective Date:
    
    The closing date of the offering of the Convertible Securities.Option Type:
    
    CallSeller:
    
    LehmanBuyer:
    
    CounterpartyShares:
    
    The Common Stock of Counterparty, par value USD 0.162/3 per share (Ticker Symbol:PKD).Number of Options:
    
    10% of the number of Convertible Securities in denominations of USD1,000
principal amount issued by Counterparty on the closing date for the initial issuance of
the Convertible Securities; providedthat if the Underwriters, as defined in the
Underwriting Agreement dated the date hereof between the Company and Banc of America
Securities LLC, as representative of the several underwriters (the Underwriting
Agreement) exercise their option to purchase additional Securities pursuant to Section
2(c) of the Underwriting Agreement, then on the Additional Premium Payment Date, the
Number of Options shall be automatically increased by 10% of the number of Convertible
Securities in denominations of USD 1,000 principal amount issued pursuant to such
exercise (such Convertible Securities, the Additional Securities).Number of Shares:
    
    As of any date, the product of the Number of Options and the Conversion
Rate in effect on such date.Conversion Rate:
    
    As defined in the Indenture, but without regard to any adjustments to the
Conversion Rate pursuant to Sections 3.01(e), 10.01(c), 10.01(d), 10.04(g) and 10.04(h)
of the Indenture.Strike Price:
    
    USD 13.8463Premium:
    
    USD 2,895,700 providedthat if the Number of Options is increased pursuant to the
proviso to the definition of Number of Options above, an additional Premium equal to
the product of
 2




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the number of Options by which the Number of Options is
so increased and USD 251.80 shall be paid on the
Additional Premium Payment Date.Premium Payment Date:
    
    July 5, 2007Additional Premium Payment Date:
    
    The closing date for the purchase and sale of the Additional Securities.Exchange:
    
    New York Stock ExchangeRelated Exchange:
    
    All ExchangesProcedures for Exercise:Potential Exercise Dates:
    
    Each Conversion Date.Conversion Date:
    
    Each Conversion Date as defined in the Indenture.Required Exercise on Conversion Dates:
    
    On each Conversion Date, a number of Options equal to the number of Convertible Securities in denominations of USD1,000
principal amount submitted for conversion on such Conversion Date in accordance with
the terms of the Indenture shall be automatically exercised, subject to Notice of
Exercise below.Expiration Date:
    
    July 15, 2012Automatic Exercise:
    
    As provided above under Required Exercise on Conversion Dates.Notice of Exercise:
    
    Notwithstanding anything to the contrary in the Equity Definitions, in
order to exercise any Options, Counterparty must notify Lehman in writing prior to 5:00
PM, New York City time, on the Scheduled Valid Day prior to the scheduled first day of
the applicable Settlement Averaging Period relating to the Convertible Securities
converted on the Conversion Date occurring on the relevant Exercise Date (such
Convertible Securities, the Relevant Convertible Securities) of (i) the number of
Options being exercised on such Exercise Date, (ii) the scheduled first day of the
applicable Settlement Averaging Period, (iii) the scheduled settlement date under the
Indenture for the Relevant Convertible Securities and (iv) whether Counterparty has
elected to satisfy its conversion obligations with respect to the Relevant Convertible
Securities in Shares only (as described in Section 10.02(b) of the Indenture) (Gross
Share Settlement); providedthat with respect to Options relating to Relevant
Convertible Securities with a Conversion Date occurring on or after April 15, 2012,
such Notice of Exercise may be given on or prior to the second Scheduled Valid Day
immediately preceding the Expiration Date and need only specify the number of Options
being exercised.
 3




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Notice of Gross Share Settlement:
    
    If Counterparty has elected Gross Share Settlement for all
Convertible Securities with a Conversion Date occurring on or after April 15, 2012,
then with respect to Options relating to such Convertible Securities, Counterparty
shall notify Lehman of such election before 5:00 p.m. (New York City time) on or prior
to April 15, 2012.Lehmans Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose
of Giving Notice:
    
    To be provided by Lehman.Settlement Terms:Settlement Method:
    
    Net Share SettlementNet Share Settlement:
    
    Lehman will deliver to Counterparty, on or before the
relevant Settlement Date, a number of Shares equal to the Net Shares in respect of any
Option exercised or deemed exercised hereunder. In no event will the Net Shares be less
than zero.Net Shares:
    
    In respect of any Option exercised or deemed exercised, a number of
Shares equal to (i) the sum of the quotients, for each Valid Day during the Settlement
Averaging Period for such exercisable Option, of (A) the product of (x) excess, if any,
of the Relevant Price less the Strike Price on such Valid Day and (y) the Conversion
Rate on such Valid Day divided by (B) such Relevant Price, divided by (ii) the number
of Valid Days in the Settlement Averaging Period; providedthat if the calculation
contained in clause (A) above results in a negative number, such number shall be
replaced with the number zero. Notwithstanding the forgoing, if Counterparty has
elected Gross Share Settlement and so specified in the Notice of Exercise, or if
applicable, the Notice of Gross Share Settlement, then with respect to any Option
relating to the Relevant Convertible Securities with a Conversion Date occurring on or
following April 15, 2012, the Net Shares shall be equal to the lesser of (i) a number
of Shares determined as described above and (ii) a number of Shares equal to the Net
Convertible Value for such Option divided by the Obligation Price. Lehman will deliver
cash in lieu of any fractional Shares to be delivered with respect to any Net Shares
valued at the Relevant Price for the last Valid Day of the Settlement Averaging Period.Net Convertible Value:
    
