EXHIBIT 10.150

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                   AMENDED AND RESTATED CREDIT AGREEMENT

                                   among

                       READING & BATES CORPORATION,

                       READING & BATES DRILLING CO.,

                       VARIOUS LENDING INSTITUTIONS,

                         CREDIT AGRICOLE INDOSUEZ,
                          as DOCUMENTATION AGENT

                     CREDIT LYONNAIS NEW YORK BRANCH,
                           as DOCUMENTATION AGENT

                                    and

                     CHRISTIANIA BANK OG KREDITKASSE,
                             NEW YORK BRANCH,

                         as ADMINISTRATIVE AGENT,
                                 ARRANGER
                           AND SECURITY TRUSTEE

                  _______________________________________

                       Dated as of November 13, 1996
                                    and
                  Amended and Restated as of July 3, 1997
                  _______________________________________

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                    TABLE OF CONTENTS

SECTION 1.  Amount and Terms of Credit
     1.01  Commitment
     1.02  Minimum Borrowing Amounts, etc.
     1.03  Notice of Borrowing
     1.04  Disbursement of Funds
     1.05  Notes
     1.06  Conversions
     1.07  Pro Rata Borrowings
     1.08  Interest
     1.09  Interest Periods
     1.10  Increased Costs, Illegality, etc.
     1.11  Compensation
     1.12  Change of Lending Office;
               Limitation on Indemnities
     1.13  Replacement of Banks

SECTION 2.  Letters of Credit
     2.01  Letters of Credit
     2.02  Letter of Credit Requests; Request for
             Issuance of Letter of Credit
     2.03  Agreement to Repay Letter of Credit Payments
     2.04  Letter of Credit Participations
     2.05  Increased Costs
     2.06  Indemnities

SECTION 3.  Fees; Commitments
     3.01  Fees
     3.02  Voluntary Reduction of Commitments
     3.03  Mandatory Adjustments of Commitments, etc.

SECTION 4.  Payments
     4.01  Voluntary Prepayments
     4.02  Mandatory Prepayments
     4.03  Method and Place of Payment
     4.04  Net Payments

SECTION 5.  Conditions Precedent
     5.01  Execution of Agreement; Notes
     5.02  No Default; Representations and Warranties
     5.03  Officer's Certificate
     5.04  Opinions of Counsel
     5.05  Corporate Proceedings
     5.06  Adverse Change, etc.
     5.07  Litigation
     5.08  Approvals
     5.09  Fees
     5.10  Security Agreement
     5.11  Subsidiary Guaranty
     5.12  Mortgages
     5.13  Evidence of Filing of Mortgage Amendments;
              Variation of Australian Mortgage, etc.
     5.14  Pledge Agreement
     5.15  Refinancing; Existing Credit Agreement
     5.16  Compliance Certificate

SECTION 6.  Representations, Warranties and Agreements
     6.01  Corporate Status
     6.02  Corporate Power and Authority
     6.03  No Violation
     6.04  Litigation
     6.05  Use of Proceeds; Margin Regulations
     6.06  Governmental Approvals
     6.07  Investment Company Act
     6.08  Public Utility Holding Company Act
     6.09  True and Complete Disclosure
     6.10  Financial Condition; Financial Statements;
               Projections
     6.11  Security Interests
     6.12  Tax Returns and Payments
     6.13  Compliance with ERISA
     6.14  Subsidiaries
     6.15  Patents, etc.
     6.16  Pollution and Other Regulations
     6.17  Properties
     6.18  Labor Relations
     6.19  Existing Indebtedness
     6.20  Citizenship
     6.21  Rig Classification

SECTION 7.  Affirmative Covenants
     7.01  Information Covenants
     7.02  Books, Records and Inspections
     7.03  Insurance
     7.04  Payment of Taxes
     7.05  Consolidated Corporate Franchises
     7.06  Compliance with Statutes, etc.
     7.07  Good Repair
     7.08  End of Fiscal Years; Fiscal Quarters
     7.09  Use of Proceeds
     7.10  Earnings Concentration Account
     7.11  Additional Rig Valuations
     7.12  Further Assurances
     7.13  ERISA

SECTION 8.  Negative Covenants
     8.01  Changes in Business
     8.02  Consolidation, Merger or Sale of Assets, etc.
     8.03  Liens on Collateral; Arcade Drilling
     8.04  Indebtedness of Arcade
     8.05  Dividends; Restrictions on Subsidiaries, etc.
     8.06  Transactions with Affiliates
     8.07  Vessel Management; Registry
     8.08  Coverage Ratio
     8.09  Working Capital
     8.10  Leverage Ratio
     8.11  Collateral Maintenance

SECTION 9.  Events of Default
     9.01  Payments
     9.02  Representations, etc.
     9.03  Covenants
     9.04  Default Under Other Agreements
     9.05  Bankruptcy, etc.
     9.06  Security Documents
     9.07  Guaranty
     9.08  Judgments
     9.09  Citizenship
     9.10  Employee Benefit Plans
     9.11  Change of Control

SECTION 10.  Definitions

SECTION 11.  The Administrative Agent and the
                Security Trustee
     11.01  Appointment of the Administrative
                Agent and the Security Trustee
     11.02  Nature of Duties
     11.03  Lack of Reliance on the Administrative Agent
     11.04  Certain Rights of the Administrative Agent
     11.05  Reliance
     11.06  Indemnification
     11.07  The Administrative Agent in Its
               Individual Capacity
     11.08  Holders
     11.09  Resignation by the Administrative Agent

SECTION 12.  Miscellaneous
     12.01  Payment of Expenses, etc.
     12.02  Right of Setoff
     12.03  Notices
     12.04  Benefit of Agreement
     12.05  No Waiver; Remedies Cumulative
     12.06  Payments Pro Rata
     12.07  Calculations; Computations
     12.08  GOVERNING LAW; SUBMISSION TO JURISDICTION;
                VENUE; WAIVER OF JURY TRIAL
     12.09  Counterparts
     12.10  Effectiveness
     12.11  Headings Descriptive
     12.12  Amendment or Waiver
     12.13  Survival
     12.14  Domicile of Loans
     12.15  Confidentiality
     12.16  Registry

SECTION 13.  Holdings Guaranty
     13.01  The Guaranty
     13.02  Bankruptcy
     13.03  Nature of Liability
     13.04  Independent Obligation
     13.05  Waiver of Notice, etc.
     13.06  Authorization
     13.07  Reliance
     13.08  Subordination
     13.09  Waiver

ANNEX I     --  Commitments
ANNEX II    --  Bank Addresses
ANNEX III   --  Existing Letters of Credit
ANNEX IV    --  Commitment Reduction Schedule
ANNEX V     --  Subsidiaries
ANNEX VI    --  Rigs and Vessels
ANNEX VII   --  Existing Indebtedness
ANNEX VIII  --  Existing Liens
ANNEX IX    --  Approved Shipbrokers

EXHIBIT A   --  Form of Notice of Borrowing
EXHIBIT B   --  Form of Note
EXHIBIT C   --  Form of Letter of Credit Request
EXHIBIT D   --  Form of Section 4.04(b)(ii) Certificate
EXHIBIT E-1 --  Form of Opinion of Wayne Hillin, Esq.
EXHIBIT E-2 --  Form of Opinion of White & Case
EXHIBIT F   --  Form of Officers' Certificate
EXHIBIT G   --  Form of Security Agreement
EXHIBIT H   --  Form of Subsidiary Guaranty
EXHIBIT I-1 --  Form of US Mortgage
EXHIBIT I-2 --  Form of Panamanian Mortgage
EXHIBIT I-3 --  Form of Australian Mortgage
EXHIBIT J   --  Form of Pledge Agreement
EXHIBIT K   --  Form of Compliance Certificate
EXHIBIT L   --  Form of Assignment and Assumption Agreement

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          AMENDED  AND RESTATED CREDIT AGREEMENT, dated as of November  13,
1996  and  amended and restated as of July 3, 1997, among READING  &  BATES
CORPORATION ("Holdings"), a Delaware corporation, READING & BATES  DRILLING
CO.  (the  "Borrower"), an Oklahoma corporation, the  lending  institutions
listed  from  time  to time on Annex I hereto (each a  "Bank"  and,  collec
tively, the "Banks"), CREDIT AGRICOLE INDOSUEZ and CREDIT LYONNAIS NEW YORK
BRANCH as documentation agents (the "Documentation Agents") and CHRISTIANIA
BANK OG KREDITKASSE, NEW YORK BRANCH, as administrative agent, arranger and
security  trustee  (the "Administrative Agent").  Unless otherwise  defined
herein,  all  capitalized terms used herein and defined in Section  10  are
used herein as so defined.

                      W I T N E S S E T H :

          WHEREAS,  subject to and upon the terms and conditions set  forth
herein, the Banks are willing to make available to the Borrower the  credit
facilities provided for herein;

          NOW, THEREFORE, IT IS AGREED:

          SECTION 1.  Amount and Terms of Credit.

          1.01   Commitment.  Subject to and upon the terms and  conditions
herein set forth, each Bank severally agrees to make a loan or loans  (each
a  "Loan"  and,  collectively,  the "Loans")  under  the  Facility  to  the
Borrower, which Loans (i) shall be made at any time and from time  to  time
on and after the Restatement Effective Date and prior to the Maturity Date,
(ii) except as hereinafter provided, may, at the option of the Borrower, be
incurred  and  maintained as, and/or converted into,  Base  Rate  Loans  or
Eurodollar  Loans,  provided  that all Loans  made  as  part  of  the  same
Borrowing shall, unless otherwise specifically provided herein, consist  of
Loans  of  the same Type, (iii) may be repaid and reborrowed in  accordance
with the provisions hereof, (iv) shall not exceed in the aggregate for  all
Banks  at  any  time outstanding, the Total Commitment and  (v)  shall  not
exceed for any Bank at any time outstanding that aggregate principal amount
which, when combined with the aggregate outstanding principal amount of all
other  Loans of such Bank and with such Bank's Adjusted Percentage  of  the
Letter  of  Credit  Outstandings (exclusive of Unpaid  Drawings  which  are
repaid with the proceeds of, and simultaneously with the incurrence of, the
respective incurrence of Loans) at such time, equals (1) if such Bank is  a
Non-Defaulting Bank, the Adjusted Commitment of such Bank at such time  and
(2)  if such Bank is a Defaulting Bank, the Commitment of such Bank at such
time.

          1.02   Minimum  Borrowing Amounts, etc.  The aggregate  principal
amount  of  each  Borrowing shall not be less than  the  Minimum  Borrowing
Amount  for the Loans constituting such Borrowing.  More than one Borrowing
may  be  incurred  on  any day, provided that at no  time  shall  there  be
outstanding more than 10 Borrowings of Eurodollar Loans.

          1.03   Notice  of  Borrowing.  Whenever the Borrower  desires  to
incur  Loans under the Facility, it shall give the Administrative Agent  at
its  Notice  Office, prior to 12:00 Noon (New York time),  at  least  three
Business   Days'  prior  written  notice  (or  telephonic  notice  promptly
confirmed  in writing) of each Borrowing of Eurodollar Loans and  at  least
one  Business  Day's  prior written notice (or telephonic  notice  promptly
confirmed  in  writing) of each Borrowing of Base Rate  Loans  to  be  made
hereunder.  Each such notice (each a "Notice of Borrowing") shall be in the
form  of  Exhibit  A  and shall be irrevocable and shall  specify  (i)  the
aggregate  principal  amount  of the Loans to  be  made  pursuant  to  such
Borrowing,  (ii)  the date of Borrowing (which shall be  a  Business  Day),
(iii) whether the respective Borrowing shall consist of Base Rate Loans  or
(to  the  extent permitted) Eurodollar Loans and, if Eurodollar Loans,  the
Interest  Period  to be initially applicable thereto and (iv)  disbursement
instructions.  The Administrative Agent shall promptly give each Bank  writ
ten  notice  (or telephonic notice promptly confirmed in writing)  of  each
proposed Borrowing, of such Bank's proportionate share thereof and  of  the
other matters covered by the Notice of Borrowing.

          1.04   Disbursement of Funds.  (a)  No later than 1:00 P.M.  (New
York  time)  on the date specified in each Notice of Borrowing,  each  Bank
will  make available its pro rata share of each Borrowing requested  to  be
made on such date in the manner provided below.  All such amounts shall  be
made  available to the Administrative Agent in U.S. Dollars and immediately
available funds at the Payment Office and the Administrative Agent promptly
will make available to the Borrower by depositing to its account at the Pay
ment  Office  (or  in  accordance with any other disbursement  instructions
given  by  the Borrower) the aggregate of the amounts so made available  in
U.S.  Dollars  and immediately available funds.  Unless the  Administrative
Agent  shall have been notified by any Bank prior to the date of  Borrowing
that  such  Bank  does not intend to make available to  the  Administrative
Agent  its portion of the Borrowing or Borrowings to be made on such  date,
the  Administrative Agent may assume that such Bank has  made  such  amount
available  to the Administrative Agent on such date of Borrowing,  and  the
Administrative Agent, in reliance upon such assumption, may  (in  its  sole
discretion  and  without any obligation to do so)  make  available  to  the
Borrower  a corresponding amount.  If such corresponding amount is  not  in
fact  made  available  to the Administrative Agent by  such  Bank  and  the
Administrative  Agent  has  made  available  same  to  the  Borrower,   the
Administrative Agent shall be entitled to recover such corresponding amount
from  such Bank.  If such Bank does not pay such corresponding amount forth
with  upon  the  Administrative Agent's demand therefor, the Administrative
Agent  shall promptly (and in any event within two Business Days  from  the
date  the  Administrative Agent made such funds available to the  Borrower)
notify  the Borrower, and the Borrower shall (within two Business  Days  of
receiving  such demand) pay such corresponding amount to the Administrative
Agent.   The  Administrative Agent shall also be  entitled  to  recover  on
demand from such Bank or the Borrower, as the case may be, interest on such
corresponding   amount  in  respect  of  each  day  from  the   date   such
corresponding amount was made available by the Administrative Agent to  the
Borrower  to  the  date  such  corresponding amount  is  recovered  by  the
Administrative  Agent, at a rate per annum equal to (x)  if  paid  by  such
Bank, the overnight Federal Funds Effective Rate or (y) if paid by the  Bor
rower, the then applicable rate of interest, calculated in accordance  with
Section 1.08, for the respective Loans.

          (b)   Nothing herein shall be deemed to relieve any Bank from its
obligation to fulfill its commitments hereunder or to prejudice any  rights
which the Borrower may have against any Bank as a result of any default  by
such Bank hereunder.

          1.05  Notes.  (a)  The Borrower's obligation to pay the principal
of,  and  interest on, the Loans made to it by each Bank shall be evidenced
by  a  promissory note substantially in the form of Exhibit B  with  blanks
appropriately  completed  in  conformity  herewith  (each  a  "Note"   and,
collectively, the "Notes").

          (b)   The Note issued to each Bank shall (i) be executed  by  the
Borrower,  (ii)  be  payable to the order of such Bank  and  be  dated  the
Restatement Effective Date, (iii) be in a stated principal amount equal  to
the  Commitment of such Bank on such date and be payable in  the  principal
amount  of  the Loans evidenced thereby, (iv) mature on the Maturity  Date,
(v) bear interest as provided in the appropriate clause of Section 1.08  in
respect  of the Base Rate Loans and Eurodollar Loans, as the case  may  be,
evidenced  thereby, (vi) be subject to mandatory repayment as  provided  in
Section  4.02 and (vii) be entitled to the benefits of and subject to  this
Agreement and the other Credit Documents.

          (c)   Each  Bank will note on its internal records the amount  of
each Loan made by it and each payment in respect thereof and will, prior to
any  transfer of any of its Notes, endorse on the reverse side thereof  the
outstanding principal amount of Loans evidenced thereby.  Failure  to  make
any such notation shall not affect the Borrower's obligations in respect of
such Loans.

          1.06  Conversions.  The Borrower shall have the option to convert
on  any  Business  Day all or a portion at least equal  to  the  applicable
Minimum  Borrowing Amount of the outstanding principal amount of the  Loans
owing  pursuant to the Facility into a Borrowing or Borrowings pursuant  to
the Facility of another Type of Loan, provided that (i) except as otherwise
provided  in Section 1.10(b), Eurodollar Loans may be converted  into  Base
Rate  Loans  only on the last day of an Interest Period applicable  thereto
and  no  partial conversion of a Borrowing of Eurodollar Loans shall reduce
the  outstanding principal amount of the Eurodollar Loans made pursuant  to
such  Borrowing  to  less  than  the Minimum  Borrowing  Amount  applicable
thereto, (ii) no Base Rate Loans may be converted into Eurodollar Loans  at
any time when a Default or Event of Default is in existence on the date  of
the  conversion  if  the Administrative Agent or the  Required  Banks  have
determined that such a conversion would be disadvantageous to the Banks and
(iii) Borrowings of Eurodollar Loans resulting from this Section 1.06 shall
be  limited  in  number as provided in Section 1.02.  Each such  conversion
shall  be effected by the Borrower giving the Administrative Agent  at  its
Notice Office, prior to 12:00 Noon (New York time), at least three Business
Days'  (or  one Business Day's, in the case of a conversion into Base  Rate
Loans)  prior  written notice (or telephonic notice promptly  confirmed  in
writing)  (each  a "Notice of Conversion") specifying the Loans  to  be  so
converted,  the Type of Loans to be converted into and, if to be  converted
into  a  Borrowing of Eurodollar Loans, the Interest Period to be initially
applicable  thereto.  The Administrative Agent shall give each Bank  prompt
notice of any such proposed conversion affecting any of its Loans.

          1.07   Pro Rata Borrowings.  All Loans under this Agreement shall
be  made  by the Banks pro rata on the basis of their Commitments.   It  is
understood that no Bank shall be responsible for any default by  any  other
Bank in its obligation to make Loans hereunder and that each Bank shall  be
obligated to make the Loans provided to be made by it hereunder, regardless
of the failure of any other Bank to fulfill its commitments hereunder.

          1.08   Interest.  (a)  The unpaid principal amount of  each  Base
Rate  Loan shall bear interest from the date of the Borrowing thereof until
maturity  (whether by acceleration or otherwise) at a rate per annum  which
shall at all times be the Base Rate in effect from time to time.

          (b)   The  unpaid principal amount of each Eurodollar Loan  shall
bear  interest  from  the  date  of the Borrowing  thereof  until  maturity
(whether  by acceleration or otherwise) at a rate per annum which shall  at
all  times be the Applicable Eurodollar Margin plus the relevant Eurodollar
Rate.

          (c)   All overdue principal and, to the extent permitted by  law,
overdue  interest  in  respect of each Loan and any  other  overdue  amount
payable hereunder shall bear interest at a rate per annum equal to the Base
Rate  in effect from time to time plus 2%, provided that no Loan shall bear
interest  after maturity (whether by acceleration or otherwise) at  a  rate
per  annum  less  than 2% plus the rate of interest applicable  thereto  at
maturity.

          (d)   Interest shall accrue from and including the  date  of  any
Borrowing to but excluding the date of any repayment thereof and  shall  be
payable (i) in respect of each Base Rate Loan, quarterly in arrears on  the
first day of each January, April, July and October, (ii) in respect of each
Eurodollar Loan, on the last day of each Interest Period applicable thereto
and,  in the case of an Interest Period in excess of three months,  on  the
date occurring three months after the first day of such Interest Period and
(iii) in respect of each Loan, on any prepayment or conversion (other  than
the prepayment and conversion of Base Rate Loans) (on the amount prepaid or
converted), at maturity (whether by acceleration or otherwise)  and,  after
such maturity, on demand.

          (e)   All  computations of interest hereunder shall  be  made  in
accordance with Section 12.07(b).

          (f)  The Administrative Agent, upon determining the interest rate
for  any Borrowing of Loans for any Interest Period, shall promptly  notify
the Borrower and the Banks thereof.

          1.09   Interest Periods.  (a)  At the time the Borrower  gives  a
Notice of Borrowing or Notice of Conversion in respect of the making of, or
conversion  into,  a  Borrowing of Eurodollar Loans (in  the  case  of  the
initial  Interest Period applicable thereto) or prior to  12:00  Noon  (New
York time) on the third Business Day prior to the expiration of an Interest
Period  applicable to a Borrowing of Eurodollar Loans, it  shall  have  the
right  to  elect  by  giving the Administrative Agent  written  notice  (or
telephonic  notice  promptly confirmed in writing) of the  Interest  Period
applicable to such Borrowing, which Interest Period shall, at the option of
the  Borrower,  be  a  one,  three  or six month  period.   Notwithstanding
anything to the contrary contained above:

         (i)   the  initial Interest Period for any Borrowing of Eurodollar
     Loans shall commence on the date of such Borrowing (including the date
     of  any  conversion  from a Borrowing of Base  Rate  Loans)  and  each
     Interest  Period  occurring thereafter in respect  of  such  Borrowing
     shall  commence on the day on which the next preceding Interest Period
     expires;

        (ii)  if any Interest Period begins on a day for which there is  no
     numerically corresponding day in the calendar month at the end of such
     Interest  Period, such Interest Period shall end on the last  Business
     Day of such calendar month;

       (iii)  if any Interest Period would otherwise expire on a day  which
     is  not a Business Day, such Interest Period shall expire on the  next
     succeeding  Business Day, provided that if any Interest  Period  would
     otherwise expire on a day which is not a Business Day but is a day  of
     the  month  after which no further Business Day occurs in such  month,
     such Interest Period shall expire on the next preceding Business Day;

       (iv)  no Interest Period shall extend beyond the Maturity Date;

       (v)   no  Interest  Period  with respect to any Borrowing  of  Loans
     under  the Facility may be elected that would extend beyond  any  date
     upon which a Scheduled Commitment Reduction is required to be made  in
     respect  of  the Facility if, after giving effect to the selection  of
     such   Interest  Period,  the  aggregate  principal  amount  of  Loans
     maintained  as  Eurodollar  Loans under  the  Facility  with  Interest
     Periods  ending  after such date would exceed the aggregate  principal
     amount of Loans of the Facility permitted to be outstanding after such
     Scheduled Commitment Reduction;

        (vi)   no Interest Period may be elected at any time when a Default
     or  Event of Default is then in existence if the Administrative  Agent
     or  the  Required Banks have determined that such an election at  such
     time would be disadvantageous to the Banks; and

      (vii)  no more than six Interest Periods of one month may be selected
     by the Borrower in any calendar year.

          (b)   If upon the expiration of any Interest Period, the Borrower
has failed to (or may not) elect a new Interest Period to be applicable  to
the  respective  Borrowing  of  Eurodollar Loans  as  provided  above,  the
Borrower  shall be deemed to have elected a one month Interest  Period  for
such  Borrowing,  provided that if the Borrower may not elect  an  Interest
Period,  the  Borrower  will  be deemed to have  elected  to  convert  such
Borrowing  into  a  Borrowing  of  Base Rate  Loans  effective  as  of  the
expiration date of such current Interest Period.

1.10  Increased Costs, Illegality, etc.  (a)  In the event that (x) in  the
case  of  clause (i) below, the Administrative Agent or (y) in the case  of
clauses  (ii)  and  (iii)  below, any Bank  shall  have  determined  (which
determination  shall, absent manifest error, be final  and  conclusive  and
binding upon all parties hereto):

         (i)   on  any  date for determining the Eurodollar  Rate  for  any
     Interest Period that, by reason of any changes arising after the  date
     of  this Agreement affecting the interbank Eurodollar market, adequate
     and  fair  means do not exist for ascertaining the applicable interest
     rate  on the basis provided for in the definition of Eurodollar  Rate;
     or

        (ii)   at  any time, that such Bank shall incur increased costs  or
     reductions  in  the  amounts  received or  receivable  hereunder  with
     respect  to  any  Eurodollar Loans (other than any increased  cost  or
     reduction  in  the  amount received or receivable resulting  from  the
     imposition  of  or a change in the rate or basis of taxes  or  similar
     charges) because of (x) any change since the date of this Agreement in
     any appli-cable law, governmental rule, regulation, guideline or order
     (or  in the interpretation or administration thereof and including the
     introduction  of  any new law or governmental rule, regulation,  guide
     line or order) (such as, for example, but not limited to, a change  in
     official  reserve requirements, but, in all events, excluding reserves
     required  under Regulation D to the extent included in the computation
     of the Eurodollar Rate) and/or (y) other circumstances occurring after
     the  date  of  this  Agreement and affecting the interbank  Eurodollar
     market; or

       (iii)  at any time, that the making or continuance of any Eurodollar
     Loan has become unlawful by compliance by such Bank in good faith with
     any  law,  governmental rule, regulation, guideline (or would conflict
     with  any  such governmental rule, regulation, guideline or order  not
     having  the force of law but with which such Bank customarily complies
     even though the failure to comply therewith would not be unlawful);

then, and in any such event, such Bank (or the Administrative Agent in  the
case  of  clause  (i)  above) shall (x) on such date  and  (y)  within  ten
Business Days of the date on which such event no longer exists, give notice
(by   telephone  confirmed  in  writing)  to  the  Borrower  and   to   the
Administrative Agent of such determination (which notice the Administrative
Agent shall promptly transmit to each of the other Banks).  Thereafter  (x)
in  the  case  of  clause (i) above, Eurodollar Loans shall  no  longer  be
available until such time as the Administrative Agent notifies the Borrower
and  the  Banks  that the circumstances giving rise to such notice  by  the
Administrative Agent no longer exist, and any Notice of Borrowing or Notice
of  Conversion given by the Borrower with respect to Eurodollar Loans which
have  not yet been incurred shall be deemed rescinded by the Borrower,  (y)
in  the  case of clause (ii) above, the Borrower shall, subject to  Section
1.12(b)  (to the extent applicable), pay to such Bank, upon written  demand
therefor, such additional amounts (in the form of an increased rate of,  or
a  different method of calculating, interest or otherwise as such  Bank  in
its  sole  discretion shall determine) as shall be required  to  compensate
such Bank for such increased costs or reductions in amounts receivable here
under  (a  written notice as to the additional amounts owed to  such  Bank,
showing the basis for the calculation thereof, submitted to the Borrower by
such Bank shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) and (z) in the case of clause (iii) above, the Bor
rower  shall  take  one  of the actions specified  in  Section  1.10(b)  as
promptly as possible and, in any event, within the time period required  by
law.

          (b)   At  any  time that any Eurodollar Loan is affected  by  the
circumstances described in Section 1.10(a)(ii) or (iii), the  Borrower  may
(and  in  the  case  of  a  Eurodollar Loan affected  pursuant  to  Section
1.10(a)(iii),  the  Borrower shall) either (i) if the  affected  Eurodollar
Loan  is then being made pursuant to a Borrowing, cancel said Borrowing  by
giving  the  Administrative Agent telephonic notice (confirmed promptly  in
writing) thereof on the same date that the Borrower was notified by a  Bank
pursuant  to  Section  1.10(a)(ii)  or  (iii),  or  (ii)  if  the  affected
Eurodollar  Loan  is then outstanding, upon at least three  Business  Days'
notice  to  the Administrative Agent, require the affected Bank to  convert
each such Eurodollar Loan into a Base Rate Loan, provided that if more than
one  Bank is affected at any time, then all affected Banks must be  treated
the same pursuant to this Section 1.10(b).

          (c)   If  any Bank shall have determined that after the  date  of
this  Agreement, the adoption or effectiveness of any applicable law,  rule
or  regulation  regarding capital adequacy, or any change therein,  or  any
change  in the interpretation or administration thereof by any governmental
authority,  central  bank or comparable agency charged  with  the  interpre
tation  or  administration thereof, or compliance by  such  Bank  with  any
request or directive regarding capital adequacy (whether or not having  the
force of law but with which such Bank customarily complies even though  the
failure  to  comply therewith would not be unlawful) of any such authority,
central bank or comparable agency, has or would have the effect of reducing
the rate of return on such Bank's capital or assets as a consequence of its
commitments or obligations hereunder to a level below that which such  Bank
could  have  achieved  but  for  such adoption,  effectiveness,  change  or
compliance (taking into consideration such Bank's policies with respect  to
capital  adequacy), then from time to time, within 15 days after demand  by
such  Bank  (with a copy to the Administrative Agent), the Borrower  shall,
subject  to  Section 1.12(b) (to the extent applicable), pay to  such  Bank
such  additional amount or amounts as will compensate such  Bank  for  such
reduction.   Each Bank, upon determining in good faith that any  additional
amounts will be payable pursuant to this Section 1.10(c), will give  prompt
written  notice thereof to the Borrower, which notice shall set  forth  the
basis  of the calculation of such additional amounts, although the  failure
to give any such notice shall not release or diminish any of the Borrower's
obligations to pay additional amounts pursuant to this Section 1.10(c) upon
the subsequent receipt of such notice.

          1.11 Compensation.  The Borrower shall compensate each Bank, upon
its written request (which request shall set forth the basis for requesting
such  compensation),  for all reasonable losses, expenses  and  liabilities
(including, without limitation, any loss, expense or liability incurred  by
reason  of  the  liquidation or reemployment of  deposits  or  other  funds
required  by  such Bank to fund its Eurodollar Loans but excluding  in  any
event the loss of anticipated profits) which such Bank may sustain:  (i) if
for  any  reason  (other than a default by such Bank or the  Administrative
Agent)  a  Borrowing of Eurodollar Loans does not occur on a date specified
therefor in a Notice of Borrowing or Notice of Conversion (whether  or  not
withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a));
(ii)  if  any prepayment, repayment or conversion of any of its  Eurodollar
Loans  (including  as  a result of Section 1.10 or the  last  paragraph  of
Section 9) occurs on a date which is not the last day of an Interest Period
applicable thereto; (iii) if any prepayment of any of its Eurodollar  Loans
is  not  made on any date specified in a notice of prepayment given by  the
Borrower; or (iv) as a consequence of (x) any other default by the Borrower
to  repay its Eurodollar Loans when required by the terms of this Agreement
or (y) an election made pursuant to Section 1.10(b).

