EXHIBIT 10.179

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                               CREDIT AGREEMENT

                         dated as of October 3, 1997

               $80,000,000 UNSECURED REVOLVING CREDIT FACILITY

                        FALCON DRILLING COMPANY, INC.
                                 as Borrower

                                BANQUE PARIBAS
                            as Agent and a Lender

                      ARAB BANKING CORPORATION (B.S.C.)
                           as Co-Agent and a Lender

                        ING (U.S.) CAPITAL CORPORATION
                                 as a Lender

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                              TABLE OF CONTENTS

  ARTICLE 1- Definitions  . . . . . . . . . . . . . . . . . . . . . . . .
        Section 1.1       Definitions . . . . . . . . . . . . . . . . . .
        Section 1.2       Other Definitional Provisions . . . . . . . .
        Section 1.3       Accounting Terms and Determinations . . . . .
        Section 1.4       Financial Covenants and Reporting . . . . . .

  ARTICLE 2 - Loans . . . . . . . . . . . . . . . . . . . . . . . . . .
        Section 2.1       Commitments.  . . . . . . . . . . . . . . . .
        Section 2.2       Notes . . . . . . . . . . . . . . . . . . . .
        Section 2.3       Repayment of Loans  . . . . . . . . . . . . .
        Section 2.4       Interest  . . . . . . . . . . . . . . . . . .
        Section 2.5       Borrowing Procedure . . . . . . . . . . . . .
        Section 2.6       Optional Prepayments, Conversions and
                          Continuations of Loans  . . . . . . . . . . .
        Section 2.7       Mandatory Prepayments . . . . . . . . . . . .
        Section 2.8       Minimum Amounts.  . . . . . . . . . . . . . .
        Section 2.9       Certain Notices.  . . . . . . . . . . . . . .
        Section 2.10      Use of Proceeds . . . . . . . . . . . . . . .
        Section 2.11      Commitment Fee and Other Fees . . . . . . . .
        Section 2.12      Computations. . . . . . . . . . . . . . . . .
        Section 2.13      Termination or Reduction of Commitments . . .
        Section 2.14      Letters of Credit . . . . . . . . . . . . . .

  ARTICLE 3 - Payments  . . . . . . . . . . . . . . . . . . . . . . . .
        Section 3.1       Method of Payment . . . . . . . . . . . . . .
        Section 3.2       Pro Rata Treatment  . . . . . . . . . . . . .
        Section 3.3       Sharing of Payments, Etc  . . . . . . . . . .
        Section 3.4       Non-Receipt of Funds by the Agent . . . . . .
        Section 3.5       Withholding Taxes . . . . . . . . . . . . . .
        Section 3.6       Withholding Tax Exemption . . . . . . . . . .

  ARTICLE 4 - Yield Protection and Illegality . . . . . . . . . . . . .
        Section 4.1       Additional Costs  . . . . . . . . . . . . . .
        Section 4.2       Limitation on Types of Loans  . . . . . . . .
        Section 4.3       Illegality  . . . . . . . . . . . . . . . . .
        Section 4.4       Treatment of Affected Loans . . . . . . . . .
        Section 4.5       Compensation  . . . . . . . . . . . . . . . .
        Section 4.6       Capital Adequacy  . . . . . . . . . . . . . .
        Section 4.7       Additional Interest on Eurodollar Loans . . .

  ARTICLE 5 - Setoff  . . . . . . . . . . . . . . . . . . . . . . . . .
        Section 5.1       Collateral  . . . . . . . . . . . . . . . . .

  ARTICLE 6 - Conditions Precedent  . . . . . . . . . . . . . . . . . .
        Section 6.1       Initial Extension of Credit . . . . . . . . .
        Section 6.2       All Extensions of Credit  . . . . . . . . . .

  ARTICLE 7 - Representations and Warranties  . . . . . . . . . . . . .
        Section 7.1       Corporate Existence . . . . . . . . . . . . .
        Section 7.2       Financial Statements  . . . . . . . . . . . .
        Section 7.3       Entity Action; No Breach  . . . . . . . . . .
        Section 7.4       Operation of Business . . . . . . . . . . . .
        Section 7.5       Intellectual Property . . . . . . . . . . . .
        Section 7.6       Litigation and Judgments  . . . . . . . . . .
        Section 7.7       Rights in Properties; Liens . . . . . . . . .
        Section 7.8       Enforceability  . . . . . . . . . . . . . . .
        Section 7.9       Approvals . . . . . . . . . . . . . . . . . .
        Section 7.10      Debt  . . . . . . . . . . . . . . . . . . . .
        Section 7.11      Taxes . . . . . . . . . . . . . . . . . . . .
        Section 7.12      Margin Securities . . . . . . . . . . . . . .
        Section 7.13      ERISA . . . . . . . . . . . . . . . . . . . .
        Section 7.14      Disclosure  . . . . . . . . . . . . . . . . .
        Section 7.15      Capitalization  . . . . . . . . . . . . . . .
        Section 7.16      Agreements  . . . . . . . . . . . . . . . . .
        Section 7.17      Compliance with Laws  . . . . . . . . . . . .
        Section 7.18      Investment Company Act  . . . . . . . . . . .
        Section 7.19      Public Utility Holding Company Act  . . . . .
        Section 7.20      Environmental Matters . . . . . . . . . . . .
        Section 7.21      Labor Disputes and Acts of God  . . . . . . .
        Section 7.22      Material Contracts  . . . . . . . . . . . . .
        Section 7.23      Outstanding Securities  . . . . . . . . . . .
        Section 7.24      Priority of Payment.  . . . . . . . . . . . .
        Section 7.25      Solvency  . . . . . . . . . . . . . . . . . .
        Section 7.26      Employee Matters  . . . . . . . . . . . . . .
        Section 7.27      Insurance . . . . . . . . . . . . . . . . . .

  ARTICLE 8 - Affirmative Covenants . . . . . . . . . . . . . . . . . .
        Section 8.1       Reporting Requirements  . . . . . . . . . . .
        Section 8.2       Maintenance of Existence; Conduct of Business
        Section 8.3       Maintenance of Properties . . . . . . . . . .
        Section 8.4       Taxes and Claims  . . . . . . . . . . . . . .
        Section 8.5       Insurance . . . . . . . . . . . . . . . . . .
        Section 8.6       Inspection Rights . . . . . . . . . . . . . .
        Section 8.7       Keeping Books and Records . . . . . . . . . .
        Section 8.8       Compliance with Laws  . . . . . . . . . . . .
        Section 8.9       Compliance with Agreements  . . . . . . . . .
        Section 8.10      Further Assurances  . . . . . . . . . . . . .
        Section 8.11      ERISA . . . . . . . . . . . . . . . . . . . .
        Section 8.12      Concentration Account . . . . . . . . . . . .
        Section 8.13      No Consolidation in Bankruptcy  . . . . . . .

  ARTICLE 9 - Negative Covenants  . . . . . . . . . . . . . . . . . . .
        Section 9.1       Debt  . . . . . . . . . . . . . . . . . . . .
        Section 9.2       Limitation on Liens . . . . . . . . . . . . .
        Section 9.3       Mergers, Etc  . . . . . . . . . . . . . . . .
        Section 9.4       Restricted Payments . . . . . . . . . . . . .
        Section 9.5       Investments.  . . . . . . . . . . . . . . . .
        Section 9.6       Limitation on Issuance of Capital Stock . . .
        Section 9.7       Transactions With Affiliates  . . . . . . . .
        Section 9.8       Disposition of Property . . . . . . . . . . .
        Section 9.9       Sale and Leaseback  . . . . . . . . . . . . .
        Section 9.10      Lines of Business . . . . . . . . . . . . . .
        Section 9.11      Environmental Protection  . . . . . . . . . .
        Section 9.12      Intercompany Transactions . . . . . . . . . .
        Section 9.13      Consulting and Management Fees  . . . . . . .
        Section 9.14      Modification of Other Agreements  . . . . . .
        Section 9.15      ERISA.  . . . . . . . . . . . . . . . . . . .

  ARTICLE 10 - Financial Covenants  . . . . . . . . . . . . . . . . . .
        Section 10.1      Consolidated Current Ratio  . . . . . . . . .
        Section 10.2      Consolidated Tangible Net Worth . . . . . . .
        Section 10.3      Consolidated Interest Coverage Ratio  . . . .

  ARTICLE 11 - Default  . . . . . . . . . . . . . . . . . . . . . . . .
        Section 11.1      Events of Default . . . . . . . . . . . . . .
        Section 11.2      Remedies  . . . . . . . . . . . . . . . . . .
        Section 11.3      Cash Collateral . . . . . . . . . . . . . . .
        Section 11.4      Performance by the Agent  . . . . . . . . . .

  ARTICLE 12 - The Agent  . . . . . . . . . . . . . . . . . . . . . . .
        Section 12.1      Appointment, Powers and Immunities  . . . . .
        Section 12.2      Rights of Agent as a Bank . . . . . . . . . .
        Section 12.3      Defaults  . . . . . . . . . . . . . . . . . .
        Section 12.4      Indemnification . . . . . . . . . . . . . . .
        Section 12.5      Independent Credit Decisions  . . . . . . . .
        Section 12.6      Several Commitments . . . . . . . . . . . . .
        Section 12.7      Successor Agent . . . . . . . . . . . . . . .

  ARTICLE 13 - Miscellaneous  . . . . . . . . . . . . . . . . . . . . .
        Section 13.1      Expenses  . . . . . . . . . . . . . . . . . .
        Section 13.2      Indemnification . . . . . . . . . . . . . . .
        Section 13.3      Limitation of Liability . . . . . . . . . . .
        Section 13.4      No Duty . . . . . . . . . . . . . . . . . . .
        Section 13.5      No Fiduciary Relationship . . . . . . . . . .
        Section 13.6      Equitable Relief  . . . . . . . . . . . . . .
        Section 13.7      No Waiver; Cumulative Remedies  . . . . . . .
        Section 13.8      Successors and Assigns  . . . . . . . . . . .
        Section 13.9      Survival  . . . . . . . . . . . . . . . . . .
        Section 13.10     Entire Agreement  . . . . . . . . . . . . . .
        Section 13.11     Amendments. . . . . . . . . . . . . . . . . .
        Section 13.12     Maximum Interest Rate . . . . . . . . . . . .
        Section 13.13     Notices . . . . . . . . . . . . . . . . . . .
        Section 13.14     Governing Law; Submission to Jurisdiction; Service
                          of Process  . . . . . . . . . . . . . . . . .
        Section 13.15     Counterparts  . . . . . . . . . . . . . . . .
        Section 13.16     Severability  . . . . . . . . . . . . . . . .
        Section 13.17     Headings  . . . . . . . . . . . . . . . . . .
        Section 13.18     Construction  . . . . . . . . . . . . . . . .
        Section 13.19     Independence of Covenants . . . . . . . . . .
        Section 13.20     Confidentiality . . . . . . . . . . . . . . .
        Section 13.21     Waiver of Jury Trial  . . . . . . . . . . . .
        Section 13.22     Approvals and Consent.  . . . . . . . . . . .
        Section 13.23     Agent for Services of Process . . . . . . . .
        Section 13.24     Joint and Several Obligations . . . . . . . .
        Section 13.25     Co-Agent  . . . . . . . . . . . . . . . . . .


                              INDEX TO EXHIBITS

  Exhibit           Description of Exhibit                     Section

  "A"               Form of Assignment and Acceptance             1.1
  "B"               Form of Note                                  1.1
  "C"               Form of Notice of Borrowings, Conversions,
                    Continuations or Prepayments                  2.9



                              INDEX TO SCHEDULES

  Schedule          Description of Schedule

  1.1(a)            Permitted Liens
  7.6               Litigation
  7.10              Existing Debt
  7.11              Taxes
  7.13              Plans
  7.15(b)           Capitalization of Subsidiaries
  7.22              Material Contracts and Defaults
  7.26              Employee Matters
  9.5               Investments
  9.7               Certain Transactions with Affiliates
  9.12              Intercompany Transactions


                               CREDIT AGREEMENT

        THIS CREDIT AGREEMENT, dated as of October 3, 1997, is among FALCON
  DRILLING  COMPANY, INC.,  a  Delaware corporation  ("Falcon  Drilling" or
  "Borrower"),  BANQUE PARIBAS, a  bank organized under the  laws of France
  acting through  its Houston Agency, ARAB BANKING  CORPORATION (B.S.C.), a
  banking  corporation  organized  under the  laws  of Bahrain,  ING (U.S.)
  CAPITAL CORPORATION, a corporation  organized under the laws of Delaware,
  each  of the  other banks or  lending institutions which is  or which may
  from time  to time become a  party hereto or  any permitted  successor or
  assignee  thereof  (each  of  Banque  Paribas,  Arab  Banking Corporation
  (B.S.C.), ING (U.S.) Capital Corporation and such other banks or  lending
  institutions  is  sometimes hereinafter  individually  referred  to  as a
  "Bank" and  all of such  Persons are  sometimes hereinafter  collectively
  referred  to as the "Banks"), BANQUE PARIBAS, as agent for itself and the
  other Banks  (in  such capacity,  together with  its successors  in  such
  capacity, the "Agent") and ARAB BANKING CORPORATION (B.S.C.), as Co-Agent
  for  itself and  the other  Banks (in  such capacity,  together with  its
  successors and assigns in such capacity, the "Co-Agent").

                                  RECITALS:

        Borrower  desires  that  the  Lenders  extend  a  revolving  credit
  facility to Borrower to provide working capital financing for, and  other
  funds for the general corporate purposes of, Borrower.

        NOW  THEREFORE, in  consideration of  the premises  and  the mutual
  covenants herein contained, the parties hereto hereby agree as follows:

                                  ARTICLE 1

                                 Definitions

        Section 1.1 Definitions.  As  used in this Agreement, the following
  terms have the following meanings:

        "ABR"  means the sum of  (a) the greater  of the Prime  Rate or the
  Federal Funds Rate, plus (b) one-half of one percent per annum.

        "ABR Loans" means Loans that bear interest at  rates based upon the
  ABR.

        "Additional Costs" means as specified in Section 4.1(a).

        "Adjusted Eurodollar  Rate" means, for any  Eurodollar Loan for any
  Interest  Period therefor,  the  rate  per  annum  (rounded  upwards,  if
  necessary, to the nearest 1/16 of 1%) determined by the Agent to be equal
  to (a)  the Eurodollar Rate  for such  Eurodollar Loan for such  Interest
  Period, divided by (b) the remainder of one minus the Reserve Requirement
  for such Eurodollar Loan for such Interest Period.

        "Affiliate"  means,  as to  any Person,  any other  Person (a) that
  directly or indirectly, through  one or more intermediaries, controls  or
  is controlled by, or  is under common control with, such Person; (b) that
  directly or indirectly beneficially owns  or holds ten percent or more of
  any class  of voting stock of such Person; or (c) ten  percent or more of
  the voting stock of which is directly or indirectly beneficially owned or
  held by the Person in question.  The term "control" means the possession,
  directly  or indirectly, of the power to direct or cause direction of the
  management and  policies of  a Person, whether through  the ownership  of
  voting  securities,  by  contract  or  otherwise.    Notwithstanding  the
  foregoing,  (i) in no  event shall  the Agent  or any  Bank be  deemed an
  Affiliate of Borrower or any of its Subsidiaries and (ii) for purposes of
  (A) the  definition of the  term "Net Proceeds" and  (B) Sections 7.6 and
  8.1(f), the  Chatterjee Group shall  not be deemed to be  an Affiliate of
  Falcon  Drilling  or  any  of  its  Subsidiaries  if  (but  only  if) the
  Chatterjee Group (1) directly  and indirectly beneficially owns and holds
  no more than 50% of  the voting stock of Falcon Drilling and (2) does not
  directly  or  indirectly  control  the election  of  a  majority  of  the
  directors of Falcon Drilling or any of its Subsidiaries.

        "Agent"  means  as  specified  in  the  initial paragraph  of  this
  Agreement.

        "Agreement" means this Credit Agreement and any and all amendments,
  modifications, supplements, renewals, extension or restatements hereof.

        "Applicable  Lending Office" means  for each Bank and  each Type of
  Loan, the Lending Office of such  Bank (or of an Affiliate  of such Bank)
  designated for  such Type of  Loan below its name on  the signature pages
  hereof (or, with respect to a Bank that becomes a party to this Agreement
  pursuant to  an assignment made  in accordance with  Section 13.8, in the
  Assignment and Acceptance executed  by it) or  such other office  of such
  Bank (or of an Affiliate of such Bank) as such Bank may from time to time
  specify to  Borrower and the  Agent as the office  by which its  Loans of
  such Type are to be made and maintained.

        "Applicable Margin" means  (a) 0.75% per annum with respect  to ABR
  Loans and (b) 1.75% per annum with respect to Eurodollar Loans;

        "Acquisition Loans" means the "Loans" as defined in the Acquisition
  Loans Credit Agreement.

        "Acquisition  Loans  Credit Agreement"  means  that  certain Credit
  Agreement  dated  November 12,  1996,  among  Borrower,  the  banks named
  therein,  Banque Paribas,  as  agent  for such  banks, and  Arab  Banking
  Corporation (B.S.C.), as co-agent for such banks originally relating to a
  $40,000,000 Acquisition Loans Credit Facility.

        "Asset  Disposition" means  the  disposition (other  than  sales of
  Inventory  in the  ordinary  course  of  business  consistent  with  past
  practices or the grant of a Permitted Lien as security or the transfer of
  a Non-Recourse Rig)  of any or all of the Property of  Borrower or any of
  its  Subsidiaries,   whether  by   sale,  conveyance,  lease,   transfer,
  assignment, condemnation or  otherwise, but excluding (a) the issuance of
  Capital Stock and (b) any involuntary disposition resulting from casualty
  damage to Property.

        "Assignee" means as specified in Section 13.8(b).

        "Assigning Bank" means as specified in Section 13.8(b).

        "Assignment  and  Acceptance" means  an  assignment  and acceptance
  entered  into by  a  Bank  and its  Assignee  and accepted  by  the Agent
  pursuant to  Section  13.8(e), in  substantially the  form of  Exhibit  A
  hereto.

        "Bank" and "Banks"  means as specified in the initial  paragraph of
  this Agreement.

        "Bank Parties"  means the  Agent, the Co-Agent  (at any  time a Co-
  Agent has  been designated  by Banque Paribas), the  Banks, the  Required
  Banks and/or any Bank.

        "Bankruptcy Code" means as specified in Section 11.1(e).

        "Basle Accord" means the proposals for risk-based capital framework
  described by the Basle  Committee on Banking Regulations and  Supervisory
  Practices  in its  paper entitled  "International Convergence  of Capital
  Measurement  and   Capital  Standards"  dated   July  1988,  as  amended,
  supplemented and otherwise modified  and in effect from time to time,  or
  any replacement thereof.

        "Borrower" means  as specified  in the  initial  paragraph of  this
  Agreement.

         Borrower Member  means  Borrower and each other Person which  is a
  member  of a  Control  Group  including, or  under common  control  with,
  Borrower,  within the  meaning of Section  414(b) or (c) of  the Code, or
  4001(a)(14) of ERISA.

        "Borrowing  Base  Account"  has  the  meaning given  to  it  in the
  Acquisitions Loans Credit Agreement.

        "Business Day" means (a) any day on which commercial banks are  not
  authorized or required to close in Houston, Texas, or New York, New York,
  and   (b) with  respect   to  all   borrowings,   payments,  Conversions,
  Continuations, Interest Periods and notices in connection with Eurodollar
  Loans, any day which is a Business Day described in clause (a) above  and
  which is also a day  on which dealings in Dollar deposits are carried out
  in the London interbank market.

        "Capital   Expenditures"  means,   for  any   period,  expenditures
  (including  the aggregate  amount of  Capital Lease  Obligations incurred
  during such period) made by Falcon Drilling or any of its Subsidiaries to
  acquire  or  construct   fixed  assets,  plant  or  equipment  (including
  renewals, improvements or replacements) during such  period and which, in
  accordance with GAAP, are classified as capital expenditures.

        "Capital  Lease   Obligations"  means,   as  to   any  Person,  the
  obligations of such Person to pay rent or  other amounts under a lease of
  (or  other agreement  conveying the  right to  use) real  and/or personal
  Property,  which obligations  are  classified  as a  capital lease  on  a
  balance sheet of such Person under GAAP.  For purposes of this Agreement,
  the amount  of such  Capital Lease Obligations shall  be the  capitalized
  amount thereof, determined in accordance with GAAP.

        "Capital Stock"  means corporate  stock, partnership  interests and
  any  and   all  shares,   interests,  participations,   rights  or  other
  equivalents  (however  designated)  of  corporate  stock  or  partnership
  interests issued by  any entity (whether a corporation, a  partnership or
  another entity) and any rights, warrants  or options to acquire an equity
  interest in such entity.

        "Cash Proceeds" means, with respect to any Asset Disposition by any
  Person, the  aggregate consideration received  for such Asset Disposition
  by such  Person in the form  of cash or  cash equivalents  (including any
  amounts of  insurance or  other proceeds received in  connection with  an
  Asset  Disposition), including  payments in  respect of  deferred payment
  obligations when received in the form of cash or cash equivalents (except
  to the extent that such obligations are financed or sold with recourse to
  such  Person  or any  subsidiary  thereof).   For  the  purposes  of this
  definition, "cash or cash equivalents" shall  be deemed to include, for a
  period  not to  exceed  12  months from  the related  Asset  Disposition,
  noncash consideration received with  respect to  an Asset Disposition  to
  the extent  that  such noncash  consideration consists  of  (i)  publicly
  traded debt securities of  a Person, which securities are rated as "BBB-"
  or higher by Standard and Poor's Corporation ("S&P") and "Baa3" or higher
  by   Moody's  Investors   Service,  Inc.   ("Moody's"),  or   (ii)  other
  indebtedness of  a Person if  (A) the lowest  rated long-term,  unsecured
  debt obligation  issued by such  Person is rated "BBB-" or  higher by S&P
  and "Baa3" or higher by Moody's or (B) in the case of other indebtedness,
  the payment  of  such other  indebtedness is  secured by  an  irrevocable
  letter of credit issued by  a commercial bank having  capital and surplus
  in excess of $100,000,000 and long term unsecured debt obligations  rated
  at least "A-" by S&P and "A3" by Moody's.

        "Change of Control" means the existence or occurrence of any of the
  following:  (a) a determination by  Falcon Drilling or the Agent that any
  Person  or  group (as  defined in  Section  13(d)(3) or  14(d)(2)  of the
  Exchange Act)  other than the Chatterjee Group  has become the  direct or
  indirect  beneficial owner (as  defined in Rule 13d-3  under the Exchange
  Act)  of   more  than  40%  of  the  Voting  Stock  of  Falcon  Drilling;
  (b) Borrower  is  merged  with  or  into  or  consolidated  with  another
  corporation,  and  immediately  after  giving  effect to  the  merger  or
  consolidation,  less  than  50%  of  the  outstanding  voting  securities
  entitled to vote  generally in the election of  directors or persons  who
  serve similar  functions of  the surviving or resulting  entity are  then
  beneficially owned (within  the meaning of Rule 13d-3 under  the Exchange
  Act)  in  the  aggregate  by (i)  the  stockholders  of  Falcon  Drilling
  immediately prior to such merger  or consolidation, or  (ii) if a  record
  date  has been set to determine the stockholders  of Borrower entitled to
  vote on such merger or consolidation, the stockholders of Falcon Drilling
  as   of  such  record  date;  (c) Borrower,  either  individually  or  in
  connection with  one or  more Subsidiaries, sells,  conveys, transfers or
  leases, or  the  Subsidiaries sell,  convey, transfer  or lease,  all  or
  substantially all of the assets of Falcon Drilling and its  Subsidiaries,
  taken  as  a whole  (either  in one  transaction or  a series  of related
  transactions),  including Capital  Stock  of the  Subsidiaries  of Falcon
  Drilling, to any  Person (other than a  Wholly Owned Subsidiary of Falcon
  Drilling); (d)  the liquidation  or dissolution of Borrower;  or (e)  the
  first day on which a majority of the individuals who constitute the Board
  of  Directors of  Falcon Drilling on the  date hereof  are not Continuing
  Directors; provided, however, (i) the R&B Merger shall not be  considered
  a Change of Control  and (ii) following the R&B  Merger, a change in  the
  Board of  Directors of  Falcon Drilling  shall in  no event  constitute a
  Change of Control.

        "Chatterjee Group"  means Purnendu Chatterjee  and George Soros and
  any  Person, other  than  Borrower or  any  Subsidiary of  a Borrower,  a
  majority of the Capital Stock of which is beneficially owned, directly or
  indirectly, by such individual(s), either individually or collectively.

        "Closing Date" means the date of this Agreement as set forth on the
  first page hereof.

        "Co-Agent"  means  as specified  in the  initial paragraph  of this
  Agreement.

        "Code" means the Internal Revenue Code of 1986, as amended, and the
  regulations promulgated and rulings issued thereunder.

        "Commitment" means, as to any  Bank, the obligation of such Bank to
  make Loans  and  incur or  participate in  Letter of  Credit  Liabilities
  hereunder in an aggregate principal amount at any one time outstanding up
  to but not exceeding the amount set forth opposite the name of such  Bank
  on the  signature pages hereto under the heading "Commitment" or, if such
  Bank is a party to an Assignment and Acceptance, the  amount set forth in
  the most recent Assignment  and Acceptance of such Bank, as the  same may
  be reduced or terminated pursuant to Section 2.13 or 11.2.

        "Commitment  Percentage"  means, as  to  any  Bank,  the percentage
  equivalent of  a fraction the numerator  of which  is the  amount of  the
  outstanding  Commitment  of  such  Bank  (or,  if   such  Commitment  has
  terminated or expired, the outstanding principal amount of its Loans  and
  Letter  of  Credit  Liabilities)  and  the denominator  of  which  is the
  aggregate amount of the outstanding Commitments of all of the Banks  (or,
  if such Commitments have terminated or expired, the aggregate outstanding
  principal amount of all Loans and Letter of Credit Liabilities).

        "Consolidated Current  Assets" means,  at any  particular time, all
  amounts  which, in  conformity with  GAAP, would  be included  as current
  assets on a consolidated balance sheet of Borrower.

        "Consolidated Current  Liabilities" means, at  any particular time,
  all amounts which, in conformity with GAAP,  would be included as current
  liabilities on a  consolidated balance sheet of Borrower and  the current
  portion  of Consolidated Funded  Debt, exclusive of,   in connection with
  any calculation  of Consolidated Current  Liabilities during the 12-month
  period immediately  preceding the  Maturity Date  or the  Revolving Loans
  Maturity Date,  the  outstanding principal  amount of  the Loans  or  the
  outstanding principal amount of the Revolving Loans, respectively.

        "Consolidated  Current Ratio"  means, at  any particular  time, the
  ratio of Consolidated Current Assets to Consolidated Current Liabilities.

        "Consolidated Funded  Debt" means, at  any particular time, (a) all
  Debt of Borrower  and its consolidated subsidiaries which matures by  its
  terms, or is renewable at  the option of the obligor to a date, more than
  one year  after the  original creation of  such Debt,  (b) all other Debt
  which  would  be   classified  as  "funded  indebtedness"  or  "long-term
  indebtedness" on a consolidated balance sheet of Borrower as of such date
  in accordance with GAAP, and (c) all obligations of Borrower for borrowed
  money.

        "Consolidated Interest  Coverage Ratio" means,  for any period, the
  ratio  of  (a) EBITDA of  Borrower  for such  period to  (b) Consolidated
  Interest Expense for such period.

        "Consolidated  Interest Expense"  means,  for any  period,  (a) all
  interest on Debt  of Borrower and its  consolidated subsidiaries  accrued
  during  such period,  including  the interest  portion of  payments under
  Capital  Lease Obligations,  and  (b) all  other amounts  which  would be
  classified as interest  expense on a consolidated statement of  income of
  Borrower for such period in accordance with GAAP.

        "Consolidated Net Income" means, for any period, the net income (or
  loss) of Borrower for such period, determined  on a consolidated basis in
  accordance with GAAP.

        "Consolidated Net Worth" means, at any particular time, the sum  of
  all  amounts  which,  in  conformity with  GAAP,  would  be  included  as
  stockholders' equity on a consolidated balance sheet of Borrower.

        "Consolidated Tangible  Net Worth"  means, at  any particular time,
  the remainder of (a) Consolidated Net Worth minus (b) the aggregate  book
  value of  Intangible  Assets shown  on a  consolidated balance  sheet  of
  Borrower.

        "Continue",  "Continuation"  and  "Continued"  shall refer  to  the
  continuation pursuant to Section 2.6 of a Eurodollar Loan as a Eurodollar
  Loan from one Interest Period to the next Interest Period.

        "Continuing  Director" means an  individual who (a) is a  member of
  the Board of Directors of Falcon Drilling and (b) either (i) was a member
  of the Board  of Directors of Falcon  Drilling as of the Closing  Date or
  (ii)  whose nomination for election or election to the Board of Directors
  of Falcon Drilling was  approved by  a vote of  at least 66  2/3% of  the
  directors then  still in  office  who were  either  directors as  of  the
  Closing Date or whose election or nomination for election was  previously
  so approved.

        "Contract Rate" means as specified in Section 13.12(a).

        "Convert", "Conversion" and "Converted" shall refer to a conversion
  pursuant to Section 2.6  or Article 4 of one Type  of Loan into the other
  Type of Loan.

        "Currency  Hedge  Agreement"  means any  foreign  currency exchange
  agreement, option or future contract or  other similar agreement designed
  to protect  against  or manage  a Person's  exposure to  fluctuations  in
  foreign currency exchange rates.

        "Current Date" means a date occurring no more than 30 days prior to
  the Closing Date or such  earlier date which is  reasonably acceptable to
  the Agent.

        "Debt"  means as to  any Person at any  time (without duplication):
  (a) any indebtedness, liability  or obligation of such Person, contingent
  or  otherwise, for  borrowed money; (b) any   indebtedness,  liability or
  obligation of such Person evidenced by bonds, debentures, notes or  other
  similar  instruments; (c)  any indebtedness,  liability or  obligation of
  such  Person for  all or any part  of the  purchase price  of Property or
  services or  for  the cost  of Property  constructed or  of  improvements
  thereto (including any indebtedness, liability or obligation under or  in
  connection  with  any  letter  of  credit  related thereto),  other  than
  accounts payable  included in current liabilities  incurred in respect of
  Property and services  purchased in the ordinary course of  business; (d)
  any indebtedness,  liability  or obligation  of such  Person  upon  which
  interest  charges  are  customarily  paid  (other  than  accounts payable
  incurred  in the  ordinary  course  of business);  (e)  any indebtedness,
  liability  or obligation of  such Person under conditional  sale or other
  title  retention  agreements  relating  to  purchased  Property;  (f) any
  indebtedness, liability or obligation of such Person issued or assumed as
  the  deferred purchase  price  of Property  (other than  accounts payable
  incurred in  the  ordinary course  of business);  (g) any  Capital  Lease
  Obligation  or  any  obligation  pursuant  to  any  sale  and  lease-back
  transaction of such Person; (h) any indebtedness, liability or obligation
  of any  other Person secured by (or for which the  obligee thereof has an
  existing right,  contingent or otherwise,  to be secured by) any  Lien on
  Property owned or acquired, whether or not any indebtedness, liability or
  obligation  secured thereby  has been  assumed, by  such Person;  (i) any
  indebtedness,  liability or obligation  of such Person in  respect of any
  letter of  credit supporting any indebtedness, liability or obligation of
  any  other  Person;  (j)  the  maximum  fixed  repurchase  price  of  any
  Redeemable Stock of such  Person or, if such Person is a  Subsidiary, any
  preferred  stock of  such Person,  exclusive of  any Redeemable  Stock or
  Subsidiary preferred stock  issued by a Subsidiary of Borrower  and owned
  by Borrower; (k) any obligation of such Person  under or with respect  to
  any Interest Rate  Protection Agreement or Currency  Hedge Agreement; and
  (l) any indebtedness, liability or obligation which is in economic effect
  a guarantee, regardless of its characterization, with respect to any Debt
  of another  Person,  to the  extent  guaranteed.   For  purposes  of  the
  preceding sentence, the maximum  fixed repurchase price of any Redeemable
  Stock or Subsidiary preferred stock that does not have a fixed repurchase
  price shall be calculated in accordance with the terms of such Redeemable
  Stock  or Subsidiary  preferred  stock  as if  such Redeemable  Stock  or
  Subsidiary preferred  stock were  repurchased on any date  on which  Debt
  shall  be required  to  be  determined pursuant  to the  this  Agreement;
  provided, however, that if such Redeemable Stock  or Subsidiary preferred
  stock is not then permitted to be repurchased, the repurchase price shall
  be the book value of such Redeemable Stock or Subsidiary preferred stock.
  The amount of Debt of any Person at any date shall be (i) the outstanding
  book value at such date of all indebtedness, liabilities and  obligations
  as described  above  and (ii)  the maximum  liability of  all  contingent
  indebtedness, liabilities and obligations at such date.

        "Debtor   Relief    Law"   means   any   applicable    liquidation,
  conservatorship,  receivership,  bankruptcy,  moratorium,  rearrangement,
  insolvency, reorganization or similar law for the relief of debtors  from
  time to time in effect and generally affecting the rights of creditors.

        "Default" means an  Event of Default or  the occurrence of an event
  or condition which with notice or  lapse of time or both  would become an
  Event of Default.

        "Default Rate" means, in respect of any principal of any Loan,  any
  Reimbursement  Obligation or any other  amount payable  by Borrower under
  this Agreement  or any  other Loan  Document which is not  paid when  due
  (whether  at stated maturity,  by acceleration or otherwise),  a rate per
  annum during the  period commencing on the due  date until such amount is
  paid in full equal to the  sum of 2.00% plus the Prime Rate as in  effect
  from  time to time  plus the  Applicable Margin for ABR  Loans; provided,
  however, that if such amount in default is principal of a Eurodollar Loan
  and the due date is a  day other than the last day of an Interest  Period
  therefor, the "Default Rate" for such principal  shall be, for the period
  from  and including the due date and to but excluding the last day of the
  Interest  Period  therefor,  2.00%  plus  the  interest  rate  for   such
  Eurodollar Loan  for such Interest  Period as provided in  Section 2.4(a)
  hereof, and, thereafter, the rate provided for above in this definition.

        "Dollars" and "$" mean lawful money of the United States.

        "Drilling  Rigs" has  the meaning  given to  it in  the Acquisition
  Loans Credit Agreement.

        "EBITDA" means, for any period, without duplication, the sum of the
  following for Borrower for such period determined on a consolidated basis
  in   accordance   with  GAAP:      (a) Consolidated   Net   Income,  plus
  (b) Consolidated Interest Expense, plus (c) income and franchise taxes to
  the  extent  deducted   in  determining  Consolidated  Net  Income,  plus
  (d) depreciation and amortization expense and other non-cash items to the
  extent deducted  in determining  Consolidated Net  Income, minus (e) non-
  cash income  to  the extent  included  in  determining  Consolidated  Net
  Income.

        "Eligible  Assignee" means  any  (i) a  commercial bank  or finance
  company organized  under the  laws of  the United  States,  or any  State
  thereof or the District of Columbia, and having total assets in excess of
  $1,000,000,000; (ii)  a  savings and  loan association  or  savings  bank
  organized under  the laws of the  United States, or  any State thereof or
  the  District  of   Columbia,  and  having  a   net  worth  of  at  least
  $100,000,000, calculated in accordance with generally accepted accounting
  principles; (iii)  any  Affiliate of  any Bank;  (iv) a  commercial  bank
  organized under  the laws of any  other country which is  a member of the
  OECD, or  a political subdivision  of any such country, and  having total
  assets in  excess of  $1,000,000,000, provided that such  bank is  acting
  through  a  branch  or agency  located  in  the country  in  which it  is
  organized or another country which is also a member of the OECD;  (v) the
  central bank of  any country which is a member  of the OECD; or  (vi) if,
  but only  if, any Event  of Default  has occurred and  is continuing, any
  other  bank,  insurance  company,  commercial  finance  company  or other
  financial  institution approved  by the  Agent, such  approval not  to be
  unreasonably withheld.

        "Environmental Law" means any federal, state, local or foreign law,
  statute, code or ordinance, principle of common law, rule or  regulation,
  as  well as  any Permit,  order, decree,  judgment or  injunction issued,
  promulgated, approved or entered thereunder, relating to pollution or the
  protection,  cleanup  or   restoration  of  the  environment  or  natural
  resources, or to the public health or safety, or  otherwise governing the
  generation,    use,    handling,    collection,    treatment,    storage,
  transportation,  recovery, recycling, renewal,  discharge or  disposal of
  Hazardous  Materials, including,  without limitation,  the  Comprehensive
  Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C.
  9601  et  seq., the Superfund Amendment and  Reauthorization Act of 1986,
  99-499, 100  Stat. 1613,  the Resource Conservation and  Recovery Act  of
  1976, 42 U. S. C.   6901 et seq., the Occupational Safety and Health Act,
  29 U S.C.   651 et seq., the Clean Air Act, 42 U.S.C.   7401 et seq., the
  Clean  Water Act,  33 U.S.C.    1251 et seq., the  Emergency Planning and
  Community  Right to  Know Act,  15 U.S.C.,    651  et  seq., the  Federal
  Insecticide, Fungicide and Rodenticide Act, 7 U.S.C.    300F et seq., and
  the Toxic Substances Control Act, 15 U.S.C.   2601 et seq., and any state
  or local counterparts.