    With respect to an Option, (i) the Total Convertible Value
for such Option minus (ii) USD 1,000.Total Convertible Value:
    
    With respect to an Option, (i) the aggregate number of
Shares, if any, that Counterparty is obligated to deliver to the holder of an
Convertible Security for the relevant Conversion Date pursuant
 4




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##### 



to Section 10.03(b) of the Indenture, multiplied by
(ii) the Obligation Price.Obligation Price:
    
    The opening price as displayed under the heading Op on Bloomberg page
PKD.N <equity> (or any successor thereto) on the Obligation Valuation Date.Obligation Valuation Date:
    
    Settlement DateSettlement Averaging Period:
    
    For any Option, (i) with respect to an Option with a Conversion
Date occurring prior to April 15, 2012, the twenty (20) consecutive Valid Day period
beginning on, and including, the third Valid Day following such Conversion Date (or the
forty (40) consecutive Valid Day period commencing on, and including, the third Valid
Day following such Conversion Date if Counterparty has elected Gross Share Settlement
and specified Gross Share Settlement in the Notice of Exercise) or (ii) with respect to
an Option with a Conversion Date occurring on or following April 15, 2012, the twenty
(20) consecutive Valid Day period beginning on, and including, the twenty-second (22nd)
Scheduled Valid Day immediately prior to the Expiration Date (or the forty (40)
consecutive Valid Day period commencing on, and including, the forty second (42nd)
Scheduled Valid Day immediately prior to the Expiration Date if Counterparty has
delivered a Notice of Gross Share Settlement to Lehman on or prior to April 15, 2012).Settlement Date:
    
    For any Option, the third Valid Day following the final day of the
applicable Settlement Averaging Period with respect to such Option.Settlement Currency:
    
    USDValid Day:
    
    A day on which (i) there is no Market Disruption Event and (ii) trading
in the Shares generally occurs on the Exchange or, if the Shares are not then listed on
the Exchange, on the principal other U.S. national or regional securities exchange on
which the Shares are then listed or, if the Shares are not then listed on a U.S.
national or regional securities exchange, on the principal other market on which the
Shares are then traded. If the Shares (or other security for which a Relevant Price
must be determined) is not so listed or quoted, a Valid Day means a Business Day.Scheduled Valid Day:
    
    A day that is scheduled to be a Valid Day on the primary U.S. national
securities exchange or market on which the Shares are listed or admitted to trading.Market Disruption Event:
    
    Section 6.3 of the Equity Definitions is hereby replaced in its
entirety by the following:Market Disruption Event means in respect of a Share,
(i) a failure by the Exchange or, if the Shares are not
then listed on the Exchange, by the principal other
U.S. national or regional securities exchange on which
the Shares are then listed or, if the Shares are not
then listed on a U.S. national or regional
 5




---



##### 



securities exchange, by the principal other market on
which the Shares are then traded, to open for trading
during its regular trading session or (ii) the
occurrence or existence prior to 1:00 p.m., New York
City time, on any trading day for the Shares for an
aggregate one half hour period of any suspension or
limitation imposed on trading (by reason of movements
in price exceeding limits permitted by the stock
exchange or otherwise) in the Shares or in any options,
contracts or future contracts relating to the Shares.Relevant Price:
    
    On any Valid Day, the per Share volume-weighted average price as displayed
under the heading Bloomberg VWAP on Bloomberg page PKD.N <equity> AQR (or any
equivalent successor if such page is not available) in respect of the period from the
scheduled opening time of trading on the Exchange to the Scheduled Closing Time of the
Exchange on such Valid Day (or if such volume-weighted average price is unavailable,
the market value of one Share on such Valid Day, as determined by the Calculation Agent
using a volume-weighted method). The Relevant Price will be determined without regard
to after hours trading or any other trading outside of the regular trading session
hours.Other Applicable Provisions:
    
    To the extent Lehman is obligated to deliver Shares
hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in Section 9.11 of the Equity Definitions shall
be modified by excluding any representations therein relating to restrictions,
obligations, limitations or requirements under applicable securities laws arising as a
result of the fact that Counterparty is the Issuer of the Shares) and 9.12 of the
Equity Definitions will be applicable, except that all references in such provisions to
Physically-Settled shall be read as references to Net Share Settled. Net Share
Settled in relation to any Option means that Lehman is obligated to deliver Shares
hereunder.Restricted Certificated Shares:
    
    Notwithstanding anything to the contrary in the Equity
Definitions, Lehman may, in whole or in part, deliver Shares in certificated form
representing the Number of Shares to be Delivered to Counterparty in lieu of delivery
through the Clearance System. With respect to such certificated Shares, the
Representation and Agreement contained in Section 9.11 of the Equity Definitions shall
be modified by deleting the remainder of the provision after the word encumbrance in
the fourth line thereof.Share Adjustments:Method of Adjustment:
    
