exv4w2






Exhibit 4.2




EXECUTION VERSION




 





REVOLVING CREDIT AGREEMENT




Dated as of August 4, 2009




among




SEAHAWK DRILLING, INC.




as Borrower,




CERTAIN SUBSIDIARIES THEREOF,




as Guarantors,




THE LENDERS FROM TIME TO TIME PARTY HERETO,




as Lenders,




and




NATIXIS, NEW YORK BRANCH,




as Administrative Agent, Issuing Bank, Lead Arranger and Sole Bookrunner




 















 







TABLE OF CONTENTS




	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
	 	 	1	 
	 
	 	 	 	 
	Section 1.01 Certain Defined Terms
	 	 	1	 
	 
	 	 	 	 
	Section 1.02 Computation of Time Periods
	 	 	35	 
	 
	 	 	 	 
	Section 1.03 Accounting Terms
	 	 	35	 
	 
	 	 	 	 
	Section 1.04 Types of Revolving Advances
	 	 	35	 
	 
	 	 	 	 
	Section 1.05 Miscellaneous
	 	 	35	 
	 
	 	 	 	 
	ARTICLE II THE REVOLVING ADVANCES
	 	 	36	 
	 
	 	 	 	 
	Section 2.01 The Revolving Advances
	 	 	36	 
	 
	 	 	 	 
	Section 2.02 Method of Borrowing
	 	 	36	 
	 
	 	 	 	 
	Section 2.03 Fees
	 	 	40	 
	 
	 	 	 	 
	Section 2.04 Reduction of the Revolving Commitments
	 	 	41	 
	 
	 	 	 	 
	Section 2.05 Repayment
	 	 	42	 
	 
	 	 	 	 
	Section 2.06 Interest
	 	 	42	 
	 
	 	 	 	 
	Section 2.07 Prepayments
	 	 	43	 
	 
	 	 	 	 
	Section 2.08 Funding Losses
	 	 	49	 
	 
	 	 	 	 
	Section 2.09 Increased Costs
	 	 	49	 
	 
	 	 	 	 
	Section 2.10 Payments and Computations
	 	 	51	 
	 
	 	 	 	 
	Section 2.11 Taxes
	 	 	52	 
	 
	 	 	 	 
	Section 2.12 Sharing of Payments, Etc
	 	 	55	 
	 
	 	 	 	 
	Section 2.13 Applicable Lending Offices
	 	 	55	 
	 
	 	 	 	 
	Section 2.14 Letters of Credit
	 	 	55	 
	 
	 	 	 	 
	Section 2.15 Mitigation Obligations; Replacement of Lenders; Removal of Defaulting
Lender 
	 	 	61	 
	 
	 	 	 	 
	Section 2.16 Increase in Revolving Commitments
	 	 	62	 
	 
	 	 	 	 
	ARTICLE III CONDITIONS OF LENDING
	 	 	64	 
	 
	 	 	 	 
	Section 3.01 Binding Effect; Termination
	 	 	64	 
	 
	 	 	 	 
	Section 3.02 Initial Conditions Precedent
	 	 	64	 
	 
	 	 	 	 
	Section 3.03 Conditions Precedent to Each Revolving Advance
	 	 	69	 
	 
	 	 	 	 
	Section 3.04 Determinations Under Sections 3.02 and 3.03
	 	 	70	 






-i-









 






TABLE OF CONTENTS
(continued)



	 	 	 	 	 
	 	 	Page	 
	ARTICLE IV REPRESENTATIONS AND WARRANTIES
	 	 	70	 
	 
	 	 	 	 
	Section 4.01 Existence
	 	 	70	 
	 
	 	 	 	 
	Section 4.02 Power and Authority
	 	 	70	 
	 
	 	 	 	 
	Section 4.03 Authorization and Approvals
	 	 	71	 
	 
	 	 	 	 
	Section 4.04 Enforceable Obligations
	 	 	71	 
	 
	 	 	 	 
	Section 4.05 Financial Statements; No Material Adverse Effect
	 	 	71	 
	 
	 	 	 	 
	Section 4.06 True and Complete Disclosure
	 	 	72	 
	 
	 	 	 	 
	Section 4.07 Litigation
	 	 	72	 
	 
	 	 	 	 
	Section 4.08 Compliance with Laws
	 	 	73	 
	 
	 	 	 	 
	Section 4.09 No Default
	 	 	73	 
	 
	 	 	 	 
	Section 4.10 Subsidiaries; Corporate Structure
	 	 	73	 
	 
	 	 	 	 
	Section 4.11 Liens; Condition of Properties
	 	 	73	 
	 
	 	 	 	 
	Section 4.12 Environmental Condition
	 	 	73	 
	 
	 	 	 	 
	Section 4.13 Insurance
	 	 	74	 
	 
	 	 	 	 
	Section 4.14 Taxes
	 	 	75	 
	 
	 	 	 	 
	Section 4.15 ERISA Compliance
	 	 	75	 
	 
	 	 	 	 
	Section 4.16 Security Interests
	 	 	76	 
	 
	 	 	 	 
	Section 4.17 Bank Accounts
	 	 	77	 
	 
	 	 	 	 
	Section 4.18 Labor Relations
	 	 	77	 
	 
	 	 	 	 
	Section 4.19 Intellectual Property
	 	 	77	 
	 
	 	 	 	 
	Section 4.20 Solvency
	 	 	77	 
	 
	 	 	 	 
	Section 4.21 Margin Regulations
	 	 	78	 
	 
	 	 	 	 
	Section 4.22 Investment Company Act
	 	 	78	 
	 
	 	 	 	 
	Section 4.23 Names and Locations
	 	 	78	 
	 
	 	 	 	 
	Section 4.24 Citizenship
	 	 	78	 
	 
	 	 	 	 
	ARTICLE V AFFIRMATIVE COVENANTS
	 	 	78	 
	 
	 	 	 	 
	Section 5.01 Preservation of Existence, Etc
	 	 	78	 
	 
	 	 	 	 
	Section 5.02 Compliance with Laws, Etc
	 	 	79	 
	 
	 	 	 	 
	Section 5.03 Maintenance of Property
	 	 	79	 
	 
	 	 	 	 
	Section 5.04 Maintenance of Insurance
	 	 	79	 






-ii-









 





TABLE OF CONTENTS
(continued)


	 	 	 	 	 
	 	 	Page	 
	Section 5.05 Payment of Taxes, Etc
	 	 	83	 
	 
	 	 	 	 
	Section 5.06 Reporting Requirements
	 	 	83	 
	 
	 	 	 	 
	Section 5.07 Other Notices
	 	 	86	 
	 
	 	 	 	 
	Section 5.08 Books and Records; Inspection
	 	 	89	 
	 
	 	 	 	 
	Section 5.09 Use of Proceeds
	 	 	89	 
	 
	 	 	 	 
	Section 5.10 Nature of Business
	 	 	89	 
	 
	 	 	 	 
	Section 5.11 Operation of Rigs
	 	 	89	 
	 
	 	 	 	 
	Section 5.12 Additional Mortgaged Vessels
	 	 	91	 
	 
	 	 	 	 
	Section 5.13 Additional Guarantors
	 	 	93	 
	 
	 	 	 	 
	Section 5.14 Additional Collateral Requirements
	 	 	93	 
	 
	 	 	 	 
	Section 5.15 Further Assurances in General
	 	 	94	 
	 
	 	 	 	 
	Section 5.16 PEMEX Consent
	 	 	94	 
	 
	 	 	 	 
	ARTICLE VI NEGATIVE COVENANTS
	 	 	95	 
	 
	 	 	 	 
	Section 6.01 Liens, Etc
	 	 	95	 
	 
	 	 	 	 
	Section 6.02 Debts, Guaranties and Other Obligations
	 	 	96	 
	 
	 	 	 	 
	Section 6.03 Merger or Consolidation
	 	 	97	 
	 
	 	 	 	 
	Section 6.04 Dispositions
	 	 	98	 
	 
	 	 	 	 
	Section 6.05 Investments; Acquisitions
	 	 	99	 
	 
	 	 	 	 
	Section 6.06 Restricted Payments
	 	 	100	 
	 
	 	 	 	 
	Section 6.07 Change in Nature of Business
	 	 	100	 
	 
	 	 	 	 
	Section 6.08 Transactions With Affiliates
	 	 	100	 
	 
	 	 	 	 
	Section 6.09 Agreements Restricting Liens and Distributions
	 	 	101	 
	 
	 	 	 	 
	Section 6.10 Limitation on Accounting Changes or Changes in Fiscal Periods
	 	 	101	 
	 
	 	 	 	 
	Section 6.11 Limitation on Speculative Hedging
	 	 	101	 
	 
	 	 	 	 
	Section 6.12 Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities
	 	 	102	 
	 
	 	 	 	 
	Section 6.13 Operating Leases
	 	 	102	 
	 
	 	 	 	 
	Section 6.14 Capital Expenditures
	 	 	102	 
	 
	 	 	 	 
	Section 6.15 Amendment of Material Contracts
	 	 	102	 
	 
	 	 	 	 
	Section 6.16 Operation of Rigs
	 	 	102	 






-iii-









 






TABLE OF CONTENTS
(continued)



	 	 	 	 	 
	 	 	Page	 
	Section 6.17 Financial Covenants
	 	 	104	 
	 
	 	 	 	 
	ARTICLE VII EVENTS OF DEFAULT 
	 	 	104	 
	 
	 	 	 	 
	Section 7.01 Events of Default
	 	 	104	 
	 
	 	 	 	 
	Section 7.02 Optional Acceleration of Maturity
	 	 	106	 
	 
	 	 	 	 
	Section 7.03 Automatic Acceleration of Maturity
	 	 	106	 
	 
	 	 	 	 
	Section 7.04 Non-exclusivity of Remedies
	 	 	107	 
	 
	 	 	 	 
	Section 7.05 Right of Set-off
	 	 	107	 
	 
	 	 	 	 
	Section 7.06 Application of Proceeds
	 	 	107	 
	 
	 	 	 	 
	ARTICLE VIII THE GUARANTY
	 	 	108	 
	 
	 	 	 	 
	Section 8.01 Liabilities Guaranteed
	 	 	108	 
	 
	 	 	 	 
	Section 8.02 Nature of Guaranty
	 	 	108	 
	 
	 	 	 	 
	Section 8.03 Agent’s Rights
	 	 	109	 
	 
	 	 	 	 
	Section 8.04 Guarantor’s Waivers
	 	 	109	 
	 
	 	 	 	 
	Section 8.05 Maturity of Obligations, Payment
	 	 	110	 
	 
	 	 	 	 
	Section 8.06 Agent’s Expenses
	 	 	110	 
	 
	 	 	 	 
	Section 8.07 Liability
	 	 	111	 
	 
	 	 	 	 
	Section 8.08 Events and Circumstances Not Reducing or Discharging any Guarantor’s
Obligations 
	 	 	111	 
	 
	 	 	 	 
	Section 8.09 Subordination of All Guarantor Claims
	 	 	113	 
	 
	 	 	 	 
	Section 8.10 Claims in Bankruptcy
	 	 	114	 
	 
	 	 	 	 
	Section 8.11 Payments Held in Trust
	 	 	114	 
	 
	 	 	 	 
	Section 8.12 Benefit of Guaranty
	 	 	114	 
	 
	 	 	 	 
	Section 8.13 Reinstatement
	 	 	114	 
	 
	 	 	 	 
	Section 8.14 Liens Subordinate
	 	 	115	 
	 
	 	 	 	 
	Section 8.15 Guarantor’s Enforcement Rights
	 	 	115	 
	 
	 	 	 	 
	Section 8.16 Limitation
	 	 	115	 
	 
	 	 	 	 
	Section 8.17 Contribution Rights
	 	 	115	 
	 
	 	 	 	 
	Section 8.18 Release of Guarantors
	 	 	116	 
	 
	 	 	 	 
	ARTICLE IX THE ADMINISTRATIVE AGENT
	 	 	116	 
	 
	 	 	 	 
	Section 9.01 Appointment and Authority
	 	 	116	 






-iv-









 





TABLE OF CONTENTS
(continued)



	 	 	 	 	 
	 	 	Page	 
	Section 9.02 Rights as a Lender
	 	 	116	 
	 
	 	 	 	 
	Section 9.03 Exculpatory Provisions
	 	 	117	 
	 
	 	 	 	 
	Section 9.04 Reliance by the Administrative Agent
	 	 	118	 
	 
	 	 	 	 
	Section 9.05 Delegation of Duties
	 	 	118	 
	 
	 	 	 	 
	Section 9.06 Resignation or Removal of the Administrative Agent
	 	 	118	 
	 
	 	 	 	 
	Section 9.07 Non-Reliance on Administrative Agent and Other Lenders
	 	 	119	 
	 
	 	 	 	 
	Section 9.08 Indemnification
	 	 	120	 
	 
	 	 	 	 
	Section 9.09 Collateral and Guaranty Matters
	 	 	120	 
	 
	 	 	 	 
	Section 9.10 No Other Duties, Etc
	 	 	122	 
	 
	 	 	 	 
	ARTICLE X MISCELLANEOUS
	 	 	122	 
	 
	 	 	 	 
	Section 10.01 Amendments, Etc
	 	 	122	 
	 
	 	 	 	 
	Section 10.02 Notices, Etc
	 	 	123	 
	 
	 	 	 	 
	Section 10.03 No Waiver; Cumulative Remedies
	 	 	125	 
	 
	 	 	 	 
	Section 10.04 Costs and Expenses
	 	 	125	 
	 
	 	 	 	 
	Section 10.05 Indemnification
	 	 	126	 
	 
	 	 	 	 
	Section 10.06 Successors and Assigns
	 	 	127	 
	 
	 	 	 	 
	Section 10.07 Confidentiality
	 	 	130	 
	 
	 	 	 	 
	Section 10.08 Execution in Counterparts
	 	 	131	 
	 
	 	 	 	 
	Section 10.09 Survival of Representations, Etc
	 	 	131	 
	 
	 	 	 	 
	Section 10.10 Severability
	 	 	131	 
	 
	 	 	 	 
	Section 10.11 Interest Rate Limitation
	 	 	131	 
	 
	 	 	 	 
	Section 10.12 Governing Law
	 	 	132	 
	 
	 	 	 	 
	Section 10.13 Submission to Jurisdiction
	 	 	132	 
	 
	 	 	 	 
	Section 10.14 Waiver of Jury
	 	 	132	 
	 
	 	 	 	 
	Section 10.15 Entire agreement
	 	 	133	 






-v-









 









TABLE OF CONTENTS
(continued)


	 	 	 	 	 
	 	 	Page	 
	EXHIBITS:
	 	 	 	 
	 
	 	 	 	 
	Exhibit A
—  Form of Assignment and
Acceptance Agreement
	 	 	 	 
	Exhibit B
—  Form of Assignment of
Earnings
	 	 	 	 
	Exhibit C
—  Form of Assignment of
Insurance
	 	 	 	 
	Exhibit D
—  Form of Borrowing Base
Report
	 	 	 	 
	Exhibit E
—  Form of Compliance
Certificate
	 	 	 	 
	Exhibit F
—  Form of Letter of Credit
Request
	 	 	 	 
	Exhibit G
—  Form of Note
	 	 	 	 
	Exhibit H
—  Form of Notice of
Borrowing
	 	 	 	 
	Exhibit I
—   Form of Notice of Conversion or
Continuation
	 	 	 	 
	Exhibit J
—   Form of Pledge Agreement
	 	 	 	 
	Exhibit K
—  Form of Rig Mortgage
	 	 	 	 
	Exhibit L
—  Form of Security
Agreement
	 	 	 	 
	 
	 	 	 	 
	SCHEDULES:
	 	 	 	 
	 
	 	 	 	 
	Schedule 1.01(a)  —    Guarantors
	 	 	 	 
	Schedule 1.01(b)  —    Initial Collateral Rigs
	 	 	 	 
	Schedule 1.01(c)  —    Non-Collateral Rigs
	 	 	 	 
	Schedule 1.01(d)  —    Consolidated EBITDA Adjustments
	 	 	 	 
	Schedule 2.01  —        Revolving Commitments and Pro Rata Shares of the Lenders
	 	 	 	 
	Schedule 3.02(f)  —    Minimum Capital
	 	 	 	 
	Schedule 4.07  —        Litigation
	 	 	 	 
	Schedule 4.10  —        Subsidiaries
	 	 	 	 
	Schedule 4.13  —        Insurance
	 	 	 	 
	Schedule 4.17  —        Bank Accounts
	 	 	 	 
	Schedule 4.23  —        Names and Locations
	 	 	 	 
	Schedule 5.04(b)  —    Rigs Insured Values
	 	 	 	 
	Schedule 5.04(d)  —    Loss Payable Clause
	 	 	 	 
	Schedule 6.01  —        Existing Liens
	 	 	 	 
	Schedule 6.05  —        Existing Investments
	 	 	 	 
	Schedule 6.09  —        Burdensome Agreements
	 	 	 	 
	Schedule 10.02  —      Addresses for Notice
	 	 	 	 







-vi-











 





REVOLVING CREDIT AGREEMENT




     This Revolving Credit Agreement dated as of August 4, 2009 is among Seahawk Drilling, Inc., a
Delaware corporation (the “Borrower”), the Guarantors, the Lenders, and Natixis, New York
Branch (“Natixis”), as Administrative Agent for the Lenders and as Issuing Bank.



     The Borrower, the Guarantors, the Lenders, the Administrative Agent and the Issuing Bank agree
as follows:



ARTICLE I




DEFINITIONS AND ACCOUNTING TERMS




     Section 1.01 Certain Defined Terms. Any terms used in this Agreement that are defined
in Article 9 of the UCC (as hereinafter defined), whether or not therein capitalized, shall have
the meanings assigned to those terms by the UCC as of the date of this Agreement. As used in this
Agreement, the terms defined above shall have the meanings set forth therein and the following
terms shall have the following meanings:



     “Acceptable Credit Support” means a letter of credit issued from (a) a Lender or an
Affiliate thereof or (b) a commercial bank organized under the laws of the United States of America
or any other country which is a member of the Organization for Economic Cooperation and
Development, or a political subdivision of any such country, with a credit rating of at least A- as
determined by S&P and at least A3 as determined by Moody’s (or if such Person has only one debt
rating, such rating is at least A- as determined by S&P or at least A3 as determined by Moody’s),
in a form reasonably acceptable to the Administrative Agent and which has the effect of assuring
the payment or reimbursement for any monetary obligations of the Account Debtor with respect to a
Tier 1 Eligible Receivable.



     “Acceptable Flag Jurisdiction” means each of the United States of America, the
Bahamas, the Republic of Liberia, the Marshall Islands, Vanuatu, Panama and any other jurisdiction
reasonably acceptable to the Required Lenders.



     “Acceptable Additional Rig” shall mean any Rig now or hereafter acquired;
provided that such Rig must (i) have a class certificate reasonably acceptable to the
Administrative Agent, (ii) must be of an age and type reasonably acceptable to the Administrative
Agent and (iii) be registered in an Acceptable Flag Jurisdiction; provided,
however, that (i) the class certificate, age and type of each Non-Collateral Rig that is
listed in Schedule 1.01(c) hereto is and, until the Maturity Date, shall be, reasonably
acceptable to the Administrative Agent and (ii) the class and type remain the same as in effect on
the Closing Date.



     “Acceptable Replacement Rig” shall mean, with respect to a Collateral Rig, any now
owned or hereafter acquired Rig with a fair market value, or if more than one now owned or
hereafter acquired Rigs, Rigs with an aggregate fair market value, that is comparable to the fair
market value of such Collateral Rig (as determined in accordance with the Appraisal Report most
recently delivered to the Administrative Agent pursuant to Section 5.06(h) or delivered
pursuant













 







to a Rig Exchange to the Administrative Agent by the Borrower); provided that each
such Rig must (a) have a class certificate reasonably acceptable to the Administrative Agent,
(b) be of an age and type reasonably acceptable to the Administrative Agent and (c) be registered
in an Acceptable Flag Jurisdiction; provided, however, that (i) the class
certificate, age and type of each Non-Collateral Rig that is listed in Schedule 1.01(c)
hereto is and, until the Maturity Date, shall be, reasonably acceptable to the Administrative Agent
and (ii) the class and type remain the same as in effect on the Closing Date.



     “Acceptable Security Interest” in any Property means a Lien which (a) exists in favor
of the Administrative Agent, for the ratable benefit of the Secured Parties; (b) is superior to all
other Liens except Excepted Liens; (c) secures the Obligations; and (d) is perfected and
enforceable against the Loan Party that created such security interest in preference to any rights
of any Person therein, other than Excepted Liens.



     “Account Control Agreement” shall mean, if any deposit or securities account of the
Borrower or any Loan Party is held with a financial institution that is not the Administrative
Agent, an agreement or agreements in form and substance reasonably acceptable to the Administrative
Agent between the Administrative Agent and such other financial institution governing any such
deposit accounts or securities of the Borrower or such Loan Party.



     “Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any of its
Subsidiaries (a) acquires any going business or all or substantially all of the assets of any firm,
corporation or limited liability company, or division thereof, whether through purchase of assets,
merger or otherwise, or (b) directly or indirectly acquires (in one transaction or as the most
recent transaction in a series of transactions) at least a majority (in number of votes) of the
securities of a corporation which have ordinary voting power for the election of directors (other
than securities having such power only by reason of the happening of a contingency) or a majority
(by percentage or voting power) of the outstanding ownership interests of a partnership or limited
liability company.



     “Additional Lender” has the meaning set forth in Section 2.16(b).



     “Adjusted Base Rate” means, for any day, a fluctuating rate of interest per annum
equal to the highest of the following, in each case, to the extent determinable by the
Administrative Agent: (a) the Federal Funds Rate plus one and one-half percent (1.50%), (b) the
Daily One Month LIBOR Rate plus one and one-half percent (1.50%), and (c) the Prime Rate.



     “Administrative Agent” means Natixis in its capacity as administrative agent for the
Lenders under the Loan Documents and any successor in such capacity appointed pursuant to
Section 9.06.



     “Administrative Questionnaire” means an administrative questionnaire in a form
supplied by the Administrative Agent.



     “Affected Lender” has the meaning set forth in Section 2.07(d).



2









 





     “Affiliate” of any Person, means any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under common control with,
such Person or any Subsidiary of such Person. The term “control” (including the terms “controlled
by” or “under common control with”) means the possession, directly or indirectly, of the power to
(a) vote or direct the voting of 10% or more of the outstanding shares of Voting Stock of such
Person or (b) direct or cause the direction of the management and policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.



     “Agreement” means this Revolving Credit Agreement dated as of August 4, 2009 among the
Borrower, the Guarantors, the Lenders, the Issuing Bank and the Administrative Agent.



     “Applicable Lending Office” means (a) with respect to any Lender, the office, branch,
subsidiary, affiliate or correspondent bank of such Lender specified in its Administrative
Questionnaire or such other office, branch, subsidiary, affiliate or correspondent bank as such
Lender may from time to time specify to the Borrower and the Administrative Agent from time to time
and (b) with respect to the Administrative Agent or the Issuing Bank, the address specified for
such Person on Schedule 10.02 or to such other address, facsimile number, electronic mail
address or telephone number as shall be designated by such Person in a notice to the other parties.



     “Applicable Margin” means, for any day, (a) with respect to Base Rate Advances, 3.50%,
and (b) with respect to Eurodollar Advances, 4.50%.



     “Appraisal Report” has the meaning set forth in Section 5.06(h)(i).



     “Approved Fund” means any Fund that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender, or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.



     “Approved Rig Appraiser” means Bassoe Offshore (USA) Inc. or any other rig appraiser
selected by the Administrative Agent and reasonably acceptable to the Borrower.



     “Arranger” means Natixis in its capacity as lead arranger and sole bookrunner.



     “Asset Disposition” means any Disposition of any Collateral or Non-Collateral Rigs
(other than a Disposition of Non-Collateral Rigs in satisfaction of the Contested Mexican Tax
Assessments) by the Borrower or other Loan Party pursuant to Section 6.04(c).



     “Assignment and Acceptance” shall mean an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of any party whose consent is required by
Section 10.06), and accepted by the Administrative Agent, in substantially the form of the
attached Exhibit A or any other form approved by the Administrative Agent and, if no Event
of Default has occurred and is continuing, the Borrower, each in their reasonable discretion.



     “Assignment of Earnings” means an Assignment of Earnings in substantially the form of
the attached Exhibit B among one or more of the Loan Parties and the Administrative Agent,
for the ratable benefit of the Secured Parties.



3









 





     “Assignment of Insurance” means an Assignment of Insurance in substantially the form
of the attached Exhibit C among one or more of the Loan Parties and the Administrative
Agent, for the ratable benefit of the Secured Parties.



     “Attributable Indebtedness” means, on any date, (a) in respect of any Capital Lease of
any Person, the capitalized amount thereof that would appear on a balance sheet of such Person
prepared as of such date in accordance with GAAP, and (b) in respect of any Synthetic Lease
Obligation, the capitalized amount of the remaining lease payments under the relevant lease that
would appear on a balance sheet of such Person prepared as of such date in accordance with GAAP if
such lease were accounted for as a capital lease.



     “Availability” means, on any date, the excess, if any, of (a) the least of (i) the
Revolving Commitments, (ii) the Borrowing Base and the (iii) the Fixed Charge Coverage Cap, in each
case, in effect on such date, over (b) the sum of the outstanding principal amount of Revolving
Advances and the Letter of Credit Exposure, in each case, on such date.



     “Base Rate Advance” means a Revolving Advance that bears interest at a rate determined
by reference to the Adjusted Base Rate.



     “Borrower” has the meaning set forth in the introductory paragraph hereto.



     “Borrowing” means a borrowing consisting of simultaneous Revolving Advances of the
same Type made, converted or continued on the same Business Day, and, in the case of Eurodollar
Advances, as to which a single Interest Period is in effect.



     “Borrowing Base” means, as of any date of determination, an amount determined in
Dollars as of the most immediately preceding Borrowing Base Determination Date, which is equal to
the sum of the following:



     (a) 80% of Tier 1 Eligible Receivables; plus



     (b) 60% of Tier 2 Eligible Receivables; plus



     (c) the lesser of (i) 20% of the Orderly Liquidation Value of the Collateral Rigs and (ii)
$25,000,000, minus (without duplication)



     (d) 100% of the Discretionary Reserve Amount.



     “Borrowing Base Determination Date” means ten (10) Business Days after the last day of
each calendar month.



     “Borrowing Base Report” means a borrowing base report in substantially the form of the
attached Exhibit D signed by a Responsible Officer of the Borrower.



     “Borrowing Date” means the date on which any Revolving Advance is made or any Letter
of Credit is issued hereunder.



4









 





     “Business Day” means any day other than a Saturday, Sunday or other day on which
commercial banks are authorized to close under the laws of, or are in fact closed in, New York and,
if such day relates to any Eurodollar Advance, means any such day on which dealings in Dollar
deposits are conducted by and between banks in the London interbank eurodollar market.



     “Capital Expenditures” means, for any Person for any period, the aggregate of all
expenditures in respect of the purchase or other acquisition of , the addition of value to, any
fixed or capital asset (excluding normal replacements and maintenance which are properly charged to
current operations) which should be capitalized by such Person in accordance with GAAP other than
(a) expenditures in respect of Acquisitions and Rig Acquisitions financed with Net Cash Proceeds
received upon either (i) the issuance and sale by the Borrower of its Equity Interests for the sole
purpose of making such Acquisition or Rig Acquisition or (ii) an Asset Disposition to the extent
permitted by Section 2.07(c)(iii), (b) expenditures for which the Borrower or its
Subsidiaries will be reimbursed directly or indirectly (including, without limitation, by
compensation from a customer or supplier, whether in the form of a lump sum payment, any increase
in the day rate for a Rig or otherwise) and (c) Net Cash Proceeds from any Recovery Event or Asset
Disposition to the extent applied as set forth in Section 2.07.



     “Capital Lease” of a Person means any lease of any Property by such Person as lessee
that would, in accordance with GAAP, be required to be classified and accounted for as a capital
lease on the balance sheet of such Person.



     “Cash Equivalents” means:



     (a) direct obligations of, or obligations the principal of and interest on which are
unconditionally guaranteed by, the United States of America (or by any agency thereof to the extent
such obligations are backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof;



     (b) investments in commercial paper maturing within 365 days from the date of acquisition
thereof and having, at such date of acquisition, ratings of at least A-1 or the equivalent thereof
by S&P or at least P-1 or the equivalent thereof by Moody’s;



     (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within one year from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, the Administrative Agent or any domestic office
of any commercial bank organized under the laws of the United States of America or any state
thereof or the District of Columbia that has a combined capital and surplus and undivided profits
of not less than $500,000,000;



     (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria of clause (c) above;



     (e) investments in “money market funds” within the meaning of Rule 2a-7 of the Investment
Company Act of 1940, as amended, substantially all of whose assets are invested in investments of
the type described in clauses (a) through (d) above; and



5









 





     (f) demand deposit accounts maintained in the ordinary course of business.



     “Change in Law” means the occurrence, after the date of this Agreement, of any of the
following: (a) the adoption or taking effect of any law, rule, regulation or treaty, (b) any change
in any law, rule, regulation or treaty or in the administration, interpretation or application
thereof by any Governmental Authority or (c) the making or issuance of any request, guideline or
directive (whether or not having the force of law) by any Governmental Authority.



     “Change of Control” means the occurrence of any of the following events:



     (a) any acquisition pursuant to which any Person or group (as defined in Section 13(d)(3) or
14(d)(2) of the Exchange Act) has become the direct or indirect beneficial owner (as defined in
Rule 13d-3 under the Exchange Act) of more than 35% of the Voting Stock of the Borrower;



     (b) the Borrower is merged with or into or consolidated with another Person and, immediately
after giving effect to the merger or consolidation, less than a majority of the outstanding voting
securities entitled to vote generally in the election of directors or persons who serve similar
functions of the surviving or resulting Person are then beneficially owned (within the meaning of
Rule 13d-3 of the Exchange Act) in the aggregate by (i) the stockholders of the Borrower
immediately prior to such merger or consolidation, or (ii) if the record date has been set to
determine the stockholders of the Borrower entitled to vote on such merger or consolidation, the
stockholders of the Borrower as of such record date;



     (c) the Borrower, either individually or in conjunction with one or more of its Subsidiaries,
sells, conveys, transfers or leases, or its Subsidiaries sell, convey, transfer or lease, all or
substantially all of the assets of the Borrower and its Subsidiaries, taken as a whole (either in
one transaction or a series of related transactions), including Equity Interests of its
Subsidiaries, to any Person except as otherwise permitted by Section 6.04;



     (d) the liquidation or dissolution of the Borrower; or



     (e) a majority of the individuals who constitute the board of directors of the Borrower are
not Continuing Directors.



     “Charter Obligations” means all obligations (other than obligations backed by a
cash-secured letter of credit) of any Person with respect to liquidated damages, fees or other
liabilities arising under the terms of and incurred in connection with the termination or breach of
charters or similar contractual arrangements entered into with respect to the charter or lease of
Collateral Rigs, net of any amounts owed by any counterparty to such charter or contractual
arrangement, in each case calculated on a probable loss basis in accordance with GAAP.



     “Closing Date” means the date on which the conditions precedent set forth in
Section 3.02 shall have been satisfied or waived pursuant to Section 10.01, which
date shall not be later than September 30, 2009.



6









 





     “Code” means the United States Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time, and any successor statute and all rules and regulations
promulgated thereunder.



     “Collateral” means all the “Collateral” as defined in any Security Document and shall
include the Collateral Rigs.



     “Collateral Rigs” means (a) each of the Initial Collateral Rigs and (b) any other
Acceptable Additional Rig or Acceptable Replacement Rig now or hereafter acquired by the Borrower
or any of its Subsidiaries.



     “Compliance Certificate” means a Compliance Certificate signed by a Financial Officer
of the Borrower in substantially the form of the attached Exhibit E.



     “Consolidated Current Assets” shall mean, at any time, the consolidated current assets
of the Borrower and its Subsidiaries at such time determined in accordance with GAAP.



     “Consolidated Current Liabilities” shall mean, at any time, the consolidated current
liabilities of the Borrower and its Subsidiaries at such time determined in accordance with GAAP
minus (a) the current portion of any Debt under this Agreement to the extent otherwise
included therein and (b) costs, expenses and related liabilities arising from, related to or in
connection with the Pride Wyoming mat-supported jackup rig in 2008 to the extent not covered by
Pride’s insurance policies (including any deductibles, premium payments for removal of wreckage
claims or retention amounts) and its related liabilities in a net amount not to exceed $3,500,000.



     “Consolidated EBITDA” means, for any period, without duplication, the sum of the
following for the Borrower and its Subsidiaries on a consolidated basis, each calculated for such
period:



     (a) Consolidated Net Income for such period of determination plus



     (b) to the extent deducted in determining Consolidated Net Income, Consolidated Interest
Expense, charges against income for foreign, federal, state, and local taxes (and similar taxes to
the extent based on income, revenue or profits), depreciation and amortization expense and
extraordinary, unusual or non-recurring expenses, charges or losses (including the cumulative
effect of changes in GAAP and impairment charges related to long-lived assets) plus



     (c) certain allocated non-recurring general and administrative expenses as set forth on
Schedule 1.01(d) and certain impairment charges as set forth on Schedule 1.01(d),
minus



     (d) extraordinary or non-recurring gains for such period minus



     (e) any gain realized upon the sale or other disposition of any assets of the Borrower or any
of its Subsidiaries for such period (other than in the ordinary course of business) minus



     (f) the income of any Person (other than Wholly-Owned Subsidiaries of the Borrower) in which
the Borrower or a Wholly-Owned Subsidiary of the Borrower has an ownership interest except to the
extent such income is received by the Borrower or such Wholly-



7









 







Owned Subsidiary in a cash distribution during such period, all as determined on a
consolidated basis in accordance with GAAP, plus the loss or minus



     (g) the income of any Person accrued prior to the date it becomes a Subsidiary of the Borrower
or is merged into or consolidated with the Borrower or any of its Subsidiaries, minus



     (h) non-cash gains (other than gains resulting from derivatives to the extent the amount of
commodities hedged with such derivatives exceeds the Borrower’s and its Subsidiaries’ commodities
sold), losses or adjustments under Statements of Financial Accounting Standards No. 133, Accounting
for Derivative Instruments and Hedging Activities, as a result of changes in the fair market value
of derivatives;



provided however that, with respect to each quarterly period ending on or after September 30, 2009,
Consolidated EBITDA will be determined as follows: (i) for the fiscal quarter ending September 30,
2009, Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the two
fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such
period plus (B) the product of the Consolidated EBITDA for the fiscal quarter ending
September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009,
Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for the two fiscal
quarters ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period
plus (B) the Consolidated EBITDA for the two fiscal quarters ending December 31, 2009,
(iii) for the fiscal quarter ending March 31, 2010, Consolidated EBITDA shall be computed by adding
(A) the Consolidated EBITDA for the fiscal quarter ending June 30, 2009 as set forth in the Pro
Forma Financial Statements for such period plus (B) the Consolidated EBITDA for the three
fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter,
Consolidated EBITDA shall be computed by adding the Consolidated EBITDA for the four fiscal
quarters ending on such date.



     “Consolidated Interest Expense” means, for any period, (a) the interest expense of the
Borrower and its Subsidiaries calculated on a consolidated basis in accordance with GAAP for such
period, minus (b) the interest income of the Borrower and its Subsidiaries calculated on a
consolidated basis in accordance with GAAP for such period and the amortization of any deferred
financing costs incurred in connection with this Agreement to the extent otherwise included in the
calculations thereof; provided however that for the purposes of determining Consolidated Interest
Expense, with respect to each quarterly period ending on or after September 30, 2009, Consolidated
Interest Expense will be determined as follows: (i) for the fiscal quarter ending September 30,
2009, Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest
Expense for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma Financial
Statements for such period plus (B) the product of the Consolidated Interest Expense for
the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal quarter ending
December 31, 2009, Consolidated Interest Expense shall be computed by adding (A) the Consolidated
Interest Expense for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma
Financial Statements for such period plus (B) the Consolidated Interest Expense for the two
fiscal quarters ending December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010,
Consolidated Interest Expense shall be computed by adding (A) the Consolidated Interest Expense for
the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such
period plus (B) the Consolidated Interest



8









 







Expense for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter
ending thereafter, Consolidated Interest Expense shall be computed by adding the Consolidated
Interest Expense for the four fiscal quarters ending on such date.



     “Consolidated Net Income” means, for any period, the net income of the Borrower and
its Subsidiaries calculated on a consolidated basis for such period after taxes, as determined in
accordance with GAAP.



     “Consolidated Net Worth” shall mean, at any time of determination, with respect to the
Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP, the sum
of total assets less total liabilities on their balance sheet as of such date, but excluding any
treasury stock, after appropriate deduction for any minority interests in Subsidiaries.



     “Consolidated Tangible Net Worth” shall mean, at any time of determination, with
respect to the Borrower, the Consolidated Net Worth of such Person and its Subsidiaries on such
date less the amount of all intangible items under GAAP included therein, including, without
limitation, goodwill, franchises, licenses, patents, trademarks, trade names, copyrights, service
marks, brand names and write-ups of assets.



     “Contested Mexican Tax Assessments” means tax assessments, including any ordinary
course penalties and interest thereon, from the Servicio de Administración Tributaria, an agency of
the Secretaría de Hacienda y Crédito Público of the Republic of Mexico, and any successor entity,
related to the operations of certain Subsidiaries of the Borrower that are being contested by the
Borrower or such Subsidiaries; and the Dollar equivalent of the approximate amount of the Contested
Mexican Tax Assessments as of the Effective Date is no more than $130,000,000.



     “Continue”, “Continuation”, and “Continued” each refers to a
continuation of Revolving Advances for an additional Interest Period upon the expiration of the
Interest Period then in effect for such Revolving Advances.



     “Continuing Directors” means, as of any date of determination, any member of the board
of directors (or Persons, committees or other group performing similar functions) of the Borrower
who (a) was a member of such board of directors (or Persons, committees or other group performing
similar functions) on the Effective Date or the Closing Date or (b) was nominated for election or
elected to such board of directors (or Persons, committees or other group performing similar
functions) with the approval of a majority of the Continuing Directors who were members of such
board of directors (or Persons, committees or other group performing similar functions) at the time
of such nomination or election.



     “Convert”, “Conversion”, and “Converted” each refers to a conversion
of Revolving Advances of one Type into Revolving Advances of another Type pursuant to
Section 2.02(b).



     “Daily One Month LIBOR Rate” means, for any day, the rate per annum equal to the
Eurodollar Rate for a one-month Interest Period in the approximate amount of the Eurodollar Advance
being made, continued or converted by the Administrative Agent. The “Daily One Month LIBOR Rate”
is a rate reasonably determined by the Administrative Agent based upon such offers or other market
indicators of the inter-bank market as the Administrative Agent in its



9









 







discretion deems reasonably appropriate including, but not limited to, the BBA LIBOR (as
defined under “Eurodollar Rate” below).



     “Debt,” means, for any Person at a particular time, without duplication, all of the
following, whether or not included as indebtedness or liabilities in accordance with GAAP:



     (a) all obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments;



     (b) obligations of such Person to pay the deferred purchase price of property or services
(other than trade accounts payable in the ordinary course of business);



     (c) monetary obligations of such Person as lessee under Capital Leases of such Person;



     (d) all reimbursement obligations of such Person owing under letters of credit, bankers’
acceptances, bank guarantees, surety bonds or similar instruments which are issued upon the
application of such Person or upon which such Person is an account party or for which such Person
is in any way liable for reimbursement;



     (e) net obligations of such Person under any Swap Contract;



     (f) obligations owing under Off-Balance Sheet Liabilities of such Person;



     (g) obligations of others of the type referred to in clauses (a) through (f), (h) and (i) of
this definition secured by a Lien on Property now or hereafter owned or acquired by such Person
(including obligations arising under conditional sales or other title retention agreements),
whether or not such obligations shall have been assumed by such Person or is limited in recourse
(provided, that if such Person has not assumed or otherwise become liable in respect of such Debt,
such Debt shall be deemed to be in an amount equal to the lesser of the amount of such Debt and the
fair market value of the Property encumbered by such Lien);



     (h) all Charter Obligations owing of such Person;



     (i) all obligations of such Person to purchase, redeem, retire, defease or otherwise make any
payment for the acquisition of any Equity Interest in such Person or any other Person, valued, in
the case of a redeemable preferred interest, at the greater of its voluntary or involuntary
liquidation preference plus accrued and unpaid dividends;



     (j) obligations of the nature described in the immediately preceding clauses (a) through (i)
which are owing to Pride by the Borrower or any Subsidiary; and



     (k) all Guarantees of such Person in respect of any of the foregoing.



     For all purposes hereof, the Debt of any Person shall include the Debt of any partnership or
joint venture (other than a joint venture that is itself a corporation or limited liability
company) in which such Person is a general partner or a joint venturer, except to the extent such
Debt is expressly made non-recourse to such Person. The amount of any net obligation under



10









 







any Swap Contract on any date shall be deemed to be the Swap Termination Value thereof as of
such date. The amount of any Capital Lease or Off-Balance Sheet Liability as of any date shall be
deemed to be the amount of Attributable Indebtedness in respect thereof as of such date.



     “Default” means any event or condition which with the giving of any notice or lapse of
time, or both, would, unless cured or waived, become an Event of Default.



     “Defaulting Lender” means any Lender that has, as reasonably determined by the
Administrative Agent, (a) failed to fund any portion of its Revolving Advances or participations in
the Letter of Credit Obligations on the date required to be funded by it hereunder, (b) notified
the Borrower, the Administrative Agent, the Issuing Bank or any Lender in writing that it does not
intend to comply with any of its funding obligations under this Agreement or has made a public
statement to the effect that it does not intend to comply with its funding obligations under this
Agreement or under any other agreement in which it commits to extend credit, (c) otherwise failed
to pay over to the Administrative Agent, the Issuing Bank or any other Lender any other amount
required to be paid by it hereunder on the date when due, unless the subject of a good faith
dispute, or (d) (i) become or is, or its holding company has become or is, insolvent or (ii)
become, or its holding company has become, the subject of a bankruptcy or insolvency proceeding, or
has had a receiver, conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or
appointment.



     “Deposit Accounts” has the meaning set forth in Section 5.14(a).



     “Discretionary Reserve Amount” means, subject to 10 days’ prior written notice from
the Administrative Agent, the total amount of reserves in such amounts, and with respect to such
matters, as the Administrative Agent in good faith and in its reasonable credit judgment shall deem
necessary or appropriate from time to time, against the Borrowing Base, with respect to (a) sums
that the Loan Parties are required to pay (such as taxes, assessments, insurance premiums, or, in
the case of leased assets, rents or other amounts payable under such leases) and have failed to pay
under any Loan Document, (b) amounts owing by any Loan Party to any Person to the extent secured by
a Lien on any of the Collateral which is specifically identified thereon as entitled to have
priority over the Liens pursuant to the Security Documents, or which Lien, in its commercially
reasonable discretion, the Administrative Agent establishes has a priority superior to the Liens
pursuant to the Security Documents (such as Liens in favor of landlords, warehousemen, stevedores,
carriers, mechanics, materialmen, laborers, or suppliers, or Liens for ad valorem, excise, sales,
or other taxes where given priority under applicable law) in and to such item of the Collateral,
and (c) currency fluctuations, provided, however, that the amount of each such reserve shall bear a
reasonable relationship to the purpose for which such reserve is being established. Such notice
shall be accompanied by a reasonably detailed explanation of the basis or bases by which such
Discretionary Reserve Amount was determined.



     “Disposition” or “Dispose” means the sale, transfer, license, lease (as a
lessor) or other voluntary disposition (including any sale and leaseback transaction) of any
property by any Person, including any sale, assignment, transfer or other disposal, with or without
recourse, of any notes or accounts receivable or any rights and claims associated therewith.



11









 





     “Dollars” and “$” means the lawful money of the United States of America.



     “Domestic Subsidiary” means a Subsidiary that is organized or incorporated under the
laws of the United States of America or any state thereof or the District of Columbia.



     “Earnings Collateral” means (a) all freights, hire and other moneys earned and to be
earned, due or to become due, or paid or payable to, or for the account of, any Loan Party, of
whatsoever nature, arising out of or as a result of the use, operation, pooling or chartering by
such Loan Party or its agents of any Rig, including, without limitation, all rights arising out of
the owner’s lien on cargoes and subfreights thereunder, (b) all moneys and claims for moneys due
and to become due to any Loan Party, and all claims for damages, arising out of the breach of any
and all present and future drilling contracts, charter parties, pooling arrangements, bills of
lading, contracts and other engagements of affreightment or for the carriage or transportation of
cargo, and operations of every kind whatsoever of any Rig and in and to any and all claims and
causes of action for money, loss or damages that may accrue or belong to any Loan Party, its
successors or assigns, arising out of or in any way connected with the present or future use,
operation, pooling or chartering of any Rig or arising out of or in any way connected with any and
all present and future requisitions, drilling contracts, charter parties, pooling arrangements,
bills of lading, contracts and other engagements of affreightment or for the carriage or
transportation of cargo, and other operations of any Rig, (c) all moneys and claims due and to
become due to any Loan Party, and all claims for damages and all insurances and other proceeds, in
respect of the actual or constructive total loss of or requisition of use of or title to any Rig,
and (d) any proceeds of any of the foregoing.



     “Effective Date” means August 4, 2009.



     “Eligible Assignee” means (a) a Lender, (b) an Affiliate of a Lender, (c) an Approved
Fund, and (d) any other commercial bank or financial institution approved by the Administrative
Agent, and, so long as no Event of Default has occurred and is continuing, the Borrower, in either
case, such approval not to be unreasonably withheld, delayed or conditioned; provided that
notwithstanding the foregoing, “Eligible Assignee” shall not include the Borrower or any of the
Borrower’s Affiliates or Subsidiaries or any natural person.



     “Eligible Receivables” means, as at any date of determination, any Account of the
Borrower or any other Loan Party; provided, however, that unless otherwise approved
by the Administrative Agent, the following Accounts are not Eligible Receivables:



     (a) Accounts that do not arise out of sales, leases, licenses, assignments or other
dispositions of goods or rendering of services or for the use or hire of a vessel under a charter
or other contract by any Loan Party and that are not true and correct statements of bona fide
obligations incurred in the amount of such Account for goods sold, leased, licensed, assigned or
otherwise disposed to, or services rendered by, or for the use or hire of a vessel under a charter
or other contract to, the applicable Account Debtor;



     (b) Accounts with respect to which the Administrative Agent does not have an Acceptable
Security Interest, including, without limitation, Accounts evidenced by an Instrument or Chattel
Paper not in the possession of Administrative Agent;



12









 





     (c) (i) except with respect to Accounts owing from PEMEX and its Affiliates, Accounts not
denominated in Dollars (but not necessarily payable in Dollars); and (ii) with respect to Accounts
owing from PEMEX and its Affiliates, Accounts not denominated in Dollars;



     (d) Accounts that are owing from any Person that is a Loan Party or, if not entered into in
compliance with Section 6.08, another Affiliate of the Borrower;



     (e) Accounts for which an invoice has not been sent to the applicable Account Debtor (i) in
accordance with the normal and customary billing practices of such Loan Party or (ii) by the
15th day of the subsequent calendar month in which such Account arose, whichever shall
be the shorter period;



     (f) (i) except with respect to Accounts owing from PEMEX and its Affiliates, to the extent
that such Account, together with all other Accounts owing by such Account Debtor and its Affiliates
as of any date of determination exceed twenty percent (20%) of all Eligible Receivables; and (ii)
with respect to Accounts owing from PEMEX and its Affiliates, to the extent that such Account,
together with all other Accounts owing by PEMEX and its Affiliates (but not including Accounts
arising from the Pride Tennessee or the Pride Wisconsin), as of any date of determination exceed
sixty percent (60%) of all Eligible Receivables unless all of the Accounts are owing from PEMEX and
its Affiliates, in which case only sixty percent (60%) of such Accounts shall be included for
purposes of determining the Borrowing Base;



     (g) Accounts arising from the Pride Tennessee or the Pride Wisconsin;



     (h) Accounts owing from any Person from which an aggregate amount of more than twenty-five
percent (25%) of the Accounts owing therefrom are not Eligible Receivables by virtue of non-payment
when due (which is (i) with respect to Tier 2 Eligible Receivables, more than ninety (90) days
after the original invoice date and (ii) with respect to Tier 1 Eligible Receivables, more than one
hundred twenty (120) days after the original invoice date) other than as a result of a bona fide
dispute with respect thereto which is not reasonably expected to prejudice payments on other
Accounts from such Person;



     (i) Accounts owing from any Account Debtor that (i) has disputed liability for any Account
owing from such Account Debtor or (ii) has otherwise asserted any claim, demand or liability
against the Borrower or any of its Subsidiaries, whether by action, defense, set-off, suit,
counterclaim or otherwise; provided that for purposes of this subclause (h), such Account shall be
excluded only to the extent of the amounts being disputed, or claims, demands or liabilities
asserted, by such Person at any date of determination;



     (j) Accounts with respect to which the account debtor is any United States Governmental
Authority, unless Borrower has, with respect to such Accounts, complied with the Federal Assignment
of Claims Act of 1940 as amended (31 U.S.C. Section 3727 et seq.) or any applicable statute or
municipal ordinance of similar purpose and effect;



     (k) Accounts with respect to which the Account Debtor is the subject of any bankruptcy or
other insolvency proceeding;



13









 





     (l) Accounts with respect to which the Account Debtor’s obligation to pay is not absolute or
is contingent upon the fulfillment of any condition whatsoever or if the Account represents a
progress billing consisting of an invoice for goods sold or used or services rendered pursuant to a
contract under which the Account Debtor’s obligation to pay that invoice is subject to Borrower’s
completion of further performance under such contract or is subject to the equitable lien of a
surety bond issuer;



     (m) Accounts with respect to which the Account Debtor is located in New Jersey, or any other
state denying creditors access to its courts in the absence of a Notice of Business Activities
Report or other similar filing or other statutory or legal exemption or exception, unless the
applicable Loan Party has either qualified as a foreign corporation authorized to transact business
in such state or has filed a Notice of Business Activities Report or similar filing with the
applicable state agency for the then current year or has available to it any such other statutory
or legal exemption or exception;



     (n) Accounts with respect to which the Account Debtor is a creditor of any Loan Party unless
such Person has waived any right of setoff in a manner acceptable to the Administrative Agent;
provided, however, that any such Account shall only be ineligible as to that portion of such
Account which is less than or equal to the amount owed by such Loan Party to such Person; or



     (o) Subject to 15 days’ prior written notice from the Administrative Agent, Accounts that are
otherwise eligible that are deemed to be ineligible for borrowing purposes for other reasons by the
Administrative Agent in good faith and in its reasonable credit judgment, which notice shall be
accompanied by a reasonably detailed explanation of the basis or bases by which each such Account
was deemed ineligible for borrowing purposes.



     “Environmental Claim” means any allegation, notice of violation, action, lawsuit,
claim, demand, judgment, order or proceeding by any Governmental Authority or any Person for
liability or damage, including, without limitation, personal injury, property damage, contribution,
indemnity, direct or consequential damages, damage to the environment, nuisance, pollution, or
contamination, or for fines, penalties, fees, costs, expenses or restrictions arising under or
otherwise related to an obligation under Environmental Law.



     “Environmental Law” means all former, current and future Federal, state, local and
foreign laws (including common law), treaties, regulations, rules, ordinances, codes, decrees,
judgments, directives, orders (including consent orders), and agreements in each case, relating to
protection of the environment, natural resources, human health and safety or the presence, Release
of, or exposure to, Hazardous Materials, or the generation, manufacture, processing, distribution,
use, treatment, storage, transport, recycling or handling of, or the arrangement for such
activities with respect to, Hazardous Materials.



     “Environmental Liability” shall mean all liabilities, obligations, damages, losses,
claims, actions, suits, judgments, orders, fines, penalties, fees, expenses and costs (including
administrative oversight costs, natural resource damages and remediation costs), whether contingent
or otherwise, arising out of or relating to (a) compliance or non-compliance with any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or



14









 







disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials, (d) the Release
of any Hazardous Materials or (e) any contract, agreement or other consensual arrangement pursuant
to which liability is assumed or imposed with respect to any of the foregoing.



     “Environmental Permit” means any permit, license, order, approval or other
authorization under any Environmental Law.



     “Equity Interests” means, with respect to any Person, all of the shares of capital
stock of (or other ownership or profit interests in) such Person, all of the warrants, options or
other rights for the purchase or acquisition from such Person of shares of capital stock of (or
other ownership or profit interests in) such Person, and all of the other ownership or profit
interests in such Person (including partnership, member or trust interests therein), whether voting
or nonvoting, and whether or not such shares, warrants, options, rights or other interests are
outstanding on any date of determination, and for the avoidance of doubt, excluding all of the
securities convertible into or exchangeable for shares of capital stock of (or other ownership or
profit interests in) such Person or warrants, rights or options for the purchase or acquisition
from such Person of such shares (or such other interests).



     “ERISA” means the Employee Retirement Income Security Act of 1974, as amended from
time-to-time, and any successor statute and all rules and regulations promulgated thereunder.



     “ERISA Affiliate” means any trade or business (whether or not incorporated) under
common control with the Borrower within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions relating to Section 412 of the
Code).



     “ERISA Event” means (a) a Reportable Event with respect to a Pension Plan; (b) a
withdrawal by the Borrower or any ERISA Affiliate from a Pension Plan subject to Section 4063 of
ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2)
of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e)
of ERISA; (c) a complete or partial withdrawal by the Borrower or any ERISA Affiliate from a
Multiemployer Plan or notification that a Multiemployer Plan is in reorganization; (d) the filing
of a notice of intent to terminate, the treatment of a Plan amendment as a termination under
Sections 4041 or 4041A of ERISA, or the commencement of proceedings by the PBGC to terminate a
Pension Plan or Multiemployer Plan; (e) an event or condition which constitutes grounds under
Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multiemployer Plan; or (f) the imposition of any liability under Title IV of ERISA,
other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Borrower
or any ERISA Affiliate.



     “Eurocurrency Liabilities” has the meaning assigned to that term in Regulation D.



     “Eurodollar Advance” means a Revolving Advance that bears interest based on the
Eurodollar Rate.



     “Eurodollar Rate” means, with respect to a Eurodollar Advance for the relevant
Interest Period, the rate per annum equal to the British Bankers Association LIBOR Rate (“BBA




15









 




LIBOR”), as published by Reuters (or other commercially available source providing
quotations of BBA LIBOR as reasonably designated by the Administrative Agent from time to time) at
approximately 11:00 a.m., London time, two Business Days prior to the commencement of such Interest
Period, for Dollar deposits (for delivery on the first day of such Interest Period) with a term
equivalent to such Interest Period. If such rate is not available at such time for any reason,
then either (a) the “Eurodollar Rate” for such Interest Period shall be the rate per annum
reasonably determined by the Administrative Agent to be the rate at which deposits in Dollars for
delivery on the first day of such Interest Period in same day funds in the approximate amount of
the Eurodollar Advance being made, continued or converted by the Administrative Agent and with a
term equivalent to such Interest Period would be offered by the Administrative Agent’s London
Branch to major banks in the London or other off-shore interbank eurodollar market at their request
at approximately 11:00 a.m. (London time) two Business Days prior to the commencement of such
Interest Period or (b) for purposes of determining the Daily One Month LIBOR Rate only, the Daily
One Month LIBOR Rate shall be equal to the rate per annum for Dollar deposits quoted by the
Administrative Agent for the purpose of calculating effective rates of interest for loans making
reference to the “Daily One Month LIBOR Rate,” as the inter-bank market offered rate in effect from
time to time for delivery of funds one (1) month in amounts approximately equal to the principal
amount of such loans.




     “Eurodollar Rate Reserve Percentage” of any Lender for the Interest Period for any
Eurodollar Advance means the reserve percentage applicable during such Interest Period (or if more
than one such percentage shall be so applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so applicable) under
regulations issued from time-to-time by the Federal Reserve Board for determining the maximum
reserve requirement (including, without limitation, any emergency, supplemental or other marginal
reserve requirement) for such Lender with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities having a term equal to such Interest Period. The Eurodollar
Rate Reserve Percentage shall be adjusted automatically on and as of the effective date of any
change by the Federal Reserve Board in any reserve percentage.



     “Events of Default” has the meaning set forth in Section 7.01.



     “Excepted Liens” means:



     (a) Liens pursuant to any Loan Document;



     (b) Liens for taxes, assessments or governmental charges or levies on its Property if the same
shall not at the time be delinquent or thereafter can be paid without penalty, or are being
contested in good faith and, if necessary, by appropriate proceedings diligently conducted and for
which reserves in accordance with, and to the extent required by, GAAP shall have been maintained
on the books of the applicable Person, other than the Contested Mexican Tax Assessments;



     (c) Liens imposed by law, or arising by operation of law, or arising in the ordinary course of
business, including, without limitation, (i) construction, carriers’, warehousemen’s, landlord’s,
mechanics’, materialmen’s, and other similar liens, and (ii) Liens arising out of crew’s wages,
repairs, supplies, towage, use of drydock or marine railway or necessaries, and other



16









 







similar maritime liens (other than those described elsewhere in this definition of “Excepted
Liens”), in any event, to the extent such Liens (whether or not imposed by, or arising by operation
of, law) are not covered under Section 6.01(f) and to the extent such Liens arise in the ordinary
course of business and secure payment of obligations not more than 30 days past due or which are
being contested in good faith and, if necessary, by appropriate proceedings diligently conducted
and for which reserves in accordance with, and to the extent required by, GAAP shall have been
maintained on the books of the applicable Person;



     (d) Liens for damages arising from maritime torts which are covered by insurance and any
deductible applicable thereto, or in respect of which a bond or other security has been posted on
behalf of the relevant Loan Party with the appropriate court or other tribunal to prevent the
arrest or secure the release of the Rig from arrest, unless any such Lien is being contested in
good faith and by appropriate proceedings or other acts by the relevant Loan Party, and such Loan
Party shall have set aside on its books adequate reserves with respect to such Lien and so long as
such deferment in payment shall not subject the applicable Rig to sale, forfeiture or loss;



     (e) Liens imposed or incurred and pledges or deposits made in the ordinary course of business
in connection with workers’ compensation, unemployment insurance, social security or other
retirement benefits, or similar legislation or statutory requirements, other than any Lien imposed
by ERISA;



     (f) Minor defects, irregularities and deficiencies of title to, and easements, rights-of-way,
restrictions and other similar encumbrances affecting, real property which, in the aggregate, are
not substantial in amount, and which do not materially detract from the value of the property
subject thereto or materially interfere with the ordinary conduct of the business of the applicable
Person;



     (g) Liens arising out of, or securing, judgments against the Borrower or any of the
Subsidiaries in respect of which any of such Persons shall in good faith be prosecuting an appeal
or proceedings for review in respect of which there shall be secured a subsisting stay of execution
pending such appeal or proceedings; provided, however, that the aggregate amount of
all such judgments could not constitute an Event of Default;



     (h) Liens arising out of conditional sale, title retention, consignment or similar
arrangements for the sale of goods entered into by any Loan Party in the ordinary course of
business;



     (i) licenses of intellectual property granted by any Loan Party in the ordinary course of
business and not interfering in any material respect with the ordinary conduct of business of the
Loan Parties;



     (j) the filing of UCC financing statements solely as a precautionary measure in connection
with operating leases or consignment of goods; and



     (k) rights of set-off of banks and other Persons in the ordinary course of banking and trading
arrangements.



     “Exchange Act” means the Securities Exchange Act of 1934, as amended.



17









 





     “Excluded Equity Issuance” means the issuance of Equity Interests by the Borrower to
management or employees of a Loan Party under any employee stock option or stock purchase plan or
other employee benefits plan in existence from time to time.



     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank, or any other recipient of any payment to be made by or on account of any obligation
of the Borrower hereunder, (a) taxes imposed on or measured by its overall net income (however
denominated), and franchise taxes imposed on it, by the United States of America, by any state
thereof or by the jurisdiction (or any political subdivision thereof) under the laws of which such
recipient is organized or in which its principal office is located or, in the case of any Lender,
in which its Applicable Lending Office is located, (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction in which the Borrower
is located and (c) in the case of a Lender, any withholding tax that is imposed on amounts payable
to such Lender at the time such Lender becomes a party hereto (or designates a new lending office)
or is attributable to such Lender’s failure (other than as a result of a Change in Law) to comply
with Section 2.11(e), except to the extent that such Lender (or its assignor, if any) was
entitled, at the time of designation of a new lending office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to Section 2.11(a).



     “Federal Funds Rate" means, for any day, the rate per annum equal to the
weighted average of the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day; provided that (a) if such
day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such
transactions on the next preceding Business Day as so published on the next succeeding Business
Day, and (b) if no such rate is so published on such next succeeding Business Day, the Federal
Funds Rate for such day shall be the average rate (rounded upward, if necessary, to a whole
multiple of 1/100 of 1%) charged to the Administrative Agent on such day on such transactions as
reasonably determined by the Administrative Agent.



     “Federal Reserve Board” means the Board of Governors of the Federal Reserve System or
any of its successors.



     “Fee Letter” means the letter agreement dated as of July 2, 2009 among the Borrower,
the Administrative Agent and the Arranger, as amended, restated or otherwise modified by that
certain fee letter dated as of the Effective Date.



     “Financial Officer” for any Person means the chief financial officer, treasurer or
senior financial officer of such Person.



     “Fixed Charge Coverage Ratio” means, as of the date of determination, the ratio of (a)
Consolidated EBITDA for the Borrower and its Subsidiaries on a consolidated basis for the period of
the four prior fiscal quarters ending on such date to (b) Fixed Charges for such period;
provided, however, that for the purposes of determining the “Consolidated Interest
Expense paid in cash” component of Fixed Charges for such period, with respect to each quarterly
period ending on or after September 30, 2009, Consolidated Interest Expense paid in cash will be



18









 







determined as follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated
Interest Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense
paid in cash for the two fiscal quarters ending June 30, 2009 as set forth in the Pro Forma
Financial Statements for such period plus (B) the product of the Consolidated Interest
Expense paid in cash for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the
fiscal quarter ending December 31, 2009, Consolidated Interest Expense paid in cash shall be
computed by adding (A) the Consolidated Interest Expense paid in cash for the two fiscal quarters
ending June 30, 2009 as set forth in the Pro Forma Financial Statements for such period
plus (B) the Consolidated Interest Expense paid in cash for the two fiscal quarters ending
December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated Interest
Expense paid in cash shall be computed by adding (A) the Consolidated Interest Expense paid in cash
for the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial Statements for
such period plus (B) the Consolidated Interest Expense paid in cash for the three fiscal
quarters ending March 31, 2010, and (iv) for each fiscal quarter ending thereafter, Consolidated
Interest Expense paid in cash shall be computed by adding the Consolidated Interest Expense paid in
cash for the four fiscal quarters ending on such date.



     “Fixed Charge Coverage Cap” means, as of any date of determination, an amount
calculated during each period that commences with the occurrence of the Fixed Charge Coverage Cap
Ratio being less than 1.50 to 1.00 as of the end of a fiscal quarter (in this definition, the
“reference date”) and ending on the first date thereafter that 100% of the Revolving
Commitments are available to the Borrower, which calculations are made in accordance with this
definition as follows: an amount equal to the greater of (a) (i) for the first fiscal quarter
occurring thereafter, 75% of the Revolving Commitments in effect on the reference date, (ii) for
the second fiscal quarter occurring after the reference date, 75% of the amount determined in
clause (a)(i) of this definition, and (iii) for each immediately subsequent fiscal quarter, 75% of
the amount determined pursuant to this definition for the previous fiscal quarter until such time
thereafter as the Fixed Charge Coverage Cap Ratio is greater than or equal to 1.50 to 1.00 as of
the end of a fiscal quarter and (b) $35,000,000; provided, however, that when the
Fixed Charge Coverage Cap Ratio is greater than or equal to 1.50 to 1.00 as of the end of a fiscal
quarter, for purposes of calculating the available Revolving Commitments pursuant to clause (a)
above, the amount of available Revolving Commitments shall be increased in subsequent fiscal
quarters (so long as the Fixed Charge Coverage Cap Ratio for each such fiscal quarter is equal to
or greater than 1.50 to 1.00) by the respective amounts by which such availability was reduced
pursuant to this definition in each of the prior fiscal quarters, in the inverse order of such
reductions, until the Fixed Charge Coverage Cap equals 100% of the Revolving Commitments then in
effect; provided further that, notwithstanding anything herein to the contrary, the Fixed
Charge Coverage Cap shall be in effect only during such period when the aggregate amount of the
Revolving Commitments is equal to or greater than $40,000,000.



     “Fixed Charge Coverage Cap Ratio” means, as of the date of determination, the ratio of
(a) Consolidated EBITDA for the Borrower and its Subsidiaries on a consolidated basis for the
fiscal quarter ending on such date to (b) Fixed Charges for such period.



     “Fixed Charges” means the sum (without duplication) of (a) foreign, federal, state,
and local taxes (other than such taxes that are treated as components of pre-tax income in the
income statement so long as such taxes reduce EBITDA) paid in cash, (b) Consolidated Interest
Expense



19









 







paid in cash, and (c) the aggregate amount of all Maintenance Capital Expenditures, in each
case, of or by the Borrower and its Subsidiaries on a consolidated basis for such period.



     “Flag Jurisdiction Transfer” shall mean the transfer of the registration and flag of a
Collateral Rig from one Acceptable Flag Jurisdiction to another Acceptable Flag Jurisdiction,
provided that the following conditions are satisfied with respect to such exchange:



     (a) On each Flag Jurisdiction Transfer Date, the Loan Party which is consummating a Flag
Jurisdiction Transfer on such date shall have duly authorized, executed and delivered, and caused
to be recorded in the appropriate vessel registry a Rig Mortgage (or such other form as shall be
reasonably satisfactory to the Administrative Agent) in the Acceptable Flag Jurisdiction, with
respect to the Collateral Rig being transferred (the “Transferred Vessel”) and the Rig
Mortgage shall be effective to create in favor of the Administrative Agent and/or the Lenders an
Acceptable Security Interest. All filings, deliveries of instruments and other actions necessary
or desirable in the reasonable opinion of the Administrative Agent to perfect and preserve such
security interests shall have been duly effected and the Administrative Agent shall have received
evidence thereof in form and substance reasonably satisfactory to the Administrative Agent.



     (b) On each Flag Jurisdiction Transfer Date, the Administrative Agent shall have received from
(i) counsel to the Borrower and each Loan Party reasonably satisfactory to the Administrative
Agent, an opinion addressed to the Administrative Agent and each of the Lenders and dated such Flag
Jurisdiction Transfer Date, which shall (A) be in form and substance reasonably acceptable to the
Administrative Agent and (B) cover the recordation of the security interests granted pursuant to
the Rig Mortgage(s) to be delivered on such date and such other matters incident thereto as the
Administrative Agent may reasonably request and (ii) local counsel to the Loan Parties consummating
the relevant Flag Jurisdiction Transfer reasonably satisfactory to the Administrative Agent
practicing in those jurisdictions in which the Transferred Vessel is registered and/or the Loan
Party owning such Transferred Vessel is organized, which opinions shall be addressed to the
Administrative Agent and each of the Lenders and dated such Flag Jurisdiction Transfer Date, which
shall (A) be in form and substance reasonably acceptable to the Administrative Agent and (B) cover
the perfection of the security interests granted pursuant to the Rig Mortgage(s) and such other
matters incident thereto as the Administrative Agent may reasonably request.



     (c) On each Flag Jurisdiction Transfer Date:




     (i) The Administrative Agent shall have received (A) certificates of ownership or
abstracts of title from appropriate authorities showing (or confirmation updating previously
reviewed certificates and indicating) the registered ownership of the Transferred Vessel
transferred on such date by the relevant Loan Party and (B) the results of maritime registry
searches with respect to the Transferred Vessel transferred on such date, indicating no
record liens other than Liens in favor of the Administrative Agent, for the ratable benefit
of the Secured Parties, and Excepted Liens.




     (ii) The Administrative Agent shall have received from an Insurance Advisor
certificates of insurance with respect to the insurance maintained by the Loan Party in



20









 







respect of the Transferred Vessel transferred on such date to the extent required by
Section 5.04.



          (d) On or prior to each Flag Jurisdiction Transfer Date, the Administrative Agent shall
have received a certificate, dated the Flag Jurisdiction Transfer Date, signed by a Responsible
Officer of the Loan Party commencing such Flag Jurisdiction Transfer, certifying that (i) all
necessary governmental (domestic and foreign) and third party approvals and/or consents in
connection with the Flag Jurisdiction Transfer being consummated on such date and otherwise
referred to herein shall have been obtained and remain in effect, (ii) there exists no judgment,
order, injunction or other restraint prohibiting or imposing materially adverse conditions upon
such Flag Jurisdiction Transfer or the other transactions contemplated by this Agreement and
(iii) copies of resolutions approving the Flag Jurisdiction Transfer of such Loan Party and any
other matters the Administrative Agent may reasonably request.




     “Flag Jurisdiction Transfer Date” shall mean the date on which a Flag Jurisdiction
Transfer occurs.



     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is resident for tax purposes. For purposes of this
definition, the United States of America, each State thereof and the District of Columbia shall be
deemed to constitute a single jurisdiction.



     “Foreign Subsidiary” means any Subsidiary that is not a Domestic Subsidiary.



     “Fund” means any Person (other than a natural person) that is (or will be) engaged in
making, purchasing, holding or otherwise investing in commercial loans and similar extensions of
credit in the ordinary course of its business.



     “GAAP” means United States generally accepted accounting principles applied on a
consistent basis.



     “Governmental Authority” means the government of the United States of America or any
other nation, or of any political subdivision thereof, whether state or local, and any agency,
authority, instrumentality, regulatory body, court, central bank, or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government (including any supra-national bodies such as the European Union or the
European Central Bank).



     “Governmental Proceedings” means any action or proceedings by or before any
Governmental Authority, including, without limitation, the promulgation, enactment or entry of any
Legal Requirement.



     “Guarantee” means, as to any Person, (a) any obligation, contingent or otherwise, of
such Person guaranteeing or having the economic effect of guaranteeing any Debt or other obligation
payable or performable by another Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of such Person, direct or indirect, (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such Debt or other
obligation or to purchase (or to advance or supply funds for the purchase of) any security for the



21









 







payment of such Debt or other obligation, (ii) to purchase or lease property, securities or
services for the purpose of assuring the owner of such Debt or other obligation of the payment or
performance of such Debt or other obligation, (iii) to maintain working capital, equity capital or
any other financial statement condition or liquidity or level of income or cash flow of the primary
obligor so as to enable the primary obligor to pay such Debt or other obligation, or (iv) entered
into for the purpose of assuring in any other manner the owner of such Debt or other obligation of
the payment or performance thereof or to protect such owner against loss in respect thereof (in
whole or in part), or (b) any Lien on any assets of such Person securing any Debt or other
obligation of any other Person, whether or not such Debt or other obligation is assumed by such
Person; provided, however, that the term “Guarantee” shall not include endorsements
for collection or deposit in the ordinary course of business. The amount of any Guarantee shall be
deemed to be an amount equal to the stated or determinable amount of the related primary
obligation, or portion thereof, in respect of which such Guarantee is made or, if not stated or
determinable, the maximum reasonably anticipated liability in respect thereof as determined by the
guaranteeing Person in good faith. The term “Guarantee” as a verb has a corresponding meaning.



     “Guarantor” means (a) each of the Material Domestic Subsidiaries in existence on the
date hereof listed on Schedule 1.01(a), and (b) any other Person that becomes a Material
Domestic Subsidiary after the date hereof, and “Guarantors” means all such Guarantors collectively.



     “Guarantor Claims” has the meaning set forth in Section 8.09(a).



     “Guarantor Payment” has the meaning set forth in Section 8.17(a).



     “Hazardous Material” means (a) any petroleum products or byproducts and all other
hydrocarbons, coal ash, radon gas, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, chlorofluorocarbons and all other ozone-depleting substances and (b) any chemical,
material, substance or waste that is prohibited, limited or regulated by or pursuant to any
Environmental Law.



     “Illegality Event” has the meaning set forth in Section 2.07(d).



     “Indemnified Liabilities” has the meaning set forth in Section 10.05.



     “Indemnified Taxes” means any Taxes other than Excluded Taxes.



     “Indemnitee” has the meaning set forth in Section 10.05.



     “Initial Collateral Rigs” means each of the offshore drilling rigs listed on
Schedule 1.01(b) hereto. Schedule 1.01(b) sets forth a true and complete listing
of the name, registered owner, official number, and jurisdiction of registration of each Collateral
Rig as of the Closing Date.



     “Insurance Advisor” means an independent maritime insurance broker selected by the
Borrower and reasonably acceptable to the Administrative Agent.



22









 





     “Insurance Collateral” means (a) all Insurance Policies in respect of the Collateral
Rigs, whether heretofore, now or hereafter effected, and all renewals of or replacements for the
same, (b) all claims, returns of premium and other moneys and claims for moneys due and to become
due under or in respect of the Insurance Policies in respect of the Collateral Rigs, (c) all other
rights of the Loan Parties under or in respect of the Insurance Policies in respect of the
Collateral Rigs and (d) any proceeds of any of the foregoing.



     “Insurance Policies” includes (a) all contracts of insurance (including, without
limitation, all certificates of entry in protection and indemnity and war risks associations or
clubs) in respect of the Rigs, whether heretofore, now or hereafter effected, and all renewals of
or replacements for the same, (b) all claims, returns of premium and other moneys and claims for
moneys due and to become due under or in respect of said contracts of insurance, and (c) all other
rights of each owner of a Rig under or in respect of said contracts of insurance.



     “Interest Period” means, for each Eurodollar Advance comprising part of a Borrowing,
the period commencing on the date of such Eurodollar Advance or the date of the Conversion of any
existing Base Rate Advance into such Eurodollar Advance and ending on the last day of the period
selected by the Borrower pursuant to the provisions below and Section 2.02 and, thereafter,
each subsequent period commencing on the last day of the immediately preceding Interest Period and
ending on the last day of the period selected by the Borrower pursuant to the provisions below and
Section 2.02. The duration of each such Interest Period shall be one, two, three, or six
months, in each case as the Borrower may select; provided, however, that:



     (a) Interest Periods commencing on the same date for Revolving Advances by each Lender
comprising part of the same Borrowing shall be of the same duration;



     (b) whenever the last day of any Interest Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period shall be extended to occur on the next
succeeding Business Day, provided that if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last day of such Interest Period shall
occur on the next preceding Business Day;



     (c) any Interest Period which begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the calendar month in which it would have
ended if there were a numerically corresponding day in such calendar month; and



     (d) no Borrower may select any Interest Period for any Eurodollar Advance which ends after the
Maturity Date.



     “Investment” of any Person means any investment of such Person (a) so classified under
GAAP, and (b) whether or not so classified, any loan, advance (other than prepayments or deposits
made in the ordinary course of business) or extension of credit made by such Person to another
Person which constitutes Debt of such other Person or contribution of capital by such Person in
another Person; and any stocks, bonds, mutual funds, partnership interests, notes (including
structured notes), debentures or other securities owned by such Person (but excluding



23









 







capital expenditures of such Person determined in accordance with GAAP) and issued by another
Person.



     “Investment Grade Rating” of a Person means that such Person has a minimum debt rating
on its long-term senior unsecured non-credit enhanced debt securities of at least BBB- as
determined by S&P and at least Baa3 as determined by Moody’s (or if such Person has only one debt
rating on its long-term senior unsecured non-credit enhanced debt securities, such rating is at
least BBB- as determined by S&P or at least Baa3 as determined by Moody’s).



     “ISM Code” has the meaning set forth in Section 4.08.



     “ISP” means, with respect to any Letter of Credit, the “International Standby
Practices 1998” published by the Institute of International Banking Law & Practice, Inc. (or such
later version thereof as may be in effect at the time of issuance).



     “Issuing Bank” means Natixis and any successor Issuing Bank pursuant to Section
2.14(h).