        "Environmental   Liabilities"   means,  as   to  any   Person,  all
  indebtedness,   liabilities,   obligations,   responsibilities,  Remedial
  Actions, losses, damages, punitive damages, consequential damages, treble
  damages,  costs   and  expenses  (including,   without  limitation,   all
  reasonable  fees,  disbursements  and  expenses  of  counsel,  expert and
  consulting  fees and  costs  of investigation  and  feasibility studies),
  fines,  penalties, sanctions  and interest  incurred as  a result  of any
  claim or demand, by any Person, whether based in  contract, tort, implied
  or  express warranty,  strict  liability  or criminal  or  civil statute,
  including  any Environmental  Law, Permit,  order or  agreement  with any
  Governmental  Authority  or other  Person,  arising  from  environmental,
  health or safety conditions  or the  Release or threatened  Release of  a
  Hazardous Material into the environment.

        "Equity Issuance" means  any issuance by Falcon Drilling or  any of
  its Subsidiaries  of any Capital  Stock of Falcon Drilling or  any of its
  Subsidiaries, respectively.

        "ERISA" means the Employee Retirement Income  Security Act of 1974,
  as  amended  from  time  to  time,  and  the  regulations  and  published
  interpretations thereunder.

        "ERISA Affiliate" means any corporation  or trade or business which
  is a member of a group of entities, organizations or employers of which a
  Loan Party  is also a  member and which  is treated as  a single employer
  within the meaning of Sections 414(b), (c), (m) or (o) of the Code.

        "Eurodollar  Loan" means  any Loan  that bears  interest at  a rate
  based upon the Eurodollar Rate or the Adjusted Eurodollar Rate.

        "Eurodollar  Rate" means, for any Eurodollar  Loan for any Interest
  Period  therefor, the rate  per annum (rounded upwards,  if necessary, to
  the nearest  1/16 of 1%)  quoted by  the Reference Bank at  approximately
  11:00  a.m.  London  time  (or  as soon  thereafter  as  practicable) two
  Business Days  prior to  the first  day of  such Interest  Period for the
  offering by the Reference Bank to leading  banks in the London  interbank
  market  of Dollar deposits  in immediately available funds  having a term
  comparable  to such Interest  Period and  in an amount comparable  to the
  principal amount  of the  Eurodollar Loan made  by the  Reference Bank to
  which such  Interest  Period relates.    If  the Reference  Bank  is  not
  participating in any Eurodollar Loans during any Interest Period therefor
  (pursuant to  Section 4.4 or for any  other reason), the  Eurodollar Rate
  and the Adjusted Eurodollar Rate for such Loans for such Interest  Period
  shall be  determined by reference  to the  amount of the  Loans which the
  Reference Bank would have made had it been participating in such Loans.

        "Event of Default" has the meaning specified in Section 11.1.

        "Exchange  Act"  means  the Securities  Exchange  Act of  1934,  as
  amended.

        "Falcon  Atlantic" means  Falcon  Atlantic Ltd.,  a  Cayman Islands
  company.

        "Falcon Brazil" means Falcon Drilling do Brasil, Ltda., a Brazilian
  limited liability company.

        "Falcon Drilling"  means as specified in  the initial  paragraph of
  this Agreement.

        "Falcon Holdings" means  Falcon Drilling Holdings, L.P., a Delaware
  limited partnership.

        "Falcon Inland" means Falcon Inland, Inc., a Delaware corporation.

        "Falcon  Management"  means  Falcon  Drilling  Management,  Inc., a
  Delaware corporation.

        "Falcon   Offshore"  means   Falcon  Offshore,  Inc.,   a  Delaware
  corporation.

        "Falcon Services"  means Falcon Services  Company, Inc., a Delaware
  corporation.

        "Falcon  Venezuela" means  Falcon  Drilling de  Venezuela,  Inc., a
  Delaware corporation.

        "Falcon Workover"  means Falcon Workover  Company, Inc., a Delaware
  corporation.

        "FALRIG  Offshore"   means  FALRIG  Offshore,   Inc.,  a   Delaware
  corporation.

        "FALRIG  Offshore  GP"  means  FALRIG  Offshore  Partners,  a Texas
  general partnership.

        "FALRIG Offshore LP" means FALRIG Offshore (USA), L.P.,  a Delaware
  limited partnership.

        "FALRIG Venezuela" means  Perforaciones Falrig de Venezuela C.A., a
  Venezuelan company.

        "Federal  Funds  Rate"  means,  for  any day,  the  rate  per annum
  (rounded upwards, if  necessary, to the nearest 1/16  of 1%) equal to the
  weighted  average of the  rates on  overnight Federal  funds transactions
  with  members of  the Federal  Reserve System  arranged by  Federal funds
  brokers on such day, as published by the Federal Reserve Bank of New York
  on the  Business Day next succeeding such  day, provided that  (a) if the
  day  for which such rate  is to be determined  is not a Business Day, the
  Federal Funds Rate  for such day shall be  such rate on such transactions
  on the next preceding Business Day as so published on the next succeeding
  Business  Day, and  (b) if such  rate is  not so  published on  such next
  succeeding Business Day, the Federal  Funds Rate for any day shall be the
  average rate which would be charged to the Reference  Bank on such day on
  such transactions as determined by the Agent.

        "Foreign Subsidiary" means Falcon  Atlantic, Falcon Brasil,  FALRIG
  Venezuela or  any other  Subsidiary of  Borrower  which is  incorporated,
  organized or  otherwise existing under the laws  of a country  other than
  the United States.

        "Funding Date" means the earlier to occur of the date of the making
  of the initial  Loan or the date of the issuance of the initial Letter of
  Credit.

        "GAAP" means generally accepted accounting principles, applied on a
  consistent basis, as  set forth in Opinions of the  Accounting Principles
  Board of the American Institute of Certified Public Accountants and/or in
  statements  of  the Financial  Accounting  Standards  Board  and/or their
  respective successors and which are applicable in the circumstances as of
  the date in question.  Accounting principles are applied on a "consistent
  basis" when  the accounting  principles applied in a  current period  are
  comparable  in  all  material  respects  to  those  accounting principles
  applied in a preceding period.

        "Governmental Authority" means  any nation or government, any state
  or  political subdivision  thereof and  any entity  exercising executive,
  legislative,  judicial, regulatory  or  administrative  functions  of  or
  pertaining to government.

        "Governmental Requirement" means any law, statute, code, ordinance,
  order, rule, regulation, judgment, decree, injunction, franchise, Permit,
  certificate, license, authorization  or other directive or requirement of
  any  federal,  state,  county,  municipal,  parish,  provincial  or other
  Governmental  Authority or  any  department,  commission,  board,  court,
  agency or any other instrumentality of any of them.

        "Guarantee"  by any  Person  means any  indebtedness,  liability or
  obligation,  contingent   or  otherwise,  of   such  Person  directly  or
  indirectly  guaranteeing any  Debt  or other  indebtedness,  liability or
  obligation  of any other  Person and, without limiting  the generality of
  the  foregoing,  any indebtedness,  liability  or  obligation,  direct or
  indirect, contingent or otherwise, of such Person (a) to purchase or  pay
  (or advance or supply funds for the purchase or payment of) such  Debt or
  other indebtedness, liability or obligation (whether arising by virtue of
  partnership arrangements, by  agreement to keep-well, to purchase assets,
  goods,  securities or  services,  to take-or-pay,  to  maintain financial
  statement conditions or otherwise) or (b) entered into for the purpose of
  assuring  in  any  other  manner  the  obligee  of  such  Debt  or  other
  indebtedness,  liability or  obligation  of the  payment  thereof  or  to
  protect the  obligee against  loss in  respect  thereof (in  whole or  in
  part),  provided that the  term Guarantee shall not  include endorsements
  for collection or deposit  in the ordinary course of business.   The term
  "Guarantee"  used as a verb has  a corresponding meaning.   The amount of
  any  Guarantee shall  be deemed to  be an  amount equal to the  stated or
  determinable amount of  the primary indebtedness, liability or obligation
  in  respect  of  which such  Guarantee  is  made or,  if  not  stated  or
  determinable,   the  maximum   anticipated  indebtedness,   liability  or
  obligation  in respect  thereof  (assuming such  Person  is  required  to
  perform thereunder).

        "Hazardous   Material"  means   any  substance,   product,   waste,
  pollutant,  chemical, contaminant, insecticide, pesticide, constituent or
  material which  is or  becomes listed, regulated or  addressed under  any
  Environmental  Law, including,  without limitation,  asbestos, petroleum,
  underground storage tanks (whether empty or containing any substance) and
  polychlorinated biphenyls.

        "Holder" means a Person in whose name a note evidencing Senior Debt
  is registered.

        "Indenture"  means that  certain Indenture  by and  among Borrower,
  certain of its Subsidiaries and Texas Commerce Bank National Association,
  as Trustee,  dated as of  January 15, 1994, relating to  the Senior Fixed
  Rate  Notes,  and any  and  all  amendments,  modifications, supplements,
  renewals, extensions or restatements thereof.

        "Intangible Assets" of any Person means those assets of such Person
  which are (a) deferred  assets, other than prepaid insurance  and prepaid
  taxes,  (b)  patents,  copyrights,  trademarks,  tradenames,  franchises,
  goodwill, experimental expenses  and other similar assets  which would be
  classified  as  intangible  assets  on  a balance  sheet  of  such Person
  prepared in accordance  with GAAP, and (c) unamortized debt  discount and
  expense.

        "Intellectual Property" means any United States or foreign patents,
  patent applications, trademarks, trade names, service marks, brand names,
  logos  and other  trade  designations (including  unregistered  names and
  marks),  trademark  and  service  mark  registrations  and  applications,
  copyrights  and  copyright  registrations and  applications,  inventions,
  invention  disclosures,  protected   formulae,  formulations,  processes,
  methods,  trade  secrets, computer  software,  computer programs,  source
  codes,   manufacturing  research   and  similar   technical  information,
  engineering  know-how, customer  and supplier  information, assembly  and
  test data drawings or royalty rights.

        "Intercreditor Agreement" means the Intercreditor Agreement in form
  and substance  satisfactory to  the Banks and the  Revolving Loans  Banks
  with respect to the relative priorities of Liens securing the Obligations
  and the Revolving Loans Obligations.

        "Interest Period" means, with respect to any Eurodollar Loan,  each
  period commencing on the date such  Loan is made or Converted from an ABR
  Loan or (if continued) the last day of the next preceding Interest Period
  with  respect to such  Loan, and ending on  the numerically corresponding
  day in the  first, second, third  or sixth calendar  month thereafter, as
  Borrowers may select as provided in Section  2.9 hereof, except that each
  such  Interest Period  which  commences on  the last  Business  Day of  a
  calendar  month  (or  on  any  day for  which  there  is  no  numerically
  corresponding day in the appropriate subsequent calendar month) shall end
  on  the last Business  Day of the appropriate  subsequent calendar month.
  Notwithstanding  the  foregoing: (a) each  Interest  Period  which  would
  otherwise end on a day which is not a Business Day shall  end on the next
  succeeding Business Day (or, if such succeeding Business Day falls in the
  next  succeeding calendar  month, on  the next  preceding Business  Day);
  (b) any  Interest Period which would otherwise extend beyond the Maturity
  Date shall  end on  the Maturity  Date;  (c) no more  than five  Interest
  Periods for  Eurodollar Loans shall be  in effect at  the same  time; and
  (d) no Interest Period shall have  a duration of less than one month and,
  if the  Interest Period  for any  Eurodollar Loans would  otherwise be  a
  shorter period, such Loans shall not be available hereunder.

        "Interest Rate  Protection Agreements"  means, with  respect to any
  Person,  an  interest  rate  swap,  cap or  collar  agreement  or similar
  arrangement  between such Person providing for the transfer or mitigation
  of interest rate risks either generally or under specified contingencies.

        "Investments" means as specified in Section 9.5.

        "Issue Date" shall have the meaning specified in the Indenture.

        "Issuing Bank" means Banque Paribas or (if Banque Paribas does  not
  wish to be  the issuer of a particular Letter of Credit  and another Bank
  agrees to be such issuer)  such other Bank as Borrower may designate from
  time to time which agrees to be the issuer of such Letter of Credit.

        "Kestrel" means Kestrel Offshore, Inc., a Delaware corporation.

        "Letter of Credit" means any standby letter of credit issued by the
  Issuing Bank for the account of Borrower pursuant to this Agreement.

        "Letter of  Credit Liabilities" means, at  any time,  the aggregate
  face amount  of all  outstanding Letters of Credit  and all  unreimbursed
  drawings under Letters of Credit.

        "Lien"  means  any lien,  mortgage,  security  interest,  tax lien,
  financing  statement, pledge, charge, hypothecation  or other encumbrance
  of  any kind  or  nature whatsoever  (including, without  limitation, any
  conditional  sale  or  title  retention  agreement),  whether  arising by
  contract, operation of law or otherwise.

        "Loan  Documents" means this Agreement, the  Notes, the Term Sheet,
  the  Letters of  Credit, any  Currency Hedge  Agreement or  Interest Rate
  Protection  Agreement between  Borrower and  any  Bank that  is expressly
  approved by the Agent and expressly determined by the Agent (at any time)
  to  be  a  Loan  Document,  and  all  other  agreements,  documents   and
  instruments executed  and/or delivered pursuant to or  in connection with
  any  of  the  foregoing,  and  any  and  all  amendments,  modifications,
  supplements, renewals, extensions or restatements thereof.

        "Loan Party" means Borrower and any other Person (if any) who is or
  becomes a party to any agreement, document or instrument that  Guarantees
  or secures payment or performance of the Obligations or any part thereof.

        "Loans" means as specified in Section 2.1(a).

        "Material Adverse Effect" means any material adverse effect, or the
  occurrence  of any  event or the  existence of  any condition  that could
  reasonably  be expected  to have  a material  adverse effect,  on (a) the
  business  or financial  condition of (i)  Borrower and  its Subsidiaries,
  taken  as a  whole,  or (ii)  Borrower  on an  individual  basis, (b) the
  ability of  Borrower to  pay and  perform  the Obligations  when due,  or
  (c) the validity or enforceability of any of the Loan Documents, any Lien
  created or purported to be  created by any of the Loan Documents   or the
  rights  and remedies  of the  Agent or  the Banks under  any of  the Loan
  Documents.

        "Material  Contracts"  means,  as   to  Borrower  or  any   of  its
  Subsidiaries,  any material contract as such  term is used  or defined in
  item  601(b)(10)  of Regulation  S-K  promulgated by  the Securities  and
  Exchange Commission (or in any successor regulation).

        "Material Subsidiary" means any Subsidiary of Borrower that engages
  in any material operations or that contributes or has contributed, during
  any fiscal quarter, 1% or more of the aggregate gross revenue of Borrower
  and its consolidated Subsidiaries on a consolidated basis.

        "Maturity Date"  means the  date that  is 364  days after  the date
  hereof.

        "Maximum  Rate" means, with  respect to any Bank,  the maximum non-
  usurious  interest rate  (or,  if  the context  so requires,  the  amount
  calculated at such rate), if  any, that at any time or  from time to time
  may be contracted for, taken, reserved, charged or received with  respect
  to the Loans or on other amounts,  if any, payable to such  Bank pursuant
  to this  Agreement or any other Loan  Document, under laws  applicable to
  such Bank  which are presently in  effect, or, to  the extent  allowed by
  law, under  such applicable  laws which  may hereafter  be in effect  and
  which allow  a higher maximum non-usurious  interest rate than applicable
  laws now allow.  The  Maximum Rate shall be  calculated in a manner  that
  takes into  account  any and  all fees,  payments  and other  charges  in
  respect of  the Loan Documents that constitute  interest under applicable
  law.  Each change in any interest rate provided for herein based upon the
  Maximum  Rate resulting  from a  change  in the  Maximum Rate  shall take
  effect without  notice to  Borrowers at  the time of such  change in  the
  Maximum Rate.  For purposes of  determining the Maximum Rate  under Texas
  law,  the applicable  rate ceiling  shall be  the indicated  rate ceiling
  described  in,  and  computed  in  accordance  with,  Article  5069-1.04,
  Vernon's Texas  Civil Statutes  or any successor  or replacement statute;
  provided, however, that,  to the extent permitted by applicable  law, the
  Agent shall have the  right to  change the applicable  rate ceiling  from
  time to time in accordance with applicable law.

        "Multiemployer Plan" means a  multiemployer plan defined as such in
  Section 3(37)  of ERISA to  which contributions have been made  by or are
  required from any Loan Party or any ERISA Affiliate  since 1974 and which
  is covered by Title IV of ERISA.

        "Net  Proceeds"  means,  with  respect  to  any  Asset Disposition,
  (a) the  gross  amount  of  cash  received  by  Borrower or  any  of  its
  Subsidiaries from any Asset Disposition, minus (b) the amount, if any, of
  all taxes paid or payable by Borrower or any of its Subsidiaries directly
  resulting  from such  Asset Disposition  (including  the amount,  if any,
  estimated by Borrower in good faith at the time of such Asset Disposition
  for taxes payable by Borrower or any  of its Subsidiaries on or  measured
  by net  income  or gain  resulting from  such Asset  Disposition),  minus
  (c) the out-of-pocket  costs and  expenses incurred  by Borrower  or such
  Subsidiary in connection with such Asset Disposition (including brokerage
  fees paid to a Person  other than an Affiliate of Borrower) excluding any
  fees  or expenses  paid to  an Affiliate  of Borrower,  minus (d) amounts
  applied to  the repayment  of indebtedness  (other than the  Obligations)
  secured  by  a  Permitted Lien  on  the  Property  subject  to  the Asset
  Disposition.  "Net Proceeds" with respect to any Asset Disposition  shall
  also  include proceeds (after deducting any  amounts specified in clauses
  (b), (c) and (d) of  the preceding sentence) of insurance with respect to
  any actual  or constructive  loss of Property, an  agreed or  compromised
  loss of Property or the taking of any Property under the power of eminent
  domain and condemnation awards and awards in lieu of condemnation for the
  taking  of Property under the  power of  eminent domain.   "Net Proceeds"
  means, with respect to any Equity Issuance, (i) the gross  amount of cash
  or other consideration received  from such Equity Issuance minus (ii) the
  out-of-pocket  costs and expenses  incurred by  the issuer  in connection
  with such Equity  Issuance (including underwriting fees paid to  a Person
  other than an Affiliate of Borrower)  excluding any fees or expenses paid
  to an Affiliate of Borrower.

        "Non-Material Subsidiary"  means  any  of Falcon  Holdings,  Falcon
  Management, Kestrel  or Raptor prior  to the time that such  entity is or
  becomes a Material Subsidiary.

        "Non-Recourse  Debt" means Debt  or that portion of  Debt (a) as to
  which  neither Borrower nor  any of its Subsidiaries (other  than an Non-
  Recourse  Subsidiary)  (i) provides   credit  support  pursuant   to  any
  guaranty,  undertaking,  agreement,  document  or instrument  that  would
  constitute   Debt,   (ii) is   directly   or    indirectly   liable,   or
  (iii) constitutes  the lender, and (b) no  default with  respect to which
  (including  any  rights  that  the  holders  thereof  may  have  to  take
  enforcement action against an Non-Recourse Subsidiary) would permit (upon
  notice, lapse of time or  both) any holder of any other Debt of  Borrower
  or any  of its  Subsidiaries (other than an  Non-Recourse Subsidiary)  to
  declare a default on such  other Debt or cause the payment thereof to  be
  accelerated or payable prior to its stated maturity.

        "Non-Recourse Rig" means as defined in the Indenture.

        "Non-Recourse   Subsidiary"  means   a   Subsidiary   of   Borrower
  (i) established for the purpose of acquiring or investing in one  or more
  of the Non-Recourse  Rigs, (ii) substantially all of the assets  of which
  consist of  one or more  of the Non-Recourse Rigs, (iii) at  least 67% of
  the equity interest in all the Capital Stock of  which is owned directly,
  or  indirectly through one or more Wholly-Owned Subsidiaries, by Borrower
  and,  in the  case  of a  Non-Recourse  Subsidiary that  has a  board  of
  directors or similar  governing body, a majority of the members  of which
  board of  directors or similar governing body are nominees of Borrower or
  such Wholly-Owned Subsidiaries, and (iv) which shall have been designated
  as a Non-Recourse Subsidiary by a resolution of the Board of Directors of
  Borrower.  Borrower  may redesignate any Non-Recourse Subsidiary to  be a
  Subsidiary  other than a  Non-Recourse Subsidiary by a  resolution of the
  Board  of  Directors  of  Borrower  if,  after  giving  effect  to   such
  redesignation,  Borrower could incur $1.00 of additional Debt pursuant to
  Section  4.16  of  the  Indenture  (such  redesignation  being  deemed an
  incurrence of Debt  (other than  Non-Recourse Debt)).   Any  Non-Recourse
  Subsidiary shall become a Subsidiary other than a Non-Recourse Subsidiary
  upon  the  repayment,   renewal,  extension,  refinancing,  refunding  or
  repurchase  of  the Non-Recourse  Debt  of  such  Non-Recourse Subsidiary
  (other than  Permitted Non-Recourse  Subsidiary Refinancing Indebtedness,
  as  such term is defined in the Indenture).  Any indebtedness incurred to
  effect  such renewal,  extension,  refinancing, refunding  or  repurchase
  shall be  deemed to be incurred  on the date  of such renewal, extension,
  refinancing, refunding or repurchase.

        "Notes" means the promissory notes of Borrower evidencing the Loans
  in  the  form  of  Exhibit  C   hereto,  and  any  and   all  amendments,
  modifications,  supplements, renewals, extensions or restatements thereof
  and  all substitutions  therefor  (including promissory  notes  issued by
  Borrower pursuant to Section 13.8).

        "Note Purchase Agreement" means that certain agreement by and among
  Borrower, certain of its Subsidiaries and Crescent/Mach I Partners, L.P.,
  dated  as of  February 23,  1994, relating  to the  Senior Floating  Rate
  Notes, and any  and all amendments, modifications, supplements, renewals,
  extensions or restatements thereof.

        "OECD"   means  the  Organization  for   Economic  Cooperation  and
  Development.

        "Obligations" means (a) any  and all indebtedness,  liabilities and
  obligations of Borrower  and the other Loan  Parties, and/or any of them,
  to the  Agent, the Issuing Bank  and/or the  Banks, and/or  any of  them,
  evidenced  by and/or arising pursuant to  any of the  Loan Documents, now
  existing  or  hereafter  arising,  whether  direct,   indirect,  related,
  unrelated, fixed, contingent, liquidated, unliquidated, joint, several or
  joint and several, including,  without limitation, (i) the obligations of
  Borrower to  repay the  Loans and the Reimbursement  Obligations, to  pay
  interest  on  the Loans  and  the  Reimbursement  Obligations (including,
  without limitation,  interest accruing after  any, if any, implementation
  of  or  filing  under  any  Debtor  Relief  Law)  and  to  pay all  fees,
  indemnities, costs and  expenses (including attorneys' fees) provided for
  in the Loan Documents, and (ii) the indebtedness constituting the  Loans,
  the  Reimbursement  Obligations and  such  fees,  indemnities,  costs and
  expenses,  and  (b) the  indebtedness,  liabilities  and  obligations  of
  Borrower under  any  and  all  Interest  Rate Protection  Agreements  and
  Currency Hedge Agreements  that it may enter into  with any Bank that are
  expressly approved by the Agent and expressly determined by the Agent (at
  any time) to be Loan Documents.

        "Operating Lease"  means, with  respect to  any Person,  any lease,
  rental or  other agreement for the  use by  that Person  of any  Property
  which is not a Capital Lease Obligation.

        "Outstanding  Credit" means,  at  any particular  time, the  sum of
  (a) the outstanding principal amount of the Loans, plus (b) the Letter of
  Credit Liabilities.

        "Payor" means as specified in Section 3.4.

        "PBGC" means the Pension Benefit Guaranty Corporation or any entity
  succeeding to all or any of its functions under ERISA.

        "Pension Plan" means an employee pension benefit plan as defined in
  Section 3(2) of  ERISA (including a Multiemployer Plan) which  is subject
  to the funding requirements under Section 302 or 4212 of ERISA or Section
  412  of the  Code, in  whole  or in  part,  and which  is established  or
  maintained  or contributed  to currently  or at any  time within  the six
  years  immediately  preceding  the Closing  Date  or,  in the  case  of a
  Multiemployer Plan, at  any time since September 2, 1974, by  Borrower or
  any ERISA Affiliate for employees of Borrower or any ERISA Affiliate.

        "Peril" means as specified in Section 8.5.

        "Permits"  means  all  permits,  certificates,  approvals,  orders,
  licenses and other authorizations.

        "Permitted  Capital  Expenditures"  means as  specified  in Section
  10.6.

        "Permitted Liens" means:

              (a)   Liens disclosed on Schedule 1.1(a) hereto;

              (b)   Liens   securing   payment   and  performance   of  the
        "Obligations"  as that  term is  defined in  each of  the Revolving
        Loans Credit Agreement and the Acquisition Loans Credit Agreement.

              (c)   Encumbrances    consisting    of    easements,   zoning
        restrictions or other  restrictions on the use of real  Property or
        imperfections  to title  that  (i) do not  (individually or  in the
        aggregate) materially  affect the value  of the Property encumbered
        thereby  or materially  impair  the  ability  of  Borrower  or  its
        Subsidiaries to  use such Property  in their respective businesses,
        and  none of which is violated in any  material respect by existing
        or  proposed structures or  land use and (ii) were  entered into in
        the ordinary  course  of business  and could  not have  a  Material
        Adverse Effect;

              (d)   Liens  for taxes,  assessments  or  other  governmental
        charges that  are not  delinquent or which are  being contested  in
        good faith  by appropriate proceedings,  which proceedings have the
        effect of preventing the forfeiture or sale of the Property subject
        to   such  Liens,  and  for  which   adequate  reserves  have  been
        established;

              (e)   Liens   of    mechanics,   materialmen,   warehousemen,
        carriers, landlords, suppliers or vendors imposed by law or arising
        by operation of law,  or Liens for master's or crew's wages imposed
        by law or arising by  operation of law, or  other similar statutory
        or  maritime Liens, securing  obligations that are not  yet due and
        are incurred in the ordinary course of business or which  are being
        contested  in  good   faith  by   appropriate  proceedings,   which
        proceedings have the effect of preventing the forfeiture or sale of
        the Property subject to such Liens, and for which adequate reserves
        have been established;

              (f)   Liens  resulting  from good  faith  deposits  to secure
        payment of workmen's compensation or other social security programs
        or  to secure  the performance  of tenders,  statutory obligations,
        surety and appeal bonds, bids, contracts (other than for payment of
        Debt), or leases, all in the ordinary course of business;

              (g)   Liens  to  secure  Debt  incurred  for  the  purpose of
        financing all or a  part of the purchase price or construction cost
        of Property (including the cost  of upgrading refurbishing rigs  or
        drillships)  acquired  or  constructed   after  the  Closing  Date;
        provided  that (i)  the principal  amount of  Debt secured  by such
        Liens shall  not exceed 66 % of  the lesser of  cost or fair market
        value of the assets or Property so acquired or constructed and (ii)
        such Liens  shall  not encumber  any other  assets or  Property  of
        Borrower and shall attach to  such Property within 120  days of the
        construction or acquisition of such assets or Property;

              (h)   Easements, rights-of-way, restrictions  and other Liens
        and imperfections to title that are approved by the Agent;

              (i)   Liens on Property of a Person existing at the time such
        Person is  merged or consolidated with or  into Borrower or  any of
        its  Subsidiaries  pursuant  to  a  transaction  permitted  by this
        Agreement (and  not incurred as a result of, or in anticipation of,
        such transaction),  provided that such Lien  relates solely to such
        Property;

              (j)   Liens on  Property acquired after  the Closing Date and
        existing at the  time of the acquisition thereof (and  not incurred
        as a result of, or in anticipation of, such transaction),  provided
        that such Lien relates solely to such Property;

              (k)   Liens securing Capital  Lease Obligations not to exceed
        $30,000,000 in aggregate  principal amount (as to Borrower  and its
        Subsidiaries) at any time outstanding;

              (l)   any charter or lease of  equipment entered into in  the
        ordinary course of business for full and fair consideration;

              (m)   leases or  subleases of real  property to other Persons
        in the ordinary course of business for full and fair consideration;

              (n)   Liens on the Capital Stock of a Non-Recourse Subsidiary
        securing loans made to such Non-Recourse Subsidiary;

              (o)   Liens on Property  other than Collateral referred to in
        item (a)  above of  this definition securing Debt  in an  aggregate
        principal amount not to exceed $20,000,000 at any time outstanding;

              (p)   Liens securing  that  Debt  permitted  by  Section  9.1
        hereof; and

              (q)   Any  extension, renewal  or replacement  of any  of the
        foregoing,  provided that  Liens permitted  hereunder shall  not be
        extended  or  spread   to  cover  any  additional  indebtedness  or
        Property;

  provided, however, that (i) none of  the Permitted Liens (except those in
  favor of the Agent) may  attach or relate to the Capital  Stock of or any
  other ownership interest in Borrower or any Subsidiary (other than a Non-
  Recourse  Subsidiary) of  Borrower,  (ii)  none of  the  Permitted Liens,
  except  the Permitted  Liens  referred to  in  clauses (b),  (d)  and (e)
  preceding, may attach or relate  to any of the "Collateral" as defined in
  the Acquisition  Loans Credit Agreement, and (iii) none  of the Permitted
  Liens referred  to in  subclause (ii) of  clause (b)  preceding may  have
  priority equal or prior  to the Liens in  favor of the Agent as  security
  for the  Obligations except  such Permitted   Liens  referred to in  such
  subclause (ii) which attach or relate to the Receivables of Borrower.

        "Permitted Refinancing Debt"  means Debt of Borrower or any  of its
  Subsidiaries incurred  in exchange for, or the net proceeds  of which are
  used to renew, extend, refinance, refund or  repurchase, outstanding Debt
  of such Person which outstanding Debt was incurred in accordance with, or
  is otherwise  permitted by,  the terms of this  Agreement; provided  that
  (a) if  the  Debt   being  renewed,  extended,  refinanced,  refunded  or
  repurchased is pari passu with or subordinated in right of payment to the
  Obligations or any part thereof, then such  new Debt shall be pari  passu
  with or  subordinated in  right of payment to,  as the  case may  be, the
  Obligations (or the applicable  part thereof) at least to the same extent
  as the Debt being renewed, extended, refinanced, refunded or repurchased,
  (b) such new  Debt  is scheduled  to mature  later  than the  Debt  being
  renewed, extended, refinanced, refunded or repurchased, (c) such new Debt
  has an Average  Life (as such term  is defined in  the Indenture) at  the
  time such Debt is incurred  that is greater than the Average Life of  the
  Debt being  renewed, extended,  refinanced, refunded  or repurchased, and
  (d) such new Debt is in an aggregate  principal amount (or, if such  Debt
  is  issued  at  a  price less  than  the  principal amount  thereof,  the
  aggregate amount of  gross proceeds  therefrom is) not in  excess of  the
  aggregate principal  amount then  outstanding of the  Debt being renewed,
  extended, refinanced,  refunded or  repurchased  (or  if the  Debt  being
  renewed,  extended, refinanced, refunded or  repurchased was  issued at a
  price less than the  principal amount thereof, then not in excess  of the
  amount  of liability  in  respect thereof  determined in  accordance with
  GAAP).

        "Person"  means  any  individual, corporation,  trust, association,
  company,  partnership,  joint  venture, Governmental  Authority  or other
  entity.

        "Plan" means any employee benefit  plan as defined in  Section 3(3)
  of ERISA established or maintained or contributed to by any Loan Party or
  any ERISA Affiliate, including any Pension Plan.

         Preferred Ship  Mortgages  means (a)  that certain First Preferred
  Fleet Mortgage  dated as of  November 12, 1996, executed by  Borrower, as
  owner  and mortgagor,  to  and  in favor  of  BANK ONE,  TEXAS,  N.A., as
  mortgagee, which  creates a  Lien  on certain  of  the Drilling  Rigs  as
  security for the Obligations, and  any and all amendments, modifications,
  and supplements,  renewals, extensions, or  restatements thereof, and (b)
  and any other  mortgage or other security agreement which creates  a Lien
  on any Drilling Rig as security for the Obligations.

        "Prime Rate" means, at  any time,  the rate of  interest per  annum
  then  most  recently  established  by  Citibank,  N.A.  as   its  highest
  commercial prime rate, which rate  may not be the lowest rate of interest
  charged by  Citibank, N.A. to  its commercial borrowers.  Each  change in
  any interest rate provided for herein based upon the Prime Rate resulting
  from  a change  in the  Prime Rate  shall take  effect without  notice to
  Borrower at the time of such change in the Prime Rate.

        "Principal  Office"  means  the  principal  office  of  the  Agent,
  presently located at 1200 Smith Street, Suite 3100, Houston, Texas 77002.

        "Proforma Interest  Coverage Ratio"  means, as of the  date of  the
  transaction  giving  rise  to  the need  to  calculate  such  ratio  (the
  "Transaction Date"),  the ratio of (a) the aggregate EBITDA  for the four
  fiscal  quarters  preceding the  Transaction Date  to  (b)  the aggregate
  Consolidated Interest Expense  that is anticipated to  accrue during  the
  fiscal quarter in which the  Transaction Date occurs and the three fiscal
  quarters immediately  subsequent thereto (based  upon the proforma amount
  and maturity  of, and interest payments in  respect of, Debt  expected by
  Borrower  to  be  outstanding on  the  Transaction  Date  and  reasonably
  anticipated  by Borrower to be  outstanding from time to time during such
  period).   In determining such ratio, (i) interest rates in effect on the
  Transaction Date shall  remain in effect throughout  the relevant period,
  except that  if  Borrower is  a party  to  any Interest  Rate  Protection
  Agreements that would  have the effect of changing  the interest rate  on
  the  Debt of  such Person  proposed to  be incurred  during a  period (or
  portion thereof),  such resulting  rate shall be  used for  the period or
  portion thereof, (ii) any Consolidated Interest  Expense of Borrower with
  respect  to Debt incurred or retired  by Borrower (excluding Non-Recourse
  Debt)  during the  fiscal quarter  in which  the Transaction  Date occurs
  shall be calculated as  if such Debt  was so incurred  or retired on  the
  first day  of the fiscal  quarter in  which the Transaction Date  occurs,
  (iii)  if  the transaction  giving  rise  to the  need  to  calculate the
  Proforma Interest Coverage  Ratio would have the effect of  increasing or
  decreasing  EBITDA in  the future  and if  such increase  or  decrease is
  readily quantifiable  and is  directly attributable  to such transaction,
  EBITDA shall be calculated on a proforma basis as if such transaction had
  occurred  on the  first day  of  the four  fiscal quarters  preceding the
  fiscal quarter in which the Transaction Date occurs, and (iv) if Borrower
  shall have sold any material  portion of its  assets during such  period,
  EBITDA for such period shall  be reduced by an amount equal to the EBITDA
  (if  positive),  or  increased  by  an  amount equal  to  the  EBITDA (if
  negative), directly attributable  to the assets which were sold  for such
  period  calculated on  a proforma  basis as  if such  asset sale  and any
  related retirement of Debt had occurred on the first day of such quarter.
  As  used in  this  definition,  "Borrower" shall  mean Borrower  and  its
  consolidated Subsidiaries, excluding any Non-Recourse Subsidiaries.

        "Prohibited Transaction" means any transaction set forth in Section
  406 of ERISA or Section 4975 of the Code.

        "Property"  means property of all  kinds, real,  personal or mixed,
  tangible  or  intangible   (including,  without  limitation,  all  rights
  relating  thereto), whether  owned or  acquired on  or after  the Closing
  Date.

        "Quarterly Date" means the last day of each March, June,  September
  and December of each year, the first of which shall be the first such day
  after the Closing Date.

        "R&B  Merger" means the proposed  combination of  the Borrower with
  Reading  &  Bates  Corporation,  which combination  will  be effected  by
  merging one  subsidiary  of  R&B  Falcon  Corporation into  Borrower  and
  another  Subsidiary  of  R&B  Falcon  Corporation  into  Reading  & Bates
  Corporation,  following which  Borrower and  Reading &  Bates Corporation
  will  be wholly  owned subsidiaries  of R&B  Falcon Corporation,  and the
  former shareholders of Borrower and Reading & Bates Corporation will  own
  all of the outstanding shares of R&B Falcon Corporation.

        "R&B Option" means the option to purchase shares of common stock of
  the  Borrower granted  to Reading  & Bates  Corporation pursuant  to that
  certain FDC  Corporation  Stock  Option  Agreement  dated July  10,  1997
  between Borrower and Reading & Bates Corporation.