          1.12  Change  of Lending Office; Limitation on Indemnities.   (a)
Each Bank agrees that, upon the occurrence of any event giving rise to  the
operation  of Section 1.10(a)(ii) or (iii), 1.10(c), 2.05 or 4.04  with  re
spect  to  such Bank, it will, if requested by the Borrower, use reasonable
efforts  (subject  to  overall  policy  considerations  of  such  Bank)  to
designate  another  lending  office for any  Loan,  Letters  of  Credit  or
Commitments affected by such event, provided that such designation is  made
on  such  terms that such Bank and its lending office suffer  no  economic,
legal  or  regulatory  disadvantage,  with  the  object  of  avoiding   the
consequence of the event giving rise to the operation of any such  Section.
Nothing  in  this Section 1.12 shall affect or postpone any of  the  obliga
tions  of  the Borrower or the right of any Bank provided in Section  1.10,
2.05 or 4.04.

          (b)   Notwithstanding anything in this Agreement to the contrary,
to the extent any notice required by Section 1.10, 2.05 or 4.04 is given by
any  Bank more than 90 days after such Bank obtained, or reasonably  should
have obtained, knowledge of the occurrence of the event giving rise to  the
additional costs of the type described in such Section, such Bank shall not
be  entitled  to  compensation under Section 1.10, 2.05  or  4.04  for  any
amounts  incurred  or accruing prior to the giving of such  notice  to  the
Borrower.

          1.13 Replacement of Banks.  (x)  Upon the occurrence of any event
giving rise to the operation of Section 1.10(a)(ii) or (iii), 1.10(c), 2.05
or 4.04 with respect to any Bank which results in such Bank charging to the
Borrower increased costs in excess of those being generally charged by  the
other Banks or such Bank becoming incapable of making Eurodollar Loans, (y)
if  a  Bank  becomes  a Defaulting Bank and/or (z) as provided  in  Section
12.12(b),  in  the  case of a refusal by a Bank to consent  to  a  proposed
change,  waiver,  discharge or termination with respect to  this  Agreement
which has been approved by the Required Banks, the Borrower shall have  the
right, if no Default or Event of Default then exists, to replace such  Bank
(the  "Replaced  Bank")  with  one or more  other  Eligible  Transferee  or
Transferees  reasonably  acceptable to the Administrative  Agent,  none  of
which  Transferees shall constitute a Defaulting Bank at the time  of  such
replacement  (collectively, the "Replacement Bank"), provided that  (i)  at
the  time of any replacement pursuant to this Section 1.13, the Replacement
Bank  shall  enter  into  one or more Assignment and Assumption  Agreements
pursuant  to Section 12.04(b) (and with all fees payable pursuant  to  said
Section 12.04(b) to be paid by the Replacement Bank) pursuant to which  the
Replacement Bank shall acquire all of the Commitments and outstanding Loans
of,  and  in each case participations in Letters of Credit by, the Replaced
Bank  and, in connection therewith, shall pay to (x) the Replaced  Bank  in
respect  thereof an amount equal to the sum of (A) an amount equal  to  the
principal  of, and all accrued interest on, all outstanding  Loans  of  the
Replaced  Bank, (B) an amount equal to all Unpaid Drawings that  have  been
funded  by  (and not reimbursed to) such Replaced Bank, together  with  all
then  unpaid interest with respect thereto at such time and (C)  an  amount
equal  to  all accrued, but theretofore unpaid, Fees owing to the  Replaced
Bank  pursuant  to  Section 3.01, and (y) the Letter of  Credit  Issuer  an
amount  equal  to  such Replaced Bank's Percentage of  any  Unpaid  Drawing
(which  at  such time remains an Unpaid Drawing) to the extent such  amount
was  not theretofore funded by such Replaced Bank, and (ii) all obligations
of  the  Borrower owing to the Replaced Bank (other than those specifically
described  in clause (i) above in respect of which the assignment  purchase
price  has been, or is concurrently being, paid) shall be paid in  full  to
such  Replaced Bank concurrently with such replacement.  Upon the execution
of  the  respective Assignment and Assumption Agreements,  the  payment  of
amounts  referred to in clauses (i) and (ii) above and, if so requested  by
the  Replacement Bank, delivery to the Replacement Bank of a Note  executed
by the Borrower, the Replacement Bank shall become a Bank hereunder and the
Replaced  Bank  shall  cease to constitute a Bank  hereunder,  except  with
respect to indemnification provisions applicable to the Replaced Bank under
this  Agreement, which shall survive as to such Replaced Bank as  described
herein.

          SECTION 2.  Letters of Credit.

          2.01  Letters of Credit.  (a)  Subject to and upon the terms  and
conditions  herein set forth, the Borrower may request that the  Letter  of
Credit Issuer at any time and from time to time on or after the Restatement
Effective  Date  and  prior to the Business Day immediately  preceding  the
Maturity Date issue, for the account of the Borrower and in support of  L/C
Supportable  Obligations, and subject to and upon the terms and  conditions
herein set forth, the Letter of Credit Issuer agrees to issue from time  to
time, irrevocable standby letters of credit denominated in U.S. Dollars  or
any  other  currency acceptable to the Letter of Credit Issuer (subject  to
the  provisions of Section 2.01(b)) and in such form as may be approved  by
the  Letter of Credit Issuer (each such standby letter of credit, a "Letter
of  Credit" and collectively, the "Letters of Credit").  Annex III contains
a  description  of all letters of credit issued under the  Existing  Credit
Agreement  prior  to the Restatement Effective Date and which  will  remain
outstanding on the Restatement Effective Date.  Each such letter of credit,
including any extension thereof (each an "Existing Letter of Credit") shall
constitute  a  "Letter of Credit" for all purposes of  this  Agreement  and
shall be deemed issued for purposes of Sections 2.04 and 3.01(b) and (c) on
the Restatement Effective Date.

          (b)   Whenever  the Letter of Credit Issuer issues  a  Letter  of
Credit  in  a  currency  other  than U.S. Dollars,  the  Letter  of  Credit
Outstandings  relating  to such Letter of Credit  at  such  time  shall  be
calculated on the basis of the U.S. Dollar Equivalent of the Stated  Amount
of such Letter of Credit.  Any U.S. Dollar Equivalent established according
to  the  preceding sentence shall remain in effect until such date  as  the
calculation of the U.S. Dollar Equivalent determined as above, if  made  on
such  date,  would yield a U.S. Dollar Equivalent which varies  by  greater
than  10.0%  from the U.S. Dollar Equivalent then in effect, at which  time
the  Letter of Credit Outstandings shall be adjusted to reflect the current
U.S.  Dollar  Equivalent  of the Stated Amount of such  Letter  of  Credit.
Subsequent adjustments shall then be made on any date on which the  current
calculation of the U.S. Dollar Equivalent would yield a result which varies
by greater than 10.0% from the U.S. Dollar Equivalent then in effect.

          (c)  Notwithstanding the foregoing, (i) no Letter of Credit shall
be  issued, the Stated Amount of which, when added to the Letter of  Credit
Outstandings (exclusive of Unpaid Drawings which are repaid on the date of,
and  prior  to  the issuance of, the respective Letter of Credit)  at  such
time,  would  exceed  either (x) $30,000,000  or  (y)  when  added  to  the
aggregate  principal amount of all Loans made by Non-Defaulting Banks  then
outstanding,  the  Adjusted Total Commitment at such time;  and  (ii)  each
Letter  of  Credit shall have an expiry date occurring not later  than  the
Business Day immediately preceding the Maturity Date.

          2.02   Letter of Credit Requests; Request for Issuance of  Letter
of Credit.  (a)  Whenever it desires that a Letter of Credit be issued, the
Borrower  shall give the Letter of Credit Issuer written notice  (including
by way of telecopier) in the form of Exhibit C prior to 1:00 P.M. (New York
time) at least three Business Days (or such shorter period as may be accept
able to the Letter of Credit Issuer) prior to the proposed date of issuance
(which shall be a Business Day) (each a "Letter of Credit Request"),  which
Letter  of  Credit Request shall include any documents that the  Letter  of
Credit Issuer customarily requires in connection therewith.  The Letter  of
Credit  Issuer  shall promptly notify each Bank of each  Letter  of  Credit
Request.

          (b)   The  Letter  of Credit Issuer shall, on the  date  of  each
issuance of a Letter of Credit by it, give each Bank and the Borrower  writ
ten notice of the issuance of such Letter of Credit.

          2.03   Agreement  to Repay Letter of Credit Payments.   (a)   The
Borrower hereby agrees to reimburse the Letter of Credit Issuer, by  making
payment at the Payment Office, for any payment or disbursement made by  the
Letter  of  Credit Issuer under any Letter of Credit (each such  amount  so
paid or disbursed until reimbursed, an "Unpaid Drawing") immediately after,
and  in  any  event on the date on which the Borrower is  notified  by  the
Letter  of  Credit Issuer of such payment or disbursement with interest  on
the  amount  so  paid or disbursed by the Letter of Credit Issuer,  to  the
extent  not  reimbursed prior to 1:00 P.M. (New York time) on the  date  of
such payment or disbursement, from and including the date paid or disbursed
to  but  not  including the date the Letter of Credit Issuer is  reimbursed
therefor  at a rate per annum which shall be the Base Rate as in effect  on
the date of such notice of payment or disbursements (plus an additional  2%
per  annum  if not reimbursed by the third Business Day after the  date  of
such  notice of payment or disbursement), such interest also to be  payable
on demand.

          (b)   The  Borrower's  obligation  under  this  Section  2.03  to
reimburse  the  Letter  of Credit Issuer with respect  to  Unpaid  Drawings
(including,  in  each  case,  interest  thereon)  shall  be  absolute   and
unconditional  under  any  and all circumstances and  irrespective  of  any
setoff,  counterclaim or defense to payment which the Borrower may have  or
have  had  against  the  Letter of Credit Issuer or  any  Bank,  including,
without limitation, any defense based upon the failure of any drawing under
a  Letter of Credit to conform to the terms of the Letter of Credit  (other
than  the  failure  of the Letter of Credit Issuer to  determine  that  any
documents  required to be delivered under such Letter of Credit  have  been
delivered  and  that  they substantially comply  on  their  face  with  the
requirements   of  such  Letter  of  Credit)  or  any  non-application   or
misapplication  by  the  beneficiary  of  the  proceeds  of  such  drawing;
provided,  however, that the Borrower shall not be obligated  to  reimburse
the Letter of Credit Issuer for any wrongful payment made by the Letter  of
Credit  Issuer  under a Letter of Credit as a result of acts  or  omissions
constituting  willful misconduct or gross negligence on  the  part  of  the
Letter of Credit Issuer.

          2.04  Letter of Credit Participations.  (a)  Immediately upon the
issuance by the Letter of Credit Issuer of any Letter of Credit, the Letter
of Credit Issuer shall be deemed to have sold and transferred to each other
Bank, and each such Bank (each a "Participant") shall be deemed irrevocably
and  unconditionally  to have purchased and received  from  the  Letter  of
Credit  Issuer,  without  recourse or warranty, an undivided  interest  and
participation,  to the extent of such Bank's Adjusted Percentage,  in  such
Letter  of  Credit,  each substitute letter of credit,  each  drawing  made
thereunder  and  the obligations of the Borrower under this Agreement  with
respect  thereto  (although  the Letter of  Credit  Fee  shall  be  payable
directly  to  the  Administrative Agent for the account  of  the  Banks  as
provided  in  Section 3.01(b) and the Participants shall have no  right  to
receive  any  portion  of  any Facing Fees) and any  security  therefor  or
guaranty  pertaining  thereto.   Upon any  change  in  the  Commitments  or
Adjusted  Percentages of the Banks pursuant to Section 12.04(b) or  upon  a
Bank  Default,  it is hereby agreed that, with respect to  all  outstanding
Letters  of  Credit  and Unpaid Drawings, there shall be  an  automatic  ad
justment to the participations pursuant to this Section 2.04 to reflect the
new  Adjusted  Percentages of the assigning and assignee  Bank  or  of  all
Banks, as the case may be.

          (b)   In  determining whether to pay under any Letter of  Credit,
the  Letter of Credit Issuer shall not have any obligation relative to  the
Participants  other  than to determine that any documents  required  to  be
delivered  under such Letter of Credit have been delivered  and  that  they
substantially comply on their face with the requirements of such Letter  of
Credit.   Any action taken or omitted to be taken by the Letter  of  Credit
Issuer  under  or  in  connection with any Letter of Credit,  if  taken  or
omitted in the absence of gross negligence or willful misconduct, shall not
create  for  the  Letter of Credit Issuer any resulting  liability  to  the
Participants.

          (c)   In the event that the Letter of Credit Issuer makes any pay
ment  under any Letter of Credit and the Borrower shall not have reimbursed
such  amount  in  full to the Letter of Credit Issuer pursuant  to  Section
2.03(a), the Letter of Credit Issuer shall promptly notify each Participant
of  such  failure, and each Participant shall promptly and  unconditionally
pay  to  the  Letter  of  Credit Issuer, the amount of  such  Participant's
Adjusted Percentage of such payment in U.S. Dollars and in same day  funds;
provided,  however, that no Participant shall be obligated to  pay  to  the
Letter of Credit Issuer its Adjusted Percentage of such unreimbursed amount
for any wrongful payment made by the Letter of Credit Issuer under a Letter
of  Credit as a result of acts or omissions constituting willful misconduct
or  gross  negligence on the part of the Letter of Credit Issuer.   If  the
Administrative Agent so notifies any Participant required to fund an Unpaid
Drawing under a Letter of Credit prior to 12:00 Noon (New York time) on any
Business Day, such Participant shall make available to the Letter of Credit
Issuer such Participant's Adjusted Percentage of the amount of such payment
on  such Business Day in same day funds.  If and to the extent such Partici
pant  shall not have so made its Adjusted Percentage of the amount of  such
Unpaid  Drawing available to the Letter of Credit Issuer, such  Participant
agrees  to  pay  to the Letter of Credit Issuer, forthwith on  demand  such
amount,  together with interest thereon, for each day from such date  until
the  date  such  amount  is  paid to the Letter of  Credit  Issuer  at  the
overnight Federal Funds Effective Rate.  The failure of any Participant  to
make  available to the Letter of Credit Issuer its Adjusted  Percentage  of
any  Unpaid Drawing under any Letter of Credit shall not relieve any  other
Participant of its obligation hereunder to make available to the Letter  of
Credit  Issuer its Adjusted Percentage of any payment under any  Letter  of
Credit  on the date required, as specified above, but no Participant  shall
be  responsible for the failure of any other Participant to make  available
to the Letter of Credit Issuer such other Participant's Adjusted Percentage
of any such payment.

          (d)  Whenever the Letter of Credit Issuer receives a payment of a
reimbursement obligation as to which the Administrative Agent has  received
for  the  account  of  the Letter of Credit Issuer any  payments  from  the
Participants  pursuant  to clause (c) above, the Letter  of  Credit  Issuer
shall  pay  to  each  Participant which has paid  its  Adjusted  Percentage
thereof,  in  Dollars  and  in same day funds,  an  amount  equal  to  such
Participant's  Adjusted  Percentage of the  principal  amount  thereof  and
interest  thereon  accruing at the overnight Federal Funds  Effective  Rate
after the purchase of the respective participations.

          (e)   The obligations of the Participants to make payments to the
Letter  of  Credit Issuer with respect to Letters of Credit shall  be  irre
vocable  and not subject to counterclaim, set-off or other defense  or  any
other  qualification or exception whatsoever (provided that no  Participant
shall  be  required to make payments resulting from the  Letter  of  Credit
Issuer's  gross  negligence or willful misconduct) and  shall  be  made  in
accordance  with  the  terms and conditions of  this  Agreement  under  all
circumstances,  including, without limitation, any of the following  circum
stances:

         (i)   any lack of validity or enforceability of this Agreement  or
     any of the other Credit Documents;

        (ii)   the existence of any claim, set-off, defense or other  right
     which the Borrower may have at any time against a beneficiary named in
     a  Letter  of Credit, any transferee of any Letter of Credit  (or  any
     Person for whom any such transferee may be acting), the Administrative
     Agent, any Bank or other Person, whether in connection with this Agree
     ment,  any  Letter of Credit, the transactions contemplated herein  or
     any  unrelated  transactions  (including  any  underlying  transaction
     between  the Borrower and the beneficiary named in any such Letter  of
     Credit);

       (iii)  any draft, certificate or other document presented under  the
     Letter  of Credit proving to be forged, fraudulent, or invalid in  any
     respect  or  any statement therein being untrue or inaccurate  in  any
     respect;

         (iv)   the  surrender  or  impairment  of  any  security  for  the
     performance  or observance of any of the terms of any  of  the  Credit
     Documents; or

        (v)  the occurrence of any Default or Event of Default.

          2.05   Increased  Costs.  If at any time after the  date  of  the
Agreement,  the adoption or effectiveness of any applicable  law,  rule  or
regulation,  or any change therein, or any change in the interpretation  or
administration  thereof  by  any governmental authority,  central  bank  or
comparable   agency  charged  with  the  interpretation  or  administration
thereof, or compliance by the Letter of Credit Issuer or any Bank with  any
request or directive (whether or not having the force of law but with which
such  Bank customarily complies even though the failure to comply therewith
would  not  be unlawful) by any such authority, central bank or  comparable
agency  shall  either  (i) impose, modify or make applicable  any  reserve,
deposit, capital adequacy or similar requirement against Letters of  Credit
issued by the Letter of Credit Issuer or such Bank's participation therein,
or  (ii) shall impose on the Letter of Credit Issuer or any Bank any  other
conditions  affecting this Agreement, any Letter of Credit or  such  Bank's
participation  therein;  and  the result of any  of  the  foregoing  is  to
increase  the cost to the Letter of Credit Issuer or such Bank of  issuing,
maintaining  or  participating in any Letter of Credit, or  to  reduce  the
amount of any sum received or receivable by the Letter of Credit Issuer  or
such  Bank  hereunder (other than any increased cost or  reduction  in  the
amount  received or receivable resulting from the imposition of or a change
in the rate or basis of taxes or similar charges), then, upon demand to the
Borrower  by  the  Letter of Credit Issuer or such Bank (a  copy  of  which
notice  shall be sent by the Letter of Credit Issuer or such  Bank  to  the
Administrative Agent), the Borrower shall, subject to Section  1.11(b)  (to
the  extent  applicable), pay to the Letter of Credit Issuer or  such  Bank
such  additional amount or amounts as will compensate the Letter of  Credit
Issuer  or  such Bank for such increased cost or reduction.  A  certificate
submitted to the Borrower by the Letter of Credit Issuer or such  Bank,  as
the case may be (a copy of which certificate shall be sent by the Letter of
Credit Issuer or such Bank to the Administrative Agent), setting forth  the
basis  for the determination of such additional amount or amounts necessary
to  compensate the Letter of Credit Issuer or such Bank as aforesaid  shall
be  conclusive and binding on the Borrower absent manifest error,  although
the  failure to deliver any such certificate shall not release or  diminish
any  of  the  Borrower's obligations to pay additional amounts pursuant  to
this Section 2.05 upon the subsequent receipt thereof.

          2.06   Indemnities.  The Borrower hereby agrees to reimburse  and
indemnify  the  Letter  of  Credit Issuer  for  and  against  any  and  all
liabilities,  obligations,  losses, damages,  penalties,  claims,  actions,
judgments,  suits, costs, expenses or disbursements of whatsoever  kind  or
nature  which may be imposed on, asserted against or incurred by the Letter
of Credit Issuer in performing its respective duties in any way relating to
or  arising  out  of its issuance of Letters of Credit; provided  that  the
Borrower  shall  not  be  liable  for  any  portion  of  such  liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,  costs,
expenses  or  disbursements resulting from the Letter  of  Credit  Issuer's
gross negligence or willful misconduct.  To the extent the Letter of Credit
Issuer  is not indemnified by the Borrower, the Participants will reimburse
and  indemnify  the  Letter  of  Credit  Issuer,  in  proportion  to  their
respective "percentages" of the Total Commitment, for and against  any  and
all  liabilities, obligations, losses, damages, penalties, claims, actions,
judgments,  suits, costs, expenses or disbursements of whatsoever  kind  or
nature  which may be imposed on, asserted against or incurred by the Letter
of Credit Issuer in performing its respective duties in any way relating to
or  arising  out  of its issuance of Letters of Credit;  provided  that  no
Participants   shall  be  liable  for  any  portion  of  such  liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,  costs,
expenses  or  disbursements resulting from the Letter  of  Credit  Issuer's
gross negligence or willful misconduct.

          SECTION 3.  Fees; Commitments.

          3.01    Fees.    (a    The  Borrower  agrees  to   pay   to   the
Administrative Agent a commitment commission ("Commitment Commission")  pro
rata  for  the account of each Non-Defaulting Bank for the period from  and
including  the Restatement Effective Date to, but not including,  the  date
the Total Commitment has been terminated, which Commitment Commission shall
be  equal to the amount set forth below as determined by Holdings' Leverage
Ratio,  as  calculated for the last day of the fiscal quarter  last  ended,
computed  at  such rate for each day, on the daily amount  of  such  Bank's
Unutilized  Commitment;  provided that,  in  the  event  a  change  in  the
Commitment Commission is made, such change shall not become effective until
the date on which the Administrative Agent receives written notice from the
Borrower indicating that such change is warranted:

     0.25% per annum      If  the  Leverage Ratio is equal to or less  than
                          0.25 to 1.00

     0.35% per annum      If  the  Leverage Ratio is greater than  0.25  to
                          1.00.

Such Commitment Commission shall be due and payable in arrears on the first
day of each January, April, July and October and on the date upon which the
Total Commitment is terminated.

          (b    The Borrower agrees to pay to the Administrative Agent  for
the  account  of  each Non-Defaulting Bank pro rata on the basis  of  their
respective Adjusted Percentages, a fee in respect of each Letter of  Credit
(the  "Letter  of Credit Fee") computed at a rate per annum  equal  to  the
Applicable Eurodollar Margin then in effect on the daily Stated  Amount  of
such  Letter  of Credit.  Accrued Letter of Credit Fees shall  be  due  and
payable quarterly in arrears on the first day of each January, April,  July
and  October  of  each year and on the date after the Total  Commitment  is
terminated and no Letters of Credit remain outstanding.

          (c   The Borrower agrees to pay to the Letter of Credit Issuer  a
fee  in  respect of each Letter of Credit issued by it (the  "Facing  Fee")
computed  at the rate of 1/8 of 1% per annum on the daily Stated Amount  of
such  Letter  of  Credit.  Accrued Facing Fees shall  be  due  and  payable
quarterly  in  arrears on the first day of each January,  April,  July  and
October  of  each  year  and  on the date after  the  Total  Commitment  is
terminated and no Letters of Credit remain outstanding.

          (d    The Borrower agrees to pay directly to the Letter of Credit
Issuer  upon request the amount of any charges or expenses incurred by  the
Letter  of Credit Issuer in connection with any confirmation of Letters  of
Credit  by local banks requested by the Borrower or any beneficiary of  any
Letter of Credit.

          (e    The  Borrower shall pay to the Administrative Agent (x)  on
the  Restatement Effective Date for its own account and/or for distribution
to  the Banks such Fees as heretofore agreed in writing by the Borrower and
the  Administrative Agent and (y) for its own account such  other  fees  as
agreed  to  in  writing between the Borrower and the Administrative  Agent,
when and as due.

          (f    All  computations of Fees shall be made in accordance  with
Section 12.07(b).

          3.02   Voluntary Reduction of Commitments.  Upon at least  thirty
Days'  prior written notice (or telephonic notice confirmed in writing)  to
the   Administrative  Agent  at  its  Notice  Office  (which   notice   the
Administrative  Agent shall promptly transmit to each of  the  Banks),  the
Borrower shall have the right, without premium or penalty, to terminate  or
partially  reduce the Total Unutilized Commitment, provided  that  (w)  any
such termination shall apply to proportionately and permanently reduce  the
Commitment  of  each  Bank, (x) no such reduction  shall  reduce  any  Non-
Defaulting Bank's Commitment to an amount that is less than the sum of  (A)
the outstanding Loans of such Bank plus (B) such Bank's Adjusted Percentage
of  Letter  of Credit Outstandings, (y) any partial reduction  pursuant  to
this Section 3.02 shall be in the amount of at least $5,000,000 and (z) any
such  reduction shall reduce the remaining Scheduled Commitment  Reductions
pro  rata  based  on  the  then remaining amounts of  Scheduled  Commitment
Reductions.

          3.03   Mandatory Adjustments of Commitments, etc.  (a   The Total
Commitment  shall terminate on the earlier of (i) the Maturity  Date,  (ii)
July  31,  1997, unless the Restatement Effective Date has occurred  on  or
before such date and (iii) unless the Required Banks otherwise consent, the
date on which any Change of Control occurs.

          (b    In  addition  to any other mandatory commitment  reductions
pursuant  to  this  Section 3.03, on each date set forth below,  the  Total
Commitment  shall be permanently reduced by the amount set  forth  opposite
such  date  (each  such  reduction, as  same  may  be  further  reduced  in
accordance   with  Sections  3.02  and  3.03(d),  a  "Scheduled  Commitment
Reduction"):

         Date                   Amount

 May 13, 1999                   $37,000,000
 November 13, 1999              $37,000,000
 May 13, 2000                   $37,000,000
 November 13, 2000              $37,000,000
 May 13, 2001                   $37,000,000
 Maturity Date                    Remaining
                                   amount
                                  of Total
                                 Commitment

          (c    In  addition  to any other mandatory commitment  reductions
pursuant  to this Section 3.03, on the Business Day following the  date  of
receipt thereof by the Borrower and/or any of its Subsidiaries of the  Cash
Proceeds  from  any  Collateral Disposition, the Total Commitment  then  in
effect  shall  be  permanently reduced by an  amount  equal  to  the  Total
Commitment as in effect on the Restatement Effective Date multiplied by the
percentage  set  forth  on Annex IV hereto adjacent  to  the  name  of  the
Mortgaged  Rig (other than the Jack Bates, the Paul B. Loyd,  Jr.  and  the
Henry  Goodrich) which is the subject of such Collateral Disposition  under
the heading "Percentage Reduction", provided that, so long as no Default or
Event  of  Default then exists or would result therefrom, at the Borrower's
option,  Rig  41 and the Earnings and Insurances of Rig 41 may be  released
(and  the  Collateral  Agent hereby agrees to  take  such  action,  at  the
Borrower's  expense,  necessary to release  Rig  41)  from  the  Panamanian
Mortgage  securing  such  Mortgaged Rig  and  the  Security  Agreement,  as
applicable, without any reduction in the Total Commitment, so long as it is
promptly thereafter pledged exclusively to secure financing provided by, or
guaranteed  by,  the  U.S.  Maritime  Administration  under  its  Title  XI
Shipbuilding   Loan  Guarantee  Program  (the  "Title  XI  Financing")   in
connection with the upgrade and/or refit of Rig 41.

          (d    Notwithstanding anything to the contrary contained  herein,
and  in  addition to any other mandatory commitment reductions pursuant  to
this Section 3.03, in the case of any Collateral Disposition involving  the
Jack  Bates,  the Total Commitment then in effect shall be reduced  by  the
lesser of the Total Commitment then in effect or $130,000,000.

          (e    In  addition  to any other mandatory commitment  reductions
pursuant to this Section 3.03, in the case of any sale, disposition or loss
by  Arcade Drilling AS ("Arcade") with respect to the Henry Goodrich or the
Paul  B.  Loyd, Jr. (collectively, the "Arcade Rigs") the Total  Commitment
then  in effect shall be reduced by the lesser of the Total Commitment then
in effect or $130,000,000 per rig.

          (f    Each  reduction of the Total Commitment  pursuant  to  this
Section  3.03 shall apply proportionately to the Commitment of  each  Bank.
Any  reduction to the Total Commitment pursuant to this Section 3.03  shall
reduce  the remaining Schedule Commitment Reductions pro rata based on  the
then remaining amounts of Scheduled Commitment Reductions.

          SECTION 4.  Payments.

          4.01   Voluntary Prepayments.  The Borrower shall have the  right
to  prepay Loans in whole or in part, without premium or penalty, from time
to time on the following terms and conditions:  (i) the Borrower shall give
the   Administrative  Agent  at  the  Payment  Office  written  notice  (or
telephonic  notice promptly confirmed in writing) of its intent  to  prepay
the  Loans,  the amount of such prepayment and (in the case  of  Eurodollar
Loans)  the specific Borrowing or Borrowings pursuant to which made,  which
notice shall be given by the Borrower at least five Business Days prior  to
the  date  of  such  prepayment of Loans, which notice  shall  promptly  be
transmitted  by  the Administrative Agent to each of the Banks;  (ii)  each
partial  prepayment  of  any Borrowing shall be in an  aggregate  principal
amount  of at least $1,000,000 and, if greater, in an integral multiple  of
$100,000, provided that no partial prepayment of Eurodollar Loans made  pur
suant  to  a Borrowing shall reduce the aggregate principal amount  of  the
Loans  outstanding pursuant to such Borrowing to an amount  less  than  the
Minimum  Borrowing  Amount;  (iii) Eurodollar Loans  may  only  be  prepaid
pursuant  to  this  Section 4.01 on the last day  of  the  Interest  Period
applicable  thereto; and (iv) each prepayment in respect of any Loans  made
pursuant  to  a Borrowing shall be applied pro rata among the  Banks  which
made  such  Loans, provided that at the Borrower's election  in  connection
with any prepayment of Loans pursuant to this Section 4.01, such prepayment
shall not be applied to any Loans of a Defaulting Bank.

          4.02  Mandatory Prepayments.

          (A)  Requirements:

          (a    (i)  If  on  any date the sum of the aggregate  outstanding
principal  amount of Loans made by Non-Defaulting Banks and the  Letter  of
Credit  Outstandings  exceeds  the Adjusted Total  Commitment  as  then  in
effect, the Borrower shall repay on such date the principal of Loans of Non-
Defaulting Banks, in an aggregate amount equal to such excess.   If,  after
giving  effect  to the repayment of all outstanding Loans of Non-Defaulting
Banks,  the  aggregate amount of Letter of Credit Outstandings exceeds  the
Adjusted  Total Commitment then in effect, the Borrower shall  pay  to  the
Administrative  Agent  an amount in cash and/or Cash Equivalents  equal  to
such   excess  (up  to  the  aggregate  amount  of  the  Letter  of  Credit
Outstandings  at  such time) and the Administrative Agent shall  hold  such
payment  as security for the obligations of the Borrower hereunder pursuant
to  a  cash  collateral agreement to be entered into in form and  substance
reasonably  satisfactory to the Administrative Agent  (which  shall  permit
certain  investments in Cash Equivalents satisfactory to the Administrative
Agent, until the proceeds are applied to the secured obligations).