     “LC Cash Collateral Account” means special interest bearing cash collateral accounts
pledged by the Borrower to the Administrative Agent, for the ratable benefit of the Secured
Parties, containing cash deposited pursuant to Section 2.14(e), 7.02 or
7.03 to be maintained at the Administrative Agent’s office in accordance with Section
2.14(g) and bear interest or be invested in the Administrative Agent’s reasonable discretion.



     “Legal Requirement” means, as to any Person, any law, statute, ordinance, decree,
award, requirement, order, writ, judgment, injunction, rule, regulation (or official interpretation
of any of the foregoing) of, and the terms of any license or permit issued by, any Governmental
Authority which is binding on such Person.



     “Lenders” means (a) the lenders listed on the signature pages of this Agreement, (b)
each Eligible Assignee that has become a party hereto pursuant to an Assignment and Acceptance
(other than any such person that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (c) any other Person that has become a party hereto pursuant to a joinder agreement
in accordance with Section 2.16.



     “Letter of Credit” means any letter of credit issued hereunder and may be a commercial
letter of credit or a standby letter of credit.



     “Letter of Credit Application” means (a) a request for issuance of a Letter of Credit
in substantially the form of the attached Exhibit F and (b) an application and agreement
for the issuance or amendment of a Letter of Credit in the form from time to time in use by the
Issuing Bank.



     “Letter of Credit Exposure” means, at any time, the sum of (a) the aggregate undrawn
maximum face amount of each outstanding Letter of Credit at such time and (b) the aggregate unpaid
amount of all Reimbursement Obligations owing with respect to such Letters of Credit at such time.



24









 





     “Letter of Credit Obligations” means any obligations of the Borrower under this
Agreement in connection with the Letters of Credit, including the Reimbursement Obligations.



     “Letter of Credit Sublimit” means an amount equal to 75% of the aggregate amount of
the Revolving Commitments.



     “Letter of Credit Documents” means, with respect to any Letter of Credit, such Letter
of Credit, the related Letter of Credit Application and any agreements, documents, and instruments
entered into in connection with or relating to such Letter of Credit.



     “Lien” shall mean, with respect to any asset, (a) any mortgage, deed of trust, lien
(statutory or other), pledge, assignment, preference, deposit arrangement, encumbrance, charge,
security interest, priority or other security or preferential arrangement of any kind or nature
whatsoever, whether voluntary or involuntary in or on such asset, which is intended to secure the
payment of an obligation, or (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset.



     “Loan Documents” means this Agreement, any Notes issued pursuant to Section
2.02(g)(iv), the Letter of Credit Documents, the Security Documents, the Fee Letter and each
other agreement, instrument or document executed by any Loan Party or any of their respective
officers (in their capacity as an officer of such Loan Party) at any time in connection with this
Agreement (exclusive, for the avoidance of doubt, any of the Transaction Documents), all as
amended, restated, supplemented or modified from time to time.



     “Loan Party” means the Borrower or any Guarantor.



     “Maintenance Capital Expenditures” means, without duplication for any period, the sum
of all Capital Expenditures used for the normal maintenance of any existing fixed or capital asset,
but excluding Reactivation Capital Expenditures.



     “Master Separation Agreement” means that certain Master Separation Agreement between
Pride and the Borrower.



     “Material Adverse Effect” means a material adverse change in, or a material adverse
effect on, (a) the operations, business, assets, properties, or condition (financial or otherwise)
of the Borrower and its Subsidiaries, taken as a whole, (b) the rights and remedies of the
Administrative Agent or any Lender upon any Loan Document, or of the ability of any Loan Party to
perform its obligations under any Loan Document to which it is a party or (c) the legality,
validity, binding effect or enforceability against any Loan Party of any of the Loan Documents to
which it is a party.



     “Material Domestic Subsidiary” means any Material Subsidiary that is a Domestic
Subsidiary.



     “Material Subsidiary” means any Subsidiary of the Borrower that (a) accounts for
assets or revenues that constitute more than 5% of the combined GAAP value of the assets or
revenues, respectively, of the Borrower and its Subsidiaries on a consolidated basis as of the end
of the



25









 







most recent fiscal quarter, (b) accounts for Consolidated EBITDA greater than 5% of the
Consolidated EBITDA as of the end of the most recent fiscal quarter, (c) owns Equity Interests in
any Subsidiary described in clause (a) or (b) above, and (d) owns any Collateral Rig, and “Material
Subsidiaries” means all such Subsidiaries collectively.



     “Maturity Date” means the second anniversary of the Closing Date as confirmed in
writing by the Administrative Agent promptly upon the occurrence of the Closing Date.



     “Maximum Rate” means the maximum nonusurious interest rate under applicable law
(determined under such laws after giving effect to any items which are required by such laws to be
construed as interest in making such determination, including without limitation if required by
such laws, certain fees and other costs).



     “Moody’s” means Moody’s Investors Service, Inc., or any successor that is a national
credit rating organization.



     “Multiemployer Plan” means any employee benefit plan of the type described in
Section 4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate makes or is obligated to
make contributions, or during the preceding five plan years, has made or been obligated to make
contributions.



     “Natixis” has the meaning set forth in the introductory paragraph hereto.



     “Net Cash Proceeds” means



     (a) with respect to any Asset Disposition or any Recovery Event, proceeds in cash as and when
received by the Person making an Asset Disposition and on account of the occurrence of an Recovery
Event, net of: (i) in the event of an Asset Disposition, (A) all costs and expenses costs relating
to such Asset Disposition, including sales, use or other transaction taxes, legal, title,
commissions and other fees and expenses incurred as a result of such Asset Disposition and reserves
for indemnity obligations of such Person in connection with such Asset Disposition, but excluding
amounts payable to any Loan Party or, if other than as provided in Section 6.08, any
Affiliate of a Loan Party, (B) amounts required, by its terms or in order to obtain a necessary
consent to such Asset Disposition or by applicable law, to be applied to repay principal, interest
and prepayment premiums and penalties on Debt secured by a Lien on the Property which is the
subject of such Asset Disposition, and (C) the amount of reserves established by the Borrower or
any of its Subsidiaries in good faith and pursuant to commercially reasonable practices for
adjustment in respect of the sale price of such asset or assets in accordance with GAAP, provided
that if the amount of such reserves exceeds the amounts for which it was reserved, then such
excess, upon the determination thereof, shall then constitute Net Cash Proceeds, and (ii) in the
event of a Recovery Event, (A) all of the costs and expenses incurred in connection therewith,
including the commencement and prosecution of any related actions taken or legal proceedings filed
in connection therewith, the enforcement of all related rights and remedies, and the collection of
such proceeds, award or other payments, and (B) any amounts retained by or paid to parties having
superior rights to such proceeds, awards or other payments; and



     (b) with respect to the sale or issuance of any Equity Interest by the Borrower, the excess of
(i) cash received in connection with such transaction over (ii) the underwriting



26









 







discounts and commissions, and other reasonable and customary out-of-pocket expenses, incurred
by the Borrower or such Subsidiary in connection therewith.



     “Non-Collateral Rigs” means each Rig that, at the relevant time of determination, is
not a Collateral Rig. The initial Non-Collateral Rigs are listed on Schedule 1.01(c), and
Schedule 1.01(c) set forth a true and complete listing of the name, registered owner,
official number, and jurisdiction of registration of each Non-Collateral Rig as of the Closing
Date.



     “Note” means a promissory note made by the Borrower in favor of a Lender pursuant to
Section 2.02(g)(iv) evidencing Revolving Advances made by such Lender in substantially the
form of the attached Exhibit G.



     “Notice of Borrowing” means a notice of borrowing in substantially the form of the
attached Exhibit H signed by a Responsible Officer of the Borrower.



     “Notice of Conversion or Continuation” means a notice of conversion or continuation in
substantially the form of the attached Exhibit I signed by a Responsible Officer of the
Borrower.



     “Obligations” means all Revolving Advances to, and other debts, liabilities and
payment obligations of, any Loan Party arising under any Loan Document or otherwise with respect to
any Revolving Advance, Letter of Credit or, during such times that a Lender is a lender party
hereto, any Swap Contract to which a Lender or its Affiliate is a party, whether direct or indirect
(including those acquired by assumption), absolute or contingent, due or to become due, now
existing or hereafter arising and including interest and fees that accrue after the commencement by
or against any Loan Party of any proceeding under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors naming such Person as the debtor in such proceeding, regardless
of whether such interest and fees are allowed claims in such proceeding.



     “Off-Balance Sheet Liability” of a Person means (a) any repurchase obligation or
liability of such Person with respect to accounts or notes receivable sold by such Person, (b)
Synthetic Lease Obligations, or (c) any other monetary obligation arising with respect to any other
transaction which is the functional equivalent of or takes the place of borrowing but which does
not constitute a liability on the balance sheets of such Person, and, for the avoidance of doubt,
excluding any lease that constitutes an Operating Lease; and, for the avoidance of doubt, excluding
any surety bonds or similar instruments which are issued upon the application of such Person or
upon which such Person is an account party or for which such Person is in any way liable for
reimbursement.



     “Omnibus Restructuring Agreement” means that certain Omnibus Restructuring Agreement
dated as of August 4, 2009 among Pride, the Borrower and the other parties thereto as in effect on
the Effective Date in the form and substance provided in the copy thereto provided to the Lenders
on or prior to the Effective Date and without giving any effect to any amendment, supplement or
other modification thereto that has not be approved by the Lenders.



     “Operating Lease” of a Person means any lease of Property by such Person as lessee
which has an original term (including any required renewals and any renewals effective at the
option of the lessor) of one year or more and is not a Capital Lease.



27









 





     “Orderly Liquidation Value” means, as of any date of determination, with respect to
any Collateral Rig, the orderly liquidation value thereof as established by the most recent
Appraisal Report delivered to Administrative Agent in accordance with Section 5.06(h)
hereof, taking into account any loss or damage to, or any condemnation, seizure or taking of, such
Collateral Rig or Asset Disposition that has occurred since the most recent Appraisal Report was
delivered with respect to such Collateral. To the extent that any Appraisal Report provides a
range of orderly liquidation values for any Rig, then the orderly liquidation value for such
Collateral Rig shall be the arithmetical average of the highest and lowest orderly liquidation
values given for such Collateral Rig in such Appraisal Report.



     “Other Taxes” means all present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies arising from any payment made hereunder or
under any other Loan Document or from the execution, delivery or enforcement of, or otherwise with
respect to, this Agreement or any other Loan Document.



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



     “PEMEX” means Petróleos Mexicanos, the Republic of Mexico’s state-owned petroleum
company.



     “Pension Plan” means any “employee pension benefit plan” (as such term is defined in
Section 3(2) of ERISA), other than a Multiemployer Plan, that is subject to Title IV of ERISA and
is sponsored or maintained by the Borrower or any ERISA Affiliate or to which the Borrower or any
ERISA Affiliate contributes or has an obligation to contribute, or in the case of a multiple
employer or other plan described in Section 4064(a) of ERISA, has made contributions at any time
during the immediately preceding five plan years.



     “Permitted Liens” has the meaning set forth in Section 6.01.



     “Person” means and includes natural persons, corporations, limited partnerships,
general partnerships, limited liability companies, limited liability partnerships, joint stock
companies, joint ventures, associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and governments and agencies
and political subdivisions thereof.



     “Plan” means any Pension Plan or any Multiemployer Plan.



     “Pledge Agreement” means the Pledge Agreement in substantially the form of the
attached Exhibit J among one or more of the Loan Parties and the Administrative Agent, for
the ratable benefit of the Secured Parties.



     “Pride” means Pride International, Inc., a Delaware corporation.



     “Prime Rate” means the rate of interest in effect for such day as publicly announced
from time to time by Natixis as its “prime rate.” The “prime rate” is a rate set by Natixis based
upon various factors including Natixis’ costs and desired return, general economic conditions and
other factors, and is used as a reference point for pricing some loans, which may be priced at,
above, or



28









 







below such announced rate. Any change in the Adjusted Base Rate due to a change in the “prime
rate” shall take effect at the opening of business on the day specified in the public announcement
of such change.



     “Pro Forma Financial Statements” means the unaudited pro forma consolidated and
consolidating balance sheet of the Borrower and its Subsidiaries as of June 30, 2009 and related
consolidated statements of income or operations, stockholders’ equity and cash flows for such
period, prepared giving effect to the Transactions as if they had occurred on such date, including,
without limitation, sufficient information in order determine the results of operations for the
Borrower and its Subsidiaries.



     “Pro Rata Share” means, with respect to each Lender at any time, (a) before the
Revolving Commitments terminate, the ratio (expressed as a percentage) of such Lender’s Revolving
Commitment to the aggregate Revolving Commitments and (b) thereafter, the ratio (expressed as a
percentage) of such Lender’s aggregate outstanding Revolving Advances immediately prior to such
termination to the aggregate outstanding Revolving Advances of all the Lenders immediately prior to
such termination. The initial Pro Rata Share of each Lender is set forth opposite the name of such
Lender on Schedule 2.01 or in the Assignment and Assumption or joinder agreement pursuant
to which such Lender becomes a party hereto.



     “Projections” means the Borrower’s forecasted consolidated and consolidating: (a)
balance sheets; (b) profit and loss statements; (c) cash flow statements; and (d) capitalization
statements, for the three calendar year period commencing on the Closing Date, together with
reasonably appropriate supporting details and a statement of underlying assumptions.



     “Property” of any Person means any interest of such Person in any property or asset
(whether real, personal or mixed, tangible or intangible).



     “Reactivation Capital Expenditures” means Capital Expenditures used for either (a)
one-time, non-recurring expenditures that are incurred in connection with returning a cold-stacked,
non-operating Rig to service, including, without limitation, satisfying certification requirements
of the United States Coast Guard, the Minerals Management Service or any other Governmental
Authority reasonably necessary for the operation of such Rig or (b) otherwise improving the
operational capabilities of any Rig in order to satisfy the requirements of charters or similar
contractual arrangements entered into with respect to the charter or lease of such Rig for a term
of 12 months or more; provided, however, “Reactivation Capital Expenditures” shall
not include Maintenance Capital Expenses or any other Capital Expenditure (i) of such nature
incurred in connection with Acquisitions and Rig Acquisitions, (ii) in excess of those typical in
the industry for the operation and maintenance of such Rig given its primary design and
capabilities, as determined by the Administrative Agent in its reasonable discretion after
consultation with an Approved Rig Appraiser, or (iii) required to be performed at the time of and
as required in connection with any inspection by the United States Coast Guard or any other
Governmental Authority necessary for the operation of such Rig unless such inspection relates to
returning a cold-stacked, non-operating Rig to service as described above.



     “Recovery Event” means, with respect to any Collateral owned by the Borrower or its
Subsidiaries, any settlement of or payment in respect of any insurance proceeds (excluding any



29









 









claim in respect of business interruption), condemnation award or other compensation paid or
payable on account of any loss or damage to, or any condemnation, appropriation, seizure or taking
of, such Property for which such Person receives Net Cash Proceeds.



     “Registration Statement” means the registration statement on Form 10 (including the
information statement included as an exhibit thereto) filed by the Borrower pursuant to Section
12(b) of the Exchange Act.



     “Regulations T, U, X and D” means Regulations T, U, X, and D, respectively, of the
Federal Reserve Board, as the same is from time-to-time in effect, and all official rulings and
interpretations thereunder or thereof.



     “Reimbursement Obligations” means all of the obligations of the Borrower to reimburse
the Issuing Bank for amounts paid by the Issuing Bank under Letters of Credit as established by the
Letter of Credit Applications and Section 2.14(c).



     “Related Parties” means, with respect to any Person, such Person’s Affiliates and the
partners, directors, officers, employees, agents and advisors of such Person and of such Person’s
Affiliates.



     “Release” means any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through the environment or
within or upon any building, structure, facility or fixture.



     “Reportable Event” means any of the events set forth in Section 4043(c) of ERISA.



     “Required Lenders” means, as of any date of determination, (a) before the Revolving
Commitments terminate, Lenders holding more than
662/3% of the then aggregate Revolving Commitments
and (b) thereafter, Lenders holding more than 662/3% of the aggregate unpaid principal amount of the
Revolving Advances and participation interests in the Letter of Credit Exposure at such time.



     “Responsible Officer” for any Person means, the Chief Executive Officer, President,
Chief Financial Officer, any Executive or Senior Vice President, Vice President, Secretary,
Treasurer or Assistant Secretary of such Person.



     “Restricted Payment” means: (a) the declaration or making by the Borrower or any
Subsidiary of any dividend or other distribution (whether in cash, securities or other property)
with respect to any Equity Interest in such Person; or (b) any payment (whether in cash, securities
or other property), including any sinking fund or similar deposit, for the purchase, redemption,
retirement, acquisition, cancellation or termination of any Equity Interests in the Borrower or any
Subsidiary or the exercise of any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any Subsidiary.



     “Revolving Advance” means an advance by a Lender to the Borrower as part of a
Borrowing pursuant to Section 2.01 and refers to a Base Rate Advance or a Eurodollar
Advance.



30









 





     “Revolving Commitment” means, as of each date of determination in relation to each
Lender, its obligation to (a) make Revolving Advances to the Borrower pursuant to Section
2.01, and (b) purchase participation in L/C Obligations pursuant to Section 2.14(b), in
an aggregate principal amount at any one time outstanding not to exceed the amount set forth
opposite such Lender’s name on Schedule 2.01 or in the Assignment and Assumption or joinder
agreement pursuant to which such Lender becomes a party hereto, as applicable, as such amount may
be adjusted from time to time in accordance with this Agreement. The initial aggregate amount of
the Revolving Commitments is $36,000,000.



     “Revolving Commitment Increase Effective Date” has the meaning set forth in
Section 2.16(c).



     “Rig” means, to the extent now owned or hereafter acquired by any Loan Party, any
mobile offshore drilling rig owned by any Loan Party and its substructure, engine, braking system,
drill pipe, drill collar and related equipment and parts (including spare parts related to such
Rig).



     “Rig Acquisition” means any transaction, or any series of related transactions,
consummated on or after the date of this Agreement, by which the Borrower or any of its
Subsidiaries acquires a Rig.



     “Rig Exchange” shall mean the exchange of a Collateral Rig for a Rig which constitutes
an Acceptable Replacement Rig, provided that (a) the provisions of Section 5.12
with respect to an Acceptable Replacement Rig are satisfied in connection therewith and (b) the
Administrative Agent shall have received a certificate, dated the Rig Exchange Date, signed by a
Responsible Officer of the Borrower which certificate shall set forth the calculations required to
establish whether the Borrower is in compliance with Section 6.18(b) after giving effect to
such Rig Exchange and certifying that the replacement Rig constitutes an Acceptable Replacement Rig
and that the provisions of Section 5.12 are satisfied in connection therewith. Upon the
occurrence of a Rig Exchange, the Administrative Agent shall, at the request of the Borrower,
terminate and release all Liens on the replaced Rig subject to such Rig Exchange.



     “Rig Mortgages” means each of the First Preferred Mortgages (or other ship mortgage,
fleet mortgage, naval mortgage or other agreement, document or instrument evidencing a grant of
liens in a rig or Rig) in substantially the form of the attached Exhibit K among one or
more of the Loan Parties and the Administrative Agent, for the ratable benefit of the Secured
Parties, which pledges a Collateral Rig as collateral for all or a portion of the Obligations, in
form and substance reasonably acceptable to the Administrative Agent and as required to create an
Acceptable Security Interest.



     “S&P” means Standard & Poor’s Rating Agency Group, a division of Mc-Graw Hill
Companies, Inc., or any successor that is a national credit rating organization.



     “Sale and Leaseback Transaction” means a transaction or series of transactions
pursuant to which the Borrower or any Subsidiary shall sell or transfer to any Person (other than
the Borrower or a Subsidiary) any Property, whether now owned or hereafter acquired, and, as part
of the same transaction or series of transactions, the Borrower or such Subsidiary shall rent or



31









 







lease as lessee (other than pursuant to a capital lease), or similarly acquire the right to
possession or use of, such Property.



     “SEC” means the United States Securities and Exchange Commission, and any successor
entity.



     “Secured Parties” means the Administrative Agent, the Lenders, the Issuing Bank, the
Swap Counterparties and the beneficiaries of each indemnification obligation undertaken by any Loan
Party under any Loan Document.



     “Security Agreement” means the Security Agreement in substantially the form of the
attached Exhibit L among one or more of the Loan Parties and the Administrative Agent, for
the ratable benefit of the Secured Parties, and each other document, instrument or agreement
executed by any Loan Party in connection therewith in order to comply with the Legal Requirements
of any jurisdiction other than the United States of America or any state thereof or the District of
Columbia.



     “Security Documents” means the Assignments of Earnings, the Assignments of Insurance,
the Rig Mortgages, the Security Agreement, the Pledge Agreement and each other document, instrument
or agreement executed by any Loan Party in connection therewith or otherwise creates or purports to
create a Lien to secure all or a portion of the Obligations.



     “Security Maintenance Ratio” means, as of any date of determination, the ratio of (a)
the Orderly Liquidation Value of the Collateral Rigs as of such date and (b) the sum of the
outstanding principal amount of Revolving Advances and the Letter of Credit Exposure, in each case,
on such date.



     “Subsidiary” of a Person means any corporation, association, partnership or other
business entity of which more than 50% of the outstanding Equity Interests having by the terms
thereof ordinary voting power under ordinary circumstances to elect a majority of the board of
directors (or Persons, committees or other group performing similar functions or, if there are no
such directors or Persons, committees or other group, having general voting power) of such entity
(irrespective of whether at the time Equity Interests of any other class or classes of such entity
shall or might have voting power upon the occurrence of any contingency) is at the time directly or
indirectly owned or controlled by such Person, by such Person and one or more Subsidiaries of such
Person or by one or more Subsidiaries of such Person. Unless otherwise indicated herein, (a) each
reference to the term “Subsidiary” shall mean a Subsidiary of the Borrower, and (b) so long as
Mexico Offshore Inc., a Delaware corporation merges into the Borrower on, and ceases to exist as
of, a date no later than the Business Day immediately following the Effective Date, such Person
shall not be considered a Subsidiary of the Borrower for purposes of this Agreement.



     “Swap Contract” means (a) any and all rate swap transactions, basis swaps, credit
derivative transactions, forward rate transactions, commodity swaps, commodity options, forward
commodity contracts, equity or equity index swaps or options, bond or bond price or bond index
swaps or options or forward bond or forward bond price or forward bond index transactions, interest
rate options, forward foreign exchange transactions, cap transactions, floor



32









 







transactions, collar transactions, currency swap transactions, cross-currency rate swap
transactions, currency options, spot contracts, or any other similar transactions or any
combination of any of the foregoing (including any options to enter into any of the foregoing),
whether or not any such transaction is governed by or subject to any master agreement, and (b) any
and all transactions of any kind, and the related confirmations, which are subject to the terms and
conditions of, or governed by, any form of master agreement published by the International Swaps
and Derivatives Association, Inc., any International Foreign Exchange Master Agreement, or any
other master agreement (any such master agreement, together with any related schedules, a
“Master Agreement”), including any such obligations or liabilities under any Master
Agreement.



     “Swap Counterparty” means any Lender or any Affiliate thereof that is party to a Swap
Contract with the Borrower or any of its Subsidiaries.



     “Swap Termination Value” means, in respect of any one or more Swap Contracts, after
taking into account the effect of any legally enforceable netting agreement relating to such Swap
Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and
termination value(s) determined in accordance therewith, such termination value(s), and (b) for any
date prior to the date referenced in clause (a), the amount(s) determined as the mark-to-market
value(s) for such Swap Contracts, as reasonably determined based upon one or more mid-market or
other readily available quotations provided by any recognized dealer in such Swap Contracts (which
may include a Lender or any Affiliate of a Lender).



     “Synthetic Lease Obligation” means the monetary obligation of a Person under (a) a
so-called synthetic, off-balance sheet or tax retention lease, or (b) an agreement for the use or
possession of Property creating obligations that do not appear on the balance sheet of such Person
but which, in each case in respect to the foregoing clauses (a) and (b), upon the insolvency or
bankruptcy of such Person, would be characterized as the indebtedness of such Person (without
regard to accounting treatment).



     “Taxes” means all present or future taxes, levies, imposts, duties, deductions,
withholdings, assessments, fees or other charges imposed by any Governmental Authority, including
any interest, additions to tax or penalties applicable thereto.



     “Tier 1 Eligible Receivables” means each Eligible Receivable, provided,
however, that no Eligible Receivable shall be a Tier 1 Eligible Receivable unless (a) the
Account Debtor of such Eligible Receivable or any Person guaranteeing such Account Debtor’s
obligations under such Eligible Receivable, shall either have an Investment Grade Rating or
Acceptable Credit Support and (b) such Eligible Receivable shall not be unpaid more than one
hundred twenty (120) days after the original invoice date.



     “Tier 2 Eligible Receivables” means each Eligible Receivable other than a Tier 1
Eligible Receivable; provided, however, that no such Eligible Receivable shall be a
Tier 2 Eligible Receivable unless (a) the Account Debtor of such Eligible Receivable shall either
be (i) organized or incorporated under the laws of the United States of America or a state thereof
or the District of Columbia and such Eligible Receivable shall be denominated and payable in
Dollars, or (ii) PEMEX or any of its Affiliates and such Eligible Receivable shall be denominated
in



33









 







Dollars (but not necessarily payable in Dollars), and (b) such Eligible Receivable shall not
be unpaid more than ninety (90) days after the original invoice date.



     “Total Loss” means (a) the actual, constructive, arranged, agreed, or compromised
total loss of any Collateral Rig; (b) the loss, theft or destruction of any Collateral Rig or
damage thereto to such extent as shall, as determined by the Insurance Advisor, make repair thereof
uneconomical or shall render such Rig permanently unfit for normal use for any reason whatsoever;
(c) the requisition for title or other compulsory acquisition or forfeiture of any Collateral Rig
otherwise than by requisition for hire; or (d) the capture, condemnation, seizure, arrest,
detention or confiscation of any Collateral Rig by any Governmental Authority or by Persons acting
or purporting to act on behalf of any Governmental Authority unless such Rig is released from such
capture, seizure, arrest, detention or confiscation within one (1) month after the occurrence
thereof.



     “Transaction Documents” means each of the following agreements executed by Pride and
the Borrower: (a) Master Separation Agreement, (b) the Tax Sharing Agreement, (c) the Employee
Matters Agreement, (d) the Omnibus Restructuring Agreement, (e) the Transition Services Agreement
between Pride, as service provider, and the Borrower, as service recipient, (f) the Transition
Services Agreement between Pride, as service recipient, and the Borrower, as service provider, (g)
the Tax Support Agreement, and (h) any other agreement executed by the Borrower in connection with
the Transactions.



     “Transactions” means the distribution to the stockholders of Pride of all of the
shares of common stock of the Borrower as described in the Registration Statement.



     “Type” has the meaning set forth in Section 1.04.



     “UCC” means the Uniform Commercial Code as in effect on the date hereof in the State
of New York, as amended from time to time, and any successor statute.



     “Unfunded Pension Liability” means the excess of a Pension Plan’s benefit liabilities
under Section 4001(a)(16) of ERISA, over the current value of that Pension Plan’s assets,
determined in accordance with the assumptions used for funding the Pension Plan pursuant to Section
412 of the Code for the applicable plan year.



     “Voting Stock” means, with respect to any Person, Equity Interests of such Person of
any class or classes, the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of members of the board of directors (or Persons, committees or
other group performing similar functions) of such Person.



     “Wholly-Owned Subsidiary” of any Person shall mean a subsidiary of such Person of
which Equity Interests representing 100% of the Equity Interests of such Person (other than shares
required by law to be owned by another Person, including director’s qualifying shares) are, at the
time any determination is being made, owned, controlled or held by such Person or one or more
Wholly-Owned Subsidiaries of such Person or by such Person and one or more Wholly-Owned
Subsidiaries of such Person.



34









 





     “Working Capital Ratio” shall mean, at any date of determination, the ratio of (a) the
sum of (i) Consolidated Current Assets on such date plus (ii) the lesser of (A)
Availability and (B) $25,000,000 on such date to (b) Consolidated Current Liabilities on such date.



     Section 1.02 Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word “from” means “from and
including” and the words “to” and “until” each means “to but excluding”.



     Section 1.03 Accounting Terms.



     (a) For purposes of this Agreement, all accounting terms not otherwise defined herein shall be
construed in conformity with, and all financial data (including financial ratios and other
financial calculations) required to be submitted pursuant to this Agreement shall be prepared in
conformity with, GAAP applied on a consistent basis, as in effect from time to time.



     (b) If at any time any Accounting Change (as defined below) would affect the computation of
any financial ratio or requirement set forth in any Loan Document, and either the Borrower or the
Required Lenders shall so request, the Administrative Agent, the Lenders and the Borrower shall
negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof
in light of such change in GAAP (subject to the approval of the Required Lenders); provided
that, until so amended, (i) such ratio or requirement shall continue to be computed in accordance
with GAAP prior to such change therein and (ii) the Borrower shall provide to the Administrative
Agent and the Lenders financial statements and other documents required under this Agreement or as
reasonably requested hereunder setting forth a reconciliation between calculations of such ratio or
requirement made before and after giving effect to such change in GAAP. “Accounting Changes”
means: (A) changes in accounting principles required by GAAP and implemented by the Borrower; and
(B) changes in carrying value of the Borrower’s or any of its Subsidiaries’ assets, liabilities or
equity accounts resulting from any adjustments that, in each case, were applicable to, but not
included in, the Pro Forma Financial Statements.



     (c) In addition, all calculations and defined accounting terms used herein shall, unless
expressly provided otherwise, when referring to any Person, refer to such Person on a consolidated
basis and mean such Person and its consolidated subsidiaries.



     Section 1.04 Types of Revolving Advances. Revolving Advances are distinguished by
“Type”. The “Type” of a Revolving Advance refers to whether such Revolving Advance is a Eurodollar
Advance or a Base Rate Advance, each of which constitutes a Type.



     Section 1.05 Miscellaneous. The definitions of terms herein shall apply equally to
the singular and plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words “include,”
“includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The
word “will” shall be construed to have the same meaning and effect as the word “shall.” The word
“or” is not exclusive. Unless the context requires otherwise (a) any definition of or reference to
any agreement, instrument, schedule or other document herein shall be construed as referring to
such agreement, instrument, schedule or other document as from time to time



35









 







amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modifications set forth herein) and in effect, (b) any reference herein to any
Person shall be construed to include such Person’s successors and permitted assigns, (c) the words
“herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d) all references
herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or
regulation herein shall, unless otherwise specified, refer to such law or regulation as amended,
modified or supplemented from time to time and (f) the words “asset” and “property” shall be
construed to have the same meaning and effect and to refer to any and all tangible and intangible
assets and properties, including cash, securities, accounts and contract rights.



ARTICLE II




THE REVOLVING ADVANCES




     Section 2.01 The Revolving Advances. Each Lender severally agrees, on the terms and
conditions set forth in this Agreement, to make Revolving Advances to the Borrower from
time-to-time on any Business Day from the Closing Date until the Maturity Date in an aggregate
amount up to but not to exceed at any time outstanding the remainder obtained from subtracting (a)
such Lender’s Pro Rata Share of the Letter of Credit Exposure from (b) the least of (i) its
Revolving Commitment, (ii) its Pro Rata Share of the Borrowing Base and (iii) its Pro Rata Share of
the Fixed Charge Coverage Cap; provided however that the aggregate outstanding
principal amount of the sum of (x) all Revolving Advances plus (y) the Letter of Credit Exposure
shall not at any time exceed the least of (1) aggregate amount of the Revolving Commitments, (2)
the Borrowing Base and (3) the Fixed Charge Coverage Cap. Each Borrowing shall be in an aggregate
amount not less than $2,500,000 and in integral multiples of $500,000 in excess thereof, or in the
amount of the unused Revolving Commitments, and shall consist of Revolving Advances of the same
Type made on the same day by the Lenders ratably according to their respective Revolving
Commitments. Within the limits of each Lender’s Revolving Commitment, the Borrower may from
time-to-time borrow, prepay pursuant to Sections 2.07(b) and (c) and reborrow under
this Section 2.01.



     Section 2.02 Method of Borrowing.



     (a) Notice. Each Borrowing shall be made pursuant to a Notice of Borrowing, given in
writing or by telecopier or telephone, confirmed promptly in writing, not later than (i) if the
Borrowing is comprised of Eurodollar Advances, 12:00 p.m. (New York time) on the third Business Day
before the requested Borrowing Date and (ii) if the Borrowing is comprised of Base Rate Advances,
12:00 p.m. (New York time) at least one Business Day in advance of the requested Borrowing Date, in
each case to the Administrative Agent’s Applicable Lending Office. The Administrative Agent shall
give to each Lender prompt notice on the day of receipt of a timely Notice of Borrowing and of such
Lender’s Pro Rata Share thereof. The Notice of Borrowing shall be in writing specifying (A) the
Borrowing Date (which shall be a Business Day), (B) the requested Type of Revolving Advances
comprising such Borrowing, (C) the aggregate amount of such Borrowing, and (D) if such Borrowing is
to be comprised of Eurodollar Advances, the requested Interest Period. If the Borrower fails to
specify a Type of



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Revolving Advance in a Notice of Borrowing, then the Revolving Advance shall be made as a Base
Rate Advance. In the case of a requested Borrowing comprised of Eurodollar Advances, the
Administrative Agent shall promptly notify the Borrower and each Lender of the applicable interest
rate under Section 2.06(a)(ii). Each Lender shall make available its Pro Rata Share of
such Borrowing before 11:00 a.m. (New York time) on the Borrowing Date in immediately available
funds to the Administrative Agent at the Administrative Agent’s Applicable Lending Office. After
the Administrative Agent’s receipt of such funds and upon fulfillment of the applicable conditions
set forth in Section 3.02 (and, if such Revolving Advance is the initial Revolving Advance
(unless a Letter of Credit shall have been issued prior to such date), Section 3.01) the
Administrative Agent will promptly make such funds available to the Borrower not later than 12:00
p.m. (New York time) at such account as the Borrower shall specify in writing to the Administrative
Agent.



     (b) Conversions and Continuations. In order to elect to Convert or Continue a
Revolving Advance under this Section, the Borrower shall deliver an irrevocable Notice of
Conversion or Continuation to the Administrative Agent at its Applicable Lending Office no later
than (i) 12:00 p.m. (New York time) at least one Business Day in advance of such requested
Conversion date in the case of a Conversion of a Eurodollar Advance to a Base Rate Advance or (ii)
12:00 p.m. (New York time) at least three Business Days in advance of such requested Conversion
date in the case of a Conversion of a Base Rate Advance into, or Continuation of a Eurodollar
Advance to, a Eurodollar Advance. Each such Notice of Conversion or Continuation shall be in
writing or by telex, telecopier or telephone, confirmed promptly in writing specifying (A) the
requested Conversion or Continuation date (which shall be a Business Day), (B) the amount, Type of
the Revolving Advance to be Converted or Continued, (C) whether a Conversion or Continuation is
requested, and if a Conversion, into what Type of Revolving Advance, and (D) in the case of a
Conversion of a Base Rate Advance to, or a Continuation of, a Eurodollar Advance, the requested
Interest Period. Promptly after receipt of a Notice of Conversion or Continuation under this
paragraph, the Administrative Agent shall provide each Lender with a copy thereof and of such
Lender’s Pro Rata Share thereof and, in the case of a Conversion to or a Continuation of a
Eurodollar Advance, notify the Borrower and each Lender of the interest rate under
Section 2.06(a)(ii). Notwithstanding anything in this Agreement to the contrary,
Conversions of Eurodollar Advances may only be made at the end of the applicable Interest Period
for such Revolving Advances; provided, however, that Conversions of Base Rate
Advances may be made at any time. The portion of Revolving Advances comprising part of the same
Borrowing that are converted to Revolving Advances of another Type shall constitute a new
Borrowing.



     (c) Certain Limitations. Notwithstanding anything in paragraphs (a) and (b) above:




     (i) at no time shall there be more than five Interest Periods applicable to outstanding
Eurodollar Advances;




     (ii) each Lender’s obligations to make a Eurodollar Advance shall, to the extent
applicable, be subject to the applicable provisions of Sections 2.07(d) and
2.09(a).




     (iii) if the Required Lenders determine that for any reason in connection with any
request for a Borrowing as a Eurodollar Advance that (A) Dollar deposits are not



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being offered to banks in the London interbank eurodollar market for the applicable
amount and Interest Period of such Eurodollar Advance, (B) adequate and reasonable means do
not exist for determining the Eurodollar Rate for any requested Interest Period with respect
to a proposed Eurodollar Advance, or (C) the Eurodollar Rate for any requested Interest
Period with respect to a proposed Eurodollar Advance does not adequately and fairly reflect
the cost to such Required Lenders of funding such Revolving Advance, the Administrative
Agent will promptly so notify the Borrower and each Lender, and thereafter, the obligation
of the Lenders to make or maintain any Borrowings as Eurodollar Advances (1) in respect to
the applicable amount and Interest Period referred to in the preceding clause (A), or (2) in
the circumstances referred to in the preceding clauses (B) and (C), shall be suspended until
the Administrative Agent (upon the instruction of the Required Lenders) revokes such notice,
and upon receipt of such notice, the Borrower may revoke any pending request for a Borrowing
of, conversion to, or continuation of, Eurodollar Advances in such amounts and for such
corresponding Interest Period or, failing that, will be deemed to have converted such
request into a request for a Borrowing of a Base Rate Advance in the amount specified
therein;




     (iv) if the Borrower shall request a Revolving Advance of, Conversion of a Base Rate
Advance to, or Continuation of, a Eurodollar Advance in any such Notice of Borrowing and
shall fail to select the duration or Continuation of any Interest Period for any Eurodollar
Advance in accordance with the provisions contained in the definition of “Interest Period”
in Section 1.01 and paragraphs (a) and (b) above, the Borrower shall be deemed to
have specified an Interest Period of one month. If the Borrower shall fail to deliver a
Notice of Conversion or Continuation, the Administrative Agent will forthwith so notify the
Borrower and the Lenders and such Revolving Advances will be made available to the Borrower
on the date of such Borrowing as Base Rate Advances or, if such Revolving Advance is an
existing Eurodollar Advance, Convert into Base Rate Advances; and




     (v) no Revolving Advance may be Converted or Continued as a Eurodollar Advance at any
time when a Default or an Event of Default has occurred and is continuing without the
consent of the Required Lenders.



     (d) Notices Irrevocable. Subject to Section 2.02(c), each Notice of Borrowing
and each Notice of Conversion or Continuation delivered by the Borrower shall be irrevocable and
binding on the Borrower. In the case of the initial Borrowing or any Borrowing which the related
Notice of Conversion or Continuation specifies is to be comprised of Eurodollar Advances, the
Borrower shall indemnify each Lender against funding losses in accordance with Section 2.08.



     (e) Administrative Agent Reliance. Unless the Administrative Agent shall have
received notice from a Lender before the Borrowing Date that such Lender will not make available to
the Administrative Agent such Lender’s Pro Rata Share of the Borrowing, the Administrative Agent
may assume that such Lender has made its Pro Rata Share of such Borrowing available to the
Administrative Agent on the Borrowing Date in accordance with paragraph (a) of this
Section 2.02 and the Administrative Agent may, in reliance upon such



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assumption, make available to the Borrower on the Borrowing Date a corresponding amount. If
and to the extent that such Lender shall not have so made its Pro Rata Share of such Borrowing
available to the Administrative Agent, such Lender and the Borrower severally agree to immediately
repay to the Administrative Agent on demand such corresponding amount, together with interest on
such amount, for each day from the date such amount is made available to the Borrower until the
date such amount is repaid to the Administrative Agent, at (i) in the case of the Borrower, the
interest rate applicable on such day to Base Rate Advances and (ii) in the case of such Lender, a
rate reasonably determined by the Administrative Agent in accordance with banking industry rules on
interbank compensation. If such Lender shall not have been earlier terminated by the Borrower
pursuant to Section 2.15, such Lender shall repay to the Administrative Agent such
corresponding amount and interest as provided above, such corresponding amount so repaid shall
constitute such Lender’s Revolving Advance as part of such Borrowing for purposes of this Agreement
even though not made on the same day as the other Revolving Advances comprising such Borrowing. If
such Lender’s Revolving Advance as part of such Borrowing is not made available by such Lender
within three Business Days of the Borrowing Date, the Borrower shall repay such Lender’s Pro Rata
Share of such Borrowing (together with interest thereon at the interest rate applicable during such
period to Base Rate Advances) to the Administrative Agent not later than three Business Days after
receipt of written notice from the Administrative Agent specifying such Lender’s share of such
Borrowing that was not made available to the Administrative Agent.



     (f) Lender Obligations Several. The failure of any Lender to make a Revolving Advance
to be made by it as part of any Borrowing shall not relieve any other Lender of its obligation, if
any, to make its Revolving Advance on the applicable Borrowing Date. No Lender shall be
responsible for the failure of any other Lender to make a Revolving Advance to be made by such
other Lender on any applicable Borrowing Date.



     (g) Noteless Agreement; Evidence of Indebtedness.




     (i) Each Lender shall maintain in accordance with its usual practice an account or
accounts evidencing the indebtedness of the Borrower to such Lender resulting from the
Revolving Advances made by such Lender from time to time, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.




     (ii) The Administrative Agent shall also maintain accounts in which it will record (A)
the amount of each Revolving Advance made hereunder, the Type thereof and the Interest
Period with respect thereto, (B) the amount of any principal or interest due and payable or
to become due and payable from the Borrower to each Lender hereunder and (C) the amount of
any payment received by the Administrative Agent hereunder from the Borrower and each
Lender’s share thereof.




     (iii) The entries maintained in the accounts maintained pursuant to paragraphs (i) and
(ii) above shall be conclusive evidence of the existence and amounts of the Obligations
therein recorded absent manifest error; provided, however, that in the event
of a conflict, absent manifest error, the Administrative Agent’s accounts of record shall
control and provided further that the failure of the Administrative Agent or any Lender to



39









 







maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Obligations in accordance with their terms.




     (iv) Upon written notice to the Borrower (with a copy to the Administrative Agent) at
least three Business Days prior to the Closing Date, or at any time thereafter, any Lender
may request that the Revolving Advances owing to such Lender be evidenced by a Note. In
such event, the Borrower shall execute and deliver to such Lender a Note payable to the
order of such Lender and its registered permitted assigns. Thereafter, the Revolving
Advances evidenced by such Note and interest thereon shall at all times (including after any
assignment pursuant to Section 10.06) be represented by one or more Notes payable to
the order of such Lender or any permitted assignee pursuant to Section 10.06, except
to the extent that any such Lender or permitted assignee subsequently returns any such Note
for cancellation and requests that such Revolving Advances once again be evidenced as
described in paragraphs (i) and (ii) above.



     Section 2.03 Fees.



     (a) Revolving Commitment Fees. Subject to Section 2.03(f), the Borrower
agrees to pay to the Administrative Agent, for the pro rata benefit of each Lender in accordance
with its Pro Rata Share, a commitment fee (a “Commitment Fee”) on the average daily amount
by which the aggregate Revolving Commitments exceeds the sum of (i) the aggregate principal amount
of outstanding Revolving Advances and (ii) the Letter of Credit Exposure, from the Closing Date, in
the case of each Lender listed on the signature pages hereto, and from the effective date in the
Assignment and Acceptance or joinder agreement pursuant to which it became a Lender in the case of
each other Lender, until the Maturity Date at a rate per annum equal to 1.50%. The Commitment Fees
payable pursuant to this clause (a) are due quarterly in arrears on the last Business Day of each
March, June, September and December commencing September 30, 2009 and on the Maturity Date.



     (b) Agent’s Fees. The Borrower agrees to pay to the Administrative Agent and the
Arranger the fees as separately agreed upon by the Borrower, the Administrative Agent and the
Arranger in the Fee Letter.



     (c) Ticking Fee. The Borrower agrees to pay to the Administrative Agent, for the pro
rata benefit of each Lender in accordance with its Pro Rata Share, a ticking fee accruing from the
Effective Date to the date on which all conditions set forth in Section 3.02 (other than the
condition in Section 3.02(d)) shall have been met, in the amount of 1.50% per annum of the
aggregate Revolving Commitments. The foregoing fee shall be due and payable on the Closing Date.



     (d) Letter of Credit Fees. Subject to Section 2.03(f),




     (i) The Borrower agrees to pay to the Administrative Agent, for the pro rata benefit of
each Lender in accordance with its Pro Rata Share, a letter of credit fee at a per annum
rate equal to the Applicable Margin for Eurodollar Advances. Each such fee shall be based
on the maximum face amount available to be drawn under such Letter of Credit (it being
understood that effect shall be given to any decreases to the maximum face



40









 







amount of any Letter of Credit to the extent that, under the terms of such Letter of
Credit, such decreases have become permanently effective and are not susceptible to
reinstatement) from the date of issuance of the Letter of Credit until its expiration date
and shall be payable quarterly in arrears on the last Business Day of each March, June,
September and December, commencing with the first such date to occur after the issuance of
such Letter of Credit, until the earlier of its expiration date or the Maturity Date. All
such fees shall be computed on the basis of the actual number of days elapsed in a year of
360 days.




     (ii) The Borrower agrees to pay to the Issuing Bank, a fronting fee for each Letter of
Credit equal to 0.25% per annum of the initial stated amount of such Letter of Credit (or,
with respect to any subsequent increase to the stated amount of any such Letter of Credit,
such increase in the stated amount). Each such fee shall be based on the maximum face
amount available to be drawn under such Letter of Credit (it being understood that effect
shall be given to any decreases to the maximum face amount of any Letter of Credit to the
extent that, under the terms of such Letter of Credit, such decreases have become
permanently effective and are not susceptible to reinstatement) from the date of issuance of
the Letter of Credit until its expiration date and shall be payable quarterly in arrears on
the last Business Day of each March, June, September and December, commencing with the first
such date to occur after the issuance of such Letter of Credit, until the earlier of its
expiration date or the Maturity Date. All such fees shall be computed on the basis of the
actual number of days elapsed in a year of 360 days.




     (iii) In addition, the Borrower agrees to pay to the Issuing Bank all reasonable and
customary costs and expenses as set forth in Section 10.04(b).



     (e) Generally. All such fees shall be paid on the dates due, in immediately available
Dollars to the Administrative Agent for distribution, if and as appropriate, among the Lenders,
except that the fees payable pursuant to Section 2.03(d)(ii) and (iii) shall be
paid directly to the Issuing Bank. Once paid, absent manifest error, none of these fees shall be
refundable under any circumstances.



     (f) Defaulting Lenders. The Borrower shall not be obligated to pay the Administrative
Agent, and the Defaulting Lender shall not be entitled to the receipt of, any Defaulting Lender’s
Pro Rata Share of the fees described in Section 2.03(a) and Section 2.03(d) for the
period commencing on the day such Defaulting Lender becomes a Defaulting Lender and continuing for
so long as such Lender continues to be a Defaulting Lender, and during all such periods, no such
fees shall accrue to or for the benefit of such Defaulting Lender.



     Section 2.04 Reduction of the Revolving Commitments.



     (a) At any time and from time to time, the Borrower shall have the right, upon at least three
Business Days’ irrevocable notice to the Administrative Agent, to terminate in whole or reduce in
part the unused portion of the Revolving Commitments; provided that each partial reduction
of Revolving Commitments shall be in the minimum aggregate amount of $5,000,000 and in integral
multiples of $5,000,000 in excess thereof (or such lesser amount as may then be outstanding) and,
except as provided in Section 2.15(c), shall be made ratably among the



41









 







Lenders in accordance with their respective Revolving Commitments; and provided
further that the aggregate amount of the Revolving Commitments may not be reduced below the
sum of the aggregate principal amount of the outstanding Revolving Advances and the Letter of
Credit Exposure; and provided further that, for the avoidance of doubt, any
termination of Revolving Commitments pursuant to Section 2.15(c) and any reduction to
Availability as a result of changes to the Fixed Charge Coverage Cap shall, in each case, not be
deemed to be a termination of Revolving Commitments pursuant to this Section 2.04.



     (b) Any reduction or termination of the Revolving Commitments pursuant to this Section
2.04 shall be permanent, with no obligation of the Revolving Lenders to reinstate such
Revolving Commitments and the commitment fees provided for in Section 2.03(a) shall
thereafter be computed on the basis of the Revolving Commitments as so reduced. The Administrative
Agent shall give each Lender prompt notice of any commitment reduction or termination by Borrower.



     Section 2.05 Repayment. The Borrower shall repay on the Maturity Date the aggregate
principal amount of the Revolving Advances outstanding on such date.



     Section 2.06 Interest. The Borrower shall pay interest on the unpaid principal amount
of each Revolving Advance made by each Lender to it from the date of such Revolving Advance until
such principal amount shall be paid in full, at the following rates per annum:



     (a) Revolving Advances.




     (i) Base Rate Advances. If such Revolving Advance is a Base Rate Advance, a
rate per annum equal to the Adjusted Base Rate plus the Applicable Margin in respect
of Base Rate Advances, payable in arrears on the last Business Day of each March, June,
September and December and on the date such Base Rate Advance shall be paid in full.




     (ii) Eurodollar Advances. If such Revolving Advance is a Eurodollar Advance, a
rate per annum equal to the Eurodollar Rate for such Interest Period plus the
Applicable Margin in respect of Eurodollar Advances, payable in arrears on the last day of
such Interest Period, and, in the case of Interest Periods of greater than three months, on
each Business Day which occurs at three month intervals from the first day of such Interest
Period.



     (b) Additional Interest on Eurodollar Advances. The Borrower shall pay to each
Lender, so long as any such Lender shall be required under regulations of the Federal Reserve Board
to maintain reserves with respect to liabilities or assets consisting of or including Eurocurrency
Liabilities incurred in connection with Borrowings made hereunder in the form of Eurodollar
Advances, additional interest on the unpaid principal amount of the Eurodollar Advances of such
Lender, from the effective date of such Eurodollar Advance until such principal amount is paid in
full, at an interest rate per annum equal at all times to the remainder obtained by subtracting
(i) the Eurodollar Rate for the Interest Period for such Revolving Advance from (ii) the rate
obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage of such Lender for such Eurodollar Advances for such Interest Period, payable on
each date on which interest is payable on such



42









 







Revolving Advance. Such additional interest payable to any Lender shall be determined by such
Lender and notified to the Borrower through the Administrative Agent (such notice to include a
reasonably detailed calculation of such additional interest, which calculation shall be conclusive
absent manifest error, and be accompanied by any evidence indicating the need for such additional
interest and certification from such Lender that such Lender is generally requesting such
additional interest from other borrowers which such Lender reasonably deems similarly situated to
the Borrower.



     (c) Usury Recapture. If during any period a rate of interest contracted for under
this Agreement (calculated after giving affect to all items charged which constitute “interest”
under applicable laws, including fees and margin amounts, if applicable) is greater than the
Maximum Rate for the period of time in which such contracted rate would otherwise be in effect, the
unpaid principal amount of the Revolving Advances shall bear interest at the Maximum Rate until the
total amount of interest accrued on such principal amount equals the total amount of interest which
would accrued on such principal amount if such contract rate of interest had at all times been in
effect for such applicable period.



          In the event, upon payment in full of the Revolving Advances, the total amount of interest
paid or accrued under the terms of this Agreement and the Revolving Advances is less than the total
amount of interest which would have been paid or accrued if the rates of interest set forth in this
Agreement had, at all times, been in effect, then the Borrower shall, to the extent permitted by
applicable law, pay the Administrative Agent for the account of the Lenders an amount equal to the
difference between (i) the lesser of (A) the amount of interest which would have been charged on
its Revolving Advances if the Maximum Rate had, at all times, been in effect and (B) the amount of
interest which would have accrued on its Revolving Advances if the rates of interest set forth in
this Agreement had at all times been in effect and (ii) the amount of interest actually paid under
this Agreement on its Revolving Advances.




          In the event the Lenders ever receive, collect or apply as interest any sum in excess of the
Maximum Rate, such excess amount shall, to the extent permitted by law, be applied to the reduction
of the principal balance of the Revolving Advances, and if no such principal is then outstanding,
such excess or part thereof remaining shall be paid to the Borrower.




     (d) Default Interest. If the Borrower shall default in the payment of the principal
of or interest on any Revolving Advance or any other amount becoming due hereunder, by acceleration
or otherwise, or under any other Loan Document, the Borrower shall on demand from time to time pay
interest, to the extent permitted by law, on the outstanding Revolving Advances to but excluding
the date of actual payment (after as well as before judgment) (a) in the case of overdue principal,
at the rate otherwise applicable to such Revolving Advance pursuant to Section 2.06 plus
2.00% per annum, (b) in the case of Letter of Credit Fees, at a rate per annum equal to the
Applicable Margin for Eurodollar Advances plus 2% per annum and (c) in all other cases, at a rate
per annum (computed on the basis of the actual number of days elapsed over a year of 365 or 366
days, as the case may be, when determined by reference to the Prime Rate and over a year of 360
days at all other times) equal to the rate that would be applicable to a Base Rate Advance plus
2.00%.



     Section 2.07 Prepayments.



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     (a) Right to Prepay. The Borrower shall have no right to prepay any principal amount
of any Revolving Advance except as provided in this Section 2.07.



     (b) Optional. At any time and from time to time, the Borrower may elect to prepay, in
whole or in part without premium or penalty, any of the Revolving Advances owing by it to the
Lenders, after giving prior written notice of such election by (i) 12:00 p.m. (New York time) at
least three Business Days before such prepayment date, in the case of Borrowings which are
comprised of Eurodollar Advances, and (ii) 12:00 p.m. (New York time) on or before the Business Day
of such prepayment, in case of Borrowings which are comprised of Base Rate Advances, in each case
to the Administrative Agent stating the proposed date and aggregate principal amount of such
prepayment and the Type(s) of Revolving Advances to be prepaid and, if Eurodollar Advances are to
prepaid, the Interest Period(s) thereof. If any such notice is given, the Administrative Agent
shall give prompt notice thereof to each Lender and of the amount of such Lender’s Pro Rata Share
thereof and the Borrower shall prepay on the prepayment date specified therein Revolving Advances
comprising part of the same Borrowing in whole or ratably in part in an aggregate principal amount
equal to the amount specified in such notice, together with accrued and unpaid interest to the date
of such prepayment on the principal amount prepaid and amounts, if any, required to be paid
pursuant to Section 2.08 as a result of such prepayment being made on such date;
provided, however, that each partial prepayment shall be in an aggregate principal
amount not less than $1,000,000 and in integral multiples of $250,000 in excess thereof (or such
lesser amount as may then be outstanding).



     (c) Mandatory Prepayments of Revolving Advances.




     (i) Deficiency. On any date on which the aggregate outstanding principal
amount of the Revolving Advances plus the Letter of Credit Exposure exceeds the
least of (A) the aggregate Revolving Commitments, (B) the Borrowing Base and (C) the Fixed
Charge Coverage Cap, the Borrower shall prepay the Revolving Advances, as set forth in
Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide
cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in
the amount of such excess; provided, however, that the Borrower shall not be
required to make deposits into the LC Cash Collateral Account until the Revolving Advances
have been repaid in full; and provided further, that if any change in the
Fixed Charge Coverage Cap causes such excess to occur, then the Borrower shall make such
prepayment or deposit within 5 days after a Responsible Officer of the Borrower’s knowledge
thereof.




     (ii) Reduction of Revolving Commitments. On the date of each reduction of the
aggregate Revolving Commitments pursuant to Section 2.04, the Borrower shall prepay
the Revolving Advances or make deposits into the LC Cash Collateral Account to provide cash
collateral for the Letter of Credit Exposure, or any combination of the foregoing, to the
extent, if any, that the aggregate unpaid principal amount of all Revolving Advances
plus the Letter of Credit Exposure exceeds the least of (i) the aggregate Revolving
Commitments, (ii) the Borrowing Base and (iii) the Fixed Charge Coverage Cap;
provided, however, that the Borrower shall not be required to make deposits
into the LC Cash Collateral Account until the Revolving Advances have been repaid in full.



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     (iii) Asset Dispositions; Recovery Event.




     (A) If the Borrower or any of its Subsidiaries shall at any time or from time
to time receive Net Cash Proceeds in excess of $2,000,000 from any Asset Disposition
or Recovery Event, then (1) the Borrower shall promptly notify Administrative Agent
of the amount of such Net Cash Proceeds and (2) except as may otherwise permitted by
clauses (B) or (C) of this Section 2.07(c)(iii), and subject to Section
2.07(c)(vii), on the next Business Day following such receipt, the Borrower
shall prepay the Revolving Advances, as set forth in Section 2.07(c)(vi), or
make deposits into the LC Cash Collateral Account to provide cash collateral for the
Letter of Credit Exposure, or any combination of the foregoing, in an amount equal
to the amount of such Net Cash Proceeds; provided, however, that the
Borrower shall not be required to make deposits into the LC Cash Collateral Account
(x) until the Revolving Advances have been repaid in full and (y) unless and only to
the extent that, on such date, the LC Cash Collateral Account contains an amount
less than 100% of the Letter of Credit Exposure on such date.




     (B) At the election of the Borrower (and in lieu of clause (C) of this
Section 2.07(c)(iii)), and so long as no Default or Event of Default shall
have occurred and is continuing, the Borrower, the applicable Subsidiary or other
Loan Party (or any combination of the foregoing) may reinvest all or any portion of
such Net Cash Proceeds if such reinvestment complies with the following
requirements: (1) the Borrower shall deliver to the Administrative Agent a
certificate of a Responsible Officer of the Borrower to the effect that the Borrower
and/or any such permitted Subsidiary or other Loan Party intends to reinvest all or
any portion of such Net Cash Proceeds in accordance with this
Section 2.07(c)(iii)(B); (2) the Borrower, the applicable Subsidiary or
other Loan Party (or any combination of the foregoing) shall reinvest or commit to
reinvest such Net Cash Proceeds to acquire Rigs or other operating assets (including
the construction of any such assets and the Acquisition of all of the Equity
Interests in one or more Persons owning or constructing any such assets) or to
improve, enlarge, develop, re-construct or repair the affected asset, or any
combination of the foregoing in each case, within 365 days after the receipt of the
applicable Net Cash Proceeds, (3) the Borrower, the applicable Subsidiary or other
Loan Party (or any combination of the foregoing) shall take all related actions
required by Section 5.12 through Section  5.15, as the case
may be, with respect thereto (provided that (y) any Equity Interests purchased with
Net Cash Proceeds of Collateral pursuant to this Section 2.07(c)(iii)(B)
shall be issued by a Person organized under the laws of the United States of America
or any state or political subdivision of thereof or the District of Columbia and (z)
solely for purposes of this clause (3), Section 5.12 shall not apply to any
Rig purchased, improved, enlarged, developed, re-constructed or repaired, in each
case unless such Rig is a Collateral Rig, with Net Cash Proceeds of any Asset
Disposition of a Non-Collateral Rig); provided, further,
however, that if any Net Cash Proceeds shall not be expended in accordance
with this Section 2.07(c)(iii) within such period or if an Event of Default
shall subsequently occur and be continuing, the Borrower



45









 







shall prepay the Revolving Advances, as set forth in
Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to
provide cash collateral for the Letter of Credit Exposure, or any combination of the
foregoing, in an amount equal to the amount of such Net Cash Proceeds not expended
in accordance with this Section 2.07(c)(iii)(B); provided,
however, that the Borrower shall not be required to make deposits into the
LC Cash Collateral Account (x) until the Revolving Advances have been repaid in full
and (y) unless and only to the extent that, on such date, the LC Cash Collateral
Account contains an amount less than 100% of the Letter of Credit Exposure on such
date.




     (C) At the election of the Borrower (and in lieu of clause (B) of this
Section 2.07(c)(iii)), and so long as no Default or Event of Default shall
have occurred and is continuing, the Borrower, the applicable Subsidiary or other
Loan Party (or any combination of the foregoing) may, if the property affected by an
Asset Disposition or Recovery Event (as the case may be) was a Collateral Rig,
substitute one or more Non-Collateral Rigs rather than prepay any related amounts or
reinvest all or any portion of such Net Cash Proceeds, if such substitution complies
with the following requirements: (1) the Borrower shall deliver to the
Administrative Agent a certificate of a Responsible Officer of the Borrower to the
effect that the Borrower and/or any such permitted Subsidiary or other Loan Party
intends to substitute one or more Non-Collateral Rigs for the affected Collateral
Rig; (2) the Non-Collateral Rig(s) proposed for substitution shall each be an
Acceptable Replacement Rig; (3) the Borrower, the applicable Subsidiary or other
Loan Party (or any combination of the foregoing) shall encumber such theretofore
Non-Collateral Rig in favor of the Administrative Agent, for the ratable benefit of
the Secured Parties, such that such Rig thereafter becomes a Collateral Rig and
shall take all related actions required by Section 5.12 through Section
5.15, as the case may be, with respect thereto; provided,
further, however, that if an Event of Default shall subsequently
occur and be continuing, the Borrower shall prepay the Revolving Advances, as set
forth in Section 2.07(c)(vi), or make deposits into the LC Cash Collateral
Account to provide cash collateral for the Letter of Credit Exposure, or any
combination of the foregoing, in an amount not less than all of the applicable Net
Cash Proceeds received.




     (D) Pending the application of any such Net Cash Proceeds, the Borrower may (1)
reduce outstanding Debt under the Revolving Advances and may, subject to the
fulfillment of the applicable conditions set forth in Section 3.02, reborrow
such amounts (which amounts, to the extent originally constituting Net Cash
Proceeds, shall be deemed to retain their original character as Net Cash Proceeds
when so reborrowed) for application as required by this Section 2.07 or (2)
invest such Net Cash Proceeds in Cash Equivalents in which the Administrative Agent,
for the ratable benefit of the Secured Parties, has an Acceptable Security Interest.
With respect to any Asset Disposition or Recovery Event which will result in Net
Cash Proceeds in excess of $25,000,000, the Borrower shall notify the Administrative
Agent thereof on or prior to the date of



46









 







the applicable Asset Disposition or promptly following the date that the
Borrower has actual knowledge that a Recovery Event has occurred.




     (iv) Equity Issuance. Upon the issuance and sale by the Borrower of any of its
Equity Interests (other than Excluded Equity Issuances), the Borrower shall, subject to
Section 2.07(c)(vii), prepay the Revolving Advances, as set forth in
Section 2.07(c)(vi), or make deposits into the LC Cash Collateral Account to provide
cash collateral for the Letter of Credit Exposure, or any combination of the foregoing, in
an amount equal to all Net Cash Proceeds received by it therefrom on the next Business Day
following receipt thereof by the Borrower; provided, however, that the
Borrower shall not be required to make deposits into the LC Cash Collateral Account (x)
until the Revolving Advances have been repaid in full and (y) unless and only to the extent
that, on such date, the LC Cash Collateral Account contains an amount less than 100% of the
Letter of Credit Exposure on such date; provided, further, however,
that at the election of the Borrower (as notified by the Borrower to the Administrative
Agent on or prior to the date of receipt of such Net Cash Proceeds), and so long as no
Default or Event of Default shall have occurred and be continuing, the Borrower may reinvest
or commit to reinvest such proceeds in assets and properties of the nature described in
clause (2) of Section 2.07(c)(iii)(B) or for other corporate purposes within 365
days of receipt of such Net Cash Proceeds and pending application of such proceeds, the
Borrower may apply such proceeds as provided in Section 2.07(c)(iii)(D); and
provided, further, however, that if any Net Cash Proceeds shall not
be expended in accordance with this Section 2.07(c)(iv) within such period or if an Event of
Default shall subsequently occur and be continuing, the Borrower shall prepay the Revolving
Advances, as set forth in Section 2.07(c)(vi), or make deposits into the LC Cash
Collateral Account to provide cash collateral for the Letter of Credit Exposure, or any
combination of the foregoing, in an amount equal to the remaining Net Cash Proceeds, if any;
provided, however, that the Borrower shall not be required to make deposits
into the LC Cash Collateral Account (x) until the Revolving Advances have been repaid in
full and (y) unless and only to the extent that, on such date, the LC Cash Collateral
Account contains an amount less than 100% of the Letter of Credit Exposure on such date.




     (v) Reserved.




     (vi) Application of Prepayments. Each prepayment pursuant to this Section
2.07(c) shall be accompanied by accrued interest on the amount prepaid to the date of
such prepayment and amounts, if any, required to be paid pursuant to Section 2.08 as
a result of such prepayment being made on such date.




     (vii) Notwithstanding any of the other provisions of clauses (iii) through (v) of this
Section 2.07(c), so long as no Default under Section 7.01(a) or
Section 7.01(e), or Event of Default shall have occurred and be continuing:




     (A) If, on any date on which a prepayment would otherwise be required to be
made pursuant to clause (iii), (iv) or (v) of this Section 2.07(c), unless
an Event of Default has occurred and is continuing, the aggregate amount of Net Cash
Proceeds required by such clause to be applied to prepay Revolving



47









 







Advances on such date is less than or equal to $2,500,000, the Borrower may
defer such prepayment until the first date thereafter on which the aggregate amount
of Net Cash Proceeds or other amounts otherwise required under clause (iii), (iv) or
(v) of this Section 2.07(c) to be applied to prepay Revolving Advances
exceeds $2,500,000. During such deferral period, unless an Event of Default has
occurred and is continuing, the Borrower may apply all or any part of such aggregate
amount to prepay Revolving Advances and may, subject to the fulfillment of the
applicable conditions set forth in Section 3.02, reborrow such amounts
(which amounts, to the extent originally constituting Net Cash Proceeds, shall be
deemed to retain their original character as Net Cash Proceeds when so reborrowed)
for application as required by this Section 2.07. Upon the occurrence of a
Default under Section 7.01(a) or Section 7.01(e), or an Event of
Default during any such deferral period, the Borrower shall immediately prepay the
Revolving Advances in the amount of all Net Cash Proceeds received by the Borrower
and other amounts, as applicable, that are required to be applied to prepay
Revolving Advances under this Section 2.07 (without giving effect to the
first and second sentences of this clause (A)) but which have not previously been so
applied.




     (B) If, on any date on which a prepayment would otherwise be required to be
made pursuant to clause (iii), (iv) or (v) of this Section 2.07(c), unless
an Event of Default has occurred and is continuing, the Borrower may, upon prior
written notice to the Administrative Agent, elect to defer all or any portion of
such required prepayment until the end of one or more Interest Periods immediately
following the receipt of such Net Cash Proceeds provided that (1) all of the
applicable Net Cash Proceeds not previously applied to prepay the Revolving Advances
shall be deposited in a deposit account subject to an Account Control Agreement no
later than the one Business Day following receipt of such Net Cash Proceeds and
(2) such Net Cash Proceeds are applied to prepay the Revolving Advances at the end
of such Interest Period(s), as the case may be or immediately if an Event of Default
has occurred and is continuing. The Borrower hereby grants to the Administrative
Agent, for the ratable benefit of the Secured Parties, a security interest in all
such cash, deposit accounts and all balances therein and all proceeds of the
foregoing.



     (d) Illegality. If any Lender shall notify the Administrative Agent and the Borrower
in writing that any Change in Law makes it unlawful (such unlawfulness being an “Illegality
Event”) for such Lender or its Applicable Lending Office (such Lender being an “Affected
Lender”) to perform its obligations under this Agreement or to make or maintain Eurodollar
Advances then outstanding hereunder, then the Borrower shall, no later than 12:00 p.m. (New York
time) (i) (A) if not prohibited by any Legal Requirement applicable to such Affected Lender to
maintain such Eurodollar Advances for the duration of the Interest Period, on the last day of the
Interest Period for each outstanding Eurodollar Advance or (B) if prohibited by any Legal
Requirement applicable to such Affected Lender to maintain such Eurodollar Advances for the
duration of the Interest Period, on the third Business Day following its receipt of such notice,
prepay all Eurodollar Advances of all of the Lenders then outstanding, together with accrued and
unpaid interest on the principal amount prepaid to the date of such prepayment and amounts, if



48









 







any, required to be paid pursuant to Section 2.08 as a result of such prepayment being
made on such date, (ii) each Affected Lender shall simultaneously make a Base Rate Advance and each
other Lender shall make an Eurodollar Advance, in each case, in an amount equal to the aggregate
principal amount of the affected Eurodollar Advances, and (iii) the right of the Borrower to select
Eurodollar Advances shall be suspended until the earlier to occur of the date on which (A) such
Affected Lender shall notify the Administrative Agent that the Illegality Event no longer exists
and (B) such Affected Lender shall be replaced by the Borrower pursuant to Section 2.15(b)
with a Person that is not prohibited from performing its obligations under this Agreement or from
making or maintaining Eurodollar Advances. Each Lender agrees to (x) promptly notify the
Administrative Agent and the Borrower in writing if such Illegality Event ceases to exist and (y)
use commercially reasonable efforts (consistent with its internal policies and subject to legal and
regulatory restrictions) to designate a different Applicable Lending Office if the making of such
designation would avoid the effect of this paragraph and would not, in the reasonable judgment of
such Lender, be otherwise disadvantageous to such Lender.



     (e) Ratable Payments; Effect of Notice. Each payment of any Revolving Advance
pursuant to this Section 2.07 or any other provision of this Agreement shall be made in a
manner such that all Revolving Advances comprising part of the same Borrowing are paid in whole or
ratably in part; provided, however, that the Borrower shall not be obligated to pay
the Administrative Agent, and the Defaulting Lender shall not be entitled to receipt of, such
Defaulting Lender’s Pro Rata Share of such prepayment until such time as the Borrowings for which
such Defaulting Lender shall have failed to fund have either been paid by such Defaulting Lender,
including any other amounts owing pursuant thereto, or each Lender (including each Defaulting
Lender) is owed its ratable share of all Revolving Commitments then outstanding. All notices given
pursuant to this Section 2.07 shall be irrevocable and binding upon the Borrower.



     Section 2.08 Funding Losses. If (a) any payment of principal of any Eurodollar
Advance is made other than on the last day of the Interest Period for such Revolving Advance as a
result of any payment pursuant to Section 2.07 or the acceleration of the maturity of the
Revolving Advances pursuant to Article VII or (b) if the Borrower fails to make a principal
or interest payment with respect to any Eurodollar Advance on the date such payment is due and
payable, the Borrower shall, within three Business Days of any written demand sent by any Lender to
the Borrower through the Administrative Agent, pay to Administrative Agent for the account of such
Lender any amounts (without duplication of any other amounts payable in respect of breakage costs)
required to compensate such Lender for any additional losses (excluding loss of anticipated
profits), out-of-pocket costs or expenses which it may reasonably incur as a result of such payment
or nonpayment, including, without limitation, any loss (excluding loss of anticipated profits),
cost or expense actually incurred by reason of the liquidation or reemployment of deposits or other
funds acquired by any Lender to fund or maintain such Revolving Advance. A certificate of any
Lender setting forth any amount or amounts that such Lender is entitled to receive pursuant to this
Section, including reasonably detailed calculations thereof, shall be delivered to the Borrower and
shall be conclusive absent manifest error.



     Section 2.09 Increased Costs.



49









 





     (a) Increased Costs Generally. If any Change in Law shall:




     (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan,
insurance charge or similar requirement against assets of, deposits with or for the account
of, or credit extended or participated in by, any Lender (except any reserve requirement
reflected in the Eurodollar Rate Reserve Percentage), or the Issuing Bank;




     (ii) subject any Lender or the Issuing Bank to any tax of any kind whatsoever with
respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or
any Eurodollar Advance made by it, or change the basis of taxation of payments to such
Lender or the Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes
covered by Section 2.11 and the imposition of, or any change in the rate of, any
Excluded Tax payable by such Lender or the Issuing Bank); or




     (iii) impose on any Lender, the Issuing Bank, or the London interbank market any other
condition, cost or expense affecting this Agreement or Eurodollar Advances made by such
Lender, the Issuing Bank, or any Letter of Credit or participation therein;




and the result of any of the foregoing shall be to increase the cost to such Lender of
making or maintaining any Eurodollar Advance (or of maintaining its obligation to make any
such Eurodollar Advance), or to increase the cost to such Lender or the Issuing Bank of
participating in, issuing or maintaining any Letter of Credit (or of maintaining its
obligation to participate in or to issue any Letter of Credit), or to reduce the amount of
any sum received or receivable by such Lender or the Issuing Bank (whether of principal,
interest or any other amount) then, upon request of such Lender or the Issuing Bank, the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank, as the case may be,
for such additional costs incurred or reduction suffered.



     (b) Capital Requirements. If any Lender or the Issuing Bank determines that any Change
in Law affecting such Lender or the Issuing Bank or any Applicable Lending Office of such Lender or
the Issuing Bank or such Lender’s or the Issuing Bank’s holding company, if any, regarding capital
requirements has or would have the effect of reducing the rate of return on such Lender’s or the
Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if
any, as a consequence of this Agreement, the Revolving Commitments of such Lender or the Revolving
Advances made by, or participations in Letters of Credit held by, such Lender, or the Letters of
Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or
such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law
(taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such
Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then from time to
time the Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the
Issuing Bank’s holding company for any such reduction suffered.




50











 





     (c) Certificates for Reimbursement. A certificate of a Lender or the Issuing Bank
setting forth, in reasonable detail, (i) the amount or amounts necessary to compensate such Lender
or the Issuing Bank or any of their respective holding companies, as the case may be, as specified
in paragraph (a) or (b) of this Section, and (ii) the Change in Law, circumstance or other basis
for such compensation, delivered to the Borrower shall be conclusive absent manifest error. The
Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on
any such certificate within 10 days after receipt thereof. Upon request by the Borrower, a Lender
or the Issuing Bank shall also provide a certificate that such Lender or the Issuing Bank is
generally requesting such compensation from other borrowers which such Lender or the Issuing Bank
reasonably deems similarly situated to the Borrower.



     (d) Delay in Requests. Failure or delay on the part of any Lender or the Issuing Bank
to demand compensation pursuant to this Section shall not constitute a waiver of such Lender’s or
the Issuing Bank’s right to demand such compensation, provided that the Borrower shall not
be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased
costs incurred or reductions suffered more than nine months prior to the date that such Lender or
the Issuing Bank, as the case may be, notifies the Borrower of the Change in Law giving rise to
such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim
compensation therefor (except that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the nine-month period referred to above shall be extended to
include the period of retroactive effect thereof).



     Section 2.10 Payments and Computations.



     (a) Payment Procedures. The Borrower shall make each payment under this Agreement not
later than 1:00 p.m. (New York time) on the day when due to the Administrative Agent at the
Administrative Agent’s Applicable Lending Office in immediately available funds. Each Revolving
Advance shall be repaid and each payment of interest thereon shall be paid in Dollars. All
payments shall be made without setoff, deduction, or counterclaim other than in respect of amounts
owed by the Borrower to a Defaulting Lender. The Administrative Agent will promptly thereafter, and
in any event prior to the close of business on the day any timely payment is made, cause to be
distributed like funds relating to the payment of principal, interest or fees ratably (other than
amounts payable solely to the Administrative Agent, or a specific Lender pursuant to Section
2.03(b), 2.03(c), 2.03(d), 2.08, 2.09 or 2.11) to the
Lenders in accordance with each Lender’s Pro Rata Share for the account of their respective
Applicable Lending Offices, and like funds relating to the payment of any other amount payable to
any Lender to such Lender for the account of its Applicable Lending Offices, in each case to be
applied in accordance with the terms of this Agreement.



     (b) Computations. All computations of interest based on the Prime Rate shall be made
by the Administrative Agent on the basis of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Eurodollar Rate and of fees shall be made by the
Administrative Agent, on the basis of a year of 360 days, in each case for the actual number of
days (including the first day, but excluding the last day) occurring in the period for which such
interest or fees are payable. Each determination by the Administrative Agent of an interest rate
shall be conclusive and binding for all purposes, absent manifest error.



51









 





     (c) Non-Business Day Payments. Whenever any payment shall be stated to be due on a
day other than a Business Day, such payment shall be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of payment of interest or
fees, as the case may be.



     (d) Agent Reliance. Unless the Administrative Agent shall have received written
notice from the Borrower prior to the date on which any payment is due to the Lenders that the
Borrower will not make such payment in full, the Administrative Agent may assume that the Borrower
has made such payment in full to the Administrative Agent on such date and the Administrative Agent
may, in reliance upon such assumption, cause to be distributed to each Lender on such date an
amount equal to the amount then due to such Lender. If and to the extent the Borrower shall not
have so made such payment in full to Administrative Agent, each Lender shall repay to the
Administrative Agent forthwith on demand such amount distributed to such Lender, together with
interest thereon, for each day from the date such amount is distributed to such Lender until the
date such Lender repays such amount to the Administrative Agent, at a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank compensation.