        "Raptor"   means   Raptor   Exploration  Co.,   Inc.,   a  Delaware
  corporation.

        "Receivables" means, as  at any date of  determination thereof, all
  accounts (as such  term is defined in the  UCC) of Borrower and includes,
  without  limitation, the unpaid  portion of the obligation,  as stated on
  the respective invoice, or, if there is  no invoice, other writing, of  a
  customer  of Borrower in  respect of services rendered  or inventory sold
  and shipped by such Person.

        "Redeemable Stock"  means, with respect to  any Person,  any equity
  security that, by  its terms  or otherwise, is required  to be  redeemed,
  purchased or paid  by the issuer thereof, or is  redeemable, transferable
  or payable  at the  option of  the holder thereof,  at any  time prior to
  January 15, 2002, or  is exchangeable into Debt of  such Person or any of
  its Subsidiaries.

        "Reference Bank" means Banque Paribas.

        "Register" means as specified in Section 13.8(d).

        "Regulation D" means Regulation D of the Board of  Governors of the
  Federal  Reserve System as  the same may be amended  or supplemented from
  time to time.

        "Regulatory Change"  means, with  respect to  any Bank, any  change
  after the Closing Date in United States federal, state or foreign laws or
  regulations (including Regulation D) or the adoption or making after such
  date of any  interpretations, directives or requests applying to  a class
  of banks  including such Bank  of or  under any United  States federal or
  state, or any  foreign, laws  or regulations (whether  or not  having the
  force  of  law)   by  any   Governmental  Authority   charged  with   the
  interpretation or administration thereof.

        "Reimbursement  Obligation"  means  the obligation  of  Borrower to
  reimburse the Issuing Bank for any drawing under a Letter of Credit.

        "Release" means,  as to any Person,  any release,  spill, emission,
  leaking, pumping, injection, deposit, disposal, disbursement, leaching or
  migration of  Hazardous Materials into the  indoor or outdoor environment
  or  into or  out of  Property  owned by  such Person,  including, without
  limitation,  the movement of  Hazardous Materials through or  in the air,
  soil, surface water or ground water.

        "Remedial  Action"  means  all  actions  required  to  (a) cleanup,
  remove, respond to, treat or otherwise address Hazardous Materials in the
  indoor or  outdoor  environment, (b) prevent  the Release  or  threat  of
  Release  or minimize the  further Release of Hazardous  Materials so that
  they  do not migrate or endanger or threaten to endanger public health or
  welfare or the  indoor or  outdoor environment,  (c) perform studies  and
  investigations  on the  extent  and  nature of  any actual  or  suspected
  contamination, the  remedy or  remedies to be  used or  health effects or
  risks  of such  contamination,  or (d) perform  post-remedial monitoring,
  care or remedy of a contaminated site.

        "Required Banks" means, at any date of determination,  Banks having
  in the aggregate at least  75% (in Dollar amount) of the aggregate amount
  of the  outstanding Commitments (or, if  such Commitments have terminated
  or expired, the  aggregate outstanding principal amount of the  Loans and
  the aggregate Letter of Credit Liabilities).

        "Required Payment" means as specified in Section 3.4.

        "Replacement Asset" means a  Property or asset that,  as determined
  by the Board of Directors of Borrower as evidenced by a resolution of its
  Board of Directors, is used or is useful in a business related, ancillary
  or complementary to the business of Borrower and its Subsidiaries on  the
  Closing Date.

        "Reportable Event"  means any  of the events set  forth in  Section
  4043 of ERISA.

        "Reserve Requirement"  means, for  any Eurodollar Loan  of any Bank
  for  any Interest  Period therefor,  the maximum  rate at  which reserves
  (including any marginal, supplemental or emergency reserves) are required
  to be maintained during such Interest Period under any regulations of the
  Board of  Governors of the Federal Reserve  System (or any  successor) by
  such  Bank  for deposits  exceeding $1,000,000,000  against "Eurocurrency
  Liabilities" as such term is  used in Regulation D.  Without limiting the
  effect of the foregoing, the Reserve Requirement shall reflect any  other
  reserves required to be maintained by such member banks  by reason of any
  Regulatory Change against  (a) any category of liabilities which includes
  deposits  by reference  to  which  the Eurodollar  Rate or  the  Adjusted
  Eurodollar Rate is to be determined, or (b) any category of extensions of
  credit or other assets which include Eurodollar Loans.

        "Responsible Officer"  means,  as to  any  Loan  Party,  the  chief
  financial officer, vice president of finance, chief  operating officer or
  chief executive officer of such Person.

        "Restricted Payment" means  (a) any dividend or  other distribution
  (whether  in cash,  Property  or obligations),  direct  or  indirect,  on
  account  of  (or  the setting  apart  of money  for  a  sinking  or other
  analogous fund for) any shares  of any class of Capital Stock of Borrower
  or  any  of  its  Subsidiaries  now or  hereafter  outstanding,  except a
  dividend payable solely in shares of that  class of stock to the  holders
  of  that  class;  (b) any redemption,  conversion,  exchange, retirement,
  sinking fund or similar payment, purchase or other acquisition for value,
  direct  or indirect,  of any  shares of  any class  of  Capital Stock  of
  Borrower or any of its Subsidiaries now or hereafter outstanding; (c) any
  payment  or prepayment of principal  of, premium, if any, or interest on,
  or   any  redemption,  conversion,  exchange,   purchase,  retirement  or
  defeasance of, or payment with  respect to, any Subordinated  Debt or any
  Senior Debt; (d) any loan, advance or payment (pursuant  to a tax sharing
  agreement  or otherwise)  to any  shareholder of Borrower  or any  of its
  Subsidiaries;  and (e) any  payment  made  to retire,  or to  obtain  the
  surrender  of,  any  outstanding  warrants, options  or  other rights  to
  acquire shares  of any class of  Capital Stock of Borrower  or any of its
  Subsidiaries now or hereafter outstanding.

        "Revolving Loans" means the "Loans" as such term is defined in  the
  Revolving Loans Credit Agreement.

        "Revolving Loans Agent"  means the "Agent" as such term  is defined
  in the Revolving Loans Credit Agreement.

        "Revolving Loans Banks"  means the "Banks" as such term  is defined
  in the Revolving Loans Credit Agreement.

        "Revolving  Loans  Credit  Agreement"  means  that  certain  Credit
  Agreement  dated  as  of  November  12,  1996,  among  Borrower,  certain
  Subsidiaries of  Borrower, the  banks named  therein, Banque  Paribas, as
  agent  for such banks,  and Arab Banking Corporation  (B.S.), as co-agent
  for such banks.

        "Revolving Loans Documents" means the "Loan Documents" as such term
  is defined in the Revolving Loans Credit Agreement.

        "Revolving  Loans Maturity Date" means the  "Maturity Date" as such
  term is defined in the Revolving Loans Credit Agreement.

        "Revolving Loans Obligations"  means the "Obligations" as such term
  is defined in the Revolving Loans Credit Agreement.

        "Senior  Debt" means  the Debt  of Borrower  under the  Senior Debt
  Documents.

        "Senior Debt Documents" means the Senior Notes, the  Indenture, the
  Series 1996 Indenture, the Note Purchase Agreement, the Subsidiary Senior
  Note  Guaranties,  all  agreements,  documents  and  instruments  now  or
  hereafter  executed  by  Borrower  or  any  of  its  Subsidiaries  and/or
  delivered to  the trustee  pursuant to  the Indenture  or to  any  Holder
  pursuant to the  Indenture, the Series 1996 Indenture, the  Note Purchase
  Agreement  or  otherwise,  and  any  and  all  amendments, modifications,
  supplements, renewals, extensions or restatements thereof.

        "Senior Fixed Rate Notes" means the 9 % Series B Notes due 2001, if
  any,  issued  by Borrower,  and  any and  all amendments,  modifications,
  supplements, renewals,  extensions or  restatements of  such Senior Fixed
  Rate Notes.

        "Senior Floating  Rate Notes" means the Senior  Floating Rate Notes
  due  January 15, 2001, issued  by Borrower pursuant to  the Note Purchase
  Agreement  or  otherwise,  and  any  and  all  amendments, modifications,
  supplements, renewals, extensions or restatements of such Senior Floating
  Rate Notes.

        "Senior  Note Guarantors"  means Falcon  Offshore, Falcon  Drilling
  Management,  Inc.,  Falcon  Rig  Management  Company,  Inc.,  Falcon  Rig
  (Liberia), Ltd., Falcon Drilling Holdings, L.P., FALRIG Offshore, Kestrel
  Offshore,  Inc.,  Falcon  Workover  Company,   Inc.,  Raptor  Exploration
  Company, Inc., FALRIG Offshore  (USA), L.P. and FALRIG Offshore  Partners
  and  any  other   Subsidiary  of  Borrower  which  Guarantees  Borrower's
  obligations  with respect to any Senior Note pursuant to the terms of the
  Indenture, the Note Purchase Agreement or otherwise.

        "Senior Notes"  means, collectively,  the Senior  Fixed Rate Notes,
  the Senior Floating Rate Notes and the Series 1996 Notes.

        "Senior Subordinated  Debt" means  the Debt of  Borrower under  the
  Senior Subordinated Debt Documents.

        "Senior Subordinated Debt Documents"  means the Senior Subordinated
  Notes, the Senior Subordinated Notes Indenture, all agreements, documents
  and instruments  now or  hereafter executed  by Borrower  or any  of  its
  Subsidiaries  and/or  delivered to  the  Trustee pursuant  to the  Senior
  Subordinated Notes  Indenture or to any  Senior Subordinated Notes Holder
  pursuant to the Senior Subordinated Notes Indenture or otherwise, and any
  and all amendments,  modifications, supplements, renewals,  extensions or
  restatements thereof.

        "Senior  Subordinated  Notes" means  those certain 12 1/2% Series B
  Senior Subordinated Notes  due 2005 in the aggregate principal  amount of
  $50,000,000 issued pursuant to the terms of the Senior Subordinated Notes
  Indenture.

        "Senior Subordinated Notes  Holder" means a Person in whose  name a
  Senior Subordinated Note is registered.

        "Senior Subordinated Notes Indenture" means that  certain Indenture
  by and  between  Borrower, as  Issuer and  Texas Commerce  Bank  National
  Association,  as Trustee,  dated as  of March 15,  1995, relating  to the
  Senior Subordinated Notes.

        "Series  B Notes"  means the 9 %  Series B Notes due  2001, if any,
  issued by Borrower pursuant to the Indenture or otherwise.

        "Series  1996 Indenture" means  the Indenture dated as  of March 1,
  1996,  between Borrower and Bank  One, Texas, N.A., pursuant to which the
  Series 1996 Notes have been issued.

        "Series 1996 Notes" means the 8 % Series B Notes due 2003 issued by
  Borrower  pursuant  to  the  Series  1996  Indenture,  and  any  and  all
  amendments,   modifications,   supplements,   renewals,   extensions   or
  restatements thereof.

        "Solvent" means, with respect  to any Person as of the date  of any
  determination, that  on such date (a) the fair  value of the  Property of
  such Person (both  at fair valuation and at present fair  saleable value)
  is  greater than  the total  liabilities, including,  without limitation,
  contingent  liabilities, of  such Person,  (b) the present  fair saleable
  value of the assets of  such Person is not less than the amount that will
  be required to pay the probable liability of such Person  on its debts as
  they become absolute and matured, (c) such Person is able to realize upon
  its  assets  and  pay  its   debts  and  other  liabilities,   contingent
  obligations and other commitments  as they mature in the normal course of
  business, (d) such Person does  not intend to, and  does not believe that
  it will, incur debts or liabilities  beyond such Person's ability  to pay
  as such debts and liabilities mature, and (e) such Person  is not engaged
  in business or a transaction, and is not about to engage in business or a
  transaction,  for   which  such   Person's   Property  would   constitute
  unreasonably small capital after  giving due consideration to current and
  anticipated  future capital  requirements  and  current  and  anticipated
  future  business conduct and  the prevailing practice in  the industry in
  which  such Person  is engaged.   In computing  the amount  of contingent
  liabilities at any time, such liabilities shall be computed at the amount
  which in  light of  the facts  and circumstances  existing at  such time,
  represents the amount that can reasonably be expected to become an actual
  or matured liability.

        "Subordinated  Debt" means  any  Debt  of Borrower  or any  of  its
  Subsidiaries  which is, by  its terms, subordinated in any  manner (as to
  payment or collection) to any other Debt of any such Person and includes,
  without limitation, the Senior Subordinated Debt.

        "Subsidiary" means,  with respect  to any  Person, any corporation,
  partnership  or  other  entity  of which  at  least  a  majority  of  the
  outstanding  shares of  stock, partnership  interests or  other ownership
  interests having  by the terms  thereof ordinary voting  power to elect a
  majority  of  the  board of  directors  (or  Persons  performing  similar
  functions) of  such corporation,  partnership or  entity (irrespective of
  whether  or not at the  time, in the case of a  corporation, stock of any
  other  class  or classes  of such  corporation shall  have or  might have
  voting power  by reason of  the happening  of any contingency)  is at the
  time  directly or indirectly owned or controlled by such Person or one or
  more  of its  Subsidiaries or  by  such Person  and one  or  more of  its
  Subsidiaries.

        "Subsidiary Senior  Note Guaranties"  means the  obligations of the
  Senior  Note  Guarantors  under  the  Indenture  and  the  Note  Purchase
  Agreement pursuant to which  the Senior Note Guarantors guarantee payment
  of the Senior Fixed Rate Notes and the Senior Floating Rates.

        "Term Sheet"  means that certain letter agreement  dated August 27,
  1997 containing a  "Summary of Terms"  as executed by Banque Paribas  and
  agreed to and accepted by Borrower as of August 27, 1997.

        "Type" means any type of Loan (i.e.,  an ABR Loan or an  Eurodollar
  Loan).

        "UCC" means the  Uniform Commercial Code as  in effect in the State
  of New  York, Texas,  Louisiana  or any  other  jurisdiction, as  may  be
  applicable to  or in connection  with any  Lien on  any Property  created
  pursuant to any Security Document.

        "UCP" means as specified in Section 2.14(b).

        "United States" means the United States of America.

        "Voting Stock" means, with respect to any Person, securities of any
  class or  classes of Capital  Stock in such Person entitling  the holders
  thereof (whether at all times or at the times that such class  of Capital
  Stock has voting power by reason of the happening  of any contingency) to
  vote in the  election of members of the  board of directors or comparable
  body of such Person.

        "Wholly-Owned  Subsidiary" means,  with  respect to  any  Person, a
  Subsidiary of such  Person all of whose outstanding Capital  Stock (other
  than directors' qualifying shares, if any) shall at the  time be owned by
  such Person and/or one or more of its Wholly-Owned Subsidiaries.

        Section 1.2 Other  Definitional   Provisions.     All   definitions
  contained  in this Agreement  are equally applicable to  the singular and
  plural forms of  the terms  defined.  The  words "hereof",  "herein", and
  "hereunder" and words of similar import referring to this Agreement refer
  to this  Agreement as a whole and not to any particular provision of this
  Agreement.     Unless  otherwise  specified,   all  Article  and  Section
  references pertain to this Agreement.  Terms used herein that are defined
  in  the UCC,  unless otherwise  defined herein,  shall have  the meanings
  specified in the UCC.

        Section 1.3 Accounting Terms and Determinations.

              (a)   All  accounting terms  not specifically  defined herein
        shall  be construed  in accordance with  GAAP consistent  with such
        accounting  principles applied  in the  preparation of  the audited
        financial statements referred  to in Section 7.2(a).  All financial
        information delivered to the Agent pursuant to Section 8.1 shall be
        prepared in accordance with GAAP applied on a basis consistent with
        such  accounting  principles  applied  in  the  preparation  of the
        audited financial  statements referred  to in  Section 7.2(a) or in
        accordance with Section 8.7.

              (b)   Borrower shall  deliver to the Agent  and the  Banks at
        the same time  as the delivery of  any annual, quarterly or monthly
        financial  statement  under  Section   8.1  (i) a  description   in
        reasonable detail of any material variation between the application
        of GAAP employed  in the preparation of the next  preceding annual,
        quarterly or monthly financial statements as to which no  objection
        has  been made in  accordance with the last  sentence of subsection
        (a) above, and  (ii) reasonable estimates of the difference between
        such statements arising as a consequence thereof.

              (c)   To  enable the  ready  and consistent  determination of
        compliance  with   the  covenants  set   forth  in  this  Agreement
        (including Article 10  hereof), Borrower  will not change  the last
        day of  its fiscal year from  December 31, or the last  days of the
        first three fiscal quarters in each  of its fiscal years  from that
        existing on the Closing Date.

        Section 1.4 Financial  Covenants  and  Reporting.    The  financial
  covenants contained  in  Article 10  (including the  defined  terms  used
  therein)  shall  be  calculated  on  a consolidated  basis  for  Borrower
  exclusive of any Non-Recourse Subsidiary, notwithstanding anything to the
  contrary contained in this Agreement.

                                  ARTICLE 2

                                    Loans

        Section 2.1 Commitments.

              (a)   Loans.   Subject  to the  terms and conditions  of this
        Agreement, each  Bank severally  agrees to make one  or more  loans
        (the "Loans") to Borrower from time  to time from and including the
        Closing  Date to  but excluding  the Maturity  Date up  to  but not
        exceeding the amount  of such Bank's Commitment as then  in effect;
        provided, however,  that the  Outstanding Credit  shall not at  any
        time exceed the Commitments.   Subject to the foregoing limitations
        and the other terms and conditions of this Agreement, Borrower  may
        borrow, repay and reborrow the Loans hereunder.

              (b)   Continuation and  Conversion of Loans.   Subject to the
        terms  and conditions of  this Agreement, Borrowers may  borrow the
        Loans  as ABR Loans  or Eurodollar Loans and,  until the applicable
        Maturity Date,  Borrower may  Continue Eurodollar  Loans or Convert
        Loans of one Type into Loans of the other Type.

              (c)   Lending Offices.  Loans of each Type made by each  Bank
        shall  be made  and maintained  at  such Bank's  Applicable Lending
        Office for Loans of such Type.

              (d)   Limitations.   Notwithstanding  any other  provision of
        this  Agreement,  Borrower  shall  not  be  entitled  to  make  any
        borrowing hereunder or in any way utilize the Commitments hereunder
        unless the  Outstanding Credit  as  defined in the Revolving  Loans
        Credit Agreement equals $25,000,000 and the "Outstanding Credit" as
        defined  in   the  Acquisition   Loans  Credit   Agreement   equals
        $60,000.00.

        Section 2.2 Notes.  The Loans made by each Bank shall be  evidenced
  by a single promissory note made by Borrower in substantially the form of
  Exhibit B hereto, dated  the Closing Date,  payable to the  order of such
  Bank in  a principal  amount equal  to its  Commitment  as originally  in
  effect  and otherwise duly completed.  Each Bank  is hereby authorized by
  Borrower to endorse on the schedule (or a continuation thereof)  attached
  to the Note of such  Bank, to the extent applicable, the date, amount and
  Type of  and the  Interest Period  for each  Loan made  by such  Bank  to
  Borrower  hereunder and  the  amount  of each  payment or  prepayment  of
  principal of such Loan received by such  Bank, provided that any  failure
  by  such  Bank  to  make  any  such  endorsement  shall  not  affect  the
  obligations of Borrower under  such Note or this Agreement in respect  of
  such Loan.

        Section 2.3 Repayment of Loans.   Borrower shall pay  to the  Agent
  for the account of each Bank the outstanding principal  of the Loans (and
  the outstanding principal  of the Loans shall be  due and payable) on the
  Maturity Date.

        Section 2.4 Interest.

              (a)   Interest Rate.  Borrower shall pay to the Agent for the
        account of  each Bank  interest on the unpaid  principal amount  of
        each Loan made by  such Bank for the period commencing on  the date
        of such Loan  to but excluding the date  such Loan shall be paid in
        full, at the following rates per annum:

                    (i)   during the periods such Loan is an ABR  Loan, the
              ABR Rate plus the Applicable Margin; and

                   (ii)   during  the periods  such  Loan is  a  Eurodollar
              Loan, the Eurodollar Rate plus the Applicable Margin.

              (b)   Payment Dates.   Accrued interest on the Loans shall be
        due and payable as follows:

                    (i)   in the case of ABR Loans, on each Quarterly Date;

                   (ii)   in the case of each Eurodollar Loan, on  the last
              day of the  Interest Period with respect thereto and,  in the
              case  of an  Interest Period  greater  than three  months, at
              three-month intervals  after the  first day  of such Interest
              Period;

                  (iii)   upon the payment or prepayment of any Loan or the
              Conversion of any Loan to  a Loan of the other Type (but only
              on the principal amount so paid, prepaid, or Converted); and

                   (iv)   on the Maturity Date.

              (c)   Default  Interest.     Notwithstanding  the  foregoing,
        Borrower will  pay  to  the Agent  for  the  account of  each  Bank
        interest at  the applicable  Default Rate on any  principal of  any
        Loan  made by such  Bank, any Reimbursement Obligation  and (to the
        fullest extent  permitted by  law) on any other  amount payable  by
        Borrower (including,  without limitation, an  amount required to be
        prepaid pursuant to  Section 2.7, but excluding unmatured interest)
        under  this Agreement  or any  other  Loan Document  to or  for the
        account of such Bank,  which is not paid in full when  due (whether
        at stated maturity,  by acceleration or otherwise),  for the period
        from  and including the due date thereof to  but excluding the date
        the  same is  paid in full.   Interest payable at  the Default Rate
        shall be payable from time to time on demand.

        Section 2.5 Borrowing  Procedure.   Borrower  shall give  the Agent
  notice of each  borrowing hereunder in accordance with Section 2.9.   Not
  later than  11:00 a.m.  (Houston, Texas time) on  the date  specified for
  each borrowing hereunder, each Bank will make available the amount of the
  Loan to be made by it on such date to the Agent, at the Principal Office,
  in immediately available funds, for  the account of Borrower.  The amount
  so received  by the Agent  shall, subject to the terms  and conditions of
  this  Agreement,  be  made  available  to Borrower  by  wire  transfer of
  immediately available  funds to  Borrower s bank account  # 1884879600 at
  Bank  One, Texas N.A., Houston,  Texas (or to another account of Borrower
  specified by it which is acceptable to the Agent) no later than 1:00 p.m.

        Section 2.6 Optional Prepayments, Conversions  and Continuations of
  Loans.   Subject to Section 2.7, Borrower shall have the  right from time
  to time  to prepay the Loans, or to Convert all or part  of a Loan of one
  Type  into  a Loan  of  another  Type or  to  Continue  Eurodollar Loans;
  provided that:   (a) Borrower shall  give the Agent  notice of  each such
  prepayment,  Conversion  or  Continuation  as  provided  in  Section 2.9,
  (b) Eurodollar Loans  may  only  be Converted  on  the last  day  of  the
  Interest Period, and (c) except for Conversions of Eurodollar  Loans into
  ABR Loans,  no Conversions or Continuations shall be made while a Default
  has occurred and is  continuing.  Borrower shall not make any  payment of
  principal on the Revolving  Loans or  the Acquisition Loans  at any  time
  there is an outstanding principal balance on any Loan.

        Section 2.7 Mandatory Prepayments.  If  at anytime  the Outstanding
  Credit exceeds the Commitments  at such time, within seven days after the
  occurrence thereof Borrower  shall pay  to the Agent  the amount  of such
  excess as a prepayment of the Loans.

        Section 2.8 Minimum   Amounts.      Except  for   Conversions   and
  prepayments pursuant to  Section 2.7 and Article 4, each  borrowing, each
  Conversion and each prepayment  of principal of the Loans shall be  in an
  amount at  least  equal to  $1,000,000 or  an integral  multiple  thereof
  (borrowings, prepayments  or Conversions of  or into  Loans of  different
  Types  or, in  the case  of Eurodollar  Loans, having  different Interest
  Periods at the  same time hereunder shall be deemed  separate borrowings,
  prepayments and Conversions  for purposes of the foregoing, one  for each
  Type, or Interest Period),  provided, that  no minimum prepayment  amount
  shall exist with respect to the Loans.

        Section 2.9 Certain Notices.   Notices by Borrower  to the Agent of
  terminations or  reductions of  Commitments, of borrowings,  Conversions,
  Continuations  and prepayments of  Loans and of the  duration of Interest
  Periods shall be  irrevocable and shall be  effective only if received by
  the  Agent not  later  than 11:00  a.m.  (Houston,  Texas, time)  on  the
  Business  Day prior to  the date of the  relevant termination, reduction,
  borrowing,  Conversion, Continuation or  prepayment or  the first  day of
  such Interest Period specified below:

                                                      Number of
            Notice                                     Business
                                                      Days Prior

         Termination or reductions of Commitments        3
         Borrowing of Loans which are ABR Loans          1
         Borrowing of Loans which are Eurodollar Loans   3
         Conversions or Continuations of Loans           3
         Prepayments of Revolving Credit Loans           1

  Each such notice of termination or reduction shall  specify the amount of
  the  Commitments to  be  terminated  or reduced.    Each such  notice  of
  borrowing, Conversion, Continuation or prepayment shall specify the Loans
  to  be borrowed, Converted, Continued  or prepaid and the amount (subject
  to Section 2.8 hereof)  and Type of the Loans to be  borrowed, Converted,
  Continued or prepaid (and, in the case of a Conversion, the Type of Loans
  to result from  such Conversion) and  the date of borrowing,  Conversion,
  Continuation or prepayment  (which shall be a Business Day).   Notices of
  borrowings,  Conversions, Continuations  or prepayments  shall be  in the
  form  of Exhibit D hereto, appropriately  completed as  applicable.  Each
  such notice of the duration of an Interest Period shall specify the Loans
  to which  such Interest Period is  to relate.   The Agent  shall promptly
  notify the  Banks of  the contents  of each such  notice.   In the  event
  Borrower  fails to  select  the Type  of  Loan, or  the duration  of  any
  Interest  Period  for any  Eurodollar  Loan, within  the time  period and
  otherwise as provided in  this Section 2.9, such  Loan (if outstanding as
  an Eurodollar Loan) will be automatically  Converted into an ABR  Loan on
  the  last day  of the  preceding Interest  Period for  such  Loan or  (if
  outstanding as an ABR Loan)  will remain as, or (if not then outstanding)
  will  be made as, an  ABR Loan.   Borrower may not  borrow any Eurodollar
  Loans, Convert any  Loans into Eurodollar Loans  or Continue any Loans as
  Eurodollar Loans  if the  interest rate for such  Eurodollar Loans  would
  exceed the Maximum Rate.

        Section 2.10      Use of Proceeds.  The proceeds of the Loans shall
  be  used  by Borrower  for general  corporate  purposes,  including asset
  acquisition and capital  expenditure financing.  None of the  proceeds of
  any Loan will be used to  acquire any security in any transaction that is
  subject to Section  13 or 14 of the  Securities Exchange Act of  1934, as
  amended.

        Section 2.11      Commitment Fee  and Other Fees.   Borrower agrees
  to pay  to the Agent for the account of each Bank a commitment fee on the
  daily average unused amount of such Bank's Commitment for the period from
  and including the Closing Date to and including the Maturity Date, at the
  rate of  0.20% per annum based on a 365 day year and the actual number of
  days elapsed.  Accrued  commitment fees  shall be payable  in arrears  on
  each Quarterly Date beginning on September 30, 1997,  and on the Maturity
  Date.  Furthermore,  Borrower agrees to pay to  the Agent the  additional
  fees specified in the Term Sheet.

        Section 2.12      Computations.    Interest   payable  by  Borrower
  hereunder  and under  the other  Loan Documents  on all  Eurodollar Loans
  shall be  computed on  the basis  of a  year of 360 days  and the  actual
  number  of days elapsed  (including the first day but  excluding the last
  day) occurring  in the period for  which payable  unless in  the case  of
  interest such calculation would  result in a usurious rate, in which case
  interest  shall be calculated on the basis  of a year of 365 or 366 days,
  as the case may be.  Interest payable by Borrower hereunder and under the
  other  Loan Documents  on ABR  Loans and all  fees payable  hereunder and
  under  the Loan Documents shall be computed on the basis of a year of 365
  or 366 days, as the case may be.

        Section 2.13      Termination   or    Reduction   of   Commitments.
  Borrower shall have the right to terminate  or reduce in part the  unused
  portion of  the Commitments at any  time and from  time to time, provided
  that:    (a) Borrower  shall  give  notice of  each  such  termination or
  reduction  as provided  in Section  2.9; and  (b) each partial  reduction
  shall  be  in an  aggregate  amount  at  least equal  to  $500,000.   The
  Commitments  may not  be reinstated  after they  have been  terminated or
  reduced.

        Section 2.14      Letters of Credit.

              (a)   Subject to the  terms and conditions of this Agreement,
        Borrower may utilize the Commitments by requesting that the Issuing
        Bank  issue Letters of Credit; provided,  that the aggregate amount
        of outstanding Letter  of Credit Liabilities shall not at  any time
        exceed $1,000.   Upon the  date of issue of each  Letter of Credit,
        the Issuing  Bank shall  be deemed, without further  action by  any
        party hereto,  to have sold  to each  Bank, and each  Bank shall be
        deemed,  without  further  action  by any  party  hereto,  to  have
        purchased from the  Issuing Bank, a participation to the  extent of
        such Bank's Commitment Percentage in such Letter of Credit.

              (b)   Borrower shall  give the Issuing Bank  (with a  copy to
        the  Agent) at  least five  Business Days irrevocable  prior notice
        (effective  upon receipt)  specifying the  date  of each  Letter of
        Credit and the nature of the transactions to be supported  thereby.
        Upon receipt of such notice the Issuing Bank shall promptly  notify
        each Bank  of the  contents thereof and of  such Bank's  Commitment
        Percentage of the  amount of the proposed Letter  of Credit.   Each
        Letter of Credit shall have an expiration date that does not exceed
        one  year from the date of issuance and that does not extend beyond
        the Maturity  Date, shall  be payable in Dollars,  shall support  a
        transaction entered into  in connection with and reasonably related
        to Borrower's existing business,  shall be satisfactory in form and
        substance to the Issuing Bank and shall be issued pursuant to  such
        agreements, documents and instruments (including a letter of credit
        application and  reimbursement agreement)  as the  Issuing Bank may
        reasonably require, none of  which shall be inconsistent with  this
        Section 2.14;  provided, however, that Letters  of Credit having an
        aggregate face amount not to exceed $1,000 at any time  outstanding
        may have expiration dates that extend beyond one year from the date
        of issuance (but  not to extend beyond  the Maturity Date) with the
        prior  written consent  of the  Agent, which  consent shall  not be
        unreasonably withheld.  Each Letter of Credit shall (i) provide for
        the  payment of  drafts  presented  for, on  or thereunder  by  the
        beneficiary, in accordance with the terms thereof, when such drafts
        are accompanied by the documents described in the Letter of Credit,
        if  any, and  (ii) to the  extent not  inconsistent with  the terms
        hereof or any applicable  letter of credit application,  be subject
        to  the Uniform Customs and Practice  for Documentary Credits (1993
        Revision), International  Chamber of  Commerce Publication  No. 500
        (together  with  any  subsequent  revision  thereof  approved  by a
        Congress of the International Chamber of Commerce and adhered to by
        the Issuing Bank, the "UCP"), and shall, as to matters not governed
        by  the UCP,  be  governed  by, and  construed and  interpreted  in
        accordance with, the laws of the State of New York.

              (c)   Borrower agrees to pay to the Agent for the account  of
        each Bank, in arrears on each Quarterly Date following the  Closing
        Date (beginning on December 31, 1996)  and on the Maturity Date, if
        such  Letter of  Credit  was  outstanding at  any time  during  any
        portion of the  quarterly period (or, with respect to  the December
        31, 1996 Quarterly Date, the period from Closing Date through  such
        Quarterly Date)  immediately preceding  such Quarterly  Date or the
        Maturity Date, a nonrefundable letter of credit fee with respect to
        each Letter of Credit issued in an amount equal to (i) the rate per
        annum equal to the Applicable Margin for Eurodollar Loans in effect
        on the date of issuance of such  Letter of Credit (with respect  to
        the fee due  on the first Quarterly Date  after issuance) or on the
        first day  of the  applicable quarterly  or other  period beginning
        after the  quarter  during which  the issuance  of such  Letter  of
        Credit occurred  (with respect  to the fee due  on each  subsequent
        Quarterly Date or on the Maturity Date) minus 0.25%, multiplied  by
        (ii) the daily  average  face amount  of the  Letter of  Credit  in
        effect during  the applicable period.   The Agent  agrees to pay to
        each Bank, promptly after receiving any payment of letter of credit
        fees  referred  to  above in  this  Section  2.14(c),  such  Bank's
        Commitment Percentage of such fees.  Borrower agrees to  pay to the
        Issuing Bank for its own account, in arrears on each Quarterly Date
        following the Closing Date (beginning on December 31, 1996) and  on
        the Maturity Date, if  such Letter of Credit was outstanding at any
        time during any  portion of the quarterly period (or,  with respect
        to  the  December 31,  1996  Quarterly Date,  the  period from  the
        Closing  Date through  such Quarterly  Date)  immediately preceding
        such Quarterly Date or the Maturity Date, a nonrefundable letter of
        credit fee  with respect  to each  Letter of  Credit issued  by the
        Issuing Bank hereunder in an amount equal to the greater of (A) (1)
        0.25% per annum multiplied by (2) the daily average face amount  of
        the Letter of Credit in effect during such period,  or (B) $300.00.
        In addition to the foregoing fees, Borrower shall pay or  reimburse
        the Issuing Bank for such normal and customary costs and  expenses,
        including, without limitation, administrative, issuance, amendment,
        payment and negotiation charges, as are incurred or charged by  the
        Issuing  Bank in  issuing,  effecting payment  under,  amending, or
        otherwise administering any Letter of Credit.

              (d)   Upon  receipt from  the  beneficiary of  any  Letter of
        Credit of any demand for payment or other drawing under such Letter
        of Credit, the Issuing Bank shall promptly notify Borrower and each
        Bank as to  the amount to  be paid  as a result of  such demand  or
        drawing and  the payment  date.   If at any time  the Issuing  Bank
        shall make  a  payment  to a  beneficiary  of  a Letter  of  Credit
        pursuant to a  drawing under such Letter  of Credit, each Bank will
        pay to the Issuing Bank, immediately upon the Issuing Bank's demand
        at  any  time commencing  after  such  payment  until reimbursement
        therefor  in full  by  Borrower,  an amount  equal to  such  Bank's
        Commitment Percentage  of such  payment, together  with interest on
        such amount for each day from the date of  such payment to the date
        of payment  by such Bank of  such amount at a rate  of interest per
        annum equal to the Federal Funds Rate.

              (e)   Borrower  shall  be   irrevocably  and  unconditionally
        obligated,   without  presentment,   demand,   protest   or   other
        formalities  of any  kind, to  reimburse the  Issuing Bank  for any
        amounts paid by the Issuing Bank  upon any drawing under any Letter
        of Credit on or before the second Business  Day after such drawing.
        The Issuing Bank will pay to each such Bank such  Bank's Commitment
        Percentage  of all amounts  received from or on  behalf of Borrower
        for  application  in   payment,  in  whole  or  in  part,   of  the
        Reimbursement Obligation  in respect of  any Letter of Credit,  but
        only to the  extent such Bank has made  payment to the Issuing Bank
        in  respect of such  Letter of Credit pursuant  to Section 2.14(d).
        Outstanding  Reimbursement Obligations  shall bear  interest (i) at
        the rate then  applicable to ABR  Loans to and including the  fifth
        day  after  such Reimbursement  Obligations become  outstanding and
        (ii) at the Default  Rate thereafter,  and such  interest shall  be
        payable on demand.

              (f)   The  Reimbursement Obligations  of Borrower  under this
        Agreement  and   the  other  Loan   Documents  shall  be  absolute,
        unconditional and  irrevocable, and shall  be performed strictly in
        accordance  with the  terms of  this Agreement  and the  other Loan
        Documents  under all  circumstances whatsoever,  including, without
        limitation, the following circumstances:

                    (i)   Any  lack of  validity or  enforceability of  any
              Letter of Credit or any other Loan Document;

                   (ii)   Any  amendment or  waiver  of or  any  consent to
              departure from any Loan Document;

                  (iii)   The existence of any claim, setoff, counterclaim,
              defense or other  right which any Loan Party or  other Person
              may have at any time against any beneficiary of any Letter of
              Credit, the Agent,  the Issuing Bank, the Banks or  any other
              Person,  whether in  connection  with this  Agreement  or any
              other Loan Document or any unrelated transaction;

                   (iv)   Any statement, draft  or other document presented
              under any Letter of Credit proving  to be forged, fraudulent,
              invalid  or  insufficient in  any  respect  or  any statement
              therein being untrue or inaccurate in any respect whatsoever;

                    (v)   Payment by  the Issuing Bank  under any Letter of
              Credit against presentation of a draft or other document that
              does  not comply  with the  terms of  such Letter  of Credit,
              provided, that such  payment shall not have constituted gross
              negligence or willful misconduct of the Issuing Bank; and

                   (vi)   Any other circumstance whatsoever, whether or not
              similar  to any  of the  foregoing, provided that  such other
              circumstance or event  shall not have been the result  of the
              gross negligence or willful misconduct of the Issuing Bank.

