EXHIBIT 10.111


                                BAREBOAT CHARTER

                                M. G. HULME, JR.

                                     BETWEEN

                      DEEP SEA INVESTORS, L.L.C., as OWNER

                                       AND

                   READING & BATES DRILLING CO., as CHARTERER

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                                TABLE OF CONTENTS

   ARTICLE 1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . .

   ARTICLE 2 SCHEDULES AND OBJECTIVES  . . . . . . . . . . . . . . . . . . .
       2.1        Schedules and Exhibits . . . . . . . . . . . . . . . . . .
       2.2        Objectives . . . . . . . . . . . . . . . . . . . . . . . .
       2.3        CONDITION OF THE PROPERTY  . . . . . . . . . . . . . . . .

   ARTICLE 3 TERM, DELIVERY DATE AND PURCHASE OPTION . . . . . . . . . . . .
       3.1        Duration . . . . . . . . . . . . . . . . . . . . . . . . .
       3.2        Delivery of the Vessel to the Charterer  . . . . . . . . .
       3.3        Early Termination  . . . . . . . . . . . . . . . . . . . .
       3.4        Remedies . . . . . . . . . . . . . . . . . . . . . . . . .
       3.5        Redelivery of the Vessel . . . . . . . . . . . . . . . . .
       3.6        Survey of the Vessel at End of Charter Period  . . . . . .
       3.7        Purchase Option  . . . . . . . . . . . . . . . . . . . . .
       3.8        Determination of Purchase Option Price . . . . . . . . . .

   ARTICLE 4 NATURE OF COMPENSATION  . . . . . . . . . . . . . . . . . . . .
       4.1        Absolute Obligation  . . . . . . . . . . . . . . . . . . .
       4.2        Net Charter  . . . . . . . . . . . . . . . . . . . . . . .

   ARTICLE 5 UPGRADE PROGRAM . . . . . . . . . . . . . . . . . . . . . . . .
       5.1        Scope of Upgrade; Title to Upgrade . . . . . . . . . . . .
       5.2        Assignment of Rights Under Upgrade Program . . . . . . . .
       5.3        Appointment of Upgrade Agent . . . . . . . . . . . . . . .
       5.4        Upgrade Agent's Warranties . . . . . . . . . . . . . . . .
       5.5        Upgrade Agent's Duties . . . . . . . . . . . . . . . . . .
       5.6        Change Orders  . . . . . . . . . . . . . . . . . . . . . .
       5.7        Independent Engineer . . . . . . . . . . . . . . . . . . .
       5.8        Completion . . . . . . . . . . . . . . . . . . . . . . . .
       5.9        Payment  . . . . . . . . . . . . . . . . . . . . . . . . .
       5.10       Reimbursement Conditions . . . . . . . . . . . . . . . . .

   ARTICLE 6 REPRESENTATIONS AND WARRANTIES  . . . . . . . . . . . . . . . .
       6.1        Representations and Warranties of the Owner  . . . . . . .
       6.2        Representations and
                     Warranties of the Charterer . . . . . . . . . . . . . .

   ARTICLE 7 USE AND OPERATION OF THE VESSEL . . . . . . . . . . . . . . . .
       7.1        Use of the Vessel  . . . . . . . . . . . . . . . . . . . .
       7.2        Manning, etc., of the Vessel . . . . . . . . . . . . . . .
       7.3        Documentation of the Vessel  . . . . . . . . . . . . . . .
       7.4        General and Particular Average . . . . . . . . . . . . . .
       7.5        Site and Access  . . . . . . . . . . . . . . . . . . . . .
       7.6        Owner Liability for Materials
                     Furnished by the Charterer  . . . . . . . . . . . . . .
       7.7        Environmental and Related
                     Reporting and Inspection  . . . . . . . . . . . . . . .
       7.8        Notice of Entry  . . . . . . . . . . . . . . . . . . . . .

   ARTICLE 8 MAINTENANCE OF CONDITION AND CLASSIFICATION; REPAIRS  . . . . .
       8.1        Maintenance of Classification  . . . . . . . . . . . . . .
       8.2        Repair . . . . . . . . . . . . . . . . . . . . . . . . . .
       8.3        Drydocking or Underwater
                     Survey in Lieu of Drydocking  . . . . . . . . . . . . .
       8.4        Required Survey  . . . . . . . . . . . . . . . . . . . . .

   ARTICLE 9 EQUIPMENT AND STORES  . . . . . . . . . . . . . . . . . . . . .
       9.1        Fuel, etc. . . . . . . . . . . . . . . . . . . . . . . . .
       9.2        Equipment, etc.  . . . . . . . . . . . . . . . . . . . . .
       9.3        The Charterer's Additional Equipment, etc. . . . . . . . .
       9.4        Title to Improvements; Option to Purchase  . . . . . . . .
       9.5        No Lease of Essential Severables . . . . . . . . . . . . .

   ARTICLE 10 THE CHARTERER'S CHANGES, ADDITIONS AND REPLACEMENTS  . . . . .
       10.1       Structural Changes or Alterations;
                     Installation of Equipment, etc. . . . . . . . . . . . .
       10.2       Replacement of Parts . . . . . . . . . . . . . . . . . . .
       10.3       Vessel Markings  . . . . . . . . . . . . . . . . . . . . .

   ARTICLE 11ADDITIONAL COVENANTS  . . . . . . . . . . . . . . . . . . . . .
       11.1       General Covenants  . . . . . . . . . . . . . . . . . . . .
       11.2       No Impairment  . . . . . . . . . . . . . . . . . . . . . .
       11.3       Financial Information  . . . . . . . . . . . . . . . . . .
       11.4       Compliance Certificates  . . . . . . . . . . . . . . . . .
       11.5       Further Assurances, etc. . . . . . . . . . . . . . . . . .
       11.6       Maintenance of Corporate Existence, etc. . . . . . . . . .
       11.7       Conditions of Consolidation, Merger, etc.  . . . . . . . .
       11.8       Indemnity of the Owner by Customers for Oil
                     Pollution and Related Environmental Claims  . . . . . .

   ARTICLE 12 PAYMENTS, INVOICES AND SECURITY  . . . . . . . . . . . . . . .
       12.1       Basic Hire . . . . . . . . . . . . . . . . . . . . . . . .
       12.2       Supplemental Hire  . . . . . . . . . . . . . . . . . . . .
       12.3       Payment Terms  . . . . . . . . . . . . . . . . . . . . . .
       12.4       Invoices . . . . . . . . . . . . . . . . . . . . . . . . .
       12.5       Security for Obligations . . . . . . . . . . . . . . . . .

   ARTICLE 13 GENERAL OBLIGATIONS AND PERFORMANCE  . . . . . . . . . . . . .
       13.1       Independent Owner Relationships  . . . . . . . . . . . . .
       13.2       Inspection . . . . . . . . . . . . . . . . . . . . . . . .
       13.3       Performance of the Charterer . . . . . . . . . . . . . . .
       13.4       Operations Outside of U.S. Waters  . . . . . . . . . . . .

   ARTICLE 14 LIABILITY AND INDEMNITY  . . . . . . . . . . . . . . . . . . .
       14.1       Survival of Indemnities  . . . . . . . . . . . . . . . . .
       14.2       Pollution  . . . . . . . . . . . . . . . . . . . . . . . .
       14.3       The Charterer's Indemnity  . . . . . . . . . . . . . . . .
       14.4       Patent Infringement  . . . . . . . . . . . . . . . . . . .
       14.5       Both-to-Blame Collision Clause . . . . . . . . . . . . . .
       14.6       Liens, Attachments and Encumbrances  . . . . . . . . . . .
       14.7       Indemnification by the Charterer . . . . . . . . . . . . .
       14.8       The Charterer's Duties to Remove Liens, etc. . . . . . . .

   ARTICLE 15 INSURANCE  . . . . . . . . . . . . . . . . . . . . . . . . . .
       15.1       The Charterer's Insurance  . . . . . . . . . . . . . . . .
       15.2       Nonperformance of Insurance Companies  . . . . . . . . . .
       15.3       Subrogation  . . . . . . . . . . . . . . . . . . . . . . .

   ARTICLE 16 ASSIGNMENT OF CHARTER  . . . . . . . . . . . . . . . . . . . .
       16.1       Assignment and Subcontract by the Owner  . . . . . . . . .
       16.2       Assignment by the Charterer  . . . . . . . . . . . . . . .
       16.3       Assignment of Subcharter Hire  . . . . . . . . . . . . . .

   ARTICLE 17 LOSS, TAKING OR SEIZURE. . . . . . . . . . . . . . . . . . . .
       17.1       Taking by the U.S. Government  . . . . . . . . . . . . . .
       17.2       Event of Loss not a Total Loss . . . . . . . . . . . . . .
       17.3       Payment of Stipulated Loss Value . . . . . . . . . . . . .
       17.4       Application of Payments  . . . . . . . . . . . . . . . . .
       17.5       Date of Loss . . . . . . . . . . . . . . . . . . . . . . .
       17.6       Effect of Payment of Stipulated Loss Value . . . . . . . .

   ARTICLE 18 TAX  . . . . . . . . . . . . . . . . . . . . . . . . . . . .   
       18.1       Characterization as a Lease  . . . . . . . . . . . . . . .
       18.2       Representations  . . . . . . . . . . . . . . . . . . . . .
       18.3       Tax Indemnity  . . . . . . . . . . . . . . . . . . . . . .
       18.4       Payments . . . . . . . . . . . . . . . . . . . . . . . . .
       18.5       Records  . . . . . . . . . . . . . . . . . . . . . . . . .

   ARTICLE 19 GENERAL  . . . . . . . . . . . . . . . . . . . . . . . . . . .
       19.1       Notices  . . . . . . . . . . . . . . . . . . . . . . . . .
       19.2       Expenses . . . . . . . . . . . . . . . . . . . . . . . . .
       19.3       The Owner's Right to Perform for the Charterer . . . . . .
       19.4       Waivers  . . . . . . . . . . . . . . . . . . . . . . . . .
       19.5       Entire Agreement . . . . . . . . . . . . . . . . . . . . .
       19.6       Successors and Assigns . . . . . . . . . . . . . . . . . .
       19.7       Law  . . . . . . . . . . . . . . . . . . . . . . . . . . .
       19.8       Parties' Intention . . . . . . . . . . . . . . . . . . . .
       19.9       Counterparts; Uniform Commercial Code  . . . . . . . . . .
       19.10      Warranty of Authority  . . . . . . . . . . . . . . . . . .
       19.11      Usage; Headings  . . . . . . . . . . . . . . . . . . . . .
       19.12      WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . .
       19.13      VENUE; SERVICE OF PROCESS  . . . . . . . . . . . . . . . .
       19.14      Agent for Service of Process . . . . . . . . . . . . . . .

   SIGNATURES  . . . . . . . . . . . . . . . . . . . . . . . . . .  [fill in]

   Schedule A     Description of Vessel M. G. Hulme, Jr.,
                      Including Specifications
   Schedule B     Upgrade Program
   Schedule C     Charterer's Insurance
   Schedule D     Stipulated Loss Value
   Schedule E     Pending Litigation
   Schedule F     Computation of Basic Hire Upgrade Adjustment

   Exhibit A      Form of Certificate of Completion
   Exhibit B      Form of Certificate of Delivery
   Exhibit C      Form of Certificate for Reimbursement
   Exhibit D      Form of Completion Certificate of Independent Engineer
   Exhibit E      Form of Reimbursement Certificate of
                     Independent Engineer 

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                              BAREBOAT CHARTER

                              "M.G. HULME, JR."

      This  Bareboat Charter  dated as of  November 28, 1995  is between Deep
Sea Investors,  L.L.C., a  Delaware limited liability  company (the "Owner"),
and Reading & Bates  Drilling Co., an Oklahoma corporation,  as the Charterer
(the "Charterer");

                            W I T N E S S E T H:

      WHEREAS, the Charterer desires to conduct drilling activities; and

      WHEREAS, the  Owner is  the owner  of the  Vessel M.G.  HULME, JR.  (as
described hereunder  at Schedule A  (the "Vessel")) and,  upon the terms  and
subject to the  conditions hereof, is willing  to charter such Vessel  to the
Charterer on a bareboat basis to conduct such drilling activities;

      NOW,  THEREFORE,  the  parties hereto,  each  in  consideration of  the
promises and agreements of the other, hereby agree as follows:

                                  ARTICLE 1
                                 DEFINITIONS

When  used in this  Charter (in  addition to  the terms defined  elsewhere in
this Charter), the following terms shall have the following meanings:

      "Additional  Collateral"  has  the meaning  assigned  to  such term  in
      Section 12.5(a).

      "Adequate Provision" means, with  respect to any Lien, claim, liability
      or other obligation, the  posting with or for the benefit  of the Owner
      Group, of a bond or letter of  credit issued by a bank, surety or other
      similar  institution acceptable  to  the  Owner  or other    collateral
      acceptable to the  Owner, in each  case, pursuant  to documentation  in
      form and  substance acceptable to  the Owner, having  a face  amount or
      fair market value no less than the amount owed under such Lien,  claim,
      liability or other obligation.
  
      "Affiliate(s)"  in  relation  to  a  party  hereto,  means  any  person
      controlling, controlled  by or  under common  control with such  party,
      with the concept  of control in  such context  meaning the  possession,
      directly or indirectly, of  the power to direct or cause  the direction
      of  the  management  and  policies  of  another,  whether  through  the
      ownership of voting securities, by contract or otherwise.

      "Appraisal Procedure" means  the procedure specified in  the succeeding
      sentences for determining an amount or  value.  If either the Owner  or
      the  Charterer shall  give  written  notice  to  the  other  requesting
      determination of  such amount or value by  appraisal, the Owner and the
      Charterer  shall  consult  for  the purpose  of  appointing  a mutually
      acceptable qualified independent  appraiser.  If such  parties shall be
      unable to agree on an  appraiser within 20 days  of the giving of  such
      notice, such amount  or value shall be  determined by a panel  of three
      independent  appraisers,  one  of   whom  shall  be  selected  by   the
      Charterer, another  of whom  shall  be selected  by the  Owner and  the
      third   of  whom  shall  be   selected  by   the  American  Arbitration
      Association (or  its successor) if  such other two  appraisers shall be
      unable to agree upon a third appraiser within  10 days of the selection
      date  of  the   second  of  such  two  appraisers;  provided,  that  if
      (a) either party  shall not select  its appraiser within  35 days after
      giving  of such notice, such amount or value shall be determined solely
      by the appraiser selected by the  other party, and (b) if both  parties
      shall not select their  respective appraisers within such period,  such
      amount or value shall be determined solely  by an appraiser selected by
      the  American  Arbitration   Association  (or  its  successor).     The
      appraiser or appraisers  appointed pursuant to the  foregoing procedure
      shall be  instructed  to determine  such  amount  or value  within  the
      lesser of:   (i) 45 days after such appointment and (ii) the applicable
      period remaining  until delivery  of such appraisal  is required  under
      this Charter  and the Charter  Documents; and such determination  shall
      be final and  binding upon the parties.   If three appraisers  shall be
      appointed, the determination of  the appraiser  that shall differ  most
      from the  other two  appraisers shall  be excluded,  the remaining  two
      determinations shall be averaged and such  average shall constitute the
      determination of the appraisers.  The Charterer  shall pay all fees and
      expenses relating to an appraisal for any purpose under this Charter.

      "Basic  Hire" means  the  charter hire  amount  payable on  the Payment
      Dates as set forth in Section 12.1.

      "Business  Day" means  any day on  which commercial banks  are open for
      business in New York City, New York.

      "Certificate  of  Completion"   means  the  Certificate  of  Completion
      substantially in  the form of Exhibit A duly  executed by the Charterer
      for the purpose of evidencing the Upgrade Completion.

      "Certificate   of  Delivery"   means   the  Certificate   of   Delivery
      substantially in  the form  of Exhibit B  hereto duly  executed by  the
      Charterer for the  purpose of evidencing the  Charterer's acceptance of
      delivery of the Vessel under this Charter.

      "Certificate   for   Reimbursement"    means   the   Certificate    for
      Reimbursement substantially  in the form of  Exhibit C duly executed by
      the Charterer evidencing  the Charterer's request for  reimbursement on
      any Upgrade Payment Date.

      "Change Order"  means  a written  order  to  Contractor signed  by  the
      Charterer  and if  required  by Section  5.6,  the Owner,  issued after
      execution of the  Upgrade Contract, authorizing a change in the Upgrade
      Program or an adjustment in the Upgrade Nonseverable Cost.  

      "Charter" means this  Bareboat Charter as it  may from time to  time be
      supplemented, amended,  waived or modified in accordance with the terms
      hereof.

      "Charter  Documents" means  this Charter,  the  Guaranty, the  Security
      Documents and any  other document, instrument or  agreement executed in
      connection herewith or therewith.

      "Charter  Period" means,  collectively, the  Primary Term  and, if any,
      the Extended Term.

      "Charterer"  means   Reading  &   Bates  Drilling   Co.,  an   Oklahoma
      corporation, and its  successors and assigns to the extent permitted by
      the terms hereof.

      "Charterer Group" means,  individually and collectively, the  Charterer
      and  its subsidiaries,  its  and  their co-venturers,  contractors  and
      subcontractors  and  its  and  their  Affiliates,  and  the  employees,
      invitees and insurers  of all of  those entities,  but shall  expressly
      exclude the Owner Group.

      "Code" means  the  United States  Internal  Revenue  Code of  1986,  as
      amended, and any amending or superseding tax laws  of the United States
      of America.

      "Completion Certificate  of Independent Engineer" means  the Completion
      Certificate  of  Independent  Engineer substantially  in  the  form  of
      Exhibit D  hereto duly  executed by  the Independent  Engineer for  the
      purpose of evidencing the Upgrade Completion. 

     "Contractor"  means Amfels,  Inc., a  Texas corporation,  and any other
      Person performing all or any part of the Upgrade Program.

      "Cunningham Mortgage"  means the  Preferred Ship Mortgage  dated as  of
      November  28_,  1995 made  by the  Charterer  in favor  of  the Trustee
      covering the Jim Cunningham.

      "Crude  Oil" means any  hydrocarbon product that  is in  liquid form at
      surface temperature and pressure, including condensate.

      "Debt" means,  for any Person  (without duplication), whether  recourse
      is to all or a portion  of the assets of such Person and whether or not
      contingent, (a) every  obligation of  such Person  for money  borrowed,
      (b) every obligation  of such  Person evidenced  by bonds,  debentures,
      notes  or other similar instruments, (c) every reimbursement obligation
      of such Person  with respect to letters of credit, bankers' acceptances
      or similar facilities  issued for the account of such Person, (d) every
      obligation of  such Person issued  or assumed as  the deferred purchase
      price of property  or services (but excluding trade accounts payable or
      accrued  liabilities  arising  in the  ordinary  course  of  business),
      (e) every  obligation   of  such  Person  under  a  lease,  that  under
      generally accepted accounting principles is  required to be capitalized
      on  the balance sheet  of such  Person, (f) every  obligation under any
      charter,  operating  lease  or  title  retention  arrangement  with  an
      original term  in excess  of  one year  or which  is renewable  at  the
      option of the  tenant for a  total term of  one year or  more, (g)  the
      maximum fixed  redemption or  repurchase price  of redeemable stock  of
      such Person that by its terms or otherwise is required to be  redeemed,
      if  any,  at   the  time  of  determination  plus  accrued  but  unpaid
      dividends, and (h) every  obligation of the type referred to in clauses
      (a) through  (g) of another Person and all  dividends of another Person
      the payment of which, in either case, such  Person has guaranteed or is
      responsible  or  liable  for,  directly   or  indirectly,  as  obligor,
      guarantor or otherwise.

      "Default"  means any event or condition which  after notice or lapse of
      time or both would become an Event of Default.

      "Delivery Date"  means the date  on which the  Vessel is simultaneously
      (a) sold by  Reading  and Bates,  Inc.  to and  accepted by  the  Owner
      pursuant to the terms of the MOA  and (b) chartered by the Owner to the
      Charterer hereunder as provided in Article 2.

      "Drilling Contracts" means any contractual  arrangement with respect to
      the Vessel providing  for the use or  employment of the Vessel  for the
      locating of, drilling for, development of, extraction  of or processing
      of  Crude Oil,  Natural  Gas or  mineral  deposits found  in underwater
      locations, and activities ancillary thereto.

      "Escalated" means,  with respect to  any amount and  as at any date  of
      determination,  such  amount  as  multiplied  by  a  fraction  (a)  the
      numerator  of  which is  the  Consumer Price  Index  - U.S.  Average as
      published by the Bureau  of Statistics of the  Department of Labor  (or
      if  the publication  of  the Consumer  Price  Index is  discontinued, a
      comparable  index  similar in  nature to  the discontinued  index which
      clearly reflects the  change in the real value  of the purchasing power
      of  the Dollar as reasonably  selected by the  Owner (hereafter in this
      definition referred to  as the "index")) reported for the calendar year
      immediately preceding such  date and (b)  the denominator  of which  is
      equal to the index reported for 1995.

      "Event of Default" means  any of the events defined as  such in Section
      3.3(b).

      "Event of Loss" means  any of the following events:   (a) the actual or
      constructive  loss of the  Vessel for the lesser  of (i) six (6) months
      (or such longer period  of up to 12 months  from the date of  such loss
      so long as the Charterer  shall have made arrangements within  such six
      (6)  month  period  for  the  repair  and  restoration  of  the  Vessel
      satisfactory  to  the  Owner   and  the  Independent  Engineer  and  is
      diligently proceeding  with such  repair and  restoration) or  (ii) the
      remainder of the  Charter Period, (b) the loss, theft or destruction of
      the Vessel, (c)  damage or destruction of  the Vessel or damage  to the
      Vessel to  such extent  as shall  make repair  thereof uneconomical  or
      other event resulting in the Vessel's  being permanently rendered unfit
      for normal use for any  reason whatsoever, other than  obsolescence, or
      (d) the  condemnation,  confiscation, requisition,  seizure, forfeiture
      or other  taking of title to or use of the  Vessel (except that, in the
      case  of  a taking  of title,  or taking  of use  by the  United States
      Government, a  period equal  to the lesser  of (i)  six (6) months  and
      (ii) the then remaining  term of the Charter Period shall  have elapsed
      from the  date of  such  taking), in  each case  as determined  by  the
      Owner.

      "Expiration Date" means the last day of the Primary Term.

      "Extended Term"  has  the meaning  assigned  to  such term  in  Section
      3.1(b).

      "Fair Market Sale Value" means,  for any property, the cash  sale value
      of such property  that would be obtained in an arm's-length transaction
      between an informed and willing seller under  no compulsion to sell and
      an informed  and willing buyer-user  (other than a  person currently in
      possession  or a  used equipment dealer),  which determination shall be
      made (a), in the case  of the Vessel,  without deduction for any  costs
      of removal  of the Vessel from the  location of current use  and (b) on
      the  assumption that  such property  is free  and clear  of  all liens,
      charges and  encumbrances and,  in the case  of the  Vessel, is in  the
      condition  and repair in  which it is required  to be returned pursuant
      to Section 3.5 hereof (but otherwise on an "as-is" basis).

      "Guarantor" means Reading & Bates  Corporation, a Delaware corporation,
      or any other  Person that guarantees  or provides  collateral or  other
      credit support for the obligations of the Charterer hereunder.

      "Guaranty" shall  mean the Guaranty  entered into by  any Guarantor for
      the  benefit  of the  Owner,  as the  same  may from  time  to  time be
      supplemented, amended, waived or modified in accordance with  the terms
      thereof.

      "Highest Lawful  Rate" means the  maximum nonusurious contract rate  of
      interest permitted by applicable law.

      "Hire" means Basic Hire and Supplemental Hire, collectively.

      "Income Taxes" means all income,  franchise or similar Taxes  which are
      based on, or measured by or with respect to, net income.

      "Indemnitee" has the meaning assigned to such term in Section 14.3.

      "Independent Engineer" means  Barnett & Casbarian,  or any other Person
      selected by the  Owner and approved  by the  Charterer, which  approval
      shall not be unreasonably withheld or delayed.

      "Investor"  means  each  of GATX  Marine  Investors  Corporation,  MDFC
      Equipment  Leasing  Corporation,  Heller Financial  Leasing,  Inc.  and
      their respective successors and assigns.

      "Jim  Cunningham"  means  the drilling  rig  Jim  Cunningham,  official
      number 651643.

      "Lien" means  any mortgage, pledge,  lien, charge, encumbrance,  lease,
      right, security interest or claim of any nature.

      "Limited  Liability  Company  Agreement"  means  the  Limited Liability
      Company  Agreement  dated as  of  November 28, 1995  among  GATX Marine
      Investors Corporation, MDFC Equipment  Leasing Corporation, and  Heller
      Financial Leasing, Inc. creating the Owner.

      "MOA" means the Memorandum of  Agreement dated as of  November 28, 1995
      between Reading and Bates, Inc. and the Owner.

      "Moody's"   means  Moody's   Investor  Service,   Inc.,   a  New   York
      corporation, and its successors and assigns.

      "Mortgages" means the Cunningham Mortgage and the Yost Mortgage.

      "Natural Gas" means  any mixture of hydrocarbons or of hydrocarbons and
      noncombustible gases,  in a  gaseous form  at  surface temperature  and
      pressure, which consists  essentially of methane, but  includes ethane,
      propane, butanes, and other liquefiable hydrocarbons.

      "1954 Code" means the  United States Internal Revenue Code of  1954, as
      amended and in effect prior  to the enactment of the Tax  Reform Act of
      1986 (Pub. L. No. 99-514).

      "Nonseverables" means improvements, modifications and additions  to the
      Vessel that are  not readily removable  without causing  damage to  the
      Vessel or that  in accordance with applicable statutes,  orders, cases,
      rules, regulations and other laws may not be removed from the Vessel.

      "Obligations" means the obligations  of the Obligors under  the Charter
      Documents.

      "Obligors" means, collectively, the Charterer and each Guarantor.

      "Operating Area"  means any area  in which the  Charterer shall operate
      the Vessel with notice to the Owner pursuant to Section 13.4.

      "Overdue Rate" means an interest rate per annum  equal to the lesser of
      (a) the  Prime  Rate plus  four  percent  (4%)  per  annum and  (b) the
      Highest Lawful Rate.

      "Owner"  means Deep Sea Investors,  L.L.C., a limited liability company
      organized under the laws of the State of Delaware.

      "Owner Group" means,  individually and collectively, the Owner  and its
      subsidiaries,   its   and  their   co-venturers  and   contractors  and
      subcontractors and the  Investors, its and their  respective Affiliates
      (other than  the Charterer), and its and their shareholders, directors,
      officers, attorneys,  accountants, consultants and representatives, the
      employees, insurers and  invitees of all of those entities, the Trustee
      and the M. G. Hulme, Jr., but shall expressly exclude Charterer Group.

      "Owner Liens" means  Liens described in clause (b) of the definition of
      Permitted Liens.

      "Owner's Cost" means, as  of any date, the sum of the purchase price of
      the Vessel and Upgrade Nonseverable Cost.

      "Payment Date"  means each date that  is a monthly anniversary  date of
      the calendar  day immediately  before the  Delivery Date  (such monthly
      date being deemed for  this purpose  to be the  day of each  succeeding
      month corresponding to such date  immediately before the Delivery  Date
      or, if such  month does not have  a corresponding day, the  last day of
      such month), up to and including the end of the Charter Period.

      "Permitted Liens" means, as  of any date, (a) any lien arising out of a
      claim for crew's  wages, supplies or  the like, or salvage  not covered
      by insurance, or for taxes, assessments or other governmental  charges,
      in each  case, incurred  in the  ordinary course  of  business, and  in
      existence as of the  date of  determination for not  more than 30  days
      and,  as  of the  date of  determination,  neither overdue  nor  in the
      aggregate in  excess of $1,000,000  unless such are  being contested in
      good faith  and by appropriate  Persons and proceedings,  in each case,
      in  the  Owner's  judgment  and  unless  Adequate  Provision  has  been
      provided by  the Charterer for payment of such  amounts that may become
      due and payable and such Lien attaches  only to such Adequate Provision
      and not to the  Vessel, any part thereof or any  Drilling Contract and,
      in  the Owner's judgment,  no risk of forfeiture  or other  loss of the
      Vessel, any part  thereof, or any right  of the Charterer or  the Owner
      under  any Drilling  Contract, exists,  or is  threatened or  imminent;
      (b) any lien created  by, through  or under the  Owner as  a result  of
      claims  against  the Owner  for  which  the Owner  is  not entitled  to
      indemnification from  the Charterer or any  Guarantor, or  discharge of
      which  is not the obligation of the Charterer or any Guarantor, whether
      at  law, by  contract,  in equity  or  under admiralty  principles; and
      (c) Drilling Contracts  complying with the  provisions of this  Charter
      and the other Charter Documents  and the rights of the  Charterer under
      this Charter, including  subcharters of the Vessel  in accordance  with
      the terms of  this Charter, provided that no  such contracts, rights or
      subcharters shall  suffer  or  permit  to  be  continued  any  Lien  or
      encumbrance incurred by Charterer or  any subcharterer or any  of their
      agents which  might have priority  over the title  and interest of  the
      Owner in the Vessel  or any part thereof or equipment or other property
      used in connection with the Vessel.

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

      "Primary  Term"  has the  meaning  assigned  to  such  term in  Section
      3.1(a).

      "Prime Rate" means the per  annum rate of interest published from  time
      to time in the Eastern edition  of The Wall Street Journal, which  rate
      shall change with each  published change in such rate,  effective as of
      the date of such publication.

      "Purchase Option Price" means the Fair Market  Sale Value of the Vessel
      determined in  accordance  with  Section 3.8,  not  to  exceed  40%  of
      Owner's Cost.