     (e) Certain Deductions by the Administrative Agent. If any Lender shall fail to make
any payment required to be made by it pursuant to Sections 2.01, 2.02(e),
2.10(d), 2.14(b), or 2.14(c) then the Administrative Agent may, in its
discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received
by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations
under such Sections until all such unsatisfied obligations are fully paid and the Administrative
Agent shall promptly provide written notice to the Borrower of any such application of amounts. If
at any time prior to the acceleration or maturity of the Revolving Advances, the Administrative
Agent shall receive any payment in respect of principal of a Revolving Advance or a reimbursement
of Letter of Credit Obligations while one or more Defaulting Lenders shall be party to this
Agreement, the Administrative Agent shall apply such payment first to satisfy such Defaulting
Lender’s obligations to fund its Pro Rata Share of any Borrowings until such time as such
unsatisfied obligations are paid in full or each Lender (including each Defaulting Lender) is owed
its Pro Rata Share of all Revolving Advances then outstanding. After acceleration or maturity of
the Revolving Advances, all principal will be paid ratably as provided in Section 7.06.



     Section 2.11 Taxes.



     (a) Payments Free of Taxes. Any and all payments by or on account of any obligation of
any Loan Party hereunder or under any other Loan Document shall be made free and clear of and
without reduction or withholding for any Indemnified Taxes or Other Taxes, provided that if
any Loan Party shall be required by any Legal Requirement applicable to such Loan Party to deduct
any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative Agent, such Lender or
the Issuing Bank, as the case may be, receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall make such deductions and (iii) the
Borrower shall timely pay the full amount deducted to the relevant Governmental Authority in
accordance with such Legal Requirements.



52









 





     (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
paragraph (a) above, the Borrower shall timely pay any Other Taxes to the relevant Governmental
Authority in accordance with applicable law, to the extent such Other Taxes are imposed on the
Borrower under applicable law.



     (c) Indemnification by the Borrower. The Borrower shall indemnify the Administrative
Agent, each Lender and the Issuing Bank, within 10 days after demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) paid by the Administrative
Agent, such Lender or the Issuing Bank, as the case may be, on or with respect to any payment by or
on account of any obligation of the Borrower hereunder (including any penalties, interest and
reasonable expenses arising therefrom or with respect thereto), except as a result of the gross
negligence or willful misconduct of the Administrative Agent, such Lender or the Issuing Bank, as
the case may be, whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Issuing Bank (with a copy to the
Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender or
the Issuing Bank, shall be conclusive absent manifest error.



     (d) Evidence of Payments. As soon as reasonably practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting such payment or
other evidence of such payment reasonably satisfactory to the Administrative Agent.



     (e) Status of Lenders. Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the Borrower is resident
for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments
hereunder or under any other Loan Document shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by
the Borrower or the Administrative Agent, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without withholding or at a
reduced rate of withholding. In addition, any Lender or the Issuing Bank, at the time or times
prescribed by applicable law or reasonably requested by the Borrower or the Administrative Agent,
shall deliver such other documentation prescribed by applicable law or reasonably requested by the
Borrower or the Administrative Agent as will enable the Borrower or the Administrative Agent to
determine whether or not such Lender or the Issuing Bank is subject to backup withholding or
information reporting requirements. Each Lender shall promptly notify the Borrower and the
Administrative Agent of any change in circumstances which would modify or render invalid any
claimed exemption of or reduction in withholdings.



          Without limiting the generality of the foregoing, in the event that the Borrower is resident
for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrower
and the Administrative Agent (in such number of copies as shall be requested by the recipient) on
or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from
time to time thereafter upon the request of the Borrower or the



53









 






Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever
of the following is applicable:





     (i) duly completed copies of Internal Revenue Service Form W-8BEN claiming eligibility
for benefits of an income tax treaty to which the United States of America is a party,




     (ii) duly completed copies of Internal Revenue Service Form W-8ECI,




     (iii) in the case of a Foreign Lender claiming the benefits of the exemption for
portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that
such Foreign Lender is not (A) a “bank” within the meaning of section 881(c)(3)(A) of the
Code, (B) a “10 percent shareholder” of the Borrower within the meaning of section
881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in section
881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form
W-8BEN, or




     (iv) any other form prescribed by applicable law as a basis for claiming exemption from
or a reduction in United States Federal withholding tax duly completed together with such
supplementary documentation as may be prescribed by applicable law to permit the Borrower
and the Administrative Agent to determine the withholding or deduction required to be made.



     (f) Treatment of Certain Refunds. If the Administrative Agent, a Lender or the Issuing
Bank determines, in its reasonable discretion, that it has received a refund, credit or deduction
from any taxing authority to which it would not be entitled but for the payment of any Taxes or
Other Taxes as to which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section (it being understood that the
decision as to whether or not to claim, and if claimed, as to the amount of any such refund, credit
or deduction shall be made by the Administrative Agent, such Lender or the Issuing Bank, as the
case may be, in its sole discretion), it shall pay to the Borrower an amount equal to such refund,
credit or deduction (but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out of pocket expenses of the Administrative Agent and Lender or the Issuing
Bank, as the case may be, without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund), provided that the Borrower, upon the
request of the Administrative Agent, such Lender or the Issuing Bank, agrees to repay the amount
paid over to the Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent, such Lender or the Issuing Bank in the event
the Administrative Agent, such Lender or the Issuing Bank is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require the Administrative Agent,
any Lender or the Issuing Bank to make available its tax returns (or any other information relating
to its taxes that it deems confidential) to the Borrower or any other Person.



     (g) Delay in Requests. Failure or delay on the part of any Lender or the Issuing Bank
to demand reimbursement or indemnification pursuant to this Section shall not constitute a



54









 







waiver of such Lender’s or the Issuing Bank’s right to demand such payment, provided
that the Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this
Section for any Indemnified Taxes or Other Taxes incurred more than nine months prior to the date
that such Lender or the Issuing Bank, as the case may be, notifies the Borrower of the imposition
or assertion thereof.



     Section 2.12 Sharing of Payments, Etc. If any Lender shall, by exercising any right
of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest
on any of its Revolving Advances or other obligations hereunder resulting in such Lender’s
receiving payment of a proportion of the aggregate amount of its Revolving Advances and accrued
interest thereon or other such obligations greater than its Pro Rata Share, then the Lender
receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b)
purchase (for cash at face value) participations in the Revolving Advances and such other
obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the
benefit of all such payments shall be shared by the Lenders ratably in accordance with the
aggregate amount of principal of and accrued interest on their respective Revolving Advances and
other amounts owing them, provided that: (i) if any such participations are purchased and
all or any portion of the payment giving rise thereto is recovered, such participations shall be
rescinded and the purchase price restored to the extent of such recovery, without interest; and
(ii) the provisions of this paragraph shall not be construed to apply to (x) any payment made by
the Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any
payment obtained by a Lender as consideration for the assignment of or sale of a participation in
any of its Revolving Advances or participations in Letters of Credit to any permitted assignee or
participant, other than to the Borrower or any Subsidiary thereof (as to which the provisions of
this paragraph shall apply). Each Loan Party consents to the foregoing and agrees, to the extent
it may effectively do so under applicable law, that any Lender acquiring a participation pursuant
to the foregoing arrangements may exercise against each Loan Party rights of setoff and
counterclaim with respect to such participation as fully as if such Lender were a direct creditor
of each Loan Party in the amount of such participation.



     Section 2.13 Applicable Lending Offices. Each Lender may book its Revolving Advances
at any Applicable Lending Office selected by such Lender and may change its Applicable Lending
Office from time to time. All terms of this Agreement shall apply to any such Applicable Lending
Office and the Revolving Advances shall be deemed held by each Lender for the benefit of such
Applicable Lending Office. Each Lender may, by written notice to the Administrative Agent and the
Borrower designate replacement or additional Applicable Lending Offices through which Revolving
Advances will be made by it and for whose account repayments are to be made.



     Section 2.14 Letters of Credit.



     (a) Issuance. Subject to the terms of this Agreement, from time-to-time from the
Closing Date until five Business Days before the Maturity Date, at the request of the Borrower, the
Issuing Bank shall, on the terms and conditions hereinafter set forth, issue, increase, extend the
expiration date of and honor drawings under Letters of Credit for the account of the Borrower or
for the account of any Subsidiary of the Borrower (in which case the Borrower and such Subsidiary
shall be co-applicants with respect to such Letter of Credit) on any Business Day.



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Within the foregoing limits, and subject to the terms and conditions hereof, the Borrower’s
ability to obtain Letters of Credit shall be fully revolving, and the Borrower may, during the
foregoing period, obtain Letters of Credit to replace Letters of Credit that have expired or that
have been drawn upon and reimbursed. No Letter of Credit will be issued, increased, or extended:





     (i) if such issuance, increase, or extension would cause the Letter of Credit Exposure
to exceed an amount equal to (A) the lesser of (1) the Letter of Credit Sublimit and (2) the
least of (a) the aggregate Revolving Commitments, (b) the Borrowing Base and (c) the Fixed
Charge Coverage Cap minus (B) the aggregate outstanding principal amount of all
Revolving Advances;




     (ii) if such issuance, increase, or extension would cause the applicable portion of the
Letter of Credit Exposure to violate Section 5.09;




     (iii) unless such Letter of Credit has an expiration date not later than one year after
the date of issuance thereof; provided that, any such Letter of Credit with a
one-year tenor may expressly provide that it is automatically renewable for additional
one-year periods or less (which shall in no event extend beyond the Maturity Date unless the
conditions in Section 2.14(e) are satisfied), provided, further,
that such Letter of Credit must permit the Issuing Bank to prevent any such automatic
extension once in each twelve-month period by giving at least 30 days’ notice given by the
Issuing Bank to the Borrower and the beneficiary of such Letter of Credit;




     (iv) unless such Letter of Credit is in form and substance reasonably acceptable to the
Issuing Bank;




     (v) unless the Borrower has delivered to the Issuing Bank a completed and executed
Letter of Credit Application;




     (vi) unless (A) such Letter of Credit is governed by the Uniform Customs and Practice
for Documentary Credits (2007 Revision), International Chamber of Commerce Publication No.
600 or any successor to such publication, if such Letter of Credit is a commercial Letter of
Credit, or (B) such Letter of Credit is governed by the ISP, if such Letter of Credit is a
standby Letter of Credit; provided, however, that if the terms of any such
publication shall conflict with the terms of this Agreement, the terms of this Agreement
shall control; or




     (vii) if a default of any Lender’s obligations to fund under Section 2.14(c)
exists or any Lender is at such time a Defaulting Lender hereunder, unless the Issuing Bank
has entered into arrangements reasonably satisfactory to the Issuing Bank with the Borrower
or such Lender to eliminate the Issuing Bank’s risk with respect to such Lender.



     (b) Participations. Upon the date of the issuance or increase of a Letter of Credit
occurring on or after the Closing Date, the Issuing Bank shall be deemed to have sold to each other
Lender and each other Lender shall have been deemed to have purchased from the Issuing Bank a
participation in the related Letter of Credit Obligations equal to such Lender’s Pro Rata Share at
such date. In consideration and in furtherance of the foregoing, each Lender hereby



56









 







absolutely and unconditionally agrees to pay to the Administrative Agent, for the account of
the Issuing Bank, such Lender’s Pro Rata Share of each payment or disbursement made by an Issuing
Bank pursuant to a Letter of Credit and not reimbursed by the Borrower (or, if applicable, another
party pursuant to its obligations under any other Loan Document) forthwith on the date due as
provided in Section 2.14(c). Each Lender acknowledges and agrees that its obligation to
acquire participations pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever, including the occurrence
and continuance of a Default or Event of Default, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever. The Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a demand for payment
under a Letter of Credit. The Issuing Bank shall as promptly as possible give telephonic
notification, confirmed by fax, to the Administrative Agent and the Borrower of such demand for
payment and whether the Issuing Bank has made or will make disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse the Issuing Bank and the Lenders with respect to any such
payment or disbursement. The Administrative Agent shall promptly give each Lender notice thereof.



     (c) Reimbursement. Upon the Issuing Bank’s receipt from the beneficiary of any Letter
of Credit of any notice of a drawing under such Letter of Credit, the Issuing Bank shall notify the
Borrower and the Administrative Agent thereof. The Borrower hereby agrees to pay on demand to the
Issuing Bank in respect of each Letter of Credit issued for either of their account an amount equal
to any amount paid by the Issuing Bank under or in respect of such Letter of Credit. In the event
the Issuing Bank makes a payment pursuant to a request for draw presented under a Letter of Credit
and makes demand of the Borrower for the reimbursement thereof by 12:00 p.m. (New York time) the
Borrower shall reimburse the Issuing Bank for such amount paid by the Issuing Bank on the same
Business Day; provided, however, that if the Issuing Bank makes demand after such
time, the Borrower shall so reimburse the Issuing Bank on the next succeeding Business Day. If
such payment is not promptly reimbursed by the Borrower pursuant to the immediately preceding
sentence, the Issuing Bank shall give notice of such failure to pay to the Administrative Agent and
the Lenders, and each Lender shall promptly reimburse the Issuing Bank for such Lender’s Pro Rata
Share of such unreimbursed amount, and such reimbursement shall be deemed for all purposes of this
Agreement to constitute a Borrowing comprised of Base Rate Advances to the Borrower from such
Lender. If such reimbursement is not made by any Lender to the Issuing Bank on the same day on
which the Issuing Bank shall have made payment on any such draw, such Lender shall pay interest
thereon to the Issuing Bank at a rate per annum equal to a rate reasonably determined by the
Administrative Agent in accordance with banking industry rules on interbank compensation. The
Borrower hereby unconditionally and irrevocably authorizes, empowers, and directs the
Administrative Agent and the Lenders to record and otherwise treat such payment under a Letter of
Credit not immediately reimbursed by the Borrower as a Borrowing comprised of Base Rate Advances.



     (d) Obligations Unconditional. The obligations of the Borrower under this Agreement
in respect of each Letter of Credit shall be absolute, unconditional and irrevocable, and shall be
paid strictly in accordance with the terms of this Agreement under all circumstances,
notwithstanding the following circumstances:



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     (i) any lack of validity or enforceability of any Letter of Credit Documents, any Loan
Document, or any term or provision therein;




     (ii) the existence of any claim, set-off, defense or other right that the Borrower, any
other party guaranteeing, or otherwise obligated with, the Borrower, any subsidiary or other
Affiliate thereof or any other Person may have at any time against any beneficiary or
transferee of such Letter of Credit (or any Persons for whom any such beneficiary or any
such transferee may be acting), the Issuing Bank, any Lender or any other Person, whether in
connection with this Agreement, any other Loan Document, the transactions contemplated in
this Agreement or in any Letter of Credit Documents or any unrelated transaction;




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




     (iv) payment by the Issuing Bank under such Letter of Credit against presentation of a
draft or certificate which does not strictly comply with the terms of such Letter of Credit;
or




     (v) any other act or omission to act or delay of any kind of the Issuing Bank, the
Administrative Agent, the Lenders or any other Person or any other event, circumstance or
happening whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of the Borrower’s
obligations hereunder.


Without limiting the generality of the foregoing, it is expressly understood and agreed that the
absolute and unconditional obligation of the Borrower hereunder to reimburse each payment or
disbursement made by an Issuing Bank pursuant to a Letter of Credit will not be excused by the
gross negligence or willful misconduct of the Issuing Bank.




     (e) Prepayments of Letters of Credit. In the event that any Letters of Credit shall
be outstanding or shall be drawn and not reimbursed on the 90th day prior to the
Maturity Date, the Borrower shall pay to the Administrative Agent no later than 90 days prior to
the Maturity Date, an amount equal to 105% of the Letter of Credit Exposure allocable to such
Letters of Credit to be held in the LC Cash Collateral Account and applied in accordance with
paragraph (g) below.



     (f) Liability of Issuing Bank. The Borrower assumes all risks of the acts or
omissions of any beneficiary or transferee of any Letter of Credit with respect to its use of such
Letter of Credit. Neither the Issuing Bank nor any of its officers or directors shall be liable or
responsible for:




     (i) the use which may be made of any Letter of Credit or any acts or omissions of any
beneficiary or transferee in connection therewith;




     (ii) the validity, sufficiency or genuineness of documents, or of any endorsement
thereon, even if such documents should prove to be in any or all respects invalid,
insufficient, fraudulent or forged;



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     (iii) payment by the Issuing Bank against presentation of documents which do not comply
with the terms of a Letter of Credit, including failure of any documents to bear any
reference or adequate reference to the relevant Letter of Credit; or




     (iv) any other circumstances whatsoever in making or failing to make payment under any
Letter of Credit (including the Issuing Bank’s own negligence),


except that the Borrower shall have a claim against the Issuing Bank, and the Issuing Bank
shall be liable to, and shall promptly pay to, the Borrower, to the extent of any direct, as
opposed to consequential (claims in respect of which are hereby waived by the Borrower to the
extent permitted by applicable law), damages suffered by the Borrower which the Borrower prove were
proximately caused by (i) the Issuing Bank’s willful misconduct or gross negligence in determining
whether documents presented under a Letter of Credit strictly comply with the terms of such Letter
of Credit and (ii) the Issuing Bank’s willful failure to make payment under a Letter of Credit
after the presentation to it of a draft and documents strictly complying with the terms of such
Letter of Credit. It is understood that the Issuing Bank may accept documents that appear on their
face to be in order, without responsibility for further investigation, regardless of any notice or
information to the contrary and, in making any payment under any Letter of Credit (A) the Issuing
Bank’s exclusive reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including reliance on the amount of any draft presented under
such Letter of Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such Letter of Credit
proves to be insufficient in any respect, if such document on its face appears to be in order, and
whether or not any other statement or any other document presented pursuant to such Letter of
Credit proves to be forged or invalid or any statement therein proves to be inaccurate or untrue in
any respect whatsoever and (B) any noncompliance in any immaterial respect of the documents
presented under such Letter of Credit with the terms thereof shall, in each case, be deemed not to
constitute willful misconduct or gross negligence of the Issuing Bank.




     (g) LC Cash Collateral Account.




     (i) If the Borrower is required to deposit funds in the LC Cash Collateral Account
pursuant to Sections 2.07(c), 2.14(e), 7.02(b) or 7.03(b),
then the Borrower and the Administrative Agent shall establish the LC Cash Collateral
Account and the Borrower shall execute any documents and agreements, including an assignment
of deposit accounts in form and substance reasonably satisfactory to the Administrative
Agent, that the Administrative Agent reasonably requests in connection therewith to
establish the LC Cash Collateral Account and grant the Administrative Agent an Acceptable
Security Interest in such account and the funds therein. The Borrower hereby pledges to the
Administrative Agent and grants the Administrative Agent a security interest in the LC Cash
Collateral Account, whenever established, all funds held in the LC Cash Collateral Account
from time to time and all proceeds thereof as security for the payment of the Obligations.




     (ii) Funds held in the LC Cash Collateral Account shall be held as cash collateral for
obligations with respect to Letters of Credit and promptly applied by the



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Administrative Agent at the request of the Issuing Bank to any of the Borrower’s
reimbursement or other payment obligations that exist or occur under outstanding Letters of
Credit. To the extent that any surplus funds are held in the LC Cash Collateral Account
above 105% of the Letter of Credit Exposure during the existence of an Event of Default the
Administrative Agent may (A) hold such surplus funds in the LC Cash Collateral Account as
cash collateral for the Obligations or (B) apply such surplus funds to any Obligations in
any manner directed by the Required Lenders. If no Event of Default has occurred and is
continuing, the Administrative Agent shall promptly release to the Borrower at the
Borrower’s written request any funds held in the LC Cash Collateral Account above the
amounts required by Section 2.14(e).




     (iii) Funds held in the LC Cash Collateral Account shall be invested in Cash
Equivalents maintained with, and under the sole dominion and control of, the Administrative
Agent or in another investment if mutually agreed upon by the Borrower and the
Administrative Agent, but the Administrative Agent shall have no other obligation to make
any other investment of the funds therein. The Administrative Agent shall exercise
reasonable care in the custody and preservation of any funds held in the LC Cash Collateral
Account and shall be deemed to have exercised such care if such funds are accorded treatment
substantially equivalent to that which the Administrative Agent accords its own property, it
being understood that the Administrative Agent shall not have any responsibility for taking
any necessary steps to preserve rights against any parties with respect to any such funds.



     (h) Resignation or Removal of the Issuing Bank. The Issuing Bank may resign at any
time by giving written notice to the Administrative Agent, the Lenders and the Borrower, such
resignation to be effective upon the appointment of a successor Issuing Bank, or, if no successor
Issuing Bank has been appointed, 60 days after the retiring Issuing Bank gives such notice of its
intention to resign or receives notice of its removal. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, and provided that no Event of Default has
occurred and is continuing, with the consent of the Borrower (which consent shall not be
unreasonably withheld or delayed), a successor Issuing Bank. If no successor Issuing Bank shall
have been so appointed by the Required Lenders within such time period, then the Issuing Bank may
appoint, and provided that no Event of Default has occurred and is continuing, with the consent of
the Borrower (which consent shall not be unreasonably withheld or delayed), a successor Issuing
Bank. Subject to the next succeeding sentence, upon the acceptance of any appointment as the
Issuing Bank hereunder by a Lender that shall agree to serve as successor Issuing Bank, such
successor shall succeed to and become vested with all the interests, rights and obligations of the
retiring Issuing Bank and the retiring Issuing Bank shall be discharged from its obligations to
issue additional Letters of Credit hereunder. At the time such resignation shall become effective,
the Borrower shall pay all accrued and unpaid fees pursuant to Sections 2.03(d)(ii) and
(iii). The acceptance of any appointment as the Issuing Bank hereunder by a successor Lender
shall be evidenced by an agreement entered into by such successor, in a form reasonably
satisfactory to the retiring Issuing Bank, the Administrative Agent, and provided that no Event of
Default has occurred and is continuing, the Borrower, and, from and after the effective date of
such agreement, (i) such successor Lender shall have all the rights and obligations of the previous
Issuing Bank under this Agreement and the other Loan Documents and (ii) references herein and in
the other Loan Documents to the term “Issuing Bank” shall be



60









 







deemed to refer to such successor or to any previous Issuing Bank, or to such successor and
all previous Issuing Banks, as the context shall require. After the resignation or removal of the
Issuing Bank hereunder, the retiring Issuing Bank shall remain a party hereto and shall continue to
have all the rights and obligations of the Issuing Bank under this Agreement and the other Loan
Documents with respect to Letters of Credit issued by it prior to such resignation, but shall not
be required to issue additional Letters of Credit, until the Letter of Credit Obligations with
respect to Letters of Credit issued by such retiring Issuing Bank shall have been paid in full.



     (i) Conflict with Letter of Credit Documents. If any Letter of Credit Document shall
conflict with the terms of this Agreement, the terms of this Agreement shall control.



     Section 2.15 Mitigation Obligations; Replacement of Lenders; Removal of Defaulting
Lender.



     (a) Designation of a Different Lending Office. If any Lender requests compensation
under Section 2.09, or requires the Borrower to pay any additional amount to any Lender or
any Governmental Authority for the account of any Lender pursuant to Section 2.11, or if
any Lender gives a notice pursuant to Section 2.07(d), then such Lender shall use
reasonable efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or substantially reduce amounts payable pursuant to Section 2.09 or 2.11,
as the case may be, in the future, or eliminate the need for notice pursuant to Section
2.07(d), as applicable, and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.



     (b) Replacement of Lenders. If (i) any Lender requests compensation under Section
2.09 or (ii) the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.11, (iii) any
Lender becomes an Affected Lender as set forth in Section 2.07(d), (iv) if any Lender is a
Defaulting Lender or (v) if any other circumstance exists hereunder that gives the Borrower the
right to replace a Lender as a party hereto, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to assign and
delegate, without recourse and within three Business Days of such Lender’s receipt of such notice
(in accordance with and subject to the restrictions contained in, and consents required by,
Section 10.06), all of its interests, rights and obligations under this Agreement and the
related Loan Documents to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment), provided that: (i) the Administrative
Agent shall have received the assignment fee specified in Section 10.06 (unless such
assignee is a Lender or an Affiliate of a Lender); (ii) such Lender shall have received payment of
an amount equal to the outstanding principal amount of its Revolving Advances and participations
(to the extent such Defaulting Lender actually paid the Administrative Agent for such
participations) in Letter of Credit Obligations, accrued interest thereon, accrued fees and all
other amounts payable to it hereunder and under the other Loan Documents (including any amounts
under Section 2.08) from the assignee or the Borrower; (iii) in the case of any such
assignment resulting from a claim for compensation under Section 2.09 or payments required
to be made pursuant to Section 2.11,



61









 







such assignment will result in a reduction in such compensation or payments required to be
made by the Borrower thereafter; and (iv) such assignment does not conflict with Legal Requirements
applicable to the Borrower or such assignee. A Lender shall not be required to make any such
assignment or delegation if, within such three-Business Day period, as a result of a waiver by such
Lender or otherwise, the circumstances entitling the Borrower to require such assignment and
delegation cease to apply.



     (c) Removal of Defaulting Lenders. Upon not less than three Business Days’ prior
notice to the Defaulting Lender and the Administrative Agent (which the Administrative Agent will
promptly provide to the Lenders and the Issuing Bank), the Borrower shall have the right (i) to
remove such Defaulting Lender by terminating such Defaulting Lender’s then Revolving Commitment, or
(ii) to terminate the then unused Revolving Commitment of such Defaulting Lender, in each case,
after taking into account the aggregate portion of such Revolving Commitment, if any, which
theretofore have been, or substantially contemporaneous therewith are being, assigned pursuant to
Section 10.06. In connection with the Borrower’s right to remove a Defaulting Lender and,
notwithstanding any other provision of any Loan Document to the contrary, without obligation to
make ratable prepayments on Obligations to the other Lenders, the Borrower shall pay in full all
principal, interest, fees and other amounts owing to such Defaulting Lender through the date of
termination, net of amounts owed to the Borrower by such Defaulting Lender as a consequence to the
Borrower of such Lender becoming a Defaulting Lender. provided that such removal or
termination will not be deemed to be a waiver or release of any claim by the Borrower, the
Administrative Agent, the Issuing Bank or any Lender may have against such Defaulting Lender.



     (d) Replacement or Removal Administrative Matters. In order to make all the Lenders’
interests in any outstanding Revolving Advances and Letters of Credit ratable in accordance with
any revised Pro Rata Shares after giving effect to the removal or replacement of a Lender, (i) the
Lenders shall be deemed to have made a Revolving Advance to the Borrower, the proceeds of which
were used by the Borrower to pay or prepay, if necessary, on the effective date thereof, all
outstanding Revolving Advances of all Lenders, together with any amounts due under Section
2.08 and (ii) the amount of the unfunded participations held by each Lender in each Letter of
Credit then outstanding shall be adjusted such that, after giving effect to such adjustments, the
Lenders shall hold its Pro Rata Share, calculated after giving effect to such removal or
replacement of a Lender, of unfunded participations in each such Letter of Credit. The Borrower
may net any payments required hereunder against any funds being provided by any Lender or Eligible
Assignee replacing a terminating Lender. The effect for purposes of this agreement shall be the
same as if separate transfers of funds had been made with respect thereto. This Section
2.15 shall supersede any provision in Section 10.01 to the contrary. Notwithstanding
anything herein to the contrary, as to each Lender, the sum of (A) all outstanding Revolving
Advances owing to such Lender (regardless of whether made or deemed to be made) plus (B) such
Lender’s Pro Rata Share of the Letter of Credit Exposure shall, in no event, exceed such Lender’s
Revolving Commitment.



     Section 2.16 Increase in Revolving Commitments.



     (a) Request for Increase. Provided that no Default or Event of Default has occurred
and is continuing, upon at least 30 days’ prior written notice to the Administrative Agent (which



62









 







shall promptly notify the Lenders and the Issuing Bank), the Borrower may from time to time
until the one year anniversary of the Closing Date, elect to increase the aggregate Revolving
Commitments by an amount (for all such requests) not exceeding the sum of (i) $14,000,000 plus (ii)
the aggregate amount of Revolving Commitments terminated by the Borrower pursuant to Section
2.15(c); provided that (x) any such request for an increase shall be in a minimum
amount of $5,000,000 or such lesser amount as may then be available for increases, (y) the Borrower
may make a maximum of three such requests and (z) the aggregate Revolving Commitments may not
exceed $50,000,000 minus any permanent reductions in the Revolving Commitments made pursuant to
Section 2.04.



     (b) Additional Lenders. The Borrower may designate one or more banks or other
financial institutions (which may be, but need not be, one or more of the existing Lenders) which
at the time agree to, in the case of any Person that is an existing Lender, increase its Revolving
Commitment and, in the case of any other such Person (an “Additional Lender”), become a
party to this Agreement; provided, however, that any bank or financial institution
that is not an existing Lender shall be acceptable to the Administrative Agent and the Issuing
Bank, which acceptance shall not be unreasonably withheld, delayed or conditioned. No Lender shall
have any obligation whatsoever to agree to increase its Revolving Commitment.



     (c) Conditions to Effectiveness of Increase. An increase in the aggregate Revolving
Commitments pursuant to this Section 2.16 shall become effective (the “Revolving
Commitment Increase Effective Date”) upon the receipt by the Administrative Agent of (i) a
certificate of each Loan Party dated as of the Revolving Commitment Increase Effective Date signed
by a Responsible Officer of such Person (A) certifying and attaching the resolutions adopted by
such Person approving or consenting to such increase, (B) amendments to Rig Mortgages to reflect
the increased aggregate principal amount of the Revolving Commitments, and (C) in the case of the
Borrower, certifying that, before and after giving effect to such increase, (1) the representations
and warranties contained in Article IV and the other Loan Documents are true and correct in
all material respects on and as of the Revolving Commitment Increase Effective Date (other than
those representations and warranties that are subject to a materiality qualifier, in which case
such representations and warranties shall be true and correct in all respects), except to the
extent that such representations and warranties specifically refer to an earlier date, in which
case they are true and correct in all material respects as of such earlier date (other than those
representations and warranties that are subject to a materiality qualifier, in which case such
representations and warranties are true and correct in all respects as of such earlier date), and
(2) no Event of Default has occurred and is continuing and (ii) a joinder agreement, in form and
substance reasonably satisfactory to the Administrative Agent, executed by the Borrower, each
Additional Lender and each other Lender whose Revolving Commitment is to be increased.



     (d) Pro Rata Shares. Upon any increase in the aggregate amount of the Revolving
Commitments pursuant to this Section 2.16 that is not pro rata among all Lenders, (i) the
Borrower, the Administrative Agent and the Lenders shall, as of the Revolving Commitment Increase
Effective Date of any such increase, make adjustments to the outstanding principal amount of
Revolving Advances (but not any interest accrued thereon or any accrued fees prior to such date),
including, subject to the conditions specified in Section 3.02, the borrowing of additional
Revolving Advances hereunder and the repayment of Revolving Advances, together with accrued
interest to the date of such prepayment on the principal amount prepaid, as shall be



63









 







necessary to provide for Revolving Advances by the Lenders in proportion to their respective
Revolving Commitments after giving effect to such increase, and amounts, if any, required to be
paid pursuant to Section 2.08 as a result of such prepayment being made on such date, and
each Lender shall be deemed to have made an assignment of its outstanding Revolving Advances and
Revolving Commitments, and assumed outstanding Revolving Advances and Revolving Commitments of
other Lenders as of such Revolving Commitment Increase Effective Date as may be necessary to effect
the foregoing, and (ii) effective upon such increase, the amount of the unfunded participations
held by each Lender in each Letter of Credit then outstanding shall be adjusted such that, after
giving effect to such adjustments, the Lenders shall hold its Pro Rata Share, calculated after
giving effect to such increase, of unfunded participations in each such Letter of Credit.



     (e) Conflicting Provisions. This Section shall supersede any provisions in
Sections 2.09 or 9.01 to the contrary.



ARTICLE III




CONDITIONS OF LENDING




     Section 3.01 Binding Effect; Termination. This Agreement shall become effective when
it shall have been executed by the Borrower and the Administrative Agent, and when the
Administrative Agent shall have, as to each Lender, either received a counterpart hereof executed
by such Lender or been notified by such Lender that such Lender has executed it and thereafter
shall be binding upon and inure to the benefit of the Borrower, the Administrative Agent, and each
Lender and their respective successors and assigns. If the Closing Date has not occurred on or
prior to September 30, 2009, this Agreement shall terminate at 12:01 a.m. on October 1, 2009
without any further action by or notice from any party hereto.



     Section 3.02 Initial Conditions Precedent. The obligation of each Lender to make its
initial Revolving Advance as part of the initial Borrowing, or the Issuing Bank to issue the
initial Letter of Credit, is subject to each of the following conditions precedent (unless waived,
in their respective discretion, by the Administrative Agent, the Issuing Bank and all Lenders):



     (a) Documentation. On or before the earlier to occur of the day on which the initial
Borrowing is made or the initial Letter of Credit is issued, the Administrative Agent and the
Lenders shall have received the following, each dated on or before such day, duly executed by all
the parties thereto, each in form and substance reasonably satisfactory to the Administrative
Agent:




     (i) this Agreement executed by all of the other Loan Parties and all attached Exhibits
and Schedules;




     (ii) any Note requested by a Lender pursuant to Section 2.02(g) payable to the
order of such requesting Lender in the amount of its Revolving Commitment;




     (iii) Rig Mortgage(s) duly authorized, executed and delivered by the applicable Loan
Party granting a Lien to the Administrative Agent in each Collateral Rig to secure the
Obligations, in appropriate form for recording in the appropriate vessel registry,



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together with any other documents, agreements or instruments reasonably necessary to
create an Acceptable Security Interest in such Collateral Rig;




     (iv) an Assignment of Earnings and an Assignment of Insurances, together creating a
security interest in each Loan Party’s present and future Earnings Collateral and Insurance
Collateral;




     (v) the Security Agreement executed by each of the Loan Parties, together with UCC-1
financing statements and any other documents, agreements or instruments reasonably necessary
to create an Acceptable Security Interest in the Collateral described therein;




     (vi) the Pledge Agreement executed by the Borrower and each applicable Subsidiary
pledging to the Administrative Agent, for the ratable benefit of the Secured Parties, all of
the Equity Interests of the Material Domestic Subsidiaries and 65% of the Equity Interests
of Material Subsidiaries that are Foreign Subsidiaries, together with certificates, powers
executed in blank, UCC-1 financing statements and any other documents, agreements or
instruments reasonably necessary to create an Acceptable Security Interest in such Equity
Interests;




     (vii) Account Control Agreement(s) among the Borrower, the Administrative Agent and
Citibank, N.A.;




     (viii) a certificate dated as of the Closing Date from a Responsible Officer of the
Borrower stating that (A) all representations and warranties of such Person set forth in
this Agreement and in the other Loan Documents to which it is a party are true and correct;
and (B) no Default or Event of Default has occurred and is continuing;




     (ix) copies of the certificate or articles of incorporation or other equivalent
organizational documents, including all amendments thereto, of each Loan Party, certified as
of a recent date by the Secretary of State of the state of its organization;




     (x) a certificate of the Secretary or Assistant Secretary of each Loan Party dated as
of the Closing Date and certifying (A) that attached thereto is a true and complete copy of
the organizational documents of such Loan Party as in effect on the Effective Date, the
Closing Date and at all times since a date prior to the date of the resolutions described in
clause (B) below, (B) that attached thereto is a true and complete copy of resolutions duly
adopted by the board of directors (or Persons, committees or other group performing similar
functions) of such Loan Party authorizing the execution, delivery and performance of the
Loan Documents to which such Loan Party is a party (or in the case of any Loan Party that
executed this Agreement as of the Effective Date, ratifying, confirming and adopting all
acts, transactions or agreements undertaken on or prior to the Closing Date by such Loan
Party in connection with this Agreement and the transactions contemplated hereby) and, in
the case of the Borrower, the borrowings hereunder, and that such resolutions have not been
modified, rescinded or amended and are in full force and effect, (C) that the certificate or
articles of incorporation or other organizational documents of such Loan Party have not been
amended since the date of



65









 







the last amendment thereto shown on the certified copy thereof furnished pursuant to
clause (ix) above, and (D) as to the incumbency and specimen signature of each officer
executing any Loan Document, Notice of Borrowing or any other document delivered in
connection herewith on behalf of such Loan Party;




     (xi) a certificate of another officer of each Loan Party as to the incumbency and
specimen signature of the Secretary or Assistant Secretary executing the certificate
pursuant to (x) above;




     (xii) certificates from the appropriate Governmental Authority certifying as to the
good standing, existence and authority of each of the Loan Parties in each jurisdiction
where such Loan Party is incorporated or organized;




     (xiii) opinions dated as of the Closing Date from (A) Fulbright & Jaworski, L.L.P.,
counsel to the Loan Parties, (B) Sher & Blackwell, LLP, special maritime counsel to the Loan
Parties, and (C) López Velarde, Heftye y Soria, S.C., Mexican counsel to the Loan Parties;




     (xiv) a certificate from a Financial Officer of the Borrower dated as of the Closing
Date addressed to the Administrative Agent and each of the Lenders regarding the matters set
forth in Section 4.20;




     (xv) a certificate from a Financial Officer addressed to the Administrative Agent and
each of the Lenders, certifying that the Projections delivered by the Borrower to the
Administrative Agent and the Lenders prior to the Closing Date have been prepared in good
faith and are based on reasonable assumptions when made, and there are no statements or
conclusions in such Projections which are based upon or include information known to the
Borrower on the Closing Date to be misleading in any material respect or which fail to take
into account material information known to the Borrower on the Closing Date regarding the
matters reported therein and that, as on the Closing Date, the Borrower believes that such
Projections are reasonable, it being recognized by the Administrative Agent, the Lenders and
the Issuing Bank, however, that projections as to future events are not to be viewed as
facts and that the actual results during the period or periods covered by the Projections
may materially differ from the projected results included in such Projections;




     (xvi) copies of each of the Transaction Documents certified as of the Closing Date by a
Responsible Officer or the Secretary or Assistant Secretary of the Borrower (A) as being
true and correct copies of such documents as of the Closing Date and (B) as being in full
force and effect;




     (xvii) certificates of insurance from an Insurance Advisor to the extent required by
Section 5.04.




     (xviii) Appraisal Reports for each Collateral Rig dated not more than 180 days prior to
the Closing Date, each issued by an Approved Rig Appraiser;



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     (xix) (A) certificates of ownership or abstracts of title from appropriate authorities
showing (or confirmation updating previously reviewed certificates and indicating) the
registered ownership of such Collateral Rig by the relevant Loan Party (or its predecessor),
(B) valid and current ISM/ISPS Code documentation required with respect to each Collateral
Rig pursuant to applicable Legal Requirements and (C) the results of maritime registry
searches with respect to such Collateral Rig, indicating no record liens other than Liens in
favor of the Administrative Agent and Excepted Liens, in each case, dated not more than 60
days prior to the Closing Date;




     (xx) (A) copies of the Certificates of Inspection, (B) Rig Certificates of Financial
Responsibility (Water Pollution) or International Oil Pollution Prevention Certificate, each
issued by the United States Coast Guard (or the substantial equivalent in the case of
foreign assets if available), (C) Certificates of Classification issued by the American
Bureau of Shipping, (D) Certificates of Documentation or Certificates of Registry issued by
the United States Coast Guard or foreign equivalent, (E) International Load Line
Certificates issued by the American Bureau of Shipping, and (F) Certificate of Financial
Responsibility required by the Minerals Management Service or the United States Coast Guard,
in each case as applicable and as reasonably requested by the Administrative Agent with
respect to the Collateral Rigs, in each case, dated not more than 60 days prior to the
Closing Date;




     (xxi) evidence of the class of each Collateral Rig and the classification society with
respect to such Collateral Rig;




     (xxii) acknowledgment from CT Corporation System as of the Closing Date with respect to
its irrevocable appointment as agent for service of process by each Loan Party pursuant to
Section 10.12(b);




     (xxiii) a guaranty trust agreement among the applicable Loan Parties, the
Administrative Agent and the Mexican trustee designated by the Loan Parties and acceptable
to the Administrative Agent, together with a form of consent to assignment to be executed by
PEMEX; all in form and substance reasonably satisfactory to the Administrative Agent and the
Borrower; and




     (xxiv) such other documents, governmental certificates and agreements as the
Administrative Agent may reasonably request.



     (b) Payment of Fees. On or prior to the Closing Date, the Borrower shall have paid
the fees required to be paid to the Administrative Agent, the Arranger, and the Lenders on the
Closing Date which have been invoiced to the Borrower on or before the Closing Date, including,
without limitation, the fees set forth in the Fee Letter and all other costs and expenses which
have been invoiced and are payable pursuant to Section 10.04.



     (c) Due Diligence; Corporate Structure. The Administrative Agent and the Lenders
shall have completed a satisfactory due diligence review of the assets, liabilities, business,
operations and condition (financial or otherwise) of the Borrower and its Subsidiaries, and all
legal, financial, accounting, governmental, tax and regulatory matters, and fiduciary aspects of



67









 







the proposed financing and the terms and conditions of all material obligations of the Loan
Parties. The documentation reflecting the ownership, capital, corporate, tax, organizational and
legal structure of the Loan Parties shall be acceptable to the Administrative Agent.



     (d) Consummation of the Transaction. The Administrative Agent shall have received
evidence that the Transaction shall have occurred on or before the Closing Date in accordance with
the terms of the Master Separation Agreement and that the conditions to effectiveness thereof shall
have been satisfied or waived in accordance with the terms thereof; provided,
however, that any such waiver that is materially adverse to the Lenders shall have received
the prior written consent of the Administrative Agent and the Required Lenders, such consent not to
be unreasonably withheld, conditioned or delayed.



     (e) Security Documents. The Administrative Agent shall have received evidence that
arrangements have been made for the Administrative Agent, for the ratable benefit of Secured
Parties, to have an Acceptable Security Interest in the Collateral, including, without limitation,
(i) the delivery to the Administrative Agent of such financing statements under the Uniform
Commercial Code for filing in the respective jurisdiction of incorporation or organization of each
Loan Party, (ii) lien, tax and judgment searches conducted on the Loan Parties reflecting no Liens
other than Excepted Liens against any of the Collateral as to which perfection of a Lien is
accomplished by the filing of a financing statement and (iii) lien releases with respect to any
Collateral currently subject to a Lien other than Excepted Liens.



     (f) Financial Statements. The Administrative Agent and the Lenders shall have
received true and correct copies of the Pro Forma Financial Statements and the Projections. The
Administrative Agent shall have received evidence satisfactory to the Administrative Agent
confirming that the Borrower has (i) as at the date of the declaration of the Transaction had at
least the amount of cash, and (ii) as at May 31, 2009 had at least the amount of net working
capital, in each case, as set forth in Schedule 3.02(f).



     (g) Authorizations and Approvals. To the extent required by Section 4.03, all
Governmental Authorities and Persons shall have approved or consented to the transactions
contemplated hereby, and such approvals shall be in full force and effect, and all applicable
waiting periods shall have expired without any action being taken or overtly threatened in writing
against the Borrower or any of its Subsidiaries that would restrain, prevent or otherwise impose
adverse conditions on this Agreement and the actions contemplated hereby and thereby.



     (h) No Proceeding or Litigation; No Injunctive Relief. No action, suit, investigation
or other proceeding (including, without limitation, the enactment or promulgation of a statute or
rule) by or before any arbitrator or any Governmental Authority shall be overtly threatened in
writing or pending and no preliminary or permanent injunction or order by a state or federal court
shall have been entered (i) in connection with this Agreement or any of the Transactions or (ii)
except as set forth on Schedule 4.07, which, if determined adversely to any Loan Party,
could reasonably be expected to cause a Material Adverse Effect, after giving effect to, among
other things, related insurance policies to the Borrower and its Subsidiaries.



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     (i) No Default. No Default or Event of Default shall have occurred and be continuing
or would result from such Revolving Advance or from the application of the proceeds therefrom.



     (j) Representations and Warranties. The representations and warranties contained in
Article IV hereof and in each other Loan Document shall be true and correct immediately before and
after giving effect to the Revolving Advances and to the application of the proceeds from such
Revolving Advances from the date of the Revolving Advances, as though made on and as of such date.



     (k) No Material Adverse Effect. Since the Effective Date, there has been no material
adverse change in the condition (financial or otherwise), results of operations, assets,
properties, business or prospects of the Borrower and its Subsidiaries, taken as a whole.



     (l) Additional Information. The Administrative Agent shall have received such
additional information which the Administrative Agent shall have reasonably requested, and such
information shall be reasonably satisfactory in form and substance to the Administrative Agent.



     Section 3.03 Conditions Precedent to Each Revolving Advance. The obligation of each
Lender to make a Revolving Advance on the occasion of each Borrowing (including the initial
Borrowing) or Convert or to Continue a Eurodollar Advance and the obligation of the Issuing Bank to
issue, extend or increase Letters of Credit shall be subject to the further conditions precedent
that on the date of such Revolving Advance or the date of Continuation or Conversion, or issuance,
extension or increase date of such Letters of Credit, as applicable, the following statements shall
be true (and each of the giving of the applicable Notice of Borrowing or Notice of Conversion or
Continuation and the acceptance by the Borrower of the proceeds of such Revolving Advance, the date
of such Conversion or Continuation, or the request for the issuance, extension or increase of a
Letter of Credit shall constitute a representation and warranty by the Borrower that on the date of
such Revolving Advance or the date of such issuance, extension or increase, as applicable, such
statements are true):



     (a) the representations and warranties contained in Article IV and in each other Loan
Document are true and correct in all material respects (other than those representations and
warranties that are subject to a materiality qualifier, in which case such representations and
warranties shall be true and correct in all respects), except to the extent that such
representations and warranties specifically refer to an earlier date, in which case they are true
and correct in all material respects as of such earlier date (other than those representations and
warranties that are subject to a materiality qualifier, in which case such representations and
warranties are true and correct in all respects as of such earlier date), on and as of the date of
such Revolving Advance, or the issuance, extension or increase of such Letter of Credit immediately
before and after giving effect to such Revolving Advance and to the application of the proceeds
from such Revolving Advance or to the issuance, extension or increase of such Letter of Credit, as
applicable;



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     (b) no Default or Event of Default has occurred and is continuing or, immediately after giving
effect thereto, would result from such Revolving Advance or from the application of the proceeds
therefrom or from such issuance, extension or increase of such Letter of Credit;



     (c) the Availability is greater than or equal to zero after giving effect to such Borrowing or
the issuance, increase, or extension of such Letter of Credit; and



     (d) no material adverse change has occurred and is continuing with respect to the Collateral
when taken as a whole since either the most recently delivered Borrowing Base Certificate or the
most recently delivered Appraisal Report pursuant to Section 5.14.



     Section 3.04 Determinations Under Sections 3.02 and 3.03. For purposes of determining
compliance with the conditions specified in Sections 3.02 and 3.03, each Lender
shall be deemed to have consented to, approved or accepted or to be satisfied with each document or
other matter required thereunder to be consented to or approved by or acceptable or satisfactory to
the Lenders unless an officer of the Administrative Agent responsible for the transactions
contemplated by the Loan Documents and the Borrower shall have received written notice from such
Lender prior to the Borrowings hereunder specifying its objection thereto and such Lender shall not
have made available to the Administrative Agent such Lender’s ratable portion of such Borrowings.



ARTICLE IV




REPRESENTATIONS AND WARRANTIES




     Each Loan Party represents and warrants as follows:



     Section 4.01 Existence. The Borrower and each of its Subsidiaries (a) is duly
organized, validly existing, and in good standing under the laws of the jurisdiction of its
incorporation or organization, (b) has the corporate or equivalent power and authority to own its
property and assets and to transact the business in which it is currently engaged and (c) is duly
qualified and is authorized to do business and is in good standing in each jurisdiction where its
ownership or lease of Property or conduct of its business requires such qualification; except, in
the case of clauses (b) and (c), where the failure to have such powers or be so qualified could not
reasonably be expected to have a Material Adverse Effect.



     Section 4.02 Power and Authority. Such Loan Party has the requisite corporate or
equivalent power and authority and all requisite governmental licenses, authorizations, consents
and approvals to execute, deliver and perform the Loan Documents to which it is a party and to
perform its obligations thereunder. The execution, delivery, and performance by such Loan Party of
this Agreement and the other Loan Documents to which it is a party and the consummation of the
transactions contemplated hereby (a) have been duly authorized by all necessary corporate or
equivalent action, (b) do not and will not (i) violate the terms of such Loan Party’s certificate
of incorporation, bylaws or other applicable organizational documents, (ii) violate in any material
respect any Legal Requirement applicable to such Loan Party, (iii) constitute a default under, or
result in any breach of, or creation of, any Lien under (other than the Loan Documents) the
provisions of any indenture, loan agreement or other material



70









 







agreement to which such Loan Party is a party or is subject, or by which it, or its Property,
is bound or (iv) violate any order, injunction, writ or decree of any Governmental Authority or any
arbitral award to which such Person or its property is subject.



     Section 4.03 Authorization and Approvals. No authorization, approval, consent,
exemption, or other action by, or notice to or filing with, any Governmental Authority or any other
Person is necessary or required to be made or obtained by such Loan Party in connection with (a)
the execution, delivery and performance by, or enforcement against, such Loan Party of this
Agreement and the other Loan Documents to which it is a party or the consummation of the
transactions contemplated hereby or thereby, (b) the grant by such Loan Party of the Liens granted
by it pursuant to the Loan Documents, or (c) the perfection or maintenance of such Liens created
under the Loan Documents to which it is a party, in each case, other than as have been duly
obtained, taken, given or made and as are in full force and effect, except actions by, and notices
to or filings with, Governmental Authorities (including, without limitation, the SEC) that may be
required in the ordinary course of business from time to time or that may be required to comply
with the express requirements of the Loan Documents (including, without limitation, to release
existing Liens on the Collateral or to comply with requirements to perfect, and/or maintain the
perfection of, Liens created for the ratable benefit of the Secured Parties).



     Section 4.04 Enforceable Obligations. This Agreement has been, and each other Loan
Document, when delivered hereunder, will have been, duly executed and delivered by such Loan Party
that is a party thereto. This Agreement constitutes, and each other Loan Document when so
delivered will constitute, a legal, valid and binding obligation of such Loan Party that is a party
hereto or thereto, as the case may be, enforceable against such Loan Party in accordance with its
terms, except as such enforceability may be limited by any applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium, or similar law affecting creditors’ rights
generally or general principles of equity.



     Section 4.05 Financial Statements; No Material Adverse Effect.



     (a) The Pro Forma Financial Statements have been prepared in good faith by the Borrower, based
on the assumptions stated therein (which assumptions are believed by the Borrower on the date
hereof and on the Closing Date to be reasonable in light of the conditions existing when made), are
based on the best information available to the Borrower as of the date of delivery thereof,
reasonably reflect all material adjustments required to be made to give effect to the Transactions
and present fairly, in all material respects, on a pro forma basis the reasonably estimated
consolidated financial position of the Borrower and its consolidated Subsidiaries as of such date
and for such period, assuming that the Transactions had actually occurred at such date or at the
beginning of such period, as the case may be.



     (b) The Projections delivered by the Borrower to the Administrative Agent and the Lenders
prior to the Closing Date have been prepared in good faith and are based on reasonable assumptions
when made, and there are no statements or conclusions in such Projections which are based upon or
include information known to the Borrower on the Closing Date to be misleading in any material
respect or which fail to take into account material information known to the Borrower on the
Closing Date regarding the matters reported therein. On the Closing Date, the Borrower believes
that such Projections are reasonable, it being recognized by the



71









 







Administrative Agent, the Lenders and the Issuing Bank, however, that projections as to future
events are not to be viewed as facts and that the actual results during the period or periods
covered by the Projections may materially differ from the projected results included in such
Projections.



     (c) Since the Effective Date, the Borrower has no knowledge of any event or circumstance,
either individually or in the aggregate, that could reasonably be expected to have a Material
Adverse Effect.



     Section 4.06 True and Complete Disclosure. Such Loan Party has disclosed to the
Administrative Agent all material agreements, instruments and corporate or other restrictions to
which it or any of its Subsidiaries is a party or by which it is bound, and all other matters known
to it, that, individually or in the aggregate, could, if breached or violated by, enforced against,
or adversely determined in relation to, the Borrower and its Subsidiaries, taken as a whole,
reasonably be expected to result in a Material Adverse Effect. None of (a) the Registration
Statement or (c) any other information, report, financial statement, exhibit or schedule furnished
by or on behalf of such Loan Party to the Administrative Agent or any Lender in connection with the
negotiation of any Loan Document or included therein or delivered pursuant thereto contained,
contains or will contain any material misstatement of fact or omits to state any material fact
necessary to make the statements therein, in the light of the circumstances under which they were,
are or will be made, not misleading; provided that, with respect to projected financial
information, the Loan Parties represent only that such information was prepared in good faith based
upon assumptions believed to be reasonable at the time.



     Section 4.07 Litigation. Except as set forth on Schedule 4.07, there are no
actions, suits, proceedings, claims or disputes pending or, to the knowledge of any Responsible
Officer of a Loan Party after reasonable investigation, overtly threatened in writing, at law, in
equity, in arbitration or before any Governmental Authority, by or against such Loan Party or any
of their Subsidiaries or against any of their properties or revenues that (a) purport to affect or
pertain to this Agreement, any other Loan Document, the Collateral, or the Transaction, or (b)
either individually or in the aggregate, if determined adversely to such Loan Party, could
reasonably be expected to result in a liability to the extent not covered by insurance policies to
the Borrower and its Subsidiaries in excess of $2,500,000. Additionally, there is no pending or,
to the knowledge of any Responsible Officer of such Loan Party, threatened action or proceeding
instituted against the Borrower or any of its Subsidiaries as bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its Property. Except as
set forth in Schedule 4.07, no regulatory commission having relevant jurisdiction is
currently conducting or, to the Borrower’s knowledge, has conducted within the five-year period
immediately preceding the date hereof, an investigation of the Borrower or any of its Subsidiaries
(or its predecessors in interest with respect to the business conducted and reasonably expected to
be conducted by the Borrower and its Subsidiaries), other than an investigation conducted by such
regulatory commission in its routine general administrative practice.



72









 





     Section 4.08 Compliance with Laws. None of the Loan Parties or any of the
Subsidiaries or any of their respective material Properties, including the Collateral Rigs, is in
material violation of, nor will the continued operation of their material Properties, including the
Collateral Rigs, as currently conducted violate, in any material respect any Legal Requirement
(including any Environmental Law) applicable to such Loan Party or is in default with respect to
any judgment, writ, injunction, decree or order of any Governmental Authority. The Borrower and
its Subsidiaries are in compliance in all material respects with the International Maritime
Organization’s International Management Code for the Safe Operation of Ships and Pollution
Prevention (“ISM Code”), to the extent applicable, and have established and implemented a
safety management system and such other procedures as required by the ISM Code, to the extent
applicable.



     Section 4.09 No Default. None of the Loan Parties or any of its Subsidiaries is a
party to any agreement or instrument or subject to any corporate restriction that has resulted or
could, either individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect. None of the Borrower or any of its Subsidiaries is in default, or will be in default with
the giving of any notice or lapse of time, or both, in any manner under any provision of any
indenture or other agreement or instrument evidencing Debt, any Transaction Document or any other
material agreement or instrument to which it is a party or by which it or any of its properties or
assets are or may be bound. No Default or Event of Default has occurred and is continuing or would
result from the consummation of the Transactions or the other transactions contemplated by this
Agreement or any other Loan Document.



     Section 4.10 Subsidiaries; Corporate Structure. Schedule 4.10 sets forth as
of the Closing Date a list of all Subsidiaries of the Borrower and, as to each such Subsidiary, the
jurisdiction of formation and the outstanding Equity Interests therein and the percentage of each
class of such Equity Interests owned by the Borrower and its Subsidiaries. The Equity Interests
indicated to be owned by the Borrower and its Subsidiaries on Schedule 4.10 are fully paid
and non-assessable and are owned by the persons indicated on such Schedule, free and clear of all
Liens.



     Section 4.11 Liens; Condition of Properties.



     (a) The Borrower and each of its Subsidiaries has good record and indefeasible title in all
its Property reasonably necessary for the ordinary conduct of its business (including all
Collateral Rigs), except for minor defects in title that do not interfere with its ability to
conduct its business as currently conducted or to utilize such Properties and assets for their
intended use. None of the Property of the Borrower or any of its Subsidiaries is subject to Liens,
other than Permitted Liens.



     (b) Neither the business nor the material Properties (including all Collateral Rigs) of such
Loan Party has been affected in any material respect as a result of any fire, explosion,
earthquake, flood, drought, windstorm, accident, strike or other labor disturbance, embargo,
requisition or taking of Property or cancellation of contracts, permits or concessions by a
Governmental Authority, riot, activities of armed forces or acts of God or of any public enemy.



     Section 4.12 Environmental Condition.




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     (a) The Borrower and its Subsidiaries (or, to the Borrower’s knowledge, its predecessors in
interest with respect to its business) (i) have obtained all material Environmental Permits
necessary for the ownership and operation of their respective material Properties and the conduct
of their respective businesses; (ii) are in compliance with all material terms and conditions of
such Environmental Permits and with all other material requirements of applicable Environmental
Laws; (iii) have not received notice of any unresolved, material violation or alleged violation of
any Environmental Law or Environmental Permit which could reasonably be expected to result in
liabilities in excess of $2,500,000; and (iv) are not subject to any material actual or contingent
Environmental Claim which could reasonably be expected to result in liabilities in excess of
$2,500,000.



     (b) There are no facts, circumstances, conditions or occurrences on any Rig owned or operated
by the Borrower or any of its Subsidiaries (or, to the Borrower’s knowledge, its predecessors in
interest with respect to its business) that is reasonably likely (i) to form the basis of a
Environmental Claim against the Borrower or any of its Subsidiaries or any Rig owned by the
Borrower or any of its Subsidiaries which could reasonably be expected to result in liabilities in
excess of $2,500,000, or (ii) to cause such Rig to be subject to any unreasonable restrictions on
its ownership, occupancy, use or transferability under any Environmental Law.



     (c) None of the present or previously owned or operated Properties of the Borrower or any its
Subsidiaries (or, to the Borrower’s knowledge, its predecessors in interest with respect to its
business) or of any of their present or former Subsidiaries, wherever located, (i) has been placed
on or proposed to be placed on the National Priorities List, CERCLIS, or their state or local
analogs, nor has the Borrower or any of its Subsidiaries been otherwise notified of the
designation, listing or identification of any Property of such Person or any of its present or
former Subsidiaries as a potential site for any material removal, remediation, cleanup, closure,
restoration, reclamation, or other response activity under any Environmental Laws (except as such
activities may be required by permit conditions); (ii) is subject to a Lien, arising under or in
connection with any Environmental Laws, that attaches to any revenues or to any Property owned or
operated by the Borrower, its Subsidiaries or any of their present or former Subsidiaries, wherever
located; or (iii) has been the site of any Release (as defined under any Environmental Law) of
Hazardous Material from present or past operations which has caused at the site or at any
third-party site any condition that has resulted in or could reasonably be expected to result in
the need for a Response (as defined under any Environmental Law), the cost of which would be in
excess of $2,500,000 and none of the Borrower, its Subsidiaries or any of their present or former
Subsidiaries has generated or transported or has caused to be generated or transported Hazardous
Materials to any third party site which could reasonably be expected to result in the need for
Response that would reasonably be anticipated to result in a Environmental Claim against the
Borrower or its Subsidiaries in excess of $2,500,000.



     Section 4.13 Insurance.



     (a) Schedule 4.13 sets forth a true, complete and correct description of all insurance
maintained by the Borrower and its Subsidiaries as of the Closing Date and the Borrower and its
Subsidiaries carries the insurance required to be carried under Section 5.04 of this
Agreement. As of such date, such insurance is in full force and effect and all premiums required
to be paid by such Loan Party have been duly paid.



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     (b) The properties of the Loan Parties are insured with financially sound and reputable
insurance companies that are not Affiliates of the Borrower, in such amounts, with such deductibles
and covering such risks as are customarily carried by companies engaged in similar businesses and
owning similar properties in localities where such Loan Party operates.



     Section 4.14 Taxes. All Federal, state, local and foreign income tax returns, reports
and statements required to be filed by the Borrower and its Subsidiaries (or, to the Borrower’s
knowledge, its predecessors in interest with respect to its business) have been filed with the
appropriate Governmental Authorities in all jurisdictions in which such returns, reports and
statements are required to be filed (except (a) where any obligation to so file is being contested
in good faith and by appropriate proceedings and after reserves for such items have been made in
accordance with, and to the extent required by, GAAP or (b) where a failure to do so could not
reasonably be expected to result in liabilities in excess of $2,500,000), and, except for the
Contested Mexican Tax Assessments, all income taxes and other impositions due and payable have been
timely (taking into account all extensions) paid prior to the date on which any fine, penalty,
interest, late charge or loss may be added thereto for non-payment thereof except (x) where
contested in good faith and by appropriate proceedings and after providing reserves in accordance
with, and to the extent required by, GAAP therefore or (y) where a failure to do so could not
reasonably be expected to result in liabilities in excess of $2,500,000. None of the Borrower or
any of its Subsidiaries has given, or has been requested to give, a waiver of the statute of
limitations relating to the payment of any federal, state, local or foreign income taxes or other
impositions. Proper and accurate amounts have been withheld by the Borrower and its Subsidiaries
(or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) from
their employees for all periods to comply in all material respects with the tax, social security
and unemployment withholding provisions of applicable federal, state, local and foreign law, except
where a failure to do so could not reasonably be expected to result in liabilities in excess of
$2,500,000. Except for the Contested Mexican Tax Assessments, neither the Borrower nor any of its
Subsidiaries have received any written notice from any Governmental Authority proposing an income
tax assessment against the Borrower or any Subsidiary thereof that would, if made, be reasonably
expected to result in liabilities in excess of $2,500,000.



     Section 4.15 ERISA Compliance.



     (a) With respect to all Plans, the Borrower and its ERISA Affiliates is in compliance in all
material respects with the applicable provisions of ERISA and the Code and the regulations and
published interpretations thereunder.



     (b) Each Pension Plan is in compliance in all material respects with the applicable provisions
of ERISA, the Code and other Federal or state Laws. Each Pension Plan that is intended to qualify
under Section 401(a) of the Code has received a favorable determination letter from the IRS or an
application for such a letter is currently being processed by the IRS with respect thereto and, to
the best knowledge of the Borrower, nothing has occurred which would prevent, or cause the loss of,
such qualification. The Borrower and each ERISA Affiliate have made all required contributions to
each Plan subject to Section 412 of the Code, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the Code has been made with respect
to any Plan.



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     (c) (i) No ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events, could reasonably be expected to result in material
liability of the Borrower or any of its ERISA Affiliates; (ii) no Pension Plan has any Unfunded
Pension Liability; (iii) neither the Borrower nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither the Borrower nor
any ERISA Affiliate has incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would result in such
liability) under Sections 4201 or 4243 of ERISA with respect to a Multiemployer Plan; and (v)
neither the Borrower nor any ERISA Affiliate has engaged in a transaction that could be subject to
Sections 4069 or 4212(c) of ERISA.



     Section 4.16 Security Interests.



     (a) The Pledge Agreement is effective to create in favor of the Administrative Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the
Pledged Collateral (as defined in such Pledge Agreement) and, when such Collateral (to the extent
such Pledged Collateral constitutes a “certificated security” or an “instrument” under the
applicable Uniform Commercial Code) is delivered to such Administrative Agent, such Pledge
Agreement shall constitute a fully perfected first priority Lien on, and security interest in, all
right, title and interest of the pledgors thereunder in such Pledged Collateral, in each case prior
and superior in right to any other person.



     (b) The Security Agreement is effective to create in favor of the Administrative Agent, for
the ratable benefit of the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in such Security Agreement) and, when financing statements in appropriate
form are filed in the offices specified on Schedule I to the Security Agreement, such Security
Agreement shall constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the grantors thereunder in such portion of the Collateral in which a security
interest may be perfected by the filing of a financing statement under the applicable Uniform
Commercial Code, in each case prior and superior in right to any other person, other than Excepted
Liens.



     (c) After the execution and delivery of each Rig Mortgage, each Rig Mortgage will be effective
to create in favor of the Administrative Agent, for the ratable benefit of the Secured Parties, a
legal, valid and enforceable security interest in all Collateral (as defined in such Rig Mortgage)
and, when appropriate filings or registrations are made in accordance with the laws of the Rig’s
flag, such Rig Mortgage shall constitute a first preferred perfected mortgage Lien on all right,
title and interest of the applicable Loan Party thereunder in the applicable Rig, prior and
superior in right to any other person, other than Excepted Liens, and will constitute a “preferred
mortgage” within the meaning of Section 31301(6) of Title 46 of the United States Code, entitled to
the benefits accorded a preferred mortgage on a foreign Rig, in the case of Rigs not registered
under the laws and flag of the United States of America, and in the case of Rigs registered under
the laws and flag of the United States of America, will constitute a “preferred mortgage” within
the meaning of Section 31301(6) of Title 46 of the United States Code, entitled to the benefits
accorded a preferred mortgage on a registered Rig under the laws and flag of the United States of
America.



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     Section 4.17 Bank Accounts. Schedule 4.17 sets forth the account numbers and
locations of all bank accounts of the Loan Parties as of the Closing Date.



     Section 4.18 Labor Relations. There (a) is no unfair labor practice complaint pending
against the Borrower or any of its Subsidiaries or, to the knowledge of any Responsible Officer of
a Borrower or any of its Subsidiaries, threatened against any of them, before the National Labor
Relations Board (or any successor United States federal agency that administers the National Labor
Relations Act), and no grievance or arbitration proceeding arising out of or under any collective
bargaining agreement is so pending against the Borrower or any of its Subsidiaries or, to the
knowledge of any Responsible Officer of a Borrower or any of the Subsidiaries, threatened against
any of them, (b) are no strikes, lockouts, slowdowns or stoppage against the Borrower or any
Subsidiary pending or, to the knowledge of any Responsible Officer of a Borrower or any of the
Subsidiaries, threatened and (c) no union representation petition existing with respect to the
employees of the Borrower or any of its Subsidiaries and no union organizing activities are taking
place. The hours worked by and payments made to employees of the Borrower and the Subsidiaries
(or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) have
not been in violation of the Fair Labor Standards Act or any other applicable federal, state,
provincial, local or foreign law dealing with such matters. All payments due from the Borrower or
any Subsidiary, or for which any claim may be made against the Borrower or any Subsidiary, on
account of wages and employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Borrower or such Subsidiary. The consummation of the
Transactions will not give rise to any right of termination or right of renegotiation on the part
of any union under any collective bargaining agreement to which the Borrower or any Subsidiary
(or, to the Borrower’s knowledge, its predecessors in interest with respect to its business) is
bound.



     Section 4.19 Intellectual Property. The Borrower and each of its Subsidiaries owns or
is licensed or otherwise has full legal right to use all of the patents, trademarks, service marks,
trade names, copyrights, franchises, authorizations and other rights that are reasonably necessary
for the operation of its business, without conflict with the rights of any other Person with
respect thereto, in each case, except where the failure to so own or license or any such conflict
could not reasonably be expected to have a Material Adverse Effect.



     Section 4.20 Solvency.



     (a) Immediately following the consummation of the Transactions and immediately following the
making of each Revolving Advance and after giving effect to the application of the proceeds of each
Revolving Advance, (i) the fair value of the assets of such Loan Party (including the right of
contribution) will exceed its debts and liabilities, subordinated, contingent or otherwise; (ii)
the present fair saleable value of the property of such Loan Party will be greater than the amount
that will be required to pay the probable liability of its debts and other liabilities,
subordinated, contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) such Loan Party will be able to pay its debts and liabilities, subordinated,
contingent or otherwise, as such debts and liabilities become absolute and matured; and (iv) such
Loan Party will not have unreasonably small capital with which to conduct the business in which it
is engaged as such business is now conducted and is proposed to be conducted following the Closing
Date.



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     (b) The Borrower does not intend to, or to permit any of its Subsidiaries to, and does not
believe that it or any of its Subsidiaries will, on a consolidated basis, incur debts beyond its
ability to pay such debts as they mature, taking into account the timing of and amounts of cash to
be received by it or any such Subsidiary and the timing of the amounts of cash to be payable on or
in respect of its Debt or the Debt of such Subsidiary.



     Section 4.21 Margin Regulations. None of the Borrower or any of its Subsidiaries is
engaged and will engage, principally or as one of its important activities, in the business of
purchasing or carrying margin stock (within the meaning of Regulation U), or extending credit for
the purpose of purchasing or carrying margin stock. No part of the proceeds of any Revolving
Advance will be used, whether directly or indirectly, and whether immediately, incidentally or
ultimately, to purchase or carry any margin stock (within the meaning of Regulation U) or to
refinance any Debt originally incurred for such purpose, or for any other purpose that entails a
violation of, or that is inconsistent with, the provisions of the Regulations of the Federal
Reserve Board, including Regulation T, U or X.



     Section 4.22 Investment Company Act. None of the Borrower or any of its Subsidiaries
is an “investment company” within the meaning of the Investment Company Act of 1940.



     Section 4.23 Names and Locations. As of the Effective Date and as of the Closing
Date, Schedule 4.23  sets forth (a) all legal names and all other names (including trade
names, fictitious names and business names) under which such Loan Party currently conduct business,
or has at any time during the past five years conducted business, and (b) the state or other
jurisdiction of organization or incorporation for such Loan Party and sets forth such Loan Party’s
organizational identification number or specifically designates that one does not exist.



     Section 4.24 Citizenship. Any such Loan Party that owns a Rig is qualified to own and
operate such Rig under the laws of the jurisdiction in which any such Rig is flagged, if such
qualification is necessary.



ARTICLE V




AFFIRMATIVE COVENANTS




     So long as the Revolving Advances or any amount under any Loan Document shall remain unpaid,
any Lender shall have any Revolving Commitment hereunder, or there shall exist any Letter of Credit
Exposure, unless the Required Lenders shall otherwise consent in writing, the Borrower shall, and
shall cause each of its Subsidiaries to:



     Section 5.01 Preservation of Existence, Etc. Except as permitted by Section
6.03 and Section 6.04, (a) preserve, renew and maintain in full force and effect its
legal existence and good standing under the Legal Requirements of the jurisdiction of its
formation, (b) take all reasonable action to obtain, preserve, renew, extend, maintain and keep in
full force and effect all rights, privileges, permits, licenses, authorizations and franchises
necessary or desirable in the normal conduct of its business, and (c) qualify and remain qualified
as a foreign entity in each



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jurisdiction in which qualification is reasonably necessary in view of its business and
operations or the ownership of its Properties; except, in the case of clauses (a) (with respect to
any Subsidiary), (b) and (c), to the extent that the failure to do so could not reasonably be
expected to have a Material Adverse Effect. Upon receipt of a written request therefor from the
Borrower, the Administrative Agent will execute and deliver, at the Borrower’s expense, all
documents as may reasonably be requested to effect a release of a guaranty granted in accordance
with Article VIII of this Agreement by any Person that ceases to exist in accordance with
Section 6.03 or Section 6.04.



     Section 5.02 Compliance with Laws, Etc. (a) Comply in all material respects with all
Legal Requirements (including without limitation, all Environmental Laws and ERISA) applicable to
it, its business or property now or hereafter owned or operated by the Borrower or any of its
Subsidiaries, including, without limitation, the ownership or use of any Rig, except in such
instances in which such Legal Requirement is being contested in good faith by appropriate
proceedings diligently conducted, (b) pay or cause to be paid within a reasonable time period all
costs and expenses incurred in connection with such compliance and (c) keep or cause to be kept all
Rigs free and clear of any Liens (other than Permitted Liens) imposed pursuant to Legal
Requirements, including without limitation Environmental Laws.



     Section 5.03 Maintenance of Property. Subject to Section 2.07(c), (a)
maintain and preserve all Property material to the conduct of its business and keep such Property
in good repair, working order and condition, ordinary wear and tear excepted, (b) from time to time
make, or cause to be made, all needful and proper repairs, renewals, additions, improvements and
replacements thereto necessary in order that the business carried on in connection therewith may be
properly conducted at all times and (c) use the standard of care typical in the industry in the
operation and maintenance of its facilities.



     Section 5.04 Maintenance of Insurance. With respect to each Rig:



     (a) General.




     (i) Except as otherwise specifically provided below, at their own expense, maintain
insurance payable in Dollars in amounts (and with co-insurance and deductibles), against
risks and in forms which are substantially equivalent to the coverage customarily carried by
Persons engaged in similar businesses and owning similar properties in localities where such
Rig is operated and placed through brokers and with financially sound and reputable
insurance companies or associations that are reasonably satisfactory to the Administrative
Agent;




     (ii) Renew all such insurance, including the Insurance Policies, as they expire and
provide evidence of such renewal to the Administrative Agent in accordance with Section
5.06(m);




     (iii) Punctually pay all premiums, calls, contributions or other sums payable in
respect of such insurance, including the Insurance Policies, and produce all relevant
receipts or other evidence of such payment upon the Administrative Agent’s written request
and all such Insurance Policies shall provide that there shall be no recourse



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against the Administrative Agent or any other Secured Party for unpaid premiums, club
calls, assessments or advances;




     (iv) Use commercially reasonable efforts to cause their broker (or an authorized agent
thereof) of such insurance to agree in writing to mark their records and to advise the
Administrative Agent at least seven Business Days prior to the lapse of each policy or
contract maintained by such broker by expiration, termination, failure to renew or otherwise
for any reason whatsoever and of any default in payment of any premium in respect of any
Insurance Policy with respect to any such Rig; provided, that, with respect respect
to insurance policies and contracts providing for war risk and terrorism insurance, advance
notice of lapse or notice of default shall be governed by the terms of such insurance
policies and contracts. The Administrative Agent shall not be deemed to have knowledge of
any such lapse of insurance in the absence of receipt of notice from such brokers. If such
Insurance Policies are not maintained in full force and effect, then the Administrative
Agent, at its option, may procure such insurance at the Borrower’s expense;




     (v) Deliver to the Administrative Agent, upon the written request of the Administrative
Agent, copies of all cover notes, binders, policies and certificates of entry in protection
and indemnity associations, and all endorsements and riders amendatory thereof, in respect
of Insurance Policies maintained in connection with such Rigs;




     (vi) Provide to the Administrative Agent promptly after receiving them copies of any
written notices from their insurance broker or agent relating to (A) non-payment of premiums
and cancellation of such Insurance Policies; and (B) other material modification of such
Insurance Policies; and




     (vii) Do all things reasonably necessary and provide all documents, evidence and
information within its power which may be reasonably requested by the Administrative Agent
to enable the Administrative Agent to collect or recover any monies which may at any time
become due in respect of the Insurance Policies on such Collateral Rigs.



     (b) Terms of Insurance Policies. The Insurance Policies shall include the following
terms and conditions:




     (i) each such Rig shall always be covered against marine perils and all risks of loss
or damage, including loss, damage, fire and such other perils as are customary in the
industry, in accordance with English, American or Norwegian hull clauses, as applicable,
with reasonable deductibles;




     (ii) when and while such Rig is laid up, in lieu of hull insurance, port risk insurance
may be taken out under forms of policies approved by the Administrative Agent for such Rig;




     (iii) for the purposes of insurance against Total Loss, each such Rig and its equipment
and appurtenances shall be insured for and valued at an amount at least equal to the highest
of (A) the most recent Orderly Liquidation Value determined in accordance



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with Section 5.06(h), (B) the fair market value thereof from time to time and
(C) the insured value for such Rig as set forth on Schedule 5.04(b);




     (iv) except with respect to each such Rig situated in the Gulf of Mexico or Caribbean
basin, each such Rig shall be covered against war and terrorist risks (including risks,
whether or not regarded as war risks, excluded by the “Free of Capture and Seizure” clauses
in the standard form of marine policy) in accordance with the London Institute War Clauses
and incorporating protection and indemnity clause and with crew war risk insurance being
effected separately, and all Rigs shall be covered for “strikes, riots and civil commotion”
risk. Such risks, may, at the option of the Borrower, be insured by entering such Rigs in
such war risk association or club reasonably acceptable to the Administrative Agent against
all risks covered under the rules of such association or club and with reasonable
deductibles provided therein; and




     (v) each such Rig shall also be insured against the risk of pollution unless such risk
is fully covered by the entry of such Rigs into an international group protection and
indemnity association, in each case in an amount from time to time obtainable for mobile
offshore drilling rigs of the same type, size, age and flag as such Rig and carried by, and
reflecting coverage customarily carried by Persons engaged in similar businesses and owning
similar properties in localities where such Rigs are operated, including excess pollution
coverage.