    Notwithstanding Section 11.2 of the Equity Definitions, upon the
occurrence of any event or condition set forth in Sections 10.04(a) through (f) of the
Indenture, the Calculation Agent shall upon prior written notice to Counterparty make a
corresponding adjustment, which it reasonably determines in good faith to be necessary,
to the terms relevant to the exercise, settlement or payment of the Transaction.
Immediately upon the
 6




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##### 



occurrence of any Adjustment Event, as defined in the
Indenture, Counterparty shall notify the Calculation
Agent of such Adjustment Event; and once the
adjustments to be made to the terms of the Indenture
and the Convertible Notes in respect of such Adjustment
Event have been determined, Counterparty shall
immediately notify the Calculation Agent in writing of
the details of such adjustments. Additionally,
notwithstanding Section 11.2 of the Equity Definitions,
Potential Adjustment Event shall not apply to this
Transaction and, if and to the extent that any event or
condition occurs during the term of the Transaction
with respect to Counterparty and the Shares of the type
described in Section 11.2(e), the Calculation Agent
shall not make any adjustment to the terms relevant to
the exercise, settlement or payment of the Transaction,
except to the extent otherwise described in this
paragraph, without the prior written consent of
Counterparty.Extraordinary Events:Merger Events:
    
    Section 12.1(b) of the Equity Definitions is hereby amended and restated in
its entirety for purposes of this Confirmation so that Merger Event means the
occurrence of any event or condition set forth in Section 10.06 of the Indenture.Tender Offer:
    
    Section 12.1(d) of the Equity Definitions is hereby amended and restated in
its entirety for purposes of this Confirmation so that a Tender Offer means the
occurrence of any event or condition set forth in Clause (1) of the definition of
Fundamental Change in Section 1.01of the Indenture.Consequences of Merger Events
and Tender Offers:
    
    Notwithstanding Sections 12.2 and 12.3 of the Equity
Definitions, upon the occurrence of a Merger Event or Tender Offer, the Calculation
Agent shall, to the extent that any such Merger Event or Tender Offer results in
adjustments to the terms of the exercise, settlement or payment under the Indenture,
upon prior written notice to Counterparty, make the corresponding adjustment in respect
of any adjustment under the Indenture to any one or more of the nature of the Shares,
the Number of Options, the Option Entitlement and any other variable relevant to the
exercise, settlement or payment for the Transaction; providedthat such adjustment
shall be made without regard to (x) any adjustment to the Conversion Rate pursuant to
Sections 10.01(c), 10.04(g), or 10.04(h) of the Indenture and (y) unless and to the
extent otherwise agreed by Lehman and Counterparty (and provided that Lehman may not be
required so to agree), the election, if any, by Counterparty to adjust the Conversion
Rate and the related conversion obligation pursuant to Section 10.01(d) of the
Indenture.Nationalization, Insolvency or Delisting:
    
    Cancellation and Payment (Calculation Agent Determination); providedthat, in addition to the provisions of
Section 12.6(a)(iii) of the Equity Definitions, it will also constitute a Delisting if
the Exchange is located in the United States and the Shares are not immediately
re-listed, re-traded or
 7




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##### 



re-quoted on any of the New York Stock Exchange, the
American Stock Exchange or the NASDAQ National Market
System (or their respective successors); if the Shares
are immediately re-listed, re-traded or re-quoted on
any such exchange or quotation system, such exchange or
quotation system shall thereafter be deemed to be the
Exchange; provided further that, in determining any
Cancellation Amount, notwithstanding any term or
provision in the Agreement or the Equity Definitions,
the Calculation Agent shall comply with the terms and
provisions set forth in Section 8(n)(iii) of this
Confirmation.Additional Disruption Events:(a) Change in Law:
    
    Applicable (provided that clause (y) of this term set forth in
Section 12.9(a)(ii) of the Equity Definitions shall not apply)(b) Insolvency Filing:
    
    Applicable(c) Hedging Disruption:
    
    ApplicableHedging Party:
    
    For all applicable Additional Disruption Events, LehmanDetermining Party:
    
    For all applicable Additional Disruption Events, LehmanNon-Reliance:
    
    ApplicableAgreements and Acknowledgments Regarding Hedging Activities:
    
    Applicable.Additional Acknowledgments:
    
    Applicable
 Calculation Agent
 Account Details
  
   Offices
 8




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##### 



Lehman Brothers OTC Derivatives Inc.c/o Lehman Brothers745 Seventh AvenueNew York, NY 10019Attn: Andrew Yare  Transaction Management GroupFacsimile: 646-885-9546 (United States of America)Telephone: 212-526-9986
  Parker Drilling Company1401 Enclave Parkway, Suite 600Houston, Texas 77077Attn: General Counsel
 6.
    
    Notices: For purposes of this Confirmation:
 (a)
    
    Address for notices or communications to Counterparty:
 To:
    
    Parker Drilling Company1401 Enclave Parkway, Suite 600Houston, Texas 77077Attn:
    
    General CounselTelephone:
    
    (281) 406-2000Facsimile:
    
    (281) 406-2001
 (b)
    
    Address for notices or communications to Lehman:
  7.
    
