Document:

exv10w1

 

Exhibit 10.1

EXECUTION COPY

13,000,000 Shares

TODCO

CLASS A COMMON STOCK (PAR VALUE $0.01 PER SHARE)

UNDERWRITING AGREEMENT

December 16, 2004

 

 

December 16, 2004

Morgan Stanley & Co. Incorporated

Citigroup Global Markets Inc.

Goldman, Sachs & Co.

	c/o	 	Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036
	 
	c/o	 	Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Dear Sirs and Mesdames:

     Transocean Inc., a Cayman Islands company (the “Selling Stockholder”),
proposes to sell to the several underwriters named in Schedule I hereto (the
“Underwriters”) an aggregate of 13,000,000 shares of the Class A common stock
(par value $0.01 per share) (the “Firm Shares”) of TODCO, a Delaware
corporation (the “Company").

     The Selling Stockholder also proposes to sell to the several Underwriters
not more than an additional 1,950,000 shares of the Class A common stock (par
value $0.01 per share) of the Company (the “Additional Shares”) if and to the
extent that you, as managers of the offering, shall have determined to
exercise, on behalf of the Underwriters, the right to purchase such shares of
common stock granted to the Underwriters in Section 3 hereof. The Firm Shares
and the Additional Shares are hereinafter collectively referred to as the
"Shares.” The shares of Class A common stock (par value $0.01 per share) of
the Company to be outstanding after giving effect to the sales contemplated
hereby are hereinafter referred to as the “Common Stock.”

     The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement, including a prospectus, relating to the
Shares. The registration statement as amended at the time it became effective,
including the information (if any) deemed to be part of the registration
statement at the time of effectiveness pursuant to Rule 430A under the
Securities Act of 1933, as amended (the “Securities Act”), is hereinafter
referred to as the “Registration Statement”; the prospectus in the form first
used to confirm sales of Shares is hereinafter referred to as the “Prospectus.”
If the Company has filed an abbreviated registration statement to register
additional shares of Common Stock pursuant to Rule 462(b) under the Securities
Act (the “Rule 462 Registration Statement”), then any reference herein to the
term

 

 

“Registration Statement” shall be deemed to include such Rule 462
Registration Statement.

     1. Representations and Warranties of the Company and the Selling
Stockholder. The Company and the Selling Stockholder, jointly and severally,
represent and warrant to and agree with each of the Underwriters that:

          (a) The Registration Statement (excluding for this purpose any Rule
462 Registration Statement) has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect,
and no proceedings for such purpose are pending before or threatened by
the Commission.

          (b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) the Registration Statement and
the Prospectus comply and, as amended or supplemented, if applicable,
will comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder and (iii)
the Prospectus does not contain and, as amended or supplemented, if
applicable, will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, except that the representations and warranties set forth in
this paragraph (b) do not apply to statements or omissions in the
Registration Statement or the Prospectus based upon information furnished
to the Company in writing by any Underwriter through you expressly for
use therein.

          (c) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
general affairs, management, financial position, stockholders’ equity or
result of operations, or in the earnings, business or operations of the
Company and its subsidiaries, taken as a whole, from that set forth in
the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement).

          (d) The preliminary prospectus dated December 13, 2004 filed as part
of the registration statement relating to the Shares and any preliminary
prospectus filed as part of any subsequent amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in
all material respects with the Securities Act and the applicable rules
and regulations of the Commission thereunder.

          (e) The statements set forth in the Prospectus under the caption
“Description of Capital Stock”, insofar as they purport to constitute a
summary of the terms of the Company’s capital stock, and under the
captions “Material U.S.

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Federal Income Tax Considerations for Non-U.S. Holders” and
“Underwriters”, insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate, complete and fair
in all material respects.

          (f) To the knowledge of the Company and the Selling Stockholder,
Ernst & Young LLP, who have certified certain financial statements of the
Company, are independent public accountants as required by the Securities
Act and the rules and regulations of the Commission thereunder.

          (g) Each of the Company and its significant subsidiaries (as defined
in Rule 1-02(w) forming part of Regulation S-X under the Securities Act,
except that the determination of whether a subsidiary is a significant
subsidiary shall be made as of the date hereof or as of the Closing Date,
as applicable, rather than as of the end of the relevant fiscal year)
(each, a “Significant Subsidiary”) has been duly organized and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Prospectus, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties, or conducts any
business, so as to require such qualification, except where the failure
to be so qualified would not have a material adverse effect on the
general affairs, management, financial position, stockholders’ equity or
results of operations of the Company and its subsidiaries considered as
one enterprise (a “Material Adverse Effect”).

          (h) This Agreement has been duly authorized, executed and delivered
by the Company and constitutes a valid and binding agreement of the
Company.

          (i) On the Closing Date (as defined in Section 5 hereof), the
Company will have an authorized capitalization as set forth in the
Prospectus, and all of the outstanding shares of capital stock of the
Company (including the Shares) will have been duly and validly authorized
and issued and will be fully paid and non-assessable.

          (j) All of the issued shares of capital stock of each Significant
Subsidiary of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims, except as described in the Prospectus and except to
the extent that any failure of such shares to be free and clear of all
liens, encumbrances, equities or claims would not, individually or in the
aggregate, have a Material Adverse Effect.

          (k) The Shares are duly authorized for listing on the New York Stock
Exchange, subject to notice of issuance.

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          (l) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement will
not conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries is bound or to which any of the properties or
assets of the Company or any of its subsidiaries is subject, nor will
such action result in any violation of the provisions of the Certificate
of Incorporation or Bylaws of the Company or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, except, in each case other than with respect to such
Certificate of Incorporation or Bylaws, for any such conflict, breach,
violation or default which would not, individually or in the aggregate,
have a Material Adverse Effect and would not impair the Company’s ability
to perform its obligations hereunder or have any material adverse effect
upon the consummation of the transactions contemplated hereby; and no
consent, approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required for the
performance by the Company of its obligations under this Agreement,
except for such consents, approvals, authorizations, registrations or
qualifications as (i) have been, or will have been prior to the Closing
Date, obtained under the Securities Act or the Securities Exchange Act of
1934, as amended (the “Exchange Act”) or (ii) may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters.

          (m) Neither the Company nor any of its Significant Subsidiaries is
in violation of its Certificate of Incorporation or Bylaws or other
constituent documents, as applicable, or in default in the performance or
observance of any material obligation, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any of
its properties may be bound, except for any such violation or default
which would not, individually or in the aggregate, have a Material
Adverse Effect.

          (n) Other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would, individually or in the
aggregate, have a Material Adverse Effect; and, to the best of the
Company’s and the Selling Stockholder’s knowledge, no such proceedings
are threatened or contemplated by governmental authorities or threatened
by others.

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          (o) The Company is not, and after giving effect to the offering and
sale of the Shares, will not be, an “investment company”, as such term is
defined in the Investment Company Act of 1940, as amended (the
“Investment Company Act”).

          (p) Except as set forth in the Prospectus, the Company and its
Significant Subsidiaries (i) are in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
(“Environmental Laws”), (ii) have received all permits, licenses or other
approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (iii) are in compliance with all terms
and conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required
permits, licenses or other approvals or failure to comply with the terms
and conditions of such permits, licenses or approvals would not, singly
or in the aggregate, have a Material Adverse Effect.

          (q) Except as set forth in the Prospectus, there are no costs or
liabilities associated with Environmental Laws (including, without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with Environmental Laws or any
permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties) which would,
singly or in the aggregate, have a Material Adverse Effect.

          (r) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any securities of the
Company or to require the Company to include such securities with the
Shares registered pursuant to the Registration Statement.

          (s) The Company and its Significant Subsidiaries have good and
marketable title to all real property and good and marketable title to
all personal property owned by them which is material to the business of
the Company and its subsidiaries, taken as a whole, in each case free and
clear of all liens, encumbrances and defects except such as are described
in the Prospectus or such as do not materially affect the value of such
property and would not, individually or in the aggregate, have a Material
Adverse Effect; and any real property and buildings held under lease by
the Company and its Significant Subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as do not
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries, in each case except as
described in the Prospectus and except as would not, individually or in
the aggregate, have a Material Adverse Effect.

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          (t) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all material patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information,
systems or procedures), trademarks, service marks and trade names
currently employed by them in connection with the business now operated
by them, and neither the Company or any of its subsidiaries nor the
Selling Stockholder has received any notice of infringement of or
conflict with asserted rights of others with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Affect.

          (u) No labor dispute with the employees of the Company or any of its
subsidiaries exists, except as described in the Prospectus, or, to the
knowledge of the Company, is imminent, except such as would not have a
Material Adverse Effect; and neither the Company nor the Selling
Stockholder is aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors that could have a Material Adverse Effect on
the Company and its subsidiaries, taken as a whole.

          (v) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent in the businesses in which they are engaged
(such businesses are as described in the Prospectus); and neither the
Company nor the Selling Stockholder has any reason to believe that the
Company will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its businesses at a cost that
would not have a Material Adverse Effect on the Company and its
subsidiaries, taken as a whole, except as described in the Prospectus.

          (w) The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect, except as described in the Prospectus.

          (x) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management’s
general or specific authorizations, (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability, (iii) access to assets is permitted only in

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accordance with management’s general or specific authorization and
(iv) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.

          (y) Except as described in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, (i) the Company and its subsidiaries have
not incurred any liability or obligation, direct or contingent, nor
entered into any transaction not in the ordinary course of business,
except such as would not have a Material Adverse Effect; (ii) the Company
has not purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind on its
capital stock other than ordinary and customary dividends; and (iii)
there has not been any material change in the capital stock, short-term
debt or long-term debt of the Company and its subsidiaries.

          (z) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the Company
in connection with the offering of the Shares.

          2. Additional Representations and Warranties of the Selling Stockholder.
The Selling Stockholder represents and warrants to and agrees with each of the
Underwriters that:

          (a) This Agreement has been duly authorized, executed and delivered
by the Selling Stockholder and constitutes a valid and binding agreement
of the Selling Stockholder.