        (g)   Borrower  assumes all risks  of the acts or  omissions of any
  beneficiary  of any  Letter of  Credit with  respect to  its use  of such
  Letter of Credit.  Neither the Agent, the Issuing Bank, the Banks nor any
  of their respective officers  or directors shall have  any responsibility
  or liability to Borrower or any other Person for:  (i) the failure of any
  draft  to bear  any reference  or  adequate reference  to  any Letter  of
  Credit,  or  the  failure of  any  documents to  accompany  any  draft at
  negotiation, or  the failure of any Person to surrender or to take up any
  Letter of  Credit or to send  documents apart from  drafts as required by
  the terms of any Letter  of Credit, or the failure of  any Person to note
  the  amount of  any  instrument  on any  Letter of  Credit;  (ii) errors,
  omissions, interruptions  or delays  in transmission  or delivery  of any
  messages; (iii) the validity, sufficiency or genuineness  of any draft or
  other  document, or any  endorsement(s) thereon, even if  any such draft,
  document  or endorsement  should  in  fact prove  to  be in  any  and all
  respects  invalid, insufficient,  fraudulent or  forged or  any statement
  therein is untrue or inaccurate  in any respect; (iv) the  payment by the
  Issuing  Bank  to  the  beneficiary  of  any  Letter  of  Credit  against
  presentation of any draft or other document that does not comply with the
  terms of the  Letter of Credit; or (v) any other  circumstance whatsoever
  in  making or  failing to  make  any payment  under  a Letter  of Credit;
  provided, however, that,  notwithstanding the  foregoing, Borrower  shall
  have a  claim against the Issuing  Bank, and  the Issuing  Bank shall  be
  liable to  Borrower, to the extent  of any  direct, but  not indirect  or
  consequential,  damages suffered by  Borrower which Borrower proves  in a
  final  nonappealable  judgment  were  caused  by  (A) the  Issuing Bank's
  willful misconduct  or gross negligence  in determining whether documents
  presented under any Letter of  Credit complied with the  terms thereof or
  (B) the Issuing Bank's willful failure to pay under  any Letter of Credit
  after presentation to  it of documents strictly complying with  the terms
  and conditions  of such Letter  of Credit.   The Issuing  Bank may accept
  documents  that   appear  on   their  face  to  be   in  order,   without
  responsibility  for further  investigation, regardless  of any  notice or
  information to the contrary.

                                  ARTICLE 3

                                   Payments

        Section 3.1 Method of Payment.  All payments of principal, interest
  and  other amounts  to be made  by Borrower under this  Agreement and the
  other Loan Documents shall be made to  the Agent at the Principal  Office
  for the account  of each Bank's Applicable  Lending Office in Dollars and
  in   immediately  available   funds,   without   setoff,   deduction   or
  counterclaim, not later than 11:00 a.m. (Houston, Texas time) on the date
  on which such payment shall become due (each such payment made after such
  time  on such  due  date to  be  deemed to  have  been made  on  the next
  succeeding Business  Day).  Borrower  shall, at  the time of making  each
  such payment,  specify to  the Agent the  sums payable  by Borrower under
  this Agreement and the  other Loan Documents to which such payment  is to
  be applied (and in the event that  Borrower fails to so specify, or if an
  Event of Default has occurred and is continuing, the Agent may apply such
  payment to  the Obligations  in such  order and manner as  the Agent  may
  elect, subject to Section 3.2).  Each payment received by the Agent under
  this Agreement or any other Loan Document for the account of a Bank shall
  be paid promptly to such  Bank, in immediately  available funds, for  the
  account of such  Bank's Applicable Lending Office.  Whenever  any payment
  under this Agreement or any other Loan Document shall be stated to be due
  on a day that is not a Business Day, such payment may be made on the next
  succeeding Business Day, and such extension of time shall in such case be
  included in  the computation  of the payment of  interest and  commitment
  fee, as the case may be.

        Section 3.2 Pro  Rata Treatment.   Except  to the  extent otherwise
  provided herein: (a) each  Loan shall be made  by the Banks under Section
  2.1, each payment of commitment fees under Section 2.11 shall be made for
  the  account  of the  Banks  and each  termination  or  reduction of  the
  Commitments under Section 2.13 shall be applied to the Commitments of the
  Banks on a pro rata basis; (b) the making, Conversion and Continuation of
  Loans  of a  particular  Type  (other than  Conversions provided  for  by
  Section 4.4) shall be made pro rata among the Banks holding Loans of such
  Type in accordance with their respective Commitment Percentages; (c) each
  payment and prepayment by Borrower of principal  of or interest on  Loans
  of a particular  Type shall be made  to the Agent for the account  of the
  Banks holding  Loans  of  such  Type  pro  rata in  accordance  with  the
  respective unpaid  principal amounts  of such Loans held  by such  Banks;
  (d) Interest Periods for Eurodollar  Loans shall  be allocated among  the
  Banks holding  Eurodollar  Loans pro  rata according  to  the  respective
  principal  amounts held by such Banks; and (e) the  Banks (other than the
  Issuing Bank) shall purchase participations in the Letters of Credit  pro
  rata in accordance with their respective Commitment Percentages.

        Section 3.3 Sharing  of  Payments, Etc.   If  a  Bank  shall obtain
  payment  of any principal of or interest on any of the Obligations due to
  such Bank hereunder through the exercise of any right of setoff, banker's
  lien,  counterclaim or  similar right,  or  otherwise, it  shall promptly
  purchase from the  other Banks participations in the Obligations  held by
  the  other Banks in such amounts  and make such adjustments  from time to
  time as shall be equitable to the end that  all the Banks shall share pro
  rata  in  accordance  with  the unpaid  principal  and  interest  on  the
  Obligations then  due to each  of them.   To such  end, all of the  Banks
  shall make  appropriate adjustments among  themselves (by  the resale  of
  participations sold  or otherwise) if  all or any  portion of such excess
  payment is thereafter rescinded or must otherwise be restored.   Borrower
  agrees, to the fullest extent it may  effectively do so under  applicable
  law, that any  Bank so purchasing a participation  in the Obligations  by
  the  other  Banks  may  exercise  all rights  of  setoff,  banker's lien,
  counterclaim or  similar  rights with  respect to  such participation  as
  fully  as if such Bank were a direct holder  of Obligations in the amount
  of such participation.   Nothing contained herein shall require  any Bank
  to exercise  any such right  or shall  affect the  right of  any Bank  to
  exercise,  and retain  the benefits  of exercising,  any such  right with
  respect to any other indebtedness or obligation of Borrower.

        Section 3.4 Non-Receipt of Funds by  the Agent.   Unless the  Agent
  shall have been notified by a Bank or Borrower (the "Payor") prior to the
  date  on which such Bank is to make payment  to the Agent of the proceeds
  of a Loan to be made  by it hereunder or Borrower is to make a payment to
  the Agent for the account of one or more of the Banks, as the case may be
  (such payment being herein called  the "Required Payment"), which  notice
  shall be effective upon  receipt, that the Payor does not intend  to make
  the Required Payment to the Agent, the Agent may assume that the Required
  Payment has  been made  and may,  in reliance upon  such assumption  (but
  shall  not be  required  to), make  the amount  thereof available  to the
  intended  recipient on such date  and, if the Payor has  not in fact made
  the Required Payment to the  Agent, the recipient of  such payment shall,
  on demand, pay to the Agent the amount made available to it together with
  interest thereon  in respect  of the period commencing  on the  date such
  amount  was so  made available  by  the Agent  until  the date  the Agent
  recovers such amount at a rate per annum equal to the Federal  Funds Rate
  for such period.

        Section 3.5 Withholding Taxes.   (a)  All payments  by Borrowers of
  principal  of  and  interest  on  the Loans  and  the  Letter  of  Credit
  Liabilities and  of all  fees and  other amounts  payable under the  Loan
  Documents  shall be  made free  and  clear of,  and without  deduction by
  reason of, any  present or future taxes, duties, imposts,  assessments or
  other charges levied or imposed by any Governmental Authority (other than
  taxes on  the overall net  income or gross  receipts of the  Agent or any
  Bank).   If any such taxes, duties, imposts, assessments or other charges
  are so levied  or imposed, Borrower will  (i) make additional payments in
  such amounts  so that every  net payment of principal of  and interest on
  the Loans and the Letter of Credit  Liabilities and of all other  amounts
  payable  by it under  the Loan Documents, after  withholding or deduction
  for or on  account of any such present  or future taxes, duties, imposts,
  assessments  or other  charges  (including, without  limitation,  any tax
  imposed on or measured by net income or gross  receipts of the Agent or a
  Bank attributable to payments made to or on behalf of the Agent or a Bank
  pursuant to this  Section 3.5 and any penalties or  interest attributable
  to such payments), will not be less  than the amount provided for  herein
  or therein  absent such withholding or  deduction (provided that Borrower
  shall have no obligation  to pay such additional amounts to the  Agent or
  any Bank to the  extent that such taxes,  duties, imposts, assessments or
  other charges are levied or imposed by reason of the failure of the Agent
  or  such Bank  to comply with  the provisions of Section  3.6), (ii) make
  such withholding or deduction, and (ii) remit the full amount deducted or
  withheld  to  the  relevant  Governmental  Authority  in  accordance with
  applicable  law.    Without  limiting the  generality  of the  foregoing,
  Borrower will, upon written request of any Bank, reimburse each such Bank
  for the amount of (A) such taxes, levies, duties, imports, assessments or
  other charges so levied or imposed by any Governmental Authority and paid
  by such  Bank as  a result  of payments  made by Borrower  under or  with
  respect to  the Loans  and Letter of  Credit Liabilities  other than such
  taxes, levies, duties,  imports, assessments and other charges previously
  withheld  or deducted by  Borrower which have previously  resulted in the
  payment of  the required  additional amount to  such Bank,  and (B)  such
  taxes, levies, duties, assessments and other charges so levied or imposed
  with respect to any Bank reimbursement under the foregoing clause (A), so
  that the net amount received by such Bank (net of  payments made under or
  with respect to the  Loans and  the Letter of  Credit Liabilities)  after
  such reimbursement will not be less than  the net amount such Bank  would
  have  received  if  such  taxes,  levies, duties,  assessments  and other
  charges on such reimbursement  had not been levied or imposed.   Borrower
  shall furnish  promptly to  the Agent for distribution  to each  affected
  Bank, as  the case may be,  upon request of  such Bank, official receipts
  evidencing any such withholding or reduction.

        (b)   Borrower  will indemnify  the  Agent and  each  Bank (without
  duplication)  against, and  reimburse the  Agent and  each Bank  for, all
  present  and future taxes, duties, imposts,  assessments or other charges
  (including  interest and penalties)  levied or collected (whether  or not
  legally or correctly  imposed, assessed, levied or collected), excluding,
  however, any taxes imposed on the overall net income or gross receipts of
  the  Agent or such Bank,  on or in respect  of this Agreement, any of the
  Loan  Documents  or   the  Obligations  or  any   portion  thereof   (the
  "reimbursable taxes").  Any such indemnification shall be on an after-tax
  basis, taking  into account  any such reimbursable taxes  imposed on  the
  amounts paid as indemnity.

        (c)   Without  prejudice  to  the  survival  of any  other  term or
  provision  of this  Agreement,  the  obligations of  Borrower  under this
  Section 3.5 shall survive the payment of  the Loans, the Letter of Credit
  Liabilities and the other Obligations and termination of the Commitments

        Section 3.6 Withholding  Tax   Exemption.     Each  Bank   that  is
  originally a party to this  Agreement as of the Closing Date and that  is
  not incorporated under the  laws of the United States or a  state thereof
  agrees that it will deliver to Borrower and the  Agent two duly completed
  copies of United States Internal Revenue Service Form 1001,  4224 or W-8,
  as appropriate,  certifying in  any case  that such Bank  is entitled  to
  receive payments from Borrower  under any Loan Document without deduction
  or  withholding of any United States  federal income taxes.    Each other
  Bank  that is not incorporated under  the laws of the  United States or a
  state  thereof and which is eligible to deliver a Form 1001, 4224 or W-8,
  as applicable,  undertakes to deliver to Borrower and the  Agent two duly
  completed  copies of such  form promptly  upon its becoming a  Bank under
  this  Agreement.  Each Bank which initially so delivers a Form 1001, 4224
  or W-8 pursuant  to this  Section 3.6  further undertakes  to deliver  to
  Borrower and the Agent two additional copies of such form (or a successor
  form) on  or before  the date  such form expires or  becomes obsolete  or
  after the occurrence of any event requiring  a change in the most  recent
  form so  delivered by it,  and such  amendments thereto or extensions  or
  renewals thereof as may be reasonably requested by Borrower or the Agent,
  in each case certifying  that such Bank  is entitled to  receive payments
  from Borrower under any Loan Document without deduction or withholding of
  any  United States  federal  income taxes,  unless  an  event  (including
  without limitation any change in treaty, law or regulation) has  occurred
  prior to the date on  which any such delivery would otherwise be required
  which renders  all such  forms inapplicable or which  would prevent  such
  Bank from duly completing and delivering any such form with respect to it
  and such Bank advises Borrower  and the Agent that  it is not capable  of
  receiving such payments  without any deduction or  withholding of  United
  States federal income tax.

                                  ARTICLE 4

                       Yield Protection and Illegality

        Section 4.1 Additional Costs.

              (a)   Borrower shall  pay directly to each Bank  from time to
        time, promptly upon the request of such Bank, the reasonable  costs
        incurred by  such Bank which such  Bank determines are attributable
        to its making  or maintaining of any Eurodollar Loans  hereunder or
        its  obligation  to  make  any of  such  Loans  hereunder,  or  any
        reduction  in  any  amount  receivable  by such  Bank  hereunder in
        respect of  any such  Loans or such obligation  (such increases  in
        costs  and reductions  in  amounts receivable  being  herein called
        "Additional Costs"), resulting from any Regulatory Change which:

                    (i)   changes  the  basis of  taxation  of  any amounts
              payable to  such Bank  under this Agreement or  its Notes  in
              respect of any of such Loans (other than taxes imposed on the
              overall  net income  or gross  receipts of  such Bank  or its
              Applicable  Lending  Office  for  any  of such  Loans  by the
              jurisdiction in  which such Bank has  its principal office or
              such Applicable Lending Office);

                   (ii)   imposes or modifies any reserve, special deposit,
              minimum  capital,   capital  ratio  or  similar   requirement
              relating to any  extensions of credit or other assets  of, or
              any  deposits with  or other  liabilities or  commitments of,
              such  Bank  (including  any of  such  Loans or  any  deposits
              referred to in the definition of "Eurodollar Rate" in Section
              1.1  hereof, but  excluding  the Reserve  Requirement  to the
              extent  it is  included in  the  calculation of  the Adjusted
              Eurodollar Rate); or

                  (iii)   imposes  any  other   condition  affecting   this
              Agreement or the Notes or any of such extensions of credit or
              liabilities or commitments.

        Each  Bank will notify Borrower (with  a copy to the  Agent) of any
        event occurring after the Closing Date which will entitle such Bank
        to  compensation pursuant  to this  Section  4.1(a) as  promptly as
        practicable after  it obtains  knowledge thereof  and determines to
        request such compensation, and (if  so requested by Borrower)  will
        designate a different  Applicable Lending Office for the Eurodollar
        Loans of such Bank if such designation will avoid  the need for, or
        reduce the amount of, such compensation and  will not, in the  sole
        opinion  of such Bank, violate any law, rule or regulation or be in
        any way disadvantageous to such Bank, provided that such Bank shall
        have  no obligation  to so  designate an Applicable  Lending Office
        located in the United States.  Each Bank will furnish Borrower with
        a  certificate setting  forth  the  basis and  the amount  of  each
        request of such Bank for compensation under this Section 4.1(a). If
        any  Bank requests  compensation from  Borrower under  this Section
        4.1(a),  Borrower may, by notice to  such Bank (with a  copy to the
        Agent), suspend  the obligation  of such Bank to  make or  Continue
        making,  or Convert  ABR Loans  into,  Eurodollar  Loans until  the
        Regulatory Change  giving  rise to  such request  ceases to  be  in
        effect (in which case the provisions of Section 4.4 hereof shall be
        applicable).

              (b)   Without limiting the effect of the foregoing provisions
        of this Section 4.1, in the event that, by reason of any Regulatory
        Change, any  Bank either  (i) incurs Additional  Costs based on  or
        measured by the  excess above a specified level  of the amount of a
        category  of deposits  or  other liabilities  of  such  Bank  which
        includes  deposits  by  reference to  which  the interest  rate  on
        Eurodollar Loans is  determined as provided in this Agreement  or a
        category of extensions of credit or other assets of such Bank which
        includes Eurodollar Loans  or (ii) becomes subject  to restrictions
        on the amount of such  a category of liabilities or assets which it
        may  hold, then, if such Bank so elects by notice to Borrower (with
        a  copy to  the Agent),  the obligation  of such  Bank  to make  or
        Continue  making,  or  Convert  ABR  Loans  into,  Eurodollar Loans
        hereunder shall be suspended until such Regulatory Change ceases to
        be  in effect (in  which case the provisions of  Section 4.4 hereof
        shall be applicable).

              (c)   Determinations and allocations by any Bank for purposes
        of this Section  4.1 of the effect of  any Regulatory Change on its
        costs of  maintaining its obligation to make Loans or  of making or
        maintaining  Loans or  on amounts  receivable by  it in  respect of
        Loans, and  of the  additional amounts required  to compensate such
        Bank in respect of any Additional Costs, shall be conclusive in the
        absence of  manifest error,  provided that  such determinations and
        allocations are made on a reasonable basis.

        Section 4.2 Limitation on Types  of Loans.  Anything  herein to the
  contrary notwithstanding, if with respect to any Eurodollar Loans for any
  Interest Period therefor:

              (a)   The  Agent  determines  (which  determination  shall be
        conclusive absent manifest error) that quotations of interest rates
        for  the  relevant  deposits  referred  to  in  the  definition  of
        "Eurodollar Rate" in  Section 1.1 hereof are not being  provided in
        the relative amounts or for the relative maturities for purposes of
        determining the rate of interest for such Loans as provided in this
        Agreement; or

              (b)   Required  Banks determine (which determination shall be
        conclusive absent  manifest error)  and notify  the Agent  that the
        relevant  rates of  interest  referred  to  in  the  definition  of
        "Eurodollar  Rate" or  "Adjusted  Eurodollar Rate"  in  Section 1.1
        hereof on  the basis of which  the rate of  interest for such Loans
        for  such Interest  Period is  to be  determined do  not accurately
        reflect the cost to the Banks  of making or maintaining  such Loans
        for such Interest Period;

  then the Agent shall give Borrower prompt notice thereof  and, so long as
  such condition remains in  effect, the Banks shall be under no obligation
  to make Eurodollar Loans  or to Convert  ABR Loans into  Eurodollar Loans
  and  Borrower shall,  on the  last day(s)  of the  then  current Interest
  Period(s)  for the outstanding Eurodollar Loans, either prepay such Loans
  or Convert such Loans into ABR Loans in accordance with the terms of this
  Agreement.

        Section 4.3 Illegality.   Notwithstanding  any other  provision  of
  this Agreement, in the event that it becomes unlawful for any Bank or its
  Applicable Lending Office to  (a) honor its obligation to make Eurodollar
  Loans  hereunder or (b)  maintain Eurodollar  Loans hereunder,  then such
  Bank shall  promptly notify Borrower  (with a copy  to the Agent) thereof
  and such Bank's obligation  to make or  maintain Eurodollar Loans  and to
  Convert  ABR Loans  into Eurodollar  Loans  hereunder shall  be suspended
  until such time as such Bank may again make and maintain Eurodollar Loans
  (in which case the provisions of Section 4.4 hereof shall be applicable).

        Section 4.4 Treatment of  Affected Loans.  If the obligation of any
  Bank to make or Continue,  or to Convert ABR Loans into, Eurodollar Loans
  is  suspended  pursuant  to  Section  4.1  or  4.3  hereof,  such  Bank's
  Eurodollar Loans shall  be automatically Converted into ABR Loans  on the
  last day(s)  of the  then current Interest Period(s)  for the  Eurodollar
  Loans (or, in  the case of a Conversion required by Section 4.1(b) or 4.3
  hereof, on such earlier date as such Bank  may specify to Borrower with a
  copy  to the  Agent) and,  unless  and until  such  Bank gives  notice as
  provided below  that the  circumstances specified in Section  4.1 or  4.3
  hereof which gave rise to such Conversion no longer exist:

              (a)   To the  extent that  such Bank's  Eurodollar Loans have
        been so Converted, all payments and prepayments of  principal which
        would otherwise be applied to such Bank's Eurodollar Loans shall be
        applied instead to its ABR Loans; and

              (b)   All Loans which would otherwise be made or Continued by
        such Bank as Eurodollar  Loans shall be  made as or  Converted into
        ABR  Loans and  all Loans  of such  Bank which  would  otherwise be
        Converted into Eurodollar Loans shall be Converted instead into (or
        shall remain as) ABR Loans.

  If such Bank gives notice to Borrower (with a copy to the Agent) that the
  circumstances specified in Section 4.1 or  4.3 hereof which gave  rise to
  the Conversion of  such Bank's Eurodollar Loans pursuant to  this Section
  4.4 no  longer exist (which such  Bank agrees  to do  promptly upon  such
  circumstances ceasing  to  exist) at  a time  when Eurodollar  Loans  are
  outstanding, such  Bank's ABR Loans shall be  automatically Converted, on
  the first  day(s)  of the  next succeeding  Interest Period(s)  for  such
  outstanding  Eurodollar Loans,  to the  extent  necessary so  that, after
  giving effect  thereto, all  Loans held by the  Banks holding  Eurodollar
  Loans  and by such Bank are held pro rata (as to principal amounts, Types
  and Interest Periods) in accordance with their respective Commitments.

        Section 4.5 Compensation.  Borrower shall pay  to the Agent for the
  account of each Bank, promptly  upon the request of such Bank through the
  Agent, such amount  or amounts as shall be sufficient (in  the reasonable
  opinion of  such Bank) to compensate  it for  any loss,  cost or  expense
  incurred by it as a result of:

              (a)   Any payment, prepayment or  Conversion of a  Eurodollar
        Loan   for   any  reason   (including,   without   limitation,  the
        acceleration of the outstanding  Loans pursuant to Section 11.2) on
        a date other than the last day of an Interest Period for such Loan;
        or

              (b)   Any failure  by  Borrower  for any  reason  (including,
        without  limitation,  the  failure  of   any  conditions  precedent
        specified in  Article  6 to  be satisfied)  to borrow,  Convert  or
        prepay   a  Eurodollar  Loan  on  the   date  for  such  borrowing,
        Conversion,  or  prepayment specified  in  the  relevant  notice of
        borrowing, prepayment, or Conversion under this Agreement.

        Section 4.6 Capital Adequacy.  If, after the Closing Date, any Bank
  shall  have  determined  that  the  adoption  or  implementation  of  any
  applicable law, rule or regulation regarding capital adequacy (including,
  without limitation,  any law,  rule or regulation  implementing the Basle
  Accord), or  any change therein, or any  change in the  interpretation or
  administration  thereof  by   any  central  bank  or  other  Governmental
  Authority charged  with the interpretation  or administration thereof, or
  compliance by  such Bank (or  its parent) with  any guideline, request or
  directive regarding capital adequacy (whether or not having the force  of
  law) of  any central  bank or  other Governmental  Authority  (including,
  without limitation,  any guideline or  other requirement implementing the
  Basle  Accord), has  or would  have the  effect of  reducing the  rate of
  return on such  Bank's (or its parent's) capital  as a consequence of its
  obligations hereunder or the transactions contemplated  hereby to a level
  below  that which such Bank (or  its parent) could have  achieved but for
  such  adoption,   implementation,  change  or   compliance  (taking  into
  consideration such Bank's  policies with respect to capital  adequacy) by
  an amount  deemed by such  Bank to be material,  then from time  to time,
  within ten  Business Days after demand  by such Bank (with  a copy to the
  Agent), Borrower shall pay to such Bank such additional amount or amounts
  as  will compensate  such Bank  (or its  parent) for  such reduction.   A
  certificate of such Bank claiming compensation under this Section 4.6 and
  setting forth the additional amount or amounts to be paid to it hereunder
  shall   be  conclusive   absent   manifest  error,   provided   that  the
  determination thereof is made on a reasonable basis.  In determining such
  amount  or  amounts,  such  Bank  may use  any  reasonable  averaging and
  attribution methods.

        Section 4.7 Additional  Interest  on  Eurodollar  Loans.   Borrower
  shall pay, directly  to each Bank from  time to time, additional interest
  on the unpaid principal amount of each Eurodollar Loan held by such Bank,
  from the date of the  making of such Eurodollar Loan until such principal
  amount is paid in full, at an interest rate  per annum determined by such
  Bank in  good faith equal to  the positive remainder (if any)  of (a) the
  Adjusted Eurodollar Rate applicable to such Eurodollar Loan minus (b) the
  Eurodollar  Rate applicable  to such  Eurodollar Loan.   Each  payment of
  additional  interest pursuant  to this  Section 4.7  shall be  payable by
  Borrower  on each date upon which interest is  payable on such Eurodollar
  Loan pursuant  to Section 2.4(b); provided, however,  that Borrower shall
  not be obligated  to make any  such payment of additional interest  until
  the first  Business Day after  the date when  Borrower have been informed
  (i) that such  Bank is subject to  a Reserve Requirement and (ii)  of the
  amount  of such Reserve  Requirement (after which time  Borrower shall be
  obligated  to make all  such payments of additional  interest, including,
  without limitation,  such payments of  additional interest that otherwise
  would have been payable by Borrower on or prior to such time had Borrower
  been earlier informed).

                                  ARTICLE 5

                                    Setoff

        Section 5.1 Setoff.  If an Event of Default shall have occurred and
  be continuing, each Bank  is hereby authorized at any time and  from time
  to  time,  without  notice  to  Borrower (any  such  notice  being hereby
  expressly waived by Borrower), to  set off and apply any and all deposits
  (general or  special, time or  demand, provisional or  final) at any time
  held and other indebtedness at any time owing by such Bank  to or for the
  credit or the account of  Borrower against any and all of the Obligations
  of  such Borrower now or hereafter existing under  this Agreement, any of
  such Bank's Notes or any other Loan Document, irrespective of whether  or
  not  the  Agent or  such  Bank  shall  have made  any  demand  under this
  Agreement or  any of  such Bank's  Note or such other  Loan Document  and
  although such Obligations may be unmatured.  Each Bank agrees promptly to
  notify Borrower  (with a  copy to  the Agent)  after any  such setoff and
  application,  provided that  the failure  to give  such notice  shall not
  affect the  validity  of such  setoff and  application.   The rights  and
  remedies  of each  Bank hereunder  are  in addition  to other  rights and
  remedies (including,  without limitation,  other rights  of setoff) which
  such Bank may have.

                                  ARTICLE 6

                             Conditions Precedent

        Section 6.1 Initial Extension  of Credit.   The  obligation of each
  Bank to make its  initial Loan and the obligation of the Issuing  Bank to
  issue the initial Letter of Credit are subject to the condition precedent
  that the Agent shall have received, on or before the Funding Date, all of
  the following, each dated (unless otherwise indicated or otherwise agreed
  by the Agent) as of the Closing Date, in  form and substance satisfactory
  to the Agent and, in the case  of actions to be taken, evidence  that the
  following required  actions have  been taken to the  satisfaction of  the
  Agent:

              (a)   Resolutions.  Resolutions  of the Board of Directors of
        each  Loan  Party  certified  by  its  Secretary  or  an  Assistant
        Secretary which  authorize the execution,  delivery and performance
        by such Loan Party of the Loan Documents to which it is or is to be
        a party;

              (b)   Incumbency  Certificate.   A certificate  of incumbency
        certified by the  Secretary or an Assistant Secretary of  each Loan
        Party  certifying the  name  of  each officer  of such  Loan  Party
        (i) who is authorized to sign the Loan Documents to which such Loan
        Party  is  or  is  to  be  a  party  (including  any   certificates
        contemplated therein), together  with specimen  signatures of  each
        such officer, and (ii) who  will, until replaced by  other officers
        duly authorized for that purpose, act as its representative for the
        purposes  of  signing   documents  and  giving  notices  and  other
        communications  in  connection  with  the  Loan  Documents  and the
        transactions contemplated thereby;

              (c)   Articles  or  Certificates  of   Incorporation.     The
        articles or certificates of  incorporation and Bylaws of each  Loan
        Party  certified  by  the  Secretary  of  State  of  the  state  of
        incorporation  of such Loan Party and dated as of a Current Date or
        a certificate from  an officer of the  Borrower that there has been
        no change in  the Certificate of Incorporation or Bylaws  since the
        most recent copy thereof was furnished to Agent;;

              (d)   Governmental Certificates.  Certificates of appropriate
        officials as to the  existence and good standing of each Loan Party
        in its  respective jurisdiction  of incorporation  and any and  all
        jurisdictions where such Loan Party is qualified to do business  as
        a foreign  corporation, each such certificate to  be dated as  of a
        Current Date;

              (e)   Notes.    The  Notes  duly  completed  and  executed by
        Borrower;

              (f)   Solvency  Certificate.   A  certificate  executed by  a
        Responsible Officer of  Borrower and its Subsidiaries (with respect
        to such Subsidiaries)  to the effect that, before and  after giving
        effect to the Loans, Borrower and its Subsidiaries will be Solvent,
        both on a consolidated and consolidating basis;

              (g)   Other  Consents.    Copies  of  all  material  consents
        necessary  for the execution,  delivery and performance by  each of
        the Loan  Parties of  the Loan  Documents to which it  is a  party,
        which consents  shall be  certified  by  a Responsible  Officer  of
        Borrower  as true and  correct copies  of such  consents as  of the
        Closing Date;

              (h)   Permits.  Copies of all material Permits of Borrower or
        any of its Subsidiaries and all material permits relating to any of
        the  Properties  owned  or  leased  by  any  of  them  (except  for
        certificates  of   class  of  the   American  Shipping  Bureau  and
        certificates of  documentation or  inspection of  the United States
        Coast Guard  and except  to the  extent that the  Agent may  inform
        Borrower  that copies  of  certain  of such  Permits shall  not  be
        required to  be delivered); and evidence satisfactory  to the Agent
        that Borrower and its Subsidiaries have taken appropriate action to
        ensure that Borrower and its Subsidiaries are able to conduct their
        businesses with the use of such Permits in full force and effect;

              (i)   Payment of Fees and Expenses.  Borrower shall have paid
        all fees due on the Closing Date as specified in the Term Sheet and
        all fees and expenses of or incurred  by the Agent and its  counsel
        to the extent billed as of the Closing Date and payable pursuant to
        this Agreement;

              (j)   Regulatory  Approvals.   Evidence  satisfactory  to the
        Agent  that  all  filings,  consents,  or   approvals  with  or  of
        Governmental Authorities  necessary to consummate the  transactions
        contemplated by the Loan Documents, if any, have been obtained;

              (k)   Compliance with Laws.  On the Closing Date, each Person
        that  is  a party  to  this  Agreement  or any  of  the  other Loan
        Documents shall have  complied with  all Governmental  Requirements
        necessary  to  consummate  the  transactions contemplated  by  this
        Agreement and the other Loan Documents;

              (l)   No  Prohibitions.    No Governmental  Requirement shall
        prohibit the consummation  of the transactions contemplated by this
        Agreement or  any other  Loan Document, and no  order, judgment  or
        decree of any  Governmental Authority  or arbitrator shall,  and no
        litigation or other proceeding shall be pending or threatened which
        would, enjoin, prohibit, restrain or otherwise adversely affect the
        consummation of the  transactions contemplated by this Agreement or
        the  other Loan  Documents  or  otherwise have  a  Material Adverse
        Effect;

              (m)   Material Adverse Change.   No  material adverse  change
        shall  have  occurred  with  respect  to  the  financial condition,
        business, operations, capitalization or liabilities of Borrower, or
        of Borrower and  its Subsidiaries taken as a whole,  since June 30,
        1997;

              (n)   Wiring  Instructions.    A  letter  of  direction  from
        Borrower to  the  Agent with  respect to  the disbursement  of  the
        proceeds of the Loans on the Funding Date;

              (o)   Financial Statements.   Copies of each of the financial
        statements  referred   to  in  Section   7.2,  including,   without
        limitation,  the  most   recent  audited  financial  statements  of
        Borrower and its Subsidiaries;

              (p)   Opinion of Counsel.  A favorable opinion of counsel for
        Borrower  reasonably  acceptable  to the  Agent,  each in  form and
        substance (and  covering such  matters as are)  satisfactory to the
        Agent; and

              (q)   Notice of Borrowing or Issuance of Letter of Credit.  A
        notice of borrowing in accordance with Section 2.9 (with respect to
        a  Loan) or  a notice of request  for the  issuance of  a Letter of
        Credit in accordance with Section 2.14 (with respect to a Letter of
        Credit).

        Borrower  shall deliver,  or cause  to be  delivered, to  the Agent
  sufficient  counterparts of  each document  to be  received by  the Agent
  under this Section 6.1  to permit the Agent to distribute a copy  of such
  document to the Banks.

        Section 6.2 All Extensions of Credit.   The obligation of each Bank
  to make any  Loan (including the initial Loan)  and the obligation of the
  Issuing Bank to issue any Letter of Credit (including the initial  Letter
  of Credit) are subject to the following additional conditions precedent:

              (a)   No  Default.   No Default  shall have  occurred  and be
        continuing, or would result from such Loan or Letter of Credit;

              (b)   Representations   and   Warranties.      All   of   the
        representations  and  warranties of  Borrower  and  the  other Loan
        Parties  contained  in  Article  7  hereof and  in  the  other Loan
        Documents  (a) shall be true and correct when made and (b) shall be
        deemed to be  repeated on and as of the date of such Loan or Letter
        of  Credit and shall be true  and correct in all respects on and as
        of such date, except in the case of representations and  warranties
        which expressly and specifically relate only to an earlier date;

              (c)   Additional  Documentation.    The   Agent  shall   have
        received  all   notices  and   other   agreements,  documents   and
        instruments as may be required under this Agreement as a  condition
        to such Loan or  Letter of Credit in compliance with this Agreement
        (including, without  limitation, the notice  required under Section
        2.9 with respect to a  Loan and the  notice required under  Section
        2.14  with respect  to  a  Letter of  Credit) and  such  additional
        approvals, opinions,  agreements, documents and instruments  as the
        Agent may reasonably request;

              (d)   No  Overadvance.   After  giving  effect  to  the Loans
        and/or  Letters  of Credit  requested  to be  made  and/or  issued,
        respectively,  the Outstanding  Credit shall  not exceed  an amount
        equal to the Commitments at such time; and

              (e)   No  Material Adverse  Effect.   Both  before  and after
        giving effect to the Loans and/or Letters of Credit requested to be
        made and/or issued,  respectively, no Material Adverse Effect shall
        have occurred and shall be continuing.

  Each  notice of  borrowing or  request for  the issuance  of a  Letter of
  Credit  by  Borrower  hereunder  shall  constitute  a  representation and
  warranty  by Borrower  that the  conditions precedent  set forth  in this
  Section  6.2   (other  than  the   Agent's  receipt  of  any   additional
  documentation that  it may,  at its option, request  pursuant to  Section
  6.2(c) preceding) have been satisfied (both as of the date of such notice
  and, unless Borrower  otherwise notifies the  Agent prior to  the date of
  such borrowing or  Letter of Credit, as of the date of  such borrowing or
  Letter of Credit).

                                  ARTICLE 7

                        Representations and Warranties

        Borrower  represents and warrants  to the Agent and  the Banks that
  the following statements are true, correct and complete:

        Section 7.1 Corporate  Existence.     Each  Loan  Party  (a)  is  a
  corporation or other entity duly organized, validly existing and in  good
  standing under  the  laws of  the jurisdiction  of its  incorporation  or
  organization, (b) has all requisite entity power and authority to own its
  Properties and  carry on its business  as now being or  as proposed to be
  conducted,  and (c) is qualified  to do business in  all jurisdictions in
  which the nature  of its business makes such qualification  necessary and
  where failure to so qualify would have  a Material Adverse Effect.   Each
  Loan  Party has  the corporate  power and  authority and  legal right  to
  execute, deliver and perform its obligations under the Loan Documents  to
  which  it is  or may  become a  party.   The chief  executive  office and
  principal place of business of Borrower is located in the State of Texas.