    Representations, Warranties and Agreements:
 (a)
    
    In addition to the representations and warranties in the Agreement and those
contained elsewhere herein, Counterparty represents and warrants to and for the benefit
of, and agrees with, Lehman as follows:
 (i)
    
    On the Trade Date, (A) none of Counterparty and its officers
and directors is aware of any material nonpublic information regarding
Counterparty or the Shares and (B) all reports and other documents filed by
Counterparty with the Securities and Exchange Commission pursuant to the
Securities Exchange Act of 1934, as amended (the Exchange Act) when
considered as a whole (with the more recent such reports and documents deemed
to amend inconsistent statements contained in any earlier such reports and
documents), do not contain any untrue statement of a material fact or any
omission of a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they were
made, not misleading.
 9




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##### 



(ii)
    
    (A) On the Trade Date, the Shares or securities that are
convertible into, or exchangeable or exercisable for Shares, are not, and shall
not be, subject to a restricted period, as such term is defined in Regulation
M under the Exchange Act (Regulation M) and (B) Counterparty shall not engage
in any distribution, as such term is defined in Regulation M, other than a
distribution meeting the requirements of the exceptions set forth in sections
101(b)(10) and 102(b)(7) of Regulation M, until the second Exchange Business
Day immediately following the Trade Date.(iii)
    
    On the Trade Date, neither Counterparty nor any affiliate or
affiliated purchaser (each as defined in Rule 10b-18 of the Exchange Act
(Rule 10b-18)) shall directly or indirectly (including, without limitation,
by means of any cash-settled or other derivative instrument) purchase, offer to
purchase, place any bid or limit order that would effect a purchase of, or
commence any tender offer relating to, any Shares (or an equivalent interest,
including a unit of beneficial interest in a trust or limited partnership or a
depository share) or any security convertible into or exchangeable or
exercisable for Shares, except through Lehman.(iv)
    
    Without limiting the generality of Section 13.1 of the Equity
Definitions, Counterparty acknowledges that Lehman is not making any
representations or warranties with respect to the treatment of the Transaction
under FASB Statements 133, as amended, or 150, EITF Issue No. 00-19 (or any
successor issue statements) or under FASBs Liabilities & Equity Project.(v)
    
    Without limiting the generality of Section 3(a)(iii) of the
Agreement, the Transaction will not violate Rule 13e-1 or Rule 13e-4 under the
Exchange Act.(vi)
    
    Prior to the Trade Date, Counterparty shall deliver to Lehman a
resolution of Counterpartys board of directors authorizing the Transaction and
such other certificate or certificates as Lehman shall reasonably request.(vii)
    
    Counterparty is not entering into this Confirmation to create
actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for Shares) in violation of the Exchange Act or to raise
or depress or otherwise manipulate the price of the Shares (or any security
convertible into or exchangeable for Shares) or otherwise in violation of the
Exchange Act.(viii)
    
    Counterparty is not, and after giving effect to the transactions contemplated
hereby will not be, an investment company as such term is defined in the
Investment Company Act of 1940, as amended.(ix)
    
    On the Trade Date (A) the assets of Counterparty at their fair
valuation exceed the liabilities of Counterparty, including contingent
liabilities, (B) the capital of Counterparty is adequate to conduct the
business of Counterparty and (C) Counterparty has the ability to pay its debts
and obligations as such debts mature and does not intend to, or does not
believe that it will, incur debt beyond its ability to pay as such debts
mature.
 10




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##### 



(x)
    
    On the Trade Date, the representations and warranties of
Counterparty set forth in Section 3 of the Agreement and Section 1(A) of the
Underwriting Agreement are true and correct.(xi)
    
    Counterparty understands no obligations of Lehman to it
hereunder will be entitled to the benefit of deposit insurance and that such
obligations will not be guaranteed by any affiliate of Lehman or any
governmental agency.
 (b)
    
    Each of Lehman and Counterparty agrees and represents that it is an eligible
contract participant as defined in Section 1a(12) of the U.S. Commodity Exchange Act,
as amended.(c)
    
    Each of Lehman and Counterparty acknowledges that the offer and sale of the
Transaction to it is intended to be exempt from registration under the Securities Act
of 1933, as amended (the Securities Act), by virtue of Section 4(2) thereof.
Accordingly, Counterparty represents and warrants to Lehman that (i) it has the
financial ability to bear the economic risk of its investment in the Transaction and is
able to bear a total loss of its investment, (ii) it is an accredited investor as
that term is defined in Regulation D as promulgated under the Securities Act, (iii) it
is entering into the Transaction for its own account and without a view to the
distribution or resale thereof, and (iv) the assignment, transfer or other disposition
of the Transaction has not been and will not be registered under the Securities Act and
is restricted under this Confirmation, the Securities Act and state securities laws.(d)
    
    Each of Lehman and Counterparty agrees and acknowledges that Lehman is a swap
participant and financial participant, and that Counterparty is a swap
participant, in each case within the meaning of Sections 101(53C) and 101(22A) of
Title 11 of the United States Code (the Bankruptcy Code). The parties hereto further
agree and acknowledge (A) that this Confirmation is (i) a securities contract, as
such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which
each payment and delivery hereunder is a settlement payment, as such term is defined
in Section 741(8) of the Bankruptcy Code, and (ii) a swap agreement, as such term is
defined in Section 101(53B) of the Bankruptcy Code, with respect to which each payment
and delivery hereunder is a transfer, as such term is defined in Section 101(54) of
the Bankruptcy Code, and (B) that Lehman is entitled to the protections afforded by,
among other sections, Section 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the
Bankruptcy Code.(e)
    
    Counterparty shall deliver to Lehman an opinion of counsel, dated as of the
Effective Date and reasonably acceptable to Lehman in form and substance, with respect
to the matters set forth in Section 3(a) of the Agreement.8.
    