          (ii)   If on any date the aggregate outstanding principal  amount
of  the  Loans  made  by a Defaulting Bank exceeds the Commitment  of  such
Defaulting  Bank, the Borrower shall repay the principal of Loans  of  such
Defaulting Bank in an amount equal to such excess.

          (b   Notwithstanding anything to the contrary contained elsewhere
in  this  Agreement, all then outstanding Loans shall be repaid in full  on
the Maturity Date.

          (c    On  the date on which any Change of Control occurs,  unless
otherwise agreed by the Required Banks, the outstanding principal amount of
the Loans, if any, shall become due and payable in full.

          (B)  Application:

          With  respect  to  each prepayment of Loans required  by  Section
4.02, the Borrower may designate the Types of Loans which are to be prepaid
and  the  specific Borrowing or Borrowings pursuant to which made, provided
that  (i) Eurodollar Loans may only be repaid if no Base Rate Loans of Non-
Defaulting  Banks remain outstanding; (ii) if any prepayment of  Eurodollar
Loans  made  pursuant  to a single Borrowing shall reduce  the  outstanding
Loans  made  pursuant to such Borrowing to an amount less than the  Minimum
Borrowing  Amount for such Borrowing, such Borrowing shall  be  immediately
converted into Base Rate Loans; and (iii) each prepayment of any Loans made
by  Non-Defaulting Banks pursuant to a Borrowing shall be applied pro  rata
among the Non-Defaulting Banks which made such Loans.  In the absence of  a
designation  by  the Borrower as described in the preceding  sentence,  the
Administrative Agent shall, subject to the above, make such designation  in
its  sole  discretion with a view, but no obligation, to minimize  breakage
costs  owing under Section 1.11.  Notwithstanding the foregoing  provisions
of  this Section 4.02(B), if at any time the mandatory prepayment of  Loans
pursuant to Section 4.02(A) above would result, after giving effect to  the
procedures set forth above, in the Borrower incurring breakage costs  under
Section  1.11 as a result of Eurodollar Loans being prepaid other  than  on
the  last  day  of  an  Interest Period applicable thereto  (the  "Affected
Eurodollar Loans"), then the Borrower may in its sole discretion  initially
deposit  a  portion (up to 100%) of the amounts that otherwise  would  have
been   paid  in  respect  of  the  Affected  Eurodollar  Loans   with   the
Administrative Agent (which deposit must be equal in amount to  the  amount
of  the  Affected Eurodollar Loans not immediately prepaid) to be  held  as
security for the obligations of the Borrower hereunder pursuant to  a  cash
collateral  agreement  to be entered into in form and substance  reasonably
satisfactory to the Administrative Agent and shall provide for  investments
satisfactory to the Administrative Agent and the Borrower, with  such  cash
collateral   to   be  directly  applied  upon  the  first  occurrence   (or
occurrences) thereafter of the last day of an Interest Period applicable to
the relevant Loans that are Eurodollar Loans (or such earlier date or dates
as  shall  be  requested by the Borrower), to repay an aggregate  principal
amount  of  such Loans equal to the Affected Eurodollar Loans not initially
prepaid  pursuant to this sentence.  Notwithstanding anything  to  the  con
trary   contained  in  the  immediately  preceding  sentence,  all  amounts
deposited as cash collateral pursuant to the immediately preceding sentence
shall be held for the sole benefit of the Banks whose Loans would otherwise
have  been  immediately  prepaid with the amounts deposited  and  upon  the
taking  of any action by the Administrative Agent or the Banks pursuant  to
the  remedial provisions of Section 9, any amounts held as cash  collateral
pursuant  to  this  Section 4.02(B) shall, subject to the  requirements  of
applicable law, be immediately applied to the Loans.

          4.03    Method  and  Place  of  Payment.   Except  as   otherwise
specifically  provided herein, all payments under this Agreement  shall  be
made  to  the Administrative Agent for the ratable (based on its  pro  rata
share) account of the Banks entitled thereto, not later than 1:00 P.M. (New
York  time) on the date when due and shall be made in immediately available
funds  and  in lawful money of the United States of America at the  Payment
Office,  it  being understood that written notice by the  Borrower  to  the
Administrative  Agent to make a payment from the funds  in  the  Borrower's
account  at the Payment Office shall constitute the making of such  payment
to  the extent of such funds held in such account.  Any payments under this
Agreement  which  are made later than 1:00 P.M. (New York  time)  shall  be
deemed to have been made on the next succeeding Business Day.  Whenever any
payment  to be made hereunder shall be stated to be due on a day  which  is
not  a  Business Day, the due date thereof shall be extended  to  the  next
succeeding  Business  Day  and,  with respect  to  payments  of  principal,
interest shall be payable during such extension at the applicable  rate  in
effect immediately prior to such extension.

          4.04   Net  Payments.   (a   All payments made  by  the  Borrower
hereunder  or  under any Note will be made without setoff, counterclaim  or
other  defense.  Except as provided in Section 4.04(b), all  such  payments
will  be made free and clear of, and without deduction or withholding  for,
any present or future taxes, levies, imposts, duties, fees, assessments  or
other  charges of whatever nature now or hereafter imposed by any  jurisdic
tion or by any political subdivision or taxing authority thereof or therein
with  respect  to such payments (but excluding, except as provided  in  the
second  succeeding  sentence, any tax imposed on or  measured  by  the  net
income or net profits of a Bank pursuant to the laws of the jurisdiction in
which  it  is  organized or managed and controlled or the  jurisdiction  in
which  the  principal office or applicable lending office of such  Bank  is
located  or any subdivision thereof or therein) and all interest, penalties
or  similar liabilities with respect thereto (all such non-excluded  taxes,
levies,  imposts, duties, fees, assessments or other charges being referred
to  collectively as "Taxes").  If any Taxes are so levied or  imposed,  the
Borrower  agrees to pay the full amount of such Taxes, and such  additional
amounts,  if any, as may be necessary so that every payment of all  amounts
due  under this Agreement or under any Note, after withholding or deduction
for  or  on account of any Taxes, will not be less than the amount provided
for herein or in such Note.  If any amounts are payable by the Borrower  in
respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse  each  Bank,  upon the written request of such  Bank,  for  taxes
imposed  on or measured by the net income or net profits of such  Bank  pur
suant  to  the  laws of the jurisdiction in which the principal  office  or
applicable lending office of such Bank is located or under the laws of  any
political subdivision or taxing authority of any such jurisdiction in which
the  principal office or applicable lending office of such Bank is  located
and  for  any withholding of taxes as such Bank shall determine are payable
by, or withheld from, such Bank in respect of such amounts so paid to or on
behalf  of  such Bank pursuant to the preceding sentence and in respect  of
any  amounts  paid to or on behalf of such Bank pursuant to this  sentence.
The  Borrower will furnish to the Administrative Agent within 45 days after
the  date the payment of any Taxes is due pursuant to applicable law  certi
fied  copies of tax receipts evidencing such payment by the Borrower.   The
Borrower  agrees  to indemnify and hold harmless each Bank,  and  reimburse
such  Bank upon its written request, for the amount of any Taxes so  levied
or imposed and paid by such Bank.

          (b    Each Bank that is not a United States person (as such  term
is  defined  in Section 7701(a)(30) of the Code) agrees to deliver  to  the
Borrower  and  the  Administrative Agent on or prior to the  date  of  this
Agreement, or in the case of a Bank that is an assignee or transferee of an
interest under this Agreement pursuant to Section 1.13 or 12.04 (unless the
respective  Bank  was already a Bank hereunder immediately  prior  to  such
assignment or transfer), on the date of such assignment or transfer to such
Bank,  (i)  two  accurate and complete original signed copies  of  Internal
Revenue  Service Form 4224 or 1001 (or successor forms) certifying to  such
Bank's  entitlement to a complete exemption from United States  withholding
tax  with respect to payments to be made under this Agreement and under any
Note,  or  (ii) if the Bank is not a "bank" within the meaning  of  Section
881(c)(3)(A) of the Code and cannot deliver either Internal Revenue Service
Form  1001  or  4224  pursuant  to clause  (i)  above,  (x)  a  certificate
substantially  in the form of Exhibit D (any such certificate,  a  "Section
4.04(b)(ii) Certificate") and (y) two accurate and complete original signed
copies  of Internal Revenue Service Form W-8 (or successor form) certifying
to  such  Bank's  entitlement to a complete exemption  from  United  States
withholding tax with respect to payments of interest to be made under  this
Agreement and under any Note.  In addition, each Bank agrees that from time
to time after the date of this Agreement, when a lapse in time or change in
circumstances renders the previous certification obsolete or inaccurate  in
any   material   respect,  it  will  deliver  to  the  Borrower   and   the
Administrative Agent two new accurate and complete original  signed  copies
of  Internal Revenue Service Form 4224 or 1001, or Form W-8 and  a  Section
4.04(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Bank to a
continued exemption from or reduction in United States withholding tax with
respect  to  payments  under  this Agreement and  any  Note,  or  it  shall
immediately notify the Borrower and the Administrative Agent of its  inabil
ity  to deliver any such Form or Certificate.  Notwithstanding anything  to
the  contrary contained in Section 4.04(a), but subject to Section 12.04(b)
and  the  immediately  succeeding  sentence,  (x)  the  Borrower  shall  be
entitled,  to  the  extent it is required to do so by  law,  to  deduct  or
withhold  income  or  similar taxes imposed by the United  States  (or  any
political  subdivision or taxing authority thereof or therein)  from  inter
est,  fees or other amounts payable hereunder for the account of  any  Bank
which  is  not a United States person (as such term is defined  in  Section
7701(a)(30) of the Code) for U.S. Federal income tax purposes to the extent
that  such  Bank  has  not provided to the Borrower U.S.  Internal  Revenue
Service  Forms that establish a complete exemption from such  deduction  or
withholding and (y) the Borrower shall not be obligated pursuant to Section
4.04(a)  hereof  to gross-up payments to be made to a Bank  in  respect  of
income  or similar taxes imposed by the United States if (I) such Bank  has
not provided to the Borrower the Internal Revenue Service Forms required to
be provided to the Borrower pursuant to this Section 4.04(b) or (II) in the
case  of a payment, other than interest, to a Bank described in clause (ii)
above,  to the extent that such Forms do not establish a complete exemption
from  withholding of such taxes.  Notwithstanding anything to the  contrary
contained in the preceding sentence or elsewhere in this Section  4.04  and
except  as  set  forth  in  Section 12.04(b), the Borrower  agrees  to  pay
additional  amounts and to indemnify each Bank in the manner set  forth  in
Section  4.04(a)  (without  regard  to the  identity  of  the  jurisdiction
requiring the deduction or withholding) in respect of any amounts  deducted
or  withheld by it as described in the immediately preceding sentence as  a
result  of  any changes after the date of this Agreement in any  applicable
law,  treaty, governmental rule, regulation, guideline or order, or in  the
interpretation thereof, relating to the deducting or withholding of  income
or  similar Taxes, provided such Bank shall provide to the Borrower and the
Administrative Agent any reasonably available applicable IRS tax form  (rea
sonably  similar  in its simplicity and lack of detail to  IRS  Form  1001)
necessary or appropriate for the exemption or reduction in the rate of such
U.S. federal withholding tax.

          (c    The  provisions of this Section 4.04 shall  be  subject  to
Section 1.12(b) (to the extent applicable).

          SECTION 5.  Conditions Precedent.  The obligation of the Banks to
make each Loan hereunder, and the obligation of the Letter of Credit Issuer
to  issue Letters of Credit hereunder, is subject, at the time of each such
Credit   Event  (except  as  otherwise  hereinafter  indicated),   to   the
satisfaction of each of the following conditions:

          5.01   Execution of Agreement; Notes.  The Restatement  Effective
Date  shall have occurred as provided in Section 12.10 and there shall have
been delivered to the Administrative Agent for the account of each Bank the
appropriate Note executed by the Borrower, and in the amount, maturity  and
as otherwise provided herein.

          5.02  No Default; Representations and Warranties.  At the time of
each  Credit  Event and also after giving effect thereto, (i)  there  shall
exist  no  Default  or  Event of Default and (ii) all  representations  and
warranties contained herein or in the other Credit Documents in  effect  at
such  time shall be true and correct in all material respects with the same
effect  as though such representations and warranties had been made on  and
as  of  the  date  of  such Credit Event (except to the  extent  that  such
representations  and  warranties expressly relate to an  earlier  date,  in
which  case they shall be true and correct in all material respects  as  of
such earlier date).

          5.03   Officer's Certificate.  On the Restatement Effective Date,
the  Administrative Agent shall have received a certificate dated such date
signed by the President or any Vice President of the Borrower stating  that
there has been no Material Adverse Change in the financial condition of the
Borrower  or  of Holdings and its Subsidiaries taken as a whole  since  the
date  of the last audited financial statements provided by Holdings or  the
Borrower  to  the  Administrative Agent and  that  all  of  the  applicable
conditions set forth in Sections 5.02, 5.06, 5.07(a) and 5.08 exist  as  of
such date.

          5.04   Opinions  of Counsel.  On the Restatement Effective  Date,
the  Administrative Agent shall have received opinions,  addressed  to  the
Administrative  Agent  and  each of the Banks  and  dated  the  Restatement
Effective Date, from (i) Wayne Hillin, Esq., General Counsel to the  Credit
Parties,  which opinion shall cover the matters contained in  Exhibit  E-1,
(ii)  White  &  Case,  special counsel to the Administrative  Agent,  which
opinion  shall  cover the matters contained in Exhibit E-2 and  (iii)  from
local   counsel   satisfactory   to  the  Administrative   Agent   as   the
Administrative Agent may request, which opinions shall cover the perfection
of  the  security interests granted pursuant to the Security Documents  and
such other matters incident to the transactions contemplated herein as  the
Administrative  Agent  may reasonably request and  shall  be  in  form  and
substance satisfactory to the Administrative Agent.

          5.05   Corporate Proceedings.  (a)  On the Restatement  Effective
Date, the Administrative Agent shall have received from each Credit Party a
certificate, dated the Restatement Effective Date, signed by the  President
or  any  Vice-President or other appropriate representative of such  Credit
Party  in  the form of Exhibit F with appropriate insertions and deletions,
together with copies of the certificate of formation, the by-laws, or other
organizational documents of such Credit Party and the resolutions, or  such
other  administrative approval, of such Credit Party referred  to  in  such
certificate  and all of the foregoing (including each such  certificate  of
formation,  certificate of incorporation and by-laws) shall  be  reasonably
satisfactory to the Administrative Agent.

          (b)   On the Restatement Effective Date, all corporate and  legal
proceedings and all instruments and agreements in connection with the trans
actions contemplated by this Agreement and the other Credit Documents shall
be  reasonably  satisfactory in form and substance  to  the  Administrative
Agent, and the Administrative Agent shall have received all information and
copies  of all certificates, documents and papers, including good  standing
certificates  and any other records of corporate proceedings and  governmen
tal  approvals, if any, which the Administrative Agent may have  reasonably
requested  in connection therewith, such documents and papers, where  appro
priate, to be certified by proper corporate or governmental authorities.

          5.06   Adverse  Change,  etc.  From  December  31,  1996  to  the
Restatement  Effective Date, nothing shall have occurred (and  neither  the
Banks nor the Administrative Agent shall have become aware of any facts  or
conditions  not  previously known) which the Administrative  Agent  or  the
Required Banks shall determine (a) has, or is reasonably likely to have,  a
material  adverse  effect on the rights or remedies of  the  Banks  or  the
Administrative  Agent, or on the ability of Holdings, the Borrower  or  any
Subsidiary  Guarantor to perform their respective obligations to  them,  or
(b) has, or is reasonably likely to have, a Material Adverse Effect.

          5.07  Litigation.  On the Restatement Effective Date, there shall
be  no actions, suits or proceedings pending or threatened (a) with respect
to  this  Agreement  or  any  other Credit  Document  or  the  transactions
contemplated hereby or thereby or (b) which the Administrative Agent or the
Required  Banks shall determine is reasonably likely to (i) have a Material
Adverse  Effect  or (ii) have a material adverse effect on  the  rights  or
remedies  of the Banks hereunder or under any other Credit Document  or  on
the  ability of Holdings, the Borrower or any Subsidiary Guarantor  to  per
form their respective obligations to the Banks hereunder or under any other
Credit Document.

          5.08  Approvals.  On the Restatement Effective Date, all material
necessary  governmental and third party approvals in  connection  with  the
transactions contemplated by the Credit Documents and otherwise referred to
herein  or therein shall have been obtained and remain in effect,  and  all
applicable  waiting  periods shall have expired without  any  action  being
taken  by  any  competent  authority  which  restrains  or  prevents   such
transactions  or imposes, in the reasonable judgment of the Required  Banks
or  the  Administrative  Agent,  materially  adverse  conditions  upon  the
consummation of such transactions.

          5.09   Fees.   On  the Restatement Effective Date,  the  Borrower
shall  have  paid to the Administrative Agent and the Banks  all  Fees  and
expenses agreed upon by such parties to be paid on or prior to such date.

          5.10  Security Agreement.  On the Restatement Effective Date  the
Security Agreement and Assignment of Earnings and Insurances in the form of
Exhibit  G  (as  modified, amended or supplemented from  time  to  time  in
accordance  with  the  terms thereof and hereof, the "Security  Agreement")
covering  all  of  the  Security  Agreement Collateral  and  the  Financing
Statements  (Form  UCC-1  and/or UCC-3) of  each  jurisdiction  as  may  be
necessary to perfect the security interests purported to be created by  the
Security  Agreement  shall be in full force and effect and  the  Collateral
Agent  shall  have received evidence that all other recordings and  filings
of,  or with respect to, the Security Agreement, and all other actions,  as
may  be necessary or, in the opinion of the Collateral Agent, desirable  to
perfect  the  security  interests intended to be created  by  the  Security
Agreement have been completed.

          5.11   Subsidiary  Guaranty.  On the Restatement Effective  Date,
the  Subsidiary Guaranty in the form of Exhibit H (as modified, amended  or
supplemented  from  time to time in accordance with the  terms  hereof  and
thereof,  the  "Subsidiary  Guaranty"), and the Subsidiary  Guaranty  shall
continue in full force and effect.

          5.12  Mortgages.  (a   On the Restatement Effective Date, each of
the following documents (as modified, amended or supplemented from time  to
time  in  accordance  with the terms thereof and hereof,  the  "Mortgages")
shall  have  been  amended (or, in the case of the Australian  Mortgage,  a
mortgage  variation shall have been filed) (the "Mortgage  Amendments")  to
the  satisfaction  of  the Collateral Agent or the Collateral  Trustee  (as
applicable) and shall otherwise be in full force and effect:

         (i    with  respect to the US Rigs, substantially in the  form  of
     Exhibit I-1 (as amended, modified or supplemented from time to time in
     accordance with the terms hereof and thereof, the "US Mortgage");

       (ii   with respect to the Panamanian Rigs, substantially in the form
     of Exhibit I-2 (as amended, modified or supplemented from time to time
     in  accordance  with  the  terms hereof and thereof,  the  "Panamanian
     Mortgage");

       (iii   with respect to the Australian Rig, substantially in the form
     of Exhibit I-3 (as amended, modified or supplemented from time to time
     in  accordance  with  the  terms hereof and thereof,  the  "Australian
     Mortgage"); and

          (b    On  the  Restatement Effective Date, all actions necessary,
desirable  or  otherwise reasonably requested by the  Collateral  Agent  to
provide  the  Collateral  Agent with a perfected  first  priority  security
interest  in all Collateral purported to be covered by the Mortgages  shall
have been taken.

          5.13   Evidence  of Filing of Mortgage Amendments;  Variation  of
Australian  Mortgage,  etc.  Within one Business  Day  of  the  Restatement
Effective  Date,  the  Administrative Agent shall  have  received  evidence
satisfactory to the Administrative Agent that the Mortgage Amendments  have
been  filed  and that the Mortgages, as so amended, are in full  force  and
effect.

          5.14   Pledge Agreement.  On the Restatement Effective Date,  the
Pledge  Agreement  in the form of Exhibit J (as modified,  supplemented  or
amended  from time to time, the "Pledge Agreement") shall be in full  force
and effect.

          5.15   Refinancing;  Existing  Credit  Agreement.   (a    On  the
Restatement  Effective  Date, concurrently with  the  incurrence  of  Loans
hereunder,  (i)  all loans under the Existing Credit Agreement  shall  have
been  repaid  in full with the proceeds of Loans hereunder,  together  with
accrued  interest  and fees thereon and (ii) all letters of  credit  issued
thereunder  shall  have  been assumed hereunder  and  the  Existing  Credit
Agreement  shall  have  been  replaced by this  Agreement,  including  with
respect   to   continuing  indemnification  obligations  and  reimbursement
obligations under letters of credit assumed hereunder.

          5.16  Compliance Certificate.  On the Restatement Effective Date,
and subject to Section 5.15 above, the Borrower shall have delivered to the
Administrative Agent a compliance certificate in the form of Exhibit  L  to
the  Existing Credit Agreement indicating that the Borrower is current with
respect  to  its  obligations under the Existing Credit  Agreement  and  is
otherwise in compliance with all the terms and conditions thereof.

          The  acceptance  of  the  benefits of  each  Credit  Event  shall
constitute a representation and warranty by Holding and the Borrower to the
Administrative  Agent  and each of the Banks that  all  of  the  conditions
specified above which are applicable in accordance with their express terms
at  the  time  of such acceptance exist as of that time.  All  of  the  cer
tificates,  legal opinions and other documents and papers  referred  to  in
this  Section  5,  unless otherwise specified, shall be  delivered  to  the
Administrative Agent at its Notice Office for the account of  each  of  the
Banks  and, except for the Notes, in sufficient counterparts or copies  for
each  of the Banks and shall be satisfactory in form and substance  to  the
Administrative Agent.

          SECTION 6.  Representations, Warranties and Agreements.  In order
to  induce the Banks to enter into this Agreement and to make the Loans and
issue and/or participate in Letters of Credit provided for herein, each  of
Holdings   and  the  Borrower  makes  the  following  representations   and
warranties  to, and agreements with, the Banks, all of which shall  survive
the  execution and delivery of this Agreement and the making of  the  Loans
(with the making of each Credit Event thereafter being deemed to constitute
a  representation and warranty that the matters specified in this Section 6
are true and correct in all material respects on and as of the date of each
such  Credit  Event unless such representation and warranty expressly  indi
cates  that  it is being made as of any specific date, in which  case  such
representations  and warranties shall be true and correct in  all  material
respects as of such date):

          6.01   Corporate Status.  Each Credit Party (i) is a  duly  organ
ized  and validly existing corporation in good standing under the  laws  of
the  jurisdiction  of  its  organization and has the  corporate  power  and
authority  to own its property and assets and to transact the  business  in
which  it is engaged, except in such case where the failure to be  so  duly
organized  and validly existing in good standing and to have such corporate
power and authority (x) is not reasonably likely to have a Material Adverse
Effect  and (y) is not reasonably likely to have a material adverse  effect
on  the rights or remedies of the Banks or on the ability of Holdings,  the
Borrower  or  any Subsidiary Guarantor to perform its obligations  to  them
hereunder and under the other Credit Documents to which it is a party,  and
(ii)  has  duly qualified and is authorized to do business and is  in  good
standing  in all jurisdictions where it is required to be so qualified  and
where the failure to be so qualified would have a Material Adverse Effect.

          6.02   Corporate Power and Authority.  Each Credit Party has  the
corporate  power and authority to execute, deliver and carry out the  terms
and provisions of the Credit Documents to which it is a party and has taken
all  necessary  corporate action to authorize the execution,  delivery  and
performance  of  the Credit Documents to which it is a party.  Each  Credit
Party has duly executed and delivered each Credit Document to which it is a
party  and  each  such  Credit Document constitutes the  legal,  valid  and
binding obligation of such Credit Party enforceable against such Person  in
accordance  with  its terms, except to the extent that  the  enforceability
thereof    may   be   limited   by   applicable   bankruptcy,   insolvency,
reorganization,  moratorium or similar laws generally affecting  creditors'
rights  and  by equitable principles (regardless of whether enforcement  is
sought in equity or at law).

          6.03    No  Violation.   Neither  the  execution,  delivery   and
performance by any Credit Party of the Credit Documents to which  it  is  a
party  nor  compliance  with  the terms and  provisions  thereof,  nor  the
consummation  of the transactions contemplated therein (i) will  contravene
any  applicable  provision  of any law, statute, rule,  regulation,  order,
writ, injunction or decree of any court or governmental instrumentality  of
the  United  States  or  any  State thereof,  the  Republic  of  Panama  or
Australia,  (ii) will result in any breach of any of the terms,  covenants,
conditions or provisions of, or constitute a default under, or (other  than
pursuant to the Security Documents) result in the creation or imposition of
(or  the  obligation to create or impose) any Lien upon any of the property
or assets of Holdings, the Borrower or any of their respective Subsidiaries
pursuant to the terms of, any material indenture, mortgage, deed of  trust,
agreement  or other instrument to which Holdings, the Borrower  or  any  of
their  respective  Subsidiaries is a party or by which it  or  any  of  its
property  or  assets  are bound or to which it is  subject  or  (iii)  will
violate  any  provision of the Certificate of Incorporation or  By-Laws  of
Holdings, the Borrower or any of their respective Subsidiaries.

          6.04   Litigation.   There are no actions, suits  or  proceedings
pending or, to the best of Holding's or the Borrower's knowledge threatened
with  respect  to  Holdings,  the  Borrower  or  any  of  their  respective
Subsidiaries (i) that are likely to have a Material Adverse Effect or  (ii)
that  are reasonably likely to have a material adverse effect on the rights
or  remedies of the Banks or on the ability of any Credit Party to  perform
its  obligations to them hereunder and under the other Credit Documents  to
which it is a party.

          6.05  Use of Proceeds; Margin Regulations.  (a   The proceeds  of
all  Loans shall be utilized to provide for the general corporate  purposes
of Holdings, the Borrower and their respective Subsidiaries.

          (b   Neither the making of any Loan hereunder, nor the use of the
proceeds  thereof, will violate or be inconsistent with the  provisions  of
Regulation  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 in violation of Regulation U or to extend credit for
the purpose of purchasing or carrying any Margin Stock.

          6.06   Governmental Approvals.  Except for the orders,  consents,
approvals, licenses, authorizations, validations, recordings, registrations
and  exemptions that have already been duly made or obtained and remain  in
full force and effect, no order, consent, approval, license, authorization,
or  validation of, or filing, recording or registration with, or  exemption
by,  any  foreign or domestic governmental or public body or authority,  or
any  subdivision  thereof,  is  required to authorize  or  is  required  in
connection  with (i) the execution, delivery and performance of any  Credit
Document  or  (ii) the legality, validity, binding effect or enforceability
of any Credit Document.

          6.07  Investment Company Act.  None of Holdings, the Borrower  or
any  of  their  respective  Subsidiaries is an "investment  company"  or  a
company "controlled" by an "investment company," within the meaning of  the
Investment Company Act of 1940, as amended.

          6.08  Public Utility Holding Company Act.  None of Holdings,  the
Borrower or any of their respective Subsidiaries is a "holding company," or
a  "subsidiary  company" of a "holding company," or  an  "affiliate"  of  a
"holding  company"  or  of a "subsidiary company" of a  "holding  company,"
within  the meaning of the Public Utility Holding Company Act of  1935,  as
amended.

          6.09   True  and  Complete Disclosure.  All  factual  information
(taken  as  a  whole) heretofore or contemporaneously furnished  by  or  on
behalf of Holdings, the Borrower or any of their respective Subsidiaries in
writing  to  the  Administrative Agent or any Bank for purposes  of  or  in
connection  with this Agreement or any transaction contemplated herein  is,
and  all  other  such  factual information (taken  as  a  whole)  hereafter
furnished  by or on behalf of any such Person in writing to any  Bank  will
be, true and accurate in all material respects on the date as of which such
information is dated or certified and not incomplete by omitting  to  state
any material fact necessary to make such information (taken as a whole) not
misleading  at  such time in light of the circumstances  under  which  such
information  was  provided.   The  Projections  and  pro  forma   financial
information  contained in such materials are based on good faith  estimates
and assumptions believed by such Persons to be reasonable at the time made,
it  being recognized by the Banks that such Projections as to future events
are not to be viewed as facts and that actual results during the period  or
periods  covered  by  any such Projections may differ  from  the  projected
results.   There  is  no fact known to Holdings or the  Borrower  which  is
reasonably  likely to have a Material Adverse Effect, which  has  not  been
disclosed  herein or in such other documents, certificates  and  statements
furnished  to  the  Banks  for  use  in connection  with  the  transactions
contemplated hereby.

          6.10   Financial  Condition; Financial  Statements;  Projections.
(a)   On  and  as of the Restatement Effective Date, on a pro  forma  basis
after  giving effect to all Indebtedness incurred, and to be incurred,  and
Liens  created,  and  to be created, by Holdings and  its  Subsidiaries  in
connection  therewith, (x) the sum of the assets, at a fair  valuation,  of
Holdings  and its Subsidiaries taken as a whole will exceed its debts,  (y)
Holdings  and its Subsidiaries taken as a whole will not have  incurred  or
intended to, or believe that they will, incur debts beyond their ability to
pay  such  debts as such debts mature and (z) Holdings and its Subsidiaries
taken  as  a whole will not have unreasonably small capital with  which  to
conduct its business.