      "Randolph Yost" means  the Randolph  Yost, Official Number  601699, and
      all  fixtures,  equipment  and  improvements  of  any  kind  whatsoever
      installed or located thereon and owned by the Charterer.

      "Rated Securities"  means the implied  long-term senior unsecured  debt
      of Reading & Bates.

      "Reading  &  Bates"  means Reading  &  Bates  Corporation,  a  Delaware
      corporation.

      "Reimbursement  Certificate   of   Independent  Engineer"   means   the
      Reimbursement Certificate of Independent Engineer  substantially in the
      form of  Exhibit E duly  executed by the  Independent Engineer for  the
      purpose  of  evidencing the  Charterer's  entitlement to  reimbursement
      under Section 5.9 on any Upgrade Payment Date.

      "Rights Assignment"  has the meaning  assigned to such  term in Section
      16.3.

      "Safe Harbor Lease Documents" means,  collectively, the Agreement dated
      as  of  March 22,  1982 between  American Broadcasting  Companies, Inc.
      ("ABC"),  as  Lessor,  and  the  Charterer,  as  Lessee,  covering  the
      Cunningham, the Agreement  dated as of March  22, 1982 between  ABC, as
      lessor, and  the Charterer, covering  the jack-up rigs,  J.T. Angel and
      R.W. Mowell,  the related  Preferred Ship  Mortgages and the  documents
      executed in  connection therewith,  including, without  limitation, the
      tax indemnification agreements.

      "Sale Date" means  the date, if  any, on which  the Charterer  acquires
      the  Vessel by  exercise  of its  purchase  option granted  pursuant to
      Section 3.7.

      "Security Agreement"  means the  Security Agreement  between the  Owner
      and the Trustee.

      "Security Documents" means  the Mortgages, the Security  Agreement, and
      any other agreement,  instrument or document executed and delivered for
      the purpose of supporting or securing the Obligations.

      "Severables"  means  improvements,  modifications or  additions  to the
      Vessel that are  readily removable without causing damage to the Vessel
      and may,  in accordance  with all applicable  statutes, orders,  cases,
      rules, regulations and other laws, be removed from the Vessel.

      "S&P" means Standard  & Poor's Ratings Group, a division of McGraw-Hill
      Companies, Inc.,  a  New  York  corporation,  and  its  successors  and
      assigns.

      "Shipping Act, 1916" shall mean  the United States Shipping  Act, 1916,
      as amended.

      "Shipyard" means Amfel's shipyard in Brownsville, Texas.

      "Stipulated Loss  Value" as  of any  Payment Date  listed by  number in
      Schedule  D hereto  means an amount  determined by  multiplying Owner's
      Cost by the  percentage set forth in  Schedule D opposite  such Payment
      Date number.

      "Subsidiary" means for any Person,  any other corporation, partnership,
      joint venture, limited  liability company or  other entity  at least  a
      majority of the voting stock  of which is beneficially  owned, directly
      or indirectly by such Person or its Subsidiaries.

      "Substitute  Collateral"  has  the meaning  assigned  to  such  term in
      Section 12.5(d).

      "Supplemental Hire" shall  mean any  and all  amounts, liabilities  and
      obligations other than  Basic Hire that the Charterer assumes or agrees
      to  pay  hereunder   to  the  Owner,  including,   without  limitation,
      Stipulated Loss Value and indemnity payments.

      "Taxes" means all  federal, foreign, state, local or other net or gross
      income,  gross  receipts,  sales, use,  stamp,  documentary,  transfer,
      general  consumption,  ad valorem,  property,  value  added, franchise,
      production, import,  export, withholding,  payroll, employment,  excise
      or  similar   taxes,  assessments,  duties,   fees,  levies  or   other
      governmental   charges,   including   without   limitation,    license,
      recording,  documentation  and registration  fees,  together  with  any
      interest  thereon,  any  penalties,  additions  to  tax  or  additional
      amounts with  respect  thereto and  any  interest  in respect  of  such
      penalties, additions or additional amounts.

      "Third Parties" means all persons  and entities that are  not Charterer
      Group or Owner Group.

      "Timely Liquidation  Value"  means, for  any  property, the  cash  sale
      value of  such  property that  would  be  obtained in  an  arm's-length
      transaction  between a seller that  must sell such  property in no more
      than  90   days  and  an   informed  and   willing  buyer-user,   which
      determination shall  be made with  a deduction for  the removal of  the
      property from its location and on the assumption  that such property is
      in its  current  actual condition,  which condition  shall reflect  its
      current  physical condition  and  location  and any  applicable  legal,
      governmental, physical,  contractual and other  impediments to sale  or
      use.

      "Trustee"  means  Wilmington  Trust  Company   not  in  its  individual
      capacity but solely as trustee for  the benefit of the Owner under  the
      Mortgages and any of its successors or assigns in such capacity.

      "UCC" means the Uniform  Commercial Code as enacted in the State of New
      York.

      "Upgrade  Agreements"  has  the  meaning  assigned   to  such  term  in
      Section 5.2.

      "Upgrade   Completion"  means  the  delivery   to  the   Owner  of  the
      Certificate of Completion  and the Certificate of  Independent Engineer
      and the  Owner's acknowledgment  in writing  to the  Charterer that  it
      accepts  such  Certificates;   provided,  however,  that   the  Owner's
      acceptance of such  certificates shall not constitute any waiver of its
      rights or remedies in respect of any failure  of the Upgrade Program to
      be completed in accordance  with the terms hereof or any other right or
      remedy.

      "Upgrade  Contract"  means  the  Ship  Repair  Agreement  dated  as  of
      October 31, 1995  between Amfels,  Inc., a Texas  corporation, and  the
      Charterer.

      "Upgrade Default" means the Owner shall determine that the work of  the
      Upgrade Program  is not  being conducted  in all  material respects  in
      accordance  with the  plans, schedules  or  specifications therefor  or
      that the  Charterer has  failed to  perform its  obligations under  the
      Upgrade Program in accordance with Article 5.

      "Upgrade   Maintenance"  means   that  portion   of   the  improvements
      contemplated  by the  Upgrade  Program  that constitutes  ordinary  and
      usual maintenance as more fully described on Schedule B.

      "Upgrade  Nonseverables"   means  that  portion  of   the  improvements
      contemplated  by the  Upgrade  Program that  is  not readily  removable
      without causing material damage to  the Vessel as more  fully described
      on Schedule B.

      "Upgrade  Nonseverable  Cost"  means   an  amount  not  to  exceed  (i)
      $10,000,000  to be  paid  under the  Upgrade  Agreements plus  (ii) any
      amounts authorized  by the Owner  to be  paid to construct  the Upgrade
      Program.

      "Upgrade Payment Date"  means each of  the Delivery  Date, the  Payment
      Date falling in March 1996 and the date of the Upgrade Completion.

      "Upgrade Program"  means the upgrade of the Vessel from its current 850
      meter water  capacity to 1000,  meters as more  fully described  in the
      Upgrade  Contract,  any   other  Upgrade  Agreements  and   the  plans,
      specifications and schedules set forth on Schedule B.

      "Upgrade   Severables"   means   that  portion   of   the  improvements
      contemplated by the  Upgrade Program that is readily removable from the
      Vessel without  causing material  damage to  the Vessel  as more  fully
      described on Schedule B.
 
      "Vessel"  means the M.  G. HULME,  JR., as described  on Schedule A and
      all  fixtures,  equipment  and  improvements  of  any  kind  whatsoever
      installed or located thereon pursuant  to this Charter or  as otherwise
      agreed to by the Charterer and the Owner.

      "Yost Mortgage" means  the Preferred Ship Mortgage dated as of November
      28, 1995 made by  the Charterer  in favor of  the Trustee covering  the
      Randolph Yost.

                                  ARTICLE 2
                          SCHEDULES AND OBJECTIVES

2.1   Schedules and Exhibits

      The following schedules  and exhibits are  attached hereto  and made  a
      part hereof for all  purposes.   In the event  there are any  conflicts
      between  the  body of  this  Charter  and  the  schedules and  exhibits
      attached hereto,  the  provisions in  the  body  of this  Charter  will
      prevail.

      (a)   Schedules

            Schedule   A    -   Description   of   the    Vessel,   including
            specifications.

            Schedule B - Upgrade Program

            Schedule C - Charterer's Insurance

            Schedule D - Stipulated Loss Value

            Schedule E - Pending Litigation

            Schedule F - Computation of Basic Hire Upgrade Adjustment

      (b)   Exhibits

            Exhibit A  -  Form of Certificate of Completion

            Exhibit B  -  Form of Certificate of Delivery

            Exhibit C  -  Form of Certificate for Reimbursement

            Exhibit D  -  Form  of  Completion  Certificate  of  Independent
                          Engineer

            Exhibit E  -  Form of  Reimbursement  Certificate of  Independent
                          Engineer

            Exhibit F  -  Form of Notice to Account Debtor

2.2   Objectives

      The Owner shall  provide the Vessel to  the Charterer on a  bareboat or
      demise charter  basis.   The  Owner shall  not be  responsible for  any
      other service, manning,  operations or  equipment whatsoever.   By  the
      Owner providing the  Vessel to the  Charterer in  accordance with  this
      Charter,  upon the  terms  and subject  to  the conditions  hereof, the
      Charterer shall  take and have  command, possession and  control of the
      Vessel during the term of this  Charter; as a part hereof, and  without
      limit  to  the  foregoing,  the  Charterer's  command,  possession  and
      control of  the Vessel  shall specifically  include  the obligation  to
      have the Vessel under the  command of an Offshore  Installation Manager
      certified by and for  the area  in which the  Vessel is operating  from
      time to time. 

2.3   CONDITION OF THE  PROPERTY.  THE CHARTERER ACKNOWLEDGES AND AGREES THAT
      IT  IS CHARTERING  THE  VESSEL AND  OTHER  PROPERTY HEREUNDER  "AS IS,"
      "WHERE IS,"  AND  "WITH ALL  FAULTS,  WHETHER LATENT  OR  DISCERNIBLE,"
      WITHOUT REPRESENTATION,  WARRANTY OR COVENANT  (EXPRESS OR IMPLIED)  BY
      THE OWNER,  OWNER GROUP  OR ANY INVESTOR  AND IN  EACH CASE SUBJECT  TO
      (A) THE  EXISTING STATE  OF  TITLE, (B) THE  RIGHTS  OF ANY  PARTIES IN
      POSSESSION   THEREOF,   (C) ALL  APPLICABLE   LEGAL   REQUIREMENTS  AND
      (D) VIOLATIONS  OF  LEGAL  REQUIREMENTS WHICH  MAY  EXIST  ON  THE DATE
      HEREOF.  NONE  OF OWNER, ANY MEMBER,  OWNER GROUP, OR ANY  INVESTOR HAS
      MADE OR  SHALL BE DEEMED TO  HAVE MADE ANY REPRESENTATION,  WARRANTY OR
      COVENANT (EXPRESS OR IMPLIED) OR SHALL BE DEEMED TO  HAVE ANY LIABILITY
      WHATSOEVER AS  TO THE TITLE,  VALUE, HABITABILITY, USE,  SEAWORTHINESS,
      CONDITION,   STABILITY,   SUITABILITY,   DESIGN,   OPERATION,    CLASS,
      COMPLIANCE WITH  LAWS, CONFORMANCE  TO SPECIFICATIONS,  MERCHANTABILITY
      OR  FITNESS  FOR  USE  OF ANY  PROPERTY  (OR  ANY  PART  THEREOF FOR  A
      PARTICULAR PURPOSE  OR WITH  RESPECT  TO PATENT  INFRINGEMENT), OR  ANY
      OTHER  REPRESENTATION,  WARRANTY  OR  COVENANT  WHATSOEVER,  EXPRESS OR
      IMPLIED, WITH RESPECT TO  ANY PROPERTY (OR ANY PART  THEREOF), AND NONE
      OF OWNER,  OWNER GROUP OR ANY INVESTOR SHALL  BE LIABLE FOR ANY LATENT,
      HIDDEN  OR  PATENT  DEFECT THEREIN,  ANY  REPRESENTATION,  WARRANTY  OR
      PROMISE, EXPRESS OR IMPLIED, WHICH  ANY MANUFACTURER OR BUILDER  OF THE
      VESSEL  OR ANY PROPERTY (OR ANY  PART THEREOF) MAY HAVE  MADE OR MAY BE
      DEEMED  TO HAVE  MADE  OR THE  FAILURE  OF ANY  PROPERTY,  OR ANY  PART
      THEREOF, TO COMPLY WITH ANY  LEGAL REQUIREMENT OR ANY  DAMAGES, WHETHER
      ACTUAL,  SPECIAL,  CONSEQUENTIAL  OR INCIDENTAL,  ARISING  HEREFROM  OR
      THEREFROM.   THE  CHARTERER  HAS  BEEN  AFFORDED  FULL  OPPORTUNITY  TO
      INSPECT THE  VESSEL, IS (INSOFAR  AS THE OWNER  IS CONCERNED) SATISFIED
      WITH THE  RESULTS OF ITS INSPECTIONS AND  IS ENTERING INTO THIS CHARTER
      SOLELY ON  THE BASIS  OF THE RESULTS  OF ITS  OWN INSPECTIONS, AND  ALL
      RISKS INCIDENT TO THE MATTERS  DESCRIBED IN THE PRECEDING  SENTENCE, AS
      BETWEEN OWNER, THE OWNER GROUP AND THE INVESTORS, ON THE ONE HAND,  AND
      THE CHARTERER,  ON THE OTHER  HAND, ARE TO  BE BORNE BY THE  CHARTERER.
      NOTHING IN THIS SECTION 2.3 OR  THE CHARTER SHALL OPERATE TO NEGATE  OR
      DIMINISH  ANY CLAIM  FOR  BREACH  OF  ANY REPRESENTATION,  WARRANTY  OR
      COVENANT THAT THE  OWNER MAY NOW  OR HEREAFTER  HAVE UNDER ANY  CHARTER
      DOCUMENT OR ARISING OUT OF THE TRANSACTIONS CONTEMPLATED THEREBY.

                                  ARTICLE 3
                   TERM, DELIVERY DATE AND PURCHASE OPTION

3.1   Duration

      (a)   Subject to  the terms and  conditions of this  Charter, the Owner
            bareboat (demise)  charters to the  Charterer, and the  Charterer
            bareboat  (demise) charters  from  the Owner,  the  Vessel for  a
            period beginning  on the  Delivery Date  and ending  on the  10th
            anniversary of  the Delivery Date (the  "Primary Term"), with the
            option to extend this Charter pursuant to Section 3.1(b).

      (b)   At the  end of  the Primary Term,  and subject  to the terms  and
            conditions  of this  Charter,  the term  of  this Charter  may be
            extended  for a period  of 90 days  (the "Extended  Term") by the
            Charterer providing 180 days' written  notice to the Owner  prior
            to the end  of the Primary Term  if, and only if,  such extension
            is necessary to  complete a Drilling Contract in progress that is
            in  full force and  effect on  the date such  extension notice is
            delivered and  no Default or Event of Default has occurred and is
            continuing.  The Charterer, at  its sole cost and  expense, shall
            provide the Owner with independent  verification of the necessity
            of any such extension in  form and substance satisfactory  to the
            Owner.    During  such  Extended   Term,  if  any,  all   of  the
            obligations  of  the  Charterer under  this  Charter  during  the
            Charter Period shall  continue for the Extended  Term, including,
            without  limitation,  the  obligation to  pay  Basic  Hire  under
            Section 12.1.  Prior  to any extension of the Primary  Period for
            the Vessel, the  Charterer shall give  the Owner  its good  faith
            estimate  of  the date  on which  the existing  Drilling Contract
            will be completed.

      (c)   The Charterer shall,  at all reasonable times during the last 180
            days of the  Charter Period, permit access  to the Vessel to  the
            Owner and to Persons designated  by the Owner in  connection with
            any prospective  sale or prospective  rechartering of the  Vessel
            by the  Owner, and shall permit  the inspection of  the Vessel by
            such  Persons;  provided,  however, that  the  exercise  of  such
            rights shall in  no way unreasonably  interfere with  the use  of
            the Vessel by the Charterer.

3.2   Delivery of the Vessel to the Charterer

      Delivery of the Vessel by the  Owner to the Charterer shall take  place
      at Garden  Banks Block  387, Outer  Continental Shelf,  Gulf of  Mexico
      simultaneously with delivery  of the Vessel  to the  Owner pursuant  to
      the MOA.  Upon  such delivery, the Vessel shall be deemed  to have been
      delivered  and  accepted  by   the  Charterer  and  shall  be   subject
      thereafter to all the terms and conditions of this Charter.

      Delivery of  the Vessel  by the Owner  to the Charterer  shall, without
      further action, irrevocably  constitute acceptance by the  Charterer of
      the Vessel for  all purposes of  this Charter,  which shall be  further
      evidenced  by the Charterer's execution and delivery of the Certificate
      of Delivery  simultaneously with  the execution  and  delivery of  this
      Charter,  and  shall   be  conclusive  proof  that  the  Vessel  is  in
      compliance with  all requirements of  this Charter and  that the Vessel
      is  seaworthy,  in  accordance with  specifications,  in  good  working
      order, condition  and repair  and without  defect or  inherent vice  in
      title, condition, design,  operation or fitness for use, whether or not
      discoverable  by the  Charterer as  of the  date hereof,  and free  and
      clear of  all  Liens, other  than Permitted  Liens; provided,  however,
      that nothing  contained herein shall  in any way  diminish or otherwise
      affect any right the  Charterer,  the Owner or any  of their respective
      Affiliates  may  have  against  any  shipyard, manufacturer,  supplier,
      vendor or any  other Person in respect  of the Vessel.   FROM AND AFTER
      THE  DELIVERY  DATE, THE  CHARTERER SHALL  NOT BE  ENTITLED TO  MAKE OR
      ASSERT  ANY CLAIM  AGAINST OWNER,  THE OWNER  GROUP OR  ANY INVESTOR ON
      ACCOUNT OF ANY REPRESENTATION OR  WARRANTY WITH RESPECT TO  THE VESSEL,
      THE CONSUMABLE  STORES  ON   BOARD  OR  WITH  RESPECT  TO   ITS  TITLE,
      SEAWORTHINESS,  MERCHANTABILITY,  FITNESS,  HABITABILITY,  VALUE,  USE,
      CONDITION,  SUITABILITY,   CLASS,   COMPLIANCE   WITH   LAWS,   DESIGN,
      OPERATION,  CONFORMANCE  TO  SPECIFICATIONS  NOR  ABSENCE  OF  DEFECTS,
      LATENT,  HIDDEN,   PATENT  OR  OTHER,   NOR  WITH  RESPECT  TO   PATENT
      INFRINGEMENT.  FROM AND AFTER  THE DELIVERY DATE, THE  CHARTERER WAIVES
      ANY CLAIM IT MIGHT HAVE AGAINST OWNER, THE  OWNER GROUP OR ANY INVESTOR
      FOR  ANY LIABILITY,  CLAIM, LOSS,  DAMAGE  OR EXPENSE  OF  ANY KIND  OR
      NATURE BY OR WITH  RESPECT TO  THE VESSEL OR  ANY DEFICIENCY OR  DEFECT
      THEREIN  OR INADEQUACY  THEREOF, THE  USE OR  MAINTENANCE THEREOF,  ANY
      INTERRUPTION OR  LOSS OF SERVICE  OR USE THEREOF,  WHETHER IN CONTRACT,
      TORT OR ANY THEORY OF PRODUCT OR STRICT LIABILITY.

3.3   Early Termination

      This  Charter  shall  terminate  in  accordance  with  any  notice   of
      termination  given in accordance with  this Section 3.3.   This Charter
      shall also  terminate  at the  time  stipulated below  for  any of  the
      following reasons:

      (a)   At  the  option  of  the  Owner,  this  Charter  shall  terminate
            immediately  and upon  written  notice to  the  Charterer if  any
            Event  of Loss  occurs and  upon such  termination the  Charterer
            shall pay  the Owner  on the earlier  of (i) the  receipt of  any
            insurance payable  in respect of  such Event of  Loss and (ii) 60
            days  thereafter, the  Stipulated Loss  Value  of the  Vessel set
            forth on  Schedule  D  as  of  the  Payment  Date  preceding  the
            occurrence of such  Event of Loss  plus any  past due Hire,  plus
            the sum  of   the per  diem of  the Basic  Hire due  on the  next
            Payment Date,  for  each day  during  the  period from  the  next
            preceding Payment Date to the date of such  Event of Loss (unless
            the Event of Loss shall occur  on a Payment Date, in which  case,
            such  payment shall be equal to the Stipulated Loss Value on such
            Payment  Date plus any  Hire due on  such Payment  Date), in each
            case, together  with interest thereon  computed from the date  of
            such Event of  Loss to the date  of actual payment at a  rate per
            annum equal to  the Overdue Rate.   If the time  of such loss  be
            uncertain, the loss  shall be deemed  to have occurred as  of the
            time at which communication from  the Vessel was last heard.   It
            is expressly  understood that the  Charterer shall bear all  risk
            of any such loss.

      (b)   Each of the following events shall be an "Event of Default":

            (i)   the Charterer shall fail to  pay the Owner any  amounts due
                  and payable hereunder when due; or

            (ii)  the Charterer shall fail  to perform any of its obligations
                  under Article 5,  Sections 7.3, 10.1, 11.1(a),  11.6, 11.7,
                  11.8, 12.5,  13.4,  or 14.6,  Article 15,  Section 17.3  or
                  Article 18 hereof or  any other obligation as  to which the
                  Charterer  is  specifically accorded  elsewhere  herein  or
                  otherwise  any  notice  and/or grace  period  in  which  to
                  perform such obligation or  to cure such breach thereof  or
                  default  therein and  such  notice  shall have  been  given
                  and/or such  grace period shall  have expired without  cure
                  of such failure; or

            (iii) any Obligor  shall fail  to perform any  of its obligations
                  hereunder or under  any Charter Document (other  than those
                  specified in Section 3.3(a) or  (b)(i)) which is not  cured
                  within the lesser of  (A) 10 days or (B) the then remaining
                  term of the Charter Period of the occurrence thereof; or

            (iv)  any  representation, warranty  or statement  made or deemed
                  made by any Obligor  in any Charter Document or information
                  furnished  by   or  on  behalf   of  any  Obligor  in   any
                  instrument, certificate  or other document delivered  by or
                  on behalf  of any Obligor  shall be untrue  in any material
                  respect on the date made or deemed made;  or

            (v)   (i) any  Obligor  shall fail  to  pay any  principal  of or
                  premium or interest on any Debt (excluding Debt under  this
                  Charter) of such  Obligor under which any  aggregate amount
                  of at  least $1,000,000 is  outstanding or committed,  when
                  the same  becomes due and  payable, and such failure  shall
                  continue  after any  applicable grace  period; or  (ii) any
                  other  event shall occur or condition shall exist under any
                  agreement  or instrument  relating  to  any such  Debt  and
                  shall continue  after any applicable  grace period, if  the
                  effect  of   such  event  or   condition  results  in   the
                  acceleration of, the  maturity of  such Debt;  or any  such
                  Debt shall be declared to  be due and payable,  or required
                  to  be  prepaid  (other  than   by  a  regularly  scheduled
                  required prepayment),  redeemed, purchased or  defeased, or
                  an  offer to prepay, redeem,  purchase or defease such Debt
                  shall be  required to be  made, in each case,  prior to the
                  stated maturity  thereof; or  legal action  shall be  taken
                  with  respect  to  such other  event  (including,  but  not
                  limited  to,  the   commencement  of  proceedings   seeking
                  specific  performance  or  injunctive  or  other  equitable
                  relief); or 

            (vi)  any  Obligor  shall generally  not  pay its  debts  as such
                  debts become  due, or shall admit  in writing its inability
                  to  pay  its  debts  generally,  or  shall  make  a general
                  assignment for the benefit of  creditors; or voluntarily or
                  involuntarily dissolves or is  dissolved, or terminates  or
                  is terminated; or any proceeding shall be instituted  by or
                  against such Person  or any of its  subsidiaries seeking to
                  adjudicate  it  a   bankrupt  or   insolvent,  or   seeking
                  liquidation,  winding   up,  reorganization,   arrangement,
                  adjustment, protection,  relief, or  composition  of it  or
                  its debts under any law  relating to bankruptcy, insolvency
                  or  reorganization or  relief of  debtors,  or seeking  the
                  entry of  an  order for  relief  or  the appointment  of  a
                  receiver, trustee, custodian or other  similar official for
                  it or for any substantial part of  its property and, in the
                  case  of any such proceeding instituted against it (but not
                  instituted  by it),  either  such  proceeding shall  remain
                  undismissed  or unstayed for a period of 30 days, or any of
                  the actions sought in  such proceeding (including,  without
                  limitation, the entry  of an  order for relief  against, or
                  the appointment of a receiver,  trustee, custodian or other
                  similar official  for, it  or for any  substantial part  of
                  its property) shall  occur; or any  such Person  or any  of
                  its  subsidiaries  shall   take  any  corporate   or  other
                  organizational action to  authorize any of the  actions set
                  forth  above in  this subsection  (vi);  provided, however,
                  that  nothing  contained  in  this  Section  3.3(b)(vi)  or
                  otherwise shall  be deemed to  limit, restrict or  prohibit
                  Owner  in   any  manner  from   intervening  in  any   such
                  proceeding described above and enforcing  any of its rights
                  and  remedies  whether under  this  Charter or  any  of the
                  Charter  Documents,  at  law, in  admiralty  or  equity  or
                  otherwise; or

            (vii) a judgment  or order for the payment of money in the amount
                  of at  least $1,000,000 or  more shall be rendered  against
                  any Obligor  and either  (i) enforcement proceedings  shall
                  have been  commenced by any creditor  upon such judgment or
                  order or (ii) there shall  be any period of  10 consecutive
                  days during which  a stay of enforcement  of such  judgment
                  or  order, by  reason  of a  pending  appeal or  otherwise,
                  shall not be in effect; or

           (viii) any provision of this Charter or any Charter Document shall
                  at any time  for any reason cease  to be valid  and binding
                  on any  Obligor, or  shall be declared to be null and void,
                  or  the   validity   or  enforceability  thereof  shall  be
                  contested by  any Obligor, or any  Obligor shall deny  that
                  it has  any or  further   liability  or  obligation   under
                  this Charter or any Charter Document; or

            (ix)  failure of  any Obligor  to comply  with, or  to incur  any
                  liability, whether fixed or  contingent, under or  pursuant
                  to,  any  statute,  law, regulation  or  other governmental
                  requirement  to which  such Obligor  is subject,  including
                  but not limited  to ERISA, the  Oil Pollution  Act of  1990
                  ("OPA") and any  other environmental, health or  safety law
                  or  regulation, in  each case,  which  might reasonably  be
                  expected  to  have   a  material  adverse  effect   on  the
                  condition (financial  and otherwise), business prospects or
                  the  ability of  such Obligor  to  perform its  obligations
                  under the Charter Documents; or

            (x)   any  Lien  securing  the  Obligations   shall  fail  to  be
                  perfected,  valid or enforceable,  or any  material adverse
                  effect shall occur  respecting the value or  suitability as
                  collateral of any property encumbered  by such Lien (unless
                  the Charterer  shall have provided Substitute Collateral in
                  accordance   with  Section 12.5(c)),   including,   without
                  limitation,  any levy,  attachment or  seizure  thereof or,
                  subject to Section 12.5, the  Lien securing the Obligations
                  under the Mortgage shall  fail to be (A) at  least a second
                  priority  preferred  ship  mortgage  (subject  only to  the
                  First Mortgage (as  defined in the Mortgage) at any time on
                  or  before  December 31,  1997  or  (B)  a  first  priority
                  preferred  ship  mortgage at  any  time after  December 31,
                  1997; or

            (xi)  the Upgrade  Completion shall  not occur  on or before  the
                  date that  is 150 calendar  days after the  date the Vessel
                  shall have  been delivered  to the  Shipyard in  connection
                  with the Upgrade Program; or

            (xii) an Upgrade Default shall occur and be continuing; or

           (xiii) existing  Drilling Contracts on the property subject to the
                  Mortgage or the Additional Collateral, as applicable,  fail
                  to  terminate  on  or  before  the earlier of  (A) June 30,
                  1996  or (B) the  occurrence of an Event of Loss; or 

            (xiv) an Event  of Default  under any  of the  Safe Harbor  Lease
                  Documents  shall occur  or the  Charterer or  any member of
                  the   Charterer  Group   shall   fail   to  pay   any   tax
                  indemnification   payment  under  the   Safe  Harbor  Lease
                  Documents when due.

3.4   Remedies

      Upon the occurrence of any Event of Default  and at any time thereafter
      so long as the same shall be continuing, the  Owner may, at its option,
      declare this Charter to be in default; and at any time thereafter,  the
      Owner may do, and the Charterer shall  comply with, one or more of  the
      following, as the Owner in its sole discretion shall elect:

      (a)   Upon  written  demand (which  demand  shall  have the  effect  of
            terminating all of the Charterer's  rights to use or  possess the
            Vessel or act as agent under the  Upgrade Program), the Owner may
            cause the Charterer to, and  the Charterer hereby agrees  that it
            will,  at  the  Charterer's  sole   cost  and  expense,  promptly
            redeliver the Vessel, or cause  the Vessel to be  redelivered, to
            the Owner with  all reasonable dispatch  and in  the same  manner
            and  in  the  same  condition   as  if  the  Vessel   were  being
            redelivered  at   the  expiration  of   the  Charter  Period   in
            accordance with  all of  the provisions  of Section 3.5, and  all
            obligations of  the Charterer  under said Section  shall apply to
            such redelivery;  or  the Owner  or  its  agent, at  the  Owner's
            option,  without  further  notice, may,  but  shall  be  under no
            obligation to,  retake the  Vessel wherever  found, whether  upon
            the  high  seas  or  at  any  port, harbor  or  other  place  and
            irrespective of  whether the Charterer,  any subcharterer or  any
            other person  may be  in possession  of the  Vessel, all  without
            prior demand and  without legal process, and for that purpose the
            Owner  or its  agent  may  enter upon  any  dock, pier  or  other
            premises  where  the  Vessel  may  be  and  may  take  possession
            thereof, without the  Owner or its agent  incurring any liability
            by  reason  of  such retaking,  whether  for  the  restoration of
            damage to property  caused by such retaking or for damages of any
            kind to any  Person for or with  respect to any cargo  carried or
            to  be   carried  by  the   Vessel  or  for   any  other  reason.
            Henceforth, the Owner shall  hold, possess and enjoy  the Vessel,
            free and clear  of any right  of the Charterer or  its successors
            or  assigns  to   possess  or  use  the  Vessel  for  any  reason
            whatsoever.   The exercise  by the  Owner of  its remedies  under
            this  paragraph (a) shall be without  prejudice, and in addition,
            to any of the Owner's other remedies referred  to in this Charter
            or any of the  other Charter Documents or at law, in admiralty or
            equity.