     (c) Mortgagee Interest Insurance. At the Loan Parties’ expense, obtain, for and on
behalf of the Administrative Agent, for the ratable benefit of the Secured Parties, mortgagee’s
interest insurance and mortgagee’s additional perils (pollution) insurance with respect to each
Collateral Rig. Such insurance shall cover marine perils on hull and machinery, and shall be
maintained on reasonable commercial terms as reasonably acceptable to the Administrative Agent in
the American and British insurance markets or in such other major international markets acceptable
to the Administrative Agent.



     (d) Administrative Agent as Additional Insured and Loss Payee.




     (i) In the case of all marine and war risk hull and machinery policies and all
protection and indemnity insurances (including insurance against liability for pollution or
the spillage or leakage of cargo), the Borrower will cause the Administrative Agent, for the
ratable benefit of the Secured Parties, to be named as an additional insured without
liability for premiums, club calls, assessment or advance payable under the Insurance
Policies on such Collateral Rigs;




     (ii) The Borrower will cause all policies and certificates of entry with respect to
insurance required hereby for each such Collateral Rig to contain a loss payable clause
which shall be on substantially the terms set forth in Schedule 5.04(d) hereto (or,
if such terms are not obtainable, then on such terms as the Administrative Agent shall
reasonably request), in the case of all marine and war risk hull and machinery (including
excess values) policies and all protection and indemnity and liability and oil pollution
liability insurance, and which shall provide for payment to the Borrower or its order unless
the payment is to indemnify the Administrative Agent from or reimburse the Administrative



81









 







Agent for any loss, damage or expense incurred by it or unless and until the insurers
or associations receive notice from the Administrative Agent that the Borrower is in default
hereunder, in which event all payments shall be made to the Administrative Agent, provided,
that the insurer may in all events make payments directly to third parties to whom liability
has been established in discharge of guaranties issued by the insurer or claims against the
Borrower or insurer;




     (iii) In addition, the Borrower will, at its sole cost and expense, (A) assign to the
Administrative Agent, by an Assignment of Insurances, all of the Borrower’s right, title and
interest in and to each Insurance Policy on such Collateral Rigs (including all entries in
protection and indemnity or war risk associations) with respect to the insurance required
hereby and furnish, or use its commercially reasonable efforts to cause its brokers to
furnish, written notice of such assignment to all insurers, underwriters, clubs and
associations with respect to such insurance, and (B) use its commercially reasonable efforts
to cause the insurance brokers and club managers to deliver certified copies of all
policies, contracts, binders, insurance slips, cover notes and certificates of entry
relating to such Collateral Rigs on request and to execute and deliver to the Administrative
Agent a letter of undertaking in connection with the above mentioned insurances and entries;




     (iv) With respect to any potential claims under any Insurance Policy on such Collateral
Rigs, if an Event of Default has occurred and is continuing, the Administrative Agent may,
but shall not be required to, direct the applicable Loan Party to make proof of loss, settle
and adjust any claims at the reasonable direction of the Administrative Agent, and the
expenses incurred by the Administrative Agent in the adjustment and collection of such
proceeds shall be paid by the Borrower. The Administrative Agent shall not be liable or
responsible for failure to collect or exercise diligence in the collection of any proceeds,
unless proximately caused by its gross negligence or willful misconduct.



     (e) Application of Payments under Insurance Policies. All Net Cash Proceeds received
by such Loan Party or the Administrative Agent as a result of a Recovery Event or Asset Disposition
shall be applied in accordance with the requirements of, and subject to the minimum threshold
amount set forth in, Section 2.07(c)(iii).



     (f) United States Operations. At all times during which one or more such Rigs is
operating within the jurisdiction of the United States of America, the Loan Parties shall maintain
with respect to such Rigs:




     (i) insurance or post bonds or maintain approved evidence of financial responsibility
(including, without limitation, qualification as a “qualified self-insurer” by the United
States Coast Guard) with respect to such Rigs to cover the actual cost of removal of
discharged oil for which such Loan Party or the Administrative Agent may be held strictly
liable (or held liable due to negligence of such Loan Party or any other Person) under the
Clean Water Act of 1977, as amended, the Oil Pollution Act 1990 (33 U.S.C. § 2701 et seq.),
as amended, or the Outer Continental Shelf Lands Act, as amended, or under any other Legal
Requirement, including, without limitation, any Environmental Law, of any Governmental
Authority that, now or in the future, may apply to such Rigs or to the Loan Parties, such
Rigs or their operations; and



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     (ii) such worker’s compensation or longshoremen’s and harbor workers’ insurance as
shall be required by applicable law, including endorsements for foreign and Outer
Continental Shelf operations, borrowed servant, voluntary compensation and in rem claims.



     Section 5.05 Payment of Taxes, Etc. Pay and discharge as the same shall become due
and payable, all its obligations and liabilities in accordance with their terms, including (a) all
Taxes imposed upon it or upon its income, revenue or profits or in respect of its Property, unless
the same are being contested in good faith by appropriate proceedings diligently conducted and
reserves in accordance with, and to the extent required by, GAAP are being maintained by the
Borrower or its applicable Subsidiary, (b) all lawful claims which, if unpaid, would by law become
a Lien upon its Property; and (c) all Debt, as and when due and payable, but subject to any
subordination provisions contained in any instrument or agreement evidencing such Debt, except, in
each case, where the failure to so pay or discharge would not cause a Default or an Event of
Default under this Agreement.



     Section 5.06 Reporting Requirements. Deliver to the Administrative Agent and each
Lender, in form and detail reasonably satisfactory to the Administrative Agent and the Lenders:



     (a) Audited Annual Financials. As soon as available and in any event not later than
90 days after the end of each fiscal year of the Borrower, copies of the audited consolidated
balance sheets of the Borrower and its Subsidiaries as at the end of such fiscal year, together
with the related audited consolidated statements of income or operations, and cash flows for such
fiscal year, and the notes thereto, all in reasonable detail and setting forth in each case in
comparative form the audited consolidated figures as of the end of and for the previous fiscal
year, all in reasonable detail and prepared in accordance with GAAP and accompanied by a report and
opinion of KPMG LLP or another independent certified public accountant of nationally recognized
standing reasonably acceptable to the Lenders, which report and opinion shall be prepared in
accordance with generally accepted auditing standards and shall not be subject to any “going
concern” or like qualification or exception or any qualification or exception as to the scope of
such audit and shall state that such consolidated financial statements present fairly, in all
material respects, the consolidated financial position of the Borrower and its respective
Subsidiaries as at the end of such fiscal year and their consolidated results of operations and
cash flows for such fiscal year in conformity with GAAP, or words substantially similar to the
foregoing, and that the examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted auditing standards;



     (b) Quarterly Financials. As soon as available and in any event not later than 45
days after the end of each of the first three fiscal quarters in each fiscal year, a consolidated
balance sheet of the Borrower and its Subsidiaries as at the end of such fiscal quarter, and the
related consolidated statements of income or operations, shareholders’ equity and cash flows for
such fiscal quarter and for the portion of the Borrower’s fiscal year then ended, and setting forth
in comparative form the consolidated figures for the corresponding fiscal quarter of the previous
fiscal year and the corresponding portion of the previous fiscal year, all in reasonable detail and
certified by a Financial Officer of the Borrower as fairly presenting the financial condition,
results of operations, shareholders’ equity and cash flows of the Borrower and its Subsidiaries in



83









 







accordance with GAAP, subject only to normal year-end audit adjustments and the absence of
footnotes;



     (c) Compliance Certificates. (i) Concurrently with the delivery of the financial
statements referred to in Section 5.06(a), a certificate of its independent certified
public accountants rendering the report thereon stating whether, in connection with their audit
examination, they obtained knowledge of any Default or Event of Default (which certificate may be
limited to the extent required by accounting rules or guidelines) and (ii) concurrently with the
delivery of the financial statements referred to in Sections 5.06(a) and (b), a
duly completed Compliance Certificate signed by a Financial Officer of the Borrower;



     (d) Borrowing Base Report. On each Borrowing Base Determination Date (i) a Borrowing
Base Report as of the last Business Day of the previous calendar month and (ii) a monthly Rig
status report of a recent date in scope, form and substance reasonably satisfactory to the
Administrative Agent detailing (A) whether a Rig is working, idle or stacked, (B) the then current
location of each of Rig, (C) if applicable, the then current term of and parties to any drilling
contract of any Rig, (D) for each stacked Rig, the number of days such Rig has been stacked and
whether or not such Rig is crewed, and (E) for the previous calendar month, the average day rates
and utilization for each such Rig;



     (e) Management Letters. Promptly upon receipt thereof, copies of any detailed audit
reports, management letters and any reports as to material inadequacies in accounting controls or
recommendations submitted to the board of directors (or the audit committee of the board of
directors) of the Borrower by independent accountants in connection with the accounts or books of
the Borrower or any Subsidiary thereof, or any audit of any of them;



     (f) Budgets. On or before 90 days after the commencement of each fiscal year of the
Borrower, (i) a consolidated and consolidating budget of the Borrower and its Subsidiaries which
includes consolidated and consolidating income statements, balance sheets and cash flow statements
of the Borrower and its Subsidiaries for each of the four fiscal quarters of such fiscal year and
(ii) a breakdown of projected revenues, operating expenses, utilizations and capital expenditures
for each Rig;



     (g) Projections. On or before 90 days after the commencement of each fiscal year of
the Borrower, updated Projections for the two year period commencing as of such fiscal year;



     (h) Appraisal Reports.




     (i) Within 225 days of the Closing Date and within every six months thereafter, an
appraisal report prepared by an Approved Rig Appraiser with respect to each of the Rigs, in
form, scope and methodology reasonably acceptable to Administrative Agent, setting forth the
Orderly Liquidation Value of each of the Rigs as of the date appraised (each an
“Appraisal Report”). The cost of each such Appraisal Report shall be paid by the
Borrower;




     (ii) Upon the written request of the Administrative Agent or the Required Lenders, no
more than two additional Appraisal Reports (in addition to those Appraisal Reports required
under Section 5.06(h)(i) above) in any given fiscal year of the



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Borrower, in each case to be delivered within 30 days after receipt of such request;
provided, however, that no Loan Party shall be liable for any delay in
delivery of such report if the Approved Rig Appraiser requires payment of its costs prior to
the delivery thereof and the Lenders shall not have paid such amount pursuant to the
immediately succeeding sentence. Unless an Event of Default is in existence at the time of
such request, the Lenders shall pay the costs of any Appraisal Reports requested by the
Administrative Agent or the Required Lenders, other than those required under Section
5.06(h)(i), during such calendar year;




     (iii) Within 30 days after the occurrence of any loss or damage to, or any
condemnation, seizure or taking of, any Rig (if the Net Cash Proceeds with respect thereto
could reasonably be expected to exceed $10,000,000) occurring with respect to any Rig, an
additional Appraisal Report setting forth the Orderly Liquidation Value of the affected Rig
immediately prior to such loss or damage to, or any condemnation, seizure or taking of, such
Rig and the Orderly Liquidation Value giving effect to such loss or damage to, or any
condemnation, seizure or taking of, such Rig (a “Required Additional Appraisal
Report”). The cost of each such Required Additional Appraisal Report shall be paid by
the Borrower; and




     (iv) The Borrower may, at its option and expense, provide to the Administrative Agent
an additional Appraisal Report setting forth the Orderly Liquidation Value of the Collateral
Rigs for the purpose of updating the Borrowing Base for any reason, including as a result of
any upgrades, improvements and reconfigurations of Rigs (a “Requested Additional
Appraisal Report”, together with a Required Additional Appraisal Report, the
“Additional Appraisal Report”.



     (i) Safety Management Manual. Upon written request by the Administrative Agent, a
copy of the safety management manual used to describe and implement the Borrower’s safety
management system developed, implemented and maintained in compliance with the ISM Code, if
applicable;



     (j) Securities Law Filings and other Public Information. Promptly after the same are
available, copies of each annual report, proxy or financial statement or other report or
communication sent to the stockholders of the Borrower, and copies of all annual, regular, periodic
and special reports and registration statements which the Borrower may file or be required to file
with the SEC under Section 13 or 15(d) of the Exchange Act, and not otherwise required to be
delivered to the Administrative Agent pursuant hereto;



     (k) Other Debt. Promptly after the giving or receipt thereof, copies of any material
notices given or received by any Loan Party pursuant to the terms of any indenture, loan agreement,
credit agreement or similar financing arrangement;



     (l) Collateral Updates. From time to time upon request, statements and schedules
further identifying, updating, and describing the Collateral and such other information, reports
and evidence concerning the Collateral, as Administrative Agent may reasonably request, all in
reasonable detail;



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     (m) Insurance Certificates. Copies of all insurance policies maintained pursuant to
Section 5.04 to the Administrative Agent; and prior to the cancellation, modification or
nonrenewal of any such policy of insurance, a copy of a renewal or replacement policy (or other
evidence of renewal of a policy previously delivered to the Administrative Agent) together with
evidence reasonably satisfactory to the Administrative Agent of payment of the premium therefor;



     (n) USA Patriot Act. Promptly, following a request by any Lender, all documentation
and other information that such Lender reasonably requests in order to comply with its ongoing
obligations under applicable “know your customer” and anti-money laundering rules and regulations,
including the USA Patriot Act; and



     (o) Other Information. Such other information respecting the business, Properties or
Collateral, or the condition or operations, financial or otherwise, of the Borrower and its
Subsidiaries as the Administrative Agent or any Lender may from time to time reasonably request.


Documents required to be delivered pursuant to Sections 5.06(a), (b) or (j)
(to the extent any such documents are included in materials otherwise filed with the SEC) may be
delivered electronically and if so delivered, shall be deemed to have been delivered to the
relevant parties on the date (i) on which the Borrower posts such documents, or provides a link
thereto, on the Borrower’s website on the Internet at the website address listed on Schedule
10.02; or (ii) on which such documents are posted by or on behalf of the Borrower on (A) the
SEC’s website accessible through http://www.sec.gov/idea/searchidea/webusers.htm or such successor
webpage of the SEC thereto or (B) on an Internet or intranet website, if any, to which each Lender
and the Administrative Agent have access (whether a commercial, third-party website or whether
sponsored by the Administrative Agent).




     Section 5.07 Other Notices. Deliver to the Administrative Agent and each Lender
prompt written notice of the following:



     (a) Defaults. Promptly and in any event within three Business Days after the actual
knowledge thereof by a Responsible Officer of the Borrower, the occurrence of any Default or Event
of Default or any other Debt of any Loan Party in an outstanding principal amount of at least
$2,500,000 being declared when due and payable before its stated maturity date, or any holder of
such Debt having the right to declare such Debt due and payable before its stated maturity date,
because of the occurrence of any default (or any event which, with notice and/or the lapse of time,
shall constitute any default) under such Debt;



     (b) Litigation. Promptly and in any event within five Business Days after the actual
knowledge thereof by a Responsible Officer of the Borrower, the filing or commencement of, or any
threat or notice of intention of any Person in writing to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental Authority, against the
Borrower or any Subsidiary, or any material development in any such action, suit, proceeding, that,
if determined adversely, could reasonably be expected to result in a liability of the Borrower or
any of its Subsidiaries in an aggregate amount exceeding $2,500,000;



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     (c) ERISA Events. Promptly and in any event within five Business Days after the
actual knowledge thereof by a Responsible Officer of the Borrower, the occurrence of any ERISA
Event that, alone or together with any other ERISA Events that have occurred, could reasonably be
expected to result in a liability of the Borrower or any of its Subsidiaries in an aggregate amount
exceeding $2,500,000;



     (d) Environmental Notices. In each case promptly and in any event within five
Business Days after the actual knowledge thereof by a Responsible Officer of the Borrower, any of
the following environmental matters, if such matters could reasonably be anticipated to result in a
Environmental Claim or Environmental Liability exceeding in the aggregate $2,500,000: (i) a copy of
any form of notice, summons or citation received from any Governmental Authority or any other
Person, concerning (A) material violations or alleged violations of Environmental Laws, which seeks
to impose liability therefor, (B) any notice of potential responsibility under any Environmental
Law, or (C) the filing of a Lien other than a Permitted Lien upon, against or in connection with
the Parent or any of its Subsidiaries, or any of the Rigs, (ii) any condition or occurrence on or
arising from any Rig that (A) results in noncompliance by any Loan Party with any applicable
Environmental Law or (B) could reasonably be expected to form the basis of an Environmental Claim
against any Loan Party or any such Rig; (iii) any condition or occurrence on any Rig that could
reasonably be expected to cause such Rig to be subject to any unreasonable restrictions on the
ownership, occupancy, use or transferability by any Loan Party of such Rig under any Environmental
Law; and (iv) the taking of any removal or remedial action in response to the actual or alleged
presence of any Hazardous Material on any Rig as required by any Environmental Law or any
Governmental Authority;



     (e) Collateral.




     (i) any change of its legal name, corporate structure, jurisdiction of organization or
formation or its organizational identification number or the creation or acquisition of any
Person that will become a Subsidiary of the Borrower, in each event, which is reasonably
expected to occur at least 10 Business Days before the occurrence thereof, and in
furtherance thereof, the Borrower agrees not to effect or permit any change referred to in
Section 5.07(e)(i) unless all filings have been made under the Uniform Commercial
Code or otherwise that are required in order for the Administrative Agent to continue at all
times following such change to have, and each Loan Party agrees to take all necessary action
to ensure that the Administrative Agent does continue at all times to have, a valid, legal
and perfected security interest in all the Collateral; it being understood and agreed that
(A) in connection with the merger of the Borrower into Pride SpinCo, Inc., a Delaware
corporation, in connection with the consummation of the Transaction, Pride Spinco, Inc. will
survive the merger and will change its name to Seahawk Drilling, Inc. and (B) the prior
notice required in this clause (i) shall not apply to such merger and the name changes
contemplated in the Omnibus Restructuring Agreement;




     (ii) Asset Dispositions pursuant to Section 6.04(c) promptly and within five
Business Days after the occurrence thereof or a Total Loss promptly and within five Business
Days after the actual knowledge thereof by a Responsible Officer of the Borrower;



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     (iii) any loss or damage to, or any condemnation, seizure or taking of, any portion of
Collateral with a market value in excess of $2,500,000, promptly and in any event within
five Business Days after the actual knowledge thereof by a Responsible Officer;




     (iv) any Lien on any Rig imposed by any Governmental Authority and that has not been
released or bonded within ten Business Days following the applicable Loan Party’s receipt of
notice of such imposition unless such Lien is being contested in good faith and, if
necessary, by appropriate proceedings;




     (v) an Account in excess of $1,000,000 or Accounts of a single Account Debtor or an
Affiliate group of Account Debtors in excess of $5,000,000 in the aggregate becoming subject
to any dispute or claim or other circumstances known to any Loan Party that may impair the
validity or collectibility of such accounts, promptly and in any event within five Business
Days after the actual knowledge thereof by a Responsible Officer of the Borrower;




     (vi) any correspondence received by any Loan Party from any insurer or classification
society with respect to any insurance maintained in accordance with Section 5.04
which advises the Borrower of a materially adverse event affecting the coverage on any
Collateral Rig, promptly and in any event within five Business Days after the actual
knowledge thereof by a Responsible Officer of the Borrower;




     (vii) the Borrower or any of its Subsidiaries holding or obtaining any Collateral
consisting of (A) Chattel Paper, (B) Instrument, or (C) letter of credit, each in excess of
$1,000,000 individually and $5,000,000 in the aggregate, promptly and in any event within
five Business Days after the actual knowledge thereof by a Responsible Officer of the
Borrower;




     (viii) Collateral with value in excess of $1,000,000 at any time being in the
possession or control of any warehouse or bailee not previously disclosed, promptly and in
any event within five Business Days after the actual knowledge thereof by a Responsible
Officer of the Borrower;




     (ix) Collateral with value in excess of $1,000,000 being of a type where a Lien may be
registered, recorded or filed under, or notice thereof given under, any federal statute or
regulation or any material Collateral constitutes a claim against the United States of
America, or any State or municipal government or any department, instrumentality or agency
thereof, the assignment of which claim is restricted by law, promptly and in any event
within five Business Days of the actual knowledge of a Responsible Officer of the Borrower
of the existence thereof;




     (x) any arrest of any Rig for a period of at least three continuous days or the
exercise of any Lien remedy on any Rig, in each case, by a Person other than a Secured
Party, promptly and in any event within three Business Days of the actual knowledge thereof
by a Responsible Officer of the Borrower;



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     (f) Transaction Documents. Promptly and in any event within five Business Days of the
actual knowledge thereof by a Responsible Officer of the Borrower, any default of or claim of
indemnity pursuant to any of the Transaction Documents;



     (g) Drilling Contracts. Promptly and in any event within five Business Days of the
actual knowledge thereof by a Responsible Officer of the Borrower, any notice of default,
suspension or cancellation of any drilling contract with a remaining value in excess of $1,000,000;
and



     (h) Material Changes. Promptly and in any event within five Business Days of the
actual knowledge thereof by a Responsible Officer of the Borrower, the occurrence of any event
which has resulted in, or could reasonably be expected to result in, a Material Adverse Effect.



Each notice pursuant to this Section shall be accompanied by a statement of a Responsible Officer
of the Borrower setting forth details of the occurrence referred to therein and stating what action
the Borrower have taken and propose to take with respect thereto.



     Section 5.08 Books and Records; Inspection. (a) Keep proper records and books of
account in which full, true and correct entries will be made in accordance with GAAP and all Legal
Requirements; (b) maintain such books of record and account in material conformity with all
applicable requirements of any Governmental Authority having regulatory jurisdiction over the
Borrower and its Subsidiaries, as the case may be; and (c) from time-to-time during regular
business hours upon reasonable prior notice, (i) permit representatives and independent contractors
of the Administrative Agent and each Lender to visit and inspect any of its Properties, (ii) to
examine its corporate, financial and operating records, and make copies thereof or abstracts
therefrom and (iii) to discuss its affairs, finances and accounts with its Responsible Officers and
independent public accountants, all at the reasonable expense of the Borrower and at such
reasonable times during normal business hours and as often as may be reasonably desired, upon
reasonable advance notice to the applicable Loan Party or Subsidiary; provided that the Loan
Parties shall be responsible for such reasonable expenses not more than one (1) time per year
unless an Event of Default has occurred and is continuing, in which case the Loan Parties shall be
responsible for all such reasonable expenses.



     Section 5.09 Use of Proceeds. Use the proceeds of (a) the Revolving Advances for
Reactivation Capital Expenditures and working capital related to the foregoing types of
expenditures and (b) Letters of Credit for general corporate purposes, including the backstop of
surety bonds; provided ̧ however that Revolving Advances may not be made and Letters
of Credit may not be issued to support contingent obligations, assessments and appeal bonds related
to Contested Mexican Tax Assessments other than Letters of Credit that in the aggregate principal
amount at any one time outstanding do not exceed the lesser of (a) 20% of the Revolving Commitments
and (b) $15,000,000.



     Section 5.10 Nature of Business. Maintain and operate such business in substantially
the manner in which it is conducted and operated as of the Closing Date or any business reasonably
related or incidental thereto.



     Section 5.11 Operation of Rigs. With respect to each Rig:



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     (a) (i) Comply with and satisfy all Legal Requirements of the jurisdiction of such Rig’s home
port, now or hereafter from time to time in effect, in order that such Rig shall continue to be
documented pursuant to the laws of the jurisdiction of its home port with such endorsements as
shall qualify such Rigs for participation in the trades and services to which it may be dedicated
from time to time or (ii) not do or allow to be done anything whereby such documentation is or
could reasonably be expected be forfeited;



     (b) The Borrower and each other Loan Party which owns or operates, or will own or operate, one
or more such Rigs will, at all times while owning or operating such Rigs, be qualified to own and
operate such Rigs under the laws of the jurisdiction of such Rig’s registry;



     (c) Subject to Section 2.07(c), keep such Rig in a good and sufficient state of repair
consistent with industry standards of ownership and management practice employed by owners of
mobile offshore drilling rigs of similar size and type and geographically situated and so as to
maintain the present class of such Rig at its current classification by any first-class, recognized
rating agency, including, without limitation, the American Bureau of Shipping, free of
recommendations affecting class and qualifications and change of class;



     (d) Subject to Section 2.07(c), (i) make or cause to be made all repairs to or
replacement of any damaged, worn or lost parts or equipment such that the value of such Rig will
not be materially impaired and (ii) except as otherwise contemplated by this Agreement, not remove
any material part of, or item of equipment owned by the Loan Parties installed on, such Rig except
in the ordinary course of the operation and maintenance of such Rig or unless (A) the part or item
so removed is forthwith replaced by a suitable part or item which is in the same condition as or
better condition than the part or item removed, is free from any Lien (other than Excepted Liens)
in favor of any Person other than the Administrative Agent and becomes, upon installation on such
Rig the property of the Loan Parties and subject to the security constituted by the Rig Mortgage or
the Security Agreement, if applicable, or (B) the removal will not materially diminish the value of
such Rig;



     (e) Submit such Rig to such periodical or other surveys as may be required for classification
purposes and, upon the written request of the Administrative Agent supply to the Administrative
Agent copies of all survey reports and classification certificates issued in respect thereof;



     (f) Promptly pay and discharge in the ordinary course all debts, damages and liabilities
whatsoever which have given or may give rise to maritime or possessory Liens (other than Excepted
Liens) on or claims enforceable against such Rig and all tolls, dues, taxes, assessments,
governmental charges, fines and penalties that are material in amount and lawfully charged on or in
respect of such Rig other than any of the foregoing being contested in good faith and, if
necessary, diligently by appropriate proceedings, and, in the event of arrest of any such Rig
pursuant to legal process, or in the event of its detention in exercise or purported exercise of
any such Lien or claim as aforesaid, procure, if possible, the release of such Rig from such arrest
or detention forthwith upon receiving notice thereof by providing bail or otherwise as the
circumstances may require;



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     (g) Maintain, or cause to be maintained by the charterer or lessee of any such Rig, a valid
Certificate of Financial Responsibility (Oil Pollution) issued by the United States Coast Guard
pursuant to the Federal Water Pollution Control Act to the extent that such certificate may be
required by applicable Legal Requirements for any such Rig and such other similar certificates as
may be required in the course of the operations of any such Rig pursuant to the International
Convention on Civil Liability for Oil Pollution Damage of 1969, or other applicable Legal
Requirements concerning financial responsibility for liabilities imposed on such Borrower or the
Rigs with respect to pollution by any state or nation or political subdivision thereof;



     (h) If the Person operating such Rig is not a Loan Party, promptly remit all earnings received
by such Person from such Rig back to the appropriate Loan Party. For the avoidance of doubt,
“earnings” does not include operating costs and reasonable management fees as are customary in the
industry and which are set forth and supported by a budget for such Rigs which will be delivered to
the Administrative Agent on or before such time as the subject Rig begins operations for such
Person;



     (i) Cause such Rigs to be managed by the Borrower or one of the Loan Parties, or such other
national or international, independent manager of established reputation engaged in the same or
similar operation of mobile offshore drilling rigs similar to such Rigs, as consented to by the
Administrative Agent acting upon instruction from the Required Lenders;



     (j) Cause such Rig to be registered under the laws and flag of an Acceptable Flag
Jurisdiction. Notwithstanding the foregoing, any Loan Party may transfer a Collateral to another
Acceptable Flag Jurisdiction pursuant to a Flag Jurisdiction Transfer; and



     (k) Operate such Rigs in accordance with applicable insurance requirements from time to time
in effect.



     Section 5.12 Additional Mortgaged Vessels. The Borrower shall cause any Acceptable
Additional Rig or Acceptable Replacement Rig and which is owned by the Borrower or any other Loan
Party, to become subject to a Rig Mortgage and to become a Collateral Rig hereunder, by delivering
to the Administrative Agent the following items:



     (a) a duly authorized, executed and delivered Assignment of Earnings, an Assignment of
Insurances, together covering all of such Loan Party’s present and future Earnings Collateral and
Insurance Collateral with respect to such Rig, in each case together with:




     (i) UCC-1 financing statements and any other documents, agreements or instruments
reasonably necessary to create an Acceptable Security Interest in the Collateral described
therein;




     (ii) lien, tax and judgment searches conducted on the applicable Loan Party and Rig
reflecting no Liens other than Excepted Liens against any such Rig as to which perfection of
a Lien is accomplished by the filing of a financing statement; and




     (iii) evidence that all other actions reasonably necessary or, in the reasonable
opinion of the Administrative Agent, desirable to perfect and protect the security interests



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purported to be created by the Assignment of Earnings and the Assignment of Insurances
and other Security Documents have been taken;



     (b) a duly authorized, executed and delivered Rig Mortgage (or supplement to an existing Rig
Mortgage) (or such other form as shall be reasonably satisfactory to the Administrative Agent) with
respect to such Rig in appropriate form for recording in the appropriate vessel registry and
otherwise effective to create an Acceptable Security Interest.



     (c) all other filings, deliveries of instruments and other actions reasonably necessary or
desirable in the reasonable opinion of the Administrative Agent to perfect and preserve such
security interests shall have been duly effected and the Administrative Agent shall have received
evidence thereof in form and substance reasonably satisfactory to the Administrative Agent;



     (d) with respect to each such Rig:




     (i) certificates of ownership or abstracts of title from appropriate authorities
showing (or confirmation updating previously reviewed certificates and indicating) the
registered ownership of such Rig by the relevant Loan Party;




     (ii) the results of maritime registry searches with respect to such Rig indicating no
record liens other than Liens in favor of the Administrative Agent and Excepted Liens;




     (iii) class certificates from an internationally recognized classification society
reasonably acceptable to the Administrative Agent, indicating that such Rig meets the
criteria specified in clause (a) of the definition of Acceptable Additional Rig or
Acceptable Replacement Rig;




     (iv) if such Rig is being delivered in connection with a Rig Exchange and otherwise if
requested by the Administrative Agent, a Appraisal Report; and




     (v) certificates of insurance from an Insurance Advisor in respect of such Rig from an
Insurance Advisor to the extent required by Section 5.04;



     (e) opinions from counsel to such Loan Party reasonably satisfactory to the Administrative
Agent addressed to the Administrative Agent and each of the Lenders which shall (i) be in form and
substance reasonably acceptable to the Administrative Agent and (ii) cover the perfection of the
security interests granted pursuant to the relevant Rig Mortgage and other Security Documents and
such other matters incident thereto as the Administrative Agent may reasonably request;



     (f) if the Subsidiary owning such Rig is not a Loan Party and is a Domestic Subsidiary, (i)
such Subsidiary shall (A) execute and deliver a counterpart of the Security Agreement, taking all
actions required pursuant to Section 18(i) of the Security Agreement to become a Grantor
thereunder, and taking any other action reasonably requested by the Administrative Agent and (B)
execute and deliver a joinder as a Guarantor hereto and (ii) the Borrower shall pledge and deliver,
or cause to be pledged and delivered, all of the capital stock of such Subsidiary owned by any Loan
Party to the Administrative Agent. Upon satisfaction of



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the requirements of clauses (A) and (B) above, such Subsidiary shall be considered a Guarantor
under the Loan Documents; and



     (g) such other documents, certificates and opinions as the Administrative Agent shall have
reasonably requested.



     Section 5.13 Additional Guarantors. Promptly after any Person becomes a Material
Domestic Subsidiary of the Borrower (and in any event within 30 days thereafter), (a) cause such
Person to (i) become a Guarantor by executing and delivering to the Administrative Agent a
counterpart of this Agreement or such other document as the Administrative Agent shall deem
reasonably appropriate for such purpose, (ii) deliver to the Administrative Agent documents of the
types referred to in clauses Section 3.01(a)(vii), (viii), (ix) and (x) and
opinions of counsel to such Person (which shall cover, among other things, the legality, validity,
binding effect and enforceability of the documentation referred to in clause (i)), all in form and
substance reasonably satisfactory to the Administrative Agent and (iii) execute such other Security
Documents as the Administrative Agent or any Lender may reasonably request, in each case to secure
the Obligations and (b) cause the stockholder of such Person to execute a Pledge Agreement pledging
(i) 100% of its interests in the Equity Interest of such Person to secure the Obligations and such
evidence of corporate authority to enter into and such legal opinions in relation to such Pledge
Agreement as the Administrative Agent may reasonably request, along with, if such Person has
previously issued share certificates, share certificates pledged thereby and appropriately executed
stock powers in blank; provided that no new Material Domestic Subsidiary that is restricted by an
existing contractual arrangement in existence at the time such Person becomes a Material Domestic
Subsidiary and was not created or incurred in anticipation thereof, shall be required to become a
Guarantor or enter into any Security Document if such guaranty or the entering into of such
Security Documents would violate such existing contractual arrangements.



     Section 5.14 Additional Collateral Requirements.



     (a) Deposit Accounts. Establish deposit accounts (collectively, “Deposit
Accounts”) in the name of the Borrower or any of its Subsidiaries with such banks
(“Depository Banks”) as are reasonably acceptable to the Administrative Agent (subject to
irrevocable instructions reasonably acceptable to Administrative Agent as hereinafter set forth) or
with the Administrative Agent and all invoices evidencing accounts shall bear a notice that such
invoices are payable to such Deposit Accounts and in which the Borrower or one of its Subsidiaries,
as applicable, will immediately deposit all payments made for inventory or other payments
constituting proceeds of Collateral, in the case of the Borrower and their Subsidiaries, in the
identical form in which such payment was made, whether by cash or check. The Depository Banks
shall acknowledge and agree, pursuant to an Account Control Agreement, that all payments made to
the Deposit Accounts are for the benefit of the Administrative Agent and the Secured Parties, and
that the Depository Banks have no right to setoff against the Deposit Accounts, other than for
customary charges of the Depository Bank for depositary services. Upon the occurrence and
continuance of an Event of Default, (i) the Borrower and each Subsidiary shall irrevocably instruct
each Depository Bank to promptly transfer all payments or deposits (with certain exceptions as
agreed to by the Administrative Agent) into the Deposit Accounts into the Administrative Agent’s
Account on each Business Day and (ii) if any Loan



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Party shall receive any monies, checks, notes, drafts or any other payments relating to and/or
proceeds of accounts or other Collateral, such Person shall hold such instrument or funds in trust
for the Administrative Agent, and, immediately upon receipt thereof, shall remit the same or cause
the same to be remitted, in kind, to the Administrative Agent at its address set forth in
Section 10.02 below.



     (b) Deposit of Earnings. Each Loan Party shall cause the earnings derived from each
of the respective Rigs, to the extent constituting Earnings Collateral (as defined in the
Assignment of Earnings), to be deposited by the respective Account Debtor in respect of such
earnings into one or more of the Deposit Accounts maintained for such Loan Party or the Borrower
from time to time, or, if after making commercially reasonable efforts to cause an Account Debtor
to make such deposits, an Account Debtor refuses to make such deposits, the applicable Loan Party
will immediately, upon receipt of such remittance from such Account Debtor, deposit such amounts in
such Deposit Account.



     (c) Bailees. If any Collateral in excess of $1,000,000 shall at any time be in the
possession or control of any warehouse or bailee (i) use its commercially reasonable efforts to
deliver to the Administrative Agent warehouse or bailee lien waivers reasonably satisfactory to the
Administrative Agent, (ii) notify such warehouse, bailee or agent of the Liens in favor of the
Administrative Agent, for the ratable benefit of the Secured Parties, and instruct such Person to,
upon the occurrence and continuance of an Event of Default, hold all such Collateral for
Administrative Agent’s account subject to the Administrative Agent’s instructions, and (iii) use
its commercially reasonable efforts to obtain such Person’s (A) acknowledgement that it is holding
such Collateral for the Administrative Agent’s benefit and (B) agreement to, upon the occurrence
and continuance of an Event of Default, permit the Administrative Agent to access such property in
order to exercise its rights against Collateral.



     Section 5.15 Further Assurances in General. Execute any and all further documents,
financing statements, agreements and instruments, and take all such further actions (including the
filing and recording of financing or continuation statements or amendments thereto (or similar
documents required by any laws of any applicable jurisdiction)), which may be required under any
Legal Requirement, or which the Administrative Agent or the Required Lenders may reasonably
request, all at the reasonable expense of the Borrower. The Borrower also agrees to provide to the
Administrative Agent, from time to time upon reasonable request, evidence reasonably satisfactory
to the Administrative Agent as to the perfection and priority of the Liens created or intended to
be created by the Security Documents.



     Section 5.16 PEMEX Consent. Without limiting the generality of Section 5.15, the
Borrower agrees to provide to the Administrative Agent the consent to assignment executed by PEMEX
and substantially in the form attached to the guaranty trust agreement discussed in Section
3.02(a)(xxiii) on or prior to date that is 30 days after the Closing Date (or such later date if
extended by the Administrative Agent; provided that such later date may not be later than November
30, 2009).




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ARTICLE VI




NEGATIVE COVENANTS




     So long as the Revolving Advances or any amount under any Loan Document shall remain unpaid,
any Lender shall have any Revolving Commitment, or there shall exist any Letter of Credit Exposure,
unless the Required Lenders otherwise consent in writing, no Loan Party shall:



     Section 6.01 Liens, Etc. Create, assume, incur or permit to exist, any Lien on or in
respect of any of its Property whether now owned or hereafter acquired, other than the following
(“Permitted Liens”):



     (a) Excepted Liens;



     (b) Liens existing on the Effective Date and described in Schedule 6.01; provided that
such Liens shall secure only those obligations which they secure on the date hereof and extensions,
renewals and replacements thereof permitted hereunder;



     (c) Liens securing Debt permitted under Section 6.02(d); provided that (i)
such Liens do not at any time encumber any property other than the property financed by such Debt,
and (ii) if applicable, the principal amount of the Debt secured thereby does not exceed the lesser
of the cost or fair market value of the property being acquired on the date of acquisition;



     (d) Liens on the Non-Collateral Rigs to secure contingent or direct obligations, assessments
and appeal bonds related to the Contested Mexican Tax Assessments;



     (e) Liens on leasehold interests created by the lessor of the applicable leased premises in
favor of a mortgagee of such premises;



     (f) Liens for salvage or general average for amounts which are not delinquent or which are
being contested in good faith and, if necessary, by appropriate proceedings diligently conducted,
if reserves with respect thereto are maintained on the books of the applicable Person in accordance
with, and to the extent required by, GAAP;



     (g) [Reserved]; and



     (h) Liens not otherwise permitted by any other clause of this Section 6.01 which
secure obligations, actual or contingent, in an aggregate outstanding principal amount not greater
than $2,500,000 at any time;


provided, however, the Borrower shall not, nor shall it permit any of its
Subsidiaries to, create, assume, incur or permit to exist, any consensual Lien on or in respect of
(i) any of its assets relating to or arising from the Collateral Rigs, whether now owned or
hereafter acquired, including, without limitation, any Accounts, Inventory, Equipment and General
Intangibles other than Excepted Liens and (ii) the Non-Collateral Rigs, other than Excepted Liens
and Permitted Liens permitted by Section 6.01(d).




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     Section 6.02 Debts, Guaranties and Other Obligations. Create, assume, permit to exist
or in any manner become or be liable, in respect of any Debt except:



     (a) Debt under the Loan Documents;



     (b) Debt (i) of the Borrower to Guarantors, (ii) of Guarantors to the Borrower and to other
Guarantors and (iii) of Subsidiaries to the Borrower or other Subsidiaries; provided that
(i) such Debt of any Loan Party is subordinated to the Obligations pursuant to a subordination
agreement in form and substance reasonably acceptable to the Administrative Agent; and (ii) any
such Debt shall be evidenced by a promissory note pledged to the Administrative Agent, for the
ratable benefit of the Secured Parties;



     (c) Guarantees of the Borrower or any Subsidiary in respect of Debt otherwise permitted
hereunder of the Borrower or any Subsidiary;



     (d) Debt in respect of Capital Leases and purchase money obligations for fixed or capital
assets, and in each case, extensions, renewals and replacements of any such Debt that do not
increase the outstanding principal amount thereof except by an amount equal to a reasonable premium
or other reasonable amount paid, and fees and expenses reasonably incurred, in connection with such
extensions, renewals and replacements; provided that the aggregate principal amount of Debt
permitted by this paragraph shall not exceed $5,000,000 at any time outstanding plus amounts
permitted in the preceding clause;



     (e) obligations (contingent or otherwise) of the Borrower existing or arising under any Swap
Contract, provided that (i) such obligations were entered into by such Person in the ordinary
course of business for the purpose of directly mitigating risks associated with interest rates
under this Agreement, foreign exchange liabilities, commodity expenses or casualty risks held or
reasonably anticipated by such Person and not for purposes of speculation or taking a “market view”
and (ii) no such Swap Contract requires any Loan Party to put up money, assets or other security
(excluding in the case of Swap Contracts with Swap Counterparties, Collateral under the Security
Documents) against the event of its nonperformance prior to actual default by such Loan Party in
performing its obligations thereunder;



     (f) Debt in connection with any Guarantees in favor of any protection and indemnity or war
risk associations to the extent such Guarantees are required in connection with any Insurance
Policies;



     (g) Debt in connection with any Liens permitted pursuant to Section 6.01(d);



     (h) (i) Debt consisting of performance, bid and customs bonds, letters of credit, statutory
obligations, surety and appeal bonds and other obligations of a like nature incurred in the
ordinary course of business in connection with new charter or leases of Rigs entered into after the
Effective Date (but not including bonds or other obligations incurred in connection with the
Contested Mexican Tax Assessments which the parties hereto acknowledge are covered under the
following clause (ii)), and (ii) Debt consisting of appeal bonds and other obligations of a like
nature incurred in connection with the Contested Mexican Tax Assessments in an aggregate amount not
to exceed $185,000,000 at any time;



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     (i) Debt in respect to insurance premium financing for insurance being acquired by the
Borrower or any Subsidiary under customary terms and conditions;



     (j) Debt arising in connection with endorsement of instruments for deposit in the ordinary
course of business;



     (k) Debt of the Borrower or any Subsidiary with respect to the payment by Pride or any of its
Affiliates of costs, expenses and liabilities arising from, related to or in connection with the
salvage operation of the Pride Wyoming mat-supported jackup rig in 2008 in a net amount not to
exceed $10,000,000; provided that (i) such Debt may not be secured and (ii) the Borrower or such
Subsidiary is entitled to insurance proceeds in connection with Pride Wyoming (under insurance as
to which the insurer does not dispute coverage) in an amount at least equal to the full amount of
such Debt; and



     (l) unsecured Debt not otherwise permitted by any other clause of this Section 6.02 in
an aggregate outstanding principal amount not greater than $1,000,000 at any time outstanding.



     Section 6.03 Merger or Consolidation. Merge, dissolve, liquidate, consolidate with or
into another Person, or Dispose of (whether in one transaction or in a series of transactions) all
or substantially all of its assets (whether now owned or hereafter acquired) to or in favor of any
Person, except that, so long as no Default or Event of Default has occurred and is continuing or
would result therefrom:



     (a) any Subsidiary may merge with or dissolve into (i) the Borrower, provided that the
Borrower shall be the continuing or surviving Person, or (ii) any one or more other Subsidiaries,
provided that when any Guarantor is merging with or dissolving into another Subsidiary,
such Guarantor shall be the continuing or surviving Person or such continuing or surviving Person
if not the Guarantor, shall become a Guarantor in accordance with Section 5.12;



     (b) any Subsidiary may Dispose of all or substantially all of its assets (upon voluntary
liquidation or otherwise) to the Borrower or to another Subsidiary and may thereafter liquidate or
dissolve, if applicable; provided that if the transferor in such a transaction is a
Guarantor, then the transferee must either be the Borrower or a Guarantor;



     (c) the Borrower or any of its Subsidiaries may merge with another Person to effectuate an
Acquisition permitted by Section 6.05(e); provided that the Borrower or the applicable
Subsidiary is the acquiring or surviving entity (or, with respect to any merger by a Subsidiary of
the Borrower, the surviving entity becomes a Subsidiary in the transaction); and provided further
that all other conditions of Section 6.05(e) are satisfied;



     (d) the Borrower may merge with Pride SpinCo, Inc., a Delaware corporation, in connection with
the consummation of the Transaction as detailed in the Omnibus Restructuring Agreement; and



     (e) Dispositions permitted by Section 6.04.



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     Section 6.04 Dispositions. Make any Disposition or enter into any agreement to make
any Disposition, except:



     (a) Dispositions of obsolete, worn-out or surplus assets or assets that are no longer used or
useful in the business of the Borrower or any of its Subsidiaries;



     (b) Dispositions of property by the Borrower or any Subsidiary to the Borrower or to a
Subsidiary in the ordinary course of business; provided that if the transferor of such
property is the Borrower or a Guarantor, the transferee thereof must either be the Borrower or a
Guarantor; and



     (c) Dispositions by the Borrower and its Subsidiaries to any Person that is not a Loan Party
or a Subsidiary of any Loan Party not otherwise permitted under this Section 6.04;
provided that (i) at the time of such Disposition, no Default or Event of Default shall
exist or immediately would result from such Disposition, (ii) the aggregate book value of all
property Disposed of in reliance on this clause (c) in any fiscal year shall not exceed $1,000,000
(or the equivalent in any other currency) and (iii) the Borrower receives only cash consideration
for such Disposition; and



     (d) Dispositions of inventory, Cash Equivalents, charters of vessels and leases of equipment,
in each case in the ordinary course of business;



     (e) the Disposition of assets received pursuant to Section 6.05(d);



     (f) the grant in the ordinary course of business of any non-exclusive license of patents,
trademarks, registrations therefor and other similar intellectual property;



     (g) any Disposition of assets pursuant to (i) a condemnation, appropriation, seizure or
similar taking or proceeding by a Governmental Authority or (ii) the requirement of, or at the
direction of, a Governmental Authority;



     (h) the granting of any Lien permitted hereunder and Dispositions of property subject to any
such Lien that is transferred to the lienholder or its designee in satisfaction or settlement of
such lienholder’s claim;



     (i) Dispositions permitted by Section 6.03, Investments permitted by Section
6.05 and Restricted Payments permitted by Section 6.06;



     (j) Dispositions of Non-Collateral Rigs; provided that the proceeds thereof are used solely to
satisfy the Contested Mexican Tax Assessments;



     (k) Dispositions made by the Borrower or any Subsidiary and described in the Omnibus
Restructuring Agreement so long as such Dispositions are effected in order to complete the
Transactions; and



     (l) Dispositions made by the Borrower to a newly created, wholly owned Subsidiary so long as
(i) such Dispositions are made in connection with completing the Transactions and (ii) such new
Subsidiary is a Guarantor hereunder on the date of such Disposition and the assets



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involved in such Dispositions continue to be Collateral to the extent such assets constituted
Collateral prior to such Disposition.



     Section 6.05 Investments; Acquisitions. Make any Investments or Acquisition except:



     (a) Investments held by any Loan Party in the form of Cash Equivalents;



     (b) Existing Investments in Subsidiaries and other Investments in existence on the Effective
Date and described in Schedule 6.05;



     (c) Investments in any Loan Party existing as of the Effective Date;



     (d) Investments consisting of extensions of credit in the nature of accounts receivable or
notes receivable arising from the grant of trade credit in the ordinary course of business, and
Investments received in satisfaction or partial satisfaction thereof from financially troubled
customers or suppliers to the extent reasonably necessary in order to prevent or limit loss or
received in connection with the bankruptcy or reorganization of its customers or suppliers;



     (e) Investments in newly-formed Subsidiaries;



     (f) Acquisitions and Rig Acquisitions financed with Net Cash Proceeds received upon either (i)
the issuance and sale by the Borrower of its Equity Interests for the sole purpose of making such
Acquisition or (ii) an Asset Disposition to the extent permitted by Section 2.07(c)(iii);
provided that if any Person contemporaneously with the making of such Investment, becomes a
Subsidiary, such Person shall become a Guarantor, if it is required to become a Guarantor, pursuant
to Section 5.13;



     (g) Investments under Swap Contracts permitted under Section 6.02(f);



     (h) Investments consisting of loans or advances to officers, directors and employees of the
Borrower and Subsidiaries in an aggregate amount not to exceed $500,000 at any time outstanding,
for ordinary business purposes;



     (i) (i) Guarantees permitted by Section 6.02 and (ii) Guarantees by the Borrower or
any Subsidiary for the performance or payment obligations of the Borrower or any Wholly Owned
Subsidiary, which obligations were incurred in the ordinary course of business and do not
constitute Debt;



     (j) cash Investments consisting of Capital Expenditures permitted pursuant to Section
6.14;



     (k) Investments consisting of intercompany Debt permitted to be incurred under, and complying
with the requirements of, Section 6.02;



     (l) Investments, including Acquisitions or Rig Acquisitions, made or acquired in exchange for
the issuance of Equity Interests of the Borrower;



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     (m) Investments in prepaid expenses and deposits provided to others in the ordinary course of
business;



     (n) Investments not otherwise permitted by any other clause of this Section 6.05 which
do not exceed, in the aggregate, $1,000,000 in the aggregate;



     (o) Investments, if any, made by the Borrower or any Subsidiary and described in the Omnibus
Restructuring Agreement so long as such Investments are effected in order to complete the
Transactions; and



     (p) Investments made by the Borrower to a newly created, wholly owned Subsidiary so long as
(i) such Investments are made in connection with completing the Transactions and (ii) such new
Subsidiary is a Guarantor hereunder on the date of such Investment and the assets involved in such
Investments continue to be Collateral to the extent such assets constituted Collateral prior to
such Investment.



     Section 6.06 Restricted Payments. Declare or make, directly or indirectly, any
Restricted Payment, or incur any obligation (contingent or otherwise) to do so, except that:



     (a) each Subsidiary of the Borrower may declare and make Restricted Payments to the Borrower,
the Guarantors or any of the Borrower’s Wholly-Owned Subsidiaries;



     (b) the Borrower and each Subsidiary may declare and make dividend payments or other
distributions payable to the holders of its Equity Interests solely in the common Equity Interests
of such Person;



     (c) the Borrower and each Subsidiary may purchase, redeem or otherwise acquire Equity
Interests issued by it (i) in exchange for the issuance of, or (ii) with the proceeds received
from, the substantially concurrent issue of new shares of its common Equity Interests;



     (d) the repurchase, redemption or other acquisition or retirement of Equity Interests of the
Borrower deemed to occur upon the exercise or exchange of stock options, warrants or other similar
rights to the extent such Equity Interests represent a portion of the exercise or exchange price of
those stock options, and the repurchase, redemption or other acquisition or retirement of Equity
Interests of the Borrower made in lieu of withholding taxes resulting from the exercise or exchange
of stock options, warrants or other similar rights; and



     (e) the Borrower and each Subsidiary may declare and make the Restricted Payments being
described in the Omnibus Restructuring Agreement as being made by such Person so long as such
Restricted Payments are effected in order to complete the Transactions



     Section 6.07 Change in Nature of Business. Engage in any material line of business
substantially different from those lines of business conducted by the Borrower and its Subsidiaries
on the date hereof or any business reasonably related or incidental thereto.



     Section 6.08 Transactions With Affiliates. Enter into any transaction of any kind with
any Affiliate of the Borrower, whether or not in the ordinary course of business, including,
without limitation, any payment by the Borrower or any of its Wholly-Owned Subsidiaries of



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any management, accounting or similar fees to any Affiliate, whether pursuant to a management
agreement or otherwise, other than on fair and reasonable terms substantially as favorable to the
Borrower or such Subsidiary as would be obtainable by the Borrower or such Subsidiary at the time
in a comparable arm’s length transaction with a Person other than an Affiliate, other than (a)
transactions between or among Loan Parties, (b) the Transaction Documents, (c) any Restricted
Payment permitted by Section 6.06, (d) Investments permitted under Section 6.05(c),
(e) loans and advances permitted under Section 6.05(h) and Guarantees permitted under
Section 6.05(i), (f) the performance of employment, equity award, equity option or equity
appreciation agreements, plans or other similar compensation or benefit plans or arrangements
(including vacation plans, health and insurance plans, deferred compensation plans and retirement
or savings plans) entered into by the Borrower or any Subsidiary in the ordinary course of its
business with its employees, officers and directors, (g) fees and compensation to, and indemnity
provided on behalf of, officers, directors, employees, consultants and advisors of the Borrower or
any Subsidiary in their capacity as such, to the extent such fees and compensation are customary
and (h) any contract now in effect with respect to the rigs owned by Pride or any of its Affiliates
and named Pride Tennessee and Pride Wisconsin.



     Section 6.09 Agreements Restricting Liens and Distributions. Except for restrictions
and conditions (a) imposed by Law, (b) existing on the date hereof and described in Schedule
6.09, together with each extension, renewal, amendment or modification to the extent it does
not expand the scope of any such restriction or condition or otherwise make the same more
restrictive, (c) of a customary nature contained in agreements relating to the Disposition of a
Subsidiary otherwise permitted under this Agreement pending such Disposition, provided such
restrictions and conditions apply only to the Subsidiary that is to be Disposed of, (d) contained
in joint venture agreements or other similar agreements entered into in the ordinary course of
business and to the extent permitted hereunder in respect to the Disposition or distribution of
assets of such joint venture and (e) contained in any Loan Document, create or otherwise cause or
permit to exist any prohibition, encumbrance or restriction which prohibits or otherwise limits the
ability (A) of any Subsidiary to make Restricted Payments to any Loan Party or to otherwise
transfer property to any Loan Party, (B) of any Subsidiary to Guarantee the Obligations of any Loan
Party, or (C) of the Borrower or any Subsidiary to create, incur, assume or permit to exist Liens
on property of such Person to secure the Obligations; provided, however, that this
clause (C) shall not (1) prohibit any negative pledge incurred or provided in favor of any holder
of a Lien permitted by (x) clause (f) in the definition of the term “Excepted Liens”, (y)
Sections 6.01(c) or (z) Section 6.01(d), in each case solely to the extent any such
negative pledge relates to the Property the subject of such Permitted Lien or (2) apply to
customary provisions in leases, licenses and similar contracts restricting the assignment,
encumbrance, sub-letting or transfer thereof.



     Section 6.10 Limitation on Accounting Changes or Changes in Fiscal Periods. Make any
change in (a) any of its accounting policies affecting the presentation of financial statements or
reporting practices, except as required or permitted by GAAP or Legal Requirement applicable to
such Person, (b) the fiscal year of the Borrower or any of its Subsidiaries to end on a day other
than December 31 or (c) the Borrower’s method of determining fiscal quarters.



     Section 6.11 Limitation on Speculative Hedging. (a) Purchase, assume, or hold a
speculative position in any commodities market or futures market or enter into any Swap



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Contract for speculative purposes, or (b) be party to or otherwise enter into any Swap
Contract which (i) is entered into for reasons other than as a part of its normal business
operations as a risk management strategy and/or hedge against changes resulting from market
conditions or casualty risks related to the Borrower’ or their Subsidiaries’ operations, or (ii)
obligates any Loan Party to grant any Liens not permitted under this Agreement.



     Section 6.12 Sale and Leaseback Transactions and other Off-Balance Sheet Liabilities.
Enter into or permit to exist any (a) Sale and Leaseback Transaction or (b) any other transaction
pursuant to which it incurs or has incurred Off-Balance Sheet Liabilities, except, if applicable,
for Swap Contracts permitted to be incurred under the terms of Section 6.02.



     Section 6.13 Operating Leases. Enter into or remain liable upon any Operating Lease
other than Operating Leases not exceeding in the aggregate $3,000,000 during any fiscal year of the
Borrower.



     Section 6.14 Capital Expenditures. Make or become legally obligated to make any
Capital Expenditure (including Maintenance Capital Expenditures and Reactivation Capital
Expenditures), except for Capital Expenditures in the aggregate for the Borrower and its
Subsidiaries not to exceed $20,000,000 during the life of this Agreement; provided,
however that such Capital Expenditures may be used for Maintenance Capital Expenditures and
Reactivation Capital Expenditures in the approximate amounts and for each of the Rigs as proposed
by the Borrower and agreed to by the Administrative Agent (or the Required Lenders if such
approximate amounts are inconsistent with those set forth in the Projections delivered by the
Borrower to the Administrative Agent and the Lenders prior to the Closing Date) (referred to
herein, as “Permitted Reactivation Capital Expenditures”), and (c) if the Fixed Charge
Coverage Ratio is greater than 1.50 to 1.00 as of the end of the most recently ended fiscal
quarter, or greater than 2.00 to 1.00 as of the end of the most recently ended fiscal quarter if
required by Section 6.17(a), then the Permitted Reactivation Capital Expenditures may be
increased by the amount of Consolidated EBITDA for such quarter in excess of the Minimum
Consolidated EBITDA (as defined below) for such quarter, so long as such additional Permitted
Reactivation Capital Expenditures are applied as proposed by the Borrower and agreed to by the
Administrative Agent or the Required Lenders, as the case may be. For purposes of this Section
6.14, “Minimum Consolidated EBITDA Amount” means the Consolidated EBITDA necessary in order for
Fixed Charge Coverage Ratio for the applicable quarter to be greater than 1.50 to 1.00 (or 2.00 to
1.00 if Section 6.17(a) is applicable).



     Section 6.15 Amendment of Material Contracts. Amend, modify, supplement, terminate or
waive any provision of (a) any Loan Party’s organizational documents or (b) the Transaction
Documents, in each case, other than any such amendment or other modification (i) made solely in
connection with a transaction that is otherwise permitted under this Agreement or (ii) that would
not reasonably be expected to have a Material Adverse Effect.



     Section 6.16 Operation of Rigs. With respect to the Rigs:



     (a) make any modification to any such Rig which would materially adversely alter the
structure, type or performance characteristics of such Rig or which would materially reduce the
value of such Rig;



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     (b) if an Event of Default has occurred and is continuing and unless such upgrades or
improvements are not subject to an in force contractual arrangement that was not entered into in
breach of this Agreement and which is for a term of 12 months or more, undertake or commence
upgrades or improvements on any such Rig without the previous consent of the Required Lenders and
delivery to the Administrative Agent of a written waiver or subordination of its Liens or its
equivalent, such waiver or subordination to be in form and substance reasonably satisfactory to the
Administrative Agent and executed by the Person providing such upgrades or improvements;



     (c) charter any such Rig to, or permit such Rig to serve under any contract with, a Person (i)
or engage in any transaction, which will violate the Trading with the Enemy Act, as amended, or any
of the foreign assets control regulations of the United States Treasury Department (31 CFR,
Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto,
or (ii) described or designated in the Specially Designated Nationals and Blocked Persons List of
the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (iii) that
engages or will engage in any dealings or transactions, or is or will be otherwise associated, with
any such Person, if such transaction or violation would (A) expose the Administrative Agent or any
Secured Party to any penalty, sanction or investigation or (B) jeopardize the Lien created by the
Rig Mortgages or (C) reasonably be expected to have a material adverse effect on the Loan Parties
or the operation of such Rigs, or any Loan Party’s ability to load or discharge cargo or to effect
repairs on such Rigs;



     (d) cause or permit any such Rig to be operated in any manner contrary to law applicable to it
and its operations (except where the failure to operate in compliance with any such law would not
have a material adverse effect on the Loan Parties, such Rig or the Lien created by the applicable
Rig Mortgage);



     (e) abandon any such Rig in a port outside the United States of America;



     (f) engage in any unlawful trade or violate any law or carry any cargo that shall expose any
such Rig to forfeiture or capture;



     (g) operate any such Rig in any jurisdiction or in any manner which could cause the Lien
created by the applicable Rig Mortgage to be rendered unenforceable or the Administrative Agent’s
foreclosure or enforcement rights to be materially impaired or hindered;



     (h) without giving prior written notice thereof to the Administrative Agent, change the
registered owner, name, flag, official or patent number, as the case may be, the home port or class
of any such Rig;



     (i) any act by which any Insurance Policy or entry required by Section 5.04 may be
suspended, impaired or cancelled, and permit or allow any Rig to undertake any voyage or run any
risk or transport any cargo which may not be permitted by the Insurance Policies in force, without
having previously insured such Rig by additional coverage to extend to such voyages, risks or
cargoes; or



     (j) cause or permit any Rig to operate or undertake a voyage to or to sail in any area which
has been declared a war area by the relevant underwriters and insurance companies and



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has been included in the list of exclusions from time to time in effect attached to the war
risks insurance policies in the form of the war risks trading warranties, without first notifying
thereof the Administrative Agent and the war risks underwriters of such Rig and paying any
additional insurance premiums required.



     Section 6.17 Financial Covenants.



     (a) Minimum Fixed Charge Coverage Ratio. If, at any time when Revolving Advances or
Letters of Credit are outstanding, the sum of the Availability plus unrestricted cash and Cash
Equivalents is less than $25,000,000 as of the end of the immediately preceding fiscal quarter,
permit the Fixed Charge Coverage Ratio as of the end of the fiscal quarter immediately following
such occurrence of the Borrower, beginning with the fiscal quarter ending September 30, 2009, to be
less than 2.00 to 1.00.



     (b) Security Maintenance Ratio. Permit the Security Maintenance Ratio at any time to
be less than 3.00 to 1.00.



     (c) Minimum Working Capital Ratio. Permit the Working Capital Ratio as of the end of
each fiscal quarter of the Borrower, beginning with the fiscal quarter ending September 30, 2009,
to be less than 1.20 to 1.00.



     (d) Minimum Consolidated Tangible Net Worth. Permit Consolidated Tangible Net Worth
as of the end of each fiscal quarter of the Borrower, beginning with the fiscal quarter ending
September 30, 2009, to be less than an amount equal to the sum of (i) $320,000,000, plus
(ii) 50% of the Borrower’s Consolidated Net Income for each fiscal quarter in which such
Consolidated Net Income is greater than $0, commencing with the fiscal quarter ending December 31,
2009 and ending on such date of determination plus (iii) an amount equal to 100% of the
aggregate Net Cash Proceeds received by the Borrower from issuances of its Equity Interests after
the Closing Date.



ARTICLE VII




EVENTS OF DEFAULT




     Section 7.01 Events of Default. The occurrence of any of the following events shall
constitute an “Event of Default”:



     (a) Payment. The Borrower shall fail to pay (i) any principal of any Revolving
Advance (other than as set forth in clause (iii) below) or reimburse any drawing under any Letter
of Credit when the same becomes due and payable, (ii) any interest on the Revolving Advances, any
fees, reimbursements, indemnifications, or other amounts payable in connection with the
Obligations, this Agreement or under any other Loan Document within three Business Days after the
same becomes due and payable or (iii) any mandatory prepayment required by Section 2.07
within ten days after the earlier of (A) the Borrower’s receipt of written notice thereof by the
Administrative Agent or the Required Lenders or (B) a Responsible Officer’s knowledge thereof;



     (b) Representation and Warranties. Any representation or statement made or deemed to
be made by the Borrower or any other Loan Party (or any of their respective officers in such



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capacity) in this Agreement, in any other Loan Document, or in connection with this Agreement
or any other Loan Document shall prove to have been incorrect in any material respect when made or
deemed to be made;



     (c) Covenant Breaches. Any Loan Party shall (i) fail to perform or observe any
covenant contained in Section 5.01 (with respect to the Borrower), Sections 5.04,
5.06, 5.07, 5.09, 5.12, 5.13, 5.14, 5.15
and Article VI of this Agreement or (ii) fail to perform or observe any other term or
covenant set forth in this Agreement or in any other Loan Document which is not covered by clause
(i) above or any other provision of this Section 7.01 if such failure shall remain
unremedied for 30 days after the earlier of (A) the Borrower’s receipt of written notice thereof by
the Administrative Agent or (B) a Loan Party’s Responsible Officer’s knowledge thereof;



     (d) Cross-Default. (i) Any Loan Party shall fail to pay any principal of or premium
or interest on any of its Debt which, individually or in the aggregate, is outstanding in a
principal amount of at least $2,500,000 (or the equivalent in any other currency) (but excluding
Debt evidenced by the Revolving Advances) when the same becomes due and payable (whether by
scheduled maturity, required prepayment, acceleration, demand or otherwise), or (ii) any other
event shall occur or condition shall exist under any agreement or instrument governing Debt which,
individually or in the aggregate, is outstanding in a principal amount of at least $2,500,000 (or
the equivalent in any other currency) (but excluding Debt evidenced by the Revolving Advances), if
the effect of such event or condition is to accelerate, or to permit the acceleration of, the
maturity of such Debt;



     (e) Insolvency. (i) Any Loan Party shall generally not pay its debts as such debts
become due, shall admit in writing its inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or (ii) any proceeding shall be instituted by or
against the Borrower or any Guarantor seeking to adjudicate it as a bankrupt or insolvent, or
seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or
composition of it or its debts under any law relating to bankruptcy, insolvency or reorganization
or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver,
trustee or other similar official for it or for any substantial part of its property and, in the
case of any such proceeding instituted against such Person, either such proceeding shall remain
undismissed for a period of 60 days or an order for relief granting any of the actions sought in
such proceeding shall occur; or such Person shall take any action to authorize any of the actions
set forth above in this paragraph (e) or any analogous procedure or step is taken in any
jurisdiction.



     (f) Judgments. Any judgment or order for the payment of money shall be rendered
against any Loan Party in an amount in excess of $2,500,000 (or the equivalent in any other
currency), to the extent not covered by insurance as to which the insurer does not dispute
coverage, and either (i) enforcement proceedings shall have been commenced by any creditor upon
such judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay
of enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be
in effect;



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     (g) ERISA. (i) An ERISA Event occurs with respect to a Pension Plan or Multiemployer
Plan which has resulted or could reasonably be expected to result in liability of a Loan Party
under Title IV of ERISA to the Pension Plan, Multiemployer Plan or the PBGC in an aggregate amount
in excess of $2,500,000, or (ii) the Borrower or any ERISA Affiliate fails to pay when due, after
the expiration of any applicable grace period, any installment payment with respect to its
withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan in an aggregate amount
in excess of $100,000; or



     (h) Loan Documents. Any Loan Document, at any time after its execution and delivery
and for any reason other than as expressly permitted hereunder or thereunder or satisfaction in
full of all the Obligations, ceases to be in full force and effect; or any Loan Party contests in
any manner the validity or enforceability of any Loan Document; or any Loan Party denies that it
has any or further liability or obligation under any Loan Document, or purports to revoke,
terminate or rescind any Loan Document; or



     (i) Security Documents. The Administrative Agent and the Lenders shall fail to have
an Acceptable Security Interest in any of the Collateral Rigs; or



     (j) Change in Control. A Change of Control shall occur.



     Section 7.02 Optional Acceleration of Maturity. If any Event of Default (other than
an Event of Default pursuant to paragraph (e)(ii) of Section 7.01 with respect to
the Borrower) shall have occurred and be continuing, then, and in any such event:



     (a) the Administrative Agent (i) shall at the request, or may with the consent, of the
Required Lenders, by notice to the Borrower, declare the Revolving Commitments and the obligation
of each Lender and the Issuing Bank to make extensions of credit hereunder, including making
Revolving Advances and issuing Letters of Credit, to be terminated, whereupon the same shall
forthwith terminate, and (ii) shall at the request, or may with the consent, of the Required
Lenders, by notice to the Borrower, declare all principal, interest, fees, reimbursements,
indemnifications, and all other amounts accrued and payable under this Agreement and the other Loan
Documents to be forthwith due and payable, whereupon all such amounts shall become and be forthwith
due and payable in full;



     (b) to the extent that the LC Cash Collateral Account does not contain an amount equal to 105%
of the outstanding Letter of Credit Exposure on such date and on demand of the Administrative Agent
at the request or with the consent of the Required Lenders, the Borrower shall deposit with the
Administrative Agent into the LC Cash Collateral Account an amount of cash in Dollars equal to such
deficit as security for the Obligations to the extent the Letter of Credit Obligations are not
otherwise paid at such time; and



     (c) the Administrative Agent shall at the request of, or may with the consent of, the Required
Lenders proceed to enforce its rights and remedies under the Security Documents, this Agreement,
and any other Loan Document for the ratable benefit of the Secured Parties by appropriate
proceedings.



     Section 7.03 Automatic Acceleration of Maturity. If any Event of Default pursuant to
paragraph (e)(ii) of Section 7.01 and with respect to the Borrower shall occur:



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     (a) (i) the Revolving Commitments and the obligation of each Lender and the Issuing Bank to
make extensions of credit hereunder, including making Revolving Advances and issuing Letters of
Credit, shall terminate, and (ii) all principal, interest, fees, reimbursements, indemnifications,
and all other amounts payable under this Agreement and the other Loan Documents shall become and be
forthwith due and payable in full;



     (b) to the extent the LC Cash Collateral Account does not contain an amount equal to 105% of
the outstanding Letter of Credit Exposure on such date and on demand of the Administrative Agent at
the request or with the consent of the Required Lenders, the Borrower shall deposit with the
Administrative Agent into the LC Cash Collateral Account an amount of cash in Dollars equal to such
deficit as security for the Obligations to the extent the Letter of Credit Obligations are not
otherwise paid at such time; and



     (c) the Administrative Agent shall at the request of, or may with the consent of, the Required
Lenders proceed to enforce its rights and remedies under the Security Documents, this Agreement,
and any other Loan Document for the ratable benefit of the Secured Parties by appropriate
proceedings.



     Section 7.04 Non-exclusivity of Remedies. No remedy conferred upon the Administrative
Agent, the Issuing Bank and the Lenders is intended to be exclusive of any other remedy, and each
remedy shall be cumulative of all other remedies existing by contract, at law, in equity, by
statute or otherwise.



     Section 7.05 Right of Set-off. If an Event of Default has occurred and is continuing,
each Lender, the Issuing Bank, and each of their respective Affiliates is hereby authorized at any
time and from time to time, to the fullest extent permitted by applicable law, to set off and apply
any and all deposits (general or special, time or demand, provisional or final, in whatever
currency) at any time held and other obligations (in whatever currency) at any time owing by such
Lender, the Issuing Bank or any such Affiliate to or for the credit or the account of any Loan
Party against any and all of the obligations of such Loan Party then owing by such Loan Party under
this Agreement or any other Loan Document to such Lender or the Issuing Bank, irrespective of
whether or not such Lender or the Issuing Bank shall have made any demand under this Agreement or
any other Loan Document or are owed to a branch or office of such Lender or the Issuing Bank
different from the branch or office holding such deposit or obligated on such indebtedness. The
rights of each Lender, the Issuing Bank and their respective Affiliates under this Section are in
addition to other rights and remedies (including other rights of setoff) that such Lender, the
Issuing Bank or their respective Affiliates may have. Each Lender and the Issuing Bank agrees to
notify the Borrower, the applicable Loan Party and the Administrative Agent promptly after any such
setoff and application, provided that the failure to give such notice shall not affect the validity
of such setoff and application.



     Section 7.06 Application of Proceeds. For so long as an Event of Default shall have
occurred and be continuing, any monies or property actually received by the Administrative Agent
pursuant to this Agreement or any other Loan Document, the exercise of any rights or remedies under
any Security Document or any other Loan Document with any Loan Party which secures any of the
Obligations, shall be applied in the following order:



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     (a) First, to payment of the reasonable expenses, liabilities, losses, costs, duties,
fees, charges or other moneys whatsoever (together with interest payable thereon) as may have been
paid or incurred in, about or incidental to any sale or other realization of Collateral, including
reasonable compensation to the Administrative Agent and its agents and counsel, and to the ratable
payment of any other unreimbursed reasonable expenses and indemnities for which the Administrative
Agent or any Secured Party is to be reimbursed pursuant to this Agreement or any other Loan
Document, in each case that are then due and payable;



     (b) Second, to the ratable payment of accrued but unpaid fees of the Administrative
Agent, commitment fees, letter of credit fees, and fronting fees owing to the Administrative Agent,
the Issuing Bank, and the Lenders, as applicable, in respect of the Revolving Advances and Letters
of Credit under this Agreement;



     (c) Third, to the ratable payment of accrued but unpaid interest on the Revolving
Advances then due and payable under this Agreement;



     (d) Fourth, ratably, according to the then unpaid amounts thereof, without preference
or priority of any kind among them, to the ratable payment of all other Obligations then due and
payable which relate to Revolving Advances and Letters of Credit and which are owing to the
Administrative Agent, the Issuing Bank and the Lenders, and the application as cash collateral into
the LC Cash Collateral Account for the Letter of Credit Exposure;



     (e) Fifth, ratably, according to the unpaid termination amounts thereof, to the
payment of all obligations of the Borrower or its Subsidiaries owing to any Swap Counterparty under
any Swap Contract, if any, then due and payable;



     (f) Sixth, to the ratable payment of any other outstanding Obligations then due and
payable; and



     (g) Seventh, any excess after payment in full of all Obligations shall be paid in a
commercially reasonable time to the Borrower or any other Loan Party as appropriate or to such
other Person who may be lawfully entitled to receive such excess.



ARTICLE VIII




THE GUARANTY




     Section 8.01 Liabilities Guaranteed. Each Guarantor hereby, joint and severally,
irrevocably and unconditionally guarantees the prompt payment at maturity of the Obligations.



     Section 8.02 Nature of Guaranty. This guaranty is an absolute, irrevocable, completed
and continuing guaranty of payment and not a guaranty of collection, and no notice of the
Obligations or any extension of credit already or hereafter contracted by or extended to the
Borrower need be given to any Guarantor. This guaranty may not be revoked by any Guarantor and
shall continue to be effective with respect to the Obligations arising or created after any
attempted revocation by such Guarantor and shall remain in full force and effect until the



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Obligations are paid in full and the Revolving Commitments are terminated, notwithstanding
that from time to time prior thereto no Obligations may be outstanding. The Borrower and the
Secured Parties may modify, alter, rearrange, extend for any period and/or renew from time to time,
the Obligations, and the Lenders may waive any Default or Events of Default without notice to any
Guarantor and in such event each Guarantor will remain fully bound hereunder on the Obligations.
This guaranty shall continue to be effective or be reinstated, as the case may be, if at any time
any payment of the Obligations is rescinded or must otherwise be returned by any of the Secured
Parties upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made. This guaranty may be enforced by the Administrative Agent
and any subsequent permitted holder of any of the Obligations and shall not be discharged by the
permitted assignment or negotiation of all or part of the Obligations. Each Guarantor hereby
expressly waives presentment, demand, notice of non-payment, protest and notice of protest and
dishonor, notice of Default or Event of Default, and also notice of acceptance of this guaranty,
acceptance on the part of the Secured Parties being conclusively presumed by the Secured Parties’
request for this guaranty and the Guarantors’ being party to this Agreement.



     Section 8.03 Agent’s Rights. Each Guarantor authorizes the Administrative Agent,
without notice or demand and without affecting any Guarantor’s liability hereunder, to take and
hold security for the payment of its obligations under this Article VIII and/or the
Obligations, and exchange, enforce, waive and release any such security; and to apply such security
and direct the order or manner of sale thereof as the Administrative Agent in its discretion may
determine, and to obtain a guaranty of the Obligations from any one or more Persons and at any time
or times to enforce, waive, rearrange, modify, limit or release any of such other Persons from
their obligations under such guaranties.



     Section 8.04 Guarantor’s Waivers.