        Section 7.2 Financial Statements.   Borrower  has delivered to  the
  Agent  and the Banks the Form  10-K of Borrower for the fiscal year ended
  December 31, 1996, and the Forms 10-Q of Borrower for the fiscal quarters
  ended March  31, 1997,  and June  30, 1997,  which contain  audited (with
  respect to the Form 10-K ) and unaudited (with respect to the Forms 10-Q)
  consolidated  (and certain  audited and unaudited  consolidating) balance
  sheets  and statements  of  operations  and statements  of cash  flow  of
  Borrower and its  consolidated Subsidiaries as of or for  (as applicable)
  the  fiscal  year or  fiscal quarter  (as applicable)  ended December 31,
  1996, March 31, 1997,  and June 30, 1997.  To Borrower's  knowledge, such
  financial  statements  are  true  and  correct,  have  been  prepared  in
  accordance with GAAP and fairly and accurately present, on a consolidated
  and consolidating  (where applicable)  basis, the  financial condition of
  Borrower  and its  consolidated Subsidiaries  as of the  respective dates
  indicated  therein  and the  results  of  operations  for  the respective
  periods indicated therein.  There has  been no material adverse change in
  the  business,   condition  (financial   or  otherwise),   operations  or
  Properties of Borrower, or of Borrower and its consolidated  Subsidiaries
  taken as  a whole, since  the effective date of the  financial statements
  referred to in this Section 7.2(a).

        Section 7.3 Entity Action; No  Breach.  The execution, delivery and
  performance by each Loan  Party of the Loan  Documents to which it  is or
  may become a  party and compliance  with the terms and provisions  hereof
  and thereof have  been duly authorized by all requisite  corporate action
  on  the part of the  Loan Parties and do not and  will not (a) violate or
  conflict  with, or  result in a  breach of, or require  any consent under
  (i) the articles or  certificates of incorporation or bylaws of  any Loan
  Party or the partnership  agreement or certificate of limited partnership
  or other constitutional document of any Loan Party, (ii) any Governmental
  Requirement or any order, writ, injunction or decree of any  Governmental
  Authority  or arbitrator,  or (iii) any  material agreement,  document or
  instrument to which any Loan Party is a party or by which any  Loan Party
  or any of its Property is bound  or subject, or (b) constitute a  default
  under any such  material agreement, document or instrument, or  result in
  the  creation  or  imposition  of  any Lien  (except  under  the Security
  Documents as provided in Article 5) upon any of  the revenues or Property
  of any Loan Party.

        Section 7.4 Operation of  Business.   The Loan  Parties possess all
  Permits,  franchises,  licenses and  authorizations necessary  to conduct
  their  respective  businesses  substantially  as  now  conducted  and  as
  presently proposed to be conducted except where the failure to so possess
  would not cause a Material  Adverse Effect.  None  of such Persons is  in
  material  violation   of  any  such   Permits,  franchises,  licenses  or
  authorizations required to be possessed pursuant to this Section 7.4.

        Section 7.5 Intellectual Property.  The Loan Parties own or possess
  (or will  be licensed or have  the full  right to  use) all  Intellectual
  Property  which  is  necessary  for  the operation  of  their  respective
  businesses  as  presently conducted  and  as  proposed  to  be conducted,
  without any known  conflict with the rights  of others.  The consummation
  of the  transactions contemplated  by this Agreement and  the other  Loan
  Documents will  not materially  alter or impair, individually  or in  the
  aggregate, any of  such rights of such Persons.   No product of  the Loan
  Parties  infringes upon  any  Intellectual  Property owned  by  any other
  Person,  and no  claim or litigation  is pending or, to  the knowledge of
  Borrower, threatened against any Loan Party or any such Person contesting
  its right  to use  any product  or material  which could  have a Material
  Adverse Effect.  There is no violation by any  Loan Party of any right of
  such Loan Party with respect to any material Intellectual Property  owned
  or used by such Loan Party.

        Section 7.6 Litigation and Judgments.   Each material action, suit,
  investigation or  proceeding before  or by any  Governmental Authority or
  arbitrator pending or, to  the knowledge of Borrower,  threatened against
  or affecting any Loan Party as of the date of this Agreement is disclosed
  on  Schedule 7.6 hereto  or in the Form  10-K of Borrower  for the fiscal
  year ended December  31, 1996, or  in the Form  10-Q of Borrower for  the
  fiscal  quarter ended March 31, 1997,  or June 30, 1997  except for suits
  for  personal  injury, death  or  property damage  which  are  adequately
  covered  by   insurance  (subject  to  any  deductibles,   all  of  which
  deductibles  are  customary  for  the  industry  in  which  Borrower  are
  engaged).  None of such actions, suits, investigations or proceedings (a)
  could  be reasonably expected to be adversely determined or (b) if and to
  the  extent  the  same  could be  reasonably  expected  to  be  adversely
  determined, could  be  reasonably expected  to have  a  Material  Adverse
  Effect.    On  the  date  of  this Agreement,  there  are  no outstanding
  judgments  against  any  Loan  Party or  any  of  their  Subsidiaries  or
  Affiliates.   No Loan  Party has  received any  opinion or  memorandum or
  legal advice from legal counsel to the  effect that it is exposed  to any
  liability or disadvantage that could have a Material Adverse Effect.

        Section 7.7 Rights  in  Properties;  Liens.    Except  as expressly
  stated to the  contrary on Schedule 1.1(a), each  of the Loan Parties has
  good  and indefeasible  title to,  or valid  leasehold interests  in, its
  Properties  and  assets, real  and  personal,  including  the Properties,
  assets  and leasehold  interests  reflected in  the  financial statements
  described  in Section  7.2(a), and  none of  the Properties  or leasehold
  interests of  any Loan Party or any of its Subsidiaries is subject to any
  Lien,  except  Permitted Liens.    As of  the Closing  Date, each  of the
  Drilling Rigs purported to be owned by  Borrower is owned, of record  and
  beneficially, by  Borrower free of all  liens, mortgages and encumbrances
  except  Permitted  Liens,  except  for  the PHOENIX  I  and  the ACHILLES
  Drilling  Rigs which are to be transferred to Borrower on or prior to the
  Closing  Date,  free  of  all  liens, mortgages  and  encumbrances except
  Permitted Liens.

        Section 7.8 Enforceability.  The  Loan Documents have been duly and
  validly executed  and delivered  by each  of the Loan Parties  that is  a
  party thereto and constitute the legal, valid and binding obligations  of
  the Loan Parties, enforceable against the Loan Parties in accordance with
  their respective terms, except  as limited  by bankruptcy, insolvency  or
  other  laws  of  general  application  relating  to  the  enforcement  of
  creditors' rights and general principles of equity.

        Section 7.9 Approvals.   No authorization, approval  or consent of,
  and  no  filing  or  registration  with or  notice  to,  any Governmental
  Authority or  third party  is or  will be  necessary  for the  execution,
  delivery or performance by any Loan Party of any of the Loan Documents to
  which it is a party or for the validity or enforceability thereof, except
  for such consents, approvals and filings as have been validly obtained or
  made and are  in full force  and effect.   None of the  Loan Parties  has
  failed to  obtain any  material governmental  consent, approval, license,
  Permit, franchise  or other governmental  authorization necessary for the
  ownership of any of its Properties or the conduct of its business.

        Section 7.10      Debt.   As of the Closing Date,  Borrower and its
  consolidated   Subsidiaries  have  no Debt  except for  (a) any Revolving
  Loans  or Acquisition  Loans,  (b) the  Debt disclosed  in  the financial
  statements including in the Form 10-Q of Borrower for  the fiscal quarter
  ended June 30,  1997, and  (c) the  Debt disclosed with  respect to  such
  Person on Schedule 7.10 hereto.

        Section 7.11      Taxes.    The Loan  Parties  have  filed  all tax
  returns  (federal, state and  local) required to be  filed, including all
  income, franchise,  employment, Property and sales tax  returns, and have
  paid  all  of   their  respective  liabilities  for  taxes,  assessments,
  governmental charges and other levies that are due and payable.  Borrower
  is  not aware of any pending investigation by any taxing authority of any
  Loan  Party or any of its  Subsidiaries or of any  pending but unassessed
  tax liability of any Loan Party or any of its Subsidiaries.  No tax Liens
  have been filed and, except  as disclosed on Schedule 7.11, no claims are
  being asserted  against any Loan  Party or  any of its Subsidiaries  with
  respect to any taxes.  Except as disclosed on Schedule 7.11 hereto, as of
  the Closing  Date, none of  the United  States income tax  returns of the
  Loan  Parties and any  of their respective Subsidiaries  are under audit.
  The  charges, accruals and reserves on  the books of the  Loan Parties in
  respect of  taxes or  other governmental charges are  in accordance  with
  GAAP.

        Section 7.12      Margin Securities.   None of  the Loan Parties or
  any of their respective Subsidiaries is engaged principally, or as one of
  its important  activities, in  the business of extending  credit for  the
  purpose of  purchasing or  carrying margin stock (within  the meaning  of
  Regulations  G, T,  U, or  X of  the Board  of  Governors of  the Federal
  Reserve  System), and no part of the proceeds of any Loan will be used to
  purchase or carry any margin  stock or to extend credit to others for the
  purpose of purchasing or carrying margin stock.

        Section 7.13      ERISA.

              (a)   Each Plan  of each  Loan  Party  and of  each  Borrower
        Member  is  in  compliance  in  all  material   respects  with  all
        applicable provisions of ERISA and the Code.  Neither a  Reportable
        Event nor a Prohibited Transaction has occurred within the last  60
        months with respect  to any Plan of any  Loan Party or any Borrower
        Member.   No  notice of intent  to terminate a Pension  Plan of any
        Loan  Party or  any Borrower  Member has  been filed,  nor  has any
        Pension  Plan  been  terminated.    No  circumstances  exist  which
        constitute grounds  entitling the PBGC  to institute proceedings to
        terminate,  or appoint a  trustee to administer, a  Pension Plan of
        any Loan Party or any  Borrower Member, nor has the PBGC instituted
        any such  proceedings.  Neither  any of  the Loan  Parties nor  any
        Borrower  Member  has  completely  or  partially  withdrawn  from a
        Multiemployer Plan.   Each Loan Party and each Borrower  Member has
        met its minimum funding requirements under ERISA and the Code  with
        respect to all  of its Plans subject  to such requirements, and, as
        of  the  Closing Date  except  as specified  on Schedule 7.13,  the
        present  value  of  all  vested  benefits  under  each  funded Plan
        (exclusive of  any Multiemployer  Plan) does  not  exceed the  fair
        market value of all such Plan assets allocable to such benefits, as
        determined on  the most recent  valuation date of  such Plan and in
        accordance with ERISA.   Neither  any of the  Loan Parties  nor any
        Borrower Member has incurred any liability to the PBGC under ERISA.
        No litigation is pending or threatened  concerning or involving any
        Plan  of any  Loan Party  or any  Borrower Member.    There are  no
        unfunded or unreserved liabilities relating to any Plan of any Loan
        Party or  any Borrower  Member that could, individually  or in  the
        aggregate, have  a Material  Adverse Effect if such  Loan Party  or
        Borrower Member were required to fund or reserve such liability  in
        full.   As  of  the  Closing Date,  no  funding waivers  have  been
        requested or granted under Section 412 of the Code with respect  to
        any Plan of any Loan  Party or Borrower Member.  As of the  Closing
        Date, no unfunded or  unreserved liability  for benefits under  any
        Plan or Plans of any Loan  Party or any Borrower  Member (exclusive
        of any Multiemployer Plans) exceeds $1,000,000 with respect  to any
        such  Plan  or $3,000,000  with respect  to all  such Plans  in the
        aggregate.

              (b)   No ERISA  Affiliate has  incurred any  liability to the
        PBGC or  has withdrawn from a Multiemployer  Plan. Neither Borrower
        nor any ERISA Affiliate has received a demand letter from  the PBGC
        (i) for the payment  of minimum funding contributions under Section
        302  of ERISA which  exceed $1,000,000 with respect  to any Pension
        Plan  or  $3,000,000  with  respect  to all  Pension  Plans  in the
        aggregate  or (ii) for  the payment  of employer  liabilities under
        Section 4062, 4063  or 4064 of ERISA which exceeds  $1,000,000 with
        respect to  any  Pension Plan  or $3,000,000  with respect  to  all
        Pension  Plans in  the  aggregate.    The  PBGC  has not  filed  or
        perfected  any Lien  under  Section 302(f)(1) or  4068(a)  of ERISA
        against Borrower or any ERISA Affiliate.  Neither Borrower nor  any
        ERISA  Affiliate  has received  a  notice  of  complete  or partial
        withdrawal from  a Multiemployer  Plan in which the  amount of  the
        liability  asserted  exceeds   $1,000,000  with   respect  to   any
        Multiemployer Plan or  $3,000,000 with respect to all Multiemployer
        Plans in the aggregate.

        Section 7.14      Disclosure.  No  written statement,  information,
  report, representation or  warranty made  by any Loan Party  in any  Loan
  Document, or  furnished to  the Agent  or any Bank  by any  Loan Party in
  connection  with the  Loan  Documents,  or made  in connection  with  any
  transaction contemplated hereby or thereby, contains (as of the date when
  made)  any untrue  statement of  a material  fact or  omits to  state any
  material  fact necessary  to make  the statements  herein or  therein not
  misleading.  There is no  fact known to Borrower which has had a Material
  Adverse Effect, and there is no fact known to Borrower which might in the
  future have a Material Adverse  Effect, except as may have been disclosed
  in writing to the Agent and the Banks.

        Section 7.15      Capitalization.

              (a)   As of June 30, 1997, the capitalization of Borrower and
        its consolidated Subsidiaries was as set  forth in the Form 10-Q of
        Borrower for the fiscal quarter ended June 30, 1997.

              (b)   On and  as of the  Closing Date,  Borrower directly  or
        indirectly owns (legally  and beneficially) all of  the issued  and
        outstanding Capital Stock of each of its consolidated Subsidiaries.
        On and as of the Closing Date, none of the Subsidiaries of Borrower
        has authorized or issued any Redeemable Stock.

              (c)   All of the outstanding common stock of Borrower and its
        Subsidiaries  has  been  validly  issued,  is  fully  paid  and  is
        nonassessable.  Since  June 30, 1997, no Subsidiary has  issued any
        subscriptions,  options,  warrants,   calls  or  rights  (including
        preemptive  rights)  to  acquire,  or  securities   or  instruments
        convertible into, Capital Stock of such Subsidiary.

        Section 7.16      Agreements.  None of the Loan  Parties is a party
  to any indenture, loan, credit agreement, stock purchase agreement, lease
  or  other agreement, document  or instrument, or subject  to any charter,
  corporate, partnership  or similar restriction,  that could reasonably be
  expected  to have  a  Material Adverse  Effect.   Except as  disclosed on
  Schedule 7.22, none  of the Loan Parties is  in default in any respect in
  the performance,  observance or fulfillment  of any  of the  obligations,
  covenants  or   conditions  contained  in   any  agreement,  document  or
  instrument binding  on  it or  its Properties,  except for  instances  of
  noncompliance  that, individually or  in the aggregate, could  not have a
  Material Adverse Effect.

        Section 7.17      Compliance with  Laws.  None  of the Loan Parties
  is in violation of any Governmental Requirement, except for instances  of
  non-compliance that, individually  or in the aggregate, could not  have a
  Material Adverse Effect.

        Section 7.18      Investment Company Act.  None of the Loan Parties
  is an "investment  company" within the meaning of the  Investment Company
  Act of 1940, as amended.

        Section 7.19      Public Utility Holding  Company Act.  None of the
  Loan Parties  is a  "holding  company" or  a  "subsidiary company"  of  a
  "holding company" or an "affiliate" of  a "holding company" or  a "public
  utility" within the meaning of the Public Utility Holding  Company Act of
  1935, as amended.

        Section 7.20      Environmental Matters.

              (a)   Except   for   instances   of  noncompliance   with  or
        exceptions to  any of the  following representations and warranties
        that could not  have, individually or in the aggregate,  a Material
        Adverse Effect:

                     (i)  The Loan  Parties  and all  of  their  respective
              Properties  and operations  are in  full compliance  with all
              Environmental Laws.   Borrower is not  aware of, and Borrower
              has  received no  written notice  of,  any  past, present  or
              future conditions, events, activities, practices or incidents
              which  may  interfere  with  or  prevent  the  compliance  or
              continued compliance by any Loan Party with all Environmental
              Laws;

                    (ii)  The Loan Parties have  obtained all Permits  that
              are  required under  applicable  Environmental Laws,  and all
              such Permits are in good standing and all such Persons are in
              compliance with all of the terms and conditions thereof;

                   (iii)  No Hazardous Materials exist  on, about or within
              or have  been (to  Borrower's knowledge)  or are  being used,
              generated,  stored, transported, disposed  of on  or Released
              from  any of  the Properties  of the  Loan Parties  except in
              compliance with applicable Environmental Laws.  The use which
              the Loan Parties make and intend to make of their  respective
              Properties will  not result in  the use, generation, storage,
              transportation,  accumulation, disposal  or  Release  of  any
              Hazardous  Material on,  in or from  any of  their Properties
              except in compliance with applicable Environmental Laws;

                    (iv)  Neither  the  Loan  Parties  nor  any  of   their
              respective  Subsidiaries  currently  or  previously  owned or
              leased Properties or operations is subject to any outstanding
              or,  to the  best of  Borrower's knowledge,  threatened order
              from or  agreement with  any Governmental  Authority or other
              Person  or   subject  to  any   judicial  or   administrative
              proceeding  with respect  to (A) any  failure to  comply with
              Environmental  Laws,  (B) any  Remedial  Action,  or  (C) any
              Environmental Liabilities;

                     (v)  There  are   no   conditions   or   circumstances
              associated with  the currently or  previously owned or leased
              Properties  or  operations of  the  Loan  Parties  that could
              reasonably  be expected  to  give rise  to  any Environmental
              Liabilities   or  claims   resulting  in   any  Environmental
              Liabilities.   None of the Loan Parties is subject to, or has
              received written notice of any claim from any Person alleging
              that any  of the Loan  Parties is or will be  subject to, any
              Environmental Liabilities;

                    (vi)  None of  the Properties of the Loan  Parties is a
              treatment  facility (except  for the  recycling of  Hazardous
              Materials generated onsite and the treatment of liquid wastes
              subject to the Clean Water Act), storage facility (except for
              temporary  storage  of  Hazardous Materials  generated onsite
              prior  to  their   disposal  offsite)  or  disposal  facility
              requiring  a  permit  under  the  Resource  Conservation  and
              Recovery  Act,   42  U.S.C.      6901  et  seq.,  regulations
              thereunder or  any comparable provision  of state  law.   The
              Loan Parties  and their Subsidiaries  are compliance with all
              applicable  financial  responsibility   requirements  of  all
              Environmental Laws; and

                   (vii)  None  of the Loan Parties has  failed to file any
              notice required under  applicable Environmental Law reporting
              a Release.

              (b)   No Lien arising  under any Environmental Law that could
        have, individually  or in the aggregate, a  Material Adverse Effect
        has attached to any Property or revenues of any Loan Party.

        Section 7.21      Labor  Disputes and  Acts  of God.    Neither the
  business nor the Properties of any Loan  Party are affected by any  fire,
  explosion,  accident, strike,  lockout or  other labor  dispute, drought,
  storm, hail, earthquake, embargo,  act of God or of the public  enemy, or
  other casualty (whether or not  covered by insurance), that  is having or
  could have a Material Adverse Effect.

        Section 7.22      Material Contracts.   Except as  may be disclosed
  on Schedule  7.22, (a) all of  the Material Contracts  of each Loan Party
  are  in full  force  and effect,  (b)  there are  no defaults  under  any
  Material  Contracts  (which,  individually  or  in  the  aggregate, could
  reasonably be expected to have a Material Adverse Effect), and (c) to the
  best of Borrower's knowledge after due inquiry, no other Person that is a
  party thereto is in default under any of the Material Contracts.  None of
  the Material Contracts, and no other agreement, document or instrument to
  which any Loan Party is a party or by which any Loan Party or  any of its
  Property  is based  or subject,  prohibits the  transactions contemplated
  under the Loan Documents.

        Section 7.23      Outstanding Securities.  As of the  Closing Date,
  all outstanding securities (as defined  in the Securities Act of 1933, as
  amended, or any successor thereto, and  the rules and regulations  of the
  Securities and  Exchange Commission thereunder) of  the Loan Parties have
  been  offered,  issued,  sold  and   delivered  in  compliance  with  all
  applicable Governmental Requirements.

        Section 7.24      Priority of  Payment.  The  Debt evidenced by the
  Notes and  all other Obligations of  Borrower to the  Agent and the Banks
  under  the Loan  Documents (a) constitutes  "Permitted Indebtedness"  (as
  such term is defined in the Indenture and the Note Purchase Agreement) of
  Borrower, (b) is  pari passu  in right of  payment with  the Senior Debt,
  except that the  Debt evidenced  by the Notes  and the  other Obligations
  (subject to the contractual right of the holders of the Senior Fixed Rate
  Notes to  obtain security  in the future under  certain circumstances  as
  provided  in Section 4.10 of the Indenture), and (c) shall in no event be
  subordinate  in  any respect  (including,  without  limitation,  right of
  payment)  to any  other  Debt of  Borrower  or any  of  its Subsidiaries,
  exclusive of the effect of any Permitted Liens.

        Section 7.25      Solvency.  Borrower  and each of its consolidated
  Subsidiaries,  as a  separate  entity  and on  a consolidated  basis,  is
  Solvent, both before and after giving effect  to the Loans and the  other
  transactions contemplated by the Loan Documents.

        Section 7.26      Employee   Matters.    Except  as  set  forth  on
  Schedule 7.26,  as of the Closing  Date (a) none of  the Loan Parties nor
  any  of their  respective  Subsidiaries,  nor  any  of  their  respective
  employees, is subject to any collective bargaining agreement,  and (b) no
  petition for certification  or union election is pending with  respect to
  the employees of any Loan Party or any  of their respective Subsidiaries,
  and no union or collective bargaining unit has sought such  certification
  or recognition with  respect to the employees of  any of the Loan Parties
  or  any  of  their  respective  Subsidiaries.    There  are  no  strikes,
  slowdowns, work  stoppages  or  controversies  pending  or, to  the  best
  knowledge of Borrower  after due inquiry, threatened against, any  of the
  Loan Parties or any of their respective Subsidiaries or their  respective
  employees  which could have,  either individually or in  the aggregate, a
  Material Adverse Effect.

        Section 7.27      Insurance.  Borrower has delivered to the Agent a
  true and complete  summary of the insurance that will be in  effect as of
  the  Closing  Date for  Borrower.   No  notice of  cancellation  has been
  received  for such  insurance and  Borrower and  its Subsidiaries  are in
  substantial  compliance with  all  of  the terms  and conditions  of  the
  policies providing such insurance.

                                  ARTICLE 8

                            Affirmative Covenants

        Borrower covenants and  agrees that, as long as the  Obligations or
  any part thereof are outstanding or any Bank has any Commitment hereunder
  or  any Letter of  Credit remains outstanding, Borrower  will perform and
  observe, or cause to be performed and observed, the following covenants:

        Section 8.1 Reporting Requirements.   Borrower will  furnish to the
  Agent and each Bank:

              (a)   Annual Financial Statements.  As soon as available, and
        in any event  within 90 days after  the end of each fiscal  year of
        Borrower, beginning with  the fiscal year ending December 31, 1997,
        (i) a  copy  of  the  annual  audit  report  of  Borrower  and  its
        consolidated Subsidiaries as of the end of and for such fiscal year
        then ended containing, on  a consolidated basis and  with unaudited
        consolidating schedules attached, balance  sheets and statements of
        income, retained earnings and cash flow, in each case setting forth
        in comparative form the figures for the preceding fiscal year,  all
        in reasonable detail and audited by Arthur  Andersen & Co. or other
        independent  certified public  accountants  of  recognized national
        standing, to  the  effect that  such report  has been  prepared  in
        accordance  with  GAAP  and  (ii) a  letter  from  such independent
        certified public accountants  to the Agent (A) stating that nothing
        has  come to  its attention  during its  auditing  procedures which
        indicates that a Default has occurred and  is continuing or, if  in
        its opinion a  Default has occurred and is continuing,  stating the
        nature thereof,  and (B) confirming  the calculations  set forth in
        the officer's certificate delivered simultaneously therewith;

              (b)   Quarterly Financial Statements. As  soon as  available,
        and in any  event within 45 days after the end of each of the first
        three quarters of each fiscal year of Borrower, beginning with  the
        fiscal  quarter ending September  30, 1997, a copy  of an unaudited
        financial report  of Borrower and  its consolidated Subsidiaries as
        of the end of such fiscal quarter and for the portion of the fiscal
        year then ended containing, on a consolidated basis, balance sheets
        and statements of income, retained earnings and cash flow, in  each
        case  setting  forth  in  comparative  form  the  figures  for  the
        corresponding period of the preceding fiscal year all in reasonable
        detail certified by a Responsible Officer of Borrower to have  been
        prepared  in accordance  with  GAAP  and to  fairly  and accurately
        present  (subject  to  year-end  audit  adjustments)  the financial
        condition and results of operation of Borrower and its consolidated
        Subsidiaries,  on a  consolidated and  consolidating basis,  at the
        date and for the periods indicated therein;

              (c)   Certificate  of  No  Default.    Concurrently  with the
        delivery  of  each  of  the financial  statements  referred  to  in
        Sections 8.1(a) or 8.1(b),  a certificate of a Responsible  Officer
        of  Borrower  (i) stating  that,  to  the  best  of  such officer's
        knowledge, no  Default  has occurred  and is  continuing or,  if  a
        Default has occurred and is continuing, stating the  nature thereof
        and  the action that is proposed to be  taken with respect thereto,
        and   (ii) showing   in    reasonable   detail   the   calculations
        demonstrating compliance with Article 10;

              (d)   Budget; Projections.  As soon  as available, a copy  of
        any budget or projections of Borrower or any of its Subsidiaries as
        may be prepared by or for  the directors of any such Person and, in
        any event with 30 days after the end of each fiscal year, a copy of
        a  budget   and  projections  of   Borrower  and  its  consolidated
        Subsidiaries  for the  then current fiscal  year, which  budget and
        projections  shall  including  consolidating  schedules  containing
        information exclusively as to Borrower;

              (e)   Management Letters.  Promptly  upon receipt thereof,  a
        copy  of any management  letter or written report  submitted to any
        Loan Party by independent certified public accountants with respect
        to the  business, condition  (financial or  otherwise), operations,
        prospects or Properties of such Loan Party;

              (f)   Notice  of Litigation.  Promptly after the commencement
        thereof, notice  of all  actions, suits and  proceedings before any
        Governmental  Authority  or  arbitrator  affecting  any  Loan Party
        which, if  determined adversely  to such Loan Party,  could have  a
        Material Adverse Effect;

              (g)   Notice  of Default.   As  soon as  possible and  in any
        event immediately  upon any Borrower's  knowledge of the occurrence
        of any Default, a written notice setting forth  the details of such
        Default and the action that Borrower has taken and proposes to take
        with respect thereto;

              (h)   ERISA Reports.   Promptly  after the  filing or receipt
        thereof,  copies  of all  reports,  including  annual  reports, and
        notices  which any Loan Party or any Borrower  Member files with or
        receives from the PBGC or the U.S. Department of Labor under ERISA;
        as  soon as  possible and in  any event within five  days after any
        such  Person knows or has reason  to know that any  Pension Plan is
        insolvent, or  that any Reportable  Event or Prohibited Transaction
        has occurred  with respect  to any Plan or  Multiemployer Plan,  or
        that the PBGC, any Loan Party or any Borrower Member has instituted
        or will institute proceedings under ERISA to  terminate or withdraw
        from or reorganize any Pension Plan, a certificate of a Responsible
        Officer  of  Borrower  setting   forth  the  details  as  to   such
        insolvency, withdrawal, Reportable Event, Prohibited Transaction or
        termination  and the  action that  Borrower proposes  to  take with
        respect thereto; and promptly after the receipt thereof, a copy  of
        each demand  letter or  notice which would have  been described  in
        Section 7.13(b) if it had  been received on or prior to the Closing
        Date.

              (i)   Reports  to  Other  Creditors.    Promptly   after  the
        furnishing thereof, a copy of any statement or report furnished  by
        any Loan  Party to  any other  party pursuant  to the  terms of any
        indenture,  loan, stock  purchase  or credit  or  similar agreement
        relating to any Consolidated Funded Debt and not otherwise required
        to  be furnished to the Agent  and the Banks pursuant  to any other
        clause of this Section 8.1;

              (j)   Notice  of  Material  Adverse  Effect.    Within   five
        Business Days after  Borrower becomes aware thereof, written notice
        of any matter that could reasonably be expected  to have a Material
        Adverse Effect;

              (k)   Proxy Statements, Etc.  As soon  as available, one copy
        of each financial statement, report, notice or proxy statement sent
        by  any Loan Party to  its stockholders  generally and one  copy of
        each regular, periodic or special report, registration statement or
        prospectus filed by any Loan Party with any securities exchange  or
        the Securities and Exchange Commission or any successor agency, and
        of  all press releases and other statements made by any of the Loan
        Parties  to  the public  containing  material  developments  in its
        business;

              (l)   Notices  regarding   Subsidiaries  and   Transfers   of
        Drilling Rigs.   (i) Concurrently with the delivery of each  of the
        financial  statements referred  to in  Sections 8.1(a)  and 8.1(b),
        notice of the creation or acquisition of any Subsidiary by Borrower
        after the Closing Date and subsequent to the last  delivery of such
        information, (ii)  promptly upon the  occurrence thereof, notice of
        any  sale, transfer  or other  disposition of  any Drilling  Rig by
        Borrower and  information concerning  the identity  of the Drilling
        Rig affected thereby, the  identity of  the transferee thereof  and
        the  date  of  such sale,  transfer  or  other  disposition,  (iii)
        promptly  upon the  occurrence thereof,  notice of the  creation or
        acquisition  of any  Material  Subsidiary  of Borrower,  or  of the
        existence of any Material Subsidiary of Borrower, after the Closing
        Date and subsequent  to the last delivery of such  information; and
        (iv)  promptly upon  the  occurrence thereof,  notice of  any  Non-
        Material Subsidiary being or becoming a Material Subsidiary

              (m)   Insurance.   Within 60  days prior to the  end of  each
        fiscal year of Borrower, a report in form and substance  reasonably
        satisfactory  to  the  Agent  summarizing  all  material  insurance
        coverage maintained  by Borrower  and their Subsidiaries  as of the
        date of such report and all material insurance coverage planned  to
        be maintained by such Persons in the subsequent fiscal year;

              (n)   Environmental  Assessments and Notices.  Promptly after
        the  receipt  thereof,  a  copy  of  each  environmental assessment
        (including any  analysis relating  thereto) involving  an amount in
        excess of $50,000 prepared with respect to any real Property of any
        Loan  Party  and each  notice  sent by  any Governmental  Authority
        relating to any failure  or alleged failure of a material nature to
        comply with any  Environmental Law  or any  liability with  respect
        thereto;

              (o)   Notices relating  to the  Senior Debt.   Promptly after
        the delivery or receipt thereof by Borrower, a copy of each notice,
        demand or other written  information given or received  by Borrower
        under  or in connection with  any of  the Senior Debt   (including,
        without limitation, any  notice of a default or of  any redemption,
        purchase or repayment);

              (p)   Notice Relating  to Drilling  Rig Revenues.   Within 30
        days after the end of each calendar quarter, a report setting forth
        the  following  information for  each  Drilling  Rig:  the revenues
        earned by each Drilling  Rig during the preceding calendar  quarter
        and the current contract status of such Drilling Rig; and

              (q)   General  Information.  Promptly, such other information
        concerning the Loan  Parties and their respective Subsidiaries, the
        creditworthiness  of  the   Loan  Parties   and  their   respective
        Subsidiaries  as  the Agent  or  any  Bank may  from  time to  time
        reasonably request.

        Section 8.2 Maintenance  of   Existence;   Conduct   of   Business.
  Borrower will, and will cause each of  its Subsidiaries to, preserve  and
  maintain  its  corporate  existence  and  all  of  its  material  leases,
  privileges, licenses, Permits, franchises, qualifications and rights that
  are necessary  in the ordinary  conduct of its  business.  Borrower will,
  and will  cause each of  its Subsidiaries to, conduct its  business in an
  orderly and efficient manner in accordance with good business practices.

        Section 8.3 Maintenance  of Properties.    Borrower will,  and will
  cause each of its Subsidiaries to, maintain, keep and preserve all of its
  Properties  necessary in  the  proper  conduct of  its business  in  good
  repair, working order and condition (ordinary wear and tear excepted) and
  make  all necessary  repairs,  renewals,  replacements,  betterments  and
  improvements thereof; provided, however, that nothing in this Section 8.3
  shall prevent Borrower or any of its Subsidiaries from discontinuing  the
  operation or maintenance of any of its Properties if such  discontinuance
  is, in the judgment of Borrower, desirable in the conduct of its business
  or the business of any Subsidiary.

        Section 8.4 Taxes and  Claims.  Borrower will,  and will cause each
  of  its Subsidiaries to, pay or discharge at or before maturity or before
  becoming  delinquent (a) all taxes, levies,  assessments and governmental
  charges imposed  on it or its  income or profits or  any of its Property,
  and  (b) all lawful  claims for  labor, material  and supplies  which, if
  unpaid, might become a Lien upon any of its Property;  provided, however,
  that neither  Borrower nor any  of its Subsidiaries shall be  required to
  pay  or discharge  any tax,  levy, assessment  or governmental  charge or
  claim  for labor,  material  or supplies  whose amount,  applicability or
  validity  is being  contested in  good  faith by  appropriate proceedings
  being  diligently pursued  and  for which  adequate  reserves  have  been
  established under GAAP.

        Section 8.5 Insurance.   Borrower will, and will  cause each of its
  Subsidiaries to, keep insured by financially sound and reputable insurers
  all Property of a character  usually insured by responsible  corporations
  engaged in the same or a similar business similarly situated against loss
  or damage of the kinds and in the amounts  customarily insured against by
  such entities  and carry  such other insurance  as is  usually carried by
  such  entities.    Such   insurance  shall  be  written   by  financially
  responsible  companies   selected  by   Borrower  which  are   reasonably
  acceptable to the Required Banks.  Each policy of insurance shall provide
  that it  will not be canceled,  amended or reduced  except after not less
  than ten days' prior  written notice to the Agent.  Borrower  will advise
  the Agent promptly of any policy cancellation, reduction or amendment.

        Section 8.6 Inspection Rights.   Borrower will, and will cause each
  of  its Subsidiaries to,  permit representatives and agents  of the Agent
  and each Bank, during normal business hours and upon reasonable notice to
  Borrower, to examine, copy  and make extracts from its books and records,
  to visit  and inspect its rigs  and other Properties  and to  discuss its
  business,  operations  and  financial  condition  with  its  officers and
  independent certified  public accountants  (provided that  Agent and Bank
  shall provide Borrower reasonable opportunity  to participate in any such
  discussions between or among (a) Agent and Banks  and (b) the independent
  certified  public  accountants   of  Borrower  and  their  Subsidiaries).
  Borrower  shall authorize  each  of its  Subsidiaries to  authorize their
  accountants in  writing (with a  copy to  the Agent) to  comply with this
  Section 8.6.

        Section 8.7 Keeping  Books and  Records.   Borrower will,  and will
  cause each of  its Subsidiaries to, maintain appropriate books  of record
  and account in  accordance with GAAP consistently applied in  which true,
  full and  correct entries will be made  of all their  respective dealings
  and business affairs.  If any changes in accounting principles from those
  used in the preparation of the financial statements referenced in Section
  8.1  are hereafter  required  or permitted  by  GAAP and  are  adopted by
  Borrower  or  any  of  its  Subsidiaries  with  the  concurrence  of  its
  independent certified public accountants and such changes in  GAAP result
  in a change in the method of calculation or the interpretation of  any of
  the financial  covenants,  standards or  terms found  in Section  8.1  or
  Article 10  or any  other provision of  this Agreement,  Borrower and the
  Required Banks agree to  amend any such affected  terms and provisions so
  as to reflect such changes in  GAAP with the result that the criteria for
  evaluating Borrower's or  such Subsidiaries' financial condition shall be
  the same after such changes  in GAAP as if  such changes in GAAP  had not
  been made; provided, that until any necessary amendments have been  made,
  the  certificate required  to be  delivered under  Section 8.1(d)  hereof
  demonstrating  compliance  with  Article  10  shall  include calculations
  setting forth  the adjustments from the  relevant items  as shown in  the
  current  financial  statements  based  on the  changes  to  GAAP  to  the
  corresponding items  based on  GAAP as used in  the financial  statements
  referenced in Section 7.2(a), in order to demonstrate how such  financial
  covenant compliance was derived from the current financial statements.

        Section 8.8 Compliance with  Laws.   Borrower will,  and will cause
  each  of its  Subsidiaries to,  comply with  all applicable  Governmental
  Requirements,  except for instances of noncompliance that could not have,
  individually or in the aggregate, a Material Adverse Effect.