      (b)   The  Owner,  by written  notice  to  the Charterer  specifying  a
            payment date not less than 10 days, nor more than 30 days,  after
            the date of such notice, may require the  Charterer to pay to the
            Owner, and the  Charterer hereby agrees  that it will pay  to the
            Owner,  on  the  payment   date  specified  in  such  notice,  as
            liquidated damages  for loss of  a bargain and  not as  a penalty
            and in  lieu of  any further  Basic Hire  payments hereunder,  an
            amount equal to  all unpaid Basic  Hire payable  on each  Payment
            Date occurring  on or before  the payment date  specified in such
            notice,  plus  the  Stipulated Loss  Value  computed  as  of  the
            Payment Date preceding the payment date specified  in such notice
            plus  the sum of the  per diem of the Basic  Hire due on the next
            Payment  Date  for each  day  during  the  period  from the  next
            preceding Payment  Date to the date of such  Event of Loss (or as
            of such payment  date specified in  such notice  if such  payment
            date specified in such notice  is a Payment Date),  together with
            interest  on such amounts at the Overdue  Rate for the period, if
            any,  from the  Payment  Date as  of  which such  Stipulated Loss
            Value is calculated  to and including the date of actual payment.
            Upon  such  payment of  liquidated damages,  the Owner  shall pay
            over to the Charterer  the net proceeds  of any sale, charter  or
            other disposition of  the Vessel as  and when  received but  only
            after deducting  all costs  and expenses  whatsoever incurred  by
            the  Owner  in  connection therewith,  to  the  extent  such  net
            proceeds do not exceed the  amount of such Stipulated  Loss Value
            actually so paid.   Nothing contained  in the preceding  sentence
            or  otherwise  shall  require  the  Owner  to  sell,  charter  or
            otherwise dispose of the Vessel at any time.

      (c)   The  Owner may  exercise any  other right  or remedy that  may be
            available to it under applicable  law, in equity or  admiralty or
            proceed by appropriate  court action to enforce the terms of this
            Charter  or  to recover  damages  for  the  breach  hereof or  to
            terminate this Charter.

      (d)   The Owner or its  agent may sell the Vessel at  public or private
            sale, with or  without notice to the Charterer,  advertisement or
            publication,  as  the  Owner  may  determine,  or  otherwise  may
            dispose of,  hold, possess, use, operate,  charter (whether for a
            period greater or less  than the balance of what would  have been
            the  Charter Period  in  the absence  of  the termination  of the
            Charterer's rights  to the  Vessel) to  others or  keep idle  the
            Vessel, all  on such terms  and conditions  and at such  place or
            places as  the Owner may determine and all  free and clear of any
            rights of  the Charterer  and of any  claim of  the Charterer  in
            admiralty, in equity, at  law or by statute, whether for  loss or
            damage  or  otherwise,  and without  any  duty  to the  Charterer
            except to  the  extent provided  in  paragraph  (b) above.    The
            Charterer and the  Owner agree that  10 days'  written notice  of
            the  sale to be  made by the  Owner or its designee  or after the
            time  in  which  a  private  sale  shall  occur  is  commercially
            reasonable notice for all purposes.

      In  addition,   the  Charterer  shall   be  liable  for   any  and  all
      Supplemental  Hire  payable  hereunder  before,  during  or  after  the
      exercise  of  any of  the  foregoing  remedies  and  for all  insurance
      premiums  and all  demurrage,  docking and  anchorage  charges and  all
      legal fees and any other costs and expenses whatsoever  incurred by the
      Owner or  any Investor  by reason  of the  occurrence of  any Event  of
      Default or  by reason  of the  exercise by the  Owner of  any right  or
      remedy  hereunder,  including,   without  limitation,  any   costs  and
      expenses incurred by the  Owner in connection with any retaking  of the
      Vessel or, upon the redelivery or retaking of  the Vessel in accordance
      with  this Section  3.4,  the placing  of the  Vessel in  the condition
      required  by and  otherwise  complying with  the  terms of  Section 3.5
      hereof.   No  right  or  remedy referred  to  in  this Section  3.4  is
      intended  to be  exclusive,  but each  shall  be cumulative  and  is in
      addition to,  and may be  exercised concurrently with,  any other right
      or  remedy which  is  referred to  in  this Section  3.4  or which  may
      otherwise be available to  the Owner at law, in equity or in admiralty,
      including  without limitation  the  right  to terminate  this  Charter.
      There shall be  deducted from the  aggregate amount  so recoverable  by
      the  Owner, the net  balance, if any, remaining  of any  monies held by
      the Owner which  would have been required  by the terms hereof  to have
      been  paid to  the Charterer  but for  the  occurrence of  an Event  of
      Default.  The rights  of the Owner and the obligations of the Charterer
      under  this Section  3.4 shall be  effective and enforceable regardless
      of the pendency  of any proceeding which  has or might have  the effect
      of preventing the Owner or the Charterer  from complying with the terms
      of  this Charter.   No express or  implied waiver  by the Owner  of any
      Event of Default shall  in any way be, or be construed to  be, a waiver
      of  any  further  or  subsequent  Event  of  Default.    To  the extent
      permitted  by applicable law,  the Charterer  hereby waives  any rights
      now or  hereafter conferred by  statute or otherwise  which may require
      the Owner to  sell, charter or otherwise  use the Vessel in  mitigation
      of the Owner's damages.

3.5   Redelivery of the Vessel

      Upon termination  of this  Charter, the  Charterer shall,  at its  sole
      cost and expense not to  exceed $2,500,000 as Escalated,  redeliver the
      Vessel  to  the Owner  at  an anchorage  of  the Owner's  choice.   The
      Charterer shall notify the Owner in writing at  least 360 days prior to
      the expiration  of the  Charter Period  of the  location  in which  the
      Vessel will be operating at the expiration of the Charter Period.   The
      Charterer agrees that at the  time of such redelivery the Vessel  shall
      be free  and clear  of all  Liens (other  than Owner  Liens), shall  be
      entitled to  and shall have  the classification and  rating required by
      Section 8.1, with  no requirements,  specifications or  recommendations
      of the American  Bureau of Shipping  or of any  governmental agency  or
      department unfulfilled  and with all  required certificates in  effect,
      shall be  in  compliance  with  all  laws,  conventions,  treaties  and
      customs and  rules and regulations  issued thereunder or applicable  in
      any way to the  Vessel or any use or  operation thereof, shall be  free
      of  any insignia  of the Charterer  or others,  shall be  charter free,
      cargo free, safely afloat, securely moored,  free of charge  and be  in
      the same good  order and condition as  described in the third  sentence
      of Section 3.2, but  with the Upgrade Program completed and as required
      by  Section 8.1, ordinary  wear and  tear  excepted; provided  however,
      that in the event that  the Owner elects not to exercise its  option to
      purchase  Severables  acquired  after the  Delivery  Date  pursuant  to
      Section 9.4,  the Charterer  shall redeliver  the Vessel  to the  Owner
      with  Severables comparable  to the  Severables aboard  the Vessel when
      the Vessel  was delivered  to the  Charterer pursuant  to Section  3.2.
      Any  Coast  Guard certificates  required  to  be  issued annually  with
      respect to the  Vessel shall have been  issued within 12 months  of the
      date of redelivery of the Vessel.   At the time and place of redelivery
      of  the  Vessel, the  Charterer shall  also  deliver to  the  Owner all
      documentation,    plans,     drawings,    specifications,     logbooks,
      classification  and inspection, records,  operating manuals, records of
      modification,  overhaul, use  and/or maintenance  and other  warranties
      and documents  then in its  possession or control  which were furnished
      by the manufacturers or  builders of the Vessel or the  Upgrade Program
      or  any supplier of equipment on  the Vessel or otherwise maintained by
      the  Charterer.    Upon   redelivery  of  the  Vessel  hereunder,   the
      Charterer, if requested in writing  by the Owner, will arrange  for, at
      the Charterer's cost and  expense, docking or appropriate  anchorage or
      storage facilities for the Vessel for a  period not exceeding 150 days,
      including, but not limited to,  any crew, staffing, materials,  fuel or
      other costs  or expenses incurred to stack  the Vessel with full marine
      and maintenance crews.

3.6   Survey of the Vessel at End of Charter Period

      At  least 120 days before redelivery  of the Vessel pursuant to Section
      3.5, but sufficiently in advance of such redelivery date to permit  any
      needed repairs  to be completed by such redelivery date, a joint survey
      shall be  made  by the  Charterer  and the  Owner  (with drydocking  or
      underwater survey  in lieu  of drydocking  and bottom  painting, unless
      the Owner shall  otherwise agree in writing) to determine the condition
      and  fitness of  the  Vessel, during  which  survey the  Vessel's tanks
      shall be  gas-freed and  the Vessel's  engines and  boilers opened  for
      inspection;  the redelivery  survey shall meet  all requirements of the
      next special survey of  the Vessel, provided that  if a special  survey
      of the Vessel has been made,  pursuant to the provisions of Article  8,
      within 30 months prior to such redelivery, the records  of such special
      survey shall  be taken  into account  in determining  the scope  of the
      joint survey  required pursuant to  this Section 3.6.   If requested by
      the Owner,  a surveyor from  the American Bureau  of Shipping  shall be
      present and the  Charterer shall permit  such surveyor  to examine  all
      areas  of hull and  items of machinery and  other parts  of the Vessel.
      The  Charterer will  pay for  the costs  of such  survey, drydocking or
      underwater survey in  lieu of drydocking  and bottom  painting and  the
      Charterer  shall notify the  Owner at least 10  days in  advance of the
      time  and place  of such  drydocking or  underwater survey  in  lieu of
      drydocking, bottom painting  and survey.   The Charterer,  at its  sole
      cost  and  expense,  will  fully  correct  and  repair   any  condition
      disclosed by such  survey to the extent necessary  to cause the Vessel,
      on or before the  date specified for redelivery, to comply  with all of
      the terms of  Section 8.1.   The term of  the Charter  Period shall  be
      extended  for any  period necessary  (a)  so as  to  permit the  survey
      described  in  this Section  3.6  to  occur at  least  120 days  before
      redelivery of  the Vessel pursuant  to Section 3.5 whether  as a result
      of this  Vessel's use  in completing  a Drilling  Contract in  progress
      under Section  3.1(b)  or otherwise;  and  (b)  to make  such  repairs.
      During such extension  period, if any,  all of the  obligations of  the
      Charterer  under this  Charter  applicable  during the  Charter  Period
      shall continue  in respect of  such extension period.   Upon redelivery
      of the Vessel under this or the preceding paragraph, the Charterer,  if
      requested in writing  by the Owner, will provide docking or appropriate
      anchorage or storage  facilities for the  Vessel (if  available at  the
      designated  port)  for  a  period   not  exceeding  150  days   at  the
      Charterer's cost and  expense, including, but not limited to, any crew,
      staffing, materials,  fuels  or other  cost  or  expense to  stack  the
      Vessel with full marine and maintenance crews.

3.7   Purchase Option.  

      No more  than 540, but  no less than 360  days prior to  the Expiration
      Date, the Charterer may,  so long as no Default or Event of Default has
      occurred and is continuing,  give the Owner irrevocable  written notice
      (the "Expiration Date  Election Notice") that the  Charterer elects  to
      exercise its  option to purchase the  Vessel.  If the  Charterer elects
      to exercise such option, then the  Charterer shall pay to the Owner  on
      the Expiration Date an amount  in immediately available funds  equal to
      the Purchase  Option Price and,  upon receipt  of such amount  plus all
      other  amounts  payable  under  this  Charter  and  the  other  Charter
      Documents, the Owner  shall transfer all  of the  Owner's right,  title
      and interest  in the  Vessel, such  transfer shall be  "AS IS,"  "WHERE
      IS," without  recourse and without  any representation  or warranty  of
      any kind  or nature whatsoever,  either express or  implied (except for
      the absence of  Liens arising as a  result of claims against  the Owner
      for  which  the Owner  is  not  entitled  to  indemnification from  the
      Charterer or any Guarantor or the payment or discharge of which is  not
      the obligation  of the  Charterer or  any Guarantor),  in the  Vessel's
      then-current physical  condition and  without any  other representation
      or warranty on the part of, or recourse to, the Owner.

3.8   Determination of Purchase Option Price

      During the period  from the delivery  of the  Expiration Date  Election
      Notice  to the  Owner  until  210 days  prior  to  the Sale  Date,  the
      Charterer  and the Owner  may mutually  agree on  the Fair  Market Sale
      Value of the Vessel  as of the Sale Date, and  if the Charterer and the
      Owner  fail  to  so  agree,  such  Fair  Market  Sale  Value  shall  be
      determined not less  than 90 days before  the Sale Date by  application
      of the Appraisal Procedure.


                                  ARTICLE 4
                           NATURE OF COMPENSATION

4.1   Absolute Obligation

      The obligation of  the Charterer to pay  to the Owner the  fees, rates,
      hires, indemnities and  reimbursements specified in this  Charter shall
      be absolute  and  unconditional  and  shall  not  be  affected  by  any
      circumstance  whatsoever, and  the Charterer waives  (and agrees not to
      allege or  pursue) any  right to  any such  defense, including  without
      limitation,   (a) any   setoff,  counterclaim,   abatement,  reduction,
      recoupment,  defense, or  other  right  that  the  Charterer  may  have
      against the  Owner or any  other Person, firm,  company, or entity  for
      any  reason whatsoever; (b) any unavailability  of the Vessel after its
      delivery  to the  Charterer  for any  reason;  (c) any damage,  loss or
      destruction of  or damage to the  Vessel or  interruption, restriction,
      interference, or  cessation in  the use  or possession  thereof by  the
      Charterer for any reason whatsoever,  at whatever time and  of whatever
      duration;   (d) any   confiscation,   expropriation,   nationalization,
      requisition,  seizure,  inability  to  export,  deprivation,  or  other
      taking  of title to  or possession  or use  of the  Vessel or  any part
      thereof by any  government or governmental authority or  otherwise; (e)
      any  restriction   on  possession   or  use  of   the  Vessel;  (f) the
      interference with or  prohibition of the Charterer's  possession or use
      of the  Vessel; (g) any invalidity  or unenforceability or  lack of due
      authorization or other infirmity of this Charter or the lack of  right,
      power or  authority of  any Obligor  or the  Owner to  enter into  this
      Charter or any  Charter Document; (h) any default by the Owner; (i) any
      defect in the  title, condition, quality  or fitness  for a  particular
      purpose of the  Vessel or other property or service provided hereunder;
      (j) any  amendment or  modification  of or  supplement  to the  Charter
      Documents,  any  agreements  relating  to  any  thereof  or  any  other
      instrument or agreement applicable to  the Vessel or any  part thereof,
      or any  assignment or  transfer of any  thereof, or  any furnishing  or
      acceptance of additional security, or  any release of any  security, or
      any failure  or inability to  perfect any security;  (k) any failure on
      the  part of the  Owner, the Owner  Group or any  Investor or any other
      Person  to  perform or  comply  with  any  term  of any  instrument  or
      agreement; (l) any  waiver, consent,  change, extension, indulgence  or
      other action or inaction under or in respect  of any such instrument or
      agreement or  any exercise or  nonexercise of any  right, remedy, power
      or privilege  under or in  respect of any such  instrument or agreement
      or  this  Charter;  (m) any   bankruptcy,  insolvency,  reorganization,
      arrangement,   readjustment,   composition,  liquidation,   or  similar
      proceeding with  respect to any Obligor, the Owner,  the Owner Group or
      any  Investor, or  their  respective properties  or  creditors, or  any
      action taken  by any trustee  or receiver or  by any court in  any such
      proceeding,   including,   without  limitation,   any   termination  or
      rejection  of this Charter  by any  court or  any trustee,  receiver or
      liquidating agent of  any Obligor, the  Owner Group,  any Investor,  or
      the Owner or of  any of their respective properties in  connection with
      any  such proceeding;  (n) any  assignment or  other  transfer of  this
      Charter  by  the  Charterer  or  the  Owner  or  any  lien,  charge  or
      encumbrance   on  or  affecting  the  Charterer's  estate  in,  or  any
      subchartering  of,  all or  any  part  of  the  Vessel; (o) any  libel,
      attachment, levy,  detention, sequestration or  taking into custody  of
      the Vessel, or any  interruption or prevention of or restriction  on or
      interference with the  use or possession  of the  Vessel; (p) any  act,
      omission or  breach on  the part  of the  Owner under  this Charter  or
      under any  other agreement at any time existing  among the Owner or any
      Obligor  or  under any  other  law,  governmental regulation  or  other
      agreement applicable to such Persons or the  Vessel; (q) any claim as a
      result of any other dealing between the Owner  and any Obligor; (r) any
      ineligibility of  the Vessel, or  any denial of the  Vessel's right, to
      engage in  any  trade  or  activity;  (s) any  failure  to  obtain  any
      required  governmental  consent for  any  transfer of  rights  or title
      required  to  be   made  by  the  Owner  under  this  Charter;  (t) any
      ineligibility of the  Vessel for documentation  under the  laws of  any
      jurisdiction; (u) the recovery  of any judgment against  any Person  or
      any action  to enforce the  same; (v) any defect  in the seaworthiness,
      condition,   design,   operation   or  fitness   for   use   or   other
      characteristics  of the Vessel; (w) any change in the ownership, direct
      or indirect, of the capital stock of the Owner or  any of the Obligors;
      or (x) any other cause, circumstance, or  happening, whether similar or
      dissimilar to the foregoing, any present or future law to  the contrary
      notwithstanding and whether or not  any Obligor could have  foreseen or
      shall have notice  or knowledge  of any of  the foregoing.   Except  as
      specifically  provided herein, the Charterer hereby  waives any and all
      rights that it  may now  have or  which at  any time  hereafter may  be
      conferred upon  it,  by statute,  at law,  in  admiralty or  equity  or
      otherwise, to terminate, cancel, quit or surrender this Charter.

      All  payments hereunder  shall be final  and, once  paid, be  fully and
      finally earned and nonrefundable, and  the Charterer shall not  seek to
      recover all or any part of such  payment from the Owner for any  reason
      whatsoever.

      The Charterer shall  remain obligated under this Charter  in accordance
      with its terms and shall not  take any action to terminate, rescind  or
      avoid  this   Charter,  notwithstanding  any   action  for  bankruptcy,
      insolvency,   reorganization,   liquidation,   dissolution,  or   other
      proceeding  affecting the  Owner,  any  governmental authority  or  any
      other Person,  or  any action  with  respect  to this  Charter  or  any
      Charter  Document  which may  be  taken  by  any  trustee, receiver  or
      liquidator  of  the Owner,  any  governmental  authority  or any  other
      Person or by  any court with respect  to the Owner or  any governmental
      authority.  The Charterer hereby  waives all right (i) to  terminate or
      surrender  this  Charter  or  (ii) to avail  itself  of  any abatement,
      suspension, deferment,  reduction, setoff, counterclaim or defense with
      respect to  any amount payable  hereunder.  The  Charterer shall remain
      obligated  under this  Charter  in accordance  with  its terms  and the
      Charterer hereby waives any and  all rights now or  hereafter conferred
      by statute,  at law, in  admiralty or equity  or otherwise to limit  or
      modify any of the  Owner's rights or remedies or any of the Charterer's
      rights,  remedies, obligations  or  liabilities  as described  in  this
      Charter  or  any Charter  Document  (such  waiver to  include,  without
      limitation, any  and all  rights and  remedies against  a lessor  under
      Article 2A  of  the   UCC  or  to  avoid  strict  compliance  with  its
      obligations under this Charter). 

4.2   Net Charter

      This  Charter is a  net Charter and it  is intended  that the Charterer
      shall  pay all costs, charges, fees,  assessments, expenses, duties and
      taxes  of every  character incurred  in connection  with the  delivery,
      storage,  use, possession, operation,  maintenance, repair, chartering,
      recovery,  retaking,  and  return  of  the  Vessel,  including  without
      limitation those  described elsewhere  in this  Charter.   The  parties
      intend  that  the  obligations of  the  Charterer  hereunder  shall  be
      covenants  and  agreements that  are  separate and  independent  of the
      Owner's  obligations hereunder  or hereafter  arising  or existing  and
      shall continue unaffected.

                                  ARTICLE 5
                               UPGRADE PROGRAM

5.1   Scope of Upgrade; Title to Upgrade

      The Owner recognizes  and agrees that  the Charterer  has entered  into
      the  Upgrade Contract  to  provide for  the  upgrade of  the  Vessel in
      accordance with the terms thereof  and  the other plans, schedules, and
      specifications  for the Upgrade  Program set forth on  Schedule B.  The
      Charterer shall implement  the Upgrade Program  as agent  on behalf  of
      the  Owner, subject to the  terms and conditions  of this Article 5 and
      the Upgrade Program.   The Charterer and  the Owner agree that  (a) the
      Charterer will,  in accordance with  Section 5.9, pay  for that portion
      of the Upgrade  Program that constitutes Upgrade Maintenance  and shall
      in  accordance with  Section  5.9 pay  for and  be reimbursed  for that
      portion   of    the   Upgrade   Program    that   constitutes   Upgrade
      Nonserverables. and shall  pay for, own and have title to, that portion
      of the  Upgrade Program  that constitutes Upgrade  Severables, in  each
      case, subject to the Owner's rights under Sections  5.2 and 9.4 and (b)
      the Owner will, in  accordance with Sections 5.6 and 5.9, pay for, own,
      and  have  title  to,  that   portion  of  the  Upgrade   Program  that
      constitutes Upgrade Nonseverables and such  Upgrade Nonseverables shall
      be chartered to the  Charterer in accordance with the terms and subject
      to  the  conditions  and   requirements  hereof  and  subject  to   the
      Charterer's rights under Section 3.7.

5.2   Assignment of Rights Under Upgrade Program

      The Charterer  hereby assigns, transfers  and sets over  unto the Owner
      (a) all of  the Charterer's  right, title  and interest in  and to  all
      agreements,  including,  without  limitation,   the  Upgrade  Contract,
      entered into prior  to the Delivery Date with any shipyard, contractor,
      manufacturer,  supplier or  vendor  relating  to the  Upgrade  Program,
      including, without  limitation,  any  and  all  plans,  specifications,
      diagrams, designs  or similar  matters relating  thereto (collectively,
      the "Upgrade Agreements")  and (b) all claims for damages in respect of
      the Vessel  arising as a  result of any  default by any such  shipyard,
      contractor, manufacturer,  supplier or  vendor under  any such  Upgrade
      Agreements, including,  without limitation,  all  claims arising  under
      any  warranty and  indemnity provisions contained  therein, as  well as
      all claims  arising thereunder.  The  Charterer shall at its  sole cost
      and  expense grant a lien to the  Owner upon its rights in any property
      acquired  under the  Upgrade  Program as  security for  its obligations
      hereunder pursuant to documentation in  form and substance satisfactory
      to the Owner.

5.3   Appointment of Upgrade Agent

      The Owner  hereby appoints the  Charterer to  act as the  Owner's agent
      for the implementation of the  Upgrade Program in accordance  with, and
      subject to, the  terms and conditions of  this Article 5.  If  an Event
      of Default  or an Upgrade  Default shall occur  and be continuing,  the
      Owner may,  by  a written  order,  terminate  such agency,  direct  the
      Charterer  to  stop   acting  as  such  agent  and,  unless  the  Owner
      determines otherwise,  complete the Upgrade,  without prejudice to  any
      other right or remedy the Owner  may have against the Charterer or  any
      Person.

5.4   Upgrade Agent's Warranties

      The Charterer acknowledges that the  terms of the Upgrade  Contract are
      sufficient to  have enabled  it to  determine the Upgrade  Nonseverable
      Cost, that  the amount  described in  clause (i) of  the definition  of
      Upgrade Nonseverable Cost is just and reasonable compensation for  that
      portion  of the  Upgrade that  constitutes  Upgrade Nonseverables,  and
      that the Upgrade  Agreements are sufficient to enable the Contractor to
      implement the Upgrade Program as described in Schedule B.

5.5   Upgrade Agent's Duties

      Until the Charterer's agency is terminated pursuant to Section 5.3:

      (a)   The Charterer  will administer the  Upgrade Program as  described
            herein.  The Charterer  will be the Owner's  representative until
            final payment under the Upgrade Agreements is made.

      (b)   The Charterer will cause the  Upgrade Program to be  performed in
            accordance with  the plans, schedules  and specifications of  the
            Upgrade Agreements and those described in Schedule B.

      (c)   The Charterer  will visit the  Shipyard at intervals  appropriate
            to  the   stage  of   construction  to   monitor  the   progress,
            workmanship and quality of  the Upgrade Program and  to determine
            whether the Upgrade Program  is proceeding in accordance with the
            terms of  the Upgrade  Agreements and  the plans,  specifications
            and schedules set forth on Schedule B.

      (d)   The  Charterer and  the  Owner will  review  and approve  or take
            other appropriate  action  upon  the Contractor's  submission  of
            shop drawings, product data  and samples pursuant to the  Upgrade
            Contract, but only  for conformance  with the  design concept  of
            the  Upgrade Program  and the  information  given in  the Upgrade
            Contract.   The  progress  of the  Upgrade  Program shall  not be
            considered as  having been  delayed if  such review  occurs in  a
            timely fashion. 

      (e)   The Charterer  may make Change  Orders to the  extent provided in
            Section 5.6.

      (f)   When  the   Charterer  considers  the   Upgrade  Program  to   be
            substantially  complete,  it  shall  notify  the  Owner  and  the
            Independent  Engineer thereof and deliver to  such Persons a list
            of incomplete or  unsatisfactory items with a schedule  for their
            completion.   The  Independent  Engineer  and/or the  Owner  will
            conduct   inspections   to   determine   the   accurateness   and
            completeness  of  the  list and  the  projected  date  of Upgrade
            Completion, and will  receive and forward  to the  Owner for  the
            Owner's review written warranties and related documents  required
            by the Upgrade Contract and assembled by the Contractor.

      (g)   The Charterer may provide  one or more representatives to assist,
            at the Charterer's  sole cost and  expense, in  carrying out  the
            Charterer's responsibilities at the Shipyard.

      (h)   The Charterer shall respond to  all of the Contractor's  requests
            for interpretations  of the plans  and specifications, and  other
            inquiries  regarding the  Upgrade Program.    The Charterer  will
            render  in  writing  interpretations  necessary  for  the  proper
            execution or  progress of the  Upgrade, within ten (10)  business
            days after  receipt of  the Contractor's  requests and  inquiries
            and shall deliver a copy thereof  to the Owner.

      (i)   The Charterer shall  not enter into any Upgrade Agreement for the
            supply of materials or services  to the Vessel or  Shipyard which
            purports to  grant a  security interest or  right of repossession
            to any person or  entity respecting the Upgrade or  the Vessel or
            Shipyard, or any portions thereof or chattels placed thereon.

5.6   Change Orders

      (a)   The  Upgrade  Contract,  the  Upgrade  Program  and  the  Upgrade
            Nonseverable Cost  may be changed only by Change Order.  A Change
            Order signed  by the Owner  shall indicate the Owner's  agreement
            therewith, including  increases in the  Upgrade Nonseverable Cost
            in excess of $10,000,000.

      (b)   The Charterer  may order  or propose  a Change  Order within  the
            general scope  of the  Upgrade Program  consisting of  additions,
            deletions or  other revisions and  the Upgrade Nonseverable  Cost
            shall  be  adjusted accordingly;  provided,  however,  no  Change
            Order may  increase the Upgrade  Nonseverable Cost payable  under
            the Upgrade  Agreements in  respect of  Upgrade Nonseverables  in
            excess  of the aggregate amount  of $10,000,000 without the prior
            written approval of the  Owner.   The Charterer cannot  authorize
            payment for  any  extra  work  performed  by  the  Contractor  in
            connection with  the Upgrade  Nonseverables unless  such work  is
            expressly  authorized  in  writing  by   the  Charterer  and,  if
            necessary, the Owner,  and all other conditions  contained herein
            are fulfilled.   All Change  Orders shall be  performed under the
            applicable conditions of  the Upgrade Agreements.   The Charterer
            shall deliver  to the Owner  and the Independent Engineer  copies
            of all  Change Orders and  amendments to the  Upgrade Contract or
            Upgrade Agreements.

      (c)   If  the Charterer  enters  into a  Change  Order that  allows the
            Contractor  to  perform  any such  authorized  extra  work on  an
            actual  cost  plus   basis,  the  Charterer  shall   require  the
            Contractor  to furnish  each  week  to the  Charterer,  duplicate
            payroll sheets, material  tickets, and a statement  of slips  for
            all  other  charges,  retaining  a  copy  of  each  thereof,  and
            securing on each thereof the signature of the Charterer. 

