Exhibit 10.94  
                                                                              

                              INDENTURE OF TRUST

                          Dated as of April 30, 1996

                   READING & BATES DRILLING CO., as Borrower

                                    - and -

           READING & BATES EXPLORATION CO., as Subsidiary Guarantor

                                    - and -

                           WILMINGTON TRUST COMPANY,
                                  as Trustee

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                               TABLE OF CONTENTS
                                                                          Page

INDENTURE OF TRUST  . . . . . . . . . . . . . . . . . . . . . . . . . .  - 1 -
RECITALS OF THE BORROWER AND THE SUBSIDIARY GUARANTOR . . . . . . . . .  - 1 -
GRANTING CLAUSE . . . . . . . . . . . . . . . . . . . . . . . . . . . .  - 2 -

ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION . . . . . . . .  - 2 -

Section 1.01.     Definitions . . . . . . . . . . . . . . . . . . . . .  - 2 -
Section 1.02.     Notices . . . . . . . . . . . . . . . . . . . . . . .  - 4 -
Section 1.03.     Waiver of Notice  . . . . . . . . . . . . . . . . . .  - 5 -
Section 1.04.     Effect of Headings; Table of Contents . . . . . . . .  - 5 -
Section 1.05.     Severability Clause; Further Assurances . . . . . . .  - 5 -
Section 1.06.     Governing Law; Jurisdiction . . . . . . . . . . . . .  - 6 -
Section 1.07.     Appointment of Process Agent  . . . . . . . . . . . .  - 6 -
Section 1.08.     Counterparts  . . . . . . . . . . . . . . . . . . . .  - 6 -
Section 1.09.     Survival  . . . . . . . . . . . . . . . . . . . . . .  - 6 -
Section 1.10.     No Transfer in Violation of Shipping Act  . . . . . .  - 7 -
Section 1.11.     Monies of Trustee Received by the Borrower  . . . . .  - 7 -
Section 1.12.     Binding Effect  . . . . . . . . . . . . . . . . . . .  - 7 -

ARTICLE 2
REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . .  - 7 -

Section 2.01  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  - 7 -
(a)   Organization and Existence  . . . . . . . . . . . . . . . . . . .  - 7 -
(b)   Power and Authority . . . . . . . . . . . . . . . . . . . . . . .  - 7 -
(c)   Due Authorization, Execution and Enforceability . . . . . . . . .  - 7 -
(d)   No Violations . . . . . . . . . . . . . . . . . . . . . . . . . .  - 8 -
(e)   Liens and Security Interests  . . . . . . . . . . . . . . . . . .  - 8 -
(f)   Notices of Defaults . . . . . . . . . . . . . . . . . . . . . . .  - 8 -

Section 2.02  . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  - 8 -
(a)   Organization Existence  . . . . . . . . . . . . . . . . . . . . .  - 8 -
(b)   Power and Authority . . . . . . . . . . . . . . . . . . . . . . .  - 8 -
(c)   Due Authorization, Execution and Enforceability . . . . . . . . .  - 8 -
(d)   No Violations . . . . . . . . . . . . . . . . . . . . . . . . . .  - 8 -

ARTICLE 3
REMEDIES UPON AN EVENT OF DEFAULT . . . . . . . . . . . . . . . . . . .  - 9 -

Section 3.01.     Remedies  . . . . . . . . . . . . . . . . . . . . . .  - 9 -
Section 3.02.     Suits for Enforcement by Trustee  . . . . . . . . . .  - 9 -
Section 3.03.     Enforcement of Claims . . . . . . . . . . . . . . . .  - 9 -
Section 3.04.     Application of Monies Collected After Default . . . .  - 9 -
Section 3.05.     Rights and Remedies Cumulative  . . . . . . . . . . . - 10 -
Section 3.06.     Delay or Omission Not Waiver  . . . . . . . . . . . . - 10 -
Section 3.07.     Discontinuance of Enforcement Proceedings . . . . . . - 10 -
Section 3.08.     Control by the Required Banks . . . . . . . . . . . . - 11 -
Section 3.09.     Undertaking for Costs . . . . . . . . . . . . . . . . - 11 -
Section 3.10.     Waiver of Demand, etc . . . . . . . . . . . . . . . . - 11 -

ARTICLE 4
THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 11 -

Section 4.01.     Certain Duties and Liabilities  . . . . . . . . . . . - 11 -
Section 4.02.     Certain Rights of Trustee . . . . . . . . . . . . . . - 12 -
Section 4.03.     Not Responsible for Recitals  . . . . . . . . . . . . - 13 -
Section 4.04.     Money Held in Trust . . . . . . . . . . . . . . . . . - 13 -
Section 4.05.     Compensation, Reimbursement and Indemnification . . . - 13 -
Section 4.06.     Corporate Trustee Required; Eligibility . . . . . . . - 14 -
Section 4.07.     Disqualification, Removal or Resignation of the Trustee;
                     Successor Trustees   . . . . . . . . . . . . . . . - 14 -
Section 4.08.     Co-trustees and Separate Trustees . . . . . . . . . . - 16 -

ARTICLE 5
SATISFACTION AND DISCHARGE  . . . . . . . . . . . . . . . . . . . . . . - 17 -

Section 5.01.     General . . . . . . . . . . . . . . . . . . . . . . . - 17 -
Section 5.02.     Survival of Certain Obligations . . . . . . . . . . . - 18 -

ARTICLE 6
SUPPLEMENTAL INDENTURES . . . . . . . . . . . . . . . . . . . . . . . . - 18 -

Section 6.01.     Waivers and Supplemental Indentures
                      With Consent of Banks . . . . . . . . . . . . . . - 18 -
Section 6.02.     Execution of Supplemental Indentures  . . . . . . . . - 18 -
Section 6.03.     Effect of Supplemental Indentures . . . . . . . . . . - 18 -

ARTICLE 7
INSTRUCTIONS OF THE AGENT OR REQUIRED BANKS . . . . . . . . . . . . . . - 18 -

Section 7.01.     Instructions of the Agent or Required Banks.  . . . . - 18 -

ARTICLE 8
LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . - 19 -

Section 8.01.     Limitation of Liability of Wilmington Trust Company.  - 19 -


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                              INDENTURE OF TRUST


      THIS INDENTURE OF  TRUST (this "Indenture") dated as of  April 30, 1996,
among (i) READING  & BATES DRILLING  CO., as  borrower (the "Borrower");  (ii)
READING  & BATES  EXPLORATION CO.,  as  subsidiary guarantor  (the "Subsidiary
Guarantor"), each an  Oklahoma corporation and (iii) WILMINGTON TRUST COMPANY,
a Delaware banking corporation, not  in its individual capacity but  solely as
indenture trustee (the "Trustee").

             RECITALS OF THE BORROWER AND THE SUBSIDIARY GUARANTOR

      A.    By a Credit  Agreement dated as of April  30, 1996 ( as  in effect
from time to  time, the "Credit Agreement") among Reading & Bates Corporation,
a Delaware  corporation ("Holdings"),  the Borrower, the  banks party  thereto
(the "Banks"), Credit  Lyonnais New York Branch, as  co-agent, and Christiania
Bank og  Kreditkasse, New York  branch, as agent  (the "Agent") it  was agreed
among other  things that the Banks  would make available to  the Borrower upon
the  terms  and  conditions  therein  described  a  reducing  revolving credit
facility (the "Facility") in  an aggregate amount at  any time outstanding  of
One Hundred Million  United States Dollars (US$100,000,000)  providing for the
making  of Loans and the issuance of,  and participation in, Letters of Credit
as contemplated therein.

      B.    The Subsidiary  Guarantor for good and  valuable consideration has
authorized,  executed and  delivered  a Subsidiary  Guaranty (the  "Subsidiary
Guaranty") in favor of the Agent guaranteeing  the performance by the Borrower
of  its obligations under the Credit  Agreement and the other Credit Documents
as defined in the Credit Agreement.