          (b) The execution and delivery by the Selling Stockholder of, and
the performance by the Selling Stockholder of its obligations under, this
Agreement, will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Selling Stockholder or any of its subsidiaries is
a party or by which the Selling Stockholder or any of its subsidiaries is
bound or to which any of the properties or assets of the Selling
Stockholder or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Memorandum and Articles
of Association of the Selling Stockholder or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or any of its subsidiaries or
any of their properties, except, in each case other than with respect to
such Memorandum and Articles of Association, for any such conflict,
breach, violation or default which would not, individually or in the
aggregate, impair the Selling Stockholder’s ability to perform its
obligations

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hereunder or have any material adverse effect upon the consummation
of the transactions contemplated hereby; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the performance by
the Selling Stockholder of its obligations under this Agreement, except
for such consents, approvals, authorizations, registrations or
qualifications as (i) have been, or will have been prior to the Closing,
obtained under the Securities Act or the Exchange Act or (ii) may be
required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters.

          (c) Assuming the Underwriters purchase the Shares to be sold by the
Selling Stockholder in good faith and without “notice of an adverse
claim” (as such phrase is used in Section 8-105 of the Uniform Commercial
Code of the State of Texas (the “Texas UCC”)), upon (i) delivery to the
Underwriters of the certificates representing such Shares endorsed in
blank by an effective endorsement and (ii) payment therefor in accordance
with the terms of this Agreement, the Underwriters will become “protected
purchasers” (as defined in Section 8-303(a) of the Texas UCC) of such
Shares, free and clear of “adverse claims” (as defined in Section 8-102
of the Texas UCC), except for any such adverse claims created by or at
the request of the Underwriters.

          (d) Except as described in the Prospectus, neither the Company nor
the Selling Stockholder has granted any option, right or warrant to
purchase any shares of Common Stock or securities convertible into or
exchangeable for Common Stock (other than the Class B common stock (par
value $0.01 per share) of the Company), in each case that would or could
vest within 60 days after the date of the Prospectus, except in the event
of a change of control of the Company or termination of employment or
death.

          3. Agreements to Sell and Purchase. The Selling Stockholder hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the basis of
the representations and warranties herein contained, but subject to the
conditions hereinafter stated, agrees, severally and not jointly, to purchase
from the Selling Stockholder at $17.28 a share (the “Purchase Price”), the
number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) that bears the same proportion to the number of
Firm Shares to be sold by the Selling Stockholder as the number of Firm Shares
set forth in Schedule I hereto opposite the name of such Underwriter bears to
the total number of Firm Shares.

          On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Selling Stockholder
agrees to sell to the Underwriters the Additional Shares, and the Underwriters
shall have the right to purchase, severally and not jointly, up to 1,950,000
Additional Shares at the Purchase Price. You may exercise this right on behalf
of the Underwriters in whole or from time to time in part by giving written
notice of each election to exercise the option not later than

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30 days after the date of this Agreement. Any exercise notice shall
specify the number of Additional Shares to be purchased by the Underwriters and
the date on which such shares are to be purchased. Each purchase date must be
at least one business day after the written notice is given and may not be
earlier than the closing date for the Firm Shares nor later than ten business
days after the date of such notice. Additional Shares may be purchased as
provided in Section 5 hereof solely for the purpose of covering over-allotments
made in connection with the offering of the Firm Shares. On each day, if any,
that Additional Shares are to be purchased (an “Option Closing Date”), each
Underwriter agrees, severally and not jointly, to purchase the number of
Additional Shares (subject to such adjustments to eliminate fractional shares
as you may determine) that bears the same proportion to the total number of
Additional Shares to be purchased on such Option Closing Date as the number of
Firm Shares set forth in Schedule I hereto opposite the name of such
Underwriter bears to the total number of Firm Shares.

          Each of the Company and the Selling Stockholder hereby agrees that,
without the prior written consent of Morgan Stanley & Co. Incorporated and
Citigroup Global Markets Inc. on behalf of the Underwriters, it will not,
during the period ending 60 days after the date of the Prospectus, (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock; or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise.

          The restrictions contained in the preceding paragraph shall not apply to
(i) the Shares, (ii) the issuance by the Company of shares of Common Stock upon
the exercise of an option or warrant or the conversion of a security
outstanding on the date hereof of which the Underwriters have been advised in
writing, (iii) transactions by any person other than the Company relating to
shares of Common Stock or other securities acquired in open market transactions
after the completion of the offering of the Shares, (iv) any distribution of
shares of Common Stock by the Selling Stockholder to the holders of its
ordinary shares by means of a distribution or exchange offer, (v) grants of
Common Stock or other securities pursuant to employee benefit plans described
in the Prospectus or (vi) private sales by the Selling Stockholder of Common
Stock or other securities in which the purchaser agrees to be bound by the
restrictions contained in the preceding paragraph. In addition, the Company
agrees that, without the prior written consent of Morgan Stanley & Co.
Incorporated and Citigroup Global Markets Inc. on behalf of the Underwriters,
it will not, during the period ending 60 days after the date of the Prospectus,
file any registration statement with respect to any shares of Common Stock or
any security convertible into or exercisable or exchangeable for Common Stock.

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     4. Terms of Public Offering. The Company and the Selling Stockholder are
advised by you that the Underwriters propose to make a public offering of their
respective portions of the Shares as soon after the Registration Statement and
this Agreement have become effective as in your judgment is advisable. The
Company and the Selling Stockholder are further advised by you that the Shares
are to be offered to the public initially at $18.00 a share (the “Public
Offering Price”) and to certain dealers selected by you at a price that
represents a concession not in excess of $0.43 a share under the Public
Offering Price.

     5. Payment and Delivery. Payment for the Firm Shares to be sold by the
Selling Stockholder shall be made to the Selling Stockholder in Federal or
other funds immediately available in Houston, Texas against delivery of such
Firm Shares for the respective accounts of the several Underwriters at 10:00
a.m., Houston time, on December 22, 2004. The time and date of such payment
are hereinafter referred to as the “Closing Date.”

     Payment for any Additional Shares shall be made to the Selling Stockholder
in Federal or other funds immediately available in Houston, Texas against
delivery of such Additional Shares for the respective accounts of the several
Underwriters at 10:00 a.m., Houston time, on the date specified in the
corresponding notice described in Section 3 hereof or at such other time on the
same or on such other date, in any event not later than January 22, 2005, as
shall be designated in writing by you.

     The Firm Shares and Additional Shares shall be registered in such names
and in such denominations as you shall request in writing not later than one
full business day prior to the Closing Date or the applicable Option Closing
Date, as the case may be. The Firm Shares and Additional Shares shall be
delivered to you on the Closing Date or an Option Closing Date, as the case may
be, for the respective accounts of the several Underwriters, with any transfer
taxes payable in connection with the transfer of the Shares to the Underwriters
duly paid, against payment of the Purchase Price therefor.

     6. Conditions to the Underwriters’ Obligations. The obligation of the
Selling Stockholder to sell the Shares to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Shares on the
Closing Date are subject to the condition that the Registration Statement shall
have become effective not later than 3:00 p.m. (Houston time) on the date
hereof.

     The several obligations of the Underwriters are subject to the following
further conditions:

          (a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:

               (i) there shall not have occurred any downgrading, nor shall
any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the

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possible change, in the rating accorded any of the Company’s
securities by any “nationally recognized statistical rating
organization,” as such term is defined for purposes of Rule
436(g)(2) under the Securities Act; and

               (ii) there shall not have occurred any change, or any
development involving a prospective change, in the general
affairs, management, financial position, stockholders’ equity or
results of operations, or in the earnings, business or operations
of the Company and its subsidiaries, taken as a whole, from that
set forth in the Prospectus (exclusive of any amendments or
supplements thereto subsequent to the date of this Agreement)
that, in the reasonable judgment of Morgan Stanley & Co.
Incorporated and Citigroup Global Markets Inc., is material and
adverse and that makes it, in the reasonable judgment of Morgan
Stanley & Co. Incorporated and Citigroup Global Markets Inc.,
impracticable to market the Shares on the terms and in the manner
contemplated in the Prospectus.

          (b) The Underwriters shall have received on the Closing Date an
opinion of Walkers, Cayman Islands counsel for the Selling Stockholder,
dated the Closing Date, to the effect that:

               (i) the Selling Stockholder has been duly incorporated and is
validly existing as a company in good standing under the laws of
the Cayman Islands, with full corporate power and authority to own
its properties and conduct its business as described in the
Prospectus;

               (ii) This Agreement has been duly authorized and executed
and, when delivered by the Selling Stockholder, will constitute
the legal, valid and binding obligations of the Selling
Stockholder enforceable in accordance with its terms;

               (iii) the execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated
hereby and the compliance by the Selling Stockholder with the
terms and provisions hereof do not contravene any law or
regulation of the Cayman Islands applicable to the Selling
Stockholder or contravene the Memorandum and Articles of
Association of the Selling Stockholder; and

               (iv) neither the execution, delivery or performance of this
Agreement nor the consummation of any of the transactions
contemplated hereby or the compliance by the Selling Stockholder
with the terms and provisions hereof, requires the consent or
approval of, the giving of notice to, or the registration with, or
the taking of any other action in respect of any Cayman Islands
governmental or judicial authority or agency.

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          The opinion of Walkers described in this Section 6(b) shall be
rendered to the Underwriters at the request of the Selling Stockholder
and shall so state therein.