     (a) General. Each Guarantor waives any right to require any of the Secured Parties to
(i) proceed against the Borrower or any other person liable on the Obligations, (ii) enforce any of
their rights against any other guarantor of the Obligations, (iii) proceed or enforce any of their
rights against or exhaust any security given to secure the Obligations, (iv) have the Borrower
joined with any Guarantor in any suit arising out of this Article VIII and/or the
Obligations, or (v) pursue any other remedy in the Secured Parties’ powers whatsoever. It is agreed
between the Guarantors and the Secured Parties that the foregoing waivers are of the essence of the
transaction contemplated by this Agreement and the other Loan Documents and that, but for this
Guaranty and such waivers, the Secured Parties would not extend or continue to extend credit under
this Agreement. The Secured Parties shall not be required to mitigate damages or take any action to
reduce, collect or enforce the Obligations. Each Guarantor waives any defense arising by reason of
any disability, lack of corporate authority or power, or other defense of the Borrower or any other
guarantor of the Obligations, and shall remain liable hereon regardless of whether the Borrower or
any other guarantor shall be found not liable thereon for any reason. Whether and when to exercise
any of the remedies of Secured Parties under any of the Loan Documents shall be in the sole and
absolute discretion of the Administrative Agent, and no delay by the Administrative Agent in
enforcing any remedy, including delay in conducting a foreclosure sale, shall be a defense to any
Guarantor’s liability under this Article VIII.



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     (b) In addition to the waivers contained in Section 8.04(a) hereof, each Guarantor
waives, and agrees that it shall not at any time insist upon, plead or in any manner whatsoever
claim or take the benefit or advantage of, any appraisal, valuation, stay, extension, marshaling of
assets or redemption laws, or exemption, whether now or at any time hereafter in force, which may
delay, prevent or otherwise affect the performance by it of its obligations under, or the
enforcement by the Administrative Agent or the Secured Parties of, this Guaranty. Each Guarantor
hereby waives diligence, presentment and demand (whether for nonpayment or protest or of
acceptance, maturity, extension of time, change in nature or form of the Obligations, acceptance of
further security, release of further security, composition or agreement arrived at as to the amount
of, or the terms of, the Obligations, notice of adverse change in the Borrower’s financial
condition or any other fact which might materially increase the risk to it) with respect to any of
the Obligations or all other demands whatsoever and waives, to the fullest extent permitted by law,
the benefit of all provisions of law which are or might be in conflict with the terms of this
Article VIII. Each Guarantor represents, warrants and agrees that, as of the date of this
Guaranty, its obligations under this Guaranty are not subject to any offsets or defenses of any
kind against the Administrative Agent, the Secured Parties, the Borrower or any other Person that
executes a Loan Document. Each Guarantor further agrees that its obligations under this Guaranty
shall not be subject to any counterclaims, offsets or defenses of any kind which may arise in the
future against the Administrative Agent, the Secured Parties, the Borrower or any other Person that
executes a Loan Document.



     (c) Subrogation. Until the Obligations (other than contingent indemnification
obligations of which no Secured Party has knowledge) have been paid in full, each Guarantor waives
all rights of subrogation or reimbursement against the Borrower, whether arising by contract or
operation of law (including, without limitation, any collateral right arising under any federal,
state or other applicable bankruptcy or insolvency laws) and waives any right to enforce any remedy
which the Secured Parties now have or may hereafter have against the Borrower, and waives any
benefit or any right to participate in any security now or hereafter held by the Administrative
Agent or any Secured Party.



     Section 8.05 Maturity of Obligations, Payment. Each Guarantor agrees that if the
maturity of any of the Obligations is accelerated by bankruptcy or otherwise, such maturity shall
also be deemed accelerated for the purpose of this Article VIII without demand or notice to
any Guarantor. Each Guarantor will, forthwith upon notice from the Administrative Agent, jointly
and severally pay to the Administrative Agent the amount due and unpaid by the Borrower and
guaranteed hereby. The failure of the Administrative Agent to give this notice shall not in any way
release any Guarantor hereunder.



     Section 8.06 Agent’s Expenses. If any Guarantor fails to pay the Obligations after
notice from the Administrative Agent of the Borrower’s failure to pay any Obligations at maturity
(and any Obligations remain unpaid), and if the Administrative Agent obtains the services of an
attorney for collection of amounts owing by any Guarantor hereunder, or obtaining advice of counsel
in respect of any of their rights under this Article VIII, or if suit is filed to enforce
this Article VIII, or if proceedings are had in any bankruptcy, probate, receivership or
other judicial proceedings for the establishment or collection of any amount owing by any Guarantor
hereunder, or if any amount owing by any Guarantor hereunder is collected through



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such proceedings, each Guarantor jointly and severally agrees to pay to the Administrative
Agent the Administrative Agent’s reasonable attorneys’ fees.



     Section 8.07 Liability. It is expressly agreed that the liability of each Guarantor
for the payment of the Obligations guaranteed hereby shall be primary and not secondary.



     Section 8.08 Events and Circumstances Not Reducing or Discharging any Guarantor’s
Obligations. Each Guarantor hereby consents and agrees to each of the following to the fullest
extent permitted by law, and agrees that each Guarantor’s obligations under this Article
VIII shall not be released, diminished, impaired, reduced or adversely affected by any of the
following, and waives any rights (including without limitation rights to notice) which each
Guarantor might otherwise have as a result of or in connection with any of the following:



     (a) Modifications, etc. Any renewal, extension, modification, increase, decrease,
alteration or rearrangement of all or any part of the Obligations, or this Agreement or any
instrument executed in connection therewith, or any contract or understanding between the Borrower
and any of the Secured Parties, or any other Person, pertaining to the Obligations, or the waiver
or consent by the Administrative Agent or the Secured Parties with respect to any of the provisions
hereof or thereof, or any modification or termination of the terms of any intercreditor or
subordination agreement pursuant to which claims of other creditors against any Guarantor or
Borrower are subordinated to the claims of the Secured Parties or pursuant to which the Obligations
are subordinated to claims of other creditors;



     (b) Adjustment, etc. Any adjustment, indulgence, forbearance or compromise that might
be granted or given by any of the Secured Parties to the Borrower or any Guarantor or any Person
liable on the Obligations;



     (c) Condition of the Borrower or any Guarantor. The insolvency, bankruptcy
arrangement, adjustment, composition, liquidation, disability, dissolution, death or lack of power
of the Borrower or any other Guarantor or any other Person at any time liable for the payment of
all or part of the Obligations; or any dissolution of the Borrower or any other Guarantor, or any
sale, lease or transfer of any or all of the assets of the Borrower or any other Guarantor, or any
changes in the shareholders, partners, or members of the Borrower or any other Guarantor; or any
reorganization of the Borrower or any other Guarantor;



     (d) Invalidity of Obligations. The invalidity, illegality or unenforceability of all
or any part of the Obligations, or any document or agreement executed in connection with the
Obligations, for any reason whatsoever, including without limitation the fact that the Obligations,
or any part thereof, exceed the amount permitted by law, the act of creating the Obligations or any
part thereof is ultra vires, the officers or representatives executing the documents or otherwise
creating the Obligations acted in excess of their authority, the Obligations violate applicable
usury laws, the Borrower has valid defenses, claims or offsets (whether at law, in equity or by
agreement) which render the Obligations wholly or partially uncollectible from the Borrower, the
creation, performance or repayment of the Obligations (or the execution, delivery and performance
of any document or instrument representing part of the Obligations or executed in connection with
the Obligations, or given to secure the repayment of the Obligations) is illegal, uncollectible,
legally impossible or unenforceable, or this Agreement



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or other documents or instruments pertaining to the Obligations have been forged or otherwise
are irregular or not genuine or authentic;



     (e) Release of Obligors. Any full or partial release of the liability of the Borrower
on the Obligations or any part thereof, of any co-guarantors, or any other Person now or hereafter
liable, whether directly or indirectly, jointly, severally, or jointly and severally, to pay,
perform, guarantee or assure the payment of the Obligations or any part thereof, it being
recognized, acknowledged and agreed by each Guarantor that such Guarantor may be required to pay
the Obligations in full without assistance or support of any other Person, and no Guarantor has
been induced to enter into this Article VIII on the basis of a contemplation, belief,
understanding or agreement that other parties other than the Borrower will be liable to perform the
Obligations, or the Secured Parties will look to other parties to perform the Obligations;



     (f) Other Security. The taking or accepting of any other security, collateral or
guaranty, or other assurance of payment, for all or any part of the Obligations;



     (g) Release of Collateral, etc. Any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment (including without limitation negligent, willful,
unreasonable or unjustifiable impairment) of any collateral, property or security, at any time
existing in connection with, or assuring or securing payment of, all or any part of the
Obligations;



     (h) Care and Diligence. The failure of the Secured Parties or any other Person to
exercise diligence or reasonable care in the preservation, protection, enforcement, sale or other
handling or treatment of all or any part of such collateral, property or security;



     (i) Status of Liens. The fact that any collateral, security, security interest or lien
contemplated or intended to be given, created or granted as security for the repayment of the
Obligations shall not be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other security interest or lien, it being recognized and agreed by each
Guarantor that no Guarantor is entering into this Article VIII in reliance on, or in
contemplation of the benefits of, the validity, enforceability, collectibility or value of any of
the collateral for the Obligations;



     (j) Payments Rescinded. Any payment by the Borrower to the Secured Parties is held to
constitute a preference under the bankruptcy laws, or for any reason the Secured Parties are
required to refund such payment or pay such amount to the Borrower or someone else; or



     (k) Other Actions Taken or Omitted. Any other action taken or omitted to be taken
with respect to this Agreement, the Obligations, or the security and collateral therefor, whether
or not such action or omission prejudices any Guarantor or increases the likelihood that any
Guarantor will be required to pay the Obligations pursuant to the terms hereof, it being the
unambiguous and unequivocal intention of each Guarantor that each Guarantor shall be obligated to
joint and severally pay the Obligations when due, notwithstanding any occurrence, circumstance,
event, action, or omission whatsoever, whether contemplated or uncontemplated, and whether or not
otherwise or particularly described herein, except for the full and final payment and satisfaction
of the Obligations.



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     Section 8.09 Subordination of All Guarantor Claims.



     (a) As used herein, the term “Guarantor Claims” shall mean all debts and liabilities of the
Borrower or any Subsidiary of the Borrower to any Guarantor, whether such debts and liabilities now
exist or are hereafter incurred or arise, or whether the obligation of the Borrower or such
Subsidiary thereon be direct, contingent, primary, secondary, several, joint and several, or
otherwise, and irrespective of whether such debts or liabilities be evidenced by note, contract,
open account, or otherwise, and irrespective of the person or persons in whose favor such debts or
liabilities may, at their inception, have been, or may hereafter be created, or the manner in which
they have been or may hereafter be acquired by any Guarantor. The Guarantor Claims shall include
without limitation all rights and claims of any Guarantor against the Borrower or any Subsidiary of
the Borrower arising as a result of subrogation or otherwise as a result of such Guarantor’s
payment of all or a portion of the Obligations. Until the Obligations shall be paid and satisfied
in full (other than contingent indemnification obligations of which no Secured Party has knowledge)
and each Guarantor shall have performed all of its obligations hereunder, no Guarantor shall
receive or collect, directly or indirectly, from the Borrower or any Subsidiary of the Borrower or
any other party any amount upon the Guarantor Claims.



     (b) The Borrower and each Guarantor hereby (i) authorizes the Administrative Agent and the
Secured Parties to demand specific performance of the terms of this Section 8.09, whether
or not the Borrower or any Guarantor shall have complied with any of the provisions hereof
applicable to it, at any time when it shall have failed to comply with any provisions of this
Section 8.09 which are applicable to it and (ii) irrevocably waives any defense based on
the adequacy of a remedy at law, which might be asserted as a bar to such remedy of specific
performance.



     (c) Upon any distribution of assets of any Loan Party in any dissolution, winding up,
liquidation or reorganization (whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or otherwise):




     (i) The Secured Parties shall first be entitled to receive payment in full in cash of
the Obligations before the Borrower or any Guarantor is entitled to receive any payment on
account of the Guarantor Claims.




     (ii) Any payment or distribution of assets of any Loan Party of any kind or character,
whether in cash, property or securities, to which the Borrower or any Guarantor would be
entitled except for the provisions of this Section 8.09(c), shall be paid by the
liquidating trustee or agent or other Person making such payment or distribution directly to
the Secured Parties, to the extent necessary to make payment in full of all Obligations
remaining unpaid after giving effect to any concurrent payment or distribution or provisions
therefor to the Secured Parties.



     (d) No right of the Secured Parties or any other present or future permitted holders of any
Obligations to enforce the subordination provisions herein shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of any Loan Party or by any act or
failure to act, in good faith, by any such holder, or by any noncompliance by the Borrower or any



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Guarantor with the terms hereof, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with.



     Section 8.10 Claims in Bankruptcy. In the event of receivership, bankruptcy,
reorganization, arrangement, debtor’s relief, or other insolvency proceedings involving the
Borrower or any Guarantor, as debtor, the Secured Parties shall have the right to prove their claim
in any proceeding, so as to establish their rights hereunder and receive directly from the
receiver, trustee or other court custodian, dividends and payments which would otherwise be payable
upon Guarantor Claims. Each Guarantor hereby assigns such dividends and payments to the Secured
Parties. Should the Administrative Agent or any Secured Party receive, for application upon the
Obligations, any such dividend or payment which is otherwise payable to any Guarantor, and which,
as between the Borrower or any Subsidiary of the Borrower and any Guarantor, shall constitute a
credit upon the Guarantor Claims, then upon payment in full of the Obligations, such Guarantor
shall become subrogated to the rights of the Secured Parties to the extent that such payments to
the Secured Parties on the Guarantor Claims have contributed toward the liquidation of the
Obligations, and such subrogation shall be with respect to that proportion of the Obligations which
would have been unpaid if the Administrative Agent or a Secured Party had not received dividends or
payments upon the Guarantor Claims.



     Section 8.11 Payments Held in Trust. In the event that notwithstanding Sections
8.09 and 8.10 above, any Guarantor should receive any funds, payments, claims or
distributions which are prohibited by such Sections, such Guarantor agrees to hold in trust for the
Secured Parties an amount equal to the amount of all funds, payments, claims or distributions so
received, and agrees that it shall have absolutely no dominion over the amount of such funds,
payments, claims or distributions except to pay them promptly to the Administrative Agent, and each
Guarantor covenants promptly to pay the same to the Administrative Agent.



     Section 8.12 Benefit of Guaranty. The provisions of this Article VIII are for
the benefit of the Secured Parties, their successors, and their permitted transferees, endorsees
and assigns. In the event all or any part of the Obligations are transferred, endorsed or assigned
by the Secured Parties, as the case may be, to any Person or Persons in accordance with the terms
of this Agreement, any reference to the “Secured Parties” herein, as the case may be, shall be
deemed to refer equally to such Person or Persons.



     Section 8.13 Reinstatement. This Article VIII shall remain in full force and
effect and continue to be effective in the event any petition is filed by or against the Borrower,
any Guarantor or any other Loan Party for liquidation or reorganization, in the event that any of
them becomes insolvent or makes an assignment for the benefit of creditors or in the event a
receiver, trustee or similar Person is appointed for all or any significant part of any of their
assets, and shall continue to be effective or be reinstated, as the case may be, if at any time
payment and performance of the Obligations, or any part thereof, is, pursuant to applicable law,
rescinded or reduced in amount, or must otherwise be restored or returned by the Secured Parties,
whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such
payment or performance had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated and deemed reduced
only by such amount paid and not so rescinded, reduced, restored or returned.




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     Section 8.14 Liens Subordinate. Each Guarantor agrees that any liens, security
interests, judgment liens, charges or other encumbrances upon the Borrower’s or any Subsidiary of
the Borrower’s assets securing payment of the Guarantor Claims shall be and remain inferior and
subordinate to any liens, security interests, judgment liens, charges or other encumbrances upon
the Borrower’s or any Subsidiary of the Borrower’s assets securing payment of the Obligations,
regardless of whether such encumbrances in favor of any Guarantor, the Administrative Agent or the
Secured Parties presently exist or are hereafter created or attach.



     Section 8.15 Guarantor’s Enforcement Rights. Without the prior written consent of the
Required Lenders, until the Obligations (other than contingent indemnification obligations of which
no Secured Party has knowledge) have been paid in full, no Guarantor shall (a) exercise or enforce
any creditor’s right it may have against the Borrower or any Subsidiary of the Borrower, or (b)
foreclose, repossess, sequester or otherwise take steps or institute any action or proceeding
(judicial or otherwise, including without limitation the commencement of or joinder in any
liquidation, bankruptcy, rearrangement, debtor’s relief or insolvency proceeding) to enforce any
lien, mortgages, deeds of trust, security interest, collateral rights, judgments or other
encumbrances on assets of the Borrower or any Subsidiary of the Borrower held by such Guarantor.



     Section 8.16 Limitation. It is the intention of each of the Guarantors and each
Secured Party that the amount of the Obligations guaranteed by each Guarantor shall be in, but not
in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and
similar Legal Requirement applicable to such Guarantor. Accordingly, notwithstanding anything to
the contrary contained in this Article VIII or in any other agreement or instrument
executed in connection with the payment of any of the Obligations guaranteed hereby, the amount of
the Obligations guaranteed by each Guarantor under this Article VIII shall be limited to an
aggregate amount equal to the largest amount that would not render such Guarantor’s obligations
hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any
comparable provision of any other applicable law.



     Section 8.17 Contribution Rights.



     (a) To the extent that any payment is made under this Guaranty (a “Guarantor
Payment”), by a Guarantor, which Guarantor Payment, taking into account all other Guarantor
Payments then previously or concurrently made by all other Guarantors, exceeds the amount which
such Guarantor would otherwise have paid if each Guarantor had paid the aggregate Obligations
satisfied by such Guarantor Payment in the same proportion that such Guarantor’s Allocable Amount
(as defined below) (in effect immediately prior to the most recent such Guarantor Payment) bore to
the aggregate Allocable Amounts of all of the Guarantors in effect immediately prior to the making
of the most recent such Guarantor Payment, then, following the date on which the Obligations (other
than contingent indemnification obligations of which no Secured Party has knowledge) shall be paid
in full and each Guarantor shall have performed all of its obligations hereunder, such Guarantor
shall be entitled to receive contribution and indemnification payments from, and be reimbursed by,
each of the other Guarantors for the amount of such excess, pro rata based upon their respective
Allocable Amounts in effect immediately prior to such Guarantor Payment.



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     (b) As of any date of determination, the “Allocable Amount” of any Guarantor shall be equal to
the maximum amount of the claim which could then be recovered from such Guarantor under this
Guaranty without rendering such claim voidable or avoidable under Section 548 of the Bankruptcy
Code or any other applicable law.



     (c) This Section 8.17 is intended only to define the relative rights of the Guarantors
and nothing set forth in this Section 8.17 is intended to or shall impair the obligations
of the Guarantors, jointly and severally, to pay any amounts as and when the same shall become due
and payable in accordance with the terms of this Guaranty.



     (d) The rights of the parties under this Section 8.17 shall be exercisable upon the
date the Obligations (other than contingent indemnification obligations of which no Secured Party
has knowledge) shall be paid in full and each Guarantor shall have performed all of its obligations
hereunder.



     (e) The parties hereto acknowledge that the right of contribution and indemnification
hereunder shall constitute assets of any Guarantor to which such contribution and indemnification
is owing.



     Section 8.18 Release of Guarantors. Upon the sale or disposition of any Guarantor
pursuant to the terms of this Agreement to any Person other than the Borrower or any other
Guarantor or if any Guarantor is released pursuant to Section 10.01(i), the Administrative
Agent shall, at the Borrower’ expense, promptly execute and deliver to the Borrower and such
Guarantor such documents as the Borrower and such Guarantor shall reasonably request and take any
other actions necessary or reasonably requested to evidence or effect the release of such Guarantor
from this Agreement and the other Loan Documents.



ARTICLE IX




THE ADMINISTRATIVE AGENT




     Section 9.01 Appointment and Authority. Each of the Lenders and the Issuing Bank
hereby irrevocably appoints Natixis to act on its behalf as the Administrative Agent hereunder and
under the other Loan Documents and authorizes the Administrative Agent to take such actions on its
behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof
or thereof, together with such actions and powers as are reasonably incidental thereto, including
but not limited to the execution of Security Documents on behalf of the Secured Parties. The
provisions of this Article are solely for the benefit of the Administrative Agent, the Lenders and
the Issuing Bank, and no Loan Party shall have rights as a third party beneficiary of any of such
provisions. Each of the Secured Parties hereby acknowledges and confirms their agreement that the
Administrative Agent is subject to certain Security Documents as trustee for and on behalf of the
Lenders or the terms of the declaration of trust and other terms and conditions set forth in the
applicable Security Documents.



     Section 9.02 Rights as a Lender. The Person serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and
may exercise the same as though it were not the Administrative Agent and the term “Lender”



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or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires,
include any Lender serving as the Administrative Agent hereunder in its individual capacity. Such
Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or
in any other advisory capacity for and generally engage in any kind of business with the Borrower
or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent
hereunder and without any duty to account therefor to the Lenders.



     Section 9.03 Exculpatory Provisions. The Administrative Agent shall not have any
duties or obligations except those expressly set forth herein and in the other Loan Documents.
Without limiting the generality of the foregoing, the Administrative Agent:



     (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a
Default or an Event of Default has occurred and is continuing;



     (b) shall not have any duty to take any discretionary action or exercise any discretionary
powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan
Documents that the Administrative Agent is required to exercise as directed in writing by the
Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided
for herein or in the other Loan Documents), provided that the Administrative Agent shall not be
required to take any action that, in its opinion or the opinion of its counsel, may expose the
Administrative Agent to liability or that is contrary to any Loan Document or applicable law; and



     (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any
duty to disclose, and shall not be liable for the failure to disclose, any information relating to
the Borrower or any of its Affiliates that is communicated to or obtained by the Person serving as
Agent or any of its Affiliates in any capacity.


The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the
consent or at the request of the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be
necessary, under the circumstances as provided in Sections 10.01) or (ii) in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall be deemed not to
have knowledge of any Default or an Event of Default unless and until notice describing such
Default or Event of Default is given to the Administrative Agent by the Borrower, a Lender or the
Issuing Bank.




     The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into
(i) any statement, warranty or representation made in or in connection with this Agreement or any
other Loan Document, (ii) the contents of any certificate, report or other document delivered
hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance
of any of the covenants, agreements or other terms or conditions set forth herein or therein or the
occurrence of any Default or Event of Default, (iv) the validity, enforceability, effectiveness or
genuineness of this Agreement, any other Loan Document or any other agreement, instrument or
document or (v) the satisfaction of any condition set forth in Article III or elsewhere
herein, other than to confirm receipt of items expressly required to be delivered to it and that
such items are in form and substance reasonably satisfactory to it.



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     Section 9.04 Reliance by the Administrative Agent. The Administrative Agent shall be
entitled to rely upon, and shall not incur any liability for relying upon, any notice, request,
certificate, consent, statement, instrument, document or other writing (including any electronic
message, Internet or intranet website posting or other distribution) believed by it to be genuine
and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative
Agent also may rely upon any statement made to it orally or by telephone and believed by it to have
been made by the proper Person, and shall not incur any liability for relying thereon. In
determining compliance with any condition hereunder to the making of a Revolving Advance, or the
issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender
or the Issuing Bank, the Administrative Agent may presume that such condition is satisfactory to
such Lender or the Issuing Bank unless the Administrative Agent shall have received notice to the
contrary from such Lender or the Issuing Bank prior to the making of such Revolving Advance or the
issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may
be counsel for a Loan Party), independent accountants and other experts selected by it, and shall
not be liable for any action taken or not taken by it in accordance with the advice of any such
counsel, accountants or experts.



     Section 9.05 Delegation of Duties. The Administrative Agent may perform any and all of
its duties and exercise its rights and powers hereunder or under any other Loan Document by or
through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent
and any such sub-agent may perform any and all of its duties and exercise its rights and powers by
or through their respective Related Parties. The exculpatory provisions of this Article shall apply
to any such sub-agent and to the Related Parties of the Administrative Agent and any such
sub-agent, and shall apply to their respective activities in connection with the syndication of the
credit facilities provided for herein as well as activities as the Administrative Agent.



     Section 9.06 Resignation or Removal of the Administrative Agent.



     (a) The Administrative Agent may resign from the performance of all of its functions and
duties hereunder and under the other Loan Documents at any time by giving 30 days’ prior written
notice of its resignation to the Lenders, the Issuing Bank and the Borrower. Upon receipt of any
such notice of resignation, the Required Lenders shall have the right, and provided that no Event
of Default has occurred and is continuing, with the consent of the Borrower (which consent shall
not be unreasonably withheld or delayed), to appoint a successor, which shall be a Lender with an
office in New York, or an Affiliate of any such Lender with an office in New York. If no such
successor shall have been so appointed by the Required Lenders and shall have accepted such
appointment within 60 days after the retiring Administrative Agent gives notice of its resignation,
then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Bank, appoint a
successor Administrative Agent meeting the qualifications set forth above provided and consented to
by the Borrower (provided that no Event of Default has occurred and is continuing and which consent
shall not be unreasonably withheld or delayed). If the Administrative Agent shall notify the
Borrower and the Lenders that no qualifying Person has accepted such appointment within such 60-day
period, then such resignation shall nonetheless become effective in accordance with such notice and
(1) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder
and under the other Loan Documents (except that in the case of any collateral security held by the
Administrative Agent,



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for the ratable benefit of the Secured Parties, under any of the Loan
Documents, the retiring Administrative Agent, for the ratable benefit of the Secured Parties, shall
continue to hold such collateral security until such time as a successor Administrative Agent is
appointed) and (2) the Lenders shall thereafter perform all the duties of the Administrative Agent
hereunder and under any other Loan Document and all payments, communications and determinations
provided to be made by, to or through such Administrative Agent shall instead be made by or to each
Lender and the Issuing Bank directly, as applicable, until such time as the Required Lenders
appoint a successor Administrative Agent as provided for above in this paragraph. Upon the
acceptance of a successor’s appointment as Agent hereunder, such successor shall succeed to and
become vested with all of the rights, powers, privileges and duties of the retiring (or retired)
Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its
duties and obligations hereunder or under the other Loan Documents (if not already discharged
therefrom as provided above in this paragraph). The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After the retiring Administrative Agent’s resignation
hereunder and under the other Loan Documents, the provisions of this Article and Section
10.04 shall continue in effect for the benefit of such retiring Administrative Agent, its sub
agents and their respective Related Parties in respect of any actions taken or omitted to be taken
by any of them while such replaced Administrative Agent was acting as Administrative Agent to the
extent provided therein.



     (b) If either (i) the Administrative Agent is a Lender and is a Defaulting Lender or (ii) the
Administrative Agent is not a Lender and is a Defaulting Lender due to the circumstances described
in clause (d) of the definition of Defaulting Lender, the Required Lenders shall have the right to
appoint a successor Administrative Agent which shall be a commercial bank or trust company that is,
if no Event of Default has occurred and is continuing, reasonably acceptable to the Borrower. If no
successor Administrative Agent has been so appointed and shall have accepted such appointment by
the 20th Business Day after the date the Administrative Agent became a Defaulting Lender, the
Administrative Agent shall be deemed to have been replaced and the Lenders shall thereafter perform
all the duties of the Administrative Agent hereunder and under any other Loan Document and all
payments, communications and determinations provided to be made by, to or through such
Administrative Agent shall instead be made by or to each Lender and the Issuing Bank directly, as
applicable, until such time, if any, as the Required Lenders appoint a successor Administrative
Agent as provided above. After the Administrative Agent is replaced in accordance with this clause
(b), the provisions of this Article IX, Section 10.04 and Section 10.05
shall continue in effect for the benefit of such replaced Administrative Agent, its sub agents and
their respective Related Parties in respect of any actions taken or omitted to be taken by any of
them while such replaced Administrative Agent was acting as Administrative Agent to the extent
provided therein.



     Section 9.07 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and
the Issuing Bank acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender or any of their Related Parties and based on such
documents and information as it has deemed appropriate, made its own credit analysis and decision
to enter into this Agreement. Each Lender and the Issuing Bank also acknowledges that it will,
independently and without reliance upon the Administrative Agent or any other Lender or any of
their Related Parties and based on such documents and information as it shall from time to



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time
deem appropriate, continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or any related agreement or any document furnished
hereunder or thereunder.



     Section 9.08 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders severally agree to indemnify upon demand the
Administrative Agent, the Issuing Bank and each Related Party of any and all Indemnified
Liabilities (to the extent not reimbursed by the Loan Parties), according to their respective Pro
Rata Shares, and hold harmless such Indemnitee from and against any and all Indemnified Liabilities
in all cases, whether or not caused by or arising, in whole or in part, out of the negligence of
any Related Party; provided, however, that no Lender shall be liable for the
payment to any Related Party for any portion of such Indemnified Liabilities to the extent
determined in a final, nonappealable judgment by a court of competent jurisdiction to have resulted
from such Related Party’s own gross negligence or willful misconduct; provided,
however, that no action taken in accordance with the directions of the Required Lenders
shall be deemed to constitute gross negligence or willful misconduct for purposes of this Section.
Without limitation of the foregoing, each Lender agrees to reimburse the Administrative Agent and
the Issuing Bank promptly upon demand for its ratable share of any out-of-pocket expenses
(including all fees, expenses and disbursements of any law firm or other external counsel) incurred
by the Administrative Agent or the Issuing Bank in connection with the preparation, execution,
delivery, administration, modification, amendment, or enforcement (whether through negotiations,
legal proceedings, or otherwise) of, or legal advice in respect of rights or responsibilities
under, this Agreement or any other Loan Document, to the extent that the Administrative Agent or
the Issuing Bank is not reimbursed for such by the Loan Parties. The undertaking in this Section
shall survive termination of this Agreement, termination of the Revolving Commitments, the payment
of all other Obligations and the resignation of the Administrative Agent.



     Section 9.09 Collateral and Guaranty Matters.



     (a) Each of the Secured Parties irrevocably authorizes the Administrative Agent, at its option
and in its discretion, without the necessity of any notice to or further consent from any Secured
Party:




     (i) to release any Lien on any property granted to or held by the Administrative Agent
under any Security Document (i) upon termination of the Revolving Commitments and payment in
full of all Obligations (other than contingent indemnification obligations of which no
Secured Party has knowledge), the termination or expiration of all Letters of Credit (other
than Letters of Credit as to which the Issuing Bank has an enforceable cash collateral
security in an amount equal to 105% of the Letter of Credit Exposure allocable to such
Letters of Credit or as to which other arrangements satisfactory to the Issuing Bank have
been made), and the termination of all obligations of the Issuing Bank to issue, and the
Lenders to participate in, Letters of Credit, the



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termination of all Swap Contracts with any
Swap Counterparty and the termination of all obligations of Lenders in respect of Swap
Contracts (in each case, other than Swap Contracts as to which the applicable Swap
Counterparty has advised the Administrative Agent in writing that it has received other
collateral satisfactory to it), (ii) that is sold or to be sold as part of or in connection
with any Disposition permitted hereunder or under any other Loan Document, or (iii) subject
to Section 10.01, if approved, authorized or ratified in writing by the Required
Lenders;




     (ii) to take any actions with respect to any Collateral or Security Documents which may
be necessary to perfect and maintain Acceptable Security Interests in and Liens upon the
Collateral granted pursuant to the Security Documents; and




     (iii) to take any action in exigent circumstances as may be reasonably necessary to
preserve any rights or privileges of the Secured Parties under the Loan Documents or
applicable Legal Requirements.



     (b) Upon the request of the Administrative Agent at any time, the Lenders will confirm in
writing the Administrative Agent’s authority to release particular types or items of Collateral
pursuant to this Section 9.09; provided, however, that receipt of such
confirmation shall not be a condition precedent to the effectiveness or validity of any such
release and that the failure of any Lender to confirm such authority shall not limit the
Administrative Agent’s authority to provide such release.



     (c) Each Loan Party hereby irrevocably appoints the Administrative Agent as such Loan Party’s
attorney-in-fact, with full authority to, after the occurrence and during the continuance of an
Event of Default, act for such Loan Party and in the name of such Loan Party to, in the
Administrative Agent’s discretion upon the occurrence and during the continuance of an Event of
Default, (i) file one or more financing or continuation statements, and amendments thereto,
relative to all or any part of the Collateral without the signature of such Loan Party where
permitted by law, (ii) to receive, endorse, and collect any drafts or other instruments, documents,
and chattel paper which are part of the Collateral, (iii) to ask, demand, collect, sue for,
recover, compromise, receive, and give acquittance and receipts for moneys due and to become due
under or in respect of any of the Collateral, (iv) to file any claims or take any action or
institute any proceedings which the Administrative Agent may reasonably deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights of the
Administrative Agent with respect to any of the Collateral and (v) if any Loan Party fails to
perform any covenant contained in this Agreement or the other Security Documents after the
expiration of any applicable grace periods, the Administrative Agent may itself perform, or cause
performance of, such covenant, and such Loan Party shall pay for the reasonable expenses of the
Administrative Agent incurred in connection therewith in accordance with Section 10.04.
The power of attorney granted hereby is coupled with an interest and is irrevocable.



     (d) The powers conferred on the Administrative Agent under this Agreement and the other
Security Documents are solely to protect its interest, for the ratable benefit of the Secured
Parties, in the Collateral and shall not impose any duty upon it to exercise any such powers unless
expressly set forth herein or therein. Beyond the safe custody thereof, the Administrative Agent
and each Lender shall have no duty with respect to any Collateral in its possession or control (or
in the possession or



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control of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining thereto. The
Administrative Agent shall be deemed to have exercised reasonable care in the custody and
preservation of the Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which the Administrative Agent accords its own property. Neither the
Administrative Agent nor any Lender shall be liable or responsible for any loss or damage to any of
the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee, broker or other agent or bailee selected by
Borrower or selected by the Administrative Agent in good faith.



     (e) Notwithstanding anything contained in any of the Loan Documents to the contrary, the Loan
Parties, the Administrative Agent, and each Secured Party hereby agree that no Secured Party shall
have any right individually to realize upon any of the Collateral or to enforce the Guaranties, it
being understood and agreed that all powers, rights and remedies hereunder and under the Security
Documents may be exercised solely by Administrative Agent on behalf of the Secured Parties in
accordance with the terms hereof and the other Loan Documents. By accepting the benefit of the
Liens granted pursuant to the Security Documents, each Secured Party not party hereto hereby agrees
to the terms of this paragraph (e).



     Section 9.10 No Other Duties, Etc. Anything herein to the contrary notwithstanding,
the Arranger shall have no powers, duties or responsibilities under this Agreement or any of the
other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender
or the Issuing Bank.



ARTICLE X




MISCELLANEOUS




     Section 10.01 Amendments, Etc. No amendment or waiver of any provision of this
Agreement or any other Loan Document (other than the Fee Letter), and no consent to any departure
by the Borrower or any other Loan Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Required Lenders and the Borrower, and then such waiver or
consent shall be effective only in the specific instance and for the specific purpose for which
given; provided, however, that no amendment, waiver or consent shall:



     (a) waive any condition set forth in Article III without the written consent of each
Lender;



     (b) extend or increase the Revolving Commitment of any Lender (or reinstate any Revolving
Commitment terminated pursuant to Section 7.02) without the written consent of such Lender;



     (c) postpone any date fixed by this Agreement for any mandatory reduction of the Revolving
Commitments without the written consent of each Lender;



     (d) postpone any date fixed by this Agreement or any other Loan Document for any payment or
mandatory prepayment of principal, interest, fees or other amounts due to the



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Lenders (or any of
them) hereunder or under any other Loan Document without the written consent of each Lender
directly affected thereby;



     (e) reduce the principal of, or the rate of interest specified herein on, any Revolving
Advance or Reimbursement Obligation, or (subject to clause (iv) of the second proviso to this
Section 10.01) any fees or other amounts payable hereunder or under any other Loan Document
without the prior written consent of each Lender directly affected thereby; provided,
however, that only the consent of the Required Lenders shall be necessary to waive any
obligation of the Borrower to pay interest at the Default Rate;



     (f) change Section 2.12 or any other provision of this Agreement in a manner that
would alter the pro rata sharing of payments and any other right or obligation of the Lenders
required by this Agreement without the written consent of each Lender;



     (g) change any provision of this Section, or the definition of “Required Lenders” or any other
provision hereof specifying the number or percentage of Lenders required to amend, waive or
otherwise modify any rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender directly affected thereby;



     (h) change the definition of “Borrowing Base”, “Fixed Charge Coverage Cap”, “Fixed Charge
Coverage Cap Ratio”, the components thereof or the application thereof without the written consent
of each Lender; or



     (i) release any Guarantor from the Guaranty or all or any material portion of the Collateral
without the written consent of each Lender; provided, however, that any Guarantor
or Collateral may be released if they are Disposed of as permitted hereunder;



and, provided further, that (i) no amendment, waiver or consent shall, unless in writing
and signed by the Issuing Bank in addition to the Lenders required above, affect the rights or
duties of the Issuing Bank under this Agreement or any Letter of Credit Application relating to any
Letter of Credit issued or to be issued by it; (ii) no amendment, waiver or consent shall, unless
in writing and signed by the Administrative Agent in addition to the Lenders required above, affect
the rights or duties of the Administrative Agent under this Agreement or any other Loan Document;
(iii) Section 10.06(g) may not be amended, waived or otherwise modified without the consent
of each Granting Lender all or any part of whose Revolving Advances are being funded by a SPC at
the time of such amendment, waiver or other modification; and (iv) the Fee Letter may be amended,
or rights or privileges thereunder waived, in a writing executed only by the parties thereto; and
provided, further, however, that the Revolving Commitment and outstanding
Revolving Advances of, and participation interests in the Letter of Credit Exposure held or deemed
held by, a Defaulting Lender, shall be disregarded for all purposes of any determination of whether
the requisite Lenders have taken or may take any action hereunder (including any consent to any
amendment or waiver pursuant to Section 10.01); provided that any waiver, amendment
or modification requiring the consent of all Lenders or each affected Lender which by its terms
affects such Defaulting Lender differently than other affected Lenders shall require the consent of
such Defaulting Lender.



     Section 10.02 Notices, Etc.



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     (a) General. Except in the case of notices and other communications expressly
permitted to be given by telephone (and except as provided in paragraph (c) below), all notices and
other communications provided for herein shall be in writing and shall be delivered by hand or
overnight courier service, mailed by certified or registered mail, sent by telecopier or (subject
to subsection (c) below) electronic mail address as follows:




     (i) if to the Borrower or any other Loan Party, the Administrative Agent or the Issuing
Bank, to the address, facsimile number, electronic mail address or telephone number
specified for such Person on Schedule 10.02 or to such other address, facsimile
number, electronic mail address or telephone number as shall be designated by such party in
a notice to the other parties; and




     (ii) if to any other Lender, to the address, facsimile number, electronic mail address
or telephone number specified in its Administrative Questionnaire or to such other address,
facsimile number, electronic mail address or telephone number as shall be designated by such
party in a notice to the Administrative Agent and the Borrower.


Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall
be deemed to have been given when received; notices sent by telecopier shall be deemed to have been
given when sent and confirmed received. Notices delivered through electronic communications to the
extent provided in paragraph (c) below, shall be effective as provided in said paragraph (c). In
no event shall a voicemail message be effective as a notice, communication or confirmation
hereunder.




     (b) Effectiveness of Facsimile Documents and Signatures. Loan Documents may be
transmitted and/or signed by facsimile. The effectiveness of any such documents and signatures
shall, subject to applicable Legal Requirements, have the same force and effect as manually-signed
originals and shall be binding on all Loan Parties, the Administrative Agent, the Lenders and the
Issuing Bank. The Administrative Agent may also require that any such documents and signatures be
confirmed by a manually-signed original thereof; provided, however, that the
failure to request or deliver the same shall not limit the effectiveness of any facsimile document
or signature.



     (c) Limited Use of Electronic Mail. Notices and other communications to the Lenders
and the Issuing Bank hereunder may be delivered or furnished by electronic communication (including
e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative
Agent in its sole discretion, provided that the foregoing shall not apply to notices to any
Lender or the Issuing Bank pursuant to Article II if such Lender or the Issuing Bank, as
applicable, has notified the Administrative Agent and the Borrower that it is incapable of
receiving notices under such Article by electronic communication. The Administrative Agent or the
Borrower may, in their discretion, agree to accept notices and other communications to it hereunder
by electronic communications pursuant to procedures approved by them, provided that
approval of such procedures may be limited to particular notices or communications. Unless the
Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail
address shall be deemed received upon the sender’s receipt of an acknowledgement from the intended
recipient (such as by the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such



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notice or other communication is not sent
during the normal business hours of the recipient, such notice or communication shall be deemed to
have been sent at the opening of business on the next business day for the recipient, and (ii)
notices or communications posted to an Internet or intranet website shall be deemed received upon
the deemed receipt by the intended recipient at its e-mail address as described in the foregoing
clause (i) of notification that such notice or communication is available and identifying the
website address therefor.



     (d) Reliance by Administrative Agent and Lenders. The Administrative Agent and the
Lenders shall be entitled to rely and act upon any notices (including telephonic Notices of
Borrowing) given by or on behalf of a Loan Party even if such notices were not made in a manner
specified herein, were incomplete or were not preceded or followed by any other form of notice
specified herein. All telephonic notices to and other communications with the Administrative Agent
may be recorded by the Administrative Agent, and each of the parties hereto hereby consents to such
recording.



     Section 10.03 No Waiver; Cumulative Remedies. No failure on the part of any Lender or
the Administrative Agent to exercise, and no delay by any such Person in exercising, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and privileges herein
provided in this Agreement are cumulative and not exclusive of any rights, remedies, powers and
privileges provided by law.



     Section 10.04 Costs and Expenses. The Borrower shall pay (a) all reasonable
out-of-pocket expenses incurred by the Administrative Agent (including the reasonable fees, charges
and disbursements of one external primary counsel for the Administrative Agent and of one local
counsel in each jurisdiction, if necessary (it being understood that the local counsel for any such
jurisdiction shall, if reasonably acceptable to the Administrative Agent, be limited to any local
counsel previously engaged by the Borrower in such jurisdiction, if applicable), in connection with
the syndication of the credit facilities provided for herein, the preparation, negotiation,
execution, delivery and administration of this Agreement and the other Loan Documents or any
amendments, modifications or waivers of the provisions hereof or thereof, (b) all reasonable and
customary out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance,
amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder and
(c) all out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Bank
(including the fees, charges and disbursements of any counsel for the Administrative Agent, any
Lender or the Issuing Bank), and shall pay all fees and time charges for attorneys who may be
employees of the Administrative Agent, any Lender or the Issuing Bank, in connection with the
enforcement or protection of its rights (A) in connection with this Agreement and the other Loan
Documents, including its rights under this Section, or (B) in connection with the Revolving
Advances made or Letters of Credit issued hereunder, including all such out-of-pocket expenses
incurred during any workout, restructuring or similar negotiations in respect of such Revolving
Advances or Letters of Credit. The foregoing costs and expenses shall include all search, filing,
recording, title insurance and appraisal charges and fees and taxes related thereto, and other
out-of-pocket expenses incurred by the Administrative Agent and the cost of independent public
accountants and other outside experts retained by the Administrative Agent or any Lender. All
amounts due under this Section 10.04 shall be payable



125









 








within 30 days after demand in
writing therefor. The agreements in this Section shall survive the termination of this Agreement,
the termination of the Revolving Commitments and repayment of all other Obligations.



     Section 10.05 Indemnification. The Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, and each Related Party of any of the
foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each
Indemnitee harmless from, any and all liabilities, obligations, losses, damages, penalties, claims,
demands, actions, judgments, suits, costs, expenses, or disbursements (including the reasonable
fees, charges and disbursements of one external primary counsel and of one local counsel in each
jurisdiction, if necessary (it being understood that the local counsel for any such jurisdiction
shall, if reasonably acceptable to the Person to whom such Indemnitee is a Related Party, be
limited to any local counsel previously engaged by the Borrower in such jurisdiction, if
applicable) unless an Event of Default has occurred and is continuing, in which case, it shall
include all fees, expenses and disbursements of any law firm or other external counsel and, without
duplication, the allocated cost of internal legal services and all expenses and disbursements of
internal counsel) of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against any Indemnitee in any way arising out of or in connection with (a) the execution,
delivery, enforcement, performance, or administration of this Agreement, any Loan Document, or any
other agreement, letter or instrument delivered by the Loan Parties in connection with the
transactions contemplated thereby or the consummation of the transactions contemplated thereby, (b)
any Revolving Commitment, Revolving Advance or Letter of Credit or the use or proposed use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a
Letter of Credit if the documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (c) any action taken or omitted by the Administrative
Agent or the Issuing Bank under this Agreement or any other Loan Document (including the
Administrative Agent’s and the Issuing Bank’s own negligence), (d) any actual or alleged presence
or release of Hazardous Materials on or from any property currently or formerly owned or operated
by the Borrower, any Subsidiary or any other Loan Party, or any Environmental Liability related in
any way to the Borrower, any Subsidiary or any other Loan Party, or (e) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on contract, tort or
any other theory (including any investigation of, preparation for, or defense of any pending or
threatened claim, investigation, litigation or proceeding) and regardless of whether any Indemnitee
is a party thereto (all the foregoing, collectively, the “Indemnified Liabilities”);
provided that such indemnity shall not, as to any Indemnitee, be available to the extent
that such liabilities, obligations, losses, damages, penalties, claims, demands, actions,
judgments, suits, costs, expenses or disbursements are determined by a court of competent
jurisdiction by final and nonappealable judgment to have been proximately caused by such
Indemnitee’s own bad faith, gross negligence, willful misconduct, violation of law, or by reason of
a claim by one or more other



126









 







Indemnified Parties or equity interest owners of any Indemnified
Party, so long as not proximately caused by any Loan Party or any Affiliate thereof. 



     To the fullest extent permitted by applicable law, no party hereto or Indemnitee shall
assert, and each party hereto and each Indemnitee hereby waives, any claim against any other party
or Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Revolving Advance or Letter of Credit or the use
of the proceeds thereof. No party hereto or any Indemnitee shall be liable for any damages arising
from the use by unintended recipients of any information or other materials distributed by it
through telecommunications, electronic or other information transmission systems in connection with
this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby.



     All amounts due under this Section 10.05 shall be payable within thirty days after
written demand therefor. The agreements in this Section shall survive the resignation of the
Administrative Agent, the replacement of any Lender, the termination of the Revolving Commitments
and the repayment, satisfaction or discharge of all the other Obligations. 



     Section 10.06 Successors and Assigns.



     (a) Generally. The terms and provisions of this Agreement and the other Loan
Documents shall be binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer
any of its rights or obligations hereunder without the prior written consent of the Lenders (unless
otherwise expressly permitted herein) and no Lender may assign or otherwise transfer any of its
rights or obligations hereunder except (i) to an Eligible Assignee in accordance with the
provisions of subsection (b) of this Section, (ii) by way of participation in accordance with the
provisions of subsection (d) of this Section or (iii) by way of pledge or assignment of a security
interest subject to the restrictions of subsection (f) or (i) of this Section, or (iv) to an SPC in
accordance with the provisions of subsection (h) of this Section (and any other attempted
assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby, Participants to the extent provided in
subsection (d) of this Section and, to the extent expressly contemplated hereby, the Indemnitees)
any legal or equitable right, remedy or claim under or by reason of this Agreement.
Notwithstanding anything herein to the contrary, the Borrower shall be permitted to assign is
rights and obligations hereunder to Pride SpinCo, Inc., a Delaware corporation, in connection with
the merger of Borrower into Pride SpinCo, Inc., in connection with the consummation of the
Transaction, without the prior written consent of the Lenders.



     (b) Assignments by Lenders. Any Lender may assign to one or more Eligible Assignees
all or any portion of its rights and obligations under this Agreement (including,



127









 







without
limitation, all or a portion of its Revolving Commitments, the Revolving Advances owing to it, and
participations in Letter of Credit Obligations) at the time owing to it; provided,
however, that:




     (i) except in the case of an assignment of the entire remaining amount of the assigning
Lender’s Revolving Commitment and the Revolving Advances owing to it or in the case of an
assignment to a Lender or an Affiliate of a Lender or an Approved Fund (as defined in
subsection (g) of this Section) with respect to a Lender, the aggregate amount of the
Revolving Commitments and Revolving Advances of such Lender being assigned pursuant to each
such assignment (determined as of the date of the Assignment and Acceptance with respect to
such assignment) shall not be less than $5,000,000, and, after giving effect thereto, the
assigning Lender shall have Revolving Commitments and of at least $5,000,000, in each case
unless otherwise agreed to by the Borrower and the Administrative Agent;




     (ii) the parties to each such assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance; and




     (iii) each Eligible Assignee (other than an Eligible Assignee that is a Lender or an
Affiliate of a Lender) shall pay to the Administrative Agent a $3,500 processing and
recording fee. Any such assignment need not be ratable as among the Facilities.


Upon satisfaction of clauses (i) – (iii) above, the Administrative Agent shall accept and record
such Assignment and Assumption pursuant to paragraph (c) of this Section, and from and after the
effective date specified in such Assignment and Acceptance, (A) the Eligible Assignee thereunder
shall be a party hereto for all purposes and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and (B) such assigning Lender thereunder shall, to the extent
that rights and obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under this Agreement (and,
in the case of an Assignment and Acceptance covering all or the remaining portion of such Lender’s
rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but
shall continue to be entitled to the benefits of Sections 2.09, 2.11, 10.04
and 10.05 with respect to facts and circumstances occurring prior to the effective date of
such assignment). Any assignment or transfer by a Lender of rights or obligations under this
Agreement that does not comply with this subsection shall be treated for purposes of this Agreement
as a sale by such Lender of a participation in such rights and obligations in accordance with
subsection (d) of this Section.




     (c) Register. The Administrative Agent shall maintain at its Applicable Lending
Office a copy of each Assignment and Acceptance delivered to and accepted by it and a register for
the recordation of the names and addresses of the Lenders and the Revolving Commitments of, and
principal amount of the Revolving Advances owing to, each Lender from time to time (the
“Register”). The entries in the Register shall be conclusive and binding for all purposes,
absent manifest error, and each of the Loan Parties, the Administrative Agent, the Issuing Bank,
and the Lenders may treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement. The Register shall be available for inspection by



128









 







the Borrower
or any Lender at any reasonable time and from time to time upon reasonable prior notice.



     (d) Participations. Any Lender may at any time, without the consent of or notice to,
the Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a
“Participant”) in all or a portion of such Lender’s rights and/or obligations under this
Agreement (including all or a portion of its Revolving Commitment and/or the Revolving Advances
(including such Lender’s participations in Letter of Credit Obligations) owing to it;
provided that (i) such Lender’s obligations under this Agreement (including its Revolving
Commitment to the Borrower hereunder) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations and (iii) the
Borrower, the Administrative Agent and the other Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation shall provide that
such Lender shall retain the sole right to enforce this Agreement and to approve any amendment,
modification or waiver of any provision of this Agreement; provided that such agreement or
instrument may provide that such Lender will not, without the consent of the Participant, agree to
any amendment, waiver or other modification described in the first proviso to Section 10.01
that directly affects such Participant, in each case, to the extent subject to such participation.
Subject to subsection (e) of this Section, the Borrower agree that each Participant shall be
entitled to the benefits of Sections 2.08, 2.09, 2.11, 10.04 and
10.05 to the same extent as if it were a Lender and had acquired its interest by assignment
pursuant to subsection (b) of this Section. To the extent permitted by law, each Participant also
shall be entitled to the benefits of Section 7.05 as though it were a Lender, to the extent
of such participation, provided such Participant agrees to be subject to Section
2.12 as though it were a Lender.



     (e) A Participant shall not be entitled to receive any greater payment under Section
2.09 or 2.11 than the applicable Lender would have been entitled to receive with
respect to the participation sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’ prior written consent. A Participant that would be a
Foreign Lender if it were a Lender shall not be entitled to the benefits of Section 2.11
unless the Borrower is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.11(e) as though it were a
Lender.



     (f) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender to a Federal Reserve Bank in
accordance with Regulation A of the Federal Reserve Board; provided that no such pledge or
assignment shall release such Lender from any of its obligations hereunder (including its Revolving
Commitment to the Borrower hereunder) or substitute any such pledgee or assignee for such Lender as
a party hereto.



     (g) Notwithstanding anything to the contrary contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle identified as such in writing from time
to time by the Granting Lender to the Administrative Agent and the Borrower (an “SPC”) the
option to provide all or any part of any Advance that such Granting Lender would otherwise be
obligated to make pursuant to this Agreement; provided that (i) nothing herein shall



129









 







constitute a commitment by any SPC to fund any Advance, and (ii) if a SPC elects not to exercise
such option or otherwise fails to make all or any part of such Revolving Advance, the Granting
Lender shall be obligated to make such Revolving Advance pursuant to the terms hereof. Each party
hereto hereby agrees that (i) neither the grant to any SPC nor the exercise by any SPC of such
option shall increase the costs or expenses or otherwise increase or change the obligations of the
Borrower under this Agreement, (ii) no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement for which a Lender would be liable, and (iii) the Granting Lender
shall for all purposes, including the approval of any amendment, waiver or other modification of
any provision of any Loan Document, remain the lender of record hereunder. The making of a
Revolving Advance by a SPC hereunder shall utilize the Revolving Commitment of the Granting Lender
to the same extent, and as if, such Revolving Advance were made by such Granting Lender. In
furtherance of the foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior debt of any SPC, it will not
institute against, or join any other Person in instituting against, such SPC any bankruptcy,
reorganization, arrangement, insolvency, or liquidation proceeding under the laws of the United
States or any State thereof. Notwithstanding anything to the contrary contained herein, any SPC
may (i) with notice to, but without prior consent of the Borrower and the Administrative Agent and
without paying any processing fee therefor, assign all or any portion of its right to receive
payment with respect to any Advance to the Granting Lender and (ii) disclose on a confidential
basis any non-public information relating to its funding of Revolving Advances to any rating
agency, commercial paper dealer or provider of any surety or Guarantee or credit or liquidity
enhancement to such SPC.



     (h) Notwithstanding anything to the contrary contained herein, any Lender that is a Fund may
create a security interest in all or any portion of the Revolving Advances owing to it and the
Note, if any, held by it to the trustee for holders of obligations owed, or securities issued, by
such Fund as security for such obligations or securities, provided that unless and until
such trustee actually becomes a Lender in compliance with the other provisions of this Section
10.06, (i) no such pledge shall release the pledging Lender from any of its obligations under
the Loan Documents and (ii) such trustee shall not be entitled to exercise any of the rights of a
Lender under the Loan Documents even though such trustee may have acquired ownership rights with
respect to the pledged interest through foreclosure or otherwise.



     Section 10.07 Confidentiality. Each of the Administrative Agent and the Lenders agrees to maintain
the confidentiality of the Information (as defined below), except that Information may be disclosed
(a) to its and its Affiliates’ directors, officers, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and instructed to keep such
Information confidential), (b) to the extent requested by any regulatory authority (including any
self-regulatory authority, such as the National Association of Insurance Commissioners), (c) to the
extent required by applicable laws or regulations or by any subpoena or similar legal process, (d)
to any other party hereto, (e) in connection with the exercise of any remedies hereunder or under
any other Loan Document or any action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to (i) any permitted
assignee of or Participant in, or any prospective assignee of or



130









 







Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the Borrower and its obligations, (g)
with the prior written consent of the Borrower or (h) to the extent such Information (x) becomes
publicly available other than as a result of a breach of this Section or (y) becomes available to
the Administrative Agent or any Lender on a nonconfidential basis from a source other than the
Borrower. For purposes of this Section, “Information” means all information received from any Loan
Party relating to any Loan Party or any of their respective businesses, other than any such
information that is available to the Administrative Agent or any Lender on a nonconfidential basis
prior to disclosure by any Loan Party, provided that, in the case of information received
from a Loan Party after the date hereof, such information is clearly identified at the time of
delivery as confidential. Any Person required to maintain the confidentiality of Information as
provided in this Section shall be considered to have complied with its obligation to do so if such
Person has exercised the same degree of care to maintain the confidentiality of such Information as
such Person would accord to its own confidential information.


     Section 10.08 Execution in
Counterparts. This Agreement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement.



     Section 10.09 Survival of Representations, Etc. All representations and warranties
made hereunder and in any other Loan Document or other document delivered pursuant hereto or
thereto or in connection herewith or therewith shall survive the execution and delivery hereof and
thereof. Such representations and warranties have been or will be relied upon by the
Administrative Agent and each Lender, regardless of any investigation made by the Administrative
Agent or any Lender or on their behalf and notwithstanding that the Administrative Agent or any
Lender may have had notice or knowledge of any Default or Event of Default at the time of any
Revolving Advance, and shall continue in full force and effect as long as any Revolving Advance or
any other Obligation hereunder shall remain unpaid or unsatisfied or any Letter of Credit shall
remain outstanding.



     Section 10.10 Severability. If any provision of this Agreement or the other Loan
Documents is held to be illegal, invalid or unenforceable, (a) the legality, validity and
enforceability of the remaining provisions of this Agreement and the other Loan Documents shall not
be affected or impaired thereby and (b) the parties shall endeavor in good faith negotiations to
replace the illegal, invalid or unenforceable provisions with valid provisions the economic effect
of which comes as close as possible to that of the illegal, invalid or unenforceable provisions.
The invalidity of a provision in a particular jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.



     Section 10.11 Interest Rate Limitation. Notwithstanding anything to the contrary
contained in any Loan Document, the interest paid or agreed to be paid under the Loan Documents
shall not exceed the Maximum Rate. If the Administrative Agent or any Lender shall receive
interest in an amount that exceeds the Maximum Rate, the excess interest shall be applied to the
principal of the Revolving Advances or, if it exceeds such unpaid principal, refunded to the
Borrower. In determining whether the interest contracted for, charged, or received by the
Administrative Agent or a Lender exceeds the Maximum Rate, such Person may, to the extent permitted
by applicable Law, (a) characterize any payment that is not principal as



131









 








an expense, fee, or
premium rather than interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
amortize, prorate, allocate, and spread in equal or unequal parts the total amount of interest
throughout the contemplated term of the Obligations hereunder.



     Section 10.12 Governing Law. This Agreement and each of the other Loan Documents
shall be governed by and construed in accordance with the laws of the State of New York and the
applicable laws of the United States of America.



     Section 10.13 Submission to Jurisdiction.



     (a) Any legal action or proceeding with respect to this Agreement or any other
Loan Document may be brought in the courts of the state of New York sitting in New York City or of
the United States of America for the Southern District of such state, and by execution and delivery
of this Agreement, each of the Borrower, the Administrative Agent, each Lender and the Issuing Bank
consents, for itself and in respect of its Property, to the non-exclusive jurisdiction of those
courts. Each of the Borrower, the Administrative Agent, each Lender and the Issuing Bank
irrevocably waives any objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of any Loan Document or other document related
thereto. Each of the Borrower, the Administrative Agent, each Lender and the Issuing Bank waives
personal service of any summons, complaint or other process, which may be made by any other means
permitted by the law of such state.



     (b) Each Loan Party has, or will have on or prior to the Closing Date, irrevocably appointed
CT Corporation System (the “Process Agent”), with an office on the date hereof at 111
Eighth Ave., New York, New York, 10011, as its agent to receive on its behalf and on behalf of its
property service of copies of any summons or complaint or any other process which may be served in
any action arising under any Loan Document. Such service may be made by mailing or delivering a
copy of such process to such Loan Party in care of the Process Agent at the Process Agent’s above
address, and each Loan Party hereby irrevocably authorizes and directs the Process Agent to accept
such service on its behalf. Each party hereto irrevocably consents to the service of any and all
process in any such action or proceeding by the mailing of copies of such process to it at the
address specified for it on the signature pages of this Agreement.



     (c) Nothing in this Section 10.13 shall affect the right of any party hereto to serve
legal process in any other manner permitted by law or affect the right of the parties hereto to
bring any action or proceeding against any other party in the courts of any other jurisdiction.



     Section 10.14 Waiver of Jury. Each party to this Agreement hereby
expressly and irrevocably waives any right to trial by jury of any claim, demand, action or cause
of action arising under any Loan Document or in any way connected with or related or incidental to
the dealings of the parties hereto or any of them with respect to any Loan Document, or the
transactions related thereto, in each case whether now existing or hereafter arising, and whether
founded in 




132












 




contract or tort or otherwise;
and each party hereby agrees and consents that any such claim, demand, action or cause of action
shall be decided by court trial without a jury, and that any party to this Agreement may file an
original counterpart or a copy of this section with any court as written evidence of the consent of
the signatories hereto to the waiver of their right to trial by jury.




     Section 10.15 Entire agreement . This Agreement and the other Loan
Documents represent the final agreement among the parties and may not be contradicted by evidence
of prior, contemporaneous, or subsequent oral agreements of the parties. There are no unwritten
oral agreements among the parties.



[Remainder of this page intentionally left blank. Signature pages follow.]




133









 





     EXECUTED as of the date first above written.



	 	 	 	 	 	 	 
	 	 	BORROWER:	 	 
	 
	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Randall D. Stilley
 

Randall D. Stilley
	 	 
	 

	 	Title:
	 	President and CEO	 	 
	 
	 	 	 	 	 	 
	 	 	PENINSULA DRILLING LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Steven A. Manz
 

Steven A. Manz
	 	 
	 

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING DE MEXICO LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Steven A. Manz
 

Steven A. Manz
	 	 
	 

	 	Title:
	 	Vice President	 	 






Signature page to Revolving Credit Agreement

(Seahawk Drilling, Inc.)





 









 










	 	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	NATIXIS, NEW YORK BRANCH,

as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Carlos Quinteros
 

Carlos Quinteros
	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Donovan C. Broussard
 

Donovan C. Broussard
	 	 
	 

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	LENDERS:	 	 
	 
	 	 	 	 	 	 
	 	 	NATIXIS, NEW YORK BRANCH	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Carlos Quinteros
 

Carlos Quinteros
	 	 
	 

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Donovan C. Broussard
 

Donovan C. Broussard
	 	 
	 

	 	Title:
	 	Managing Director	 	 






Signature
page to Revolving Credit Agreement


(Seahawk Drilling, Inc.)





 









 








	 	 	 	 	 
	 	CITIBANK, INC.

 	 
	 	By:  	/s/ Robert Malleck
 	 
	 	 	Robert Malleck                       	 
	 	 	Director 	 
	 



Signature page to Revolving Credit Agreement

(Seahawk Drilling, Inc.)




 









 








	 	 	 	 	 	 	 
	 	 	UBS LOAN FINANCE LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Marie Haddad
 

Marie Haddad
	 	 
	 

	 	Title:
	 	Associate Director	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Irja R. Otsa
 

Irja R. Otsa
	 	 
	 

	 	Title:
	 	Associate Director	 	 






Signature page to Revolving Credit Agreement

(Seahawk Drilling, Inc.)




 









 








	 	 	 	 	 	 	 
	 	 	ENCORE BANK, N.A.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ J David Webster
 

J David Webster
	 	 
	 

	 	Title:
	 	Senior Vice President	 	 






Signature page to Revolving Credit Agreement

(Seahawk Drilling, Inc.)





 











 





EXHIBIT A

FORM OF ASSIGNMENT AND ACCEPTANCE



This Assignment and Acceptance (the “Assignment and Acceptance”) is dated as of the
Effective Date set forth below and is entered into by and between [the][each]1 Assignor
identified in item 1 below ([the][each, an] “Assignor”) and [the][each]2
Assignee identified in item 2 below ([the][each, an] “Assignee”). [It is understood and
agreed that the rights and obligations of [the Assignors][the Assignees] 3 hereunder are
several and not joint.] 4 Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, restated, supplemented
or otherwise modified from time to time, the “Credit Agreement”), receipt of a copy of
which is hereby acknowledged by [the][each] Assignee. The Standard Terms and Conditions set forth
in Annex 1 attached hereto are hereby agreed to and incorporated herein by reference and made a
part of this Assignment and Acceptance as if set forth herein in full.



For an agreed consideration, [the][each] Assignor hereby irrevocably sells and assigns to [the
Assignee][the respective Assignees], and [the][each] Assignee hereby irrevocably purchases and
assumes from [the Assignor][the respective Assignors], subject to and in accordance with the
Standard Terms and Conditions and the Credit Agreement, as of the Effective Date inserted by the
Administrative Agent as contemplated below (i) all of [the Assignor’s][the respective Assignors’]
rights and obligations in [its capacity as a Lender][their respective capacities as Lenders] under
the Credit Agreement and any other documents or instruments delivered pursuant thereto to the
extent related to the amount and percentage interest identified below of all of such outstanding
rights and obligations of [the Assignor][the respective Assignors] under the facility identified
below (including without limitation any letters of credit and guarantees included in such facility)
and (ii) to the extent permitted to be assigned under applicable law, all claims, suits, causes of
action and any other right of [the Assignor (in its capacity as a Lender)][the respective Assignors
(in their respective capacities as Lenders)] against any Person, whether known or unknown, arising
under or in connection with the Credit Agreement, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based on or related to any
of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (i) above (the rights and obligations sold and assigned by
[the][any] Assignor to [the][any] Assignee pursuant to clauses (i) and (ii) above being referred to
herein collectively as [the][an] “Assigned Interest”). Each such sale and assignment is without recourse to [the][any] Assignor and, except as expressly






 




			
	1	 	For bracketed language here and elsewhere in this
form relating to the Assignor(s), if the assignment is from a single Assignor,
choose the first bracketed language. If the assignment is from multiple
Assignors, choose the second bracketed language.
	 
	2	 	For bracketed language here and elsewhere in this
form relating to the Assignee(s), if the assignment is to a single Assignee,
choose the first bracketed language. If the assignment is to multiple
Assignees, choose the second bracketed language.
	 
	3	 	Select as appropriate.
	 
	4	 	Include bracketed language if there are either multiple
Assignors or multiple Assignees.





Exhibit A — Form of Assignment and Acceptance

Page 1 of 7







 









 








provided in this Assignment and Acceptance, without representation or warranty by [the][any]
Assignor.




	 	 	 	 	 	 	 
	1.

	 	Assignor[s]:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	2.

	 	Assignee[s]:	 	 	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 	[for each Assignee, indicate [Affiliate][Approved Fund] of [identify Lender]]	 	 
	 
	 	 	 	 	 	 
	3.

	 	Borrower:
	 	SEAHAWK DRILLING, INC.	 	 
	 
	 	 	 	 	 	 
	4.	 	Administrative Agent:	 	 NATIXIS, NEW YORK
BRANCH, as the administrative
agent under the Credit Agreement
	 
	 	 	 	 	 	 
	5.	 	Credit Agreement:	 	Revolving Credit Agreement dated August __,
2009 among Borrower, certain Subsidiaries
thereof, as Guarantors, the Lenders party
thereto from time to time, and Natixis, New
York Branch, as Administrative Agent.
	 
	 	 	 	 	 	 
	6.

	 	Assigned Interest[s]:	 	 	 	 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	Percentage	 	 
	 	 	 	 	Aggregate Amount of	 	 	 	 	 	Assigned of	 	 
	 	 	 	 	Revolving 	 	Amount of Revolving	 	Revolving	 	 
	 	 	 	 	Commitments / 	 	Commitment / 	 	Commitment / 	 	 
	 	 	 	 	Revolving Advances	 	Revolving Advances	 	Revolving  	 	CUSIP
	Assignor[s]	 	Assignee[s]	 	for all Lenders	 	Assigned5	 	Advances6	 	Number
	 

	 	 
	 	$	 	 	 	$	 	 	 	 	 	   %	 	 
	 

	 	 
	 	$	 	 	 	$	 	 	 	 	 	   %	 	 
	 

	 	 
	 	$	 	 	 	$	 	 	 	 	 	   %	 	 








 




			
	5	 	Amount to be adjusted by the counterparties to
take into account any payments or prepayments made between the Trade Date and
the Effective Date.
	 
	6	 	Set forth, to at least 9 decimals, as a percentage
of the Revolving Commitment / Revolving Advances of all Lenders thereunder.





Exhibit A — Form of Assignment and Acceptance

Page 2 of 7





 









 











	 	 	 	 	 	 	 	 	 
	7.

	 	Trade Date:
	 	 

	7
	 	 	  





Effective
Date: ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL
BE THE EFFECTIVE DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]






 




			
	7	 	To be completed if the Assignor(s) and the
Assignee(s) intend that the minimum assignment amount is to be determined as of
the Trade Date.





Exhibit A — Form of Assignment and Acceptance

Page 3 of 7




 









 









The terms set forth in this Assignment and Acceptance are hereby agreed to:




	 	 	 	 	 	 	 
	 	 	ASSIGNOR[S]8

[NAME OF ASSIGNOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ASSIGNOR]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	ASSIGNEE[S]

[NAME OF ASSIGNEE]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 	 	[NAME OF ASSIGNEE]	 	 
	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 








 




			
	8	 	Add additional signature blocks as needed.





Exhibit A — Form of Assignment and Acceptance

Page 4 of 7




 









 








	 	 	 	 	 
	[Consented to and] 9 Accepted:	 	 
	 
	 	 	 	 
	NATIXIS, NEW YORK BRANCH, as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	[Consented to:] 10	 	 
	 
	 	 	 	 
	SEAHAWK DRILLING, INC.	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 








 




			
	9	 	To be added only if the consent of the
Administrative Agent is required by the terms of the Credit Agreement.
	 
	10	 	To be added only if the consent of the Borrower
is required by the terms of the Credit Agreement.





Exhibit A — Form of Assignment and Acceptance

Page 5 of 7





 









 








Annex 1

To Exhibit A — Assignment and Acceptance




STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ACCEPTANCE




1. Representations and Warranties.



1.1 Assignor[s]. [The][Each] Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of [the][the relevant] Assigned Interest, (ii) [the][such] Assigned Interest is
free and clear of any lien, encumbrance or other adverse claim and (iii) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Acceptance and to consummate the transactions contemplated hereby; and (b) assumes no
responsibility with respect to (i) any statements, warranties or representations made in or in
connection with the Credit Agreement or any other Loan Document, (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Loan Documents or any collateral
thereunder, (iii) the financial condition of the Borrower, or its respective Subsidiaries or
Affiliates or any other Person obligated in respect of any Loan Document or (iv) the performance or
observance by the Borrower, its Subsidiaries or Affiliates or any other Person of any of its
obligations under any Loan Document.



1.2. Assignee[s]. [The][Each] Assignee (a) represents and warrants that (i) it has full power and
authority, and has taken all action necessary, to execute and deliver this Assignment and
Acceptance and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it meets all the requirements to be an assignee under Section 10.06 of the
Credit Agreement (subject to such consents, if any, as may be required under Section 10.06 of the
Credit Agreement), (iii) from and after the Effective Date, it shall be bound by the provisions of
the Credit Agreement as a Lender thereunder and, to the extent of [the][the relevant] Assigned
Interest, shall have the obligations of a Lender thereunder, (iv) it is sophisticated with respect
to decisions to acquire assets of the type represented by the Assigned Interest and either it, or
the person exercising discretion in making its decision to acquire the Assigned Interest, is
experienced in acquiring assets of such type, (v) it has received a copy of the Credit Agreement,
and has received or has been accorded the opportunity to receive copies of the most recent
financial statements delivered pursuant to Section 5.06(a) or Section 5.06(b) thereof, as
applicable, and such other documents and information as it deems appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance and to purchase [the][such]
Assigned Interest, (vi) it has, independently and without reliance upon the Administrative Agent or
any other Lender and based on such documents and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this Assignment and Acceptance and to purchase
[the][such] Assigned Interest, and (vii) if it is not incorporated under the laws of the United
States of America or a state thereof, attached to the Assignment and Acceptance is any
documentation required to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by [the][such] Assignee; and (b) agrees that (i) it will, independently and
without reliance on the Administrative Agent, [the][any] Assignor or any other Lender, and based on
such documents and information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Loan




Exhibit A — Form of Assignment and Acceptance

Page 6 of 7




 









 







Documents, and (ii) it will perform in accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed by it as a Lender.



2. Payments. From and after the Effective Date, the Administrative Agent shall make all payments
in respect of [the][each] Assigned Interest (including payments of principal, interest, fees and
other amounts) to [the][the relevant] Assignee whether such amounts have accrued prior to, on or
after the Effective Date. The Assignor[s] and the Assignee[s] shall make all appropriate
adjustments in payments by the Administrative Agent for periods prior to the Effective Date or with
respect to the making of this assignment directly between themselves.



3. General Provisions. This Assignment and Acceptance shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors and assigns. This Assignment and
Acceptance may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Acceptance by telecopy or other electronic transmission shall be effective as delivery of a
manually executed counterpart of this Assignment and Acceptance. This Assignment and Acceptance
shall be governed by, and construed in accordance with, the law of the State of New York.




Exhibit A — Form of Assignment and Acceptance

Page 7 of 7





 











 





EXHIBIT B

FORM OF ASSIGNMENT OF EARNINGS

(this “Assignment”)




     Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), the
owner of the vessels listed on Schedule I attached hereto (the “Vessels”), in consideration
of One Dollar and No/100 ($1.00) in lawful money of the United States of America and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, (a) has
sold, assigned, transferred and set over, and by this instrument does sell, assign, transfer and
set over unto Natixis, New York Branch, as administrative agent (in such capacity as administrative
agent, the “Assignee”) under that certain Revolving Credit Agreement dated as of August ___,
2009 (as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Seahawk Drilling, Inc. a Delaware corporation (the “Borrower”), as
borrower, certain of its Subsidiaries as Guarantors, including the Assignor (collectively with the
Borrower, the “Loan Parties”), the Assignee, as administrative agent, and the Lenders, and
unto the Assignee’s successors and permitted assigns, to its and its successors’ and permitted
assigns’ own proper use and benefit and (b) does hereby grant to the Assignee a security interest
in, in each case for the ratable benefit of the Secured Parties (as defined under the Credit
Agreement) and as collateral security for the payment of the Obligations and the performance and
observance of all agreements, covenants and provisions contained in this Assignment, the other Loan
Documents and any Swap Contracts with any Swap Counterparty (as defined in the Credit Agreement),
all the right, title, interest, claim and demand of the Assignor in and to (i) all freights, hire
and other moneys earned and to be earned, due or to become due, or paid or payable to, or for the
account of, the Assignor, of whatsoever nature, arising out of or as a result of the use,
operation, pooling or chartering by the Assignor or its agents of the Vessels, including, without
limitation, all rights arising out of the owner’s lien on cargoes and subfreights thereunder, (ii)
all moneys and claims for moneys due and to become due to the Assignor, and all claims for damages,
arising out of the breach of any and all present and future drilling contracts, charter parties,
pooling arrangements, bills of lading, contracts and other engagements of affreightment or for the
carriage or transportation of cargo, and operations of every kind whatsoever of any Vessel and in
and to any and all claims and causes of action for money, loss or damages that may accrue or belong
to the Assignor, its successors or assigns, arising out of or in any way connected with the present
or future use, operation, pooling or chartering of any Vessel or arising out of or in any way
connected with any and all present and future requisitions, drilling contracts, charter parties,
pooling arrangements, bills of lading, contracts and other engagements of affreightment or for the
carriage or transportation of cargo, and other operations of any Vessel, (iii) all moneys and
claims due and to become due to the Assignor, and all claims for damages and all insurances and
other proceeds, in respect of the actual or constructive total loss of or requisition of use of or
title to any Vessel, and (iv) any proceeds of any of the foregoing and all interest and earnings
from the investment of any of the foregoing and the proceeds thereof. Capitalized terms used
herein and not otherwise defined shall be used herein as defined in the Credit Agreement.



     Section 1. Representations and Warranties. The Assignor hereby represents and
warrants to the Assignee, as an inducement to the Assignee to accept this Assignment, that neither
the whole nor any part of the right, title and interest hereby assigned is the subject of any



 









 







present assignment, security interest or pledge other than any assignments for the benefit of
the Assignee and Excepted Liens.



     Section 2. Covenants. The Assignor hereby covenants to the Assignee that:



          (a) If an Event of Default shall have occurred and be continuing under the Credit Agreement
and without derogation of the rights of the Assignee under Section 4 hereof to issue instructions
to the charterers and other obligors directly, the Assignor shall specifically authorize and direct
each charterer or other obligor to make payment of all of the freights, hire and other moneys
hereby assigned and becoming due and payable during such period directly to the Assignee in
accordance with the Loan Documents, and shall deliver to the Assignee the written acknowledgment of
such charterer or other obligor of such instructions. Notwithstanding anything to the contrary,
the Assignor and the Assignee hereby agree that so long as no Event of Default shall have occurred
and be continuing, the Assignor shall be entitled to receive and retain any and all moneys
otherwise assigned hereunder.