      C.    Pursuant to the Credit Agreement  and to secure the obligations of
the Borrower thereunder, (i) the Borrower is required to execute and deliver a
first preferred mortgage on the U.S. documented semi-submersible drilling unit
JACK BATES;  and (ii)  the  Subsidiary Guarantor  is required  to execute  and
deliver first preferred mortgages (together  with the first preferred mortgage
on the JACK BATES the "Mortgages") on each of (1)  the U.S. documented jack-up
drilling unit, D.R. STEWART and (2) the U.S. documented offshore drilling unit
W.D. KENT (together  with the JACK BATES,  the "Vessels").  As  certain of the
Banks are  not citizens of the United States of  America within the meaning of
Section 2 of the Shipping Act, 1916, as amended, and  are therefore ineligible
to be  mortgagees of  the  Vessels, the  Banks  have requested  the  Indenture
Trustee to hold, pursuant to the terms of this Indenture, the Mortgages.

      D.    To  secure  their  respective  obligations under  (i)  the  Credit
Agreement and  the Note and (ii) the Subsidiary Guaranty, the Borrower and the
Subsidiary Guarantor have  duly authorized the execution and  delivery of this
Indenture.

      E.    All things have  been done which are necessary  to constitute this
Indenture a  valid security agreement  and contract  for the  security of  the
respective obligations of the Borrower  and the Subsidiary Guarantor under (i)
the  Credit  Agreement  and  the   Note  and  (ii)  the  Subsidiary  Guaranty,
respectively, in accordance with  the terms of the Credit Agreement, the Note,
the Subsidiary Guaranty and this Indenture.


                                GRANTING CLAUSE
               NOW, THEREFORE, THIS INDENTURE WITNESSETH, that,

      To secure the payment of the Loans (as defined in the Credit Agreement),
the Unpaid Drawings (as defined in the Credit Agreement), and interest thereon
and  all other  Obligations  (as defined  below)  and the  performance of  the
covenants therein and  herein contained, and in consideration  of the premises
and of  the Banks' making  the Facility available  to the Borrower,  and other
good and valuable consideration, the  Borrower and the Subsidiary Guarantor by
these presents do grant, sell, convey,  assign, transfer, pledge, set over and
confirm  unto the Trustee  for the benefit  of the  Banks, continuing security
interests in all  of their right, title  and interest in and  all benefits in,
under and to all of the following, but as security only for the payment of the
Obligations:

      1.    The  U.S. documented  vessel JACK  BATES,  as granted  by a  first
            preferred mortgage on the JACK BATES by the Borrower;

      2.    The U.S.  documented vessel  D.R. STEWART, as  granted by  a first
            preferred  mortgage   on  the  D.R.  STEWART   by  the  Subsidiary
            Guarantor;
      3.    The  U.S. documented  vessel  W.D.  KENT, as  granted  by a  first
            preferred  mortgage on the W.D. KENT  by the Subsidiary Guarantor;
            and

      4.    Proceeds of the foregoing.

      The  Trustee shall  hold the  Mortgages as  collateral security  for the
Obligations, subject to the terms of this Indenture.

      AND IT  IS HEREBY  COVENANTED AND DECLARED  that the  security interests
granted  above are  to be  held and  applied by  the  Trustee, subject  to the
further covenants,  conditions and trusts  herein set forth, and  the Borrower
and  the Subsidiary  Guarantor do hereby  covenant and  agree to  and with the
Trustee, for the benefit of the Banks as follows:


                                   ARTICLE 1
            DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

Section 1.01.     Definitions.

      (a)   For all purposes  of this Indenture, except as otherwise expressly
provided herein or unless the  context otherwise requires, in addition to  the
words  and expressions  defined in  the recitals  hereto, the  following terms
shall have the following meanings:

      "Actual Knowledge" has the meaning specified in Section 4.01(h).

      "Business Day"  shall have  the meaning ascribed  thereto in  the Credit
      Agreement.

      "Collateral" means the  mortgages listed in the granting  clause of this
      Indenture and proceeds thereof.

      "Dollars",  "dollars"  or  "$"  means  lawful  and  freely  transferable
      currency of the United States.

      "Default Rate" shall have the  rate of interest calculated in accordance
      with Section 1.07(b) of the Credit Agreement.

      "Event  of Default"  has  the  meaning ascribed  thereto  in the  Credit
      Agreement.

      "Instructions" has the meaning set forth in Section 7.01.

      "Letters  of Credit"  has the  meaning  ascribed thereto  in the  Credit
      Agreement.

      "MARAD" means  the United States Department  of Transportation, Maritime
      Administration.

      "Obligations"  shall  means the  obligations  of  the Borrower  and  the
      Subsidiary Guarantor  with respect  to (i) the  full and  prompt payment
      when due of (x)  the principal of interest  on the Loans made under  the
      Credit Agreement, and all  reimbursement obligations and Unpaid Drawings
      with respect to the Letters of Credit  issued under the Credit Agreement
      and  (y)  all other  obligations  and  indebtedness (including,  without
      limitation, indemnities, Fees and interest  thereon) of the Borrower  to
      the Secured Creditors, whether now existing or hereafter incurred under,
      arising out of or in connection  with the Credit Agreement and the other
      Credit Documents and the due  performance and compliance by the Borrower
      with all of the terms, conditions and agreements contained in the Credit
      Agreement and the other Credit Documents; (ii) any and all sums advanced
      by  the Trustee  in order  to  preserve the  Collateral (as  hereinafter
      defined) or preserve  its security interest in the  Collateral; (iii) in
      the event  of any proceeding  for the  collection or enforcement  of any
      indebtedness,  obligations,  or  liabilities  of  the  Borrower  or  the
      Subsidiary Guarantor referred to in clause (i) above, after  an Event of
      Default shall have occurred  and be continuing, the reasonable  expenses
      of  the Trustee  of re-taking,  holding,  preparing for  sale or  lease,
      selling or otherwise disposing  of or realizing on the Collateral, or of
      any  exercise by  the Trustee  of  its rights  hereunder, together  with
      reasonable attorneys'  fees of counsel  to the Trustee and  court costs;
      and (iv) all amounts paid by any Indemnitee as to  which such Indemnitee
      has the right to reimbursement  (all such obligations, liabilities, sums
      and  expenses  referred to  in  clauses  (i)  through (iv)  above  being
      collectively referred to as the  "Obligations").  It is acknowledged and
      agreed that the "Obligations" shall  include extensions of credit of the
      types described above, whether outstanding on the date of this Indenture
      or extended from time to time after the date of this Indenture.

      "Officer's Certificate" means (i) when used with respect to the Borrower
      or the Subsidiary Guarantor, a  certificate signed by the president, the
      chief  executive  officer,  any   vice  president,  the  secretary,  any
      assistant  secretary, the treasurer  or any  assistant treasurer  of the
      Borrower  or the Subsidiary Guarantor and (ii) when used with respect to
      the  Trustee, a  certificate  signed  by a  Responsible  Officer of  the
      Trustee.

      "Person" means any individual, corporation,  partnership, joint venture,
      joint-stock company, trust, unincorporated organization or government or
      any agency or political subdivision thereof.

      "Required  Banks"  has  the  meaning  ascribed  thereto  in  the  Credit
      Agreement.

      "Responsible Officer", when used with  respect to the Trustee, means any
      officer  with  direct  responsibility  for the  administration  of  this
      Indenture and also  means, with respect to a  particular corporate trust
      matter, any other officer to whom such matter is referred because of his
      knowledge of  and familiarity with the  particular subject. "Responsible
      Officer",  when used  with respect  to  the Borrower  or the  Subsidiary
      Guarantor, means the president,  any vice president, the secretary,  any
      assistant secretary,  the treasurer  or any  assistant treasurer  of the
      Borrower or the  Subsidiary Guarantor or any other  officer or assistant
      officer  of  the  Borrower   or  the  Subsidiary  Guarantor  customarily
      performing  functions  similar   to  those  performed  by  any   of  the
      above-designated officers.