          (c) The Underwriters shall have received on the Closing Date an
opinion of Baker Botts L.L.P., United States counsel for the Selling
Stockholder, dated the Closing Date, to the effect that:

               (i) assuming its due authorization by the Selling
Stockholder, and further assuming its due execution and delivery
by the Selling Stockholder insofar as such matters are governed by
Cayman Islands law, this Agreement has been duly executed and
delivered by the Selling Stockholder;

               (ii) the execution and delivery by the Selling Stockholder
of, and the performance by the Selling Stockholder of its
obligations under, this Agreement will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument that is
identified as an exhibit to the Selling Stockholder’s Annual
Report on Form 10-K for the year ended December 31, 2003 or the
Quarterly Reports on Form 10-Q for the quarters ended March 31,
June 30 and September 30, 2004, nor will such action result in any
violation of any statute, rule or regulation or any order known to
such counsel of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or any of its
subsidiaries or any of their properties, except for any such
conflict, breach, violation or default which would not,
individually or in the aggregate, have a Material Adverse Effect
and could not reasonably be expected to adversely affect the
Selling Stockholder’s ability to perform its obligations under
this Agreement (it being understood that for purposes of this
opinion, such counsel shall not be required to pass upon
compliance with respect to antifraud or similar provisions of any
law, rule or regulation); and no consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body which, to the best of such counsel’s
knowledge, has jurisdiction over the Selling Stockholder or any of
its subsidiaries or any of their properties is required under the
laws of the States of New York or Texas for the performance by the
Selling Stockholder of its obligations under this Agreement,
except for such consents, approvals, authorizations, registrations
or qualifications as (A) have been obtained under the Securities
Act and the Exchange Act, (B) may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters or (C) would not,
individually or in the aggregate, have a Material Adverse Effect
and could not reasonably be expected to adversely affect the
Selling

-12-

 

Stockholder’s ability to perform its obligations hereunder or
have any material adverse effect upon the consummation of the
transactions contemplated hereby; and

               (iii) assuming the Underwriters purchase the Shares to be
sold by the Selling Stockholder in good faith and without “notice
of an adverse claim” (as such phrase is used in Section 8-105 of
the Texas UCC), upon (i) delivery to the Underwriters of the
certificates representing such Shares endorsed in blank by an
effective endorsement and (ii) payment therefor in accordance with
the terms of this Agreement, the Underwriters will become
“protected purchasers” (as defined in Section 8-303(a) of the
Texas UCC) of such Shares, free and clear of “adverse claims” (as
defined in Section 8-102 of the Texas UCC), except for any such
adverse claims created by or at the request of the Underwriters.

          Such counsel may rely as to matters of Cayman Islands law upon the
opinion of Walkers furnished pursuant to Section 6(b) hereof. Such
counsel may limit the foregoing opinions in all respects to the laws of
the States of New York and Texas and applicable Federal law, in each case
as in effect on the date of such opinions.

          The opinion of Baker Botts L.L.P. described in this Section 6(c)
shall be rendered to the Underwriters at the request of the Selling
Stockholder and shall so state therein.

          (d) The Underwriters shall have received on the Closing Date an
opinion of Porter & Hedges, L.L.P., United States counsel for the
Company, dated the Closing Date, to the effect that:

               (i) the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus;

               (ii) the Company has an authorized capitalization as set
forth in the Prospectus, and all of the outstanding shares of
capital stock of the Company (including the Shares) have been duly
authorized and validly issued and are fully paid and
non-assessable;

               (iii) this Agreement has been duly authorized, executed and
delivered by the Company;

               (iv) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed

-13-

 

of trust, loan agreement or other agreement or instrument
that is identified as an exhibit to the Registration Statement,
assuming the due authorization, execution and delivery by Morgan
Stanley & Co. Incorporated of that certain Waiver and Consent
dated November 19, 2004, nor will such action result in any
violation of any statute, rule or regulation or any order known to
such counsel of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of
their properties, except for any such conflict, breach, violation
or default which would not, individually or in the aggregate, have
a Material Adverse Effect and could not reasonably be expected to
adversely affect the Company’s ability to perform its obligations
under this Agreement (it being understood that for purposes of
this opinion, such counsel shall not be required to pass upon
compliance with respect to antifraud or similar provisions of any
law, rule or regulation); and no consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body which, to the best of such counsel’s
knowledge, has jurisdiction over the Company or any of its
subsidiaries or any of their properties is required under the laws
of the States of Delaware, New York or Texas for the performance
by the Company of its obligations under this Agreement, except for
such consents, approvals, authorizations, registrations or
qualifications as (A) have been obtained under the Securities Act
and the Exchange Act, (B) may be required under state securities
or Blue Sky laws in connection with the purchase and distribution
of the Shares by the Underwriters or (C) would not, individually
or in the aggregate, have a Material Adverse Effect and could not
reasonably be expected to adversely affect the Company’s ability
to perform its obligations hereunder or have any material adverse
effect upon the consummation of the transactions contemplated
hereby;

               (v) the Company is not, and after giving effect to the
offering and sale of the Shares will not be, an “investment
company”, as such term is defined in the Investment Company Act;

               (vi) the statements set forth in the Prospectus under the
caption “Description of Capital Stock”, insofar as they purport to
constitute a summary of the terms of the Company’s capital stock
and assuming the due conversion on the Closing Date of all
outstanding shares of Class B common stock into an equal number of
shares of Class A common stock as contemplated by the Prospectus
and Section 6(k) hereof, and under the captions “Material U.S.
Federal Income Tax Considerations For Non-U.S. Holders” and
“Underwriters”, insofar as they purport to constitute a summary of
the provisions of the laws and documents referred to therein, are
accurate in all material respects; and

-14-

 

               (vii) the Registration Statement and the Prospectus and any
amendments and supplements thereto made by the Company prior to
the Closing Date (other than the financial statements and
schedules, the notes thereto and the auditors’ report thereon and
other financial and accounting data included therein, or omitted
therefrom, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the
case may be, appeared on their face to comply as to form in all
material respects with the requirements of the Securities Act and
the rules and regulations thereunder.

        
    In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company and the Selling Stockholder, representatives of the
independent public accountants for the Company and representatives of and
counsel for the Underwriters at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and,
although such counsel did not independently verify such information and
is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, except for those referred to in
the opinion in clause (vi) of this Section 6(d), on the basis of the
foregoing (relying as to materiality to a certain extent upon statements
of officers and other representatives of the Company and the Selling
Stockholder), no facts have come to such counsel’s attention that would
lead such counsel to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the
Company prior to the Closing Date (other than the financial statements
and schedules, the notes thereto and the auditors’ report thereon and
other financial and accounting data included therein, or omitted
therefrom, or the exhibits thereto, as to which such counsel need express
no opinion) contained or contains an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of
its date or as of the Closing Date, the Prospectus or any amendment or
supplement thereto made by the Company prior to the Closing Date (other
than the financial statements and schedules, the notes thereto and the
auditors’ report thereon and other financial and accounting data included
therein, or omitted therefrom, as to which such counsel need express no
opinion) contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.

            Such counsel may limit the foregoing opinions in all respects to the
laws of the States of Delaware, New York and Texas and applicable Federal
law, in each case as in effect on the date of such opinions.

-15-

 

          The opinion of Porter & Hedges, L.L.P. described in this Section
6(d) shall be rendered to the Underwriters at the request of the Company
and shall so state therein.

          (e) The Underwriters shall have received on the Closing Date an
opinion of Eric B. Brown, Senior Vice President, General Counsel and
Corporate Secretary of the Selling Stockholder, dated the Closing Date,
to the effect that:

               (i) to the best of such counsel’s knowledge, neither the
Selling Stockholder nor any of its subsidiaries (other than the
Company and its subsidiaries) is in default in the performance or
observance of any material obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it is bound or to which any of its property or
assets is subject, except for any such defaults which would not,
individually or in the aggregate, have a Material Adverse Effect;
and

               (ii) the execution and delivery by the Selling Stockholder
of, and the performance by the Selling Stockholder of its
obligations under, this Agreement will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to
such counsel (after reasonable inquiry) to which the Selling
Stockholder or any of its subsidiaries (other than the Company and
its subsidiaries) is a party or by which the Selling Stockholder
or any of its subsidiaries (other than the Company and its
subsidiaries) is subject, except for any such conflict, breach,
violation or default which would not, individually or in the
aggregate, have a Material Adverse Effect and could not reasonably
be expected to adversely affect the Selling Stockholder’s ability
to perform its obligations under this Agreement.

          Such counsel may rely as to matters of Cayman Islands law upon the
opinion of Walkers furnished pursuant to Section 6(b) hereof. Such
counsel may limit the foregoing opinions in all respects to the laws of
the State of Texas and applicable Federal law, in each case as in effect
on the date of such opinions.

          The opinion of Eric B. Brown described in this Section 6(e) shall be
rendered to the Underwriters at the request of the Selling Stockholder
and shall so state therein.

          (f) The Underwriters shall have received on the Closing Date an
opinion of Randall A. Stafford, General Counsel of the Company, dated the
Closing Date, to the effect that:

               (i) each of the Significant Subsidiaries has been duly
organized, is validly existing and in good standing under the laws
of its

-16-

 

jurisdiction of organization, with corporate power and
authority to own its properties and conduct its business as
described in the Prospectus; the Company has been duly qualified
as a foreign corporation for the transaction of business and is in
good standing under the laws of the State of Texas; THE Offshore
Drilling Company has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the
laws of the States of Texas and Louisiana; Cliffs Drilling Company
has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of
the State of Texas and the Bolivarian Republic of Venezuela; and
TODCO Mexico Inc. has been duly qualified as a foreign corporation
for the transaction of business and is in good standing under the
laws of the Mexico;

               (ii) to the best of such counsel’s knowledge, neither the
Company nor any of its subsidiaries is in default in the
performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument to which it
is a party or by which it is bound or to which any of its property
or assets is subject, except for any such defaults which would
not, individually or in the aggregate, have a Material Adverse
Effect;

               (iii) to the best of such counsel’s knowledge and other than
as set forth in the Prospectus, there are no legal or governmental
proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property of the Company or
any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect;
and, to the best of such counsel’s knowledge, no such proceedings
are threatened or contemplated by governmental authorities or
threatened by others;

               (iv) all of the issued shares of capital stock of each
Significant Subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and, to
the best of such counsel’s knowledge, are owned directly by the
Company, free and clear of all liens, encumbrances, equities or
claims, except for any such liens, encumbrances, equities or
claims described in the Prospectus; and

               (v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel
(after reasonable inquiry), including any identified as exhibits
to

-17-

 

the Registration Statement, to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is subject, assuming the due authorization, execution
and delivery by Morgan Stanley & Co. Incorporated of that certain
Waiver and Consent dated November 19, 2004, except for any such
conflict, breach, violation or default which would not,
individually or in the aggregate, have a Material Adverse Effect
and could not reasonably be expected to adversely affect the
Company’s ability to perform its obligations under this Agreement.