    Other Provisions:(a)
    
    Additional Termination Events.The occurrence of (i) an event of default with
respect to Counterparty under the terms of the Convertible Securities as set forth in
Section 6.01 of the Indenture which results in an acceleration of indebtedness
evidenced by the outstanding Securities under the Indenture, (ii) an Amendment Event or
(iii) a Repayment Event shall be an Additional Termination Event with respect to which
the Transaction is the sole Affected Transaction and Counterparty is the sole Affected
Party and Lehman shall be the party entitled to designate an Early Termination Date
pursuant to Section 6(b) of the Agreement; providedthat in the case of a Repayment
Event the Transaction shall be subject to termination only in respect of the number of
 11




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##### 



Convertible Securities that cease to be outstanding in connection with or as a
result of such Repayment Event.
 Amendment Event
 Repayment Event
 (b)
    
    Alternative Calculations and Payment on Early Termination and on Certain
Extraordinary Events. If, subject to Section 8(k) below, Lehman shall owe Counterparty
any amount pursuant to Section 12.2 or 12.3 of the Equity Definitions and Consequences
of Merger Events and Tender Offers above, or Sections 12.6, 12.7 or 12.9 of the Equity
Definitions (except in the event of an Insolvency, a Nationalization, a Tender Offer or
a Merger Event, in each case, in which the consideration or proceeds to be paid to
holders of Shares consists solely of cash) or pursuant to Section 6(d)(ii) of the
Agreement (except in the event of an Event of Default in which Counterparty is the
Defaulting Party or a Termination Event in which Counterparty is the Affected Party,
that resulted from an event or events within Counterpartys control) (a Payment
Obligation), Counterparty shall have the right, in its sole discretion, to require
Lehman to satisfy any such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Lehman, confirmed in writing
within one Scheduled Trading Day, between the hours of 9:00 A.M. and 4:00 P.M. New York
City time on the Merger Date, Tender Offer Date, Announcement Date or Early Termination
Date, as applicable (Notice of Share Termination). Upon such Notice of Share
Termination, the following provisions shall apply on the Scheduled Trading Day
immediately following the Merger Date, the Tender Offer Date, Announcement Date or
Early Termination Date, as applicable:
 Share Termination Alternative:
    
    Applicable and means that Lehman shall
deliver to Counterparty the Share
Termination Delivery Property on the date
on which the Payment Obligation would
otherwise be due pursuant to Section 12.7
or 12.9 of the Equity Definitions or
Section 6(d)(ii) of the Agreement, as
applicable (the Share Termination
Payment Date), in satisfaction of the
Payment Obligation.
 12




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##### 



Share Termination Delivery 
Property:
    
    A number of Share Termination Delivery
Units, as calculated by the Calculation
Agent, equal to the Payment Obligation
divided by the Share Termination Unit
Price. The Calculation Agent shall
adjust the Share Termination Delivery
Property by replacing any fractional
portion of a security therein with an
amount of cash equal to the value of such
fractional security based on the values
used to calculate the Share Termination
Unit Price. For the avoidance of doubt
(and notwithstanding anything herein, in
the Agreement or otherwise to the
contrary), the Share Termination Delivery
Property may included shares which are
unregistered under the Securities Act.Share Termination Unit Price:
    
    The value of property contained in one
Share Termination Delivery Unit on the
date such Share Termination Delivery
Units are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation Agent in
its discretion by commercially reasonable
means and notified by the Calculation
Agent to Lehman at the time of
notification of the Payment Obligation.Share Termination Delivery Unit:
    
    In the case of a Termination Event, Event
of Default or Delisting, one Share or, in
the case of an Insolvency,
Nationalization, Merger Event or Tender
Offer, a unit consisting of the number or
amount of each type of property received
by a holder of one Share (without
consideration of any requirement to pay
cash or other consideration in lieu of
fractional amounts of any securities) in
such Insolvency, Nationalization, Merger
Event or Tender Offer. If such
Insolvency, Nationalization, Merger Event
or Tender Offer involves a choice of
consideration to be received by holders,
such holder shall be deemed to have
elected to receive the maximum possible
amount of cash.Failure to Deliver:
    
    ApplicableOther Applicable Provisions:
    
    If Share Termination Alternative is
applicable, the provisions of Sections
9.8, 9.9, 9.10, 9.11 (except that the
Representation and Agreement contained in
Section 9.11(i), (iv) and (v) of the
Equity Definitions shall be modified by
excluding any representations therein
relating to restrictions, obligations,
limitations or requirements under
applicable securities laws arising as a
result of the fact that Counterparty is
the Issuer of the Shares) and 9.12 of the
Equity Definitions will be applicable,
except that all references in such
provisions to Physically-Settled shall
be read as references to settled by
Share Termination Alternative and all
references to Shares shall be read as
references to Share Termination Delivery
Units.
 (c)
    