        Section 8.9 Compliance  with Agreements.   Borrower will,  and will
  cause each of its Subsidiaries to, comply  in all material respects  with
  all agreements, contracts and instruments binding on it or affecting  its
  Properties  or  business.    Borrower will  comply  with  all  terms  and
  provisions  of the  Senior Debt  Documents  and Senior  Subordinated Debt
  Documents which  are intended  to benefit the holders  of any  "Permitted
  Indebtedness" and the Agent and the Banks as beneficiaries of  "Permitted
  Liens" (as such terms are defined in the Indenture  and the Note Purchase
  Agreement, respectively),  including, without limitation,  the terms  and
  provisions of Sections  4.16 and 4.10 of the Indenture  and Sections 8.13
  and 8.07 of the Note Purchase Agreement.

        Section 8.10      Further  Assurances.   Borrower  will,  and  will
  cause each  of  its Subsidiaries  to, execute  and deliver  such  further
  agreements, documents and instruments and take such further action as may
  be  requested by  the Agent to  carry out the provisions  and purposes of
  this  Agreement  and  the  other  Loan  Documents  and  to  evidence  the
  Obligations.

        Section 8.11      ERISA.   Borrower  will, and  will cause  each of
  Borrower Members to, comply with all minimum funding requirements and all
  other material  requirements of ERISA,  if applicable, so  as not to give
  rise to any liability thereunder.

        Section 8.12      No Consolidation in Bankruptcy.   Borrower  will,
  and  will cause each  of its  Subsidiaries to, (a) maintain  corporate or
  partnership  (as applicable) records  and books of account  separate from
  those of any other entity, except that Borrower may commingle proceeds of
  the Receivables in the Concentration Account, (b) not commingle its funds
  or assets with those of any other entity,  and (c) except for consents or
  meetings to approve the transactions contemplated by this Agreement,  the
  Acquisition  Loans  Credit  Agreement  and  the  Revolving  Loans  Credit
  Agreement, provide  that its board  of directors or,  with respect to any
  partnership, analogous  managing body will  hold all appropriate meetings
  which will not be jointly held with any Subsidiary or Affiliate.

                                  ARTICLE 9

                              Negative Covenants

        Borrower covenants and  agrees that, as long as the  Obligations or
  any part thereof are outstanding or any Bank has any Commitment hereunder
  or  any Letter of  Credit remains outstanding, Borrower  will perform and
  observe, or cause to be performed and observed, the following covenants:

        Section 9.1 Debt.   Borrower will  not, and will not  permit any of
  its  Subsidiaries  (other  than  Non-Recourse  Subsidiaries)  to,  incur,
  create, assume or permit to exist any Debt, except:

              (a)   Debt  pursuant  hereto and  Debt  of  Borrower  and its
        Subsidiaries  to  the  Revolving  Loans  Credit  Agreement  and the
        Acquisition Loans Credit Agreement.

              (b)   Existing Debt  identified in the  Form 10-Q of Borrower
        for  the quarter ended  June 30, 1997, and  renewals, extensions or
        refinancings of any of such Debt referred to in this Section 9.1(b)
        which do not increase the outstanding principal amount of such Debt
        and the  terms  and provisions  of which  are not  materially  more
        onerous than the terms  and conditions of such Debt on the  Closing
        Date;

              (c)   Purchase money  Debt secured  by purchase  money Liens,
        which Debt  and  Liens are  permitted  under and  meet all  of  the
        requirements of clause (g) of the definition of Permitted Liens;

              (d)   Intercompany Debt  between  Borrower  and  any  of  its
        Subsidiaries  incurred  in  the  ordinary  course  of  business  or
        consistent with prudent business practices; provided, however, that
        any and all of  the Debt permitted pursuant to this Section  9.1(d)
        shall  be unsecured,  and, if  evidenced by  instruments,  shall be
        evidenced by  instruments satisfactory to the  Agent which  will be
        pledged to  the Agent for  the benefit  of the Banks  pursuant to a
        security agreement in form  and substance satisfactory to the Agent
        (except if  and to the extent  that such  a pledge  would give  the
        holders  of the Senior Notes  the contract right to also obtain the
        benefit of such a pledge);

              (e)   Debt under Currency  Hedge Agreements and Interest Rate
        Protection Agreements, provided that (i) each counterparty shall be
        rated in one of  the two highest rating categories of Standard  and
        Poor's Corporation or  Moody's Investors Service, Inc. and (ii) the
        aggregate  notional amount  (as to  Borrower and  its Subsidiaries,
        other  than  Non-Recourse   Subsidiaries)  of  all  Currency  Hedge
        Agreements  and  Interest  Rate  Protection  Agreements   to  which
        Borrower or any  of its  Subsidiaries is a party  shall not  exceed
        $10,000,000 at any time outstanding;

              (f)   Debt of Borrower or any of its Subsidiaries incurred in
        the ordinary  course of business in  respect of  performance bonds,
        surety bonds and appeal bonds in an aggregate principal amount  (as
        to Borrower and  its Subsidiaries) not to exceed $5,000,000  at any
        time outstanding;

              (g)   Debt of  a Person who becomes a  Subsidiary of Borrower
        pursuant  to a  transaction permitted  by this  Agreement occurring
        after the  Closing Date,  which Debt was outstanding  prior to  the
        date  on which  such  Subsidiary  was  acquired  (other  than  Debt
        incurred as a result of, or in anticipation of, such transaction);

              (h)   Permitted Refinancing Debt; and

              (i)   Debt  the  incurrence of  which, after  giving proforma
        effect  to  such  incurrence,  would not  result  in  the  Proforma
        Interest Coverage Ratio exceeding 2.50 to 1.00;

  provided, however, that, other than loans by a Subsidiary  of Borrower to
  Borrower or any other Subsidiary of Borrower, no Debt described in clause
  (c),  (d), (g), (h) or (i) preceding may be  incurred if a Default exists
  at the time of  such incurrence or would result therefrom.   For purposes
  of clause (d) of this Section 9.1, the term   Borrower  shall include the
  Guarantors  to the extent  necessary so that the  requirements of Section
  4.12 of the Indenture and Section 8.09 of the Note Purchase Agreement are
  not violated by the Borrower and the Guarantors.

        Section 9.2 Limitation on Liens.   Borrower will not, and  will not
  permit any of its Subsidiaries (other than Non-Recourse Subsidiaries) to,
  incur, create,  assume  or permit  to exist  any  Lien  upon any  of  its
  Property  or revenues,  whether now  owned or hereafter  acquired, except
  Permitted  Liens.   Borrower will  not, and  will not  permit any  of its
  Subsidiaries to, incur,  create, assume or permit  to exist any Lien upon
  any  Capital Stock, whether  now outstanding or hereafter  issued, of any
  Subsidiary of Borrower (other than a Non-Recourse Subsidiary).

        Section 9.3 Mergers,  Etc.   Except  pursuant  to  the  R&B Merger,
  Borrower  will  not become  a  party  to a  merger  or  consolidation, or
  wind-up, dissolve or liquidate  itself.  Borrower will  not, and will not
  permit  any of  its  Subsidiaries  to,  purchase  or  acquire  all  or  a
  substantial  part of the business, assets or Properties  of any Person if
  such purchase or acquisition (i) could reasonably be expected to cause or
  result in  the  occurrence  of a  Default  or  (ii) could  reasonably  be
  expected to have a material adverse effect upon the financial position or
  performance of Borrower.


        Section 9.4 Restricted Payments.   Borrower will  not, and will not
  permit any of its Subsidiaries (other than Non-Recourse Subsidiaries) to,
  make any Restricted Payments, except:

              (a)   Payroll advances in the ordinary course of business not
        to exceed an aggregate amount of $1,000,000 at any one time;

              (b)   Other advances  and  loans to  officers,  employees  or
        shareholders of Borrower or any of its Subsidiaries, so long as the
        aggregate  principal  amount  (as  to  Borrower  and  all   of  its
        Subsidiaries)  of  any  such  advances  and loans  does  not exceed
        $500,000 at any time outstanding;

              (c)   Payments of accrued interest and expenses with  respect
        to  the Senior Debt and  the Senior  Subordinated Debt when  due in
        accordance  with   the  Senior   Debt  Documents   and  the  Senior
        Subordinated Debt Documents,  respectively, and regularly scheduled
        payments  of principal  and accrued  interest with  respect  to the
        Senior Floating Rate Notes and Senior Subordinated Debt when due in
        accordance with  the terms  of the Senior Floating  Rate Notes  and
        Senior Subordinated Debt Documents, respectively;

              (d)   Repayment  of Debt  permitted pursuant  to Section 9.1,
        which  repayment occurs  pursuant to  a refinancing  transaction in
        which the resulting Debt constitutes Permitted Refinancing Debt;

              (e)   Restricted  Payments   not  exceeding   $2,000,000   in
        aggregate amount  (as  to Borrower  and all  of  its  Subsidiaries)
        during any fiscal year;

              (f)   Restricted Payments made to redeem  any preferred stock
        or  Redeemable Stock issued after the  Closing Date at  a price not
        exceeding the issue price thereof;

              (g)   Payment  of  dividends  on any  preferred  stock issued
        after the Closing Date;

              (h)   Investments permitted pursuant to Section 9.5; and

              (i)   Loans by  a Subsidiary  of Borrower to  Borrower or any
        other Subsidiary of Borrower;

  provided, however, that, except for loans described in clause (i)  above,
  no  such  Restricted   Payments  otherwise  permitted  pursuant  to  this
  Section 9.4 may be made to any Person if a Default exists  at the time of
  such Restricted  Payment or would  result therefrom or may be  made if an
  Event of Default exists at the time  of such Restricted Payment or  would
  result therefrom.   For purposes of  clause (a) of  this Section 9.4, the
  term  Borrower  shall  include the Guarantors to the extent  necessary so
  that the requirements  of Section 4.12 of the Indenture and  Section 8.09
  of the Note  Purchase Agreement are not violated  by the Borrower and the
  Guarantors.

        Section 9.5 Investments.   Borrower will  not, and  will not permit
  any  of its  Subsidiaries to  make or  permit to  remain outstanding  any
  advance,  loan,  extension  of  credit  or  capital  contribution  to  or
  investment in  any Person,  or purchase or  own any  stock, bonds, notes,
  debentures  or other  securities of any  Person, or be or  become a joint
  venturer with  or  partner of  any Person  (all such  transactions  being
  herein called "Investments"), except:

              (a)   Investments  in obligations  or securities  received in
        settlement of  debts (created  in the ordinary  course of business)
        owing to Borrower;

              (b)   Investments existing as  of the Closing Date identified
        on Schedule 9.5 hereto;

              (c)   Investments in  securities issued or guaranteed  by the
        United States or  any agency thereof with maturities of  four years
        or less from the date of acquisition;

              (d)   Investments in certificates of  deposit and  Eurodollar
        time deposits with  maturities of six months  or less from the date
        of acquisition, bankers'  acceptances with maturities not exceeding
        six months and overnight bank deposits, in each  case with any Bank
        or with any domestic commercial bank having capital and surplus  in
        excess of $100,000,000;

              (e)   Investments in  repurchase obligations  with a  term of
        not more than seven days for  securities of the types  described in
        clause (c) above with any Bank or with any domestic commercial bank
        having capital and surplus in excess of $100,000,000;

              (f)   Investments in  commercial paper  of a domestic  issuer
        rated A-1  or  better  or  P-1  or  better  by  Standard  &  Poor's
        Corporation  or  Moody's  Investors  Services,  Inc., respectively,
        maturing not more than six months from the date of acquisition;

              (g)   Investments in shares of money market mutual or similar
        funds having assets in excess of $100,000,000;

              (h)   Investments  in a  Subsidiary  of Borrower  that  is an
        obligor on the Revolving Loans;

              (i)   Advances  and  loans  to  officers  and  employees   of
        Borrower or  any  of its  Subsidiaries, so  long as  the  aggregate
        principal amount  (as to Borrower and  all of its Subsidiaries)  of
        such  advances and  loans  does  not exceed  $500,000 at  any  time
        outstanding;

              (j)   Investments represented by that portion of the proceeds
        from Asset  Dispositions permitted  pursuant to  Section 9.8, which
        proceeds are  either not  Cash Proceeds or  are deemed  to be  Cash
        Proceeds pursuant to the second sentence of the definition of "Cash
        Proceeds";

              (k)   The contribution  of the Non-Recourse  Rigs to the Non-
        Recourse Subsidiaries;

              (l)   Debt permitted pursuant  to Section 9.3  and Restricted
        Payments permitted pursuant to Section 9.4; and

              (m)   Other  Investments  in   an  aggregate  amount  (as  to
        Borrower and all of its  Subsidiaries) not to exceed the sum of the
        following at any  time outstanding: (i) $75,000,000, minus (ii) the
        aggregate amount paid by Borrower and all of its Subsidiaries after
        the Closing  Date in  redemption of  preferred stock  or Redeemable
        Stock.

  provided, however, that  no Investments may be made by  Borrower pursuant
  to clauses (h),  (i), (j), (k), (l) or  (m) preceding if a Default exists
  at the time of such Investment or  would result therefrom.  For  purposes
  of clause (h) of this  Section 9.5, the term  Borrower  shall include the
  Guarantors  to the extent  necessary so that the  requirements of Section
  4.12 of the Indenture and Section 8.09 of the Note Purchase Agreement are
  not violated by the Borrower and the Guarantors.

        Section 9.6 Limitation on Issuance of Capital Stock.  Borrower will
  not at  any time  on or  after the  Closing Date  issue, sell,  assign or
  otherwise dispose  of (a) any  of its  Capital Stock,  (b) any securities
  exchangeable  for or convertible  into or carrying any  rights to acquire
  any of  its Capital Stock  or (c) any  option, warrant or  other right to
  acquire  any of its Capital Stock; provided, however, that, if and to the
  extent not  otherwise  prohibited by  this Agreement  or the  other  Loan
  Documents (i) Borrower  may issue additional shares  of its Capital Stock
  or  such securities,  options,  warrants  or  other  rights,  other  than
  Redeemable  Stock, for  full  and fair  consideration,  (ii) Borrower may
  issue stock  in accordance with  the terms  of options and warrants  that
  were  outstanding  on  the  date  hereof, and  (iii)  Borrower  may grant
  compensatory stock options in the  ordinary course of business consistent
  with past practices and issue shares upon  the exercise of such  options.
  For purposes  of clause (c)(ii) of this Section 9.6,  the term  Borrower
  shall  include  the  Guarantors  to the  extent  necessary  so  that  the
  requirements of  Section 4.12  of the Indenture  and Section  8.09 of the
  Note  Purchase  Agreement  are  not violated  by  the  Borrower  and  the
  Guarantors.

        Section 9.7 Transactions  With  Affiliates.    Except  for  (a) the
  payment  of salaries in  the ordinary course of  business consistent with
  prudent business practices,  (b) the furnishing of employment benefits in
  the  ordinary  course   of  business  consistent  with  prudent  business
  practices, (c) the  transactions permitted  by Section  9.13, and (d) the
  transactions specified in  Schedule 9.7, Borrower will not, and  will not
  permit any of its Subsidiaries to, enter into any transaction, including,
  without limitation,  the purchase,  sale or exchange of  Property or  the
  rendering  of  any  service,  with any  Affiliate  of  Borrower  or  such
  Subsidiary,  except  in  the  ordinary course  of  and  pursuant  to  the
  reasonable requirements  of Borrower's or  such Subsidiary's business and
  upon fair  and reasonable  terms no less  favorable to  Borrower or  such
  Subsidiary than would be obtained in a comparable arms-length transaction
  with a Person not an Affiliate of Borrower or such Subsidiary.

        Section 9.8 Disposition of  Property.  Borrower  will not, and will
  not permit any of its Subsidiaries (other than Non-Recourse Subsidiaries)
  to, enter into an Asset Disposition, directly or indirectly, except:

              (a)   Asset  Dispositions pursuant  to which  (i) Borrower or
        its Subsidiary, as  the case may be, receives consideration  at the
        time of such disposition at least equal to the fair market value of
        such  Property,  except in  the  case  of  (A) a  Bargain  Purchase
        Contract (as such term is defined in the Indenture) entered into in
        the ordinary course  of business, (B) a transfer of a  drilling rig
        or rigs  and  related equipment  between Borrower  and one  of  its
        Subsidiaries if no Default exists  at the time of  such transfer or
        would result therefrom,  or (C) an Asset Disposition resulting from
        the requisition of title to, seizure or forfeiture of any  Property
        or  assets or any actual or constructive total loss or an agreed or
        compromised total loss;  (ii) at  least 75%  of such  consideration
        consists of Cash Proceeds (or the assumption of Debt of Borrower or
        such Subsidiary relating to the Capital Stock or Property that  was
        the subject of such disposition and the release of Borrower or such
        Subsidiary from  such indebtedness); and  (iii) after giving effect
        to  such  disposition, the  total  noncash  consideration  from all
        dispositions  held  by Borrower  and  its  Subsidiaries,  including
        noncash  consideration  described in  the  second  sentence  of the
        definition  of "Cash  Proceeds" which  is  not converted  into cash
        within 12  months after the  related dispositions, then outstanding
        is not greater than $25,000,000;

              (b)   the sale  of drill-string components, inventory  (other
        than  drilling rigs)  and obsolete  and  worn-out equipment  in the
        ordinary course of business;

              (c)   any drilling contract,  charter (bareboat or otherwise)
        or  other  lease  of  property entered  into  by  Borrower  or  any
        Subsidiary  (including,  without  limitation, bareboat  charters by
        Borrower to any  Subsidiary other than any Non-Recourse Subsidiary)
        in the ordinary course of business; provided, however, that (i) any
        such contract,  charter or other  lease affecting any Drilling  Rig
        shall be for  full and fair consideration payable to  Borrower, and
        with respect to such contracts, charters or other leases other than
        drilling contracts entered into in the ordinary course of business,
        shall be in form and substance satisfactory to the  Agent and shall
        expressly  include  terms  and  provisions  in  form  and substance
        satisfactory  to the Agent  to the effect that  the parties thereto
        acknowledge the existing  Lien on  such Drilling  Rig securing  the
        Acquisition  Loans Obligations  and agree  that such  Lien securing
        such obligations is prior  to, and will not in any way  be affected
        by, such contract, charter or other lease and (ii) neither Borrower
        nor any  of its  Subsidiaries shall enter into  any such  contract,
        charter or lease with a Non-Recourse Subsidiary.

              (d)   a Restricted Payment permitted under Section 9.4 or any
        Investment permitted under Section 9.5;

              (e)   the  transfer of the Non-Recourse  Rigs to  one or more
        Non-Recourse Subsidiaries;

              (f)   the conveyance,  transfer or other  disposition of rigs
        pursuant  to which such rigs are exchanged for rigs of a like kind,
        i.e. barge rigs may be exchanged for barge rigs and jackup rigs may
        be exchanged for jackup rigs, having an equivalent value; and

              (g)   issuances  or dispositions  of Capital  Stock permitted
        under Section 9.6.

  Provided,  in  no  event  shall  Borrower  sell,  transfer,  encumber  or
  otherwise dispose of any Drilling Rig, except for:

              (a)   Permitted Liens;

              (b)   Drilling Contracts entered into in the  ordinary course
        of business; and

              (c)   Disposition of Drilling  Rig components that  have been
        replaced by components of equal or better quality.

        Section 9.9 Sale  and Leaseback.   Except  for transactions  in the
  ordinary course of business involving real or personal Property having an
  aggregate  fair market  value of  $30,000,000 or  less and  providing for
  annual  lease  payments  in  an  annual aggregate  amount  not  to exceed
  $3,000,000,  Borrower  will   not,  and  will  not  permit  any   of  its
  Subsidiaries (other  than Non-Recourse  Subsidiaries) to,  enter into any
  arrangement with any Person  pursuant to which it leases from such Person
  real or personal Property that  has been or is to be sold or transferred,
  directly or indirectly, by it to such Person.

        Section 9.10      Lines of  Business.  Borrower  will not, and will
  not  permit any of  its Subsidiaries to, engage  in any line  or lines of
  business activity other than  the businesses in which they are engaged on
  the Closing Date and lines of business reasonably related thereto.

        Section 9.11      Environmental Protection.  Borrower will not, and
  will not permit any of its Subsidiaries to, (a) use (or permit any tenant
  to  use) any  of its  Properties for  the handling,  processing, storage,
  transportation or disposal of any Hazardous Material except in compliance
  with applicable Environmental  Laws, (b) generate any Hazardous  Material
  except in compliance  with applicable Environmental Laws, (c) conduct any
  activity that is  likely to cause a Release  or threatened Release of any
  Hazardous   Material  in   violation   of  any   Environmental   Law,  or
  (d) otherwise conduct  any activity or  use any of  its Properties in any
  manner that violates or  is likely  to violate any  Environmental Law  or
  create any  Environmental Liabilities  for which Borrower or  any of  its
  Subsidiaries  would be  responsible, except  for circumstances  or events
  described in  clauses  (a) through  (d) preceding  that could  not  have,
  individually or in the aggregate, a Material Adverse Effect.

        Section 9.12      Intercompany  Transactions.  Except   as  may  be
  expressly permitted or required by the Loan Documents or except as may be
  expressly permitted  or  required by  the Senior  Debt Documents  or  the
  Senior  Subordinated  Debt  Documents  as  summarized  on  Schedule 9.12,
  Borrower will not, and will not permit any of its Subsidiaries to, create
  or otherwise cause or permit to  exist or become effective any consensual
  encumbrance or restriction of any kind on  the ability of any  Subsidiary
  (other than  a Non-Recourse Subsidiary) to (a) pay dividends  or make any
  other distribution  to Borrower  or any of its  Subsidiaries (other  than
  Non-Recourse Subsidiaries) in  respect of such Subsidiary's Capital Stock
  or with respect  to any other  interest or participation  in, or measured
  by,  its  profits,  (b) pay any  Debt  owed to  Borrower  or  any  of its
  Subsidiaries (other than Non-Recourse Subsidiaries), (c) make any loan or
  advance to Borrower  or any of its Subsidiaries (other  than Non-Recourse
  Subsidiaries), or  (d) sell,  lease or  transfer any  of its Property  to
  Borrower or  any of  its Subsidiaries  (other Non-Recourse Subsidiaries).
  Nothing contained in this Section  9.12 shall be deemed  to constitute an
  encumbrance or restriction prohibited by Section 4.12 of the Indenture or
  Section 8.09 of the Note Purchase Agreement.

        Section 9.13      Consulting  and  Management  Fees.    Other  than
  reasonable  consulting fees paid  to Affiliates of Borrower  on an arm's-
  length basis for specific services rendered not to exceed $750,000 in the
  aggregate during  any  calendar year,  Borrower will  not, and  will  not
  permit  any of  its Subsidiaries  to, pay  any management,  consulting or
  similar fees (excluding directors' fees and legal fees) to any  Affiliate
  of  Borrower or to any director,  officer or employee of  Borrower or any
  Affiliate of Borrower.

        Section 9.14      Modification  of Other Agreements.  Borrower will
  not,  and will  not permit  any  of its  Subsidiaries  to, consent  to or
  implement any termination, amendment, modification,  supplement or waiver
  of  (a) the  Senior  Debt  Documents,  (b) the  Senior  Subordinated Debt
  Documents, (c) the certificate  of incorporation or bylaws or partnership
  agreement   or   certificate   of   limited   partnership   or  analogous
  constitutional  documents of Borrower  or any of its  Subsidiaries if the
  same  could have  a Material  Adverse Effect,  or (d) any  other Material
  Contract  to which it is a party  or any Permit which it possesses if the
  same  could  have  a  Material Adverse  Effect.    Without  limiting  the
  generality of and in addition to the foregoing, Borrower will not consent
  to or  implement any termination,  amendment, modification, supplement or
  waiver of the Senior Debt Documents or Senor Subordinated Debt  Documents
  (i) to  increase  the  principal  amount of  any  Senior  Debt  or  Senor
  Subordinated Debt, (ii) to shorten  the maturity of, or  any date for the
  payment of  any principal of or  interest on, any  Senior Debt  or Senior
  Subordinated  Debt, (iii) to  increase the  rate of  interest on  or with
  respect to any Senior Debt or Senior Subordinated Debt, (iv) to otherwise
  amend  or modify the payment or subordination terms of any Senior Debt or
  Senior Subordinated  Debt,  (v) to increase  any  cost,  fee  or  expense
  payable  by  Borrower  or  any  its  Subsidiaries,  (vi) to  provide  any
  collateral  or security for payment or  collection of any  Senior Debt or
  Senior Subordinated Debt without  the written consent of Required  Banks,
  or  (vii) in  any  other  respect  that could  be  materially  adverse to
  Borrower and its Subsidiaries taken as a whole.

        Section 9.15      ERISA.  Borrower will not:

              (a)   allow, or take (or permit  any Borrower Member to take)
        any action which would cause, any unfunded  or unreserved liability
        for benefits  under any Plan (exclusive of  any Multiemployer Plan)
        to exist or to be  created that exceeds $4,000,000  with respect to
        any such Plan  or $8,000,000 with respect to  all such Plans in the
        aggregate; or

              (b)   with respect to  any Multiemployer Plan, allow, or take
        (or  permit any  ERISA Affiliate  to take)  any action  which would
        cause, any unfunded or unreserved  liability for benefits under any
        Multiemployer Plan to exist or  to be created, either  individually
        as to any such Plan  or in the aggregate as to all such Plans, that
        could, upon  any partial or complete withdrawal from or termination
        of  any such Multiemployer  Plan or Plans, have  a Material Adverse
        Effect.

                                  ARTICLE 10

                             Financial Covenants

        Borrower covenants and  agrees that, as long as the  Obligations or
  any part thereof are outstanding or any Bank has any Commitment hereunder
  or  any Letter of  Credit remains outstanding, Borrower  will perform and
  observe the following covenants:

        Section 10.1      Consolidated Current Ratio.  Borrower will at all
  times  maintain a  Consolidated Current Ratio  of not  less than  1.00 to
  1.00.

        Section 10.2      Consolidated Tangible Net Worth.   Borrower  will
  at all times  maintain Consolidated Tangible  Net Worth in  an amount not
  less  than  the  sum  of  (a) $250,000,000,  plus  (b) 50%  of cumulative
  Consolidated  Net Income  during  any fiscal  quarter  ending  after  the
  Closing  Date if, but  only if, such Consolidated Net  Income during such
  fiscal quarter  is positive,  plus (c) 50%  of all  Net Proceeds of  each
  Equity Issuance after the Closing Date.

        Section 10.3      Consolidated Interest Coverage  Ratio.   Borrower
  will not  permit the Consolidated Interest Coverage  Ratio, calculated as
  of the end of each fiscal quarter of Borrower  commencing with the fiscal
  quarter  ending September  30,  1996,  for the  four fiscal  quarters  of
  Borrower then most recently ended, to be less than 2.50 to 1.00.


                                  ARTICLE 11

                                   Default

        Section 11.1      Events of  Default.  Each  of the following shall
  be deemed an "Event of Default":

              (a)   Borrower (i) shall  fail to  pay, repay  or prepay when
        due any amount of principal owing to the Agent or any Bank pursuant
        to  this Agreement or  any other Loan Document,  (ii) shall fail to
        pay  within one  day of  the date  when due  any amount  of accrued
        interest owing to the Agent or any Bank pursuant  to this Agreement
        or  any other Loan  Document, or (iii) or shall fail  to pay within
        five days  of the date  when due any  fee or other amount  or other
        Obligation (other than principal or interest) owing to the Agent or
        any Bank pursuant to this Agreement or any other Loan Document.

              (b)   Any representation  or warranty made  or deemed made by
        Borrower  or  any  Loan  Party  in  any Loan  Document  or  in  any
        certificate, report, notice or financial statement furnished at any
        time in connection  with this Agreement or any other  Loan Document
        shall be false,  misleading or  erroneous in  any material  respect
        when made or deemed to have been made.

              (c)   Borrower  or  any Loan  Party  shall  fail  to perform,
        observe  or  comply with  any  other  covenant,  agreement  or term
        contained in this Agreement or any other Loan Document (other  than
        covenants to pay the Obligations) and such failure is not  remedied
        or waived  within 15 days  after the  Agent or any  Bank shall have
        notified Borrower of  such failure or, if a different  grace period
        is expressly made  applicable in such other  Loan Documents, within
        such applicable grace period.

              (d)   Any  of the  Loan  Parties shall  admit in  writing its
        inability to,  or be  generally unable  to, pay its  debts as  such
        debts become due.

              (e)   Any  Loan Party shall  (i) apply for or consent  to the
        appointment  of,  or  the  taking  of  possession  by,  a receiver,
        custodian, trustee, examiner,  liquidator or the like  of itself or
        of all or any substantial part of its Property, (ii) make a general
        assignment  for  the benefit  of  its  creditors,  (iii) commence a
        voluntary case under  the United States Bankruptcy Code (as  now or
        hereafter in  effect, the  "Bankruptcy Code"),  (iv) institute  any
        proceeding  or file  a petition  seeking to  take advantage  of any
        other Debtor  Relief Law,  (v) fail to controvert in  a timely  and
        appropriate  manner, or acquiesce in writing to, any petition filed
        against it  in an  involuntary case under the  Bankruptcy Code,  or
        (vi) take  any  corporate  or  other  action  for  the  purpose  of
        effecting any of the foregoing.

              (f)   A proceeding  or case  shall be  commenced, without the
        application, approval or consent  of any of the Loan Parties in any
        court  of competent  jurisdiction, seeking  (i) its reorganization,
        liquidation,  dissolution,   arrangement  or  winding-up,  or   the
        composition or readjustment of its debts, (ii) the appointment of a
        receiver, custodian,  trustee, examiner, liquidator  or the like of
        any of the Loan  Parties or of all or  any substantial part of  its
        Property, or  (iii) similar relief  in respect of any  of the  Loan
        Parties  under any Debtor  Relief Law, and such  proceeding or case
        shall  continue  undismissed,  or  an  order,  judgment  or  decree
        approving or  ordering any  of the foregoing shall  be entered  and
        continue unstayed and  in effect, for a period  of 60 or more days;
        or  an order  for relief against  any of the Loan  Parties shall be
        entered in an involuntary case under the Bankruptcy Code.

              (g)   Any of  the Loan  Parties shall  fail to  discharge (or
        fail to  have  continually  stayed until  subsequently  discharged)
        within a  period  of 30  days after  the commencement  thereof  any
        attachment,  sequestration, forfeiture  or  similar  proceeding  or
        proceedings involving  an aggregate amount  in excess of $3,000,000
        against any of its Properties.

              (h)   A final judgment or judgments for the payment  of money
        in excess  of $5,000,000  in the aggregate  shall be  rendered by a
        court or courts against  the Loan Parties or any of them  on claims
        not covered by insurance or as  to which the insurance  carrier has
        denied  responsibility and the  same shall not be  discharged, or a
        stay of  execution thereof  shall not be procured,  within 30  days
        from the  date of  entry thereof  and the  Loan Parties shall  not,
        within said period  of 30 days, or  such longer period during which
        execution of the same shall have been stayed, appeal therefrom  and
        cause the execution thereof to be stayed during such appeal.

              (i)   Any  of the  Loan Parties  shall fail  to pay  when due
        (including  any  applicable  grace  period)  any  principal  of  or
        interest on any  Debt or Debts  (other than the  Obligations or any
        Non-Recourse Debt) having a principal amount of at least $3,000,000
        individually, or  $5,000,000 in the  aggregate, or the maturity  of
        any such Debt  or Debts  shall have been accelerated,  or any  such
        Debt or Debts shall  have been required to be prepaid prior  to the
        stated maturity thereof.

              (j)   Any event shall have  occurred (and shall not have been
        waived  or otherwise cured)  that permits any holder  or holders of
        such Debt or any Person  acting on behalf of such holder or holders
        to  accelerate the maturity  of such Debt or  require prepayment of
        such Debt.

              (k)   Any event shall have occurred (and  shall not have been
        waived or otherwise cured) that, with the giving of notice or lapse
        of time or both, would permit any holder or holders of such Debt or
        any Person acting on behalf of such holder or holders to accelerate
        the maturity of such Debt  or require the prepayment  of such Debt,
        and such default shall have continued for a period of 30 days after
        a Responsible Officer of Borrower obtains actual knowledge of  such
        default.

              (l)   This Agreement  or any other  Loan Document shall cease
        to be  in full force and effect or shall be  declared null and void
        or  the validity  or enforceability thereof  shall be  contested or
        challenged by any  Loan Party  or any of its  shareholders, or  any
        Loan  Party  shall  deny  that it  has  any  further  liability  or
        obligation under any of the Loan Documents.

              (m)   Any of  the following events shall occur  or exist with
        respect  to   any  Loan  Party  or  any  ERISA  Affiliate:  (i) any
        Prohibited  Transaction  involving  any  Plan;  (ii) any Reportable
        Event  with respect  to any  Pension Plan;  (iii) the  filing under
        Section 4041  of ERISA  of  a notice  of  intent to  terminate  any
        Pension Plan or the termination of any Pension Plan; (iv) any event
        or circumstance that might constitute grounds entitling the PBGC to
        institute  proceedings   under  Section  4042   of  ERISA  for  the
        termination of, or for the appointment of a trustee to  administer,
        any  Pension Plan,  or  the institution  by  the PBGC  of  any such
        proceedings; (v) any  "accumulated funding deficiency" (as  defined
        in Section 406 of ERISA or Section 412 of the Code), whether or not
        waived, shall exist  with respect to any Plan; or  (vi) complete or
        partial  withdrawal under Section 4201 or 4204 of ERISA from a Plan
        or the  reorganization, insolvency,  or termination  of any Pension
        Plan; and  in each  case above, such event  or condition,  together
        with  all other  events or  conditions, if  any, have  subjected or
        could in the reasonable opinion of the Agent subject any Loan Party
        or  any ERISA Affiliate to any tax, penalty or other liability to a
        Plan,  a   Multiemployer  Plan,  the  PBGC  or  otherwise  (or  any
        combination  thereof)  which  in  the  aggregate  exceed  or  could
        reasonably be expected to exceed $3,000,000.

              (n)   The occurrence of a Change of Control;

              (o)   If, at any time,  the Senior Debt shall (i) cease to be
        either pari passu with, or  subordinate in right of payment to, the
        Notes or the Obligations, (ii) become superior in right of  payment
        to the Notes or the Obligations, or (iii) otherwise have a right to
        any payment  or any security superior  to that of  the Notes or the
        Obligations; or if, at any time, the Senior Subordinated Debt shall
        (A) cease to be subordinate in right of payment to the Notes or the
        Obligations,  (B) become equal  or superior in right  of payment to
        the  Notes or  the Obligations, or  (C) otherwise  have a  right to
        payment or any security equal or superior  to that of the Notes  or
        the Obligations;

              (p)   The occurrence of (i) a "Default" (as such term is used
        or  defined  in any  of the  Senior  Debt Documents  or  the Senior
        Subordinated Debt Documents) under any of the Senior Debt Documents
        or  the Senior  Subordinated Debt  Documents, unless  (A) within 30
        days after a Responsible Officer of Borrower obtains or should have
        obtained actual  knowledge of  such Default, such  Default has been
        waived, cured or  consented to  in accordance with  such documents,
        (B) the  maturity  of the  Loans  has  not  been  accelerated,  and
        (C) such waiver  or  consent is  not made  in connection  with  any
        amendment or  modification of  any such  documents in violation  of
        Section  9.14 hereof  or in  violation  of any  of the  Senior Debt
        Documents  or   the  Senior  Subordinated   Debt  Documents  or  in
        connection with any payment to  the holders of  any Senior Debt  or
        any  Senior Subordinated Debt, (ii) an "Event  of Default" (as such
        term is  used or  defined in  any of  the Senior  Debt Documents or
        Senior Subordinated  Debt Documents)  under any of  the Senior Debt
        Documents  or  Senior  Subordinated Debt  Documents,  or  (iii) any
        acceleration  of  the  maturity  of  any  Senior   Debt  or  Senior
        Subordinated Debt.

              (q)   If,  at   any  time,   (i)  Borrower  or   any  of  its
        Subsidiaries  shall  make,  or  shall  be  required  to  make,  any
        redemption, purchase or  prepayment (whether optional or mandatory)
        with respect to any of the Senior Debt or Senior Subordinated Debt,
        (ii) any event or circumstance shall occur which gives any party to
        the Senior Debt Documents or  Senior Subordinated Debt Documents or
        any holder of any Senior Debt or Senior Subordinated Debt the right
        to request or  require Borrower or any  of its Subsidiaries, as the
        case may be, to redeem, purchase or prepay the Senior Debt or Senor
        Subordinated  Debt,   as  the  case   may  be  (including,  without
        limitation (A) the making of, or the obligation of Borrower or  any
        of its Subsidiaries to make, an Asset  Sale Offer (as such term  is
        defined in the  Indenture) or a Senior  Notes Assets Sale Offer (as
        such term  is defined  in the Note Purchase  Agreement) or  (B) the
        occurrence of a Change of Control (as  such term is defined in  the
        Indenture or the Note Purchase Agreement), or (iii) Borrower or any
        of  its  Subsidiaries shall  initiate or  give (A) any  election or
        notice relating to  any redemption, purchase or prepayment (whether
        optional  or  mandatory)  of  any of  the  Senior  Debt  or  Senior
        Subordinated  Debt or (B) any  election or  notice relating  to any
        defeasance of the Senior Debt or Senior Subordinated Debt.