            In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company and the Selling Stockholder, representatives of the
independent public accountants for the Company and representatives of and
counsel for the Underwriters at which the contents of the Registration
Statement and the Prospectus and related matters were discussed and,
although such counsel did not independently verify such information and
is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus, on the basis of the foregoing
(relying as to materiality to a certain extent upon statements of
officers and other representatives of the Company and the Selling
Stockholder), no facts have come to such counsel’s attention that would
lead such counsel to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by the
Company prior to the Closing Date (other than the financial statements
and schedules, the notes thereto and the auditors’ report thereon and
other financial and accounting data included therein, or omitted
therefrom, or the exhibits thereto, as to which such counsel need express
no opinion) contained or contains an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that, as of
its date or as of the Closing Date, the Prospectus or any amendment or
supplement thereto made by the Company prior to the Closing Date (other
than the financial statements and schedules, the notes thereto and the
auditors’ report thereon and other financial and accounting data included
therein, or omitted therefrom, as to which such counsel need express no
opinion) contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; and such counsel does not know of any
amendment to the Registration Statement required to be filed or any
contracts or other documents of a character required to be filed as an
exhibit to the Registration Statement or required to be described in the
Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required.

          For purposes of such counsel’s opinion to be rendered pursuant to
Section 6(f)(i) hereof with respect to Significant Subsidiaries, as to
matters of the laws of

-18-

 

jurisdictions other than the State of Texas and applicable Federal
law, such counsel may rely upon opinions of foreign counsel furnished
with respect to such Significant Subsidiaries. Such counsel may limit
the foregoing opinions in all respects to the laws of the State of Texas
and applicable Federal law, in each case as in effect on the date of such
opinions.

          The opinion of Randall A. Stafford described in this Section 6(f)
shall be rendered to the Underwriters at the request of the Company and
shall so state therein.

          (g) The Underwriters shall have received on the Closing Date an
opinion of Sullivan & Cromwell LLP, counsel for the Underwriters, dated
the Closing Date, covering the matters referred to in clauses (i) (but
only as to the due incorporation and valid existence of the Company),
(ii) and (vi) (but only as to the statements in the Prospectus under
“Description of Capital Stock” and “Underwriters”) and the third to last
paragraph of Section 6(d) hereof.

          (h) The Underwriters shall have received, on each of the date hereof
and the Closing Date, a letter dated the date hereof or the Closing Date,
as the case may be, in form and substance agreed by you prior to the
execution of this Agreement, from Ernst & Young LLP, independent public
accountants, containing statements and information of the type ordinarily
included in accountants’ “comfort letters” to underwriters with respect
to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus; provided that the
letter delivered on the Closing Date shall use a “cut-off date” not
earlier than the date hereof.

          (i) The “lock-up” agreements, each substantially in the form of
Exhibit A hereto, between the Underwriters and Mr. Jan Rask, Mr. T. Scott
O’Keefe and members of the Board of Directors of the Company relating to
sales and certain other dispositions of shares of Common Stock or certain
other securities, delivered to such persons on or before the date hereof,
shall be in full force and effect on the Closing Date.

          (j) The Company and Selling Stockholder shall have furnished or
caused to be furnished to the Underwriters on the Closing Date
certificates of officers of the Company and Selling Stockholder,
respectively, satisfactory to the Underwriters as to the accuracy of the
representations and warranties of the Company and Selling Stockholder,
respectively, herein at and as of such Closing Date, as to the
performance by the Company and Selling Stockholder, respectively, of all
obligations hereunder to be performed at or prior to such Closing Date,
as to the matters set forth in subsection (a) of this Section and as to
such other matters as the Underwriters may reasonably request.

          (k) The Selling Stockholder and its affiliates shall have delivered
an irrevocable notice and taken all other necessary actions, on or prior
to the Closing

-19-

 

Date, to convert all the shares of Class B common stock (par value
$0.01 per share) of the Company owned by it or any of its affiliates into
an equal number of shares of Class A common stock of the Company such
that at and as of the close of business on the Closing Date no shares of
the Company’s Class B common stock will remain outstanding.

          The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of the Additional
Shares to be sold on such Option Closing Date and other matters related to the
issuance of such Additional Shares.

          7. Covenants of the Company. In further consideration of the agreements
of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:

          (a) To furnish to you, without charge, three signed copies of the
Registration Statement (including exhibits thereto) and for delivery to
each other Underwriter a conformed copy of the Registration Statement
(without exhibits thereto) and to furnish to you in New York City,
without charge, prior to 5:00 p.m. New York City time on the business day
next succeeding the date of this Agreement and during the period
mentioned in Section 7(c) hereof, as many copies of the Prospectus and
any supplements and amendments thereto or to the Registration Statement
as you may reasonably request.

          (b) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement
to which you reasonably object, and to file with the Commission within
the applicable period specified in Rule 424(b) under the Securities Act
any prospectus required to be filed pursuant to such Rule.

          (c) If, during such period after the first date of the public
offering of the Shares and prior to the expiration of nine months after
the date of the Prospectus, the Prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, any event
shall occur or condition exist as a result of which it is necessary to
amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is
delivered to a purchaser, not misleading, or if, in the opinion of
counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Shares may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements
to the Prospectus so that the statements in the

-20-

 

Prospectus as so amended or supplemented will not, in the light of
the circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law and if at any time on or after the expiration of nine
months after the date of the Prospectus, any Underwriter is required to
deliver a prospectus in connection with the offering or sale of the
Shares, upon the request but at the expense of such Underwriter, to
prepare and furnish to such Underwriter as many copies as such
Underwriter may request of an amended Prospectus or a supplemented
Prospectus complying with Section 10(a)(3) of the Act.

          (d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent
to service of process in any jurisdiction.

          (e) To make generally available to the Company’s security holders
and to you as soon as practicable an earning statement covering the
twelve-month period ending December 31, 2005 that satisfies the
provisions of Section 11(a) of the Securities Act and the rules and
regulations of the Commission thereunder (including, at the option of the
Company, Rule 158).

          8. Expenses. Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, the Company and the
Selling Stockholder, jointly and severally, agree to pay or cause to be paid
all expenses incident to the performance of their obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the Company’s
and the Selling Stockholder’s counsel (except as provided in the following
sentence) and the Company’s accountants in connection with the registration and
delivery of the Shares under the Securities Act and all other fees or expenses
in connection with the preparation and filing of the Registration Statement,
any preliminary prospectus, the Prospectus and amendments and supplements to
any of the foregoing, including all printing costs associated therewith, and
the mailing and delivering of copies thereof to the Underwriters and dealers,
in the quantities hereinabove specified, (ii) all costs and expenses related to
the transfer and delivery of the Shares to the Underwriters, including any
transfer or other taxes payable thereon, (iii) the cost of printing or
producing any Blue Sky or Legal Investment memorandum in connection with the
offer and sale of the Shares under state securities laws and all expenses in
connection with the qualification of the Shares for offer and sale under state
securities laws as provided in Section 7(d) hereof, including filing fees and
the reasonable fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky or Legal
Investment memorandum, (iv) all filing fees and the reasonable fees and
disbursements of counsel to the Underwriters incurred in connection with the
review and qualification of the offering of the Shares by the National
Association of Securities Dealers, Inc., (v) all costs and expenses incident to
listing the Shares on the New York Stock Exchange, (vi) the cost of printing
certificates

-21-

 

representing the Shares, (vii) the costs and charges of any transfer
agent, registrar or depositary, (viii) the costs and expenses of the Company
relating to investor presentations on any “road show” undertaken in connection
with the marketing of the offering of the Shares, including, without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations with the prior approval of the Company, travel and
lodging expenses of the representatives and officers of the Company and any
such consultants, and the cost of any aircraft chartered in connection with the
road show, (ix) the document production charges and expenses associated with
printing this Agreement and (x) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section 8. It is understood, however, that, except
as provided in this Section 8, Section 9 hereof, entitled “Indemnity and
Contribution”, and the last paragraph of Section 11 hereof, the Underwriters
will pay all of their costs and expenses, including fees and disbursements of
their counsel, stock transfer taxes payable on resale of any of the Shares by
them and any advertising expenses connected with any offers they may make and
will reimburse the Company for the fees of foreign counsel retained to render
opinions with respect to the qualification as foreign corporations and good
standing of significant subsidiaries. Notwithstanding anything in this Section
8 to the contrary, the Underwriters agree to reimburse the Company and the
Selling Stockholder for a portion of the aforementioned expenses in an
aggregate amount of up to $585,000.00, or $672,750.00 if the over-allotment
option is exercised in full, against delivery of original invoices or other
acceptable documentation evidencing the Company’s or the Selling Stockholder’s
expenditure of each amount for which reimbursement is sought.

     The provisions of this Section 8 shall not supersede or otherwise affect
any other written agreement that the Company and the Selling Stockholder may
otherwise have for the allocation of such expenses among themselves.

     9. Indemnity and Contribution. (a) The Company and the Selling
Stockholder, jointly and severally, agree to indemnify and hold harmless each
Underwriter, each person, if any, who controls any Underwriter within the
meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, and each affiliate of any Underwriter within the meaning of Rule
405 under the Securities Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or any
amendment thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to any Underwriter
furnished to the Company in writing by such Underwriter through you expressly
for use

-22-

 

therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company has
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities,
unless such failure is the result of material noncompliance by the Company with
Section 7(a) hereof.

          (b) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the Selling Stockholder, the directors of the
Company, the officers of the Company who sign the Registration Statement and
each person, if any, who controls the Company or the Selling Stockholder within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act from and against any and all losses, claims, damages and
liabilities (including, without limitation, any legal or other expenses
reasonably incurred in connection with defending or investigating any such
action or claim) caused by any untrue statement or alleged untrue statement of
a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto), or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any preliminary prospectus,
the Prospectus or any amendments or supplements thereto.

          (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 9(a) or 9(b) hereof, such person (the “indemnified
party”) shall promptly notify the person against whom such indemnity may be
sought (the “indemnifying party”) in writing (but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection, except to the
extent that indemnifying party suffers actual prejudice as a result of such
failure) and the indemnifying party, upon request of the indemnified party,
shall retain counsel reasonably satisfactory to the indemnified party to
represent the indemnified party and any others the indemnifying party may
designate in such proceeding and shall pay the fees and disbursements of such
counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such indemnified party unless (i)
the indemnifying party and the indemnified party shall have mutually agreed to
the retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel

-23-

 

would be inappropriate due to actual or potential differing interests
between them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for (i)
the fees and expenses of more than one separate firm (in addition to any local
counsel) for all Underwriters and all persons, if any, who control any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act or who are affiliates of any Underwriter within
the meaning of Rule 405 under the Securities Act and (ii) the fees and expenses
of more than one separate firm (in addition to any local counsel) for the
Company, the Selling Stockholder, the directors of the Company, the officers of
the Company who sign the Registration Statement and each person, if any, who
controls the Company or the Selling Stockholder within the meaning of either
such Section. In the case of any such separate firm for the Underwriters and
such control persons and affiliates of any Underwriters, such firm shall be
designated in writing by Morgan Stanley & Co. Incorporated and Citigroup Global
Markets Inc. In the case of any such separate firm for the Company, and such
directors, officers and control persons of the Company or the Selling
Stockholder, such firm shall be designated in writing by the Company and the
Selling Stockholder. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.