    Disposition of Hedge Shares. Counterparty hereby agrees that if, in the
commercially reasonable judgment of Lehman acting in good faith, any Shares (the Hedge
Shares) acquired by Lehman for the purpose of hedging its obligations pursuant to the
Transaction cannot be sold in the public market by Lehman without registration under
the Securities Act (other than as a result of Lehman being an affiliate, as such term
is used in the Securities Act and rules and regulations promulgated thereunder, of
Counterparty), Counterparty shall, at its election: (i) in order to allow Lehman to
sell the Hedge Shares in a registered offering, make available to Lehman an effective
registration statement under the Securities Act to cover the resale of such Hedge
Shares and (A) enter into an agreement, in form and substance satisfactory to Lehman,
substantially in the form of an underwriting agreement for a registered offering, (B)
provide accountants comfort letters in customary form for registered offerings of
equity securities, (C) provide disclosure opinions of
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nationally recognized outside counsel to Counterparty reasonably acceptable to Lehman,
(D) provide other customary opinions, certificates and closing documents customary in form
for registered offerings of equity securities and (E) afford Lehman a reasonable opportunity
to conduct a due diligence investigation with respect to Counterparty customary in scope
for underwritten offerings of equity securities; provided, however, that if Lehman, in its
commercially reasonable judgment, is not reasonably satisfied with access to Counterpartys
due diligence materials, the results of its due diligence investigation, or the procedures
and documentation for the registered offering referred to above, then clause (ii) or clause
(iii) of this Section 8(c) shall apply at the election of Counterparty; (ii) in order to
allow Lehman to sell the Hedge Shares in a private placement, enter into a private placement
agreement substantially similar to private placement underwriting agreements customary for
private placements of equity securities, in form and substance reasonably satisfactory to
Lehman, including customary representations, covenants, blue sky and other governmental
filings and/or registrations, indemnities to Lehman, due diligence rights (for Lehman or any
designated buyer of the Hedge Shares from Lehman), opinions and certificates and such other
documentation as is customary for private placements agreements, all reasonably acceptable
to Lehman (in which case, the Calculation Agent shall make any adjustments to the terms of
the Transaction that are necessary, in its reasonable judgment, to compensate Lehman for any
discount from the public market price of the Shares incurred on the sale of Hedge Shares in
a private placement); or (iii) purchase the Hedge Shares from Lehman at the VWAP Price on
such Exchange Business Days, and in the amounts, requested by Lehman. VWAP Price means,
on any Exchange Business Day, the per Share volume-weighted average price as displayed under
the heading Bloomberg VWAP on Bloomberg page PKD.N <equity> VAP (or any successor
thereto) in respect of the period from 9:30 a.m. to 4:00 p.m. (New York City time) on such
Exchange Business Day (or if such volume-weighted average price is unavailable, the market
value of one Share on such Exchange Business Day, as determined by the Calculation Agent
using a volume-weighted method).(d)
    
    Amendment to Equity Definitions. The following amendment shall be made to the
Equity Definitions:
   (e)
    
    Repurchase Notices. Counterparty shall, on any day on which Counterparty
effects any repurchase of Shares, promptly give Lehman a written notice of such
repurchase (a Repurchase Notice) on such day if, following such repurchase, the
Notice Percentage as determined on such day is (i) greater than 6% and (ii) greater by
0.5% than the Notice Percentage included in the immediately preceding Repurchase Notice
(or, in the case of the first such Repurchase Notice, greater than the Notice
Percentage as of the date hereof). The Notice Percentage as of any day is the
fraction, expressed as a percentage, the numerator of which is the Number of Shares and
the denominator of which is the number of Shares outstanding on such day. In the event
that Counterparty fails to provide Lehman with a Repurchase Notice on the day and in
the manner specified in this Section 8(e) then Counterparty agrees to indemnify and
hold harmless Lehman, its affiliates and their respective directors, officers,
employees, agents and controlling persons (Lehman and each such person being an
Indemnified Party) from and against any and all losses, claims, damages and
liabilities (or actions in respect thereof), joint or several, to which such
Indemnified Party may become subject under applicable securities laws, including
without
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limitation, Section 16 of the Exchange Act, relating to or arising out of such
failure. If for any reason the foregoing indemnification is unavailable to any
Indemnified Party or insufficient to hold harmless any Indemnified Party, then
Counterparty shall contribute, to the maximum extent permitted by law, to the amount
paid or payable by the Indemnified Party as a result of such loss, claim, damage or
liability. In addition, Counterparty will reimburse any Indemnified Party for all
expenses (including reasonable counsel fees and expenses) reasonably incurred (after
notice to Counterparty in the form of a documented invoice) in connection with the
investigation of, preparation for or defense or settlement of any pending or
threatened claim or any action, suit or proceeding arising from such failure,
whether or not such Indemnified Party is a party thereto and whether or not such
claim, action, suit or proceeding is initiated or brought by or on behalf of
Counterparty. This indemnity shall survive the completion of the Transaction
contemplated by this Confirmation and any assignment and delegation of the
Transaction made pursuant to this Confirmation or the Agreement shall inure to the
benefit of any permitted assignee of Lehman.(f)
    