5.7   Independent Engineer

      The Owner shall  employ the Independent  Engineer to  advise the  Owner
      with respect  to the  design, workmanship  and quality  of the  Upgrade
      Program, the  performance of work  of the Charterer  and the Contractor
      under the  Upgrade  Program and  this  Charter,  the review  of  Change
      Orders, the  delivery of the  Reimbursement Certificate of  Independent
      Engineer and  the Completion  Certificate of  Independent Engineer  and
      any other matters relating to  the Vessel as the Owner may in  its sole
      discretion determine.  The Charterer  shall provide to the  Independent
      Engineer copies  of all correspondence  respecting the Upgrade  Program
      received  from the  Contractor or  its subcontractors  and shall permit
      the Independent  Engineer, the Owner and  their representatives to have
      access  and  inspect  the  Shipyard,  the  Vessel  and  the Charterer's
      properties and to  discuss its affairs, finances and accounts and other
      matters respecting the Upgrade Program  with any of the  Charterer, the
      Contractor or  any of  their respective  employees, officers  and other
      representatives.   The Charterer will cause the Independent Engineer to
      have access  to the Vessel  at all times  until the Upgrade Program  is
      complete. 

5.8   Completion

      The Upgrade Program shall be complete at the Upgrade Completion.

5.9   Payment

      The  Charterer shall pay directly to the Contractor all expenses of the
      Upgrade Program  and, upon fulfillment  of the conditions  set forth in
      Section 5.10, the Owner shall  reimburse the Charterer on  each Upgrade
      Payment Date in the maximum amounts and on the dates set forth below:

                  Date                                Amount
                  Delivery Date                       $2,500,000
                  March Payment Date                  $4,500,000
                  Upgrade Completion Date             balance of Upgrade 
                                                      Nonseverable Cost
5.10  Reimbursement Conditions

      The Charterer  shall  have  delivered  to the  Owner  an  appropriately
      completed and duly executed  Certificate for Reimbursement to  which is
      attached  a  bills  paid  affidavit  and  release  of  liens  from  the
      Contractor and  invoices, instruments and  other documentation in  form
      and substance satisfactory  to the Owner  that the  Charterer has  paid
      such costs and  expenses under the  Upgrade Agreements  and, except  on
      the  first Upgrade  Payment Date, the  Independent Engineer  shall have
      delivered to  the Owner  an appropriately  completed and duly  executed
      Reimbursement Certificate of Independent Engineer.

                                  ARTICLE 6
                       REPRESENTATIONS AND WARRANTIES

6.1   Representations and Warranties of the Owner.

      To  induce the Charterer to  enter into this  Charter and to consummate
      the  transactions   contemplated  hereby,  the   Owner  represents  and
      warrants  to the Charterer  that as  of the  date of execution  of this
      Charter:

      (a)   Organization  and  Good  Standing.     The  Owner  is  a  limited
            liability company  duly organized, validly  existing and in  good
            standing under the laws of the State of Delaware.

      (b)   Title.  The Owner has received whatever title to  the Vessel that
            was conveyed to the Owner pursuant to the MOA.

      (c)   Authority.  The Owner has  taken all action required  by Delaware
            law,  and by the Limited Liability Company Agreement to authorize
            the  execution  and  delivery of  this  Charter.    This  Charter
            constitutes  the  legal,  valid  and binding  obligation  of  the
            Owner,  enforceable  against  the Owner  in  accordance  with its
            terms, subject  to  bankruptcy,  insolvency or  similar  laws  of
            general application  relating  to the  enforcement of  creditors'
            rights  and  by  general  principles  of  equity.    Neither  the
            execution and  delivery of this Charter  nor, on the Commencement
            Date,  will  the  consummation  of  the  transactions  by  it  in
            accordance with the  terms hereof:  (i) violate  or conflict with
            any provision of  the Limited Liability Company Agreement  of the
            Owner, or  (ii) violate  or conflict  with any  provision of  any
            law,   rule,  regulation,   order,  permit,   certificate,  writ,
            judgment,  injunction,  decree,  determination,  award  or  other
            decision  of  any   court,  government,   government  agency   or
            instrumentality, domestic or foreign, or  arbitrator binding upon
            the Owner, which  violation or  conflict is reasonably  likely to
            prevent the Owner's performance of its obligations hereunder.

            Neither  the  execution  and  delivery of  this  Charter  nor the
            consummation of the transactions contemplated hereby  will result
            in a  breach of, or constitute a default (or with notice or lapse
            of  time or both result  in a breach of  or constitute a default)
            under or  otherwise give any  person the right  to terminate  any
            mortgage, indenture, loan  or credit  agreement, lease,  license,
            contract or any other agreement  or instrument to which the Owner
            is a party  or by which it  or any of its properties  is bound or
            affected.

      (d)   EXCEPT  AS EXPRESSLY SET OUT IN THIS SECTION 6.1, OWNER EXPRESSLY
            DISCLAIMS ANY  EXPRESS OR IMPLIED REPRESENTATIONS  OR WARRANTIES,
            INCLUDING  WITHOUT  LIMITATION,  SEAWORTHINESS,  MERCHANTABILITY,
            FITNESS  FOR  A PARTICULAR  PURPOSE,  OR WITH  RESPECT  TO PATENT
            INFRINGEMENT,  VALUE,   USE,   CONDITION,   SUITABILITY,   CLASS,
            OPERATION,   COMPLIANCE  WITH  LAWS,   DESIGN,  CONFORMANCE  WITH
            SPECIFICATIONS, OR ABSENCE OF DEFECTS, HIDDEN, PATENT,  LATENT OR
            OTHER.

6.2   Representations and Warranties of the Charterer.

      To  induce the Owner to  enter into this Charter  and to consummate the
      transactions  contemplated   hereby,  the   Charterer  represents   and
      warrants  to  the  Owner that  as  of  the date  of  execution  of this
      Charter:

   (a)    Organization and  Good Standing.   The  Charterer is  a corporation
          duly  organized, validly existing  and in  good standing  under the
          laws of the State of Oklahoma and is duly qualified or licensed and
          in  good   standing  as  a   foreign  corporation  in   each  other
          jurisdiction in which it owns or leases any facility or property or
          has  any office,  or in  which  the character  of  its business  or
          operations requires such qualification  or licensing, in each  case
          related to the subject matter of this Charter or any of the Charter
          Documents.

   (b)    Authority.  The Charterer has taken all action required by law, its
          Certificate  of  Incorporation,  as  amended,  and  its  By-Laws to
          authorize the execution  and delivery of  this Charter and each  of
          the Charter Documents to  which it is  a party.   This Charter  and
          each of the Charter Documents to which it is a party constitute the
          legal, valid and binding obligations of  the Charterer, enforceable
          against  the Charterer in  accordance with  their respective terms,
          subject  to  bankruptcy,  insolvency  or  similar  laws  of general
          application relating to the enforcement of creditors' rights and by
          general principles of equity.   Neither the execution and  delivery
          of  this Charter  or  any  of the  Charter  Documents,  nor on  the
          Delivery  Date, will the consummation  of the transactions by it in
          accordance  with  the terms  hereof  or  thereof:   (i) violate  or
          conflict with any provision of  its Certificate of Incorporation or
          By-Laws, (ii) violate  or conflict with  any provision of  any law,
          rule,  regulation,  order,  permit,  certificate,  writ,  judgment,
          injunction, decree, determination, award  or other decision of  any
          court, government,  government agency or  instrumentality, domestic
          or foreign,  or arbitrator  binding upon it,  or  (iii) create  any
          conflicts  or  resulting  liens or  require any  consents  that the
          Charterer has not obtained.

          Neither the execution and delivery of  this Charter and each of the
          Charter  Documents to which it  is a party nor  the consummation of
          the  transactions contemplated hereby  or thereby will  result in a
          breach of, or constitute a default (or with notice or lapse of time
          or both  result in  a breach of or  constitute a default)  under or
          otherwise give  any person  the right  to terminate  any  mortgage,
          indenture, loan  or credit  agreement, lease, license,  contract or
          any agreement or instrument to which the Charterer is a party or by
          which it or any of its properties is bound or affected.

   (c)    Litigation.    There  is  no  action,  suit,  proceeding, claim  or
          investigation pending or, to the best of the  Charterer's knowledge
          after due  and reasonable inquiry, threatened  against or affecting
          the Charterer or any  of its properties  or related to the  subject
          matter of this  Charter or any of the  Charter Documents before any
          court, government agency  or regulatory authority  (federal, state,
          local or foreign) that questions the validity or enforceability  of
          this Charter  or any Charter  Document or is  reasonably likely  to
          impair its ability to perform its obligations under this Charter or
          any of the Charter Documents  or to cause a material adverse effect
          on the business, financial condition or prospects of the Charterer.
          There are  no orders, writs, judgments,  stipulations, injunctions,
          decrees, determinations,  awards or  other decisions of  any court,
          government or governmental  agency or instrumentality, domestic  or
          foreign, or any arbitrator outstanding against the Charterer having
          or likely to have any such effect.

   (d)    No Defaults.  No event or condition has occurred  and is continuing
          that constitutes, or with the lapse of time or the giving of notice
          or both,  would constitute, an Event of Default by the Charterer or
          any other Member of the  Charterer Group, as the case may be, under
          this Charter or any of the Charter Documents or a default or by the
          Charterer  or any  other Member  of the  Charterer Group  under any
          indenture, trust,  deed, loan agreement, lease  other instrument or
          contract, agreement,  instrument or obligation  (i) under which any
          such  Person pays,  receives, borrows,  lends,  or is  obligated or
          entitled to pay,  receive, borrow or lend,  consideration in excess
          of $1,000,000 to  which it is a  party or by  which it is bound  or
          affected,  or (ii) which  is reasonably likely  to have  a material
          adverse effect on the business, financial condition or prospects of
          the Charterer or  its ability to perform its obligations  under the
          Charter.

   (e)    Obligations  and Liens.   Except  as disclosed  in writing  to, and
          specifically  consented to in writing  by, the Owner, the Charterer
          has no  outstanding obligations,  or Liens  on its  properties, for
          unpaid  Taxes other than  Taxes incurred in the  ordinary course of
          business, and in existence for not more than 30  days and which are
          not  overdue  unless  such  Taxes are,  in  the  Owner's reasonable
          judgment, being contested in  good faith and by appropriate Persons
          and proceedings.

   (f)    Government Regulations.  The Charterer  is not in violation of  and
          is not alleged to be in violation of  any  law,  rule,  regulation,
          order, permit, certificate, writ, judgment, stipulation, injunction
          decree, determination, award or decision of any  court, government,
          or governmental agency or instrumentality,  domestic or foreign, or
          arbitrator binding upon it, which violation or alleged violation is
          reasonably likely to have a material adverse effect on the business,
          financial condition or prospects of the Charterer or its ability to
          perform its obligations under  this  Charter  or any of the Charter
          Documents.

   (g)    No Labor Unrest.   There are no strikes or  other significant labor
          disputes in progress or pending or, to the  best of the Charterer's
          knowledge after  due and reasonable inquiry,  threatened against or
          affecting the Charterer.

   (h)    Pollution Regulations.  Neither the Charterer nor any member of the
          Charterer  Group  is  the  subject  of  any  actual  or  threatened
          environmental,   health  or  safety  investigation  or  enforcement
          proceeding related  to its operations  or business  or the  subject
          matter  of this Charter  or any  of the Charter Documents.   To the
          best of the Charterer's knowledge after due and reasonable inquiry,
          the  Charterer  is  in  compliance  with all  applicable  laws  and
          regulations relating to pollution control and environmental, health
          and safety matters  in all jurisdictions in which the  Charterer is
          doing business.

   (i)    Providing of Information. All information that the Charterer at any
          time furnishes the Owner for use in any statement,  application  or
          other filing provided for in this  Charter  or any  of  the Charter
          Documents,   does  or   shall  (as  the   case  may  be)  meet  all
          requirements of applicable  laws, rules  and regulations  and  does
          not or  shall not  (as the case may be) as  of the date prepared or
          delivered to the  Owner  contain  any statement  which  is false or
          misleading  with respect to any material fact and does not or shall
          not (as  the case may  be) as of the date prepared or  delivered to
          the Owner  omit any material fact required  to be stated therein or
          necessary in order to make such information not false or misleading
          for the purpose for  which such  information was  furnished and  no
          correction  of  any  information or omission that is no longer true
          and correct in all material respects that has not been made need be
          made  or updated in order to make  such  information,  taken  as  a
          whole,  not  false  or  misleading  in  any  material respect.  For
          purposes of this Section 6.2(i),  "information"  includes,  without
          limitation,  all  information  contained  in   the   data   sheets,
          projections, pro forma sources and uses,  the  Drilling  Contracts,
          the  "M.G. Hulme, Jr."  1,000  Meter  Water  Depth Upgrade Shipyard
          Specification,  Rev.  5,  dated October  21, 1995  by D.N. Edelson,
          Project  Engineer,  the   Enserch-Green   Canyon   Analysis,  dated
          September  11,  1995  and  the Reading & Bates Corporation/GATX Due
          Diligence Confidential Binder, dated July 20, 1995, in each case as
          provided to the Investors prior to the date hereof.

          Each  audited  income statement,  balance  sheet  and statement  of
          operation  and cash flows dated as of December 31, 1994 and for the
          fiscal year then ended and the  unaudited income statement, balance
          sheet  and  statement  of  operation and  cash  flows  dated as  of
          September 30, 1995 and for the nine months then ended were prepared
          in  accordance  with  generally  accepted   accounting  principles,
          consistently applied,  are true,  complete and correct,  and fairly
          present the  financial condition, the  results of   operations  and
          cash flows  for Reading & Bates and  its consolidated subsidiaries,
          including  the Charterer,  for the  dates  and periods  stated; and
          there  is no outstanding Debt, lien or liability, whether direct or
          contingent, that is material to the Charterer and not shown in such
          financial statements.

   (j)    Insurance.   The  Charterer maintains  insurance listed on Schedule
          C and other insurance in a  manner consistent with persons  engaged
          in the same or similar business and in compliance with this Charter.

   (k)    Certain Federal Laws and Requirements.

           (i)    The Charterer and its affiliates are exempt from the
                  Public Utility Holding Company Act of 1935.

          (ii)    None of  the Charterer and  its subsidiaries, whether
                  separately  or  together, is  an  investment  company
                  under the Investment Company Act of 1940.

         (iii)    Except  as  expressly  identified  in  this  Charter,
                  neither  the  Charterer  nor  any  affiliate  of  the
                  Charterer, as  that term is  defined in the  Employee
                  Retirement Income Security  Act of 1974, as  amended,
                  and the  rules and regulations  thereunder ("ERISA"),
                  has any material unfunded ERISA liabilities.

   (l)       Permits  and Authorizations.   The  Charterer has  obtained all
             governmental   permits,    authorizations,   certificates   and
             approvals and given  or made  all notices and  filings required
             under  applicable   law  for   the   execution,  delivery   and
             performance of this Charter and the other Charter Documents and
             its  possession,  use  and operation  of  the Vessel.   Without
             limiting   the   generality   of   the   foregoing,   and  more
             specifically,   the   Charterer   has    and   maintains    all
             environmental,   health   and   safety  permits   necessary  or
             appropriate for its operations and all such permits are in good
             standing and the Charterer is in compliance with all terms  and
             conditions of  such permits  and all applicable  environmental,
             health or safety requirements of law.

                                  ARTICLE 7
                       USE AND OPERATION OF THE VESSEL

7.1   Use of the Vessel

   The  Charterer shall have the full use  of the Vessel and may, subject to
   the  terms  and  conditions  of this  Charter,  employ  the Vessel  as  a
   semisubmersible drilling  unit throughout  the world  consistent with its
   design  capability, except that the  Vessel shall not be used contrary to
   and shall  comply with  (a) all  applicable laws  or regulations  of  any
   governmental  authority,  treaties  or conventions  (including,  but  not
   limited to, all environmental, health and safety laws) and (b) the  terms
   or policies of any insurance then required hereunder; and provided  that,
   with  respect  to the  use  or possession  of the  Vessel outside  of the
   territorial waters  and/or the  Outer  Continental  Shelf of  the  United
   States, the Charterer  shall give such indemnities suitable to  the Owner
   in an amount and form, and obtain  and continue such additional insurance
   coverage, in such amounts, having such terms and conditions and with such
   carriers, as the Owner may reasonably require at any time or from time to
   time in connection with the use or possession  of the Vessel in any given
   area outside the territorial waters and/or the Outer Continental Shelf of
   the United States.  The Charterer, in respect of the Vessel, shall at all
   times comply with all applicable laws and regulations (including, but not
   limited  to, all  environmental, health  and safety  laws), and  with the
   applicable provisions  and conditions of  all licenses, permits, consents
   and approvals of any governmental authority.

7.2   Manning, etc., of the Vessel

   During  the  Charter Period,  the  Charterer  shall  have  the  exclusive
   possession and control of the Vessel and shall man, victual, navigate and
   operate, supply, fuel, maintain  and repair the Vessel at its own expense
   or by its own measurement and shall pay all other charges and expenses of
   every  kind and nature  whatsoever incidental to the  possession, use and
   operation of the Vessel.  During the Charter Period, the possession, use,
   operation and maintenance of the Vessel shall  be at the sole risk,  cost
   and expense  of the  Charterer  until redelivery  pursuant to  the  terms
   hereof upon the  termination or expiration  of this Charter.   As between
   the Owner and the Charterer, the Offshore Installation  Manager, officers
   and crew of the  Vessel and all  other persons at  any time on board  the
   Vessel shall  be deemed  to be  engaged and employed  exclusively by  the
   Charterer and  shall be deemed to be and remain the Charterer's servants,
   navigating and working the Vessel solely  on behalf of and at the risk of
   the Charterer and the Charterer shall hold each Indemnitee harmless  from
   any and all claims against it by, or as the result of any act or omission
   of, any such  Offshore Installation Manager, officer, member of  the crew
   or other person.   The Charterer assumes and shall satisfy all  costs and
   liabilities incurred  in connection with all salvage services received by
   the Vessel.

7.3   Documentation of the Vessel

   At  or  before the  time  of  delivery  of the  Vessel  to the  Charterer
   hereunder on the  Delivery Date, the Charterer  shall cause the Vessel to
   be  documented  for  foreign trade  in  the  name  of  the  Owner  at the
   Charterer's sole  cost and  expense under  the laws and the  flag of  the
   United States  of America.  Neither the Owner nor  the Charterer (without
   the prior written consent of the other) will do or suffer or permit to be
   done  anything  which  can  or  might change  or  injuriously  affect the
   documentation of the Vessel for foreign trade under the  laws and flag of
   the United States of America.  The Charterer covenants and agrees that it
   will not  (a) cause or  permit the  Vessel to be operated  in any  manner
   which could subject the Owner to any criminal penalty, or (b) operate  or
   locate the Vessel, or permit the Vessel to be operated or located, in any
   area excluded from coverage from any insurance required by the provisions
   of Article 15 or (c) unless there shall have been an actual or total loss
   or agreed or compromised total  loss of the Vessel, abandon the Vessel in
   any  foreign port.    The  Owner and  the Charterer  hereby  respectively
   represent  that they are as of the date of execution of this Charter, and
   covenant that they  shall remain during the Charter Period,  "citizens of
   the United States" within  the meaning of Section 2 of the  Shipping Act,
   1916, as amended.  The Charterer agrees that the  Vessel will be operated
   solely in  the domestic or  foreign commerce  of the United  States.  The
   Charterer   shall  throughout   the  Charter   Period  maintain   to  the
   satisfaction  of the Owner at  the Charterer's sole cost and expense such
   documentation  of the Vessel, and shall not do  or suffer or permit to be
   done  anything  which  can  or  might change  or  injuriously  affect the
   documentation of the Vessel for foreign trade under the laws and the flag
   of  the United States or which would result in  a violation of any law or
   regulation of the United States applicable to a vessel owned by a citizen
   of the United States, as defined in the Shipping Act, 1916.

7.4   General and Particular Average

   Whenever  necessary,   average  adjusters  shall   be  appointed  by  the
   Charterer, who shall, at the Charterer's sole cost and expense, attend to
   the  settlement and  collection of  both general  and particular  average
   losses.

7.5   Site and Access

   The Charterer will be responsible for selecting and mooring the Vessel in
   a safe  and prudent  manner at  a location  in the  Operating Area.   The
   Charterer will  conduct sea  bottom condition  surveys acceptable  to the
   Owner  where required  by the  Vessel's hull  underwater surveyor  at the
   Charterer's  sole   cost  and  expense  and   will  be   responsible  for
   identifying, marking and  clearing the location of all  major impediments
   or hazards  to operations or  causing same  to be  done.  Removal of  all
   impediments or hazards shall be,  as between Owner and  the Charterer, at
   the Charterer's sole cost and expense.

7.6   Owner Liability for Materials Furnished by the Charterer

   Without limiting any indemnity provided by the Charterer, the Owner shall
   not be liable for any loss or damage resulting from the use or possession
   of  equipment,  materials,  supplies  or other  items  furnished  by  the
   Charterer.

7.7   Environmental and Related Reporting and Inspection 

   The Charterer shall notify the Owner in  writing within five days of  the
   Charterer's  obtaining notice or knowledge  thereof of  any (a) notice of
   claim that  there  has  been  a  release  or threatened  release  of  any
   contaminant into  the  environment  from  the  Vessel or  any  equipment,
   machinery or property related thereto; (b) notice of any investigation by
   any  governmental authority  evaluating  whether any  remedial  action is
   necessary or appropriate to respond to any release or threatened  release
   of any contaminant into the environment from the Vessel or any equipment,
   machinery or property related thereto; (c) notice that the Vessel or  any
   equipment,  machinery  or  property  related  thereto  is  subject  to an
   environmental  Lien;  (d) the commencement  or  threat  of  any judicial,
   administrative  or   other  proceeding   alleging  a   violation  of  any
   environmental, health or safety  requirements of law; or  (e) any new  or
   proposed  changes  to   any  existing  environmental,  health  or  safety
   requirement of law that could have a material adverse effect upon the use
   or operations  of the  Vessel  or the  Charterer.   The  Charterer  shall
   provide  from time  to time  documentation deemed  adequate by  the Owner
   showing   the  Charterer's   compliance  with   financial  responsibility
   requirements of all applicable environmental, health and safety laws.

7.8   Notice of Entry

   The Charterer will provide written notice within  ten (10) days of  entry
   of the Vessel into the jurisdictional waters of any foreign country or of
   any state or territory  of the United States other than Louisiana,  Texas
   and any other state in  which the Owner has filed financing statements or
   taken other  action to perfect  its Lien upon the equipment  owned by the
   Charterer and its Affiliates and used in connection with the Vessel.

                                  ARTICLE 8
            MAINTENANCE OF CONDITION AND CLASSIFICATION; REPAIRS

8.1   Maintenance of Classification

   The  Charterer shall  at all  times and,  at its  sole cost  and expense,
   procurement  and risk  (a)  have  exclusive control  of the  Vessel,  (b)
   maintain  and  preserve the  Vessel in  accordance  with  good commercial
   maintenance practices,  and keep  the Vessel and her  drilling and  other
   equipment in good running order, condition and repair, so that the Vessel
   shall  be  tight, staunch,  strong  and  well  and  sufficiently tackled,
   appareled, furnished, equipped and in every respect seaworthy and in good
   operating condition, and  (to the extent that such prescribes  a standard
   of maintenance that exceeds the foregoing standard in any respect) in the
   condition,  running order  and repair  which  equals or  exceeds industry
   standards  and the  condition, running  order and  repair of  vessels and
   their equipment  owned by  the Charterer  of like  kind and  age, and, in
   addition, shall

   (i)    cause  the Vessel to be a semi-submersible drilling unit capable of
          operating in water depths of up to 850 meters, before completion of
          the  Upgrade  Program and  1,000  meters  after completion  of  the
          Upgrade   Program    and   to   have    technical   specifications,
          characteristics   and  capabilities   at  least   the   substantial
          equivalent  of  those  set forth  in  Schedule A  hereto  and after
          completion of the Upgrade Program as set forth in Schedule B; and

   (ii)   keep the Vessel in such  condition as will entitle her, during  the
          Charter Period and  at the date of redelivery to  the Owner, to the
          highest applicable  classification and rating to  which an existing
          vessel of the same age and type can qualify under the then existing
          rules  and standards of  the American Bureau of  Shipping and shall
          furnish to the Owner  within 90 days after each anniversary  of the
          Delivery  Date and at any other time  upon the request of the Owner
          true  and correct photostatic copies of  all certificates issued by
          the American Bureau of Shipping evidencing the maintenance of  such
          classification.

   (iii)  The Vessel  shall, and the Charterer covenants that it will, at all
          times  comply   with  all   applicable  safety,   operational   and
          maintenance requirements of  the United States Coast  Guard and any
          other United States, international or other authority and all laws,
          treaties and conventions, and rules and regulations (including, but
          not limited to, all  environmental, health and safety laws)  issued
          thereby  or applicable  in  any  way  to  the Vessel  or  any  use,
          possession or  operation thereof  and  shall have  on  board,  when
          required thereby, valid certificates and appropriate environmental,
          health  and  safety  permits  showing  compliance therewith.    The
          Charterer  shall,  at  its  expense,  make  all  modifications  and
          alterations to the Vessel which may be necessary to comply with the
          provisions of this Section 8.1.

8.2   Repair

   The Vessel  shall be  repaired and  overhauled by the  Charterer and  the
   Charterer shall install, affix and  attach replacement parts thereon,  at
   its sole cost and  expense, in each case, whenever necessary to  keep the
   same in  good condition,  repair  and working  order in  accordance  with
   Section 8.1 or as  a result of any requirement  hereof.  The Vessel shall
   likewise  be  drydocked  or  undergo an  underwater  survey  in  lieu  of
   drydocking, cleaned and bottom painted by the Charterer, at its  expense,
   whenever necessary,  but in any event  at least as  often as necessary in
   order to  maintain the  classification referred to in  Section 8.1.   The
   Charterer  shall, at  its  expense,  promptly and  duly comply  with  all
   requirements of  the applicable  classification society  including  those
   resulting from each  special survey of the Vessel.  The  Charterer shall,
   at its expense, promptly furnish the Owner with written information as to
   any casualty  involving any  loss or  damage to  the Vessel  in excess of
   $500,000 and, upon request, all survey reports in connection therewith.

8.3   Drydocking or Underwater Survey in Lieu of Drydocking

   The Charterer shall give  the Owner notice of each proposed drydocking or
   underwater  survey  in   lieu  of  drydocking  20  days  in   advance  if
   practicable, otherwise as long in advance as may be practicable under the
   circumstances.   The Owner, any Investor or any authorized representative
   of any thereof may at any time, upon reasonable notice at its own expense
   (but after the occurrence of an Event of Default, at the Charterer's sole
   cost and expense), inspect the Vessel at drydocking or underwater  survey
   in lieu of drydocking or otherwise, at any time or from time to time, and
   inspect the Vessel's logs, but neither the  Owner nor any Investor  shall
   have any duty to do so.

8.4   Required Survey

   At  the request of  the Owner following any  explosion, release accident,
   storm,  act of  God  or other  event  or incident  that gives  the  Owner
   reasonable concern  for the physical condition  and operating  ability of
   the Vessel and at the Charterer's expense, a qualified independent marine
   surveyor or  surveyors of  recognized standing, acceptable  to the Owner,
   shall conduct a survey of the  Vessel.  For purpose of such  surveys, the
   Vessel need  not be drydocked (or  subjected to  an underwater survey  in
   lieu of  drydocking) unless  required by customary  survey practices  for
   drilling vessels of similar  age, type and service.  The Charterer  shall
   submit a detailed report  of the independent marine surveyor to the Owner
   promptly upon the completion of such survey, containing: 

   (a)    the location of the Vessel at the time of inspection;

   (b)    the findings and recommendations of the independent marine surveyor
          with respect to the condition of the Vessel; and 

   (c)    the  opinion of the  independent marine surveyor as  to whether the
          Vessel has  been maintained in  accordance with the  terms of  this
          Article 8.

                                  ARTICLE 9
                            EQUIPMENT AND STORES

9.1   Fuel, etc.

   The Owner acknowledges  that such  fuel, lubricating  oil and  unbroached
   consumable stores as may be aboard the Vessel at the time of its delivery
   to the Charterer will be the property of the Charterer.

9.2   Equipment, etc.

   The Charterer  shall have  the  use, without  additional payment  to  the
   Owner,  of such  equipment, outfit,  furniture, furnishings,  appliances,
   spare or replacement parts and nonconsumable stores as shall have been on
   board the  Vessel on the Delivery  Date.  The  same or  their substantial
   equivalent shall be  returned to the Owner  on redelivery or retaking  of
   the  Vessel  in the  same  good order  and condition  as received  by the
   Charterer on the Delivery Date, ordinary  wear and tear excepted, and any
   such items damaged or so worn in service as to be unfit  for use, or used
   as a spare part  for replacement purposes, or lost or destroyed  shall be
   replaced  by the Charterer with an  identical or substantially equivalent
   replacement item in at least as good working order and condition as those
   of  the replaced item when received by the Charterer on the Delivery Date
   at or before redelivery of the Vessel.   Such replacement, whenever made,
   shall  be deemed part of the "Vessel" for all purposes of, and its use or
   possession shall be subject to the terms and conditions of, this Charter.