          (d) To the extent the indemnification provided for in Section 9(a) or 9(b)
hereof is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, except to the
extent (but only to the extent) that the indemnifying party suffers actual
prejudice as a result of any failure by the indemnified party to notify the
indemnifying party of any action, proceeding or investigation as contemplated
by subsection (c) of this Section 9, each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the indemnifying party
or parties on the one hand and the indemnified party or parties on the other
hand from the offering of the Shares or (ii) if the allocation provided by
Section 9(d)(i) hereof is not permitted by applicable law, or if the
indemnified party failed to give the notice required under subsection (c)
above, then, except to the extent (but only to the extent) that the
indemnifying party suffers actual prejudice as a result of any failure by the
indemnified party to notify the indemnifying party of any action, proceeding or
investigation as contemplated by subsection (c) of this Section 9, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in Section 9(d)(i) hereof but also the relative fault of the

-24-

 

indemnifying party or parties on the one hand and of the indemnified party
or parties on the other hand in connection with the statements or omissions
that resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company or the Selling Stockholder on the one hand and the Underwriters on the
other hand in connection with the offering of the Shares shall be deemed to be
in the same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses) received by the Selling Stockholder and the
total underwriting discounts and commissions received by the Underwriters, in
each case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares. The relative fault of the
Company or the Selling Stockholder on the one hand and the Underwriters on the
other hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Selling Stockholder or by the Underwriters and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Underwriters’ respective obligations
to contribute pursuant to this Section 9 are several in proportion to the
respective number of Shares they have purchased hereunder, and not joint.

          (e) The Company, the Selling Stockholder and the Underwriters agree that
it would not be just or equitable if contribution pursuant to this Section 9
were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation that does
not take account of the equitable considerations referred to in Section 9(d)
hereof. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages and liabilities referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The remedies provided for in this
Section 9 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in equity.

          (f) The indemnity and contribution provisions contained in this Section 9
and the representations, warranties and other statements of the Company and the
Selling Stockholder contained in this Agreement shall remain operative and in
full force and effect regardless of (i) any termination of this Agreement, (ii)
any investigation made by or on behalf of any Underwriter, any person
controlling any Underwriter or any affiliate of any Underwriter, the Selling
Stockholder or any person controlling the Selling

-25-

 

Stockholder, or the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of the
Shares; provided, however, that if this Agreement shall be terminated pursuant
to Section 10(i), (iii), (iv), or (v) or the second paragraph of Section 11
hereof, the Company and the Selling Stockholder shall have no liability to you.

     10. Termination. The Underwriters may terminate this Agreement by notice
given by Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc. to
the Company, if after the execution and delivery of this Agreement and prior to
the Closing Date (i) trading generally shall have been suspended or materially
limited on, or by, as the case may be, the New York Stock Exchange or the
Nasdaq National Market, (ii) trading of any securities of the Company shall
have been suspended on the New York Stock Exchange, (iii) a material disruption
in securities settlement, payment or clearance services in the United States
shall have occurred, (iv) any moratorium on commercial banking activities shall
have been declared by Federal or New York State authorities or (v) there shall
have occurred any outbreak or escalation of hostilities, or any adverse change
in financial markets or any calamity or crisis that, in the reasonable judgment
of Morgan Stanley & Co. Incorporated and Citigroup Global Markets Inc., is
material and adverse and which, singly or together with any other event
specified in this clause (v), makes it, in the reasonable judgment of Morgan
Stanley & Co. Incorporated and Citigroup Global Markets Inc., impracticable or
inadvisable to proceed with the offer, sale or delivery of the Shares on the
terms and in the manner contemplated in the Prospectus.

     11. Effectiveness; Defaulting Underwriters. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.

     If, on the Closing Date or an Option Closing Date, as the case may be, any
one or more of the Underwriters shall fail or refuse to purchase Shares that it
has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate
number of the Shares to be purchased on such date, the other Underwriters shall
be obligated severally in the proportions that the number of Firm Shares set
forth opposite their respective names in Schedule I bears to the aggregate
number of Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
Shares that any Underwriter has agreed to purchase pursuant to this Agreement
be increased pursuant to this Section 11 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Firm Shares to be purchased, and arrangements satisfactory to you, the Company
and the Selling Stockholder for the purchase of such Firm Shares are not

-26-

 

made within 36 hours after such default, this Agreement shall terminate
without liability on the part of any non-defaulting Underwriter, the Company or
the Selling Stockholder. In any such case either you, the Company or the
Selling Stockholder shall have the right to postpone the Closing Date, but in
no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. If, on an Option Closing Date, any
Underwriter or Underwriters shall fail or refuse to purchase Additional Shares
and the aggregate number of Additional Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Additional
Shares to be purchased on such Option Closing Date, the non-defaulting
Underwriters shall have the option to (i) terminate their obligation hereunder
to purchase the Additional Shares to be sold on such Option Closing Date or
(ii) purchase not less than the number of Additional Shares that such
non-defaulting Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.

     If this Agreement shall be terminated by the Underwriters, or any of them,
because of any failure or refusal on the part of the Company or the Selling
Stockholder to comply with the terms or to fulfill any of the conditions of
this Agreement, or if for any reason the Company or the Selling Stockholder
shall be unable to perform its obligations under this Agreement, the Company
and the Selling Stockholder, jointly and severally, will reimburse the
Underwriters or such Underwriters as have so terminated this Agreement with
respect to themselves for all out-of-pocket expenses (including the fees and
disbursements of their counsel) reasonably incurred by such Underwriters in
connection with this Agreement or the offering contemplated hereunder, but the
Company and the Selling Stockholder shall then be under no further liability to
you except as provided in Sections 1, 8 and 9.

     12. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

     13. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

-27-

 

     14. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	

	 	TODCO	 
	 
	 	 	 	 
	

	 	By:	 	/s/ Randall A. Stafford

	

	 	 	 	Name: Randall A. Stafford
	

	 	 	 	Title: Vice President and General
Counsel
	 
	 	 	 	 
	 	 	TRANSOCEAN INC.
	 	 	as Selling Stockholder
	 
	 	 	 	 
	

	 	By:	 	/s/ Gregory L. Cauthen

	

	 	 	 	Name: Gregory L. Cauthen
	

	 	 	 	Title: Senior VP & CFO

	 	 	 
	Accepted as of the date hereof:
	 
	 	 
	Morgan Stanley & Co. Incorporated
	Citigroup Global Markets Inc.
	Goldman, Sachs & Co.
	 
	 	 
	Acting severally on behalf of themselves
	

	 	and the several Underwriters named in
	

	 	Schedule I hereto.
	 
	 	 
	By:

	 	Morgan Stanley & Co. Incorporated
	 
	 	 
	By:
	 	/s/ Joshua Han Miller

	

	 	Name: Joshua Han Miller
	

	 	Title: Vice President
	 
	 	 
	By:

	 	Citigroup Global Markets Inc.
	 
	 	 
	By:
	 	/s/ Quinn Fanning

	

	 	Name: Quinn Fanning
	

	 	Title: Director

-28-

 

SCHEDULE I

	 	 	 	 	 
	 	 	Number of Firm Shares
	Underwriter
	 	To Be Purchased

	Morgan Stanley & Co. Incorporated
	 	 	4,875,000	 
	Citigroup Global Markets Inc.
	 	 	4,875,000	 
	Goldman, Sachs & Co.
	 	 	3,250,000	 
	Total:
	 	 	13,000,000	 

 

 

EXHIBIT A

FORM OF LOCK-UP LETTER

[ ], 2004

Morgan Stanley & Co. Incorporated

Citigroup Global Markets Inc.

Goldman, Sachs & Co.

	c/o	 	Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036
	 
	c/o	 	Citigroup Global Markets Inc.

388 Greenwich Street

New York, New York 10013

Dear Sirs and Mesdames:

     The undersigned understands that Morgan Stanley & Co. Incorporated
(“Morgan Stanley”), Citigroup Global Markets Inc. (“Citigroup”) and the several
underwriters named in Schedule I to the Underwriting Agreement (as defined
below), including Morgan Stanley and Citigroup (the “Underwriters”), propose to
enter into an Underwriting Agreement (the “Underwriting Agreement”) with TODCO,
a Delaware corporation (the “Company”), and its stockholder, Transocean Inc., a
Cayman Islands company, providing for the public offering (the “Public
Offering”) by the several Underwriters of 13,000,000 shares (the “Shares”) of
the Class A common stock (par value $0.01 per share) of the Company (the
“Common Stock”).

To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley and
Citigroup on behalf of the Underwriters, he will not, during the period
commencing on the date hereof and ending 45 days after the date of the final
prospectus relating to the Public Offering (the “Prospectus”), (i) offer,
pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (i) or (ii) above is to be settled by

A-1

 

delivery of Common Stock or such other securities, in cash or otherwise. The
foregoing sentence shall not apply to (a) transactions relating to shares of
Common Stock or other securities acquired in the Public Offering or open market
transactions after the completion of the Public Offering, (b) transfers of
shares of Common Stock or any security convertible into Common Stock as a bona
fide gift or gifts and (c) transfers of Common Stock or any security
convertible into Common Stock by will or intestacy; provided that in the case
of any transfer or distribution pursuant to clause (b), (i) each donee or
distributee shall execute and deliver to Morgan Stanley and Citigroup a
duplicate form of this Lock-up Letter and (ii) no filing by any party (donor,
donee, transferor or transferee) under Section 16(a) of the Securities Exchange
Act of 1934, as amended, shall be required or shall be made voluntarily in
connection with such transfer or distribution (other than a filing on a Form
5). In addition, the undersigned agrees that, without the prior written
consent of Morgan Stanley and Citigroup on behalf of the Underwriters, he will
not, during the period commencing on the date hereof and ending 45 days after
the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock. The
undersigned also agrees and consents to the entry of stop transfer instructions
with the Company’s transfer agent and registrar against the transfer of the
undersigned’s share of Common Stock except in compliance with the foregoing
restrictions.