    Transfer and Assignment. Lehman may transfer or assign its rights and
obligations hereunder and under the Agreement, in whole or in part, to any of its
affiliates, or any entities sponsored or organized by, or on behalf of or for the
benefit of, Lehman, providedthat such transferees are not less creditworthy than, or
such transferees payment and performance obligations under this Transaction are
guaranteed by, Lehman Brothers Holdings Inc., and for so long as the ratings then
assigned to such transferees (or, in the case of any transferee whose payment and
performance obligations under this Transaction are guaranteed by Lehman Brothers
Holdings Inc., Lehman Brothers Holdings Inc.s) long term unsecured debt or deposit
obligations (not supported by third party credit enhancement) is not less than A by
Standard & Poors Ratings Services, a division of The McGraw-Hill Companies, Inc. or
A2 by Moodys Investors Service, Inc. If at any time at which the Equity Percentage
exceeds 8%, Lehman, in its discretion, is unable to effect a transfer or assignment of
a portion of its rights and obligations under this Transaction with the prior written
consent of Counterparty (such consent not to be unreasonably withheld) covering the
number of Shares causing the Equity Percentage to exceed 8% (the Excess Shares) after
its commercially reasonable efforts on pricing terms reasonably acceptable to Lehman
such that the Equity Percentage is reduced to 8% or less, Lehman may designate any
Scheduled Trading Day as an Early Termination Date with respect to a such portion (the
Terminated Portion) of the Transaction constituting the Excess Shares, such that the
Equity Percentage following such partial termination will be equal to or less than 8%.
In the event that Lehman so designates an Early Termination Date with respect to such a
portion of the Transaction, a payment or delivery shall be made pursuant to Section 6
of the Agreement and Section 8(b) of this Confirmation as if (i) an Early Termination
Date had been designated in respect of a Transaction having terms identical to the
Terminated Portion of the Transaction, (ii) Counterparty shall be the sole Affected
Party with respect to such partial termination and (iii) such portion of the
Transaction shall be the only Terminated Transaction. The Equity Percentage as of
any day is the fraction, expressed as a percentage, (A) the numerator of which is the
sum of the number of Shares that Lehman or any of its affiliates beneficially own
(within the meaning of Section 13 of the Exchange Act) on such day, other than any
Shares so owned as a hedge of the Transaction, and the Number of Shares and (B) the
denominator of which is the number of Shares outstanding on such day.(g)
    
    Staggered Settlement. Lehman may, by notice to Counterparty prior to any
Settlement Date (a Nominal Settlement Date), elect to deliver the Shares on two or
more dates (each, a Staggered Settlement Date) or at two or more times on the Nominal
Settlement Date as follows:
 (i)
    
    in such notice, Lehman will specify to Counterparty the related
Staggered Settlement Dates (each of which will be on or prior to such Nominal
Settlement Date, but not prior to the beginning of the related Cash Settlement
Averaging Period) or delivery times and how it will allocate the Shares it is
required to deliver hereunder among the Staggered Settlement Dates or delivery
times;
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(ii)
    
    the aggregate number of Shares that Lehman will deliver to
Counterparty hereunder on all such Staggered Settlement Dates and delivery
times will equal the number of Shares that Lehman would otherwise be required
to deliver on such Nominal Settlement Date; and(iii)
    
    Lehman shall reimburse Counterparty for all reasonable and
documented operational expenses related to said staggered settlement.
 (h)
    
    Right to Extend. Lehman may postpone any Potential Exercise Date or any other
date of valuation or delivery by Lehman, with respect to some or all of the relevant
Options (in which event the Calculation Agent shall make appropriate adjustments to the
Shares it is required to deliver hereunder), if Lehman determines, in its reasonable
discretion, and with the prior written consent of Counterparty (such consent not to be
unreasonably withheld), that such extension is reasonably necessary or appropriate to
preserve Lehmans hedging or hedge unwind activity hereunder in light of existing
liquidity conditions or to enable Lehman to effect purchases of Shares in connection
with its hedging, hedge unwind or settlement activity hereunder in a manner that would,
if Lehman were Counterparty or an affiliated purchaser of Counterparty, be in
compliance with applicable legal, regulatory or self-regulatory requirements, or with
related policies and procedures applicable to Lehman.(i)
    
    Disclosure. Effective from the date of commencement of discussions concerning
the Transaction, Counterparty and each of its employees, representatives, or other
agents may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the Transaction and all materials of any kind (including
opinions or other tax analyses) that are provided to Counterparty relating to such tax
treatment and tax structure.(j)
    
    Designation by Lehman. Notwithstanding any other provision in this
Confirmation to the contrary requiring or allowing Lehman to purchase, sell, receive or
deliver any Shares or other securities to or from Counterparty, Lehman may designate
any of its affiliates to purchase, sell, receive or deliver such shares or other
securities and otherwise to perform Lehman obligations in respect of the Transaction
and any such designee may assume such obligations. Lehman shall be discharged of its
obligations to Counterparty to the extent of any such performance, and shall not be
discharged at any time prior thereto.(k)
    
    No Netting and Set-off. Multiple Transaction Payment Netting and the
provisions of Section 6(f) of the Agreement shall not apply. Each party waives any and
all rights it may have to set-off delivery or payment obligations it owes to the other
party under the Transaction against any delivery or payment obligation owed to it by
the other party, whether arising under the Agreement, under any other agreement between
the parties thereto, by operation or law or otherwise.(l)
    