9.3   The Charterer's Additional Equipment, etc.

   The Charterer shall at its own expense provide such additional equipment,
   outfit,  tools, replacement parts,  crockery, linen, and other  items not
   included  in inventories as provided in this Article 9 as may be required
   in the  operation of  the Vessel,  and such  equipment, and  other items,
   shall become, on  being placed  on board the  Vessel and  without further
   act, part of the Vessel and the property of the Owner for all purposes of
   this Charter,  provided that so long  as no Default  or Event  of Default
   shall have  occurred and  be  continuing, any  such equipment  and  other
   items, so provided by  the Charterer (and not required to be  provided or
   to  have been  provided by  Section 9.2 or  any  other provision  of this
   Charter other than this Section 9.3) and capable of being removed without
   causing  damage to  the Vessel  may be  removed by  the Charterer  at the
   expiration  of the Charter  Period, and such equipment,  and other items,
   shall  become, without further  act, the  property of the Charterer.   At
   least 90 days prior to delivery or retaking of the Vessel (or such lesser
   time as may be available  in connection with any retaking), the Charterer
   shall  give notice  to the  Owner of  any such  equipment or  other items
   leased from third parties, which the Charterer has elected not to remove,
   and will  furnish  the Owner  with  copies of  all leases  and  contracts
   relating  thereto, and the Owner  may, within 30 days thereafter (or such
   lesser time as may  be applicable in connection with any retaking), elect
   to retain all or any part  of such equipment on board the  Vessel subject
   to  any  required  approval of  the  lessors  of such  equipment.    Upon
   redelivery or retaking the Owner shall assume the rights, obligations and
   liabilities  of  the  lessee  under  such leases  arising  subsequent  to
   delivery  or retaking  in connection  with any  equipment that  the Owner
   elects to so retain.   The Charterer shall  at its sole cost  and expense
   remove from the Vessel any such leased equipment which the Owner does not
   so elect to retain and  shall cause to be  repaired at its sole  cost and
   expense  any  damage  to  the  Vessel  or any  part  or  property thereof
   resulting in any manner from the Charterer's removal of any equipment.

   By its acceptance  of the Vessel upon delivery, the  Charterer represents
   and warrants to the Owner that there is on board the  Vessel an inventory
   of equipment, outfit, appliances, tools, replacement parts, nonconsumable
   stores, crockery, linen,  and other items, as in the  reasonable judgment
   and experience  of the  Charterer  are necessary  or appropriate  to  the
   possession,  use and  operation of  the Vessel  and the  Charterer hereby
   covenants that, subject to  Section 9.3, upon  redelivery or retaking  of
   the  Vessel by the  Owner, such inventory, which  may include replacement
   items of equivalent value, shall be on board the Vessel.

9.4   Title to Improvements; Option to Purchase

   Title to  Nonseverables of  the Vessel acquired after  the Delivery  Date
   shall  without further  act vest  in the  Owner and  shall  be deemed  to
   constitute a part of the Vessel and be subject to this Charter.  Title to
   all Severables of the Vessel acquired after the Delivery Date (other than
   Severables that  replace  or substitute  for Severables  that  have  been
   provided by the Owner, the title to which shall vest in the Owner)  shall
   vest  in the  Charterer; provided,  however, that  the Charterer  may not
   remove any  thereof from  the Vessel (except to  the extent  subsequently
   replaced or  worn out) prior to the end of the Charter Period except that
   the Charterer may, so long  as no Default or Event of  Default shall have
   occurred  and be continuing,  remove at the Charterer's  expense and risk
   any such  Severables, provided,  further,  that the  Owner may  elect  to
   purchase for  cash any such  Severables at the time of  redelivery of the
   Vessel to  the Owner in accordance  with any  of the  provisions of  this
   Charter.   Contemporaneously  with its  delivery of  the Expiration  Date
   Election Notice, the  Charterer shall notify the Owner of  the Severables
   described above  that it intends  to remove.   To  exercise the  election
   referred  to in  the second proviso to  the second  preceding sentence of
   this Section 9.4, the Owner shall give to the Charterer written notice of
   its  election to purchase on or  prior to such redelivery.   The purchase
   price of  such Severables shall  be equal  to the Fair  Market Sale Value
   thereof, as of the date of purchase as determined by mutual agreement or,
   in the  absence  of such  agreement, by  the  Appraisal Procedure.    The
   Charterer shall repair any damage caused by the removal of any Severables
   to the Owner's reasonable satisfaction.

9.5   No Lease of Essential Severables

   The  Charterer shall  not  lease  any Severables  that are  necessary  or
   appropriate  for  the  use,  possession  or operation  of  the  Vessel in
   accordance with  the terms and conditions of this Charter and the Charter
   Documents but shall hold good and marketable title to all such Severables
   that are,  in  accordance with  industry practice,  customarily owned  by
   drilling  contractors engaged  in businesses  similar to  the Charterer's
   business, free and clear of all Liens other than Permitted Liens.

                                 ARTICLE 10
             THE CHARTERER'S CHANGES, ADDITIONS AND REPLACEMENTS

10.1  Structural Changes or Alterations; Installation of Equipment, etc.

   Except as  may be required by Article 8 or 9  or the Upgrade Program, the
   Charterer shall  not make  any structural changes or  alterations in  the
   Vessel, or any change, alteration, addition or improvement to the  Vessel
   that  is  Nonseverable (except  for  changes,  alterations,  additions or
   improvements required to  be made pursuant to applicable law),  and shall
   make  no material  changes or  alterations in  the Vessel's  machinery or
   boilers, unless  and to the  extent that, in each  instance, (a) it first
   secures written  approval of  the Owner  (which may  be  withheld in  the
   Owner's  sole discretion  if such change  or alteration  would materially
   change the  type or  character of the  Vessel or  would adversely  affect
   Owner's status as a lessor for federal income tax purposes, but otherwise
   such approval shall not be unreasonably withheld) and (b) any such change
   or alteration  is made at the  Charterer's expense and  risk and does not
   diminish the value,  utility, useful life or seaworthiness of  the Vessel
   below the  value, utility,  useful life and seaworthiness  of the  Vessel
   immediately prior to such change if the Vessel were then in the condition
   and state of seaworthiness required to be maintained by the terms of this
   Charter.  Subject  to the foregoing provision, the Charterer  may install
   any pumps, gear or equipment  it may require in addition to that on board
   the Vessel on delivery, provided that such installations are accomplished
   at  the  Charterer's  sole  cost, expense  and  risk.   Pumps,  gear  and
   equipment  so installed shall,  without necessity of further  act, become
   part of the  Vessel and the property of the Owner;  provided that so long
   as no Default or Event of Default shall have  occurred and be continuing,
   any such pumps,  gear or equipment not required  to be installed in order
   to  meet the  requirements  of Articles  8  and 9  and not  installed  as
   replacements for  property included in the Vessel on the  date hereof are
   subject to the Owner's option  to purchase set forth in Section 9.4, and,
   if not purchased by  the Owner, may be  removed (so long as such  removal
   can be accomplished  without damage to  the Vessel) by the  Charterer, at
   its  own expense and risk,  at any time during, or  at the expiration of,
   the  Charter  Period, whereupon  such  pumps,  gear  or  equipment shall,
   without necessity of further act, become the property of the Charterer.

10.2  Replacement of Parts

   In  addition to the  permitted structural changes or  alterations and the
   addition  of pumps, gear  and equipment referred to  in Section 10.1, the
   Charterer may, in the ordinary course of maintenance, repair or  overhaul
   of the Vessel,  remove any item of  property (including any item referred
   to in Section 9.2  or 9.3  constituting a part  of the  Vessel), provided
   such item  is replaced as promptly  as possible  by an  item of  property
   which  is  free and  clear of  all  Liens  and is  in  as  good operating
   condition, working  order and repair,  and is as seaworthy as,  and has a
   value, useful  life and utility  at least equal  to that of,  the item of
   property being  replaced (including each item  of equipment) and assuming
   the  Vessel is  in the working  order, condition and repair  and state of
   seaworthiness  required  by  the terms  of  this Charter.    Any  item of
   property  so removed  from the  Vessel shall remain  the property  of the
   Owner  until replaced  in  accordance  with the  terms of  the  preceding
   sentence, but shall then, without further act, become the property of the
   Charterer but shall remain subject  to the Owner's option to purchase set
   forth in  Section 9.4.   Any  such replacement  item of  property  shall,
   without further act, become the property of the Owner, deemed part of the
   "Vessel" as defined  herein for all purposes, and its use  and possession
   shall be subject to the terms and conditions hereof.

10.3  Vessel Markings

   The  Charterer shall  not allow  the name of  any person,  association or
   corporation, other  than as required hereby,  to be placed on  the Vessel
   (other than  the current  name of  "M. G. Hulme,  Jr.") as  a designation
   which might be interpreted as  indicating a claim of ownership thereof by
   any person,  association or  corporation other than the  Owner, but,  for
   purposes of  identification, the  Charterer shall have the  right at  its
   sole cost and expense  to paint the Vessel in its  own colors, to install
   and display its stack insignia or name, and to fly its own house flag, or
   to  utilize the  colors, insignia, name  or flag of any  Affiliate of the
   Charterer.  The Charterer shall notify the  Owner of each such choice  of
   colors, name, insignia or flag before making any such change.

                                 ARTICLE 11
                            ADDITIONAL COVENANTS

11.1  General Covenants

   From  and  after the  date  of execution  of this  Charter and  until the
   termination or expiration of this Charter, the Charterer shall:

   (a)    continue  its  business as  presently  conducted  and maintain  its
          existence, rights and privileges;

   (b)    comply  with  its obligations  set  forth in  this Charter  and all
          applicable  laws (including, without limitation, all environmental,
          health and safety laws); and

   (c)    maintain  its  books  and  records  in  compliance  with  generally
          accepted  accounting  principles,  consistently applied  with  such
          adjustments  or   changes  as  to  which   the  independent  public
          accountants referred to in Section 11.3 concur.

11.2  No Impairment

   Notwithstanding  any other  contract or  other claim  of right,  from and
   after  the date of execution of this Charter and until the termination or
   expiration of  this Charter,  the  Charterer Group  shall not  enter  any
   contract  or  agreement or  perform  or  omit any  act  that  in  any way
   materially  limits  or  impairs,  or the  effect  of  which would  be  to
   materially  limit or impair, the  ability of any member  of the Charterer
   Group to comply with and fulfill its obligations set forth in the Charter
   Documents.

11.3  Financial Information

   The  Charterer will furnish, or cause  to be furnished, to  the Owner and
each Investor:

   (a)    within  45 days  after the end  of each  of the  first three fiscal
          quarters during each fiscal year of Reading & Bates, a consolidated
          balance sheet of Reading &  Bates and its consolidated Subsidiaries
          as  of  the close  of  each such  fiscal  quarter, together  with a
          consolidated income statement  and consolidated  statement of  cash
          flows  of Reading &  Bates and  such Subsidiaries  for such  fiscal
          quarter, in  each  case  setting  forth  in  comparative  form  the
          corresponding  consolidated figures for the same period of the next
          preceding fiscal  year, all in  reasonable detail and  certified by
          the chief  financial officer  of  Reading & Bates  as  being  true,
          complete  and  correct  and  as  fairly  presenting  the  financial
          condition  and   the  results  of  operations   of  the  respective
          corporations covered thereby, subject to year-end adjustments;

   (b)    within 90  days after the  close of each  fiscal year of  Reading &
          Bates,  (i) audited consolidated balance sheets  of Reading & Bates
          and  its consolidated Subsidiaries  as of the close  of such fiscal
          year,  together with  consolidated profit  and loss  statements and
          consolidated statements of cash  flows of Reading & Bates  and such
          Subsidiaries  for  such  fiscal  year,  certified  as  being  true,
          complete and correct by Arthur Andersen & Co. or independent public
          accountants  of  comparable  national  standing and  reputation  as
          fairly  presenting the consolidated financial  position, results of
          operations and cash flow of  Reading & Bates and such  Subsidiaries
          as  of the end of such fiscal  year and the consolidated results of
          their  operations for such fiscal year, and as fairly presenting in
          all   material  respects  in  conformity  with  generally  accepted
          accounting  principles applied  on  a basis  consistent  with prior
          fiscal  years with  such adjustments  or changes  as to  which such
          independent  public accountants concur;  and (ii) an  update of the
          Contract  Data   Sheet  previously   submitted  to   the  Investors
          (including, but not limited to, rig and contract status and updated
          annual budget) true, complete and correct and fairly presenting the
          information  contained therein as of the date and of its submission
          to the Owner and the Investors);

   (c)    within 30  days after the  filing thereof with  the Securities  and
          Exchange  Commission,  a copy  of each  report, form  or prospectus
          filed  by Reading &  Bates  or any  of  its Subsidiaries  with  the
          Securities  and  Exchange  Commission,  within  three days  of  the
          issuance  of any  press  release  or similar  materials  issued  by
          Reading & Bates or any of its Subsidiaries; and

   (d)    such other financial  or other information relating  to the affairs
          of Reading & Bates and its  consolidated Subsidiaries as the  Owner
          or any Investor may from time to time reasonably request.

11.4  Compliance Certificates

   The Charterer  shall furnish or cause  to be furnished,  to the Owner and
the Investors:

   (a)    within  45  days after  the  end  of the  first,  second and  third
          quarterly accounting period in each fiscal year of Reading & Bates,
          and  within 90 days after the end  of each fiscal year of Reading &
          Bates,  a  certificate of  the  Chairman, the  President or  a Vice
          President   and   the   Chief   Financial   Officer  of   Reading &
          Bates stating that  the Charterer and each  Guarantor has performed
          and  complied with all the terms  and provisions of this Charter or
          the  Guaranty and/or the  other Charter Documents, as  the case may
          be,  or, if there shall have been  an Event of Default hereunder or
          if any Guarantor shall be in default under the Guaranty, specifying
          all such  defaults and the  nature thereof of  which the  signer of
          such certificate may have notice or knowledge;

   (b)    within 90  days after  the end  of each  fiscal  year of  Reading &
          Bates,  a   certificate  of  the   independent  public  accountants
          reporting  on the  financial statements  for such  year (i) stating
          that their examination in connection with such financial statements
          has  been  made  in  accordance  with generally  accepted  auditing
          standards and  has included a review  of the relevant  terms of the
          Guaranty, the Charter and the other Charter Documents, (ii) stating
          whether or not such examination has disclosed the existence, during
          or at the end of such year, of any default by the  Charterer or any
          Guarantor in the  observance of any  of the terms of  the Guaranty,
          this Charter or the other Charter Documents, insofar as they relate
          to  accounting matters, and, if such  examination has disclosed any
          such default, specifying  all such defaults and the  nature thereof
          (it  being understood that such accountants shall not be liable for
          any failure to obtain knowledge of any such default which would not
          be disclosed in the course of  such examination), and (iii) stating
          that  they  have  reviewed  the  certificate  of  the  officers  of
          Reading & Bates,  delivered with respect  to such year  pursuant to
          paragraph (a) of this Section 11.4,  and confirming the matters set
          forth in such certificate;

   (c)    promptly  after  Reading &  Bates'   receipt  thereof,  any   audit
          management  letter or  similar  document submitted  after  the date
          hereof by independent accountants in connection with each annual or
          interim  audit  made  by  such  accountants  with  respect  to  the
          financial condition  or  affairs  of  Readings  and  Bates  or  any
          Guarantor; and

   (d)    as  promptly as practicable  (but in  any event  not later  than 15
          days) after any  officer of the Charterer or any  Guarantor obtains
          notice or knowledge of the occurrence of any default (which has not
          been remedied or waived) in the performance or observance of any of
          the terms or provisions of the Guaranty or any of the other Charter
          Documents  or any Event of Default under the Charter, a certificate
          of either the Chairman, the President  or a Vice President and  the
          Chief  Financial Officer of the Charterer or Guarantor (as the case
          may  be) describing the default or Event of Default and stating the
          date of commencement thereof, what action the Charterer proposes to
          take with  respect thereto and the  estimated date when  it will be
          remedied.

11.5  Further Assurances, etc.

   The  Charterer shall,  at its  sole cost  and expense, promptly  and duly
   execute, acknowledge  and deliver  to the  Owner such further  documents,
   instruments,  financing and  similar statements  and assurances  and take
   such further action as the Owner may from time to time reasonably request
   in order  more effectively to carry  out the intent  and purpose  of this
   Charter or the Charter Documents, to establish and protect the rights and
   remedies  created or  intended  to  be  created  in  favor of  the  Owner
   hereunder or under the Charter Documents, and to protect the title of the
   Owner in and to the Vessel.  The Charterer shall also promptly furnish to
   the  Owner such information as may be required to enable the Owner timely
   to file any reports  required to be  filed by it  as the owner under  the
   Charter or as the owner of the Vessel with any governmental authority.

11.6  Maintenance of Corporate Existence, etc.

   The Charterer shall at all times maintain its corporate existence  except
   as  permitted by Section 11.7 and will  do or cause to be done all things
   necessary  to  preserve and  keep  in full  force  and effect  its rights
   (charter and statutory) and franchises; provided that (a) it shall not be
   required to preserve any  right or  franchise if its  Board of  Directors
   shall determine that  the preservation thereof is no longer  desirable in
   the conduct of its business and (b) the loss thereof does  not materially
   adversely affect or diminish the rights of the Owner or any Investor.

11.7  Conditions of Consolidation, Merger, etc.

   The  Charterer  shall  not  consolidate with  or  merge  into  any  other
   corporation  or convey, transfer,  or lease, all or  substantially all of
   its assets  as an entirety to  any Person, unless  each of  the following
   conditions is satisfied:

   (a)    The Person  formed by such consolidation, merger  or acquisition by
          conveyance, transfer or lease  all or substantially all the  assets
          of the Charterer as an entirety (the "Resulting Entity"), shall, at
          the same  time, by  consolidation, merger, conveyance,  transfer or
          lease,  acquire all  or  substantially all  of  the assets  of  the
          Guarantor  as entireties, shall  be a citizen of  the United States
          within the meaning of the Shipping Act, 1916 or shall have obtained
          the  approval of  the  U.S. Maritime  Administration  for  any such
          consolidation, merger (and the Owner and the Investors, without any
          expense to any of the  foregoing, shall have received an opinion of
          counsel selected by the Owner as to  such citizenship of the United
          States  of such Person,  in form and substance  satisfactory in all
          respects  to the Owner),  and shall be a  corporation organized and
          existing under the laws of  one of the several states of the United
          States of America or the  District of Columbia.  Such Person, prior
          to  or upon the  occurrence of any such  transaction, shall execute
          and  deliver  to  the  Owner an  agreement  in  form and  substance
          satisfactory to the Owner, containing an  assumption by such Person
          of the due and punctual performance and observance of each covenant
          and  condition of  the  Charter and  the  Charter Documents  to  be
          performed or observed by the Charterer.

   (b)    Before and immediately after giving effect to  such transaction, no
          Default, or Event of Default shall have occurred and be continuing.

   (c)    After  giving effect to  such transaction, the rating  of the long-
          term unsecured  senior debt  or implied long-term  unsecured senior
          debt  rating  of  the  Resulting  Entity  shall  be  and  shall  be
          maintained for  six months thereafter at least "B+"  by S&P and, if
          rated by Moody's, at least "B1".

   (d)    The  Charterer shall have delivered to the Owner and each Investor,
          prior  to or upon the occurrence of such transaction, a Certificate
          of either  the Chairman or  the President and  the Chief  Financial
          Officer of the Charterer, and an opinion of counsel satisfactory to
          the  Owner,   each   stating  that   such  consolidation,   merger,
          conveyance,  transfer  or   lease  and  the   assumption  agreement
          described in Section 11.7(a) comply with this Section 11.7 and that
          all  conditions  precedent  relating  to  such  transaction  herein
          provided for have been fully complied with.

   Upon any consolidation or merger, or any conveyance, transfer or lease of
   all or substantially all of the assets of the Charterer as an entirety in
   accordance with this Section 11.7, the Resulting Entity shall succeed to,
   and be  substituted  for, and  any exercise  of  every right  and  power,
   obligation and  liability of,  the Charterer under this  Charter and  the
   Charter Documents  with the same effect  as if such Resulting  Entity had
   been named  as the  Charterer herein  and therein.   No  such conveyance,
   transfer  or lease  of all  or substantially  all of  the  assets of  the
   Charterer,  as  an  entirety  shall have  the  effect  of  releasing  the
   Charterer or any Guarantor,  as the case may be, or any  Resulting Entity
   which shall theretofore have become such in the manner prescribed in this
   Section 11.7 from its  liability under this Charter, the Guaranty  or the
   Charter Documents.   Nothing contained herein shall  permit any  charter,
   subcharter or other  arrangement for the use, operation or  possession of
   the  Vessel except in  compliance with the applicable  provisions of this
   Charter.

11.8  Indemnity  of the  Owner  by Customers  for  Oil Pollution  and Related
      Environmental Claims

   The Charterer shall  cause each of its  customers or operators  under any
   Drilling Contract  to (a) indemnify, defend and hold  harmless the Owner,
   the  Investors and  their Affiliates  from any  and all  claims, demands,
   liabilities, losses, damages, lawsuits  and expenses respecting pollution
   claims resulting  from the  release of  Crude Oil as a  consequence of  a
   blowout,  crater or  other cause  arising out  of or  in connection  with
   operations  under  such  Drilling  Contract,  in  accordance with  normal
   industry  practice, and  any  and  all related  environmental,  health or
   safety matters  (including, but not  limited to, all cost  and expense of
   controlling  clean-up  of pollution  and  all penalties  imposed  by  any
   Person) irrespective of whether the Charterer, the  Owner or any of their
   Affiliates may  have been or may  be alleged  to have  been negligent  or
   otherwise legally at  fault; and (b) if any customer under  such Drilling
   Contract  does not  maintain (i) a  consolidated  tangible  net worth  as
   determined in accordance with generally accepted accounting principles of
   at least $500,000,000 (or be a consolidated Subsidiary of a parent entity
   having such  consolidated tangible net worth)  or (ii) a senior unsecured
   debt  rating  by  S&P  of  "BBB-"  or  by Moody's  of  "Baa3"  (or  be  a
   consolidated  direct or indirect  Subsidiary of a parent  entity having a
   senior unsecured debt rating meeting such criteria), such customer  shall
   provide  (or  the  Charterer shall  provide)  operators extra  expense or
   energy exploration and development insurance coverage in an amount of  at
   least the difference between $150,000,000 (or such greater amount, as may
   be necessary to meet the applicable financial responsibility requirements
   under the  Oil Pollution Act  of 1990,  or any other  applicable laws, as
   amended from time  to time) and the  amount of the Charterer's contingent
   operators extra  expense or energy  exploration and development insurance
   or  other coverage  in effect  at such  time, with  such underwriters  or
   carriers  and containing  such  terms  and conditions  as the  Owner  may
   require,  in the  form normally  and customarily  carried by oil  and gas
   operators  engaged in  offshore  drilling operations,  for  oil pollution
   liability and expense, with the Owner, Investors, the Owner Group and the
   Charterer named as additional insureds and having the benefit of  waivers
   of subrogation. 

                                  ARTICLE 12
                       PAYMENTS, INVOICES AND SECURITY

12.1  Basic Hire

   The  Charterer shall  pay to the  Owner, in arrears on  each Payment Date
   through  the Primary  Term, an amount equal  to 1.16848%  of Owner's Cost
   (the "Primary Term Basic Hire") as adjusted on each Upgrade Payment  Date
   after the  Delivery  Date  for amounts  disbursed  by  the Owner  to  the
   Charterer pursuant to  Section 5.9 according to  the methodology outlined
   on Schedule F attached hereto, and during  any Extended Term, 125% of the
   Primary Term Basic Hire payable on each Payment Date during such Extended
   Term.  The  payment each month  of the Basic  Hire shall be  a continuing
   obligation for each month during  which this Charter is in effect, and no
   invoice  for such  amount need be  issued to the Charterer  by the Owner.
   The  Charterer's obligation  to make  such payment  is unconditional  and
   absolute during the term hereof and shall not be affected by any event of
   force majeure or otherwise.

12.2  Supplemental Hire

   In addition to its obligation to  pay Basic Hire hereunder, the Charterer
   shall pay to the Owner any and all Supplemental Hire as and when the same
   shall become due and owing, and in  the event of any failure on  the part
   of the Charterer to pay any Supplemental  Hire, the Owner shall have  all
   rights, powers and remedies provided for herein or at law or in equity or
   admiralty or otherwise in the case of nonpayment of Basic Hire.

   The  Charterer shall  pay to the Owner,  as Supplemental  Hire, all costs
   incurred  by  the  Owner  in  performing or  complying  with  the Charter
   Documents if  the Charterer fails to  perform or comply  with any  of its
   agreements contained in this  Charter, or any Charter Document including,
   but not limited to:

   (a)    Direct and indirect cost of permits, licenses and the like required
          of the  Owner as owner of  the Vessel.  Owner  shall use reasonable
          efforts, without  filing suit  or incurring out-of-pocket  or other
          additional  cost   or  expense,  to  avail   itself  of  applicable
          exemptions and/or reductions of such costs.

   (b)    All  premiums  and other  costs  to  the  Owner  for  insurance  as
          specified in Articles 11.8 and 15.

   (c)    Unless otherwise  expressly set  forth herein in  Section 19.2, the
          Charterer shall bear directly or reimburse the Owner, upon proof of
          payment by  the Owner, all  fees and expenses  (including fees  and
          expenses  of  the Owner's  counsel)  incurred by  the Owner  in the
          performance of or related to this Charter or any Charter Documents.

12.3  Payment Terms

   The Charterer shall pay all amounts for Supplemental Hire invoiced by the
   Owner within  10 days after receipt of such invoice.   Any Basic Hire not
   paid when  due and any  invoices not paid in  immediately available funds
   within 10 days after receipt by  the Charterer shall accrue interest from
   the due  date until  paid at a per  annum rate  of interest equal  to the
   Overdue Rate, computed on  a basis of 360 days, for actual  days elapsed.
   Payments  shall be made  by wire transfer in  immediately available funds
   prior  to 12:00 noon,  New York  City  time, on  the  day when  each such
   payment shall be  due to the  Owner's account at a  financial institution
   located in the State of New York or at such other office as the Owner may
   from time to time designate in writing to the Charterer.  All payments to
   the Owner  hereunder shall be without  any offset, counterclaim, discount
   or deduction and shall be made in United States Dollars.  All payments to
   the Owner stated  in this Charter are  exclusive of any Taxes, including,
   without  limitation,  sales, excise,  value  added,  stamp,  documentary,
   transfer, ad valorem, general consumption, property, use, export, import,
   employment, payroll,  withholding or other  similar Taxes,  which may  be
   imposed on  or incurred  by  the Owner,  its employees  or the  Investors
   (other than, except as otherwise provided herein, Taxes on the net income
   or franchise of the Owner, its employees or the Investors), and all costs
   associated therewith, in connection with performance by the Owner of,  or
   the Owner's  rights under, this Charter,  including the  costs associated
   with bonds or letters of credit that are not otherwise the responsibility
   of the Charterer under  this Charter.  The Charterer shall pay  the Owner
   the  amount of  all such  charges, Taxes  and costs  upon  receipt of  an
   invoice,  subject  to the  Charterer's  right to  reasonably  verify  the
   Owner's payment of such amounts.  The Owner shall use reasonable efforts,
   without filing  suit or incurring  any out-of-pocket or other  additional
   costs,  to avail  itself  of  any and  all applicable  exemptions  and/or
   reductions of such  taxes.  The Charterer  shall, at the Owner's request,
   pay such  sums directly or post  any required bonds  or letter  of credit
   required on any such items.

12.4  Invoices

   The Owner  shall render to  the Charterer a monthly invoice  on or before
   the 15th day of each month showing  all Supplemental Hire payable to  the
   Owner for the preceding month.

12.5  Security for Obligations 

   (a)    To secure the Obligations, the Obligors have executed and delivered
          the Security Documents.   Subject to Section 12.5(b), (c),  (d) and
          (e), the  Charterer shall  maintain (i) the Cunningham  Mortgage or
          (ii) any  Substitute Collateral  that  has a  fair market  value at
          least  equal  to  the Stipulated  Loss  Value  at the  time  of any
          delivery   of  such   Substitute   Collateral   (collectively,  the
          "Additional Collateral")  to secure the Obligations.   In addition,
          subject to Section  12.5(e) the Charterer  shall maintain the  Yost
          Mortgage.

   (b)    In the event that, at any time during the  periods set forth below,
          the  Timely  Liquidation  Value  of  the  Vessel  as  determined in
          accordance  with the Appraisal  Procedure at such time  is at least
          the Stipulated Loss Value at such time, neither S&P nor Moody's has
          a negative outlook for Reading  & Bates at such time and a Drilling
          Contract is  in full force  and effect at  such time that  provides
          adequate cash flow to service  the Obligations for the term of such
          Drilling  Contract, the  Charterer may  request a reduction  in the
          amount of Additional Collateral as follows:

      (i)    after the fourth  anniversary of the Delivery Date and  so long
             as (A)  the rating of  S&P of the Rated Securities  is at least
             "BB+"  and  the  rating,  if  any,  of  Moody's  of  the  Rated
             Securities is at least  "Ba1", and (B) no Default has occurred,
             the  Timely Liquidation  Value of  the  Jim  Cunningham or  the
             Timely   Liquidation   Value   of  Substitute   Collateral  (as
             determined  by  the   Appraisal  Procedure)   required  to   be
             maintained  shall be  reduced  to  50% of  the  Stipulated Loss
             Value;

      (ii)   after the seventh anniversary of the Delivery Date and so  long
             as  (A) the rating of S&P  of the Rated Securities  is at least
             "BBB-" or higher  by S&P and the rating,  if any, of Moody's of
             the Rated Securities is at least "Baa3", and (B) no Default has
             occurred,  no Additional  Collateral  shall be  required  to be
             maintained; or

      (iii)  at  any time, and so long as (A) the rating of S&P of the Rated
             Securities is at least  "BBB+" or higher by S&P and the rating,
             if any, of Moody's of the  Rated Securities is at least "Baa1",
             and (B) no Default has occurred, no Additional Collateral shall
             be required to be maintained.