      "Secured Creditors"  shall mean  the Trustee, the  Banks, the  Letter of
      Credit  Issuer  and  the  Agent  under and  as  defined  in  the  Credit
      Agreement.

      "Security  Documents"  shall have  the meaning  ascribed thereto  in the
      Credit Agreement.

      "Supplemental  Indenture"  means  any  indenture  supplemental  to  this
      Indenture entered into pursuant to Article 6.

      "United States" means the United States of America.

      "Unpaid  Drawings"  has  the  meaning ascribed  thereto  in  the  Credit
      Agreement.

            (b)   For  purposes of this  Indenture, unless otherwise expressly
      provided  or  unless the  context  otherwise,  requires, all  references
      herein  to Articles,  Sections or  other subdivisions,  unless otherwise
      specified,  refer  to the  corresponding  Articles,  Sections and  other
      subdivisions of this Indenture, and the terms "hereof, "herein", hereby"
      hereafter" and "herewith" refer to this Indenture.

            (c)   The terms defined in this Article include the plural as well
      as the singular.

            (d)   All other  terms used in  this Indenture and not  defined in
      this  Indenture which  are defined  by  reference herein  to the  Credit
      Agreement or  other instruments, have  the meanings assigned to  them in
      the Credit Agreement or such other instruments.

            (e)   All  agreements referred  to in  this Article  I and  in the
      Recitals of this Indenture  mean such agreements as  originally executed
      or, if duly amended or supplemented, as so amended or supplemented.

Section 1.02.     Notices.

      (a)   All  notices or other  communications required or  permitted to be
made hereunder  to the Borrowers,  the Subsidiary Guarantor, the  Trustee, the
Agent  or the  Banks shall  be sufficiently given  if in  writing and  made or
delivered by  hand or  by certified  or registered  mail, postage  prepaid, by
telex or telecopy, addressed  to the particular parties as provided  below, or
to such  other addresses as  such parties may  hereafter specify by  a written
notice to  such other parties (and with respect to any notice or communication
to the Trustee, with a copy to the Agent):

Borrower/Subsidiary     READING & BATES CORPORATION
Guarantor:              901 Threadneedle, Suite 200
                        Houston, TX  77079
                        Telefax: (713) 496-0285
                        Attention: Chief Financial Officer


Indenture Trustee:      WILMINGTON TRUST COMPANY
                        Rodney Square North
                        1100 North Market Street
                        Wilmington, DE 19890-0001
                        Telefax: (302) 651-8882
                        Attention:  Corporate Trust Division

                        With a copy to:

                        Jennifer L. Janss, Esq.
                        Richards, Layton & Finger
                        P.O. Box 551
                        Wilmington, DE 19899


Notices to the Agent shall be addressed to:

                        CHRISTIANIA BANK OG KREDITKASSE, 
                        New York Branch
                        11 West 42nd Street, 7th Floor
                        New York, NY 10036
                        Telefax: (212) 827-4888
                        Attention: Loan Administration

Notices to the Banks shall be addressed as provided  in Annex II to the Credit
Agreement.


Section 1.03.     Waiver of Notice.

      Where this Indenture provides for notice in any manner, such  notice may
be waived  in writing by  the person entitled  to receive such  notice, either
before or  after the event,  and such waiver  shall be the equivalent  of such
notice.

Section 1.04.     Effect of Headings; Table of Contents.                

      The table  of contents, the titles  of the Articles and  the headings of
the  Sections and paragraphs are not a part of this Indenture and shall not be
deemed to affect the meaning or construction of any of its provisions.

Section 1.05.     Severability Clause; Further Assurances.

      In case any  provision of this Indenture or any  other Security Document
shall  be  invalid,  illegal  or  unenforceable, the  validity,  legality  and
enforceability  of the  remaining provisions  of this  Indenture or  any other
Security  Document shall not  in any way  be affected or  impaired thereby. In
case this Indenture or any other Security Document, or any provision hereof or
thereof, shall be  deemed invalid,  illegal or unenforceable,  in whole or  in
part,  by reason  of any present  or future law  or any decision  of any court
having jurisdiction, or if the documents at any time held by the Trustee shall
be  deemed by  the Trustee  in the  reasonable exercise  of its  duties to  be
insufficient for  any reason to implement the rights and powers granted to the
Trustee  herein or  any other Security  Document, then,  from time  to time on
demand of  the Trustee,  the Borrower  and the  Subsidiary Guarantor  will do,
execute, acknowledge and deliver, or  cause to be done, executed, acknowledged
and  delivered, such  other  and further  assurances and  documents as  in the
opinion of the  Trustee may reasonably  be required to  create or confirm  the
security interests purported to be created by the Granting Clause hereof or to
perfect the security  interest of the Trustee therein, or  otherwise to obtain
or maintain the full benefits of this Indenture and the Mortgages.

Section 1.06.     Governing Law; Jurisdiction.

      This  Indenture shall  be  deemed  to  be  a  contract  made  under  the
substantive  laws of  the State  of New  York and  for all  purposes  shall be
construed  in  accordance  with  the  internal laws  of  said  State,  without
reference to principles  of conflicts of law.  This  Indenture may be enforced
in the federal or  state courts in  the State of New  York or any other  court
having jurisdiction. Each of the  Borrower and the Subsidiary Guarantor hereby
irrevocably  submits itself  to  the nonexclusive  jurisdiction of  the United
States District Court for the Southern District of New  York and the courts of
the State of  New York located  in the City  and County of  New York for  such
purpose.  In  addition  thereto,  each  of the  Borrower  and  the  Subsidiary
Guarantor  irrevocably waives,  to the  fullest extent  permitted by  law, any
objection which it may now or hereafter have to the laying of the venue of any
such  proceeding  brought  in any  such  court  or  any  claim that  any  such
proceeding  brought in  any such  court has  been brought  in an  inconvenient
forum.

Section 1.07.     Appointment of Process Agent.

      Each  of  the Borrower  and  the  Subsidiary Guarantor  hereby  appoints
Prentice Hall Corporation, 500 Central  Avenue, Albany, New York 12206-2290 as
its agent to accept service of process in any proceeding on  its behalf in the
State  of New York and  acknowledges that the purpose of  this provision is to
provide that service upon  such firm at its offices in  Albany, New York shall
have  the same effect as if each of  the Borrower and the Subsidiary Guarantor
had been personally served in the State of New York.

Section 1.08.     Counterparts.

      This Indenture may  be executed in any  number of counterparts,  each of
which shall  be an original;  but such counterparts shall  together constitute
but one and the same instrument.

Section 1.09.     Survival.

      All   representations,  warranties,  covenants   and  agreements  herein
contained or made  in writing in connection with any  Security Documents shall
survive the execution  of this Indenture and shall continue  in full force and
effect until  the Indebtedness secured hereby or  thereby shall have been paid
in full, and the  same shall bind and inure  to the benefit of  the respective
successors  and assigns  of the  Borrower,  the Subsidiary  Guarantor and  the
Trustee.

Section 1.10.     No Transfer in Violation of Shipping Act.

      Notwithstanding any  other provision herein  to the contrary,  except to
the extent permitted by law, no sale,  transfer or other disposition of any of
the Vessels, or  any interest therein, may be made to any person not a citizen
of the United  States within the  meaning of  Section 2 of  the Shipping  Act,
1916, as amended,  without the approval of the  Secretary of Transportation of
the United States or pursuant to an exemption therefrom.

Section 1.11.     Monies  of   Trustee  Received  by  the   Borrower  and  the
Subsidiary Guarantor.

      Any monies which  may from time to time  be received by the  Borrower or
the Subsidiary Guarantor  which should have been paid to the Trustee hereunder
shall be so received in  trust for the Trustee,  shall not be commingled  with
other funds of the  Borrower or the Subsidiary Guarantor, as the  case may be,
and shall promptly be remitted to the Trustee.

Section 1.12.     Binding Effect.