    Equity Rights. Lehman acknowledges and agrees that this Confirmation is not
intended to convey to it rights with respect to the Transaction that are senior to the
claims of common stockholders in the event of Counterpartys bankruptcy. For the
avoidance of doubt, the parties agree that the preceding sentence shall not apply at
any time other than during Counterpartys bankruptcy to any claim arising as a result
of a breach by Counterparty of any of its obligations under this Confirmation or the
Agreement.
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(m)
    
    Early Unwind. In the event the sale by Counterparty of the Convertible
Securities is not consummated with the initial purchasers pursuant to the Underwriting
Agreement for any reason by the close of business in New York on July 5 (or such later
date as agreed upon by the parties, which in no event shall be later than July 10)
(July 5 or such later date being the Early Unwind Date), the Transaction shall
automatically terminate (the Early Unwind), on the Early Unwind Date and (i) the
Transaction and all of the respective rights and obligations of Lehman and Counterparty
thereunder shall be cancelled and terminated and (ii) Counterparty shall pay to Lehman
an amount in cash equal to the aggregate amount of costs and expenses reasonably
incurred by Lehman relating to the unwinding of Lehmans hedging activities in respect
of the Transaction (including market losses incurred in reselling any Shares purchased
by Lehman or its affiliates in connection with such hedging activities). Following
such termination, cancellation and payment, each party shall be released and discharged
by the other party from and agrees not to make any claim against the other party with
respect to any obligations or liabilities of either party arising out of and to be
performed in connection with the Transaction either prior to or after the Early Unwind
Date. Lehman and Counterparty represent and acknowledge to the other that upon an
Early Unwind and following the payment referred to above, all obligations with respect
to the Transaction shall be deemed fully and finally discharged.(n)
    
    Amendments to the Agreement.Notwithstanding any term or provision contained
in the Agreement, (i) no Potential Event of Default or Event of Default shall apply
with respect to Counterparty as a defaulting party, and no Termination Event shall
apply with respect to Counterparty as an Affected Party, in each and any such case,
except to the extent any such Event of Default or Termination Event results in the
occurrence and continuance of an Additional Termination Event (as specified in this
Confirmation) or an Extraordinary Event elected as being applicable in this
Confirmation and Counterparty shall have no Specified Entities or Credit Support
Providers for purposes of the Agreement and this Transaction; (ii) without limiting the
generality of the foregoing, the Events of Default specified in Sections 5(a)(i),
(ii) (except to the extent that any violation of any such agreement or
obligation described therein or in this Confirmation (x) would reasonably be expected
to have a material adverse effect on the ability of BofA to perform its obligations
under this Transaction or (y) pertains to the disposition of Hedge Shares pursuant to
Section 8(c) of this Confirmation), (iii), (iv) (except to the extent any
misrepresentation made under this Confirmation or under the Agreement would reasonably
be expected to have a material adverse effect on the ability of Lehman to perform its
obligations under this Transaction), (v), (vi) or (vii) of the Agreement, and the
Termination Events specified in the Agreement, shall not apply with respect to
Counterparty; and (iii) with respect to any early termination of all or any portion of
this Transaction for any reason pursuant to the terms of this Confirmation, the Equity
Definitions and/or the Agreement, and additionally notwithstanding any term or
provision in the Equity Definitions, (A) any amount payable (or to be payable) by
either party hereto to the other party hereto arising as a result of such early
termination (including any costs resulting from unwinding hedging transactions) shall
be determined in good faith and in a commercially reasonable manner and (B) without
limiting the foregoing, the party determining the amount of any such payment (whether
Lehman, Counterparty or the Calculation Agent) shall (1) utilize commercially
reasonable procedures and methodologies so as to produce a commercially reasonable
determination of such amount, and (2) disclose in reasonable detail the material
information utilized (or to be utilized) by such party in making such determination.(o)
    
    Guarantee.Lehman agrees, no later than the Effective Date, to provide a
guarantee of Lehman Brothers Holdings Inc. dated the Trade Date in a form reasonably
acceptable to Counterparty, and the parties agree that the Guarantee shall be a Credit
Support Document and Lehman Brothers Holdings Inc. shall be a Credit Support Provider
under the Agreement.(p)
    
    Regulatory Provisions.
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(i)
    
    Issuer represents and warrants that it has received and read
and understands the Notice of Regulatory Treatment and the OTC Option Risk
Disclosure Statement.(ii)
    
    The Agent will furnish Issuer upon written request a statement as to
the source and amount of any remuneration received or to be received by the
Agent in connection with the Transaction evidenced hereby.
 (q)
    
    Waiver of Trial by Jury. EACH OF COUNTERPARTY AND LEHMAN HEREBY IRREVOCABLY
WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF
ITS STOCKHOLDERS) ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THE
TRANSACTION OR THE ACTIONS OF LEHMAN OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE
OR ENFORCEMENT HEREOF.(r)
    
    Governing Law. THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
NEW YORK. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK IN CONNECTION WITH ALL MATTERS RELATING HERETO AND WAIVE ANY OBJECTION TO
THE LAYING OF VENUE IN, AND ANY CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE
COURTS.
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Yours sincerely,
    
    
    
    Accepted and agreed to:Lehman Brothers OTC Derivatives Inc.
    
    
    
    Parker Drilling CompanyBy:
    
    
    
    
    
    By:Name:
    
    
    
    Name:Title:
    
    
    
    Title:
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