RESPECT TO THE COLLATERAL; IT BEING UNDERSTOOD THAT NOTHING
HEREIN, AND NO ACTION OR INACTION BY ADMINISTRATIVE AGENT, UNDER THIS LOAN
AGREEMENT OR OTHERWISE, SHALL BE DEEMED AN ASSUMPTION BY ADMINISTRATIVE AGENT OF
ANY OF BORROWER'S SAID OBLIGATIONS.
(D)
SALES AND COLLECTIONS.
BORROWER SHALL NOT
SELL, TRANSFER OR OTHERWISE DISPOSE OF ANY COLLATERAL, EXCEPT THAT SO LONG AS NO
EVENT OF DEFAULT SHALL HAVE OCCURRED AND BE CONTINUING, BORROWER MAY IN THE
ORDINARY COURSE OF ITS BUSINESS:
(I) SELL ANY INVENTORY NORMALLY HELD BY
BORROWER FOR SALE (BORROWER ACKNOWLEDGING THAT THE RIGS ARE NOT INVENTORY HELD
FOR SALE), (II) LEASE THE RIGS AND OTHER RIG COLLATERAL ON AN OPERATING BASIS,
(III) USE OR CONSUME ANY MATERIALS AND SUPPLIES NORMALLY HELD BY BORROWER FOR
USE OR CONSUMPTION, (IV) SELL, TRANSFER OR OTHERWISE DISPOSE OF EQUIPMENT OR
PARTS THAT ARE OBSOLETE OR NO LONGER NECESSARY FOR THE BUSINESS OF BORROWER
EXCEPT TO THE EXTENT (A) THE
29
AGGREGATE VALUE OF ALL SUCH SALES, TRANSFERS AND DISPOSALS DOES NOT EXCEED
$100,000 OR (B) SUCH EQUIPMENT OR PARTS ARE PROMPTLY REPLACED BY EQUIPMENT OR
PARTS OF AT LEAST COMPARABLE VALUE AND USE, AND (V) COLLECT ALL OF ITS ACCOUNTS
RECEIVABLE AND COMPROMISE AND SETTLE ITS ACCOUNTS RECEIVABLE IN THE ORDINARY
COURSE OF ITS BUSINESS.
(E)
ALTERATIONS AND MAINTENANCE.
EXCEPT UPON
THE PRIOR WRITTEN CONSENT OF ADMINISTRATIVE AGENT, BORROWER SHALL NOT MAKE OR
PERMIT ANY MATERIAL ALTERATIONS TO ANY TANGIBLE COLLATERAL WHICH WOULD
MATERIALLY REDUCE OR IMPAIR ITS MARKET VALUE OR UTILITY. BORROWER SHALL AT ALL
TIMES (I) KEEP THE TANGIBLE COLLATERAL IN GOOD CONDITION AND REPAIR, ORDINARY
WEAR AND TEAR AND OBSOLESCENCE EXCEPTED, (II) PROTECT THE COLLATERAL AGAINST
LOSS, DAMAGE OR DESTRUCTION, (III) MAINTAIN, SERVICE, TEST AND INSPECT THE
COLLATERAL (A) SUBSTANTIALLY IN ACCORDANCE WITH MANUFACTURER'S RECOMMENDATIONS,
AND SO AS TO MAINTAIN IN FULL FORCE AND EFFECT ANY MAINTENANCE WARRANTIES,
(B) IN MATERIAL COMPLIANCE WITH APPLICABLE LAW AND THE REQUIREMENTS OF
INSURANCE, (C) AT A STANDARD CONSISTENT WITH INDUSTRY PRACTICES, AND (D) IN ALL
EVENTS NOT LESS THAN BORROWER'S STANDARD PRACTICES FOR SIMILAR EQUIPMENT OWNED,
OPERATED OR LEASED BY BORROWER AND (IV) PAY OR CAUSE TO BE PAID ALL OBLIGATIONS
ARISING FROM THE REPAIR AND MAINTENANCE OF SUCH COLLATERAL, AS WELL AS ALL
OBLIGATIONS WITH RESPECT TO ANY LOCATION OF TANGIBLE COLLATERAL (E.G., ALL
OBLIGATIONS UNDER ANY LEASE, MORTGAGE OR BAILMENT AGREEMENT), EXCEPT FOR ANY
SUCH OBLIGATIONS BEING CONTESTED BY BORROWER IN GOOD FAITH BY APPROPRIATE
PROCEEDINGS TO THE EXTENT THERE IS NOT A RISK OF LOSS, FORFEITURE OR FORECLOSURE
OF COLLATERAL.
BORROWER SHALL PERMIT ANY PERSON DESIGNATED BY ADMINISTRATIVE
AGENT, DURING NORMAL BUSINESS HOURS UPON REASONABLE NOTICE TO VISIT, INSPECT AND
SURVEY THE TANGIBLE COLLATERAL, ITS CONDITION, USE AND OPERATION, AND THE
RECORDS MAINTAINED IN CONNECTION THEREWITH.
NONE OF ADMINISTRATIVE AGENT OR ANY
OF ITS DESIGNEES SHALL HAVE ANY DUTY TO MAKE ANY SUCH INSPECTION AND SHALL NOT
INCUR ANY LIABILITY OR OBLIGATION BY REASON OF NOT MAKING ANY SUCH INSPECTION.
THE FAILURE OF ANY SUCH PARTY TO OBJECT TO ANY CONDITION