   (c)    The  Owner shall  release its  lien and  security interest  in that
          portion  of  the Additional  Collateral  that is  in excess  of the
          Additional Collateral (the "Released Collateral")  the Charterer is
          required to maintain  pursuant to Section 12.5(b).  From  and after
          such release the Charterer  shall maintain such Released Collateral
          or other property (the  "Negative Pledge Property") mutually agreed
          upon by the  Owner and the Charterer that  has a Timely Liquidation
          Value  equal to  the Stipulated  Loss  Value at  the  time of  such
          release, free and clear of all Liens (other than Permitted Liens as
          defined  in   the  Cunningham  Mortgage).     The  Charterer  shall
          immediately  notify  the Owner  and  each of  the Investors  of the
          occurrence of  any event that  would not entitle  the Charterer  to
          maintain reduced Additional  Collateral pursuant to Section 12.5(b)
          and  shall promptly reinstate or  grant, as the case  may be, Liens
          upon  the Negative  Pledge Property  or, with  the approval  of the
          Owner,  provide  other Substitute  Collateral  in  accordance  with
          Section 12.5(d) as required under Section 12.5(b).

   (d)    The  Charterer shall  be entitled  to  exchange collateral  for the
          Obligations    (other than  the  Yost  Mortgage)  or discharge  its
          obligation   to  reinstate  Additional   Collateral  or  Substitute
          Collateral by providing substitute  property as collateral securing
          the  Obligations  (the  "Substitute  Collateral")  if each  of  the
          following conditions precedent shall have been satisfied:

      (i)    The Charterer shall have notified the Owner of its intention to
             provide  Substitute  Collateral,  which  Substitute  Collateral
             shall be  cash, cash equivalents, or a mobile offshore drilling
             unit and  otherwise in  all respects  satisfactory in  form and
             substance to the Owner.

      (ii)   All  instruments conveying  or granting  to the  Charterer such
             Substitute Collateral and any related agreements or instruments
             shall in all respects be satisfactory in form and substance  to
             the Owner.

      (iii)  The  Owner and each  of the Investors shall  have received with
             respect to such Substitute Collateral a report at the sole cost
             and expense of the  Charterer prepared  in accordance with  the
             Appraisal   Procedure,   in   form  and   substance  reasonably
             satisfactory to the  Owner, that the fair market value  of such
             Substitute Collateral when  added to the fair market value   of
             other Additional Collateral  for the  Obligations shall,  after
             giving   effect  to   any  release,   be  in   compliance  with
             Section 12.5 (a) or (b), as applicable.

      (iv)   The Charterer shall at its sole cost and expense have  obtained
             (to  the satisfaction  of the  Owner) all  government approvals
             required  in  connection  with the  ownership,  use, occupancy,
             possession,   operation  or   ordinary   maintenance   of  such
             Substitute     Collateral,    compliance     with    applicable
             environmental, health  and safety laws  and regulations and the
             mortgaging  of such Substitute Collateral  to the  Owner.  Each
             such governmental approval shall be in full force and effect.

      (v)    The Charterer shall at its sole cost and expense have conducted
             or  caused to  be conducted  such  title  examination or  title
             review  with  respect   to  such  Substitute  Collateral  as  a
             reasonably   prudent   operator   would   conduct   under   the
             circumstances, and the Owner  shall have approved the status of
             title of such Substitute Collateral.   The Charterer shall have
             furnished  to  the Owner  such  title  policy  or  other  title
             assurances as it receives in connection with the acquisition of
             such Substitute Collateral.

      (vi)   The Charterer shall at its sole cost and expense have  obtained
             such casualty,  liability and  other insurance  with respect to
             such Substitute Collateral as  shall be requested by the Owner,
             which insurance shall in all respects comply with, and shall be
             in all respects subject to, Article 15.  The Owner  and each of
             the  Investors   shall  have  received   a  certificate  of  an
             independent  insurance  broker  setting  forth   the  insurance
             obtained in accordance  with this paragraph (vi) and certifying
             that such insurance is  in full force  and effect and  that all
             premiums then due thereon have been paid.

      (vii)  The Charterer shall at its sole cost and expense have  executed
             and delivered to the  Owner or to a trustee or collateral agent
             designated by them  and acting on their behalf, a  mortgage and
             security  agreement  or  other  instrument  or  other  document
             granting to  the Owner  or such trustee or  collateral agent  a
             mortgage Lien and security interest,  subject to no other Liens
             (other  than  Permitted  Liens  as  defined  in  the Cunningham
             Mortgage),  in and  to such  Substitute Collateral,  each deed,
             lease, assignment or other instrument of conveyance referred to
             in paragraph (ii) above,  each government action as referred to
             in  paragraph (iv)  above,  each  ancillary  contract  and  any
             agreement  providing  for  the  operation  of  such  Substitute
             Collateral  (which  assignment shall  be  consented  to  by the
             operator, on  terms satisfactory  to the Owner),  subject to no
             Liens (other than Permitted Liens  as defined in the Cunningham
             Mortgage).  Such mortgage and security agreement  or such other
             instrument  shall be in  full force and effect and  shall be in
             all respects satisfactory in  form and substance to the  Owner.
             Each of  the foregoing instruments  and any necessary documents
             relating  thereto,  including,  without  limitation,  financing
             statements  under the  applicable  Uniform Commercial  Code  or
             other instruments  for filing  or recordation,  shall have been
             duly recorded  and filed  in all public offices  in which  such
             recordation  or  filing   is  necessary  in  order  to  provide
             constructive notice to third parties of the interests and Liens
             created thereby  and in  order to  establish, perfect, preserve
             and  protect the  validity  and effectiveness  thereof  and the
             mortgage Lien  and security  interest created  by such mortgage
             and  security agreement  or  other instrument  on  all property
             purported to be subject thereto; and all taxes, fees and  other
             charges payable in connection with any and all of the foregoing
             shall have been paid in full by the Charterer.

      (viii) The  Owner   and  the   Investors  shall   have  received  such
             environmental   reports  with   respect  to   such   Substitute
             Collateral (in form and substance satisfactory to the Owner) as
             they may request.

      (ix)   The  Owner and each  of the Investors shall  have received such
             opinions  of  counsel  satisfactory  to  the Owner  as  to such
             matters  relating  to   the  acquisition  of  such   Substitute
             Collateral,  including the validity  and enforceability  of all
             documents and  instruments referred to  in this Section 12.5(d)
             and the validity,  extent and priority of the Owner's  Lien, as
             the Owner  shall reasonably request, which opinions shall be in
             form and  substance satisfactory to the  Owner and from counsel
             acceptable to the Owner.

      (x)    The Charterer shall  have paid all costs and  expenses incurred
             by the Owner and each of the Investors in respect of  obtaining
             any  release,  Additional  Collateral,  the  Mortgages  or  the
             Substitute  Collateral,  regardless  of  whether  such release,
             Collateral, the Mortgages, Substitute Collateral  or Additional
             Collateral is delivered.

      (xi)   The  Owner  shall  have  received  an  Officer's   Certificate,
             containing such representations and  warranties with respect to
             such Substitute  Collateral and  the matters set  forth in this
             Section 12.5(d) and  any other  matters as  shall be reasonably
             requested by the Owner, and such other documents or evidence as
             to  the  satisfaction  of  the  conditions set  forth  in  this
             Section 12.5(d), as the Owner shall reasonably request.

(e)   The  Charterer  shall  be entitled  to  obtain  a release  of  the Yost
      Mortgage  if  either  (i)  the  Owner  has  satisfied  itself  that  it
      possesses a  perfected first  priority lien  on the  Jim Cunningham  or
      (ii)  the Charterer has provided the Owner  with a substitute letter of
      credit in form  satisfactory to  the Owner in  an amount  equal to  the
      excess (the "Excess  Safe Harbor Exposure")  of the  maximum amount  of
      liability,  whether  direct   or  contingent,  of  any  member  of  the
      Charterer Group under the Safe  Harbor Lease Documents over  the lesser
      of  (i) $11,000,000  or  (ii) the  amount of  such  liability  that  is
      secured  by the  Cunningham,  as determined,  in  each case,  by Arthur
      Andersen & Co., or other  independent expert satisfactory to  the Owner
      (the "Safe  Harbor Exposure  Expert").   The amount  of such letter  of
      credit shall  be  subject  to  reduction  as  the  Excess  Safe  Harbor
      Exposure reduces  as  determined by  the Safe  Harbor Exposure  Expert.
      Any release shall be in  form and substance reasonably  satisfactory to
      the Owner.

                                 ARTICLE 13
                     GENERAL OBLIGATIONS AND PERFORMANCE

13.1  Independent Owner Relationships

   In  the  performance  of  this  Charter,  the  Owner  is  an  independent
   contractor.   In  the performance of  this Charter,  the Charterer  is an
   independent contractor and shall control and direct the operation of  the
   Vessel and the performance of  the details of the work to be performed by
   the Charterer's  personnel and  shall be responsible for  the results  of
   such  work, all  in  accordance  with the  obligations imposed  upon  the
   Charterer hereunder and under the Charter Documents.  The presence of and
   the observation by the Owner's representative(s) at the site  of any work
   shall  not relieve  the Charterer  from  the Charterer's  obligations and
   responsibilities hereunder.

13.2  Inspection

   The Owner shall have the right, at the Charterer's sole cost and expense,
   to inspect the Vessel and its book and records at all reasonable times if
   the exercise of  such inspection right would  not unreasonably  interfere
   with  the  operator's  operations  on  the  Vessel  at  the  time  or any
   applicable governmental  approval, which  approvals the  Charterer  shall
   endeavor to obtain in good faith, and shall have the right to confer with
   and  have access to the officers  and employees of the  Charterer and any
   Guarantor  in connection with any  such inspection.  The Owner shall have
   the  right annually  to  cause the  Vessel  to be  surveyed by  a  marine
   surveyor  at  the  Owner's  (but,  after the  occurrence  and  during the
   continuance of  any Default,  the Charterer's)  expense.   The  Charterer
   shall  correct  at  its  sole  cost  expense  all  material  deficiencies
   discovered during any such survey or inspection.

13.3  Performance of the Charterer

   The  Charterer  shall exercise  due diligence  to carry  out any  and all
   operations  with respect to the  Vessel in a safe,  workmanlike manner in
   accordance with good  offshore industry practice, which requirement shall
   specifically include, not by way of limitation in any manner  whatsoever,
   the  obligations to  have the  Vessel under  the command  of  an offshore
   instillation manager certified by and for the area in which the Vessel is
   operating.

13.4  Operations Outside of U.S. Waters

   In  the event that the Charterer intends to operate the Vessel outside of
   U.S. territorial waters and/or the Outer Continental Shelf, the Charterer
   shall  submit at  least 15  days  before movement  of  the Vessel  to the
   intended  area  of  operation  such  documentation  demonstrating to  the
   Owner's reasonable satisfaction  (a) that operation of  the Vessel within
   the  intended area  of operation  complies with  all applicable  laws and
   regulations of the United States and of  the intended area of  operation;
   (b) that the Vessel can be removed  from such intended area of  operation
   upon  either  cessation  of  the  Vessel's  operation  in  the  area   or
   termination  of  this  Charter;  (c)  that  the  Charterer  provides  all
   additional indemnities and has secured political risk insurance  for such
   area additive to the insurances provided for herein and (d) the Vessel is
   not  subject to  any lien or  interest that might have  priority over the
   title  and interest of the  Owner.  Each move  to a new area outside U.S.
   territorial waters,  whether or  not  subject to  the jurisdiction  of  a
   different  foreign country,  shall  meet the  foregoing  requirements and
   those of Section 7.1.

                                 ARTICLE 14
                           LIABILITY AND INDEMNITY

14.1  Survival of Indemnities

   The indemnities set  forth in this Charter shall survive  the termination
   of this  Charter, and  shall remain enforceable (subject  only to  debtor
   relief  laws and general  equitable principles) as to  any claim, demand,
   liability,  damage and  expense  arising  out of  or incidental  to  this
   Charter, without regard to the termination of this Charter.

14.2  Pollution

   The Charterer shall assume all responsibility for the control and removal
   of, and hold  Owner Group  harmless from loss,  liabilities or  damage or
   claims arising  from, directly or  indirectly, pollution or contamination
   by any liquid  or nonliquid or waste  material wheresoever found  that is
   discharged,  spilled or  leaked  from  the Vessel  or  noncompliance with
   environmental,  health and  safety laws  (including but  not  limited to,
   those  stemming from  release of pollutants,  private toxic  tort claims,
   off-site disposal  of  waste or  other pollutants,  PCB's, and  asbestos-
   containing materials on or in the Vessel (irrespective  of whether any of
   the  foregoing  occurred,  existed  or  arose before  or  after  the date
   hereof)).   To the extent that any law, regulation or governmental entity
   acting within its  jurisdiction imposes on Owner Group liability  for any
   such pollution, notwithstanding  such imposition of direct liability, the
   Charterer  shall have  designated Owner  Group  as an  additional insured
   under its  insurance policies  and  the Charterer  shall hold  the  Owner
   harmless  from such  loss, liabilities,  damage or  claims and  reimburse
   Owner Group  for any  amounts that  Owner Group  may be  required to pay.
   This indemnity is valid irrespective of the negligence or fault,  whether
   sole, joint,  active or  passive  of the  indemnified party  and  whether
   predicated on strict  liability, statutory duty, contractual indemnity or
   any other theory of liability of the indemnified party.

14.3  The Charterer's Indemnity

   (a)    The  Charterer shall  defend, indemnify and  hold Owner  Group, its
          officers,    directors,    employees,    agents    and   Affiliates
          (collectively,  the "Indemnitees")  harmless from  and  against all
          claims,   liabilities,  damages,  Taxes  and  expenses  (including,
          without limitation,  attorneys' fees  and other costs  of defense),
          including  all  claims  of  any  type whatsoever,  irrespective  of
          insurance coverage, arising  out of, incidental  to, or related  to
          this Charter, any of the Charter Documents, any of the transactions
          contemplated hereby or thereby, the Vessel, the Jim Cunningham, the
          Randolph  Yost   or  any   Additional  Collateral   or   Substitute
          Collateral, except, unless  otherwise specifically provided herein,
          any  claims directly arising out of the Owner's gross negligence or
          willful misconduct.

   (b)    If  it  is  judicially  determined  that  the  monetary  limits  of
          insurance  required  under  this  Charter  or  of  the  indemnities
          voluntarily  and mutually assumed in this  Charter (which the Owner
          and  the  Charterer  hereby  agree  will  be  supported  either  by
          available liability insurance, under which the insurer has no right
          of subrogation against  the indemnitee, or voluntarily self-insured
          in  respect of  permitted  deductibles) exceed  the  maximum limits
          permitted under applicable  law, it is  agreed that such  insurance
          requirements  or indemnities  shall  automatically  be  amended  to
          conform to the maximum monetary limits permitted under such law.

   (c)    The Charterer  shall indemnify, pay  and hold harmless  Owner Group
          against any loss, liability, cost or expense incurred in respect of
          the Vessel, including actual or constructive loss of the Vessel, or
          any  effort to  interdict  the payment  to  the Owner  of  proceeds
          arising out of or related to this Charter. 

   (d)    The  indemnities  in this  Charter  apply  without  regard  to  any
          conflicting  rules  of  liability   under  any  applicable  law  or
          regulation and shall include indemnification for any and all claims
          in  which  recovery,  indemnification  or  contribution  is  sought
          directly  or indirectly by any person or entity against Owner Group
          whether predicated on negligence, strict liability, statutory  duty
          or  contractual  indemnity,  except  any  such  liability  directly
          arising  out of the  gross negligence or willful  misconduct of the
          Owner unless otherwise expressly specified herein.

14.4  Patent Infringement

   (a)    The  Charterer  shall  assume  liability  for,  and  shall  defend,
          indemnify and hold  the Owner harmless from and against,  all suits
          and  actions  alleging  that the  Vessel,  any  equipment  or  part
          thereof, or any operation of the Vessel, any such equipment or part
          thereof constitutes an infringement of any letters patent.

   (b)    If, as  a  result of  any  changes  required by  the  Charterer  in
          equipment  furnished by the  Owner, or any changes  required by the
          Charterer in operation  of such equipment or part thereof,  a claim
          is filed against the Owner alleging that such equipment or any such
          operation  conducted  infringes  any   letters  patent,  then   the
          Charterer shall  be liable for  all such claims  and indemnify  and
          hold the Owner harmless from all such claims.

14.5  Both-to-Blame Collision Clause

   Without  limitation on  any other  indemnity  of the  Charterer contained
   herein,  if the  liability  for any  collision  in  which the  Vessel  is
   involved while performing this Charter should be determined in accordance
   with  the laws  of the  United States of  America, the  following clauses
   shall apply:

   (a)    If the Vessel comes into collision with another ship as a result of
          the negligence of the other ship and any act, neglect or default of
          the Master, mariner, pilot or the servants of the Charterer  in the
          navigation  or in the management of the Vessel, the Charterer shall
          indemnify the  Owner against  all direct, consequential  or special
          loss or liability to the other ship or her owner. 

   (b)    The  foregoing  provisions  shall  also  apply  where  the  owners,
          operators or those in charge  of any ship or ships or objects other
          than,  or in  addition to,  the colliding  ships or objects  are at
          fault in respect of a collision or contact.

14.6  Liens, Attachments and Encumbrances

   None of the  Charterer, any subcharterer or party to a  Drilling Contract
   shall have  the right, power  or authority to create, incur  or permit to
   exist  any  Lien  upon the  Vessel,  except  for  Permitted  Liens.   The
   Charterer further  agrees to carry a  true copy of  this Charter with the
   ship's  papers on board the Vessel, and to exhibit the same to any person
   having business with the Vessel which  may give rise to any lien or claim
   upon the Vessel other than a Permitted Lien or to the sale, conveyance or
   mortgage of the Vessel, and on demand, to any person having business with
   the Vessel or to any representative of the  Owner, the Owner Group or any
   Investor.  The Charterer shall also place and keep prominently  displayed
   on board the Vessel  a notice, framed under glass, printed in  plain type
   of such size that the paragraph of reading matter shall cover a space not
   less than six inches wide by nine inches high, reading as follows:

                              NOTICE OF CHARTER

      This Vessel  is owned by  Deep Sea  Investors, L.L.C.   It is  under
      bareboat demise charter to Reading  & Bates Drilling Co.  Under  the
      terms of this  Charter none of the Charterer, any  subcharterer, the
      Master nor any  other person  has any right,  power or authority  to
      create, incur  or permit to  be imposed  on the Vessel  (a) any lien
      whatsoever  other  than  liens  for  current crew's  wages,  general
      average and salvage,  in each case, incurred in the  ordinary course
      of  business  and that  are  not  yet  overdue  complying  with  the
      provisions of such  charter and (b) any claims whatsoever  under any
      drilling contracts  in  respect  of the  Vessel  other  than  claims
      complying with the provisions of such charter.

   Such notice  shall be promptly  changed from time to time  to reflect the
   identity of the successors or assigns of the Owner.

14.7  Indemnification by the Charterer

   The Charterer  shall indemnify  and hold harmless the  Owner against  any
   Liens, claims or liabilities  of whatsoever nature, other  than Permitted
   Liens (but  if the  Vessel is being  redelivered to,  or otherwise coming
   into the possession of, the Owner pursuant to the terms and conditions of
   this Charter, other than Permitted Liens arising as  the result of claims
   against the Owner for which the Owner is not entitled  to indemnification
   hereunder only), whether  such Liens, claims or liabilities now  exist or
   are created  hereafter or are  founded or unfounded, upon  or relating to
   the  Vessel,  its   possession,  management,  maintenance,  repair,  use,
   employment,  chartering  or subchartering  or  operation  or  any  act or
   omission of the Charterer.

14.8  The Charterer's Duties to Remove Liens, etc.

   Without  limitation  of the  generality  of  the  Charterer's indemnities
   provided for in Section 8.2 and Article 14, the Charterer agrees that  if
   a libel or a  complaint in admiralty or any other legal  proceeding shall
   be filed against the Vessel, or if  the Vessel shall be otherwise  levied
   upon  or taken  into  custody or  detained  or sequestered  by  virtue of
   proceedings in  any court  or  tribunal or  by  any government  or  other
   authority  because of any  Liens, claims or liabilities  arising from any
   claims,  other than claims against the Owner the  payment or discharge of
   which  is not  the obligation of  the Charterer or any  Guarantor or with
   respect to which  the Owner is not  entitled to indemnification from  the
   Charterer  or any  Guarantor.   The Charterer  shall  at its  own expense
   within 15  days thereafter cause  the Vessel to be released  and all such
   Liens  and  (except  to the  extent  that  the same  shall  currently  be
   contested by  the Charterer  in  good faith  by appropriate  persons  and
   appropriate proceedings in the Owner's sole judgment and shall not affect
   the continued release, or until any risk  of forfeiture or other loss  of
   or to the Vessel, or  in any manner whatsoever interfere with the use and
   operation  of the Vessel) claims  and liabilities to  be discharged.  The
   Charterer  shall  forthwith  notify  the  Owner  by  telecopy,  telex  or
   telegram, confirmed  by  letter, of  each  such event  and of  each  such
   release  and discharge.  The  Charterer shall advise the Owner in writing
   at least once  in each three-month period as to  the status and merits of
   all  such excepted  claims  and  liabilities being  so contested  by  the
   Charterer and not discharged within fifteen days as provided above, which
   are either not bonded  or affect the ability of the  Charterer to use any
   Vessel in  the ordinary course of  its business.   The Charterer will pay
   and discharge when due  all claims for repairs and other charges incident
   to current  operations of  the  Vessel or  with  respect to  any  change,
   alteration or addition made pursuant to this  Charter and will not permit
   any  lien  referred to  in  clause  [(b)  or (c)]  of  the definition  of
   "Permitted  Liens" which  has ripened  into a  cause of  action to  be in
   effect  for more than  30 days  unless it  is fully bonded or  covered by
   insurance or Adequate Provision.

                                 ARTICLE 15
                                  INSURANCE

15.1  The Charterer's Insurance

   The Charterer shall, at its own expense,  procure  and maintain in effect
   with  respect to  and  for the  duration of  this  Charter the  insurance
   policies  with limits  of at least,  and with deductibles, if  any, of no
   more than,  those as set  forth in Schedule  C approved by  the Owner and
   having such  terms and conditions, and  with carriers and/or underwriters
   approved  by the Owner  (such approval not to  be unreasonably withheld).
   Any policies  of insurance  carried by the Charterer  in accordance  with
   this  Article 15 shall (a) provide  that the interests of  Owner Group in
   such policies shall not be invalidated by any action, inaction,  neglect,
   breach of  warranty or  misrepresentation of the Charterer  or change  in
   ownership of the Vessel and  shall insure Owner Group's interests as they
   appear,  regardless of any breach  or violation  by the Charterer  of any
   warranty, declaration or condition contained in such policies, and (b) be
   primary without right of contribution from any other insurance which  may
   be carried  by Owner Group  with respect to its interests  in the Vessel.
   The Charterer shall immediately notify underwriters of and  shall furnish
   all necessary information  concerning any occurrence which may  give rise
   to a claim under  any of said insurance policies.  Prior  to commencement
   of any  operations under  this Charter and any  renewal of  the insurance
   policies required to be maintained hereunder, the Charterer shall provide
   the  Owner  with  insurance   certificates  evidencing  the   Charterer's
   insurance coverage; such certificates shall provide for at least 30 days'
   (seven days, in the  case of war risk) prior  written notice to the Owner
   and each  of  the  Investors of  any  material change  in,  reduction  or
   cancellation  of  any  of  said  insurance policies  and  shall  show the
   Charterer, the  Owner, the  Owner Group  and the  Investors as sole  loss
   payees and additional insureds thereunder as their interests appear.   If
   requested,   copies  of   all  correspondence   and  documents   sent  to
   underwriters,  related to  any accident  or claim  arising out  of or  in
   connection with the performance of the work hereunder, shall be  provided
   to the Owner.

15.2  Nonperformance of Insurance Companies

   The  insolvency, liquidation,  bankruptcy,  or failure  of  any insurance
   company providing  insurance for  the  Charterer or  the Owner  or  their
   respective subcontractors, or  failure of  any such insurance  company to
   pay claims  accruing, shall not be  considered a waiver  of, nor shall it
   excuse the Charterer from complying  with, any of the  provisions of this
   Charter or  any of the Charter  Documents, except  that any  such act  or
   omission by  an insurance company  shall not  be deemed a  breach of this
   Charter by the Charterer.

15.3  Subrogation

   The  Charterer agrees to endorse each such insurance  policy to waive the
   underwriters' and insurance  providers' right of subrogation with respect
   to Owner  Group; and  the Charterer  agrees to  indemnify and hold  Owner
   Group harmless with  respect to any rights  of subrogation pursued by the
   Charterer's underwriters or insurance providers against Owner Group.

                                 ARTICLE 16
                            ASSIGNMENT OF CHARTER

16.1  Assignment and Subcontract by the Owner

   The Owner  shall have the right,  at any time, to  assign all or  part of
   this Charter to  any Person, so long as such Person agrees to be bound by
   this  Charter  and,  at  the  time  of  such  assignment,  has,  or is  a
   consolidated Subsidiary  of a  parent entity having,  a consolidated  net
   worth of at least $50,000,000 as determined in accordance with  generally
   accepted  accounting  principles and  is  not  primarily  engaged  in the
   offshore  drilling business,  other  than  as a  financier or  lessor  of
   offshore drilling equipment or operations.

16.2  Assignment by the Charterer

   The  Charterer shall  not have  the right  to assign  this Charter  or to
   subcharter the  Vessel without  the prior written consent  of the  Owner.
   Subject to  the terms  of applicable  law, the  Charterer shall have  the
   right,  without the consent of the Owner, so  long as no Default or Event
   of Default  shall have  occurred  and be  continuing, to  subcharter  the
   Vessel on a bareboat or time basis  to any Subsidiary of Reading &  Bates
   that is  and remains throughout the term of such  subcharter a Subsidiary
   of Reading & Bates and  a citizen of the United States within the meaning
   of the Shipping Act, 1916, and to enter into, and to permit the Vessel to
   serve under, Drilling Contracts that comply with the terms hereof and the
   other Charter Documents (provided no such Drilling Contract constitutes a
   demise or a bareboat charter or any grant of any property  right or other
   interest in the Vessel between the Charterer and others) provided that:

   (a)    each such subcharter and Drilling Contract shall be consistent with
          the  terms of this  Charter and the subcharterer  shall have agreed
          not further  to subcharter the  Vessel without complying  with this
          Section 16.2 with respect to such further subcharter;

   (b)    either (i) the  subcharterer under such subcharter or  the customer
          under a Drilling Contract is a  citizen of the United States within
          the  meaning  of  the  Shipping  Act,  1916  and  evidence  thereof
          satisfactory to the  Owner in its sole judgment shall  be submitted
          to  the Owner within 30 days of entering into such subcharter, (ii)
          the prior  approval of the  U.S. Maritime Administration  under the
          Shipping  Act, 1916 of such subcharter, in form satisfactory to the
          Owner in its sole judgment, shall have been obtained and, within 30
          days  of  entering  into  such  subcharter  or  Drilling  Contract,
          evidence  thereof satisfactory to  the Owner in  its sole judgment,
          shall have  been submitted to the Owner or (iii) such subcharter or
          Drilling Contract  shall be covered  by a general  approval of  the
          U.S. Maritime Administration  under sections 9 and 37 or  any other
          applicable  sections of  the Shipping Act,  1916 and  the Charterer
          shall have given written notice to the Owner to that  effect, which
          notice  shall  set  forth  in  reasonable detail  the  facts  which
          establish such coverage with respect to such subcharter or Drilling
          Contract; 

   (c)    such  subcharter or Drilling Contract shall not violate any laws of
          the   United  States   of  America   or  any   regulations,  rules,
          interpretations or orders thereunder;

   (d)    irrespective  of any  such subcharter,  the Charterer  shall remain
          liable  for all  of  its obligations  under  this Charter  and  the
          Charter  Documents  to the  same  extent as  if such  subcharter or
          Drilling Contract were not in effect;

   (e)    the subcharterer under each  such subcharter shall comply  with all
          applicable laws  and regulations, provided that  violations of laws
          or regulations by any such subcharterer that (i) will not result in
          the Owner, the Owner Group or the Vessel being  in violation of, or
          subject to any fine, penalty or other sanction under any applicable
          law or regulation or  any risk of forfeiture or other loss of or to
          the Vessel, (ii) do not otherwise adversely affect the interests of
          the Owner or the Owner Group or the  Investors hereunder, and (iii)
          are  not consented to by the Charterer shall not, by reason of this
          clause (e),  constitute a breach, or cause such subcharter to be in
          violation of the terms of  this Charter so long as the Charterer is
          taking  appropriate  action  to  terminate  such  violation  or  to
          terminate such subcharter;

   (f)    such subcharter or Drilling Contract shall, by its terms, expire no
          later than the end of the Charter Period, or any extension thereof,
          and Charterer shall not suffer  or permit to be continued under any
          such  subcharter  or  Drilling  Contract  any lien  or  encumbrance
          incurred  by it or its  agents, which might have  priority over the
          title and interest of the Owner in the Vessel and any part thereof,
          or  equipment or other property used in connection with the Vessel;
          and

   (g)    any  Drilling  Contract  shall  be  on   terms  and  conditions  in
          substantially the form generally used in offshore drilling and with
          an  operator and  having (i) a  consolidated tangible net  worth as
          determined   in  accordance  with   generally  accepted  accounting
          principles  of   at  least  $500,000,000  (or   be  a  consolidated
          Subsidiary  of a parent entity having  such a consolidated tangible
          net worth), or (ii) a senior unsecured debt rating by S&P of "BBB-"
          or by Moody's  of "Baa3" (or be  a consolidated direct or  indirect
          Subsidiary of a parent entity having a senior unsecured debt rating
          meeting  such  criteria)  or  (iii) maintaining (or  the  Charterer
          providing)  operators  extra  expense  or  energy  exploration  and
          development  insurance  coverage in  an  amount  of  at  least  the
          difference between  $150,000,000 (or such greater amount, as may be
          necessary   to   meet   the  applicable   financial  responsibility
          requirements  under the  Oil Pollution  Act of  1990, or  any other
          applicable laws,  as amended from time  to time) and  the amount of
          the  Charterer's  contingent  operators  extra  expense  or  energy
          exploration and  development insurance or other  coverage in effect
          at  such time, with  such underwriters  or carriers  and containing
          such terms and  conditions as the  Owner may require,  in the  form
          normally  and  customarily  maintained  by  oil and  gas  operators
          engaged  in  offshore   drilling  operations,  for  oil   pollution
          liability and expense, with  the Owner, Investors, the  Owner Group
          and  the  Charterer named  as additional  insureds  and having  the
          benefit of waivers of subrogation and with carriers or underwriters
          reasonably acceptable to the Owner.