     (b) (i) The Assignor shall notify the Assignee promptly of any and all bareboat charter
parties, time charter parties or series of successive voyage charter parties, drilling
contracts, contracts of affreightment or pooling arrangements entered into by the Assignor
respecting any Vessel having an indicated duration of at least three months (including any
exercised optional extensions or renewals) and, upon the Assignee’s request, any other
charter party or any such other agreement. The Assignor shall also provide the Assignee
with a true and complete copy of such agreements specified in this paragraph (b) upon the
Assignee’s request.




          (ii) In connection with any charter party having an indicated duration of at least six
months (including any optional extensions or renewals) the Assignor shall, at its own cost
and expense, promptly and duly execute and deliver to the Assignee a charter assignment in
respect of such charter party substantially in the form attached hereto as Exhibit A (the
“Charter Assignment”), and will use commercially reasonable efforts to cause the
charterer under such charter party to execute and deliver to the Assignee a consent to the
Charter Assignment substantially in the form attached hereto as Exhibit B. In addition to
the Charter Assignment, the Assignor shall execute any further assignments of its rights,
titles and interests pursuant to any and all agreements referred to in paragraphs (i) and
(ii) of this Section 2(b), as the Assignee may reasonably require.




          (iii) The Assignor will grant the Assignee an assignment, substantially in the form of
the Charter Assignment, mutatis mutandis, respecting each contract of
affreightment, pooling arrangement, or drilling contract it enters into having an indicated
duration of at least six months (including any optional renewals or extensions), and will
use commercially reasonable efforts to cause the obligor under such contract of
affreightment, pooling arrangement, or drilling contract to execute and deliver to the
Assignee a consent to such assignment substantially in the form attached hereto as Exhibit
B.




     (c) So long as this Assignment is in effect, the Assignor shall not assign, grant a security
interest in or pledge the whole or any part of the right, title and interest hereby



 









 







assigned to anyone other than the Assignee, its successors, endorsees and/or permitted assigns
without the prior written consent of the Assignee and the Assignor shall not take or omit to take
any action, the taking or omission of which might result in any material alteration or impairment
of this Assignment or any of the rights created by this Assignment.




     (d) The Assignor covenants and agrees with the Assignee that the Assignor will (i) duly
perform and observe all of the terms and provisions of any drilling contract, charter, contract of
affreightment or pooling arrangement on the part of such Assignor to be performed or observed; and
(ii) clearly record on the books and records of the Assignor notations of this Assignment.




     (e) At any time and from time to time, upon the written request of the Assignee, the Assignor
shall promptly and duly execute and deliver any and all such further instruments and documents as
the Assignee may reasonably request in order to obtain the full benefits of this Assignment and the
rights and powers herein granted.




     (f) Whenever requested by the Administrative Agent, the Assignor shall promptly deliver
letters to each of its agents and representatives into whose hands or control may come any
earnings, moneys and property hereby assigned, informing each such addressee of this Assignment,
and if any Event of Default has occurred and is continuing, instructing such addressee to remit or
deliver promptly to the Assignee all earnings, moneys and property hereby assigned which become due
and payable during such period may come into the addressee’s hands or control and to continue to
make such remittances or delivery until such time as the addressee may receive written notice or
instructions to the contrary direct from the Assignee. Each such addressee shall acknowledge
directly to the Assignee receipt of the Assignor’s letter of notification and instructions.




     (g) The Assignor will receive substantial, direct and indirect, benefits through the extension
of credit to the Borrower under the terms of the Credit Agreement and related documents and such
transactions and documents are necessary or convenient to the conduct, promotion or attainment of
the Assignor’s business.



     Section 3. Freedom of Assignee from Obligations. It is hereby expressly agreed that
anything herein contained to the contrary notwithstanding, the Assignee shall have no obligation or
liability under any drilling contract, charter, contract of affreightment or pooling arrangement by
reason of or arising out of this Assignment, nor shall the Assignee be required or obligated in any
manner to perform or to fulfill any obligations of the Assignor under or pursuant to any drilling
contract, charter, contract of affreightment or pooling arrangement nor to make any payment, nor to
make any inquiry as to the nature or sufficiency of any payment received by the Assignee or to
present or file any claim, or to take any other action to collect or enforce the payment of any
amounts which may have been assigned to it or which it may be entitled to hereunder at any time or
times.



     Section 4. Payment Directions to Charterers; Power of Attorney; Financing Statements.
Upon the occurrence and during the continuance of an Event of Default, the Assignee shall be
entitled to direct the charterers and other obligors to pay all moneys assigned hereunder to such
bank account in New York City or elsewhere as the Assignee may from time



 









 







to time designate. Any payments made to the Assignee pursuant to the terms of this Assignment
shall be applied in accordance with the provisions of the Credit Agreement. Upon request of the
Assignor, the Assignee shall furnish the Assignor with information from time to time as to the
accounts into which moneys assigned hereunder are paid, the amounts and sources of such payments
and the amounts and application of moneys withdrawn therefrom. The Assignee, its successors and
permitted assigns, are hereby constituted lawful attorneys of the Assignor, irrevocably and coupled
with an interest, with full power (in the name of the Assignor or otherwise), to ask, require,
demand, receive, compound and give acquittance for any and all moneys, claims, property and rights
hereby assigned, to endorse any checks or other instruments or orders in connection therewith and
to file any claims or take any action or institute any proceedings which the Assignee may deem to
be necessary or advisable in the premises, in each case during the continuance of an Event of
Default. During the continuance of a Default or Event of Default, any action or proceeding brought
by the Assignee pursuant to any of the provisions hereof or of any drilling contract, charter,
contract of affreightment, pooling arrangement or otherwise, and any claim made by the Assignee
hereunder or under any drilling contract, charter, contract of affreightment or pooling
arrangement, may be compromised, withdrawn or otherwise dealt with by the Assignee without any
notice to, or approval of, the Assignor. The Assignor hereby irrevocably authorizes the Assignee
to file, at any time and from time to time, at the Assignor’s expense, such financing and
continuation statements or papers of similar purpose or effect relating to this Assignment, without
the Assignor’s signature, as the Assignee at its option may deem appropriate and appoints the
Assignee as the Assignor’s attorney-in-fact to execute any such statements in the Assignor’s name
and to perform all other acts which the Assignee may deem appropriate to perfect and continue the
security interest conferred hereby.



     Section 5. Irrevocable Assignment. The powers and authority granted to the Assignee
herein have been given for a valuable consideration and are hereby declared to be irrevocable and
may not be amended or waived except by an instrument in writing signed by the party against whom
enforcement is sought.



     Section 6. Governing Law; Waiver of Jury Trial.



          (a) This Assignment shall be construed in accordance with and governed by the laws of the
State of New York, United States of America without regard to its conflict of laws rules (other
than Section 5-1401 of the New York General Obligations Law). Each of the Assignor and the
Assignee hereby irrevocably submits itself to the non-exclusive jurisdiction of any court of the
state of New York sitting in New York City or of the United States of America for the Southern
District of such state, and any appellate court from any thereof, for the purposes of (and solely
for the purposes of) any suit, action or other proceeding arising out of, or relating to, this
Assignment or any of the transactions contemplated hereby, hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard in such New York State or Federal court
and hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of the above-named courts for any reason whatsoever, that such suit, action or
proceeding is brought in an inconvenient forum, or that the venue of such suit, action or
proceeding is improper, or that this Assignment or the subject matter hereof may not be enforced in
or by such courts. Each of the Assignor and the Assignee irrevocably consents to the service




 









 




of any and all process in any suit, action or proceeding arising out of or relating to any
other Loan Document to which such Person is a party by the mailing of copies of such process to
such Person at its address specified in Section 10.02 of the Credit Agreement. Each of the
Assignor and the Assignee agrees that a final judgment in any such action, suit or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this paragraph shall affect the right of the Assignee or the
Assignor to serve legal process in any other manner permitted by law or affect the right of such
Person to bring any action or proceeding against the Assignor or the Assignee, as the case may be,
or any of its property in the courts of any other jurisdiction.




          (b) BY ITS SIGNATURE BELOW WRITTEN EACH OF THE ASSIGNOR AND THE ASSIGNEE HEREBY IRREVOCABLY
WAIVES UNDER APPLICABLE LAW ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
ARISING OUT OF OR RELATING TO THIS ASSIGNMENT, THE CREDIT AGREEMENT, THAT CERTAIN FIRST PREFERRED
FLEET MORTGAGE EFFECTIVE AS OF [DATE], IN RESPECT OF THE VESSEL (THE “MORTGAGE”), OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.




     Section 7. Notices. All notices and other communications hereunder shall be in
writing and shall be mailed, sent or delivered in accordance with Section 10.02 of the Credit
Agreement.



     Section 8. Headings. The division of this Assignment into sections and the insertion
of headings are for convenience of reference only and shall not affect the interpretation or
construction of this Assignment.



     Section 9. Termination. This Assignment shall create a continuing security interest
and shall (a) remain in full force and effect until the payment in full in cash of the Obligations
(other than contingent indemnification obligations of which no Secured Party has knowledge), the
termination or expiration of all Letters of Credit (other than Letters of Credit as to which the
Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter
of Credit Exposure allocable to such Letters of Credit or as to which other arrangements
satisfactory to the Issuing Bank have been made), and the termination of all obligations of the
Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, the termination of all
Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in
respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable Swap
Counterparty has advised the Assignee in writing that it has received other collateral satisfactory
to it), and the termination or expiration of the Revolving Commitments, at which time this
Assignment shall automatically terminate and be of no further force or effect, without any further
action by any party, (b) be binding upon the Assignor and its successors, transferees and assigns,
and (c) inure, together with the rights and remedies of the Assignee hereunder, to the benefit of
and be binding upon, the Assignee and the Lenders and their respective successors, permitted
transferees, and permitted assigns. Without limiting the generality of the foregoing clause, when
any Secured Party assigns or otherwise transfers any interest held by it under the Credit Agreement
or other Loan Document to any other Person pursuant to the terms of the Credit Agreement or such
other Loan Document, that other Person shall thereupon become vested with all the benefits held by
such Secured Party under this Assignment.



 









 





[THE REMAINDER OF THIS PAGE IS LEFT INTENTIONALLY BLANK.]






 









 









     IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed this ___day of
                                         .



	 	 	 	 	 
	 	 	SEAHAWK DRILLING, LLC
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 




The terms and conditions of this Assignment are hereby



ACCEPTED BY:



NATIXIS, NEW YORK BRANCH, as Administrative Agent




	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 







 









 








SCHEDULE I




Description of Vessels




	 	 	 	 	 	 	 
	OWNER	 	VESSEL	 	OFF. NO	 	FLAG OF DOCUMENTATION
	Seahawk Drilling, LLC
	 	Seahawk 2000
	 	1520
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2001
	 	1542
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2002
	 	1521
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2004
	 	1463
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2005
	 	1489
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2007
	 	1721
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2501
	 	1826
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2503
	 	1828
	 	Republic of Vanuatu
	Seahawk Drilling LLC
	 	Seahawk 2504
	 	567686
	 	United States
	Seahawk Drilling, LLC
	 	Seahawk 2505
	 	1829
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2600
	 	1488
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2601
	 	1827
	 	Republic of Vanuatu
	Seahawk Drilling LLC
	 	Seahawk 2602
	 	652045
	 	United States
	Seahawk Drilling, LLC
	 	Seahawk 3000
	 	1830
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 800
	 	1831
	 	Republic of Vanuatu







 









 








Exhibit A




ASSIGNMENT OF [TIME] CHARTER

(this “Assignment”)




[Vessel Name]




     Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), in
consideration of One Dollar and No/100 ($1.00) in lawful money of the United States of America and
for other good and valuable consideration, the receipt of which is hereby acknowledged, has sold,
assigned, transferred and set over, and does hereby sell, assign, transfer and set over unto
Natixis, New York Branch as administrative agent (in such capacity as administrative agent, the
“Assignee”), for the ratable benefit of the Secured Parties defined under that certain
Revolving Credit Agreement dated as of August ___, 2009 (as such agreement may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”) among Seahawk
Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower, certain of its
Subsidiaries as Guarantors, including the Assignor (collectively, with the Assignor, the “Loan
Parties”), the Assignee, as Administrative Agent, and the Lenders, unto the Assignee’s
successors and permitted assigns, to its and its successors’ and permitted assigns’ own proper use
and benefit for all as collateral security for the payment of the Obligations (as defined in the
Credit Agreement), and to secure as well the performance and observance of all agreements,
covenants and provisions contained in this Assignment, the other Loan Documents, and any Swap
Contracts with any Swap Counterparty (as defined in the Credit Agreement), all the right, title and
interest of the Assignor in and to: (i) that certain [Time] Charter Party dated                     , ___,
between the Assignor and [Charterer], a [state of organization] company, as charterer (the
“Charterer”), with respect to the Assignor’s [                    ] flag vessel [vessel name] (said
vessel or any vessel hereafter substituted therefor under said [Time] Charter Party being herein
called the “Vessel”), as said [Time] Charter Party may heretofore or hereafter be amended
from time to time or extended or renewed (said [Time] Charter Party as heretofore or hereafter
amended or extended or renewed being hereinafter called the “Charter”), including, without
limitation, within such assignment the right to receive all moneys due and to become due under the
Charter and all rights arising out of the owner’s lien on cargoes and subfreights thereunder, all
claims for damages arising out of the breach thereof and the right of the Assignor to terminate the
Charter, to perform thereunder and to compel performance of the terms thereof; and (ii) all moneys
and claims for moneys due and to become due to the Assignor, and all claims for damages and all
insurance and other proceeds in respect of, the actual or constructive loss of, or the requisition
(whether of title or use), condemnation, sequestration, seizure, forfeiture or other taking of, the
Vessel.



     It is expressly agreed that anything herein contained to the contrary notwithstanding, (i) the
Assignor shall remain liable under the Charter to perform all the obligations assumed by it
thereunder, (ii) the obligations of the Assignor under the Charter may be performed by the Assignee
or its nominee or other permitted assignee from the Assignee without releasing the Assignor
therefrom and (iii) the Assignee shall have no obligation or liability under the Charter by reason
of, or arising out of, this Assignment and shall not be obligated to perform any of the obligations
of the Assignor under the Charter, or to make any payment or to make any inquiry of



 









 







the sufficiency of any payment received by it, or to present or file any claim or to take any
other action to collect or enforce any payment assigned hereunder.



     While this Assignment is in effect, the Assignor does hereby constitute the Assignee, its
successors and permitted assigns, the Assignor’s true and lawful attorney, irrevocably and coupled
with an interest, with full power (in the name of the Assignor or otherwise) to, during the period
when an Event of Default is continuing, ask, require, demand, receive, compound and give
acquittance for any and all moneys and claims for money due and to become due under, or arising out
of, the Charter or otherwise assigned hereunder, to endorse any checks or other instruments or
orders in connection therewith and to file any claims or take any action or institute any
proceedings in connection therewith all as and to the extent permitted in the Credit Agreement.



     Notwithstanding anything to the contrary, so long as no Event of Default shall have occurred
and be continuing under the Credit Agreement, the Assignor shall be entitled to receive and retain
any and all moneys otherwise assigned hereunder. If an Event of Default shall have occurred and
has not been cured or waived, the Assignor shall specifically authorize and direct the Charterer or
other obligor to make payment of all of the moneys hereby assigned directly to the Assignee in
accordance with the Credit Agreement and the other Loan Documents, and shall use commercially
reasonable efforts to deliver to the Assignee the written acknowledgment of the Charterer or
obligor of such instructions.



     The Assignor agrees that at any time and from time to time, upon the written request of the
Assignee, the Assignor will promptly and duly execute and deliver any and all such further
instruments and documents as the Assignee may reasonably request or as shall be necessary for the
Assignee to obtain the full benefits of this Assignment and of the rights and powers herein
granted, including, without limitation, the execution and delivery of such Uniform Commercial Code
financing and continuation statements and the filing thereof in such jurisdictions as shall be
appropriate. To the extent permitted by applicable law, the Assignor hereby authorizes the
Assignee to execute and file any such financing or continuation statements without necessity of the
signature of the Assignor.



     The Assignor does hereby represent and warrant that the Charter is in full force and effect
and is enforceable in accordance with the terms thereof, that the Assignor is not in default
thereunder and that to Assignor’s knowledge, the Charterer has no claims against the Assignor
thereunder. The Assignor does hereby further represent and warrant that at present there is not in
effect any assignment or pledge of, and hereby covenants that the Assignor will not assign, pledge,
or (other than Excepted Liens) suffer to exist any lien, charge, security interest, or encumbrance,
or any other type of preferential arrangement, upon or with respect to, so long as this instrument
of Assignment shall remain in effect, the whole or any part of the rights hereby assigned, to
anyone other than the Assignee, its successors or permitted assigns.



     This Assignment shall create a continuing security interest and shall (a) remain in full
force and effect until the earlier to occur of (i) the date prior to or upon which all of the
following shall have occurred: (A) payment in full in cash of the Obligations (other than
contingent indemnification obligations of which no Secured Party has knowledge), (B) the
termination or expiration of all Letters of Credit and the termination of all obligations of the
Issuing Bank and



 









 







the Lenders in respect of Letters of Credit, (C) the termination of all Swap Contracts with
any Swap Counterparty and the termination of all obligations of Lenders in respect of Swap
Contracts, and (D) the termination or expiration of the Revolving Commitments, and (ii) the
termination of the Charter, at which time this Assignment shall automatically terminate, and be of
no further force or effect, without any further action by any party, (b) be binding upon the
Assignor and its successors, transferees and assigns that are permitted pursuant tot the terms of
the Credit Agreement, and (c) inure, together with the rights and remedies of the Assignee
hereunder, to the benefit of and be binding upon, the Assignee and the Lenders and their respective
successors, permitted transferees, and permitted assigns. Without limiting the generality of the
foregoing clause, when any Secured Party assigns or otherwise transfers any interest held by it
under the Credit Agreement or other Loan Document to any other Person pursuant to the terms of the
Credit Agreement or such other Loan Document, that other Person shall thereupon become vested with
all the benefits held by such Secured Party under this Assignment.



     This Assignment and the Agreement and Consent to Assignment annexed hereto may be executed by
the Assignor and the Charterer under the Charter in separate counterparts without in any way
adversely affecting the validity of said Agreement and Consent to Assignment. Prior to entering
into the Charter, the Assignor has caused the Charterer to execute and deliver to the Assignee such
Agreement and Consent to Assignment.



     This Assignment shall be governed by and construed in accordance with the laws of the State of
New York and the United States of America, without regard to its conflict of laws rules (other than
Section 5-1401 of the New York General Obligations Law). Each of the Assignor and the Assignee
hereby irrevocably submits itself to the non-exclusive jurisdiction of any New York State or
Federal court sitting in New York County and any appellate court from any thereof, for the purposes
of (and solely for the purposes of) any suit, action or other proceeding arising out of, or
relating to, this Assignment or any of the transactions contemplated hereby. The Assignor
irrevocably agrees that all claims in respect of such action or proceeding may be heard in such New
York State or Federal court and hereby irrevocably waives, and agrees not to assert, by way of
motion, as a defense, or otherwise, in any such suit, action or proceeding, any claim that it is
not personally subject to the jurisdiction of the above-named courts for any reason whatsoever,
that such suit, action or proceeding is brought in an inconvenient forum, or that the venue of such
suit, action or proceeding is improper, or that this Assignment or the subject matter hereof may
not be enforced in or by such courts. Each of the Assignor and Assignee irrevocably consents to
the service of any and all process in any suit, action or proceeding arising out of or relating to
any other Loan Document to which such Person is a party by the mailing of copies of such process to
such Person at its address specified in the Credit Agreement. Each of the Assignor and the
Assignee agrees that a final judgment in any such action, suit or proceeding shall be conclusive
and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided
by law. Nothing in this paragraph shall affect the right of the Assignee or the Assigneor to serve
legal process in any other manner permitted by law or affect the right of such Person to bring any
action or proceeding against the Assignor or the Assignee, as the case may be, or its property in
the courts of any other jurisdiction.



     Capitalized terms used herein and not otherwise defined shall be used herein as defined in the
Credit Agreement.



 









 





     BY ITS SIGNATURE BELOW WRITTEN EACH OF THE ASSIGNOR AND THE ASSIGNEE HEREBY IRREVOCABLY WAIVES
UNDER APPLICABLE LAW ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING
OUT OF OR RELATING TO THIS ASSIGNMENT, THE CREDIT AGREEMENT, THE MORTGAGE, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.



[Remainder of page intentionally left blank]




 









 





     IN WITNESS WHEREOF, the Assignor has caused this instrument of Assignment to be duly executed
as of the [                    ] day of [                    ], 20_.



	 	 	 	 	 
	 	 	SEAHAWK DRILLING, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 






 









 








Exhibit B




Notice of Assignment of [Time] Charter




and




AGREEMENT AND CONSENT TO ASSIGNMENT




To: [Charterer]




[VESSEL NAME]



We refer to the [time] charter party dated                     ,                     , as amended, made between us, Seahawk
Drilling, LLC, a Delaware limited liability company (the “Assignor”), and you, [Charterer],
by which we agreed to let and you agreed to take on [time] charter for the period and on the terms
and conditions set out in the Charter the [Vessel Name] of about [                    ] net tons and [                    ] gross
tons registered in our name under the [                    ] flag.



We hereby give you notice of the following, and you by your execution and delivery of this
Agreement and Consent to Assignment hereby agree to the following:





	1.	 	By an assignment (the “Assignment”, the defined terms therein being used herein as
therein defined) dated                      (a copy of which is attached hereto) made between us and
the Administrative Agent referred to therein, we have, as collateral security for the payment
and performance of certain obligations from time to time owned and owing to the Administrative
Agent and certain other entities, sold, assigned, transferred and set over unto the
Administrative Agent all our right, title and interest in and to the Charter (as such term is
defined in the attached Assignment) and in and to certain moneys and claims for moneys due and
to become due to us (all as more fully described in the Assignment).
	 
	2.	 	You are hereby irrevocably authorized and instructed, upon your receipt of written notice
from the Administrative Agent an Event of Default is continuing, to pay, and agree that you
will make payment of, all such moneys payable by you under the Charter to such place as the
Administrative Agent may from time to time direct.
	 
	3.	 	We shall remain liable to perform all our obligations under the Charter and the
Administrative Agent shall not be under any obligation under the Charter, but should the
Administrative Agent exercise its right to perform, or cause performance by its designee of,
our obligations under the Charter, you agree, without thereby releasing us from our
obligations under the Charter, to accept such performance.
	 
	4.	 	You consent to such assignment, and agree that, upon receipt of written notice from the
Administrative Agent, you will make payment of all moneys due and to become due under the
Charter, without setoff or deduction for any claim not arising under the Charter, direct to
the account specified by the Administrative Agent at such address as the Administrative Agent
shall request the undersigned in writing until receipt of written notice from the
Administrative Agent that all obligations of the Assignor to it have been paid in full. You
agree that you shall not seek the recovery of any payment actually made




 









 






	 	 	by you to the Administrative Agent pursuant to this Agreement and Consent to Assignment once
such payment has been made. You hereby waive the right to assert against the Administrative
Agent, as assignee of the Assignor, any claim, defense, counterclaim or setoff that you
could assert against the Assignor under the Charter. This provision shall not be construed
to relieve the Assignor of any liability to the Charterer.






	5.	 	You agree that the Administrative Agent shall be entitled to exercise any and all rights and
remedies of the Assignor under the Charter in accordance with the terms of the Assignment and
under the First Preferred Fleet Mortgage dated                     , ___, 2009 (the “Mortgage”) by
the Assignor to Natixis, New York Branch, as Administrative Agent, and you shall comply in all
respects with such exercise. You agree that the Charter, including, without limitation, all
of your liens thereunder, shall be subordinated in all respects to the lien of the Mortgage in
favor of the Administrative Agent and or trustee on the Vessel, and, at the option of the
Administrative Agent, foreclosure under the Mortgage shall terminate such Charter and such
liens and divest you and your subcharterers of all right, title and interest in and to the
Vessel. You agree that each subcharter of the Vessel shall be subordinate in all respects to
the lien of the Mortgage.






	6.	 	You hereby agree that, so long as the Obligations shall be outstanding:






	 	(a)	 	Upon the request of the Administrative Agent from time to time, you shall
provide to the Administrative Agent such information as the Administrative Agent may
reasonably request regarding the Vessel and its use, including but not limited to the
terms of each subcharter thereof, the subcharter party, the routes plied and to be
plied by such Vessel and its scheduled arrival and departure from each port on such
route.
	 
	 	(b)	 	You covenant and agree with the Administrative Agent that you will (i) duly
perform and observe all of the terms and provisions of any charter or contract of
affreightment on your part to be performed or observed; and (ii) clearly record on your
books and records notations of the Assignment.
	 
	 	(c)	 	At any time and from time to time, upon the written request of the
Administrative Agent, you shall promptly and duly execute and deliver any and all such
further instruments and documents as the Administrative Agent may reasonably request in
order to carry out the terms of the Assignment.
	 
	 	(d)	 	Whenever requested by the Administrative Agent, you shall deliver letters to
each of your agents and representatives into whose hands or control may come any
earnings, moneys and property assigned by the Assignment, informing each such addressee
of such assignments and, if you have been notified by Administrative Agent that any
Event of Default has occurred, instructing such addressee to remit or deliver promptly
to the Administrative Agent all earnings, moneys and property hereby assigned which may
come into the addressee’s hands or control and to continue to make such remittances or
delivery until such time as the addressee may receive written notice or instructions to
the contrary directly from the Administrative Agent. You shall instruct each such
addressee to acknowledge




 









 






	 	 	 	directly to the Administrative Agent receipt of your letter of notification and
instructions.






	7.	 	Your acknowledgement and consent hereunder, and your agreements herein contained, are for the
benefit of the Administrative Agent and the Secured Parties and shall be enforceable by the
Administrative Agent for its benefit and the benefit of the Secured Parties.
	 
	8.	 	This Assignment shall create a continuing security interest and shall (a) remain in full
force and effect until the earlier to occur of (i) notification to you from the Administrative
Agent that the payment in full in cash of the Obligations, the termination or expiration of
all Letters of Credit that are not fully secured in such amounts as may be required by the
Credit Agreement and the termination or expiration of the Revolving Commitments, and (ii) the
termination of the Charter, at which time the Assignment shall automatically terminate, and be
of no further force or effect, without any further action by any party, (b) be binding upon
the Assignor and its successors, transferees and assigns, and (c) inure, together with the
rights and remedies of the Assignee hereunder, to the benefit of and be binding upon, the
Assignee and the Lenders and their respective successors, permitted transferees, and permitted
assigns. Without limiting the generality of the foregoing clause, when any Secured Party
assigns or otherwise transfers any interest held by it under the Credit Agreement or other
Loan Document to any other Person pursuant to the terms of the Credit Agreement or such other
Loan Document, that other Person shall thereupon become vested with all the benefits held by
such Secured Party under this Assignment.




The authorizations and instructions by us in this Agreement and Consent to Assignment cannot be
revoked or varied by us without the Administrative Agent’s prior written consent.




[THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]




 









 








For and on behalf of:




	 	 	 	 	 
	 	 	SEAHAWK DRILLING, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	Dated:	 	 
	 

	 	 	 	 






 









 








To: SEAHAWK DRILLING,LLC AND NATIXIS, NEW YORK BRANCH



In consideration of the [Time] Charter, and for other good and valuable consideration, the receipt
of which is hereby acknowledged, we hereby agree to the terms set out above and consent to, and
agree to be bound by, the Assignment.




For and on behalf of




	 	 	 	 	 
	 	 	[CHARTERER]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





Dated:




 









 








EXHIBIT C

FORM OF ASSIGNMENT OF INSURANCE

(this “Assignment”)




     Seahawk Drilling, LLC, a Delaware limited liability company (the “Assignor”), the
owner of the vessels listed on Schedule I attached hereto (the “Vessels”), in consideration
of One Dollar and no/100 ($1.00) in lawful money of the United States of America and other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, has sold,
assigned, transferred and set over, and by this instrument does sell, assign, transfer and set over
unto Natixis, New York Branch, as administrative agent (in such capacity as administrative agent,
the “Assignee”), for the ratable benefit of the Secured Parties defined under that certain
Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or
otherwise modified and in effect from time to time, the “Credit Agreement”) among Seahawk
Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower, certain of its
Subsidiaries as Guarantors, including the Assignor (collectively with the Borrower, the “Loan
Parties”), the Assignee, as Administrative Agent, and the Lenders (as defined therein), and
unto the Assignee’s successors and permitted assigns, to its and its successors’ and permitted
assigns’ own proper use and benefit, and, as security for the payment of the Obligations (as
defined in the Credit Agreement), and to secure as well the performance and observance of all
agreements, covenants and provisions contained in this Assignment, the other Loan Documents and any
Swap Contracts with any Swap Counterparty (as defined in the Credit Agreement), all right, title
and interest of the Assignor under, in and to (i) all insurance policies and contracts of insurance
in respect of the Vessels, whether heretofore, now or hereafter effected, and all renewals of or
replacements for the same (the “Insurances”), (ii) all claims, returns of premium and other
moneys and claims for moneys due and to become due under or in respect of the Insurances, (iii) all
other rights of the Assignor under or in respect of the Insurances to the extent transferable and
(iv) any proceeds of any of the foregoing, save and except from the scope of the preceding clauses
(i) through (iii), any of the same that does not constitute Collateral as defined in the Security
Agreement, and as so defined, herein so used. Capitalized terms used herein and not otherwise
defined are used herein as defined in the Credit Agreement.



     Section 1. Representations, Warranties and Covenants. The Assignor covenants and
agrees that it will receive substantial, direct and indirect, benefits through the extension of
credit to the Borrower under the terms of the Credit Agreement and related documents and that such
transactions and documents are necessary or convenient to the conduct, promotion or attainment of
the Assignor’s business. The Assignor hereby warrants and represents that each of the Insurances
is in full force and effect and is enforceable in accordance with its terms, and that the Assignor
is not in default thereunder. The Assignor hereby further warrants and represents that it has not
assigned, pledged or in any way created or (other than Excepted Liens) suffered to be created any
security interest in the whole or any part of the right, title and interest hereby assigned, except
for the assignment to the Assignee. The Assignor hereby covenants that, without the prior written
consent thereto of the Assignee, so long as this Assignment shall remain in effect, it will not
assign or pledge the whole or any part of the right, title and interest hereby assigned to anyone
other than the Assignee, its successors or permitted assigns, and it will not take or omit to take
any action, the taking or omission of which might result in an alteration or



Exhibit C — Form of Assignment of Insurance

        Page 1 of 8


 









 







impairment of the Insurances in any material respect, or of this Assignment or of any of the
rights created by the Insurances or this Assignment.



     The Assignor hereby further covenants and agrees to procure that notice of this Assignment
shall be duly given to all underwriters and insurers and that where the consent of any underwriter
is required pursuant to any of the Insurances assigned hereby the Assignor shall obtain such
consent and evidence thereof, which evidence shall be given to the Assignee, or, in the
alternative, that in the case of protection and indemnity coverage the Assignor shall obtain, with
the Assignee’s approval (which approval shall not be unreasonably withheld), a letter of
undertaking by the underwriters or clubs, and that there shall be duly endorsed upon all slips,
cover notes, policies, certificates of entry or other instruments issued or to be issued in
connection with the Insurances assigned hereby such clauses as to additional assured or loss payees
as the Assignee may reasonably require or approve. In all cases (except in the case of protection
and indemnity coverage), unless otherwise agreed in writing by the Assignee (which agreement shall
not be unreasonably withheld), Assignor shall cause such slips, cover notes, notices, certificates
of entry or other instruments to show the Assignee as additional assured and Assignor shall cause
such policies to provide that there will be no recourse against the Assignee for payment of
premiums, calls or assessments.



     The Assignor agrees that at any time and from time to time, upon the written request of the
Assignee, its successors and permitted assigns, the Assignor will promptly and duly execute and
deliver any and all such further instruments and documents as the Assignee, its successors and
permitted assigns may reasonably request in order to obtain the full benefits of this Assignment
and of the rights and powers herein granted.



     Any payments made pursuant to the terms hereof shall be made to such account as may, from time
to time, be designated by the Assignee and shall be applied in accordance with the provisions of
the Credit Agreement.



     Section 2. Freedom of Assignee from Obligations. It is hereby expressly agreed that
anything herein contained to the contrary notwithstanding, the Assignor shall remain liable under
the Insurances to perform all of the obligations assumed by it thereunder and the Assignee shall
have no obligation or liability (including, without limitation, any obligation or liability with
respect to the payment of premiums, calls or assessments) under the Insurances by reason of or
arising out of this Assignment, nor shall the Assignee be required or obligated in any manner to
perform or fulfill any obligations of the Assignor under or pursuant to the Insurances or to make
any payment or to make any inquiry as to the nature or sufficiency of any payment received by the
Assignee or to present or file any claim, or to take any other action to collect or enforce the
payment of any amounts which may have been assigned to it or to which it may be entitled hereunder
at any time or times.



     Section 3. Power of Attorney; Financing Statements. The Assignee, its successors and
permitted assigns, are hereby constituted lawful attorneys, irrevocably and coupled with an
interest, with full power (in the name of the Assignor or otherwise) to ask, require, demand,
receive, compound and give acquittance for any and all moneys and claims for moneys due and to
become due under or arising out of the Insurances, to endorse any check or other instruments or
orders in connection therewith and to file any claims or take any action or institute any


 Exhibit C — Form of Assignment of Insurance

        Page 2 of 8



 









 







proceedings which the Assignee may deem to be necessary or advisable in the premises, subject,
where applicable, to the terms of Section 5.04(d)(iv) of the Credit Agreement. Any action
or proceeding brought by the Assignee pursuant to any of the provisions hereof or of the Insurances
or otherwise, and any claim made by the Assignee hereunder or under the Insurances, may be
compromised, withdrawn or otherwise dealt with by the Assignee without any notice to, or approval
of the Assignor if an Event of Default has occurred and is continuing. The Assignor hereby
irrevocably authorizes the Assignee, at the Assignor’s expense, to file, at any time and from time
to time, such financing and continuation statements or papers of similar purpose or effect relating
to this Assignment, without the Assignor’s signature, as the Assignee at its option may deem
appropriate and appoints the Assignee as the Assignor’s attorney-in-fact to execute any such
statements in the Assignor’s name and to perform all other acts which the Assignee may deem
appropriate to perfect and continue the security interests conferred hereby.



     Section 4. Irrevocable Assignment. The powers and authority granted to the Assignee
herein have been given for a valuable consideration and are hereby declared to be irrevocable and
may not be amended or waived except by an instrument in writing signed by the party against whom
enforcement is sought.



     Section 5. Conditions of Assignment. Unless and until an Event of Default shall have
occurred and be continuing under the Credit Agreement, the Assignor shall be entitled to exercise
all its rights under the Insurances (subject to the provisions of this Assignment) in all respects
as if this Assignment had not been made.



     Section 6. Governing Law.



          (a) This Assignment shall be construed in accordance with and governed by the laws of the
State of New York, United States of America, without regard to its conflict of laws rules (other
than Section 5-1401 of the New York General Obligations Law). Each of the Assignor and the
Assignee hereby irrevocably submits itself to the non-exclusive jurisdiction of any court of the
state of New York sitting in New York City or of the United States of America for the Southern
district of such state, and any appellate court from any thereof, for the purposes of (and solely
for the purposes of) any suit, action or other proceeding arising out of, or relating to, this
Assignment or any of the transactions contemplated hereby, hereby irrevocably agrees that all
claims in respect of such action or proceeding may be heard in such New York State or Federal court
and hereby irrevocably waives, and agrees not to assert, by way of motion, as a defense, or
otherwise, in any such suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of the above-named courts for any reason whatsoever, that such suit, action or
proceeding is brought in an inconvenient forum, or that the venue of such suit, action or
proceeding is improper, or that this Assignment or the subject matter hereof may not be enforced in
or by such courts. Each of the Assignor and the Assignee irrevocably consents to the service of
any and all process in any such suit, action or proceeding by the mailing of copies of such process
to such Person at its address specified in Section 10.02 of the Credit Agreement. Each of the
Assignor and Assignee agrees that a final judgment in any such action, suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this paragraph shall affect the right of the Assignee or the
Assignor to serve legal process in any other manner permitted by law or affect the right of



Exhibit C — Form of Assignment of Insurance

        Page 3 of 8



 









 




such Person to bring any action or proceeding against the Assignor or the Assignee, as the
case may be, or its property in the courts of any other jurisdiction.




          (b) BY ITS SIGNATURE BELOW WRITTEN THE ASSIGNOR HEREBY IRREVOCABLY WAIVES UNDER APPLICABLE LAW
ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT,
TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS ASSIGNMENT, THE CREDIT AGREEMENT OR THE
MORTGAGES OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.




     Section 7. Notices. All notices and other communications hereunder shall be in
writing and shall be mailed, sent or delivered in accordance with Section 10.02 of the Credit
Agreement.



     Section 8. Headings. The division of this Assignment into sections and the insertion
of headings are for convenience of reference only and shall not affect the interpretation or
construction of this Assignment.



     Section 9. Termination. This Assignment shall create a continuing security interest
and shall (a) remain in full force and effect until the payment in full in cash of the Obligations
(other than contingent indemnification obligations of which no Secured Party has knowledge), the
termination or expiration of all Letters of Credit (other than Letters of Credit as to which the
Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter
of Credit Exposure allocable to such Letters of Credit or as to which other arrangements
satisfactory to the Issuing Bank have been made), and the termination of all obligations of the
Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, the termination of all
Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in
respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable Swap
Counterparty has advised the Assignee in writing that it has received other collateral satisfactory
to it), and the termination or expiration of the Revolving Commitments, at which time this
Assignment shall automatically terminate, and be of no further force or effect, without any further
action by any party, (b) be binding upon the Assignor and its successors, transferees and assigns,
and (c) inure, together with the rights and remedies of the Assignee hereunder, to the benefit of
and be binding upon, the Assignee and the Lenders and their respective successors, permitted
transferees, and permitted assigns. Without limiting the generality of the foregoing clause, when
any Secured Party assigns or otherwise transfers any interest held by it under the Credit Agreement
or other Loan Document to any other Person pursuant to the terms of the Credit Agreement or such
other Loan Document, that other Person shall thereupon become vested with all the benefits held by
such Secured Party under this Assignment.



[Remainder of page intentionally left blank]



Exhibit C — Form of Assignment of Insurance

        Page 4 of 8




 









 





     IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed this ___day of
                    , 20_.



	 	 	 	 	 
	 	 	SEAHAWK DRILLING, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 




The terms and conditions of
this Assignment are hereby



ACCEPTED BY:



NATIXIS, NEW YORK BRANCH, as Administrative Agent




	 	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	Name:

	 	 

	 	 
	Title:

	 	 

	 	 
	 

	 	 

	 	 





Exhibit C — Form of Assignment of Insurance

        Page 5 of 8




 









 








SCHEDULE I




Description of Vessels




	 	 	 	 	 	 	 
	OWNER	 	VESSEL	 	OFF. NO	 	FLAG OF DOCUMENTATION
	Seahawk Drilling, LLC
	 	Seahawk 2000
	 	1520
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2001
	 	1542
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2002
	 	1521
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2004
	 	1463
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2005
	 	1489
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2007
	 	1721
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2501
	 	1826
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2503
	 	1828
	 	Republic of Vanuatu
	Seahawk Drilling LLC
	 	Seahawk 2504
	 	567686
	 	United States
	Seahawk Drilling, LLC
	 	Seahawk 2505
	 	1829
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2600
	 	1488
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 2601
	 	1827
	 	Republic of Vanuatu
	Seahawk Drilling LLC
	 	Seahawk 2602
	 	652045
	 	United States
	Seahawk Drilling, LLC
	 	Seahawk 3000
	 	1830
	 	Republic of Vanuatu
	Seahawk Drilling, LLC
	 	Seahawk 800
	 	1831
	 	Republic of Vanuatu






 Exhibit C — Form of Assignment of Insurance

        Page 6 of 8



 









 








NOTICE OF ASSIGNMENT




To Whom It May Concern:




     Seahawk Drilling, LLC, a Delaware limited liability company, (the “Owner”), owner of
the vessels listed on Schedule I attached hereto (the “Vessels”), HEREBY GIVES NOTICE that
by an Assignment of Insurance dated August ___, 2009 and made by the Owner to Natixis, New York
Branch as administrative agent (in such capacity as administrative agent, the “Assignee”),
pursuant to, and for the ratable benefit of the Secured Parties as defined under, that certain
Revolving Credit Agreement dated as of August ___, 2009 (and as such agreement may be amended,
supplemented or otherwise modified from time to time, the “Credit Agreement”), among
Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower, certain of
its Subsidiaries as Guarantors, including the Owner, the Assignee, as Administrative Agent, and the
Lenders, the Owner assigned to the Assignee all of the Owner’s right, title and interest in and to
all insurances and the benefit of all insurances heretofore, now or hereafter taken out in respect
of the Vessels. This Notice and the attached Loss Payable Clause are to be endorsed on all
policies and certificates of entry evidencing such insurances. Capitalized terms used herein and
not otherwise defined are used herein as defined in the Credit Agreement.



	 	 	 	 	 
	 	 	SEAHAWK DRILLING, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 





 Exhibit C — Form of Assignment of Insurance

        Page 7 of 8



 









 








LOSS PAYABLE CLAUSES1




     Loss, if any, payable to Natixis, New York Branch, in its capacity as Administrative Agent (in
such capacity as administrative agent, the “Assignee”), pursuant to, and for the ratable benefit of
the Secured Parties (as defined under that certain Revolving Credit Agreement dated as of August
___, 2009 (as such agreement may be amended, restated, supplemented or otherwise modified and in
effect from time to time, the “Credit Agreement”) among Seahawk Drilling, Inc., a Delaware
corporation (“the Borrower”), certain of its Subsidiaries as Guarantors, including Seahawk
Drilling, LLC, a Delaware limited liability company (the “Assignor”), the Lenders party thereto
from time to time, and the Assignee, as Administrative Agent for distribution by it first to the
Assignee in its capacity as Administrative Agent and then to the Assignor, except that, unless the
underwriters receive written notice from the Administrative Agent that an Event of Default has
occurred and is continuing, in the case of any loss involving any damage to any Vessel or liability
of any Vessel, the underwriters may pay directly for the repair, salvage, liability or other
charges involved or, if the Assignor shall have first fully repaired the damage and paid the cost
thereof, or discharged the liability or paid all of the salvage or other charges, then the
underwriters may pay the Assignor as reimbursement therefor, provided, however, that if such damage
involves a loss in excess of U.S. $50,000,000.00 or its equivalent the underwriters shall not make
such payment without first obtaining the written consent thereto of the Assignee.



     In the event of an actual or constructive total loss or a compromised or arranged total loss
or requisition of title, all insurance payments therefor shall be paid to the Assignee, for
distribution by it in accordance with the terms of the Credit Agreement.



     Capitalized terms used herein and not otherwise defined are used herein as defined in the
Credit Agreement.





 




			
	1	 	Subject to review by insurance broker.



 Exhibit C — Form of Assignment of Insurance

        Page 8 of 8



 









 













EXHIBIT D

FORM OF BORROWING BASE REPORT




[For Month Ended                                         ]





     This certificate dated as of                                         ,                      is prepared pursuant to the Revolving
Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise
modified and in effect from time to time, the “Credit Agreement”) among Seahawk Drilling,
Inc., a Delaware corporation (the “Borrower”), certain of its Subsidiaries as Guarantors,
the lenders party thereto (the “Lenders”), and Natixis, New York Branch, as administrative
agent for such Lenders (in such capacity, the “Administrative Agent”). Unless otherwise
defined in this certificate, capitalized terms that are used herein shall have the meanings
assigned to them by the Credit Agreement.



     The Borrower hereby certifies that as of the date hereof (a) no Default or Event of Default
has occurred and is continuing, (b) the representations and warranties contained in Article IV of
the Credit Agreement and in each other Loan Document are true and correct in all material respects
(other than those representations and warranties that are subject to a materiality qualifier, in
which case such representations and warranties shall be true and correct in all respects), except
to the extent that such representations and warranties specifically refer to an earlier date, in
which case they are true and correct in all material respects as of such earlier date (other than
those representations and warranties that are subject to a materiality qualifier, in which case
such representations and warranties are true and correct in all respects as of such earlier date),
and (c) the following amounts and calculations were true and correct:



	 	 	 	 	 
	A. Eligible Receivables
	 	 	 	 
	1. Accounts of the Loan Parties
	 	$	                    	 
	2. minus:
	 	 	 	 
	a. Accounts that are not valid, bona fide accounts receivable and contract receivables
	 	$	                    	 
	 
	b. Accounts with respect to which the Administrative Agent does not have an Acceptable
Security Interest
	 	$	                    	 
	 
	c. (i) except with respect to Accounts owing
from PEMEX and its Affiliates, Accounts
not denominated in Dollars (but not
necessarily payable in Dollars), (ii) with
respect to Accounts owing from PEMEX
and its Affiliates, Accounts not denominated
in Dollars
	 	$	                    	 





 Exhibit D — Form of Borrowing Base Report

        Page 1 of  6



 









 







	 	 	 	 	 
	d. Accounts that are owing from any Person
that is a Loan Party or, if not entered into in
compliance with Section 6.08 of the Credit
Agreement, another Affiliate of the Borrower
	 	$	                    	 
	 
	e. Accounts with respect to which an invoice
has not been sent to the applicable Account
Debtor in accordance with the normal and
customary billing practices of such Loan Party
and in any event no later than the 15th day of
the subsequent calendar month in which such
Account arose
	 	$	                    	 
	 
	f. except with respect to accounts owing from
PEMEX and its Affiliates, to the extent that
such Account, together with all other Accounts
owing by such Account Debtor and its
Affiliates as of any date of determination
exceed twenty percent (20%) of all Eligible
Receivables
	 	$	                    	 
	 
	g. with respect to accounts owing from PEMEX
and its Affiliates, to the extent that such Account,
together with all other Accounts owing by
PEMEX and its Affiliates (but not including
Accounts arising from the Pride Tennessee
or the Pride Wisconsin) as of any date of
determination exceed sixty percent (60%)
of all Eligible Receivables unless all of
the Accounts are owing from PEMEX
and its Affiliates, in which case only
sixty percent (60%) of such Accounts shall be
included
	 	$	                    	 
	 
	h. Accounts arising from the Pride Tennessee
or the Pride Wisconsin
	 	$	                    	 
	 
	i. Accounts owing from any Person from which
an aggregate amount of more than twenty-five
percent (25%) of the Accounts owing therefrom are
not Eligible Receivables, by virtue of
non-payment when due other than as a result of a bona
fide dispute with respect thereto which is not
reasonably expected to prejudice payments on
other Accounts from such Person
	 	$	                    	 




 Exhibit D — Form of Borrowing Base Report

        Page 2 of  6



 









 








	 	 	 	 	 
	j. Accounts with respect to which there is any
potential offset or counterclaim or unresolved
dispute with the respective Account Debtor (but
only to the extent of such potential offset or
counterclaim or unresolved dispute)
	 	$	                    	 
	 
	k. Accounts with respect to which the account debtor is any United States Governmental
Authority, unless Borrower has, with respect to such Accounts, complied with the Federal
Assignment of Claims Act of 1940 or any applicable statute or municipal ordinance of similar
purpose and effect
	 	$	                    	 
	 
	l. Accounts with respect to which the Account Debtor is the subject of any bankruptcy
or other insolvency proceeding
	 	$	                    	 
	 
	m. Accounts with respect to which the Account
Debtor’s obligation to pay is not absolute or is
contingent up on the fulfillment of any condition
whatsoever or if Account represents a progress
billing consisting of an invoice for goods sold or
used or services rendered pursuant to a contract
under which the Account Debtor’s obligation to
pay that invoice is subject to Borrower’s
completion of further performance under such
contract or is subject to the equitable lien of a
surety bond issuer
	 	$	                    	 
	 
	n. Accounts with respect to which the Account
Debtor is located in New Jersey, or any other
state denying creditors access to its courts in
the absence of a Notice of Business Activities
Report or other similar filing, unless the
applicable Loan Party has either qualified as a
foreign corporation authorized to transact
business in such state or has filed a Notice of
Business Activities Report or similar filing with
the applicable state agency for the then current
year or has available to it any such other statutory
or legal exemption or exception
	 	$	                    	 
	 
	o. Accounts with respect to which the Account
Debtor is a creditor of any Loan Party unless
such Person has waived any right of setoff in
a manner acceptable to the Administrative
	 	 	 	 





  Exhibit D — Form of Borrowing Base Report

        Page 3 of  6


 









 







	 	 	 	 	 
	Agent; provided, however, that any such
Account shall only be ineligible as to that
portion of such Account which is less than or
equal to the amount owed by such Loan Party
to such Person
	 	$	                    	 
	 
	p. Accounts deemed to be ineligible by the
Administrative Agent in good faith and
in its reasonable credit judgment for which
the Borrower has received written notice
	 	$	                    	 
	 
	3. Eligible Receivables
	 	$	                    	 
	B. Tier 1 Eligible Receivables
	 	 	 	 
	 
	1. Eligible Receivables for which either
	 	 	 	 
	 
	a. the applicable Account Debtor has, or any
Person guaranteeing such Account Debtor’s
obligations under such Eligible Receivable,
an Investment Grade Rating
	 	$	                    	 
	 
	b. Acceptable Credit Support from an Acceptable
Credit Support Provider exists
	 	$	                    	 
	 
	2. minus
	 	 	 	 
	 
	a. Eligible Receivables that are unpaid
more than one hundred twenty (120) days after the
original invoice date
	 	$	                    	 
	 
	3. Tier 1 Eligible Receivables
	 	$	                    	 
	 
	C. Tier 2 Eligible Receivables
	 	 	 	 
	 
	1. Eligible Receivables denominated in Dollars
and for which the Account Debtor is either
	 	 	 	 
	 
	a. organized or incorporated under the
laws of the United States or a State thereof
and the Eligible Receivable is denominated
and payable in Dollars
	 	$	                    	 
	 
	b. PEMEX or any of its Affiliates and the
Eligible Receivable shall be denominated
in Dollars (but not necessarily payable in Dollars)
	 	$	                    	 
	 
	2. minus
	 	 	 	 





  Exhibit D — Form of Borrowing Base Report

        Page 4 of  6


 









 







	 	 	 	 	 
	a. Tier 1 Eligible Receivables
	 	$	                    	 
	 
	b. Eligible Receivables that are unpaid more than
ninety (90) days after the original invoice date
	 	$	                    	 
	 
	3. Tier 2 Eligible Receivables
	 	$	                    	 
	 
	D. Borrowing Base
	 	 	 	 
	 
	1. 80% of Tier 1 Eligible Receivables (80% of B.3)
	 	$	                    	 
	 
	2. 60% of Tier 2 Eligible Receivables (60% of C.3)
	 	$	                    	 
	 
	3. the lesser of (i) 20% of the Orderly Liquidation
Value of the Collateral Rigs (20% of Orderly
Liquidation Value of the Collateral Rigs as set
forth on Schedule I) and (ii) 25,000,000
	 	$	                    	 
	 
	4. 100% of the Discretionary Reserve Amount
	 	$	                    	 
	 
	5. Borrowing
Base equals D.1 + D.2 + D.3 - D.4
	 	$	                    	 
	 
	E. Availability
	 	 	 	 
	 
	1. Borrowing Base (D.5)
	 	$	                    	 
	 
	2. the Revolving Commitments
	 	$	                    	 
	 
	3. the Fixed Charge Coverage Cap, if applicable
	 	$	                    	 
	 
	4. the sum of the outstanding principal amount of
Revolving Advances and the Letter of Credit
Exposure
	 	$	                    	 
	 
	5. Availability equals (the lesser of E.1, E.2 and E.3)/E.4
	 	$	                    	 






     IN WITNESS WHEREOF, I have hereto signed my name to this Borrowing Base Report as of                     ,                     .



	 	 	 	 	 
	 	 	SEAHAWK DRILLING, INC.
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 

	 	 	 	 




  Exhibit D — Form of Borrowing Base Report

        Page 5 of  6


 









 








SCHEDULE II




To the Form of Borrowing Base

($ in the 000’s)




Orderly Liquidation Value of the Collateral Rigs

(in accordance with the definition of Orderly Liquidation Value

as set forth in the Credit Agreement)




	 	 	 	 	 	 	 
	 	 	 	 	Casualty Event or	 	Orderly
	 	 	Value (establishd by	 	Asset Disposition since	 	Liquidation Value
	 	 	most recent Appraisal	 	most recent Appraisal	 	(Colum 2)-
	Name of Rig	 	Report)	 	Report	 	Colum 3)
	Seahawk 2000
	 	 
	 	 
	 	 
	Seahawk 2001	 	 	 	 	 	 
	Seahawk 2002	 	 	 	 	 	 
	Seahawk 2004	 	 	 	 	 	 
	Seahawk 2005	 	 	 	 	 	 
	Seahawk 2007	 	 	 	 	 	 
	Seahawk 2501	 	 	 	 	 	 
	Seahawk 2503	 	 	 	 	 	 
	Seahawk 2504	 	 	 	 	 	 
	Seahawk 2505	 	 	 	 	 	 
	Seahawk 2600	 	 	 	 	 	 
	Seahawk 2601	 	 	 	 	 	 
	Seahawk 2602	 	 	 	 	 	 
	Seahawk 3000	 	 	 	 	 	 
	Seahawk 800	 	 	 	 	 	 






Orderly Liquidation Value of Collateral Rigs (Sum of Amounts in Column 4):                                        



 Exhibit D — Form of Borrowing Base Report

        Page 6 of  6



 











 





EXHIBIT E

FORM OF COMPLIANCE CERTIFICATE




[For Fiscal Quarter Ended                      ]

[For Fiscal Year Ended                      ] (“Calculation Period”)




     This certificate dated as of                     , ___is prepared pursuant to the Revolving
Credit Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise
modified and in effect from time to time, the “Credit Agreement”) among Seahawk Drilling,
Inc., a Delaware corporation ( the “Borrower”), certain of its Subsidiaries as Guarantors,
the Lenders, and Natixis, New York Branch, as Administrative Agent. Unless otherwise defined in
this certificate, capitalized terms that are used herein shall have the meanings assigned to them
by the Credit Agreement.



     The Borrower hereby certifies that as of the date hereof (a) no Default or Event of Default
has occurred and is continuing, (b) the representations and warranties contained in Article IV of
the Credit Agreement and in each other Loan Document are true and correct in all material respects
(other than those representations and warranties that are subject to a materiality qualifier, in
which case such representations and warranties shall be true and correct in all respects), except
to the extent that such representations and warranties specifically refer to an earlier date, in
which case they are true and correct in all material respects as of such earlier date (other than
those representations and warranties that are subject to a materiality qualifier, in which case
such representations and warranties are true and correct in all respects as of such earlier date),
and (c) as of the end of the previous fiscal quarter (the “Subject Date”), the following
amounts and calculations were true and correct:



A. Section 6.14 — Maximum Capital Expenditures




	 	 	 	 	 	 	 
	 
	 	1.	 	Capital Expenditures made or legally obligated	 	 
	 
	 	 	 	to be made to date during this fiscal year in	 	 
	 
	 	 	 	respect of the purchase or other acquisition of	 	 
	 
	 	 	 	any fixed or capital asset (excluding normal	 	 
	 
	 	 	 	replacements, improvements and maintenance	 	 
	 
	 	 	 	which are properly charged to current operations):	 	$                     
	 
	 	 	 	 	 	 
	 
	 	2.	 	Maximum permitted during the term of the	 	 
	 
	 	 	 	Credit Agreement:	 	$20,000,0001
	 
	 	 	 	 	 	 
	 
	 	 	 	Compliance	 	Yes      No






B. Section 6.17(a) — Minimum Fixed Charge Coverage Ratio2






 




			
	1	 	Subject to increase pursuant to Section 6.14 of the
Credit Agreement.
	 
	2	 	To be tested only if at any time Revolving Advances or
Letters of Credit are outstanding and the sum of the Availability plus
unrestricted cash is less than $25,000,000.





Exhibit E — Form of Compliance Certificate

Page 1 of 10




 









 





	 	 	 	 	 	 	 	 	 
	 

	 	 	1.	 	 	Consolidated EBITDA of the Borrower and its
Subsidiaries as of the Subject Date (as set forth
on Schedule I hereto):
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	2.	 	 	Foreign, federal, state and local income taxes of the
Borrower and its Subsidiaries on a consolidated
basis paid in cash during such period:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	3.	 	 	Consolidated Interest Expense, paid in cash3, of
the Borrower and its Subsidiaries
on a consolidated basis for such period:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	4.	 	 	All Maintenance Capital Expenditures of the
Borrower and its Subsidiaries on a consolidated
basis during such period:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	5.	 	 	Fixed Charge Coverage Ratio

(Line 1 ÷ (Line 2 + Line 3 + Line 4)):	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	6.	 	 	Minimum required:
	 	2.00 to 1.00
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Compliance
	 	Yes       No






C. Section 6.17(b) — Minimum Security Maintenance Ratio




	 	 	 	 	 	 	 	 	 
	 

	 	 	1.	 	 	Orderly Liquidation Value of the Collateral
Rigs as of the Subject Date (set forth on
Schedule II hereto):
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	2.	 	 	The sum of the outstanding principal amount
of Revolving Advances and the Letter of
Credit Exposure, in each case, as of the
Subject Date:
	 	$                     








 




			
	3	 	with respect to each quarterly period ending on or
after September 30, 2009, Consolidated Interest Expense paid in cash will be
determined as follows: (i) for the fiscal quarter ending September 30, 2009,
Consolidated Interest Expense paid in cash shall be computed by adding (A) the
Consolidated Interest Expense paid in cash for the two fiscal quarters ending
June 30, 2009 as set forth in the Pro Forma Financial Statements for such
period plus (B) the product of the Consolidated Interest Expense paid
in cash for the fiscal quarter ending September 30, 2009 multiplied by 2, (ii)
for the fiscal quarter ending December 31, 2009, Consolidated Interest Expense
paid in cash shall be computed by adding (A) the Consolidated Interest Expense
paid in cash for the two fiscal quarters ending June 30, 2009 as set forth in
the Pro Forma Financial Statements for such period plus (B) the
Consolidated Interest Expense paid in cash for the two fiscal quarters ending
December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010,
Consolidated Interest Expense paid in cash shall be computed by adding (A) the
Consolidated Interest Expense paid in cash for the fiscal quarter ending June
30, 2009 as set forth in the Pro Forma Financial Statements for such period
plus (B) the Consolidated Interest Expense paid in cash for the three
fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter ending
thereafter, Consolidated Interest Expense paid in cash shall be computed by
adding the Consolidated Interest Expense paid in cash for the four fiscal
quarters ending on such date



 Exhibit E — Form of Compliance Certificate

Page 2 of 10




 









 











	 	 	 	 	 	 	 
	 
	 	3.	 	Security Maintenance Ratio (Line 1 ÷ Line 2):	 	                    
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 
	 	4.	 	Minimum required:	 	3.00 to 1.00
	 
	 	 	 	 	 	 
	 
	 	 	 	Compliance	 	Yes       No






D. Section 6.17(c) — Minimum Working Capital Ratio




	 	 	 	 	 	 	 	 	 
	 

	 	 	1.	 	 	Consolidated Current Assets of the Borrower
on the Subject Date:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	2.	 	 	The lesser of (a) the Availability of the
Borrower and (b) $25,000,000, as of the
Subject Date:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	3.	 	 	Consolidated current liabilities of the
Borrower and its Subsidiaries as of the
Subject Date:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	4.	 	 	Current portion of any Debt under the Credit
Agreement otherwise included in the
calculation of Line 3:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	5.	 	 	Costs, expenses and related liabilities arising
from, related to or in connection with the loss
of the Pride Wyoming mat-supported jackup rig
in 2008 to the extent not covered by Pride’s insurance
policies (including any deductibles, premium
payments for removal of wreckage claims or
retention amounts) and its related liabilities in
a net amount not to exceed $3,500,000:
	 	$                     
	 
	 	 	 	 	 	 	 	 
	 

	 	 	6.	 	 	Working Capitial Ratio


(Line 1 + Line 2) ÷ (Line 3 — Line 4 — Line 5):	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Minimum required:
	 	1.20 to 1.00
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Compliance
	 	Yes       No
	
E. Section 6.17(d) — Minimum Consolidated Tangible Net Worth




	 
	 

	 	 	1.	 	 	Consolidated Tangible Net Worth Floor:
	 	$320,000,000
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	2.	 	 	50% of the Borrower’s Consolidated Net
Income for each fiscal quarter in which such
Consolidated Net Income is greater than $0,
commencing with the fiscal quarter ending
December 31, 2009 and ending on such date
of determination:
	 	$                     






 Exhibit E — Form of Compliance Certificate

Page 3 of 10




 









 






	 	 	 	 	 	 	 	 	 	 	 
	 

	 	 	3.	 	 	100% of the aggregate Net Cash Proceeds
received by the Borrower from issuances of its
Equity Interests after the Closing Date:
	 	$                     

	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Minimum Required Consolidated Tangible

Net Worth on Subject Date (Line 1 + Line 2 + Line 3):
	 	$                     

	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Compliance
	 	Yes       No






 Exhibit E — Form of Compliance Certificate

Page 4 of 10




 









 




IN WITNESS WHEREOF, executed as of                     , ___.




	 	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 





 Exhibit E — Form of Compliance Certificate

Page 5 of 10




 









 






SCHEDULE I




to the Compliance Certificate

($ in 000’s)




Consolidated EBITDA of the Borrower and its Subsidiaries

(in accordance with the definition of Consolidated EBITDA

as set forth in the Credit Agreement)




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Four Fiscal	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Quarters	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Most	 
	Consolidated	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Recently	 
	EBITDA	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	Consolidated
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Net Income
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ Consolidated Interest Expense
(interest expense of the
Borrower and its Subsidiaries
calculated on a consolidated
basis minus interest income of
the Borrower and its
Subsidiaries calculated on a
consolidated basis and the
amortization of any deferred
financing costs incurred in
connection with the Credit
Agreement otherwise included in
the calculations
thereof)4
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 








 




			
	4	 	With respect to each quarterly period ending on or
after September 30, 2009, Consolidated Interest Expense will be determined as
follows: (i) for the fiscal quarter ending September 30, 2009, Consolidated
Interest Expense shall be computed by adding (A) the Consolidated Interest
Expense for the two fiscal quarters ending June 30, 2009 as set forth in the
Pro Forma Financial Statements for such period plus (B) the product of
the Consolidated Interest Expense for the fiscal quarter ending September 30,
2009 multiplied by 2, (ii) for the fiscal quarter ending December 31, 2009,
Consolidated Interest Expense shall be computed by adding (A) the Consolidated
Interest Expense for the two fiscal quarters ending June 30, 2009 as set forth
in the Pro Forma Financial Statements for such period plus (B) the
Consolidated Interest Expense for the two fiscal quarters ending December 31,
2009, (iii) for the fiscal quarter ending March 31, 2010, Consolidated Interest
Expense shall be computed by adding (A) the Consolidated Interest Expense for
the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial
Statements for such period plus (B) the Consolidated Interest Expense
for the three fiscal quarters ending March 31, 2010, and (iv) for each fiscal
quarter ending thereafter, Consolidated Interest Expense shall be computed by
adding the Consolidated Interest Expense for the four fiscal quarters ending on
such date.





Exhibit E — Form of Compliance Certificate

Page 6 of 10





 









 







	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Four Fiscal	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Quarters	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Most	 
	Consolidated	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Recently	 
	EBITDA	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	+ foreign, federal, state and
local income taxes
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ depreciation expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ amortization expense
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ extraordinary, unusual or
non-recurring expenses, charges
or losses
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+ certain allocated
non-recurring general and
administrative expenses as set
forth on Schedule 1.01(d) of the
Credit Agreement and certain
impairment charges as set forth
on Schedule 1.01(d) of the
Credit Agreement
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- extraordinary or non-recurring
gains
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	- any gain realized upon the
sale or other disposition of any
assets
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





Exhibit E — Form of Compliance Certificate

Page 7 of 10





 









 





	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Four Fiscal	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Quarters	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Most	 
	Consolidated	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Recently	 
	EBITDA	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	- income of any other Person
(other than Wholly-Owned
Subsidiaries of the Borrower) in
which the Borrower or a
Wholly-Owned Subsidiary of the
Borrower has an ownership
interest except to the extent
such income is received by the
Borrower or such Wholly-Owned
Subsidiary in a cash
distribution
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	+/- the income of any Person
accrued prior to the date it
becomes a Subsidiary of the
Borrower or is merged into or
consolidated with the Borrower
or any of its Subsidiaries
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 





 Exhibit E — Form of Compliance Certificate

Page 8 of 10




 









 






	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Four Fiscal	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Quarters	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Most	 
	Consolidated	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Quarter	 	 	Recently	 
	EBITDA	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 	 	Ended	 
	- non-cash gains (other than
gains resulting from derivatives
to the extent the amount of
commodities hedged with such
derivatives exceeds the
Borrower’s and its Subsidiaries’
commodities sold), losses or
adjustments under FASB Statement
133 as a result of changes in
the fair market value of
derivatives
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	= Consolidated EBITDA5
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 








 




			
	5	 	With respect to each quarterly period ending on or
after September 30, 2009, Consolidated EBITDA will be determined as follows:
(i) for the fiscal quarter ending September 30, 2009, Consolidated EBITDA shall
be computed by adding (A) the Consolidated EBITDA for the two fiscal quarters
ending June 30, 2009 as set forth in the Pro Forma Financial Statements for
such period plus (B) the product of the Consolidated EBITDA for the
fiscal quarter ending September 30, 2009 multiplied by 2, (ii) for the fiscal
quarter ending December 31, 2009, Consolidated EBITDA shall be computed by
adding (A) the Consolidated EBITDA for the two fiscal quarters ending June 30,
2009 as set forth in the Pro Forma Financial Statements for such period
plus (B) the Consolidated EBITDA for the two fiscal quarters ending
December 31, 2009, (iii) for the fiscal quarter ending March 31, 2010,
Consolidated EBITDA shall be computed by adding (A) the Consolidated EBITDA for
the fiscal quarter ending June 30, 2009 as set forth in the Pro Forma Financial
Statements for such period plus (B) the Consolidated EBITDA for the
three fiscal quarters ending March 31, 2010, and (iv) for each fiscal quarter
ending thereafter, Consolidated EBITDA shall be computed by adding the
Consolidated EBITDA for the four fiscal quarters ending on such date.



 Exhibit E — Form of Compliance Certificate

Page 9 of 10




 









 










SCHEDULE II




To the Compliance Certificate

($ in the 000’s)




Orderly Liquidation Value of the Collateral Rigs

(in accordance with the definition of Orderly Liquidation Value

as set forth in the Credit Agreement)




	 	 	 	 	 	 	 
	 	 	 	 	Casualty Event or	 	Orderly
	 	 	Value (established by	 	Asset Disposition since	 	Liquidation Value
	 	 	most recent Appraisal	 	most recent Appraisal	 	(Column 2 -
	Name of Rig	 	Report)	 	Report	 	Column 3)
	Seahawk 2000
	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2001	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2002	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2004	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2005	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2007	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2501	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2503	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2504	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2505	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2600	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2601	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 2602	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 3000	 	 	 	 	 	 
	 	 	 	 	 	 	 
	Seahawk 800	 	 	 	 	 	 





 Exhibit E — Form of Compliance Certificate

Page 10 of 10




 









 






EXHIBIT F

LETTER OF CREDIT REQUEST




[Date]




Natixis, New York Branch, as Administrative Agent

1251 Avenue of the Americas, 34th Floor

New York, New York 10020




Attention: [          ]




Ladies and Gentlemen:



Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), certain of its
Subsidiaries as Guarantors, the lenders from time to time party thereto (the “Lenders”),
and Natixis, New York Branch, as administrative agent for the Lenders (the “Administrative
Agent”), are parties to that certain Revolving Credit Agreement dated as of August ___, 2009 (as
amended, restated, supplemented or otherwise modified and in effect from time-to-time, the
“Credit Agreement”), the defined terms of which are used in this Letter of Credit Request
unless otherwise defined in this Letter of Credit Request. The undersigned hereby gives you
irrevocable notice pursuant to Section 2.14(a) of the Credit Agreement that the undersigned
hereby requests a Letter of Credit, and in connection with that request sets forth below the
information relating to such Letter of Credit (the “Proposed Issuance”) as required by
Section 2.14(a)(iv) of the Credit Agreement:





	 	(a)	 	The Borrower requests an [issuance] [increase] [extension] of a Letter of
Credit. [The Letter of Credit to be [increased before giving effect to the increase]
[extended] is in the face amount of $                     and evidenced by Letter of Credit
number ___.]
	 
	 	(b)	 	The beneficiary is                                         .
	 
	 	(c)	 	[The face amount of the Letter of Credit being [issued] [increased after giving
effect to the increase] is $                    .]
	 
	 	(d)	 	The Business Day of the Proposed Issuance is                     .
	 
	 	(e)	 	[The expiration date of the Letter of Credit as [issued] [extended] is
                    .]
	 
	 	(f)	 	The form of the proposed Letter of Credit is attached as Exhibit A.




The Borrower hereby certifies that the following statements are true and correct on the date
hereof, and will be true and correct on the date of the Proposed Issuance:



 Exhibit F — Form of Letter of Credit Request

Page 1 of 3




 









 









	 	(i)	 	the representations and warranties contained in Article IV of the Credit
Agreement and in each other Loan Document are true and correct in all material respects
(other than those representations and warranties that are subject to a materiality
qualifier, in which case such representations and warranties shall be true and correct
in all respects), except to the extent that such representations and warranties
specifically refer to an earlier date, in which case they are true and correct in all
material respects as of such earlier date (other than those representations and
warranties that are subject to a materiality qualifier, in which case such
representations and warranties are true and correct in all respects as of such earlier
date), on and as of the date of such Proposed Issuance, immediately before and after
giving effect to such Proposed Issuance;
	 
	 	(ii)	 	no Default or Event of Default has occurred and is continuing or would result
immediately after giving effect to such Proposed Issuance or the application of the
proceeds therefrom;
	 
	 	(iii)	 	the Availability is greater than or equal to zero immediately after giving
effect to such Proposed Issuance; and
	 
	 	(iv)	 	no material adverse change has occurred and is continuing with respect to the
Collateral when taken as a whole since either the most recently delivered Borrowing
Base Certificate or the most recently delivered Appraisal Report pursuant to
Section 5.14 of the Credit Agreement.





	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 





  Exhibit F — Form of Letter of Credit Request

Page 2 of 3




 









 






EXHIBIT A

TO LETTER OF CREDIT REQUEST




Form of Proposed Letter of Credit



See attached.



  Exhibit F — Form of Letter of Credit Request

Page 3 of 3




 









 








EXHIBIT G

FORM OF NOTE




			
	 	 	 
	$                                        
	 	                                        , 20   





For value received, the undersigned SEAHAWK DRILLING, INC., a Delaware corporation (the
“Borrower”), hereby promises to pay to the order of                                         
(“Payee”) the principal amount of                                          Dollars ($                    ) or, if
less, the aggregate outstanding principal amount of the Revolving Advances (as defined in the
Credit Agreement referred to below) made by the Payee under the Credit Agreement, together with
interest on the unpaid principal amount of the Revolving Advances from the date of such Revolving
Advances until such principal amount is paid in full, at such interest rates, and at such times, as
are specified in the Credit Agreement.



This Note is one of the Notes referred to in, and is entitled to the benefits of, and is subject to
the terms of, the Revolving Credit Agreement dated as of August ___, 2009 (as amended, restated,
supplemented or otherwise modified and in effect from time to time, the “Credit
Agreement”), among the Borrower, certain of its Subsidiaries as Guarantors, the lenders party
thereto (the “Lenders”), and Natixis, New York Branch, as administrative agent for the
Lenders (the “Administrative Agent”). Capitalized terms used in this Note that are defined
in the Credit Agreement and not otherwise defined in this Note have the meanings assigned to such
terms in the Credit Agreement. The Credit Agreement, among other things, (a) provides for the
making of the Revolving Advances by the Payee to the Borrower in an aggregate amount not to exceed
at any time outstanding the Dollar amount first above mentioned, the indebtedness of the Borrower
resulting from each such Revolving Advance being evidenced by this Note, and (b) contains
provisions for acceleration of the maturity of this Note upon the happening of certain events
stated in the Credit Agreement and for prepayments of outstanding principal amounts prior to the
maturity of this Note upon the terms and conditions specified in the Credit Agreement.



Both principal and interest are payable in lawful money of the United States of America to the
Administrative Agent at the location or address specified in writing by the Administrative Agent to
the Borrower in same day funds. The Payee shall record payments of principal made under this Note,
but no failure of the Payee to make such recordings shall affect the Borrower’s repayment
obligations under this Note.



This Note is secured by the Security Documents.



Except as specifically provided in the Credit Agreement, the Borrower hereby waives presentment,
demand, protest, notice of intent to accelerate, notice of acceleration, and any other notice of
any kind. No failure to exercise, and no delay in exercising, any rights hereunder on the part of
the holder of this Note shall operate as a waiver of such rights.



This Note shall be governed by, and construed and enforced in accordance with, the laws of the
State of New York.



THIS NOTE AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES AND MAY NOT
BE CONTRADICTED BY



 Exhibit G — Form of Note

Page 1 of 3




 









 






EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT AGREEMENTS OF THE PARTIES.



THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.




[Remainder of Page Intentionally Left Bank; Signature Page Follows]




 









 





	 	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING, INC.	 	 
	 	 	a Delaware corporation	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 





 Exhibit G — Form of Note

Page 3 of 3





 











 






EXHIBIT H

FORM OF NOTICE OF BORROWING




[Date]




NATIXIS, NEW YORK BRANCH, as Administrative Agent

1251 Avenue of the Americas, 34th Floor

New York, New York 10020

Attention: [          ]

Telephone: [          ]

Telecopier: [          ]

Electronic Mail: [          ]



Ladies and Gentlemen:



The undersigned, Seahawk Drilling, Inc., a Delaware corporation (“Borrower”), certain of
its Subsidiaries as Guarantors, the lenders from time to time party thereto (the
“Lenders”), and Natixis, New York Branch, as Administrative Agent for the Lenders, are
parties to that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended,
restated, supplemented or otherwise modified and in effect from time-to-time, the “Credit
Agreement”, the defined terms of which are used in this Notice of Borrowing unless otherwise
defined in this Notice of Borrowing). The undersigned gives you irrevocable notice pursuant to
Section 2.02(a) of the Credit Agreement that the undersigned hereby requests a Borrowing, and in
connection with that request sets forth below the information relating to such Borrowing (the
“Proposed Borrowing”) as required by Section 2.02(a) of the Credit Agreement:





	 	(a)	 	The Business Day of the Proposed Borrowing is                     ,           .
	 
	 	(b)	 	The Type of the Revolving Advances is [Eurodollar Advance] [Base Rate Advance].
	 
	 	(c)	 	The aggregate amount of the Proposed Borrowing is $                    .
	 
	 	(d)	 	[The Interest Period for each Eurodollar Advance made as part of the Proposed
Borrowing is ___ month[s] and will end on [date].]




The Borrower hereby certifies that the following statements are true and correct on the date
hereof, and will be true and correct on the date of the Proposed Borrowing:





	 	(i)	 	the representations and warranties contained in Article IV of the Credit
Agreement and in each other Loan Document are true and correct in all material respects
(other than those representations and warranties that are subject to a materiality
qualifier, in which case such representations and warranties shall be true and correct
in all respects), except to the extent that such representations and





Exhibit H — Form of Notice of Borrowing

Page 1 of 2




 









 






	 	 	 	warranties specifically refer to an earlier date, in which case they are true and correct in
all material respects as of such earlier date (other than those representations and
warranties that are subject to a materiality qualifier, in which case such
representations and warranties are true and correct in all respects as of such earlier
date), on and as of the date of such Proposed Borrowing, immediately before and after
giving effect to such Proposed Borrowing, and to the application of the proceeds from
such Proposed Borrowing, as applicable;
	 
	 	(ii)	 	no Default or Event of Default has occurred and is continuing or, immediately
after giving effect thereto, would result from such Proposed Borrowing or from the
application of the proceeds therefrom;
	 
	 	(iii)	 	the Availability is greater than or equal to zero immediately after giving
effect to such Proposed Borrowing; and
	 
	 	(iv)	 	no material adverse change has occurred and is continuing with respect to the
Collateral when taken as a whole since either the most recently delivered Borrowing
Base Certificate or the most recently delivered Appraisal Report pursuant to Section
5.14 of the Credit Agreement.