      All the covenants, promises, stipulations  and agreements of each of the
Borrower and the Subsidiary Guarantor in this Indenture shall bind each of the
Borrower  and the  Subsidiary  Guarantor and  their respective  successors and
assigns, and  shall inure to the benefit of the Trustee and its successors and
assigns, whether so expressed or not.   This Indenture is for the sole benefit
of the Borrower, the Subsidiary Guarantor, the Trustee and the Banks and their
respective successors and  assigns, and no  other party  shall have any  right
hereunder.


                                   ARTICLE 2
                   REPRESENTATIONS, WARRANTIES AND COVENANTS

Section 2.01.   Each of the  Borrower and the Subsidiary  Guarantor represents
and warrants  to the  Trustee as  of the  date hereof  and covenants with  the
Trustee that:

      (a)   Organization  and   Existence.  Each  of  the   Borrower  and  the
Subsidiary  Guarantor was  duly  organized and  is now  validly existing  as a
corporation  under the laws of the State  of Oklahoma with power and authority
to conduct its business as the same is presently  being conducted. Each of the
Borrower and the Subsidiary Guarantor shall maintain such existence so long as
this Indenture remains in effect.

      (b)   Power and  Authority.  Each of  the  Borrower and  the  Subsidiary
Guarantor had and has  legal power and authority  to enter into and  carry out
the terms of this Indenture. 

      (c)   Due  Authorization, Execution  and Enforceability.  This Indenture
has been duly authorized by all necessary corporate action on the part of each
of  the Borrower  and the  Subsidiary  Guarantor, has  been duly  executed and
delivered  by  each   of  the  Borrower  and  the   Subsidiary  Guarantor  and
constitutes,  in accordance  with  its  terms, the  legal,  valid and  binding
agreements  enforceable  against  each  of  the  Borrower and  the  Subsidiary
Guarantor,   except  to   the   extent  limited   by  applicable   bankruptcy,
reorganization, insolvency,  moratorium or  other laws of  general application
relating to  or affecting the enforcement of creditors' rights as from time to
time in effect and general equitable principles.

      (d)   No Violations.  The consummation of the  transactions contemplated
by,  and compliance by each of the  Borrower and the Subsidiary Guarantor with
all the terms and  provisions of, this Indenture  do not and will not  violate
any provisions of the Certificate of  Incorporation or Bylaws of either of the
Borrower or the Subsidiary  Guarantor, and will not result in a  breach of the
terms  and provisions  of, or  constitute a  default under,  any agreement  or
undertaking by either of the Borrower or the Subsidiary Guarantor, or by which
either of them or any of their respective properties is bound, or any order of
any court or administrative agency entered in any proceedings to which  either
of  the Borrower or the Subsidiary Guarantor is or has been a party or violate
any applicable statute, rule or regulation.

      (e)   Liens and Security Interests.

            (1)   The security interest granted by this Indenture constitutes,
a  valid perfected  assignment  of  and security  interest  in the  properties
assigned hereby  having a priority over  any other security interests  in such
property.

            (2)   Except pursuant to this Indenture  (or as permitted by  this
Indenture)  or the  Mortgages  (or  as permitted  by  the Mortgages),  neither
Borrower  nor the  Subsidiary  Guarantor has  assigned,  pledged or  otherwise
granted a  security interest in  or lien on,  and shall not  assign, pledge or
otherwise grant a security interest  in or lien on, the whole or  any part of,
the Vessels or any rights assigned by the Indenture or the Mortgages.

      (f)   Notices of Defaults. Upon the  occurrence of any Event of Default,
the Borrower and  the Subsidiary Guarantor shall promptly  notify the Trustee,
the Agent and the Banks by telecopy, confirmed by letter, unless such Event of
Default shall have been cured.


Section 2.02.  The Trustee represents and warrants that:

      (a)   Organization Existence.  The Trustee was duly organized and is now
validly existing as a banking corporation under laws of the State of Delaware.

      (b)   Power  and Authority.   The  Trustee had  and has legal  power and
authority to enter into and carry out the terms of this Indenture.

      (c)   Due Authorization,  Execution and Enforceability.   This Indenture
has been duly authorized  by all necessary corporate action on the part of the
Trustee,  has been  duly executed and  delivered by the  Trustee and, assuming
this  Indenture constitutes  the legal,  valid and  binding obligation  of the
other parties hereto, enforceable against  such parties in accordance with its
terms, constitutes, in accordance with its terms, the legal, valid and binding
agreement of the Trustee enforceable against the Trustee, except to the extent
limited by  applicable bankruptcy,  reorganization, insolvency,  moratorium or
other laws of  general application relating to or affecting the enforcement of
creditors'  rights as  from  time  to time  in  effect  and general  equitable
principles.

      (d)   No Violations.  The  consummation of the transactions contemplated
by,  and compliance by  the Trustee with  all of the  terms and provisions of,
this  Indenture do not and will not  violate any provisions of the Articles of
Incorporation or By-Laws of the Trustee and will not result in a breach of the
terms and  provisions  of, or  constitute a  default under,  any agreement  or
undertaking of the Trustee or by which it  or any of its property is bound, or
any order  of any court or administrative agency entered in any proceedings to
which the Trustee  is or has been  a party or violate any  applicable statute,
rule or regulation.


                                   ARTICLE 3
                       REMEDIES UPON AN EVENT OF DEFAULT

Section 3.01.     Remedies.

      If  an Event  of  Default shall  have  occurred and  be continuing,  the
Trustee shall be  entitled to, and shall upon  receipt of written Instructions
of the  Agent, without further notice  or demand, enforce and  exercise all or
any of its rights and  powers as a mortgagee under the respective Mortgages at
law, in equity or in admiralty.

Section 3.02.     Suits for Enforcement by Trustee.

      Subject to the provisions of Section  3.08, if an Event of Default shall
occur and  be continuing  and the  Trustee has  Actual Knowledge  thereof, the
Trustee  may in its discretion proceed to protect its rights and the rights of
the  Banks by such appropriate judicial  proceedings as the Trustee shall deem
most effectual  to protect any  such rights,  or to protect  any other  proper
right, power  or remedy  then available  to the Trustee  under the  Mortgages,
provided that  the Trustee shall  immediately thereafter notify the  Agent and
the Banks by telecopier of any action taken or proposed to be taken  hereunder
and shall thereafter act only  in accordance with the written Instructions  of
the Agent or the Required Banks or either thereof.

Section 3.03.     Enforcement of Claims by the Trustee. 

      All rights of action  and claims under this Indenture may  be prosecuted
and enforced by the Trustee in a proceeding brought in its own name as trustee
of an express  trust, and any recovery of judgment  shall, after provision for
the  payment  of  the  reasonable compensation,  expenses,  disbursements  and
advances  of the  Trustee, its agents  or counsel,  be for the  benefit of the
Banks.

Section 3.04.     Application of Monies Collected After Default.

      Any monies collected by the Trustee  pursuant to any enforcement of  any
of its rights hereunder or  under any other Credit Document on account  of the
occurrence of an Event of Default shall be applied as follows:

            (i)   to the payment or reimbursement  of all amounts owing to the
                  Trustee of the  type described in clauses (ii)  and (iii) of
                  the definition of Obligations;

            (ii)  second, to  the extent  moneys remain after  the application
                  pursuant to the preceding clause (i), an amount equal to the
                  outstanding  Obligations  shall be  paid  to  the Agent  for
                  distribution  to the  Secured  Creditors, with  each Secured
                  Creditor receiving an amount  equal to such Obligations held
                  by it or,  if the proceeds are  insufficient to pay in  full
                  all such Obligations, its Pro Rata Share (as  defined below)
                  of the amount remaining to be distributed; and

            (iii) third,  to the  extent moneys  remain after  the application
                  pursuant  to  the  preceding   clauses  (i)  and  (ii),  and
                  following  the termination  of  this  Indenture pursuant  to
                  Article 5, any  surplus then remaining shall be  paid to the
                  Borrower or the  Subsidiary Guarantor, subject, however,  to
                  the rights of  the holder of any then existing lien of which
                  the Trustee has actual notice (without investigation).