   The  Charterer shall  within 30  days after  entering into  each Drilling
   Contract  notify the Owner of the  period thereof and of  the identity of
   the other party and its relationship with the Charterer, if any. 

16.3  Assignment of Subcharter Hire.

   The  Charterer  hereby  sells,  assigns,  transfers,  creates a  security
   interest  in and sets over unto  the Owner all of  the Charterer's right,
   title and interest in and to all accounts, chattel paper, contract rights
   and  general intangibles, and all monies and claims for monies due and to
   become due under, or arising out of,  and all claims for damages  arising
   out of  the breach  of,  any subcharter  or Drilling  Contract  (Drilling
   Contracts  being   considered,  for   purposes  of   this  Section  16.3,
   subcharters) relating to  the Vessel,  whether now existing  or hereafter
   entered into.  It is expressly  agreed that, anything herein contained to
   the  contrary notwithstanding,  the Charterer  shall remain  liable under
   each  such subcharter to  perform all of its  obligations thereunder, and
   the Owner shall  have no obligations or liabilities thereunder  by reason
   of  or arising  out  of  the foregoing  assignment (herein,  the  "Rights
   Assignment").

   Upon  the  demand  of  the Owner  after  the  occurrence and  during  the
   continuation of  an Event  of Default,  the  Charterer will  specifically
   authorize  and direct each person  liable therefor to make payment of all
   monies due and to become due under or arising out of each such subcharter
   to  the  Owner  or as  the  Owner  shall direct,  and  upon  such  demand
   irrevocably authorizes  and empowers  the Owner to  ask, demand, receive,
   receipt and give acquittance for any and all such amounts which may be or
   become  due or  payable  or remain  unpaid at  any time  or times  to the
   Charterer by each  such person under or  arising out of such subcharters;
   to endorse  any checks, drafts  or other orders for the  payment of money
   payable  to the Charterer in  payment therefor; and  in its discretion to
   file any claims or take any  action or proceeding either in its  own name
   or in the name of  the Charterer or otherwise which the Owner may deem to
   be necessary or advisable in the premises.

   The  Charterer hereby  irrevocably authorizes  the Owner  after  any such
   demand has been made, in its own name or in the name and on behalf of the
   Charterer,  to   give  notification  to   persons  obligated  under  such
   subcharters that  payment is  to be  made to  the Owner  or as  the Owner
   directs and hereby agrees to cause to be delivered  to the Owner consents
   of  such  persons  to  the  Rights  Assignment,  in  form  and  substance
   satisfactory to the Owner.

   The Charterer agrees  that at any  time and from  time to time, upon  the
   Owner's  written request,  the Charterer  will execute  and  deliver such
   further  documents and do such further  acts and things as  the Owner may
   request in order to effect further the purposes of the Rights Assignment,
   provided that no such consent referred to in  the preceding paragraph may
   be required under this sentence. 

   The Charterer hereby irrevocably authorizes the Owner, at the Charterer's
   expense, to  file  such  financing  statements  relating  to  the  Rights
   Assignment, without the Charterer's signature, as the Owner at its option
   may deem appropriate, and appoints the Owner as the Charterer's attorney-
   in-fact to execute any such financing statements in the Charterer's  name
   and  to perform  all other  acts  which the  Owner  deems appropriate  to
   perfect and continue the security interest created hereby.

   The Charterer covenants and agrees with the Owner that the Charterer will
   (a) duly  perform and  observe all  of the  terms and  provisions of such
   subcharters on the part of the Charterer to be performed or observed, (b)
   clearly record in the books and records of the Charterer notations of the
   Rights  Assignment and (c) in the event that  the Charterer shall receive
   payment of  any money which  should have been paid directly  to the Owner
   pursuant to  a  demand  made or  notice  given  under this  Section  16.3
   forthwith turn over the same  to the Owner or as the Owner may direct, in
   the identical form in which received (except for such endorsements as may
   be required thereon).

                                 ARTICLE 17
                          LOSS, TAKING OR SEIZURE.

17.1  Taking by the U.S. Government

   A taking of the Vessel for use by the United States Government  shall not
   terminate this Charter, but the Charterer shall remain liable for all its
   obligations hereunder, including its liability for payment of Hire, until
   the  expiration of  the Charter  Period.   If, at  the expiration  of the
   lesser of the then remaining term of the Charter Period or 180 days after
   the taking of the Vessel  for use by the United States Government Charter
   Period,  the Vessel shall still be subject  to such taking for use by the
   United States  Government, an  Event  of Loss  shall  be deemed  to  have
   occurred on  the last day of  such 180-day period  or the Charter Period,
   whichever occurs first.

17.2  Event of Loss not a Total Loss

   In the case  of any Event  of Loss  arising out of damage  to the  Vessel
   other than actual total loss, the Charterer  shall notify the Owner  that
   the Vessel  is deemed to be  subject to  an Event of  Loss and shall  not
   consent  to a compromise or arranged total loss without the prior written
   agreement of its insurance underwriters that the Vessel is a constructive
   or compromised total  loss and  that such  underwriters agree  to pay  an
   amount  at  least equal  to the  amount  payable by  the  Charterer under
   Section 17.3.

17.3  Payment of Stipulated Loss Value

   Upon the occurrence of  an Event of Loss,  the Charterer shall  forthwith
   give  the Owner written notice of such Event of Loss and shall pay to the
   Owner within 60 days following the date  of the occurrence of such  Event
   of Loss  the Stipulated Loss  Value of  the Vessel calculated  as of such
   Basic  Hire Payment Date occurring  after the occurrence  of the Event of
   Loss  plus interest at a  rate per annum equal  to the Overdue Rate.  The
   Charterer  shall also pay to the Owner  all Basic Hire due on the Payment
   Dates next occurring after  the date of occurrence of such Event  of Loss
   and, if the date on which such Stipulated Loss Value actually is paid  in
   full is  not such  a Payment Date,  an amount  equal to  the Overdue Rate
   (computed on the basis of a 360-day year for actual  days elapsed) on the
   amount of  such Stipulated  Loss Value for the  period from  such Payment
   Date to the date such Stipulated Loss Value is paid in full. 

17.4  Application of Payments

   In  the case of all payments (other than  insurance proceeds) received by
   the Owner or  the Charterer from any governmental authority  or otherwise
   as compensation  for an Event of Loss, so much  of such payments as shall
   not exceed the sum  of the Stipulated Loss  Value and an amount equal  to
   interest hereon required to  be paid by  the Charterer as above  provided
   and  any Hire  then due  and owing  by the  Charterer hereunder  shall be
   applied, provided no Default or Event of Default shall have  occurred and
   be continuing, first,  in reduction of the Charterer's obligation  to pay
   such Hire, if  any, then due and  owing; and second, in reduction  of the
   Charterer's obligation to pay such Stipulated Loss Value and such  amount
   equal  to interest thereon as provided  above if not already  paid by the
   Charterer  or,  if  already  paid by  the  Charterer,  to  reimburse  the
   Charterer for its payment of such Stipulated Loss Value and the  balance,
   if any, of such payments remaining thereafter  shall be paid over to,  or
   retained by, the Owner. 

17.5  Date of Loss

   For the purpose of this Charter,  the date of the occurrence of  an Event
   of Loss shall be the date of the casualty or other occurrence giving rise
   to such Event of Loss  (or the earlier of the expiration of the remaining
   term  of the  Charter  Period or  the  date 180  days after  such  taking
   thereafter, in the case of a taking of title or use  or possession of the
   government of the United States of America, as provided in the definition
   of Event of Loss set  forth in Section 1 hereof), and if the date of such
   casualty or  other occurrence  shall  be uncertain,  such date  shall  be
   deemed the date the Vessel was last heard from.

17.6  Effect of Payment of Stipulated Loss Value

   In the event that the Charterer shall make payment in full of any overdue
   payments of Basic Hire, and of such  Stipulated Loss Value and an  amount
   equal to interest thereon as provided above,  the Charterer shall have no
   further obligation to  make any payment of  Basic Hire payable  after the
   Payment Date as  of which such Stipulated Loss Value was  calculated, and
   the  Charterer, subject  to  the Charterer's  obtaining  any governmental
   consent required, (a) shall  be subrogated to all rights which  the Owner
   shall have with respect to the Vessel, (b) shall receive assignments  and
   bills  of sale  from the  Owner (in  such form  described in  Section 3.7
   hereof,  but without any  representation or warranty of  any character on
   the  part of the Owner)  of any or all such rights,  together with all of
   the  Owner's right,  title and  interest  in and  to  the Vessel  and all
   machinery and equipment pertaining  thereto, and (c) shall have the right
   to  abandon the Vessel to underwriters on  behalf of the Owner as well as
   itself.   In such case, the  Owner shall execute  such documents and take
   such other action  as the Charterer may reasonably require to  effect the
   surrender  of the Vessel  to the insurance underwriters.   Nothing herein
   contained  shall  relieve  the Charterer  or  the  Owner  of  any  of its
   obligations under Article 18 incurred up to and including the date of the
   Event of Loss.  After the payment in full of the Stipulated Loss Value of
   the  Vessel and  such other  amounts, the  Charterer's obligation  to pay
   further  Basic Hire  with respect  to such  Vessel shall terminate.   All
   insurance  proceeds received  as  the result  of  an Event  of  Loss with
   respect to the  Vessel, and all payments (other than  insurance proceeds)
   received by the Owner or the Charterer from any governmental authority or
   otherwise  as compensation  for  an Event  of Loss  with  respect to  the
   Vessel,  shall be applied  in reduction of the  Charterer's obligation to
   pay Stipulated  Loss Value  with respect  to the  Vessel (plus any  other
   amounts of  Basic Hire  and Supplemental Hire  then due  and payable with
   respect to  the Vessel),  if not  already paid  by the  Charterer, or, if
   already  paid  by  the  Charterer, shall  be  applied  to  reimburse  the
   Charterer for its payment  of the Stipulated Loss  Value with respect  to
   the Vessel  and  the  balance,  if  any,  of such  proceeds  or  payments
   remaining  thereafter  shall  be  paid  over  to,  or  retained  by,  the
   Charterer.

                                 ARTICLE 18
                                     TAX

18.1  Characterization as a Lease

   Each of the parties  hereto intends that, for  Income Tax purposes,  this
   Charter will be  treated as a lease  of the Vessel from  the Owner to the
   Charterer, the  Owner will be treated as the sole owner of the Vessel and
   the Charterer will be treated as not having any ownership interest in the
   Vessel,  the Owner or any  partnership or  joint venture with  the Owner.
   The Charterer, the Owner, each of the Investors and any Affiliate thereof
   will  not take any action or  file any return or  other document which is
   inconsistent with such characterization.

18.2  Representations

   The  Charterer represents, warrants  and covenants to the  Owner, each of
   the Investors and any Affiliate thereof as follows:

   (a)    All information provided by the Charterer and its Affiliates to any
          independent appraiser or  engineer with respect  to the Vessel  was
          and  is  true, complete  and  accurate, and  the Charterer  and its
          Affiliates did not  omit any factual information  necessary to make
          such first-mentioned information not misleading or omit any factual
          information required  to permit  any such independent  appraiser or
          engineer to perform the duties for which he was retained;

   (b)    Reading  and Bates, Inc.  is the original  owner of the  Vessel and
          initially  placed the  Vessel in  service during  its taxable  year
          ended December 31, 1983;

   (c)    The Vessel is currently in service at Garden Banks Block 387, Outer
          Continental Shelf, Gulf of Mexico (OCS-G-7485);

   (d)    The Charterer  is not, and will  not become at any  time during any
          period   in  which  the  Owner   is  claiming  federal  income  tax
          depreciation deductions, a   tax-exempt entity  (within the meaning
          of Section 168(h)(1)(A) of the Code and Section 168(j)(3)(A) of the
          1954 Code); 

   (e)    During any period during which the Owner is claiming federal income
          tax depreciation deductions, the Charterer  will take no action and
          will not  suffer any action to  be taken by any  Person (other than
          the Owner) which  would cause the Vessel to  constitute "tax-exempt
          use  property" within the meaning of Section 168(h)(1) of  the Code
          (or  Section 168(j)(3)   of  the  1954  Code),   or  property  used
          "predominantly  outside the  United States"  within the  meaning of
          Section 168(g)(1)(A) of the Code  (or Section 168(f)(2) of the 1954
          Code);

   (f)    Immediately prior to the Delivery Date, Reading and Bates, Inc. was
          entitled to  accelerated cost  recovery deductions with  respect to
          the  Vessel, computed on the  basis that (i) the  Vessel is  5-year
          property   (within the meaning of  Section 168(c)(2)(B) of the 1954
          Code) and  (ii) recovery percentages  applicable to the  Vessel are
          those set forth for 5-year  property pursuant to Section  168(b)(1)
          of the 1954 Code;

   (g)    Neither the  Charterer nor any of  its Affiliates will bear  any of
          the cost of the Upgrade Nonseverables;

   (h)    The total cost of the  Upgrade Program will be reasonable and based
          on arm's-length negotiations;

   (i)    All  of the Upgrade  Severables will be readily  removable from the
          Vessel without causing material damage to the Vessel;

   (j)    The allocation of  the total cost of the  Upgrade Program among the
          Upgrade Nonseverables,  the  Upgrade Severables,  and  the  Upgrade
          Maintenance as set forth on Schedule B is reasonable;

   (k)    The Upgrade Maintenance will consist solely of ordinary and routine
          maintenance  and  repairs  that  will  not materially  add  to  the
          Vessel's value or appreciably prolong the Vessel's useful life;

   (l)    The Charterer has  not made and will not make,  with respect to the
          period  beginning with the  Delivery Date and ending  with the date
          (if  any) on which the Charterer  acquires title to the Vessel from
          the Owner, any  claim predicated on tax or  legal ownership of such
          Vessel; 

   (m)    Immediately after the Upgrade Completion,  the basis for Income Tax
          purposes of  the Vessel in  the hands of  the Owner  will take into
          account (a) the purchase price of the Vessel, including all related
          costs, expenses,  commissions, taxes, etc. incurred by the Owner in
          connection with  the acquisition of  the Vessel, and  (b) all costs
          incurred by the Owner pursuant to the Upgrade Program;

   (n)    The  Vessel  does  not  require  any  improvements,  modifications,
          upgrades  or additions in order to be rendered complete or suitable
          for its intended use, and the Vessel is ready and available for the
          Charterer's intended use; and

   (o)    No member of the "Lessee Group" (as such term is defined in Revenue
          Procedure 75-21, 1975-1 C.B. 715,  as modified by Revenue Procedure
          79-48, 1979-2  C.B.  529) of  which the Charterer is  a member has,
          nor will it  acquire at  any time  during the  Charter Period,  any
          investment in the Vessel within the meaning of Section 4(4) of said
          Revenue Procedures that is not permitted thereunder.

18.3  Tax Indemnity

   The Charterer shall indemnify and  hold the Owner, each  of the Investors
   and any Affiliate thereof harmless from:

   (a)    Any Taxes (other than Income  Taxes) imposed on or incurred by  the
          Owner,  such   Investor  or  any  Affiliate,   employee,  agent  or
          representative thereof with  respect to this Charter or any  of the
          Charter  Documents, the  Vessel,  any direct  or  indirect interest
          therein or any amounts paid or payable in connection therewith;

   (b)    Any  Income Taxes (other than U.S. federal Income Taxes) imposed on
          or  incurred by the  Owner, such Investor or  any Affiliate thereof
          (i)  caused by or  arising from  the location  or operation  of the
          Vessel   in  any   particular   waters  or   (ii) imposed   by  any
          jurisdiction, other than the  jurisdiction of incorporation of such
          Investor  or  the  jurisdiction  of a  place  of  business of  such
          Investor  (unless such place of business is determined on the basis
          of the  location of the  Vessel or the  operation of  the Vessel or
          this  Charter or any of  the Charter Documents), in  respect of the
          Vessel or by reason of the transactions contemplated by the Charter
          or any of the Charter Documents;

   (c)    Any Income Taxes imposed on or incurred by the Owner, such Investor
          or any  Affiliate thereof caused  by or arising  from the  Vessel s
          failing  to  qualify  for  accelerated  cost  recovery  deductions,
          computed  on the  basis that  (i) the  Vessel is   5-year property 
          (within the meaning  of Section 168(c)(2)(B) of the 1954  Code) and
          (ii) recovery percentages  applicable to  the Vessel are  those set
          forth for 5-year property pursuant to Section 168(b)(1) of the 1954
          Code,   by  reason   of  any   act  of   commission   or  omission,
          misrepresentation or breach of  any agreement, covenant or warranty
          contained in the  Charter or any  of the Charter  Documents on  the
          part  of the Charterer,  any subcharterer, assignee or  user of the
          Vessel or any Affiliate thereof;

   (d)    Any Income Taxes imposed on or incurred by the Owner, such Investor
          or any  Affiliate thereof caused  by or arising  from the  charter,
          subcharter  or use  of the  Vessel to  or by a   tax-exempt entity 
          (within  the meaning of Section 168(h)(1)(A) of the Code or Section
          168(j)(3)(A) of the 1954 Code);

   (e)    Any Income Taxes imposed on or incurred by the Owner, such Investor
          or any  Affiliate thereof caused  by or arising  from the   Vessels
          becoming limited use property;

   (f)    Any Income Taxes imposed on or incurred by the Owner, such Investor
          or any Affiliate thereof caused by or arising from any item of loss
          or deduction attributable to the Vessel, this Charter or any of the
          Charter Documents  or the transactions contemplated  by the Charter
          or any of the Charter  Documents not being treated as derived from,
          or allocable to, sources within the United States;

   (g)    Any Income Taxes imposed on or incurred by the Owner, such Investor
          or any Affiliate thereof caused by or arising from any replacement,
          improvement, modification, upgrade, addition or capital expenditure
          made or to be made to  or in connection with the Vessel or pursuant
          to this Charter,  any of the Charter Documents or  the transactions
          contemplated  by the  Charter or  any of  the Charter  Documents or
          otherwise;

   (h)    Any Taxes  payable as a result  of any inaccuracy or  breach of any
          representation, warranty  or covenant  of the Charterer  under this
          Charter or any of the Charter Documents;

   (i)    Any Income Taxes imposed on or incurred by the Owner, such Investor
          or any Affiliate thereof caused by or arising from the inclusion in
          income of  any amount paid or  payable by the  Charterer under this
          Section 18.3; and

   (j)    Any  attorneys  fees  or other  costs incurred  by the  Owner, such
          Investor or any  Affiliate thereof in  connection with any  payment
          from the Charterer under this Section 18.3.

18.4  Payments

   Any amount  to which  the Owner,  any of the Investors  or any  Affiliate
   thereof is entitled under Section  18.3 shall be paid in a lump sum equal
   to the present value of the amounts of the existing and anticipated Taxes
   described in  Section 18.3  payable by such indemnitee  for all  affected
   taxable periods.  In  the case  of any such  amount caused by  a loss  of
   Income Tax deductions, such amount shall be reduced (but not  below zero)
   by an  amount equal to the  present value of the  amounts of existing and
   anticipated reductions in Income Taxes payable by such indemnitee for all
   affected taxable periods  that would not be realized  but for the loss of
   such deductions.   Any amount  to which  such an  indemnitee is  entitled
   under  Section 18.3 shall be calculated on the  basis of (i) a conclusive
   presumption that such indemnitee has  and will have sufficient amounts of
   taxable income,  foreign-source income, and  foreign income tax liability
   so as  to be  able to  fully utilize on  a current basis  any Income  Tax
   benefits which could be derived from the Owner's ownership of the Vessel,
   (ii) a conclusive presumption that such indemnitee is and will be  liable
   for  Taxes  at the  highest  marginal rates  in effect  for  the relevant
   taxable  period, (iii) the date  or dates  on which any payment  of Taxes
   (including estimated Taxes) shall be due or would be due for the relevant
   taxable period if such indemnitee  was actually liable for Taxes for such
   relevant period, and (iv) an after-tax discount rate of 4.42% per  annum,
   discounted  quarterly.  Any such amount shall be paid by the Charterer to
   such  indemnitee within  thirty (30)  days following  the receipt  by the
   Charterer of  written  notice from  such indemnitee  which requests  such
   amount and provides details supporting the calculation of such amount.

18.5  Records

   The Charterer will maintain sufficient records with respect to the Vessel
   and this  Charter, will  preserve and retain  any such  records until the
   expiration of the  statutory period of limitations (including extensions)
   of the taxable periods to which any such records  relate and will provide
   copies  of such  records as  the Owner  or  any of  the Investors  or any
   Affiliate  thereof  may reasonably  request  to  enable  the  Owner, such
   Investor or any Affiliate thereof to fulfill its Tax filing obligations.

                                 ARTICLE 19
                                   GENERAL

19.1  Notices

   Notices and other communications required or permitted hereunder shall be
   in writing  and shall be deemed  sufficient for all  purposes if  sent by
   registered  or certified letter, nationally  recognized overnight courier
   service  specifying   one-day  delivery,   facsimile  or   telex  to  the
   recipient's address stipulated below and shall be effective from the date
   of receipt thereof.  Other  addresses may be substituted  for those below
   upon giving notice thereof in the manner provided above:

   if to the Owner:     Deep Sea Investors, L.L.C.
                        c/o Heller Financial
                        101 Park Avenue
                        New York, New York  10178
   Attn:                Legal Department
   Fax:                 (212) 880-7158

                        GATX Marine Investors Corporation
                        Four Embarcadero Center, Suite 2200
                        San Francisco, California  94111
   Attn:                Portfolio Management
   Fax:                 (415) 955-3415

                        Heller Financial Leasing, Inc.
                        500 W. Monroe Street
                        Chicago, Illinois  60661
   Attn:                CEFD - Central Region Credit Manager
   Fax:                 (312) 441-7519

                        MDFC Equipment Leasing Corporation
                        4060 Lakewood Boulevard, 6th Floor
                        Long Beach, California  90808
   Attn:                Director of Operations
   Fax:                 (310) 627-3002


   if to the Charterer:       Reading & Bates Drilling Co.
                              901 Threadneedle, Suite 200
                              Houston, Texas 77079
   Attn:                      Chief Financial Officer
   Fax:                       (713) 496-0285


19.2  Expenses

   Whether  or  not  any   of  the  transactions  contemplated  hereby   are
   consummated, the Charterer agrees,  upon demand, (a) to pay the appraisal
   costs, the fees and expenses of the Independent Engineer and expenses and
   disbursements  of the Owner  under the Charter and  the Charter Documents
   and (b) to pay to the parties entitled thereto, all of the legal fees and
   expenses incurred  by the Owner  and each of the  Investors in connection
   with the preparation, execution  and delivery  of the Bill  of Sale,  the
   Guaranty,  the Mortgage,  this Charter  and the  Charter Documents  up to
   $75,000 and all out-of-pocket  costs and expenses plus  50% of any  legal
   fees  in excess  of $75,000.   In  addition, the  Charter shall  pay upon
   demand  all  other costs  and  expenses  incurred by  the  Owner  and the
   Investors in connection  with the enforcement  of any of their  rights or
   remedies, any  future amendments,  supplements, waivers  or consents with
   respect to any of the Charter Documents, including, without limitation:

   (a)    the reasonable expenses and disbursements  of counsel for the Owner
          and  the  reasonable fees,  expenses and  disbursements of  Baker &
          Botts,  L.L.P., special  counsel  for the  Investors, or  any other
          counsel for services rendered after the Delivery Date in connection
          with any Charter Document  or any transaction contemplated thereby,
          or any modification, amendment or waiver of any thereof;

   (b)    all other reasonable expenses  in connection with such transactions
          including,  without limitation, the  expenses of  appraisers, other
          counsel  or of  experts whose  opinions are  required by  the terms
          hereof (to the extent not specifically required to be paid by third
          parties by the terms hereof), printing expenses and all fees, taxes
          and other  charges payable  in  connection with  the  recording  or
          filing of instruments and  financing statements desirable under the
          Charter Documents;

   (c)    reimbursement to the Owner  and Investors for their reasonable out-
          of-pocket   expenses   in  connection   with  entering   into  such
          transactions, and  any and all fees, expenses  and disbursements of
          the character referred to in clauses (a) and  (b) above which shall
          have been paid by the Owner or any of the Investors; and

   (d)    reimbursement to the Owner and Investors in an amount sufficient to
          hold each of  them harmless from and against  any and all liability
          and  loss with respect to or resulting  from any and all claims for
          or  on account  of  brokers' or  finders'  fees or  commissions  or
          financial  advisory  fees  by  any  brokers, finders  or  financial
          advisors  engaged by the Charterer or the Guarantor with respect to
          such transactions.

19.3  The Owner's Right to Perform for the Charterer

   If the  Charterer fails to  perform or comply with any  of its agreements
   contained  herein other than its  obligations to pay Hire, the Owner, may
   upon  notice  to  the  Charterer  itself  perform  or  comply  with  such
   agreement,  and the  amount of  any  expenses of  the  Owner incurred  in
   connection with such performance or compliance, together with interest on
   such amount  at the  Overdue  Rate, shall  be deemed  Supplemental  Hire,
   payable by the Charterer upon demand.

   Without in any  way limiting the obligations of the  Charterer hereunder,
   the  Charterer hereby  irrevocably appoints  the Owner  as its  agent and
   attorney,  with  full  power  and authority  at  any  time at  which  the
   Charterer is obligated to deliver possession of the Vessel to the  Owner,
   to demand and take possession of the Vessel in the name  and on behalf of
   the Charterer from whomsoever  shall be at the time in possession thereof
   in the manner described  in, and with  all rights and remedies  conferred
   under, Section 3.4(a) hereof.

19.4  Waivers

   None of the requirements of this Charter shall be considered as waived by
   either party  unless the same is  done in writing,  and then only  by the
   persons executing  this  Charter,  or  other  duly  authorized  agent  or
   representative of the Person designated in writing by a senior officer of
   such Person  and then any  such waiver  shall apply only  in the specific
   instance and for the specific purpose for which such is given.

19.5  Entire Agreement

   This  Charter  and  the Charter  Documents  contain the  entire agreement
   between  the  parties  with  respect  to the  subject  matter  hereof and
   supersede and replace any oral or  written communications heretofore made
   between the parties relating to the subject matter hereof. 

19.6  Successors and Assigns

   This  Charter  shall inure  to  the benefit  of and  be binding  upon the
   successors and assigns of the parties, provided that, except as expressly
   set forth  herein, the  Charterer  may not  assign its  rights  hereunder
   without  the express written consent  of the Owner  and that the assignor
   shall   remain  liable  for  the  performance   of  its  assignee  unless
   specifically released by the other party hereto.

19.7  Law

   The  validity, construction,  interpretation and  effect of  this Charter
   shall  be governed  by the  general maritime laws  of the  United States,
   without regard  to any choice of  law rules that would  otherwise require
   the application of the  laws of any other jurisdiction, except that where
   the general  maritime laws of the  United States look  to or  adopt state
   law, this Charter shall be governed by the laws of the State of New York,
   without regard to  any choice of law  rules that would  otherwise require
   the application of the laws of any other jurisdiction.