     The undersigned understands that the Company and the Underwriters are
relying upon this Lock-Up Agreement in proceeding toward consummation of the
Public Offering. The undersigned further understands that this Lock-Up
Agreement is irrevocable and shall be binding upon the undersigned’s heirs,
legal representatives, successors and assigns.

     Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to an Underwriting Agreement, the terms of which are subject to
negotiation between the Company and the Underwriters.

	 	 	 	 	 
	

	 	 	 	Very truly yours,
	 
	 	 	 	 
	

	 	 	 	

	

	 	 	 	(Name)
	 
	 	 	 	 
	

	 	 	 	

(Address)

A-2exv4w1

 

HCC INSURANCE HOLDINGS, INC.

as Issuer

AND

WACHOVIA BANK, N.A.

as Trustee

_______________

FIRST AMENDMENT TO SECOND SUPPLEMENTAL INDENTURE

Dated as of December 22, 2004

_______________

First Amendment to Second Supplemental Indenture dated as of March 28, 2003

 

 

Table of Contents

	 	 	 	 	 	 	 
	 	 	 	 	Page

	ARTICLE 1 AMENDMENTS	 	 	2	 
	 
	 	 	 	 	 	 
	     Section 1.01

	 	Amendment to Section 1.10
	 	 	2	 
	     Section 1.02

	 	Amendment to Section 2.01
	 	 	2	 
	     Section 1.03

	 	Amendment to Section 2.02
	 	 	3	 
	     Section 1.04

	 	Amendment of Section 2.13
	 	 	5	 
	     Section 1.05

	 	Amendment of Section 4.01
	 	 	5	 
	     Section 1.06

	 	Amendment of Section 4.02
	 	 	7	 
	     Section 1.07

	 	Amendment to Exhibit A
	 	 	10	 
	 
	 	 	 	 	 	 
	ARTICLE 2 MISCELLANEOUS	 	 	12	 
	 
	 	 	 	 	 	 
	     Section 2.01

	 	Application of First Amendment to Second Supplemental Indenture
	 	 	12	 
	     Section 2.02

	 	Effective Date
	 	 	12	 
	     Section 2.03

	 	Counterparts
	 	 	12	 

i

 

     FIRST AMENDMENT TO SECOND SUPPLEMENTAL INDENTURE, dated as of December 22, 2004 by and between
HCC INSURANCE HOLDINGS, INC., a Delaware corporation, as issuer (the “Company”), and WACHOVIA BANK,
a national banking association duly organized and existing under the laws of the United States of
America, as Trustee under the Indenture (as hereinafter defined) (the “Trustee”).

RECITALS

     WHEREAS, the Company and the Trustee are parties to that certain Indenture dated as of August
23, 2001 (the “Indenture,” all capitalized terms used and not otherwise defined herein shall have
the meanings set forth in the Indenture or the Supplemental Indenture) providing for the issuance
by the Company of Securities from time to time;

     WHEREAS, the Company and the Trustee entered into that certain Second Supplemental Indenture
dated as of March 28, 2003 (the “Supplemental Indenture”) for the purposes of establishing the
terms of a new series of Securities under the Indenture;

     WHEREAS, pursuant to Section 2.13 of the Supplemental Indenture, upon a conversion pursuant to
Section 2.01 or Section 2.02, the Company may, at its option, satisfy its Conversion Obligation in
cash, Common Stock, or any combination thereof;

     WHEREAS, pursuant to Section 4.01 of the Supplemental Indenture, the holders of the Notes have
the right to require the Company to purchase the Notes on each Purchase Date and the Company may,
at its option, pay the Purchase Price in cash, Common Stock, or any combination thereof;

     WHEREAS, pursuant to Section 4.02 of the Supplemental Indenture, upon a purchase of the Notes
in a Change of Control Offer by the Company, the Company may, at its option, pay the Change of
Control Purchase Price in cash, Common Stock, or any combination thereof;

     WHEREAS, the Company has informed the Trustee that it will forever waive its rights to elect
to pay the Purchase Price and the Change of Control Purchase Price in Common Stock;

     WHEREAS, the Company has informed the Trustee that it will forever waive its right to elect to
pay (i) the Conversion Obligation in Common Stock as to the value of the principal amount of the
Note (but not any excess over par value); and (ii) any excess over par value of the Note in cash;
and

     WHEREAS, the Company and the Trustee desire to enter into this First Amendment to Second
Supplemental Indenture to amend certain provisions of the Supplemental Indenture to reflect the
Company’s waiver.

     NOW, THEREFORE, THIS FIRST AMENDMENT TO SECOND SUPPLEMENTAL INDENTURE WITNESSETH:

     For and in consideration of the premises and the purchase of the Securities by the Holders
thereof, it is mutually agreed, for the equal and proportionate benefit of all Holders of the Notes
(as hereinafter defined), as follows:

 

 

ARTICLE 1

AMENDMENTS

     Section 1.01 Amendment to Section 1.10. The definition of “Cash Averaging Settlement Period” in
Section 1.10 of the Supplemental Indenture is deleted in its entirety and replaced with the
following:

     “Cash Settlement Averaging Period has the meaning set forth in Section 2.01.”

The definition of Conversion Obligation in Section 1.10 of the Supplemental Indenture is deleted
and replaced in its entirety with the following:

     “Conversion Obligation means the Company’s obligation upon conversion.”

The definitions of “Cash Settlement Notice Period” and “Conversion Retraction Period” in Section
1.10 of the Supplemental Indenture are deleted in their entirety.

     Section 1.02 Amendment to Section 2.01. Section 2.01 of the Supplemental Indenture is deleted in
its entirety and replaced by the following:

“Section 2.01 Conversion Privilege. Subject to and upon compliance with the
provisions of this Article 2, at any time following the issuance of the Notes and
prior to the close of business on April 1, 2023 a Holder of a Note (or any portion
of the principal amount thereof which is $1,000 or an integral multiple of $1,000),
which has not previously been redeemed pursuant to Article 3 hereof or purchased
pursuant to Article 4 hereof, may be converted by surrender of the Note to be so
converted in whole or in part together with any required funds in the manner
provided in Section 2.02 into an amount of cash and the number of shares of Common
Stock, if any, as follows:

The amount of cash to be paid for each $1,000 of principal amount of a Note to be
converted shall be the lesser of (i) the principal amount of a Note to be converted
and (ii) the conversion value of the Note to be converted during the 10 Trading Day
period which period shall begin the day after the Holder delivers a conversion
notice pursuant to Section 2.02 (the “Cash Settlement Averaging Period”) calculated
as the average during the Cash Settlement Averaging Period of the Conversion Rate on
each day of the Cash Settlement Averaging Period times the Sales Price of the
Company’s Common Stock on each such day. The Conversion Rate shall be equal to
$1,000 divided by the Conversion Price.

The number of shares of Common Stock to be paid for each $1,000 of principal amount
of a Note to be converted shall be equal to the average during the Cash Settlement
Averaging Period of the Conversion Rate in effect on each Trading Date of the Cash
Settlement Averaging Period less the result of the principal amount of the Note
being converted divided by the Sale Price of the shares of
Common Stock on each such Trading Day; provided, however, that the number of shares
of Common Stock to be paid shall not be less than zero.

2

 

Settlement in cash or a combination of cash and shares of Common Stock will occur
the day following the final day of the Cash Settlement Averaging Period.

Holders may surrender Notes for conversion on any date within a calendar quarter if,
as of the last day of the preceding calendar quarter, the Sale Price of the Common
Stock for at least 20 consecutive Trading Days in a period of 30 consecutive Trading
Days ending on the last Trading Day of the quarter is more than 130% of the
Conversion Price on the last Trading Day of the quarter. The Conversion Agent will,
on behalf of the Company, determine at the end of each quarter if the Notes are
convertible and notify the Company and the Trustee and, upon receipt of such
determination each quarter, if the Notes are convertible, the Company shall issue a
press release indicating that the Notes are convertible and publish such information
on the Company’s web site.

In addition, even if the condition in the preceding paragraph has not been
satisfied, a Holder may surrender for conversion a Note or portion of a Note:

     (i) if such Note or such portion thereof has been called for redemption
pursuant to Article 3 hereof, until the close of business on the day that is two
Business Days prior to the Redemption Date unless the Company defaults on payment of
the Redemption Price in which case the conversion right shall terminate at the close
of business on the date such default is cured and such payment is made;

     (ii) if the Company consolidates with or merges into another corporation, or is
a party to a binding share exchange pursuant to which the shares of Common Stock
would be converted into cash, securities or other property as set forth in Section
2.04 hereof, at any time from and after the date which is 15 days prior to the date
announced by the Company as the anticipated effective time of such transaction until
15 days after the actual date of such transaction; or

     (iii) during any period after December 1, 2003 in which (A) the credit rating
assigned to the Notes by Standard & Poor’s Rating Services is below BBB-, (B) the
credit rating assigned to the Notes by such rating agency is suspended or withdrawn
or (C) such rating agency is not then rating the Notes.

A Note in respect of which a Holder has delivered a Purchase Notice or Change of
Control Purchase Notice pursuant to Section 4.01 or Section 4.02 exercising the
option of such Holder to require the Company to purchase such Note may be converted
only if such notice of exercise is withdrawn in accordance with the terms of such
Section, unless the Company defaults in the payment of the applicable Purchase Price
or Change of Control Purchase Price, in which case such Note may be converted
without such withdrawal until such default is cured and such payment is made.”