      For  purposes  of this  Indenture  "Pro  Rata  Share" shall  mean,  when
calculating  a Secured  Creditors portion  of  any distribution  or amount  in
respect of  any Obligations, the amount (expressed as a percentage) equal to a
fraction the numerator of which is the then unpaid amount  of such Obligations
owning to or held by such Secured Creditor and the denominator of which is the
then outstanding amount of all such Obligations.  For  purposes of determining
the amount payable to each Secured Creditor, the Trustee shall  be entitled to
request each Secured Creditor to furnish  it with written notice of the amount
of Obligations then owed to it and shall be entitled to reply upon the amounts
stated therein in making such distribution.

Section 3.05.     Rights and Remedies Cumulative.

      No right or remedy herein conferred upon or reserved to the Trustee, the
Agent or any  of the Banks is intended  to be exclusive of any  other right or
remedy, and every right  and remedy shall, to the extent permitted  by law, be
cumulative and in addition to every other right and remedy given hereunder, or
under  the other Security  Documents or now  or hereafter existing  at law, in
equity, in  admiralty, by statute or otherwise. The assertion or employment of
any right or remedy hereunder or otherwise shall not prevent the concurrent or
subsequent assertion  or employment  of another right  or remedy  hereunder or
otherwise.

Section 3.06.     Delay or Omission Not Waiver.

      No delay or  omission of the Indenture Trustee,  the Agent or of  any of
the  Banks to exercise any right or  remedy accruing upon any Event of Default
nor  any course of dealings among the  Indenture Trustee, the Agent, the Banks
and the Borrower  and the Subsidiary Guarantor shall impair  any such right or
remedy  or constitute  a waiver  of any  Event of  Default or  an acquiescence
therein nor shall any single exercise or partial exercise of any such right or
remedy preclude  any other exercise  thereof or any  exercise of any  other or
further  right or remedy;  nor shall the acceptance  by the Indenture Trustee,
the Agent or any of the  Banks of any security or  any payment of any part  of
the Credit  Facility maturing after any Event of  Default or of any payment on
account of  any past default be construed to be  a waiver of any right to take
advantage of  any future Event of Default or of  any past Event of Default not
completely cured  thereby.   To the  extent permitted by  law, every  right or
remedy given by this Indenture or any other Security Document or by law to the
Indenture Trustee, the Agent or any of the Banks may be exercised from time to
time,  and as  often and  in such  order as  may be  deemed expedient,  by the
Indenture Trustee, the Agent or the Banks, as the case may be.

Section 3.07.     Discontinuance of Enforcement Proceedings.

      In case the Indenture Trustee shall have proceeded to enforce any right,
power or remedy under this Indenture or under any Mortgage and such proceeding
shall have  been discontinued or abandoned  for any reason or  shall have been
adversely determined to the  Indenture Trustee, then, and in every  such case,
the  Borrower, the  Subsidiary Guarantor  and the  Indenture Trustee  shall be
restored to their former  positions and rights  hereunder with respect to  the
property  subject or  intended  to  be subject  to  this Indenture  or  either
Mortgage,  as the  case may  be, and  all rights,  remedies and powers  of the
Indenture Trustee shall continue as if no such proceedings had been taken.

Section 3.08.     Control by the Required Banks.

      Subject to (i)  the provisions of Section 3.09 and (ii) the requirements
of Sections 9 and  37 of the Shipping Act, 1916, as amended,  the Agent or the
Required Banks shall have the right by written Instructions to the Trustee, to
direct the time, method and place of conducting any proceeding  for any remedy
available to the  Trustee under this  Indenture or any Mortgage  or exercising
any  trust or  power conferred  on  the Trustee  herein or  therein, and  upon
receipt of such  written Instructions, the Trustee, subject  to the provisions
of Article 4,  shall take the actions specified in  such written Instructions,
provided that such written instructions shall not be in conflict with any rule
of law or with this or expose the Indenture Trustee to personal liability.

Section 3.09.     Undertaking for Costs.

      The  parties to  this  Indenture  agree, and  the  Banks  by making  the
Facility available shall be deemed  to have agreed, that any court may  in its
discretion  require, in any  suit for the  enforcement of any  right or remedy
under this Indenture, or in any suit against the Trustee for any  action taken
or omitted by it as Trustee, the filing  by any party litigant in such suit of
an undertaking  to pay the costs of such suit,  and that such court may in its
discretion  assess  reasonable  costs, including  reasonable  attorneys' fees,
against any party litigant  in such suit, having due regard  to the merits and
good  faith of  the claims or  defenses made  by such party  litigant; but the
provisions  of this  Section shall  not apply  to any  suit instituted  by the
Trustee, or to any suit instituted  by the Banks, unless otherwise required by
law.

Section 3.10.     Waiver of Demand, etc.

      Each  of  the Borrower  and  the Subsidiary  Guarantor  hereby expressly
waives  demand and  presentment for  payment, notice  of nonpayment,  protest,
notice of protest,  notice of  dishonor, bringing  of suit,  and diligence  in
taking any  action to collect  amounts called  for under  this Indenture,  the
other Security Documents,  the Subsidiary Guaranty or the  Credit Agreement at
any time in connection herewith and therewith.

                                   ARTICLE 4
                                  THE TRUSTEE

Section 4.01.     Certain Duties and Liabilities.

      (a)   The Trustee undertakes to perform such duties and only such duties
as are specifically  set forth in this Indenture, and  no implied covenants or
obligations shall be read into this Indenture against the Trustee.

      (b)   Without  limiting the provisions of paragraph  (a) of this Section
4.01 or  the provisions of Section 3.08,  in any case where  the terms of this
Indenture or  any Mortgage  vest in  the Trustee non-mandatory,  discretionary
authority to take any action or give any consent or approval  upon the request
of  either of the  Borrower, the Subsidiary  Guarantor, the Agent,  any of the
Banks or otherwise,  the Trustee shall  be required, first  to give notice  of
such proposed  action, approval or consent  to the Agent, and  upon receipt of
written Instructions  of the Agent, the Trustee shall act with respect to such
action, approval or consent only in accordance with such written Instructions.

      (c)   In case an Event of Default shall have occurred and be continuing,
the Trustee shall (except as otherwise provided in Section 3.08) exercise such
of the  rights and powers  vested in it  by this Indenture,  and use  the same
degree of care and skill in their exercise, as a prudent man would exercise or
use under the circumstances in the conduct of his own affairs.

      (d)   No provision of  this Indenture shall be construed  to relieve the
Trustee  from  liability for  its  own  gross negligence  or  its own  willful
misconduct or that of its employees, agents, officers and attorneys.

      (e)   Save for the provisions of paragraph (d) hereof, the Trustee shall
not be liable with respect to any action taken or omitted to be taken by it in
accordance with Instructions  of the Agent or  the Required Banks  relating to
the  exercise of any trust, right, remedy  or power conferred upon the Trustee
under  this  Indenture or  any  Mortgage, or  exercisable by  it  hereunder or
thereunder.

      (f)   None of the provisions of this Indenture shall require the Trustee
to expend  or  risk  its  own  funds or  otherwise  incur  personal  financial
liability in the performance of any of its duties or in the exercise of any of
its rights  or powers, if  there is reasonable  ground for believing  that the
repayment of such funds or liability is not reasonably assured to it under the
terms of  this Indenture or by special agreement of  the Agent or the Required
Banks.

      (g)   Whether  or not therein expressly  so provided, every provision of
this  Indenture relating  to  the conduct  or  affecting the  liability of  or
affording protection to the Trustee shall be subject to the provisions of this
Section.

      (h)   The  Trustee  shall  not  be deemed  to  have  knowledge  ("Actual
Knowledge")  of the existence of an Event  of Default unless the Trustee shall
have received telecopied or other written notice of such Event of Default from
the Agent or Required Banks,  or a Responsible Officer in the  Corporate Trust
Office of the Trustee shall have actual knowledge of such Event of Default.

      (i)   The Trustee shall promptly, upon receiving Actual  Knowledge of an
Event of Default, inform the Agent and the Banks by telex  or telecopy of such
Event of Default.

      (j)   None of the provisions of this Indenture shall require the Trustee
to review  or hold policies  of insurance or  to make any  claims or  take any
other action with respect to  such insurance unless specifically instructed to
do so by the Agent.

      (k)   The Trustee agrees  that it will in its individual capacity and at
its own cost and expense promptly take such action as may be necessary duly to
discharge and satisfy in full all  liens on the Mortgages and other collateral
security held by the Trustee attributable to it in its individual capacity.

Section 4.02.     Certain Rights of Trustee.

      Except as otherwise provided in Section 4.01:

      (a)   The  Trustee  may  rely  and  shall  be  protected  in  acting  or
refraining  from  acting  upon  any  written  statement,  instrument,  notice,
request, instruction, direction or other paper  or document believed by it  to
be  genuine and  to  have been  signed  or presented  by the  proper  party or
parties;

      (b)   The Trustee  may consult  with counsel and  the written  advice of
such  counsel shall  be  full  and complete  authorization  and protection  in
respect of any  action taken, suffered or omitted by  it hereunder in reliance
thereon and in  compliance therewith, absent bad faith,  negligence or willful
misconduct on the part of the Trustee;

      (c)   The  Trustee shall be under  no obligation to  exercise any of the
rights or powers vested in it by this Indenture at the request or direction of
the Agent or  the Required Banks pursuant to this  Indenture, unless the Agent
or the Required Banks shall have offered to the Trustee reasonable security or
indemnity  against the  costs and expenses  which might  be incurred  by it in
compliance with such request or direction; 

      (d)   The Trustee shall not be bound  to make any investigation into the
facts  or  matters  stated  in  any  statement,  instrument, notice,  request,
direction or  other paper or  document referred  to in paragraph  (a) of  this
Section;

      (e)   The  Trustee may execute any of the  trusts or powers hereunder or
perform  any duties  hereunder  either directly  or by  or  through agents  or
attorneys and the  Trustee shall not be responsible for  the negligence of any
attorney or agent appointed by the Indenture Trustee with due care; and

      (f)   Should the Trustee receive written Instructions from the  Agent or
the Required  Banks which the  Trustee, in  its sole opinion,  believes to  be
conflicting Instructions, the Trustee  shall have no duty to act  thereon, but
if  indemnified to its satisfaction for  any costs, expenses or liabilities it
may  incur, it shall  seek instructions concerning  its responsibilities under
this Indenture with respect to such conflicting Instructions from any court of
competent jurisdiction.

Section 4.03.     Not Responsible for Recitals.

      The recitals contained herein  shall be taken as the  statements of each
of the  Borrower and  the Subsidiary  Guarantor, and  the  Trustee assumes  no
responsibility for their correctness. The  Trustee makes no representations as
to the validity or sufficiency of this Indenture or any Mortgage.

Section 4.04.     Money Held in Trust.

      Any money held by the Trustee in trust hereunder need  not be segregated
from other funds  except to the extent required by law.   The Trustee shall be
under no liability for interest  on any money received by it  hereunder except
as otherwise  agreed with  the  Borrower and  the Subsidiary  Guarantor.   Any
payments made  by the  Trustee under  this Indenture shall  be made  only from
monies held by it in trust hereunder.

Section 4.05.     Compensation, Reimbursement and Indemnification.

      The Borrower and the  Subsidiary Guarantor jointly and  severally agree,
subject to the provisions of Article 5:

      (a)   To pay  to the Trustee  from time to time  reasonable compensation
for  all services rendered  by it hereunder  (which compensation  shall not be
limited to any provision of law in regard to  the compensation of a trustee of
an express trust);

      (b)   To  reimburse the  Trustee  upon its  request  for all  reasonable
expenses,  disbursements and  advances  incurred  or made  by  the Trustee  in
accordance  with   any  provision   of  this  Indenture   (including,  without
limitation,  reasonable compensation  and  expenses and  disbursements of  its
agents and counsel and expenses  incurred in enforcing its rights  or remedies
under any Security Document), except any such expense, disbursement or advance
as may be attributable to its gross negligence or willful misconduct; and

      (c)   To indemnify  the Trustee, its directors,  officers, employees and
agents  for, and  to hold it  and them  harmless against, any  and all claims,
losses,  liabilities  or  expenses of  any  kind  (including attorneys'  fees)
incurred without gross  negligence or willful misconduct on its  or their part
and arising out of or  in connection with the acceptance or  administration of
this trust, including the costs and expenses of defending itself or themselves
against any claim of liability in the premises.

      (d)   That to secure the obligations  of the Borrower and the Subsidiary
Guarantor under this Section 4.05, the Trustee shall have a lien  prior to the
rights of the Banks on all money  or property held or collected by the Trustee
pursuant to this Indenture.

Section 4.06.     Corporate Trustee Required; Eligibility.

      There shall at all times be a Trustee hereunder which shall be a bank or
trust company which (i) is organized as a corporation or  banking association,
and  is doing  business under  the  laws of  the United  States  or any  State
thereof,  (ii) is  authorized  under  such laws  to  exercise corporate  trust
powers, (iii) is a citizen of the United States  within the meaning of Section
2 of the  Shipping Act, 1916,  as amended, (iv)  is subject to  supervision or
examination by  federal or state  authority, (v)  has a  combined capital  and
surplus (as set forth in its most recent published report of  condition) of at
least  $50,000,000 and  (vi)  is  a  trustee  approved  by  the  Secretary  of
Transportation pursuant to  Section 9  and, if applicable,  Section 37 of  the
Shipping Act, 1916,  as amended,  and Chapter 313  of Title  46 of the  United
States Code.  The  Trustee hereby  represents and  warrants that  on the  date
hereof it complies with the requirements  of the foregoing sentence. If at any
time the  Trustee shall cease to be eligible in accordance with the provisions
of this Section, it shall resign immediately in the manner and with the effect
hereinafter specified in this Article.

Section 4.07.     Disqualification,  Removal  or Resignation  of  the Trustee;
Successor Trustees.

      (a)   If  the Trustee  ceases at any  time to  be a  Trustee approved by
MARAD, it promptly will so notify the Agent and resign hereunder and cooperate
in all reasonable respects in the appointment of its successor, but shall have
no other  liability hereunder for loss  of its status as  an approved trustee.
The Agent  shall immediately  appoint a qualified  successor trustee  or shall
take the actions provided for below in the event a qualified successor trustee
cannot be found by it. In addition, the Agent may in its discretion remove the
Trustee  at any  time, without  cause,  by causing  a written  notice of  such
removal to be delivered to the Trustee, the Borrower, the Subsidiary Guarantor
and the Banks  which notice shall state the effective date and the name of the
qualified  successor  trustee selected  by  the  Agent.  No removal  shall  be
effective unless a qualified successor trustee is available and willing to act
for  the Banks  or  unless the  actions  provided  for below  in  the event  a
qualified successor trustee is not available to the Agent have been initiated.
In the  event of discharge or removal, the Trustee shall execute all documents
and take such  other actions  as necessary or  desirable to the  Agent or  the
Required Banks to  transfer the Trustee's function of trustee to the successor
trustee. The  compensation of the Trustee shall cease as of the effective date
of discharge  or removal, except  those rights of indemnification  which shall
survive  its removal.  Upon discharge  or removal,  the Trustee  shall, within
thirty  days, furnish  the Agent,  the  Banks, the  successor trustee  and the
Borrower  and the  Subsidiary Guarantor  a  complete accounting  of the  trust
estate, its  compensation, costs and expenses  as of the date  of discharge or
removal. Such amount shall be promptly paid by the Borrower and the Subsidiary
Guarantor. 