          (b   (i)   The  consolidated balance sheet of  Holdings  and  its
Subsidiaries  at December 31, 1995 and the related consolidated  statements
of  operations  and  cash flows of Holdings and its  Subsidiaries  for  the
fiscal  year,  as the case may be, ended as of said date, which  have  been
examined  by Arthur Andersen LLP, independent certified public accountants,
who  delivered an unqualified opinion in respect therewith,  and  (ii)  the
consolidated balance sheet of Holdings and its Subsidiaries as of June  30,
1996,  copies of which have heretofore been furnished to each Bank, present
fairly  the financial position of such entities at the dates of said  state
ments  and  the  results for the period covered thereby in accordance  with
GAAP  (or, in the case of the balance sheet, presents a good faith estimate
of the consolidated financial condition of Holdings and its Subsidiaries at
the  date  thereof), except to the extent provided in  the  notes  to  said
financial statements and, in the case of the June 30, 1996 statements,  sub
ject to normal and recurring year-end audit adjustment.  All such financial
statements  (other than the aforesaid balance sheet) have been prepared  in
accordance with generally accepted accounting principles and practices  con
sistently  applied  except to the extent provided  in  the  notes  to  said
financial  statements.  Nothing has occurred since December 31,  1995  that
has had or is reasonably likely to have a Material Adverse Effect.

          (c    Except  as  reflected in the financial statements  and  the
notes  thereto  described  in  Section  6.10(b),  there  were  as  of   the
Restatement  Effective Date no liabilities or obligations with  respect  to
Holdings, the Borrower or any of their respective Subsidiaries of a  nature
(whether absolute, accrued, contingent or otherwise and whether or not due)
which,  either individually or in aggregate, would be material to  Holdings
and  its  Subsidiaries taken as a whole, except as incurred  subsequent  to
December  31, 1996 in the ordinary course of business consistent with  past
practices.

          (d    On  and as of the Restatement Effective Date, the financial
projections, together with adjustments thereto, previously delivered to the
Administrative Agent and the Banks (the "Projections") have  been  prepared
on  a basis consistent with the financial statements referred to in Section
6.10(a)  (other  than as set forth or presented in such  Projections),  and
there are no statements or conclusions in any of the Projections which  are
based  upon or include information known to Holdings or the Borrower to  be
misleading  in  any  material respect or which fail to  take  into  account
material   information  not  otherwise  disclosed   in   writing   to   the
Administrative Agent and the Banks regarding the matters reported  therein.
On  the Restatement Effective Date, Holdings and the Borrower believed that
the Projections were reasonable and attainable.

          6.11  Security Interests.  On and after the Restatement Effective
Date,  each  of  the  Security  Documents  creates,  as  security  for  the
Obligations  purported  to  be secured thereby,  a  valid  and  enforceable
perfected  security  interest in and Lien on all of the Collateral  subject
thereto,  to  the  extent  perfection of a security  interest  or  Lien  is
governed by Article 8 or Article 9 of the UCC (as defined in the applicable
Security  Documents),  the  Ship Mortgage  Act  (as  defined  in  the  U.S.
Mortgages),  or  comparable provisions under the laws of  the  Republic  of
Panama  and  Australia,  and subject to no other  Liens  (except  that  the
Collateral  may be subject to Permitted Liens), in favor of the  Collateral
Agent  or the Security Trustee, as the case may be, for the benefit of  the
Banks.   No  filings  or recordings are required in order  to  perfect  the
security  interests created under any Security Document except for  filings
or  recordings required in connection with any such Security Document which
shall  have been made upon or prior to (or are the subject of arrangements,
satisfactory  to the Administrative Agent, for filing on or promptly  after
the date of) the execution and delivery thereof.

          6.12   Tax  Returns and Payments.  Each of Holdings, the Borrower
and  each of their respective Subsidiaries has filed all federal income tax
returns  and all other material tax returns, domestic and foreign, required
to  be  filed by it and has paid all material taxes and assessments payable
by it which have become due, other than those not yet delinquent and except
for  those  contested in good faith.  Holdings, the Borrower  and  each  of
their  respective Subsidiaries has paid, or has provided adequate  reserves
with  respect  thereto, in accordance with GAAP, for the  payment  of,  all
federal,  state  and foreign income taxes applicable for all  prior  fiscal
years and for the current fiscal year to the date hereof.

          6.13   Compliance  with ERISA.  (a) Each Plan is  in  substantial
compliance  with ERISA and the Code; no Reportable Event has occurred  with
respect  to a Plan; no Plan is insolvent or in reorganization; no Plan  has
an accumulated or waived funding deficiency or has applied for an extension
of  any amortization period within the meaning of Section 412 of the  Code;
all  contributions required to be made with respect to a Plan and a Foreign
Pension  Plan have been timely made; neither Holdings nor the Borrower  nor
any  Subsidiary  of the Borrower nor any ERISA Affiliate has  incurred  any
material  liability  to or on account of a Plan pursuant  to  Section  409,
502(i),  502(l),  4062, 4063, 4064, 4069, 4201, 4204 or 4212  of  ERISA  or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or expects to incur  any
liability  (including  any indirect, contingent,  or  secondary  liability)
under  any  of  the  foregoing  Sections  with  respect  to  any  Plan;  no
proceedings  have  been instituted to terminate or  appoint  a  trustee  to
administer any Plan; no condition exists which presents a material risk  to
Holdings,  the  Borrower or any Subsidiary of the  Borrower  or  any  ERISA
Affiliate  of incurring a liability to or on account of a Plan pursuant  to
the  foregoing  provisions of ERISA and the Code; or except  as  would  not
reasonably  be expected to have a Material Adverse Effect, no lien  imposed
under the Code or ERISA on the assets of the Borrower or any Subsidiary  of
the Borrower or any ERISA Affiliate exists or is reasonably likely to arise
on  account  of  any Plan; and Holdings, the Borrower and their  respective
Subsidiaries do not maintain or contribute to any employee welfare  benefit
plan  (as  defined  in  Section 3(1) of ERISA) which provides  benefits  to
retired employees or other former employees (other than as required by  Sec
tion  601  of  ERISA) or any employee pension benefit plan (as  defined  in
Section  3(2)  of  ERISA) the obligations with respect  to  which  are  not
properly  recognized  or disclosed in such entity's consolidated  financial
statements and notes related thereto.

          (b)  Each Foreign Pension Plan has been maintained in substantial
compliance  with  its  terms  and with the  requirements  of  any  and  all
applicable  laws,  statutes, rules, regulations and  orders  and  has  been
maintained,  where  required, in good standing with  applicable  regulatory
authorities.   None  of Holdings, the Borrower or any of  their  respective
Subsidiaries has incurred any obligation in connection with the termination
of or withdrawal from any Foreign Pension Plan.

          6.14   Subsidiaries.  Annex V lists each Subsidiary  of  Holdings
(and  the  direct and indirect ownership interest of Holdings therein),  in
each case existing on the Restatement Effective Date.

          6.15   Patents,  etc.  Holdings and each of its Subsidiaries  has
obtained  all  material patents, trademarks, service  marks,  trade  names,
copyrights,  licenses and other rights, free from burdensome  restrictions,
that  are necessary for the operation of their businesses taken as a  whole
as presently conducted.

          6.16  Pollution and Other Regulations.  (a   Each of Holdings and
its   Subsidiaries  is  in  substantial  compliance  with  all   applicable
Environmental Laws governing its business for which failure  to  comply  is
reasonably  likely to have a Material Adverse Effect, and neither  Holdings
nor any of its Subsidiaries is liable for any material penalties, fines  or
forfeitures for failure to comply with any of the foregoing.  All licenses,
permits,  registrations or approvals required for the business of  Holdings
and  each of its Subsidiaries, as conducted as of the Restatement Effective
Date,  under any Environmental Law have been secured and Holdings and  each
of  its  Subsidiaries is in substantial compliance therewith,  except  such
licenses, permits, registrations or approvals the failure to secure  or  to
comply  therewith is not likely to have a Material Adverse Effect.  Neither
Holdings  nor  any  of its Subsidiaries is in any respect in  noncompliance
with, breach of or default under any writ, order, judgment, injunction,  or
decree  to  which  Holdings or such Subsidiary is a party  or  which  would
affect  the  ability  of Holdings or such Subsidiary to  operate  any  Real
Property, offshore drilling rig or other facility and no event has occurred
and  is  continuing which, with the passage of time or the giving of notice
or  both,  would constitute noncompliance, breach of or default thereunder,
except  in each such case, such noncompliance, breaches or defaults as  are
not likely to, in the aggregate, have a Material Adverse Effect.  There are
as of the Restatement Effective Date no Environmental Claims pending or, to
the  best  knowledge  of  Holdings and the  Borrower,  threatened,  against
Holdings or any of its Subsidiaries wherein an unfavorable decision, ruling
or  finding  would be reasonably likely to have a Material Adverse  Effect.
There  are no facts, circumstances, conditions or occurrences on  any  Real
Property,  offshore  drilling rig or other facility owned  or  operated  by
Holdings or any of its Subsidiaries that is reasonably likely (i)  to  form
the   basis  of  an  Environmental  Claim  against  Holdings,  any  of  its
Subsidiaries or any Real Property, offshore drilling rig or other  facility
owned  by  Holdings or any of its Subsidiaries, or (ii) to cause such  Real
Property,  offshore drilling rig or other facility to  be  subject  to  any
restrictions on its ownership, occupancy, use or transferability under  any
Environmental Law, except in each such case, such Environmental  Claims  or
restrictions  that  individually or in the  aggregate  are  not  reasonably
likely to have a Material Adverse Effect.

          (b)  Hazardous Materials have not at any time been (i) generated,
used,  treated or stored on, or transported to or from, any Real  Property,
offshore  drilling rig or other facility at any time owned or  operated  by
Holdings  or any of its Subsidiaries, or (ii) released on or from any  such
Real Property, offshore drilling rig or other facility, in each case where,
to  the  best of Holdings' or the Borrower's knowledge, such occurrence  or
event  individually  or in the aggregate is reasonably  likely  to  have  a
Material Adverse Effect.

          6.17  Properties.  (a)  Holdings and each of its Subsidiaries has
title  to  all  material  properties owned by them including  all  property
reflected  in  the consolidated balance sheet of Holdings and  its  Subsidi
aries as referred to in Section 6.10(b), free and clear of all Liens, other
than  (i) as referred to in the consolidated balance sheet or in the  notes
thereto or (ii) Permitted Liens.

          (b)  Annex VI sets forth all the offshore drilling rigs and other
vessels owned or chartered by Holdings and each of its Subsidiaries on  the
Restatement  Effective  Date, and identifies the  registered  owner,  flag,
official  or  patent  number, as the case may be,  the  home  port,  class,
location  and operating status on the Restatement Effective Date,  and,  if
chartered-in by Holdings or any of its Subsidiaries, the name  and  address
of the owner of such chartered-in vessel.

          6.18  Labor Relations.  Neither Holdings nor its Subsidiaries  is
engaged  in any unfair labor practice that is reasonably likely to  have  a
Material  Adverse Effect.  There is (i) no unfair labor practice  complaint
pending  against Holdings or any of its Subsidiaries or threatened  against
any of them, before the National Labor Relations Board, and no grievance or
arbitration  proceeding arising out of or under any  collective  bargaining
agreement is so pending against Holdings or any of its Subsidiaries or,  to
the  best of Holdings' or the Borrower's knowledge, threatened against  any
of  them,  (ii)  no  strike, labor dispute, slowdown  or  stoppage  pending
against Holdings or any of its Subsidiaries or, to the best of Holdings' or
the  Borrower's  knowledge,  threatened against  Holdings  or  any  of  its
Subsidiaries  and  (iii)  no union representation  petition  existing  with
respect  to  the  employees of Holdings or any of its Subsidiaries  and  no
union  organizing activities are taking place, except with respect  to  any
matter specified in clause (i), (ii) or (iii) above, either individually or
in  the  aggregate,  such as is not reasonably likely to  have  a  Material
Adverse Effect.

          6.19   Existing Indebtedness.  Annex VII sets forth  a  true  and
complete  list of all Indebtedness of Holdings and each of its Subsidiaries
on  the Restatement Effective Date and which is to remain outstanding after
the  Restatement  Effective Date (excluding the Loans and  the  Letters  of
Credit,  the  "Existing Indebtedness"), in each case showing the  aggregate
principal  amount  thereof  and the name of  the  respective  borrower  (or
issuer)  and any other entity which directly or indirectly guaranteed  such
debt.

          6.20   Citizenship.   The Mortgagors are  qualified  to  own  and
operate  the  Mortgaged  Rigs under the laws  of  the  United  States,  the
Republic of Panama and Australia, as may be applicable.

          6.21   Rig  Classification.  Each offshore drilling rig owned  or
leased by Holdings and its Subsidiaries is classified in the highest  class
available  for  rigs  of  its  age and type with  the  American  Bureau  of
Shipping, Inc. or another internationally recognized classification society
reasonably  acceptable  to  the Collateral  Agent,  free  of  any  material
outstanding requirements or recommendations, other than (i) with respect to
any  Mortgaged  Rig, as permitted under the Mortgage relating  thereto  and
(ii)  with  respect to any other rigs, such requirements or recommendations
which if not cured by the owner thereof would not materially diminish  such
rig's value.

          SECTION  7.   Affirmative Covenants.  Holdings and  the  Borrower
covenant  and  agree that on the Restatement Effective Date and  thereafter
for  so long as this Agreement is in effect (and until the Commitments have
terminated, no Letters of Credit or Notes are outstanding and the Loans and
Unpaid  Drawings,  together with interest, Fees and all  other  Obligations
incurred hereunder, are paid in full):

          7.01   Information Covenants.  Holdings and/or the Borrower  will
furnish to each Bank:

          (a)   Annual Financial Statements.  (i) Within 90 days after  the
     close  of each fiscal year of Holdings, the consolidated balance sheet
     of  Holdings  and its Subsidiaries, as at the end of such fiscal  year
     and  the  related consolidated statements of operations  and  of  cash
     flows for such fiscal year and (ii) within 180 days after the close of
     each  fiscal year of the Borrower, the consolidated balance  sheet  of
     the  Borrower and its Subsidiaries, as at the end of such fiscal  year
     and  the related consolidated statements of operations and cash  flows
     for   such  fiscal  year;  in  each  case  including  the  amount   of
     Consolidated  Capital Expenditures made during such fiscal  year,  set
     ting  forth comparative consolidated figures for the preceding  fiscal
     year,  and, in the case of financial statements delivered pursuant  to
     clause   (i)   above,   examined  by  independent   certified   public
     accountants of recognized national standing whose opinion shall not be
     qualified  as to the scope of audit and as to the status  of  Holdings
     and  its  Subsidiaries as a going concern, together with a certificate
     of  such  accounting firm stating that in the course  of  its  regular
     audit  of  the business of Holdings and the Borrower, which audit  was
     conducted  in  accordance with generally accepted auditing  standards,
     such accounting firm has obtained no knowledge of any Default or Event
     of  Default which has occurred and is continuing or, if in the opinion
     of  such  accounting  firm  such a Default or  Event  of  Default  has
     occurred and is continuing, a statement as to the nature thereof.

          (b)  Quarterly Financial Statements.  As soon as available and in
     any  event  within 45 days after the close of each of the first  three
     quarterly  accounting  periods in each fiscal year,  the  consolidated
     balance sheet of Holdings and its Subsidiaries, as at the end of  such
     quarterly period and the related consolidated statements of operations
     and  of  cash  flows  for such quarterly period and  for  the  elapsed
     portion  of the fiscal year ended with the last day of such  quarterly
     period, including the amount of Consolidated Capital Expenditures made
     during  such  period,  and  in  each case  setting  forth  comparative
     consolidated figures for the related period in the prior fiscal  year,
     all  of which shall be unaudited, but certified by the chief financial
     officer  or controller of Holdings, subject to changes resulting  from
     audit and normal year-end audit adjustments.

          (c)   Rig  Status Report.  As soon as available and in any  event
     within  60  days after the end of the first three fiscal  quarters  of
     Holdings  and  within  90  days after the end  of  the  fourth  fiscal
     quarter,  a report (in form satisfactory to the Administrative  Agent)
     detailing  (i)(A) the then current location of each  of  the  offshore
     drilling  rigs  owned or leased by Holdings and its Subsidiaries,  (B)
     the  then  current  term of and parties to any contract  of  any  such
     offshore drilling rig, and (C) the then current day rate with  respect
     to  any  such  contract and (ii) for the previous fiscal quarter,  the
     average day rates and utilization for each such offshore drilling rig.

          (d)  Forecast; etc.  Not more than 60 days after the commencement
     of  each fiscal year of Holdings, a forecast which includes an  income
     statement, balance sheet and cash flow statement of Holdings  and  its
     Subsidiaries for each of the four fiscal quarters of such fiscal year,
     including  a  breakdown of revenues, operating expenses,  utilizations
     and  Consolidated  Capital Expenditure assumptions for  each  offshore
     drilling rig owned or leased by Holdings and its Subsidiaries.

          (e)   Compliance Certificate.  At the time of the delivery of the
     financial  statements  provided for in Sections  7.01(a)  and  (b),  a
     certificate of Holdings and/or the Borrower signed by its chief  finan
     cial  officer, controller or other Authorized Officer in the  form  of
     Exhibit K to the effect that no Default or Event of Default exists or,
     if  any  Default or Event of Default does exist, specifying the nature
     and extent thereof, which certificate shall set forth the calculations
     required  to establish whether Holdings and its Subsidiaries  were  in
     compliance  with  the provisions of Section 8 as at the  end  of  such
     fiscal period or year, as the case may be.

          (f)  Notice of Default or Litigation.  Promptly, and in any event
     within  (x) three Business Days after Holdings or the Borrower obtains
     knowledge  thereof,  notice  of  the occurrence  of  any  event  which
     constitutes  a Default or Event of Default which notice shall  specify
     the  nature  thereof, the period of existence thereof and what  action
     Holdings or the Borrower proposes to take with respect thereto and (y)
     ten Business Days after the Borrower obtains knowledge thereof, notice
     of   the  commencement  of  or  any  significant  development  in  any
     litigation or governmental proceeding pending against Holdings or  the
     Borrower  or any of their respective Subsidiaries which is  likely  to
     have a Material Adverse Effect or is likely to have a material adverse
     effect  on  the  ability of Holdings, the Borrower or  any  Subsidiary
     Guarantor  to  perform its obligations hereunder or  under  any  other
     Credit Document.

          (g)   Auditors'  Reports.   Promptly  upon  receipt  thereof  and
     following  such time as management shall have had reasonable  time  to
     respond  thereto, a copy of each formal report or "management  letter"
     submitted  to Holdings or the Borrower by its independent  accountants
     in  connection with any annual, interim or special audit made by it of
     the books of Holdings or the Borrower.

          (h)   Insurance  Report.  On or before each  anniversary  of  the
     Initial  Borrowing Date, a report from Holdings and/or the  Borrower's
     independent maritime insurance broker as required by the Mortgages.

          (i)  Annual Rig Valuation Report.  At the time of the delivery of
     the  financial statements provided for in Section 7.01(a), an  updated
     rig  valuation  report from an Approved Shipbroker setting  forth  the
     current Market Value of each Mortgaged Rig.

          (j)  SEC Reports.  Promptly upon transmission thereof, copies  of
     any material filings and registration with, and reports to, the SEC by
     Holdings  or  any  of  its Subsidiaries and copies  of  all  financial
     statements, proxy statements, notices and reports as Holdings  or  any
     of its Subsidiaries shall generally send to analysts or all holders of
     their capital stock in their capacity as such holders (in each case to
     the  extent  not theretofore delivered to the Banks pursuant  to  this
     Agreement).

          (k)    Other   Information.   From  time  to  time,  such   other
     information   or   documents   (financial   or   otherwise)   as   the
     Administrative  Agent on its own behalf or on behalf of  the  Required
     Banks may reasonably request.

          7.02   Books, Records and Inspections.  Holdings will,  and  will
cause  each of its Subsidiaries to, permit, upon reasonable notice  to  the
chief  financial  officer, controller or any other  Authorized  Officer  of
Holdings  or the Borrower, officers and designated representatives  of  the
Administrative  Agent  or the Required Banks, to the extent  necessary,  to
examine  the  books of account of Holdings and any of its Subsidiaries  and
discuss  the affairs, finances and accounts of Holdings and of any  of  its
Subsidiaries with, and be advised as to the same by, its and their officers
and independent accountants, all at such reasonable times and intervals and
to such reasonable extent as the Administrative Agent or the Required Banks
may desire.

          7.03   Insurance.  In addition to any requirements set  forth  in
the  Mortgages, Holdings will, and will cause each of its Subsidiaries  to,
at  all  times maintain in full force and effect insurance in such  amounts
with  carriers of such insurance industry ratings, covering such risks  and
liabilities and with such deductibles or self-insured retentions as are  in
accordance  with normal industry practice for similarly situated  insureds.
Holdings will, and will cause each of its Subsidiaries to, furnish on  each
anniversary of the Initial Borrowing Date to the Administrative Agent a sum
mary  of the insurance carried together with certificates of insurance  and
other evidence of such insurance.

          7.04   Payment  of Taxes.  Holdings will pay and  discharge,  and
will  cause  each  of  its Subsidiaries to pay and  discharge,  all  taxes,
assessments and governmental charges or levies imposed upon it or upon  its
income  or  profits, or upon any properties belonging to it, prior  to  the
date  on  which penalties attach thereto, and all lawful claims  which,  if
unpaid,  might become a Lien or charge upon any properties of  Holdings  or
any  of its Subsidiaries, provided that neither Holdings nor any Subsidiary
shall  be  required to pay any such tax, assessment, charge, levy or  claim
which is being contested in good faith and by proper proceedings if it  has
maintained adequate reserves with respect thereto in accordance with GAAP.

          7.05   Consolidated Corporate Franchises.  Holdings will do,  and
will  cause each of its Subsidiaries to do, or cause to be done, all things
necessary  to  preserve  and keep in full force and effect  its  existence,
material  rights  and  authority, unless  the  failure  to  do  so  is  not
reasonably  likely  to have a Material Adverse Effect,  provided  that  any
transaction permitted by Section 8.02 will not constitute a breach of  this
Section 7.05.

          7.06   Compliance with Statutes, etc.  Holdings  will,  and  will
cause  each  of  its Subsidiaries to, comply with all applicable  statutes,
regulations and orders of, and all applicable restrictions imposed by,  all
governmental bodies, domestic or foreign, in respect of the conduct of  its
business  and  the  ownership of its property other  than  those  the  non-
compliance with which would not have a Material Adverse Effect or would not
have  a  material  adverse effect on the ability of  any  Credit  Party  to
perform its obligations under any Credit Document to which it is party.

          7.07   Good  Repair.  Except for offshore drilling rigs currently
under  or  scheduled  to be repaired or which have  been  damaged  or  have
suffered  a  casualty  as  to which (within a reasonable  period  of  time)
Holdings  and/or  the  Borrower have not made a  determination  whether  to
replace  or repair, or if the determination to replace or repair  has  been
made, as to which such replacement or repairs are being undertaken, subject
to  availability of equipment, materials and/or repair facilities, Holdings
will,  and will cause each of its Subsidiaries to, keep its properties  and
equipment  used or useful in its business, in whomsoever's possession  they
may  be, in good repair, working order and condition, normal wear and  tear
excepted,  and, subject to Section 8.02, see that from time to  time  there
are made in such properties and equipment all necessary and proper repairs,
renewals, replacements, extensions, additions, betterments and improvements
thereto  to the extent and in the manner useful or customary for  companies
in similar businesses.

          7.08   End of Fiscal Years; Fiscal Quarters.  Holdings will,  for
financial reporting purposes, cause (i) each of its fiscal years to end  on
December  31 of each year and (ii) each of its fiscal quarters  to  end  on
March 31, June 30, September 30 and December 31 of each year.

          7.09   Use of Proceeds.  All proceeds of the Loans shall be  used
as provided in Section 6.05.

          7.10    Earnings  Concentration  Account.   The  Borrower   shall
maintain  with  Christiania Bank og Kreditkasse, Grand  Cayman  Branch,  on
terms  substantially similar to those in effect prior  to  the  Restatement
Effective  Date, an account (the "Concentration Account")  into  which  the
Earnings  of  the Borrower and the Subsidiary Guarantors arising  from  the
operation of the Mortgaged Rigs shall be deposited and maintained  as  cash
collateral  in  accordance  with  the Security  Agreement.   Funds  in  the
Concentration Account shall be released from time to time to  the  Borrower
upon  the  Borrower's  request  (which request  shall  be  implied  by  any
withdrawal by the Borrower of funds from the Concentration Account), unless
and  until  such time as the Administrative Agent, following the occurrence
of  an  Event of Default, requires that said monies be held as security  or
applied  by  the  Administrative Agent, for the benefit of itself  and  the
Banks,  as it may direct, whereafter the Borrower shall procure such  funds
and  ensure  that such funds are held as security or applied in  accordance
with the directions of the Administrative Agent.

          7.11  Additional Rig Valuations.  At any time as may be requested
by  the  Administrative Agent on behalf of the Required Banks  (but  in  no
event  in  excess  of three times in any fiscal year of  Holdings  (without
taking  into  account  the right of Holdings or the Borrower  to  retain  a
second  Approved  Shipbroker  in  accordance  with  immediately  succeeding
sentence))  and  at the expense of the Borrower, Holdings or  the  Borrower
shall  retain the Approved Shipbroker requested by the Administrative Agent
to supply a written report setting forth the Market Value of each Mortgaged
Rig  at  such time.  Holdings or the Borrower may retain a second  Approved
Shipbroker of its own choosing at such time and at its own expense  to  sup
ply  a  second  written  report setting forth  the  Market  Value  of  such
Mortgaged Rigs.  Promptly upon receipt thereof Holdings and/or the Borrower
shall deliver copies of each such report to the Banks.

          7.12  Further Assurances.

          (a)  Holdings and the Borrower will, and will cause each of their
respective Subsidiaries to, at the expense of the Borrower, make,  execute,
endorse,  acknowledge, file and/or deliver to the Collateral Agent  or  the
Security  Trustee,  as the case may be, from time to  time  such  vouchers,
invoices, schedules, confirmatory assignments, conveyances, financing state
ments,  transfer  endorsements,  powers  of  attorney,  certificates,  real
property surveys, reports and other assurances or instruments and take such
further  steps relating to the Collateral as the Collateral  Agent  or  the
Security Trustee, as the case may be, may reasonably require.

          (b)   Holdings  and the Borrower agree that each action  required
above  by this Section 7.12 shall be completed as soon as possible, but  in
no  event later than 60 days after such action is requested to be taken  by
the  Administrative Agent or the Required Banks, provided that in no  event
shall  Holdings or the Borrower be required to take any action, other  than
using  its  reasonable commercial efforts without any material expenditure,
to  obtain consents or other actions from third parties with respect to its
compliance with this Section 7.12.

          7.13   ERISA.  As soon as possible and, in any event,  within  10
days  after Holdings, the Borrower or any of  their respective Subsidiaries
or any ERISA Affiliate knows or has reason to know of the occurrence of any
of  the  following, Holdings or the Borrower will deliver to  each  of  the
Banks  a  certificate of the Chief Financial Officer  of  Holdings  or  the
Borrower  setting forth details as to such occurrence and  the  action,  if
any,  that  Holdings, the Borrower, such Subsidiary or such ERISA Affiliate
is  required  or  proposes to take, together with any notices  required  or
proposed  to  be given to or filed with or by Holdings, the Borrower,  such
Subsidiary,  the  ERISA Affiliate, the PBGC, or a Plan participant  or  the
Plan  administrator  with respect thereto:  that  a  Reportable  Event  has
occurred;  that an accumulated funding deficiency has been incurred  or  an
application may be or has been made to the Secretary of the Treasury for  a
waiver  or  modification  of the minimum funding  standard  (including  any
required  installment payments) or an extension of any amortization  period
under  Section 412 of the Code or Section 302 of ERISA with  respect  to  a
Plan;  that a contribution required to be made to a Plan or Foreign Pension
Plan  has  not been timely made; that a Plan has been or may be terminated,
reorganized,  partitioned or declared insolvent under Title  IV  of  ERISA;
that  a Plan has an Unfunded Current Liability giving rise to a lien  under
ERISA  or  the  Code;  that proceedings may be or have been  instituted  to
terminate or appoint a trustee to administer a Plan, that a proceeding  has
been  instituted pursuant to Section 515 of ERISA to collect  a  delinquent
contribution  to  a  Plan;  that  Holdings,  the  Borrower,  any  of  their
respective  Subsidiaries  or any ERISA Affiliate  will  or  may  incur  any
liability (including any indirect contingent or secondary liability) to  or
on  account  of the termination of or withdrawal from a Plan under  Section
4062,  4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or with respect  to  a
Plan  under Section 401(a)(29), 4971 or 4975 of the Code or Section 409  or
502(i) or 502(l) of ERISA; or that Holdings, the Borrower or any Subsidiary
may  incur  any  material unrecognized liability pursuant to  any  employee
welfare  benefit plan (as defined in Section 3(1) of ERISA)  that  provides
benefits  to  retired employees or other former employees  (other  than  as
required by Section 601 of ERISA) or any employee pension benefit plan  (as
defined  in Section 3(2) of ERISA).  Upon request, Holdings or the Borrower
will  deliver  to  each of the Banks a complete copy of the  annual  report
(Form  5500)  of each Plan (including to the extent required,  the  related
financial  and  actuarial  statements and  opinions  and  other  supporting
statements, certifications, schedules and information) required to be filed
with  the  Internal  Revenue Service.  In addition to any  certificates  or
notices  delivered  to  the Banks pursuant to the  first  sentence  hereof,
copies  of  annual reports, and any material notices received by  Holdings,
the Borrower or any of their respective Subsidiaries or any ERISA Affiliate
from any governmental agency with respect to any Plan shall be delivered to
the  Banks no later than 10 days after the date such report has been  filed
with  the  Internal  Revenue Service or such notice has  been  received  by
Holdings,  the  Borrower,  the  Subsidiary  or  the  ERISA  Affiliate,   as
applicable.

          SECTION 8.  Negative Covenants.  Holdings and the Borrower hereby
covenant and agree that as of the Restatement Effective Date and thereafter
for  so long as this Agreement is in effect and until the Commitments  have
terminated, no Letters of Credit or Notes are outstanding and the Loans and
Unpaid  Drawings,  together with interest, Fees and all  other  Obligations
incurred hereunder, are paid in full:

          8.01   Changes in Business.  Holdings and the Borrower will  not,
and  will  not  permit any of their respective Subsidiaries to,  materially
alter  the character of the business of Holdings and its Subsidiaries taken
as a whole from that conducted on the Restatement Effective Date (including
any  material  expansion  outside  of the offshore  contract  drilling  and
production  business), provided that this Section 8.01 shall  not  restrict
the  engaging  in business ancillary to the offshore contract drilling  and
production business.