              (r)   If  at  any time,  there  shall  have  occurred  and be
        continuing  an "Event  of  Default" as  that  term is  used  in the
        Revolving Loans  Credit Agreement  or the  Acquisition Loans Credit
        Agreement.

        Section 11.2      Remedies.   If any  Event of  Default shall occur
  and  be continuing, the Agent may and, if directed by the Required Banks,
  the Agent shall do any one or more of the following:

              (a)   Acceleration.  Declare all outstanding principal of and
        accrued and unpaid interest on the Loans and the other  Obligations
        and all other amounts payable by Borrower under the Loan  Documents
        immediately due and  payable, and the same  shall thereupon  become
        immediately due  and payable, without  notice, demand, presentment,
        notice of  dishonor, notice  of acceleration,  notice of  intent to
        accelerate, protest or other formalities of any kind, all of  which
        are hereby expressly waived by Borrower;

              (b)   Termination of Commitments.  Terminate  the Commitments
        (including, without limitation,  the obligation of the Issuing Bank
        to issue Letters of Credit) without notice to Borrower;

              (c)   Judgment. Reduce any claim to judgment;

              (d)   Foreclosure.  Foreclose  or otherwise enforce  any Lien
        granted to  the Agent for the  benefit of itself  and the  Banks to
        secure  payment and  performance of  the Obligations  in accordance
        with the terms of the Loan Documents; or

              (e)   Rights.    Exercise any  and  all  rights  and remedies
        afforded  by  the  laws  of  the   State  of  Texas  or  any  other
        jurisdiction, by any of the Loan Documents, by equity or  otherwise
        against any or all of the Loan Parties or any other Person;

  provided, however, that upon  the occurrence of an Event of Default under
  Section 11.1(e) or Section  11.1(f), the Commitments of  all of the Banks
  (including,  without limitation,  the obligation  of the Issuing  Bank to
  issue Letters  of Credit) shall  immediately and automatically terminate,
  and the outstanding  principal of and accrued and unpaid interest  on the
  Loans and the other Obligations and all other amounts payable by Borrower
  under  the   Loan  Documents  shall   thereupon  become  immediately  and
  automatically due and payable without notice, demand, presentment, notice
  of  dishonor, notice  of acceleration,  notice  of intent  to accelerate,
  protest  or other  formalities  of  any kind,  all  of which  are  hereby
  expressly waived by Borrower.

        Section 11.3      Cash  Collateral.   If  (a) an Event  of  Default
  shall have occurred and be continuing or  (b) any Letter of Credit shall,
  for whatever reason, remain outstanding after all Loans and Reimbursement
  Obligations  have been paid  in full and all Commitments  have expired or
  terminated,  then  Borrower  shall,  if  requested by  the  Agent  or the
  Required  Banks, pledge  to the  Agent as  security for  the Obligations,
  pursuant  to a  security agreement  or assignment  in form  and substance
  satisfactory to the  Agent, an amount in immediately available  funds (in
  excess of any funds already  pledged or assigned by Borrower to the Agent
  as of the date of  the occurrence of such Event of Default) equal  to the
  then outstanding Letter of Credit Liabilities, such funds to be held in a
  cash  collateral account satisfactory  to the Agent without  any right of
  withdrawal by Borrower.

        Section 11.4      Performance by the Agent.  If Borrower shall fail
  to  perform any covenant or agreement in accordance with the terms of the
  Loan Documents,  the Agent may,  at the direction  of the Required Banks,
  perform or attempt to  perform such  covenant or agreement  on behalf  of
  Borrower.   In such event,  Borrower shall, at the request  of the Agent,
  promptly pay any amount expended by the Agent or  the Banks in connection
  with  such performance  or  attempted  performance to  the Agent  at  the
  Principal  Office,  together  with  interest  thereon  at  the applicable
  Default Rate  from and  including the  date  of such  expenditure to  but
  excluding the date such expenditure is paid in full.  Notwithstanding the
  foregoing,  it is  expressly agreed that neither  the Agent  nor any Bank
  shall have  any liability  or responsibility for the  performance of  any
  obligation of  Borrower under  this Agreement  or any  of the other  Loan
  Documents.

                                  ARTICLE 12

                                  The Agent

        Section 12.1      Appointment,  Powers and  Immunities.   Each Bank
  hereby irrevocably appoints and authorizes the Agent to  act as its agent
  hereunder  and under  the other  Loan Documents with  such powers  as are
  specifically delegated  to the Agent  by the terms of this  Agreement and
  the  other  Loan  Documents,  together with  such  other  powers  as  are
  reasonably incidental thereto.  Neither the Agent, the Co-Agent, nor  any
  of their respective Affiliates, officers, directors, employees, attorneys
  or agents shall be liable for any action taken or omitted to be  taken by
  any of them  hereunder or otherwise in connection with this  Agreement or
  any  of the  other  Loan  Documents except  for  its or  their  own gross
  negligence or willful misconduct  or the wrongful failure of the Agent or
  Co-Agent, in their capacities  as a  Bank, to fund  their own  respective
  Commitment pursuant to the terms of this Agreement.  Without limiting the
  generality of the  preceding sentence, the Agent (a) may treat  the payee
  of any Note as the holder thereof until the Agent receives written notice
  of the  assignment or transfer thereof  signed by such  payee and in form
  satisfactory to  the Agent; (b) shall have  no duties or responsibilities
  except  those expressly set forth  in this  Agreement and the  other Loan
  Documents, and  shall not by reason  of this Agreement  or any other Loan
  Document  be  a trustee  or  fiduciary  for any  Bank;  (c) shall not  be
  required to  initiate any litigation  or collection proceedings hereunder
  or under  any other Loan Document  except to the  extent requested by the
  Required  Banks;  (d) shall  not  be  responsible to  the  Banks  for any
  recitals,  statements, representations  or warranties  contained  in this
  Agreement  or  any  other  Loan  Document, or  any  certificate  or other
  document  referred to  or provided  for in,  or received  by any  of them
  under,  this Agreement  or any  other  Loan Document,  or for  the value,
  validity, effectiveness, enforceability or sufficiency of this  Agreement
  or  any other Loan Document or any other document referred to or provided
  for herein or  therein or for any failure by any Person to perform any of
  its  obligations  hereunder or  thereunder;  (e) may  consult  with legal
  counsel (including counsel  for Borrower), independent public accountants
  and other experts  selected by it and shall not be liable  for any action
  taken or omitted  to be taken in good faith  by it in accordance with the
  advice  of such counsel,  accountants or experts; and  (f) shall incur no
  liability under  or in respect of  any Loan Document  by acting  upon any
  notice, consent,  certificate or  other instrument  or writing reasonably
  believed by it to be  genuine and signed or  sent by the proper  party or
  parties.  As to any matters not expressly provided for by this Agreement,
  the  Agent  shall in  all  cases  be  fully protected  in  acting,  or in
  refraining from acting,  hereunder in accordance with instructions signed
  by  the Required Banks,  and such instructions of the  Required Banks and
  any action taken  or failure to act pursuant  thereto shall be binding on
  all of the Banks; provided, however, that the Agent shall not be required
  to  take any  action which  exposes the  Agent to  liability or  which is
  contrary to this Agreement or any other Loan Document or applicable law.

        Section 12.2      Rights of Agent  as a Bank.  With respect  to its
  Commitment, the Loan made by it and the Note issued to it, Banque Paribas
  (and any successor acting  as Agent) in its capacity as a  Bank hereunder
  shall have the same rights and powers hereunder as any other Bank and may
  exercise the same as though it were not acting as the Agent, and the term
  "Bank"  or "Banks" shall, unless the context otherwise indicates, include
  the Agent in its  individual capacity.  The Agent and its  Affiliates may
  (without  having to account  therefor to any Bank)  accept deposits from,
  lend money  to,  act as  trustee under  indentures of,  provide  merchant
  banking services to and generally engage in any kind of banking, trust or
  other business with the Loan Parties or any of  their Affiliates, and any
  other  Person who  may do  business with  or own  securities of  the Loan
  Parties or any of their  Affiliates, all as if it were not acting  as the
  Agent and without any duty to account therefor to the Banks.

        Section 12.3      Defaults.  The Agent  shall not be deemed to have
  knowledge or notice of the occurrence of  a Default (other than the  non-
  payment of principal  of or interest on the  Loans or of commitment fees)
  unless the Agent  has received notice from  a Bank or Borrower specifying
  such Default  and stating that such notice is a "Notice  of Default".  In
  the event  that the Agent receives  such a notice of  the occurrence of a
  Default, the  Agent shall  give prompt notice thereof  to the  Banks (and
  shall give each Bank prompt notice of each such  non-payment).  The Agent
  shall (subject  to Section  12.1) take such  action with  respect to such
  Default as shall be directed  by the Required Banks, provided that unless
  and until the Agent shall  have received such  directions, the Agent  may
  (but shall not be obligated  to) take such action, or refrain from taking
  such  action, with respect to such Default as it shall seem advisable and
  in the best interest of the Banks.

        Section 12.4      INDEMNIFICATION.  THE  BANKS   HEREBY  AGREE   TO
  INDEMNIFY THE AGENT AND THE CO-AGENT FROM  AND HOLD THE AGENT AND THE CO-
  AGENT  HARMLESS  AGAINST (TO  THE  EXTENT NOT  PROMPTLY REIMBURSED  UNDER
  SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF  BORROWER
  UNDER  SECTIONS  13.1  AND  13.2),   RATABLY  IN  ACCORDANCE  WITH  THEIR
  RESPECTIVE COMMITMENT PERCENTAGES, ANY AND ALL LIABILITIES,  OBLIGATIONS,
  LOSSES,  DAMAGES, PENALTIES,  ACTIONS,  JUDGMENTS,  DEFICIENCIES,  SUITS,
  COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND DISBURSEMENTS OF ANY KIND
  OR  NATURE WHATSOEVER WHICH  MAY BE IMPOSED ON, INCURRED  BY, OR ASSERTED
  AGAINST THE AGENT OR THE CO-AGENT  IN ANY WAY RELATING TO  OR ARISING OUT
  OF ANY OF THE LOAN  DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO  BE TAKEN
  BY THE  AGENT OR  THE CO-AGENT  UNDER OR  IN RESPECT  OF ANY  OF THE LOAN
  DOCUMENTS;  PROVIDED, FURTHER,  THAT  NO  BANK SHALL  BE LIABLE  FOR  ANY
  PORTION OF THE FOREGOING TO  THE EXTENT CAUSED BY THE AGENT'S OR THE  CO-
  AGENT'S  GROSS NEGLIGENCE OR WILLFUL  MISCONDUCT.   WITHOUT LIMITATION OF
  THE FOREGOING,  IT IS THE  EXPRESS INTENTION OF THE BANKS  THAT THE AGENT
  AND  THE CO-AGENT SHALL  BE INDEMNIFIED HEREUNDER FROM  AND HELD HARMLESS
  AGAINST ALL OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
  ACTIONS,  JUDGMENTS,  DEFICIENCIES,  SUITS,  COSTS,  EXPENSES  (INCLUDING
  ATTORNEYS'  FEES) AND  DISBURSEMENTS OF  ANY KIND  OR NATURE  DIRECTLY OR
  INDIRECTLY  ARISING OUT  OF OR  RESULTING FROM  THE SOLE  OR CONTRIBUTORY
  NEGLIGENCE OF  THE AGENT OR  THE CO-AGENT (EXCEPT TO THE  EXTENT THE SAME
  ARE CAUSED BY THE  AGENT'S OR  THE CO-AGENT'S [AS  APPLICABLE] OWN  GROSS
  NEGLIGENCE OR WILLFUL MISCONDUCT).  WITHOUT LIMITING  ANY OTHER PROVISION
  OF THIS SECTION 12.4, EACH BANK AGREES TO REIMBURSE THE AGENT AND THE CO-
  AGENT  PROMPTLY UPON  DEMAND FOR  ITS PRO  RATA SHARE (CALCULATED  ON THE
  BASIS  OF  THE  COMMITMENTS)   OF  ANY  AND  ALL  OUT-OF-POCKET  EXPENSES
  (INCLUDING  ATTORNEYS' FEES)  INCURRED BY  THE AGENT  OR THE  CO-AGENT IN
  CONNECTION  WITH  THE  PREPARATION, EXECUTION,  DELIVERY, ADMINISTRATION,
  MODIFICATION,  AMENDMENT  OR  ENFORCEMENT (WHETHER  THROUGH NEGOTIATIONS,
  LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF RIGHTS
  OR RESPONSIBILITIES  UNDER, THE  LOAN DOCUMENTS, TO THE  EXTENT THAT  THE
  AGENT OR THE CO-AGENT, AS APPLICABLE, IS NOT PROMPTLY REIMBURSED FOR SUCH
  EXPENSES BY BORROWER.

        Section 12.5      Independent Credit  Decisions.  Each Bank  agrees
  that it has independently and  without reliance on the Agent or any other
  Bank,  and based  on  such documents  and  information as  it  has deemed
  appropriate, made  its own  credit analysis of Borrower  and decision  to
  enter into  this Agreement  and that it will,  independently and  without
  reliance  upon the Agent or any other Bank, and based upon such documents
  and information as  it shall  deem appropriate at the  time, continue  to
  make its own analysis and  decisions in taking or not taking action under
  this Agreement or any of  the other Loan Documents.   The Agent shall not
  be required to keep itself  informed as to the  performance or observance
  by any  Loan Party  of this  Agreement or any  other Loan  Document or to
  inspect the Properties or  books of any Loan Party.  Except  for notices,
  reports  and other  documents and  information expressly  required to  be
  furnished to  the Banks by  the Agent  hereunder or under  the other Loan
  Documents, the Agent shall not have any duty or responsibility to provide
  any  Bank with any  credit or other financial  information concerning the
  affairs,  financial condition  or business of any  Loan Party  (or any of
  their  Affiliates) which may come into the possession of the Agent or any
  of its Affiliates.

        Section 12.6      Several Commitments.  The  Commitments and  other
  obligations of the Banks under this Agreement  are several.  The  default
  by any Bank in making a Loan in accordance with its Commitment  shall not
  relieve the  other Banks of  their obligations under this Agreement.   In
  the  event  of  any  default  by  any  Bank  in  making  any  Loan,  each
  nondefaulting Bank shall  be obligated to make its  Loan but shall not be
  obligated to advance the amount which the defaulting Bank was required to
  advance hereunder.  In no event shall any Bank be required  to advance an
  amount or amounts  with respect to  any of the  Loans which would in  the
  aggregate  exceed such Bank's Commitment  with respect to such Loans.  No
  Bank shall  be responsible for any  act or  omission of  any other  Bank.
  Notwithstanding anything to  the contrary contained in this  Agreement or
  any of the other Loan Documents, any Bank that fails to make available to
  the  Agent its pro  rata share  of any Loan or  to purchase  its pro rata
  share of any Letter of Credit as, when and to the full extent required by
  the provisions  of this  Agreement, shall be deemed  delinquent (a  "Non-
  Funding Bank") and shall be deemed a Non-Funding Bank  until such time as
  such  delinquency is satisfied.   A Non-Funding  Bank shall be  deemed to
  have  assigned any  and all  payments due  to it  from the  Loan Parties,
  whether on account of outstanding Loans, the Letter of Credit,  interest,
  fees  or otherwise, to the remaining non-delinquent Banks for application
  to, and reduction of, their respective pro rata shares of all outstanding
  Loans, Letters of Credit, fees and/or otherwise.   As among the Banks,  a
  Non-Funding Bank shall be deemed to have satisfied  in full a delinquency
  when and if,  as a result of application  of the assigned payments to all
  outstanding  Loans,   etc.  of  the   non-delinquent  Banks,  the  Banks'
  respective pro rata shares of all outstanding Loans and Letters of Credit
  have  returned to those  in effect immediately prior  to such delinquency
  and without giving effect to the nonpayment causing such delinquency.

        Section 12.7      Successor Agent.   Subject to the appointment and
  acceptance of a  successor Agent as provided below, the Agent  may resign
  at any time by giving notice thereof to the Banks and Borrower.  Upon any
  such resignation, the Required Banks will have the right, after notice to
  and  consultation with  Borrower if  (but only  if)  no Default  has then
  occurred and is continuing, to appoint another Bank as a successor Agent.
  If no successor Agent shall have been so appointed  by the Required Banks
  and  shall  have  accepted  such  appointment within  30  days  after the
  retiring Agent's giving of notice of resignation, then the retiring Agent
  may, on behalf of the Banks, appoint a  successor Agent, which shall be a
  commercial bank  organized under the  laws of  the United  States or  any
  state  thereof  and  having  combined  capital and  surplus  of  at least
  $100,000,000.  Upon the acceptance of its appointment as successor Agent,
  such  successor Agent shall  thereupon succeed to and  become vested with
  all rights, powers,  privileges, immunities and duties  of the  resigning
  Agent, and the resigning  Agent shall be  discharged from its  duties and
  obligations under this Agreement and the other Loan Documents.  After any
  Agent's resignation  as Agent,  the provisions of this  Article 12  shall
  continue in  effect for its benefit  in respect of  any actions  taken or
  omitted to be taken by it while it was the Agent.

                                  ARTICLE 13

                                Miscellaneous

        Section 13.1      Expenses.    Whether   or  not  the  transactions
  contemplated hereby  are consummated, Borrower  hereby agrees, on demand,
  to pay or reimburse the  Agent and each of  the Banks for paying  (as the
  Agent  may request):  (a) all reasonable out-of-pocket costs and expenses
  of the  Agent in connection with  the preparation, negotiation, execution
  and delivery of this Agreement and the  other Loan Documents and any  and
  all (actual or proposed) amendments, modifications, renewals,  extensions
  and  supplements thereof and  thereto, and the syndication  of the Loans,
  including, without  limitation, the reasonable fees and expenses of legal
  counsel  for  the  Agent,  (b) all  reasonable  out-of-pocket  costs  and
  expenses of  the Agent and  the Banks in connection with  any Default and
  the enforcement of this Agreement or any other Loan Document,  including,
  without limitation, the reasonable fees and expenses of legal counsel for
  the  Agent and the  Banks, (c) all transfer, stamp,  documentary or other
  similar  taxes,  assessments   or  charges  levied  by  any  Governmental
  Authority  in  respect  of  this  Agreement  or any  of  the  other  Loan
  Documents,  (d) all  costs,  expenses,  assessments   and  other  charges
  incurred  in  connection  with  any  filing,  registration,  recording or
  perfection of any Lien contemplated by  this Agreement or any  other Loan
  Document,  and  (e) all   reasonable  out-of-pocket  costs  and  expenses
  incurred  by  the  Agent  in  connection  with  due  diligence,  computer
  services, copying,  appraisals, environmental  audits, collateral audits,
  field exams, insurance, consultants and search reports.

        Section 13.2      INDEMNIFICATION.   BORROWER SHALL  INDEMNIFY  THE
  AGENT, THE CO-AGENT  AND EACH BANK AND EACH  AFFILIATE THEREOF AND  THEIR
  RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS FROM, AND
  HOLD  EACH OF  THEM HARMLESS  AGAINST, ANY  AND ALL  LOSSES, LIABILITIES,
  CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,  DISBURSEMENTS, COSTS AND EXPENSES
  (INCLUDING  REASONABLE ATTORNEYS' AND CONSULTANTS' FEES)  TO WHICH ANY OF
  THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR RELATE
  TO (A) THE NEGOTIATION,  EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION
  OR ENFORCEMENT  OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
  CONTEMPLATED BY THE  LOAN DOCUMENTS, (C) ANY BREACH  BY ANY LOAN PARTY OF
  ANY REPRESENTATION,  WARRANTY, COVENANT  OR OTHER  AGREEMENT CONTAINED IN
  ANY  OF THE LOAN  DOCUMENTS, (D) THE USE  OR PROPOSED USE OF  ANY LOAN OR
  LETTER OF CREDIT,  (E) ANY AND ALL TAXES, LEVIES, DEDUCTIONS  AND CHARGES
  IMPOSED ON  THE AGENT,  THE ISSUING  BANK OR  ANY BANK  (OTHER THAN TAXES
  IMPOSED ON THE OVERALL NET INCOME OR GROSS RECEIPTS OF THE AGENT, THE CO-
  AGENT, THE ISSUING BANK OR  ANY OTHER BANK) IN  RESPECT OF ANY LETTER  OF
  CREDIT, (F) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL,  REMOVAL
  OR CLEANUP OF ANY HAZARDOUS MATERIAL OR THE EXISTENCE  OF ANY UNDERGROUND
  STORAGE TANK LOCATED ON, ABOUT, WITHIN OR AFFECTING ANY OF THE PROPERTIES
  OF ANY  LOAN  PARTY,  OR OTHERWISE  ATTRIBUTABLE  TO  ANY LOAN  PARTY  IN
  CONNECTION WITH  ANY OTHER SITE, OR (G) ANY  INVESTIGATION, LITIGATION OR
  OTHER   PROCEEDING,   INCLUDING,   WITHOUT  LIMITATION,   ANY  THREATENED
  INVESTIGATION,  LITIGATION OR  OTHER PROCEEDING  RELATING  TO ANY  OF THE
  FOREGOING;  BUT EXCLUDING  ANY OF  THE FOREGOING  TO THE  EXTENT DIRECTLY
  CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF  THE PERSON TO BE
  INDEMNIFIED.  WITHOUT LIMITING  ANY PROVISION OF THIS AGREEMENT OR OF ANY
  OTHER LOAN DOCUMENT,  IT IS THE  EXPRESS INTENTION OF  THE PARTIES HERETO
  THAT EACH  PERSON TO  BE INDEMNIFIED  UNDER THIS  SECTION  13.2 SHALL  BE
  INDEMNIFIED  FROM  AND  HELD  HARMLESS   AGAINST  ANY  AND  ALL   LOSSES,
  LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS,  DISBURSEMENTS, COSTS
  AND EXPENSES  (INCLUDING REASONABLE  ATTORNEYS' FEES)  ARISING OUT OF  OR
  RESULTING  FROM  THE SOLE  OR  CONTRIBUTORY  NEGLIGENCE  OF  SUCH PERSON.
  WITHOUT  PREJUDICE TO THE SURVIVAL OF ANY OTHER TERM OR PROVISION OF THIS
  AGREEMENT,  THE OBLIGATIONS  OF  BORROWER UNDER  THIS  SECTION 13.2 SHALL
  SURVIVE THE  REPAYMENT OF THE LOANS AND LETTER OF  CREDIT LIABILITIES AND
  OTHER OBLIGATIONS AND TERMINATION OF THE COMMITMENTS.

        Section 13.3      Limitation of Liability.   None of the Agent, the
  Co-Agent,  any  Bank  or  any  Affiliate,  officer,  director,  employee,
  attorney or agent thereof shall be liable  to Borrower or any Loan  Party
  for any  error of  judgment or act  done in  good faith, or be  otherwise
  liable or responsible  under any circumstances whatsoever (including such
  Person's  negligence),  except  for  such  Person's  gross  negligence or
  willful misconduct.   None of the  Agent, the Co-Agent,  any Bank, or any
  Affiliate, officer,  director, employee, attorney  or agent thereof shall
  have any liability with respect to, and Borrower hereby waives,  releases
  and  agrees not  to sue  any of  them upon,  any  claim for  any special,
  indirect,  incidental or  consequential damages  suffered or  incurred by
  Borrower or any other Loan Party in  connection with, arising out of,  or
  in any way related to, this Agreement or any of the other Loan Documents,
  or any of the  transactions contemplated by this Agreement or any  of the
  other  Loan Documents.   Borrower hereby waive, release and  agree not to
  sue  the Agent,  the Co-Agent  or  any Bank  or  any of  their respective
  Affiliates,  officers,  directors,  employees,  attorneys or  agents  for
  exemplary or punitive damages in respect of any claim in connection with,
  arising out of,  or in any way related to,  this Agreement or any  of the
  other Loan  Documents, or  any of the transactions  contemplated by  this
  Agreement or any of the other Loan Documents.

        Section 13.4      No Duty.  All attorneys,  accountants, appraisers
  and other professional Persons and consultants retained by the Agent, the
  Co-Agent and  the Banks shall have  the right to  act exclusively  in the
  interest of the Agent, the Co-Agent and  the Banks and shall have no duty
  of  disclosure, duty of loyalty, duty of care or other duty or obligation
  of  any  type  or nature  whatsoever  to  Borrower  or  any  of Borrower'
  shareholders or any other Person.

        Section 13.5      No  Fiduciary  Relationship.    The  relationship
  between Borrower and each Bank is solely that of debtor and creditor, and
  neither the Agent, the  Co-Agent nor any Bank has any fiduciary  or other
  special relationship with Borrower  or any other Loan  Party, and no term
  or condition of  any of the  Loan Documents shall be  construed so as  to
  deem the  relationship between Borrower and any  Bank, or any  other Loan
  Party and any  Bank, to be  other than that of  debtor and creditor.   No
  joint venture or partnership is created by this Agreement among the Banks
  or between Borrower or any other Loan Party and any Bank.

        Section 13.6      Equitable Relief.  Borrower recognize that in the
  event Borrower fail to  pay, perform, observe or discharge any or  all of
  the Obligations, any remedy at law may  prove to be inadequate relief  to
  the Agent  and the Banks.   Borrower therefore agrees  that the Agent and
  the  Banks, if the  Agent or the Banks  so request, shall  be entitled to
  temporary  and permanent injunctive  relief in any such  case without the
  necessity of proving actual damages.

        Section 13.7      No  Waiver; Cumulative  Remedies.  No  failure on
  the part of the Agent or any Bank to exercise and no delay in exercising,
  and no course of  dealing with respect to, any right, power  or privilege
  under this Agreement or any other Loan Document shall operate as a waiver
  thereof, nor shall any single  or partial exercise of any right, power or
  privilege  under this Agreement  or any other Loan  Document preclude any
  other or  further exercise  thereof or the  exercise of  any other right,
  power or  privilege.   The  rights  and  remedies provided  for  in  this
  Agreement and the  other Loan Documents are cumulative and  not exclusive
  of any rights and remedies provided by law.

        Section 13.8      Successors and Assigns.

              (a)   This Agreement shall  be binding upon and inure  to the
        benefit of  the parties hereto and  their respective successors and
        assigns.   Borrower may not assign or transfer any  of their rights
        or obligations hereunder without the  prior written consent of  the
        Agent and  the Banks.   Any Bank may sell participations  to one or
        more banks or  other institutions in or to  all or a portion of its
        rights  and obligations  under this  Agreement  and the  other Loan
        Documents (including, without limitation,  all or a portion  of its
        Commitment and  the  Loan owing  to it);  provided,  however,  that
        (i) such Bank's obligations under this Agreement and the other Loan
        Documents  (including, without  limitation, its  Commitment)  shall
        remain unchanged, (ii) such Bank shall remain solely responsible to
        Borrower for  the performance of  such obligations, (iii) such Bank
        shall  remain  the holder  of  its Note  for all  purposes  of this
        Agreement, (iv) Borrower shall continue to deal solely and directly
        with  such   Bank  in  connection  with   such  Bank's  rights  and
        obligations under this Agreement and the  other Loan Documents, and
        (v) such  Bank shall not  sell a participation that  conveys to the
        participant  the right to  vote or give or  withhold consents under
        this Agreement or any other Loan Document, other than the right  to
        vote upon or consent to (A) any increase of such Bank's Commitment,
        (B) any reduction  of the  principal amount of, or  interest to  be
        paid on, the Loan of such Bank, (C) any reduction of any commitment
        fee or other amount payable to such  Bank under any Loan  Document,
        (D) any  postponement of  any date  for the  payment of  any amount
        payable in respect of  the Loan of such Bank, and (E)  any  release
        of any  Loan Party from  liability under the  Loan Documents.  Each
        holder of  a  participation interest  in this  Agreement  shall  be
        entitled to the benefits of the provisions of Section 3.5, 4.6, 4.7
        and  13.2 of this Agreement  as if and to the same  extent as if it
        were a Bank hereunder.

              (b)   Borrower  and  the  Banks  agree  that  any  Bank  (the
        "Assigning Bank") may at  any time assign  to one or  more Eligible
        Assignees  all, or a proportionate part  of all, of  its rights and
        obligations  under  this Agreement  and  the  other  Loan Documents
        (including, without limitation, its Commitment, Loans and Letter of
        Credit Liabilities) (each  an "Assignee"); provided, however,  that
        (i) each  such assignment  shall  be  of a  consistent, and  not  a
        varying, percentage  of all  of  the  Assigning Bank's  rights  and
        obligations  under this  Agreement  and the  other  Loan Documents,
        (ii) except  in the case of an assignment of all of a Bank's rights
        and obligations  under this Agreement and the other Loan Documents,
        the  amount   of  the  Commitment,  Loans   and  Letter  of  Credit
        Liabilities of the Assigning  Bank being assigned pursuant  to each
        assignment (determined as of the date of the  Assignment Acceptance
        with respect to such assignment)  shall in no event be less than an
        amount  equal to  $5,000,000, and  (iii) the  parties to  each such
        assignment  shall  execute  and  deliver   to  the  Agent  for  its
        acceptance and  recording in the  Register (as  defined below),  an
        Assignment and Acceptance, together with the Notes subject to  such
        assignment, and a  processing and recordation fee of $2,500.   Upon
        such execution, delivery,  acceptance and recording, from and after
        the  effective date  specified in  each Assignment  and Acceptance,
        which effective date shall be at least five Business Days after the
        execution  thereof,  or, if  so  specified in  such Assignment  and
        Acceptance, the  date of  acceptance thereof by  the Agent, (A) the
        Assignee thereunder shall be a party hereto as a "Bank" and, to the
        extent that rights and obligations hereunder have  been assigned to
        it pursuant to such Assignment and Acceptance, have the rights  and
        obligations  of a Bank  hereunder and under the  Loan Documents and
        (B) the Assigning Bank thereunder  shall, to the extent that rights
        and obligations hereunder have been assigned by it pursuant to such
        Assignment and  Acceptance, relinquish  its rights  and be released
        from  its  obligations  under  this  Agreement and  the  other Loan
        Documents  (and,  in  the  case  of  an  Assignment  and Acceptance
        covering  all or  the  remaining  portion of  a Bank's  rights  and
        obligations under the Loan Documents, such Bank shall cease to be a
        party thereto).  Notwithstanding anything to the contrary contained
        herein,  each   Assigning  Bank   shall,  concurrently   with  each
        assignment to an Assignee referred to in this Section 13.8(b), also
        assign  to such Assignee  an identical  interest in  such Assigning
        Bank's Acquisition Loans and commitments thereunder.  (For example,
        if  an  Assigning  Bank  assigns  50%  of  its  Commitment  or  its
        Obligations  to  an  Assignee,  such  Assigning  Bank  shall  also,
        concurrently therewith,  assign 50%  of its  commitment relating to
        the  Acquisition  Loans  or  its  Acquisition  Loans   Obligations,
        respectively, to such Assignee.)

              (c)   By   executing   and   delivering  an   Assignment  and
        Acceptance,  the   Assigning  Bank  thereunder   and  the  Assignee
        thereunder confirm  to  and agree  with each  other and  the  other
        parties hereto  as  follows: (i)  other than  as provided  in  such
        Assignment   and   Acceptance,   such  Assigning   Bank   makes  no
        representation or  warranty  and  assumes  no  responsibility  with
        respect to any statements, warranties or representations made in or
        in connection with the Loan  Documents or the execution,  legality,
        validity and  enforceability, genuineness, sufficiency  or value of
        the Loan  Documents or any  other instrument or document  furnished
        pursuant thereto; (ii) such  Assigning Bank makes no representation
        or  warranty and  assumes no  responsibility  with  respect to  the
        financial  condition  of  any Loan  Party  or  the  performance  or
        observance  by any  Loan Party  of its  obligations under  the Loan
        Documents; (iii) such Assignee confirms that it has received a copy
        of the other Loan Documents, together with copies of the  financial
        statements referred to in Section 7.2 and such other documents  and
        information as  it has  deemed appropriate to make  its own  credit
        analysis and decision to enter into such Assignment and Acceptance;
        (iv) such Assignee will,  independently and  without reliance  upon
        the Agent or such  Assigning Bank and  based on such  documents and
        information as it  shall deem appropriate at the time,  continue to
        make its own credit decisions in taking or not taking  action under
        this  Agreement and  the  other Loan  Documents;  (v) such Assignee
        confirms  that  it  is  an  Eligible  Assignee;  (vi) such Assignee
        appoints and authorizes the  Agent to take such  action as agent on
        its behalf and exercise such powers under the Loan Documents as are
        delegated to  the Agent  by the terms thereof,  together with  such
        powers  as  are  reasonably  incidental   thereto;  and  (vii) such
        Assignee agrees that it will perform in accordance with their terms
        all of the obligations which by the terms of the Loan Documents are
        required to be performed by it as a Bank.

              (d)   The Agent shall maintain at its Principal Office a copy
        of each Assignment  and Acceptance delivered to and accepted  by it
        and a  register for the  recordation of the  names and addresses of
        the Banks and the Commitments of, and principal amount of the Loans
        owing  to,  each Bank  from time  to  time (the  "Register").   The
        entries in  the Register  shall be conclusive and  binding for  all
        purposes, absent  manifest error, and Borrower,  the Agent  and the
        Banks may  treat each Person whose name is recorded in the Register
        as a Bank hereunder for all purposes under the Loan Documents.  The
        Register shall be available for inspection by Borrower or any  Bank
        at any reasonable time and from time to  time upon reasonable prior
        notice.

              (e)   Upon  its  receipt  of  an  Assignment  and  Acceptance
        executed by an Assigning Bank and Assignee representing that it  is
        an  Eligible  Assignee,  together with  the  Note subject  to  such
        assignment, the Agent shall, if such Assignment and  Acceptance has
        been  completed and  is  in  substantially the  form of  Exhibit  A
        hereto, (i) accept such  Assignment and Acceptance, (ii) record the
        information  contained  therein  in the  Register,  and  (iii) give
        prompt  written notice thereof to  Borrower.   Within five Business
        Days after its  receipt of such notice Borrower, at  their expense,
        shall  execute  and  deliver  to  the Agent  in  exchange  for each
        surrendered Note  a new Note  in an amount equal to  the Commitment
        assumed by it  (or, if the Commitments have terminated  or expired,
        the  Loans  assigned  to  it)  pursuant  to  such   Assignment  and
        Acceptance  and, if  the Assigning  Bank has  retained any  Loan or
        Letter of Credit  Liability, the Commitment retained by it  (or, if
        the Commitments have  terminated or expired, the  Loans retained by
        it)  (each  such promissory  note  shall constitute  a  "Note"  for
        purposes of the Loan Documents).  Such new Notes shall be dated the
        effective  date  of   such  Assignment  and  Acceptance  and  shall
        otherwise be in substantially the form of Exhibit C hereto.

              (f)   Any  Bank may,  in  connection with  any  assignment or
        participation or proposed  assignment or participation pursuant  to
        this  Section 13.8,  disclose to  the  Assignee or  participant, or
        proposed  Assignee  or  participant,  any  information  relating to
        Borrower  or any Subsidiary or  Affiliate of  Borrower furnished to
        such  Bank  by  or  on  behalf  of Borrower  or  any  Subsidiary or
        Affiliate of Borrower; provided  that each such actual or  proposed
        Assignee or participant  shall agree to be bound by  the provisions
        of Section 13.20.

              (g)   Any Bank may assign and pledge all or part of  the Note
        held  by  it  to any  Federal  Reserve  Bank or  the  United States
        Treasury as collateral  security pursuant  to Regulation  A of  the
        Board of Governors of the Federal Reserve System and any  operating
        circular  issued  by such  Federal  Reserve  System  and/or Federal
        Reserve Bank; provided,  that any payment made by Borrower  for the
        benefit of  such assigning and/or pledging  Bank in accordance with
        the  terms   of  the   Loan  Documents   shall  satisfy  Borrower's
        obligations  under the  Loan Documents  in respect  thereof to  the
        extent of  such payment.   No such assignment  and/or pledge  shall
        release  the assigning  and/or pledging  Bank from  its obligations
        hereunder.

        Section 13.9      Survival.   All  representations  and  warranties
  made or  deemed made in this  Agreement or any other  Loan Document or in
  any document, statement or  certificate furnished in connection with this
  Agreement shall survive the execution and delivery of this Agreement  and
  the other Loan Documents and the  making of the Loans and the issuance of
  the  Letters of Credit, and no investigation by the  Agent or any Bank or
  any closing shall affect the representations and warranties or the  right
  of the Agent or  any Bank to  rely upon them.   Without prejudice to  the
  survival of any other obligation  of Borrower hereunder, the  obligations
  of  Borrower under  Article 4  and Sections 13.1  and 13.2  shall survive
  repayment of the Notes and termination of the Commitments.