      (b)   (i)   The Trustee or any successor  thereto may resign at any time
without  cause by  giving at  least ninety  days prior  written notice  to the
Agent,  the Banks  and  to the  Borrower and  the  Subsidiary Guarantor,  such
resignation to  be effective on the  date specified in such  notice. The Agent
shall, prior to the date specified in such notice, appoint a successor trustee
meeting  the requirements  of  Section  4.06.  If the  Agent  shall  not  have
appointed  such a  qualified successor  trustee within  sixty days  after such
notice,  the Trustee  may apply  to  any court  of  competent jurisdiction  to
appoint a  qualified successor trustee  to act until such  time, if any,  as a
successor  shall  have been  appointed by  the Agent  as herein  provided. Any
qualified successor trustee  so appointed by such court  shall immediately and
without further act be superseded by any qualified successor trustee appointed
by the  Agent. Any banking institution  or trust company  becoming a successor
trustee hereunder shall  be deemed  the Trustee for  all purposes hereof,  and
each reference herein to the Trustee shall thereafter be deemed a reference to
such banking institution or trust company.

            (ii)  Any successor trustee,  whether appointed by  a court or  by
the Agent  as provided in subparagraph  (b) (i), shall execute  and deliver to
the  predecessor  trustee  an   instrument  accepting  such  appointment,  and
thereupon such  successor trustee,  without further  act, shall become  vested
with all  the estates, properties,  rights, powers, duties  and trusts  of the
predecessor trustee in  the trust hereunder with like  effect as if originally
named as  the Trustee herein; and  such predecessor trustee  shall execute and
deliver an instrument transferring to  such successor trustee, upon the trusts
herein  expressed, all  the estates,  properties, rights,  powers, duties  and
trusts of  such predecessor trustee,  and such predecessor trustee  shall duly
assign, transfer, deliver and pay over to such successor trustee  any property
or monies  or other things of value then held by such predecessor trustee upon
the trusts herein expressed.

            (iii) Any successor trustee, however appointed, shall be a trustee
approved by MARAD in accordance with the provisions of Chapter 313 of Title 46
of the United States Code.

            (iv)  Any bank into  which the Trustee may be  merged or converted
or with which it may be  consolidated, or any bank resulting from any  merger,
conversion on consolidation to which the Trustee shall be a party, or any bank
to  which  substantially all  the  business of  the  Indenture Trustee  may be
transferred, shall,  subject to  the terms  of  this Section  4.07(b), be  the
Trustee under this  Indenture without any further act,  provided the successor
bank remains qualified.

            (v)   Within sixty days of the  effective date of its resignation,
the Trustee  shall provide the Agent  a statement and accounting  as though it
had been removed in accordance with Section 4.07(a) hereof.

      (c)   A successor trustee shall be appointed by an instrument in writing
which  shall state the  effective date on  which said  successor trustee shall
become the Trustee hereunder and  the holder of this instrument and  the trust
estate,  which   document  shall  contain  the   executed  acknowledgement  of
acceptance by  the successor trustee  of the trust,  the trust estate  and the
duties of the Trustee as herein provided.

      The  Trustee or  any  predecessor trustee  shall duly  assign, transfer,
deliver  and pay  over to  any successor  trustee any  property and  monies or
things of value subject to the trust hereunder and  held by the Trustee or any
predecessor trustee, as the case may  be. Should any act or further instrument
from  the Trustee, any  predecessor trustee, or  the Banks be  required by any
successor  trustee for more  fully and certainly vesting  in and confirming to
such successor  trustee such estates, properties, rights, remedies and trusts,
then  on  request by  such  successor  trustee  any  and  all  such  acts  and
instruments shall be  done, made, executed, acknowledged and  delivered by the
Indenture Trustee, any predecessor trustee, or the Banks, as the case may be.

      (d)   Should for any  reason the Agent  be unable to locate  a qualified
successor trustee,  then  prior  to ceasing  to  act as  trustee  or  becoming
disqualified to do so the Trustee shall cooperate with the Agent and the Banks
in the following:

            (i)   First,   petition  MARAD   for  approval   of  a   presently
unqualified bank or trust  company satisfactory to  the Agent or the  Required
Banks and willing to act as trustee;

            (ii)  If  MARAD approval  cannot  be obtained  for such  available
unqualified trustee then the Agent or the Required Banks and the Trustee shall
petition the United  States District Court  for the Southern  District of  New
York  for instructions to  the Trustee in  order that the  trust estate may be
preserved  and to prevent the Agent, the  Banks or the Trustee from falling in
violation of law. To the  extent that such may  be required or necessary,  the
parties  hereto agree  that  said  Court has  jurisdiction  for this  purpose;
however, if, in the interest of justice, the said Court determines to transfer
the  matter to any other United States court,  the parties hereby agree to the
jurisdiction of  such transferee court. Any such petition shall be served upon
the parties hereto and MARAD, with a copy mailed to the chief counsel of MARAD
and the Borrower  and the Subsidiary Guarantor. The Trustee  and any successor
trustee hereby  agree to abide by  the instructions of the  court issuing same
and to all acts, execute such documents and instructions as may be required in
connection  therewith and  all other  instruments  and documents  necessary to
preserve  the trust  estate for  the benefit  of the Banks,  as beneficiaries,
under the terms  hereof as well as preserving the  adequacy and enforceability
of any interest held in the trust estate.

Section 4.08.     Co-trustees and Separate Trustees.

      At any time or times, for the purpose of meeting  the legal requirements
of any jurisdiction  in which any  security may  at the time  be located,  the
Borrower,  the  Subsidiary Guarantor  and  the  Trustee  shall have  power  to
appoint, and upon  the written  request of the  Trustee, the  Agent or of  the
Required  Banks, the  Borrower and  the  Subsidiary Guarantor  shall for  such
purpose join with  the Trustee in execution,  delivery and performance  of all
instruments and agreements necessary or proper to appoint, one or more persons
approved by the Trustee either to act as co-trustee, jointly with the Trustee,
and,  if deemed  necessary  by the  appointing  party, as  secured party  with
respect to all or any part of the security, or to act as separate trustee and,
if deemed  necessary as aforesaid, as  secured party with respect  to any such
property, in either case with such powers as may be provided in the instrument
of  appointment,  and to  vest  in  such person  or  persons  in the  capacity
aforesaid, any property, title, right  or power deemed necessary or desirable,
subject  to the  other provisions  of this  Section. If  the Borrower  and the
Subsidiary Guarantor do not join in such appointment within fifteen days after
the receipt by them  of a request so to do, or in case an Event of Default has
occurred and  is continuing, the Trustee acting alone shall have power to make
such appointment.

      Any person appointed  as co-trustee or separate trustee  hereunder shall
satisfy the  qualifications prescribed in clauses (i), (iii), (iv) and (vi) of
Section 4.06.

      Should  any  written instrument  from  the Borrower  and  the Subsidiary
Guarantor be  required by any co-trustee or  separate trustee so appointed for
more fully  confirming to such  co-trustee or separate trustee  such property,
title,  right or  power, any and  all such  instruments shall,  on request, be
executed, acknowledged  and  delivered  by  the Borrower  and  the  Subsidiary
Guarantor.

      Every co-trustee or  separate trustee shall, to the  extent permitted by
law, but  to such extent  only, be appointed  subject to the  following terms,
namely:

      (a)   All rights, powers, duties and obligations hereunder in respect of
the custody  of the Security Documents held by the Trustee hereunder, shall be
exercised solely by the Trustee.

      (b)   The  rights, powers,  duties and  obligations hereby  conferred or
imposed  upon  the  Trustee  in  respect  of  any  property  covered  by  such
appointment shall be conferred or  imposed upon and exercised or performed  by
the Trustee or by the Trustee and such co-trustee or separate trustee jointly,
as  shall be provided in the instrument appointing such co-trustee or separate
Trustee, except to the  extent that under any law or any jurisdiction in which
any  particular act is  to be performed,  the Trustee shall  be incompetent or
unqualified to perform  such act, in which  event such rights, powers,  duties
and  obligations  shall be  exercised  and  performed  by such  co-trustee  or
separate trustee.