          8.02  Consolidation, Merger or Sale of Assets, etc.  Holdings and
the Borrower will not, and will not permit any of the Subsidiary Guarantors
to,  wind  up,  liquidate  or  dissolve its  affairs,  or  enter  into  any
transaction of merger or consolidation, sell or otherwise dispose of all or
substantially all of its property or assets or of any Collateral  or  agree
to  do  any  of the foregoing at any future time, except that the following
shall be permitted:

          (a)  (i) any Subsidiary of Holdings (other than the Borrower) may
     be  merged  or consolidated with or into, or be liquidated  into,  the
     Borrower (so long as the Borrower is the surviving corporation) or any
     Guarantor (so long as such Guarantor is the surviving corporation) and
     (ii)  all  or  any  part  of the business, properties  and  assets  of
     Holdings or any of its Subsidiaries (other than the Borrower)  may  be
     conveyed, leased, sold or transferred to the Borrower or any Guarantor
     or  any Subsidiary of the Borrower or any Guarantors, provided that if
     any  Collateral  is  transferred pursuant  to  this  Section  8.02(a),
     Holdings  and/or  the Borrower shall provide the Administrative  Agent
     with  ten  Business  Days'  notice prior to  such  transfer,  and  the
     Borrower or such Subsidiary, as the case may be, owning the Collateral
     after such transfer shall take all action reasonably requested by  the
     Collateral  Agent and/or the Security Trustee in respect  of  the  con
     tinued priority and perfection of such Collateral;

          (b)   Holdings may liquidate or dissolve or consolidate or  merge
     into  another  entity,  provided (i)  Holdings  is  the  successor  or
     survivor  in  respect of such merger, and after giving effect  thereto
     Holdings  will be in full compliance with the terms of this  Agreement
     and  (ii)  Standard & Poor's shall have affirmed in writing that  such
     transaction  will not impair Holdings' implied senior debt  rating  as
     such debt rating is in effect immediately prior to the announcement or
     consummation  of  such  liquidation,  dissolution,  consolidation   or
     merger;

          (c)   other sales or dispositions of assets provided that (x) the
     Total  Commitment shall be reduced as required by Section  3.03(c)  in
     the  case of the sale or disposition of assets constituting Collateral
     and  (y) each such sale or disposition shall be in an amount at  least
     equal to the fair market value thereof (as determined by the Board  of
     Directors  of  the  Borrower  in  the  case  of  sales  in  excess  of
     $20,000,000) and for proceeds consisting solely of not less than  100%
     cash  in  the case of assets constituting Collateral and (z)  no  such
     sale or disposition shall constitute the sale or disposition of all or
     substantially  all  of  the  combined  assets  of  Holdings  and   its
     Subsidiaries taken together; and

          (d)   other sales or dispositions of assets in each case  to  the
     extent  the  Required  Banks have consented  in  writing  thereto  and
     subject to such conditions as may be set forth in such consent.

          To the extent any Collateral is sold or otherwise disposed of (to
any  Person other than Holdings and its Subsidiaries) as permitted by  this
Section  8.02, such Collateral shall be sold or otherwise disposed of  free
and  clear  of  the  Liens  created  by the  Security  Documents,  and  the
Administrative Agent, the Collateral Agent and the Security  Trustee  shall
be authorized to take any actions deemed appropriate in order to effect the
foregoing.

          8.03   Liens on Collateral; Arcade Drilling.  Holdings  will  not
permit  Arcade  to  create, incur, assume or suffer to exist  any  Lien  or
assign any right to receive income, or file or permit the filing of any UCC
Financing  Statement or any other similar notice of Lien under any  similar
recording or notice statute, and Holdings and the Borrowers will  not,  and
will  not  permit any of their respective Subsidiaries to,  create,  incur,
assume  or suffer to exist any Lien upon or with respect to any Collateral,
whether  now  owned  or  hereafter acquired, or sell  any  such  Collateral
subject  to  an  understanding or agreement, contingent  or  otherwise,  to
repurchase such Collateral (including sales of accounts receivable or notes
with  recourse to Holdings or any of its Subsidiaries) or assign any  right
to  receive income, or file or permit the filing of any financing statement
under  the UCC or any other similar notice of Lien on any Collateral  under
any similar recording or notice statute; except that the following shall be
permitted:

          (a)   Liens  for  taxes  not yet due or  Liens  for  taxes  being
     contested  in  good  faith and by appropriate  proceedings  for  which
     adequate reserves with respect thereto, in accordance with GAAP,  have
     been established;

          (b)   Liens  imposed by law which were incurred in  the  ordinary
     course  of  business, such as carriers', warehousemen's and mechanics'
     Liens,  statutory landlord's Liens, maritime Liens and  other  similar
     Liens arising in the ordinary course of business, and (x) which do not
     in  the aggregate materially detract from the value of such Collateral
     or  materially impair the use thereof in the operation of the business
     of  Holdings, the Borrower or any of their respective Subsidiaries  or
     (y) which are being contested in good faith by appropriate proceedings
     (including  the providing of bail), which proceedings have the  effect
     of preventing the forfeiture or sale of the Collateral subject to such
     Lien  or procuring the release of the Collateral subject to such  Lien
     from arrest or detention;

          (c)   Liens created by or pursuant to this Agreement or the other
     Credit Documents;

          (d)  Liens permitted under the express terms of the Mortgages  or
     other Security Documents;

          (e)   Liens existing on the Restatement Effective Date and listed
     on  Annex VIII, without giving effect to any subsequent extensions  or
     renewals thereof;

          (f)   Liens  arising from judgments, decrees or  attachments  (or
     securing  of  appeal bonds with respect thereto)  to  the  extent  not
     covered  by  insurance,  so  long  as the  obligations  in  connection
     therewith  do not exceed $5,000,000 in the aggregate and otherwise  in
     circumstances not constituting an Event of Default under Section 9.08;

          (g)   any  interest or title of a lessor or charterer  under  any
     lease  or charter (i) in existence on the Restatement Effective  Date,
     (ii)  among Holdings and/or any of its Subsidiaries or (iii) otherwise
     permitted by this Agreement;

          (h)  immaterial Liens on any Real Property of Holdings or any  of
     its Subsidiaries; and

          (i)  Liens on Rig 41 and the Earnings and insurances relating  to
     Rig 41 securing Title XI Financing incurred pursuant to the Borrower's
     election  under,  and  in accordance with, the  proviso  contained  in
     Section 3.03(c).

          8.04  Indebtedness of Arcade.  Holdings will not permit Arcade to
contract,  create,  incur,  assume or suffer  to  exist  any  Indebtedness,
except:

        (i)  Indebtedness incurred pursuant to this Agreement and the other
     Credit Documents;

        (ii)   Indebtedness of Arcade existing on the Restatement Effective
     Date  to  the  extent  the  same  is  listed  on  Annex  VII,  but  no
     refinancings or renewals thereof;

       (iii)   Indebtedness evidenced by Capitalized Lease  Obligations  so
     long   as   the  aggregate  principal  amount  of  Capitalized   Lease
     Obligations outstanding at any time pursuant to this Section 8.04 does
     not exceed $1,000,000 in the aggregate; and

       (iv)  Indebtedness subject to Liens permitted under Section 8.03(e).

          8.05       Dividends;      Restrictions     on      Subsidiaries,
etc.   (a)   Holdings will not, and will not permit any of its Subsidiaries
to,  declare or pay any dividends (other than dividends (i) payable  solely
in  capital  stock  of  Holdings  or rights  in  respect  thereof  or  (ii)
constituting  spin-offs  of  divisions  or  direct  or  indirect  operating
subsidiaries  of  Holdings (other than Arcade and the  Borrower  and  their
direct  or  indirect  Subsidiaries)) or return any capital  to,  the  stock
holders of Holdings or authorize or make any other distribution, payment or
delivery  of property or cash to the stockholders of Holdings as  such,  or
redeem, retire, purchase or otherwise acquire, directly or indirectly,  for
a  consideration, any shares of any class of the capital stock of  Holdings
now  or  hereafter  outstanding (or any warrants for or  options  or  stock
appreciation  rights in respect of any of such shares), or  set  aside  any
funds  for any of the foregoing purposes, or permit any of its Subsidiaries
to  purchase or otherwise acquire for consideration any shares of any class
of  the  capital  stock of Holdings, now or hereafter outstanding  (or  any
options  or  warrants or stock appreciation rights issued by Holdings  with
respect  to  its capital stock) (all of the foregoing "Dividends"),  except
that:

        (i)  Holdings may redeem or repurchase common stock of Holdings (or
     options  to  purchase such common stock) from (1)  present  or  former
     officers, employees and directors of Holdings, the Borrower, or any of
     their  Subsidiaries  (or  their estates)  upon  the  death,  permanent
     disability, retirement or termination of employment of any such Person
     or  otherwise in accordance with any stock option plan or any employee
     stock  ownership plan, or (2) stockholders of Holdings so long as  the
     purpose  of  such purchase is to acquire common stock of Holdings  for
     reissuance to new officers, employees and directors (or their estates)
     of  Holdings, the Borrower or any of their respective Subsidiaries  to
     the extent so reissued within 12 months of any such purchase, provided
     that  in all such cases (x) no Default or Event of Default is then  in
     existence  or would arise therefrom, (y) the aggregate amount  of  all
     cash paid in respect of all such shares so redeemed or repurchased  in
     any calendar year does not exceed $15,000,000 plus proceeds of key man
     life  insurance used for the purpose of repurchasing such common stock
     owned  by  such Person and, provided further, that in the  event  that
     Holdings   subsequently  resells  to  any  member  of  its,   or   any
     Subsidiary's  management, any shares redeemed or repurchased  pursuant
     to  this clause (i), the amount of repurchases Holdings may make  from
     officers, employees and directors pursuant to this clause (i) shall be
     increased by an amount equal to any cash received by Holdings upon the
     resale of such shares;

        (ii)   So  long as no Default or Event of Default exists  or  would
     result   therefrom,  Holdings  may  make  open  market  purchases   of
     outstanding  common stock of Holdings in an aggregate  amount  not  to
     exceed $100,000,000.

       (iii)   Holdings may pay or make Dividends on (i) existing  Class  A
     common stock (up to a maximum of $100 per annum) and (ii) any issue of
     preferred stock whether now existing or hereafter issued;

        (iv)   so  long as no Default or Event of Default exists  or  would
     result therefrom, Holdings shall be permitted to pay or make Dividends
     in  an amount not to exceed 50%, in the aggregate, of Consolidated Net
     Income on a cumulative basis beginning October 1, 1996; and

         (v)   so  long as no Default or Event of Default exists  or  would
     result  therefrom,  the  Borrower  may  dividend  to  Holdings  up  to
     $100,000,000 in the aggregate, so long as the entirety of such  amount
     is  promptly  used  by  Holdings to make open  market  repurchases  of
     outstanding common stock of Holdings pursuant to Section 8.05(a)(ii).

          (b)   Holdings and the Borrower will not, and will not permit any
of  the  Subsidiary Guarantors to, create or otherwise cause or  suffer  to
exist any encumbrance or restriction which prohibits or otherwise restricts
(A)  the  ability of any Subsidiary Guarantor to (a) pay dividends or  make
other  distributions or pay any Indebtedness owed to the  Borrower  or  any
Subsidiary Guarantor, or (b) make loans or advances to the Borrower or  any
Subsidiary Guarantor, (c) transfer any of its properties or assets  to  the
Borrower or any Subsidiary Guarantor or (B) the ability of the Borrower  or
any other Subsidiary Guarantor of the Borrower to create, incur, assume  or
suffer  to  exist  any  Lien upon its property  or  assets  to  secure  the
Obligations, other than prohibitions or restrictions existing under  or  by
reason of:

        (i) this Agreement and the other Credit Documents;

       (ii) applicable law;

       (iii)  customary  non-assignment  provisions  entered  into  in  the
     ordinary course of business and consistent with past practices;

        (iv)  any  restriction or encumbrance with respect to a  Subsidiary
     Guarantor imposed pursuant to an agreement which has been entered into
     for the sale or disposition of all or substantially all of the capital
     stock or assets of such Subsidiary Guarantor, so long as such sale  or
     disposition is permitted under this Agreement; and

         (v) Permitted Liens and any documents or instruments governing the
     terms  of  any Indebtedness or other obligations secured by  any  such
     Liens,  provided that such prohibitions or restrictions apply only  to
     the assets subject to such Liens.

          8.06   Transactions with Affiliates.  Holdings and  the  Borrower
will  not,  and  will not permit any of their respective  Subsidiaries  to,
enter  into any transaction or series of transactions after the Restatement
Effective Date whether or not in the ordinary course of business, with  any
Affiliate other than on terms and conditions substantially as favorable  to
Holdings  or  such  Subsidiary as would be obtainable by Holdings  or  such
Subsidiary  at  the  time in a comparable arm's-length transaction  with  a
Person  other  than an Affiliate, provided that the foregoing  restrictions
shall not apply to (i) employment arrangements entered into in the ordinary
course  of  business  with officers of Holdings and its Subsidiaries,  (ii)
customary fees paid to members of the Board of Directors of Holdings and of
its  Subsidiaries,  (iii) capital contributions made  by  Holdings  to  the
Borrower,  (iv)  all  transactions  between  or  among  Holdings  and   its
Subsidiaries, (v) all immaterial transactions with the officers or  members
of  the  Board  of Directors of Holdings or its Subsidiaries and  (vi)  all
immaterial transactions with Affiliates.

          8.07   Vessel  Management; Registry.  Holdings and  the  Borrower
will not, and will not permit any of their Subsidiaries to, (i) change  the
overall management of any of the Mortgaged Rigs from Holdings or any of its
Subsidiaries  or  (ii) change the national registry of any  Mortgaged  Rig,
provided  that,  in  the  case  of the US Rigs,  the  Borrower  and/or  its
Subsidiaries  may,  upon 60 day's prior written notice  to  the  Collateral
Agent,  elect to change the national registry of any or all of the US  Rigs
from  the  United  States of America to the Republic  of  Panama,  provided
further  that  all  steps  necessary and  proper  in  the  opinion  of  the
Collateral Agent to continue, without interruption, the perfected  security
interest of the Collateral Agent and/or Collateral Trustee in such US  Rigs
shall  have  been taken, at the Borrower's expense, to the satisfaction  of
the Collateral Agent.

          8.08  Coverage Ratio.  Holdings will not permit the ratio of  (i)
Consolidated EBITDAR to (ii) the sum of Consolidated Interest Expense  plus
Consolidated  Rent  Expense  for  any period  of  four  consecutive  fiscal
quarters  of  Holdings (taken as one accounting period)  to  be  less  than
3.50:1.00.

          8.09   Working Capital.  Holdings will not permit Working Capital
on  the  last day of any fiscal quarter of Holdings to be less than  $0  if
Working  Capital  was  less  than $0 on the last  day  of  the  immediately
preceding fiscal quarter.

          8.10   Leverage  Ratio.  Holdings will not  permit  the  Leverage
Ratio  (i)  at  the end of any fiscal quarter ending prior to November  13,
1999 to be greater than 0.50:1.00 and (ii) at the end of any fiscal quarter
ending  thereafter  to be greater than 0.40:1.00; provided  that  from  and
including the date upon which Holdings announces the repurchase by Holdings
of its common stock in an aggregate amount of not less than $50,000,000, to
and  including  November 13, 1998, the maximum Leverage Ratio  pursuant  to
this Section 8.10 shall be 0.60:1.00.

          8.11  Collateral Maintenance.  (a)  Holdings shall not permit the
Market  Value of the Mortgaged Rigs at any time to be less than  1.6  times
the Total Commitment in effect from time to time.

          (b)  Holdings will not (i) permit its percentage ownership of the
total capital stock of Arcade at any time to be reduced below 74.4% or (ii)
pledge any Arcade shares now held or hereafter acquired by Holdings or  any
of its Subsidiaries to any Person other than the Collateral Agent.

          SECTION 9.  Events of Default.  Upon the occurrence of any of the
following specified events (each an "Event of Default"):

          9.01   Payments.  The Borrower shall (i) default in  the  payment
when due of any principal of the Loans and such default shall continue  for
two  or more Business Days or (ii) default, and such default shall continue
for three or more Business Days after notice by the Administrative Agent or
the  Required  Banks,  in the payment when due of any Unpaid  Drawing,  any
interest  on the Loans or any Fees or any other amounts owing hereunder  or
under any other Credit Document; or

          9.02   Representations,  etc.   Any representation,  warranty  or
statement  made by any Credit Party herein or in any other Credit  Document
or  in  any  statement or certificate delivered or required to be delivered
pursuant hereto or thereto shall prove to be untrue in any material respect
on the date as of which made or deemed made; or

          9.03   Covenants.  Holdings or the Borrower shall (a) default  in
the  due performance or observance by it of any term, covenant or agreement
contained  in  Section  7.08  or Section  8  or  (b)  default  in  the  due
performance  or observance by it of any term, covenant or agreement  (other
than  those referred to in Section 9.01, 9.02 or clause (a) of this Section
9.03)   contained  in  this  Agreement  and  such  default  shall  continue
unremedied for a period of at least 30 days after notice to the Borrower by
the Administrative Agent or the Required Banks; or

          9.04   Default  Under  Other  Agreements.   (a)   Holdings,   the
Borrower or any of their respective Subsidiaries shall (i) default  in  any
payment  with  respect  to any Indebtedness (other  than  the  Obligations)
beyond  the period of grace, if any, applicable thereto or (ii) default  in
the observance or performance of any agreement or condition relating to any
such  Indebtedness or contained in any instrument or agreement  evidencing,
securing  or relating thereto, or any other event shall occur or  condition
exist,  the effect of which default or other event or condition results  in
acceleration or the renegotiation of the material payment terms of any such
Indebtedness  to become due prior to its stated maturity; or (b)  any  such
Indebtedness of Holdings or any of its Subsidiaries shall be declared to be
due  and  payable,  or  required to be prepaid other than  by  a  regularly
scheduled  required  prepayment,  prior to  the  stated  maturity  thereof,
provided that it shall not constitute an Event of Default pursuant to  this
Section 9.04 unless the aggregate principal amount of such Indebtedness  in
default exceeds $5,000,000 at any one time; or

          9.05   Bankruptcy, etc.  Holdings, the Borrower or any  of  their
respective  Subsidiaries shall commence a voluntary case concerning  itself
under  Title 11 of the United States Code entitled "Bankruptcy," as now  or
hereafter  in effect, or any successor thereto (the "Bankruptcy Code");  or
an  involuntary case is commenced against Holdings, the Borrower or any  of
their  respective Subsidiaries and the petition is not controverted  within
10  days,  or  is not dismissed within 60 days, after commencement  of  the
case; or a custodian (as defined in the Bankruptcy Code) is appointed  for,
or  takes  charge of, all or substantially all of the property of Holdings,
the  Borrower  or  any of their respective Subsidiaries; or  Holdings,  the
Borrower  or  any  of  their respective Subsidiaries  commences  any  other
proceeding  under  any  reorganization, arrangement,  adjustment  of  debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of
any  jurisdiction whether now or hereafter in effect relating to  Holdings,
the Borrower or any of their respective Subsidiaries; or there is commenced
against Holdings, the Borrower or any of their respective Subsidiaries  any
such  case or proceeding which remains undismissed for a period of 60 days;
or  Holdings,  the  Borrower  or any of their  respective  Subsidiaries  is
adjudicated  insolvent or bankrupt; or any order of relief or  other  order
approving any such case or proceeding is entered; Holdings, the Borrower or
any  of  their  respective  Subsidiaries suffers  any  appointment  of  any
custodian  or  the like for it or any substantial part of its  property  to
continue undischarged or unstayed for a period of 60 days; or Holdings, the
Borrower or any of their respective Subsidiaries makes a general assignment
for the benefit of creditors; or any corporate action is taken by Holdings,
the  Borrower  or any of their respective Subsidiaries for the  purpose  of
effecting any of the foregoing; or

          9.06  Security Documents.  (i) Any Security Document shall, after
the  execution and delivery thereof, cease to be in full force and  effect,
or shall cease to give the Collateral Agent or the Security Trustee, as the
case  may  be,  the Liens, rights, powers and privileges  purported  to  be
created  thereby in favor of the Collateral Agent or the Security  Trustee,
as  the  case may be, or (ii) any Credit Party shall default in any respect
in  the due performance or observance of any term, covenant or agreement on
its part to be performed or observed pursuant to any such Security Document
and  such  default (unless such default creates an Event of  Default  under
clause  (i)  above) shall continue unremedied for a period of at  least  30
days  after  notice  to  the Borrower by the Administrative  Agent  or  the
Required Banks; or

          9.07   Guaranty.   Any  Guaranty or any provision  thereof  shall
cease to be in full force and effect, or any Guarantor or any Person acting
by  or  on  behalf  of such Guarantor shall deny or disaffirm  all  or  any
portion  of such Guarantor's obligation thereunder, or any Guarantor  shall
default in the observance of any term, covenant or agreement on its part to
be  performed or observed pursuant thereto and such default (other than any
default  arising  from  a  failure to make any  payment  thereunder)  shall
continue  unremedied for a period of at least 30 days after notice  to  the
Borrower by the Administrative Agent or the Required Banks; or

          9.08   Judgments.   One  or more judgments or  decrees  shall  be
entered  against Holdings, the Borrower or any other Credit Party involving
a  liability of $1,000,000 or more in the case of any one such judgment  or
decree  and $5,000,000 or more in the aggregate for all such judgments  and
decrees  for Holdings, the Borrower and the other Credit Parties (not  paid
or  to  the  extent  not covered by insurance) and any  such  judgments  or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 60 days from the entry thereof; or

          9.09  Citizenship.  Any Mortgagor shall cease to be qualified  to
own and operate the Mortgaged Rigs under the laws of the United States, the
Republic of Panama or Australia, as may be applicable; or

          9.10   Employee Benefit Plans. (a)(i) A contribution required  to
be  made  with respect to any (x) employee pension benefit plan (as defined
in  Section  3(2) of ERISA) maintained or contributed to by  (or  to  which
there  is  an obligation to contribute of) Holdings or a Subsidiary  or  an
ERISA  Affiliate or (y) Foreign Pension Plan has not been  timely  made  or
(ii)  Holdings  or  any  Subsidiary has incurred  or  is  likely  to  incur
liabilities  pursuant  to one or more employee welfare  benefit  plans  (as
defined  in  Section  3(1)  of  ERISA) that  provide  benefits  to  retired
employees or other former employees (other than as required by Section  601
of  ERISA) or employee pension benefit plans (as defined in Section 3(2) of
ERISA); (b) there shall result from any such event or events the imposition
of  a  lien,  the  granting of a security interest, or  a  liability  or  a
material  risk  of  incurring a liability; and  (c)  which  lien,  security
interest  or  liability,  individually, and/or in  the  aggregate,  in  the
opinion of the Required Banks, will have a Material Adverse Effect; or

          9.11  Change of Control.  A Change of Control shall occur;
then,  and in any such event, and at any time thereafter, if any  Event  of
Default shall then be continuing, the Administrative Agent shall, upon  the
written  request of the Required Banks, by written notice to the  Borrower,
take  any or all of the following actions, without prejudice to the  rights
of  the Administrative Agent or any Bank to enforce its claims against  any
Credit  Party,  except  as  otherwise specifically  provided  for  in  this
Agreement (provided that, if an Event of Default specified in Section  9.05
shall occur with respect to the Borrower, the result which would occur upon
the  giving  of written notice by the Administrative Agent as specified  in
clauses (i) and (ii) below shall occur automatically without the giving  of
any  such  notice):  (i) declare the Total Commitment terminated, whereupon
the  Commitment of each Bank shall forthwith terminate immediately and  any
Commitment  Commission  or any other Fees shall forthwith  become  due  and
payable without any other notice of any kind; (ii) declare the principal of
and  any accrued interest in respect of all Loans and all obligations owing
hereunder  (including Unpaid Drawings) and thereunder to be, whereupon  the
same  shall become, forthwith due and payable without presentment,  demand,
protest or other notice of any kind, all of which are hereby waived by each
Credit  Party; (iii) enforce, as Collateral Agent (or direct the Collateral
Agent  to enforce), any or all of the Liens and security interests  created
pursuant  to  the Security Documents; (iv) terminate any Letter  of  Credit
which  may  be  terminated in accordance with its  terms;  (v)  direct  the
Borrower  to  pay  (and  the Borrower hereby agrees upon  receipt  of  such
notice, or upon the occurrence of any Event of Default specified in Section
9.05  in  respect of the Borrower, it will pay) to the Collateral Agent  at
the  Payment Office such additional amounts of cash, to be held as security
for  the  Borrower's  reimbursement obligations in respect  of  Letters  of
Credit then outstanding equal to the aggregate Stated Amount of all Letters
of  Credit  then  outstanding; and (vi) apply  any  amounts  held  as  cash
collateral pursuant to Section 4.02 or this Section 9 to repay Obligations.

          SECTION 10.   Definitions.  As used herein, the  following  terms
shall  have  the  meanings herein specified unless  the  context  otherwise
requires.   Defined terms in this Agreement shall include in  the  singular
number the plural and in the plural the singular:

          "Adjusted Commitment" for each Non-Defaulting Bank shall mean  at
any  time  the product of such Bank's Adjusted Percentage and the  Adjusted
Total Commitment.

          "Adjusted  Percentage" shall mean (x) at  a  time  when  no  Bank
Default exists, for each Bank such Bank's Percentage and (y) at a time when
a Bank Default exists (i) for each Bank that is a Defaulting Bank, zero and
(ii) for each Bank that is a Non-Defaulting Bank, the percentage determined
by  dividing  such  Bank's Commitment at such time by  the  Adjusted  Total
Commitment at such time, it being understood that all references herein  to
Commitments  and  the Adjusted Total Commitment at a time  when  the  Total
Commitment  or  Adjusted Total Commitment, as the case  may  be,  has  been
terminated  shall  be  references  to the  Commitments  or  Adjusted  Total
Commitment, as the case may be, in effect immediately prior to such  termin
ation,  provided that (A) no Bank's Adjusted Percentage shall  change  upon
the  occurrence of a Bank Default from that in effect immediately prior  to
such  Bank  Default if, after giving effect to such Bank  Default  and  any
repayment  of  Loans  at  such  time  pursuant  to  Section  4.02(A)(a)  or
otherwise,  the  sum of (i) the aggregate outstanding principal  amount  of
Loans   of  all  Non-Defaulting  Banks  plus  (ii)  the  Letter  of  Credit
Outstandings, exceeds the Adjusted Total Commitment; (B) the changes to the
Adjusted Percentage that would have become effective upon the occurrence of
a  Bank  Default but that did not become effective as a result of  the  pre
ceding  clause  (A)  shall become effective on the  first  date  after  the
occurrence  of  the  relevant Bank Default on which  the  sum  of  (i)  the
aggregate  outstanding principal amount of the Loans of all  Non-Defaulting
Banks plus (ii) the Letter of Credit Outstandings is equal to or less  than
the  Adjusted  Total  Commitment; and (C) if (i)  a  Non-Defaulting  Bank's
Adjusted  Percentage is changed pursuant to the preceding  clause  (B)  and
(ii) any repayment of such Bank's Loans, or of Unpaid Drawings with respect
to Letters of Credit, that were made during the period commencing after the
date of the relevant Bank Default and ending on the date of such change  to
its  Adjusted Percentage must be returned to the Borrower as a preferential
or similar payment in any bankruptcy or similar proceeding of the Borrower,
then  the change to such Non-Defaulting Bank's Adjusted Percentage effected
pursuant  to said clause (B) shall be reduced to that positive  change,  if
any,  as  would  have  been made to its Adjusted  Percentage  if  (x)  such
repayments  had  not been made and (y) the maximum change to  its  Adjusted
Percentage  would have resulted in the sum of the outstanding principal  of
Loans  made  by such Bank plus such Bank's new Adjusted Percentage  of  the
outstanding  principal  amount of Letter of Credit  Outstandings  equalling
such Bank's Commitment at such time.

          "Adjusted  Total  Commitment" shall mean at any  time  the  Total
Commitment less the aggregate Commitments of all Defaulting Banks.

          "Administrative  Agent" shall have the meaning  provided  in  the
first  paragraph of this Agreement and shall include any successor  to  the
Administrative Agent appointed pursuant to Section 11.09.

          "Affected  Eurodollar Loan" shall have the  meaning  provided  in
Section 4.02(B).

          "Affiliate"  shall  mean, with respect to any Person,  any  other
Person directly or indirectly controlling (including but not limited to all
directors  and officers of such Person), controlled by, or under direct  or
indirect common control with such Person.  A Person shall be deemed to  con
trol  a  corporation if such Person possesses, directly or indirectly,  the
power  (i)  to  vote 10% or more of the securities having  ordinary  voting
power  for the election of directors of such corporation or (ii) to  direct
or  cause the direction of the management and policies of such corporation,
whether  through  the  ownership  of  voting  securities,  by  contract  or
otherwise.

          "Agreement" shall mean this Credit Agreement, as the same may  be
from time to time modified, amended and/or supplemented.

          "Applicable  Eurodollar Margin" shall be equal to the  percentage
per annum set forth below opposite Holdings' applicable Leverage Ratio,  as
calculated  for  the  last day of the fiscal quarter last  ended;  provided
that,  in the event a change in the Applicable Eurodollar Margin is  to  be
made,  such change shall not become effective until the date on  which  the
Administrative  Agent receives written notice from the Borrower  indicating
that such change is warranted:

                                           Applicable
            Leverage Ratio            Eurodollar Margin

         Equal to or less than
           0.25:1.00                  0.65% per annum

         Greater than 0.25:1:00       0.85% per annum.

          "Approved Bank" shall have the meaning provided in the definition
of "Cash Equivalents."