        Section 13.10     ENTIRE AGREEMENT.  THIS AGREEMENT, THE NOTES, AND
  THE  OTHER LOAN  DOCUMENTS REFERRED  TO HEREIN  EMBODY THE  FINAL, ENTIRE
  AGREEMENT  AMONG THE  PARTIES  HERETO  AND (EXCEPT  AS PROVIDED  IN  THIS
  SECTION 13.10 WITH RESPECT TO THE TERM SHEET) SUPERSEDE ANY AND ALL PRIOR
  COMMITMENTS,  AGREEMENTS,  REPRESENTATIONS  AND  UNDERSTANDINGS,  WHETHER
  WRITTEN OR  ORAL, RELATING TO THE  SUBJECT MATTER HEREOF  AND MAY  NOT BE
  CONTRADICTED  OR   VARIED  BY  EVIDENCE   OF  PRIOR,  CONTEMPORANEOUS  OR
  SUBSEQUENT ORAL AGREEMENTS  OR DISCUSSIONS OF THE PARTIES HERETO.   THERE
  ARE   NO   UNWRITTEN   ORAL   AGREEMENTS   AMONG   THE   PARTIES  HERETO.
  Notwithstanding  the foregoing,  the Term  Sheet  shall continue  in full
  force and effect as it relates to fees as provided in Section 2.11.

        Section 13.11     Amendments.    No  amendment  or  waiver  of  any
  provision of  this Agreement,  the Notes or  any other  Loan Document  to
  which Borrower is a party, nor any  consent to any departure by  Borrower
  therefrom,  shall in  any  event be  effective unless  the same  shall be
  agreed or consented to by the Required Banks and Borrower in writing, and
  each  such waiver  or consent  shall be  effective  only in  the specific
  instance and for the specific purpose for which  given; provided, that no
  amendment, waiver  or consent shall, unless in writing and  signed by all
  of  the Banks  and Borrower,  do any  of the following:  (a) increase the
  Commitments  of  the  Banks  or  subject  the  Banks  to  any  additional
  obligations;  (b) reduce the principal  of, or interest on,  the Notes or
  any fees or other amounts payable hereunder; (c) postpone any date  fixed
  for any payment of principal of, or interest on, the Notes or any fees or
  other  amounts  payable   hereunder;  (d) waive  any  of  the  conditions
  precedent specified  in Article 6;  (e) change the Commitment Percentages
  or the aggregate  unpaid principal amount of  the Notes or the percentage
  of the Banks which shall be required for the Banks or any of them to take
  any action  under this Agreement; (f) change  any provision  contained in
  Section 9.14 or this Section 13.11 or modify the definition  of "Required
  Banks" contained in  Section 1.1; and provided further, however,  that no
  amendment, waiver or consent relating to Sections 12.1, 12.2, 12.3,  12.4
  or 12.5 shall require  the agreement of any  Loan Party.  Notwithstanding
  anything to the  contrary contained in this Section 13.11,  no amendment,
  waiver or consent shall be made with respect to Article 12 hereof without
  the prior written consent of the Agent.

        Section 13.12     Maximum Interest Rate.

              (a)   No  interest rate  specified in  this Agreement  or any
        other Loan Document shall at any time exceed the  Maximum Rate.  If
        at  any  time  the  interest  rate (the  "Contract  Rate")  for any
        Obligation  shall  exceed the  Maximum  Rate,  thereby  causing the
        interest accruing on  such Obligation to be limited to  the Maximum
        Rate, then any  subsequent reduction in the Contract Rate  for such
        Obligation shall not reduce the rate of interest on such Obligation
        below the  Maximum  Rate until  the aggregate  amount  of  interest
        accrued  on such Obligation equals the aggregate amount of interest
        which  would have accrued  on such Obligation if  the Contract Rate
        for such Obligation had at all times been in effect.

              (b)   Notwithstanding anything to the  contrary contained  in
        this Agreement or the  other Loan Documents, none of the terms  and
        provisions of this Agreement or the other Loan Documents shall ever
        be construed to create a  contract or obligation to pay interest at
        a rate in excess of the Maximum Rate; and neither the Agent nor any
        Bank  shall ever charge, receive, take,  collect, reserve or apply,
        as interest on the Obligations, any amount in excess of the Maximum
        Rate.   The parties  hereto agree that any  interest, charge,  fee,
        expense  or other obligation  provided for in this  Agreement or in
        the  other  Loan   Documents  which   constitutes  interest   under
        applicable  law  shall  be,  ipso  facto  and  under  any  and  all
        circumstances, limited or reduced to an amount equal to the  lesser
        of (i) the amount  of such interest, charge, fee, expense  or other
        obligation that  would be  payable in the absence  of this  Section
        13.12(b), or (ii) an amount, which when added to all other interest
        payable under this  Agreement and the other Loan  Documents, equals
        the Maximum Rate.  If, notwithstanding the foregoing, the Agent  or
        any Bank  ever contracts  for, charges,  receives, takes, collects,
        reserves or applies as interest any amount in excess of the Maximum
        Rate, such amount which would be deemed excessive interest shall be
        deemed  a  partial  payment  or  prepayment  of  principal  of  the
        Obligations and treated hereunder  as such; and if the Obligations,
        or  applicable portions thereof,  are paid  in full,  any remaining
        excess  shall promptly  be paid to  Borrower (or  other appropriate
        Person).   In  determining whether  the interest  paid or  payable,
        under any specific contingency, exceeds the Maximum Rate, Borrower,
        the Agent and the Banks shall,  to the maximum extent  permitted by
        applicable law,  (A) characterize any  nonprincipal payment  as  an
        expense,  fee  or  premium  rather  than  as  interest, (B) exclude
        voluntary  prepayments and  the effects thereof,  and (C) amortize,
        prorate,  allocate and spread  in equal or unequal  parts the total
        amount of interest throughout  the entire contemplated term  of the
        Obligations, or  applicable portions thereof,  so that the interest
        rate does not  exceed the Maximum Rate at  any time during the term
        of the Obligations; provided  that, if the unpaid principal balance
        is  paid  and  performed in  full  prior to  the  end  of  the full
        contemplated term  thereof, and if  the interest  received for  the
        actual period of  existence thereof exceeds the  Maximum Rate,  the
        Agent and/or  the Banks, as  appropriate, shall refund to  Borrower
        (or other  appropriate Person)  the amount of such  excess and,  in
        such  event, the  Agent and the  Banks shall not be  subject to any
        penalties  provided  by any  laws  for  contracting  for, charging,
        receiving, taking,  collecting, reserving  or applying  interest in
        excess of the Maximum Rate.

              (c)   Pursuant to  Article 15.10(b)  of Chapter 15,  Subtitle
        79,  Revised  Civil Statutes  of Texas  1925, as  amended, Borrower
        agrees  that such  Chapter  15 (which  regulates  certain revolving
        credit loan  accounts and  revolving tri-party  accounts) shall not
        govern or in any manner apply to the Obligations.

        Section 13.13     Notices.   All  notices and  other communications
  provided for  in this  Agreement and  the other  Loan Documents  to which
  Borrower is a party shall be given  or made by telecopy or in writing and
  telecopied,  mailed  by  certified  mail  return  receipt  requested,  or
  delivered  to  the  intended  recipient  at  the  "Address  for  Notices"
  specified  below its name on the signature pages hereof (or, with respect
  to  a  Bank  that becomes  a  party  to  this  Agreement  pursuant  to an
  assignment  made in accordance  with Section 13.8, in  the Assignment and
  Acceptance executed by it); or, as to any party, at such other address as
  shall be designated by such  party in a notice to each other party  given
  in accordance with  this Section 13.13.  Except as otherwise  provided in
  this Agreement, all such communications shall be deemed to have been duly
  given when  transmitted by  telecopy or personally delivered  or, in  the
  case of a mailed notice, upon receipt, in each case given or addressed as
  aforesaid; provided, however,  that notices to the Agent shall  be deemed
  given when received by the Agent.

        Section 13.14  GOVERNING LAW; SUBMISSION  TO JURISDICTION;  SERVICE
  OF PROCESS.  EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN CERTAIN
  LOAN  DOCUMENTS, THIS AGREEMENT,  THE NOTES AND THE  OTHER LOAN DOCUMENTS
  SHALL BE GOVERNED BY,  AND CONSTRUED IN ACCORDANCE WITH, THE LAWS  OF THE
  STATE OF  TEXAS  AND APPLICABLE  LAWS OF  THE  UNITED  STATES.   EACH  OF
  BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF EACH OF  (A)
  ANY  UNITED STATES  DISTRICT COURT  OF  NEW YORK,  (B) THE  UNITED STATES
  DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS, (C) ANY NEW YORK STATE
  COURT  SITTING IN  NEW YORK,  NEW  YORK, AND  (D)  ANY TEXAS  STATE COURT
  SITTING  IN HOUSTON,  TEXAS, FOR  THE PURPOSES  OF ALL  LEGAL PROCEEDINGS
  ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY  OTHER LOAN DOCUMENT OR
  THE TRANSACTIONS  CONTEMPLATED HEREBY  OR THEREBY.   BORROWER IRREVOCABLY
  CONSENTS TO  THE SERVICE  OF ANY AND ALL  PROCESS IN  ANY SUCH  ACTION OR
  PROCEEDING BY THE MAILING OF COPIES OF  SUCH PROCESS TO SUCH BORROWER  AT
  ITS  ADDRESS  SET  FORTH  UNDERNEATH  ITS  SIGNATURE  HERETO.    BORROWER
  IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
  WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH
  PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING
  BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORM.

        Section 13.15     Counterparts.  This  Agreement may be executed in
  one  or more counterparts, each of which shall be deemed an original, but
  all of which together shall constitute one and the same instrument.

        Section 13.16     Severability.   Any  provision of  this Agreement
  held by a court of competent jurisdiction to be  invalid or unenforceable
  shall  not impair or  invalidate the remainder of this  Agreement and the
  effect thereof shall be  confined to the provision held to be  invalid or
  illegal.

        Section 13.17     Headings.      The    headings,   captions    and
  arrangements  used in this  Agreement are for convenience  only and shall
  not affect the interpretation of this Agreement.

        Section 13.18     Construction.  Borrower, the Agent, and the Banks
  acknowledges that  it has  had the  benefit of  legal counsel  of its own
  choice and has been afforded an opportunity to review  this Agreement and
  the other Loan  Documents with its legal counsel and that  this Agreement
  and the other Loan Documents  shall be construed as if jointly drafted by
  the parties hereto.

        Section 13.19     Independence  of   Covenants.     All   covenants
  hereunder shall  be  given independent  effect so  that if  a  particular
  action or condition is not permitted by  any of such covenants, the  fact
  that it would be permitted by an exception to, or be otherwise within the
  limitations  of, another  covenant shall  not avoid  the occurrence  of a
  Default if such action is taken or such condition exists.

        Section 13.20     Confidentiality.   Each  Bank agrees  to exercise
  its best efforts  to keep any information delivered or made  available by
  any  Loan  Party to  it  which is  clearly  indicated to  be confidential
  information,  confidential from  anyone  other than  Persons  employed or
  retained  by such  Bank who  are  or are  expected  to become  engaged in
  evaluating, approving, structuring  or administering the Loans;  provided
  that  nothing   herein  shall  prevent  any  Bank  from  disclosing  such
  information  (a) to the Agent, the Co-Agent or any other Bank, (b) to any
  Person if  reasonably incidental  to the administration of  the Loans  or
  Letter  of  Credit  Liabilities,  (c) upon the  order  of  any  court  or
  administrative agency, (d) upon  the request or demand of  any regulatory
  agency or  authority having  jurisdiction over  such Bank,  (e) which has
  been publicly disclosed,  (f) in connection with any  litigation to which
  the Agent, any Bank or their respective Affiliates may be a party, (g) to
  the extent  reasonably required  in connection with the  exercise of  any
  remedy under  the Loan  Documents, (h) to such Bank's  legal counsel  and
  independent auditors,  and (i) to  any actual or  proposed participant or
  Assignee of all or part of its  rights hereunder, so long as  such actual
  or  proposed participant or Assignee agrees to be bound by the provisions
  of this Section 13.20.

        Section 13.21  WAIVER  OF  JURY  TRIAL.    TO  THE  FULLEST  EXTENT
  PERMITTED  BY  APPLICABLE  LAW,  EACH   OF  THE  PARTIES  HERETO   HEREBY
  IRREVOCABLY AND  EXPRESSLY WAIVES  ALL RIGHT  TO A TRIAL BY  JURY IN  ANY
  ACTION, PROCEEDING  OR COUNTERCLAIM (WHETHER BASED UPON CONTRACT, TORT OR
  OTHERWISE) ARISING OUT OF OR RELATING TO ANY OF THE LOAN DOCUMENTS OR THE
  TRANSACTIONS CONTEMPLATED THEREBY OR THE ACTIONS OF THE AGENT OR ANY BANK
  IN THE NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.

        Section 13.22     Approvals   and  Consent.    Except   as  may  be
  expressly provided to the contrary in this Agreement or in the other Loan
  Documents  (as applicable), in  any instance under this  Agreement or the
  other Loan Documents where the approval, consent or exercise of  judgment
  of any Bank Party is requested or required, (a) the granting or denial of
  such  approval  or consent  and the  exercise of  such judgment  shall be
  within  the sole discretion of such Bank Party, and such Bank Party shall
  not, for any reason or to any extent, be required to grant such  approval
  or  consent  or  to  exercise  such judgment  in  any  particular manner,
  regardless of the reasonableness of the request or the action or judgment
  of such  Bank Party, and (b) no  approval or  consent of  any Bank  Party
  shall in any event be  effective unless the same shall  be in writing and
  the  same shall  be effective only  in the specific instance  and for the
  specific purpose for which given.

        Section 13.23     Agent for  Services of Process.   Borrower hereby
  irrevocably designates Edwin T. Markham with offices at 666 Third Avenue,
  9th Floor,  New York, New York,   10017 to receive  for and on  behalf of
  such Borrower  service of  process in New  York.   In the event that  Mr.
  Markham resigns or ceases  to serve  as Borrower's agent  for service  of
  process  hereunder, Borrower  agrees  forthwith (a) to  designate another
  agent for service of process in New York, New York and (b) to give prompt
  written  notice to  the Agent  of the  name and  address  of such  agent.
  Borrower agrees that  the failure of its agent  for service of process to
  give any  notice of  any such  service of process to  Borrower 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 Borrower  available to  be served,  then Borrower
  further irrevocably  consents to  the service of process  by the  mailing
  thereof by  the Agent  or the Required  Banks by  registered or certified
  mail, postage prepaid, to Borrower at its address listed on the signature
  pages hereof.   Nothing in  this Section 13.23 shall affect  the right of
  the Agent  or  the Banks  to serve  legal  process  in any  other  manner
  permitted by law  or affect the right of the  Agent or any Bank  to bring
  any action or proceeding against Borrower or its Property in the court of
  any jurisdiction.

        Section 13.24     Joint and Several  Obligations.   Each and  every
  representation, warranty, covenant, agreement, indebtedness, liability or
  obligation  of Borrower under  this Agreement or any  other Loan Document
  shall  be,   and  shall   be  deemed  to   be,  the   joint  and  several
  representation, warranty, covenant, agreement, indebtedness, liability or
  obligation, respectively, of Borrower.

        Section 13.25     Co-Agent.  All  of the privileges  and immunities
  created by Articles  12 and 13 of this Agreement in favor of the Agent in
  its capacity as such  shall be equally applicable to the Co-Agent  in its
  capacity as such.

        IN  WITNESS  WHEREOF, the  parties hereto  have duly  executed this
  Agreement as of the day and year first above written.

                                      BORROWER:

                                      FALCON DRILLING COMPANY, INC.

                                      By:   __________________________
                                            Leighton E. Moss
                                            Vice President and General Counsel

                                      Address for Notices:

                                      1900 West Loop South, Suite 1800
                                      Houston, Texas 77027
                                      Telecopy No.:     713-623-8103
                                      Telephone No.:    713-623-8984
                                      Attention:        Don P. Rodney


                                      AGENT:

                                      BANQUE PARIBAS

                                      By:
                                      Name:
                                      Title:

                                      By:
                                      Name:
                                      Title:

                                      Address for Notices:

                                      Banque Paribas
                                      1200 Smith Street, Suite 3100
                                      Houston, Texas 77002
                                      Telecopy No.:     713-659-3832
                                      Telephone No.:    713-659-4811
                                      Attention:        Mr. Brian M. Malone
                                                        Vice President


                                      BANKS:

                                      BANQUE PARIBAS

                                      By:
  Commitment:                         Name:
                                      Title:
  $31,515,151.52

                                      By:
                                      Name:
                                      Title:

                                      Address for Notices:

                                      Banque Paribas
                                      1200 Smith Street, Suite 3100
                                      Houston, Texas 77002
                                      Telecopy No.:     713-659-3832
                                      Telephone No.:    713-659-4811
                                      Attention:        Mr. Brian M. Malone
                                                        Vice President

                                      Lending Office for ABR Loans:

                                      Banque Paribas
                                      1200 Smith Street, Suite 3100
                                      Houston, Texas 77002
                                      Attention:  Leah Evans
                                                  Operations Officer

                                      Lending Office for Eurodollar Loans:

                                      Banque Paribas
                                      1200 Smith Street, Suite 3100
                                      Houston, Texas 77002
                                      Attention:  Leah Evans
                                                  Operations Officer


                                      ARAB BANKING CORPORATION (B.S.C.)


                                      By:
  Commitment:                         Name:
                                      Title:
  $24,242,424.24
                                      Address for Notices:

                                      Arab Banking Corporation (B.S.C.)
                                      277 Park Avenue, 32nd Floor
                                      New York, New York 10172
                                      Telecopy No.:     212-583-0921
                                      Telephone No.:    212-583-4720
                                      Attention:  Loan Administration Manager

                                      With copies to:

                                      Arab Banking Corporation (B.S.C.)
                                      600 Travis Street, Suite 1900
                                      Houston, Texas 77002
                                      Telecopy No.:     713-227-6507
                                      Telephone No.:    713-227-8444
                                      Attention:  Mr. Stephen A. Plauche
                                                  Vice President

                                      Lending Office for ABR Loans:

                                      Arab Banking Corporation (B.S.C.)
                                      277 Park Avenue, 32nd Floor
                                      New York, New York 10172
                                      Telecopy No.:     212-583-0921
                                      Telephone No.:    212-583-4720
                                      Attention:  Loan Administration Manager

                                      Lending Office for Eurodollar Loans:

                                      Arab Banking Corporation (B.S.C.)
                                      277 Park Avenue, 32nd Floor
                                      New York, New York 10172
                                      Telecopy No.:     212- 583-0921
                                      Telephone No.:    212-583-4720
                                      Attention:  Loan Administration Manager

                                      ING (U.S.) CAPITAL CORPORATION

                                      By:
  Commitment:                         Name:
                                      Title:
  $24,242,424.24
                                      By:
                                      Name:
                                      Title:

                                      Address for Notices:

                                      ING (U.S.) Capital Corporation


                                      Telecopy No.:
                                      Telephone No.:
                                      Attention:

                                      Lending Office for ABR Loans:


                                      Attention:

                                      Lending Office for Eurodollar Loans:

                                      Attention:



                                 EXHIBIT "A"

                          ASSIGNMENT AND ACCEPTANCE

                         Date:  _______________, 19__


        Reference   is   made  to   the  Credit   Agreement  dated   as  of
  _____________, 1997 (as the same may be  amended and in effect from  time
  to time, the "Credit Agreement"), among Falcon Drilling Company, Inc.,  a
  Delaware  corporation, each of  the Banks  or other  lending institutions
  which  is  or which  may  from  time  to  time  became  a  party  thereto
  (individually a "Bank"  and collectively the "Banks"), Banque  Paribas as
  agent for  itself and  the other  Banks (in such capacity  as agent,  the
  "Agent"), and the Co-Agent (if any) for the Banks named therein (the "Co-
  Agent"). Capitalized terms used herein  and not otherwise defined  herein
  shall have the  meanings assigned to such  terms in the Credit Agreement.
  This Assignment and Acceptance is being executed pursuant to Section 13.8
  of the Credit Agreement.

        ___________________________       (the       "Assignor")        and
  ___________________________ (the "Assignee") agree as follows:

        (a)   The Assignor hereby  sells and  assigns to the  Assignee, and
              the Assignee hereby  purchases and assumes from the Assignor,
              a ________% interest in and to all the Assignor's rights  and
              obligations  under the  Credit Agreement  and the  other Loan
              Documents  as  of  the  Effective  Date  (as  defined  below)
              (including, without limitation, such  percentage interest  in
              the Commitment of the Assignor on the Effective Date and such
              percentage  interest  in  the  Loans  and  Letter  of  Credit
              Liabilities   owing  to  the  Assignor   outstanding  on  the
              Effective Date together  with such percentage interest in all
              unpaid interest  and fees  accrued from  the Effective Date).
              After giving  effect to  this Assignment  and Acceptance, the
              Commitment  of  Assignor  will  be $_______________  and  the
              Commitment of Assignee will be $_______________.

        (b)   The Assignor (i) represents that, as of the date  hereof, its
              Commitment is  $_______________,  the  outstanding  principal
              balance of its Loans is $_______________, and the outstanding
              principal  balance of  its  Letter of  Credit  Liabilities is
              $_____________________ (all  as unreduced  by any assignments
              which   have  not  yet   become  effective);   (ii) makes  no
              representation or warranty and assumes no responsibility with
              respect to any statements, warranties or representations made
              in  or in connection  with the Credit Agreement  or any other
              Loan   Document   or   the  execution,   legality,  validity,
              enforceability,  genuineness,  sufficiency  or  value  of the
              Credit Agreement or any  other Loan Document, other than that
              it  is the legal  and beneficial owner of  the interest being
              assigned by it  hereunder and that such interest is  free and
              clear of any  adverse claim; (iii) makes no representation or
              warranty and  assumes no  responsibility with  respect to the
              financial condition  of any Loan Party  or the performance or
              observance by any Loan Party of any of its obligations  under
              the  Credit  Agreement   or  any  other  Loan  Document;  and
              (iv) attaches the Note held by Assignor and requests that the
              Agent exchange  such Note for a new Note payable to the order
              of (A) the  Assignee  in an  amount equal  to the  amount  of
              Assignor's  Commitment  assumed  by  Assignee  hereunder, and
              (B) the  Assignor in  an amount  equal to  the amount  of the
              Commitment retained by Assignor.

        (c)   The Assignee  (i) represents and warrants  that it is legally
              authorized  to  enter  in  this  Assignment  and  Acceptance;
              (ii) confirms  that  it has  received  a copy  of the  Credit
              Agreement, together with  copies of the most recent financial
              statements  delivered  pursuant  to Section 8.1  thereof, and
              such  other  documents  and  information  as  it  has  deemed
              appropriate to  make its own credit analysis  and decision to
              enter into this Assignment and Acceptance;  (iii) agrees that
              it will, independently and without reliance upon the Agent or
              Co-Agent,  the Assignor or  any other Bank and  based on such
              documents and information as it shall deem appropriate at the
              time, continue to make its own credit decisions in taking  or
              not taking  action under  the Credit Agreement  and the other
              Loan  Documents;   (iv) confirms  that  it   is  an  Eligible
              Assignee; (v) appoints and  authorizes the Agent to take such
              action on  the Assignee's behalf and to  exercise such powers
              under the Loan Documents as are delegated to the Agent by the
              terms thereof,  together with  such powers  as are reasonably
              incidental  thereto;  (vi) agrees  that  it will  perform  in
              accordance  with their  terms  all obligations  which  by the
              terms  of the Credit  Agreement and the other  Loan Documents
              are  required to be  performed by it as  a Bank; (vii) agrees
              that it  will keep confidential  all information with respect
              to the Loan Parties furnished  to it by any Loan Party or the
              Assignor marked as being confidential (other than information
              generally   available  to  the  public)  in  accordance  with
              Section 13.20  of the  Credit Agreement;  and (viii) attaches
              the forms prescribed by  the Internal Revenue Service  of the
              United States certifying  as to the Assignee's exemption from
              United States withholding  taxes with respect to all payments
              to be made to the Assignee under the Credit Agreement or such
              other documents as  are necessary  to indicate that  all such
              payments  are subject  to such  tax at  a rate reduced  by an
              applicable tax treaty.(1)

        (d)   The effective  date for this  Assignment and Acceptance shall
              be ______________, 19__  (the "Effective Date").(2) Following
              the  execution of this Assignment and  Acceptance, it will be
              delivered  to the Agent  for acceptance and recording  by the
              Agent.

                   (1) If the Assignee is organized under the laws of a
                       jurisdiction outside the United States.

                   (2) Such date  shall be  at least  five (5)  Business
                       Days after  the execution  of this Assignment and
                       Acceptance  and  delivery  thereof  to  the Agent
                       (unless otherwise agreed by the Agent).

        (e)   Upon  such  acceptance  and  recording,  from  and  after the
              Effective Date,  (i) the  Assignee shall  be a  party to  the
              Credit  Agreement  and,   to  the  extent  provided  in  this
              Assignment  and   Acceptance,  shall  have  the   rights  and
              obligations of  a Bank thereunder  and under  the other  Loan
              Documents and (ii) the Assignor shall, to the extent provided
              in this Assignment  and Acceptance, relinquish its rights and
              be released  from its obligations  under the Credit Agreement
              and the other Loan Documents.

        (f)   Upon  such  acceptance  and  recording,  from  and  after the
              Effective Date, the Agent  shall make all payments in respect
              of  the  interest  assigned  hereby  (including  payments  of
              principal, interest, fees and other amounts) to the Assignee.
              The  Assignor   and  Assignee  shall   make  all  appropriate
              adjustments in  payments under  the Credit  Agreement and the
              Note for periods prior to the Effective Date directly between
              themselves.

        (g)   THIS  ASSIGNMENT AND  ACCEPTANCE  SHALL BE  GOVERNED  BY, AND
              CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF  TEXAS
              AND APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.

        (h)   The  Assignee's address  for  notices and  Applicable Lending
              Office  for  purposes of  the  Credit  Agreement  (until such
              address or office are subsequently changed in accordance with
              the  Credit Agreement) are  specified below  its name  on the
              signature pages of this Assignment and Acceptance.

                                      [NAME OF ASSIGNOR]


                                      By:
                                      Name:
                                      Title:


                                      [NAME OF ASSIGNEE]


                                      By:
                                      Name:
                                      Title:

                                      Address for Notices:


                                      Telecopy No.:
                                      Telephone No.:
                                      Attention:


                                      Lending Office for ABR Loans:



                                      Lending Office for Eurodollar Loans:



  ACCEPTED BY:

  BANQUE PARIBAS, as Agent for the Banks

  By:
  Name:
  Title:


  By:
  Name:
  Title:

  Date:


                                 EXHIBIT "B"

                        UNSECURED REVOLVING LOAN NOTE


  $______________               Houston, Texas          ______________, 1997

        FOR  VALUE  RECEIVED, Falcon  Drilling  Company,  Inc.,  a Delaware
  corporation  (the  Borrower ),  promises to  pay to  the order  of Banque
  Paribas, a  French banking  corporation, (the  "Bank"), at  the Principal
  Office of the  Agent, in lawful money of the United States of America and
  in    immediately   available    funds,    the   principal    amount   of
  ______________________________________________________  (_______________)
  or such  lesser  amount as  shall equal  the aggregate  unpaid  principal
  amount of the Loans made by the Bank (or its  predecessor in interest) to
  the  Borrower under the Credit  Agreement referred to below, on the dates
  and in the principal amounts provided in the Credit Agreement, and to pay
  interest  on the  unpaid principal  amount  of each  such  Loan, at  such
  office, in like money and funds, for the period commencing on the date of
  each such Loan until each such Loan  shall be paid in full, at  the rates
  per annum and on the dates provided in the Credit Agreement.

        This Note is one  of the Notes referred to in the  Credit Agreement
  dated  as  of  __________,  1997,  among the  Borrower,  the  Banks named
  therein,  Banque Paribas,  as Agent for the  Banks, and  the Co-Agent (if
  any)  for the Banks named therein (such Credit Agreement, as the same may
  be amended,  modified, supplemented, renewed,  extended, or restated from
  time to  time, being referred  to herein as  the "Credit Agreement"), and
  evidences  Loans  made  by  the  Bank (or  its  predecessor  in interest)
  thereunder.   The  holder of  this Note  shall  be entitled  to,  without
  limitation,  the benefits provided  in the Credit Agreement  as set forth
  therein. The  Credit Agreement,  among other  things, contains provisions
  for  acceleration of  the maturity  of  this Note  upon the  happening of
  certain stated  events and  for  prepayment of  the  Loans prior  to  the
  maturity of  this Note upon  the terms  and conditions  specified in  the
  Credit Agreement. Capitalized terms used in this Note have the respective
  meanings assigned to them in the Credit Agreement.

        THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
  LAWS OF THE  STATE OF TEXAS AND THE  APPLICABLE LAWS OF THE UNITED STATES
  OF AMERICA.  THIS NOTE IS PERFORMABLE IN HARRIS COUNTY, TEXAS.

        Each Borrower,  surety, guarantor,  endorser, and  other party ever
  liable for payment of any sums of money payable on this Note  jointly and
  severally waive notice,  presentment, demand for payment, protest, notice
  of protest and non-payment or dishonor, notice of acceleration, notice of
  intent  to  accelerate,  notice   of  intent  to  demand,   diligence  in
  collecting, grace, and all other formalities of any kind, and consent  to
  all  extensions without  notice  for any  period or  periods of  time and
  partial payments,  before or  after maturity, and any  impairment of  any
  collateral securing this Note, all without  prejudice to the holder.  The
  holder  shall similarly have the  right to deal in any  way, at any time,
  with  one or  more of the  foregoing parties without notice  to any other
  party, and to grant any such party any extensions of  time for payment of
  any of  said indebtedness, or to release or substitute part or all of the
  collateral securing  this  Note, or  to grant  any other  indulgences  or
  forbearances whatsoever, without notice to any other party and without in
  any way affecting the personal liability of any party hereunder.

        THIS NOTE, TOGETHER  WITH THE OTHER LOAN  DOCUMENTS, REPRESENTS THE
  FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
  PRIOR,  CONTEMPORANEOUS OR  SUBSEQUENT  ORAL AGREEMENTS  OF  THE PARTIES.
  THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

                                      FALCON DRILLING COMPANY, INC.


                                      By:
                                          Leighton E. Moss
                                          Vice President and General Counsel


                                 EXHIBIT "C"

                                  NOTICE


                                                         _____________, 19__

  Banque Paribas, as Agent
  1200 Smith Street, Suite 3100
  Houston, Texas 77002

  Gentlemen:

        Reference   is  made   to  the   Credit   Agreement  dated   as  of
  _____________, 1997 (as the same may be  amended and in effect from  time
  to time, the "Credit Agreement"), among Falcon Drilling Company, Inc.,  a
  Delaware  corporation,  (the  "Borrower"),  each of  the  Banks or  other
  lending institutions  which is or which  may from time  to time  become a
  party  thereto (individually   a   Bank   and collectively  the "Banks"),
  Banque Paribas, as agent for itself and the other Banks (in such capacity
  as agent,  the  Agent ), and the  Co-Agent (if any)  for the  Banks named
  therein  (the   Co-Agent ).    Capitalized  terms  used  herein  and  not
  otherwise defined herein  shall have the meanings assigned to  such terms
  in the Credit Agreement.

        This  irrevocable  Notice  is  given by  the  Borrower pursuant  to
  Section 2.9 of the Credit Agreement.  The Borrower hereby notifies you of
  the following (check and/or complete the applicable item):

  ____  (a)    Borrowing.

            (i)   The Borrower  requests a Loan in  the amount of  $________
                  on _____________, 19___.

           (ii)   The Loan will be of the following Type:
                  [ABR Loan] [Eurodollar Loan].

          (iii)   If  the  Loan  will be  a  Eurodollar  Loan, the  Interest
                  Period will be ___________ month[s].

  ____  (b)    [Conversion] [Continuation] of Loan.

            (i)   The  Borrower requests a [Conversion]  [Continuation] of a
                  Loan in the amount of $________ on __________, 19___.

           (ii)   The Type of Loan to be  [Converted] [Continued] will be  a
                  [ABR Loan] [Eurodollar Loan].

          (iii)   The Loan  resulting from  the [Conversion]  [Continuation]
                  will be a [ABR Loan] [Eurodollar Loan].

           (iv)   If   the    Loan   resulting    from   the    [Conversion]
                  [Continuation]  will be  a  Eurodollar Loan,  the Interest
                  Period for such Loan will be _____ month[s].

  ____  (c)    Prepayment.

            (i)   The Borrower  will make a prepayment  of the principal  of
                  the   Loans   in   the    amount   of   $___________    on
                  ______________, 19___.

           (ii)   The Loan  to be  prepaid will  be of  the following  Type:
                  [ABR Loan] [Eurodollar Loan].

          (iii)   If the  Loan to be prepaid is a Eurodollar Loan, it has an
                  Interest  Period  of  _____  month[s]  that  will  end  on
                  _____________, 19___  [and the  breakage costs  associated
                  with   the   prepayment  of   such   Eurodollar   Loan  is
                  $____________].

                                      Very truly yours,

                                      FALCON DRILLING COMPANY, INC.


                                      By:
                                      Name:
                                      Title:


                               SCHEDULE 1.1(a)

                               Permitted Liens

  3.    Pledge by Falcon  Drilling Holdings, L.P. ("FDH") of its  shares of
        stock  and joint venture  interests in Foraven S.A.  and Forwest de
        Venezuela C.A.,  securing the guarantees by FDH and Falcon Drilling
        Company, Inc. of 3/14 of a $14,500,000 loan by Compagnie Financiere
        De  CIC Et  De  L'Union  Europeenne  ("CFCICUE")  to  Foraven  S.A.
        pursuant  to  that certain  Pledge Over Shares  between FDH  as the
        Chargor  and CFCICUE  as  the  Bank dated  November 15,  1991  with
        respect  to the  stock  in  Foraven S.A.  and that  certain  Pledge
        Agreement Over the Shares of Forwest de Venezuela C.A. executed  by
        FDH in favor of CFCICUE.

                                 SCHEDULE 7.6

                                  Litigation

  In October  1996, suit  was initiated against the  Company by  Springwell
  Corporation in the United States District Court for the Southern District
  of New York.  Springwell alleges that  it  introduced  the Company to  an
  investment banking firm  which subsequently participated in placements of
  debt and  equity of  the Company.   Springwell claims it  is entitled  to
  compensation based on quantum meruit and express or implied agreements by
  the Company  or its agents to  pay Springwell a  commission.  The Company
  believes Springwell s claims are  without merit and intends to vigorously
  contest such claims.


                                SCHEDULE 7.10

                                Existing Debt

  None


                                SCHEDULE 7.11

                                    Taxes

  None


                                SCHEDULE 7.13

                                    Plans

  None

                               SCHEDULE 7.15(b)

                        Capitalization of Subsidiaries

  1.    Falcon Drilling Company, Inc. Owns all of the capital stock of:
              Falcon Services Company, Inc.
              Raptor Exploration Company, Inc.
              Falcon Inland, Inc.
              Falcon Drilling Management, Inc.
              Falcon Workover Company, Inc.
              Falcon Drilling de Venezuela, Inc.
              FALRIG Offshore, Inc.
              Falcon Offshore, Inc.
              Falcon Atlantic Inc.
              Perforaciones FALRIG de Venezuela, S.A.
              Double Eagle Marine, Inc.
              Sun Towing Company, Inc.
              MNS Towing, Inc.

  2.    Falcon Drilling  Company, Inc.  and Falcon  Drilling Management are
  the sole partners of Falcon Drilling Holdings, L.P.

  3.    Falcon  Offshore, Inc.  owns all  of the  capital stock  of Kestrel
  Offshore, Inc.

  4.    Falcon  Offshore, Inc.  and  Kestrel  Offshore, Inc.  are  the sole
  partners of FALRIG Offshore   Partners.

  5.    FALRIG  Offshore, Inc.  and FALRIG  Offshore Partners are  the sole
  partners of FALRIG  Offshore (USA), L.P.

  6.    All of the capital interest  of Falcon Drilling do Brasil, Ltda. is
  owned by Falcon Offshore, Inc. and FALRIG Offshore, Inc.

                                SCHEDULE 7.22

                              Material Contracts

  Under its  contracts with  Petroleo Brasiliero S.A.  to provide  contract
  drilling  with the  drillship Peregrine  I, the Company  is liable  for a
  penalty  of approximately $15,000  per day  for each day beyond  June 30,
  1996  that the drillship was not  available to be placed in service.  The
  drillship  was not available to be  placed in service   until November 2,
  1996.

  BHP Petroleum  Pty. Ltd. is in default  in the payment to  the Company of
  amounts owned to the Company under a drilling contact.

  Articmorneftigas is in default under a Memorandum of Agreement to charter
  a drillship to the Company.

                                SCHEDULE 7.26

                               Employee Matters

  None

                                 SCHEDULE 9.5

                                 Investments

  None

                                 SCHEDULE 9.7

                     Certain Transactions with Affiliates

  None

                                SCHEDULE 9.12

                          Intercompany Transactions

  None