     Section 1.03 Amendment to Section 2.02. Section 2.02 of the Supplemental Indenture is deleted in
its entirety and replaced by the following:

3

 

“Section 2.02 Exercise of Conversion Privilege. In order to exercise the
conversion privilege, the Holder of any Note to be converted shall surrender such
Note, duly endorsed or assigned to the Company or in blank, at the Corporate Trust
Office of the Trustee, located at 5847 San Felipe, Suite 1050, Houston, Texas 77057,
Attn: Kevin M. Dobrava, accompanied by a duly signed and completed written notice to
the Company at the Corporate Trust Office that the Holder elects to convert such
Note. Notes that are surrendered for conversion during the period from the close of
business on any Regular Record Date immediately preceding any Interest Payment Date
to the opening of business on such Interest Payment Date shall (except in the case
of Notes or portions thereof which have been called for redemption or in respect of
which a Purchase Notice or Change of Control Purchase Notice delivered by the Holder
has not been withdrawn, the conversion rights of which would terminate during the
period between such Regular Record Date and the close of business on such Interest
Payment Date) be accompanied by payment in immediately available funds or other
funds acceptable to the Company of an amount equal to the interest payable on such
Interest Payment Date on the principal amount of Notes being surrendered for
conversion; provided, however, that no such payment shall be required if there shall
exist at the time of conversion a default in the payment of interest on the Notes.
No payment or adjustment shall be made upon any conversion on account of any
interest accrued on the Notes surrendered for conversion from the Interest Payment
Date preceding the day of conversion. Rather, such amount shall be deemed to be
paid in full to the Holder through delivery of cash or a combination of cash and
Common Stock, in exchange for the Note being converted pursuant to the provisions
hereof, and the fair market value of the combination of cash and any shares of
Common Stock shall be treated as issued, to the extent thereof, first in exchange
for accrued and unpaid interest and the balance, if any, of such fair market value
of any such Common Stock and any cash payment shall be treated as issued in exchange
for the principal amount of the Note being converted pursuant to the provisions
hereof. In addition, no adjustment or payment shall be made upon any conversion on
account of any dividends on any Common Stock issued upon conversion. In addition,
Holders shall not be entitled to receive any dividends payable to holders of Common
Stock as of any Record Date before the close of business on the conversion date.

Notes shall be deemed to have been converted immediately prior to the close of
business on the day of surrender of such Notes for conversion in accordance with the
foregoing provisions, and at such time the rights of the Holders of such Notes as
Holders shall cease, and the Person or Persons entitled to receive any Common Stock
issuable upon conversion shall be treated for all purposes as the record holder or
holders of any such Common Stock at such time. As promptly as practicable on or
after the conversion date, the Company shall issue and shall
deliver to the Trustee at its Corporate Trust Office a certificate or certificates
for the number of full shares of Common Stock issuable upon conversion, together
with payment in lieu of any fraction of a share thereof, as provided in Section 2.03
hereof, and the cash payment, and the Trustee shall forward such certificate or
certificates and cash at the addresses set forth in the written notices sent to the
Company by the Holders electing to convert their Notes.”

4

 

     Section 1.04 Amendment of Section 2.13. Section 2.13 of the Supplemental Indenture shall be
deleted in its entirety.

     Section 1.05 Amendment of Section 4.01. Section 4.01 of the Supplemental Indenture is deleted in
its entirety and replaced by the following:

     “Section 4.01. Purchase at Option of Holders on Specified Purchase Dates.

     (a) At the option of the Holder thereof, Notes shall be purchased for cash by
the Company on April 1, 2009, April 1, 2014 and April 1, 2019 (each, a “Purchase
Date”) at a purchase price equal to the principal amount of the Notes plus accrued
and unpaid interest on the Notes to (but excluding) the applicable Purchase Date
(the “Purchase Price”).

Purchases of Notes hereunder shall be made upon:

       (i) delivery to the Paying Agent by the Holder of a written notice of purchase
(a “Purchase Notice”) at any time from the opening of business on the date that is
20 Business Days prior to the applicable Purchase Date until the close of business
on the applicable Purchase Date; and

       (ii) delivery of the Notes to be purchased to the Paying Agent prior to, on or
after the Purchase Date (together with all necessary endorsements) at the offices of
the Paying Agent, such delivery being a condition to receipt by the Holder of the
Purchase Price therefor; provided, however, that such Purchase Price shall be so
paid only if the Notes so delivered to the Paying Agent shall conform in all
respects to the description thereof in the related Purchase Notice, as determined by
the Company.

     (b) In connection with any purchase of Notes, the Company shall mail a written
notice to each Holder at their addresses shown in the Security Register of the
Security Registrar (and to beneficial owners as required by applicable law) on a
date not less than 20 Business Days prior to each Purchase Date setting forth the
procedures that Holders must follow to require the Company to purchase their Notes.

     (c) The Purchase Notice given by each Holder electing to have the Company
purchase some or all of the Notes held by such Holder must state:

       (i) the certificate numbers of the Holder’s Notes to be delivered for purchase
(or, if the Notes are not certificated, such other identification necessary to
comply with the procedures of the Depositary);

       (ii) the portion of the principal amount of Notes to be purchased, which must
be $1,000 or an integral multiple of $1,000; and

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       (iii) that the Notes are to be purchased by the Company pursuant to the terms
and conditions specified in Article 4.

     (d) Notwithstanding anything herein to the contrary, any Holder delivering a
Purchase Notice to the Paying Agent shall have the right to withdraw such Purchase
Notice at any time prior to the close of business on the Purchase Date by delivery
of a written notice of withdrawal to the Paying Agent. The notice will specify:

       (i) the principal amount of Notes being withdrawn;

       (ii) the certificate numbers of the Notes being withdrawn (or, if the Notes are
not certificated, such withdrawal notice must comply with the procedures of the
Depositary); and

       (iii) the principal amount, if any, of the Notes that remain subject to the
Purchase Notice (which number must be $1000 or an integral multiple of $1,000).

     (e) The Company shall to the extent applicable: (i) comply with the provisions
of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act
which may then be applicable and (ii) file the related Schedule TO (or any successor
schedule, form or report) or any other required schedule under the Exchange Act; and
(iii) otherwise comply with all applicable securities laws.

     (f) The Company shall (i) accept for payment Notes or portions thereof validly
tendered pursuant to the Purchase Notice, (ii) deposit with the Paying Agent (no
later than 10:00 A.M. New York City time on the Purchase Date) money, in immediately
available funds, sufficient to pay the Purchase Price of all Notes or portions
thereof so tendered and accepted and (iii) deliver, or direct the Paying Agent to
deliver, to the Trustee the Notes so accepted together with an Officers’ Certificate
setting forth the Notes or portions thereof tendered to and accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to the Holders of Notes
so accepted payment in an amount in cash equal to the Purchase Price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new Note
equal in principal amount to any unpurchased portion to the Notes surrendered;
provided that each such new Note shall be issued in an original principal amount in
denominations of $1,000 and integral multiples thereof. Any Notes not validly
tendered and not accepted by the Company shall be promptly mailed or delivered by
the Company to the Holder thereof.

     (g) With respect to each Note for which a Purchase Notice has been given, if
the Paying Agent holds money sufficient to pay the Purchase Price on the Business
Day following the applicable Purchase Date, in accordance with the terms of the
Indenture, then immediately after the Purchase Date interest on such Note will cease
to accrue, whether or not such Note is delivered to the Paying

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Agent. Thereafter,
all other rights of the Holder shall terminate, other than the right to receive the
Purchase Price upon delivery of such Note.

     (h) There shall be no purchase of any Notes pursuant to this Section 4.01 if
there has occurred and is continuing an Event of Default (other than a default in
the payment of the Purchase Price). The Paying Agent will promptly return to the
respective Holders thereof any Notes: (i) with respect to which a Purchase Notice
has been withdrawn in compliance with the Indenture or (ii) held by it during the
continuance of an Event of Default (other than a default in the payment of the
Purchase Price) in which case, upon such return, the Purchase Notice with respect
thereto shall be deemed to have been withdrawn.”

     Section 1.06 Amendment of Section 4.02. Section 4.02 of the Supplemental Indenture is deleted in
its entirety and replaced by the following:

     “Section 4.02. Purchase at Option of Holders Upon Change of Control.

     (a) Upon the occurrence of a Change of Control on or prior to April 1, 2009
(the date of such occurrence, the “Change of Control Date”), the Company shall
notify the Holders of the Notes in writing of such occurrence in accordance with
paragraph (b) below, and shall make an offer to purchase (a “Change of Control
Offer”), and shall purchase, on a Business Day (a “Change of Control Purchase Date”)
that is 40 Business Days following the Change of Control Date all of the then
outstanding Notes validly tendered at a purchase price in cash equal to the
principal amount of the Notes plus accrued and unpaid interest on the Notes to (but
excluding) the Change of Control Purchase Date (the “Change of Control Purchase
Price”).

     (b) Notice of a Change of Control Offer (a “Change of Control Notice”) shall be
sent, by first-class mail, postage prepaid, by the Company within 15 Business Days
after the Change of Control Date to the Holders of the Notes at their addresses
shown in the Security Register of the Security Registrar (and to beneficial owners
as required by applicable law) with a copy to the Trustee and the Paying Agent (and
shall also be given by release made to Reuters Economic Services and Bloomberg
Business News). The Change of Control Offer shall remain open from the time of
delivery of the Change of Control Notice for at least 15 Business Days and until
5:00 p.m., New York City time, on the Business Day prior to the Change of Control
Purchase Date. The Change of Control Notice, which shall govern the terms of the
Change of Control Offer, shall include such disclosures as are required by law and
shall state:

       (i) briefly, the events causing a Change of Control and Change of
Control Date;

       (ii) the date by which the Change of Control Purchase Notice pursuant
to this Section 4.02 must be delivered to the Paying Agent;

       (iii) the Change of Control Purchase Price;

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       (iv) the Change of Control Purchase Date;

       (v) the name and address of the Paying Agent and the Conversion Agent;

       (vi) the Conversion Price and any adjustments thereto;

       (vii) that Notes as to which a Change of Control Purchase Notice has
been given may be converted if they are otherwise convertible pursuant to
Article 2 hereof only if the Change of Control Purchase Notice has been
withdrawn in accordance with the terms of this Section 4.02;

       (viii) that Notes must be surrendered to the Paying Agent to collect
payment;

       (ix) that the Change of Control Purchase Price for any Note as to which
a Change of Control Purchase Notice has been duly given and not withdrawn
will be paid promptly following the later of the Change of Control Purchase
Date and the time of surrender of such Note as described in Section 4.02(h);

       (x) briefly, the procedures the Holder must follow to exercise rights
under this Section 4.02;

       (xi) the procedures for withdrawing a Change of Control Notice as set
forth in Section 4.02 hereof;

       (xii) that, unless the Company defaults in making payment of such
Change of Control Purchase Price, interest, if any, on Notes surrendered for
purchase by the Company will cease to accrue on and after the Change of
Control Purchase Date; and

       (xiii) the CUSIP number of the Notes.