	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exhibit H — Form of Notice of Borrowing

Page 2 of 2





 









 









EXHIBIT I

FORM OF NOTICE OF CONVERSION OR CONTINUATION




[Date]




NATIXIS, NEW YORK BRANCH

1251 Avenue of the Americas, 34th Floor

New York, New York 10020

Attention: [          ]

Telephone: [          ]

Telecopier: [          ]

Electronic Mail: [          ]



Ladies and Gentlemen:



The undersigned, Seahawk Drilling, Inc., a Delaware corporation (“Borrower”), certain of
its Subsidiaries as Guarantors, the lenders from time to time party thereto (the
“Lenders”), and Natixis, New York Branch, as Administrative Agent for the Lenders, are
parties to that certain Revolving Credit Agreement dated as of August ___, 2009 (as amended,
restated, supplemented or otherwise modified and in effect from time-to-time, the “Credit
Agreement”, the defined terms of which are used in this Notice of Conversion or Continuation
unless otherwise defined in this Notice of Conversion or Continuation). The undersigned gives you
irrevocable notice pursuant to Section 2.02(b) of the Credit Agreement that the undersigned hereby
requests a Conversion or Continuation of an outstanding Borrowing, and in connection with that
request sets forth below the information relating to such Conversion or Continuation (the
“Proposed Election”) as required by Section 2.02(b) of the Credit Agreement:





(a) The Business Day of the Proposed Election is                     , 20___.




(b) The amount and Type of Revolving Advance to be Converted or Continued pursuant to this
Proposed Election consists of $               [Base Rate Advances][Eurodollar Advances].




(c) The requested Proposed Election is a [Conversion][Continuation] [and if the Proposed
Election is a Conversion, the Conversion shall be made to a [Base Rate Advance][a Eurodollar
Advance]].




(d) [If a Conversion to, or Continuation of, a Eurodollar Advance, the Interest Period shall
be ___ month[s] and will end on [date].]


The Borrower hereby certifies that the following statements are true on the date hereof, and will
be true on the date of the Proposed Election:





	 	(i)	 	the representations and warranties contained in Article IV of the Credit
Agreement and in each other Loan Document are true and correct in all material respects
(other than those representations and warranties that are subject to a materiality
qualifier, in which case such representations and warranties shall be true and correct
in all respects), except to the extent that such representations and





Exhibit I — Form of Notice of Conversion or Continuation

Page 1 of 2




 









 






	 	 	 	warranties specifically refer to an earlier date, in which case they are true and
correct in all material respects as of such earlier date (other than those
representations and warranties that are subject to a materiality qualifier, in which
case such representations and warranties are true and correct in all respects as of
such earlier date), on and as of the date of such Proposed Election, immediately
before and after giving effect to such Proposed Election;






	 	(ii)	 	no Default or Event of Default has occurred and is continuing or, immediately
after giving effect thereto, would result from such Proposed Borrowing or from the
application of the proceeds therefrom;
	 
	 	(iii)	 	the Availability is greater than or equal to zero immediately after giving
effect to such Proposed Borrowing; and
	 
	 	(iv)	 	no material adverse change has occurred and is continuing with respect to the
Collateral when taken as a whole since either the most recently delivered Borrowing
Base Certificate or the most recently delivered Appraisal Report pursuant to Section
5.14 of the Credit Agreement.





	 	 	 	 	 	 	 
	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exhibit I — Form of Notice of Conversion or Continuation

Page 2 of 2




 









 








EXHIBIT J

FORM OF PLEDGE AGREEMENT




     THIS PLEDGE AGREEMENT dated as of August [___], 2009 (this “Pledge Agreement”), is
entered into by and among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”),
each of the undersigned other than the Borrower and Administrative Agent (as herein defined) (and
together with the Borrower, collectively, the “Pledgors” and, individually, a
“Pledgor”) and Natixis, New York Branch, as administrative agent (in such capacity, the
“Administrative Agent”), for the ratable benefit of the Secured Parties (as defined in the
Credit Agreement described below).



RECITALS




     A. This Pledge Agreement is entered into in connection with that certain Revolving Credit
Agreement dated as of August ___, 2009 (as amended, restated, supplemented or otherwise modified
from time to time, the “Credit Agreement”), among the Borrower, certain Subsidiaries
thereof as Guarantors, the lenders party thereto from time to time (individually, a
“Lender” and collectively, the “Lenders”), and Natixis, New York Branch, as
Administrative Agent for such Lenders and as Issuing Bank (as defined therein).



     B. Each Pledgor will derive substantial direct or indirect benefit from (i) the transactions
contemplated by the Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement) and (ii) Swap Contracts (as defined in the Credit Agreement) entered into by any Loan
Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit
Agreement), and such transactions and documents are necessary or convenient to the conduct,
promotion or attainment of such Pledgor’s business.



     C. It is a requirement under the Credit Agreement that the Pledgors secure the due payment and
performance of all Obligations (as defined in the Credit Agreement) by entering into this Pledge
Agreement.



AGREEMENT




     NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, each Pledgor hereby agrees with the
Administrative Agent, for the ratable benefit of the Secured Parties, as follows:



     Section 1. Definitions; Interpretations. All capitalized terms not otherwise defined
in this Pledge Agreement that are defined in the Credit Agreement shall have the meanings assigned
to such terms by the Credit Agreement. Any terms used in this Pledge Agreement that are defined in
the UCC (as defined below) and not otherwise defined herein or in the Credit Agreement shall have
the meanings assigned to those terms by the UCC. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the context may require,
any pronoun shall include the corresponding masculine, feminine and neuter forms. The words
“include,” “includes” and “including” shall be deemed to be followed by the phrase “without
limitation.” The word “will” shall be construed to have the same meaning



Exhibit J — Form of Pledge Agreement

Page 1 of 26




 









 




and effect as the word “shall.” The word “or” is not exclusive. Unless the context requires
otherwise (i) any definition of or reference to any agreement, instrument, schedule or other
document herein shall be construed as referring to such agreement, instrument, schedule or other
document as from time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein) and in effect, (ii)
any reference herein to any Person shall be construed to include such Person’s successors and
permitted assigns, (iii) the words “herein,” “hereof” and “hereunder,” and words of similar import,
shall be construed to refer to this Pledge Agreement in its entirety and not to any particular
provision hereof, (iv) all references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Pledge
Agreement, (v) any reference to any law or regulation herein shall, unless otherwise specified,
refer to such law or regulation as amended, modified or supplemented from time to time and (vi) the
words “asset” and “property” shall be construed to have the same meaning and effect and to refer to
any and all tangible and intangible assets and properties, including cash, securities, accounts and
contract rights. For purposes of this Pledge Agreement, “UCC” means the Uniform Commercial Code as
in effect on the date hereof in the State of New York, as amended from time to time thereafter, and
any successor statute; provided, however, in the event that, by reason of mandatory provisions of
law, any or all of the attachment, perfection or priority of the security interest in any Pledged
Collateral (as defined below) is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such
attachment, perfection or priority and for purposes of definitions related to such provisions.




     Section 2. Pledge.



     2.01. Grant of Pledge.




     (a) As collateral security for the prompt and complete payment and performance when due
of all Secured Obligations, each Pledgor hereby pledges, charges and grants to the
Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security
interest in, the Pledged Collateral, as defined in Section 2.02 below. This Pledge
Agreement shall secure all Obligations now or hereafter existing, including any extensions,
modifications, substitutions, amendments, and renewals thereof, whether for principal,
interest, fees, expenses, indemnifications or otherwise. All such obligations shall be
referred to in this Pledge Agreement as the “Secured Obligations”.




     (b) Notwithstanding anything contained herein to the contrary, it is the intention of
each Pledgor, the Administrative Agent and the other Secured Parties that the amount of the
Secured Obligation secured by each Pledgor’s interests in any of its Property shall be in,
but not in excess of, the maximum amount permitted by fraudulent conveyance, fraudulent
transfer and other similar Legal Requirement pplicable to such Pledgor. Accordingly,
notwithstanding anything to the contrary contained in this Pledge Agreement or in any other
agreement or instrument executed in connection with the payment of any of the Secured
Obligations, the amount of the Secured Obligations secured by each Pledgor’s interests in
any of its Property pursuant to this Pledge Agreement shall be limited to an aggregate
amount equal to the largest amount that



Exhibit J — Form of Pledge Agreement

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would not render such Pledgor’s obligations hereunder or the liens and security
interest granted to the Administrative Agent hereunder subject to avoidance under Section
548 of the United States Bankruptcy Code or any comparable provision of any other applicable
law.



     2.02. Pledged Collateral. “Pledged Collateral” shall mean all of each
Pledgor’s right, title, and interest in the following, whether now owned or hereafter acquired:




     (a) (i) all of the membership interests issued by a Domestic Subsidiary to such Pledgor
listed in the attached Schedule 2.02(a) and all additional membership interests of such
issuer hereafter acquired by such Pledgor (the “Domestic Membership Interests”),
(ii) all of the membership interests issued to such Pledgor by a Foreign Subsidiary that is
directly held by such Pledgor and listed in the attached Schedule 2.02(a) and 65% of
all additional membership interests of such issuer hereafter acquired by such Pledgor (the
“Foreign Membership Interests”; and together with the Domestic Membership Interests,
the “Membership Interests”), (iii) the certificates representing the Membership
Interests, if any, and (iv) all rights to money or Property which such Pledgor now has or
hereafter acquires in respect of the Membership Interests, including, without limitation,
(A) any proceeds from a sale by or on behalf of such Pledgor of any of the Membership
Interests, and (B) any distributions, dividends, cash, instruments and other property from
time-to-time received or otherwise distributed in respect of the Membership Interests,
whether regular, special or made in connection with the partial or total liquidation of the
issuer and whether attributable to profits, the return of any contribution or investment or
otherwise attributable to the Membership Interests or the ownership thereof (collectively,
the “Membership Interests Distributions”);




     (b) (i) all of the general and limited partnership interests issued by a Domestic
Subsidiary to such Pledgor listed in the attached Schedule 2.02(b) and all additional
general and limited partnership interests of such issuer hereafter acquired by such Pledgor
(the “Domestic Partnership Interests”), (ii) all of the general and limited
partnership interests issued to such Pledgor by a Foreign Subsidiary that is directly held
by such Pledgor and listed in the attached Schedule 2.02(b) and 65% of all
additional general and limited partnership interests of such issuer hereafter acquired by
such Pledgor (the “Foreign Partnership Interests”; and together with the Domestic
Partnership Interests, the “Partnership Interests”), and (iii) all rights to money
or Property which such Pledgor now has or hereafter acquires in respect of the Partnership
Interests, including, without limitation, (A) any proceeds from a sale by or on behalf of
such Pledgor of any of the Partnership Interests, and (B) any distributions, dividends,
cash, instruments and other property from time-to-time received or otherwise distributed in
respect of the Partnership Interests, whether regular, special or made in connection with
the partial or total liquidation of the issuer and whether attributable to profits, the
return of any contribution or investment or otherwise attributable to the Partnership
Interests or the ownership thereof (collectively, the “Partnership Interests
Distributions”);




     (c) (i) all of the shares of stock issued by a Domestic Subsidiary to such Pledgor
listed in the attached Schedule 2.02(c) and all additional shares of stock of such issuer
hereafter acquired by such Pledgor (the “Domestic Shares”), (ii) all of the shares
of



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Page 3 of 26




 









 









stock issued to such Pledgor by a Foreign Subsidiary that is directly held by such
Pledgor and listed in the attached Schedule 2.02(c) and 65% of all additional shares
of stock of such issuer hereafter acquired by such Pledgor (the “Foreign Shares”;
and together with the Domestic Shares, the “Pledged Shares”), (iii) the certificates
representing the Pledged Shares, and (iv) all rights to money or Property which such Pledgor
now has or hereafter acquires in respect of the Pledged Shares, including, without
limitation, (A) any proceeds from a sale by or on behalf of such Pledgor of any of the
Pledged Shares, and (B) any distributions, dividends, cash, instruments and other property
from time-to-time received or otherwise distributed in respect of the Pledged Shares,
whether regular, special or made in connection with the partial or total liquidation of the
issuer and whether attributable to profits, the return of any contribution or investment or
otherwise attributable to the Pledged Shares or the ownership thereof (collectively, the
“Pledged Shares Distributions”; together with the Membership Interests Distributions
and the Partnership Interest Distributions, the “Distributions”); and




     (d) all proceeds from the Pledged Collateral described in paragraphs (a), (b) and (c)
of this Section 2.02.



     2.03. Delivery of Pledged Collateral. All certificates or instruments, if any,
representing the Pledged Collateral shall be delivered to the Administrative Agent and shall be in
suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance reasonably satisfactory to the
Administrative Agent. After the occurrence and during the continuance of an Event of Default, the
Administrative Agent shall have the right, upon prior written notice to the applicable Pledgor, to
transfer to or to register in the name of the Administrative Agent or any of its nominees any of
the Pledged Collateral, subject to the rights specified in Section 2.04. In addition, after the
occurrence and during the continuance of an Event of Default, the Administrative Agent shall have
the right at any time to exchange the certificates or instruments representing the Pledged
Collateral for certificates or instruments of smaller or larger denominations.



     2.04. Rights Retained by Pledgor. Notwithstanding the pledge in Section 2.01,




     (a) unless an Event of Default shall have occurred and is continuing, (i) each Pledgor
shall be entitled to receive and retain any dividends and other Distributions paid on or in
respect of its Pledged Collateral and the proceeds of any sale of its Pledged Collateral as
permitted by the Credit Agreement; and (ii) each Pledgor shall be entitled to exercise any
voting and other consensual rights pertaining to its Pledged Collateral for any purpose not
inconsistent with the terms of this Pledge Agreement or the Credit Agreement;
provided, however, that no Pledgor shall exercise nor shall it refrain from
exercising any such right if such action or inaction, as applicable, would have a material
adverse effect on the value of the Pledged Collateral; and




     (b) if an Event of Default shall have occurred and is continuing,




     (i) until such time thereafter as the Administrative Agent gives written notice
of its election to exercise such voting and other consensual rights pursuant



Exhibit J — Form of Pledge Agreement

Page 4 of 26




 









 









and in accordance with Section 5 hereof, each Pledgor shall have the rights set
forth in Section 2.04(a) subject to the limitations thereof; and




     (ii) at and after such time as the Administrative Agent gives written notice of
its election to exercise such voting and other consensual rights pursuant to and in
accordance with Section 5 hereof, each Pledgor shall execute and deliver (or cause
to be executed and delivered) to the Administrative Agent all proxies and other
instruments as the Administrative Agent may reasonably request to enable the
Administrative Agent to (A) exercise the voting and other rights which such Pledgor
is entitled to exercise pursuant to paragraph (a)(ii) or paragraph (b)(i) of this
Section 2.04, and (B) receive any Distributions and proceeds of sale of the Pledged
Collateral which such Pledgor is authorized to receive and retain pursuant to
paragraph (a)(i) of this Section 2.04.



     Section 3. Representations and Warranties. Each Pledgor represents and warrants to
the Administrative Agent and the other Secured Parties as follows:




     (a) The Pledged Collateral applicable to such Pledgor listed on the attached Schedules
2.02(a), 2.02(b) and 2.02(c) have been duly authorized and validly issued to such Pledgor
and are fully paid and nonassessable.




     (b) Such Pledgor is the legal and beneficial owner of the Pledged Collateral free and
clear of any Lien, except for (i) the security interest created by this Pledge Agreement and
(ii) the Excepted Liens.




     (c) No authorization, authentication, approval, or other action by, and no notice to or
filing with, any Governmental Authority or regulatory body is required to be made or
obtained by any Loan Party either (i) for the pledge by such Pledgor of the Pledged
Collateral pursuant to this Pledge Agreement or for the execution, delivery, or performance
of this Pledge Agreement by such Pledgor or (ii) for the exercise by the Administrative
Agent or any Secured Party of the voting or other rights provided for in this Pledge
Agreement or the remedies in respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may be required in connection with such disposition by laws affecting
the offering and sale of securities generally).




     (d) Such Pledgor has the requisite corporate (or equivalent), power and authority to
deliver, pledge, assign and transfer the Pledged Collateral to the Administrative Agent.




     (e) As of the date of this Pledge Agreement (and as of each date that this Pledge
Agreement is supplemented), the Membership Interests listed on the attached Schedule 2.02(a)
constitute (i) the percentage of the issued and outstanding membership interests of the
respective issuer thereof set forth on Schedule 2.02(a), (ii) with respect to any Domestic
Subsidiary, all of the membership interests of such issuer in which such Pledgor has any
ownership interest, and (iii) with respect to any Foreign Subsidiary, at least 65% of the
membership interests of such issuer in which such Pledgor has any ownership interest.



Exhibit J — Form of Pledge Agreement

Page 5 of 26




 









 









     (f) As of the date of this Pledge Agreement (and as of each date that this Pledge
Agreement is supplemented), the Partnership Interests listed on the attached Schedule
2.02(b) constitute (i) the percentage of the issued and outstanding general and limited
partnership interests of the respective issuer thereof set forth on Schedule 2.02(b), (ii)
with respect to any Domestic Subsidiary, all of the partnership interests of such issuer in
which such Pledgor has any ownership interest, and (iii) with respect to any Foreign
Subsidiary, at least 65% of the partnership interests of such issuer in which such Pledgor
has any ownership interest.




     (g) As of the date of this Pledge Agreement (and as of each date that this Pledge
Agreement is supplemented), the Pledged Shares listed on the attached Schedule 2.02(c)
constitute (i) the percentage of the issued and outstanding shares of capital stock of the
respective issuer thereof set forth on Schedule 2.02(c), (ii) with respect to any Domestic
Subsidiary, all of the shares of stock of such issuer in which such Pledgor has any
ownership interest, and (iii) with respect to any Foreign Subsidiary, at least 65% of the
            shares of stock of such issuer in which such Pledgor has any ownership interest.




     (h) As of the date of this Pledge Agreement (and as of each date that this Pledge
Agreement is supplemented), Schedule 3 sets forth its sole jurisdiction of formation, type
of organization, federal tax identification number, the organizational number, and all names
under which it has conducted business during the last five years prior to the date of this
Pledge Agreement (or the date of any supplement to this Pledge Agreement).



     Section 4. Pledgor’s Covenants. Until (a) the payment in full in cash of the Secured
Obligations (other than contingent indemnification obligations of which no Secured Party has
knowledge), (b) the termination or expiration of all Letters of Credit (other than Letters of
Credit as to which the Issuing Bank has an enforceable cash collateral security in an amount equal
to 105% of the Letter of Credit Exposure allocable to such Letters of Credit or as to which other
arrangements satisfactory to the Issuing Bank have been made), and the termination of all
obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of Credit ,
(c) the termination of all Swap Contracts with any Swap Counterparty and the termination of all
obligations of Lenders in respect of Swap Contracts (in each case, other than Swap Contracts as to
which the applicable Swap Counterparty has advised the Administrative Agent in writing that it has
received other collateral satisfactory to it), and (d) the termination or expiration of the
Revolving Commitments (the date on or prior to which all of the preceding shall have occurred being
the “Security Termination Date”), each Pledgor covenants and agrees with the Administrative
Agent that:



     4.01. Protect Collateral; Further Assurances. Each Pledgor will warrant and defend
the rights and title herein granted unto the Administrative Agent, for the ratable benefit of the
Secured Parties, in and to such Pledgor’s Pledged Collateral (and all right, title, and interest
represented by such Pledged Collateral) against the claims and demands of all Persons whomsoever.
Each Pledgor agrees that, at the expense of such Pledgor, such Pledgor will promptly execute and
deliver all further instruments and documents and take all further action, that may be reasonably
necessary and that the Administrative Agent or any Secured Party may reasonably request, in order
to perfect and protect any security interest granted or charged or



Exhibit J — Form of Pledge Agreement

Page 6 of 26




 









 







purported to be granted or charged hereby or to enable the Administrative Agent or any Secured
Party to exercise and enforce its rights and remedies hereunder with respect to any of such
Pledgor’s Pledged Collateral. Each Pledgor hereby authorizes the Administrative Agent to file any
financing statements, amendments or continuations without the signature of such Pledgor to the
extent permitted by applicable law in order to perfect or maintain the perfection of any security
interest granted under this Pledge Agreement, including financing statements containing an “all
assets” or “all personal property” collateral description.




     4.02. Additional Shares. Each Pledgor agrees that it will pledge hereunder, promptly
upon its acquisition (directly or indirectly) thereof, any additional Equity Interests of an issuer
of the Pledged Collateral; provided that, no Pledgor is required to pledge more than 65% of the
Equity Interests issued by any individual issuer that is a Foreign Subsidiary.



     4.03. Jurisdiction of Formation; Name Change. Each Pledgor shall give the
Administrative Agent at least 10 Business Days prior written notice before it (i) in the case of
any Pledgor that is not a “registered organization” (as such term is defined in Section 9-102 of
the UCC), changes the location of its principal place of business and chief executive office, (ii)
changes the location of its jurisdiction of formation or organization, or (iii) changes its legal
name or uses a trade name other than its current name used on the such Pledgor enters into this
Pledge Agreement; provided that, such Pledgor shall not effect or permit any such change unless all
filings have been made under the UCC or otherwise that are required in order for the Administrative
Agent to continue at all times following such change to have, and each Pledgor agrees to take all
necessary action to ensure that the Administrative Agent does continue at all times to have, a
valid, legal and perfected security interest in all the Pledged Collateral. Each Pledgor
represents and warrants that, as to Membership Interests and Partnership Interests, (a) such
Pledged Collateral does not constitute “securities” as defined in Section 8.102 and 8.03 of the UCC
and (b) the limited liability company agreement or the partnership agreement, as applicable, of the
issuer thereof does not expressly “opt in” to “security” status in accordance with Section 8-103 of
the UCC. Other than as permitted by Section 6.15 of the Credit Agreement but subject to the terms
of this Section 4.03, no Grantor shall amend, supplement, modify or restate its articles or
certificate of incorporation, bylaws, limited liability company agreements, or other equivalent
organizational documents, nor amend its name or change its jurisdiction of incorporation,
organization or formation without the prior written consent of the Administrative Agent.



     Section 5. Remedies upon Default. Upon the occurrence and during the continuance of
an Event of Default:



     5.01. UCC Remedies. To the extent permitted by law, the Administrative Agent may
exercise in respect of the Pledged Collateral, in addition to other rights and remedies provided
for in this Pledge Agreement or otherwise available to it, all the rights and remedies of a secured
party under the UCC (whether or not the UCC applies to the affected Pledged Collateral).



     5.02. Dividends and Other Rights.




     (a) All rights of the Pledgors to exercise the voting and other consensual rights which
they would otherwise be entitled to exercise pursuant to Section 2.04(a) may



Exhibit J — Form of Pledge Agreement

Page 7 of 26




 









 









be exercised by the Administrative Agent if the Administrative Agent so elects and
gives written notice of such election to the affected Pledgor and all rights of the Pledgors
to receive any Distributions on or in respect of the Pledged Collateral and the proceeds of
sale of the Pledged Collateral that they would otherwise be authorized to receive and retain
pursuant to Section 2.04(b) shall cease.




     (b) All Distributions on or in respect of the Pledged Collateral and the proceeds of
sale of the Pledged Collateral which are received by any Pledgor shall be received in trust
for the benefit of the Administrative Agent, for the ratable benefit of the Secured Parties,
shall be segregated from other funds of such Pledgor, and shall be promptly paid over to the
Administrative Agent, for the ratable benefit of the Secured Parties, as Pledged Collateral
in the same form as so received (with any necessary endorsement).



     5.03. Sale of Pledged Collateral. Subject to the mandatory requirements of applicable
law, the Administrative Agent may sell all or part of the Pledged Collateral at public or private
sale, at any of the Administrative Agent’s offices or elsewhere, for cash, on credit, or for future
delivery, and upon such other terms as the Administrative Agent may deem commercially reasonable in
accordance with applicable laws. Each Pledgor agrees that to the extent permitted by law such
sales may be made without notice. If notice is required by law, each Pledgor hereby deems 10 days’
advance notice of the time and place of any public sale or the time after which any private sale is
to be made reasonable notification, recognizing that if the Pledged Collateral threatens to decline
speedily in value or is of a type customarily sold on a recognized market shorter notice may be
reasonable. The Administrative Agent shall not be obligated to make any sale of the Pledged
Collateral regardless of notice of sale having been given. The Administrative Agent may adjourn
any public or private sale from time-to-time by announcement at the time and place fixed therefor,
and such sale may, without further notice, be made at the time and place to which it was so
adjourned. Each Pledgor shall fully cooperate with Administrative Agent in selling or realizing
upon all or any part of the Pledged Collateral. In addition, each Pledgor shall fully comply with
the securities laws of the United States, the State of New York, and other states, and take such
actions as may be necessary to permit Administrative Agent to sell or otherwise dispose of any
securities representing the Pledged Collateral in compliance with such laws.



     5.04. Exempt Sale. If, in the opinion of the Administrative Agent, there is any
question that a public or semipublic sale or distribution of any Pledged Collateral will violate
any state, federal, or other applicable securities law, the Administrative Agent in its reasonable
discretion (a) may offer and sell securities privately to purchasers who will agree to take them
for investment purposes and not with a view to distribution and who will agree to imposition of
restrictive legends on the certificates representing the security, or (b) may sell such securities
in an intrastate offering under Section 3(a)(11) of the Securities Act of 1933, as amended, and no
sale so made in good faith by the Administrative Agent shall be deemed to be not “commercially
reasonable” solely because so made. Each Pledgor shall cooperate fully with the Administrative
Agent in all reasonable respects in selling or realizing upon all or any part of the Pledged
Collateral.



Exhibit J — Form of Pledge Agreement

Page 8 of 26




 









 








     5.05. Application of Collateral. The proceeds of any sale, or other realization upon
all or any part of the Pledged Collateral by the Administrative Agent or any other Secured Party
shall be applied by the Administrative Agent or such Secured Party as set forth in Section 7.06 of
the Credit Agreement. Notwithstanding the foregoing, nothing contained herein shall contradict the
terms of Section 9.09(e) of the Credit Agreement which provides that only the Administrative Agent
may exercise all rights, remedies and powers as the secured party of the liens granted herein.



     5.06. Cumulative Remedies. Each right, power and remedy herein specifically granted
to the Administrative Agent or otherwise available to it shall be cumulative, and shall be in
addition to every other right, power and remedy herein specifically given or now or hereafter
existing at law, in equity, or otherwise, and each such right, power and remedy, whether
specifically granted herein or otherwise existing, may be exercised at any time and from
time-to-time as often and in such order as may be deemed expedient by the Administrative Agent in
its sole discretion. No failure on the part of the Administrative Agent to exercise, and no delay
in exercising, and no course of dealing with respect to, any such right, power or remedy, shall
operate as a waiver thereof, nor shall any single or partial exercise of any such rights, power or
remedy preclude any other or further exercise thereof or the exercise of any other right.



     Section 6. Administrative Agent as Attorney-in-Fact for Pledgor.



     6.01. Attorney-in-Fact. Each Pledgor hereby constitutes and irrevocably appoints the
Administrative Agent, acting for and on behalf of the Secured Parties and each successor or assign
of the Administrative Agent and the Secured Parties, the true and lawful attorney-in-fact of such
Pledgor, with full power and authority in the place and stead of such Pledgor and in the name of
such Pledgor, the Administrative Agent or otherwise to take any action and execute any instrument
at the written direction of the Secured Parties and enforce all rights, interests and remedies of
such Pledgor with respect to the Pledged Collateral, including the right:



     (i) to ask, require, demand, receive and give acquittance for any and all moneys and claims
for moneys due and to become due under or arising out of any of the other Pledged Collateral;



     (ii) to elect remedies thereunder and to endorse any checks or other instruments or orders in
connection therewith;



     (iii) to file any claims or take any action or institute any proceedings in connection
therewith which the Administrative Agent may deem to be necessary or advisable;



     (iv) to pay, settle or compromise all bills and claims which may be or become liens or
security interests against any or all of the Pledged Collateral, or any part thereof, unless a bond
or other security satisfactory to the Administrative Agent has been provided;



     (v) upon foreclosure, to do any and every act which any Pledgor may do on its behalf with
respect to the Pledged Collateral or any part thereof and to exercise any or all of such Pledgor’s
rights and remedies under any or all of the Pledged Collateral; and



Exhibit J — Form of Pledge Agreement

Page 9 of 26




 









 








     (vi) to receive, indorse, and collect all instruments made payable to such Pledgor
representing any dividend, or the proceeds of the sale of the Pledged Collateral, or other
distribution in respect of the Pledged Collateral and to give full discharge for the same;


provided, however, that the Administrative Agent shall not exercise any such rights
or take any such actions except after the occurrence and during the continuation of an Event of
Default. This power of attorney is a power coupled with an interest and shall be irrevocable.




     6.02. Administrative Agent May Perform. The Administrative Agent may from time-to-time
perform any act which any Pledgor has agreed hereunder to perform and which such Pledgor shall fail
to perform after being requested in writing so to perform (it being understood that no such request
need be given after the occurrence and during the continuance of any Event of Default and after
notice thereof by the Administrative Agent to any Pledgor) and the Administrative Agent may from
time-to-time take any other action which the Administrative Agent reasonably deems necessary for
the maintenance, preservation or protection of any of the Pledged Collateral or of its security
interest therein, and the reasonable expenses of the Administrative Agent incurred in connection
therewith shall be part of the Secured Obligations and shall be secured hereby. The Administrative
Agent shall endeavor to provide notice to the affected Pledgor of any action taken hereunder;
provided however, the failure to provide such notice shall not be construed as a waiver of any
rights of the Administrative Agent provided under this Pledge Agreement or under applicable law.



     6.03. Administrative Agent Has No Duty. The powers conferred on the Administrative
Agent hereunder are solely to protect its interest as a secured party in the Pledged Collateral and
shall not impose any duty on it to exercise any such powers. Except for reasonable care of any
Pledged Collateral in its possession and the accounting for moneys actually received by it
hereunder, the Administrative Agent shall have no duty as to any Pledged Collateral or
responsibility for taking any necessary steps to preserve rights against prior parties or any other
rights pertaining to any Pledged Collateral.



     6.04. Reasonable Care. The Administrative Agent shall be deemed to have exercised
reasonable care in the custody and preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equal to that which the Administrative Agent
accords its own property, it being understood that the Administrative Agent shall have no
responsibility for (a) ascertaining or taking action with respect to calls, conversions, exchanges,
maturities, tenders, or other matters relative to any Pledged Collateral, whether or not the
Administrative Agent has or is deemed to have knowledge of such matters, or (b) taking any
necessary steps to preserve rights against any parties with respect to any Pledged Collateral.



     Section 7. Miscellaneous.



     7.01. Expenses. Each Pledgor will upon demand pay to the Administrative Agent for its
benefit and the benefit of the Secured Parties the amount of (i) any reasonable out-of-pocket
expenses, including the reasonable fees, charges and disbursements of experts and one external
primary counsel for the Administrative Agent and of one local counsel in each jurisdiction, if
necessary (it being understood that the local counsel for any such jurisdiction shall, if
reasonably acceptable to the Administrative Agent, be limited to any local counsel previously
engaged by a



Exhibit J — Form of Pledge Agreement

Page 10 of 26




 









 







Loan Party in such jurisdiction, if applicable), in any case, which the Administrative Agent
and the Secured Parties may incur in connection with the custody, preservation, use, or operation
of, any Pledged Collateral, and (ii) any out-of-pocket expenses, including the fees and
disbursements of its counsels and of any experts, which the Administrative Agent and the Secured
Parties may incur in connection with (A) the sale, collection, or other realization of, any of the
Pledged Collateral, (B) the exercise or enforcement of any of the rights of the Administrative
Agent or any Secured Party hereunder, and (C) the failure by any Pledgor to perform or observe any
of the provisions hereof.




     7.02. Amendments, Etc. No amendment or waiver of any provision of this Pledge
Agreement nor consent to any departure by any Pledgor herefrom shall be effective unless the same
shall comply with Section 10.01 of the Credit Agreement, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.



     7.03. Addresses for Notices. All notices and other communications provided for
hereunder shall be made in the manner and to the addresses set forth in Section 10.02 of the Credit
Agreement or on the signatures hereof.



     7.04. Continuing Security Interest; Transfer of Interest.




     (a) This Pledge Agreement shall create a continuing security interest in the Pledged
Collateral and shall (a) remain in full force and effect until the Security Termination
Date, (b) be binding upon each Pledgor and its successors, transferees and assigns, and (c)
inure, together with the rights and remedies of the Administrative Agent hereunder, to the
benefit of and be binding upon, the Administrative Agent and the Lenders and their
respective successors, permitted transferees, and permitted assigns, and to the benefit of
and be binding upon, the Swap Counterparties, and each of their respective successors,
transferees, and assigns to the extent such successors, transferees, and assigns of a Swap
Counterparty is a Lender or an Affiliate of a Lender. Without limiting the generality of
the foregoing clause, when any Lender assigns or otherwise transfers any interest held by it
under the Credit Agreement or other Loan Document to any other Person pursuant to the terms
of the Credit Agreement, that other Person shall thereupon become vested with all the
benefits held by such Lender under this Pledge Agreement.




     (b) Upon the occurrence of the Security Termination Date, the security interest granted
hereby shall automatically terminate without any further action by any party, and all rights
to the Pledged Collateral shall revert to the applicable Pledgor to the extent such Pledged
Collateral has not been sold or otherwise applied pursuant to the terms hereof. Upon any
such termination or if authorized under Section 9.09 of the Credit Agreement, the
Administrative Agent will, at the Pledgors’ expense, deliver all Pledged Collateral to the
applicable Pledgor, execute and deliver to the applicable Pledgor such documents as such
Pledgor shall reasonably request and take any other actions reasonably requested to evidence
or effect such termination.



     7.05. Waivers. Each Pledgor hereby waives:



Exhibit J — Form of Pledge Agreement

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     (a) promptness, diligence, notice of acceptance, and any other notice (other than as
set forth herein) with respect to any of the Secured Obligations and this Pledge Agreement;




     (b) any requirement that the Administrative Agent or any Secured Party protect (other
than as required herein), secure, perfect, or insure any Lien or any Property subject
thereto or exhaust any right or take any action against any Pledgor, any Guarantor, or any
other Person or any collateral; and




     (c) any duty on the part of the Administrative Agent to disclose to any Pledgor any
matter, fact, or thing relating to the business, operation, or condition of any Pledgor, any
Guarantor, or any other Person and their respective assets now known or hereafter known by
such Person.



     7.06. Severability. If any provision of this Pledge Agreement is held to be illegal,
invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions
of this Pledge Agreement shall not be affected or impaired thereby and (ii) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the
illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.



     7.07. CHOICE OF LAW. This Pledge Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the applicable laws of the United States of
America.



     7.08. Counterparts. This Pledge Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement. Delivery of an executed counterpart signature page by facsimile or other
electronic transmission is as effective as executing and delivering this Pledge Agreement in the
presence of the other parties to this Pledge Agreement. In proving this Pledge Agreement, a party
must produce or account only for the executed counterpart of the party to be charged.



     7.09. Reinstatement. If, at any time after payment in full of all Secured Obligations
and termination of the Administrative Agent’s security interest granted herein, any payments on the
Secured Obligations previously made must be disgorged by the Administrative Agent for any reason
whatsoever, including, without limitation, the insolvency, bankruptcy or reorganization of any
Grantor or any other Person, this Pledge Agreement and the Administrative Agent’s security
interests herein shall be reinstated as to all disgorged payments as though such payments had not
been made, and each Grantor shall sign and deliver to the Administrative Agent all documents, and
shall do such other acts and things, as may be necessary to reinstate and perfect the
Administrative Agent’s security interest. EACH GRANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED
PARTY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7.09
(INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ONE EXTERNAL PRIMARY COUNSEL AND OF
ONE LOCAL COUNSEL IN EACH



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JURISDICTION, IF NECESSARY (IT BEING UNDERSTOOD THAT THE LOCAL COUNSEL FOR ANY SUCH
JURISDICTION SHALL, IF REASONABLY ACCEPTABLE TO THE PERSON TO WHOM SUCH SECURED PARTY IS A RELATED
PARTY, BE LIMITED TO ANY LOCAL COUNSEL PREVIOUSLY ENGAGED BY THE BORROWER IN SUCH JURISDICTION, IF
APPLICABLE) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT INCLUDING SUCH CLAIM, DAMAGE, LOSS,
LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED SECURED PARTY’S OWN NEGLIGENCE
BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE DETERMINED BY A COURT OF
COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE BEEN PROXIMATELY CAUSED BY SUCH
SECURED PARTY’S OWN BAD FAITH, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, VIOLATION OF LAW OR BY REASON
OF A CLAIM BY ONE OR MORE OTHER SECURED PARTIES OR EQUITY INTEREST OWNERS OF ANY SECURED PARTY, SO
LONG AS NOT PROXIMATELY CAUSED BY ANY GRANTOR OR ANY AFFILIATE THEREOF.




     7.10. Conflicts. In the event of any explicit or implicit conflict between any
provisions of this Pledge Agreement and any provision of the Credit Agreement, the terms of the
Credit Agreement shall be controlling.



     7.11. Additional Pledgors. Pursuant to the Credit Agreement, the Borrower is required
to cause each holder of an Equity Interest in a Material Subsidiary that did not own any such
Equity Interest on the date of the Credit Agreement is required to enter into this Pledge Agreement
as a Pledgor within 30 days of such Subsidiary becoming a Material Subsidiary. Upon execution and
delivery after the date hereof by the Administrative Agent and such Subsidiary of an instrument in
the form of Annex 1, such Subsidiary shall become a Pledgor hereunder with the same force and
effect as if originally named as a Pledgor herein. The execution and delivery of any instrument
adding an additional Pledgor as a party to this Pledge Agreement shall not require the consent of
any other Pledgor hereunder. The rights and obligations of each Pledgor hereunder shall remain in
full force and effect notwithstanding the addition of any new Pledgor as a party to this Pledge
Agreement.



     7.12. Submission to Jurisdiction.




     (a) Any legal action or proceeding with respect to this Pledge Agreement
may be brought in the courts of the state of New York sitting in New York City or of the
United States of America for the Southern District of such state, and by execution and
delivery of this Pledge Agreement, each party to this Pledge Agreement consents, for itself
and in respect of its Property, to the non-exclusive jurisdiction of those courts. Each
party to this Pledge Agreement irrevocably waives any objection, including any objection to
the laying of venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any action or proceeding in such jurisdiction in respect
of this Pledge Agreement or other document related hereto. Each party to this Pledge
Agreement waives personal service of any summons, complaint 



Exhibit J — Form of Pledge Agreement

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or other process, which may be made by any other means permitted by the law of such
state.




     (b) Nothing in the immediately preceding clause (i) shall affect the right of any party
hereto to serve legal process in any other manner permitted by law or affect the right of
any party hereto to bring any action or proceeding against any other party in the courts of
any other jurisdiction.



     7.13. Waiver of Jury. Each party to this Pledge Agreement hereby
expressly and irrevocably waives any right to trial by jury of any claim, demand, action or cause
of action arising under this Pledge Agreement or in any way connected with or related or incidental
to the dealings of the parties hereto or any of them with respect to this Pledge Agreement, or the
transactions related hereto, in each case whether now existing or hereafter arising, and whether
founded in contract or tort or otherwise; and each party hereby agrees and consents that any such
claim, demand, action or cause of action shall be decided by court trial without a jury, and that
any party to this Pledge Agreement may file an original counterpart or a copy of this section with
any court as written evidence of the consent of the signatories hereto to the waiver of their right
to trial by jury.



     7.14. Integration. This Pledge Agreement and the other Loan Documents represent the
final agreement among the parties with respect to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties.
There are no oral agreements among the parties hereto.



[SIGNATURE PAGES FOLLOW]




Exhibit J — Form of Pledge Agreement

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     The parties hereto have caused this Pledge Agreement to be duly executed as of the date first
above written.



	 	 	 	 	 	 	 
	 	 	PLEDGORS:	 	 
	 
	 	 	 	 	 	 
	 	 	[BORROWER]

[PERSONS OWNING EQUITY OF MATERIAL SUBSIDIARIES]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	[Name]	 	 
	 

	 	 	 	[Title]	 	 






Exhibit J — Form of Pledge Agreement

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	 	 	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	NATIXIS, NEW YORK BRANCH, as 

Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





Exhibit J — Form of Pledge Agreement

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SCHEDULE 2.02(A)




MEMBERSHIP INTERESTS




	 	 	 	 	 	 	 
	 	 	 	 	Type of	 	 
	 	 	Issuer	 	Membership	 	% of Membership
	Pledgor	 	(Domestic/Foreign)	 	Interest	 	Interest Owned
	 

	 	 
	 	 	 	 





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SCHEDULE 2.02(B)




PARTNERSHIP INTERESTS




	 	 	 	 	 	 	 
	 	 	Issuer	 	Type of Partnership	 	% of Partnership
	Pledgor	 	(Domestic/Foreign)	 	Interest	 	Interest Owned
	 

	 	 
	 	 	 	 





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SCHEDULE 2.02(C)




PLEDGED SHARES




	 	 	 	 	 	 	 	 	 	 	 
	 	 	Issuer	 	Type of	 	Number of	 	% of Shares	 	Certificate
	Pledgor	 	(Domestic/Foreign)	 	Shares	 	Shares	 	Owned	 	No.
	 

	 	 
	 	 
	 	 
	 	 	 	 





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SCHEDULE 3




ORGANIZATIONAL INFORMATION




	 	 	 	 	 
	Pledgor:
	 	 	 	 
	 

	 	 

	 	 
	Sole Jurisdiction of Formation / Filing:
	 	 	 	 
	 

	 	 

	 	 
	Type of Organization:
	 	 	 	 
	 

	 	 

	 	 
	Organizational Number:
	 	 	 	 
	 

	 	 

	 	 
	Federal Tax Identification Number:
	 	 	 	 
	 

	 	 

	 	 
	Prior Names:
	 	 	 	 
	 

	 	 

	 	 






Exhibit J — Form of Pledge Agreement

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Annex 1 to the

Pledge Agreement




     SUPPLEMENT NO.                      dated as of                     , 20___(the “Supplement”), to the
Pledge Agreement dated as of August [___], 2009 (this “Pledge Agreement”), by and among
Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), each of the undersigned
other than the Borrower and the Administrative Agent (as herein defined) (and together with the
Borrower, collectively, the “Pledgors” and, individually, a “Pledgor”) and Natixis,
New York Branch, as administrative agent (the “Administrative Agent”), for the ratable
benefit of the Secured Parties (as defined in the Credit Agreement described below)



RECITALS




     A. Reference is made to that certain Revolving Credit Agreement dated as of August ___, 2009
(as amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) by and among the Borrower, certain Subsidiaries of the Borrower as Guarantors, the
lenders party thereto from time to time (the “Lenders”), and Natixis, New York Branch, as
Administrative Agent for such Lenders and as Issuing Bank (as defined therein).



     B. The Pledgors entered into the Pledge Agreement in order to induce the Lenders to make
Revolving Advances and the Issuing Bank to issue, extend and renew Letters of Credit under the
Credit Agreement. Pursuant to the Credit Agreement, the Borrower is required to cause each holder
of an Equity Interest in a Material Subsidiary that did not own any such Equity Interest on the
date of the Credit Agreement is required to enter into this Pledge Agreement as a Pledgor within 30
days of such Subsidiary becoming a Material Subsidiary. Section 7.11 of the Pledge Agreement
provides that such holder may become a Pledgor under the Pledge Agreement by execution and delivery
of an instrument in the form of this Supplement. The undersigned (the “New Pledgor”) is
executing this Supplement in accordance with the requirements of the Credit Agreement to become a
Pledgor under the Pledge Agreement in order to induce the Lenders to make additional Revolving
Advances and for the Issuing Bank to make, extend, and renew Letters of Credit under the Credit
Agreement, and as consideration for Revolving Advances previously made and Letters of Credit
previously issued thereunder.



     C. The New Pledgor is an Affiliate of the Borrower and will derive substantial direct or
indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement) and (ii) Swap Contracts (as defined in the Credit
Agreement) entered into by any Loan Party (as defined in the Credit Agreement) with a Swap
Counterparty (as defined in the Credit Agreement), and such transactions and documents are
necessary or convenient to the conduct, promotion or attainment of such New Pledgor’s business.



     D. Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Pledge Agreement and the Credit Agreement.



     Accordingly, the Administrative Agent and the New Pledgor agree as follows:



Exhibit J — Form of Pledge Agreement

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     SECTION 1. In accordance with Section 7.11 of the Pledge Agreement, the New Pledgor by its
signature below becomes a Pledgor under the Pledge Agreement with the same force and effect as if
originally named therein as a Pledgor and the New Pledgor hereby agrees (a) to all the terms and
provisions of the Pledge Agreement applicable to it as a Pledgor thereunder and (b) represents and
warrants that the representations and warranties made by it as a Pledgor thereunder are true and
correct on and as of the date hereof in all material respects. In furtherance of the foregoing,
the New Pledgor, as security for the payment and performance in full of the Secured Obligations,
does hereby create and grant to the Administrative Agent, for the ratable benefit of the Secured
Parties, a continuing security interest in and lien on all of the New Pledgor’s right, title and
interest in and to the Pledged Collateral of the New Pledgor. Each reference to a “Pledgor” in the
Pledge Agreement shall be deemed to include the New Pledgor. The Pledge Agreement is hereby
incorporated herein by reference.



     SECTION 2. The New Pledgor represents and warrants to the Administrative Agent and the other
Secured Parties that this Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in accordance with its
terms, except as such enforceability may be limited by any applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or similar laws affecting creditors’ rights generally
or general principles of equity.



     SECTION 3. This Supplement may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same agreement. Delivery of
an executed counterpart signature page by facsimile or other electronic transmission is as
effective as executing and delivering this Supplement in the presence of the other parties to this
Supplement. In proving this Supplement, a party must produce or account only for the executed
counterpart of the party to be charged. This Supplement shall become effective when the
Administrative Agent shall have received counterparts of this Supplement that, when taken together,
bear the signatures of the New Pledgor and the Administrative Agent.



     SECTION 4. The New Pledgor hereby represents and warrants that, as of the date of this
Supplement, (a) set forth on Schedules 2.02(a), 2.02(b), and 2.02(c) attached hereto are true and
correct schedules of all its Membership Interests, Partnership Interests and Pledged Shares, as
each term is defined in the Pledge Agreement, and (b) set forth on Schedule 3 attached hereto are
its sole jurisdiction of formation, type of organization, its federal tax identification number and
the organizational number, if applicable, and all names under which it has conducted business
during the last five years prior to the date of this Supplement.



     SECTION 5. Except as expressly supplemented hereby, the Pledge Agreement shall remain in full
force and effect.



     SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.



     SECTION 7. If any provision of this Supplement is held to be illegal, invalid or
unenforceable, (i) the legality, validity and enforceability of the remaining provisions of this



Exhibit J — Form of Pledge Agreement

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Supplement shall not be affected or impaired thereby and (ii) the parties shall endeavor in
good faith negotiations to replace the illegal, invalid or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of the illegal, invalid
or unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.




     SECTION 8. All communications and notices hereunder shall be in writing and given as provided
in the Pledge Agreement. All communications and notices hereunder to the New Pledgor shall be
given to it at the address set forth under its signature hereto or to such other address, facsimile
number, electronic mail address or telephone number as shall be designated by the New Pledgor in a
notice to the Administrative Agent.



     SECTION 9. The New Pledgor agrees to reimburse the Administrative Agent for its reasonable
out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other
charges and disbursements of counsel for the Administrative Agent.



     SECTION 10. This Supplement, the Pledge Agreement and the other Loan Documents, represent the
final agreement among the parties with respect to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties.
There are no oral agreements among the parties hereto.



[SIGNATURES PAGES FOLLOW]




Exhibit J — Form of Pledge Agreement

Page 23 of 26




 









 







     IN WITNESS WHEREOF, the New Pledgor and the Administrative Agent have duly executed this
Supplement to the Pledge Agreement as of the day and year first above written.



	 	 	 	 	 	 	 	 	 
	 	 	NEW PLEDGOR:	 	 
	 
	 
	[	 	 	 		 	]	 
	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	 	 	Name:	 	 	 	 
	 

	 	 	 	Title:
	 	 

	 	 
	 

	 	 	 	 	 	 

	 	 






	 	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	NATIXIS, NEW YORK BRANCH, as	 	 
	 	 	Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






Exhibit J — Form of Pledge Agreement

Page 24 of 26




 









 









Schedules




Supplement No. ____ 

to the Pledge Agreement




Pledged Collateral of the New Pledgor 




SCHEDULE 2.02(A)




MEMBERSHIP INTERESTS




	 	 	 	 	 	 	 
	 	 	 	 	Type of	 	 
	 	 	Issuer	 	Membership	 	% of Membership
	Pledgor	 	(Domestic/Foreign)	 	Interest	 	Interest Owned
	 

	 	 
	 	 
	 	 





SCHEDULE 2.02(B)




PARTNERSHIP INTERESTS




	 	 	 	 	 	 	 
	 	 	Issuer	 	Type of Partnership	 	% of Partnership
	Pledgor	 	(Domestic/Foreign)	 	Interest	 	Interest Owned
	 

	 	 
	 	 
	 	 





SCHEDULE 2.02(C)




PLEDGED SHARES




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Issuer	 	Type of	 	Number of	 	% of Shares	 	Certificate
	Pledgor	 	(Domestic/Foreign)	 	Shares	 	Shares	 	Owned	 	No.
	 

	 	 
	 	 
	 	   





SCHEDULE 3




ORGANIZATIONAL INFORMATION




	 	 	 	 	 
	New Pledgor:

	 	[PLEDGOR]	 	 
	 
	 	 	 	 
	Sole Jurisdiction of Formation / Filing:

	 	[STATE]	 	 
	 
	 	 	 	 
	Type of Organization:

	 	[ENTITY TYPE]	 	 
	 
	 	 	 	 
	Organizational Number:
	 	 	 	 
	 

	 	 

	 	 






Exhibit J — Form of Pledge Agreement

Page 25 of 26





 









 









	 	 	 	 	 
	Federal Tax Identification Number:
	 	 	 	 
	 

	 	 

	 	 
	Prior Names:
	 	 	 	 
	 

	 	 

	 	 







Exhibit J — Form of Pledge Agreement

Page 26 of 26



 











 





EXHIBIT K

FORM OF RIG MORTGAGE




FIRST PREFERRED FLEET MORTGAGE




by




SEAHAWK DRILLING, LLC,




to




NATIXIS, NEW YORK BRANCH,

as

Administrative Agent




Dated [                       __], 2009 and effective [                       __], 2009




Vanuatu Vessels




[Seahawk 2000, Seahawk 2001, Seahawk 2002, Seahawk 2004, Seahawk 2005, Seahawk 2007,

Seahawk 2501, Seahawk 2503, Seahawk 2505, Seahawk 2600, Seahawk 2601, Seahawk 3000,

Seahawk 800]




Exhibit K — Form of Rig Mortgage

Page 1 of 18




 









 





     This FIRST PREFERRED FLEET MORTGAGE (this “Mortgage”) is made this the [___] day of
[                    ], 2009 and is effective the [___] date of [                    ], 2009, by SEAHAWK DRILLING, LLC, a
Delaware limited liability company (the “Shipowner”), with an address at: 5847 San Felipe,
Suite 1600, Houston, Texas 77057, to NATIXIS, NEW YORK BRANCH, with an address at 9 West 57th
Street, 35th Floor, New York, NY 10019, as Administrative Agent (together with its successors and
permitted assigns as such, the “Mortgagee”).



     WHEREAS:



     1. The Shipowner is party to the Revolving Credit Agreement dated as of August [___], 2009 (as
amended, restated, supplemented or otherwise modified from time to time, the “Credit
Agreement”) among Seahawk Drilling, Inc., a Delaware corporation (the “Borrower”), as borrower,
certain of its Subsidiaries as Guarantors, including the Shipowner, NATIXIS, NEW YORK BRANCH, as
administrative agent, and the lenders party thereto (the “Lenders”), pursuant to which the
Lenders have agreed from time to time to extend credit and/or issue letters of credit for the
benefit of the Borrower and its subsidiaries, including the Shipowner, in an aggregate amount up to
thirty-six million United States Dollars (US$36,000,000.00), which amount is the principal amount
of this Mortgage. Capitalized terms used herein and not otherwise defined are used herein as
defined in the Credit Agreement, a copy of a form of which, including certain exhibits, is annexed
hereto as Exhibit A and made a part hereof.



     2. The Shipowner will receive substantial, direct and indirect, benefits through the extension
of credit under the terms of the Credit Agreement, and related documents; and in consideration of
such benefit and other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the Shipowner has executed this Mortgage.



     3. The Shipowner is the sole owner of the whole of the Vanuatu flag vessels described on
Schedule I attached hereto, which are duly documented in the name of the Shipowner under the laws
and flag of the Republic of Vanuatu, qualified to engage in the trade specified, which vessels are
further described on Schedule I attached hereto and made a part hereof; and



     4. The Shipowner, in order to secure its debts, liabilities, and obligations, covenants and
duties arising under the Credit Agreement and the other Loan Documents or otherwise with respect to
any Revolving Advance, Letter of Credit or a Swap Contract to which a Lender or its Affiliate is a
party, whether direct or indirect (including those acquired by assumption), absolute or contingent,
due or to become due, now existing or hereafter arising and including interest and fees that accrue
after the commencement by or against any Loan Party of any proceeding under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors naming such Person as the debtor in
such proceeding, regardless of whether such interest and fees are allowed claims in such
proceeding, including, without limitation, the payment of all sums of money (whether for principal,
premium, if any, interest, fees, expenses, indemnities or otherwise) from time to time payable by
the Shipowner under the Credit Agreement, this Mortgage (including, without limitation, the costs,
expenses and other amounts payable by Shipowner hereunder pursuant to Section 3.9 in connection
with Mortgagee’s enforcing its rights and remedies pursuant to this Mortgage), and to secure the
performance and observance of all agreements, covenants and provisions contained in the Credit
Agreement, this Mortgage and the other Loan



Exhibit K — Form of Rig Mortgage

Page 2 of 18




 









 




Documents (collectively, the “Secured Obligations”), has duly authorized the execution
and delivery of this Mortgage.




     NOW, THEREFORE, to secure the prompt payment of the Secured Obligations and the performance
and observance of all agreements, covenants and provisions of the Shipowner contained in the Credit
Agreement, this Mortgage, the Guaranty and the other Loan Documents, the Shipowner has granted,
conveyed, mortgaged, pledged, confirmed, assigned, transferred and set over, and by these presents
does grant, convey, mortgage, pledge, confirm, assign, transfer and set over unto the Mortgagee the
whole of each of the vessels (as more specifically described on Schedule I), together with all of
the boilers, engines, generators, drilling machinery and equipment, pumps and pumping equipment,
machinery, masts, spars, sails, boats, anchors, cables, chains, rigging, tackle, outfit, apparel,
furniture, fittings, equipment, spares, fuel, stores and all other appurtenances thereunto
appertaining or belonging, and also any and all additions, improvements and replacements hereafter
made in or to such vessel, or any part thereof, or in or to her equipment and appurtenances
aforesaid for each such vessel (collectively, the “Vessels” and each, a “Vessel”);



     TO HAVE AND TO HOLD all and singular the Vessels unto the Mortgagee and its successors and
permitted assigns, to its and its successors’ and permitted assigns’ own use, benefit and behove
forever, subject to the rights of the Shipowner therein as herein provided;



     PROVIDED, HOWEVER, and these presents are upon the condition that, upon the occurrence of
certain conditions and/or payment of certain obligations in accordance with Section 3.12 of this
Mortgage, the liens, estate and rights hereby granted shall be subject to termination and release
in accordance with the terms of such Section 3.12 of this Mortgage.



     IT IS HEREBY COVENANTED, DECLARED AND AGREED that each of the Vessels is to be held subject to
the further covenants, conditions, provisions, terms and uses hereinafter set forth.



ARTICLE I

COVENANTS OF THE SHIPOWNER




     The Shipowner covenants and agrees with the Mortgagee as follows:



     SECTION 1.1 The Shipowner will pay when due all Secured Obligations from time to time payable
by the Shipowner under the Credit Agreement and the other Loan Documents and will observe, perform
and comply with the covenants, terms and conditions herein and in the Credit Agreement and the
other Loan Documents, on its part to be observed, performed or complied with.



     SECTION 1.2 The Shipowner is and shall remain duly qualified to own, document and operate each
of the Vessels under the applicable laws and regulations of the Republic of Vanuatu. Each of the
Vessels is duly documented in the name of the Shipowner as owner under the laws of the Republic of
Vanuatu.



     SECTION 1.3 The Shipowner lawfully owns and is lawfully possessed of each of the Vessels free
from any Lien, charge or encumbrance whatsoever (except for this Mortgage



Exhibit K — Form of Rig Mortgage

Page 3 of 18




 









 




and the Excepted Liens), and will warrant and defend the title and possession thereto and to
every part thereof for the benefit of the Mortgagee against the claims and demands of all persons
whomsoever.




     SECTION 1.4 The Shipowner has caused this Mortgage to be duly filed and will cause it to be
duly recorded and will comply with and satisfy all of the provisions and requirements of Chapter 5,
Section 55 of the Vanuatu Maritime Act Cap. 131 (as amended) (hereinafter called the “Vanuatu
Maritime Law”) and will otherwise comply with and satisfy all of the other applicable
provisions of the Vanuatu Maritime Law in order to establish, perfect and maintain this Mortgage as
a valid, enforceable and duly perfected first preferred mortgage lien thereunder upon each of the
Vessels and upon all renewals, replacements and improvements made in or to the same for the amount
of the Secured Obligations.



     SECTION 1.5 For each of the Vessels, the Shipowner will not (a) cause or permit such Vessel to
be operated in any manner contrary to law, (b) engage in any unlawful trade or violate any law, (c)
carry any cargo that will expose such Vessel to penalty, confiscation, forfeiture, capture or
condemnation, or (d) do, or suffer or permit to be done, anything which can or may injuriously
affect the registration or enrollment of such Vessel under the laws and regulations of the Republic
of Vanuatu. The Shipowner will at all times keep each Vessel duly documented as a Vanuatu flag
vessel.



     SECTION 1.6 Neither the Shipowner, any charterer, the master of any of the Vessels nor any
other person has or shall have any right, power or authority to create, incur or permit to be
placed or imposed or continued upon any of the Vessels any Lien whatsoever other than this Mortgage
and other Excepted Liens.



     SECTION 1.7 For each of the Vessels, the Shipowner will place, and at all times and places
will retain, a properly certified copy of this Mortgage on board such Vessel with her papers and
will cause such certified copy and such Vessel’s marine document to be exhibited to any and all
persons having business therewith which might give rise to any lien thereon other than Excepted
Liens, and to any representative of the Mortgagee; and the Shipowner will place and keep
prominently displayed in the chart room and in the master’s cabin of such Vessel, or in the case of
a rig, in a prominent place aboard the rig, or in such location as the rig’s papers are kept, a
framed printed notice in plain type reading as follows:



“NOTICE OF MORTGAGE





This Vessel is covered by a First Preferred Fleet Mortgage to NATIXIS, NEW YORK
BRANCH, as Administrative Agent, under authority of the Vanuatu Maritime Law, 1981,
as amended. Under the terms of said Mortgage, neither the Shipowner, any charterer,
the master of this Vessel nor any other person has any right, power or authority to
create, incur or permit to be imposed upon this Vessel any lien whatsoever other
than Excepted Liens (as defined in the Credit Agreement attached as an exhibit to
the First Preferred Fleet Mortgage).”



     SECTION 1.8 Except for this Mortgage and the other Excepted Liens, for each of the Vessels,
Shipowner will pay or cause to be discharged or make adequate provision for the



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satisfaction or discharge of all claims or demands (except to the extent that the same shall
concurrently be contested by the Shipowner in good faith by appropriate proceedings that shall not
affect the continued release of the relevant Vessel), or will cause such Vessel to be released or
discharged from any Lien, encumbrance or charge therefor.




     SECTION 1.9 For each of the Vessels,



     (a) if a libel or complaint be filed against such Vessel or such Vessel be otherwise attached,
arrested, levied upon or taken into custody by any Governmental Authority or any person that
purports to be acting on behalf of a Governmental Authority for any cause whatsoever, the Shipowner
will promptly notify the Mortgagee by facsimile, confirmed by letter, at its address as specified
in this Mortgage, and within thirty (30) consecutive days will cause such Vessel to be released and
all Liens thereon other than this Mortgage and other Excepted Liens to be discharged (except to the
extent that the claim giving rise to such lien shall concurrently be contested by the Shipowner in
good faith by appropriate proceedings that shall not affect the release of such Vessel) and will
promptly notify the Mortgagee thereof in the manner aforesaid; and



     (b) if the Shipowner shall fail or neglect to furnish proper security or otherwise to release
such Vessel from libel, arrest, levy, seizure or attachment within the time period required by
Section 1.9(a) above, the Mortgagee or any person acting on behalf of the Mortgagee may furnish
security to release such Vessel and by so doing shall not be deemed to cure the default of the
Shipowner unless and until the Shipowner shall have reimbursed the Mortgagee from all costs and
expenses (including reasonable attorney’s fees) incurred by the Mortgagee or such third party
acting at the direction of the Mortgagee in procuring such release, including for any security so
furnished.



     SECTION 1.10 For each of the Vessels,



     (a) except while such Vessel is undergoing repairs, maintenance or is in lay up cold-stacked,
warm-stacked or similar suspensions of use or operation, the Shipowner will at all times and
without cost or expense to the Mortgagee maintain and preserve, or cause to be maintained and
preserved, such Vessel (i) in good running order and repair so that such Vessel shall be, insofar
as due diligence can make her so, tight, staunch, strong and well and sufficiently tackled,
apparelled, furnished, equipped and in every respect seaworthy and (ii) in at least as good a
working order and condition as when this Mortgage was executed, ordinary wear and tear excepted;
and will keep such Vessel, or cause her to be kept, in such condition as will entitle her to such
classification rating with the American Bureau of Shipping or other classification society of like
standing reasonably acceptable to the Mortgagee, (each, a “Classification Society”) that
companies engaged in the operation of vessels of the same type, size, age and flag as such Vessel
maintain respecting their vessels with such Classification Society. Notwithstanding the foregoing,
if such Vessel is affected by any loss or damage or any condemnation or taking of such Vessel or a
portion or component thereof, the Shipowner shall make all necessary repairs and replacements to
such Vessel to the extent and as permitted by the terms of the Credit Agreement;



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     (b) such Vessel shall, and the Shipowner covenants that it will, at all times comply with all
applicable laws, rules and regulations to the extent set forth in the Credit Agreement, and such
Vessel shall have on board as and when required thereby certificates showing compliance therewith;



     (c) the Shipowner will not make, or permit to be made, any substantial change in the
structure, type or speed of such Vessel or change in the rig of such Vessel; and



     (d) the Shipowner may, in the ordinary course of maintenance, repair or overhaul of such
Vessel, remove any item of property constituting a part of such Vessel, provided such item of
property is replaced to the extent necessary to maintain such Vessel in the condition required
herein or in the Credit Agreement. Any such replacement item of property shall, without necessity
of further act hereunder, become part of such Vessel and subject to this Mortgage.



     SECTION 1.11 The Shipowner will not transfer or change the flag or port of documentation of
any of the Vessels except as set forth in the Credit Agreement.



     SECTION 1.12 The Shipowner will not sell, mortgage or transfer any of the Vessels except in
accordance with the applicable provisions of the Credit Agreement. The Shipowner will not charter
any of the Vessels on a demise or bareboat basis for a charter period of more than six (6) months
without the prior written consent of the Mortgagee, which consent will not be unreasonably
withheld, conditioned or delayed. To the extent the Shipowner demise or bareboat charters such
Vessel, or enters into time charter parties or a series of successive voyage charter parties,
drilling contract, contracts of affreightment or pooling arrangements respecting any Vessel having
an indicated duration of at least six months (including any exercised optional extensions or
renewals) it will: (a) provide Mortgagee a copy of any such charter and all related documents, (b)
maintain in favor of Mortgagee a first priority perfected security interest in and Lien upon the
charter agreement and all related rights and the proceeds thereof subject to Excepted Liens, and
(c) cause any such charter and the rights of the Shipowner thereunder to be freely assignable to
Mortgagee and/or its designee.



     SECTION 1.13 The Shipowner agrees that, if the Shipowner fails to perform covenants or
obligations under this Mortgage, including, without limitation, its obligations with respect to
insurance, the discharging of Liens, taxes, dues, assessments, governmental charges, fines,
penalties lawfully imposed, repairs, reasonable attorneys’ fees, and other obligations that are not
Excepted Liens, the Mortgagee may, but shall not be obligated to, perform the Shipowner’s
obligations under this Mortgage, and any reasonable expenses incurred by the Mortgagee in
performing the Shipowner’s obligations shall be paid by the Shipowner within ten (10) Business Days
of demand. Any such performance by the Mortgagee may be made by the Mortgagee in reasonable
reliance on any statement, invoice or claim, without inquiry into the validity or accuracy thereof.
The amount and nature of any expense of the Mortgagee hereunder shall be conclusively established
by a certificate of any officer of the Mortgagee absent manifest error, and such amount shall be
included in the Secured Obligations, secured by this Mortgage.



     SECTION 1.14 In the event that at any time and from time to time this Mortgage or any
provisions hereof shall be deemed invalidated in whole or in part by reason of any present or
future law or any decision of any Governmental Authority, then the Shipowner, forthwith



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upon the request of the Mortgagee, will execute such other and further assurances and
documents as are reasonably requested by the Mortgagee to accomplish the purposes of this
Agreement.




     SECTION 1.15 In the event of the requisition (whether of title or use), condemnation,
sequestration, seizure or forfeiture of any of the Vessels by any Governmental Authority or by
anyone else, the Shipowner will give prompt written notice thereof to the Mortgagee, and any
payments in respect thereof shall be paid to the Shipowner, and the Shipowner shall cause any such
payment to be applied to the Secured Obligations to the extent required, and in accordance with,
the terms of the Credit Agreement.



ARTICLE II

EVENTS OF DEFAULT AND REMEDIES




     SECTION 2.1 If an Event of Default shall have occurred and be continuing, then, in each and
every such case the Mortgagee shall have the right to:



     (a) in accordance with the Credit Agreement, declare immediately due and payable all of the
Secured Obligations (in which case all of the same shall be immediately due), and bring suit at
law, in equity or in admiralty, as it may be advised, to recover judgment for the Secured
Obligations and satisfy the same out of the Vessels;



     (b) exercise all of the rights and remedies in foreclosure with respect to any of the Vessels
and otherwise given to mortgagees by the provisions of Legal Requirement, including but not limited
to, the provisions of the Vanuatu Maritime Law and the regulations in effect thereunder from time
to time, as amended;



     (c) take and enter into possession of any of the Vessels, at any time, wherever the same may
be, without court decision or other legal process and without being responsible for loss or damage,
and the Shipowner or other person in possession forthwith upon demand of the Mortgagee shall
surrender to the Mortgagee possession of such Vessel and the Mortgagee may, without being
responsible for loss or damage (except to the extent caused by the Mortgagee’s gross negligence or
willful misconduct), hold, lay up, lease, charter, operate or otherwise use such Vessel for such
time and upon such terms as it may deem to be for its best advantage, and demand, collect and
retain all hire, freights, earnings, issues, revenues, income, profits, return premiums, salvage
awards or recoveries, recoveries in general average, and all other sums due or to become due in
respect of such Vessel or in respect of any insurance thereon from any person whomsoever,
accounting only for the net profits, if any, arising from such use of such Vessel and charging upon
all receipts from the use of such Vessel or from the sale thereof by court proceedings or pursuant
to Section 2.1(e) below, all costs, expenses, charges, damages or losses by reason of such use
(including reasonable attorney’s fees); and if at any time the Mortgagee shall avail itself of the
right herein given it to take possession of such Vessel, the Mortgagee shall have the right to dock
such Vessel for a reasonable time at any dock, pier or other premises of the Shipowner without
charge, or to dock them at any other place at the cost and expense of the Shipowner, and the
Mortgagee shall have the right to require the Shipowner to deliver, and the Shipowner shall on
demand, at its own cost and expense, deliver to the Mortgagee such Vessel as demanded; and the
Shipowner hereby irrevocably instructs the masters of such Vessel so long as this Mortgage is
outstanding to deliver such Vessel to the Mortgagee as demanded;



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     (d) inspect and make copies of all original class records held by the Classification Society
relating to such Vessel; and/or



     (e) without being responsible for loss or damage, other than loss or damage due to its own
gross negligence or willful misconduct, sell such Vessel, at any place and at such time as the
Mortgagee may specify and in such manner and such place (whether by public or private sale) as the
Mortgagee may deem advisable (without necessity of bringing such Vessel to the place designated for
such sale), free from any claim by the Shipowner in admiralty, in equity, at law or by statute,
after first giving notice of the time and place of any public sale with a general description of
the property in the following manner:




     (i) by publishing such notice for 10 consecutive days in a daily newspaper of general
circulation published in New York City;




     (ii) if the place of sale should not be New York City, then also by publication of a
similar notice in a daily newspaper, if any, published at the place of sale; and




     (iii) by mailing a similar notice to the Shipowner at its last known address on the day
of first publication;


and notice of the time and place of any private sale by mailing such notice to the Shipowner at its
last known address.




     SECTION 2.2 Any sale of any of the Vessels or any interest therein made by the Mortgagee after
the occurrence and during the continuance of an Event of Default in pursuance of this Mortgage and
in accordance with applicable law, whether under the power of sale hereby granted or any judicial
proceedings, shall, to the extent not restricted by applicable law, operate to divest all right,
title and interest of any nature whatsoever of the Shipowner in and to such Vessel or such interest
therein sold, as the case may be, and shall bar any claim from the Shipowner, its successors and
assigns, and all persons claiming by, through or under them. No purchaser shall be bound to
inquire whether notice has been given, or whether any default has occurred, or as to the propriety
of the sale, or as to the application of the proceeds thereof. In the case of any such sale, the
Mortgagee shall be entitled, to apply the proceeds to the Secured Obligations in accordance with
Section 7.06 of the Credit Agreement. At any such sale, the Mortgagee may bid for and purchase
such property and upon compliance with the terms of sale may hold, retain and dispose of such
property without further accountability therefor.



     SECTION 2.3 The Mortgagee is hereby appointed attorney-in-fact of the Shipowner to execute and
deliver to any purchaser referred to in Section 2.2, and is hereby vested with full power and
authority to make, after the occurrence and during the continuation of an Event of Default, in the
name and on behalf of the Shipowner, a good conveyance of the title to such Vessel so sold. In the
event of any sale of any of the Vessels under any power herein contained, the Shipowner will, if
and when required by the Mortgagee, execute such form of conveyance of such Vessel and other
related documents as the Mortgagee may specify. The powers and authority granted to the Mortgagee
herein have been given for a valuable consideration and are hereby declared to be irrevocable.



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     SECTION 2.4 The Mortgagee is hereby appointed attorney-in-fact of the Shipowner in the name of
the Shipowner to, after the occurrence and during the continuation of an Event of Default, demand,
collect, receive, compromise and sue for, so far as may be permitted by law, all freights, hire,
earnings, issues, revenues, income and profits of each of the Vessels and all amounts due from
underwriters under any insurance thereon as payments of losses or as return premiums or otherwise,
salvage awards and recoveries of each of the Vessels, recoveries in general average or otherwise in
respect of each of the Vessels, and all other sums in respect of each of the Vessels, due or to
become due at the time of the occurrence and during the continuation of any Event of Default, or in
respect of any insurance thereon, from any person whomsoever, and to make, give and execute in the
name of the Shipowner acquittances, receipts, releases or other discharges for the same, whether
under seal or otherwise, and to endorse and accept in the name of the Shipowner all checks, notes,
drafts, warrants, agreements and other instruments in writing with respect to the foregoing. The
powers and authority granted to the Mortgagee herein have been given for a valuable consideration
and are hereby declared to be irrevocable.



     SECTION 2.5 Whenever any right to enter and take possession of any of the Vessels accrues to
the Mortgagee, it may require the Shipowner to deliver, and the Shipowner shall on demand, at its
own cost and expense, deliver to the Mortgagee such Vessel as demanded. If any legal proceedings
shall be taken to enforce any right under this Mortgage, the Mortgagee shall be entitled as a
matter of right to the appointment of a receiver of such Vessel and of the freights, hire,
earnings, issues, revenues, income and profits due or to become due and arising from the operation
thereof.



     SECTION 2.6 The Shipowner authorizes and empowers the Mortgagee or its appointees or any of
them to, after the occurrence and during the continuation of an Event of Default, appear in the
name of the Shipowner, its successors and assigns, in any court of any country or nation of the
world where a suit is pending against any of the Vessels because of or on account of an alleged
lien against such Vessel from which such Vessel has not been released and to take such proceedings
as any of them may deem necessary towards the defense of such suit and the purchase or discharge of
such lien, and all reasonable expenditures made or incurred by them or any of them for the purpose
of such defense or purchase or discharge shall be a debt due from the Shipowner, its successors and
assigns, to the Mortgagee, and shall be secured by the lien of this Mortgage in like manner and
extent as if the amount and description thereof were written herein.



     SECTION 2.7 The Shipowner covenants that at any time that any Secured Obligations shall be due
and payable (whether by acceleration or otherwise), the same shall be paid in accordance with the
Credit Agreement and other Loan Documents; and in case the Shipowner shall fail to pay the same
when due and payable in accordance with the Credit Agreement and other Loan Documents, and that
failure constitutes an Event of Default, the Mortgagee shall be entitled to recover judgment for
the whole amount so due and unpaid, together with such further amounts as shall be provided by the
Credit Agreement, other Loan Documents and applicable law. All moneys collected by the Mortgagee
under this Section 2.7 shall be applied by the Mortgagee in accordance with the terms of the Credit
Agreement.



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     SECTION 2.8 Each and every power and remedy herein given to the Mortgagee shall be cumulative
and shall be in addition to every other power and remedy herein given or now or hereafter existing
at law, in equity, in admiralty, by statute or under any Loan Document or other agreement, and each
and every power and remedy whether herein given or otherwise existing may be exercised from time to
time and as often and in such order as may be deemed expedient by the Mortgagee, and the exercise
or the beginning of the exercise of any power or remedy by the Mortgagee shall not be construed to
be a waiver of the right to exercise at the same time or thereafter any other power or remedy. No
delay or omission by the Mortgagee in the exercise of any right or power or in the pursuance of any
remedy accruing upon the occurrence and during the continuance of any Event of Default shall impair
any such right, power or remedy or be construed to be a waiver of any such right, power or remedy;
nor shall the acceptance by the Mortgagee of any security or of any payment of or on account of the
Secured Obligations be construed to be a waiver of any right that the Mortgagee may have hereunder
after the occurrence and during the continuance of such Event of Default or any other Event of
Default, including any subsequent Event of Default of the same or a different nature.



     SECTION 2.9 If at any time prior to any sale of or consummation of foreclosure proceedings on
any of the Vessels by the Mortgagee after the occurrence and during the continuance of an Event of
Default in accordance herewith, the Shipowner offers to cure such Event of Default and to
pay all expenses, advances, fees and damages to the Mortgagee arising from such Events of Default
to the extent provided for in the Credit Agreement or other Loan Documents, including all costs
and expenses incurred by the Mortgagee upon the exercise by the Mortgagee of its rights hereunder
as a result of such Event of Default, then the Mortgagee may, but shall be under no obligation to,
accept such offer, cure and payment and restore the Shipowner to its former position, but such
action shall not affect any rights which the Mortgagee may have hereunder after the occurrence and
during the continuance of any subsequent Event of Default or impair any rights consequent thereon.