          "Approved  Company"  shall  have  the  meaning  provided  in  the
definition of "Cash Equivalents."
          "Approved   Shipbroker"  shall  mean  each  of  the  first-class,
international,  independent,  sale-and-purchase  Shipbrokers  of   offshore
drilling  units listed on Annex IX, as such Annex may be revised from  time
to  time  at  the  request of the Required Banks with the  consent  of  the
Borrower, which consent shall not be unreasonably withheld.

          "Arcade" shall mean Arcade Drilling AS, a Norwegian Corporation.

          "Arcade Rigs" shall have the meaning provided in Section 3.03(e).

          "Assignment  and Assumption Agreement" shall mean the  Assignment
and   Assumption  Agreement  substantially  in  the  form  of   Exhibit   L
(appropriately completed).

          "Australian  Rig"  shall mean the offshore  drilling  vessel  Ron
Tappmeyer.

          "Authorized  Officer" shall mean any officer of Holdings  or  the
Borrower  designated  as  such in writing to the  Administrative  Agent  by
Holdings or the Borrower.

          "Bank" shall have the meaning provided in the first paragraph  of
this Agreement.

          "Bank  Default" shall mean (i) the refusal (which  has  not  been
retracted) of a Bank to make available its portion of any Loans or to  fund
its  portion of any unreimbursed payment under Section 2.04(c)  or  (ii)  a
Bank  having notified the Administrative Agent and/or the Borrower that  it
does  not intend to comply with the obligations under Section 1.01 or under
Section  2.04(c),  in the case of either (i) or (ii) as  a  result  of  the
appointment of a receiver or conservator with respect to such Bank  at  the
direction or request of any regulatory agency or authority.

          "Bankruptcy  Code"  shall have the meaning  provided  in  Section
9.05.

          "Base  Rate"  shall  mean  the higher of (i)  the  Administrative
Agent's  Prime  Rate,  and  (ii) 0.50% per annum above  the  Federal  Funds
Effective Rate.

          "Base  Rate  Loan" shall mean each Loan bearing interest  at  the
rates provided in Section 1.08(a).

          "Borrower" shall have the meaning provided in the first paragraph
of this Agreement.

          "Borrowing"  shall  mean  the incurrence  of  one  Type  of  Loan
pursuant to the Facility by the Borrower from all of the Banks with respect
to  such  Facility on a pro rata basis on a given date (or  resulting  from
conversions  on a given date), having in the case of Eurodollar  Loans  the
same  Interest Period; provided that Base Rate Loans incurred  pursuant  to
Section  1.10(b) shall be considered included in any related  Borrowing  of
Eurodollar Loans.

          "Business  Day"  shall mean (i) for all purposes  other  than  as
covered  by clause (ii) below, any day excluding Saturday, Sunday  and  any
day  which shall be in the Cities of New York and/or London a legal holiday
or  a  day  on  which banking institutions are authorized by law  or  other
governmental  actions to close and (ii) with respect  to  all  notices  and
determinations in connection with, and payments of principal  and  interest
on,  Loans,  any  day which is a Business Day described in clause  (i)  and
which  is  also  a  day  for trading by and between banks  in  U.S.  dollar
deposits in the interbank Eurodollar market.

          "Capital  Expenditures" shall mean, with respect to  any  Person,
all  expenditures by such Person which should be capitalized in  accordance
with GAAP, including all such expenditures with respect to fixed or capital
assets  (including,  without limitation, expenditures for  maintenance  and
repairs  which should be capitalized in accordance with generally  accepted
accounting  principles)  and  the amount of Capitalized  Lease  Obligations
incurred by such Person.

          "Capital Lease" as applied to any Person shall mean any lease  of
any  property  (whether real, personal or mixed) by that Person  as  lessee
which, in conformity with GAAP, is accounted for as a capital lease on  the
balance sheet of that Person.

          "Capitalized Lease Obligations" shall mean all obligations  under
Capital Leases of Holdings or any of its Subsidiaries in each case taken at
the amount thereof accounted for as liabilities in accordance with GAAP.

          "Cash  Equivalents" shall mean (i) securities issued or  directly
and  fully  guaranteed or insured by the United States of  America  or  any
agency  or instrumentality thereof (provided that the full faith and credit
of  the  United  States  of America is pledged in support  thereof)  having
maturities  of not more than six months from the date of acquisition,  (ii)
U.S. dollar denominated time deposits, certificates of deposit and bankers'
acceptances of (x) any Bank, (y) any domestic commercial bank of recognized
standing  having capital and surplus in excess of $500,000,000 or  (z)  any
bank (or the parent company of such bank) whose short-term commercial paper
rating  from Standard & Poor's Corporation ("S&P") is at least A-1  or  the
equivalent  thereof or from Moody's Investors Service, Inc. ("Moody's")  is
at least P-1 or the equivalent thereof (any such bank, an "Approved Bank"),
in  each case with maturities of not more than six months from the date  of
acquisition,  (iii) repurchase obligations with a term  of  not  more  than
seven  days for underlying securities of the types described in clause  (i)
above  entered into with any bank meeting the qualifications  specified  in
clause  (ii)  above, (iv) commercial paper issued by any Bank  or  Approved
Bank  or  by the parent company of any Bank or Approved Bank and commercial
paper issued by, or guaranteed by, any industrial or financial company with
a  short-term  commercial paper rating of at least A-1  or  the  equivalent
thereof  by  S&P or at least P-1 or the equivalent thereof by Moody's  (any
such  company,  an  "Approved Company"), or guaranteed  by  any  industrial
company with a long term unsecured debt rating of at least A or A2, or  the
equivalent of each thereof, from S&P or Moody's, as the case may be, and in
each case maturing within six months after the date of acquisition and  (v)
investments  in  money market funds substantially all of whose  assets  are
comprised  of securities of the type described in clauses (i) through  (iv)
above.

          "Cash  Proceeds"  shall  mean, with  respect  to  any  Collateral
Disposition,  the aggregate cash payments (including any cash  received  by
way  of deferred payment pursuant to a note receivable issued in connection
with  such Collateral Disposition, other than the portion of such  deferred
payment  constituting interest, but only as and when so received)  received
by Holdings and/or any Subsidiary from such Collateral Disposition.

          "CBK"  shall  mean  Christiania Bank  og  Kreditkasse,  New  York
Branch.

          "CERCLA"  shall  mean  the Comprehensive Environmental  Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C.  ?  9601  et
seq.

          "Change  of  Control" shall mean (a) Holdings shall at  any  time
cease  to  own  100% of the capital stock of the Borrower or,  directly  or
indirectly,  any Subsidiary Guarantor, (b) any "person" (as  such  term  is
used  in  Sections 13(d) and 14(d) of the Exchange Act), is or becomes  the
beneficial  owner (as defined in Rules 13d-3 and 13d-5 under  the  Exchange
Act), directly or indirectly, of more than 50% of the total voting power of
the  Voting  Stock of Holdings or (c) during any period of two  consecutive
years individuals who at the beginning of such period constituted the Board
of Directors of Holdings (together with any new directors whose election by
such  Board  of  Directors or whose nomination for election  by  the  stock
holders  of Holdings was approved by a vote of a majority of the  directors
of Holdings then still in office who were either directors at the beginning
of  such period or whose election or nomination for election was previously
so  approved) cease for any reason to constitute a majority of the Board of
Directors of Holdings then in office.

          "Claims"  shall  have the meaning provided in the  definition  of
"Environmental Claims."

          "Code"  shall mean the Internal Revenue Code of 1986, as  amended
from  time  to time and the regulations promulgated and the rulings  issued
thereunder.  Section references to the Code are to the Code, as  in  effect
at  the  Restatement Effective Date and any subsequent  provisions  of  the
Code, amendatory thereof, supplemental thereto or substituted therefor.

          "Collateral" shall mean all of the Security Agreement Collateral,
the  Pledged Stock as defined in the Pledge Agreement, the "Rig" as defined
in  each  of  the  Mortgages  and  any cash  collateral  delivered  to  the
Collateral Agent pursuant to this Agreement.

          "Collateral Agent" shall mean the Administrative Agent acting  as
collateral agent for the Banks.

          "Collateral  Disposition" shall mean (i) the  sale,  transfer  or
other  voluntary disposition by the Borrower or any Guarantor to any Person
other  than  the Borrower or any Guarantor of any asset of the Borrower  or
such  Guarantor  constituting Collateral or (ii)  any  Total  Loss  of  any
Mortgaged Rig.

          "Commitment"  shall mean, with respect to each Bank,  the  amount
set  forth  opposite such Bank's name in Annex I directly below the  column
entitled  "Commitment," as the same may be (x) reduced from  time  to  time
pursuant to Sections 3.02, 3.03 and/or 9 or (y) adjusted from time to  time
as a result of assignments to or from such Bank pursuant to Section 12.04.

          "Commitment  Commission"  shall  have  the  meaning  provided  in
Section 3.01(a).

          "Consolidated Capital Expenditures" shall mean, for  any  period,
the  aggregate  of  all expenditures (whether paid in cash  or  accrued  as
liabilities and including in all events all amounts expended or capitalized
under  Capital Leases) by Holdings and its Subsidiaries during that  period
that,  in conformity with GAAP, are or are required to be included  in  the
property, plant or equipment reflected in the consolidated balance sheet of
Holdings   and   its  Subsidiaries,  provided  that  Consolidated   Capital
Expenditures  shall  in  any  event include  the  purchase  price  paid  in
connection  with  the  acquisition of any  Person  (including  through  the
purchase of all of the capital stock or other ownership interests  of  such
Person  or  through  merger or consolidation) to the  extent  allocable  to
"drilling  and  other  property  and  equipment"  provided  further,   that
Consolidated  Capital Expenditures shall only include  the  amount  thereof
actually paid in cash during such period.

          "Consolidated Current Assets" shall mean, the current  assets  of
Holdings  and  its  Subsidiaries determined  on  a  consolidated  basis  in
accordance with GAAP, including cash and Cash Equivalents.

          "Consolidated  Current  Liabilities"  shall  mean,  the   current
liabilities  of Holdings and its Subsidiaries determined on a  consolidated
basis  in accordance with GAAP, but excluding (i) the current portion under
the   Holdings  Convertible  Debentures  and  (ii)  the  current  liability
associated  with  the  required repayment of Loans in connection  with  the
Scheduled Commitment Reduction occurring on the Maturity Date.

          "Consolidated EBIT" shall mean, for any period, (A)  the  sum  of
the amounts for such period of (i) Consolidated Net Income, (ii) provisions
for  taxes  based  on  income, (iii) Consolidated  Interest  Expense,  (iv)
amortization  or  write-off  of  deferred financing  costs  to  the  extent
deducted in determining Consolidated Net Income and (v) loss-es on sales of
assets (excluding sales in the ordinary course of business) and other extra
ordinary  losses less (B) the amount for such period of gains on  sales  of
assets  (excluding  sales in the ordinary course  of  business)  and  other
extraordinary  gains,  all  as  determined  on  a  consolidated  basis   in
accordance with GAAP.

          "Consolidated EBITDAR" shall mean, for any period, the sum of the
amounts  for  such  period  of  (i) Consolidated  EBIT,  (ii)  depreciation
expense, (iii) amortization expense and (iv) Consolidated Rent Expense, all
as determined on a consolidated basis in accordance with GAAP.

          "Consolidated  Funded Indebtedness" shall mean, all  Indebtedness
of  Holdings  and  its Subsidiaries calculated on a consolidated  basis  in
accordance  with  GAAP;  provided that with respect  to  calculations  made
pursuant  to  Section  8.10  only, Consolidated Funded  Indebtedness  shall
exclude  (i)  up to $200,000,000 of unsecured subordinated debt  issued  by
Holdings  in  one or more public offerings following the Initial  Borrowing
Date,  which  shall (x) mature after the Maturity Date, (y)  not  have  any
principal  payments  prior  to the Maturity Date,  and  (z)  be  explicitly
subordinated  to this Facility and (ii) up to a maximum of $100,000,000  in
the  aggregate of residual value guarantees related to the financing of the
two  drillships  being  constructed  pursuant  to  joint  ventures  between
affiliates  of  Reading & Bates Corporation and Conoco, provided  that  the
underlying  obligations of such residual value guarantees shall not  mature
prior to the date which is 12 months after the Maturity Date.

          "Consolidated Interest Expense" shall mean, for any period, total
interest  expense  (including  that  attributable  to  Capital  Leases)  of
Holdings  and  its Subsidiaries in accordance with GAAP on  a  consolidated
basis  with  respect to all outstanding Indebtedness of  Holdings  and  its
Subsidiaries, including, without limitation, all commissions, discounts and
other  fees and charges owed with respect to letters of credit and bankers'
acceptance financing.

          "Consolidated  Net  Income" shall mean for any  period,  the  net
income  (or loss) of Holdings and its Subsidiaries on a consolidated  basis
for  such  period  taken  as  a  single  accounting  period  determined  in
conformity with GAAP.

          "Consolidated  Net  Worth" shall mean, at any time,  shareholders
equity  (excluding  treasury stock) of Holdings and its Subsidiaries  on  a
consolidated basis determined in accordance with GAAP.

          "Consolidated Rent Expense" shall mean for any period,  the  rent
expense  of Holdings and its Subsidiaries on a consolidated basis for  such
period  taken  as a single accounting period determined in accordance  with
GAAP.

          "Contingent  Obligations"  shall  mean  as  to  any  Person   any
obligation  of  such  Person  guaranteeing or intending  to  guarantee  any
Indebtedness  ("primary  obligations") of any other  Person  (the  "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation,  any obligation of such Person, whether or not contingent,  (a)
to purchase any such primary obligation or any property constituting direct
or  indirect security therefor, (b) to advance or supply funds (i) for  the
purchase  or  payment of any such primary obligation or  (ii)  to  maintain
working  capital or equity capital of the primary obligor or  otherwise  to
maintain  the net worth or solvency of the primary obligor, (c) to purchase
property, securities or services primarily for the purpose of assuring  the
owner  of any such primary obligation of the ability of the primary obligor
to  make  payment of such primary obligation or (d) otherwise to assure  or
hold  harmless the owner of such primary obligation against loss in respect
thereof,  provided, however, that the term Contingent Obligation shall  not
include  endorsements  of  instruments for deposit  or  collection  in  the
ordinary course of business.  The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determinable amount of the
primary  obligation in respect of which such Contingent Obligation is  made
or,  if  not  stated  or  determinable, the maximum reasonably  anticipated
liability  in respect thereof (assuming such Person is required to  perform
thereunder) as determined by such Person in good faith.

          "Credit  Documents"  shall mean this Agreement,  the  Notes,  the
Security  Documents  and  each  Guaranty  and  any  documents  executed  in
connection therewith.

          "Credit Event" shall mean and include the making of a Loan or the
issuance of a Letter of Credit.

          "Credit  Party"  shall  mean  Holdings,  the  Borrower  and  each
Subsidiary Guarantor.

          "Default"  shall  mean  any event, act or  condition  which  with
notice or lapse of time, or both, would constitute an Event of Default.

          "Defaulting  Bank" shall mean any Bank with respect  to  which  a
Bank Default is in effect.

          "Dividends" shall have the meaning provided in Section 8.05.

          "Documentation  Agents" shall have the meaning  provided  in  the
first paragraph of this Agreement.

          "Earnings"  shall have the definition provided  in  the  Security
Agreement.

          "Eligible  Transferee" shall mean and include a commercial  bank,
financial  institution  or  other  "accredited  investor"  (as  defined  by
Regulation D of the Securities Act of 1933).

          "Environmental   Claims"  means  any  and   all   administrative,
regulatory  or  judicial actions, suits, demands, demand  letters,  claims,
liens,  notices of noncompliance or violation, investigations  (other  than
internal reports prepared by Holdings or any of its Subsidiaries solely  in
the  ordinary course of such Person's business and not in response  to  any
third  party action or request of any kind) or proceedings relating in  any
way  to  any Environmental Law or any permit issued, or any approval given,
under  any such Environmental Law (hereafter, "Claims"), including, without
limitation,  (a)  any and all Claims by governmental or  regulatory  author
ities  for  enforcement,  cleanup, removal,  response,  remedial  or  other
actions  or damages pursuant to any applicable Environmental Law,  and  (b)
any  and  all  Claims  by  any third party seeking  damages,  contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from Hazardous Materials arising from alleged injury or threat of injury to
health, safety or the environment.

          "Environmental Law" means any applicable Federal, state,  foreign
or local statute, law, rule, regulation, ordinance, code, guide, policy and
rule  of common law now or hereafter in effect and in each case as amended,
and  any  judicial or administrative interpretation thereof, including  any
judicial  or administrative order, consent decree or judgment, relating  to
the  environment, health, safety or Hazardous Materials, including, without
limitation,  CERCLA;  RCRA;  the Federal Water Pollution  Control  Act,  as
amended,  33  U.S.C. ? 1251 et seq.; the Toxic Substances Control  Act,  15
U.S.C.  ?  7401 et seq.; the Clean Air Act, 42 U.S.C. ? 7401 et  seq.;  the
Safe Drinking Water Act, 42 U.S.C. ? 3808 et seq.; the Oil Pollution Act of
1990,  33  U.S.C.  ?  2701 et seq. and any applicable state  and  local  or
foreign counterparts or equivalents.

          "ERISA" shall mean the Employee Retirement Income Security Act of
1974,  as  amended from time to time, and the regulations  promulgated  and
rulings issued thereunder.  Section references to ERISA are to ERISA, as in
effect  at the Restatement Effective Date and any subsequent provisions  of
ERISA, amendatory thereof, supplemental thereto or substituted therefor.

          "ERISA  Affiliate" shall mean each person (as defined in  Section
3(9)  of  ERISA)  which together with Holdings or any Subsidiary  would  be
deemed to be a "single employer" (i) within the meaning of Sections 414(b),
(c),  (m)  and  (o)  of the Code or (ii) as a result  of  Holdings  or  any
Subsidiary being or having been a general partner of such person.

          "Eurodollar Loans" shall mean each Loan bearing interest  at  the
rates provided in Section 1.08(b).

          "Eurodollar Rate" shall mean with respect to each Interest Period
for  a  Loan, the offered rate (rounded upward to the nearest 1/16  of  one
percent) for deposits of Dollars for a period equivalent to such period  at
or  about 11:00 A.M. (London time) on the second London Banking Day  before
the first day of such period as is displayed on Telerate page 3750 (British
Bankers' Association Interest Settlement Rates) (or such other page as  may
replace  such  page  3750  on such system or on any  other  system  of  the
information  vendor for the time being designated by the  British  Bankers'
Association  to calculate the BBA Interest Settlement Rate (as  defined  in
the   British  Bankers'  Association's  Recommended  Terms  and  Conditions
("BBAIRS" terms) dated August 1985)), provided that if on such date no such
rate is so displayed, the Eurodollar Rate for such period shall be the rate
quoted  to  the  Administrative Agent as the offered rate for  deposits  of
Dollars in an amount approximately equal to the amount in relation to which
the  Eurodollar  Rate is to be determined for a period equivalent  to  such
period by prime banks in the London Interbank Market at or about 11:00 A.M.
(London  time)  on  the second Banking Day before the  first  day  of  such
period.

          "Event of Default" shall have the meaning provided in Section 9.

          "Existing  Credit  Agreement" shall mean  the  Credit  Agreement,
dated as of November 13, 1996, by and among Holdings, the Borrower, various
lending institutions, Banque Indosuez and Credit Lyonnais, New York Branch,
as  Documentation  Agents  and Christiania Bank og  Kreditkasse,  New  York
Branch, as Administrative Agent.

          "Existing  Indebtedness"  shall  have  the  meaning  provided  in
Section 6.19.

          "Existing  Letter of Credit" shall have the meaning  provided  in
Section 2.01(a).

          "Facility" shall mean the credit facility established under  this
Agreement, evidenced by the Total Commitment.

          "Facing Fee" shall have the meaning provided in Section 3.01(c).

          "Federal  Funds  Effective Rate" shall mean  for  any  period,  a
fluctuating  interest rate equal for each day during  such  period  to  the
weighted average of the rates on overnight Federal Funds transactions  with
members of the Federal Reserve System arranged by Federal Funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding  Business Day) by the Federal Reserve Bank of New  York,  or,  if
such  rate  is  not so published for any day which is a Business  Day,  the
average of the quotations for such day on such transactions received by the
Administrative  Agent  from  three  Federal  Funds  brokers  of  recognized
standing selected by the Administrative Agent.

          "Fees" shall mean all amounts payable pursuant to, or referred to
in, Section 3.01.

          "Foreign  Pension Plan" means any plan, fund (including,  without
limitation,  any superannuation fund) or other similar program  established
or  maintained outside the United States of America by Holdings or any  one
or  more  of  its  Subsidiaries primarily for the benefit of  employees  of
Holdings  or  such  Subsidiaries residing  outside  the  United  States  of
America, which plan, fund or other similar program provides, or results in,
retirement  income, a deferral of income in contemplation of retirement  or
payments to be made upon termination of employment, and which plan  is  not
subject to ERISA or the Code.

          "GAAP" shall mean generally accepted accounting principles in the
United  States  of America as in effect on the date of this  Agreement;  it
being understood and agreed that determinations in accordance with GAAP for
purposes of Section 8, including defined terms as used therein, are subject
(to the extent provided therein) to Section 12.07(a).

          "Guaranteed  Obligations"  shall  mean  all  obligations  of  the
Borrower to each Bank for the full and prompt payment when due (whether  at
the  stated  maturity, by acceleration or otherwise) of the  principal  and
interest on each Note issued by the Borrower to such Bank, and Loans  made,
under  the  Credit Agreement and all reimbursement obligations  and  Unpaid
Drawings  with  respect to Letters of Credit, together with all  the  other
obligations  and  liabilities (including, without limitation,  indemnities,
fees  and  interest thereon) of the Borrower to such Bank now  existing  or
hereafter  incurred under, arising out of or in connection with the  Credit
Agreement  or  any  other  Credit Document  and  the  due  performance  and
compliance with all the terms, conditions and agreements contained  in  the
Credit Documents by the Borrower.

          "Guarantor" shall mean each Subsidiary Guarantor and Holdings.

          "Guaranty"  shall  mean  the guaranty  of  Holdings  pursuant  to
Section 13 hereof and the Subsidiaries Guaranty.

          "Hazardous  Materials"  means  (a)  any  petroleum  or  petroleum
products,  radioactive materials, asbestos in any form  that  is  or  could
become  friable, urea formaldehyde foam insulation, transformers  or  other
equipment   that   contained,   electric   fluid   containing   levels   of
polychlorinated biphenyls, and radon gas; (b) any chemicals,  materials  or
substances   defined  as  or  included  in  the  definition  of  "hazardous
substances," "hazardous waste," "hazardous materials," "extremely hazardous
waste,"   "restricted   hazardous  waste,"   "toxic   substances,"   "toxic
pollutants,"  "contaminants," or "pollutants," or words of similar  import,
under  any  applicable  Environmental Law;  and  (c)  any  other  chemical,
material  or  substance,  exposure  to  which  is  prohibited,  limited  or
regulated by any governmental authority.

          "Holdings" shall have the meaning provided in the first paragraph
of this Agreement.

          "Holdings Convertible Debentures" shall mean Holdings' 8%  Senior
Subordinated Convertible Debentures due December 1998.

          "Indebtedness"  of any Person shall mean without duplication  (i)
all  indebtedness  of  such Person for borrowed money,  (ii)  the  deferred
purchase price of assets or services which in accordance with GAAP would be
shown on the liability side of the balance sheet of such Person, (iii)  the
face  amount of all letters of credit issued for the account of such Person
and,   without   duplication,  all  drafts  drawn  thereunder,   (iv)   all
Indebtedness  of a second Person secured by any Lien on any property  owned
by  such  first Person, whether or not such indebtedness has been  assumed,
(v)  all Capitalized Lease Obligations of such Person, (vi) all obligations
of  such  Person  to pay a specified purchase price for goods  or  services
whether  or  not  delivered  or  accepted, i.e.,  take-or-pay  and  similar
obligations,  (vii) all net obligations of such Person under Interest  Rate
Agreements and (viii) all Contingent Obligations of such Person (other than
Contingent  Obligations arising from the guaranty by  such  Person  of  the
obligations  of Holdings, the Borrower and/or their respective Subsidiaries
to  the  extent  such  guaranteed  obligations  are  permitted  under  this
Agreement); provided that Indebtedness shall not include (x) trade payables
and  accrued  expenses,  in each case arising in  the  ordinary  course  of
business  and  (y)  Indebtedness  of a direct  or  indirect  Subsidiary  of
Holdings  (the "Relevant Subsidiary"), of which neither Holdings,  nor  the
Borrower,  nor any of their Subsidiaries other than the Relevant Subsidiary
is liable or obligated in any manner.

          "Initial Borrowing Date" shall mean November 13, 1996.

          "Interest  Period"  with  respect to  any  Loan  shall  mean  the
interest period applicable thereto, as determined pursuant to Section 1.09.

          "Interest  Rate  Agreement" shall mean  any  interest  rate  swap
agreement,  any  interest  rate cap agreement,  any  interest  rate  collar
agreement or other similar agreement or arrangement designed to protect any
Credit Party against interest rate risk.

          "L/C Supportable Obligations" shall mean such obligations of  the
Borrower,  the Guarantors or their Subsidiaries (other than obligations  in
respect of Indebtedness) as are not inconsistent with the policies  of  the
Letter of Credit Issuer.

          "Leasehold"  of  any  Person means all of the  right,  title  and
interest  of such Person as lessee or licensee in, to and under  leases  or
licenses of land, improvements and/or fixtures.

          "Letter  of  Credit" shall have the meaning provided  in  Section
2.01(a).

          "Letter of Credit Fee" shall have the meaning provided in Section
3.01(b).

          "Letter  of  Credit  Issuer"  shall  mean  Christiania  Bank   og
Kreditkasse, New York Branch.

          "Letter of Credit Outstandings" shall mean, at any time, the  sum
of, without duplication, (i) the aggregate Stated Amount of all outstanding
Letters  of Credit and (ii) the aggregate amount of all Unpaid Drawings  in
respect of all Letters of Credit.

          "Letter  of  Credit Request" shall have the meaning  provided  in
Section 2.02(a).

          "Leverage  Ratio"  shall mean, at any date of determination,  the
ratio   of   Consolidated  Funded  Indebtedness  on  such  date  to   Total
Capitalization on such date.

          "Lien"  shall  mean  any  mortgage,  pledge,  security  interest,
security  title,  encumbrance, lien or charge of any  kind  (including  any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement or any lease in the nature thereof) other than  arising
from an event constituting a Total Loss.

          "Loan" shall have the meaning provided in Section 1.01.

          "Margin Stock" shall have the meaning provided in Regulation U.

          "Market Value" shall mean as of any date of calculation the value
as  of  such date of any offshore drilling rig or other vessel provided  in
the  most  recent  valuation report delivered in  connection  with  Section
7.01(i) and Section 7.11, or in the case two reports have been supplied  as
of such date, the arithmetic mean of the values provided in such reports.

          "Material Adverse Effect" shall mean a material adverse effect on
the   business,   property,  assets,  liabilities,  operations,   condition
(financial or otherwise) or prospects of the Borrower or Holdings  and  its
Subsidiaries taken as a whole.

          "Maturity Date" shall mean November 13, 2001.

          "Minimum Borrowing Amount" shall mean $1,000,000.

          "Mortgage" shall have the meaning provided in Section 5.12(a).

          "Mortgaged  Rigs"  shall  mean  and  include  the  US  Rigs,  the
Panamanian Rigs and the Australian Rig.

          "Mortgagor" shall mean each Credit Party to a Mortgage.

          "Non-Defaulting  Bank"  shall  mean  each  Bank  other   than   a
Defaulting Bank.

          "Note" shall have the meaning provided in Section 1.05(a).

          "Notice  of Borrowing" shall have the meaning provided in Section
1.03.

          "Notice of Conversion" shall have the meaning provided in Section
1.06.

          "Notice Office" shall mean the office of the Administrative Agent
at  11  West 42nd Street, 7th Floor, New York, New York 10036 or such other
office as the Administrative Agent may designate to the Borrower from  time
to time.

          "Obligations"  shall  mean  all  amounts,  direct  or   indirect,
contingent  or  absolute, of every type or description,  and  at  any  time
existing,  owing to the Administrative Agent, the Collateral Agent  or  any
Bank pursuant to the terms of this Agreement or any other Credit Document.

          "Panamanian Mortgage" shall have the meaning provided in  Section
5.12(a).

          "Panamanian  Rigs"  shall  mean  the  offshore  drilling  vessels
Charley Graves, J.W. McLean, and Rig 41.

          "Participant" shall have the meaning provided in Section 2.04(a).

          "Payment  Office"  shall mean the office  of  the  Administrative
Agent  at 11 West 42nd Street, 7th Floor, New York, New York 10036 or  such
other office as the Administrative Agent may designate to the Borrower from
time to time.

          "PBGC"  shall  mean  the  Pension  Benefit  Guaranty  Corporation
established pursuant to Section 4002 of ERISA, or any successor thereto.

          "Percentage" shall mean for each Bank the percentage obtained  by
dividing such Bank's Commitment by the Total Commitment, provided  that  if
the Total Commitment has been terminated, the Percentage of each Bank shall
be  determined by dividing such Bank's Commitment immediately prior to such
termination by the Total Commitment immediately prior to such termination.

          "Permitted  Liens" shall mean Liens described in Section  8.03(a)
through (i).

          "Person"  shall mean any individual, partnership, joint  venture,
firm, corporation, association, trust or other enterprise or any government
or  political  subdivision  or  any agency, department  or  instrumentality
thereof.

          "Plan"  shall mean any multiemployer or single-employer  plan  as
defined in Section 4001 of ERISA, which is maintained or contributed to  by
(or  to which there is an obligation to contribute of) Holdings or a Subsid
iary of Holdings or an ERISA Affiliate.

          "Pledge  Agreement"  shall have the meaning provided  in  Section
5.14.

          "Prime Rate" shall mean the rate which CBK announces from time to
time  as its prime lending rate, the Prime Rate to change when and as  such
prime lending rate changes.
          "Projections"  shall  have  the  meaning  set  forth  in  Section
6.10(d).

          "RCRA" shall mean the Resource Conservation and Recovery Act,  as
amended, 42 U.S.C. ? 6901 et seq.