     (c) To exercise a purchase right pursuant to this Section 4.02, a Holder shall
deliver to the Paying Agent a written notice (a “Change of Control Purchase Notice”)
of such Holder’s exercise of such right, in accordance with the terms and conditions
set forth in the Change of Control Notice. The notice (which must be delivered to
the Paying Agent prior to the close of business on the Change of Control Purchase
Date) shall state:

       (i) the certificate numbers of the Holder’s Notes to be delivered for
purchase (or, if the Notes are not certificated, such other identification
necessary to comply with the procedures of the Depositary);

       (ii) the portion of the principal amount of Notes to be purchased,
which portion must be $1,000 or an integral multiple thereof; and

8

 

       (iii) that such Notes shall be purchased pursuant to the terms and
conditions specified in Article 4.

Upon receipt by the Paying Agent of a Change of Control Purchase Notice, the Holder
of the Note in respect of which such Change of Control Purchase Notice was given
shall (unless such Change of Control Purchase Notice is withdrawn) thereafter be
entitled to receive solely the Change of Control Purchase Price with respect to such
Note.

     (d) Notwithstanding anything herein to the contrary, a Holder shall have the
right to withdraw any Change of Control Purchase Notice at any time prior to the
close of business on the Change of Control Purchase Date by delivery of a written
notice of withdrawal to the Paying Agent. The notice will specify:

       (i) the principal amount of Notes being withdrawn;

       (ii) the certificate numbers of the Notes being withdrawn (or, if the
Notes are not certificated, such withdrawal notice must comply with the
procedures of the Depositary); and

       (iii) the principal amount, if any, of the Notes that remain subject to
the Purchase Notice (which number must be $1000 or an integral multiple of
$1,000).

Notes in respect of which a Change of Control Purchase Notice has been given by the
Holder thereof may not be converted into shares of Common Stock on or after the date
of the delivery of such Change of Control Purchase Notice, unless such Change of
Control Purchase Notice has first been validly withdrawn as set forth in the
foregoing paragraph, unless the Company has defaulted in the payment of the Change
of Control Purchase Price.

     (e) On the Change of Control Purchase Date, the Company shall (i) accept for
payment Notes or portions thereof validly tendered pursuant to the Change of Control
Offer, (ii) deposit with the Paying Agent (no later than 10:00 A.M. New York City
time on the Change of Control Purchase Date) money, in immediately available funds,
sufficient to pay the Change of Control Purchase Price of all Notes or portions
thereof so tendered and accepted, (iii) deliver, or direct the Paying Agent to
deliver, to the Trustee the Notes so accepted, and (iv) deliver to the Trustee an
Officers’ Certificate setting forth the Notes or portions
thereof tendered to and accepted for payment by the Company. The Paying Agent shall
promptly mail or deliver to the Holders of Notes so accepted for payment an amount
of cash equal to the Change of Control Purchase Price, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Note equal in
principal amount to any unpurchased portion to the Notes surrendered; provided that
each such new Note shall be issued in an original principal amount in denominations
of $1,000 and integral multiples thereof. Any Notes not validly tendered and not
accepted by the Company shall be promptly mailed or delivered by the Company to the
Holder thereof. The Company will publicly announce the results of the Change of
Control Offer not later than the third Business Day following the Change of Control
Purchase Date.

9

 

     (f) The Company shall to the extent applicable: (i) comply with the provisions
of Rule 13e-4, Rule 14e-1 and any other tender offer rules under the Exchange Act
which may then be applicable and (ii) file the related Schedule TO (or any successor
schedule, form or report) or any other required schedule under the Exchange Act; and
(iii) otherwise comply with all applicable securities laws.

     (g) With respect to each Note for which a Change of Control Purchase Notice has
been given, if the Paying Agent holds money sufficient to pay the Change of Control
Purchase Price on the Business Day following the Change of Control Purchase Date, in
accordance with the terms of the Indenture, then immediately after the Change of
Control Purchase Date, interest on the principal amount of such Note will cease to
accrue, whether or not such Note is delivered to the Paying Agent. Thereafter, all
other rights of the Holder shall terminate, other than the right to receive the
Change of Control Purchase Price upon delivery of such Note.

     (h) There shall be no purchase of any Notes pursuant to this Section 4.02 if
there has occurred and is continuing an Event of Default (other than a default in
the payment of the Change of Control Purchase Price). The Paying Agent will
promptly return to the respective Holders thereof of any Notes: (i) with respect to
which a Change of Control Purchase Notice has been withdrawn in compliance with
Section 4.02(d) or (ii) held by it during the continuance of an Event of Default
(other than a default in the payment of the Change of Control Purchase Price) in
which case, upon such return, the Change of Control Purchase Notice with respect
thereto shall be deemed to have been withdrawn.”

     Section 1.07 Amendment to Exhibit A. Section 9 of Exhibit A to the Supplemental Indenture is
deleted in its entirety and replaced by the following:

     “9. CONVERSION. Subject to and in compliance with the provisions of the Indenture (including,
without limitation, the conditions to conversion set forth in Section 2.01 of the Second
Supplemental Indenture), a Holder is entitled, at such Holder’s option, to convert the Holder’s
Note (or any portion of the principal amount thereof that is $1,000 or an integral
multiple $1,000), into an amount of cash and the number of shares of fully paid and nonassessable
shares of Common Stock, if any, at the Conversion Price in effect at the time of conversion.

     The Company will notify Holders of any event triggering the right to convert the Holder’s Note
as specified above in accordance with the Indenture.

     A Note in respect of which a Holder has delivered a Purchase Notice or Change of Control
Purchase Notice, as the case may be, exercising the option of such Holder to require the Company to
purchase such Security may be converted only if such Purchase Notice or Change of Control Purchase
Notice, as the case may be, is withdrawn in accordance with the terms of the Indenture.

10

 

     The initial Conversion Price is $33.97, subject to adjustment in certain events described in
the Indenture.

     To convert a Note, a Holder must (1) complete and manually sign the conversion notice below
(or complete and manually sign a facsimile of such notice) and deliver such notice to the
Conversion Agent, (2) surrender the Note to the Conversion Agent, (3) furnish appropriate
endorsements and transfer documents if required by the Conversion Agent, the Company or the Trustee
and (4) pay any transfer or similar tax, if required.

     No fractional shares of Common Stock shall be issued upon conversion of any Security. Instead
of any fractional share of Common Stock that would otherwise be issued upon conversion of such
Security, the Company shall pay a cash adjustment as provided in the Indenture.

     Notes that are surrendered for conversion during the period from the close of business on any
Regular Record Date immediately preceding any Interest Payment Date to the opening of business on
such Interest Payment Date shall (except in the case of Notes or portions thereof which have been
called for redemption or in respect of which a Purchase Notice or Change of Control Purchase Notice
delivered by the Holder has not been withdrawn, the conversion rights of which would terminate
during the period between such Regular Record Date and the close of business on such Interest
Payment Date) be accompanied by payment in immediately available funds or other funds acceptable to
the Company of an amount equal to the interest payable on such Interest Payment Date on the
principal amount of Notes being surrendered for conversion; provided, however, that no such payment
shall be required if there shall exist at the time of conversion a default in the payment of
interest on the Notes. No payment or adjustment shall be made upon any conversion on account of
any interest accrued on the Notes surrendered for conversion from the Interest Payment Date
preceding the day of conversion. Rather, such amount shall be deemed to be paid in full to the
Holder through delivery of cash or a combination of cash and Common Stock, in exchange for the Note
being converted pursuant to the provisions hereof, and the fair market value of the combination of
cash and any shares of Common Stock, shall be treated as issued, to the extent thereof, first in
exchange for accrued and unpaid interest and the balance, if any, of such fair market value of any
such Common Stock and any cash payment shall be treated as issued in exchange for the principal
amount of the Note being converted pursuant to the provisions hereof. In addition, no adjustment
or payment shall be made upon any conversion on account of any dividends on any Common Stock issued upon conversion.
In addition, Holders shall not be entitled to receive any dividends payable to holders of Common
Stock as of any Record Date before the close of business on the conversion date.

     If the Company (i) is a party to a consolidation, merger or binding share exchange or (ii)
reclassifies the Common Stock or (iii) conveys, transfers or leases its properties and assets
substantially as an entirety to any Person, the right to convert a Note into shares of Common Stock
may be changed into a right to convert it into securities, cash or other assets of the Company or
such other Person, in each case in accordance with the Indenture.

11

 

     The above description of conversion of the Security is qualified by reference to, and is
subject in its entirety by, the more complete description thereof contained in the Indenture.”

ARTICLE 2

MISCELLANEOUS

     Section 2.01 Application of First Amendment to Second Supplemental Indenture. Each and every term
and condition contained in this First Amendment to Second Supplemental Indenture that modifies,
amends or supplements the terms and conditions of the Indenture, as supplemented by the Second
Supplemental Indenture, shall apply only to the Notes created thereby and not to any future series
of Securities established under the Indenture. Except as specifically amended and supplemented by,
or to the extent inconsistent with, this First Amendment Second Supplemental Indenture, the
Indenture, as supplemented by the Second Supplemental Indenture, shall remain in full force and
effect and is hereby ratified and confirmed.

     Section 2.02 Effective Date. This First Amendment to Second Supplemental Indenture shall be
effective as of the date first above written and upon the execution and delivery hereof by each of
the parties hereto.

     Section 2.03 Counterparts. This First Amendment to Second Supplemental Indenture may be executed
in any number of counterparts, each of which so executed shall be deemed to be an original, but all
such counterparts shall together constitute but one and the same instrument.

[Signature page follows]

12

 

     IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to Second Supplemental
Indenture to be duly executed by their respective officers hereunto duly authorized, all as of the
day and year first above written.

	 	 	 	 	 
	 	HCC INSURANCE HOLDINGS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	Edward H. Ellis, Jr. 	 
	 	 	Title:  	Executive Vice President 	 
	 

	 	 	 	 	 
	 	WACHOVIA BANK, as Trustee

 	 
	 	By:  	 	 
	 	 	Name:  	Kevin M. Dobrava 	 
	 	 	Title:  	Vice President

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