      (c)   The  Trustee at any time, by an  instrument in writing executed by
it,  with  the  concurrence  of  the Borrower  and  the  Subsidiary  Guarantor
evidenced by separate  resolutions of the  board of directors  of each of  the
Borrower and the Subsidiary Guarantor, may accept the resignation of or remove
any  co-trustee or separate trustee appointed under this Section, and, in case
an Event of Default shall have occurred and be continuing, the Trustee may act
alone  in the  execution,  delivery  and performance  of  all instruments  and
agreements necessary  or proper to  effectuate such resignation or  removal. A
successor to any co-trustee or separate trustee so resigned or  removed may be
appointed in the manner provided in this Section.

      (d)   No co-trustee  or separate  trustee hereunder shall  be personally
liable  by reason  of any  act or omission  of the  Trustee or  any other such
trustee hereunder.

      (e)   Any notice of instruction delivered to the Trustee by the Agent or
the Required  Banks  shall be  deemed  to have  been  delivered to  each  such
co-trustee and separate trustee.

                                   ARTICLE 5
                          SATISFACTION AND DISCHARGE

Section 5.01.     General.

      If the  Borrower and the Subsidiary  Guarantor shall pay or  cause to be
paid  all of the  Obligations, then this  Indenture and the  liens, estate and
rights  and interest  hereby and  thereby created  shall cease,  determine and
become null  and void, and the  Trustee, upon written request  of the Borrower
and the Subsidiary Guarantor, accompanied  by an opinion of counsel acceptable
to the Trustee, and at the cost and expense of the Borrower and the Subsidiary
Guarantor, shall forthwith cause satisfaction and discharge of  this Indenture
and  shall execute and  deliver to the  Borrower and the  Subsidiary Guarantor
such instruments as may be  necessary, duly acknowledging the satisfaction and
discharge  of  this Indenture  and  forthwith  the  estate, right,  title  and
interest of the Trustee in and to any property held by it under this Indenture
or  under any Mortgage  shall thereupon cease,  determine and  become null and
void,  and  the Trustee  shall  transfer  the same  to  the  Borrower and  the
Subsidiary Guarantor.


Section 5.02.     Survival of Certain Obligations.

      Notwithstanding the  satisfaction and  discharge of this  Indenture, (a)
the liabilities and  obligations of the Borrower and  the Subsidiary Guarantor
to  the Trustee under Section 4.05 shall survive, and (b) if the Borrower's or
the  Subsidiary Guarantor's  trustee in  bankruptcy  or any  Person under  any
applicable bankruptcy law shall recover all or part of the Obligations payable
hereunder from the  Trustee or from any  of the Banks, this Indenture  and all
other Security  Documents  shall be  deemed  not to  have  been satisfied  and
discharged  but shall continue to be in full force and effect to the extent of
the amount so recovered.

                                   ARTICLE 6
                            SUPPLEMENTAL INDENTURES

Section 6.01.     Waivers and Supplemental Indentures With Consent of Banks.

      This  Indenture may  not be  waived, modified,  amended  or supplemented
without the prior written consent of the Agent or the Required Banks.

Section 6.02.     Execution of Supplemental Indentures.

      In  executing,  or  accepting  the  additional  trusts  created  by  any
indenture  supplemental  hereto or  the  modifications thereby  of  the trusts
created by  this Indenture,  the  Trustee shall  be entitled  to receive,  and
(subject to  Sections 4.01 and 6.01) shall be fully protected in relying upon,
an opinion  of counsel  of the Borrower  and the Subsidiary  Guarantor stating
that the execution  of such Supplemental Indenture is  authorized or permitted
by this Indenture.  The Trustee may, but shall not be obligated to, enter into
any such Supplemental Indenture which affects the Trustee's own rights, duties
or immunities under this Indenture or otherwise.

Section 6.03.     Effect of Supplemental Indentures.

      Upon  the execution of any indenture supplemental hereto, this Indenture
shall be  modified in  accordance therewith,  and such Supplemental  Indenture
shall form a part of this Indenture for all purposes.

                                   ARTICLE 7
                  INSTRUCTIONS OF THE AGENT OR REQUIRED BANKS

Section 7.01.     Instructions of the Agent or Required Banks.

      (a)   Any  request, demand,  authorization, direction,  notice, consent,
waiver of or other action required or  permitted by this Indenture to be given
by  the  Agent  or  the  Required  Banks  (sometimes  referred  to  herein  as
"Instructions") shall be given in accordance with Section 1.02.   The Trustee,
the Borrower and the Subsidiary Guarantor shall be entitled to assume that any
Instructions so  given have  been duly authorized.   No instructions  shall be
given which are in violation  of this Indenture (or the Credit  Agreement, the
Subsidiary Guaranty or any of the Security Documents, as defined in the Credit
Agreement) or in violation of any applicable laws. 

      (b)   Unless  and  until the  Trustee  shall  have received  conflicting
Instructions  from the  Agent  or  the Required  Banks,  any request,  demand,
authorization, direction, notice, consent, waiver or other action by the Agent
or the Required Banks  shall bind the other Banks in respect  of anything done
or  suffered  to  be done  by  the  Indenture  Trustee,  the Borrower  or  the
Subsidiary Guarantor in reliance thereon.


                                   ARTICLE 8
                            LIMITATION OF LIABILITY

Section 8.01.     Limitation of Liability of Wilmington Trust Company.

      It is  expressly understood and  agreed by the parties  hereto that this
Indenture   is  executed  and  delivered   by  Wilmington  Trust  Company  not
individually  but solely  as  Indenture  Trustee and,  except  as provided  in
Section  4.01, nothing  contained herein  shall be  construed as  creating any
liability  on Wilmington  Trust Company  individually, including  any covenant
either express or implied herein, all such liability,  if any, being expressly
waived by all parties hereto.   


      IN WITNESS WHEREOF, the parties hereto  have caused this Indenture to be
duly executed on the day and year first above written.


                              READING & BATES DRILLING CO.


                              By:  ______________________________
                                    Title:

                              READING & BATES EXPLORATION CO.


                              By:  ________________________________
                                    Title:

                              WILMINGTON  TRUST COMPANY, not in its individual
                              capacity but solely as Trustee  


                              By:  ______________________________
                                    Title:



                                ACKNOWLEDGEMENT



STATE OF NEW YORK       )
                        ) S.S.
COUNTY OF NEW YORK      )



On   this  ______   day  of   April,  1996   before  me   personally  appeared
_________________ to me  known who being by  me duly sworn did  depose and say
that he resides at  ___________________________, that he is __________________
for READING  & BATES  DRILLING CO.,  the corporation  described  in and  which
executed the  foregoing instrument;  and that  he signed  his name  thereto by
order of the Board of Directors of READING & BATES DRILLING CO.


                          __________________________
                                 Notary Public




                                ACKNOWLEDGEMENT



STATE OF NEW YORK       )
                        ) S.S.
COUNTY OF NEW YORK      )



On   this  ______   day  of   April,  1996   before  me   personally  appeared
_________________  to me known who being  by me duly sworn  did depose and say
that he resides at  ___________________________, that he is __________________
for READING &  BATES EXPLORATION CO., the  corporation described in and  which
executed the  foregoing instrument; and  that he  signed his  name thereto  by
order of the Board of Directors of READING & BATES EXPLORATION CO.


                          __________________________
                                 Notary Public





                                ACKNOWLEDGEMENT



STATE OF DELAWARE       )
                        ) S.S.
COUNTY OF NEW CASTLE    )



On   this  ______   day  of   April,  1996   before  me   personally  appeared
_________________ to me  known who being by  me duly sworn did  depose and say
that he resides at  ___________________________, that he is __________________
for WILMINGTON TRUST COMPANY, the  corporation described in and which executed
the foregoing instrument; and that he signed his name  thereto by order of the
Board of Directors of WILMINGTON TRUST COMPANY.


                          __________________________
                                 Notary Public