          "Real  Property" of any Person shall mean all of the right, title
and  interest  of  such Person in and to land, improvements  and  fixtures,
including Leaseholds.

          "Register" shall have the meaning provided in Section 12.16.

          "Regulation D" shall mean Regulation D of the Board of  Governors
of  the  Federal  Reserve System as from time to time  in  effect  and  any
successor to all or a portion thereof establishing reserve requirements.

          "Regulation U" shall mean Regulation U of the Board of  Governors
of  the  Federal  Reserve System as from time to time  in  effect  and  any
successor to all or a portion thereof establishing margin requirements.

          "Relevant  Subsidiary"  shall have the meaning  provided  in  the
definition of Indebtedness.

          "Replaced Bank" shall have the meaning provided in Section 1.12.

          "Replacement  Bank"  shall have the meaning provided  in  Section
1.12.

          "Reportable  Event"  shall  mean an event  described  in  Section
4043(c) of ERISA with respect to a Plan other than those events as to which
the 30-day notice period is waived under subsection .13, .14, .16, .18, .19
or .20 of PBGC Regulation Section 2615.

          "Required  Banks" shall mean Non-Defaulting Banks whose  outstand
ing Commitments (or, if after the Total Commitment has been terminated, out
standing  Loans  and Adjusted Percentage of Letter of Credit  Outstandings)
constitute greater than 50% of the Adjusted Total Commitment (or, if  after
the  Total Commitment has been terminated, the total outstanding  Loans  of
Non-Defaulting  Banks and the aggregate Adjusted Percentages  of  all  Non-
Defaulting Banks of the total Letter of Credit Outstandings at such time).

          "Restatement Effective Date" shall have the meaning  provided  in
Section 12.10.

          "Scheduled Commitment Reduction" shall have the meaning  provided
in Section 3.03(b).

          "SEC"  shall mean the Securities and Exchange Commission  or  any
successor thereto.

          "Section 4.04(b)(ii) Certificate" shall have the meaning provided
in Section 4.04(b)(ii).

          "Secured  Creditors"  shall have the meaning  set  forth  in  the
Security Documents.

          "Security  Agreement" shall have the meaning provided in  Section
5.10.

          "Security  Agreement Collateral" shall mean all  "Collateral"  as
defined in the Security Agreement.

          "Security   Documents"  shall  mean  and  include  the   Security
Agreement, the Pledge Agreement and each Mortgage.

          "Security  Trustee" shall mean Christiania Bank  og  Kreditkasse,
New  York  Branch,  as  trustee for the Banks  with  respect  to  the  U.S.
Mortgages, and any successor trustee appointed in accordance with the terms
hereof.

          "Stated  Amount" of each Letter of Credit shall mean the  maximum
available to be drawn thereunder (regardless of whether any conditions  for
drawing could then be met).

          "Subsidiary"  of  any  Person shall  mean  and  include  (i)  any
corporation more than 50% of whose stock of any class or classes having  by
the  terms  thereof  ordinary  voting power to  elect  a  majority  of  the
directors of such corporation (irrespective of whether or not at  the  time
stock of any 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
owned  by such Person directly or indirectly through Subsidiaries and  (ii)
any  partnership, association, joint venture or other entity in which  such
Person  directly or indirectly through Subsidiaries, has more  than  a  50%
equity  interest  at  the time.  Unless otherwise expressly  provided,  all
references herein to "Subsidiary" shall mean a Subsidiary of Holdings.

          "Subsidiary Guarantor" shall mean each Subsidiary of the Borrower
which owns a Mortgaged Rig and executes the Subsidiary Guaranty.

          "Subsidiary Guaranty" shall have the meaning provided in  Section
5.11.

          "Substitute  Basis"  shall have the meaning provided  in  Section
1.09(b).

          "Taxes" shall have the meaning provided in Section 4.04(a).

          "Title  XI Financing" shall have the meaning provided in  Section
3.03(c).

          "Total  Capitalization"  shall mean, at  any  time,  the  sum  of
Consolidated Funded Indebtedness and Consolidated Net Worth at such time.

          "Total  Commitment"  shall mean, at any  time,  the  sum  of  the
Commitments of each of the Banks.

          "Total  Loss"  shall  mean any "Total Loss"  as  defined  in  any
Mortgage.

          "Total  Unutilized Commitment" shall mean, at any time,  (i)  the
Total  Commitment at such time less (ii) the sum of the aggregate principal
amount of all Loans at such time plus the Letter of Credit Outstandings  at
such time.

          "Type" shall mean any type of Loan determined with respect to the
interest  option applicable thereto, i.e., a Base Rate Loan  or  Eurodollar
Loan.

          "UCC" shall mean the Uniform Commercial Code.

          "Unfunded  Current Liability" of any Plan means  the  amount,  if
any,  by which the actuarial present value of the accumulated plan benefits
under  the  Plan as of the close of its most recent plan year  exceeds  the
fair  market  value  of the assets allocable thereto,  each  determined  in
accordance with Statement of Financial Accounting Standards No.  87,  based
upon  the  actuarial  assumptions used by the Plan's actuary  in  the  most
recent annual valuation of the Plan.

          "Unpaid  Drawing"  shall  have the meaning  provided  in  Section
2.03(a).

          "Unutilized Commitment" for each Bank, shall mean the  excess  of
(i)  the Commitment of such Bank over (ii) the sum of (x) the aggregate out
standing  principal amount of Loans made by such Bank plus  (y)  an  amount
equal   to  such  Bank's  Adjusted  Percentage  of  the  Letter  of  Credit
Outstandings at such time.

          "U.S.  Dollar  Equivalent"  shall  mean,  at  any  time  for  the
determination thereof, the amount of U.S. Dollars necessary to purchase the
amount  of  the  relevant currency at the spot exchange  rate  therefor  as
quoted  by the Administrative Agent as of 11:00 A.M. (London time)  on  the
date  two Business Days prior to the date of any determination thereof  for
purchase on such date.

          "U.S. Dollars" shall mean freely transferable lawful money of the
United States.

          "US Mortgage" shall have the meaning provided in Section 5.12(a).
          "US  Rigs"  shall mean the offshore drilling vessels Jack  Bates,
D.R. Stewart,  W.D. Kent, F.G. McClintock, Randolph Yost, J.T. Angel, Roger
W. Mowell, Harvey H. Ward, George H. Galloway and C.E. Thornton.

          "Voting  Stock" shall mean, with respect to any corporation,  the
outstanding   stock  of  all  classes  (or  equivalent   interests)   which
ordinarily,  in the absence of contingencies, entitles holders  thereof  to
vote   for  the  election  of  directors  (or  Persons  performing  similar
functions) of such corporation, even though the right so to vote  has  been
suspended by the happening of such a contingency.

          "Wholly-Owned Subsidiary" of any Person shall mean any Subsidiary
of  such  Person to the extent all of the capital stock or other  ownership
interests  in such Subsidiary, other than directors' qualifying  shares  or
shares held by a nominee or in trust for such Person, is owned directly  or
indirectly by such Person.

          "Working  Capital" shall mean the excess of Consolidated  Current
Assets  over  Consolidated Current Liabilities exclusive  of  the  Holdings
Convertible Debentures.

          "Written"  or  "in  writing"  shall  mean  any  form  of  written
communication   or  a  communication  by  means  of  telex   or   facsimile
transmission.

          SECTION 11.  The Administrative Agent and the Security Trustee.

         11.01   Appointment of the Administrative Agent and  the  Security
Trustee.   (a)  The Banks hereby designate Christiania Bank og Kreditkasse,
New  York Branch as Administrative Agent to act as specified herein and  in
the  other Credit Documents.  Each Bank hereby irrevocably authorizes,  and
each  holder  of  any Note by the acceptance of such Note shall  be  deemed
irrevocably to authorize, the Administrative Agent to take such  action  on
its  behalf  under  the  provisions of this  Agreement,  the  other  Credit
Documents  and any other instruments and agreements referred to  herein  or
therein  and  to exercise such powers and to perform such duties  hereunder
and  thereunder  as  are  specifically delegated  to  or  required  of  the
Administrative Agent by the terms hereof and thereof and such other  powers
as are reasonably incidental thereto.  The Administrative Agent may perform
any  of  its  duties  hereunder  by  or through  its  respective  officers,
directors, agents, employees or Affiliates.

          (b)   Each of the Banks irrevocably appoints Christiania Bank  og
Kreditkasse, New York Branch as security trustee solely for the purpose  of
holding legal title to the Mortgages of each of the U.S. Rigs on behalf  of
the Banks with regard to the (i) security, powers, rights, titles, benefits
and interests (both present and future) constituted by and conferred on the
Banks or any of them or for the benefit thereof under or pursuant to the US
Mortgages  (including, without limitation, the benefit  of  all  covenants,
undertakings,  representations, warranties and obligations given,  made  or
undertaken to any Bank in the US Mortgages), (ii) all moneys, property  and
other  assets paid or transferred to or vested in any Bank or any agent  of
any  Bank  or  received or recovered by any Bank or any agent of  any  Bank
pursuant  to,  or  in connection with, the US Mortgages, whether  from  the
Borrower  or  any  Guarantor  or any other  person  and  (iii)  all  money,
investments, property and other assets at any time representing or deriving
from any of the foregoing, including all interest, income and other sums at
any  time  received or receivable by any Bank or any agent of any  Bank  in
respect  of  the  same  (or  any part thereof).  CBK  hereby  accepts  such
appointment as security trustee.

          (c)   For  purposes of this Section 11, the term  "Administrative
Agent"   shall   include   CBK  in  its  capacity  as   Collateral   Agent,
Administrative Agent and Security Trustee.

         11.02   Nature of Duties.  The Administrative Agent shall not have
any  duties  or responsibilities except those expressly set forth  in  this
Agreement and the other Credit Documents.  Neither the Administrative Agent
nor  any  of  its  respective  officers, directors,  agents,  employees  or
Affiliates  shall be liable for any action taken or omitted by it  or  them
hereunder  or under any other Credit Document or in connection herewith  or
therewith,  unless  caused  by  its or their gross  negligence  or  willful
misconduct.  The duties of the Administrative Agent shall be mechanical and
administrative in nature; the Administrative Agent shall not have by reason
of  this Agreement or any other Credit Document a fiduciary relationship in
respect  of  any  Bank  or  the holder of any Note;  and  nothing  in  this
Agreement  or any other Credit Document, expressed or implied, is  intended
to  or shall be so construed as to impose upon the Administrative Agent any
obligations  in  respect  of this Agreement or any  other  Credit  Document
except as expressly set forth herein or therein.

         11.03   Lack  of  Reliance on the Administrative Agent.   Independ
ently and without reliance upon the Administrative Agent, each Bank and the
holder of each Note, to the extent it deems appropriate, has made and shall
continue  to  make (i) its own independent investigation of  the  financial
condition  and affairs of Holdings and its Subsidiaries in connection  with
the   making  and  the  continuance  of  the  Loans  and  issuance   and/or
participation  in  Letters of Credit and the taking or not  taking  of  any
action  in  connection herewith and (ii) its own appraisal  of  the  credit
worthiness  of  Holdings  and its Subsidiaries  and,  except  as  expressly
provided  in  this Agreement, the Administrative Agent shall not  have  any
duty  or  responsibility, either initially or on  a  continuing  basis,  to
provide  any  Bank  or  the holder of any Note with  any  credit  or  other
information with respect thereto, whether coming into its possession before
the  making  of  the  Loans  or  at  any time  or  times  thereafter.   The
Administrative Agent shall not be responsible to any Bank or the holder  of
any  Note  for  any  recitals, statements, information, representations  or
warranties  herein  or  in  any  document,  certificate  or  other  writing
delivered  in  connection  herewith or for  the  execution,  effectiveness,
genuineness, validity, enforceability, perfection, collectibility, priority
or  sufficiency of this Agreement or any other Credit Document or the finan
cial condition of Holdings and its Subsidiaries or be required to make  any
inquiry  concerning  either the performance or observance  of  any  of  the
terms,  provisions  or conditions of this Agreement  or  any  other  Credit
Document,  or  the financial condition of Holdings and its Subsidiaries  or
the existence or possible existence of any Default or Event of Default.

         11.04   Certain  Rights  of  the  Administrative  Agent.   If  the
Administrative  Agent shall request instructions from  the  Required  Banks
with  respect to any act or action (including failure to act) in connection
with  this Agreement or any other Credit Document, the Administrative Agent
shall be entitled to refrain from such act or taking such action unless and
until  the Administrative Agent shall have received instructions  from  the
Required  Banks; and the Administrative Agent shall not incur liability  to
any  Person  by  reason of so refraining.  Without limiting the  foregoing,
neither any Bank nor the holder of any Note shall have any right of  action
whatsoever   against  the  Administrative  Agent  as  a   result   of   the
Administrative  Agent acting or refraining from acting hereunder  or  under
any  other  Credit  Document in accordance with  the  instructions  of  the
Required Banks.

         11.05   Reliance.  The Administrative Agent shall be  entitled  to
rely,  and  shall  be fully protected in relying, upon any  note,  writing,
resolution,  notice, statement, certificate, telex, teletype or  telecopier
message, cablegram, radiogram, order or other document or telephone message
signed,  sent or made by any Person that the Administrative Agent  believed
to  be the proper Person, and, with respect to all legal matters pertaining
to  this  Agreement and any other Credit Document and its duties  hereunder
and thereunder, upon advice of counsel selected by the Administrative Agent
(which may be counsel for Holdings and/or the Borrower).

         11.06  Indemnification.  To the extent the Administrative Agent is
not  reimbursed  and indemnified by the Borrower, the Banks will  reimburse
and  indemnify the Administrative Agent, in proportion to their  respective
"percentages"  as used in determining the Required Banks, for  and  against
any  and  all liabilities, obligations, losses, damages, penalties, claims,
actions,  judgments, suits, costs, expenses or disbursements of  whatsoever
kind or nature which may be imposed on, asserted against or incurred by the
Administrative Agent in performing its respective duties hereunder or under
any  other Credit Document, in any way relating to or arising out  of  this
Agreement  or  any other Credit Document; provided that no  Bank  shall  be
liable  for any portion of such liabilities, obligations, losses,  damages,
penalties,   claims,   actions,  judgments,  suits,  costs,   expenses   or
disbursements resulting from the Administrative Agent's gross negligence or
willful misconduct.

         11.07   The Administrative Agent in Its Individual Capacity.  With
respect  to  its  obligation  to  make  Loans  under  this  Agreement,  the
Administrative Agent shall have the rights and powers specified herein  for
a  "Bank" and may exercise the same rights and powers as though it were not
performing  the  duties specified herein; and the term  "Banks,"  "Required
Banks,"  "holders of Notes" or any similar terms shall, unless the  context
clearly  otherwise indicates, include the Administrative Agent in its  indi
vidual  capacity.  The Administrative Agent may accept deposits from,  lend
money  to,  and  generally engage in any kind of banking,  trust  or  other
business with Holdings or its Subsidiaries or any Affiliate thereof  as  if
it were not performing the duties specified herein, and may accept fees and
other  consideration from Holdings or any of its Subsidiaries for  services
in  connection with this Agreement and otherwise without having to  account
for the same to the Banks.

         11.08   Holders.  The Administrative Agent may deem and treat  the
payee  of any Note as the owner thereof for all purposes hereof unless  and
until  a written notice of the assignment, transfer or endorsement thereof,
as  the  case may be, shall have been filed with the Administrative  Agent.
Any  request, authority or consent of any Person who, at the time of making
such request or giving such authority or consent, is the holder of any Note
shall  be  conclusive  and  binding on any subsequent  holder,  transferee,
assignee  or indorsee, as the case may be, of such Note or of any  Note  or
Notes issued in exchange therefor.

         11.09    Resignation  by  the  Administrative  Agent.   (a)    The
Administrative Agent may resign from the performance of all  its  functions
and duties hereunder and/or under the other Credit Documents at any time by
giving  15  Business  Days' prior written notice to the  Borrower  and  the
Banks.   Such  resignation  shall take effect upon  the  appointment  of  a
successor Administrative Agent pursuant to clauses (b) and (c) below or  as
otherwise provided below.

          (b)   Upon  any  such notice of resignation, the  Required  Banks
shall appoint a successor Administrative Agent hereunder or thereunder  who
shall  be a commercial bank or trust company reasonably acceptable  to  the
Borrower.

          (c)   If a successor Administrative Agent shall not have been  so
appointed  within  such  15 Business Day period, the Administrative  Agent,
with   the  consent  of  the  Borrower,  shall  then  appoint  a  successor
Administrative Agent who shall serve as Administrative Agent  hereunder  or
thereunder  until such time, if any, as the Required Banks  appoint  a  suc
cessor Administrative Agent as provided above.

          (d)   If no successor Administrative Agent has been appointed pur
suant  to  clause (b) or (c) above by the 20th Business Day after the  date
such  notice  of  resignation was given by the  Administrative  Agent,  the
Administrative Agent's resignation shall become effective and the  Required
Banks  shall thereafter perform all the duties of the Administrative  Agent
hereunder and/or under any other Credit Document until such time,  if  any,
as  the Required Banks appoint a successor Administrative Agent as provided
above.

          SECTION 12.  Miscellaneous.

         12.01   Payment  of Expenses, etc.  The Borrower agrees  to:   (i)
whether  or  not the transactions herein contemplated are consummated,  pay
all reasonable out-of-pocket costs and expenses of the Administrative Agent
in  connection with the negotiation, preparation, execution and delivery of
the  Credit Documents and the documents and instruments referred to therein
and  any  amendment, waiver or consent relating thereto (including, without
limitation,  the  reasonable fees and disbursements of  White  &  Case  and
special   maritime  counsel  Watson,  Farley  &  Williams)   and   of   the
Administrative Agent and the Collateral Agent and, after the occurrence and
during  the  continuance  of an Event of Default,  each  of  the  Banks  in
connection  with the enforcement of the Credit Documents and the  documents
and  instruments  referred to therein (including, without  limitation,  the
actual  reasonable fees and disbursements of counsel for the Administrative
Agent  and, after the occurrence and during the continuance of an Event  of
Default  for  each  of  the Banks); (ii) pay and hold  each  of  the  Banks
harmless  from and against any and all present and future stamp  and  other
similar  taxes with respect to the foregoing matters and save each  of  the
Banks harmless from and against any and all liabilities with respect to  or
resulting from any delay or omission (other than to the extent attributable
to  such  Bank) to pay such taxes; and (iii) indemnify each Bank (including
in  its  capacity as the Administrative Agent or Letter of Credit  Issuer),
its  officers,  directors, employees, representatives and agents  from  and
hold  each  of  them harmless against any and all liabilities, obligations,
losses,  damages,  penalties,  claims, actions,  judgments,  suits,  costs,
expenses or disbursements of whatsoever kind or nature which may be imposed
on,  asserted against or incurred by any of them as a result of, or arising
out  of,  or in any way related to, or by reason of, (a) any investigation,
litigation or other proceeding (whether or not any Bank is a party thereto)
related  to the entering into and/or performance of any Credit Document  or
the  use of the proceeds of any Loans hereunder or the consummation of  any
transactions contemplated in any Credit Document, whether initiated by  the
Borrower  or  any other Person, including, without limitation,  the  actual
reasonable  fees  and disbursements of counsel incurred in connection  with
any  such investigation, litigation or other proceeding (but excluding  any
such  losses,  liabilities,  claims, damages  or  expenses  to  the  extent
incurred  by  reason of the gross negligence or willful misconduct  of  the
Person  to  be  indemnified)  or  (b) the actual  or  alleged  presence  of
Hazardous  Materials  in  the air, surface water, groundwater,  surface  or
subsurface  of  any  Real  Property, offshore  drilling  rig,  facility  or
location  at  any  time  owned  or operated  by  Holdings  or  any  of  its
Subsidiaries,  the  generation,  storage,  transportation  or  disposal  of
Hazardous  Materials at any Real Property, offshore drilling rig,  facility
or  location  at  any  time owned or operated by Holdings  or  any  of  its
Subsidiaries,  the  non-compliance of any Real Property, offshore  drilling
rig, facility or location at any time owned or operated by Holdings or  any
of  its  Subsidiaries with federal, state and local laws, regulations,  and
ordinances (including applicable permits thereunder) applicable to any such
Real  Property,  offshore  drilling  rig,  facility  or  location,  or  any
Environmental Claim asserted against Holdings, any of its Subsidiaries,  or
any  Real Property, offshore drilling rig, facility or location at any time
owned  or  operated by Holdings or any of its Subsidiaries,  including,  in
each case, without limitation, the actual reasonable fees and disbursements
of  counsel  and  other consultants incurred in connection  with  any  such
investigation,  litigation or other proceeding (but excluding  any  losses,
liabilities, claims, damages or expenses to the extent incurred  by  reason
of  the  gross  negligence  or  willful misconduct  of  the  Person  to  be
indemnified).  To the extent that the undertaking to indemnify, pay or hold
harmless  the  Administrative Agent or any Bank set forth in the  preceding
sentence may be unenforceable because it is violative of any law or  public
policy, the Borrower shall make the maximum contribution to the payment and
satisfaction  of each of the indemnified liabilities which  is  permissible
under applicable law.

         12.02   Right  of  Setoff.   In addition  to  any  rights  now  or
hereafter  granted under applicable law or otherwise, and  not  by  way  of
limitation  of  any such rights, if an Event of Default then  exists,  each
Bank  is  hereby authorized at any time or from time to time,  without  pre
sentment, demand, protest or other notice of any kind to the Borrower or to
any other Person, any such notice being hereby expressly waived, to set off
and  to appropriate and apply any and all deposits (general or special) and
any  other  Indebtedness at any time held or owing by such Bank  (including
without  limitation by branches and agencies of such Bank wherever located)
to  or for the credit or the account of the Borrower against and on account
of  the Obligations and liabilities of the Borrower to such Bank under this
Agreement  or  under any of the other Credit Documents, including,  without
limitation, all interests in Obligations of the Borrower purchased by  such
Bank  pursuant to Section 12.06(b), and all other claims of any  nature  or
description  arising out of or connected with this Agreement or  any  other
Credit  Document, irrespective of whether or not such Bank shall have  made
any  demand hereunder and although said Obligations, liabilities or claims,
or any of them, shall be contingent or unmatured.

         12.03   Notices.   (a)   Except  as otherwise  expressly  provided
herein,  all notices and other communications provided for hereunder  shall
be  in  writing (including telex or telecopier communication)  and  mailed,
telexed,  telecopied or delivered, if to Holdings or its  Subsidiaries,  at
the address specified opposite its signature below or in the other relevant
Credit  Documents,  as  the case may be; if to any  Bank,  at  its  address
specified for such Bank on Annex II; or, at such other address as shall  be
designated  by  any party in a written notice to the other parties  hereto.
All such notices and communications shall be effective when received.

          (b)   Without in any way limiting the obligation of the  Borrower
to  confirm  in  writing  any  telephonic  notice  permitted  to  be  given
hereunder,  the Administrative Agent may, prior to receipt of  written  con
firmation,  act without liability upon the basis of such telephonic  notice
believed by the Administrative Agent in good faith to be from an Authorized
Officer of the Borrower.  In each such case, the Borrower hereby waives the
right  to  dispute the Administrative Agent's record of the terms  of  such
telephonic notice.

         12.04  Benefit of Agreement.  (a)  This Agreement shall be binding
upon  and  inure  to  the benefit of and be enforceable by  the  respective
successors  and assigns of the parties hereto, provided that  the  Borrower
may  not  assign  or  transfer any of its rights or  obligations  hereunder
without the prior written consent of the Banks.  Each Bank may at any  time
grant  participations in any of its rights hereunder or under  any  of  the
Notes  to another financial institution, provided that in the case  of  any
such  participation, the participant shall not have any rights  under  this
Agreement  or  any of the other Credit Documents (the participant's  rights
against such Bank in respect of such participation to be those set forth in
the  agreement  executed by such Bank in favor of the participant  relating
thereto)  and  all  amounts  payable by the  Borrower  hereunder  shall  be
determined as if such Bank had not sold such participation, except that the
participant shall be entitled to the benefits of Sections 1.10 and 4.04  of
this  Agreement  to  the extent that such Bank would be  entitled  to  such
benefits  if  the  participation had not been entered into  or  sold,  and,
provided  further,  that  no  Bank shall  transfer,  grant  or  assign  any
participation under which the participant shall have rights to approve  any
amendment  to  or  waiver of this Agreement or any  other  Credit  Document
except  to  the extent such amendment or waiver would (i) extend the  final
scheduled  maturity  of  any  Loan or Note in  which  such  participant  is
participating  (it being understood that any waiver of the  application  of
any  prepayment or the method of any application of any prepayment to,  the
Scheduled  Commitment Reductions shall not constitute an extension  of  the
final  maturity date), or reduce the rate or extend the time of payment  of
interest  or  Fees  thereon (except in connection  with  a  waiver  of  the
applicability  of any post-default increase in interest rates),  or  reduce
the  principal amount thereof, or increase such participant's participating
interest in any Commitment over the amount thereof then in effect (it being
understood  that a waiver of any condition, covenant, Default or  Event  of
Default or of a mandatory reduction in the Total Commitment, or a mandatory
prepayment,  shall not constitute a change in the terms of any Commitment),
(ii) release all or substantially all of the Collateral or (iii) consent to
the  assignment  or  transfer by the Borrower of  any  of  its  rights  and
obligations under this Agreement.

          (b)   Notwithstanding the foregoing, (x) any Bank may assign  all
or  a  portion of its outstanding Commitment and its rights and obligations
hereunder to its Affiliate or to another Bank, and (y) with the consent  of
the  Administrative  Agent and the Borrower (which  consent  shall  not  be
unreasonably  withheld),  any Bank may assign  all  or  a  portion  of  its
outstanding Commitment and its rights and obligations hereunder to  one  or
more  Eligible Transferees.  No assignment pursuant to the immediately  pre
ceding  sentence  shall  to  the  extent  such  assignment  represents   an
assignment to an institution other than one or more Banks hereunder, be  in
an  aggregate  amount less than $5,000,000 unless the entire Commitment  of
the assigning Bank is so assigned.  If any Bank so sells or assigns all  or
a  part  of its rights hereunder or under the Notes, any reference in  this
Agreement  or  the Notes to such assigning Bank shall thereafter  refer  to
such  Bank and to the respective assignee to the extent of their respective
interests  and  the respective assignee shall have, to the extent  of  such
assignment  (unless  otherwise  provided  therein),  the  same  rights  and
benefits  as  it  would  if it were such assigning Bank.   Each  assignment
pursuant  to this Section 12.04(b) shall be effected by the assigning  Bank
and the assignee Bank executing an Assignment and Assumption Agreement.  In
the  event  of  any  such  assignment (x) to a  commercial  bank  or  other
financial institution not previously a Bank hereunder, either the assigning
or  the assignee Bank shall pay to the Administrative Agent a nonrefundable
assignment  fee  of  $3,500  and (y) to a Bank,  either  the  assigning  or
assignee  Bank  shall  pay  to  the Administrative  Agent  a  nonrefundable
assignment  fee  of $1,500, and at the time of any assignment  pursuant  to
this Section 12.04(b), (i) Annex I shall be deemed to be amended to reflect
the  Commitment of the respective assignee (which shall result in a  direct
reduction to the Commitment of the assigning Bank) and of the other  Banks,
and  (ii)  if  any  such assignment occurs after the Restatement  Effective
Date,  if  requested  by  the assigning Bank and  the  assignee  Bank,  the
Borrower  will  issue  new  Notes to the respective  assignee  and  to  the
assigning  Bank in conformity with the requirements of Section 1.05.   Each
Bank  and the Borrower agree to execute such documents (including,  without
limitation, amendments to this Agreement and the other Credit Documents) as
shall  be  necessary to effect the foregoing.  Nothing in this  clause  (b)
shall  prevent or prohibit any Bank from pledging its Notes or Loans  to  a
Federal  Reserve Bank in support of borrowings made by such Bank from  such
Federal Reserve Bank.

          (c)   Notwithstanding any other provisions of this Section 12.04,
no  transfer  or  assignment of the interests or obligations  of  any  Bank
hereunder or any grant of participation therein shall be permitted if  such
transfer,  assignment or grant would require Holdings or  the  Borrower  to
file  a  registration statement with the SEC or to qualify the Loans  under
the "Blue Sky" laws of any State.

          (d)    Each  Bank  initially  party  to  this  Agreement   hereby
represents,  and each Person that became a Bank pursuant to  an  assignment
permitted  by  this  Section  12 will, upon  its  becoming  party  to  this
Agreement,  represent  that  it  is a commercial  lender,  other  financial
institution or other "accredited" investor (as defined in SEC Regulation D)
which  makes loans in the ordinary course of its business and that it  will
make  or  acquire Loans for its own account in the ordinary course of  such
business, provided that subject to the preceding clauses (a) and  (b),  the
disposition  of any promissory notes or other evidences of or interests  in
Indebtedness  held by such Bank shall at all times be within its  exclusive
control.

         12.05  No Waiver; Remedies Cumulative.  No failure or delay on the
part of the Administrative Agent or any Bank in exercising any right, power
or  privilege hereunder or under any other Credit Document and no course of
dealing  between Holdings or any of its Subsidiaries and the Administrative
Agent  or any Bank shall operate as a waiver thereof; nor shall any  single
or partial exercise of any right, power or privilege hereunder or under any
other Credit Document preclude any other or further exercise thereof or the
exercise  of  any other right, power or privilege hereunder or  thereunder.
The  rights and remedies herein expressly provided are cumulative  and  not
exclusive of any rights or remedies which the Administrative Agent  or  any
Bank  would otherwise have.  No notice to or demand on Holdings or  any  of
its  Subsidiaries  in  any  case  shall entitle  Holdings  or  any  of  its
Subsidiaries to any other or further notice or demand in similar  or  other
circumstances  or  constitute a waiver of the rights of the  Administrative
Agent  or  the  Banks to any other or further action in  any  circumstances
without notice or demand.

         12.06   Payments Pro Rata.  (a)  The Administrative  Agent  agrees
that  promptly after its receipt of each payment from or on behalf  of  any
Credit  Party  in respect of any Obligations of the Borrower or  any  other
Credit  Party  hereunder, it shall distribute such  payment  to  the  Banks
(other than any Bank that has expressly waived its right to receive its pro
rata share thereof) pro rata based upon their respective shares, if any, of
the Obligations with respect to which such payment was received.

          (b)   Each  of  the Banks agrees that, if it should  receive  any
amount  hereunder  (whether  by  voluntary  payment,  by  realization  upon
security,  by  the  exercise of the right of setoff or  banker's  lien,  by
counterclaim  or  cross action, by the enforcement of any right  under  the
Credit  Documents, or otherwise) which is applicable to the payment of  the
principal of, or interest on, the Loans, Unpaid Drawings or Fees, of a  sum
which with respect to the related sum or sums received by other Banks is in
a greater proportion than the total of such Obligation then owed and due to
such Bank bears to the total of such Obligation then owed and due to all of
the  Banks immediately prior to such receipt, then such Bank receiving such
excess  payment shall purchase for cash without recourse or  warranty  from
the other Banks an interest in the Obligations of the Borrower or any other
Credit Party, respectively, to such Banks in such amount as shall result in
a  proportional participation by all of the Banks in such amount,  provided
that  if  all or any portion of such excess amount is thereafter  recovered
from  such  Bank, such purchase shall be rescinded and the  purchase  price
restored to the extent of such recovery, but without interest.

          (c)   Notwithstanding anything to the contrary contained  herein,
the  provisions of the preceding Sections 12.06(a) and (b) shall be subject
to  the  express  provisions of this Agreement which  require,  or  permit,
differing  payments  to  be  made to Non-Defaulting  Banks  as  opposed  to
Defaulting Banks.

         12.07   Calculations; Computations.  (a)  The financial statements
to  be furnished to the Banks pursuant hereto shall be made and prepared in
accordance  with GAAP consistently applied throughout the periods  involved
(except as set forth in the notes thereto or as otherwise disclosed in writ
ing by Holdings or the Borrower to the Banks), provided that (x) except  as
otherwise specifically provided herein, all computations determining compli
ance  with  Section  8, including definitions used therein,  shall  utilize
accounting principles and policies in effect at the time of the preparation
of,  and  in conformity with those used to prepare, the December  31,  1995
historical financial statements of Holdings delivered to the Banks pursuant
to Section 6.10(b) and (y) that if at any time the computations determining
compliance  with  Section  8 utilize accounting principles  different  from
those  utilized  in the financial statements furnished to the  Banks,  such
financial statements shall be accompanied by reconciliation work-sheets.

          (b)   All  computations of interest and Fees hereunder  shall  be
made on the actual number of days elapsed over a year of 360 days.

         12.08  GOVERNING LAW; SUBMISSION TO JURISDICTION; VENUE; WAIVER OF
JURY  TRIAL.   (a)  THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS  AND  THE
RIGHTS  AND  OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER  SHALL  BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK.  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT OR ANY
OTHER CREDIT DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR  OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND, BY EXE
CUTION  AND  DELIVERY OF THIS AGREEMENT, HOLDINGS AND THE  BORROWER  HEREBY
IRREVOCABLY  ACCEPT FOR THEMSELVES AND IN RESPECT OF THEIR PROPERTY,  GENER
ALLY  AND  UNCONDITIONALLY,  THE  JURISDICTION  OF  THE  AFORESAID  COURTS.
HOLDINGS  AND  THE BORROWER FURTHER IRREVOCABLY CONSENT TO THE  SERVICE  OF
PROCESS  OUT  OF  ANY OF THE AFOREMENTIONED COURTS IN ANY  SUCH  ACTION  OR
PROCEEDING  BY  THE  MAILING OF COPIES THEREOF BY REGISTERED  OR  CERTIFIED
MAIL, POSTAGE PREPAID, TO THE BORROWER LOCATED OUTSIDE NEW YORK CITY AND BY
HAND  DELIVERY TO THE BORROWER LOCATED WITHIN NEW YORK CITY, AT ITS ADDRESS
FOR NOTICES PURSUANT TO SECTION 12.03, SUCH SERVICE TO BECOME EFFECTIVE  30
DAYS  AFTER  SUCH MAILING.  NOTHING HEREIN SHALL AFFECT THE  RIGHT  OF  THE
ADMINISTRATIVE AGENT, ANY BANK OR THE HOLDER OF ANY NOTE TO  SERVE  PROCESS
IN  ANY  OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS  OR
OTHERWISE   PROCEED  AGAINST  HOLDINGS  OR  THE  BORROWER  IN   ANY   OTHER
JURISDICTION.

          (b)   HOLDINGS  AND  THE  BORROWER HEREBY IRREVOCABLY  WAIVE  ANY
OBJECTION  WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF  VENUE  OF
ANY OF THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION
WITH  THIS  AGREEMENT OR ANY OTHER CREDIT DOCUMENT BROUGHT  IN  THE  COURTS
REFERRED  TO IN CLAUSE (A) ABOVE AND HEREBY FURTHER IRREVOCABLY  WAIVE  AND
AGREE  NOT  TO  PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY  SUCH  ACTION  OR
PROCEEDING  BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN  AN  INCONVENIENT
FORUM.

          (c)   EACH  OF  THE PARTIES TO THIS AGREEMENT HEREBY  IRREVOCABLY
WAIVES  ALL  RIGHT  TO  A  TRIAL  BY JURY  IN  ANY  ACTION,  PROCEEDING  OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.

         12.09  Counterparts.  This Agreement may be executed in any number
of   counterparts  and  by  the  different  parties  hereto   on   separate
counterparts,  each  of which when so executed and delivered  shall  be  an
original,  but  all of which shall together constitute  one  and  the  same
instrument.  A set of counterparts executed by all the parties hereto shall
be lodged with the Borrower and the Administrative Agent.

         12.10   Effectiveness.  This Agreement shall become  effective  on
the date (the "Restatement Effective Date") on which Holdings, the Borrower
and each of the Banks shall have signed a copy hereof (whether the same  or
different  copies) and shall have delivered the same to the  Administrative
Agent at the Payment Office of the Administrative Agent or, in the case  of
the  Banks,  shall have given to the Administrative Agent  telephonic  (con
firmed  in  writing), written telex or facsimile transmission notice  (actu
ally  received) at such office that the same has been signed and mailed  to
it.

         12.11  Headings Descriptive.  The headings of the several sections
and  subsections  of this Agreement are inserted for convenience  only  and
shall not in any way affect the meaning or construction of any provision of
this Agreement.

         12.12   Amendment or Waiver.  (a)  Neither this Agreement nor  any
other  Credit  Document  nor any terms hereof or thereof  may  be  changed,
waived,  discharged or terminated unless such change, waiver, discharge  or
termination  is  in writing signed by the Borrower and the Required  Banks,
provided  that  no  such  change, waiver, discharge or  termination  shall,
without  the  consent of each Bank (other than a Defaulting Bank)  affected
thereby, (i) extend the Maturity Date (it being understood that any  waiver
of  the  application  of  any prepayment of the  Loans  or  the  method  of
application of any prepayment to the Scheduled Commitment Reductions, shall
not  constitute any such extension), or reduce the rate or extend the  time
of payment of interest (other than as a result of waiving the applicability
of  any post-default increase in interest rates) or Fees thereon, or reduce
the principal amount thereof, (ii) increase the Commitment of any Bank over
the amount thereof then in effect (it being understood that a waiver of any
condition,  covenant, Default or Event of Default shall  not  constitute  a
change in the terms of any Commitment of any Bank), (iii) release or permit
the  release  of  (x)  any Mortgaged Rig from the Lien  of  the  respective
Security  Documents or (y) the Guaranty of Holdings pursuant to Section  13
or  the  Guaranty  of any Subsidiary Guarantor so long as  such  Subsidiary
Guarantor continues to own any Mortgaged Rig (except, in the case  of  both
(x)  and  (y)  above, as expressly provided in the Credit Documents),  (iv)
amend, modify or waive any provision of this Section 12.12, (v) reduce  the
percentage  specified  in  the  definition  of  Required  Banks  (it  being
understood  and  agreed  that,  with the consent  of  the  Required  Banks,
additional extensions of credit pursuant to this Agreement may be  included
in  the determination of Required Banks on substantially the same basis  as
the  Commitments  (and related extensions of credit) are  included  on  the
Restatement Effective Date), (vi) consent to the assignment or transfer  by
the  Borrower of any of its rights and obligations under this Agreement  or
(vii)  waive,  change  the  timing or amount of, or  extend  any  mandatory
reduction  in  the  Total  Commitment  including,  without  limitation,   a
Scheduled Commitment Reduction.  No provision of Sections 2 or 11,  or  any
other   provisions  relating  to  the  Letter  of  Credit  Issuer  or   the
Administrative   Agent  may  be  modified  without  the  consent   of   the
Administrative Agent.

          (b)    If,  in  connection  with  any  proposed  change,  waiver,
discharge  or  termination to any of the provisions of  this  Agreement  as
contemplated  by clauses (i) through (vii), inclusive, of  the  proviso  to
Section  12.12(a), the consent of the Required Banks is  obtained  but  the
consent of one or more of such other Banks whose consent is required is not
obtained, then the Borrower shall have the right to replace each such  non-
consenting  Bank  or  Banks  (so long as all non-consenting  Banks  are  so
replaced)  with one or more Replacement Banks pursuant to Section  1.13  so
long  as  at  the  time  of such replacement, each  such  Replacement  Bank
consents  to  the  proposed  change,  waiver,  discharge  or  termi-nation;
provided  that  the  Borrower shall not have the right to  replace  a  Bank
solely  as  a  result  of  the  exercise of such  Bank's  rights  (and  the
withholding  of  any  required consent by such Bank)  pursuant  to  Section
12.12(a)(ii).

         12.13   Survival.   All  indemnities set forth  herein  including,
without limitation, in Section 1.10, 1.11, 2.05, 4.04, 11.06 or 12.01 shall
survive  the  execution and delivery of this Agreement and the  making  and
repayment of the Loans.

         12.14   Domicile of Loans.  Each Bank may transfer and  carry  its
Loans  at,  to  or  for  the account of any branch  office,  subsidiary  or
Affiliate of such Bank, provided that the Borrower shall not be responsible
for  costs  arising  under  Section 1.10 or 4.04 resulting  from  any  such
transfer (other than a transfer pursuant to Section 1.12(a)) to the  extent
not otherwise applicable to such Bank prior to such transfer.

         12.15  Confidentiality.  Subject to Section 12.04, the Banks shall
hold  all  non-public information obtained pursuant to the requirements  of
this  Agreement  in  accordance with its customary procedure  for  handling
confidential  information of this nature and in accordance  with  safe  and
sound banking practices and in any event may make disclosure reasonably  re
quired  by any bona fide transferee or participant in connection  with  the
contemplated  transfer of any Loans or participation therein  (so  long  as
such transferee or participant agrees to be bound by the provisions of this
Section  12.15) or as required or requested by any governmental  agency  or
representative thereof or pursuant to legal process, provided that,  unless
specifically prohibited by applicable law or court order, each  Bank  shall
notify  the Borrower of any request by any governmental agency or represen-
tative  thereof  (other  than  any  such  request  in  connection  with  an
examination  of  the financial condition of such Bank by such  governmental
agency)  for  disclosure  of  any  such  non-public  information  prior  to
disclosure of such information, and provided further that in no event shall
any  Bank  be  obligated or required to return any materials  furnished  by
Holdings or any Subsidiary.

         12.16     Registry.    The   Borrower   hereby   designates    the
Administrative Agent to serve as the Borrower's agent, solely for  purposes
of  this Section 12.16, to maintain a register (the "Register") on which it
will  record  the Commitments from time to time of each of the  Banks,  the
Loans  made  by  each of the Banks and each repayment  in  respect  of  the
principal  amount  of the Loans of each Bank.  Failure  to  make  any  such
recordation,  or  any  error  in  such recordation  shall  not  affect  the
Borrower's obligations in respect of such Loans.  With respect to any Bank,
the  transfer  of  the  Commitments of such Bank  and  the  rights  to  the
principal  of, and interest on, any Loan made pursuant to such  Commitments
shall  not  be  effective until such transfer is recorded on  the  Register
maintained  by the Administrative Agent with respect to ownership  of  such
Commitments  and Loans and prior to such recordation all amounts  owing  to
the  transferor  with respect to such Commitments and  Loans  shall  remain
owing to the transferor.  The registration of assignment or transfer of all
or   part  of  any  Commitments  and  Loans  shall  be  recorded   by   the
Administrative  Agent  on  the Register only upon  the  acceptance  by  the
Administrative  Agent of a properly executed and delivered  Assignment  and
Assumption  Agreement pursuant to Section 12.04(b).   Coincident  with  the
delivery   of   such  an  Assignment  and  Assumption  Agreement   to   the
Administrative  Agent  for  acceptance and registration  of  assignment  or
transfer  of  all or part of a Loan, or as soon thereafter as  practicable,
the  assigning or transferor Bank shall surrender the Note evidencing  such
Loan,  and  thereupon one or more new Notes in the same aggregate principal
amount  shall be issued to the assigning or transferor Bank and/or the  new
Bank.

          SECTION 13.  Holdings Guaranty.

         13.01   The Guaranty.  In order to induce the Banks to enter  into
this  Agreement  and to extend credit hereunder and in recognition  of  the
direct  benefits to be received by Holdings from the proceeds of the  Loans
and  the issuance of the Letters of Credit, Holdings hereby agrees with the
Banks   as   follows:   Holdings  hereby  unconditionally  and  irrevocably
guarantees as primary obligor and not merely as surety the full and  prompt
payment  when due, whether upon maturity, by acceleration or otherwise,  of
any  and  all of the Guaranteed Obligations of the Borrower to the  Secured
Creditors.  If any or all of the Guaranteed Obligations of the Borrower  to
the  Secured Creditors becomes due and payable hereunder, Holdings  uncondi
tionally  promises  to pay such indebtedness to the Secured  Creditors,  on
order,  or demand, together with any and all reasonable expenses which  may
be  incurred  by the Administrative Agent or the Secured Creditors  in  col
lecting any of the Guaranteed Obligations.

         13.02   Bankruptcy.   Additionally, Holdings  unconditionally  and
irrevocably  guarantees  the  payment of any  and  all  of  the  Guaranteed
Obligations  of the Borrower to the Secured Creditors whether or  not  then
due  or  payable  by  the Borrower upon the occurrence in  respect  of  the
Borrower  of  any of the events specified in Section 9.05, and  uncondition
ally  and  irrevocably promises to pay such Guaranteed Obligations  to  the
Secured  Creditors,  on order, or demand, in lawful  money  of  the  United
States.  Holdings' guaranty of the payment of any and all of the Guaranteed
Obligations hereunder shall constitute a guaranty of payment,  and  not  of
collection.

         13.03   Nature of Liability.  The liability of Holdings  hereunder
is  exclusive and independent of any security for or other guaranty of  the
Guaranteed  Obligations of the Borrower whether executed by  Holdings,  any
other  guarantor  or  by  any other party, and the  liability  of  Holdings
hereunder  shall  not be affected or impaired by (a) any  direction  as  to
application of payment by the Borrower or by any other party,  or  (b)  any
other continuing or other guaranty, undertaking or maximum liability  of  a
guarantor  or  of any other party as to the Guaranteed Obligations  of  the
Borrower, or (c) any payment on or in reduction of any such other  guaranty
or  undertaking, or (d) any dissolution, termination or increase,  decrease
or  change  in personnel by the Borrower, or (e) any payment  made  to  the
Administrative Agent or the Secured Creditors on the indebtedness which the
Administrative Agent or such Secured Creditors repay the Borrower  pursuant
to  court  order in any bankruptcy, reorganization, arrangement, moratorium
or  other  debtor relief proceeding, and Holdings waives any right  to  the
deferral or modification of its obligations hereunder by reason of any such
proceeding.

         13.04    Independent  Obligation.   The  obligations  of  Holdings
hereunder are independent of the obligations of any other guarantor or  the
Borrower,  and  a separate action or actions may be brought and  prosecuted
against  Holdings whether or not action is brought against any  other  guar
antor  or  the  Borrower  and whether or not any  other  guarantor  or  the
Borrower be joined in any such action or actions.  Holdings waives, to  the
fullest  extent permitted by law, the benefit of any statute of limitations
affecting its liability hereunder or the enforcement thereof.  Any  payment
by the Borrower or other circumstance which operates to toll any statute of
limitations  as  to  the  Borrower shall operate to  toll  the  statute  of
limitations as to Holdings.

         13.05   Waiver of Notice, etc.  Holdings hereby waives  notice  of
acceptance  of this Guaranty and notice of any liability to  which  it  may
apply,  and  waives promptness, diligence, presentment, demand of  payment,
protest, notice of dishonor or nonpayment of any such liabilities, suit  or
taking of other action by the Administrative Agent, any Bank, the Letter of
Credit  Issuer, the Collateral Agent or the Security Trustee  against,  and
any  other  notice  to, any party liable thereon (including  Holdings,  any
other guarantor or the Borrower).

         13.06   Authorization.   Holdings  authorizes  the  Administrative
Agent  and the Secured Creditors without notice or demand (except as  shall
be  required  by  applicable statute and cannot  be  waived),  and  without
affecting or impairing its liability hereunder, from time to time to:

          (a)   change  the  manner, place or terms of payment  of,  and/or
     change  or  extend the time of payment of, renew, increase, accelerate
     or alter, any of the Guaranteed Obligations (including any increase or
     decrease  in the rate of interest thereon), any security therefor,  or
     any  liability incurred directly or indirectly in respect thereof, and
     the Guaranty herein made shall apply to the Guaranteed Obligations  as
     so changed, extended, renewed or altered;

          (b)   take  and  hold security for the payment of the  Guaranteed
     Obligations  and sell, exchange, release, surrender, realize  upon  or
     otherwise  deal  with in any manner and in any order any  property  by
     whomsoever  at any time pledged or mortgaged to secure,  or  howsoever
     securing, the Guaranteed Obligations or any liabilities (including any
     of those hereunder) incurred directly or indirectly in respect thereof
     or hereof, and/or any offset thereagainst;

          (c)   exercise or refrain from exercising any rights against  the
     Borrower or others or otherwise act or refrain from acting;

          (d)  release or substitute any one or more endorsers, guarantors,
     the Borrower or other obligors;

          (e)   settle or compromise any of the Guaranteed Obligations, any
     security  therefor or any liability (including any of those hereunder)
     incurred directly or indirectly in respect thereof or hereof, and  may
     subordinate the payment of all or any part thereof to the  payment  of
     any  liability  (whether due or not) of the Borrower to its  creditors
     other than the Banks;

          (f)   apply any sums by whomsoever paid or howsoever realized  to
     any  liability or liabilities of the Borrower to the Secured Creditors
     regardless  of  what  liability  or liabilities  of  Holdings  or  the
     Borrower remain unpaid;

          (g)   consent to or waive any breach of, or any act, omission  or
     default  under, this Agreement or any of the instruments or agreements
     referred  to  herein, or otherwise amend, modify  or  supplement  this
     Agreement or any of such other instruments or agreements; and/or

          (h)    take   any  other  action  which  would,  under  otherwise
     applicable principles of common law, give rise to a legal or equitable
     discharge of Holdings from its liabilities under this Section 13.

         13.07  Reliance.  It is not necessary for the Administrative Agent
or  the  Secured Creditors to inquire into the capacity or  powers  of  the
Borrower or its Subsidiaries or the officers, directors, partners or agents
acting  or  purporting to act on its behalf, and any Guaranteed Obligations
made  or  created in reliance upon the professed exercise  of  such  powers
shall be guaranteed hereunder.

         13.08   Subordination.  Any of the indebtedness  of  the  Borrower
relating  to the Guaranteed Obligations now or hereafter owing to  Holdings
is  hereby subordinated to the Guaranteed Obligations of the Borrower owing
to  the  Administrative  Agent  and  the  Secured  Creditors;  and  if  the
Administrative Agent so requests at a time when an Event of Default exists,
all  such  indebtedness  relating  to the  Guaranteed  Obligations  of  the
Borrower  to Holdings shall be collected, enforced and received by Holdings
for  the  benefit  of  the  Secured Creditors  and  be  paid  over  to  the
Administrative Agent on behalf of the Secured Creditors on account  of  the
Guaranteed Obligations of the Borrower to the Secured Creditors,  but  with
out  affecting  or impairing in any manner the liability of Holdings  under
the  other provisions of this Guaranty.  Prior to the transfer by  Holdings
of  any  note  or negotiable instrument evidencing any of the  indebtedness
relating  to  the  Guaranteed  Obligations of  the  Borrower  to  Holdings,
Holdings  shall mark such note or negotiable instrument with a legend  that
the same is subject to this subordination.

         13.09  Waiver.  (a)  Holdings waives any right (except as shall be
required  by  applicable  statute and cannot  be  waived)  to  require  the
Administrative  Agent or the Secured Creditors to (i) proceed  against  the
Borrower,  any other guarantor or any other party, (ii) proceed against  or
exhaust  any  security held from the Borrower, any other guarantor  or  any
other  party or (iii) pursue any other remedy in the Administrative Agent's
or  the  Secured Creditors' power whatsoever.  Holdings waives any  defense
based on or arising out of any defense of the Borrower, any other guarantor
or  any  other  party,  other  than  payment  in  full  of  the  Guaranteed
Obligations, based on or arising out of the disability of the Borrower, any
other  guarantor  or  any  other  party, or  the  unenforceability  of  the
Guaranteed Obligations or any part thereof from any cause, or the cessation
from  any cause of the liability of the Borrower other than payment in full
of  the  Guaranteed Obligations.  The Administrative Agent and the  Secured
Creditors  may, at their election, foreclose on any security  held  by  the
Administrative Agent, the Collateral Agent or the Secured Creditors by  one
or  more judicial or nonjudicial sales, whether or not every aspect of  any
such  sale is commercially reasonable (to the extent such sale is permitted
by   applicable   law),  or  exercise  any  other  right  or   remedy   the
Administrative  Agent  and  the  Secured Creditors  may  have  against  the
Borrower  or  any  other party, or any security, without  affecting  or  im
pairing in any way the liability of Holdings hereunder except to the extent
the  Guaranteed  Obligations have been paid.  Holdings waives  any  defense
arising  out  of  any  such election by the Administrative  Agent  and  the
Secured  Creditors,  even  though  such  election  operates  to  impair  or
extinguish  any  right of reimbursement or subrogation or  other  right  or
remedy of Holdings against the Borrower or any other party or any security.

          (b)   Holdings  waives all presentments, demands for performance,
protests   and   notices,   including,  without  limitation,   notices   of
nonperformance,  notices  of  protest,  notices  of  dishonor,  notices  of
acceptance  of  this  Guaranty, and notices of the existence,  creation  or
incurring  of  new or additional Guaranteed Obligations.  Holdings  assumes
all  responsibility for being and keeping itself informed of the Borrower's
financial condition and assets, and of all other circumstances bearing upon
the  risk of nonpayment of the Guaranteed Obligations and the nature, scope
and  extent  of the risks which Holdings assumes and incurs hereunder,  and
agrees  that the Administrative Agent and the Secured Creditors shall  have
no duty to advise Holdings of information known to them regarding such cir-
cum-stances or risks.

                    *             *            *

       IN  WITNESS  WHEREOF,  each  of  the  parties hereto has  caused  a
counterpart of this Agreement to be duly executed  and delivered as of the
date first above written.

Address:                         READING & BATES CORPORATION

901 Threadneedle
Suite 200                        By
Houston, Texas  77079              Name:
Attn:  General Counsel             Title:
Telephone:  (281) 496-5000
Facsimile:  (281) 496-0285


                         READING & BATES DRILLING CO.

                         By
                           Name:
                           Title:

                         CHRISTIANIA BANK OG KREDITKASSE, NEW YORK BRANCH,
                         Individually and as Administrative Agent

                         By
                           Name:
                           Title:

                         By
                           Name:
                           Title:

                         CREDIT AGRICOLE INDOSUEZ,
                         Individually and as Documentation Agent

                         By
                           Name:
                           Title:

                         CREDIT LYONNAIS NEW YORK BRANCH,
                         Individually and as Documentation Agent

                         By
                           Name:
                           Title:

                         SKANDINAVISKA ENSKILDA BANKEN AB (publ.),
                         Individually and as Co-Manager

                         By
                           Name:
                           Title:

                         THE FUJI BANK LIMITED,
                         Individually and as Co-Manager

                         By
                           Name:
                           Title:

                         BANK AUSTRIA

                         By
                           Name:
                           Title:

                         THE BANK OF TOKYO-MITSUBISHI, LTD., HOUSTON AGENCY

                         By
                           Name:
                           Title:

                         MEESPIERSON N.V.

                         By
                           Name:
                           Title:

                         SANWA BANK

                         By
                           Name:
                           Title:

                         FIRST NATIONAL BANK OF COMMERCE

                         By
                           Name:
                           Title:

                         THE SUMITOMO BANK, LIMITED

                         By
                           Name:
                           Title:

                         WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION

                         By
                           Name:
                           Title:

                         THE DAI-ICHI KANGYO BANK, LTD.

                         By
                           Name:
                           Title:


                                                    ANNEX I

                       COMMITMENTS

     INSTITUTION                                  COMMITMENT

Christiania Bank og Kreditkasse                   $65,000,000
Credit Agricole Indosuez                          $47,000,000
Credit Lyonnais                                   $47,000,000
Skandinaviska-Enskilda                            $40,000,000
Fuji Bank                                         $32,000,000
Bank Austria                                      $26,500,000
Bank of Tokyo-Mitsubishi                          $26,500,000
Mees Pierson                                      $26,500,000
Sumitomo                                          $25,000,000
First NBC                                         $18,500,000
Sanwa Bank                                        $18,500,000
Dai-Ichi Kangyo                                   $13,500,000
Wells Fargo                                       $13,500,000

     Total                                        $400,000,000


                                                   ANNEX II

                      BANK ADDRESSES

Christiania Bank og Kreditkasse,   11 West 42nd Street
New York Branch                    7th Floor
                                   New York, NY  10036
                                   Attn:  Hans Chr. Kjelsrud
                                   Tel. No.:  (212) 827-4800
                                   Fax No.:  (212) 827-4888

Credit Lyonnais                    1000 Louisiana
New York Branch                    Suite 5360
                                   Houston, Texas  77002
                                   Attn:  Diane Scott
                                   Tel. No.:  (713) 751-0500
                                   Fax No.:  (713) 751-0307

Credit Agricole Indosuez           Representative Office Norway
                                   Ruselokkveien 6
                                   0120 Oslo, Norway
                                   Attn:  Mr. Bjorn Hundevadt-Gulbrandsen
                                          Mr. Hans Jorgen Wibstad
                                   Tel. No.: 011 47 22 83 30 50
                                   Fax No.:  011 47 22 83 30 55

Mees Pierson                       Camomile Court
                                   23 Camomile Street
                                   London EC3A 7PP
                                   Attn:  Harris Antoniou
                                   Tel. No.: 44 171 444 8789
                                   Fax No.:  44 171 444 8810

The Fuji Bank Limited              Houston Agency
                                   1 Houston Center, Suite 4100
                                   1221 McKinney Street
                                   Houston, TX  77010
                                   Attn:  Mark E. Polasek
                                   Tel. No.: (713) 650-7863 or
                                             (713) 759-1800
                                   Fax No.:  (713)759-0048

First National Bank of Commerce    210 Baronne Street
                                   P.O. Box 60279
                                   New Orleans, LA  70160-0279
                                   Attn:  Joshua C. Cummings
                                          Mr. Jesse Shannon
                                          Anthony Restell
                                   Tel. No.: (504) 561-1361
                                   Fax No.: (504) 561-1316

Sanwa Bank                         Dallas Agency 1
                                   220 Ross Avenue
                                   Suite 4100W
                                   Dallas, TX  75201
                                   Attn:  Matt Patrick
                                          Erik Reimer
                                   Tel. No.: (214) 744-555
                                             (214) 665-0243
                                   Fax No.: (214) 741-6535

Bank Austria                       565 Fifth Avenue
                                   New York, NY  10017
                                   Attn:  Paul H. Deerin
                                          Jonathan Bakker
                                   Tel. No.: (212) 880-1033
                                             (212) 880-1074
                                   Fax No.: (212) 880-1040

Skandinaviska Enskilda Banken AB   Rosenkrantz GT 22
                                   Box 1843 Vika
                                   N-0123 Oslo, Norway
                                   Attn:  Bjarte Boe
                                          Snorre Krogstad
                                   Tel. No.: 47 22 82 70 04
                                             47 22 82 70 05
                                   Fax No.: 47 22 82 71 11

The Bank of Tokyo-Mitsubishi Ltd.  Houston Agency
                                   1100 Louisiana, Suite 2800
                                   Houston, TX  77002
                                   Attn:  Deanna Breland
                                   Tel. No.: (713) 655-3810
                                   Fax No.: (713) 65-0116


The Sumitomo Bank Limited          Houston Agency
                                   700 Louisiana Street, Suite 1750
                                   Houston, TX  77002
                                   Attn: Robert Johnson
                                         William R. McKown
                                   Tel. No.: (713) 238-8235
                                   Fax No.: (713) 759-0020

Wells Fargo Bank (Texas), N.A.     Energy Department
                                   1000 Louisiana Street, 3rd Floor
                                   Houston, TX  77002
                                   Attn:  Frank Schageman
                                   Tel. No.:  (713) 250-4352
                                   Fax No.:  (713) 250-7912

The Dai-Ichi Kangyo Bank, Ltd.     1100 Louisiana Street, #4940
                                   Houston, TX  77002
                                   Attn:  Kelton Glasscock
                                   Tel. No.:  (713) 654-5055
                                   Fax No.:  (713) 654-1667


                                                   ANNEX IV

              COMMITMENT REDUCTION SCHEDULE

               Rig 41                   10%
               J.W. McLean              12%
               C.E. Thornton             5%
               F.G. McClintock           6%
               Ron Tappmeyer             7%
               Randolph Yost             7%
               D.R. Stewart              7%
               Harvey H. Ward            7%
               J.T. Angel                7%
               Roger W. Mowell           7%
               George H. Galloway        7%
               Charley Graves            2%
               W.D. Kent                 2%