     SECTION 2.10 In case the Mortgagee shall have proceeded to enforce any right, power or remedy
under this Mortgage by foreclosure, entry or otherwise, and such proceedings shall have been
discontinued or abandoned for any reason or shall have been determined adversely to the Mortgagee,
then and in every such case the Shipowner and the Mortgagee shall be restored to their former
positions and rights hereunder with respect to the property subject or intended to be subject to
this Mortgage, and all rights, remedies and powers of the Mortgagee shall continue as if no such
proceedings had been taken.



     SECTION 2.11 Unless otherwise specified herein or in the Credit Agreement, any cash proceeds
received by the Mortgagee from the sale of, collection of, or other realization upon any part of
any of the Vessels or related collateral or any other amounts received by the Mortgagee hereunder,
including the net earnings of any charter operation or other use of the Vessel by the Mortgagee
under any of the powers specified in Article I and/or Article II of this Mortgage, may be, at the
reasonable discretion of the Mortgagee (a) held by the Mortgagee in one or more cash collateral
accounts as cash collateral for the Secured Obligations under the terms of the Security Agreement
or (b) applied to the Secured Obligations. Amounts applied to the Secured Obligations shall be
applied to the payment of the Secured Obligations in the order set forth in Section 7.06 of the
Credit Agreement. Any surplus cash collateral or cash proceeds



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held by the Mortgagee after payment in full of the Secured Obligations shall be paid over to
the Shipowner or to whomever may be lawfully entitled to receive such surplus.




     SECTION 2.12 Unless and until one or more Events of Default shall occur and be continuing, the
Shipowner (a) shall be suffered and permitted to retain actual possession and use of each of the
Vessels and (b) to the extent permitted by Section 2.07(c)(iii) of the Credit Agreement shall have
the right, from time to time, in its discretion, and without application to the Mortgagee, and
without obtaining a release thereof by the Mortgagee, to dispose of, free from the lien hereof, any
boilers, engines, generators, pumps and pumping equipment, machinery, masts, spars, sails, rigging,
boats, anchors, cables, chains, tackle, out fit, apparel, furniture, fittings, equipment, spares,
fuel, stores or any other appurtenances of each of the Vessels, provided such item of property is
replaced and such Vessel is maintained in the condition required herein and in the Credit
Agreement, and such replacement item, if any, shall forthwith become subject to the lien of this
Mortgage as a first preferred mortgage thereon.



     SECTION 2.13 Notwithstanding anything to the contrary in this Mortgage, the amount of any
Secured Obligations that are secured by the Shipowner’s rights in the Vessels or any related
collateral or subject to a Lien in favor of the Mortgagee hereunder or under any other Security
Document shall be limited to the extent, if any, required so that the Liens granted under this
Mortgage shall not be subject to avoidance under Section 548 of the bankruptcy code of the United
States or to being set aside or annulled under any applicable law relating to fraud on creditors.
In determining the limitations, if any, on the amount of any Secured Obligations that are subject
to the Lien on the Vessels and related collateral hereunder pursuant to the preceding sentence, it
is the intention of the parties hereto that any rights of subrogation or contribution which such
Shipowner may have under the Loan Documents, any other agreement or applicable Law shall be taken
into account.



ARTICLE III

SUNDRY PROVISIONS




     SECTION 3.1 The maximum principal amount that may be outstanding under this Mortgage at any
time is thirty six million United States Dollars (US$36,000,000.00), and for purposes of recording
this Mortgage as required by the Vanuatu Maritime Law, the total amount of this Mortgage is thirty
six million United States Dollars (US$36,000,000.00), premium (if any) and interest and performance
of mortgage covenants. The maturity date is August [___], 2011. There is no separate discharge
amount for each Vessel.



     SECTION 3.2 All of the covenants, promises, stipulations and agreements of the Shipowner in
this Mortgage contained shall bind the Shipowner and its successors and permitted assigns and shall
be binding on and inure to the benefit of the Mortgagee and its successors and permitted assigns.
In the event of any assignment of this Mortgage by the Mortgagee in accordance with the applicable
provisions of the Credit Agreement and Vanuatu Maritime Law, the term “Mortgagee” as used
in this Mortgage shall be deemed to mean any such successor or permitted assignee.



     SECTION 3.3 Wherever and whenever herein any right, power or authority is granted or given to
the Mortgagee, such right, power or authority may be exercised in all cases



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by the Mortgagee or such agent or agents as it may appoint, and the act or acts of such agent
or agents when taken shall constitute the act of the Mortgagee hereunder.




     SECTION 3.4 (a) In the event that this Mortgage or any provisions hereof shall be deemed
invalidated in whole or in part by reason of any present or future law or any decision of any
Governmental Authority, the validity and enforceability of any other provision hereof shall not be
affected thereby. Any such invalidity or unenforceability of any provision of this Mortgage in any
jurisdiction or nation shall not render such provision invalid or unenforceable under the laws of
any other jurisdiction or nation and the Shipowner, forthwith upon the request of the Mortgagee,
will execute such other and further assurances and documents as are reasonably requested by the
Mortgagee to accomplish the purposes of this Agreement.



     (b) Anything herein to the contrary notwithstanding, it is intended that nothing herein shall
waive the preferred status of this Mortgage and that, if any provision of this Mortgage or portion
thereof shall be construed to waive the preferred status of this Mortgage, then such provision to
such extent shall be void and of no effect and shall cease to be a part of this Mortgage, without
affecting the remaining provisions, which shall remain in full force and effect.



     (c) For property other than a Vessel, if any should be determined to be covered by the
Mortgage, the discharge amount is 0.01% of the total amount of the outstanding principal amount
under the Credit Agreement.



     SECTION 3.5 ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS MORTGAGE OR ANY OTHER LOAN
DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK SITTING IN NEW YORK CITY OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF SUCH STATE, AND BY EXECUTION AND DELIVERY OF THIS
MORTGAGE, EACH OF THE SHIPOWNER AND THE MORTGAGEE CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE SHIPOWNER AND THE
MORTGAGEE IRREVOCABLY WAIVES ANY OBJECTION INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED
ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY
ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF ANY LOAN DOCUMENT OR OTHER DOCUMENT RELATED
THERETO. EACH OF THE SHIPOWNER AND THE MORTGAGEE WAIVES PERSONAL SERVICE OF ANY SUMMONS, COMPLAINT
OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS PERMITTED BY THE LAW OF SUCH STATE.



     SECTION 3.6 Nothing in Section 3.5 shall affect the right of any the Administrative
Agent or any other Lender to serve legal process in any other manner permitted by law or affect the
right of the Administrative Agent or any Lender to bring any action or proceeding against the
Shipowner in the courts of any other jurisdiction.



     SECTION 3.7 This Mortgage may be executed in any number of counterparts, each of which shall
be an original; but such counterparts shall together constitute but one and the same instrument.



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     SECTION 3.8 The term “Dollars” or the symbol “$” as used herein shall mean
Dollars in any coin or currency of the United States of America which at the time of payment shall
be legal tender for public and private debts.



     SECTION 3.9 Enforcement Expenses; Indemnification.




          (a) Costs and Expenses. The Shipowner shall pay all out-of-pocket expenses incurred
by the Mortgagee, any Lender or the Issuing Bank (including the fees, charges and disbursements
of any counsel for the Mortgagee, any Lender or the Issuing Bank) in connection with the
enforcement or protection of (i) its rights in connection with this Mortgage and (ii) its rights
against the Shipowner in connection with the Credit Agreement and the other Loan Documents,
including its rights under this Section, including all such out-of-pocket expenses incurred
during any workout, restructuring or negotiations in respect of the Revolving Advances or Letters
of Credit.




          (b) INDEMNIFICATION BY SHIPOWNER. THE SHIPOWNER SHALL INDEMNIFY THE MORTGAGEE (AND
ANY SUB-AGENT THEREOF), EACH LENDER AND THE ISSUING BANK, AND EACH RELATED PARTY OF ANY OF THE
FOREGOING PERSONS (EACH SUCH PERSON BEING CALLED AN “INDEMNITEE”) AGAINST, AND HOLD EACH
INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS, DAMAGES, LIABILITIES AND RELATED EXPENSES
(INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ANY COUNSEL FOR ANY INDEMNITEE)
INCURRED BY ANY INDEMNITEE OR ASSERTED AGAINST ANY INDEMNITEE BY ANY THIRD PARTY OR BY SHIPOWNER
OR ANY OTHER LOAN PARTY ARISING OUT OF, IN CONNECTION WITH, OR AS A RESULT OF (I) THE EXECUTION
OR DELIVERY OF THIS MORTGAGE, ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
HEREBY OR THEREBY, THE PERFORMANCE BY THE PARTIES HERETO OF THEIR RESPECTIVE OBLIGATIONS
HEREUNDER OR THEREUNDER, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, OR,
IN THE CASE OF THE MORTGAGEE (AND ANY SUB-AGENT THEREOF) AND ITS RELATED PARTIES ONLY, THE
ADMINISTRATION OF THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS, (II) ANY LOAN OR LETTER OF CREDIT
OR THE USE OR PROPOSED USE OF THE PROCEEDS THEREFROM (INCLUDING ANY REFUSAL BY THE ISSUING BANK
TO HONOR A DEMAND FOR PAYMENT UNDER A LETTER OF CREDIT IF THE DOCUMENTS PRESENTED IN CONNECTION
WITH SUCH DEMAND DO NOT STRICTLY COMPLY WITH THE TERMS OF SUCH LETTER OF CREDIT), (III) ANY
ACTUAL OR ALLEGED PRESENCE OR RELEASE OF HAZARDOUS MATERIALS ON OR FROM ANY PROPERTY OWNED OR
OPERATED BY ANY LOAN PARTY OR ANY LOAN PARTY’S SUBSIDIARY, OR ANY ENVIRONMENTAL LIABILITY RELATED
IN ANY WAY TO ANY LOAN PARTY OR ANY LOAN PARTY’S SUBSIDIARY, OR (IV) ANY ACTUAL OR PROSPECTIVE
CLAIM, LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING, WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY, WHETHER BROUGHT BY A THIRD PARTY OR BY THE SHIPOWNER OR ANY
OTHER LOAN PARTY, AND REGARDLESS OF WHETHER ANY INDEMNITEE IS A PARTY THERETO, IN ALL



Exhibit K — Form of Rig Mortgage

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CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE,
CONTRIBUTORY OR SOLE NEGLIGENCE OF THE INDEMNITEE; PROVIDED THAT SUCH INDEMNITY SHALL NOT, AS TO
ANY INDEMNITEE, BE AVAILABLE TO THE EXTENT THAT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR
RELATED EXPENSES (X) ARE DETERMINED BY A COURT OF COMPETENT JURISDICTION BY FINAL AND
NONAPPEALABLE JUDGMENT TO HAVE RESULTED FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNITEE OR (Y) RESULT FROM A CLAIM BROUGHT BY SHIPOWNER OR ANY OTHER LOAN PARTY AGAINST AN
INDEMNITEE FOR BREACH IN BAD FAITH OF SUCH INDEMNITEE’S OBLIGATIONS HEREUNDER OR UNDER ANY OTHER
LOAN DOCUMENT, IF SUCH SHIPOWNER OR SUCH LOAN PARTY HAS OBTAINED A FINAL AND NONAPPEALABLE
JUDGMENT IN ITS FAVOR ON SUCH CLAIM AS DETERMINED BY A COURT OF COMPETENT JURISDICTION.




          (c) All amounts due under this Section 3.9 shall be Secured Obligations and shall be
payable not later than ten (10) Business Days after demand therefor. The agreements in this
Section shall survive repayment of the other Secured Obligations and all other amounts payable
under the Credit Agreement and the other Loan Documents.



     SECTION 3.10 EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS MORTGAGE OR ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE
BEEN INDUCED TO ENTER INTO THIS MORTGAGE AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.



     SECTION 3.11 All notices and other communications hereunder shall be in writing and shall be
mailed, sent or delivered in accordance with Section 10.02 of the Credit Agreement.



     SECTION 3.12 Upon (a) the payment in full in cash of the Secured Obligations (other than
contingent indemnification obligations of which no Secured Party has knowledge), (b) the
termination or expiration of all Letters of Credit (other than Letters of Credit as to which the
Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of the Letter
of Credit Exposure allocable to such Letters of Credit or as to which other arrangements
satisfactory to the Issuing Bank have been made), and the termination of all obligations of the
Issuing Bank to issue, and the Lenders to participate in, Letters of Credit, (c) the termination of
all Swap Contracts with any Swap Counterparty and the termination of all obligations of Lenders in
respect of Swap Contracts (in each case, other than Swap Contracts as to which the applicable



Exhibit K — Form of Rig Mortgage

Page 14 of 18




 









 




Swap Counterparty has advised the Administrative Agent in writing that it has received other
collateral satisfactory to it), and (d) the termination or expiration of the Revolving Commitments,
the liens, estates and rights hereby granted shall terminate and all rights to the Vessels shall
revert to the Shipowner to the extent Vessels have not been sold or otherwise applied pursuant to
the terms hereof. In connection with any termination or release pursuant to this Section 3.12 or
if termination or release is authorized under Section 9.09 of the Credit Agreement, the
Administrative Agent shall promptly, and without the necessity of any notice to or further consent
from any other Secured Party, at the Shipowner’s expense, execute and deliver all further
instruments and documents (including without limitation, release of mortgages), and take all
further action that the Shipowner may reasonably request to evidence such termination or release.




     SECTION 3.13 None of the terms or provisions of this Mortgage may be waived, amended,
supplemented or otherwise modified except in accordance with Section 10.01 of the Credit Agreement.
No consent of any Swap Counterparty (except in such Person’s capacity as a Lender, if applicable)
shall be required for any waiver, amendment, supplement or other modification to this Mortgage.



     SECTION 3.14 Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, the Shipowner shall not assert, and hereby waives, any claim against any
Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages
(as opposed to direct or actual damages) arising out of, in connection with, or as a result of,
this Mortgage, any other Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the
proceeds thereof. No Indemnitee shall be liable for any damages arising from the use by unintended
recipients of any information or other materials distributed to such unintended recipients by such
Indemnitee through telecommunications, electronic or other information transmission systems in
connection with this Mortgage or the other Loan Documents or the transactions contemplated hereby
or thereby other than for direct or actual damages resulting from the gross negligence or willful
misconduct of such Indemnitee as determined by a final and nonappealable judgment of a court of
competent jurisdiction.



     SECTION 3.15 In the event of a direct conflict between this Mortgage and the Credit Agreement,
the Credit Agreement shall control; provided, however, the parties understand and agree that this
Mortgage sets forth additional covenants, obligations and rights and the parties will use all
reasonable efforts to construe the provisions and covenants in this Mortgage as not being in direct
conflict with the Credit Agreement, and, provided further, this Mortgage shall be governed by and
construed in accordance with, Vanuatu Maritime Law.



[The rest of this page has been left intentionally blank.]




Exhibit K — Form of Rig Mortgage

Page 15 of 18




 









 










     IN WITNESS WHEREOF, the Shipowner has executed this Mortgage on the day and year first above
written.



	 	 	 	 	 	 	 
	 	 	SEAHAWK DRILLING, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	Name:
	 	 

	 	 
	 

	 	Title:
	 	 

	 	 
	 

	 	 	 	 

	 	 






	 	 	 	 	 	 	 
	STATE OF Texas

	 	 	)	 	 	 
	 

	 	 	)	 	 	ss. :
	COUNTY OF HARRIS

	 	 	)	 	 	 






     On this ___day of [___], 2009, before me personally appeared [Name], to me known, who being by
me duly sworn, did depose and say that he resides at                     ; that he the duly
elected and acting                      of SEAHAWK DRILLING, LLC, the company described in and which
executed the foregoing instrument; and that he signed his name thereto by order of the Board of
Directors of said company and that said instrument is the act and deed of said company.



	 	 	 	 	 
	 

	 	 

Notary Public
	 	 






Exhibit K — Form of Rig Mortgage

Page 16 of 18





 












 





EXHIBIT A

TO

FIRST PREFERRED FLEET MORTGAGE




[Copy of the Credit Agreement with certain exhibits]




Exhibit K – Form of Rig Mortgage




Page 17 of 18




 









 





SCHEDULE I

TO

FIRST PREFERRED MORTGAGE




DESCRIPTION OF THE VESSEL




(including the current classification)




	 	 	 	 	 
	 	 	 	 	Name of Class Society /
	Vessel Name	 	Official Number	 	Vessel Classification
	Seahawk 2000
	 	1520	 	ABS
	Seahawk 2001
	 	1542	 	ABS
	Seahawk 2002
	 	1521	 	ABS
	Seahawk 2004
	 	1463	 	ABS
	Seahawk 2005
	 	1489	 	ABS
	Seahawk 2007
	 	1721	 	ABS
	Seahawk 2501
	 	1826	 	ABS
	Seahawk 2503
	 	1828	 	ABS
	Seahawk 2505
	 	1829	 	ABS
	Seahawk 2600
	 	1488	 	ABS
	Seahawk 2601
	 	1827	 	ABS
	Seahawk 3000
	 	1830	 	ABS
	Seahawk 800
	 	1831	 	ABS






Exhibit K – Form of Rig Mortgage




Page 18 of 18




 









 





EXHIBIT L

FORM OF SECURITY AGREEMENT




     THIS SECURITY AGREEMENT dated as of August [___], 2009 (this “Security Agreement”), is
entered by and among SEAHAWK DRILLING, INC., a Delaware corporation (the “Borrower”), the
Guarantors (as defined in the Credit Agreement described below, and, together with the Borrower,
the “Grantors” and, individually, each a “Grantor”) and NATIXIS, NEW YORK BRANCH,
as administrative agent (in such capacity, the “Administrative Agent”), for the ratable
benefit of the Secured Parties (as defined in the Credit Agreement described below).



RECITALS




     A. This Security Agreement is entered into in connection with that certain Revolving Credit
Agreement dated as of August ___, 2009 (as it has been or may be amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”), among the Borrower, the
Guarantors, the lenders party thereto from time to time (individually, a “Lender” and
collectively, the “Lenders”), and Natixis, New York Branch, as Administrative Agent for
such Lenders and as Issuing Bank (as defined in the Credit Agreement).



     B. Each Grantor will derive substantial direct or indirect benefit from (i) the transactions
contemplated by the Credit Agreement and the other Loan Documents (as defined in the Credit
Agreement) and (ii) Swap Contracts (as defined in the Credit Agreement) entered into by any Loan
Party (as defined in the Credit Agreement) with a Swap Counterparty (as defined in the Credit
Agreement), and such transactions and documents are necessary or convenient to the conduct,
promotion or attainment of such Guarantor’s business.



     C. It is a requirement under the Credit Agreement that the Grantors secure the due payment and
performance of all Obligations (as defined in the Credit Agreement) by entering into this Security
Agreement.



AGREEMENT



NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, each Grantor hereby agrees with the
Administrative Agent for the benefit of the Secured Parties as follows:




     Section 1. Definitions; Interpretation. (a) All capitalized terms not otherwise
defined in this Security Agreement that are defined in the Credit Agreement shall have the meanings
assigned to such terms in the Credit Agreement. Any terms used in this Security Agreement that are
defined in the UCC (as defined below) and not otherwise defined herein or in the Credit Agreement
shall have the meanings assigned to those terms by the UCC. The following terms shall have the
meanings specified below:




“Accounts” means an “account” as defined in the UCC, including, without limitation,
all of any Grantor’s rights to payment for goods sold or leased, services performed, or



 









 







otherwise, whether now in existence or arising from time to time hereafter, including,
without limitation, rights arising under any Contract or evidenced by an account, note,
contract, security agreement, Chattel Paper (including, without limitation, tangible Chattel
Paper and electronic Chattel Paper), Contract Document or other evidence of indebtedness or
security, together with all of the right, title and interest of any Grantor in and to (i)
all security pledged, assigned, hypothecated or granted to or held by any Grantor to secure
the foregoing, (ii) all of any Grantor’s right, title and interest in and to any goods or
services, the sale of which gave rise thereto, (iii) all guarantees, endorsements and
indemnifications on, or of, any of the foregoing, (iv) all books, correspondence, credit
files, records, ledger cards, invoices, and other papers relating thereto, including without
limitation all similar information stored on a magnetic medium or other similar storage
device and other papers and documents in the possession or under the control of any Grantor
or any computer bureau from time to time acting for any Grantor, (v) all evidences of the
filing of financing statements and other statements granted to any Grantor and the
registration of other instruments in connection therewith and amendments thereto, notices to
other creditors or secured parties, and certificates from filing or other registration
officers, (vi) all credit information, reports and memoranda relating thereto, and (vii) all
other writings related in any way to the foregoing.




“Cash Collateral” means all amounts from time to time held in any checking, savings,
deposit or other account of such Grantor, all monies, proceeds or sums due or to become due
therefrom or thereon and all documents (including, but not limited to passbooks,
certificates and receipts) evidencing all funds and investments held in such accounts.




“Chattel Paper” has the meaning set forth in the UCC.




“Collateral” has the meaning set forth in Section 2 of this Security Agreement.




“Contract” means any contract to which any Grantor now is, or hereafter will be
bound, or to which such Grantor is or hereafter will be a party, beneficiary or assignee,
including any Insurance Contract, and all exhibits, schedules and other attachments to such
contract, as the same may be amended, supplemented or otherwise modified or replaced from
time to time.




“Contract Documents” means all Instruments, Chattel Paper, letters of credit, bonds,
guarantees or similar documents evidencing, representing, arising from or existing in
respect of, relating to, securing or otherwise supporting the payment of, the Contract
Rights.




“Contract Rights” means (i) all (A) of any Grantor’s rights to payment under any
Contract or Contract Document and (B) payments due and to become due to any Grantor under
any Contract or Contract Document, in each case whether as contractual obligations, damages
or otherwise; (ii) all of any Grantor’s claims, rights, powers, or privileges and remedies
under any Contract or Contract Document; and (iii) all of any Grantor’s rights under any
Contract or Contract Document to make determinations, to exercise any election (including,
but not limited to, election of remedies) or option or to give or



Exhibit L – Form of Security Agreement



Page 2 of 26









 







receive any notice, consent, waiver or approval together with full power and authority with
respect to any Contract or Contract Document to demand, receive, enforce or collect any of
the foregoing rights or any property which is the subject of any Contract or Contract
Document, to enforce or execute any checks, or other instruments or orders, to file any
claims and to take any action which, in the opinion of the Administrative Agent, may be
necessary or advisable in connection with any of the foregoing in the case of clauses (i) –
(iii) hereof.




“Deposit Account” has the meaning set forth in the UCC.




“Document” means a bill of lading, dock warrant, dock receipt, warehouse receipt or
order for the delivery of goods, and also any other document which in the regular course of
business or financing is treated as adequately evidencing that the person in possession of
it is entitled to receive, hold and dispose of the document and the goods it covers.




“Equipment” means any equipment now or hereafter owned or leased by any Grantor, or
in which any Grantor holds or acquires any other right, title or interest, constituting
“equipment” under the UCC, including, without limitation, all machinery, equipment,
facilities, supplies, or other tangible personal property, including engines, valves,
fittings, tools, machinery and parts, communication systems, and other equipment used by any
Grantor for the provision of services, and any manuals, instructions, blueprints, computer
software (including software that is imbedded in and part of the equipment) and similar
items which relate to the above, and any and all additions, substitutions and replacements
of any of the foregoing, wherever located together with all improvements thereon and all
attachments, components, parts, equipment and accessories installed thereon or affixed
thereto.




“Excluded Contract Collateral” has the meaning set forth in Section 2(b)(i) of this
Security Agreement.




“Excluded Deposit Account” has the meaning set forth in Section 2(b)(iii) of this
Security Agreement.




“Excluded Equipment” has the meaning set forth in Section 2(b)(ii) of this Security
Agreement.




“Excluded Equity” has the meaning set forth in Section 2(b)(iv) of this Security
Agreement.




“Excluded Insurance Proceeds” has the meaning set forth in Section 2(b)(v) of this
Security Agreement.




“Fixtures” means any fixtures now or hereafter owned or leased by any Grantor, or in
which any Grantor holds or acquires any other right, title or interest, constituting
“fixtures” under the UCC, including without limitation any and all additions, substitutions
and replacements of any of the foregoing, wherever located together with all improvements
thereon and all attachments, components, parts, equipment and accessories installed thereon
or affixed thereto.



Exhibit L – Form of Security Agreement



Page 3 of 26









 






“General Intangibles” means all general intangibles now or hereafter owned by any
Grantor, or in which any Grantor holds or acquires any other right, title or interest,
constituting “general intangibles” or “payment intangibles” under the UCC, including, but
not limited to, all trademarks, trademark applications, trademark registrations, tradenames,
fictitious business names, business names, company names, business identifiers, prints,
labels, trade styles and service marks (whether or not registered), trade dress, including
logos and/or designs, copyrights, patents, patent applications, goodwill of any Grantor’s
business symbolized by any of the foregoing, trade secrets, license rights, license
agreements, permits, franchises, and any rights to tax refunds to which any Grantor is now
or hereafter may be entitled.




“Instrument” means an “instrument” as defined in the UCC, including, without
limitation, any Negotiable Instrument, or any other writing which evidences a right to the
payment of money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary endorsement or
assignment (other than Instruments constituting Chattel Paper).




“Insurance Contracts” means all contracts and policies of insurance and re-insurance
maintained or required to be maintained by or on behalf of any Grantor under the Loan
Documents.




“Inventory” means all of the inventory of any Grantor, or in which any Grantor holds
or acquires any right, title or interest, of every type or description, now owned or
hereafter acquired and wherever located, whether raw, in process or finished, and all
materials usable in processing the same and all documents of title covering any inventory,
including, without limitation, work in process, materials used or consumed in any Grantor’s
business, now owned or hereafter acquired or manufactured by any Grantor and held for sale
in the ordinary course of its business, all present and future substitutions therefor, parts
and accessories thereof and all additions thereto, all Proceeds thereof and products of such
inventory in any form whatsoever, and any other item constituting “inventory” under the UCC.




“Inventory Records” means all books, records, other similar property, and General
Intangibles at any time relating to Inventory.




“Investment Property” means “investment property” as defined in the UCC, including,
without limitation, all securities (whether certificated or uncertificated), security
entitlements, securities accounts, commodity contracts, and commodity accounts.




“Negotiable Instrument” means a “negotiable instrument” as defined in the UCC.




“Proceeds” means all proceeds (as defined in the UCC) of any or all of the
Collateral, including without limitation (i) any and all proceeds of, all claims for, and
all rights of any Grantor to receive the return of any premiums for, any insurance,
indemnity, warranty or guaranty payable from time to time with respect to any of the
Collateral, (ii) any and all payments (in any form whatsoever) made or due and payable from
time to time in connection with any requisition, confiscation, condemnation, seizure or
forfeiture



Exhibit L – Form of Security Agreement



Page 4 of 26









 







of all or any part of the Collateral by any Governmental Authority (or any Person acting
under color of any Governmental Authority), (iii) all proceeds received or receivable when
any or all of the Collateral is sold, exchanged or otherwise disposed, whether voluntarily,
involuntarily, in foreclosure or otherwise, (iv) all claims of any Grantor for damages
arising out of, or for breach of or default under, any Collateral, (v) all rights of any
Grantor to terminate, amend, supplement, modify or waive performance under any Contracts, to
perform thereunder and to compel performance and otherwise exercise all remedies thereunder,
and (vi) any and all other amounts from time to time paid or payable under or in connection
with any of the Collateral.




“Secured Obligations” means all Obligations now or hereafter existing, including any
extensions, modifications, substitutions, amendments and renewals thereof, whether for
principal, interest, fees, expenses, indemnification, or otherwise.




“Security Agreement” means this Security Agreement, as the same may be modified,
supplemented or amended from time to time in accordance with its terms.




“Security Termination Date” means the date on or prior to which all of the following
shall have occurred: (a) the payment in full in cash of the Secured Obligations (other than
contingent indemnification obligations of which no Secured Party has knowledge), (b) the
termination or expiration of all Letters of Credit (other than Letters of Credit as to which
the Issuing Bank has an enforceable cash collateral security in an amount equal to 105% of
the Letter of Credit Exposure allocable to such Letters of Credit or as to which other
arrangements satisfactory to the Issuing Bank have been made), and the termination of all
obligations of the Issuing Bank to issue, and the Lenders to participate in, Letters of
Credit, (c) the termination of all Swap Contracts with any Swap Counterparty and the
termination of all obligations of Lenders in respect of Swap Contracts (in each case, other
than Swap Contracts as to which the applicable Swap Counterparty has advised the
Administrative Agent in writing that it has received other collateral satisfactory to it),
and (d) the termination or expiration of the Revolving Commitments.




“Swap Contract” has the meaning set forth in the Credit Agreement.




“UCC” means the Uniform Commercial Code as in effect on the date hereof in the State
of New York, as amended from time to time thereafter, and any successor statute; provided,
however, in the event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of the security interest in any Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction other than the State of New York,
the term “UCC” shall mean the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such attachment, perfection
or priority and for purposes of definitions related to such provisions.



     (b) The definitions of terms herein shall apply equally to the singular and plural forms of
the terms defined. Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be
deemed to be followed by the phrase “without limitation.” The word “will”



Exhibit L – Form of Security Agreement



Page 5 of 26









 







shall be construed to have the same meaning and effect as the word “shall.” The word “or” is
not exclusive. Unless the context requires otherwise (i) any definition of or reference to any
agreement, instrument, schedule or other document herein shall be construed as referring to such
agreement, instrument, schedule or other document as from time to time amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements or modifications
set forth herein) and in effect, (ii) any reference herein to any Person shall be construed to
include such Person’s successors and permitted assigns, (iii) the words “herein,” “hereof” and
“hereunder,” and words of similar import, shall be construed to refer to this Security Agreement in
its entirety and not to any particular provision hereof, (iv) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Security Agreement, (v) any reference to any law or regulation
herein shall, unless otherwise specified, refer to such law or regulation as amended, modified or
supplemented from time to time and (vi) the words “asset” and “property” shall be construed to have
the same meaning and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights.



     Section 2. Assignment, Pledge and Grant of Security Interest.



     (a) As collateral security for the prompt and complete payment and performance when due of all
Secured Obligations, each Grantor hereby assigns, pledges, charges, and grants to the
Administrative Agent for the ratable benefit of the Secured Parties a lien on and continuing
security interest in all of such Grantor’s right, title and interest in, to and under, all items
described in this Section 2, whether now owned or hereafter acquired by such Grantor and wherever
located and whether now owned or hereafter existing or arising (collectively, the
“Collateral”):




	 	(i)	 	all Contracts, all Contract Rights, Contract Documents
and Accounts associated with such Contracts and each and every document
granting security to such Grantor under any such Contract;
	 
	 	(ii)	 	all Accounts (other than Excluded Accounts);
	 
	 	(iii)	 	all Inventory;
	 
	 	(iv)	 	all Equipment (other than Excluded Equipment);
	 
	 	(v)	 	all General Intangibles;
	 
	 	(vi)	 	all Investment Property (other than Excluded Equity);
	 
	 	(vii)	 	all Fixtures;
	 
	 	(viii)	 	all checking, savings, deposit or other account of such Grantor and all
other accounts held in the name of such Grantor (other than Excluded
Deposit Accounts);
	 
	 	(ix)	 	all Cash Collateral;





Exhibit L – Form of Security Agreement



Page 6 of 26









 






	 	(x)	 	any right to receive a payment under any Swap Contract
in connection with a termination thereof;
	 
	 	(xi)	 	(A) all policies of insurance and Insurance Contracts
now or hereafter held by or on behalf of such Grantor, including casualty
and liability, business interruption, and any title insurance, (B) all
Proceeds of insurance (other than Excluded Insurance Proceeds), and (C) all
rights, now or hereafter held by such Grantor to any warranties of any
manufacturer or contractor of any other Person;
	 
	 	(xii)	 	any and all liens and security interests (together
with the documents evidencing such security interests) granted to such
Grantor by an obligor to secure such obligor’s obligations owing under any
Instrument, Chattel Paper, or Contract that is pledged hereunder or with
respect to which a security interest in such Grantor’s rights in such
Instrument, Chattel Paper, or Contract is granted hereunder;
	 
	 	(xiii)	 	any and all guaranties given by any Person for the benefit of such
Grantor which guarantees the obligations of an obligor under any
Instrument, Chattel Paper or Contract, which are pledged hereunder;
	 
	 	(xiv)	 	without limiting the generality of the foregoing, all
other goods, Instruments, Chattel Paper, Documents, and Fixtures of such
Grantor whether now existing or hereafter acquired from time to time; and
	 
	 	(xv)	 	any and all additions, accessions and improvements to,
all substitutions and replacements for, and all products and Proceeds of or
derived from, all of the items described above in this Section 2.





     (b) Notwithstanding anything to the contrary contained in Section 2(a) and other than to the
extent set forth in this Section 2(b), the following property shall be excluded from the lien and
security interest granted hereunder (and shall, as applicable, not be included as “Collateral”,
“Contracts”, “Contract Rights”, “Contract Documents”, “Accounts”, “Inventory”, “Equipment”,
“General Intangibles”, “Investment Property”, “Fixtures”, “Insurance Contracts”, “Proceeds”,
“Instruments”, or “Chattel Paper” for the purposes hereof):




     (i) any Contract, Contract Document or other document (and any Contract Rights arising
thereunder and Collateral related thereto) to which any of the Grantors is a party on the
date hereof or any license or permit issued by a Governmental Authority and held by a
Grantor (but excluding any Contract and Contract Rights arising thereunder related to a
Collateral Rig but including any Contract with PEMEX and all Contract Rights and Collateral
related thereto), in any case to the extent (but only to the extent) that the granting of a
security interest therein would constitute or result in (A) the abandonment, invalidation or
unenforceability of any material right, title or interest of any Grantor therein, (B) a
material violation by any Grantor of any law to which it is subject or (C) in a breach or
termination pursuant to the terms of, or a default under, any such Contract, Contract
Document, document, license or permit, the result of which




Exhibit L – Form of Security Agreement



Page 7 of 26









 







would be the loss of such asset
or any material right, title or interest of any Grantor therein (all such Contracts,
Contract Documents, Contract Rights, documents, licenses, permits and related
Collateral being the “Excluded Contract Collateral”); provided, however, that
(x) the exclusion from the lien and security interest granted by such Grantor hereunder of
any Excluded Contract Collateral shall not limit, restrict or impair the grant by such
Grantor of the lien and security interest in any accounts or receivables arising under any
such Excluded Contract Collateral or any payments due or to become due thereunder, (y) to
the extent severable, if a security interest in a portion of any Excluded Contract
Collateral would not result in any of the consequences specified in clauses (A), (B) and (C)
above, then such portion shall not be included as Excluded Contract Collateral and the lien
and security interest granted hereby shall attach automatically and immediately to such
portion and such portion shall automatically and immediately be subject to the terms of this
Security Agreement as “Collateral”, and (z) any Excluded Contract Collateral or any portion
thereof shall automatically and immediately cease to be excluded from this Section 2(b) and
shall automatically and immediately be subject to the terms of this Security Agreement as
“Collateral” (and the lien and security interest granted hereby shall automatically and
immediately attach thereto), to the extent that (1) any condition or consequence described
in clause (A), (B) or (C) above is remedied or is ineffective or is subsequently rendered
ineffective under Sections 9.406, 9.407, 9.408 or 9.409 of the UCC or under any other Legal
Requirement or under any principles of equity or is otherwise no longer in effect, or (2)
the applicable Grantor has obtained the requisite consents related to such Excluded Contract
Collateral to the creation of a lien and security interest in, such Excluded Contract;




     (ii) any Equipment of a Grantor (A) that is subject to a Lien securing purchase money
debt or obligations under a Capital Lease to the extent (and only to the extent) that (1)
such Lien and such Debt are permitted under the terms of the Credit Agreement, and (2) the
documents relating to such Debt prohibits the granting of a Lien in such Equipment, (B) that
is used exclusively on a Non-Collateral Rig, or (C) to the extent a security interest
encumbering such Equipment could not be perfected by the filing of a financing statement
(collectively, the “Excluded Equipment”);




     (iii) any checking, savings, deposit or other account of such Grantor (A) exclusively
used for payroll, payroll taxes and other employee wage and benefit payments to or for the
benefit of any Grantor’s employees or (B) exclusively holding deposits made by any
purchasers of Equipment in contemplation of a sale thereof which is not prohibited by the
Credit Agreement (collectively, the “Excluded Deposit Accounts”);




     (iv) 35% of all Equity Interest directly held by any Grantor in a Foreign Subsidiary
(collectively, the “Excluded Equity”);




     (v) any Proceeds of an Insurance Contract to the extent (and only to the extent) that
such Proceeds results from damages to a Non-Collateral Rig (collectively, the “Excluded
Insurance Proceeds”); and




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     (vi) any Account arising from the use or operation of the vessels the Pride
Tennessee and the Pride Wisconsin, and all Proceeds thereof (collectively, the “Excluded
Accounts”);


provided, however, that any Proceeds received by any Grantor from the sale,
transfer or other disposition of any Excluded Contract Collateral, Excluded Deposit Account,
Excluded Equipment, Excluded Equity, Excluded Insurance Proceeds, Excluded Accounts or any other
property excluded under clauses (i) through (v) above shall constitute Collateral unless any assets
or property constituting such Proceeds are themselves subject to the exclusions set forth in
clauses (i) through (v) above. Furthermore, notwithstanding anything to the contrary contained
herein, as to any Grantor, the “Collateral” as defined above shall not include any “Pledged
Collateral” as defined in the Pledge Agreement as defined in the Credit Agreement (but only to the
extent such Grantor has pledged such Pledged Collateral under such Pledge Agreement).




     (c) Notwithstanding anything contained herein to the contrary, it is the intention of each
Grantor, the Administrative Agent and the other Secured Parties that the amount of the Secured
Obligation secured by each Grantor’s interests in any of its Property shall be in, but not in
excess of, the maximum amount permitted by fraudulent conveyance, fraudulent transfer and other
similar Legal Requirement applicable to such Grantor. Accordingly, notwithstanding anything to the
contrary contained in this Security Agreement or in any other agreement or instrument executed in
connection with the payment of any of the Secured Obligations, the amount of the Secured
Obligations secured by each Grantor’s interests in any of its Property pursuant to this Security
Agreement shall be limited to an aggregate amount equal to the largest amount that would not render
such Grantor’s obligations hereunder or the liens and security interest granted to the
Administrative Agent hereunder subject to avoidance under Section 548 of the United States
Bankruptcy Code or any comparable provision of any other applicable law.



     Section 3. Representations and Warranties. Each Grantor hereby represents and
warrants the following to the Administrative Agent and the other Secured Parties:



     (a) Records. As of the date hereof (i) such Grantor’s sole jurisdiction of formation
and type of organization are as set forth in Schedule 1 attached hereto, (ii) all records
concerning the Accounts, General Intangibles, or any other Collateral applicable to such Grantor
are located at the address for such Grantor on such Schedule 1, and (iii) none of the
Accounts are evidenced by a promissory note or other instrument.



     (b) Other Liens. Such Grantor is, and will be the record, legal, and beneficial owner
of all of the Collateral pledged by such Grantor free and clear of any Lien, except for the
Excepted Liens. No effective financing statement or other instrument similar in effect covering
all or any part of the Collateral is, or will be, on file in any recording office, except such as
may be filed in connection with this Security Agreement or in connection with other Permitted Liens
or for which satisfactory releases have been received by the Administrative Agent.



     (c) Lien Priority and Perfection.



          (i) Subject only to Excepted Liens, this Security Agreement creates valid and continuing
security interests in the Collateral, securing the payment and performance of all the




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Secured
Obligations. Upon the filing of financing statements with the jurisdiction listed in Schedule
1, the security interests granted to the Administrative Agent hereunder will constitute valid
first-priority perfected security interests in all Collateral with respect to which a security
interest can be perfected by the filing of a financing statement, subject only to Excepted Liens.




          (ii) No consent of any other Person and no authorization, approval, or other action by, and no
notice to or filing with any Governmental Authority is required to be made or
obtained by any Loan Party (A) for the grant by such Grantor of the pledge, assignment, and
security interest granted hereby or for the execution, delivery, or performance of this Security
Agreement by such Grantor, (B) for the validity, perfection, or maintenance of the pledge,
assignment, lien, and security interest created hereby (including the first-priority (subject to
Excepted Liens) nature thereof), except for security interests that cannot be perfected by filing
under the UCC, or (C) for the exercise by the Administrative Agent of the rights provided for in
this Security Agreement or the remedies in respect of the Collateral pursuant to this Security
Agreement, except (1) those consents to assignment of licenses, permits, approvals, powers, and
other rights that are as a matter of law not assignable, (2) those consents, approvals,
authorizations, actions, notices or filings which have been duly obtained or made and, in the case
of the maintenance of perfection, the filing of continuation statements under the UCC, and (3)
those filings and actions described in Section 3(c)(i).




     (d) Tax Identification Number and Organizational Number. The federal tax
identification number of such Grantor and, if applicable, the organizational number of such Grantor
are as set forth in Schedule 1.



     (e) Tradenames; Prior Names. Except as set forth on Schedule 1, as of the
date hereof, such Grantor has not conducted business under any name other than its current name
during the last five years prior to the date of this Security Agreement.



     (f) Exclusive Control. Such Grantor has exclusive possession and control of its
respective Equipment and Inventory other than Collateral with a value equal to or less than
$1,000,000 in the aggregate.



     Section 4. Covenants.



     (a) Further Assurances.



          (i) Each Grantor agrees that from time to time, at its expense, such Grantor shall promptly
execute and deliver all instruments and documents, and take all action, that may be reasonably
necessary or desirable, or that the Administrative Agent may reasonably request, in order to
perfect, preserve and protect any pledge, charge, assignment, or security interest granted or
intended to be granted hereby or to enable the Administrative Agent to exercise and enforce its
rights and remedies hereunder with respect to any Collateral. Without limiting the generality of
the foregoing, each Grantor (A) at the request of Administrative Agent, shall execute such
instruments, endorsements or notices, as may be reasonably necessary or as the Administrative Agent
may reasonably request, in order to perfect and preserve the assignments and security interests
granted or purported to be granted hereby, (B) shall, at the reasonable request of the
Administrative Agent, mark conspicuously each document included in the




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Collateral, each Chattel
Paper included in the Accounts, and each of its records pertaining to the Collateral, in each case,
with a value in excess of $250,000 individually (or $1,000,000 in the aggregate), but in any event
any Collateral that is included in determining the then effective Borrowing Base (regardless of
value) with a legend, in form and substance reasonably satisfactory to the Administrative Agent,
indicating that such document, Chattel Paper, or record is subject to the pledge, assignment, and
security interest granted hereby, (C) shall, if any Collateral shall be evidenced by a promissory
note or other instrument or chattel paper, deliver
and pledge to the Administrative Agent hereunder such note or instrument or chattel paper duly
endorsed and accompanied by duly executed instruments of transfer or assignment, all in form and
substance reasonably satisfactory to the Administrative Agent, and (D) authorizes the
Administrative Agent to file any financing statements, amendments or continuations without the
signature of such Grantor to the extent permitted by applicable law in order to perfect or maintain
the perfection of any security interest granted under this Security Agreement (including, without
limitation, financing statements using an “all assets” or “all personal property” collateral
description).




          (ii) Each Grantor shall pay all filing, registration and recording fees and all refiling,
re-registration and re-recording fees, and all other reasonable expenses incident to the execution
and acknowledgment of this Security Agreement, any assurance, and all federal, state, county and
municipal stamp taxes and other taxes, duties, imports, assessments and charges arising out of or
in connection with the execution and delivery of this Security Agreement, any agreement
supplemental hereto, any financing statements, and any instruments of further assurance.




          (iii) Each Grantor shall promptly provide to the Administrative Agent all information and
evidence the Administrative Agent may reasonably request concerning the Collateral to enable the
Administrative Agent to enforce the provisions of this Security Agreement.




     Section 5. Change of Name; State of Formation. Each Grantor shall give the
Administrative Agent at least 10 Business Days prior written notice before it (i) in the case of
any Grantor that is not a “registered organization” (as such term is defined in Section 9-102 of
the UCC), changes the location of its principal place of business and chief executive office, (ii)
changes the location of its jurisdiction of formation or organization, (iii) changes the location
of the Equipment, Inventory, or original copies of any Chattel Paper evidencing Accounts, in each
case, with a value in excess of $250,000 individually (or $1,000,000 in the aggregate) but in any
event any such Collateral that is included in determining the then effective Borrowing Base
(regardless of value), or (iv) changes its legal name or uses a trade name other than its current
name used on the date such Grantor entered into this Pledge Agreement; provided that, such Grantor
shall not effect or permit any such change unless all filings have been made under the UCC or
otherwise that are required in order for the Administrative Agent to continue at all times
following such change to have, and each Grantor agrees to take all necessary action to ensure that
the Administrative Agent does continue at all times to have, a valid, legal and perfected security
interest in all the Collateral. Other than as permitted by Section 6.15 of the Credit Agreement
but subject to the terms of this Section 5, no Grantor shall amend, supplement, modify or restate
its articles or certificate of incorporation, bylaws, limited liability company agreements, or
other equivalent organizational documents, nor amend its name or change its




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jurisdiction of
incorporation, organization or formation without the prior written consent of the Administrative
Agent.



     (a) Right of Inspection. Each Grantor shall hold and preserve, at its own cost and
expense complete records of the Collateral in the ordinary course of business, including, but not
limited to, Instruments, Chattel Paper, Contracts, and records with respect to the Accounts, and
will permit representatives of the Administrative Agent, upon reasonable advance notice, at any
time during normal business hours to inspect the Collateral, copy records pertaining thereto,
and if applicable, copy such Collateral. At the Administrative Agent’s reasonable written request
(which may be delivered by electronic mail so long as such electronic mail is delivered to the
corporate secretary of the applicable Grantor), each Grantor shall promptly deliver copies of any
and all such records to the Administrative Agent.



     (b) Liability Under Contracts and Accounts. Notwithstanding anything in this Security
Agreement to the contrary, (i) the execution of this Security Agreement shall not release any
Grantor from its obligations and duties under any Contract Document, or any other contract or
instrument which are part of the Collateral and Accounts included in the Collateral, (ii) the
exercise by the Administrative Agent of any of its rights hereunder shall not release any Grantor
from any of its duties or obligations under any Contract Documents, or any other Contract or
Instrument which are part of the Collateral and Accounts included in the Collateral, and (iii) the
Administrative Agent shall not have any obligation or liability under any Contract Documents, or
any other contract or instrument which are part of the Collateral and Accounts included in the
Collateral by reason of the execution and delivery of this Security Agreement, nor shall the
Administrative Agent be obligated to perform any of the obligations or duties of any Grantor
thereunder or to take any action to collect or enforce any claim for payment assigned hereunder.



     (c) Accounts. Each Grantor agrees that it will use commercially reasonable efforts to
ensure that each Account (i) is and will be, in all material respects, the genuine, legal, valid,
and binding obligations of the account debtor in respect thereof, (ii) is and will be, in all
material respects, enforceable in accordance with its terms, is not and will not be subject to any
setoffs, defenses, taxes, counterclaims, except in the ordinary course of business, (iii) is and
will be, in all material respects, in compliance with all applicable laws, whether federal, state,
local or foreign, and (iv) which if evidenced by Chattel Paper in excess of $1,000,000 individually
or $2,000,000 in the aggregate (when aggregated with all other Collateral constituting Chattel
Paper, Instrument or letter of credit), will not require the consent of the account debtor in
respect thereof in connection with its assignment hereunder.



     (d) Negotiable Instrument. If any Grantor shall at any time hold or acquire any
Negotiable Instruments in respect of any Collateral or which constitutes Collateral, including
promissory notes, with a value in excess of $250,000 individually or $1,000,000 in the aggregate
(but in any event any such Collateral that is included in determining the then effective Borrowing
Base (regardless of value)), such Grantor shall forthwith endorse, assign and deliver the same to
the Administrative Agent, accompanied by such instruments of transfer or assignment duly executed
in blank as the Administrative Agent may from time to time reasonably request.



     (e) Other Covenants of Grantor. Each Grantor agrees that (i) upon the occurrence and
during the continuance of an Event of Default, any action or proceeding to enforce this




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Security
Agreement may be taken by the Administrative Agent either in such Grantor’s name or in the
Administrative Agent’s name, as the Administrative Agent may deem necessary, and (ii) such Grantor
will, until the Security Termination Date, warrant and defend its title to the Collateral and the
interest of the Administrative Agent in the Collateral against any claim or demand of any Persons
(other than Excepted Liens) which could reasonably be expected to materially and adversely affect
such Grantor’s title to, or the Administrative Agent’s right or interest in, such Collateral.



     Section 6. Termination of Security Interest. Upon the occurrence of the Security
Termination Date, the security interest granted hereby shall terminate and all rights to the
Collateral shall revert to the applicable Grantor to the extent such Collateral has not been sold
or otherwise applied pursuant to the terms hereof. Upon any such termination or if otherwise
authorized under Section 9.09 of the Credit Agreement, the Administrative Agent will, at the
Grantors’ expense, execute and deliver to the applicable Grantor such documents (including, without
limitation, UCC-3 termination statements) as such Grantor shall reasonably request to evidence such
termination.



     Section 7. Reinstatement. If, at any time after payment in full of all Secured
Obligations and termination of the Administrative Agent’s security interest granted herein, any
payments on the Secured Obligations previously made must be disgorged by the Administrative Agent
for any reason whatsoever, including, without limitation, the insolvency, bankruptcy or
reorganization of any Grantor or any other Person, this Security Agreement and the Administrative
Agent’s security interests herein shall be reinstated as to all disgorged payments as though such
payments had not been made, and each Grantor shall sign and deliver to the Administrative Agent all
documents, and shall do such other acts and things, as may be necessary to reinstate and perfect
the Administrative Agent’s security interest. EACH GRANTOR SHALL DEFEND AND INDEMNIFY EACH SECURED
PARTY FROM AND AGAINST ANY CLAIM, DAMAGE, LOSS, LIABILITY, COST OR EXPENSE UNDER THIS SECTION 7
(INCLUDING THE REASONABLE FEES, CHARGES AND DISBURSEMENTS OF ONE EXTERNAL PRIMARY COUNSEL AND OF
ONE LOCAL COUNSEL IN EACH JURISDICTION, IF NECESSARY (IT BEING UNDERSTOOD THAT THE LOCAL COUNSEL
FOR ANY SUCH JURISDICTION SHALL, IF REASONABLY ACCEPTABLE TO THE PERSON TO WHOM SUCH SECURED PARTY
IS A RELATED PARTY, BE LIMITED TO ANY LOCAL COUNSEL PREVIOUSLY ENGAGED BY THE BORROWER IN SUCH
JURISDICTION, IF APPLICABLE) IN THE DEFENSE OF ANY SUCH ACTION OR SUIT INCLUDING SUCH CLAIM,
DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE ARISING AS A RESULT OF THE INDEMNIFIED SECURED PARTY’S
OWN NEGLIGENCE BUT EXCLUDING SUCH CLAIM, DAMAGE, LOSS, LIABILITY, COST, OR EXPENSE DETERMINED BY A
COURT OF COMPETENT JURISDICTION BY FINAL AND NONAPPEALABLE JUDGMENT TO HAVE BEEN PROXIMATELY CAUSED
BY SUCH SECURED PARTY’S OWN BAD FAITH, GROSS NEGLIGENCE, WILLFUL MISCONDUCT, VIOLATION OF LAW OR BY
REASON OF A CLAIM BY ONE OR MORE OTHER SECURED PARTIES OR EQUITY INTEREST OWNERS OF ANY SECURED
PARTY, SO LONG AS NOT PROXIMATELY CAUSED BY ANY GRANTOR OR ANY AFFILIATE THEREOF.




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     Section 8. Remedies upon Event of Default. If any Event of Default has occurred and
is continuing, the Administrative Agent may (and shall at the written request of the Required
Lenders), (i) proceed to protect and enforce the rights vested in it by this Security Agreement or
otherwise available to it, including but not limited to, the right to cause all revenues and other
moneys pledged hereby as Collateral to be paid directly to it, and to enforce its rights hereunder
to such payments and all other rights hereunder by such appropriate judicial proceedings as it
shall deem most effective to protect and enforce any of such rights, either at law or in equity or
otherwise, whether for specific enforcement of any covenant or agreement contained in any of the
Contract Documents, or in aid of the exercise of any power therein or herein granted, or for any
foreclosure hereunder and sale under a judgment or decree in any judicial proceeding, or to enforce
any other legal or equitable right vested in it by this Security Agreement or by law; (ii) cause
any action at law or suit in equity or other proceeding to be instituted and prosecuted and enforce
any rights hereunder or included in the Collateral, subject to the provisions and requirements
thereof; (iii) subject to the mandatory requirements of applicable law, sell or otherwise dispose
of any or all of the Collateral or cause the Collateral to be sold or otherwise disposed of in one
or more sales or transactions, at such prices and in such manner as may be commercially reasonable,
and for cash or on credit or for future delivery, without assumption of any credit risk, at public
or private sale, without demand of performance or notice of intention to sell or of time or place
of sale (except such notice as is required by applicable statute and cannot be waived), it being
agreed that the Administrative Agent may be a purchaser on behalf of the Secured Parties at any
such sale and that the Administrative Agent, any other Secured Party, or any other Person who may
be a bona fide purchaser for value and without notice of any claims of any or all of the Collateral
so sold shall thereafter hold the same absolutely free from any claim or right of whatsoever kind,
including any equity of redemption of any Grantor, any such demand, notice or right and equity
being hereby expressly waived and released to the extent permitted by law; (iv) incur reasonable
expenses, including reasonable attorneys’ fees, reasonable consultants’ fees, and other costs
appropriate to the exercise of any right or power under this Security Agreement; (v) perform any
obligation of any Grantor hereunder and make payments, purchase, contest or compromise any
encumbrance, charge or lien, and pay taxes and expenses, without, however, any obligation to do so;
(vi) in connection with any acceleration and foreclosure, take possession of the Collateral and
render it usable and repair and renovate the same, without, however, any obligation to do so, and
enter upon any location where the Collateral may be located for that purpose, control, manage,
operate, rent and lease the Collateral, collect all rents and income from the Collateral and apply
the same to in accordance with Section 12; (vii) secure the appointment of a receiver for the
Collateral or any part thereof; (viii) require any Grantor to, and each Grantor hereby agrees that
it will at its expense and upon request of the Administrative Agent forthwith, assemble all or part
of the Collateral as directed by the Administrative Agent and make it available to the
Administrative Agent at a place and time to be designated by the Administrative Agent which is
reasonably convenient to both parties; (ix) exercise any other or additional rights or remedies
granted to a secured party under the UCC; or (x) occupy any premises owned or, to the extent lawful
and permitted, leased by any Grantor where the Collateral or any part thereof is assembled for a
reasonable period in order to effectuate its rights and remedies hereunder or under law, without
obligation to any Grantor in respect of such occupation. If, pursuant to applicable law, prior
notice of sale of the Collateral under this Section is required to be given to any Grantor, each
Grantor hereby acknowledges that the minimum time required by such applicable law, or if no minimum
time is specified, 10 days




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shall be deemed a reasonable notice period. The Administrative Agent shall not be obligated
to make any sale of Collateral regardless of notice of sale having been given. The Administrative
Agent may adjourn any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at the time and place to
which it was so adjourned.



     Section 9. Remedies Cumulative; Delay Not Waiver.



     (a) No right, power or remedy herein conferred upon or reserved to the Administrative Agent is
intended to be exclusive of any other right, power or remedy and every such right, power and remedy
shall, to the extent permitted by law, be cumulative and in addition to every other right, power
and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder or otherwise shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy. Resort to any or all
security now or hereafter held by the Administrative Agent may be taken concurrently or
successively and in one or several consolidated or independent judicial actions or lawfully taken
nonjudicial proceedings, or both.



     (b) No delay or omission of the Administrative Agent to exercise any right or power accruing
upon the occurrence and during the continuance of any Event of Default as aforesaid shall impair
any such right or power or shall be construed to be a waiver of any such Event of Default or an
acquiescence therein; and every power and remedy given by this Security Agreement may be exercised
from time to time, in accordance with and subject to the terms hereof and as often as shall be
deemed expedient, by the Administrative Agent.



     Section 10. Contract Rights. Upon the occurrence and during the continuance of an
Event of Default, the Administrative Agent may exercise any of the Contract Rights that are
included in or related to Collateral and remedies of any Grantor under or in connection with the
Instruments, Chattel Paper, or Contracts, the General Intangibles, or which otherwise relate to the
Collateral, including, without limitation, any rights of any Grantor to demand or otherwise require
payment of any amount under, or performance of any provisions of, the Instruments, Chattel Paper,
or Contracts, or the General Intangibles.



     Section 11. Accounts.



     (a) the Administrative Agent may, or may direct any Grantor to, to the extent reasonably
necessary to perfect, preserve or protect the security interests granted hereby, notify the account
debtors or obligors under any Accounts of the collateral assignment of such Accounts to the
Administrative Agent. Upon the occurrence and during the continuation of an Event of Default, the
Administrative Agent may direct such account debtors or obligors to make payment of all amounts due
or to become due directly to the Administrative Agent. Upon such notification and direction, and
at the expense of the Grantors, the Administrative Agent may enforce collection of any such
Accounts, and adjust, settle, or compromise the amount or payment thereof in the same manner and to
the same extent as any Grantor might have done.



     (b) After receipt by any Grantor of the notice referred to in Section 11(a) above that an
Event of Default has occurred and is continuing, all amounts and proceeds (including




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instruments) received by such Grantor in respect of the Accounts shall be received in trust
for the benefit of the Administrative Agent, for the ratable benefit of the Secured Parties,
hereunder, shall be segregated from other funds of such Grantor, and shall promptly be paid over to
the Administrative Agent, for the ratable benefit of the Secured Parties, in the same form as so
received (with any necessary endorsement) to be held as Collateral. No Grantor shall adjust,
settle, or compromise the amount or payment of any Account, nor release wholly or partly any
account debtor or obligor thereof, nor allow any credit or discount thereon.



     Section 12. Application of Collateral. The proceeds of any sale, or other realization
upon all or any part of the Collateral by the Administrative Agent or any other Secured Party shall
be applied by the Administrative Agent or such Secured Party as set forth in Section 7.06 of the
Credit Agreement. Notwithstanding the foregoing, nothing contained herein shall contradict the
terms of Section 9.09(e) of the Credit Agreement which provides that only the Administrative Agent
may exercise all rights, remedies and powers as the secured party of the liens granted herein.



     Section 13. Administrative Agent as Attorney-in-Fact for Grantor. Each Grantor hereby
constitutes and irrevocably appoints the Administrative Agent, acting for and on behalf of itself
and the Secured Parties and each successor or assign of the Administrative Agent and the Secured
Parties, the true and lawful attorney-in-fact of such Grantor, with full power and authority in the
place and stead of such Grantor and in the name of such Grantor, the Administrative Agent or
otherwise to take any action and execute any instrument at the written direction of the Secured
Parties and enforce all rights, interests and remedies of such Grantor with respect to the
Collateral, including the right:



     (a) to ask, require, demand, receive and give acquittance for any and all moneys and claims
for moneys due and to become due under or arising out of any of the other Collateral, including
without limitation, any Insurance Contracts;



     (b) to elect remedies thereunder and to endorse any checks or other instruments or orders in
connection therewith;



     (c) to file any claims or take any action or institute any proceedings in connection therewith
which the Administrative Agent may deem to be necessary or advisable;



     (d) to pay, settle or compromise all bills and claims which may be or become liens or security
interests against any or all of the Collateral, or any part thereof, unless a bond or other
security satisfactory to the Administrative Agent has been provided; and



     (e) upon foreclosure, to do any and every act which any Grantor may do on its behalf with
respect to the Collateral or any part thereof and to exercise any or all of such Grantor’s rights
and remedies under any or all of the Collateral;


provided, however, that the Administrative Agent shall not exercise any such rights
or take any such actions except after the occurrence and during the continuation of an Event of
Default. This power of attorney is a power coupled with an interest and shall be irrevocable.




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     Section 14. Administrative Agent May Perform. The Administrative Agent may from
time-to-time perform any act which any Grantor has agreed hereunder to perform and which such
Grantor shall fail to perform after being requested in writing so to perform (it being understood
that no such request need be given after the occurrence and during the continuance of any Event of
Default and after notice thereof by the Administrative Agent to any Grantor) and the Administrative
Agent may from time-to-time take any other action which the Administrative Agent reasonably deems
necessary for the maintenance, preservation or protection of any of the Collateral or of its
security interest therein, and the reasonable expenses of the Administrative Agent incurred in
connection therewith shall be part of the Secured Obligations and shall be secured hereby. The
Administrative Agent shall endeavor to provide notice to the affected Grantor of any action taken
hereunder; provided however, the failure to provide such notice shall not be construed as a waiver
of any rights of the Administrative Agent provided under this Security Agreement or under
applicable law.



     Section 15. Administrative Agent Has No Duty. The powers conferred on the
Administrative Agent hereunder are solely to protect its interest, as the secured party, in the
Collateral and shall not impose any duty on it to exercise any such powers. Except for reasonable
care of any Collateral in its possession and the accounting for moneys actually received by it
hereunder, the Administrative Agent shall have no duty as to any Collateral or responsibility for
taking any necessary steps to preserve rights against prior parties or any other rights pertaining
to any Collateral.



     Section 16. Reasonable Care. The Administrative Agent shall be deemed to have
exercised reasonable care in the custody and preservation of the Collateral in its possession if
the Collateral is accorded treatment substantially equal to that which the Administrative Agent
accords its own Property.



     Section 17. Payments Held in Trust. During the continuance of an Event of Default,
all payments received by any Grantor under or in connection with any Collateral shall be received
in trust for the benefit of the Administrative Agent, for the ratable benefit of the Secured
Parties, and shall be segregated from other funds of such Grantor and shall be forthwith paid over
to the Administrative Agent, for the ratable benefit of the Secured Parties, in the same form as
received (with any necessary endorsement).



     Section 18. Miscellaneous.



     (a) Expenses. Each Grantor will upon demand pay to the Administrative Agent for its
benefit and the benefit of the Secured Parties the amount of (i) any reasonable out-of-pocket
expenses, including the reasonable fees, charges and disbursements of experts and one external
primary counsel for the Administrative Agent and of one local counsel in each jurisdiction, if
necessary (it being understood that the local counsel for any such jurisdiction shall, if
reasonably acceptable to the Administrative Agent, be limited to any local counsel previously
engaged by a Loan Party in such jurisdiction, if applicable), in any case, which the Administrative
Agent and the Secured Parties may incur in connection with the custody, preservation, use, or
operation of, any Pledged Collateral, and (ii) any out-of-pocket expenses, including the fees and
disbursements of its counsels and of any experts, which the Administrative Agent and the Secured
Parties may incur in connection with (A) the sale, collection, or other realization of, any




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of the Collateral, (B) the exercise or enforcement of any of the rights of the Administrative
Agent or any Secured Party hereunder, and (C) the failure by any Grantor to perform or observe any
of the provisions hereof.



     (b) Amendments; Etc. No amendment or waiver of any provision of this Security
Agreement nor consent to any departure by any Grantor herefrom shall be effective unless the same
shall comply with Section 10.01 of the Credit Agreement, and then such waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.



     (c) Addresses for Notices. All notices and other communications provided for
hereunder shall be made in the manner and to the addresses set forth in Section 10.02 of the Credit
Agreement.



     (d) Continuing Security Interest; Transfer of Interest. This Security Agreement shall
create a continuing security interest in the Collateral and shall (a)  remain in full force and
effect until the Security Termination Date, (b) be binding upon each Grantor and its successors,
transferees and assigns, and (c) inure, together with the rights and remedies of the Administrative
Agent hereunder, to the benefit of and be binding upon, the Administrative Agent and the Lenders
and their respective successors, permitted transferees, and permitted assigns, and to the benefit
of and be binding upon, the Swap Counterparties, and each of their respective successors,
transferees, and assigns to the extent such successors, transferees, and assigns of a Swap
Counterparty is a Lender or an Affiliate of a Lender. Without limiting the generality of the
foregoing clause, when any Lender assigns or otherwise transfers any interest held by it under the
Credit Agreement or other Loan Document to any other Person pursuant to the terms of the Credit
Agreement or such other Loan Document, that other Person shall thereupon become vested with all the
benefits held by such Lender under this Security Agreement.



     (e) Severability. If any provision of this Security Agreement is held to be illegal,
invalid or unenforceable, (i) the legality, validity and enforceability of the remaining provisions
of this Security Agreement shall not be affected or impaired thereby and (ii) the parties shall
endeavor in good faith negotiations to replace the illegal, invalid or unenforceable provisions
with valid provisions the economic effect of which comes as close as possible to that of the
illegal, invalid or unenforceable provisions. The invalidity of a provision in a particular
jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.



     (f) Choice of Law. This Security Agreement shall be governed by and construed in
accordance with the laws of the State of New York and the applicable laws of the United States of
America.



     (g) Counterparts. This Security Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall constitute one and
the same agreement. Delivery of an executed counterpart signature page by facsimile or other
electronic transmission is as effective as executing and delivering this Security Agreement in the
presence of the other parties to this Security Agreement. In proving this Security Agreement, a
party must produce or account only for the executed counterpart of the party to be charged.




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     (h) Conflicts. In the event of any explicit or implicit conflict between any
provision of this Security Agreement and any provision of the Credit Agreement, the terms of the
Credit Agreement shall be controlling.



     (i) Additional Grantors. Pursuant to the Credit Agreement, each Material Domestic
Subsidiary that was not in existence on the date of the Credit Agreement is required to enter into
this Security Agreement as a Grantor promptly upon (but in an event within 30 days after) becoming
a Material Domestic Subsidiary. Upon execution and delivery after the date hereof by the
Administrative Agent and such Subsidiary of an instrument in the form of Annex 1, such Material
Domestic Subsidiary shall become a Grantor hereunder with the same force and effect as if
originally named as a Grantor herein. The execution and delivery of any instrument adding an
additional Grantor as a party to this Security Agreement shall not require the consent of any other
Grantor hereunder. The rights and obligations of each Grantor hereunder shall remain in full force
and effect notwithstanding the addition of any new Grantor as a party to this Security Agreement.



     (j) Submission to Jurisdiction.



          (i) Any legal action or proceeding with respect to this Security Agreement may be
brought in the courts of the state of New York sitting in New York City or of the United States of
America for the Southern District of such state, and by execution and delivery of this Security
Agreement, each party to this Security Agreement consents, for itself and in respect of its
Property, to the non-exclusive jurisdiction of those courts. Each party to this Security Agreement
irrevocably waives any objection, including any objection to the laying of venue or based on the
grounds of forum non conveniens, which it may now or hereafter have to the bringing of any action
or proceeding in such jurisdiction in respect of this Security Agreement or other document related
hereto. Each party to this Security Agreement waives personal service of any summons, complaint or
other process, which may be made by any other means permitted by the law of such state.




          (ii) Nothing in the immediately preceding clause (i) shall affect the right of any party
hereto to serve legal process in any other manner permitted by law or affect the right of any party
hereto to bring any action or proceeding against any other party in the courts of any other
jurisdiction.




     (k) Waiver of Jury. Each party to this Security Agreement hereby expressly and
irrevocably waives any right to trial by jury of any claim, demand, action or cause of action
arising under this Security Agreement or in any way connected with or related or incidental to the
dealings of the parties hereto or any of them with respect to this Security Agreement, or the
transactions related hereto, in each case whether now existing or hereafter arising, and whether
founded in contract or tort or otherwise; and each party hereby agrees and consents that any such
claim, demand, action or cause of action shall be decided by court trial without a jury, and that
any party to this Security Agreement may file an original counterpart or a copy of this section
with any 




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court as written evidence of the consent of the signatories hereto to the waiver of their
right to trial by jury.




     (l) Integration. This Security Agreement and the other Loan Documents represent the
final agreement among the parties with respect to the subject matter hereof and may not be
contradicted by evidence of prior, contemporaneous, or subsequent oral agreements by the parties.
There are no oral agreements among the parties hereto.



[SIGNATURE PAGES FOLLOW]





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     The parties hereto have caused this Security Agreement to be duly executed as of the date
first above written.



	 	 	 	 	 	 	 
	 	 	GRANTORS:	 	 
	 
	 	 	 	 	 	 
	 	 	[BORROWER]	 	 
	 	 	[MATERIAL DOMESTIC SUBSIDIARIES]	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ADMINISTRATIVE AGENT:	 	 
	 
	 	 	 	 	 	 
	 	 	NATIXIS, NEW YORK BRANCH,

as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 





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SCHEDULE 1



to Security Agreement




[FOR BORROWER AND EACH MATERIAL DOMESTIC SUBSIDIARY]




	 	 	 	 	 
	Grantor:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Jurisdiction of Formation / Filing:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Type of Organization:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Address where records for

Collateral are kept:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Organizational Number (if applicable):
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Federal Tax Identification Number:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Prior Names:
	 	 	 	 
	 

	 	 	 	 





Exhibit L – Form of Security Agreement



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Annex 1 to the

Security Agreement




     SUPPLEMENT NO. ___dated as of                     , 20___(the “Supplement”), to the
Security Agreement dated as of August [___], 2009 (as amended, supplemented, restated or otherwise
modified from time to time, the “Security Agreement”), by and among SEAHAWK DRILLING, INC.,
a Delaware corporation (the “Borrower”), the Guarantors (as defined in the Credit Agreement
described below, and, together with the Borrower, the “Grantors” and, individually, each a
“Grantor”) and NATIXIS, NEW YORK BRANCH, as administrative agent (the “Administrative
Agent”), for the ratable benefit of the Secured Parties (as defined in the Credit Agreement
described below).



     A. Reference is made to that certain Revolving Credit Agreement dated as of August [___], 2009
by and among the Borrower, the Guarantors, the lenders party thereto from time to time
(individually, a “Lender” and collectively, the “Lenders”), and Natixis, New York
Branch, as administrative agent (in such capacity, the “Administrative Agent”) for such
Lenders (as amended, restated, supplemented or otherwise modified from time-to-time, the
“Credit Agreement”).



     B. Capitalized terms used herein and not otherwise defined herein shall have the meanings
assigned to such terms in the Security Agreement and the Credit Agreement.



     C. The Grantors have entered into the Security Agreement in order to induce the Lenders to
make Revolving Advances and the Issuing Bank to issue, extend, and renew Letters of Credit under
the Credit Agreement. Pursuant to the Credit Agreement, each Material Domestic Subsidiary that was
not in existence on the date of the Credit Agreement is required to enter into the Security
Agreement as a Grantor, within 30 days of becoming a Material Domestic Subsidiary. Section 18(i)
of the Security Agreement provides that additional Material Domestic Subsidiaries may become
Grantors under the Security Agreement by execution and delivery of an instrument in the form of
this Supplement. The undersigned (the “New Grantor”) is executing this Supplement in
accordance with the requirements of the Credit Agreement to become a Grantor under the Security
Agreement in order to induce the Lenders to make additional Revolving Advances and for the Issuing
Bank to issue, extend, and renew Letters of Credit under the Credit Agreement, and as consideration
for Revolving Advances previously made and Letters of Credit previously issued thereunder.



     D. The New Grantor is a Material Domestic Subsidiary and will derive substantial direct or
indirect benefit from (i) the transactions contemplated by the Credit Agreement and the other Loan
Documents (as defined in the Credit Agreement) and (ii) Swap Contracts (as defined in the Credit
Agreement) entered into by any Loan Party (as defined in the Credit Agreement) with a Swap
Counterparty (as defined in the Credit Agreement), and such transactions and documents are
necessary or convenient to the conduct, promotion or attainment of such Guarantor’s business.



     Accordingly, the Administrative Agent and the New Grantor agree as follows:




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     SECTION 1. In accordance with Section 18(j) of the Security Agreement, the New Grantor by its signature
below becomes a Grantor under the Security Agreement with the same force and effect as if
originally named therein as a Grantor and the New Grantor hereby agrees (a) to all the terms and
provisions of the Security Agreement applicable to it as a Grantor thereunder and (b) represents
and warrants that the representations and warranties made by it as a Grantor thereunder are true
and correct on and as of the date hereof in all material respects. In furtherance of the
foregoing, the New Grantor, as security for the payment and performance in full of the Secured
Obligations (as defined in the Security Agreement), does hereby create and grant to the
Administrative Agent, for the ratable benefit of the Secured Parties, a continuing security
interest in and lien on all of the New Grantor’s right, title and interest in and to the Collateral
(as defined in the Security Agreement) of the New Grantor. Each reference to a “Grantor” in the
Security Agreement shall be deemed to include the New Grantor. The Security Agreement is hereby
incorporated herein by reference.



     SECTION 2. The New Grantor represents and warrants to the Administrative Agent and the other Secured
Parties that this Supplement has been duly authorized, executed and delivered by it and constitutes
its legal, valid and binding obligation, enforceable against it in accordance with its terms,
except as such enforceability may be limited by any applicable bankruptcy, reorganization,
insolvency, fraudulent conveyance, moratorium or similar laws affecting creditors’ rights generally
or general principles of equity.



     SECTION 3. This Supplement may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart signature page by facsimile or other electronic transmission is as effective
as executing and delivering this Supplement in the presence of the other parties to this
Supplement. In proving this Supplement, a party must produce or account only for the executed
counterpart of the party to be charged. This Supplement shall become effective when the
Administrative Agent shall have received counterparts of this Supplement that, when taken together,
bear the signatures of the New Grantor and the Administrative Agent.



     SECTION 4. The New Grantor hereby represents and warrants that set forth on Schedule 1
attached hereto are, as of the date hereof, (a) its sole jurisdiction of formation and type of
organization, (b) the location of all records concerning its Accounts, General Intangibles, or any
other Collateral, (c) its federal tax identification number and the organizational number, if
applicable, and (d) all names used by it during the last five years prior to the date of this
Supplement.



     SECTION 5. Except as expressly supplemented hereby, the Security Agreement shall remain in full force
and effect.



     SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.



     SECTION 7. If any provision of this Supplement is held to be illegal, invalid or unenforceable, (i)
the legality, validity and enforceability of the remaining provisions of this




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Supplement shall
not be affected or impaired thereby and (ii) the parties shall endeavor in good faith
negotiations to replace the illegal, invalid or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the illegal, invalid or
unenforceable provisions. The invalidity of a provision in a particular jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.



     SECTION 8. All communications and notices hereunder shall be in writing and given as provided in the
Security Agreement. All communications and notices hereunder to the New Grantor shall be given to
it at the address set forth under its signature hereto or to such other address, facsimile number,
electronic mail address or telephone number as shall be designated by the New Grantor in a notice
to the Administrative Agent.



     SECTION 9. The New Grantor agrees to reimburse the Administrative Agent for its reasonable
out-of-pocket expenses in connection with this Supplement, including the reasonable fees, other
charges and disbursements of counsel for the Administrative Agent.



     SECTION 10. This Supplement, the Security Agreement and the other Loan Documents, represent the final
agreement among the parties with respect to the subject matter hereof and may not be contradicted
by evidence of prior, contemporaneous, or subsequent oral agreements by the parties. There are no
oral agreements among the parties hereto.



     IN WITNESS WHEREOF, the New Grantor and the Administrative Agent have duly executed this
Supplement to the Security Agreement as of the day and year first above written.



	 	 	 	 	 	 	 
	 	 	[Name of New Grantor],	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Address:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	NATIXIS, NEW YORK BRANCH,
as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Title:	 	 	 	 
	 

	 	 	 	 	 	 






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Schedule 1

Supplement No. ____ 

to the Security Agreement




	 	 	 	 	 
	New Grantor:

	 	[GRANTOR]
	 	 
	 
	 	 	 	 
	Jurisdiction of Formation / Filing:

	 	[STATE]	 	 
	 
	 	 	 	 
	Type of Organization:

	 	[ENTITY TYPE]	 	 
	 
	 	 	 	 
	Address where records for

Collateral are kept:

	 	[ADDRESS]
[ADDRESS]	 	 
	 
	 	 	 	 
	Organizational Number (if applicable):
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Federal Tax Identification Number:
	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Prior Names:
	 	 	 	 
	 

	 	 	 	 






Exhibit L – Form of Security Agreement



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