19.8  Parties' Intention

   It  is the  intent  of  all parties  hereto  and affected  hereby  in the
   execution and performance of this Charter, the Charter Documents and  all
   related documentation to remain in strict compliance with  all applicable
   laws from  time to  time in  effect.   Further, it is  the intent of  all
   parties hereto and affected hereby  to evidence, by this Charter, a lease
   between the Owner, as lessor, and  the Charterer, as lessee,  rather than
   any  other  form of  financial  arrangement  including  specifically, but
   without  limitation,  a  loan  or  other  debt financing.    Any  and all
   payments,  amounts,  liabilities,  commitment  fees  and  other   amounts
   expended  and  obligations  of  the  Charterer  incurred  or  arising  in
   connection  with this  Charter, the  Charter  Documents  and all  related
   documentation are intended to evidence, lease payment obligations  of the
   Charterer or  reimbursements to  the  Owner and  the Investors  or  their
   agents, representatives  or designees, for  services actually  performed,
   goods actually furnished  or provided,  or other expenses  or liabilities
   for which reimbursement  is provided in connection with this  Charter and
   the  Charter  Documents.   To  the extent  that  any  such charge  herein
   provided for or  payment herein made  is held or deemed  to be held by  a
   court of competent jurisdiction to be "interest", the parties hereto  and
   affected hereby stipulate and agree that none of the terms and provisions
   contained in or pertaining  to this Charter, the Charter Documents or any
   related document shall ever be  construed to create a contract to pay for
   the use, forbearance or detention of money with interest at  a rate or in
   an amount in excess of the maximum lawful non-usurious  rate or amount of
   interest permitted to be charged,  paid or received under said laws.  For
   purposes  of  this  Charter,  the  Charter  Documents  and  all   related
   documentation,  "interest" shall  include  the aggregate  of  all charges
   which constitute  interest under applicable  laws, which term "applicable
   laws" shall include, but not  be limited to, the laws of the State of New
   York and, to the extent they may apply, the  laws of the United States of
   America,  that are  contracted for,  chargeable or receivable  under this
   Charter  and all  related documentation.   The  Charterer shall  never be
   required to pay unearned interest on  any of its obligations hereunder or
   in connection herewith and shall never be required to pay interest on any
   of its obligations hereunder or in connection herewith at a rate or in an
   amount  in excess of  the maximum  lawful non-usurious rate or  amount of
   interest  that may  be lawfully  charged under  applicable laws,  and the
   provisions of this  paragraph shall control over all other  provisions of
   this  Charter, the Charter Documents and  all related documentation which
   may be in apparent conflict herewith.  If the effective rate or amount of
   interest which  would otherwise  be payable under or  in connection  with
   this Charter or any related documentation would exceed the maximum lawful
   non-usurious rate or amount of  interest the Owner or any Investor or any
   assignee thereof  is allowed  by applicable laws to  charge, collect  and
   receive, or in the event any such person or  entity shall charge, collect
   or receive monies that are deemed to constitute interest which  would, in
   the  absence of this Section 19.8, be in excess of an amount permitted to
   be  charged, collected  and received  under the  applicable laws  then in
   effect, then  any such  excess  amount shall  be  reduced to  the  amount
   allowed  under said laws as  now or hereafter  construed by courts having
   jurisdiction, and all such monies so collected, charged or received  that
   are  deemed to constitute interest  in excess of the  maximum lawful non-
   usurious rate or amount of interest permitted by applicable laws shall be
   immediately,  at the  option  of  the recipient  thereof, be  applied  to
   principal, if any outstanding, or returned  to or credited to the account
   of the Charterer upon such determination.

19.9  Counterparts; Uniform Commercial Code

   This  Charter  may  be  executed  by  the  parties  hereto  in   separate
   counterparts,  each of which when  so executed and  delivered shall be an
   original, but all such counterparts shall together constitute but one and
   the same instrument.   Each  counterpart of this Charter  which has  been
   executed  by the parties  hereto shall be prominently  marked to identify
   the  party to  whom originally  delivered.   If this  Charter constitutes
   chattel paper (as such term is defined in the  Uniform Commercial Code as
   in  effect in any  applicable jurisdiction), a security  interest in this
   Charter  may  be  created  only  by the  transfer  or  possession of  the
   counterpart  marked  "Owner's Copy"  and  containing  a  receipt therefor
   executed  by the  Owner on  or immediately  following the  signature page
   thereof  and, in  addition, the  Owner may  file Uniform  Commercial Code
   Financing Statements in any relevant jurisdiction.

19.10 Warranty of Authority

   By executing this Charter on behalf of any entity, each signatory to this
   Charter  represents and  warrants  that he  or  she  has full  and  valid
   authority to enter into this Charter on behalf of the entity for which he
   or she signs.

19.11 Usage; Headings

   Unless the context otherwise requires, use of the singular number in this
   Charter  shall include the plural number  and vice versa, and  use of one
   gender herein shall include each other gender and vice versa.  Use of the
   words "hereof,"  "herein," "hereto,"  "hereby," "hereunder,"  or words of
   similar import in this  Charter refer to this Charter as a  whole and not
   to  any specific  paragraph, subparagraph,  section, sentence,  clause or
   part of  this  Charter.   Section headings  and  numbers herein  are  for
   reference  purposes only  and do  not constitute a  part of  this Charter
   (unless the context indicates otherwise).

19.12 WAIVER OF JURY TRIAL

   EACH OF THE  CHARTERER AND THE OWNER WAIVE ANY  AND ALL RIGHT TO TRIAL BY
   JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR  RELATING TO THIS CHARTER,
   THE CHARTER DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY.

19.13 VENUE; SERVICE OF PROCESS

   THE CHARTERER,  FOR ITSELF, ITS SUCCESSORS AND  ASSIGNS, HEREBY KNOWINGLY
   AND  INTENTIONALLY AND  IRREVOCABLY  AND UNCONDITIONALLY  a) SUBMITS, FOR
   ITSELF  AND ITS PROPERTY,  TO THE NONEXCLUSIVE JURISDICTION  OF THE STATE
   COURTS  OF THE  STATE OF NEW YORK  AND THE FEDERAL COURTS  SITTING IN THE
   STATE OF NEW YORK AND AGREES AND CONSENTS THAT SERVICE  OF PROCESS MAY BE
   MADE UPON IT IN ANY LEGAL PROCEEDING ARISING OUT OF OR IN CONNECTION WITH
   THIS CHARTER  OR THE  OTHER CHARTER  DOCUMENTS BY SERVICE  OF PROCESS  AS
   PROVIDED BY NEW YORK LAW, b) WAIVES, TO THE EXTENT  PERMITTED BY LAW, ANY
   OBJECTION WHICH IT  MAY NOW OR HEREAFTER  HAVE TO THE LAYING  OF VENUE OF
   ANY LITIGATION ARISING OUT  OF OR IN CONNECTION WITH THIS CHARTER  OR THE
   OTHER CHARTER  DOCUMENTS BROUGHT IN ANY  NEW YORK STATE  COURT OR FEDERAL
   COURT SITTING  IN THE  STATE OF NEW YORK, c) WAIVES  ANY CLAIMS  THAT ANY
   LITIGATION  BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT
   FORUM,  d) CONSENTS  TO  THE  SERVICE  OF  PROCESS  OUT  OF  ANY  OF  THE
   AFOREMENTIONED COURTS  IN ANY  SUCH LITIGATION BY THE  MAILING OF  COPIES
   THEREOF BY CERTIFIED MAIL, RETURN RECEIPT  REQUESTED, POSTAGE PREPAID, TO
   THE CHARTERER  AT THE  ADDRESS SET FORTH  HEREIN AND  e) AGREES THAT  ANY
   LEGAL PROCEEDING AGAINST  THE CHARTERER ARISING OUT OF, RELATED TO  OR IN
   CONNECTION  WITH THIS  CHARTER  OR  THE OTHER  CHARTER DOCUMENTS  OR  THE
   OBLIGATIONS  HEREUNDER OR  THEREUNDER  MAY  BE BROUGHT  IN ANY  COURT  OF
   COMPETENT JURISDICTION IN THE  STATE OF NEW  YORK.  NOTHING HEREIN  SHALL
   AFFECT THE RIGHT OF THE OWNER TO COMMENCE  LEGAL PROCEEDINGS OR OTHERWISE
   PROCEED AGAINST THE CHARTERER OR ANY OF THE OTHER MEMBER OF THE CHARTERER
   GROUP  IN  ANY  OTHER JURISDICTION  OR  TO  SERVE PROCESS  IN  ANY MANNER
   PERMITTED BY APPLICABLE LAW.

19.14 Agent for Service of Process

   The   Charterer   hereby   irrevocably   designates   The   Prentice-Hall
   Corporation, with offices at 500 Central Avenue, Albany, New York  12206-
   2290, as agent to receive  for and on behalf of the  Charterer service of
   process in New York.   In  the event that  The Prentice-Hall  Corporation
   System,  Inc. resigns  or ceases to  serve as  the Charterer's  agent for
   service  of process  hereunder, the  Charterer  agrees  forthwith (a)  to
   designate another agent for service of process  in the State of New  York
   and (b)  to give  prompt written  notice to  the  Owner of  the name  and
   address  of such  agent.  The  Owner agrees to use  reasonable efforts to
   cause  a  copy  of such  process  served on  such  agent  to be  promptly
   forwarded  to  the Charterer  at its  address set  forth herein,  and the
   Charterer agrees that  the failure of the Charterer to receive  such copy
   shall not  impair or affect  in any way  the validity of  such service of
   process or of any judgment  based thereon.  The Charterer agrees that the
   failure of  its agent for  service of process  to give any notice  of any
   such service of process to the Charterer  shall not impair or affect  the
   validity of such  service or of any judgment  based thereon.  If, despite
   the foregoing, there is for any reason no agent for service of process of
   the  Charterer  available  to  be  served,  then  the  Charterer  further
   irrevocably consents to the service  of process by the mailing thereof by
   the  Owner by  registered  or  certified mail,  postage prepaid,  to  the
   Charterer at  its address  herein.  Nothing in  this Section 19.14  shall
   affect the right  of the Owner to serve legal process in any other manner
   permitted by law or affect the right of the Owner to  bring any action or
   proceeding against  the Charterer  or its property  in the  courts of any
   other jurisdiction.

      IN WITNESS HEREOF,  the parties hereto  have executed  this Charter  on
the 28th day of November, 1995.

DEEP SEA INVESTORS, L.L.C.                READING & BATES DRILLING CO.

By:   GATX MARINE INVESTORS
      CORPORATION, Member

      By:                                 By:                                
      Name:                               Name:                              
      Title:                              Title:                       



By:   HELLER FINANCIAL LEASING, INC.
      Member

      By:                              
      Name:                            
      Title:  

 
By:   MDFC EQUIPMENT LEASING CORPORATION,
      Member

      By:                              
      Name:                            
      Title:      

------------------------------------------------------------------------------
                               SCHEDULE A

                   DESCRIPTION OF VESSEL M.G. HULME, JR.,
                          INCLUDING SPECIFICATIONS 


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

                                SCHEDULE C
                            CHARTERER'S INSURANCE

As specified  in  Article 15,  the  Charterer  shall maintain  the  following
insurance coverage:  

1. Workmen's Compensation and Employers' Liability Insurance

   All of the Charterer's employees shall be covered for statutory  benefits
   as set forth  and required by applicable law in  the Area of Operation or
   such other jurisdiction under which the Charterer may become obligated to
   pay benefits.    Employers'  Liability insurance,  including  appropriate
   maritime coverage  covering all employees, shall be provided with minimum
   primary policy  limits as  required  by applicable  statute, or  U.S.  $1
   million per occurrence, whichever is greater.

2. Comprehensive General Liability 

   Insurance coverage  shall be  provided  for  liability arising  from  all
   operations of  the Charterer.    The policy  shall include  coverage  for
   premises and operations, independent  contractors, completed  operations,
   and  contractual liability  (or their  equivalents).   Insurance coverage
   shall also be provided for  all owned, hired, and nonowned vehicles.  The
   minimum primary  policy limits shall be U.S. $1 million single  limit per
   occurrence under  the General  Liability policies.   Automobile Liability
   insurance shall  have  minimum policy  limits of  U.S. $1,000,000  single
   limit per occurrence, or such greater amount as required by law.

3. Protection and Indemnity (Marine Liability) Insurance

   Full form marine protection  and indemnity insurance, including, but  not
   limited to,  sudden and  accidental pollution liability  and  contractual
   liability   coverage  or   equivalent  insurance   (including  equivalent
   insurance  against liability for  fines and penalties arising  out of the
   operation  of  the Vessel)  with  such club  or under  forms  of policies
   approved  by the Owner.  Such protection and indemnity insurance shall be
   maintained in the broadest forms generally available in the United States
   market, shall be  in an amount not less  than that carried by experienced
   and responsible  companies engaged  in the drilling  of petroleum,  shall
   include  a  cross-liability  endorsement  and  shall  be  placed  through
   independent   brokers  of  recognized   standing  and   with  first-class
   underwriters reasonably acceptable  to the Owner.  No hull  and machinery
   or  protection and  indemnity insurance  shall provide  for a  deductible
   amount in excess of $500,000 with respect to the Vessel without the prior
   written consent of the Owner.

4. Excess Liability

   The Charterer shall carry Excess Liability Insurance in amounts not  less
   than $200  million each occurrence  in addition  to and in  excess of all
   primary  Liability  Coverages carried  by  Charterer,  including  but not
   limited to insurance required under Paragraphs 1, 2 and 3 (oil  pollution
   sublimit $80 million per Paragraph 6).

5. Marine Physical Damage, Including Hull and Machinery

   All  risk Marine  and hull and  machinery shall be provided  with a limit
   equal to that normally  carried by experienced and responsible  companies
   engaged in offshore  drilling, but shall not be  less than the greater of
   (a) 110% of the  Stipulated Loss  Value of the  Vessel; or  (b) the  Fair
   Market  Sale Value  of  the  Vessel.   Coverage shall  include  collision
   liability and navigation limits adequate for the Vessel's trade. 

6. Oil Pollution Insurance

   Oil  pollution insurance  coverage issued by  the Vessel's P &  I Club or
   equivalent  coverage in  the amount of not  less than  US $80,000,000 per
   occurrence,   unless   additional  insurance   or   proof  of   financial
   responsibility  of a greater  amount shall be required  by a governmental
   authority, in which  case such greater amount  shall be obtained and kept
   in full force and effect  by the Charterer.  The Charterer shall maintain
   insurance,  if   available,  covering   similar  oil   removal  risks  or
   liabilities  and civil  or  criminal penalties  incident thereto  and not
   attributable  to the  action  or inaction  of  the Owner  under any  law,
   regulation or judicial decision of any of the United States of America or
   foreign jurisdiction  or jurisdictions  or political  subdivision thereof
   applicable to the Vessel or its  operations to the extent  such insurance
   is requested in  writing by the Owner  and recommended by  an independent
   marine insurance broker  as insurance which it would be imprudent  not to
   carry for the  protection of the Charterer  and the Owner in view  of the
   nature of the Vessel and the Vessel's operations.

7. War, Political Risk, Confiscation and Expropriation Insurance

   If  and  to  the extent  that  the  Vessel is  operated  outside  of  the
   territorial  waters  and/or the  Outer  Continental Shelf  of the  United
   States (and  in addition to  any coverage required by the  Owner for such
   operations  under this  Charter), War,  Political Risk,  Confiscation and
   Expropriation Insurance  shall be  provided for the Vessel  with a  limit
   equal to the value insured under Paragraph 5 above.

8. Other Losses

   Losses  not covered by  the above stated policies  because of deductibles
   and policy limits stated above shall be borne according to  the liability
   and indemnity provisions of this Charter.

9. Owner Group as Additional Insured

   All  coverages and other  insurance policies carried by  the Charterer or
   that the Charterer  is required at any time  to maintain pursuant to this
   Charter shall name  Owner Group as an  additional insured and loss  payee
   for all  risks and losses for  which the Charterer  is liable  under this
   Charter.

10.   Additional Provisions

   The  Charterer will deliver to the Owner and each of the Investors copies
   of all cover notes and certificates of insurance and, if requested by the
   Owner  copies of  all  binders  and policies  with respect  to  insurance
   carried on the Vessel.  On or before the Delivery Date of the Vessel, and
   on  each anniversary  of the  Delivery Date,  and each  time  there is  a
   reduction or  material change  in the insurance coverage  carried on  the
   Vessel, the Charterer will furnish to the Owner and each of the Investors
   a detailed report signed by independent marine insurance brokers (who may
   be the insurance brokers regularly  employed by the Charterer)  appointed
   by the Charterer  and reasonably acceptable to the Owner,  describing the
   insurance policies then carried  and maintained on the Vessel  (including
   the names of the underwriters, the types of risk covered by such polices,
   the  amount insured  thereunder  and the  expiration  date  thereof)  and
   stating that in the opinion of  said insurance brokers such  insurance is
   adequate and  reasonable for  protection of the Owner,  is in  compliance
   with the terms of Article 15 and is comparable with that carried by other
   responsible operators of  similar drilling  vessels.  All  policies shall
   include  the following:   (i) breach of warranty protection  to the Owner
   Group,  (ii) waiver  of subrogation  clause and  (iii) at least  30 days 
   prior  written  notice  of cancellation  or  material modification.   The
   insurance shall be primary, without right of contribution from any  other
   insurance which may be  carried by the Owner Group, and contain  a waiver
   of set  off  of  premiums against  claims  proceeds and  provide  for  no
   recourse for premium payments by the Owner Group. 

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

                                  SCHEDULE D

                            STIPULATED LOSS VALUE

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

                                  SCHEDULE E

                             PENDING LITIGATION


      Proceedings disclosed in  Reading & Bates'  Report on  Form 10-Q  dated
September 30, 1995 filed with the Securities & Exchange Commission. 

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

                                  SCHEDULE F

                Computation of Basic Hire Upgrade Adjustment


      Effective as of each Upgrade Payment Date after the Delivery  Date, the
Basic Hire shall  be adjusted for  the amount  to be funded  by the Owner  in
respect of the Upgrade  Program on such Upgrade Payment Dates  using the U.S.
Treasury  note rate  published  in The  Wall  Street Journal  for  such notes
maturing on or about  the Expiration Date as adjusted and  illustrated below,
assuming  a  November  15,  1995   funding  of  the  first   Upgrade  Program
installment payment and  the Purchase Price under the  MOA, the occurrence of
the  second installment payment of  the Upgrade Program  on February 15, 1996
and  the third  installment  payment of  the  Upgrade Program  on Completion,
assumed to be May 15, 1996.


      11/15/95 Close (Index change as of 11/13/ WSJ - 19 bp)

      Hulme:  Rental 1.171945 Implicit to Cap 10.6841
      Nov portion of Upgrade:  Rental 1.1845983 Implicit to Cap 10.8726
      Weighted 50:2.5:  Rental 1.1725475 Implicit 10.6931

      2/15/96 Close (at original 6/22 index rate)

      Feb portion of Upgrade:  Rental 1.21079696 Implicit to Cap 11.0884

      5/16/96 Close (at original 6/22 index rate)

      May portion of Upgrade:  Rental 1.22053144 Implicit to Cap 11.0493 

------------------------------------------------------------------------------ 
                           Exhibit A to Charter

                      FORM OF CERTIFICATE OF COMPLETION

      The  following certificate  (this "Certificate")  is  required for  the
occurrence of  the Upgrade  Completion (as  defined in  the Bareboat  Charter
(the "Charter")  dated as of  November 28, 1995  between Deep Sea  Investors,
L.L.C., a Delaware  limited liability company  (the "Owner"),  and Reading  &
Bates  Drilling  Co., an  Oklahoma  corporation  (the  "Charterer").   Unless
otherwise  defined  herein,  all  capitalized  terms  used  herein  have  the
meanings assigned to such terms in the Charter.

      The Charterer hereby certifies as follows:

      (a)  all  environmental,  governmental and  other operating permits and
approvals necessary,  as of the date  hereof, for the  continued operation of
the Vessel have been  obtained and are in full  force and effect, there  have
been no defaults under any such  permits and approvals and the Charterer  has
no  knowledge  that  any  such permits  or  approvals  will  be suspended  or
terminated prior to the scheduled expiration thereof;

      (b)  all insurance required by the Charter is in full force and effect;

      (c)  the Charter, the Charter Documents, the Drilling Contract and each
Security Document is in full force and effect;

      (d)  no Event of Default or Default has occurred and is continuing;

      (e)  all work  performed in  connection with  the construction  of  the 
Upgrade   Program  has  been  accepted  by  the  Charterer  without  material
exception;

      (f)  the Vessel is capable of being operated for the purposes for which
it has undergone the Upgrade  Program without  material modification thereto;

      (g)  the Vessel  Upgrade has  been completed  in  accordance  with  the 
plans,  specifications  and  schedules  set  forth in  the  Upgrade  Program,
industry standards and accepted practices;

      (h)  the  statements  contained  in  the  Certificate  of  Independent
Engineer are true, complete and correct;

      (i)  the  Charterer  has  paid  all costs and expenses for  the Upgrade
Program  other than  for Upgrade Nonseverables,  which have been  paid by the
Owner; and

      (j)  the Upgrade Nonseverables  Cost is  $______, which amount has been
incurred and  computed in accordance with  the terms of the  Charter  and  is
properly reimburseable by the Owner thereunder.

      IN WITNESS WHEREOF, the undersigned has executed this Certificate  this
_____ day of ________________________, 199___.

                                                READING & BATES DRILLING CO.

                                                By:                          
                                                Name:                        
                                                Title:


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

                                                        Exhibit B to Charter

                       FORM OF CERTIFICATE OF DELIVERY

            The  following  certificate  (this  "Certificate")  is  delivered
pursuant to Section 3.2 of  the Bareboat Charter (the "Charter")  dated as of
November 28,  1995 between  Deep Sea  Investors, L.L.C.,  a Delaware  limited
liability  company  (the "Owner"),  and  Reading  &  Bates  Drilling Co.,  an
Oklahoma corporation  (the "Charterer").   Unless  otherwise defined  herein,
all  capitalized terms used  herein have the meanings  assigned to such terms
in the Charter.

            The Charterer hereby certifies as follows:

            0.14.1      the Charterer has inspected the  Vessel and made such
review, inquiry and other investigation  necessary or appropriate to  deliver
this Certificate.

            0.14.2      the  Charterer  has  accepted  the  Vessel  for   all
purposes under  the Charter  and confirms  that the Vessel  is in  compliance
with all requirements of  the Charter  and that the  Vessel is seaworthy,  in
accordance with specifications,  in good working order, condition  and repair
and without  defect or inherent  vice in title,  condition, design, operation
or fitness for  use, whether or not discoverable  by the Charterer as  of the
date hereof, and free and clear of all Liens other than Permitted Liens.

            IN   WITNESS  WHEREOF,   the   undersigned  has   executed   this
Certificate this _____ day of ________________________, 199___.


                                                READING & BATES DRILLING CO.


                                                By:                          
                                                Name:                        
                                                Title: 

-----------------------------------------------------------------------------
                                                         Exhibit C to Charter


                    FORM OF CERTIFICATE FOR REIMBURSEMENT

            The  following  certificate  (this  "Certificate")  is  delivered
pursuant  to Section 5.10 of the Bareboat Charter (the "Charter") dated as of
November 28,  1995 between  Deep Sea  Investors, L.L.C.,  a Delaware  limited
liability  company  (the "Owner"),  and  Reading  &  Bates  Drilling Co.,  an
Oklahoma corporation  (the "Charterer").   Unless  otherwise defined  herein,
all  capitalized terms used  herein have the meanings  assigned to such terms
in the Charter.

            The Charterer hereby certifies as follows:

            (a)         the  Charterer  has visited  the  Shipyard, inspected
the Vessel  and the  work under  the Upgrade  Program and  made such  review,
inquiry  and other  investigation necessary  or appropriate  to deliver  this
Certificate;

            (b)         each  of  the Charter,  the  Charter  Documents,  the
Drilling Contract and the Security Documents is in full force and effect;

            (c)         no Event  of Default  or Default has  occurred and is
continuing;

            (d)         all work  performed to date  for the Upgrade  Program
has been  accepted by the  Charterer without material exception  and has been
completed in accordance with the  plans, specifications and schedules  of the
Upgrade Program, industry standards and accepted practices;

            (e)         the  statements  contained  in   the  Certificate  of
Independent Engineer attached hereto are true, complete and correct;

            (f)         the Charterer has  paid all costs and expenses of the
Upgrade  Program  that are  currently  due,  except  any  portion of  Upgrade
Nonseverable Cost, all  of which have been  (or will be from  the proceeds of
the  advance  requested under  clause (g)  below) and  no Lien  encumbers the
Vessel or any interest  of the Owner therein (other than Permitted Liens) and
no  litigation, investigation  or proceeding  of or  before  any governmental
authority or arbitrator  is pending or threatened by or against the Charterer
or with respect to the  Vessel or any interest  of the Owner therein or  with
respect to  the Charter  Documents or  any of  the transactions  contemplated
thereby, nor is any litigation, investigation or proceeding of  or before any
governmental authority or  arbitrator pending or threatened by or against the
Charterer  or any  of  their respective  properties  or revenues  which could
reasonably be expected to create such a Lien or otherwise to  have a material
adverse effect on  the financial or other  condition of the Charterer  or its
ability to perform its obligations under the Charter Documents;

            (g)         the  Charterer  hereby  requests reimbursement  under
the  Charter of $______,  which amount constitutes  a portion  of the Upgrade
Nonseverable Cost,  has been  properly incurred  and  computed in  accordance
with Article 5 of  the Charter and  has been properly  paid by the  Charterer
thereunder and is properly reimburseable by the Owner under the Charter; and

            (h)         the  representations and warranties of the members of
the Charter Group contained in the Charter Documents are true and correct  as
of the date hereof as though made on and as of the date hereof; and

            (i)         the Charterer agrees  that the Basic Hire  payable on
each Payment Date shall  be increased to $________ and the Schedule  D to the
Charter is hereby  deleted and Schedule D  in the form of  Exhibit A attached
hereto is substituted in lieu thereof.

            IN   WITNESS   WHEREOF,  the   undersigned   has  executed   this
Certificate this _____ day of ________________________, 199___.


                                                READING & BATES DRILLING CO.


                                                By:                          
                                                Name:                        
                                                Title:  


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

                                                        Exhibit D to Charter


           FORM OF COMPLETION CERTIFICATE OF INDEPENDENT ENGINEER

            The  following  certificate  (this  "Certificate")  is  delivered
pursuant  to Section 5.10 of the Bareboat Charter (the "Charter") dated as of
November 28,  1995, between  Deep Sea Investors,  L.L.C., a  Delaware limited
liability  company  (the "Owner"),  and  Reading  &  Bates  Drilling Co.,  an
Oklahoma corporation  (the "Charterer").   Unless  otherwise defined  herein,
all  capitalized terms used  herein have the meanings  assigned to such terms
in the Charter.

            [Name of the Independent Engineer], a  [type of entity] organized
under the laws of _____________  (the "Independent Engineer"), acting  by and
through ___________, its duly authorized  representative, does hereby certify
as follows:

            (a)         the Independent  Engineer has  visited the  Shipyard,
inspected the  Vessel and the  work under the  Upgrade Program and made  such
review, inquiry and other  investigation necessary or appropriate  to deliver
this Certificate;

            (b)         the  workmanship,  quality  and  construction of  the
Upgrade   Program  has  been   performed  in   accordance  with   the  plans,
specifications and schedules for  each portion of the Upgrade Program  and in
accordance with industry practice;

            (c)         the Upgrade  Program has been  completed according to
its plans,  specifications and schedule at a  cost not to exceed  the sum of:
(i) $10,000,000 and  (ii) amounts to  be expended pursuant  to Change  Orders
approved by the Owner in accordance with the terms of the Charter;

            (d)         all  guaranties  of  workmanship,  quality,   design,
equipment, materials, construction  and processes have  been met  or, to  the
extent that any  such guaranty has failed  to have been met, such  failure is
immaterial to the successful completion of the Upgrade Program;

            (e)         any  performance  tests  under  the  Upgrade  Program
required  to  have   been  successfully  completed  have   been  successfully
completed or, to the extent that any  such test has been failed, such failure
is immaterial to the successful completion of the Upgrade Program; and

            (f)         to  the best  knowledge of  the Independent  Engineer
after  due inquiry, no  Lien encumbers the Vessel  or any  part thereof other
than Permitted Liens and no basis exists for the assertion of any such Lien.

            IN   WITNESS   WHEREOF,   the  undersigned   has   executed  this
Certificate this ______ day of _______________________.


                                    By:                                      
                                    Name:                                    
                                    Title:  


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

                                                        Exhibit E to Charter


          FORM OF REIMBURSEMENT CERTIFICATE OF INDEPENDENT ENGINEER

            The  following  certificate  (this  "Certificate")  is  delivered
pursuant  to Section 5.10 of the Bareboat Charter (the "Charter") dated as of
November 28,  1995, between  Deep Sea Investors,  L.L.C., a  Delaware limited
liability  company  (the "Owner"),  and  Reading  &  Bates  Drilling Co.,  an
Oklahoma corporation  (the "Charterer").   Unless  otherwise defined  herein,
all  capitalized terms used  herein have the meanings  assigned to such terms
in the Charter.

            [Name of the Independent Engineer], a  [type of entity] organized
under the laws of _____________  (the "Independent Engineer"), acting  by and
through ___________, its duly authorized  representative, does hereby certify
as follows:

            (a)   the  Independent   Engineer  has   visited  the   Shipyard,
inspected the  Vessel and the  work under the  Upgrade Program and made  such
review, inquiry and other  investigation necessary or appropriate  to deliver
this Certificate;

            (b)   the  workmanship, quality and  construction of  the Upgrade
Program  has   been  performed  to   date  in  accordance   with  the  plans,
specifications and schedules for  each portion of the Upgrade Program  and in
accordance with industry practice;

            (c)   in the  opinion of the  Independent Engineer and  as far as
the Independent  Engineer can reasonably  ascertain, except  as described  on
Schedule A  attached  hereto,   the  Upgrade  Program  should   be  completed
according to its plans,  specifications and schedule at a cost  not to exceed
the sum  of:   (i) $10,000,000 and  (ii) amounts to  be expended  pursuant to
Change Orders  approved by  the Owner  in accordance  with the  terms of  the
Charter;

            (d)   all guaranties  of workmanship, quality, design, equipment,
materials, construction and processes required to have been  met on or before
the date hereof, have been met  or, to the extent that any  such guaranty has
failed  to  have been  met,  such  failure is  immaterial  to  the successful
completion of the Upgrade Program;

            (e)   any performance tests  under the  Upgrade Program  required
to have been successfully  completed on or before the date  hereof, have been
successfully completed or, to  the extent that any such test has been failed,
such failure  is  immaterial to  the  successful  completion of  the  Upgrade
Program; and

            (f)   to the  best knowledge  of the  Independent Engineer  after
due inquiry,  no Lien  encumbers the Vessel  or any  part thereof other  than
Permitted Liens and no basis exists for the assertion of any such Lien.

            IN   WITNESS   WHEREOF,  the   undersigned   has  executed   this
Certificate this ______ day of _______________________.


                                    By:                                      
                                    Name:                                    
                                    Title: