Document:

exv4w2

Exhibit 4.2

EXECUTION VERSION 

TERM LOAN AND REVOLVING LOAN CREDIT FACILITY AGREEMENT

PROVIDING FOR A

US$435,000,000

SECURED TERM LOAN FACILITY

10,000,000

SECURED REVOLVER FACILITY

AND A

US$50,000,000

SECURED COST OVERRUN TERM LOAN FACILITY

 

BULLY 2, LTD.,

AS BORROWER,

CHINA DEVELOPMENT BANK CORPORATION,

THE EXPORT-IMPORT BANK OF CHINA,

STANDARD CHARTERED BANK,

HSBC BANK PLC,

RZB FINANCE LLC,

AS LENDERS,

STANDARD CHARTERED BANK,

AS LEAD ARRANGER,

CHINA DEVELOPMENT BANK CORPORATION,

THE EXPORT-IMPORT BANK OF CHINA,

STANDARD CHARTERED BANK,

HSBC BANK PLC,

AS MANDATED LEAD ARRANGERS,

RZB FINANCE LLC,

AS COST OVERRUN TERM LOAN LEAD ARRANGER,

AND

STANDARD CHARTERED BANK,

AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT

 

dated as of

October 21, 2008

AMENDED AND RESTATED

As of October 9, 2009

 

 

	 	 	 	 	 	 	 

	1.	 	DEFINITIONS	 	2
	 
	 	 	 	 	 	 
	 
	 	1.1	 	Specific Definitions	 	2
	 
	 	1.2	 	Computations of Time Periods; Other Definitional Provisions	 	47
	 
	 	1.3	 	Accounting Terms	 	48
	 
	 	1.4	 	Certain Matter Regarding Materiality	 	48
	 
	 	1.5	 	Forms of Documents	 	48
	 
	 	1.6	 	References to Date of Agreement	 	48
	 
	 	 	 	 	 	 
	2.	 	REPRESENTATIONS AND WARRANTIES	 	49
	 
	 	 	 	 	 	 
	 
	 	2.1	 	Representations and Warranties	 	49
	 
	 	 	 	 	 	 
	3.	 	AMOUNT AND TERMS OF THE FACILITIES	 	58
	 
	 	 	 	 	 	 
	 	 	Purposes	 	58
	 
	 	3.2	 	Advances	 	59
	 
	 	3.3	 	The Notes	 	60
	 
	 	3.4	 	Borrowing; Drawdown Notice	 	60
	 
	 	3.5	 	Changes of Commitments	 	60
	 
	 	3.6	 	Several Obligations; Certain Remedies Independent	 	61
	 
	 	 	 	 	 	 
	4.	 	CONDITIONS	 	61
	 
	 	 	 	 	 	 
	 
	 	4.1	 	Conditions Precedent to the Closing Date	 	61
	 
	 	4.2	 	Conditions Precedent to the Effective Date	 	67
	 
	 	4.3	 	Conditions Precedent to Senior Term Loans and Cost Overrun Term Loans	 	68
	 
	 	4.4	 	Further Conditions Precedent	 	71
	 
	 	 	 	 	 	 
	5.	 	REPAYMENT AND PREPAYMENT	 	73
	 
	 	 	 	 	 	 
	 
	 	5.1	 	Repayment	 	73
	 
	 	5.2	 	Mandatory Prepayments	 	74
	 
	 	5.3	 	Voluntary Prepayment	 	75
	 
	 	5.4	 	Repayments and Prepayments Generally	 	76
	 
	 	 	 	 	 	 
	6.	 	INTEREST AND RATE	 	76
	 
	 	 	 	 	 	 
	 
	 	6.1	 	Floating Rate	 	76
	 
	 	6.2	 	Applicable Rate; Default Rate	 	76
	 
	 	6.3	 	Interest Payments	 	77
	 
	 	6.4	 	Banking Days	 	77
	 
	 	6.5	 	360 Day Year	 	77

i

 

	 	 	 	 	 	 	 

	 
	 	6.6	 	Interest Determinations	 	77
	 
	 	6.7	 	Consolidation of Advances	 	77
	 
	 	 	 	 	 	 
	7.	 	PAYMENTS	 	78
	 
	 	 	 	 	 	 
	 
	 	7.1	 	Borrower Payments Generally	 	78
	 
	 	7.2	 	Advances	 	78
	 
	 	7.3	 	Payments by Administrative Agent to Lenders	 	78
	 
	 	7.4	 	Set-Off; Sharing of Payments	 	78
	 
	 	7.5	 	Application of Insufficient Payments	 	79
	 
	 	7.6	 	Pro Rata Treatment	 	79
	 
	 	7.7	 	Non-Receipt of Funds by the Administrative Agent	 	80
	 
	 	7.8	 	Non-Banking Days	 	80
	 
	 	 	 	 	 	 
	8.	 	EVENTS OF DEFAULT	 	81
	 
	 	 	 	 	 	 
	 
	 	8.1	 	Events of Default	 	81
	 
	 	 	 	 	 	 
	9.	 	COVENANTS	 	86
	 
	 	 	 	 	 	 
	 
	 	9.1	 	Affirmative Covenants	 	86
	 
	 	9.2	 	Negative Covenants	 	103
	 
	 	 	 	 	 	 
	10.	 	JOINT COMMITTEE	 	113
	 
	 	 	 	 	 	 
	 
	 	10.1	 	Appointment of the Joint Committee	 	113
	 
	 	10.2	 	Approval of a Wholly Owned Subsidiary Proposed Transaction	 	113
	 
	 	10.3	 	Approval of a Proposed Transaction	 	114
	 
	 	10.4	 	Proposed Transaction Fee	 	115
	 
	 	10.5	 	No Waiver; Proposed Transaction	 	115
	 
	 	 	 	 	 	 
	11.	 	SUCCESSORS AND ASSIGNS	 	115
	 
	 	 	 	 	 	 
	 
	 	11.1	 	Successors and Assigns Generally	 	115
	 
	 	11.2	 	Assignment; Participations; Etc. by the Lenders	 	115
	 
	 	11.3	 	Assignment by SCB	 	117
	 
	 	11.4	 	Register	 	118
	 
	 	11.5	 	Participations	 	118
	 
	 	11.6	 	Certain Pledges	 	119
	 
	 	11.7	 	Taxes	 	119
	 
	 	11.8	 	Treatment of Certain Refunds	 	120
	 
	 	 	 	 	 	 
	12.	 	YIELD PROTECTION, ETC.	 	121
	 
	 	 	 	 	 	 
	 
	 	12.1	 	Illegality	 	121

ii

 

	 	 	 	 	 	 	 

	 
	 	12.2	 	Increased Costs	 	121
	 
	 	12.3	 	Interest Rate Determination	 	122
	 
	 	12.4	 	Administrative Agent's Certificate	 	124
	 
	 	12.5	 	Break-Funding	 	124
	 
	 	12.6	 	Mitigation Obligations	 	124
	 
	 	 	 	 	 	 
	13.	 	CURRENCY INDEMNITY	 	125
	 
	 	 	 	 	 	 
	 
	 	13.1	 	Judgment Currency	 	125
	 
	 	 	 	 	 	 
	14.	 	FEES AND EXPENSES	 	125
	 
	 	 	 	 	 	 
	 
	 	14.1	 	Fee Letters	 	125
	 
	 	14.2	 	Commitment Fee	 	125
	 
	 	14.3	 	Expenses	 	126
	 
	 	 	 	 	 	 
	15.	 	APPLICABLE LAW AND JURISDICTION	 	126
	 
	 	 	 	 	 	 
	 
	 	15.1	 	GOVERNING LAW	 	126
	 
	 	15.2	 	Submission to Jurisdiction; Process Agent; Alternative Process;	 	 
	 
	 	 	 	Waiver of Venue, Etc.	 	126
	 
	 	15.3	 	WAIVER OF JURY TRIAL	 	127
	 
	 	 	 	 	 	 
	16.	 	THE ADMINISTRATIVE AGENT	 	128
	 
	 	 	 	 	 	 
	 
	 	16.1	 	Appointment of Administrative Agent	 	128
	 
	 	16.2	 	Duties of the Administrative Agent	 	128
	 
	 	16.3	 	Role of the Lead Arranger; Mandated Lead Arrangers	 	128
	 
	 	16.4	 	No Fiduciary Duties	 	128
	 
	 	16.5	 	Business with the Borrower and the Joint Venturers	 	129
	 
	 	16.6	 	Rights and Discretions	 	129
	 
	 	16.7	 	Required Lenders' Instructions	 	130
	 
	 	16.8	 	Responsibility for Documentation	 	130
	 
	 	16.9	 	Exclusion of Liability	 	131
	 
	 	16.10	 	Resignation of the Administrative Agent	 	131
	 
	 	16.11	 	Confidentiality	 	132
	 
	 	16.12	 	Relationship with the Lenders	 	133
	 
	 	16.13	 	Credit Appraisal by the Lenders	 	133
	 
	 	16.14	 	Administrative Agent's and Joint Committee Management Time	 	134
	 
	 	16.15	 	Deduction from Amounts payable by the Administrative Agent	 	134
	 
	 	16.16	 	Reliance and Engagement Letters	 	134
	 
	 	 	 	 	 	 
	17.	 	COLLATERAL AGENT	 	134

iii

 

	 	 	 	 	 	 	 

	 
	 	17.1	 	Appointment by Administrative Agent	 	134
	 
	 	 	 	 	 	 
	18.	 	NOTICES AND DEMANDS	 	134
	 
	 	 	 	 	 	 
	 
	 	18.1	 	Addresses	 	134
	 
	 	18.2	 	Receipt	 	135
	 
	 	 	 	 	 	 
	19.	 	MISCELLANEOUS	 	136
	 
	 	 	 	 	 	 
	 
	 	19.1	 	No Waiver	 	136
	 
	 	19.2	 	Survival	 	136
	 
	 	19.3	 	Severability	 	136
	 
	 	19.4	 	No Fiduciary Relationship	 	136
	 
	 	19.5	 	Indemnification by Borrower	 	136
	 
	 	19.6	 	Captions	 	137
	 
	 	19.7	 	Amendments	 	137
	 
	 	19.8	 	Lender Confidentiality	 	138
	 
	 	19.9	 	Entire Agreement	 	138
	 
	 	19.10	 	WAIVER OF IMMUNITY	 	138
	 
	 	19.11	 	USA Patriot Act Notice; OFAC and Bank Secrecy Act	 	139
	 
	 	19.12	 	Defaulting Lenders	 	139

iv

 

	 	 	 

	EXHIBITS
	 
	 	 
	A
	 	FORM OF DRAWDOWN NOTICE
	B-1
	 	FORM OF SENIOR TERM LOAN NOTE
	B-2
	 	FORM OF SENIOR REVOLVER NOTE
	B-3
	 	FORM OF COST OVERRUN TERM LOAN NOTE
	C
	 	FORM OF MARSHALL ISLANDS MORTGAGE
	D
	 	FORM OF ASSIGNMENT OF EARNINGS
	E
	 	FORM OF ASSIGNMENT OF INSURANCES
	F
	 	FORM OF ASSIGNMENT OF CONSTRUCTION CONTRACTS/DRILLING
	 
	 	CONTRACT
	G
	 	FORM OF SHARE PLEDGE AGREEMENT
	H-1
	 	FORM OF CONTROL AGREEMENT
	H-2
	 	FORM OF SINGAPORE CHARGE OF ACCOUNTS
	I
	 	FORM OF ASSIGNMENT OF MANAGEMENT AGREEMENT
	J
	 	FORM OF ASSIGNMENT AND ASSUMPTION
	K
	 	FORM OF COMPLIANCE CERTIFICATE
	L
	 	FORM OF LOAN BORROWING CERTIFICATE
	M
	 	FORM OF TECHNICAL AND ENVIRONMENTAL CONSULTANT
	 
	 	 
	CERTIFICATE
	 
	 	 
	N
	 	RESERVED
	O
	 	FORM OF GUARANTEE
	P
	 	FORM OF CONSENT AND AGREEMENT
	Q
	 	FORM OF BORROWER SUBSIDIARY SECURITY AGREEMENT
	R
	 	FORM OF SINGAPORE DEED
	S
	 	FORM OF SECURITY AGREEMENT

v

 

	 	 	 

	SCHEDULES
	 
	 	 
	1
	 	THE LENDERS AND THE COMMITMENTS
	1A
	 	AMOUNTS AND PERCENTAGE INTERESTS
	3
	 	CONSTRUCTION DATA
	5.1(a)
	 	AMORTIZATION
	9.1(z)
	 	PROJECT STATISTICAL DATA

vi

 

TERM LOAN

AND CREDIT FACILITY AGREEMENT

          THIS TERM LOAN AND REVOLVING LOAN CREDIT FACILITY AGREEMENT (this “Agreement”) is made as of
the 21st day of October, 2008, as amended and restated on October 9, 2009, by and among (i) BULLY
2, LTD., an exempt company incorporated in the Cayman Islands, as borrower (the “Borrower”), (ii)
CHINA DEVELOPMENT BANK CORPORATION, THE EXPORT-IMPORT BANK OF CHINA, STANDARD CHARTERED BANK, a
company incorporated by Royal Charter in England (with reference number ZC18, hereinafter “SCB”),
HSBC BANK PLC, RZB FINANCE LLC (together with their respective successors and assigns, the
“Lenders”), (iii) SCB, as lead arranger (in such capacity and any successor thereto, the “Lead
Arranger”), (iv) CHINA DEVELOPMENT BANK CORPORATION, THE EXPORT-IMPORT BANK OF CHINA, SCB and HSBC
BANK PLC, as mandated lead arrangers (the “Mandated Lead Arrangers”), (v) RZB FINANCE LLC, as Cost
Overrun Term Loan Lead Arranger (the “Cost Overrun Term Loan Lead Arranger”) and (vi) SCB as
administrative agent (in such capacity and any successor thereto, the “Administrative Agent”) and
collateral agent (in such capacity and any successor thereto, the “Collateral Agent”, and together
with the Administrative Agent, the “Agents”) for the Lenders.

WITNESSETH THAT:

          WHEREAS, the Borrower, certain of the Lenders, the Lead Arranger, the Administrative Agent and
the Collateral Agent entered into a Credit Agreement (the “Original Credit Agreement”), dated as of
October 21, 2008 in order to, among other things, (i) partly finance the construction of the
drillship to be named FRONTIER BULLY II and registered under the laws and flag of the Republic of
the Marshall Islands pursuant to terms of the Construction Contracts, the Approved AFE and the
Master Construction Schedule (as such terms are defined herein) and (ii) operate the Vessel to
perform its obligations under the Drilling Contract (as hereinafter defined) (the “Project”);

          WHEREAS, at the request of the Borrower, SCB has agreed to serve as Lead Arranger and as the
Administrative Agent and the Collateral Agent under this Agreement and the Lenders have agreed to
provide to the Borrower secured term loans and a revolving credit facility in the aggregate amount
of Four Hundred Ninety Five Million Dollars (US$495,000,000) on the terms and conditions set forth
herein;

          WHEREAS, the Borrower has pledged all of its interest in the Collateral and the Accounts (as
hereinafter defined) as security for the obligations of the Borrower under this Agreement;

          WHEREAS, in connection with the syndication of the Advances under the Original Credit
Agreement, the parties hereto desire to amend and restate the Original Credit Agreement in its
entirety as described herein;

          NOW, THEREFORE, in consideration of the premises set forth above, the covenants and agreements
hereinafter set forth, and other good and valuable consideration, the

1

 

receipt and adequacy of which are hereby acknowledged, the parties hereto agree as set forth
below:

1. DEFINITIONS

     1.1 Specific Definitions. In this Agreement the words and expressions specified below
shall, except where the context otherwise requires, have the meanings attributed to them below:

	 	 	 

	“Acceptable Accounting Firm”

	 	means Deloitte & Touche or such internationally
recognized accounting firm as shall be approved by
the Majority Lenders, such approval not to be
unreasonably withheld;
	 
	 	 
	“Acceptable Insurance Broker”

	 	means any nationally recognized independent
insurance broker reasonably satisfactory to the
Administrative Agent, after consultation with the
Insurance Consultant and the Borrower;
	 
	 	 
	“Account Collateral”

	 	has the meaning assigned to that term in the
Depositary Agreement;
	 
	 	 
	“Administrative Agent”

	 	has the meaning ascribed thereto in the preamble;
	 
	 	 
	“Administrative Agent’s Account”

	 	means Standard Chartered Bank, New York (SWIFT CODE
SCBLUS33) for the account of Standard Chartered
Bank, London (SWIFT CODE SCBLGB2L), (Account No.
3582-088442-001);
	 
	 	 
	“Administrative Questionnaire”

	 	means an Administrative Questionnaire in a form
supplied by the Administrative Agent;
	 
	 	 
	“Advance(s)”

	 	means any amount advanced to the Borrower with
respect to the Facilities or (as the context may
require) the aggregate amount of all such Advances
for the time being outstanding;
	 
	 	 
	“Affected Property”

	 	means the Vessel (in whole or in part) to the
extent, lost, destroyed, damaged or otherwise taken
as a result of any Event of Loss;
	 
	 	 
	“Affiliate”

	 	means, as to any Person, any other Person that,
directly or indirectly, controls, is controlled by
or is under common control with such Person or is a
director or officer of such Person; and for purposes
of this definition, the term “control” (including
the terms “controlling”, “controlled by” and “under
common control with”) of a Person shall mean the
possession,

2

 

	 	 	 

	 

	 	direct or indirect, of the power to vote 15% or more of the Voting Shares of such Person or
to direct or cause the direction of the management
and policies of such Person, whether through the
ownership of such Voting Shares, by contract or
otherwise;
	 
	 	 
	“Agency and Depositary Fee Letter”

	 	means that certain letter agreement dated as of
October 21, 2008 between the Borrower, the Agents
and the Depositary with respect to certain fees
payable by the Borrower for the account of SCB, in
its capacities as Administrative Agent and
Collateral Agent and Standard Chartered Bank, New
York Branch in its capacity as Depositary;
	 
	 	 
	“Agency and Depositary Fee”

	 	has the meaning ascribed thereto in the Agency and
Depositary Fee Letter;
	 
	 	 
	“Agents”

	 	has the meaning ascribed thereto in the preamble;
	 
	 	 
	“Agreement”

	 	has the meaning ascribed thereto in the preamble;
	 
	 	 
	“Applicable Lending Office”

	 	means, for each Lender, the “Lending Office” of such
Lender (or of an Affiliate of such Lender) specified
in the Administrative Questionnaire delivered by
such Lender to the Administrative Agent or such
other office of such Lender (or of an Affiliate of
such Lender) as such Lender may from time to time
specify in writing to the Administrative Agent and
the Borrower as the office by which its Advances are
to be made and maintained;
	 
	 	 
	“Applicable Margin”

	 	means, for purposes of the Senior Term Loan and the
Senior Revolver:
	 
	 	 
	 

	 	(a) during the period prior to the occurrence of the
Delivery Date (as defined in the Shanghai
Construction Contract), 2.50% per annum;
	 
	 	 
	 

	 	(b) for the period commencing with the occurrence of
the Delivery Date (as defined in the Shanghai
Construction Contract) and ending on (and excluding)
the Shell Commencement Date, 2.30% per annum;
	 
	 	 
	 

	 	(c) for the period commencing with the Shell
Commencement Date and ending on (and including) the
day immediately prior to the first day of the sixth
year following the Shell Commencement Date, 2.25%
per annum;

3

 

	 	 	 

	 

	 	(d) for the period commencing with the first day of
the sixth year following the Shell Commencement Date
and thereafter, 2.40% per annum;
	 
	 	 
	 

	 	provided that, if the Vessel has a Utilization Rate
of at least 95% for 3 consecutive months at any time
after the Shell Commencement Date, such margin shall
be equal to (i) 2.15% with respect to clause (c)
above and (ii) 2.30% with respect to clause (d)
above commencing with the next succeeding Interest
Period and each subsequent Interest Period
thereafter for so long as such Utilization Rate
remains at or above 95%; provided further, that if
the Vessel has a Utilization Rate of at least 97.5%
for 3 consecutive months at any time after the Shell
Commencement Date, such margin shall be equal to (i)
2.10% with respect to clause (c) above and (ii)
2.25% with respect to clause (d) above commencing
with the next succeeding Interest Period and each
subsequent Interest Period thereafter for so long as
such Utilization Rate remains at or above 97.5%;
	 
	 	 
	 

	 	For purposes of the Cost Overrun Term Loan:
	 
	 	 
	 

	 	(a) during the period prior to the occurrence of the
Shell Commencement Date, 3.50% per annum;
	 
	 	 
	 

	 	(b) for the period commencing with the Shell
Commencement Date and thereafter, 3.25% per annum;
	 
	 	 
	“Applicable Rate”

	 	has the meaning ascribed thereto in Section 6.2;
	 
	 	 
	“Approved AFE”

	 	means the AFE approved by the Borrower and the
Manager and dated March 12, 2008 setting forth
$470,416,641.00 as the amount of all projected
payments of Project Costs to construct the Vessel
through the Construction Completion Date, as
certified by the Borrower and provided to the
Administrative Agent and the Technical and
Environmental Consultant;
	 
	 	 
	“Approved Fund”

	 	means any Fund which is, or the assets of which are,
administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an
Affiliate of an entity that administers or manages a
Lender;
	 
	 	 
	“Approved Joint Venture”

	 	means the joint venture between, Shell EP Offshore

4

 

	 	 	 

	 

	 	Ventures Limited and Frontier Drillships 2 described
in the Joint Venture Agreement;
	 
	 	 
	“Assignment and Assumption”

	 	means an assignment and assumption entered into by a
Lender and an Eligible Assignee (with the consent of
any party whose consent is required by Section
11.2), and accepted by the Administrative Agent, in
substantially the form of Exhibit J or any other
form approved by the Administrative Agent;
	 
	 	 
	“Assignments”

	 	means each of Assignment of Earnings, Assignment of
Insurances, Assignments of Construction Contracts,
Assignment of the Drilling Contract and Assignment
of the Management Agreement;
	 
	 	 
	“Assignment Notices”

	 	means notices by the Borrower to be given pursuant
to the respective Assignments, to be in form and
substance satisfactory to the Administrative Agent
in its sole discretion;
	 
	 	 
	“Assignments of Construction
Contracts”

	 	means each of the first priority assignments of the
Construction Contracts and other material contracts
of the Borrower associated with the construction and
outfitting of the Vessel including manufacturer’s
warranties and guaranties in favor of the Collateral
Agent in respect of the Vessel, substantially in the
form of Exhibit F;
	 
	 	 
	“Assignment of Drilling Contract”

	 	means the first priority assignment of the Drilling
Contract in favor of the Collateral Agent in respect
of the Project, substantially in the form of Exhibit
F;
	 
	 	 
	“Assignment(s) of Earnings”

	 	means first priority assignments of earnings and
charterparties, to be made by the Borrower in favor
of the Collateral Agent, in respect of the Project
Revenues, including earnings under the Drilling
Contract, and the mobilization fee to be paid by
Shell EP Wells Equipment Services B.V. under the
Drilling Contract, in accordance with the terms of
the Drilling Contract, substantially in the form of
Exhibit D;
	 
	 	 
	“Assignment(s) of Insurances”

	 	means first priority assignments of insurances, to
be made by the Borrower in favor of the Collateral
Agent, in respect of the insurances provided
pursuant to Section 9.1(j), substantially in the
form of Exhibit E;
	 
	 	 
	“Assignment of Management

	 	means the first priority assignment of the Management

5

 

	 	 	 

	Agreement”

	 	Agreement in favor of the Collateral Agent in respect of the Project, substantially in the form of Exhibit I;
	 
	 	 
	“Authorized Officer”

	 	means (a) with respect to any Person that is a
corporation, the chairman, chief executive officer,
president, vice president, assistant vice-president,
treasurer, assistant treasurer, attorney-in-fact,
secretary, assistant secretary, general manager or
director of such Person or the individuals authorized
to act as such by the corporation’s by-laws, (b) with
respect to any Person that is a partnership, each
general partner of such person or the chairman, chief
executive officer, president, vice president,
treasurer, assistant treasurer, attorney-in-fact,
secretary or assistant secretary of a general partner
of such Person and (c) with respect to any Person that
is a limited liability company, the manager, the
managing partner or a duly appointed officer of such
Person or the individuals authorized to represent such
person pursuant to the constitutive documents of such
limited liability company or the chairman, chief
executive officer, president, vice president,
treasurer, assistant treasurer, attorney-in-fact,
secretary or assistant secretary of a manager or
managing member of such Person;
	 
	 	 
	“Banking Day(s)”

	 	means days on which banks are open for the transaction
of business of the nature required by this Agreement
in New York, New York, Houston, Texas, London, England
and Beijing, P.R. China;
	 
	 	 
	“Base Case Forecast”

	 	means the projections relating to the Construction and
operation of the Project for the period commencing on
the date of such Base Case Forecast and continuing
through the Final Payment Date, as agreed upon with
the Borrower and the Technical and Environmental
Consultant, and in form and substance reasonably
acceptable to the Administrative Agent and the
Borrower, which projections shall be certified by an
Authorized Officer of the Borrower to the effect that
(a) such projections were made in good faith and (b)
the assumptions on the basis of which such projections
were made were (when made) believed to be reasonable
and consistent with the estimated projected total
Project Cost (not including soft costs) for the
Construction of the Project through the Construction
Completion Date being equal to or less than
$492,723,924.00, and the Master Construction Schedule
(plus a variance of four (4) months) and the
Transaction Documents;

6

 

	 	 	 

	“Board”

	 	means the Board of Governors of the Federal Reserve
System;
	 
	 	 
	“Borrower”

	 	has the meaning ascribed thereto in the preamble, and
any permitted successor or assign;
	 
	 	 
	“Borrower Subsidiary Security
Agreement”

	 	means a security agreement substantially in the form
attached as Exhibit Q securing a Borrower Subsidiary’s
obligations under such Person’s Guarantee Agreement;
	 
	 	 
	“Borrowing Certificate”

	 	means a certificate and related attachments and
certifications, substantially in the form of Exhibit L
executed by an Authorized Officer of the Borrower and
otherwise duly completed;
	 
	 	 
	“Bridge Loan”

	 	means the unsecured loan in an aggregate amount of
$8,000,000.00 made by the Purchasers and Shell EP
Offshore Ventures Limited to the Borrower pursuant to
the note purchase agreement dated October 16, 2008
among such parties in order to pay certain Project
Costs incurred by the Borrower prior to the Closing
Date;
	 
	 	 
	“Builders”

	 	means each of (i) Shanghai Shipyard Co., Ltd., (ii)
Keppel and (iii) Huisman;
	 
	 	 
	“Bridge Loan Notes”

	 	means the unsecured promissory notes executed by the
Borrower to evidence the Bridge Loan;
	 
	 	 
	“Bully Rig Intellectual
Property Agreement”

	 	means the Intellectual Property Contribution Agreement
dated as of July 3, 2008, between the Borrower and
Bully 1 Ltd.;
	 
	 	 
	“Capital Budget”

	 	means in respect of the Project a budget, prepared and
certified by the Borrower of Permitted Capital
Expenditures expected to be incurred by the Borrower
during the relevant fiscal year to which such budget
applies;
	 
	 	 
	“Capital Expenditures”

	 	means, for any Person for any period, the sum of,
without duplication, (a) all expenditures relating to
the Vessel made, directly or indirectly, by such
Person or any of its Subsidiaries during such period
for equipment, fixed assets, real property or
improvements, or for replacements or substitutions
therefore or additions thereto, that have been or
should be, in accordance with

7

 

	 	 	 

	 

	 	GAAP, reflected as
additions to property, plant or equipment on a
Consolidated balance sheet of such Person or have a
useful life of more than one (1) year plus (b) the
aggregate principal amount of all Indebtedness
(including obligations under Capitalized Leases)
assumed or incurred in connection with any such
expenditures. For purposes of this definition, the
purchase price of equipment that is purchased
simultaneously with the trade-in of existing equipment
or with insurance proceeds shall be included in
Capital Expenditures only to the extent of the gross
amount of such purchase price less the credit granted
by the seller of such equipment for the equipment
being traded in at such time or the amount of such
proceeds, as the case may be;
	 
	 	 
	“Capitalized Leases”

	 	means all leases that have been or should be, in
accordance with GAAP, recorded as capitalized leases;
	 
	 	 
	“Cash Equivalents”

	 	means any of the following having a maturity of not
greater than 180 days from the date of acquisition
thereof: (a) readily marketable direct obligations of
the Government of the United States or any agency or
instrumentality thereof or obligations unconditionally
guaranteed by the full faith and credit of the
Government of the United States, (b) certificates of
deposit of or time deposits with any commercial bank
that is a Lender or a member of the Federal Reserve
System, issues (or the parent of which issues)
commercial paper rated as described in clause (c)
below, is organized under the laws of the United
States or any State thereof and has combined capital
and surplus of at least $1,000,000,000, (c) commercial
paper in an aggregate amount of no more than
$5,000,000 per issuer outstanding at any time, issued
by any corporation organized under the laws of any
State of the United States and rated at least
“Prime-1” (or the then equivalent grade) by Moody’s or
“A-1” (or the equivalent grade) by S&P or (d)
Investments, classified in accordance with GAAP as
Current Assets of the Borrower or any of its
Subsidiaries, in money market funds that are
registered under the Investment Company Act of 1940,
as amended, the portfolios of which are limited solely
to Investments of the character, quality and maturity
described in clauses (a), (b) and (c) of this
definition;
	 
	 	 
	“Change in Law”

	 	means the occurrence, after the date of this
Agreement,

8

 

	 	 	 

	 

	 	of any of the following: (a) the adoption
or taking effect of any law, rule, regulation or
treaty, (b) any change in any law, rule, regulation or
treaty or in the administration, interpretation or
application thereof by any Governmental Authority or
(c) the making or issuance of any request, guideline
or directive (whether or not having the force of law)
by any Governmental Authority;
	 
	 	 
	“Classification Society”

	 	means Det Norske Veritas in Houston, Texas with whom
the Vessel is or will be entered and who has conducted
or will conduct periodic physical surveys and/or
inspections of the Vessel;
	 
	 	 
	“Closing Date”

	 	means the date on which the Administrative Agent shall
have notified the Borrower that all of the conditions
set forth in Section 4.1 shall have been satisfied (or
waived by each Lender);
	 
	 	 
	“Code”

	 	means the Internal Revenue Code of 1986, as amended,
and any successor statute and regulations promulgated
thereunder;
	 
	 	 
	“Collateral”

	 	means (a) the “Collateral” as defined in the Security
Agreement, (b) the Account Collateral, (c) the Vessel,
(d) the “Insurance” as defined in the Assignment of
Insurances, (e) the “Earnings” as defined in the
Assignment of Earnings, (f) the “Assigned Rights” as
defined in each of the Assignment of Construction
Contracts, the Assignment of the Drilling Contract and
the Assignment of the Management Agreement, (g) the
“Collateral” as defined in each Share Pledge
Agreement, (h) the “Charged Asset” as defined in the
Singapore Deed, (i) the “Charged Account” as defined
in the Singapore Charge over Account, (j) each Local
Payment Account and (k) all other Property of any
Security Party, whether real, personal or mixed, with
respect to which a Lien is granted as security for the
Secured Obligations;
	 
	 	 
	“Collateral Accounts”

	 	has the meaning assigned to that term in the
Depositary Agreement;
	 
	 	 
	“Collateral Agency Agreement”

	 	means the Collateral Agency and Intercreditor
Agreement dated as of October 21, 2008, by and among
the Borrower, the Administrative Agent, the Collateral
Agent and the Depositary;

9

 

	 	 	 

	“Commitment(s)”

	 	means, (a) the Senior Term Loan Commitments, (b)
Senior Revolver Commitments and (c) the Cost Overrun
Term Loan Commitments, with respect to any Lender set
out opposite its name on Schedule 1 hereto or, as the
case may be, pursuant to any assignment made pursuant
to Section 11.2, which portion may be reduced in
accordance with the terms of this Agreement;
	 
	 	 
	“Commitment Letter”

	 	means the Commitment Letter dated September 25, 2008
from SCB to the Borrower and acknowledged and agreed
to by the Borrower;
	 
	 	 
	“Computation Period”

	 	means, on any date of determination following the
Shell Commencement Date, the period of four
consecutive complete fiscal quarters of the Borrower
ending on or most recently prior to such date of
determination; provided that, in the event such date
of determination falls on a date prior to the fourth
complete fiscal quarter of the Borrower after the
Shell Commencement Date, “Computation Period” shall
mean the period commencing on the first day of the
first full fiscal quarter after the Shell Commencement
Date and ending on the last day of the fiscal quarter
of the Company ending on or most recently ended prior
to such date of determination;
	 
	 	 
	“Consent and Agreement”

	 	means the consent and agreements to be provided with
respect to the Project Documents, each substantially
in the form of Exhibit P;
	 
	 	 
	“Consolidated”

	 	refers to the consolidation of accounts in accordance
with GAAP;
	 
	 	 
	“Consolidated Net Income”

	 	means, with respect to the Borrower and its
Subsidiaries for any period, the net income (or loss)
of the Borrower and its Subsidiaries, determined on a
Consolidated basis in accordance with GAAP, after
allowances for taxes for such period; provided,
however that the following shall be excluded from such
net income (or loss): (a) the net income of any
Person in which the Borrower or any of its
Subsidiaries has an interest (which interest does not
cause the net income of such Person to be Consolidated
with the net income of the Borrower and its
Subsidiaries in accordance with GAAP), except to the
extent of the amount of dividends or distributions
actually paid in cash during such period by such
Person to the Borrower or any of its Subsidiaries, (b)
the net income during such

10

 

	 	 	 

	 

	 	period of any Subsidiary of
the Borrower that is not a Security Party to the
extent that the declaration or payment or dividends or
similar distributions by that Subsidiary is not at the
time permitted by operation of the terms of its
charter or any agreement, instrument or governmental
authorization (which has not been obtained) applicable
to such Subsidiary, unless such restriction with
respect to the payment of dividends or similar
distributions has been legally waived, (c) any
extraordinary non-cash gains or losses during such
period and (d) any gains or losses attributable to
write-ups or write-downs of assets; provided further
that if the Borrower or any of its Subsidiaries shall
acquire or dispose of any material property during
such period, then Consolidated Net Income shall be
calculated after giving pro forma effect to such
acquisition or disposition, as if such acquisition or
disposition had occurred on the first day of such
period;
	 
	 	 
	“Construction”

	 	means the construction of the Vessel by the Builders,
pursuant to the Approved AFE and the Master
Construction Schedule; the verb “Construct” shall have
a correlative meaning;
	 
	 	 
	“Construction Completion Date”

	 	means the date on which the Vessel is ready to
commence mobilization to the first work location in
accordance with the Drilling Contract as certified by
an Authorized Officer of the Borrower in accordance
with Section 9.1(l);
	 
	 	 
	“Construction Contracts”

	 	means each of the contracts in excess of $15,000,000
between the Security Parties and a shipyard or third
party vendor relating to the Construction of the
Vessel, including, but not limited to (i) Shanghai
Construction Contract; (ii) Keppel Construction
Contract; and (iii) Huisman Construction Contract, in
each case including any refund guarantees, performance
guarantees, completion guarantees and/or performance
bonds associated therewith;
	 
	 	 
	“Construction Period Insurances”

	 	has the meaning ascribed thereto in Section 9.1(j);
	 
	 	 
	“Construction Report”

	 	means a report of the status of Construction
containing a summary of data relating to the
Construction of the Vessel with respect to the
categories listed in Schedule 3, executed by an
Authorized Officer of the Borrower and delivered from
time to time as contemplated by Section 9.1(w);

11

 

	 	 	 

	“Contribution Agreement”

	 	means the Capital Contribution and Note Purchase
Agreement dated October 21, 2008 between the Borrower
and the Joint Venturers, in form and substance
acceptable to the Administrative Agent, in respect of
the obligation of the Joint Venturers to (i) make
capital contributions to the Borrower in connection
with the Senior Capital Contribution Funding in the
aggregate amount of $94,000,000 and (ii) make capital
contributions to the Borrower in connection with the
Cost Overrun Capital Contribution Funding in the
initial aggregate amount of $100,000,000 pursuant to
the issuance of Cost Overrun Notes, such
unsecured notes to be fully subordinated to the
obligations of the Borrower to the Secured Parties
hereunder and under the Security Documents;
	 
	 	 
	“Contribution Certificate”

	 	means a certificate of an Authorized Officer from each
of the Joint Venturers, in form and substance
acceptable to the Administrative Agent, (i)
identifying the amount of the Term Loan Capital
Contribution and identifying whether such Term Loan
Capital Contribution is a Senior Capital Contribution
Funding or a Cost Overrun Capital Contribution
Funding, (ii) identifying the sources of capital
contribution for such Term Loan Capital Contribution,
(iii) in respect of a Senior Capital Contribution
Funding, confirming that the Senior Term Loan Required
Equity Ratio is satisfied, (iv) in respect of a Cost
Overrun Capital Contribution Funding, confirming that
the Cost Overrun Term Loan Required Equity Ratio is
satisfied and (v) that any such contribution or loan
was made in exchange for not less than reasonably
equivalent value;
	 
	 	 
	“Control Agreement”

	 	means any an account control agreement among the
Borrower or a Permitted Person, a bank maintaining a
Local Payment Account and the Collateral Agent, (i)
with respect to any Local Payment Account held at
Wells Fargo Bank, National Association substantially
in the form of Exhibit H-1 hereto and (ii) with
respect to any other Local Payment Account (other than
an account maintained in Singapore) in form and
substance satisfactory to the Joint Committee pursuant
to Article 10; provided that no Control Agreement
shall be required with respect to any Unsecured Local
Payment Account;

12

 

	 	 	 

	“Coordination Fee”

	 	has the meaning ascribed thereto in the Upfront Fee
and Coordination Fee Letter;
	 
	 	 
	“Cost Overrun Capital
Contribution Funding”

	 	means an irrevocable capital contribution to the
Borrower that has been certified as such in an
applicable Contribution Certificate and made pursuant
to the Contribution Agreement to fund Project Cost
overruns in the maximum aggregate amount of One
Hundred Million Dollars ($100,000,000); provided that
if (i) the “Current Project Outlook” line item (or its
equivalent) as contained in the most recent
Construction Report delivered prior to the Keppel
Commencement Date projects that total Project Costs
through the Construction Completion Date will be equal
to or less than $470,416,641.00 and (ii) no Cost
Overrun Capital Contributions have been made as of the
Keppel Commencement Date, then upon the occurrence of
the Keppel Commencement Date, the aggregate “Cost
Overrun Capital Contribution Funding” commitment
(inclusive of amounts contributed or advanced to the
Borrower pursuant to the Cost Overrun Capital
Contribution Funding commitment) shall be reduced to
an amount equal to Fifty Million Dollars
($50,000,000);
	 
	 	 
	“Cost Overrun Lenders”

	 	means the Lenders providing the Cost Overrun Term Loan
(together with their respective successors and
assigns) and identified as such on Schedule 1;
	 
	 	 
	“Cost Overrun Note(s)”

	 	means a promissory note of the Borrower substantially
in the form of Exhibit A to the Contribution
Agreement;
	 
	 	 
	“Cost Overrun Secured Hedge
Agreement”

	 	has the meaning ascribed thereto in Section 9.1(u)(ii);
	 
	“Cost Overrun Term Loan”

	 	has the meaning ascribed thereto in Section 3.1(b);
	 
	 	 
	“Cost Overrun Term Loan
Commitments”

	 	means, with respect to any Lender, the Cost Overrun
Term Loan portion of the Facilities set out opposite
its name on Schedule 1 hereto or, as the case may be,
pursuant to any assignment made pursuant to Section
11.2, which portion may be reduced in accordance with
the terms of this Agreement; provided that if (i) the
“Current Project Outlook” line item (or its
equivalent) as contained in the most recent
Construction Report delivered prior to the Keppel
Commencement

13

 

	 	 	 

	 

	 	Date projects that total Project Costs
through the Construction Completion Date will be equal
to or less than $470,416,641.00 and (ii) no Cost
Overrun Capital Contributions have been made as of the
Keppel Commencement Date, then upon the occurrence of
the Keppel Commencement Date, the aggregate “Cost
Overrun Term Loan Commitments” shall be reduced
ratably among the Cost Overrun Lenders according to
their respective Cost Overrun Term Loan Commitments to
an amount equal to Twenty Five Million Dollars
($25,000,000);
	 
	 	 
	“Cost Overrun Term Loan
Drawdown Date(s)”

	 	means the dates, each being a Banking Day, upon which
the Borrower has requested that an Advance under the
Cost Overrun Term Loan be made available to the
Borrower, and such Advance is made;
	 
	 	 
	“Cost Overrun Term Loan Equity
Ratio”

	 	means, at any time, the ratio of (A) the sum of all
Cost Overrun Capital Contribution Fundings made to and
including such time to (B) the sum of all Advances of
the Cost Overrun Term Loan made to and including such
time;
	 
	 	 
	“Cost Overrun Term Loan Lead
Arranger”

	 	has the meaning ascribed thereto in the preamble;
	 
	 	 
	“Cost Overrun Term Loan Note”

	 	means the promissory note to be executed by the
Borrower to evidence the Cost Overrun Term Loan,
substantially in the form of Exhibit B-3;
	 
	 	 
	“Current Assets”

	 	of any Person means all assets (other than non-cash
obligations under FAS 133) of such Person that would,
in accordance with GAAP, be classified as current
assets on a Consolidated balance sheet of a company
conducting a business the same as or similar of that
of such Person, after deducting adequate reserves in
each case in which a reserve is proper in accordance
with GAAP;
	 
	 	 
	“Current Liabilities”

	 	of any Person means (a) all Indebtedness of such
Person except Funded Debt, (b) all amounts of Funded
Debt of such Person required to be paid or prepaid
within one year after such date and (c) all other
items (including taxes accrued as estimated but
excluding non-cash obligations under FAS 133) that in
accordance with GAAP would be classified as current
liabilities on a Consolidated balance sheet of such
Person;

14

 

	 	 	 

	“Debt Service”

	 	means, for any period with respect to the Project, the
sum, computed without duplication, of the following: (a) all amounts payable by the Borrower in respect of
scheduled payments of principal of the Advances for
such period (and excluding prepayments of Advances
payable during such period pursuant to Section 5.3)
plus (b) all amounts payable by the Borrower in
respect of Interest Expense for such period plus (c)
all fees payable in accordance with Article 14 and in
accordance with the Fee Letters;
	 
	 	 
	“Debt Service Coverage Ratio”

	 	means, for any period, the ratio of (a) the excess (if
any) of (i) Project Revenues for such period over (ii)
Operation and Maintenance Expenses for such period
plus any Capital Expenditures for such period which
are not Permitted Capital Expenditures to (b) Debt
Service for such period;
	 
	 	 
	“Default”

	 	means an Event of Default or an event which with
notice or lapse of time or both would become an Event
of Default;
	 
	 	 
	“Default Rate”

	 	has the meaning ascribed thereto in Section 6.2;
	 
	 	 
	“Defaulting Lender”

	 	means, at any time, a Lender as to which the
Administrative Agent has notified the Borrower that
(i) such Lender has failed for three or more Business
Days to comply with its obligations under the Credit
Agreement to make an Advance (a “funding obligation”),
(ii) such Lender has notified the Administrative
Agent, or has stated publicly, that it will not comply
with any such funding obligation thereunder, or has
defaulted on its funding obligations under any other
loan agreement or credit agreement or other similar
agreement, (iii) such Lender has, for three or more
Business Days, failed to confirm in writing to the
Administrative Agent, in response to a written request
of the Administrative Agent, that it will comply with
its funding obligations under the Credit Agreement, or
(iv) a Lender Insolvency Event has occurred and is
continuing with respect to such Lender. Any
determination that a Lender is a Defaulting Lender
under clauses (i) through (iv) above will be made by
the Administrative Agent in its sole discretion acting
in good faith. The Administrative Agent will promptly
send to all parties

15

 

	 	 	 

	 

	 	hereto a copy of any notice to the
Borrower provided for in this definition;
	 
	 	 
	“Depositary”

	 	has the meaning ascribed thereto in the Depositary
Agreement;
	 
	 	 
	“Depositary Agreement”

	 	means the Depositary Agreement dated as of October 21,
2008, by and among the Borrower, the Collateral Agent
and the Depositary;
	 
	 	 
	“Direct Agreement”

	 	means the agreement between Shell EP Wells Equipment
Services B.V. and the Collateral Agent (on behalf of
the Lenders) dated as of October 21, 2008;
	 
	 	 
	“Disposition”

	 	means any sale, assignment, transfer or other
disposition of any property (whether now owned or
hereafter acquired) by the Borrower or any Subsidiary
of the Borrower to any other Person excluding any
sale, assignment, transfer or other disposition of any
property sold or disposed of in the ordinary course of
business and on ordinary business terms;
	 
	 	 
	“Distribution Certificate”

	 	has the meaning ascribed thereto in Section 9.2(g);
	 
	 	 
	“Distribution Conditions”

	 	has the meaning ascribed thereto in Section 9.2(g);
	 
	 	 
	“DOC”

	 	means a document of compliance issued to an Operator
in accordance with Rule 13 of the ISM Code;
	 
	 	 
	“Dollars” and the sign “$”

	 	means the legal currency, at any relevant time
hereunder, of the United States of America;
	 
	 	 
	“Drawdown Dates”

	 	means collectively the Senior Term Loan Drawdown
Dates, the Senior Revolver Drawdown Dates and the Cost
Overrun Term Loan Drawdown Dates;
	 
	 	 
	“Drawdown Notice”

	 	has the meaning ascribed thereto in Section 3.4(a);
	 
	 	 
	“Drilling Contract”

	 	means the Offshore Drilling Rig Contract dated as of
March 20, 2008, and amended by Amendment No. 1 dated
June 18, 2008 between Shell EP Wells Equipment
Services B.V. and the Borrower and assigned to the
Secured Parties pursuant to the Assignment of the
Drilling Contract;
	 
	 	 
	“Effective Date”

	 	has the meaning ascribed thereto in Section 4.2;
	 
	 	 
	“Eligible Assignee”

	 	means (a) a Lender, (b) an Affiliate of a Lender, (c)
an

16

 

	 	 	 

	 

	 	Approved Fund, and (d) any other Person (other than
a natural person) approved by the Administrative
Agent, such approval not to be unreasonably withheld
or delayed; provided that the term “Eligible Assignee”
shall not include the Borrower or any Affiliate or
Subsidiary thereof;
	 
	 	 
	“Environmental Affiliate”

	 	means the Manager, any Permitted Person and any other
Person or entity the liability of which for
Environmental Claims the Borrower or any other
Security Party may have assumed by contract or
operation of law;
	 
	 	 
	“Environmental Approvals”

	 	has the meaning ascribed thereto in Section 2.1(w);
	 
	 	 
	“Environmental Claim”

	 	has the meaning ascribed thereto in Section 2.1(x);
	 
	 	 
	“Environmental Laws”

	 	has the meaning ascribed thereto in Section 2.1(w);
	 
	 	 
	“Equator Principles”

	 	means The “Equator Principles — An Industry Approach
for Financial Institutions in Determining, Assessing
and Managing Environmental and Social Risk in Project
Financing,” dated June 4, 2003, as amended on July 8,
2006, to which certain Lenders are a party;
	 
	 	 
	“Equity Interests”

	 	means shares of capital stock, partnership interests,
membership interests in a limited liability company,
beneficial interests in a trust or other equity
ownership interests in a Person, and any warrants,
options or other rights entitling the holder thereof
to purchase or acquire any such equity interest;
	 
	 	 
	“ERISA”

	 	means the Employment Retirement Income Security Act of
1974, as amended;
	 
	 	 
	“ERISA Affiliate”

	 	means a trade or business (whether or not
incorporated) which is under common control with the
Borrower within the meaning of Sections 414(b), (c),
(m) or (o) of the Code;
	 
	 	 
	“Event of Abandonment”

	 	means a formal, public announcement by any Security
Party or Builder of a decision to abandon or
indefinitely defer, or the abandonment of, the
Construction, completion or operation of any material
portion of the Project for any reason;
	 
	 	 
	“Event(s) of Default”

	 	means any of the events set out in Section 8.1;
	 
	 	 
	“Event of Loss”

	 	means any loss of, destruction of or damage to, or any

17

 

	 	 	 

	 

	 	condemnation or other taking of (including an Event of
Taking), the Vessel;
	 
	 	 
	“Event of Taking”

	 	means any taking, seizure, confiscation, requisition,
exercise of rights of eminent domain, public
improvement, inverse condemnation, condemnation or
similar action or threat of any such action of or
proceeding by any Government Authority or other Person
relating to the Vessel;
	 
	 	 
	“Excluded Taxes”

	 	means, with respect to either Agent, any Lender or any
other recipient of any payment to be made by or on
account of any obligation of a Security Party under
the Loan Documents, (a) Taxes imposed on or measured
by its overall net income (however denominated), and
franchise taxes imposed on it (in lieu of net income
taxes), in either case, by the jurisdiction under the
laws of which such recipient is organized, in which
its principal office is located or, in the case of any
Lender, in which its Applicable Lending Office is
located and (b) any branch profits taxes imposed by
the United States of America or any similar Tax
imposed by any other jurisdiction in which any
Security Party is located;
	 
	 	 
	“Facility(ies)”

	 	means the credit facility, consisting of each of the
Senior Term Loan, the Senior Revolver and the Cost
Overrun Term Loan, to be made available to the
Borrower by the Lenders pursuant to Section 3.2 in the
maximum principal amount of Four Hundred Ninety Five
Million Dollars ($495,000,000);
	 
	 	 
	“Facility Balance”

	 	means the aggregate Dollar amount of the Facilities,
including unpaid costs and accrued but unpaid
interest, at any relevant time then outstanding;
	 
	 	 
	“FDR Holdings”

	 	means FDR Holdings Limited, an exempt company
incorporated in the Cayman Islands;
	 
	 	 
	“Fee Letters”

	 	means, collectively, the Agency and Depositary Fee
Letter and the Upfront Fee and Coordination Fee
Letter;
	 
	 	 
	“Final Payment Date”

	 	means the date which is the earlier of (i) the date
that is the fifteenth calendar day of the month
immediately following the last day of the first
complete fiscal quarter following the seven (7) year
anniversary of the Shell Commencement Date (or such
earlier date as the Commitments shall have been
terminated in accordance

18

 

	 	 	 

	 

	 	with the terms herein), and
(ii) April 15, 2018; provided that if such date is not
a Banking Day, then the Final Payment Date shall be
the next following Banking Day unless such next
following Banking Day falls in the following month, in
which case the Final Payment Date shall be the
immediately preceding Banking Day;
	 
	 	 
	“Frontier Drillships”

	 	means Frontier Drillships, Ltd., an exempt company
incorporated in the Cayman Islands;
	 
	 	 
	“Frontier Drillships 2”

	 	means Frontier Drillships 2, Ltd., an exempt company
incorporated in the Cayman Islands;
	 
	 	 
	“Frontier Group Company”

	 	means any Subsidiary of FDR Holdings Limited, other
than the Borrower and any Subsidiary of the Borrower;
	 
	 	 
	“Frontier Security Parties”

	 	has the meaning ascribed thereto in the introductory
paragraph of Section 2.1;
	 
	 	 
	“Fund”

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

	 	of any Person means Indebtedness in respect of the
Facilities, in the case of the Borrower and any
Subsidiary of the Borrower, and all other Indebtedness
of such Person that by its terms matures more than one
(1) year after the date of determination or matures
within one (1) year from such date but is renewable or
extendible, at the option of such Person, to a date
more than one (1) year after such date or arises under
a revolving credit or similar agreement that obligates
the lender or lenders to extend credit during a period
of more than one (1) year after such date, including,
without limitation, all amounts of Funded Debt of such
Person required to be paid or prepaid within one (1)
year after the date of determination;
	 
	 	 
	“GAAP”

	 	has the meaning given to it in Section 1.3 below;
	 
	 	 
	“Government Approval”

	 	means (a) any authorization, consent, approval,
license, lease, ruling, permit, certification, waiver,
exemption, filing, variance, claim, order, judgment or
decree of, by or with, (b) any required notice to, (c)
any declaration of or with or (d) any registration by
or with, any

19

 

	 	 	 

	 

	 	Government Authority, in each case
relating to the Project to the extent (i) not routine,
(ii) not ministerial in nature or (iii) not otherwise
immaterial to the Project or compliance with any
Government Rule or obtaining or maintaining any
Government Approval;
	 
	 	 
	“Government Authority”

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

	 	means any statute, law, regulation, ordinance, rule,
judgment, order, decree, permit, concession, grant,
franchise, license, agreement, directive, requirement
of, or other governmental restriction or any similar
binding form of decision of or determination by, or
any binding interpretation or administration of any of
the foregoing by, any Government Authority, including
all common law, whether now or hereafter in effect;
	 
	 	 
	“Guarantee Agreement”

	 	means a guarantee agreement substantially in the form
attached as Exhibit O pursuant to which a Borrower
Subsidiary agrees to guarantee the Secured
Obligations;
	 
	 	 
	“Guarantor”

	 	has the meaning assigned to that term in the Guarantee
Agreement;
	 
	 	 
	“Guaranty”

	 	By any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly
guaranteeing any Indebtedness of any other Person,
including any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to
purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness (whether
arising by virtue of partnership arrangements, or by
agreement to purchase assets, goods, securities or
services, or to take-or-pay, other than agreements to
purchase goods at an arm’s length price in the
ordinary course of business) or (b) entered into for
the purpose of assuring in any other manner the holder
of such Indebtedness of the payment thereof or to
protect such holder against loss in respect thereof
(in whole or in part), provided that the term

20

 

	 	 	 

	 

	 	“Guaranty” shall not include endorsements of
instruments for collection or deposit in the ordinary
course of business; the term “Guarantee” used as a
verb has a corresponding meaning;
	 
	 	 
	“Gusto Consent”

	 	means the consent of Gusto B.V. to the sublicense of
the Gusto License from Bully 1, Ltd. to the Borrower;
	 
	 	 
	“Gusto License”

	 	has the meaning ascribed thereto in the Bully Rig
Intellectual Property Agreement;
	 
	 	 
	“Hedging Agreement”

	 	means any interest rate future agreement, interest
rate option agreement, interest rate swap agreement,
interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement, currency
hedging agreement or other similar agreement or
arrangement entered into between the Borrower and a
Permitted Hedging Counterparty, which is designed to
protect the Borrower against fluctuations in interest
rates or currency rates applicable under this
Agreement, and which will be covered by a 1992 or 2002
multicurrency cross border ISDA Master Agreement (ISDA
Master Agreement), issued by the International Swaps
and Derivatives Association; provided however that,
notwithstanding anything to the contrary contained
herein or in any of the Security Documents, only
“Hedging Agreements” entered into by and between the
Borrower and a Permitted Hedging Counterparty shall be
secured on a pari passu basis;
	 
	 	 
	“HSE Case”

	 	has the meaning ascribed thereto in the Drilling
Contract;
	 
	 	 
	“Huisman Construction Contract”

	 	means the agreement between Huisman Special Lifting
Equipment B.V. and the Borrower in respect of the
construction of the drill tower on the Vessel dated
March 28, 2008, and amended by Amendment No. 1 dated
September 8, 2008;
	 
	 	 
	“Huisman”

	 	means Huisman Special Lifting Equipment B.V.;
	 
	 	 
	“IADC Guidelines”

	 	means all guidelines, guidance notes, manuals,
handbooks, codes of practice or related documents
published by the International Association of Drilling
Contractors, as amended or modified;

21

 

	 	 	 

	“Impairment”

	 	means, with respect to any Project Document or
Government Approval, any of the following which could
reasonably be expected to have a Material Adverse
Effect on the Borrower or the Project if not cured
within 30 days of the occurrence of such event, (a)
the rescission, early termination, cancellation,
repeal or invalidity thereof, (b) the suspension or
injunction thereof, (c) the inability to satisfy in a
timely manner stated conditions to effectiveness
thereof or (d) the amendment, modification or
supplement (unless otherwise approved by the
Administrative Agent in accordance with Section
9.2(k)(i)(F) and Section 9.2(o)) of such Project
Document or Government Approval in whole or in part.
The verb “Impair” shall have a correlative meaning;
	 
	 	 
	“Indebtedness”

	 	means, with respect to any Person at any date of
determination (without duplication), (i) all
indebtedness of such Person for borrowed money, (ii)
all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (iii)
all obligations of such Person in respect of letters
of credit or other similar instruments (including
reimbursement obligations with respect thereto), (iv)
all obligations of such Person to pay the deferred and
unpaid purchase price of property or services, which
purchase price is due more than six months after the
date of placing such property in service or taking
delivery thereof or the completion of such services,
except trade payables arising in the ordinary course
not overdue for more than 60 days, (v) all obligations
on account of principal of such Person as lessee under
capitalized leases, (vi) all indebtedness of other
Persons secured by a lien on any asset of such Person,
whether or not such indebtedness is assumed by such
Person; provided that if recourse to such indebtedness
is limited to the value of the secured asset the
amount of such indebtedness shall be the lesser of (a)
the fair market value of such asset at such date of
determination and (b) the amount of such indebtedness,
(vii) all obligations of such Person under Hedging
Agreements and (viii) all indebtedness of other
Persons guaranteed by such Person to the extent
guaranteed; the amount of Indebtedness of any Person
at any date shall be the outstanding balance at such
date of all unconditional obligations as described
above and, with respect to contingent obligations, the
maximum liability upon the occurrence of the
contingency giving rise to the

22

 

	 	 	 

	 

	 	obligation; provided
that the amount outstanding at any time of any
indebtedness issued with original issue discount is
the face amount of such indebtedness less the
remaining unamortized portion of the original issue
discount of such indebtedness at such time as
determined in conformity with GAAP; and provided
further that (A) for purposes of this definition, the
amount of the obligations of such Person in respect of
any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting
agreements) that such Person would be required to pay
if such Hedging Agreement were terminated at such time
and (B) Indebtedness shall not include (1) any
liability for current or deferred federal, state,
local or other taxes, (2) any trade payables arising
in the ordinary course not overdue for more than 60
days or (3) the Cost Overrun Notes issued pursuant to
the Contribution Agreement;
	 
	 	 
	“Indemnified Taxes”

	 	means Taxes other than Excluded Taxes;
	 
	 	 
	“Initial Advance”

	 	means that portion of the Senior Term Loan to be
advanced on the Initial Drawdown Date;
	 
	 	 
	“Initial Capital Budget”

	 	has the meaning ascribed thereto in Section 9.1(y);
	 
	 	 
	“Initial Cost Overrun Term Loan
Advance”

	 	means the initial Advance of the Cost Overrun Term
Loan;
	 
	 	 
	“Initial Drawdown Date”

	 	means the Drawdown Date on which the Initial Advance
under the Senior Term Loan shall be drawn down
pursuant to terms hereof;
	 
	 	 
	“Initial Operating Budget”

	 	has the meaning ascribed thereto in Section 9.1(y);
	 
	 	 
	“Initial Principal Payment Date”

	 	means, the earlier to occur of (a) the date that is
the fifteenth calendar day of the month immediately
following the last day of the first complete fiscal
quarter following the Shell Commencement Date and (b)
July 15, 2011; provided that if any such date is not a
Banking Day, then the Initial Principal Payment Date
shall be the immediately preceding Banking Day;
	 
	 	 
	“Insurance Consultant”

	 	means AON Limited who shall advise the Administrative
Agent and Lenders in connection with the
insurance-related matters in connection with the
Project and including any replacement of AON Limited
by the Administrative Agent selected in consultation
with the Borrower;

23

 

	 	 	 

	“Insurance Report”

	 	has the meaning ascribed thereto in Section 4.1(o);
	 
	 	 
	“Interest Expense”

	 	shall mean, for any period, the sum, computed without
duplication, of the following: (a) all interest in
respect of the Advances accrued or capitalized during
such period (whether or not actually paid during such
period) plus (b) the net amounts payable (or minus the
net amounts receivable) under interest rate Hedging
Agreements during such period as determined in
accordance with GAAP;
	 
	 	 
	“Interest Payment Date”

	 	means, the last day of each Interest Period; provided
that interest payable at the Default Rate shall be
payable from time to time on demand and if no such
demand is made, then each Principal Payment Date;
	 
	 	 
	“Interest Period”

	 	means, in respect of each Advance, the period
commencing on the relevant Drawdown Date or the last
day of the preceding Interest Period for such Advance
and ending (3) months thereafter, except for the
initial Interest Period which will be less than three
(3) months, in accordance with Section 6.1 or such
other period selected by the Borrower and agreed to by
the Administrative Agent; provided that such other
period shall not be for a period longer than three (3)
months;
	 
	 	 
	“Investment”

	 	by a Person means any loan or advance or the
extensions of credit to or for the benefit of, or any
Guaranty of any obligations of, another Person (other
than Indebtedness of such Person), any purchase or
other acquisition of any equity interests or debt or
the assets comprising a division or business unit
(including any vessel) or a substantial part of all of
the business of such other Person, any capital
contribution to such other Person or any other direct
or indirect investment in such other Person,
including, without limitation, any acquisition by way
of a merger or consolidation (or similar transaction)
and any arrangement pursuant to which the investor
incurs Indebtedness in respect of such other Person;
	 
	 	 
	“ISM Code”

	 	means the International Safety Management Code for the
Safe Operating of Ships and for Pollution Prevention
constituted pursuant to Resolution A. 741(18) of the
International Maritime Organization and incorporated
into the Safety of Life at Sea Convention and includes

24

 

	 	 	 

	 

	 	any amendments or extensions thereto and any
regulation issued pursuant thereto;
	 
	 	 
	“ISPS Code”

	 	means the International Ship and Port Facility Code
adopted by the International Maritime Organization at
a conference in December 2002 and amending the Safety
of Life at Sea Convention and includes any amendments
or extensions thereto and any regulation issued
pursuant thereto;
	 
	 	 
	“ISSC”

	 	means the International Ship Security Certificate
issued pursuant to the ISPS Code;
	 
	 	 
	“Joint Committee”

	 	has the meaning ascribed thereto in Section 10.1;
	 
	 	 
	“Joint Committee Approval”

	 	has the meaning ascribed thereto in Section 10.3;
	 
	 	 
	“Joint Venture Agreement”

	 	the Joint Venture Agreement entered into between Shell
EP Offshore Ventures Limited and Frontier Drillships 2
dated July 3, 2008 and assigned and amended by the
Assignment Agreement and Amendment to Joint Venture
Agreement dated September 30, 2008 among Shell EP
Offshore Ventures Limited, Frontier Drillships and
Frontier Drillships 2;
	 
	 	 
	“Joint Venturers”

	 	means Frontier Drillships 2 and Shell EP Offshore
Ventures Limited as the shareholders of the Borrower;
	 
	 	 
	“Keppel”

	 	means Keppel Shipyard Limited of Singapore;
	 
	 	 
	“Keppel Commencement Date”

	 	means, as confirmed by the Technical and Environmental
Consultant in writing to the Administrative Agent, the
date on which all of the following shall have
occurred: (i) the Vessel has arrived at the Keppel
shipyard, (ii) the arrival at the Keppel shipyard of
all major equipment and components to be incorporated
into the Vessel (other than the blow-out preventer and
drilling riser) and (iii) the Construction of the
Vessel is still scheduled to be completed materially
in accordance with the Approved AFE and the Master
Construction Schedule;
	 
	 	 
	“Keppel Construction Contract”

	 	means the agreement for the integration of the Vessel,
entered into by and between Keppel and the Borrower,
dated January 22, 2008;
	 
	 	 
	“Lead Arranger”

	 	has the meaning ascribed thereto in the preamble;

25

 

	 	 	 

	“Lead Arranger’s Side Letter
Agreement”

	 	means that certain letter agreement dated as of
October 21, 2008, between the Borrower and the Lead
Arranger;
	 
	 	 
	“Lender(s)”

	 	has the meaning ascribed thereto in the preamble;
	 
	 	 
	“Lender Insolvency Event”

	 	means that (i) a Lender or its Parent Company is
insolvent, or is generally unable to pay its debts as
they become due, or admits in writing its inability to
pay its debts as they become due, or makes a general
assignment for the benefit of its creditors, or (ii)
such Lender or its Parent Company is the subject of a
bankruptcy, insolvency, reorganization, liquidation or
similar proceeding, or a receiver, trustee,
conservator, intervenor or sequestrator or the like
has been appointed for such Lender or its Parent
Company, or such Lender or its Parent Company has
taken any action in furtherance of or indicating its
consent to or acquiescence in any such proceeding or
appointment;
	 
	 	 
	“LIBOR”

	 	means, in relation to any Advance:
	 

	 	(a) the applicable Screen Rate; or

(b) (if no Screen Rate is available for the currency
or Interest Period of that Advance) the arithmetic
mean of the rates (rounded upwards to four decimal
places) as supplied to the Administrative Agent at its
request quoted by the Reference Banks to leading banks
in the London interbank market, 

as of the Specified Time on the Quotation Day for the
offering of deposits in Dollars and for a period
comparable to the Interest Period of that Advance;
	 
	 	 
	“Lien”

	 	means, with respect to any Property of any Person, any
mortgage, lien, pledge, charge, lease, easement,
servitude, security interest, fiduciary or conditional
assignment or transfer or encumbrance of any kind in
respect of such Property of such Person. For purposes
of this Agreement and the other Loan Documents, a
Person shall be deemed to own subject to a Lien any
Property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional
sale agreement, capital lease or other title retention
agreement (other than an operating lease) relating to
such Property;

26

 

	 	 	 

	“Loan Documents”

	 	means, collectively, this Agreement, the Notes, the
Security Documents, the Hedging Agreements, the Lead
Arranger’s Side Letter Agreement and the Fee Letters;
	 
	 	 
	“Local Payment Account”

	 	has the meaning assigned to that term in the
Depositary Agreement;
	 
	 	 
	“Loss Proceeds”

	 	means insurance proceeds, condemnation awards or other
compensation, awards, damages and other payments or
relief (exclusive, in each case, of the proceeds of
liability insurance and any payments for interruption
of operations) with respect to any Event of Loss;
	 
	 	 
	“Majority Lenders”

	 	means, (a) at any time prior to the indefeasible
payment in full of the Secured Obligations of the
Senior Lenders, the Senior Lenders holding more than
50% of the aggregate outstanding principal amount of
the Advances under the Senior Facility and (b) at any
time after the indefeasible payment in full of the
Secured Obligations of the Senior Lenders, the Cost
Overrun Lenders holding more than 50% of the aggregate
outstanding principal amount of the Advances under the
Cost Overrun Term Loan or, if no Advances are
outstanding under the Cost Overrun Term Loan, Cost
Overrun Lenders having more than 50% of the aggregate
amount of the Cost Overrun Term Loan Commitments as
most recently in effect;
	 
	 	 
	“Management Agreement”

	 	means the management agreement entered into between
the Borrower and Frontier Drilling USA, Inc. dated as
of July 10, 2008;
	 
	 	 
	“Manager”

	 	means Frontier Drilling USA, Inc. in its capacity as
manager under the Management Agreement;
	 
	 	 
	“Mandated Lead Arrangers”

	 	has the meaning ascribed thereto in the preamble;
	 
	 	 
	“MARPOL”

	 	means the International Convention for the Prevention
of Pollution from Ships, 1973, as modified by the
Protocol of 1978 relating thereto, as amended or
modified;
	 
	 	 
	“Master Construction Schedule”

	 	means the construction schedule dated July 2, 2007
setting forth the proposed design, engineering,
procurement, construction and testing milestone
schedule for the Vessel through the Construction
Completion Date, provided pursuant to Section 4.1(s)
and as certified by the Borrower;

27

 

	 	 	 

	“Material Adverse Effect”

	 	means a material adverse effect on one or more of the
following: (a) the business, assets, operations or
financial condition of the Borrower or any of its
Subsidiaries, (b) the ability of the Borrower or any
of its Subsidiaries, the Manager, Shell EP Wells
Equipment Services B.V., subject to the proviso
hereto, Shell EP Offshore Ventures Limited and
Frontier Drillships 2 and any Permitted Person party
to a Permitted Charter Agreement and/ or Permitted
Local Agency Agreement to perform its material
obligations under any Transaction Document to which it
is a party in accordance with the terms thereof, (c)
the validity or enforceability of the obligations of
the Borrower or any of its Subsidiaries, the Manager,
Shell EP Wells Equipment Services B.V., subject to the
proviso hereto, Shell EP Offshore Ventures Limited and
Frontier Drillships 2 and any Permitted Person party
to a Permitted Charter Agreement and/ or Permitted
Local Agency Agreement or the rights of the
Administrative Agent or Lenders under this Agreement
or under any other Transaction Document or (d) the
validity, enforceability or priority of the security
interests granted to the Collateral Agent pursuant to
the Security Documents; provided that, references to
Shell EP Offshore Ventures Limited and Frontier
Drillships 2 in this definition shall no longer apply
after each of Shell EP Offshore Ventures Limited and
Frontier Drillships 2 have irrevocably paid the Senior
Capital Contribution Funding and their respective
obligations to make any Cost Overrun Capital
Contribution Funding pursuant to the Contribution
Agreement have terminated;
	 
	 	 
	“Materials of Environmental
Concern”

	 	has the meaning ascribed thereto in Section 2.1(w);
	 
	 	 
	“Modified Base Case Forecast”

	 	means the modified Base Case Forecast adjusting the
assumptions in the Base Case Forecast as to (i) the
interest rate (including the Applicable Margin) to
reflect the fixed interest rate contracted pursuant to
the interest rate Hedging Agreements entered into
pursuant to Section 9.1(u), (ii) the foreign exchange
rates to reflect the fixed foreign exchange rates
contracted pursuant to foreign exchange rate Hedging
Agreements entered into pursuant to Section 9.1(u) and
(iii) the commitment fee required pursuant to Section
14.2 and the fees required pursuant to the Upfront Fee
and Coordination Fee Letter

28

 

	 	 	 

	 

	 	and Additional Upfront Fee
Letter, such modified Base Case Forecast dated as of
December 11, 2008 and prepared by the Lead Arranger
(in consultation with the Borrower) and delivered to
the Borrower by the Lead Arranger;
	 
	 	 
	“Moody’s”

	 	means Moody’s Investors Service, Inc;
	 
	 	 
	“Mortgage”

	 	means the first preferred mortgage to cover the Vessel
under the laws of the Republic of the Marshall
Islands, to be granted by the Borrower in favor of the
Collateral Agent, substantially in the form of Exhibit
C, pursuant to Section 9.1(p);
	 
	 	 
	“Net Available Amount”

	 	means (a) in the case of any Disposition, the amount
of Net Cash Payments received in connection with such
Disposition and (b) in the case of any Event of Loss,
the aggregate amount of Loss Proceeds received by the
Borrower or any of its Subsidiaries in respect of an
Event of Loss related to the Project net of reasonable
expenses incurred by such or the Borrower or any of
its Subsidiaries, as applicable, in connection with
the collection of such Loss Proceeds;
	 
	 	 
	“Net Cash Payments”

	 	means, with respect to any Disposition, the aggregate
amount of all cash payments, and the fair market value
of any non-cash consideration, received by the
Borrower or any of its Subsidiaries directly or
indirectly in connection with such Disposition;
provided that (a) Net Cash Payments shall be net of
(i) the amount of any legal, title and recording tax
expenses, commissions and other fees and expenses paid
by the Borrower or any of its Subsidiaries in
connection with such Disposition and (ii) any federal,
state and local income or other taxes estimated to be
payable to a Governmental Authority by the Borrower or
any of its Subsidiaries as a result of such
Disposition (but only to the extent that such
estimated taxes are in fact paid to the relevant
federal, state or local governmental authority within
one year of the date of such Disposition); provided
that any portion of the taxes contemplated in this
clause (a)(ii) that are not paid within one year of
receipt of the proceeds of such Disposition will
become Net Cash Payments at the earlier of (x) the
time at which it is determined that such taxes are not
payable and (y) the end of such period, (b) Net Cash
Payments shall be net of any repayments by the
Borrower or any of its Subsidiaries of Indebtedness

29

 

	 	 	 

	 

	 	permitted pursuant to Section 9.2(e), including any
prepayment premium thereon, to the extent that (i)
such Indebtedness is secured by a Lien on the property
that is the subject of such Disposition and (ii) the
transferee of (or holder of a Lien on) such property
requires that such Indebtedness be repaid as a
condition to the purchase of such property and (c) any
reserve for adjustment in respect of (i) the sale
price of property Disposed of established in
accordance with GAAP and (ii) any liabilities
associated with such property and retained by the
Borrower or any of its Subsidiaries after the
Disposition thereof, including liabilities related to
environmental matters or indemnification obligations
associated with such transaction; provided that any
portion of the reserves or liabilities contemplated by
this clause (c) that are later reversed or canceled
will become Net Cash Payments at the time of such
reversal or cancellation;
	 
	 	 
	“Non-Defaulting Lender”

	 	means, at any time, a Lender that is not a Defaulting
Lender or a Potential Defaulting Lender;
	 
	 	 
	“Notes”

	 	means collectively, the Senior Term Loan Note, the
Senior Revolver Note and the Cost Overrun Term Loan
Note;
	 
	 	 
	“Operating Budget”

	 	means in respect of the Project a budget, prepared and
certified by the Borrower of Operation and Maintenance
Expenses expected to be incurred by the Borrower
during the relevant fiscal year to which such budget
applies;
	 
	 	 
	“Operating Rate”

	 	means the Operating Rate, the Reduced Operating Rate,
the Rig Moving Rate, the Remedial Work Rate and the
Force Majeure Rate (each as defined in the Drilling
Contract);
	 
	 	 
	“Operation and Maintenance
Expenses”

	 	means, for any period with respect to the Project, the
sum, computed without duplication, of the following:
	 
	 

	 	(a) general and administrative expenses plus (b)
payroll and other expenses for operating the Project
and maintaining it in good repair and operating
condition payable during such period plus (c)
insurance costs payable during such period plus (d)
applicable sales and excise taxes (if any) payable by
the Borrower or any Subsidiary with respect to amounts
paid under any time charter agreement and bareboat
charter agreement and

30

 

	 	 	 

	 

	 	other products and services
generated by the Project during such period plus (e)
franchise taxes payable by the Borrower or any
Subsidiary during such period plus (f) without
duplication of taxes referred to in clauses (d) and
(e) above, all Taxes payable by Subsidiaries in
connection with Permitted Transactions, (g)
registration fees and property taxes payable by the
Borrower or any Subsidiary during such period plus (h)
costs and fees attendant to the obtaining and
maintaining in effect the Government Approvals payable
during such period plus (i) legal, accounting and
other professional fees attendant to any of the
foregoing items payable during such period plus (j)
any fees and expenses of the Secured Parties during
such period not included in Debt Service hereunder
plus (k) the reasonable costs of administration and
enforcement of the Transaction Documents plus (l) all
other costs and expenses included in the applicable
Operating Budget plus (m) management fees payable
under the Management Agreement incurred after the
Construction Completion Date; but excluding (i)
payments into any of the Collateral Accounts during
such period, (ii) payments of any kind with respect to
Restricted Payments during such period, (iii)
depreciation for such period and (iv) any Permitted
Capital Expenditures made during such period that are
properly chargeable to fixed capital accounts for such
period in accordance with GAAP;
	 
	 	 
	“Operator”

	 	means, with respect to the Vessel, the Borrower or an
Affiliate of the Borrower, or, subject to the sole
discretion of the Administrative Agent, such Person(s)
with whom the Borrower has contracted to be concerned
with the operation of the Vessel and falls within the
definition of “Company” set out in rule 1.1.2 of the
ISM Code;
	 
	 	 
	“Ordinary Course Settlement
Payments”

	 	means all regularly scheduled payments due under any
Hedging Agreement from time to time, calculated in
accordance with the terms of such Hedging Agreement,
as applicable, including “Fixed Rate” payment amounts,
but excluding, for the avoidance of doubt any
Termination Payments due and payable under such
Hedging Agreement;
	 
	 	 
	“Original Credit Agreement”

	 	has the meaning ascribed thereto in the recitals;
	 
	 	 
	“Other Taxes”

	 	means all present or future stamp, or documentary taxes

31

 

	 	 	 

	 

	 	or any other excise or property taxes, charges
or similar levies arising from any payment made
hereunder or under any other Loan Document or the
Contribution Agreement or from the execution, delivery
or enforcement of, or otherwise with respect to, this
Agreement, any other Loan Document or the Contribution
Agreement;
	 
	 	 
	“Parent Company”

	 	means, with respect to a Lender, the bank holding
company (as defined in Federal Reserve Board
Regulation Y), if any, of such Lender, and/or any
Person owning, beneficially or of record, directly or
indirectly, a majority of the shares of such Lender;
	 
	 	 
	“Participant”

	 	has the meaning ascribed thereto in Section 11.5;
	 
	 	 
	“Permitted Affiliate”

	 	has the meaning ascribed thereto in Section 9.2(p);
	 
	 	 
	“Permitted Bareboat Charter
Agreement”

	 	means any bareboat charter agreement entered into in
connection with a Permitted Transaction;
	 
	 	 
	“Permitted Capital Expenditures”

	 	has the meaning ascribed thereto in Section 9.2(l);
	 
	 	 
	“Permitted Charter Agreement”

	 	means a Permitted Bareboat Charter Agreement and / or
Permitted Time Charter Agreement as the context may
require;
	 
	 	 
	“Permitted Hedging
Counterparty(ies)”

	 	means any Person that (i) is a Lender, (ii) enters
into a Hedging Agreement in accordance with Section
9.1(u) and (iii) enters into a Secured Party Addition
Agreement pursuant to Section 3.03(c) of the
Collateral Agency Agreement. Any “Permitted Hedging
Counterparty” that ceases to be a Lender hereunder
shall also cease to be a “Permitted Hedging
Counterparty” upon the expiration of any outstanding
hedges with such counterparties;
	 
	 	 
	“Permitted Indebtedness”

	 	means (i) Indebtedness under this Facility, (ii) the
Cost Overrun Notes issued under the Contribution
Agreement, (iii) trade debt incurred in the ordinary
course of business which is not more than sixty (60)
days past due or is being disputed in good faith, and
(iv) only until the Initial Advance under this
Agreement, the Bridge Loan and related Bridge Loan
Notes issued in connection therewith;
	 
	 	 
	“Permitted Investments”

	 	has the meaning ascribed thereto in Section 9.2(d);

32

 

	 	 	 

	“Permitted Liens”

	 	means:
	 
	 	 
	 

	 	(i) liens for Taxes, assessments and other
governmental charges not at the time delinquent or
thereafter payable without penalty or being contested
in good faith by appropriate proceedings promptly
initiated and diligently conducted and for which such
reserve or other appropriate provisions, if any, to
the extent required by GAAP for the eventual payment
thereof in the event it is found that such are payable
by the Borrower;
	 
	 	 
	 

	 	(ii) liens imposed by law of carriers, warehousemen,
mechanics, materialmen and landlords, trade credit
under industry standard terms and other similar liens
incurred in the ordinary course of business for sums
not overdue or being contested in good faith by
appropriate proceedings, which proceedings have the
effect of preventing the forfeiture or sale of the
Property subject to such liens and for which adequate
reserves have been made to the extent required by GAAP
for the eventual payment thereof in the event it is
found that such sums are payable by the Borrower;

(iii) maritime liens:
	 
	 	 
	 

	 	(a) arising in the ordinary course of business by
operation of law in respect of sums which are not
overdue or of which the Borrower is unaware or that
are being contested in good faith by appropriate
proceedings and for which reserves have been made to
the reasonable satisfaction of the Administrative
Agent; or
	 
	 	 
	 

	 	(b) arising in connection with salvage and general
average; or
	 
	 	 
	 

	 	(c) arising in connection with crew wages claimed but
not paid;
	 
	 	 
	 

	 	(iv) liens incurred in the ordinary course of business
in connection with worker’s compensation, unemployment
insurance or other forms of governmental insurance or
benefits, or to secure performance of tenders and
statutory obligations entered into in the ordinary
course of business or to secure obligations on surety
or appeal bonds in the ordinary course of business or
easements, rights of way and similar encumbrances

33

 

	 	 	 

	 

	 	incurred in the ordinary course of business and not
interfering with the ordinary conduct of the business
of the Borrower; and
	 
	 	 
	 

	 	(v) liens required by the terms of this Agreement;
	 
	 	 
	“Permitted Local Agency
Agreement”

	 	means any local agency agreement entered into in
connection with a Permitted Transaction;
	 
	 	 
	“Permitted Local Agent”

	 	has the meaning ascribed thereto in Section 9.2(p);
	 
	 	 
	“Permitted Person”

	 	has the meaning ascribed thereto in Section 9.2(p);
	 
	 	 
	“Permitted Time Charter
Agreement”

	 	means any time charter agreement entered into in
connection with a Permitted Transaction;
	 
	 	 
	“Permitted Transaction”

	 	means, any Proposed Transaction approved in accordance
with Section 10.2 or Section 10.3;
	 
	 	 
	“Person”

	 	means any individual, sole proprietorship,
corporation, partnership (general or limited), limited
liability company, business trust, bank, trust
company, joint venture, association, joint stock
company, trust or other unincorporated organization,
whether or not a legal entity, or any government or
agency or political subdivision thereof;
	 
	 	 
	“Plan”

	 	means any employee benefit plan covered by Title IV of
ERISA;
	 
	 	 
	“Pledgor(s)”

	 	means each of the Borrower (to the extent it has
provided a pledge with respect of the shares of a
Subsidiary), Frontier Drillships 2 and Shell EP
Offshore Ventures Limited and any party acquiring an
ownership stake in the Borrower in connection with the
Approved Joint Venture;
	 
	 	 
	“Potential Defaulting Lender”

	 	means, at any time, a Lender (i) as to which the
Administrative Agent has notified the Borrower that an
event of the kind referred to in the definition of
“Lender Insolvency Event” has occurred and is
continuing in respect of any Subsidiary of such
Lender, (ii) as to which the Administrative Agent has
in good faith determined and notified the Borrower
that such Lender or its Parent Company or a Subsidiary
thereof has notified the Administrative Agent, or has
stated publicly, that it will not comply with its
funding obligations under any other

34

 

	 	 	 

	 

	 	loan agreement or
credit agreement or other similar agreement or (iii)
that has, or whose Parent Company has, a
non-investment grade rating from Moody’s or S&P or
another nationally recognized rating agency. Any
determination that a Lender is a Potential Defaulting
Lender under any of clauses (i) through (iii) above
will be made by the Administrative Agent in its sole
discretion acting in good faith. The Administrative
Agent will promptly send to all parties hereto a copy
of any notice to the Borrower provided for in this
definition;
	 
	 	 
	“Principal Payment Dates”

	 	means the Initial Principal Payment Date and the dates
falling at quarterly intervals thereafter until and
including the Final Payment Date; provided that if any
such date is not a Banking Day, then the relevant
Principal Payment Date shall be the next following
Banking Day unless such next following Banking Day
falls in the following month, in which case such
Principal Payment Date shall be the immediately
preceding Banking Day;
	 
	 	 
	“Project”

	 	has the meaning ascribed thereto in the preamble;
	 
	 	 
	“Project Costs”

	 	means all costs incurred by the Borrower to achieve
the Construction Completion Date with respect to the
Project in the manner contemplated by (and consistent
with) the Transaction Documents and the Approved AFE
or otherwise approved by the Majority Lenders, in
consultation with the Technical and Environmental
Consultant, which costs include, without duplication:
	 
	 	 
	 

	 	(a) costs incurred by the Borrower under the
Construction Contracts, and other costs directly
related to the design, engineering, construction,
installation, commissioning, testing, acceptance and
transporting of the Vessel;
	 
	 	 
	 

	 	(b) fees and expenses incurred by or on behalf of the
Borrower in respect of the Construction, including
financial, accounting, legal, surveying and consulting
fees, and the costs of engineering;
	 
	 	 
	 

	 	(c) Interest Expense, fees and expenses under the Loan
Documents incurred until the Construction Completion
Date;

35

 

	 	 	 

	 

	 	(d) insurance required during Construction as set
forth in Section 9.1(j);
	 
	 	 
	 

	 	(e) costs incurred for commissioning, conducting the
sea trials for, and operation of Vessel prior to the
Construction Completion Date;
	 
	 	 
	 

	 	(f) management fees payable under the Management
Agreement incurred until the Construction Completion
Date;
	 
	 	 
	 

	 	(g) other general administrative costs in connection
with the Project incurred until the Construction
Completion Date; and
	 
	 	 
	 

	 	(h) solely with respect to the Advance immediately
preceding the Construction Completion Date the
estimate of the Borrower, including a reasonable
contingency, of Project Costs during the period
between the Construction Completion Date and a
reasonable period (in light of the nature of the
Project Costs to be incurred) after the Shell
Commencement Date;
	 
	 	 
	“Project Cost Threshold Amount”

	 	means, the aggregate amount of Project Costs (not
including Interest Expense during Construction and
other financing costs) estimated to be incurred by the
Project through the Construction Completion Date,
which, prior to the delivery of the Modified Base Case
Forecast, shall be equal to $492,723,924.00 as
indicated in the Base Case Forecast and, after the
delivery of the Modified Base Case Forecast, shall be
equal to the analogous amount of such Project Costs
pursuant to the Modified Base Case Forecast as
notified to the Borrower by the Administrative Agent;
	 
	 	 
	“Project Documents”

	 	means, collectively, the Construction Contracts, the
Drilling Contract, the Management Agreement, the Rig
Transportation Agreement upon the execution thereof,
any “Other Contract” (as defined in the Drilling
Contract pursuant to Sections IIB Article 28.1.3 and
28.1.4) which requires the written consent of the
Collateral Agent pursuant to Section 4(b) of the
Direct Agreement, the Joint Venture Agreement and the
Contribution Agreement, any other contracts,
agreements, instruments, letters, undertakings or
other documentation entered into in connection with a
Permitted Transaction and any other contracts,
agreements, instruments, letters,

36

 

	 	 	 

	 

	 	undertakings or
other documentation (x) under which the Borrower or
any Borrower Subsidiary could reasonably be expected
to have obligations or liabilities in excess of
$15,000,000 in the aggregate at any one time and (y)
that could not be reasonably replaced by a third party
provider without undue expense;
	 
	 	 
	“Project Party”

	 	means each Person from time to time party to a Project
Document;
	 
	 	 
	“Project Revenues”

	 	mean, for any period with respect to the Project, (a)
all ordinary course cash revenues under the Drilling
Contract, (b) any payments received for interruption
of operations during such period (including business
interruption insurance) and (c) all other ordinary
course income or revenue, however earned or received,
by the Borrower (with respect to the Project) during
such period, including any Government Authority
incentives received as tax credits, tax deductions or
otherwise but only to the extent, and when, realized
by the Borrower in cash. Project Revenues shall
exclude, (i) net amounts receivable under Hedging
Agreements earned in respect of the Project, (ii) the
Net Available Amount in respect of an Event of Loss,
(iii) amounts received under the Shanghai Completion
Guarantee and (v) amounts received under physical loss
or damage insurance policies;
	 
	 	 
	“Property”

	 	of any Person means any property or assets, or
interest therein, of such Person;
	 
	 	 
	“Proposed Transaction”

	 	means any transaction proposed by the Borrower in
relation to the operation of the Vessel including any
proposed bareboat charter agreements, proposed time
charter agreements, proposed local agency agreements,
and any other instruments and documentation related to
such transaction, any proposed Permitted Persons
related thereto and any other actions required and
proposed by the Borrower to be taken in connection
with Section 9.2(p);
	 
	 	 
	“Proposed Transaction
Documentation”

	 	means all proposed documentation and information
required to be provided in connection with a Proposed
Transaction pursuant to Section 9.2(p) including, but
not limited to, information reasonably requested by
the Joint Committee in relation thereto pursuant to
such Section;

37

 

	 	 	 

	“Purchasers”

	 	means each of the purchasers identified in the Sponsor
Purchase Agreement;
	 
	 	 
	“Quarterly Date”

	 	means the fifteenth day of each January, April, July
and October in each year, the first of which shall be
the first such day after the date hereof; provided
that if any such day is not a Banking Day, such
Quarterly Date shall be the next preceding Banking
Day;
	 
	 	 
	“Quotation Day”

	 	means the day on which an interest rate is determined
for an Interest Period;
	 
	 	 
	“Reference Banks”

	 	means the principal London offices of Citibank, N.A.
and Standard Chartered Bank or such other banks as may
be appointed by the Administrative Agent in
consultation with the Borrower;
	 
	 	 
	“Regulation T”

	 	means Regulation T of the Board (or any successor) as
the same may be modified and supplemented and in
effect from time to time;
	 
	 	 
	“Regulation U”

	 	means Regulation U of the Board (or any successor) as
the same may be modified and supplemented and in
effect from time to time;
	 
	 	 
	“Regulation X”

	 	means Regulation X of the Board (or any successor) as
the same may be modified and supplemented and in
effect from time to time;
	 
	 	 
	“Related Parties”

	 	means, with respect to any Person, such Person’s
Affiliates and such Person’s and such Person’s
Affiliates’ respective managers, administrators,
trustees, partners, directors, officers, employees,
agents, fund managers and advisors;
	 
	 	 
	“Required Cost Overrun Capital
Contribution Funding”

	 	means, at any time, the amount of Cost Overrun Capital
Contribution Funding to be made to maintain the Cost
Overrun Term Loan Equity Ratio equal to or greater
than 1.00 to 1.00;
	 
	 	 
	“Required Senior Capital
Contribution Funding”

	 	means, at any time, the amount of Senior Capital
Contribution Funding to be made to maintain the Senior
Term Loan Equity Ratio equal to or greater than 17.5
to 82.5;
	 
	 	 
	“Requisite Lenders”

	 	means the Majority Lenders, the Supermajority Lenders,
or the Supermajority Cost Overrun Lenders, as the
context may require;

38

 

	 	 	 

	“Restoration”

	 	means, with respect to any Affected Property, to
rebuild, repair, restore or replace such Affected
Property;
	 
	 	 
	“Restricted Payment”

	 	means any dividend or other payment made by a Person
in respect of, or any purchase, redemption,
retirement, defeasance or other acquisition for value
of, any of such Person’s capital stock or other equity
interests (or any warrants, rights or options to
acquire such capital stock or other equity interests),
whether now or hereafter outstanding;
	 
	 	 
	“Restricted Payment Date”

	 	has the meaning ascribed thereto in Section 9.2(g);
	 
	 	 
	“Revenue Account”

	 	has the meaning ascribed thereto in the Depositary
Agreement;
	 
	 	 
	“Rig Transportation Agreement”

	 	shall mean the agreement to be entered into by the
Borrower providing for the towing of the hull from
Shanghai Shipyard Co., Ltd.’s shipyard to the shipyard
of Keppel Shipyard Limited of Singapore;
	 
	 	 
	“S&P”

	 	means Standard & Poor’s Ratings Group, a division of
McGraw-Hill, Inc.;
	 
	 	 
	“SCB”

	 	has the meaning ascribed thereto in preamble;
	 
	 	 
	“Screen Rate”

	 	means the British Bankers’ Association Interest
Settlement Rate for the relevant currency and period
displayed on the appropriate page of the Reuters
screen. If the agreed page is replaced or service
ceases to be available, the Administrative Agent may
specify another page or service displaying the
appropriate rate after consultation with the Borrower
and the Lenders;
	 
	 	 
	“Second Advance”

	 	means that portion of the Senior Term Loan to be
advanced on the Second Drawdown Date;
	 
	 	 
	“Second Drawdown Date”

	 	means the Drawdown Date on which the Second Advance
under the Senior Term Loan shall be drawn down
pursuant to the terms hereof;
	 
	 	 
	“Secured Hedging Agreement
Obligations”

	 	means, with respect to any Hedging Agreement, the
unpaid amount of any Ordinary Course Settlement
Payment or any Termination Payment and interest
thereon (including interest accruing after the
maturity thereof and interest accruing after the
filing of any

39

 

	 	 	 

	 

	 	petition in bankruptcy, or the
commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower, whether or not a
claim for post-filing or post-petition interest is
allowed in such proceeding) and all other obligations
and liabilities of the Borrower to the Permitted
Hedging Counterparty, whether direct or indirect,
absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under,
out of, or in connection with, such Hedging Agreement
or any other document made, delivered or given in
connection therewith, whether on account of principal,
interest, fees, indemnities, costs, expenses
(including all fees, charges and disbursements of
counsel that are required to be paid by the Borrower)
or otherwise;
	 
	 	 
	“Secured Parties”

	 	means the Administrative Agent, the Collateral Agent,
each Lender and each Permitted Hedging Counterparty;
	 
	 	 
	“Secured Party Addition
Agreement”

	 	has the meaning ascribed thereto in the Collateral
Agency Agreement;
	 
	 	 
	“Secured Obligations”

	 	means, collectively, without duplication: (i) all of
the Borrower’s and each Subsidiary of the Borrower’s
Indebtedness, financial liabilities and obligations,
of whatsoever nature and however evidenced (including
principal, interest (including interest accruing after
the maturity of such indebtedness, financial
liabilities or obligations and interest accruing after
the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like
proceeding, relating to the Borrower or any Subsidiary
of the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in
such proceeding), premium, fees, reimbursement
obligations, penalties, indemnities and legal and
other expenses, whether due after acceleration or
otherwise) to the Secured Parties in their capacities
as such under the Loan Documents, including the
Secured Hedging Agreement Obligations; (ii) any and
all sums advanced by the Collateral Agent in order to
preserve the Collateral or preserve its security
interest in the Collateral; and (iii) in the event of
any proceeding for the collection or enforcement of
the obligations described in clauses (i) and (ii)
above, after an Event of Default has occurred and is
continuing and unwaived, the expenses of retaking,
holding, preparing for sale or lease, selling or
otherwise disposing of or realizing on the Collateral,

40

 

	 	 	 

	 

	 	or of any exercise by the Collateral Agent of its
rights under the Security Documents, together with
reasonable attorneys’ fees and court costs;
	 
	 	 
	“Security Agreement”

	 	the security agreement entered into between the
Borrower and the Collateral Agent substantially in the
form of Exhibit S;
	 
	 	 
	“Security Document(s)”

	 	means the Mortgage, the Assignments, the Share Pledge
Agreements, the Security Agreement, the Collateral
Agency Agreement, the Depositary Agreement, the Direct
Agreement, each Consent and Agreement, the Singapore
Deed, any Control Agreement, any Singapore Charge over
Account, each Borrower Subsidiary Security Agreement,
any security documents or instruments entered into in
connection with a Permitted Transaction, and any
documents required by the Administrative Agent in
substitution for any of the foregoing and any other
documents that may be executed as security for the
repayment of the Secured Obligations;
	 
	 	 
	“Security Party(ies)”

	 	means the Borrower, any Subsidiary of the Borrower,
the Pledgors and, in connection with any Permitted
Transaction, any Permitted Person party to a Security
Document or any of them, as the context may require;
	 
	 	 
	“Security Period”

	 	means the period from the Closing Date to the date
upon which the Secured Obligations are repaid in full
or prepaid in full;
	 
	 	 
	“Senior Capital Contribution
Funding”

	 	means an irrevocable capital contribution to the
Borrower, made pursuant to the Contribution Agreement
and for purposes of maintaining a Senior Term Loan
Equity Ratio equal to or greater than 17.5 to 82.5
that has been certified as such in an applicable
Contribution Certificate;
	 
	 	 
	“Senior Facility”

	 	means the Senior Term Loan and the Senior Revolver;
	 
	 	 
	“Senior Lenders”

	 	means those Lenders providing the Senior Term Loan
and, if applicable, the Senior Revolver (together with
their respective successors and assigns) and
identified as such on Schedule 1;
	 
	 	 
	“Senior Revolver”

	 	has the meaning ascribed thereto in Section 3.1(a);

41

 

	 	 	 

	“Senior Revolver Availability
Period”

	 	means the period from the Construction Completion Date
until the date which is three months immediately
preceding the Final Payment Date, provided that if
such date is not a Banking Day, the “Senior Revolver
Availability Period” shall end on the immediately
preceding Banking Day;
	 
	 	 
	“Senior Revolver Commitment”

	 	means, with respect to any Senior Lender, the Senior
Revolver portion of the Senior Facility set out
opposite its name on Schedule 1 hereto or, as the case
may be, pursuant to any assignment made pursuant to
Section 11.2, which portion may be reduced in
accordance with the terms of this Agreement; provided
that such Senior Revolver Commitment shall, upon
written request of the Borrower made not later than
thirty (30) days prior to the end of the Term Loan
Availability Period, be increased by the Unused Senior
Term Loan Commitment ratably among the Senior Lenders
maintaining both Senior Term Loan Commitments and
Senior Revolver Commitments, in accordance with such
Senior Lenders respective Senior Revolver Commitments
immediately prior to such increase;
	 
	 	 
	“Senior Revolver Drawdown
Date(s)”

	 	means the dates, each being a Banking Day, upon which
the Borrower has requested that an Advance under the
Senior Revolver be made available to the Borrower, and
such Advance is made;
	 
	 	 
	“Senior Revolver Note”

	 	means the promissory note to be executed by the
Borrower to evidence the Senior Revolver,
substantially in the form of Exhibit B-2;
	 
	 	 
	“Senior Secured Hedge Agreement”

	 	has the meaning ascribed thereto in Section 9.1(u)(i);
	 
	 	 
	“Senior Term Loan”

	 	has the meaning ascribed thereto in Section 3.1(a);
	 
	 	 
	“Senior Term Loan Commitments”

	 	means, with respect to any Lender, the Senior Term
Loan portion of the Senior Facility set out opposite
its name on Schedule 1 hereto or, as the case may be,
pursuant to any assignment made pursuant to Section
11.2 and 11.3, which portion may be reduced in
accordance with the terms of this Agreement;
	 
	 	 
	“Senior Term Loan Drawdown Date”

	 	means the date, being a Banking Day, upon which the Borrower has requested that the Senior Term Loan be made available to the Borrower, and such Advance is made;

42

 

	 	 	 

	“Senior Term Loan Equity Ratio”

	 	means, at any time, the ratio of (A) the sum of
all Senior Capital Contribution Fundings made to
and including such time to (B) the sum of all
Advances of the Senior Term Loan made to and
including such time;
	 
	 	 
	“Senior Term Loan Note”

	 	means the promissory note to be executed by the
Borrower to evidence the Senior Term Loan,
substantially in the form of Exhibit B-1;
	 
	 	 
	“Shanghai Completion Guarantee”

	 	means the Completion Guarantee dated as of June
8, 2008 and issued by Bank of China in favor of
the Borrower;
	 
	 	 
	“Shanghai Consent and Agreement”

	 	means the Consent and Agreement provided by
Shanghai Shipyard Co., Ltd. in connection with
the Shanghai Constructing Contract substantially
in the form of the exhibit thereof attached to
the Assignment of the Shanghai Construction
Contract;
	 
	 	 
	“Shanghai Construction Contract”

	 	means the contract for the Construction of the
Vessel, entered into by and between Shanghai
Shipyard Co., Ltd. and the Borrower (as
successor by novation to Frontier Drillships),
dated June 23, 2007;
	 
	 	 
	“Share Pledge Agreement(s)”

	 	means the pledge of ordinary shares of the
Borrower to be executed by the Pledgors in favor
of the Collateral Agent pursuant to
Section 4.1(d) hereof substantially in the form
of Exhibit G;
	 
	 	 
	“Shell Cancellation Event”

	 	means the delivery by Shell EP Wells Equipment
Services B.V. of a notice of termination under
Section IIA, Article 15 of the Drilling Contract
pursuant to the terms thereof;
	 
	 	 
	“Shell Commencement Date”

	 	means the date on which the Vessel is ready to
begin operations at the first work location in
accordance with the Drilling Contract as
certified by an Authorized Officer of the
Borrower and notified in writing to the
Administrative Agent and Technical and
Environmental Consultant;
	 
	 	 
	“Shell EP Offshore Ventures Limited”

	 	means Shell EP Offshore Ventures Limited, a
company organized under the laws of England and
Wales and a 100% indirect subsidiary of Royal
Dutch Shell plc;
	 
	 	 
	“Shell EP Wells Equipment Services
B.V.”

	 	means Shell EP Wells Equipment Services B.V., a
company organized under the laws of Netherlands
and a 100% indirect subsidiary of Royal Dutch
Shell plc;

43

 

	 	 	 

	“Shell HSE Policies”

	 	means all guidelines, guidance notes, manuals,
handbooks, codes of practice, memorandum and
other documents provided by, or on behalf of,
Shell EP Wells Equipment Services B.V. relating
to Shell EP Wells Equipment Services B.V.’s
environmental, health and safety standards and
environmental, health and safety risk assessment
process;
	 
	 	 
	“Singapore Charge over Account”

	 	means any a charge over account by the Borrower
in favor of the Collateral Agent with respect to
a Local Payment Account of the Borrower held in
the Republic of Singapore substantially in the
form of Exhibit H-2 hereto;
	 
	 	 
	“Singapore Deed”

	 	the deed entered into between the Borrower and
the Collateral Agent substantially in the form
of Exhibit R;
	 
	 	 
	“SMC”

	 	means a safety management certificate issued in
respect of the Vessel in accordance with Rule 13
of the ISM Code;
	 
	 	 
	“SOLAS”

	 	means the International Convention for the
Safety of Life at Sea, 1974;
	 
	 	 
	“Solvent”

	 	means, with respect to any Person at any time,
that (a) the fair value of the Property of such
Person is greater than the total amount of
liabilities (including contingent liabilities)
of such Person, (b) such Person does not intend
to, and does not believe that it will, incur
debts or liabilities beyond such Person’s
ability to pay as such debts and liabilities
mature, (c) such Person is not engaged in a
business and is not about to engage in a
business for which such Person’s Property would
constitute an unreasonably small capital and
(d) such Person is not insolvent as defined in
the bankruptcy or insolvency laws of the country
of its formation, and with respect to the
Borrower, the United States of America and the
Cayman Islands;
	 
	 	 
	“Specified Time”

	 	means approximately 11:00 a.m. London, England
time on the date two (2) Banking Days prior to
the relevant Interest Period;
	 
	 	 
	“Sponsor Purchase Agreement”

	 	means the Purchase and Sale Agreement dated as
of September 30, 2008 between FDR Holdings,
Frontier

44

 

	 	 	 

	 

	 	Drillships 2, Frontier Drillships and
the Purchasers in respect of the obligation of
the Purchasers to purchase securities of, or
provide funding to, Frontier Drillships 2 in
connection with (i) the Senior Capital
Contribution Funding in the aggregate amount of
$47,000,000 and (ii) the Cost Overrun Capital
Contribution Funding in the aggregate principal
amount of up to $50,000,000, all on the terms
and conditions provided therein;
	 
	 	 
	“Subsidiary(ies)”

	 	means, with respect to any Person, any business
entity of which more than 50% of the outstanding
voting stock or other equity interest is owned
directly or indirectly by such Person and/or one
or more other Subsidiaries of such Person;
	 
	 	 
	“Supermajority Cost Overrun Lenders”

	 	means, the Cost Overrun Lenders holding more
than 66 2/3% of the aggregate outstanding
principal amount of the Advances under the Cost
Overrun Term Loan or, if no Advances are
outstanding under the Cost Overrun Term Loan,
Cost Overrun Lenders having more than 66 2/3% of
the aggregate amount of the Cost Overrun Term
Loan Commitments as most recently in effect;
	 
	 	 
	“Supermajority Lenders”

	 	means, (a) at any time prior to the indefeasible
payment in full of the Secured Obligations of
the Senior Lenders, the Senior Lenders holding
more than 66 2/3% of the aggregate outstanding
principal amount of the Advances under the
Senior Facility and (b) at any time after the
indefeasible payment in full of the Secured
Obligations of the Senior Lenders, the
Supermajority Cost Overrun Lenders;
	 
	 	 
	“Suspension Account”

	 	has the meaning ascribed thereto in the
Depositary Agreement;
	 
	 	 
	“Taxes”

	 	means all present or future taxes, levies,
imposts, duties, deductions, withholdings,
assessments, fees or other charges imposed by
any Government Authority, including any
interest, additions to Tax or penalties
applicable thereto;
	 
	 	 
	“Technical and Environmental
Consultant”

	 	means Det Norske Veritas AS in Oslo, Norway who
shall advise the Administrative Agent and
Lenders in connection with the Construction;
	 
	 	 
	“Technical and Environmental
Consultant’s Report”

	 	means, with respect to the Project, a report
covering the technical and environmental due
diligence of the Project

45

 

	 	 	 

	 

	 	in accordance with the
scope of work agreed to as part of the
engagement by the Lenders of the Technical and
Environmental Consultant, including but not
limited to the information required in such
report pursuant to Section 4.1(s);
	 
	 	 
	“Termination Payment”

	 	means any amount payable to or by the Borrower
in connection with a termination (whether as a
result of the occurrence of an event of default
or other termination event) of any Hedging
Agreement; provided that for the avoidance of
doubt, “Termination Payments” shall not include
any Ordinary Course Settlement Payments due
under any such Hedging Agreement;
	 
	 	 
	“Term Loan Availability Period”

	 	means the period from the Closing Date until the
earlier to occur of (a) the Construction
Completion Date and (b) March 30, 2011, provided
that if such date is not a Banking Day, the
“Term Loan Availability Period” shall end on the
immediately preceding Banking Day;
	 
	 	 
	“Term Loan Capital Contribution”

	 	means a capital contribution consisting of
either a Senior Capital Contribution Funding or
a Cost Overrun Capital Contribution Funding;
	 
	 	 
	“Total Loss”

	 	has the meaning ascribed thereto in the Mortgage;
	 
	 	 
	“Transaction Documents”

	 	means the Loan Documents and the Project
Documents;
	 
	 	 
	“Unsecured Local Payment Account”

	 	(i) any deposit account of the Borrower
established and maintained by a banking
institution in which the Borrower maintains an
average daily balance of less than Two Hundred
Thousand Dollars ($200,000.00) and less than One
Million Dollars ($1,000,000.00) at all times;
provided that no more than three (3) such
Unsecured Local Payment Accounts shall exist at
any time and the aggregate amounts contained in
all such Unsecured Local Payment Accounts shall
be less than One Million One Hundred Thousand
Dollars ($1,100,000.00) at all times;
	 
	 	 
	“Unused Senior Term Loan Commitment”

	 	means a portion of the Senior Term Loan
Commitment remaining on the last day of the Term
Loan Availability Period (taking into account
any reduction due to any Advance made on such
date), up to but not exceeding Ten Million
Dollars ($10,000,000);
	 
	 	 
	“Upfront Fee”

	 	has the meaning ascribed thereto in the Upfront
Fee and Coordination Fee Letter;

46

 

	 	 	 

	“Upfront Fee and Coordination Fee
Letter”

	 	means that certain letter agreement dated as of
the date hereof between the Borrower and
Standard Chartered Bank, in its capacity as an
Lead Arranger hereof;
	 
	 	 
	“Utilization Rate”

	 	means the percentage obtained by dividing
(i) the number of days, including partial days,
the Borrower is entitled to receive compensation
at the Operating Rate for a given period by
(ii) the actual number of days in such period,
as reported by the Borrower to the
Administrative Agent as part of the operating
report provided pursuant to Section 9.1(z), as
verified by the Administrative Agent in its
reasonable discretion, following consultation
with the Technical and Environmental Consultant;
	 
	 	 
	“Vessel”

	 	means the whole of the drillship to be named
FRONTIER BULLY II described in recitals hereof
and includes her engines, machinery, boats,
boilers, masts, rigging, anchors, chains,
cables, apparel, tackle, outfit, spare gear,
fuel, consumable or other stores, freights,
belongings and appurtenances, whether on board
or ashore, whether now owned or hereafter
acquired, and all additions, improvements and
replacements hereafter made in or to the said
Vessel, or any part thereof, or in or to the
stores, belongings and appurtenances aforesaid
except such equipment or stores which, when
placed aboard said Vessel, do not become the
Property of the Borrower;
	 
	 	 
	“Voting Shares”

	 	means, with respect to any Person, any class or
classes of capital stock or other ownership
interests pursuant to which the holders thereof
have the general voting power under ordinary
circumstances to elect directors, managers or
trustees of such Person (irrespective of whether
or not, at the time, stock of any other class or
classes has, or might have, voting power by
reason of the happening of any contingency).

     1.2 Computations of Time Periods; Other Definitional Provisions.

          In this Agreement and the other Loan Documents, unless the context requires otherwise, (a) in
the computation of periods of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each mean “to

47

 

but excluding”, (b)
references to “writing” include printing, typing, lithography and other means of reproducing words
in a tangible visible form, (c) the words “including,” “includes” and
“include” shall be deemed to be followed by the words “without limitation”, (d) references to
sections, articles, clauses (or subdivisions of clauses), exhibits, annexes or schedules are to
this Agreement, (e) references to any definition of or reference to agreements, instruments or
other contractual instruments (including this Agreement and the other Loan Documents) shall be
deemed to include all subsequent amendments, amendments and restatements, supplements, and other
modifications to such instruments (provided, however, such amendments, amendments and restatements,
supplements, and other modifications occur in accordance with the terms of thereof), (f) any
reference herein to any Person shall be construed to include such Person’s successors and assigns,
(g) the words “herein”, “hereof” and “hereunder”, and words of similar import, shall be construed
to refer to this Agreement in its entirety and not to any particular provision hereof, (h) any
reference to any law or regulation herein shall, unless otherwise specified, refer to such law or
regulation as amended, modified or supplemented from time to time, (i) the words “asset” and
“property” shall be construed to have the same meaning and effect and to refer to any and all
tangible and intangible assets and properties, including cash, securities, accounts and contract
rights, (j) references to days, months, quarters and years refer to calendar days, months, quarters
and years, respectively. The definitions of terms herein shall apply equally to the singular and
plural forms of the terms defined. The word “will” shall be construed to have the same meaning and
effect as the word “shall” and the words importing either gender include the other gender.

     1.3 Accounting Terms. Unless otherwise specified herein, all accounting terms used in
this Agreement and the other Loan Documents shall be interpreted, and all financial statements and
certificates and reports as to financial matters required to be delivered to the Administrative
Agent or to the Lenders under this Agreement shall be prepared, in accordance with generally
accepted accounting principles for the United States (“GAAP”).

     1.4 Certain Matter Regarding Materiality. To the extent that any representation,
warranty, covenant or other undertaking of the Borrower in this Agreement is qualified by reference
to those which are not reasonably expected to have a “Material Adverse Effect” or language of
similar import, no inference shall be drawn therefrom that any Administrative Agent or any Lender
has knowledge or approves of any noncompliance by the Borrower with any Governmental Rule, as in
effect from time to time.

     1.5 Forms of Documents. Except as otherwise expressly provided in this Agreement,
references to documents or certificates “substantially in the form” of Exhibits to another document
shall mean that such documents or certificates are duly completed in the form of the related
Exhibits with substantive changes subject to the provisions of Section 19.7 of this Agreement, as
the case may be, or the correlative provisions of the Security Documents.

     1.6 References to Date of Agreement. All references herein to “the date hereof”, “the
date of this Agreement” and the like are, unless otherwise specified, references to October 21,
2008.

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2. REPRESENTATIONS AND WARRANTIES

     2.1 Representations and Warranties. In order to induce the Administrative Agent, the
Collateral Agent and the Lenders to enter into this Agreement and to make the Facilities, the
Borrower on its own behalf and, where applicable, on behalf of the Security Parties, other
than Shell EP Offshore Ventures Limited (the “Frontier Security Parties”), represents and warrants
to the Administrative Agent, the Collateral Agent and the Lenders (which representations and
warranties shall survive the execution and delivery of this Agreement and the making of the
Facilities) that:

	 	(a)	 	Use of Proceeds. The proceeds of the Facilities will be
used solely in accordance with, and solely for the purposes contemplated by
Section 9.1(x) and the Borrower’s use of the Facilities does not contravene any
law, official requirement or other regulatory measure or procedure implemented
to combat “money laundering” (as defined in Article 1 of the Directive
(91/308/EEC) of the Council of the European Communities) and comparable United
States Federal and state laws, including without limitation, (A) the United
States Trading with the Enemy Act of October 6, 1917, as amended, (B) any of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive
order relating thereto, (C) Executive Order No. 13224, 66 Fed. Reg. 49,079
(2001), issued by the President of the United States (Executive Order Blocking
Property and Prohibiting Transactions with Persons Who Commit, Threaten to
Commit or Support Terrorism) and (D) the anti-money laundering provisions of the
Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law
107-56 (October 26, 2001) amending the Bank Secrecy Act, 31 U.S.C. Section 5311
et seq. No part of the proceeds from the Facilities will be used, directly or
indirectly, for any payments to any governmental official or employee, political
party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct
business or obtain any improper advantage, in material violation of the United
States Foreign Corrupt Practices Act of 1977, as amended. None of the Frontier
Security Parties, (A) is or will become a “blocked person” or entity described
in Schedule 1 of the Terrorism Order or described in such Department of the
Treasury Rule or (B) engages or will engage in any dealings or transactions, nor
is any such Person otherwise associated, with any such blocked person or entity.
	 
	 	(b)	 	Corporate Status. Each of the Frontier Security Parties
is a company duly organized and validly existing under the laws of its
jurisdiction of formation, and are qualified to do business and in good standing
in each jurisdiction wherein the nature of the business transacted thereby makes
such qualification necessary and where failure so to qualify could reasonably be
expected to have a Material Adverse Effect.

49

 

	 	(c)	 	Corporate Authority. Each of the Frontier Security
Parties has full power and authority to, and all necessary consents, approvals
and authorizations have been obtained to permit the Borrower to own its Property
and carry on its business as now being or as proposed to be conducted and enter
into and
perform its obligations under this Agreement, the Notes and the Security
Documents to which it is a party and to borrow, service and repay the
Facilities and no further consents or authorities are necessary for the
service and repayment of the Facilities or any part thereof.
	 
	 	(d)	 	Project Documents.

	 	(i)	 	As of the Closing Date all Project Documents
required to be delivered on the Closing Date have been obtained and are
in full force and effect.
	 
	 	(ii)	 	The Project Documents in effect on the Closing
Date and on the date of the Initial Advance, constitute and include all
material contracts and agreements relating to the Vessel as of the
Closing Date.
	 
	 	(iii)	 	There are no material contracts, services,
materials or rights (other than Government Approvals) required for the
current stage of the Construction other than those granted by, or to be
provided to the Borrower pursuant to, the Project Documents.
	 
	 	(iv)	 	The Administrative Agent has received a
certified copy of each Project Document (other than those that are not
required to be delivered as of the date of the making of this
representation) as in effect on the date of its delivery to the
Administrative Agent and each amendment, modification or supplement to
each such Project Document.
	 
	 	(v)	 	Except as permitted pursuant to Section 9.2(k),
none of the Project Documents has been amended, modified or
supplemented or has been Impaired, and all of the Project Documents
(other than those that are not required to be entered into pursuant to
this Agreement as of the date of the making of this representation or
that have been cancelled or terminated as permitted under this
Agreement) are in full force and effect. All conditions precedent to
the obligations of the Borrower under the Project Documents have been
satisfied or waived except for such conditions precedent which need not
and cannot be satisfied until a later stage of Construction.
	 
	 	(vi)	 	No Project Party is in default of any material
covenant or material obligation set forth in any Project Document.

50

 

	 	(vii)	 	All representations, warranties and other
factual statements made by each Frontier Security Party in the Project
Documents to which such Security Party is a party are true and correct
in all material respects.
	 
	 	(viii)	 	No undischarged Liens have been filed in connection with any work
performed or Project Document, except for Permitted Liens.
	 
	 	(ix)	 	All material permits, licenses, trademarks,
patents or agreements with respect to the usage of technology that are
necessary for the Construction have been obtained, are final and are in
full force and effect, except for any such material permit, license,
trademark, patent or agreement the failure of which to obtain and
maintain in full force and effect could not reasonably be expected to
have a Material Adverse Effect.

	 	(e)	 	Drilling Contract Validity. The Drilling Contract
constitutes a legal, valid and binding obligation of the Borrower, enforceable
in accordance with its terms, subject, however, to the effect of insolvency or
bankruptcy laws affecting generally the enforcement of creditors’ rights.
	 
	 	(f)	 	Enforceability. This Agreement has been duly executed and
delivered by the Borrower and each of this Agreement and the other Transaction
Documents constitutes the legal, valid and binding obligation of each of the
Frontier Security Parties party thereto, enforceable against each of the
Frontier Security Parties party thereto in accordance with its terms, subject,
however, to the effect of insolvency or bankruptcy laws affecting generally the
enforcement of creditors rights.
	 
	 	(g)	 	Filings; Stamp Taxes. Other than the recording of the
Mortgage with the Maritime Administrator of the Republic of the Marshall Islands
in New York promptly upon registration of the Vessel under Marshall Islands
flag, but in any event no later than the Shell Commencement Date and the filing
of UCC Financing Statements with the Recorder of Deeds in Washington, D.C. in
respect of the Security Documents, and fees consequent thereto, it is not
necessary for the legality, validity, enforceability or admissibility into
evidence of this Agreement and the other Loan Documents that any of them or any
document relating thereto be registered, filed, recorded or enrolled with any
Government Authority in any relevant jurisdiction or that any stamp,
registration, recording or similar Taxes be paid on or in relation to this
Agreement and the other Loan Documents.
	 
	 	(h)	 	Collateral. On and after the Closing Date (and, with
respect to the Mortgage, after the recording of the Mortgage with the Maritime
Administrator of the Republic of the Marshall Islands) the provisions of the
Security Documents then delivered are effective to create, in favor of the
Collateral Agent for the benefit of the Secured Parties, a legal, valid and

51

 

	 	 	 	enforceable first priority Lien on and security interest in all of the
Collateral purported to be covered thereby, and all necessary and appropriate
action has been taken so that each such Security Document creates a perfected
Lien on and security interest in all right, title and interest of the Borrower
in the Collateral covered thereby, prior and
superior to all other Liens other than Permitted Liens and all necessary and
appropriate consents to the creation, perfection and enforcement of such
Liens have been obtained from each of the parties to the Project Documents.
	 
	 	(i)	 	Government Approvals.

	 	(i)	 	No material Government Approvals the failure of
which to obtain could reasonably be expected (either individually or in
the aggregate) to have a Material Adverse Effect are required to be
obtained by the Borrower prior to the Shell Commencement Date.
	 
	 	(ii)	 	With respect to representations and warranties
made on and after the Shell Commencement Date, the Borrower has
obtained and maintained all material Government Approvals for the
benefit and operation of the Vessel by the Borrower or any third party.
	 
	 	(iii)	 	The Borrower is not in violation of or failing
to comply with, any applicable Government Rule or Government Approval
the violation of or the non-compliance with which could reasonably be
expected (either individually or in the aggregate) to have a Material
Adverse Effect.

	 	(j)	 	Violation of Law, Contracts. The execution and delivery
of, the performance of its obligations under, and compliance by each of the
Frontier Security Parties with the provisions of this Agreement, the other Loan
Documents and the Contribution Agreement to which they are parties do not, and
will not during the Security Period, contravene (i) any Government Rule existing
at the date hereof, (ii) any contractual restriction binding each of the
Frontier Security Parties or their assets or (iii) the constitutive documents of
the Frontier Security Parties.
	 
	 	(k)	 	Litigation. No action, suit or proceeding is pending or
threatened against any Frontier Security Party or with respect to any Project
Document which could reasonably be expected (either individually or in the
aggregate) to have a Material Adverse Effect.
	 
	 	(l)	 	Defaults. The Borrower is not in default (A) under any
Transaction Document in any material respect by which it is bound, (B) in
respect of any material financial commitments or obligations or (C) under any
applicable order, writ, injunction or decree of any Government Authority or
arbitral tribunal. No default has occurred and is continuing or would result

52

 

	 	 	 	from the consummation of the transaction contemplated by this Agreement or any
other Security Document which could reasonably be expected (either individually or in
the aggregate) to have a Material Adverse Effect.

	 	(m)	 	Investment Company. None of the Frontier Security
Parties are required to be registered as an “investment company” (as defined in
the Investment Company Act of 1940, as amended).

	 	(n)	 	Margin Stock. None of the proceeds of the Facilities
will be used to purchase or carry margin stock or extend credit to others for
the purpose of purchasing or carrying margin stock within the meanings of
Regulations T, U or X; neither of the Frontier Security Parties is engaged in
the business of extending credit for the purpose of purchasing or carrying
margin stock within the meaning of Regulations T, U or X.

	 	(o)	 	Disclosure.

	 	(i)	 	The Borrower has disclosed to the
Administrative Agent and the Lenders all agreements, instruments and
corporate or other restrictions to which it is subject, and all other
matters known to it, that, individually or in the aggregate, could
reasonably be expected (either individually or in the aggregate) to
have a Material Adverse Effect. Neither this Agreement nor any other
Transaction Document nor any reports, financial statements,
certificates or other written information furnished to the
Administrative Agent or the Lenders by or on behalf of the Borrower in
connection with the negotiation of, and the extension of credit under,
this Agreement and the other Loan Documents and the transactions
contemplated by the Project Documents or delivered to the
Administrative Agent or the Lenders hereunder or thereunder (as
modified or supplemented by other information so furnished) contains
any untrue statement of a material fact or omits to state a material
fact (known to the Borrower in the case of any documents not furnished
by it) in each case, necessary to make the statements contained herein
or therein, taken as a whole, in light of the circumstances under which
they were made, not misleading; provided that with
respect to any projected financial information, forecasts, estimates,
or forward-looking information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed
to be reasonable at the time and is subject to the uncertainties that
are inherent in any projections, and makes no representation as to the
actual attainability of any projections. Without limiting the
generality of the foregoing, no representation or warranty is made by
the Borrower as to any information or material provided to the
Borrower, the Administrative Agent or the Lenders by the Technical and
Environmental Consultant or the Insurance Consultant (except to

53

 

	 	 	 	the extent such information or material originated with the
Borrower).

	 	(ii)	 	As of the Closing Date, the Borrower has
provided all material information to the Technical and Environmental
Consultant in order to allow such Person to issue their bring-down
certificate on the Closing Date as contemplated in Section 4.1(s)(iii).

	 	(iii)	 	To the extent required pursuant to Sections
4.3(e) and (f), as of the date of the Initial Advance, the Borrower has
provided all material information to the Technical and Environmental
Consultant or the Insurance Consultant, as applicable, in order to
allow such Persons to issue their bring-down certificates on the date
of each Initial Advance.

	 	(p)	 	The Vessel.

	 	(i)	 	During Construction, the Vessel will be insured
in accordance with Section 9.1(j).

	 	(ii)	 	After completion of the Construction:

	 	(A)	 	the Vessel will be classed in the
highest classification and rating for vessels of the same age
and type with the Classification Society without any material
outstanding overdue recommendations affecting class;

	 	(B)	 	the Vessel will be in every
material way fit for its intended services;

	 	(C)	 	the Vessel will conform to and
comply with all applicable Government Approvals, applicable
Environmental Laws and all applicable Government Rules, except
where the failure to so conform and comply could not reasonably
be expected (either individually or in the aggregate) to have a
Material Adverse Effect;

	 	(D)	 	the Facility will be secured by
the Mortgage, entered into by the Borrower in favor of the
Collateral Agent; and

	 	(E)	 	the Vessel will be insured in
accordance with the provisions of the Mortgage and Section
9.1(j) herein.

	 	(q)	 	Ownership. (i) 50% of the outstanding ordinary shares of
the Borrower are owned by Frontier Drillships 2 and (ii) 50% of the outstanding
ordinary shares of the Borrower are owned by Shell EP Offshore Ventures Limited,
and (iii) all of the outstanding ordinary shares of Frontier Drillships 2 are
owned by FDR Holdings and the Purchasers. None of such ordinary shares

54

 

	 	 	 	or capital stock is, other than as provided in the Sponsor Purchase Agreement
or the Approved Joint Venture, subject to any existing option, warrant, call,
right, commitment or other agreement of any character to which either the
Borrower, any Subsidiary of the Borrower or the Pledgors is a party
requiring, and there are no securities or interests of the Borrower or any
Subsidiary of the Borrower outstanding which upon conversion or exchange
would require, the issuance, sale or transfer of any additional equity
interests of the Borrower or any Subsidiary of the Borrower or other
securities convertible into, exchangeable for or evidencing the right to
subscribe for or purchase partnership interests, ordinary shares or other
equity securities of the Borrower or any Subsidiary of the Borrower, as the
case may be. There are no shareholder agreements or other written agreements
among the Borrower’s shareholders other than as contemplated by the
Contribution Agreement and the Approved Joint Venture or this Agreement. On
the Closing Date, the Borrower does not have any Subsidiaries.
	 
	 	(r)	 	Foreign Assets Control Regulation. None of the
transactions contemplated herein will violate any of the provisions of the
Foreign Assets Control Regulations of the United States of America (Title 31,
Code of Federal Regulations, Chapter V, Part 500, as amended), any of the
provisions of the Cuban Assets Control Regulations of the United States of
America (Title 31, Code of Federal Regulations, Chapter V, Part 515, as
amended), any of the provisions of the Iranian Assets Control Regulations (Title
31, Code of Federal Regulations, Chapter V, Part 560, as amended) or any
provisions of Executive Order No. 12810, or any of the provisions of the
Regulations of the United States of America Governing Transactions in Foreign
Shipping of Merchandise (Title 31, Code of Federal Regulations, Chapter V, Part
505, as amended).

	 	(s)	 	Offices. The registered office of the Borrower is
located at Appleby Trust (Cayman) Ltd., Clifton House, 75 Fort Street, P.O. Box
1350, Grand Cayman KY1-1108, Cayman Islands, British West Indies.

	 	(t)	 	ERISA. The execution and delivery by the Borrower of
this Agreement and the other Transaction Documents and the consummation by the
Borrower of the transactions hereunder and thereunder will not involve any
prohibited transaction within the meaning of ERISA or Section 4975 of the Code.
No condition exists or event or transaction has occurred in connection with any
Plan maintained or contributed to by any Frontier Security Party or any ERISA
Affiliate thereof resulting from the failure of any thereof to comply with ERISA
insofar as ERISA applies thereto which is reasonably likely to result in the
Borrower or the Pledgors or any ERISA Affiliate thereof incurring any liability,
fine or penalty which individually or in the aggregate could have a Material
Adverse Effect on the Borrower or any other Frontier Security Party.

55

 

	 	(u)	 	Taxes. The Borrower has filed or caused to be filed all
tax returns which are required to have been filed and have paid all Taxes shown
to be due and payable on said returns or on any assessments made against it or
any of its property or assets except such as are being contested in good faith
by appropriate proceedings and for which adequate reserves have been made to the
extent required in accordance with GAAP. The Borrower is not liable for Taxes
of any other Person, whether by contract, by operation of law (including as a
successor) or otherwise.

	 	(v)	 	Payments Free of Taxes. All payments made or to be made
by or on behalf of the Borrower under or pursuant to this Agreement, the other
Loan Documents and the Contribution Agreement shall be made free and clear of,
and without deduction or withholding for or on account of, any Taxes, provided
all Lenders that are not resident for tax purposes in the jurisdiction in which
the Borrower is resident comply with Section 11.7(e).

	 	(w)	 	Environmental Compliance. (A) The Borrower and the
Subsidiaries of the Borrower are in material compliance with all applicable
Government Rules, conventions and agreements, including, without limitation,
applicable laws of the Republic of the Marshall Islands, SOLAS and MARPOL
requirements, relating to pollution prevention or protection of human health or
the environment (including, without limitation, ambient air, surface water,
ground water, navigable waters, waters of the contiguous zone, ocean waters and
international waters), including, without limitation, Government Rules, laws of
the Republic of the Marshall Islands, SOLAS and MARPOL requirements relating to
(1) emissions, discharges, releases or threatened releases of chemicals,
pollutants, contaminants, toxic wastes, toxic substances, hazardous materials,
oil, hazardous substances, petroleum and petroleum products and by-products
(“Materials of Environmental Concern”), and (2) the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (“Environmental Laws”); (B) each of the
Borrower and the Subsidiaries of the Borrower have all Government Approvals
required under applicable Environmental Laws (“Environmental Approvals”); (C)
the Borrower and the Subsidiaries of the Borrower will, when required, be in
compliance with all Environmental Approvals required to operate its business as
then being conducted; and (D) to the best of the Borrower’s knowledge there are
no circumstances that may prevent or interfere with such compliance, in the
future, including any pending or threatened actions to challenge, revoke,
cancel, terminate, limit or modify any Government Approvals; except, in the case
of clauses (A), (B), (C) and (D) above, to the extent any such violation, breach
default or circumstance could not reasonably be expected to have a Material
Adverse Effect.

	 	(x)	 	Environmental Claims. There is no claim, action, cause of
action, investigation or demand by any Person, entity, enterprise or government,
or any political subdivision, intergovernmental body or agency, department or

56

 

	 	 	 	instrumentality thereof, alleging potential liability for, or a requirement
to incur, investigatory costs, cleanup costs, response and/or remedial costs
(whether incurred by a governmental entity or otherwise), natural resources
damages, property damages, personal injuries, attorneys’ fees and expenses,
or fines or penalties, in each case arising out of, based on or resulting
from (A) the presence, or release or threat of release into the environment,
of any Materials of Environmental Concern at any location, whether or not
owned by such Person, or (B) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law or Environmental
Approval (“Environmental Claim”) (other than Environmental Claims that have
been fully and finally adjudicated or otherwise determined and all fines,
penalties and other costs, if any, payable by the Borrower or any Subsidiary
of the Borrower, as the case may be, in respect thereof have been paid in
full or which are fully covered by insurance (including permitted
deductibles)) or, to the best of the Borrower’s knowledge, threatened against
the Borrower or any Subsidiary of the Borrower; except, in the case of
clauses (A) and (B) above, to the extent any such claim, action, cause of
action, investigation or demand could not reasonably be expected to have a
Material Adverse Effect.

	 	(y)	 	Past Environmental Matters. To the best of the
Borrower’s knowledge, there is no past or present actions, activities,
circumstances, conditions, events or incidents, including, without limitation,
the release, emission, discharge or disposal of any Materials of Environmental
Concern, that could form the basis of any Environmental Claim against the
Borrower or any Subsidiary of the Borrower.

	 	(z)	 	Compliance with ISM Code and ISPS Code. Upon the Shell
Commencement Date, the Vessel and its respective Operator will comply with, to
the extent applicable, with the requirements of the ISM Code, and the ISPS Code
including (but not limited to) the maintenance and renewal of valid certificates
pursuant thereto.

	 	(aa)	 	Borrower’s Activities. The Borrower (i) is not engaged in
any other business activity other than the Construction of the Vessel and
activities relating thereto, (ii) has no subsidiaries other than as permitted by
this Agreement, and (iii) has no Indebtedness other than Permitted Indebtedness.

	 	(bb)	 	Sponsor Purchase Agreement. The Sponsor Purchase
Agreement has been entered into by the parties thereto and remains in full force
and effect.

	 	(cc)	 	Liens. There are no Liens of any kind on any Property
owned by the Borrower other than Permitted Liens.

	 	(dd)	 	Solvency. The Borrower is and, immediately after giving
effect to each Advance and the use of proceeds thereof will be, Solvent.

57

 

	 	(ee)	 	Title to Property. Borrower has good and marketable
title to, or valid and subsisting leasehold interest in, its properties and
assets, including all Property forming a part of the Collateral pursuant to this
Agreement or the Security Documents or permitted thereby.

	 	(ff)	 	Survival of Representations. All representations,
covenants and warranties made herein without reference to a specific date and in
any certificate or other document delivered pursuant hereto or in connection
herewith shall survive (A) the making of the Facilities, (B) the issuance of the
Notes to be issued by the Borrower hereunder, and (C) shall be reaffirmed and
have full force and effect as if entered into upon any Drawdown Date or upon the
making of any Advance under any of the Facilities (except for the representation
made in Section 2.1(d)(ii)).

	 	(gg)	 	Absence of Immunity. The Borrower is not entitled to any
immunity on the ground of sovereignty or the like from the jurisdiction of any
court or from any action, suit, set-off or proceeding, or the service of process
in connection therewith, arising under the Transaction Documents.

	 	(hh)	 	Event of Loss. No Event of Loss has occurred and is
continuing that could reasonably be expected to have a Material Adverse Effect.

	 	(ii)	 	No Material Adverse Effect. As of the Closing Date,
there are no facts or circumstances which, individually or in the aggregate,
have resulted in or could reasonably be expected (either individually or in the
aggregate) to have a Material Adverse Effect.

     3. AMOUNT AND TERMS OF THE FACILITIES

            Purposes. Subject to the terms and conditions hereof, the Senior Lenders and Cost
Overrun Lenders, as applicable, shall make the Facilities available to the Borrower or its order in
an aggregate amount of up to Four Hundred Ninety Five Million Dollars ($495,000,000).

	 	(a)	 	Senior Facility. The Senior Facility provided by the
Senior Lenders shall be comprised of two (2) tranches as follows:

	 	(i)	 	A term loan in the aggregate principal amount
of up to Four Hundred and Thirty Five Million Dollars ($435,000,000)
(the “Senior Term Loan”) for the purposes set forth in Section
9.1(x)(i), (ii) and (iv); and

	 	(ii)	 	Subject to an increase pursuant to the Unused
Senior Term Loan Commitment as referenced in the definition of “Senior
Revolver Commitment”, a revolving credit facility in the aggregate
principal amount of up to Ten Million Dollars ($10,000,000) (the
“Senior Revolver”) for the purposes set forth in Section 9.1(x)(iii).

58

 

	 	(b)	 	Cost Overrun Term Loan. Subject to the reduction of the
Cost Overrun Term Loan Commitment after the Keppel Commencement Date as
referenced in the definition of “Cost Overrun Term Loan Commitment”, the Cost
Overrun Term Loan provided by the Cost Overrun Lenders shall be comprised of a
credit facility in the aggregate principal amount of up to Fifty Million Dollars
($50,000,000) (the “Cost Overrun Term Loan”) solely for the purpose of
financing, together with the Cost Overrun Capital Contribution Fundings,
potential cost overruns related to the Construction including, but not limited
to interest accruing on the Cost Overrun Term Loan.

     3.2 Advances.

	 	(a)	 	With respect to the Senior Term Loan, each of the Senior Lenders,
relying upon each of the representations and warranties set out in Section 2.1,
hereby severally and not jointly agrees with the Borrower, subject to and upon
the terms and conditions of this Agreement, to make one or more term loans
available through the Administrative Agent to the Borrower or its order in an
aggregate principal amount not to exceed its Senior Term Loan Commitment ratably
with the other Senior Lenders according to their respective Senior Term Loan
Commitments and, as to all Lenders, in an aggregate principal amount up to but
not exceeding Four Hundred and Thirty Five Million Dollars ($435,000,000),
provided that (i) any such Advance shall be in a minimum amount
of Five Million Dollars ($5,000,000) and (ii) no such Advance shall occur after
the Term Loan Availability Period.

	 	(b)	 	With respect to the Senior Revolver, each of the Senior Lenders,
relying upon each of the representations and warranties set out in Section 2.1,
hereby severally and not jointly agrees with the Borrower, subject to and upon
the terms and conditions of this Agreement, to make loans through the
Administrative Agent to the Borrower or its order in an aggregate principal
amount at any one time outstanding up to but not exceeding such Lender’s Senior
Revolver Commitment ratably with the other Senior Lenders according to their
respective Senior Revolver Commitments; provided that (i) any
such Advance shall be in a minimum amount of Two Million Dollars ($2,000,000);
(ii) no more than five (5) Senior Revolver Advances shall be outstanding at any
time; and (iii) the last Senior Revolver Drawdown Date shall occur prior to the
end of the Senior Revolver Availably Period. During the Senior Revolver
Availability Period, within such limit and subject to the other terms and
conditions of this Agreement, the Borrower may borrow under this Section 3.2(b),
prepay under Section 5.3 and Section 3.2(d) of the Depositary Agreement, and
reborrow under this Section 3.2(b).
	 
	 	(c)	 	With respect to the Cost Overrun Term Loan, each of the Cost
Overrun Lenders, relying upon each of the representations and warranties set out
in

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	 	 	 	Section 2.1, hereby severally and not jointly agrees with the Borrower,
subject to and upon the terms and conditions of this Agreement, to make one or
more Cost Overrun Term Loans available through the Administrative Agent to the
Borrower or its order in an aggregate principal amount not to exceed its Cost
Overrun Term Loan Commitment ratably with the other Cost Overrun Lenders
according to their respective Cost Overrun Term Loan Commitments and, as to all
Lenders, in an aggregate principal amount, subject to the reduction of the Cost
Overrun Term Loan Commitment after the Keppel Commencement Date as referenced in
the definition of “Cost Overrun Term Loan Commitment”, up to but not exceeding
Fifty Million Dollars ($50,000,000), provided that (i) any such
Advance shall be in a minimum amount of One Million Dollars ($1,000,000); and
(ii) no such Advance shall occur after the Term Loan Availability Period.

     3.3 The Notes. Each of the Facilities shall be evidenced by a separate Note payable
to the order of applicable Lender and dated the Closing Date. Each Advance made by the Lenders to
the Borrower may be evidenced by a notation of the same made by the Administrative Agent on the
grid attached to the applicable Note relating to the Facility under which such Advance was made,
which notation, absent manifest error, shall be prima facie evidence of the amount
of the relevant Advance.

     3.4 Borrowing; Drawdown Notice.

          (a) The Borrower shall, not later than 11:00 a.m. London, England time on the date three (3)
Banking Days prior to the relevant Drawdown Date, serve a notice (a “Drawdown Notice”) for an
Advance under any of the Facilities substantially in the form of Exhibit A on the Administrative
Agent. Each such notice shall (i) be in writing addressed to the Administrative Agent, (ii) be
effective on receipt by the Administrative Agent, (iii) specify the amount of the Advance to be
drawn and identify the Facility and, if applicable, the tranche of such Facility to which such
Advance relates, (iv) specify the initial Interest Period for such Advance, (v) specify the Banking
Day on which such Advance is to be drawn and (vi) be irrevocable. The Administrative Agent shall
promptly notify the Lenders of the contents of each such notice. The Borrower shall not be
permitted to request more than two Advances during each calendar month.

          (b) Not later than 11:00 a.m. London, England time on each Drawdown Date, each Lender shall
make available the amount of the Advance to be made by such Lender on such Drawdown Date to the
Administrative Agent, at the Administrative Agent’s Account, in immediately available funds, for
the account of the Borrower. The amount so received by the Administrative Agent shall, subject to
the terms and conditions of this Agreement, be remitted by
the Administrative Agent in such manner as may be agreed by the Administrative Agent and the
Borrower.

     3.5 Changes of Commitments.

          (a) The aggregate amount of the Senior Revolver Commitments shall be automatically reduced to
zero on the last day of the Senior Revolver Availability Period.

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          (b) The aggregate amount of the Senior Term Loan Commitments and Cost Overrun Term Loan
Commitments shall be automatically reduced to zero on the last day of the Term Loan Availability
Period.

          (c) The Borrower shall have the right to terminate or reduce the aggregate unused amount of
the Commitments at any time or from time to time; provided that (i) the Borrower
shall provide no less than fifteen (15) Banking Days’ prior notice to the Administrative Agent
(which shall promptly notify the Lenders thereof) of each such termination or reduction, which
notice shall specify the effective date of such termination or reduction and the amount of any such
reduction (provided that the amount of any such reduction of the Commitments shall
be equal to $5,000,000 or an integral multiple of $1,000,000 in excess thereof or, if less than
such amount remains unutilized, the remaining Commitments) and (ii) the Commitments may not be
reduced below an amount which is available and sufficient, in the reasonable judgment of the
Administrative Agent and the Technical and Environmental Consultant, to achieve the Construction
Completion Date in accordance with the Approved AFE and the Master Construction Schedule; provided
that the Commitments shall terminate upon payment in full of the Facilities. Any notice provided
pursuant to this Section 3.5(c) shall be irrevocable and effective only upon receipt by the
Administrative Agent.

          (d) The Commitments once terminated or reduced may not be reinstated.

     3.6 Several Obligations; Certain Remedies Independent. The failure of any Lender to
make any Advance required to be made by it shall not relieve any other Lender of its obligation to
make its Advances, but neither any Lender nor either Agent shall be responsible for the failure of
any other Lender to make an Advance to be made by such other Lender, and (except as otherwise
provided in Section 7.7) no Lender shall have any obligation to either Agent or any other Lender
for the failure by such Lender to make any Advance required to be made by such Lender. The amounts
payable by the Borrower at any time hereunder to each Lender shall be a separate and independent
debt, and each Lender shall be entitled to protect and enforce its individual rights arising out of
this Agreement and the Notes independently of any other Lender, and it shall not be necessary for
any other Lender or either Agent to consent to, or be joined as an additional party in, any
proceedings to recover the payment of any overdue amounts.

4. CONDITIONS

     4.1 Conditions Precedent to the Closing Date. The occurrence of the Closing Date is subject to (1) the Lenders having completed their
commercial, legal, technical and environmental due diligence review with respect to the Security
Parties and the Project in scope and with results satisfactory to the Lenders and (2) receipt by
the Administrative Agent of each of the agreements and other documents, and the satisfaction of the
conditions precedent, set forth below, each of which shall be (x) in form and substance
satisfactory to the Lenders and (y) if applicable, in full force and effect (unless, in each case,
waived by each Lender):

	 	(a)	 	Borrower Documents. The Administrative Agent shall have
received the following documents in form and substance satisfactory to the
Administrative Agent and its counsel:

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	 	(i)	 	copies, certified as true and complete by an
Authorized Officer of the Borrower, of the resolutions of the board of
directors and shareholders of the Borrower evidencing approval of this
Agreement and the other Transaction Documents to which it is a party
and authorizing an appropriate officer or officers or attorney or
attorneys-in-fact to execute the same on its behalf, together with an
incumbency certificate with respect thereto;

	 	(ii)	 	copies, certified as true and complete by an
Authorized Officer of the Borrower of all documents evidencing any
other necessary action (including by such parties thereto other than
the Borrower as may be required by the Administrative Agent), approvals
or consents with respect to this Agreement and the other Transaction
Documents to which it is a party;

	 	(iii)	 	copies, certified as true and complete by an
Authorized Officer of the Borrower of the constitutional documents of
the Borrower and all amendments thereto;

	 	(iv)	 	a good standing certificate or the equivalent
thereto for the Borrower; and

	 	(v)	 	a certificate of an Authorized Officer of the
Borrower certifying that: (i) each of the representations and
warranties contained in Section 2.1 is true and correct on and as of
the Closing Date, (ii) no Default or Event of Default has occurred and
is continuing as of the Closing Date and no Default or Event of Default
will result from the consummation of the transactions contemplated by
the Transaction Documents, (iii) no Material Adverse Effect has
occurred and is continuing between the execution of the Commitment
Letter and the Closing Date and (iv) the Collateral is subject to the
perfected first priority Lien (subject only to Permitted Liens) and the
security interest established pursuant to the Security Documents.

	 	(b)	 	Other Security Party Corporate Documents. The
Administrative Agent shall have received from Frontier Drillships 2 and Shell EP
Offshore Ventures Limited the following documents in form and substance
satisfactory to the Administrative Agent and its counsel:

	 	(i)	 	copies, certified as true and complete by an
Authorized Officer of each of Frontier Drillships 2 and Shell EP
Offshore Ventures Limited of the resolutions of its respective board of
directors evidencing approval of the Transaction Documents to which it
is a party authorizing an appropriate officer(s) or director(s),
attorney or attorneys-in-fact or other authorized Person to execute the
same

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	 	 	 	on its behalf, together with an incumbency certificate with
respect thereto;

	 	(ii)	 	copies, certified as true and complete by an
Authorized Officer of all documents evidencing any other necessary
action (including by such parties thereto other than Frontier
Drillships 2 and Shell EP Offshore Ventures Limited as may be required
by the Administrative Agent), approvals or consents with respect to the
Transaction Documents to which it is a party;

	 	(iii)	 	copies, certified as true and complete by an
Authorized Officer of constitutional documents and all amendments
thereto;

	 	(iv)	 	a good standing certificate or the equivalent
from the jurisdiction of formation of Frontier Drillships 2 and Shell
EP Offshore Ventures Limited; and

	 	(v)	 	evidence that each of Frontier Drillships 2 and
Shell EP Offshore Ventures Limited, is the legal and beneficial owner
of fifty percent (50%) of ordinary shares of the Borrower, as set forth
in Section 2.1(q).

	 	(c)	 	Loan Documents. The Administrative Agent shall have
received each Loan Document (other than the Hedging Agreements which shall be
provided pursuant to Section 9.1(u), the Mortgage which shall be provided
pursuant to Section 9.1(p), and the Shanghai Consent and Agreement and the
acknowledgments related to the Assignments of Construction Contracts which shall
each be provided pursuant to Section 9.1(dd)) and the Contribution Agreement
duly executed and delivered by the intended parties thereto.

	 	(d)	 	Ancillary Security Documents. The Administrative Agent
shall have received (a) such Uniform Commercial Code Financing Statements as the
Administrative Agent shall require, each in form and substance satisfactory to
the Administrative Agent; (b) from each Pledgor, the share certificates, if
certificated, irrevocable proxies, instruments of transfer and other
documents to be delivered pursuant to the Share Pledge Agreements and (c) the
executed copies of the Assignment Notices delivered by the Borrower pursuant
to the Assignments;.

	 	(e)	 	Project Documents. The Administrative Agent shall have
received a duly signed and executed copy of each Project Document, each
certified as true and complete by an Authorized Officer of the Borrower, and a
certificate of the Technical and Environmental Consultant certifying that they
have reviewed the Approved AFE, Master Construction Schedule, the Keppel
Construction Contract, the Shanghai Construction Contract, the Huisman
Construction Contract, the technical assumption in the Base Case Forecast

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	 	 	 	as per
the Technical and Environmental Consultant’s memorandum dated June 9, 2008 and
purchase order amounts dated May 6, 2008.

	 	(f)	 	Financial Statements; Solvency. The Administrative Agent
shall have received pro forma financial statements for the Borrower.

	 	(g)	 	Legality. The Administrative Agent being satisfied that
no Default or Event of Default has occurred, no Event of Default will arise
following the making of the Initial Advance and that no event or state of
affairs exists which constitutes, in the opinion of the Administrative Agent, a
threat that it will be unlawful for the Borrower or any other Security Party to
make any payment as required under the terms of this Agreement, any other Loan
Document or the Contribution Agreement.

	 	(h)	 	Governmental Approvals. The Administrative Agent shall
have received satisfactory evidence that all material permits and Government
Approvals necessary for the then-current stage of Construction have been
obtained and complied with and continue to be complied with in all material
respects.

	 	(i)	 	Environmental Claims. The Administrative Agent shall be
satisfied that neither the Borrower nor any other Security Party is subject to
any Environmental Claim which could have a material adverse effect on the
business, assets or results of operations of any thereof.

	 	(j)	 	Money Laundering Due Diligence. The Administrative Agent
having received such documentation and other information required by bank
regulatory authorities under applicable “know your customer” and anti-money
laundering rules and regulations, including, without limitation, the USA PATRIOT
Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), shall have
been received by the Agents in form and substance reasonably satisfactory to the
Agents, and such other information as may reasonably be requested by the Agents.

	 	(k)	 	Process Agent. CT Corporation System shall have
delivered to the Administrative Agent a signed copy of its acceptance of
appointment as agent as provided for in Section 15.2 and any other Loan
Document.

	 	(l)	 	Reserved.

	 	(m)	 	Legal Opinions. The Administrative Agent shall have
received opinions, dated the date hereof and, in the case of clause (v) below, a
final draft opinion which shall be executed prior to the Initial Drawdown Date,
each in form and substance reasonably satisfactory to the Administrative Agent
and its counsel, from (i) Gardere Wynne Sewell LLP, special counsel to the
Security Parties (other than Shell EP Wells Equipment Services B.V. and Shell EP
Offshore Ventures Limited), (ii) Appleby, special Cayman Islands

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	 	 	 	counsel to the
Borrower, (iii) Slaughter and May, special counsel to Shell EP Offshore Ventures
Limited, (iv) Milbank, Tweed, Hadley and McCloy LLP, special counsel to the
Administrative Agent, (v) De Brauw Blackstone Westbroek N.V., special counsel to
Shell EP Wells Equipment Services B.V. (vi) Stephenson Harwood, special counsel
to the Borrower, (vii) Stamford Law Corporation, special counsel to the
Administrative Agent and (viii) such other legal counsel as requested by the
Administrative Agent.

	 	(n)	 	Technical and Environmental Consultant. The Technical
and Environmental Consultant shall have been appointed to act on behalf of the
Administrative Agent and the Lenders.

	 	(o)	 	Insurance Consultant’s Report. A report from the
Independent Insurance Consultant confirming, among other things, that the
insurance policies provided for the Project are typical for undertakings similar
to the Project, are in full force and effect, the premiums due thereon have been
paid, that such policies otherwise conform with the requirements specified in
the Loan Documents and including as annexes the certificates of insurance for
such insurance policies (the “Insurance Report”).

	 	(p)	 	Joint Venture. Evidence that each of Shell EP Offshore
Ventures Limited and Frontier Drillships 2 has made a capital contribution in
the amount of Forty Seven Million Dollars ($47,000,000.00) to the Borrower and
purchased 50% of the outstanding capital shares of the Borrower.

	 	(q)	 	Sponsor Purchase Agreement. The Administrative Agent
shall have received a certified copy of the executed Sponsor Purchase Agreement.

	 	(r)	 	Appraisal.

	 	(i)	 	The Administrative Agent shall have received an
appraisal of the Vessel produced by an appraisal company acceptable to
the Administrative Agent which includes (but is not limited to) (i) a
description of the potential market for the Vessel for a period of
time requested by the Administrative Agent, (ii) a description of
historical market valuations and (iii) an assessment of the fair
market value of the Vessel at or near (x) the Closing Date and (y)
the estimated Final Payment Date.

	 	(s)	 	Project Development.

	 	(i)	 	Approved AFE and Master Construction
Schedule. The Administrative Agent shall have received a copy of
the Approved AFE and the Master Construction Schedule, each certified
as true and complete by an Authorized Officer of the Borrower, which

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	 	 	 	shall be reviewed and approved by the Technical and
Environmental Consultant on behalf of the Administrative Agent.
	 
	 	(ii)	 	Base Case Forecast for the Project.
The Administrative Agent shall have received a copy of the Base Case
Forecast for the Project, dated as of the Closing Date certified as
such by an Authorized Officer of the Borrower, in consultation with the
Technical and Environmental Consultant and in form and substance
satisfactory to the Administrative Agent, and all related statements
and reports.
	 
	 	(iii)	 	Report and Bring-Down Certificate of the
Technical and Environmental Consultant. The Administrative Agent
shall have received the Technical and Environmental Consultant’s Report
on the Project favorably reviewing (among other matters reviewed at the
request of the Administrative Agent or the Lenders):

	 	(A)	 	Technical. (1) the
technical and economic feasibility of the Project and permitting
relating to the Project, (2) the reasonableness and consistency
of the Approved AFE, the Master Construction Schedule, the
Project Documents and the assumptions related to the costs and
operating performance of the Project, (3) the reasonableness of
the assumptions underlying the Base Case Forecast for the
Project, (4) the appropriateness and completeness of the
Government Approvals obtained and (5) such other matters as the
Administrative Agent may reasonably request.
	 
	 	(B)	 	Environmental. An
assessment of whether the Project’s environmental, health and
safety review process, based on the Shell HSE Policies,
including the delivery of a HSE Case pursuant to Section 9.1(cc)
hereto, conforms to the Equator Principles.
	 
	 	(C)	 	Generally. In addition,
the Technical and Environmental Consultant shall provide a
bring-down certificate, dated the Closing Date, to the effect
that no act, event or condition has occurred since the date of
each such report that adversely affects the information and
conclusions set forth therein in a material manner and entitling
the Administrative Agent to rely upon the findings of the
Technical and Environmental Consultant as set forth in the
report. The foregoing certificate shall be in form and
substance acceptable to the Administrative Agent.

	 	(t)	 	Accounts Established. Evidence of the establishment of
the Collateral Accounts.

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	 	(u)	 	Shanghai Completion Guarantee. The Borrower shall have
delivered to the Administrative Agent and the Collateral Agent a copy of the
duly signed and executed Shanghai Completion Guarantee.
	 
	 	(v)	 	Capitalization of Shell EP Wells Equipment Services B.V..
Evidence that Shell EP Wells Equipment Services B.V. has an issued share
capital in an amount in excess of $200,000,000.
	 
	 	(w)	 	Insurance.

	 	(i)	 	The Borrower shall have delivered a certificate
of an Authorized Officer setting forth the Construction Period
Insurances and stating that such insurance (A) has been obtained and in
each case is in full force and effect, (B) materially complies with
Section 9.1(j) and (C) that all premiums then due and payable have been
paid in full.
	 
	 	(ii)	 	The Borrower shall have delivered certificates
of insurance evidencing the existence of all insurance required to be
maintained by the Borrower pursuant to Section 9.1(j) and the
designation of the Collateral Agent as the loss payee or additional
named insured, as the case may be, thereunder to the extent required by
Section 9.1(j), such certificates to be in such form and contain such
information as is specified in Section 9.1(j), including one or more
certificates from Acceptable Insurance Brokers.

	 	(x)	 	Intellectual Property. The Borrower shall have delivered
evidence satisfactory to the Administrative Agent that Bully 1 has consented to
the assignment of the Bully Rig Intellectual Property Agreement.
	 
	 	(y)	 	Register of Mortgages and Charges; Register of Members;
Registrar of Companies. The Borrower shall have delivered a certified copy
of its (A) register of mortgages and charges evidencing the charges over the
assets of the Borrower created pursuant to the Security Documents and (B)
register of members evidencing the equitable charge over the shares of the
Borrower created pursuant to the Share Pledge Agreements.

     4.2  Conditions Precedent to the Effective Date. The amendment and restatement shall
become effective on the first date on which all of the following conditions precedent have been
satisfied (the “Effective Date”):

	 	(a)	 	Borrower Documents. The Administrative Agent shall have
received each of the following documents in form and substance satisfactory to
the Administrative Agent and its counsel:

	 	(i)	 	this Agreement, duly executed and delivered by
the Borrower and dated as of the Effective Date;

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	 	(ii)	 	evidence that all actions that the
Administrative Agent may deem necessary or desirable in order to
maintain the Liens created or intended to be created by the Security
Documents as valid perfected first priority and subsisting Liens on the
Collateral has been taken; and
	 
	 	(iii)	 	amendments to each of the Share Pledge
Agreements, duly executed and delivered by each of Frontier Drillships
2 and Shell EP Offshore Ventures Limited and dated as of the Effective
Date.

	 	(b)	 	No Default; Representations and Warranties. On the
Effective Date, the following statements shall be true and the Administrative
Agent shall have received for the account of each Lender a certificate signed by
a duly authorized officer of the Borrower, dated the Effective Date, stating
that:

	 	(i)	 	The representations and warranties set forth in
Section 2.1 are true and correct prior to, and immediately after, the
Effective Date; and
	 
	 	(ii)	 	No Default or Event of Default has occurred and
is continuing.

	 	(c)	 	Legal Opinions. The Administrative Agent shall have
received opinions, dated the date of the Effective Date, each in form and
substance reasonably satisfactory to the Administrative Agent and its counsel,
from (i) Gardere Wynne Sewell LLP, special counsel to the Security Parties
(other than Shell EP Wells Equipment Services B.V. and Shell EP Offshore
Ventures Limited) and (ii) Appleby, special Cayman Islands counsel to the
Borrower.

     4.3  Conditions Precedent to Senior Term Loans and Cost Overrun Term Loans. In addition to
the conditions set forth in Section 4.4, the obligation of the Lenders to make any Advance
available to the Borrower under the Senior Term Loan or the Cost Overrun Term Loan shall be
expressly and separately subject to the following conditions precedent on the relevant Drawdown
Date, in each case in form and substance satisfactory to the Lenders, unless in each case, waived
by the Administrative Agent (acting on the behalf of the Majority Lenders):

	 	(a)	 	Liens. The Administrative Agent shall have received
evidence satisfactory to it and to its legal advisers that, save for Permitted
Liens and the Liens created by the Mortgage and the Security Documents, there
are no Liens, charges or encumbrances of any kind whatsoever on the Vessel, its
earnings or insurances or on any other assets thereof except as permitted hereby
or by any of the Security Documents.
	 
	 	(b)	 	No Change in Laws. The Administrative Agent being
satisfied that no change in any applicable laws, regulations, rules or in the
interpretation thereof shall have occurred which make it unlawful for the
Borrower or any other Security Party to make any payment as required under the
terms of

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	 	 	 	this Agreement, the other Loan Documents, the Contribution Agreement or any
of them.
	 
	 	(c)	 	Required Capital Contribution.

	 	(i)	 	Required Senior Capital Contribution.
In respect of any Advance under the Senior Term Loan the Administrative
Agent shall have received satisfactory evidence that after giving
effect to such Advance the Senior Term Loan Equity Ratio will be equal
to or greater than 17.5 to 82.5, including a Contribution Certificate
from each of Frontier Drillships 2 and Shell EP Offshore Ventures
Limited evidencing any Required Senior Capital Contribution Funding.
	 
	 	(ii)	 	Required Cost Overrun Capital
Contribution.

	 	(A)	 	In respect of the Initial Cost
Overrun Term Loan Advance the Administrative Agent shall have
received satisfactory evidence that the sum of all Cost Overrun
Capital Contribution Fundings made prior to such Advance equals
or exceeds Ten Million Dollars ($10,000,000).
	 
	 	(B)	 	In respect of any Advance under
the Cost Overrun Term Loan, the Administrative Agent shall have
received satisfactory evidence that after giving effect to such
Advance the Cost Overrun Term Loan Equity Ratio will be equal to
or greater than 1.00 to 1.00, including a Contribution
Certificate from each of Frontier Drillships 2 and Shell EP
Offshore Ventures Limited evidencing any Required Cost Overrun
Capital Contribution Funding.

	 	(d)	 	Insurance. With respect to each Senior Term Loan or the
Cost Overrun Term Loan Advance, all insurance for the Project shall be in full
force and effect, as certified by the Insurance Consultant, and certificates of
insurance with respect to the insurance policies required by Section 9.1(j) in
respect of the Project, together with evidence of the payment of all premiums
therefor which are then due and payable, shall have been delivered.
	 
	 	(e)	 	Technical and Environmental Consultant Bring-Down.
Solely with respect to the Initial Advance and to the extent that the proposed
Initial Drawdown Date is later than 30 days after the Closing Date, the
Technical and Environmental Consultant shall provide a bring-down certificate,
dated the Initial Drawdown Date, to the effect that no act, event or condition
has occurred since the date of each such report that adversely affects the
information and conclusions set forth therein and entitling the Administrative
Agent to rely upon the findings of the Technical and

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	 	 	 	Environmental Consultant as set forth in the report. The foregoing
certificate shall be in form and substance acceptable to the Administrative
Agent.
	 
	 	(f)	 	Insurance Consultant Bring-Down. Solely with respect to
the Initial Advance, the Insurance Consultant shall provide a bring-down
certificate, dated the Initial Drawdown Date, to the effect that no act, event
or condition has occurred since the date of each such report that adversely
affects the information and conclusions set forth therein and entitling the
Administrative Agent to rely upon the findings of the Insurance Consultant as
set forth in the report. The foregoing certificate shall be in form and
substance acceptable to the Administrative Agent.
	 
	 	(g)	 	RESERVED.
	 
	 	(h)	 	Funding Limitation. The Administrative Agent and the
Borrower shall have received written confirmation from the Lead Arranger of the
occurrence of the Close of Syndication pursuant to the Lead Arranger’s Side
Letter Agreement; provided that the foregoing condition shall
not apply if (i) the aggregate amount of Advances plus (ii) the amount
in the Drawdown Notice for the proposed Advance does not exceed One Hundred
Million Dollars ($100,000,000.00).
	 
	 	(i)	 	Bridge Loan Notes. Solely for purposes of the Initial
Advance, the Borrower shall repay on the Initial Drawdown Date all outstanding
principal and interest on the Bridge Loan Notes with the proceeds of the Initial
Advance.
	 
	 	(j)	 	Fees.

	 	(i)	 	Solely for purposes of the Initial Advance and
contemporaneously with the Initial Drawdown Date, the Borrower shall
pay in full any fees due and payable under the Upfront Fee and
Coordination Fee Letter to the Administrative Agent from the proceeds
of the Initial Advance; provided that if the Initial Drawdown Date has
not occurred within fifteen (15) days of the Closing Date payment of
such fees shall be due and payable pursuant to Section 9.1(m).
	 
	 	(ii)	 	Solely for purposes of the Initial Advance and
contemporaneously with the Initial Drawdown Date, the Borrower shall
pay in full any fees and expenses due and payable pursuant to Article
14 to the recipient of such amounts from the proceeds of the Initial
Advance; provided that if the Initial Drawdown Date has not occurred
within fifteen (15) days of the Closing Date payment of such fees and
expenses shall be due and payable pursuant to Section 9.1(m).

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	 	(iii)	 	Solely for purposes of the Second Advance and
contemporaneously with the Second Drawdown Date, the Company shall
pay in full any fees due and payable under the Additional Upfront Fee
Letter to the Administrative Agent from the proceeds of the Second
Advance; provided that if the Second Drawdown Date has not occurred
within fifteen (15) days of the date of the Additional Upfront Fee
Letter, (A) the Borrower shall pay the Additional Upfront Fee on or
prior to the fifteenth (15th) day after the date of the Additional
Upfront Fee Letter in accordance with the terms thereof.

	 	(k)	 	Initial Advance Cost of Funds. Solely for purposes of
the Initial Advance, the Borrower shall have delivered an executed copy of a
letter confirming the Substitute Basis applicable to the Initial Advance in form
and substance acceptable to the Administrative Agent and acknowledged and agreed
to by the Administrative Agent.
	 
	 	(l)	 	Intellectual Property. The Borrower shall have delivered
a certified copy of the Gusto Consent.

     4.4 Further Conditions Precedent. The obligation of the Lenders to make any Advance
available to the Borrower shall be expressly and separately subject to the following conditions
precedent on the relevant Drawdown Date, in each case in form and substance satisfactory to the
Lenders, unless in each case, waived by the Administrative Agent (acting on the behalf of the
Majority Lenders):

	 	(a)	 	Drawdown Notice. The Administrative Agent having
received a Drawdown Notice substantially in the form of Exhibit A in accordance
with the terms of Section 3.4, such notice shall include a certification that
all amounts of the Advance requested for the proposed Drawdown Date shall be
utilized to pay for Project Costs (and in the case of the Initial Advance, repay
all outstanding principal and interest on the Bridge Loan Notes) and shall
include a listing of each such Project Cost which the Borrower intends to pay
with such Advance which is individually above the amount of Two Million Dollars
($2,000,000).
	 
	 	(b)	 	Borrower Certificate.

	 	(i)	 	A Borrowing Certificate certifying that:
(1) each of the representations and warranties contained in Section 2.1
(other than Section 2.1(d)(ii)) is true and correct on and as of the
Drawdown Date, (2) no Default or Event of Default has occurred and is
continuing as of the Drawdown Date and (3) no Material Adverse Effect
has occurred and is continuing as of the Drawdown Date, (4) in respect
of any Advance under the Senior Term Loan by the Senior Lenders, after
giving effect to such Advance the Senior
Term Loan Equity Ratio will be equal to or greater than 17.5

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	 	 	 	to 82.5 and (5) in respect of any Advance under the Cost Overrun Term Loan by
the Cost Overrun Lenders, after giving effect to such Advance the
Cost Overrun Term Loan Equity Ratio will be equal to or greater than
1.00 to 1.00.
	 
	 	(ii)	 	In addition, and solely with respect to any
Advance requested by the Borrower under the Senior Term Loan or the
Cost Overrun Term Loan, the certificate shall also include a
certification that: (A) the “Revised Authority Total” set forth in the
latest Construction Report provided pursuant to Section 9.1(w) does not
exceed the Project Cost Threshold Amount, (B) the construction schedule
contained in the latest Construction Report provided pursuant to
Section 9.1(w) is in compliance with the Master Construction Schedule
within a variance of four (4) months, (C) the Vessel is reasonably
expected to achieve the Construction Completion Date by no later than
October 31, 2010 and (D) sufficient funds exist in order to achieve the
Shell Commencement Date.
	 
	 	(iii)	 	In addition, and solely with respect to any
Advance requested by the Borrower under the Senior Revolver, the
certificate shall also include a certification that all amounts of the
Advance requested for the proposed Drawdown Date shall be used to pay
for Operation and Maintenance Expenses related to the operation of the
Vessel including mobilization costs of the Vessel incurred after the
Construction Completion Date.

	 	(c)	 	Technical and Environmental Consultant’s Certificate.
Solely with respect to any Advance requested by the Borrower under the Senior
Term Loan or the Cost Overrun Term Loan and in the event that the Borrower is
unable make any certification required pursuant to Section 4.4(b)(ii), the
Administrative Agent shall require the receipt of a report of the Technical and
Environmental Consultant prior to the Drawdown Date reasonably satisfactory to
the Administrative Agent, as to (a) the progress of Construction of the Project
as provided in the construction schedule contained in the latest Construction
Report provided pursuant to Section 9.1(w), (b) the existence of sufficient
committed funds needed to achieve the Shell Commencement Date and (c) the
Vessel is reasonably expected to achieve the Construction Completion Date by no
later than March 30, 2011. The Technical and Environmental Consultant’s report
shall contain, at a minimum, a certificate of the Technical and Environmental
Consultant substantially in the form of Exhibit M; provided
that, if the Borrower is unable to make any certification required
pursuant to Section 4.4(b)(ii) for more than one consecutive Advance, the
requirements of this Section will be satisfied by a certification from the
Borrower that there have been no changes to the Construction of the Vessel or
the construction schedule
related thereto which would result in the report previously provided by the

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	 	 	 	Technical and Environmental Consultant pursuant to this Section to no longer
be true and correct; provided further, that notwithstanding
the immediately preceding proviso, the Administrative Agent, in its
discretion, may require receipt of a report of the Technical and
Environmental Consultant prior to the Drawdown Date to the extent that the
Administrative Agent receives any information from the Technical and
Environmental Consultant indicating that any statement contained in the most
recent Technical and Environmental Consultant report submitted pursuant to
the first clause of this Section 4.4(c), other than statements related to
past events, is no longer true and correct.
	 
	 	(d)	 	No Change in Laws. The Administrative Agent being
satisfied that no Change in Law exists as of the Drawdown Date that could
reasonably be expected to have a Material Adverse Effect.
	 
	 	(e)	 	Senior Facility Interest Hedging Agreement. After the
occurrence of the Initial Drawdown Date, the Borrower shall have entered into an
interest rate Hedging Agreement pursuant to Section 9.1(u) and such agreement
shall be secured on a pari passu basis with the Facilities.
	 
	 	(f)	 	Currency Hedging Agreement. After the occurrence of the
Initial Drawdown Date, the Borrower shall have entered into a foreign currency
Hedging Agreement pursuant to Section 9.1(u) and such agreement shall be secured
on a pari passu basis with the Facilities.
	 
	 	(g)	 	Cost Overrun Term Loan Hedging Agreement. With respect
only to Advances under the Cost Overrun Term Loan and after the occurrence of
the Initial Cost Overrun Term Loan Advance, the Borrower shall have entered into
an interest rate Hedging Agreement pursuant to Section 9.1(u) and such agreement
shall be secured on a pari passu basis with the Facilities.
	 
	 	(h)	 	Fees. The Administrative Agent shall have received
payment of any fees due and payable under Section 14.
	 
	 	(i)	 	Accounts. Evidence of the establishment of the
Collateral Accounts, including any additional Collateral Accounts established
pursuant to an amendment or modification of the Depositary Agreement.

5. REPAYMENT AND PREPAYMENT

     5.1 Repayment. The Borrower shall repay:

	 	(a)	 	the principal of the Senior Term Loan in twenty-eight
(28) consecutive quarterly installments in accordance with Schedule 5.1(a)
commencing on the Initial Principal Payment Date and on each Principal Payment Date
thereafter. The final installment shall be payable on the Final Payment

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	 	 	 	Date and shall be in the amount referenced in Schedule 5.1(a), together with a
one-time balloon payment of Ninety Million Dollars ($90,000,000) (as may be
reduced by prepayment or otherwise), plus any other amount which remains
outstanding under or in connection with the Senior Term Loan on the Final
Payment Date; provided, however, that if the Senior Term Loan has not been
fully advanced, the balloon payment shall be reduced by such undrawn portion;
	 
	 	(b)	 	on the Final Payment Date, the principal of any Advances under
the Senior Revolver outstanding at that time; and
	 
	 	(c)	 	on each Principal Payment Date, the outstanding principal of
Advances under the Cost Overrun Term Loan to the extent of funds available
pursuant to clause seventh of Section 3.2(d) of the Depositary Agreement,
commencing with the third Principal Payment Date after the Initial Principal
Payment Date and ending (but not including) on the Final Payment Date for the
quarterly period which ends on such Principal Payment Date. All amounts
outstanding under the Cost Overrun Term Loan shall be repaid in full on the
Final Payment Date.

     5.2 Mandatory Prepayments. In addition to mandatory repayments of principal of Advances
as set forth in Section 5.1 above, the Borrower shall make the following mandatory prepayments (to
be effected in each case in the manner specified in Section 5.4 below):

	 	(a)	 	Event of Loss. The Borrower shall prepay the Advances in
an amount equal to such portion of the Net Available Amount determined in
accordance with 9.1(j)(ix) as no longer required for Restoration.
	 
	 	(b)	 	Asset Sales. Pursuant to Section 3.11 of the Depositary
Agreement, the Borrower shall prepay the Advances in an aggregate amount equal
to 100% of the Net Available Amount in excess of $1,000,000 resulting from the
Disposition of any of its or any other Subsidiary’s physical assets (other than
Dispositions permitted under Sections 9.2(h)).
	 
	 	(c)	 	Debt Service Coverage Ratio Prepayment Event. If the
Debt Service Coverage Ratio for the applicable Computation Period falls below
1.25 to 1.0 for:

	 	(i)	 	two (2) consecutive fiscal quarters, then fifty
percent (50%) of amounts on deposit in the Suspension Account will be
applied to prepay the Advances on the Principal Payment Date
immediately following the end of such second fiscal quarter;
	 
	 	(ii)	 	three (3) consecutive fiscal quarters, then
seventy-five percent (75%) of amounts on deposit in the Suspension
Account will be applied to prepay the Advances on the Principal Payment
Date immediately following the end of such third fiscal quarter; and

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	 	(iii)	 	four (4) consecutive quarters and each
consecutive quarter thereafter that the Debt Service Coverage Ratio
remains below 1.25 to 1.0, then one hundred percent (100%) of amounts
on deposit in the Suspension Account will be applied to prepay the
Advances on the Principal Payment Date immediately following the end of
such fourth quarter and any applicable fiscal quarter thereafter.

	 	(d)	 	Project Payments. The Borrower shall prepay the Advances
in an amount equal to 100% of the net proceeds received from Project Parties in
respect of termination payments, liquidated damages, indemnity payments and any
damages payments due under the terms of such Project Documents, other than any
such proceeds to the extent such amounts are applied to pay for Project Costs as
certified in writing and confirmed by the Technical and Environmental
Consultant.
	 
	 	(e)	 	Shell Cancellation Event. Pursuant to Section 3.8 of the
Depositary Agreement, upon the occurrence and during the continuance of a Shell
Cancellation Event, 100% of the amounts on deposit in the Suspension Account
will be applied to prepay the Advances.

     5.3 Voluntary Prepayment.

	 	(a)	 	The Borrower shall be entitled to prepay the Senior Facility in
whole or in part without penalty at the end of any Interest Period in minimum
amounts equal to Five Million Dollars ($5,000,000) or such lesser amount
required to prepay the Senior Revolver in full, and integral multiples of Five
Million Dollars ($5,000,000) or such lesser amount required to prepay the Senior
Revolver in full, upon giving to the Administrative Agent prior written notice
not later than 11:00 a.m. London, England time on the date ten (10) Banking Days
prior to the relevant date of prepayment. Such optional prepayment notice shall
be irrevocable and any amounts received by the Senior Lenders as a prepayment
under this Section 5.3(a) shall be applied toward the payment of principal as
due on each Principal Payment Date in inverse order of maturity. Each notice of
optional prepayment shall specify the Senior Facility, the amount to be prepaid
and the date of prepayment. The Administrative Agent shall promptly notify the
Senior Lenders of the contents of each such notice.
	 
	 	(b)	 	Upon repayment in full of the Senior Facility, the Borrower
shall be entitled to prepay the Cost Overrun Term Loan in whole or in part
without penalty at the end of any Interest Period prior to the Final Maturity
Date. Each notice of optional prepayment shall specify the Cost Overrun Term
Loan, the amount to be prepaid and the date of prepayment. The Administrative
Agent shall promptly notify the Cost Overrun Term Loan Lenders of the contents
of each such notice.

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     5.4 Repayments and Prepayments Generally. Any and all repayments and prepayments
hereunder, whether mandatory or voluntary, are subject to the following:

	 	(a)	 	with respect to the Senior Term Loan and the Cost Overrun Term
Loan, any amounts repaid or prepaid shall not be available for reborrowing; and
	 
	 	(b)	 	shall be applied (i) first, to the installments of the Senior
Term Loan in the inverse order of maturity and the outstanding principal amount
of the Senior Revolver Advances until the Senior Facility is repaid in full and
(ii) second, to the outstanding principal amount of the Cost Overrun Term Loan
until repaid in full; amounts paid in respect of (i) and (ii) above shall be
accompanied, on the date of repayment or prepayment, by all accrued interest up
until the date of such prepayment with respect to the portion of the principal
being prepaid together with all amounts (if any) payable under Section 12.5 as a
result of such prepayment.

6. INTEREST AND RATE

     6.1 Floating Rate. Each Interest Period (other than the initial Interest Period) shall be
a period of three (3) months (unless otherwise provided below) and shall be subject to the
following restrictions: (a) no Event of Default shall have occurred and be continuing, (b) during
the Term Loan Availability Period, no Interest Period may commence before and end after any
Quarterly Date, and, after the Term Loan Availability Period, no Interest Period may commence
before and end after any Principal Payment Date unless, after giving effect to such Advance, the
aggregate principal amount of the Advances having Interest Periods that end after such Principal
Payment Date shall be equal to or less than the aggregate principal amount of the Advances
scheduled to be outstanding after giving effect to the payments of principal required to be made on
such Principal Payment Date, as applicable; provided that no Interest Period should commence before
and end after the Final Payment Date, (c) subject to clause (b) above, the initial Interest Period
in respect of each Advance made after the initial Advance shall end on the last day of the then
current Interest Period for the initial Advance and (d) any Interest Period that would otherwise
end on a day that is not a Banking Day shall end on the next succeeding Banking Day unless such
succeeding Banking Day would fall in the next month, in which case such Interest Period shall end
on the immediately preceding Banking Day. The Borrower shall pay any and all administrative costs
incurred by the Lenders and any costs incurred pursuant to Section 12.5 by
reason of the Borrower’s selection of Interest Periods and as a consequence of the Interest
Period consolidation referenced in clause (c) of this Section 6.1 (the Administrative Agent’s
certification as to the amount such costs shall be conclusive absent manifest error).

     6.2 Applicable Rate; Default Rate. The Borrower agrees to pay to the Administrative Agent
for the account of each Lender interest on the unpaid principal amount of each Advance of such
Lender for the period from the relevant Drawdown Date until the date such Advance shall be paid in
full at a rate per annum equal to the Applicable Margin plus LIBOR (the “Applicable Rate”) for each
Interest Period in respect of such Advance. Notwithstanding the foregoing, any payment hereunder
not paid when due, whether on a Principal Payment Date or by acceleration, shall bear interest
thereafter at a rate per annum (the “Default Rate”) equal to either (i) the

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Applicable Margin plus two percent (2%) over the cost to the Lenders of funding such overdue amount, or (ii) two percent
(2%) over the Applicable Rate, whichever is greater.

     6.3 Interest Payments. During the Term Loan Availability Period interest will be
capitalized and added to the principal amount of the Senior Term Loan or Cost Overrun Term Loan, as
applicable, on the Interest Payment Date. Following the Term Loan Availability Period, the
Borrower shall pay interest on all Advances on each Interest Payment Date; provided
that interest payable at the Default Rate shall be payable from time to time on demand.

     6.4 Banking Days. If interest would, under this Article 6, be payable on a day which is
not a Banking Day, it shall then be payable on the next following Banking Day, unless such next
following Banking Day falls in the following month in which case it shall be payable on the Banking
Day immediately preceding the day on which such interest would otherwise be payable.

     6.5 360 Day Year. All interest on the Advances and fees hereunder shall accrue from day
to day and be calculated on the actual number of days elapsed occurring in the period for which
payable and on the basis of a 360 day year.

     6.6 Interest Determinations. Promptly after the determination of any interest rate
provided for herein or any change therein, the Administrative Agent shall give notice thereof to
the Lenders and to the Borrower. Each determination by the Administrative Agent of an interest
rate hereunder shall be conclusive and binding for all purposes, absent manifest error.

     6.7 Consolidation of Advances.

	 	(a)	 	If two or more Interest Periods:

	 	(i)	 	relates to Advances made under a Facility; and
	 
	 	(ii)	 	end on the same date;

	 	those Advances will be consolidated into, and treated as, a single Advance made on
the last day of the Interest Period.
	 
	 	(b)	 	Any Advance made during an Interest Period for a previous Advance
(an “Existing Interest Period”) will, subject to paragraph (c) and (d) below,
have an initial Interest Period ending on the last day of such Existing Interest
Period.
	 
	 	(c)	 	The Administrative Agent shall be entitled to shorten any
interest period for any Advance to ensure that the aggregate principal amount of
Advances with an Interest Period ending on a Principal Payment Date is not less
than the amount of principal due to be repaid on that Principal Payment Date.
	 
	 	(d)	 	If paragraph (b) above would result in an Advance having an
Interest Period of less than one month, then the initial Interest Period for
such Advance will be such period as the Administrative Agent and the Borrower
may agree.

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7. PAYMENTS

     7.1 Borrower Payments Generally. Each payment of principal, interest and other amounts to
be made by the Borrower under this Agreement and the other Loan Documents shall be made in Dollars,
in immediately available funds, without deduction, set-off or counterclaim, to the Administrative
Agent’s Account not later than 11:00 a.m. London, England time on the date on which such payment
shall become due (each such payment made after such time on such due date to be deemed to have been
made on the next succeeding Banking Day).

     7.2 Advances. The Borrower shall, subject to Section 7.6 and the order of priority set
forth in Section 3.2(d) of the Depositary Agreement, at the time of making each payment under this
Agreement and the Notes for account of any Lender, specify to the Administrative Agent (which shall
notify the intended recipient(s) thereof) the amounts payable by the Borrower hereunder to which
such payment is to be applied (and in the event that the Borrower fails to so specify, or if an
Event of Default has occurred and is continuing, the Administrative Agent shall distribute such
payment to the Lenders for application in accordance with an order of priority consistent with
Section 3.2(d) of the Depositary Agreement).

     7.3 Payments by Administrative Agent to Lenders. Each payment received by the Administrative Agent under this Agreement for account of any
Lender shall be paid by the Administrative Agent promptly to such Lender, in the same funds as
received, for account of such Lender’s Applicable Lending Office.

     7.4 Set-Off; Sharing of Payments.

          (a) Set-Off Generally. Upon the occurrence and during the continuance of any Event of
Default, each Lender and each of its Affiliates is hereby authorized at any time and from time to
time, to the fullest extent permitted by applicable law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final, in whatever currency) at any time held
and other indebtedness at any time owing by such Lender or such Affiliate to or for the credit or
the account of the Borrower against any and all of the obligations of the Borrower now or hereafter
existing under this Agreement or any other Loan Document to such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement or any other Loan Document and
although such obligations of the Borrower may be contingent or unmatured or are owed to a branch or
office of such Lender different from the branch or office holding such deposit or obligated on such
indebtedness. Each Lender agrees promptly to notify the Borrower after any such set-off and
application, provided that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of each Lender and its Affiliates under this
Section 7.4(a) are in addition to other rights and remedies (including other rights of set-off)
that such Lender and its Affiliates may have.

          (b) Sharing Among Lenders. Each Lender agrees that if it shall, through the exercise
of a right of banker’s lien, setoff or counterclaim or pursuant to a secured claim under
Section 506 of the Federal Bankruptcy Code or other security or interest arising from, or in lieu
of, such secured claim, exercised or received by such Lender under any applicable bankruptcy,
insolvency or other similar law or otherwise, or by any other means, obtain payment (voluntary or
involuntary) in respect of any Advance or Advances and accrued interest thereon or other such

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obligations greater than its pro rata share thereof as provided herein, it shall (i) notify the
Administrative Agent of such fact and (ii) be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the purchase price for, a
participation in the funded Commitment of such other Lender so that the aggregate funded Commitment
of each Lender shall be in the same proportion to the aggregate funded Commitments then outstanding
as its funded Commitment prior to such exercise of banker’s lien, setoff or counterclaim or other
event was to the principal amount of all funded Commitments outstanding prior to such exercise of
banker’s lien, setoff or counterclaim or other event; provided, however, that, if any such purchase
or purchases or adjustments shall be made pursuant to this Section 7.4(b) and the payment giving
rise thereto shall thereafter be recovered, such purchase or purchases or adjustments shall be
rescinded to the extent of such recovery and the purchase price or prices or adjustment restored
without interest. The Borrower expressly consents to the foregoing arrangement and agrees, to the
extent it may effectively do so under applicable law, that any Lender holding a participation in a
funded Commitment deemed to have been so purchased may exercise any and all rights of banker’s
lien, setoff or counterclaim with respect to any and all moneys owing to such Lender by reason
thereof as fully as if such Lender had made an Advance in the amount of such participation. The
provisions of this Section 7.4(b)
shall not be construed to apply to (i) any payment made by the Borrower pursuant to and in
accordance with the express terms of this Agreement or (ii) any payment obtained by a Lender as
consideration for the assignment of or sale of a participation in any of its Advances to an
assignee or Participant, other than to the Borrower or any Affiliate thereof (as to which the
provisions of this subsection shall apply).

          (c) Exercise of Rights Not Required. Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to exercise, and retain
the benefits of exercising, any such right with respect to any other indebtedness or obligation of
the Borrower.

     7.5 Application of Insufficient Payments. If at any time insufficient funds are received
by and available to the Administrative Agent to pay fully all amounts of principal, interest, fees
and other amounts then due and payable hereunder, such funds shall be applied in accordance with an
order of priority consistent with Section 3.2(d) of the Depositary Agreement and then, after
application thereof, to pay other amounts then due and payable hereunder, ratably among the parties
entitled thereto in accordance with the amounts of such other amounts then due and payable to such
parties.

     7.6 Pro Rata Treatment. Except to the extent otherwise expressly provided herein or any
other Loan Document, (a) the Advances under each of the Facilities shall be made, and any reduction
of Commitments under each of the Facilities shall be made, pro rata according to
the respective amounts of the Commitments; (b) each payment or prepayment of principal of the (i)
Advances under the Senior Term Loan and Senior Revolver shall be made for account of the Senior
Lenders pro rata in accordance with the respective unpaid principal amounts of the
Advances under the Senior Term Loan and Senior Revolver, as the case may be, held by them and (ii)
Advances under the Cost Overrun Term Loan shall be made for account of the Cost Overrun Lenders
pro rata in accordance with the respective unpaid principal amounts of the Advances
under the Cost Overrun Term Loan held by them; (c) each payment of interest on the Advances under
the Senior Facility and fees applicable to the Senior Facility hereunder shall be

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made for account of the Senior Lenders pro rata in accordance with the respective amounts of
interest on the Advances under the Senior Facility or fees hereunder, as applicable, then due and
payable to the Senior Lenders; and (d) each payment of interest on the Advances under the Cost
Overrun Term Loan and fees applicable to the Cost Overrun Term Loan hereunder shall be made for
account of the Cost Overrun Lenders pro rata in accordance with the respective
amounts of interest on the Advances under the Cost Overrun Term Loan or fees hereunder, as
applicable, then due and payable to the Cost Overrun Lenders.

     7.7 Non-Receipt of Funds by the Administrative Agent.

          (a) Funding By Lenders. Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed Drawdown Date that such Lender will not make available to the
Administrative Agent such Lender’s share of the applicable Advance, the
Administrative Agent may assume that such Lender has made such share available at such time in
accordance with Section 3.4(b) and may, in reliance upon such assumption, make available to the
Borrower a corresponding amount. In such event, if a Lender has not in fact made its share of such
Advance available to the Administrative Agent, then the applicable Lender and the Borrower
severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount
with interest thereon, for each day from the date such amount is made available to the Borrower
until the date of payment to the Administrative Agent, at (i) in the case of a payment to be made
by such Lender, a rate determined by the Administrative Agent in accordance with banking industry
rules on interbank compensation and (ii) in the case of a payment to be made by the Borrower, a
rate per annum equal to the sum of (x) the rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation plus (y) the Applicable
Margin per annum. If the Borrower and such Lender shall pay such interest to the Administrative
Agent for the same or an overlapping period, the Administrative Agent shall promptly remit to the
Borrower the amount of such interest paid by the Borrower for such period. If such Lender pays its
share of the relevant Advance to the Administrative Agent, then the amount so paid shall constitute
such Lender’s Advance included in such Advance. Any payment by the Borrower shall be without
prejudice to any claim the Borrower may have against a Lender that shall have failed to make such
payment to the Administrative Agent.

          (b) Payments by Borrower. Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the Administrative Agent for the
account of the Lender hereunder that the Borrower will not make such payment, the Administrative
Agent may assume that the Borrower has made such payment on such date in accordance herewith and
may, in reliance upon such assumption, distribute to the Lenders the amount due. In such event, if
the Borrower has not in fact made such payment, then each of the Lenders severally agrees to repay
to the Administrative Agent forthwith on demand the amount so distributed to such Lender with
interest thereon, for each day from the date such amount is distributed to it until the date of
payment to the Administrative Agent, a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation.

     7.8 Non-Banking Days. Subject to Section 6.4, if the due date of any payment under this
Agreement would otherwise fall on a day that is not a Banking Day, such date shall be

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extended to the next succeeding Banking Day and, in the case of any payment accruing interest, interest thereon
shall be payable for the period of such extension.

8. EVENTS OF DEFAULT

     8.1 Events of Default. In the event that one or more of the following events shall occur
and be continuing:

	 	(a)	 	Facilities Payment Default. Any principal of or interest
payable in connection with the Facilities is not paid on the due date thereof or
any other amount becoming payable to the Lenders under this Agreement or any
other Loan Document (other than the fees payable in connection with the Fee
Letters) or any of them is not paid within five (5) Banking Days of the due date
thereof; or
	 
	 	(b)	 	Fee Letter Payment Default. Any fee payable in
connection with the Fee Letters is not paid on the due date thereof or any other
amount becoming payable to the Lenders under the Fee Letters; or
	 
	 	(c)	 	Breach of Representation. (i) Any representation or
warranty made or deemed made by the Borrower or any other Security Party in this
Agreement, any other Loan Document or the Contribution Agreement or (ii) any
representation, warranty or statement in any certificate, financial statement or
other document furnished to the Administrative Agent or any Lender by or on
behalf any Security Party or (iii) any material representation or warranty made
or deemed made by any Security Party in connection with any Transaction Document
or the Contribution Agreement or (iv) any representation, warranty or statement
in any certificate, financial statement or other document furnished to the
Administrative Agent or any Lender by or on behalf of any Security Party shall
prove to have been false or misleading in any material respect as of the time
made or deemed made, confirmed or furnished; provided that such
misrepresentation or such false statement shall not constitute an Event of
Default if such condition or circumstance is (A) subject to cure, as determined
by the Majority Lenders in their reasonable judgment and (B) remedied within
thirty (30) days after written notice of such default from the Administrative
Agent;
	 
	 	(d)	 	Impossibility; Illegality; Unenforceability. It becomes
impossible or unlawful for the Borrower or any other Security Party to fulfill
any of the covenants and obligations contained in this Agreement, any other Loan
Document or the Contribution Agreement or for the Administrative Agent or the
Lenders to exercise any of the material rights vested in them under this
Agreement, any other Loan Document or the Contribution Agreement or this
Agreement, any other Loan Document or the Contribution Agreement becomes
unenforceable; or

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	 	(e)	 	Covenant Default.

	 	(i)	 	The Borrower shall fail to observe or perform
any covenant or agreement contained in Sections 9.1(a), 9.1(c), 9.1(j),
9.1(n), 9.1(t), 9.2(a), 9.2(b), 9.2(e), 9.2(g) and 9.2(h) or shall
default in the performance of any of its obligations contained in any
Loan Document or the Contribution Agreement and shall fail to cure such
default within the grace period specified therein, if any; or
	 
	 	(ii)	 	The Borrower shall default in the performance
of any of its covenants or obligations to be performed or observed by
it under this Agreement or any other Loan Document (not otherwise
addressed in this Section 8.1) and such default shall continue
unremedied for a period of thirty (30) days after written notice of
such default (specifying such default and requiring remedy thereof)
from the Administrative Agent; provided that such cure
period shall be extended to a total of sixty (60) days so long as no
Material Adverse Effect could reasonably be expected to occur as a
result of such default; or
	 
	 	(iii)	 	Any Security Party (other than the Borrower)
shall fail to observe or perform any covenant or agreement contained in
any Transaction Document to which it is a party and shall fail to cure
such default within the grace period specified therein, if any; or

	 	(f)	 	Cancellation or Termination of a Project Document.

	 	(i)	 	Any of the Construction Contracts, the
Contribution Agreement, the Management Agreement or the Drilling
Contract has been repudiated, cancelled, materially changed or it has
been terminated for any reason and a substitute contract acceptable to
the Administrative Agent and the Majority Lenders is not entered into
within thirty (30) days; or
	 
	 	(ii)	 	Any Project Document (other than the
Construction Contracts, the Management Agreement or the Drilling
Contract) has been repudiated, cancelled, materially changed or has
been terminated for any reason and such repudiation, cancellation,
material change or termination could reasonably be expected to have a
Material Adverse Effect and a substitute contract acceptable to the
Administrative Agent and the Majority Lenders is not entered into
within thirty (30) days; or

	 	(g)	 	Other Debts. The Borrower fails to make payment at
stated maturity, upon acceleration or otherwise of any principal of, premium or
interest on any indebtedness or obligation for borrowed money or for the
deferred purchase price of property which indebtedness or obligation in the

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	 	 	 	aggregate exceeds Five Million Dollars ($5,000,000) and any such failure
shall continue for more than the period of grace, if any, specified in the
terms of such indebtedness or obligation, or otherwise agreed, and shall not
have been remedied or waived pursuant thereto; or any mortgage or other
security interest or charge present or future and created or assumed by the
Borrower shall become enforceable and the holder thereof shall take steps to
enforce the same; or
	 
	 	(h)	 	Change of Control. Other than as provided in the
Approved Joint Venture, the current shareholders of the Borrower cease to retain
100% control of the Borrower, as set forth in Section 2.1(q); or
	 
	 	(i)	 	The Vessel. The Borrower ceases to retain its ownership
of the Vessel (other than in the case of a sale or Total Loss of the Vessel, the
proceeds from which are applied in accordance with Section 3.10 of the
Depositary Agreement) or, without the prior written consent of the
Administrative Agent, the registration or flag of the Vessel is changed;
provided, however, the Borrower may transfer ownership of the Vessel to a
Subsidiary of the Borrower or Permitted Affiliate in connection with a Permitted
Transaction; or
	 
	 	(j)	 	Bankruptcy; Reorganization.

	 	(i)	 	The (A) Borrower or any of its Subsidiaries,
(B) prior to the expiration of any Builder’s warranty obligations under
the Construction Contracts, any Builder or (C) any other Project Party
shall (1) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee, examiner or liquidator
of itself or of all or a substantial part of its Property, (2) make a
general assignment for the benefit of its creditors, (3) file a
petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, suspension of payments,
liquidation, dissolution, arrangement or winding-up, or composition or
readjustment of debts or (4) take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the
acts described in this Section 8.1(j); or
	 
	 	(ii)	 	A proceeding or case shall be commenced against
the (A) Borrower or any of its Subsidiaries, (B) prior to the
expiration of any Builder’s warranty obligations under the Construction
Contracts, any Builder or (C) any other Project Party without its
application or consent, seeking (1) its reorganization, liquidation,
dissolution, arrangement or winding up, (2) the appointment of a
receiver, custodian, trustee, examiner, liquidator or the like of it or
of all or any substantial part of its Property or (3) similar relief in
respect of it under any law relating to bankruptcy, insolvency,
reorganization, winding up, or composition or adjustment or debts,

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	 	 	 	and such proceeding or case shall continue undismissed, or an order,
judgment or decree approving or ordering any of the foregoing shall
be entered and continue unstayed and in effect, for a period of 60 or
more days, or a declaration of bankruptcy or suspension of payments
shall be entered against the Borrower under the bankruptcy laws of
the Cayman Islands or any Subsidiary of the Borrower under the
jurisdiction of its formation as now or hereafter in effect; or

	 	(k)	 	Inability to Pay Debts. The Borrower or any Subsidiary
of the Borrower is unable to pay or admits its inability to pay its debts as
they become due or if a moratorium shall be declared in respect of any
indebtedness of the Borrower or any Subsidiary of the Borrower; or
	 
	 	(l)	 	Total Loss of the Vessel. The Vessel shall become a
Total Loss unless such loss is fully covered by insurance maintained pursuant to
Section 9.1(j) and as required pursuant to the Mortgage assigned to the
Collateral Agent and the related insurer has not disputed liability with respect
to such Total Loss; or
	 
	 	(m)	 	Material Adverse Effect. A Material Adverse Effect
shall, in the reasonable opinion of the Majority Lenders, have occurred; or
	 
	 	(n)	 	Cancellation or Termination of Sponsor Purchase
Agreement. The Sponsor Purchase Agreement has been repudiated, cancelled,
materially changed (and such material change could reasonably be expected to
have a Material Adverse Effect) or it has been terminated for any reason without
the prior written consent of the Majority Lenders; or
	 
	 	(o)	 	Enforceability.

	 	(i)	 	(A) This Agreement, any other Loan Document or
the Contribution Agreement ceases to be enforceable, (B) any Loan
Document or the Contribution Agreement, except for any Security
Document, shall otherwise cease to be valid and binding or in full
force and effect or shall be Impaired (in each case, except in
connection with its expiration in accordance with its terms in the
ordinary course (and not related to any default hereunder)) or (C) any
party to a Loan Document or the Contribution Agreement shall have
expressly repudiated its obligations thereunder; or
	 
	 	(ii)	 	(A) Any Construction Contract, the Management
Agreement or the Drilling Contract ceases to be enforceable, otherwise
ceases to be valid and binding or in full force and effect or shall be
Impaired (in each case, except in connection with its expiration in
accordance with its terms in the ordinary course (and not related to
any default thereunder)) or (B) any Builder or Shell EP Wells Equipment

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	 	 	 	Services B.V. shall be in material default (after any applicable
notice, grace period or both) or shall have expressly repudiated its
obligations thereunder, as applicable; or
	 
	 	(iii)	 	(A) Any Project Document (other than any
Construction Contract, Management Agreement or the Drilling Contract)
ceases to be enforceable, otherwise ceases to be valid and binding or
in full force and effect or shall be Impaired (in each case, except in
connection with its expiration in accordance with its terms in the
ordinary course (and not related to any default thereunder)) or (B) any
Project Party (other than any Builder, the Manager or Shell EP Wells
Equipment Services B.V.) shall be in material default (after any
applicable notice, grace period or both) or shall have expressly
repudiated its obligations thereunder, as applicable; provided
that (A) and (B) of this Section 8.1(o)(iii) shall only be an
Event of Default if such event could reasonably be expected to have a
Material Adverse Effect;

	 	(p)	 	Liens. (i) The Liens in favor of the Secured Parties
under the Security Documents shall at any time cease to constitute valid and
perfected Liens granting a first priority security interest in the Collateral
(subject to Permitted Liens) to the Secured Parties, (ii) except for expiration
in accordance with its terms, any of the Security Documents shall at any time
for any reason cease to be valid and binding or in full force and effect or
(iii) the enforceability of any Loan Document or the Contribution Agreement
shall be contested by any Security Party or Affiliate of any Security Party, and
in the case of clause (i) or (ii) (unless the event set forth in clause (ii) is
the result of a declaration as set forth in clause (s) below), such circumstance
continues unremedied for more than ten (10) Banking Days after notice of such
circumstance from the Administrative Agent; or
	 
	 	(q)	 	Security Documents. Except as otherwise addressed in
this Section 8.1, any the Borrower or any of its Subsidiaries under a Security
Document (including each counterparty to a Consent and Agreement) shall default
in the performance of any of its obligations (other than a payment obligation,
which is governed by other provisions of this Section 8.1) under such Security
Document and such default shall continue unremedied for more than 30 days after
the occurrence thereof; provided that if such default
constitutes a contest or repudiation of the enforceability of such Security
Document against the Borrower or any of its Subsidiaries, such event shall be
governed by either paragraph (r) or (p) of this Section 8.1; or
	 
	 	(r)	 	Government Approval. Any Government Approval shall be
Impaired and such Impairment continues to exist for more than 30 days or such
Government Approval is not replaced within 30 days; or
	 
	 	(s)	 	Event of Abandonment. An Event of Abandonment shall have
occurred; or

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	 	(t)	 	Event of Taking. An Event of Taking shall have occurred
with respect to (i) any Equity Interest in any Security Party or (ii) all or
substantially all of the Project, or otherwise could reasonably be expected to
have a Material Adverse Effect; or
	 
	 	(u)	 	Environmental Claim. An Environmental Claim shall have
been brought against an the Borrower or any Subsidiary of the Borrower, which,
individually or, in the case of multiple similar fact claims, in the aggregate,
could reasonably be expected to have a Material Adverse Effect;
	 
	 	(v)	 	Judgment. A judgment is or judgments are rendered
against the Borrower or any of its Subsidiaries in an aggregate amount of
$10,000,000 or more (or the equivalent in other currencies) and shall remain
unsatisfied, undischarged and in effect for a period of 30 or more days without
a stay of execution, unless the same is adequately bonded or is being contested
by appropriate proceedings properly instituted and diligently conducted and, in
either case, such process is not being executed against assets thereof; or

THEREUPON: in any such event, (1) the Administrative Agent may, and shall if so directed by the
Majority Lenders, by notice to the Borrower, declare the Commitments to be terminated forthwith,
whereupon the Commitments shall forthwith terminate, and/or (2) the Administrative Agent shall,
upon request of the Majority Lenders, by notice to the Borrower declare the principal of and the
accrued interest on the Advances and the Notes and all other amounts whatsoever payable by the
Borrower hereunder (including any amounts payable under Section 12.5) to be forthwith due and
payable, whereupon such amounts shall be immediately due and payable without presentment, demand,
protest or other formalities of any kind, all of which are hereby expressly waived by the Borrower;
provided that, in the case of an Event of Default of the kinds referred to in
clauses (j)(i) or (j)(ii) with respect to the Borrower, the Commitments shall automatically
terminate and the Advances and such other amounts shall automatically become due and payable,
without any further action by any party.

9. COVENANTS

     9.1 Affirmative Covenants. The Borrower hereby covenants and undertakes with the Lenders
that, from the date hereof and so long as any Secured Obligations remain outstanding the Borrower
will, and will cause it Subsidiaries, if any, to:

	 	(a)	 	Corporate Existence. Maintain, and procure that each of
its Subsidiaries preserve and maintain, (A) its corporate existence and remain
duly organized and validly existing and in good standing under the laws of the
jurisdiction of its incorporation or formation, as the case may be, and (B) all
of its material rights, privileges, licenses and franchises, including all
permits, trademarks, patents, agreements with respect to the usage of technology
and other intellectual property necessary for its business, except, solely in
the case of this clause (B), to the extent the
failure to preserve and maintain the same could not reasonably be expected to
have a Material Adverse Effect.

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	 	(b)	 	Events of Default. Promptly, but no later than five (5)
days after obtaining knowledge thereof, notify the Administrative Agent of any
occurrence of (i) which constitutes a Default or an Event of Default or
(ii) which, in its reasonable opinion, might adversely affect its ability, or
the ability of any other party thereto, to perform its obligations under this
Agreement, any other Loan Document or the Contribution Agreement.
	 
	 	(c)	 	Further Acts. Without prejudice to Section 2.1 and this
Section 9.1, from time to time give, execute, deliver, file and record any
financing statement, notice, instrument, document, agreement or other papers
that may be necessary or desirable or that may be reasonably requested by
Administrative Agent or the Majority Lenders for the continued due performance
of all its and each other Security Party’s respective obligations under this
Agreement, the other Loan Documents and the Contribution Agreement, including
but not limited to obtaining documentation as to the validity of the ownership
structure of the Borrower and the tax implications, if any, relating thereto.
	 
	 	(d)	 	Financial Information. Deliver to the Administrative
Agent:

	 	(i)	 	as soon as available but not later than one
hundred twenty (120) days after the end of each fiscal year of the
Borrower, complete copies of the audited consolidated financial reports
thereof, all in reasonable detail, which shall include at least a
balance sheet as of the end of such year, an income statement and a
statement of sources and uses of funds for such year all reported on in
conformity with GAAP, with the opinion of an Acceptable Accounting
Firm;
	 
	 	(ii)	 	as soon as available, but not later than
forty-five (45) days after the end of each quarter of each fiscal year,
commencing at the end of the first full fiscal quarter after the
Closing Date, of the Borrower, quarterly interim consolidated balance
sheets and profit and loss statements thereof, certified to be true,
complete and in conformity with GAAP by the chief financial officer of
Frontier Drilling USA, Inc. on behalf of the Borrower;
	 
	 	(iii)	 	concurrently with each delivery of financial
statements pursuant to subparagraphs (i) and (ii) of this
sub-section (d), a certificate substantially in the form of Exhibit K
of the chief financial officer of Frontier Drilling USA, Inc. on behalf
of the Borrower stating (A) that he is generally familiar with the
business and operations of the Borrower and the assets of the Borrower,
(B) he has reviewed the provisions of this Agreement, each other Loan
Document and the Contribution Agreement, in connection with the performance or
observance by the Borrower and Frontier Drillships 2, as the case may
be, thereof, (C) he has reviewed such other

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	 	 	 	documentation and information and has made such investigations and inquiries as deemed
necessary and prudent, (D) that to his knowledge no Default or Event
of Default has occurred and is continuing or a Default or Event of
Default has occurred and is continuing setting forth the details
thereof and the action which the Borrower is taking or proposes to
take with respect thereto and (E) if such certificate is delivered
after the first day of the first full fiscal quarter following the
Shell Commencement Date, the Debt Service Coverage Ratio for the most
recent fiscal quarter and including reasonable detail of the
calculations in making such determination; and
	 
	 	(iv)	 	such other statement or statements, lists of
property and accounts, budgets, reports and financial information with
respect to operation and management of the Vessel and information
regarding possible claims or disputes with respect to the Vessel,
certified to be true and complete by the chief financial officer of
Frontier Drilling, USA Inc. on behalf of the Borrower, as the
Administrative Agent may from time to time reasonably request.

	 	(e)	 	Governmental Approvals.

	 	(i)	 	Comply in all material respects with all
applicable Government Rules and shall from time to time obtain and
renew, and shall comply in all material respects with, applicable
Government Approvals as is or in the future shall be necessary for the
operation of the Vessel (including prior to mobilizing the Vessel to
another work location pursuant to the Drilling Contract) under
applicable Government Rules (except any such Government Rules and
Government Approvals the non-compliance with which could not reasonably
be expected (either individually or in the aggregate) to have a
Material Adverse Effect).
	 
	 	(ii)	 	Issue such notices of transfer and shall take
such other actions as the Administrative Agent, acting for the benefit
of itself and the Lenders, reasonably requests, without undue expense
or delay, to secure for the Administrative Agent and the Lenders the
benefit of each Government Approval related to the Project upon the
exercise of remedies under the Security Documents.

	 	(f)	 	Environmental Matters. Promptly upon the occurrence of
any of the following conditions, provide to the Administrative Agent a
certificate of the Authorized Officer of the Borrower, specifying in detail the
nature of such condition and its proposed response or the response of its
Environmental Affiliates to any written communication whatsoever that alleges
that such Person is not in compliance with the HSE Case, any applicable
Environmental Law or Environmental Approval, if such

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	 	 	 	noncompliance could reasonably be expected (either individually or in the aggregate) to have a
Material Adverse Effect, knowledge by it, or any of its Environmental
Affiliates that there exists any Environmental Claim or action to challenge,
revoke, cancel, terminate, limit or modify any Environmental Approval pending
or threatened against any such Person, which could reasonably be expected
(either individually or in the aggregate) to have a Material Adverse Effect,
or knowledge by it of any release, emission, discharge or disposal of any
material that could form the basis of any Environmental Claim against it or
any of its Environmental Affiliates if such Environmental Claim could
reasonably be expected (either individually or in the aggregate) to have a
Material Adverse Effect. Upon the written request of the Agent, it will
submit to the Agent at reasonable intervals, a report providing an update of
the status of any issue or claim identified in any notice or certificate
required pursuant to this subsection.
	 
	 	(g)	 	Litigation. As soon as the same is instituted (or, to
the knowledge of the Borrower, threatened), furnish or caused to be furnished to
the Administrative Agent notice thereof with a description thereof in reasonable
detail of any investigation, litigation, arbitration or administrative
proceedings against or involving the Borrower or any other Security Party that
could reasonably be expected (either individually or in the aggregate) to have a
Material Adverse Effect. Upon the written request of the Administrative Agent,
it will submit to the Administrative Agent at reasonable intervals, a report
providing an update of the status of any investigation, litigation, arbitration
or administrative proceedings identified in any notice or certificate required
pursuant to this subsection.
	 
	 	(h)	 	ERISA Liability. Promptly upon learning of the
occurrence of any material liability of the Borrower or any ERISA Affiliate
pursuant to ERISA in connection with the termination of any Plan or withdrawal
or partial withdrawal from any multiemployer plan (as defined in ERISA) or of a
failure to satisfy the minimum funding standards of Section 412 of the Code or
Part 3 of Title I of ERISA by any Plan in each case for which the Borrower, the
Pledgors or any ERISA Affiliate is plan administrator (as defined in ERISA),
furnish or cause to be furnished to the Administrative Agent written notice
thereof.
	 
	 	(i)	 	ISM Code and ISPS Code. After the Shell Commencement
Date, (i) as applicable, procure that each Operator will comply with and ensure
that the Vessel which it operates will comply with the requirements of the ISM
Code and the ISPS Code, including (but not limited to) the maintenance and
renewal of valid certificates pursuant thereto; and (ii) as applicable will
procure that the Operators will immediately inform the Administrative Agent
if there is any threatened or actual withdrawal of its DOC or the ISSC or the
SMC in respect of any Vessel; and (iii) will procure that the

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	 	 	 	Operators will
promptly inform the Administrative Agent upon the issuance to the Borrower or
Operators of a DOC and the issuance to the Vessel of an SMC and an ISSC.
	 
	 	(j)	 	Insurance; Events of Loss.

	 	(i)	 	Compliance with Insurance Requirements.
(A) Comply with all insurance requirements set forth in any Project
Document with respect to the Project and (B) enforce the obligations of
all Project Parties with respect to insurance requirements applicable
to such Project Parties under the respective Project Documents.
	 
	 	(ii)	 	Insurance Maintained During
Construction. (A) To the extent commercially available at
reasonable terms (as confirmed by the Insurance Consultant and
Technical and Environmental Consultant or otherwise agreed by the
Administrative Agent), maintain or cause to be maintained (for, among
others, its benefit and for the benefit of the Collateral Agent on
behalf of the Secured Parties) the insurance policies annexed to the
Insurance Report (the “Construction Period Insurances”) for the
duration specified in such policies or such later date or dates when
approved by the Administrative Agent (following consultation with the
Insurance Consultant) but in no event (taking in account timely
renewals) expiring prior to the Shell Commencement Date, (B) not
materially change any terms of any Construction Period Insurances or
suffer them to be materially changed, or materially change underwriters
or any Construction Period Insurances or suffer them to be materially
changed, without Majority Lender approval, (C) take all reasonable
actions necessary to ensure that the Builders do not Construct the
Vessel other than in conformity with the terms of all policies,
binders, cover notes or other instruments of the Construction Period
Insurances (including any warranties express or implied therein)
without first obtaining the written consent of the insurers under the
Construction Period Insurances to such activities (if required by such
insurers) and complying with such requirements as to extra premiums or
otherwise as the Majority Lenders and/or such insurers may prescribe
and (D) to do all things necessary and proper, and execute and deliver
all documents and instruments to enable the Collateral Agent to collect
or recover any moneys to become due the Collateral Agent in respect of
the Construction Period Insurances.
	 
	 	(iii)	 	Insurance Maintained During
Operations. (A) To the extent commercially available at reasonable
terms (as confirmed by the
Insurance Consultant or otherwise agreed by the Administrative
Agent), maintain or cause to be maintained the insurance identified
in Section 5(B) of Exhibit C (Form of Marshall Islands Mortgage)

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	 	 	 	for the period between the expiry of the Construction Period Insurances
and the Final Payment Date and (B) comply with Section 5(B) of
Exhibit C (Form of Marshall Islands Mortgage), and after execution
thereof, the Mortgage.
	 
	 	(iv)	 	Right to Procure Insurance. In the
event that the Borrower or any of its Subsidiaries fails to (A) procure
or maintain, or (B) cause the Builders to procure and maintain, the
insurance coverage required by this Section 9.1(j) or Section 5(B) of
Exhibit C (Form of Marshall Islands Mortgage), and after execution
thereof, the Mortgage, the Administrative Agent, upon 30 days’ prior
notice (unless such insurance coverage would lapse within such period,
in which event notice shall be given as soon as reasonably possible) to
the Borrower of any such failure, may (but shall not be obligated to)
take out the required policies of insurance and pay the premiums on the
same. All amounts so advanced for such purpose by the Administrative
Agent and the Lenders shall become an additional obligation of the
Borrower to the Administrative Agent and the Lenders, and the Borrower
shall forthwith pay such amounts to the Administrative Agent, together
with interest on such amounts at the Default Rate from the date so
advanced.
	 
	 	(v)	 	Compromise, Adjustment or Settlement.
The Administrative Agent shall be entitled at its option to participate
in any compromise, adjustment or settlement in connection with any
Event of Loss under any policy or policies of insurance (other than
third-party liability insurance policies) or any proceeding with
respect to any Event of Taking of Property of the Borrower or any of
its Subsidiaries or otherwise in excess of $5,000,000 and the Borrower
shall within five (5) Banking Days after the Administrative Agent’s
request, reimburse the Administrative Agent for all out-of-pocket
expenses (including reasonable attorneys’ and experts’ fees) incurred
by the Administrative Agent in connection with such participation. The
Borrower shall not make any compromise, adjustment or settlement in
connection with any such claim without the approval of the
Administrative Agent (in the case of amounts in excess of $5,000,000)
or the Majority Lenders (in the case of amounts in excess of
$10,000,000), which such approval shall not be unreasonably withheld or
delayed.
	 
	 	(vi)	 	Notice of Event of Loss or Change in
Insurance Coverage. Promptly notify the Administrative Agent of
any Event of Loss which it believes will exceed $5,000,000,
individually or in the
aggregate. The Borrower shall promptly notify the Administrative
Agent of (A) each written notice received by it with respect to the
cancellation of, adverse change in, or default under, any insurance

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	 	 	 	policy required to be maintained in accordance with this
Section 9.1(j) and Section 5 of Exhibit C (Form of Marshall Islands
Mortgage), and after execution thereof, the Mortgage and (B) any
event specified in Section 9.1(j) and Section 5 of Exhibit C (Form of
Marshall Islands Mortgage), and after execution thereof, the
Mortgage.
	 
	 	(vii)	 	No Duty of Secured Parties to Verify.
No provision of this Section 9.1(j) nor any other provision of this
Agreement or any Transaction Document shall impose on the Secured
Parties any duty or obligation to verify the existence or adequacy of
the insurance coverage maintained by the Borrower and/or any of its
Subsidiaries, nor shall the Secured Parties be responsible for any
representations or warranties made by or on behalf of the Borrower to
any insurance company or underwriter.
	 
	 	(viii)	 	Loss Proceeds.

	 	(A)	 	Deposits to Revenue
Account. In the event that the Borrower or any of its
Subsidiaries or the Administrative Agent receives any amount of
proceeds of insurance and other payments received for
interruption of operations in respect of any Event of Loss, such
amounts shall be deposited in accordance with the Depositary
Agreement in the Revenue Account.
	 
	 	(B)	 	Deposits to Loss Proceeds
Account. In the event that the Borrower or any of its
Subsidiaries or the Administrative Agent receives an amount of
Loss Proceeds in respect of any Event of Loss, the Net Available
Amount shall be deposited in accordance with Section 3.10 of the
Depositary Agreement in the Loss Proceeds Account.
	 
	 	(C)	 	Corrections. In the
event the Borrower or any of its Subsidiaries receives any
amount specified in clauses (A) or (B) above and fails to
deposit such amount in the correct account pursuant to clause
(A) or (B) above, the Borrower shall correct any such error
within two (2) Banking Days of receipt of such amounts.

	 	(ix)	 	Restoration.

	 	(A)	 	Amounts to be made available to
the Borrower from the Loss Proceeds Account for Restoration
following any
Event of Loss shall be remitted to the Borrower pursuant to
Section 3.10 of the Depositary Agreement, in the event that

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	 	 	 	the Net Available Amount is less than or equal to $2,000,000.
	 
	 	(B)	 	Amounts to be made available to
the Borrower from the Loss Proceeds Account for Restoration
following any Event of Loss shall be remitted to the Borrower
pursuant to Section 3.10 of the Depositary Agreement in the
event that the Net Available Amount is greater than $2,000,000
but less than or equal to $10,000,000 if the Technical and
Environmental Consultant shall have delivered to the
Administrative Agent and the Collateral Agent a certificate to
the effect that the Net Available Amount deposited in the Loss
Proceeds Account is sufficient (together with all other monies
reasonably expected to be available to the Borrower as
determined by the Administrative Agent in consultation with the
Technical and Environmental Consultant), in the reasonable
opinion of the Technical and Environmental Consultant, for such
Restoration. Amounts made available to the Borrower shall only
be utilized for Restoration and, if determined by the Borrower
(and confirmed in writing by the Technical and Environmental
Consultant) that any portion of such Net Available Amount is no
longer required for such Restoration, such remaining amounts
shall be used to prepay the Advances pursuant to Section 5.2.
	 
	 	(C)	 	Amounts to be made available to
the Borrower from the Loss Proceeds Account for Restoration
following any Event of Loss shall be remitted to the Borrower
pursuant to Section 3.10 of the Depositary Agreement in the
event that the Net Available Amount is greater than $10,000,000
if (A) the Borrower shall submit a plan for Restoration as soon
as commercially practicable, but in no event more than 60 days
after the occurrence of such Event of Loss and the Technical and
Environmental Consultant shall have delivered a certificate to
the Administrative Agent and the Collateral Agent to the effect
that the Borrower’s plan of Restoration is prudent and sound and
the Net Available Amount deposited in the Loss Proceeds Account
is sufficient (together with all other monies reasonably
expected to be available to the Borrower as determined by the
Administrative Agent in consultation with the Technical and
Environmental Consultant), in the reasonable opinion of the
Technical and Environmental Consultant, for such Restoration and
(B) the Majority Lenders have consented to such use of the Net
Available Amount. Amounts made available to the Borrower shall

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	 	 	 	only be
utilized for such Restoration and, if determined by the
Borrower (and confirmed in writing by the Technical and
Environmental Consultant) that any portion of such to Net
Available Amount is no longer required for such Restoration,
such remaining amounts shall be used to prepay the Advances
pursuant to Section 5.2.

	 	(x)	 	Modifications to Insurance Coverage.
The Majority Lenders (in consultation with the Insurance Consultant)
may at any time and in consultation with the Borrower propose an
amendment to the requirements of this Section 9.1(j) and the insurance
requirements in Exhibit C (Form of Marshall Islands Mortgage) and after
execution thereof, the Mortgage, upon a change in circumstances with
respect to the Project arising after the Closing Date that in the
reasonable judgment of the Majority Lenders and the Insurance
Consultant renders the coverage specified therein materially inadequate
and such amendment shall require the Borrower’s consent in accordance
with the terms hereof, such consent not to be unreasonably withheld
taking into consideration the prudent practices of vessel owners and
operators primarily engaged in the same type of operations as the
Borrower; provided that any such request for change in
or additional coverage shall be commercially available at reasonable
terms.

	 	(k)	 	Money Laundering. Upon the Administrative Agent’s
request, promptly supply, or procure the supply of, such documentation and other
evidence as is reasonably requested by the Administrative Agent in order for
each Lender to carry out and be satisfied with the results of all necessary
“know your client” or other checks which it is required to carry out in relation
to the transactions contemplated by this Agreement, the other Loan Documents and
the Contribution Agreement and to the identity of any parties to the Loan
Documents and the Contribution Agreement (other than the Lenders) and their
directors and officers.
	 
	 	(l)	 	Construction Completion Date.

	 	(i)	 	The Borrower shall notify the Administrative
Agent in writing of the date it projects to be the Construction
Completion Date (the “Projected Construction Completion Date”) at least
thirty days prior to such Projected Construction Completion Date. If
at any point after such notification, but prior to the Projected
Construction Completion Date, the Borrower determines that such
Projected Construction Completion Date will not be the Construction
Completion Date, the Borrower shall promptly provide the Administrative
Agent the revised Projected Construction Completion Date.

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	 	(ii)	 	The Borrower shall provide a written
certification by an Authorized Officer of the Borrower notifying the
Administrative Agent of the occurrence of the Construction Completion
Date no later than two (2) Banking Days after the occurrence thereof.

	 	(m)	 	Fees. In the event that the Initial Drawdown Date has
not occurred within fifteen (15) days after the Closing Date, (i) the Borrower
shall pay the Upfront Fee and the Coordination Fee on or prior to the fifteenth
(15th) day after the Closing Date in accordance with the terms of the Upfront
Fee and Coordination Fee Letter and (ii) the Borrower shall pay all fees and
expenses due and payable pursuant to Article 14 on or prior to the fifteenth
(15th) day after the Closing Date.
	 
	 	(n)	 	Ownership of Borrower. The Borrower shall insure that
if, as a result of the Approved Joint Venture, the ownership of the Borrower or
any Subsidiary changes from that set forth in Section 2.1(q), the new owner
shall immediately become a Pledgor hereunder and shall execute a pledge of its
            shares in the Borrower or a Subsidiary of the Borrower, as the case may be, in
favor of the Collateral Agent substantially in the form of Exhibit G hereto.
	 
	 	(o)	 	Taxes; Payment of Obligations. Timely file all required
Tax returns and, except as contested in good faith by the Borrower (for which
adequate reserves have been maintained to the extent required in accordance with
GAAP), the Borrower shall pay and discharge, and cause any Subsidiary to pay and
discharge, (A) all Taxes imposed on it or upon its properties or assets prior to
the date on which penalties could attach thereto, and all lawful claims for
labor, materials and supplies, which, if unpaid, might become a lien upon any
properties or assets of the Borrower, (B) all lawful claims which, if unpaid
would by law become a lien upon its properties and (C) Indebtedness, as and when
due and payable.
	 
	 	(p)	 	Mortgage. Promptly upon registration of the Vessel under
Marshall Islands flag, but in any event no later than the Shell Commencement
Date, execute and deliver to the Administrative Agent the Mortgage and the
Borrower shall provide the Administrative Agent with evidence satisfactory to it
and its legal advisers that:

	 	(i)	 	the Vessel is in the sole and absolute
ownership of the Borrower, unencumbered save and except for the
Mortgage thereon in favour of the Collateral Agent and Permitted Liens,
and is duly registered in the name of the Borrower under the flag of
the Republic of the Marshall Islands;
	 
	 	(ii)	 	RESERVED;
	 
	 	(iii)	 	RESERVED;

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	 	(iv)	 	the Mortgage is duly recorded under the
laws of the Republic of the Marshall Islands and constitutes a first
preferred mortgage lien on the Vessel under the laws of such
jurisdiction;
	 
	 	(v)	 	legal opinions, dated the date of recordation
of the Mortgage each in form and substance reasonably satisfactory to
the Administrative Agent and its counsel from (a) Gardere Wynne Sewell
LLP, special counsel to the Security Parties (other than Shell EP Wells
Equipment Services B.V. and Shell EP Offshore Ventures Limited), (b)
Appleby, special Cayman Islands counsel to the Borrower and (c) a
reasonably acceptable legal opinion from such other legal counsel as
requested by the Administrative Agent;
	 
	 	(vi)	 	RESERVED;
	 
	 	(vii)	 	RESERVED; and
	 
	 	(viii)	 	the Vessel is in compliance with all Government Rules (except to the
extent that the noncompliance with any Government Rule could not
reasonably be expected (either individually or in the aggregate) to
have in a Material Adverse Effect) and Environmental Laws, as are
applicable to the Vessel.

	 	(q)	 	Separateness. Maintain separate bank accounts and
separate books of account for each of its Subsidiaries and Frontier Drillships
2. The separate liabilities of the Borrower shall be readily distinguishable
from the liabilities of each Affiliate of the Borrower, including the Pledgors
(except to the extent otherwise contemplated by the Transaction Documents).
	 
	 	(r)	 	Keeping of Books; Visitation Rights. Keep proper books
of record and account, in which full and correct entries shall be made of all
financial transactions and the assets and business of the Borrower and its
Subsidiaries in accordance with GAAP and permit representatives of the
Administrative Agent or any Lender, during normal business hours, at their own
cost and expense (provided that, if an Event of Default has
occurred and is continuing the Borrower shall indemnify the Administrative Agent
and each Lender for such costs and expenses) and following reasonable notice
(provided that, if an Event of Default has occurred and is
continuing, no such notice shall be required), to examine, copy and make
extracts from its books and records, to inspect any of its Property, and to
discuss its business and affairs with its officers and accountants, to the
extent reasonably requested by the Administrative Agent or such Lender, as the
case may be.

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	 	(s)	 	Project Documents.

	 	(i)	 	Perform and observe all of its material
covenants and material obligations contained in each of the Project
Documents, cause each
Subsidiary of the Borrower to perform and observe all of its material
covenants and material obligations contained in each of the Project
Documents, take all reasonable and necessary action to ensure that
each Permitted Affiliate and Permitted Local Agent performs and
observes all of its material covenants and material obligations
contained in each of the Project Documents, take all reasonable and
necessary action to prevent the termination, suspension or
cancellation of any Project Document in accordance with the terms of
such Project Documents or otherwise (except for the expiration of any
Project Document in accordance with its terms and not as a result of
a breach or default thereunder) and enforce against the relevant
Project Party each material covenant or material obligation of each
Project Document to which such Person is a party in accordance with
such agreement’s terms.
	 
	 	(ii)	 	Subject to Section 9.1(s)(iii), promptly
provide copies of any material change orders under the Construction
Contracts or material variations under the Drilling Contract.
	 
	 	(iii)	 	After the aggregate amount of Project Costs
(not including Interest Expense during Construction and other financing
costs) incurred by the Project or the “Current Project Outlook” line
item (or its equivalent) contained in the most recent Construction
Report exceeds the Project Cost Threshold Amount (whichever occurs
first), obtain the prior written consent of the Administrative Agent in
consultation with the Technical and Environmental Consultant (such
approval not to be unreasonably withheld or delayed) prior to approving
any change order under the Construction Contracts if (A) the amount of
such change order exceeds $1,000,000, (B) the approval of such change
order would result in the aggregate Project Costs incurred by the
Project to exceed the Project Cost Threshold Amount plus
$5,000,000.00; provided that the calculation of the aggregate Project
Costs incurred by the Project referenced in this clause (B) shall not
include (1) Interest Expense during Construction and other financing
costs and (2) amounts related to change orders consented to by the
Administrative Agent or (C) such proposed change order could reasonably
be expected to have a Material Adverse Effect.
	 
	 	(iv)	 	Furnish a Consent and Agreement with respect to
any Project Document entered into after the Closing Date promptly after
the execution of such Project Document (other than those entered into
in connection with a Permitted Transaction), to the extent the

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	 	 	 	Borrower
informs the Administrative Agent that after reasonable efforts it is
unable to obtain such Consent and Agreement from the applicable Project
Party, the Borrower shall promptly send a letter on the Borrower’s
letterhead and signed by an Authorized Officer
of Borrower (and deliver a copy of such letter to the Administrative
Agent) notifying such Project Party that its Project Document and all
associated documents and obligations have been pledged as collateral
security to the Secured Parties and are subject to the Secured
Parties’ Lien on such Property. The requirement to deliver Consent
and Agreements with respect to Project Documents entered into
pursuant to a Permitted Transaction shall be governed by Section
9.2(p).
	 
	 	(v)	 	Subject to Section 9.2(k), furnish to the
Administrative Agent and the Technical and Environmental Consultant
with certified copies of (A) all amendments, supplements or
modifications of any Project Documents, and (B) all Project Documents
executed after the Closing Date, in each case, promptly after execution
and delivery of such documents to the Borrower.
	 
	 	(vi)	 	Furnish to the Administrative Agent and the
Technical and Environmental Consultant any notice constituting a Shell
Cancellation Event within three (3) Banking Days of receipt thereof.

	 	(t)	 	Ranking. Promptly take all actions as may be necessary
to ensure that the Secured Obligations of the Borrower under this Agreement and
the other Loan Documents will at all times constitute senior secured obligations
of the Borrower ranking at least pari passu with all other present and future
senior secured Indebtedness of the Borrower.
	 
	 	(u)	 	Hedging Agreements.

	 	(i)	 	Provide evidence no later than thirty (30)
Banking Days after the Initial Drawdown Date that the Borrower shall
have entered into (A) interest rate Hedging Agreements (in form and
substance satisfactory to the Administrative Agent) for no less than
60% of the aggregate of the Senior Term Loan Commitments and (B)
foreign currency Hedging Agreements (in form and substance satisfactory
to the Administrative Agent) for no less than 100% of the amounts
denominated in foreign currency and to be paid by the Borrower under
the Construction Contracts; each of such agreements in clause (A) and
(B) shall be secured on a pari passu basis with the Facilities (each, a
“Senior Secured Hedge Agreement”);

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	 	(ii)	 	Provide evidence no later than thirty (30)
Banking Days after the disbursement of the Initial Cost Overrun Term
Loan Advance that the Borrower shall have entered into an interest rate
Hedging Agreement (in form and substance satisfactory to the
Administrative Agent) for no less than 100% of the aggregate of
the Cost Overrun Term Loan Commitment, which shall be secured on a
pari passu basis with the Facilities (each, a “Cost Overrun Secured
Hedge Agreement”);

	 	(v)	 	Wet Tow. Provide certified copies of an executed Rig
Transportation Agreement by no later than the date that is one (1) month prior
to the scheduled departure date from the Shanghai Shipyard Co., Ltd. shipyard,
each in form and substance acceptable to the Independent Engineer and
Administrative Agent.
	 
	 	(w)	 	Construction Reports. Prior to the Construction
Completion Date, deliver to the Administrative Agent and the Technical and
Environmental Consultant Construction Reports certified by an Authorized Officer
of the Borrower on a monthly basis commencing for the first full month after the
Closing Date containing a summary of data relating to the Construction of the
Vessel with respect to the categories listed in Schedule 3.
	 
	 	(x)	 	Use of Proceeds. Use the proceeds of:

	 	(i)	 	the Senior Term Loan and Cost Overrun Term Loan
to pay for the Project Costs in respect of the Construction of the
Project or as otherwise approved by the Majority Lenders and the
Technical and Environmental Consultant;
	 
	 	(ii)	 	RESERVED;
	 
	 	(iii)	 	the Senior Revolver to pay for Operation and
Maintenance Expenses related to the operation of the Vessel including
mobilization costs of the Vessel incurred after the Construction
Completion Date; and
	 
	 	(iv)	 	the Initial Advance of the Senior Term Loan to
pay all outstanding principal and interest on the Bridge Loan Notes.

	 	(y)	 	Operating Budget and Capital Budget.

	 	(i)	 	At least thirty (30) days prior to the
Construction Completion Date, adopt an Operating Budget and a Capital
Budget for the period from such date to the conclusion of the then
current fiscal year (and for each month during such period) (the
“Initial Operating Budget” and the “Initial Capital Budget”,
respectively), and, no less than ten (10) days in advance of the
beginning of each fiscal

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	 	 	 	year of the Borrower thereafter, the Borrower
shall adopt an Operating Budget and a Capital Budget for the succeeding
fiscal year (and for each month during such period); provided
that the Capital Budget shall be subject to the prior approval
of the Administrative Agent, following consultation with the Technical
and Environmental Consultant, if the Capital Expenditures portion
exceeds $4,000,000 multiplied by the ratio of days between the
Construction Completion Date and the end of the fiscal year to 365,
which approval shall not be unreasonably withheld or delayed
	 
	 	(ii)	 	Copies of each proposed Operating Budget and
Capital Budget after the Initial Operating Budget and Initial Capital
Budget shall be furnished to the Administrative Agent at least thirty
(30) days before the beginning of the fiscal year to which such
Operating Budget and Capital Budget apply.

	 	(iii)	 	With respect to any Operating Budget proposed
after the Initial Operating Budget, to the extent the Operating Budget
exceeds the Operating Budget of the immediately preceding year by 10%
or more on a per day basis, such Operating Budget shall be subject to
the prior approval of the Administrative Agent, following consultation
with the Technical and Environmental Consultant, which approval shall
not be unreasonably withheld or delayed. In the event that any proposed
Operating Budget or amendment thereof pursuant to Section 9.1(y)(v) is
not approved by the Administrative Agent, the Operating Budget from the
previous fiscal year shall apply for the then-current fiscal year until
an Operating Budget is approved.
	 
	 	(iv)	 	With respect to any Capital Budget proposed
after the Initial Capital Budget, to the extent the Capital Budget
exceeds $4,000,000, such Capital Budget shall be subject to the prior
approval of the Administrative Agent, following consultation with the
Technical and Environmental Consultant, which approval shall not be
unreasonably withheld or delayed; provided that
approval of the Administrative Agent shall not be required for the
Capital Budget proposed for the first full fiscal year following the
first day of the fourth anniversary of the Construction Completion Date
unless such Capital Budget exceeds $7,000,000. In the event that any
proposed Capital Budget or amendment thereof pursuant to Section
9.1(y)(v) is not approved by the Administrative Agent, the Capital
Budget from the previous fiscal year shall apply for the then-current
fiscal year until a Capital Budget is approved.
	 
	 	(v)	 	Comply, within the variances described below,
with each of the Operating Budget and the Capital Budget. If during
any fiscal year the Borrower reasonably projects that (A) aggregate
actual

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	 	 	 	expenditures for labor, insurance, rig maintenance, catering,
freight or under any other line item of Operation and Maintenance
Expenses contained in the Operating Budget for such fiscal year will
exceed by more than 15% or Two Million Dollars ($2,000,000) on an
annual basis the amount budgeted for Operation and Maintenance Expenses
in the then-applicable
Operating Budget or (B) actual expenditures for Capital Expenditures
will exceed by more than 10% or Five Hundred Thousand Dollars
($500,000) the amount budgeted for Capital Expenditures in the
then-applicable Capital Budget, then the Borrower shall prepare and
submit for the approval (such approval not to be unreasonably
withheld or delayed) of the Administrative Agent and the Technical
and Environmental Consultant an amended Operating Budget and Capital
Budget (as applicable) for the remainder of such fiscal year.

	 	(z)	 	Operating Statements and Reports. Furnish to the
Administrative Agent and the Technical and Environmental Consultant (i)
commencing forty-five (45) days after the Construction Completion Date, a
monthly operating statement of the Project not more than thirty-five (35) days
after the end of each month, and (ii) not more than ninety (90) days after the
end of each fiscal year of the Borrower, an operating statement of the Project
for such fiscal year (with monthly detail). The monthly operating statement
shall include summary of the information relating to the operation of the
Project with respect to the categories listed in Schedule 9.1(z). The monthly
and annual operating statements shall each be certified as materially complete
and correct by an Authorized Officer of the Borrower. The form of such
operating statements shall be in form and substance satisfactory to the
Administrative Agent, in consultation with the Technical and Environmental
Consultant, and shall be agreed upon with the Borrower.
	 
	 	(aa)	 	Evidence of Project Costs. Furnish to the Administrative
Agent and the Technical and Environmental Consultant, within thirty (30) days
after the end of each fiscal quarter of the Borrower (for purposes of this
Section, “Applicable Quarter”), a certificate dated as of such date certifying
and attaching the following:

	 	(i)	 	(A) evidence demonstrating that all amounts
borrowed pursuant to the Advances made during such Applicable Quarter
were used to pay Project Costs, including a copy of all invoices paid
excluding amounts related to interest payments from the proceeds of
each Advance made during such Applicable Quarter and related
documentation in connection with any other Project Costs which the
Borrower paid with such Advance, each to the extent that the related
Project Cost was in individually in excess of Two Million Dollars
($2,000,000), (B) certification that Advances made during to the
Applicable Quarter and all capital contributions not yet

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	 	 	 	expended as previously projected shall be expended during the next thirty (30)
days, or (C) in the event that (B) cannot be satisfied, reduce the
amount of the Advance immediately following such certification in an
amount equal to the amounts not previously expended and not
contemplated to be spent pursuant to clause (B)
above; provided that in no event shall the Borrowing
be reduced below $1,000,000.

	 	(bb)	 	Delivery of HSE Case. At least one hundred and eighty
days prior to the Construction Completion Date and at each other date a HSE Case
is required to be delivered to Shell EP Wells Equipment Services B.V. pursuant
to the terms and conditions of the Drilling Contract, deliver to the
Administrative Agent a HSE Case and the Borrower shall provide the
Administrative Agent with evidence satisfactory to it, that such HSE Case was
prepared in accordance with IADC Guidelines and has been accepted by Shell EP
Wells Equipment Services B.V. in accordance with the terms and conditions of the
Drilling Contract.
	 
	 	(cc)	 	Compliance with HSE Case. Comply with the HSE Case,
including all requirements relating to implementation of the HSE Case contained
in Section V, Article 6 and Section V, Article 7 of the Drilling Contract.
	 
	 	(dd)	 	Construction Contracts Consent and Agreement;
Acknowledgments. Furnish to the Administrative Agent within thirty (30)
days after the Closing Date (1) the executed Shanghai Consent and Agreement and
(2) acknowledgments to the Assignments of Construction Contracts from each of
Keppel and Huisman in connection with the Keppel Construction Contract and the
Huisman Construction Contract, respectively.
	 
	 	(ee)	 	Subsidiary Dividends and Distributions. Commencing on
and after the Initial Principal Payment Date, to the maximum extent permitted
under applicable Government Rules, cause each Subsidiary to make dividends or
distributions directly or indirectly to the Borrower no less frequently than
quarterly (on or prior to the date fifteen (15) days after the end of each
calendar quarter) or, if applicable Government Rules require a longer period of
time to elapse between such dividends and distributions, as frequently as
permitted by such applicable Government Rules, in an amount at least equal to
the collected balance in any Local Payment Account of such Subsidiary to the
extent such balance exceeds 110% of the aggregate amount required to pay
Operating and Maintenance Expenses of such Subsidiary that are currently payable
or reasonably anticipated to be payable during the thirty (30) day period
commencing on the Monthly Payment Date (as defined in the Depositary Agreement)
falling on or immediately prior to the date of such dividend or distribution.
	 
	 	(ff)	 	Shell Commencement Date.

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	 	(i)	 	On or prior to the Shell Commencement Date,
provide the Administrative Agent with evidence satisfactory to it and
its legal advisers that:

	 	(A)	 	the Vessel has been accepted by
Shell EP Wells Equipment Services B.V. in accordance with the
terms and conditions of the Drilling Contract and all delay
penalties or fines and any other amounts payable to Shell EP
Wells Equipment Services B.V. under the Drilling Contract (if
any) shall have been paid in full; and
	 
	 	(B)	 	the Vessel is duly licensed and
all necessary Government Approvals will have been obtained for
the operation of the Vessel.

	 	(ii)	 	On the Shell Commencement Date, provide the
Administrative Agent with satisfactory evidence to it and its legal
advisers that at such time:

	 	(A)	 	the Vessel is classed in the
highest classification and rating for vessels of the same age
and type with the relevant Classification Society without any
material outstanding overdue recommendations affecting class;
and
	 
	 	(B)	 	the Vessel is insured in
accordance with the provisions of the Mortgage and Section
9.1(j) and the Independent Insurance Consultant has delivered a
report (in form and substance acceptable to the Majority
Lenders) confirming, among other things, that the insurance
policies required pursuant to the Mortgage are typical for
undertakings similar to the Project, are in full force and
effect, the premiums due thereon have been paid, that such
policies otherwise conform with the requirements specified in
the Loan Documents and including as annexes the certificates of
insurance for such insurance policies.

     9.2 Negative Covenants. The Borrower hereby covenants and undertakes with the Lenders
that, from the date hereof and so long as any principal, interest or other moneys are owing in
respect of the Facilities or under this Agreement or any other Loan Document, that the Borrower
will not, nor will it permit any Subsidiary, to the extent applicable, to:

	 	(a)	 	Liens and Accounts.

	 	(i)	 	Without written prior consent of the Majority
Lenders, create, assume or permit to exist any Lien whatsoever upon any
of its property or other assets, real or personal, tangible or
intangible, whether now owned or hereafter acquired except Permitted
Liens.

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	 	(ii)	 	Without prior written consent of the Majority
Lenders, maintain, or permit any of its Subsidiaries to maintain,
deposit accounts or securities accounts in its name or for its account,
other than the Collateral Accounts, Local Payment Accounts and
Unsecured Local Payment Accounts.

	 	(b)	 	Nature of Business.

	 	(i)	 	Change, or permit any of its Subsidiaries to
change, the nature of its business or commence or engage in any
business other than the owning, operation and chartering of the Vessel;
	 
	 	(ii)	 	Create, acquire or permit to exist any
Subsidiary unless:

	 	(A)	 	such Subsidiary is a wholly-owned
Subsidiary of the Borrower or such Subsidiary is created
pursuant to Section 9.2(p)(i) as part of a Permitted
Transaction;
	 
	 	(B)	 	such Person becomes a guarantor
by executing and delivering to the Administrative Agent a
Guarantee Agreement substantially in the form of Exhibit O; and
	 
	 	(C)	 	such Person enters into and
delivers to the Collateral Agent a Borrower Subsidiary Security
Agreement substantially in the form of Exhibit Q securing such
Person’s obligations under such Person’s Guarantee Agreement;
and

	 	 	 	provided that, until such Person either (1) delivers all
documentation requested pursuant to Section 10.2 or 10.3, as applicable or
(2) delivers to the Agents such evidence as the Agents may reasonably
require (including appropriate corporate documentation, resolutions and
legal opinions in form and substance reasonably satisfactory to the
Administrative Agent) as to the due organization, authorization, execution,
delivery, legality, validity, binding effect and enforceability of such
instruments, and of the guarantee agreement and the security agreement
and/or instruments, and as to the perfection and first priority of the
Collateral provided by such Subsidiary, such Person shall not be permitted
to own or maintain any Property with a value in excess of One Hundred
Thousand Dollars ($100,000) or to enter into any contracts, agreements,
instruments, letters, undertakings or other documentation under which such
Subsidiary could reasonably be expected to have obligations or liabilities
in excess of One Hundred Thousand Dollars ($100,000).
	 
	 	(c)	 	Change Offices. Change its name or the location of its
chief executive office or the office where its corporate records are kept or
open any new office for the conduct of its business on less than thirty (30)
days prior written notice to the Administrative Agent.

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	 	(d)	 	Permitted Investments. Notwithstanding anything to the
contrary contained in the Control Agreement entered into with Wells Fargo Bank,
National Association, make or instruct any relevant Person to make, any
Investments except (each of the following a “Permitted Investment”):

	 	(i)	 	the Hedging Agreements;
	 
	 	(ii)	 	Reserved;
	 
	 	(iii)	 	Investments permitted in connection with a
Permitted Transaction;
	 
	 	(iv)	 	readily marketable direct obligations of the
United States or any agency or instrumentality thereof or obligations
unconditionally guaranteed by the full faith and credit of the United
States,;
	 
	 	(v)	 	obligations of domestic and foreign
corporations, provided that in each case such obligations are rated at
least “AAA” (or the then equivalent grade) by Moody’s or “AAA” (or the
then equivalent grade) by S&P;
	 
	 	(vi)	 	certificates of deposit of or time deposits
with any commercial bank that is a Lender or a member of the Federal
Reserve System, issues (or the parent of which issues) commercial paper
rated as described in clause (vii) below, is organized under the laws
of the United States or any State thereof and has combined capital and
surplus of at least $1 billion;
	 
	 	(vii)	 	commercial paper in an aggregate amount of no
more than $5,000,000 per issuer outstanding at any time, issued by any
corporation organized under the laws of any State of the United States
and rated at least “P-1” (or the then equivalent grade) by Moody’s or
“A-1” (or the then equivalent grade) by S&P; or
	 
	 	(viii)	 	Investments, classified in accordance with GAAP as current assets of
the Borrower or any of its Subsidiaries, in money market funds that are
registered under the Investment Company Act of 1940, as amended, the
portfolios of which are limited solely to Investments of the character
and quality described in clauses (iv) and (v) of this Section.

	 	(e)	 	Permitted Indebtedness. Incur or suffer to exist any
indebtedness other than Permitted Indebtedness.
	 
	 	(f)	 	Assume Obligations. Assume, guarantee, endorse or
otherwise become liable in connection with any obligation of any Person, firm or
entity, other than wholly-owned Subsidiaries of the Borrower, and except as
contemplated by this Agreement or any other Loan Document.

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	 	(g)	 	Restricted Payments. Declare any Restricted Payment, or
make any distribution of any kind thereon, except the Borrower may make a
Restricted Payment on or within ten (10) days after a Principal Payment Date (a
“Restricted Payment Date”) in cash from and to the extent of cash then on
deposit in the Distribution Account, subject to the satisfaction of each of the
following conditions (the “Distribution Conditions”) on the Restricted Payment
Date and after giving effect to such Restricted Payment:

	 	(i)	 	No Default or Event of Default shall have
occurred and be continuing or would occur as a consequence of such
Restricted Payment;
	 
	 	(ii)	 	all Advances under the Cost Overrun Term Loan
have been repaid in full;
	 
	 	(iii)	 	all outstanding Advances under the Senior
Revolver have been repaid in full;
	 
	 	(iv)	 	the Debt Service Coverage Ratio, for the
Computation Period most recently ended prior to such Restricted Payment
Date, is not less than 1.25 to 1.0;
	 
	 	(v)	 	the Borrower shall have delivered to the Agent,
at least five (5) Banking Days prior to the proposed Restricted Payment
Date, a certificate of an Authorized Officer of the Borrower dated the
Restricted Payment Date (a “Distribution Certificate”):

	 	(A)	 	to the effect that each of the
foregoing conditions shall have been satisfied as of such
Restricted Payment Date;
	 
	 	(B)	 	to the effect that the making of
such Restricted Payment is not expected to have a Material
Adverse Effect on the Borrower;
	 
	 	(C)	 	setting out in reasonable detail
the calculations for computing the Debt Service Coverage Ratio,
for the Computation Period and stating that such calculations
were prepared pursuant to clause (iv) and above and were made,
in each case, in good faith and were based on assumptions
believed to be reasonable; and

	 	(vi)	 	The Administrative Agent, in its reasonable
discretion may, from time to time, give notice to the Borrower of its
intention to review the Borrower’s calculations and certifications. In
the event that the Administrative Agent disputes the Borrower’s
calculations and certifications or requests additional information in
order to facilitate its evaluation of the Borrower’s calculation, the

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	 	 	 	Administrative Agent (at the request of the Majority Lenders) may
give to the Borrower notice in writing instructing that such
Restricted Payment be delayed for such reasonable period of time as
shall be necessary to resolve such dispute or complete such
evaluation.

	 	(h)	 	Prohibition of Fundamental Changes.

	 	(i)	 	Except as otherwise permitted pursuant to a
Permitted Transaction, (i) change its legal form, amend its operating
agreement or any other organizational document, merge into or
consolidate with, or acquire all or any substantial part of the assets
or any class of stock of (or other equity interest in), any other
Person and shall not liquidate or dissolve or (ii) convey, sell, lease,
transfer or otherwise dispose of, in one transaction or a series of
transactions, any assets except: (A) Dispositions of (1) Permitted
Investments in accordance with the Depositary Agreement, (2) obsolete,
worn out, surplus or defective assets, whether now owned or hereafter
acquired, sold in the ordinary course of business or (3) damaged or
destroyed property, upon receipt of insurance proceeds in connection
therewith; (B) Dispositions of property to the extent that (1) such
property is exchanged for credit against the purchase price of similar
replacement property that is promptly purchased or (2) the proceeds of
such Dispositions are applied to the purchase price of replacement
property (which replacement property is actually promptly purchased in
accordance with the terms of the purchase order related to such
replacement property) pursuant to Section 3.11(b) of the Depositary
Agreement; (3) Dispositions in respect of property having an aggregate
fair market value not in excess of $2,000,000 in any calendar year; (4)
Dispositions of property, the Net Cash Payments received in respect of
which are applied to prepay the Advances in accordance with Section
5.2; and (5) Restricted Payments made in accordance with this
Agreement.
	 
	 	(ii)	 	Purchase or acquire any assets other than: (i)
the purchase of assets reasonably required for the completion of the
Vessel in accordance with the Construction Contracts, applicable
Government Approvals and applicable Government Rules and as
contemplated by the Approved AFE and the Master Construction Schedule,
(ii) the purchase of assets in the ordinary course of business
reasonably required in connection with the operation of the Project
contemplated by the then-effective Operating Budget, (iii) the purchase
of assets reasonably required in connection with Permitted Capital
Expenditures under the Capital Budget and (iv) Permitted Investments.

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	 	(i)	 	Change Flag, Class or Operator. Without the prior
written consent of the Majority Lenders, change, or allow to be changed, the
Vessel’s flag, registration, classification society or Operator from that in
effect on the Shell Commencement Date.
	 
	 	(j)	 	Money Laundering. In connection with this Agreement, any
other Loan Document and the Contribution Agreement, contravene or permit the
Borrower or any Subsidiary of the Borrower to contravene, any law, official
requirement or other regulatory measure or procedure implemented to combat
“money laundering” (as defined in Article 1 of the Directive (91/308/EEC) of the
Council of the European Communities) and comparable United States Federal and
state laws, including without limitation, (A) the United States Trading with the
Enemy Act of October 6, 1917, as amended, (B) any of the foreign assets control
regulations of the United States Treasury Department (31 CFR, Subtitle B,
Chapter V, as amended) or any enabling legislation or executive order relating
thereto, (C) Executive Order No. 13224, 66 Fed. Reg. 49,079 (2001), issued by
the President of the United States (Executive Order Blocking Property and
Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support
Terrorism) and (D) the anti-money laundering provisions of the Uniting and
Strengthening America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, Public Law 107-56 (October 26,
2001) amending the Bank Secrecy Act, 31 U.S.C. Section 5311 et seq. No part of
the proceeds from the Facilities will be used, directly or, to the Borrower’s
knowledge, indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in material
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended. Neither the Borrower nor any other Security Party, (A) will become a
“blocked person” or entity described in Schedule 1 of the Terrorism Order or
described in such Department of the Treasury Rule or (B) engage in any dealings
or transactions, nor is any such Person otherwise associated, with any such
blocked person or entity.
	 
	 	(k)	 	Project Documents.

	 	(i)	 	Without the prior written consent of the
Majority Lenders in consultation with the Technical and Environmental
Consultant:

	 	(A)	 	suspend, cancel or terminate or
consent to, allow to subsist, or accept any suspension,
cancellation or termination of, any (A) Construction Contract,
(B) the Drilling Contract, (C) the Management Agreement and (D)
any other Project Document the suspension, cancellation or
termination of which could reasonably be expected (either
individually or in the aggregate) to have a Material Adverse
Effect;

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	 	(B)	 	except as otherwise permitted
pursuant to a Permitted Transaction, sell, transfer, assign
(other than pursuant to the Security Documents) or otherwise
dispose of (by operation of law, capacity release or otherwise)
or consent to any such sale, transfer, assignment or disposition
of any part of its interest in (A) any Construction Contract,
(B) the Drilling Contract, (C) the Management Agreement and (D)
any other Project Document that the sale, transfer, assignment
or other disposition of which could reasonably be expected
(either individually or in the aggregate) to have a Material
Adverse Effect, or consent to the sale, transfer, assignment or
disposition under such Project Document by the other Project
Party thereto (expect with respect to consenting to an
assignment of the Drilling Contract by Shell EP Wells Equipment
Services B.V. which shall be governed by Section 9.2(k)(ii)),
	 
	 	(C)	 	waive any material default under,
or material breach of, or waive, fail to enforce, forgive,
compromise, settle, adjust or release (or consent to any of the
foregoing in respect of) any material right, interest or
entitlement, howsoever arising, under, or in respect of, (A) any
Construction Contract, (B) the Drilling Contract, (C) the
Management Agreement and (D) any other Project Document under
which the failure to comply with this Section 9.2(k)(i)(C) could
reasonably be expected (either individually or in the aggregate)
to have a Material Adverse Effect,
	 
	 	(D)	 	initiate or settle a material
arbitration claim or proceeding under (A) any Construction
Contract, (B) the Drilling Contract, (C) the Management
Agreement and (D) any other Project Document with respect to
which such initiation or settlement could reasonably be expected
(either individually or in the aggregate) to have a Material
Adverse Effect,
	 
	 	(E)	 	agree to or petition, request or
take any other material legal or administrative action that
seeks, or may reasonably be expected, to Impair (A) any
Construction Contract, (B) the Drilling Contract, (C) the
Management Agreement and (D) any other Project Document,
	 
	 	(F)	 	except as otherwise permitted
pursuant to a Permitted Transaction, amend, supplement or modify
or in any way vary, or agree to the variation of, any material
provision, covenant or obligation of (A) any Construction
Contract, (B) the Drilling Contract, (C) the Management
Agreement

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	 	 	 	and (D) any other Project Document with respect to which such
amendment, supplement, modification or variation could
reasonably be expected (either individually or in the
aggregate) to have a Material Adverse Effect, other than
through change orders with respect to the Construction
Contracts, which change order protocol is addressed in
Section 9.1(s), and

	 	(ii)	 	Prior to the Borrower providing its consent, if
such consent is required under the Drilling Contract, to an assignment
or novation of any or all of Shell EP Wells Equipment Services B.V.’s
rights, duties and obligations under the Drilling Contract or any
subleasing of the Vessel by Shell EP Wells Equipment Services B.V., the
Borrower shall have received the prior written consent of the
Supermajority Lenders in consultation with the Technical and
Environmental Consultant.

	 	(l)	 	Permitted Capital Expenditures. Make any Capital
Expenditures other than Capital Expenditures provided for in the then-applicable
Capital Budget (including the Capital Expenditure allowed pursuant to the
variance permitted pursuant to Section 9.1(y)(v)) and as otherwise approved by
the Majority Lenders in writing, such approval to be subject to the sole
discretion of the Majority Lenders (“Permitted Capital Expenditures”).
	 
	 	(m)	 	Accounting Changes. Change the last day of its fiscal
year from December 31 of each year, or the last days of the first three fiscal
quarters in each of its fiscal years from March 31, June 30 and September 30 of
each year, respectively or permit any change in its accounting policies or
reporting practices, except as required by GAAP, without the prior written
consent of the Administrative Agent.
	 
	 	(n)	 	Transaction with Affiliates. Directly or indirectly
enter into any transaction with an Affiliate except in the ordinary course of
and pursuant to the reasonable requirements of its business and upon
commercially reasonable terms that are not less favorable to it than those which
might be obtained in a comparable arm’s-length transaction at the time from a
Person which is not such an Affiliate.
	 
	 	(o)	 	Governmental Approvals. Petition, request or take any
legal or administrative action that seeks to amend, supplement or modify any
Government Approval in any material respect unless (A) the Borrower shall have
furnished to the Administrative Agent a copy (certified by an Authorized Officer
of the Borrower) of the proposed amendment, supplement or modification and a
description of the actions that the Borrower proposes to take and (B) such
amendment, supplement or modification could not reasonably be expected (either
individually or in the aggregate) to have a Material Adverse Effect. The
Borrower shall

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	 	 	 	promptly upon receipt or publication furnish a copy (certified by the Authorized Officer of the Borrower) of each such amendment, supplement or modification to the Administrative Agent.
	 
	 	(p)	 	Permitted Transactions. Enter into any bareboat
charter agreement, time charter agreement or local agency agreement (as
applicable) unless:

	 	(i)	 	the counterparty to such bareboat charter
agreement and / or time charter agreement is (each a “Permitted
Person”):

	 	(A)	 	a wholly owned Subsidiary of the
Borrower;
	 
	 	(B)	 	a partially owned Subsidiary of
the Borrower; provided that such Subsidiary is owned directly or
indirectly by (1) the Borrower, (2) any Subsidiary of the
Borrower or (3) any Frontier Group Company;
	 
	 	(C)	 	an Affiliate of the Borrower;
provided that such Affiliate is owned directly or indirectly by
(1) the Borrower, (2) any Subsidiary of the Borrower or (3) any
Frontier Group Company (a “Permitted Affiliate”); or
	 
	 	(D)	 	a local agent company; provided
that (1) such local agent is not a restricted entity under the
Foreign Asset Control Regulations or other similar regulations
to the extent applicable to the Lenders and (2) such local agent
is approved as part of the approval of the Proposed Transaction
pursuant to Section 10.3 (a “Permitted Local Agent”);

	 	(ii)	 	the counterparty to such local agency agreement
is a Permitted Local Agent;
	 
	 	(iii)	 	to the extent any Permitted Person party to
the Proposed Transaction is not a wholly-owned Subsidiary of the
Borrower, the form and substance of such bareboat charter agreement,
time charter agreement and / or local agency agreement (as applicable)
is approved as part of the Proposed Transaction in accordance with
Section 10.3;
	 
	 	(iv)	 	simultaneously with the execution and delivery
of any bareboat charter agreement, time charter agreement and / or
local agency agreement (as applicable), the Borrower and the
counterparty to such bareboat charter agreement, time charter agreement
and / or local agency agreement (as applicable) executes and delivers a
Consent and Agreement related to such bareboat charter

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	 	 	 	agreement, time charter agreement and / or local agency agreement (as applicable);
	 
	 	(v)	 	the Borrower and counterparty to each such
bareboat charter agreement, time charter agreement and / or local
agency agreement (as applicable) performs any other actions reasonably
requested by the Joint Committee with respect to the Collateral Agent maintaining
a first priority Lien in the Collateral on behalf of the Secured
Parties and assuring that each bareboat charter agreement, time
charter agreement and / or local agency agreement (as applicable)
remains subject to such Lien at all times;
	 
	 	(vi)	 	the Borrower shall deliver to the Joint
Committee:

	 	(A)	 	certified copies of the
constitutive documents of each Permitted Person party to the
Proposed Transaction;
	 
	 	(B)	 	certified copies of the
shareholder and / or board resolutions of the Borrower and each
Permitted Person authorizing such Proposed Transaction;
	 
	 	(C)	 	evidence of the Borrower and each
Permitted Person party to the Proposed Transaction having
obtained any material Governmental Approvals required for the
operation of the Vessel under the Proposed Transaction;
	 
	 	(D)	 	a tax report relating to the tax
structure of the Proposed Transaction, in form and substance
acceptable to the Joint Committee;
	 
	 	(E)	 	a certificate of chief financial
officer of Frontier Drilling USA Inc. on behalf of the Borrower
stating that (x) he has reviewed the provisions of each
agreement required to entered into in connection with the
Proposed Transaction and (y) that after giving effect to any
Taxes related to the Proposed Transaction and any agency fees
and other fees attendant to the Proposed Transaction (including
amounts required to be paid to or by the Permitted Local Agent),
such Proposed Transaction shall not cause the average Debt
Service Coverage Ratio of the Project for the period beginning
on the first full fiscal quarter following the date of such
certificate until the Final Payment Date to be below the average
Debt Service Coverage Ratio assumed in the Modified Base Case
Forecast for the period beginning on the first full fiscal
quarter following the date of such certificate until the Final
Payment Date;

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	 	(F)	 	legal opinions reasonably
requested by the Joint Committee with respect to the Proposed
Transaction, in form and substance acceptable to the Joint
Committee;
	 
	 	(G)	 	certified copies of any reports
or information provided to the Borrower by Trace International
Inc. (or any replacement thereof) as part of the Borrower’s due diligence
of any proposed Permitted Person; and
	 
	 	(H)	 	any other information reasonably
requested by the Joint Committee.

	 	(q)	 	No Restrictions on Subsidiary Dividends and
Distributions. Permit any Subsidiary to, enter into or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of
any Subsidiary to make dividends or distributions to its immediate parent.

10. JOINT COMMITTEE

     10.1 Appointment of the Joint Committee. Each Lender hereby appoints and authorizes SCB to
act as a member of the joint committee hereunder and further agrees that SCB, in consultation with
the Borrower may appoint on behalf of the Lenders another lender as the second member of the joint
committee (SCB and such second member, together with any replacement members, the “Joint
Committee”) with such powers as are expressly delegated to the Joint Committee by the terms of
Section 9.2(p), together with such other powers as are reasonably incidental thereto. The Joint
Committee shall not have any duties or responsibilities except those expressly set forth in Section
9.2(p) and such other powers as are reasonably incidental thereto, or be a trustee or fiduciary for
any Lender. Notwithstanding anything to the contrary contained herein, the Joint Committee shall
not be required to take any action which is contrary to this Agreement or any other Loan Document
or any Government Rule. All determinations to be made by the Joint Committee under this Agreement
shall be made by unanimous vote of its members and otherwise in accordance with the procedures set
forth in this Agreement. In the event that either member of the Joint Committee at any time
reduces its Commitments to less than $10,000,000, ceases to be a Lender hereunder, or otherwise
resigns from the Joint Committee, the remaining member of the Joint Committee shall appoint a
Lender as a successor member to the Joint Committee; provided (a) such Lender shall be a
Lender with one of the five largest Commitments at such time among the Lenders who are not then
members of the Joint Committee and (b) the Borrower approves of such Lender’s appointment (such
approval not to be unreasonably withheld) within two Business Days of receipt of notice of such
Lender’s appointment to the Joint Committee. For any period that SCB is the sole Lender under this
Agreement, the Joint Committee shall be deemed to consist solely of SCB.

     10.2 Approval of a Wholly Owned Subsidiary Proposed Transaction. Notwithstanding any other
provision of this Agreement, any Proposed Transaction in which each Person proposed as a Permitted
Person is a wholly owned Subsidiary of the Borrower shall be automatically approved in accordance
with the following protocol:

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	 	(a)	 	prior to implementation of the Proposed Transaction, the Borrower
shall deliver to the Joint Committee all Proposed Transaction Documentation;
	 
	 	(b)	 	within ten (10) Banking Days of the receipt of the Proposed
Transaction Documentation, the Joint Committee shall provide written
confirmation to the Borrower and the Administrative Agent of the receipt of (i)
the Proposed Transaction Documentation and (ii) request any other actions
requested by the Joint Committee with respect to the Collateral Agent
maintaining a first priority Lien in the Collateral on behalf of the Secured
Parties, (ii) whether any additional legal opinions are requested by the Joint
Committee with respect to the Proposed Transaction or (iii) any other
information is requested by the Joint Committee (the “Required Proposed
Transaction Documentation”), if any;
	 
	 	(c)	 	if no Required Proposed Transaction Documentation is requested
pursuant to Section 10.2(b), the Proposed Transaction shall be deemed
automatically approved and the Borrower may execute the Proposed Transaction;
	 
	 	(d)	 	if any Required Proposed Transaction Documentation is requested
and the Joint Committee notifies the Borrower that the Proposed Transaction
could be expected to result in a Material Adverse Effect unless such Required
Proposed Transaction Documentation is provided, the delivery of such Required
Proposed Transaction Documentation to the Administrative Agent shall be required
prior to the implementation of the Proposed Transaction; and
	 
	 	(e)	 	if any Required Proposed Transaction Documentation is requested
and the Joint Committee does not notify the Borrower that the Proposed
Transaction could be expected to result in a Material Adverse Effect unless such
Required Proposed Transaction Documentation is provided, the Proposed
Transaction shall be automatically approved and the Borrower may execute the
Proposed Transaction; provided that the Required Proposed Transaction
Documentation is provided to the Joint Committee within forty-five (45) days of
the receipt by the Joint Committee of the Proposed Transaction Documentation.

     10.3 Approval of a Proposed Transaction. Notwithstanding any other provision of this
Agreement, approval of any Proposed Transaction in which any Permitted Person is not a wholly-owned
Subsidiary of the Borrower shall be determined in accordance with the following protocol:

	 	(a)	 	The Borrower shall deliver to the Joint Committee all Proposed
Transaction Documentation.
	 
	 	(b)	 	The Joint Committee (after consultation with the Technical and
Environmental Consultant) shall notify the Borrower within twenty (20) days of
receipt of the Proposed Transaction Documentation whether the

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	 	 	 	members of the Joint Committee have obtained all required internal
approval for the authorization of the Proposed Transaction (“Joint Committee
Approval”).
	 
	 	(c)	 	Upon achieving Joint Committee Approval, the Joint Committee
shall deliver to the Lenders the Proposed Transaction Documentation for their
review and approval in accordance with clause (d) below.
	 
	 	(d)	 	The Proposed Transaction shall be deemed to be approved by the
Lenders unless an amount of Lenders equal to the Majority Lenders provide the
Joint Committee with written notification of their rejection of the Proposed
Transaction within ten (10) Banking Days of the date such Lender acknowledges to
the Joint Committee that they have received the Proposed Transaction
Documentation delivered by the Joint Committee.

     10.4 Proposed Transaction Fee. Commencing with and including the third Proposed
Transaction presented to the Joint Committee under Section 10.3 and each Proposed Transaction
thereafter, the Borrower shall pay a non-refundable fee of $7,500.00 per member of the Joint
Committee to the Administrative Agent, acting on the behalf of the members of the Joint Committee,
prior to the delivery of the Proposed Transaction Documentation for such Proposed Transaction.

     10.5 No Waiver; Proposed Transaction. Approval of a Proposed Transaction under this
Article 10 shall not be construed to waive any other provision of this Agreement in respect of such
Proposed Transaction.

11. SUCCESSORS AND ASSIGNS

     11.1 Successors and Assigns Generally. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and assigns
permitted hereby, except that the Borrower may not assign or otherwise transfer any of its rights
or obligations hereunder without the prior written consent of the Administrative Agent and each
Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder
except (i) to an assignee in accordance with the provisions of Section 11.2, (ii) by way of
participation in accordance with the provisions of Section 11.5 or (iii) by way of pledge or
assignment of a security interest pursuant to Section 11.6 (and any other attempted assignment or
transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby, Participants to the extent provided in
paragraph (d) of Section 11.2 and, to the extent expressly contemplated hereby, the respective
Related Parties of the Administrative Agent, Collateral Agent and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.

     11.2 Assignment; Participations; Etc. by the Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its Commitment and the
Advances at the time owing to it); provided that any such assignment shall be
subject to the following conditions:

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	 	(a)	 	Minimum Amounts.

	 	(i)	 	in the case of an assignment of the entire
remaining amount of the assigning Lender’s Commitment and the Advances
at the time owing to it or in the case of an assignment to a Lender, an
Affiliate of a Lender or an Approved Fund, no minimum amount need be
assigned; and
	 
	 	(ii)	 	in any case not described in clause (a)(i)
above, the amount of the Commitment (which for this purpose includes
the Advances outstanding thereunder) or, if the Commitment is not then
in effect, the principal outstanding balance of the Advances of the
assigning Lender subject to each such assignment (determined as of the
date the Assignment and Assumption with respect to such assignment is
delivered to the Administrative Agent or, if “Trade Date” is specified
in the Assignment and Assumption, as of the Trade Date) shall not be
less than One Million Dollars ($1,000,000), unless each of the
Administrative Agent and, so long as no Default has occurred and is
continuing, the Borrower otherwise consents (each such consent not to
be unreasonably withheld or delayed).

	 	(b)	 	Proportionate Amounts. Each partial assignment shall be
made as an assignment of a proportionate part of all the assigning Lender’s
rights and obligations under this Agreement with respect to the Advances or the
Commitment assigned.
	 
	 	(c)	 	Required Consents. The consent of (i) the Borrower (such
consent not to be unreasonably withheld or delayed) shall be required unless (x)
any Default has occurred and is continuing at the time of such assignment or (y)
such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund and
(ii) the consent of the Administrative Agent (such consent not to be
unreasonably withheld or delayed) shall be required for assignments to a Person
who is not a Lender, an Affiliate of a Lender or an Approved Fund.
	 
	 	(d)	 	Assignment and Assumption. The parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Assumption, together with a processing and recordation fee of $3,500, and
the assignee, if it is not already a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire.
	 
	 	(e)	 	No Assignment to Borrower. No such assignment shall be
made to the Borrower or any of the Borrower’s Affiliates.
	 
	 	(f)	 	No Assignment to Natural Persons. No such assignment
shall be made to a natural person.

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	 	(g)	 	No Assignment to Competitors. No such assignment shall
be made to any Person or Affiliate of a Person who is primarily engaged in the
same type of operations as the Borrower.

Subject to acceptance and recording thereof by the Administrative Agent pursuant to Section 11.4,
from and after the effective date specified in each Assignment and Assumption, the assignee
thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such
Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and
the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment
and Assumption, be released from its obligations under this Agreement (and, in the case of an
Assignment and Assumption covering all of the assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the
benefits of Article 12 and 19.5 with respect to facts and circumstances occurring prior to the
effective date of such assignment. Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and obligations in accordance
with Section 11.5.

     11.3 Assignment by SCB.

          (a) (i) SCB hereby irrevocably sells and assigns to China Development Bank Corporation all of
its rights and obligations in its capacity as a Senior Lender under this Agreement and any other
documents or instruments delivered pursuant hereto to the extent related to the Advances and the
unutilized Senior Term Loan Commitment amount identified on Schedule 1A hereto and (ii) China
Development Bank Corporation hereby irrevocably purchases and assumes such assignment (and its
Senior Term Loan Commitment Amount shall be utilized by virtue of such assignment to the amount set
forth on Schedule 1A hereto). By the execution and delivery of this Agreement the Administrative
Agent and Borrower consent to such assignment. The Administrative Agent shall make all payments in
respect of the outstanding rights and obligations assigned pursuant to this subclause (a)
(including all payments of principal, interest and other amounts) to SCB for amounts which have
accrued to but excluding the Effective Date and to China Development Bank Corporation for amounts
which have accrued from and after the Effective Date.

          (b) (i) SCB hereby irrevocably sells and assigns to The Export-Import Bank of China all of its
rights and obligations in its capacity as a Senior Lender under this Agreement and any other
documents or instruments delivered pursuant hereto to the extent related to the Advances and the
unutilized Senior Term Loan Commitment amount identified on Schedule 1A hereto and (ii) The
Export-Import Bank of China hereby irrevocably purchases and assumes such assignment (and its
Senior Term Loan Commitment Amount shall be utilized by virtue of such assignment to the amount set
forth on Schedule 1A hereto). By the execution and delivery of this Agreement the Administrative Agent and Borrower consent to such assignment. The
Administrative Agent shall make all payments in respect of the outstanding rights and obligations
assigned pursuant to this subclause (b) (including all payments of principal, interest and other
amounts) to SCB for amounts which have accrued to but excluding the Effective Date

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and to The Export-Import Bank of China for amounts which have accrued from and after the Effective Date.

          (c) SCB (a) represents and warrants that (i) it is the legal and beneficial owner of the
interests being assigned by it hereunder, (ii) such interests are free and clear of any lien,
encumbrance or other adverse claim and (iii) it has full power and authority, and has taken all
action necessary, to execute and deliver this Agreement and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with this Agreement, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of this Agreement or any
collateral hereunder, (iii) the financial condition of the Borrower, any of its Subsidiaries or
Affiliates or any other Person obligated in respect of this Agreement or (iv) the performance or
observance by the Borrower, any of its Subsidiaries or Affiliates.

          (d) Each of China Development Bank Corporation and The Export-Import Bank of China (a)
represents and warrants that (i) it has full power and authority, and has taken all action
necessary, to execute and deliver this Agreement and to consummate the transactions contemplated
hereby and to become a Lender under this Agreement, (ii) it meets all requirements of an eligible
assignee under this Agreement, (iii) from and after the Effective Date, it shall be bound by the
provisions of this Agreement as a Lender hereunder and, to the extent of the interests being
assigned to it hereunder, shall have the obligations of a Lender hereunder, (iv) it has received
copies of such documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Agreement and to purchase the interests being assigned to
it hereunder on the basis of which it has made such analysis and decision independently and without
reliance on the Administrative Agent or any other Lender; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, SCB or any other Lender, and based
on such documents and information as it shall deem appropriate at the time, continue to make its
own credit decisions in taking or not taking action under this Agreement and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender.

     11.4 Register. The Administrative Agent, acting solely for this purpose as an agent of
the Borrower, shall maintain a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitments of, and
principal amounts of the Advances owing to, each Lender pursuant to the terms hereof from time to
time (the “Register”). The entries in the Register shall be conclusive, and the Borrower, the
Administrative Agent and the Lenders shall treat each Person whose name is recorded in the Register
pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement,
notwithstanding notice to the contrary. The Register shall be available for inspection by the
Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

     11.5 Participations. Any Lender may at any time, without the consent of, or notice to, the
Borrower or the Administrative Agent, sell participations to any Person (other than a natural
person or the Borrower or any of the Borrower’s Affiliates or Subsidiaries) (each, a “Participant”)
in all or a portion of such Lender’s rights and/or obligations under this Agreement (including all
or a portion of its Commitment and/or the Advances owing to it); provided that

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(i) such Lender’s obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of such obligations and
(iii) the Borrower, the Administrative Agent and the Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender’s rights and obligations under this
Agreement.

          Any agreement or instrument pursuant to which a Lender sells such a participation shall
provide that such Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided that
such agreement or instrument may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver that would (i) increase or extend the
term of such Lender’s Commitment, (ii) extend the date fixed for the payment of principal of or
interest on any Advance or any portion of any fee hereunder payable to the Participant, (iii)
reduce the amount of any such payment of principal, (iv) reduce the rate at which interest is
payable thereon to a level below the rate at which the Participant is entitled to receive such
interest, (v) release any Guarantor from the Guarantee Agreement (other than in accordance with the
provisions of the Loan Documents) or (vi) release any Property covered by any Security Document,
except in connection with Dispositions permitted hereunder or as otherwise provided herein or in
the Security Documents. The Borrower agrees that each Participant shall be entitled to the
benefits of Article 12 to the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to Section 11.2. To the extent permitted by law, each Participant also shall
be entitled to the benefits of Section 7.4 as though it were a Lender, provided
that such Participant agrees to be subject to Section 7.4 as though it were a Lender.

     11.6 Certain Pledges. Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement and any Note to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank;
provided that no such pledge or assignment shall release such Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party
hereto.

     11.7 Taxes.

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

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          (b) Payment of Other Taxes by the Borrower. Without limiting the provisions of
subsection (a) above, the Borrower shall timely pay any Other Taxes that arise from any payment
made under, or otherwise with respect to, any Loan Document to the relevant Governmental Authority
in accordance with applicable law.

          (c) Indemnification by the Borrower. The Borrower shall indemnify each Agent and each
Lender, within thirty (30) days after demand therefor, for the full amount of any Indemnified Taxes
or Other Taxes (including Indemnified Taxes or Other Taxes imposed or asserted on or attributable
to amounts payable under this Section) attributable to the Borrower or that arise from any payment
made under, or otherwise with respect to, any Loan Document, and paid by such Administrative Agent
or such Lender and any penalties, interest and reasonable expenses arising therefrom or with
respect thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or legally
imposed or asserted by the relevant Governmental Authority. A certificate as to the amount of such
payment or liability delivered to the Borrower by a Lender or the Collateral Agent (in each case
with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on
behalf of a Lender or the Collateral Agent, shall be conclusive absent manifest error.

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

          (e) Any Lender that is not resident for tax purposes in the jurisdiction in which the Borrower
is resident for such purposes and is entitled to an exemption from or reduction of withholding tax
under the law of the jurisdiction in which the Borrower is resident, or any treaty to which such
jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall,
to the extent legally able to do so, use reasonable efforts to deliver to the Borrower (with a copy
to the Administrative Agent), at the time or times prescribed by applicable law, such properly
completed and executed documentation prescribed by applicable law or reasonably requested by the
Borrower or Administrative Agent as will permit such payments to be made without withholding or at
a reduced rate; provided that nothing herein shall obligate any Lender to disclose
any confidential information in connection therewith.

     11.8 Treatment of Certain Refunds. If the Administrative Agent or a Lender reasonably determines, in its sole discretion, that
it has received a refund of any Taxes as to which it has been indemnified by the Borrower or with
respect to which the Borrower has paid additional amounts pursuant to this Section, it shall pay to
the Borrower an amount equal to such refund (but only to the extent of indemnity payments made, or
additional amounts paid by the Borrower under this Section with respect to the Taxes giving rise to
such refund), net of all reasonable out-of-pocket expenses of the Administrative Agent or such
Lender, as the case may be, and without interest (other than any interest paid by the relevant
taxing authority with respect to such refund); provided that the Borrower, upon the
request of the Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant taxing authority)
to the Administrative Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to

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such taxing authority. This paragraph shall not be construed to
require the Administrative Agent or any Lender to make available its tax returns (or any other
information relating to its taxes that it deems confidential) to the Borrower or any other Person.

12. YIELD PROTECTION, ETC.

     12.1 Illegality. Notwithstanding any other provision of this Agreement, in the event that
any Change in Law shall make it unlawful for any Lender or its Applicable Lending Office to make or
maintain its Advances or give effect to its obligations as contemplated by this Agreement (and, in
the opinion of such Lender, the designation of a different Applicable Lending Office would either
not avoid such unlawfulness or would be disadvantageous to such Lender), such Lender shall inform
the Administrative Agent and the Borrower to that effect, whereafter (a) such Lender’s Commitment
shall be suspended until such time as such Lender may again make and maintain its Advances
hereunder and (b) if such Change in Law shall so mandate, such Lender’s Advances shall be prepaid
by the Borrower, together with accrued and unpaid interest thereon and all other amounts payable by
the Borrower under this Agreement, on or before such date as shall be mandated by such Change in
Law. In any such event, but without prejudice to the aforesaid obligations of the Borrower to
prepay the amounts referenced above, the Borrower and relevant Lender shall negotiate in good faith
with a view to agreeing on terms for making its portion of the Commitment available from another
jurisdiction on a basis which is not unlawful.

     12.2 Increased Costs.

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

	 	(i)	 	impose, modify or deem applicable any reserve
requirements or require the making of any special deposits, compulsory
loans, insurance charge or similar requirement against or in respect of
any assets of, deposits with or for the account of, or loans by, any
Lender; or
	 
	 	(ii)	 	impose on any Lender any other condition, cost
or expense affecting this Agreement or any Advance of such Lender;

and the result of any of the foregoing is either to increase the cost to such Lender of making
available or maintaining its Advances or of maintaining its Commitments, or any part thereof or to
reduce the amount of any sum received or receivable by such Lender hereunder (whether of principal,
interest or any other amount) then, upon request of such Lender, the Borrower will pay to such Bank
such additional amount or amounts as will compensate such Bank for such additional costs incurred
or reduction suffered. This Section 12.2(a) shall not apply to matters covered by Section 11.7.

	 	(b)	 	Capital Requirements. If any Lender determines that any
Change in Law affecting such Lender or any lending office of such Lender or such
Lender’s holding company, if any, regarding capital requirements has or would
have the effect of reducing the rate of return on such Lender’s

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	 	 	 	capital or on the capital of such Lender’s holding company, if any, as a consequence of this
Agreement, the Commitment of such Lender or the Advances of such Lender to a
level below that which such Lender or such Lender’s holding company could have
achieved but for such Change in Law (taking into consideration such Lender’s
policies and the policies of such Lender’s holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered in accordance with
Section 12.2(c) below.
	 
	 	(c)	 	Certificate for Reimbursement.

	 	(i)	 	Lenders shall deliver a certificate to the
Borrower notifying of the occurrence of any Change in Law referenced in
Sections 12.2(a) and (b) above and setting forth the amount or amounts
necessary to compensate such Lender or its holding company, as the case
may be, such certification shall be conclusive absent manifest error.
	 
	 	(ii)	 	The Borrower shall within ten (10) days after
receipt of such certification pay to such Lender such amount as the
Lender certifies to be necessary to compensate such Lender or its
holding company, as the case may be.

	 	(d)	 	Delay. Failure or delay on the part of any Lender to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s right to demand such compensation; provided that
the Borrower shall not be required to compensate a Lender pursuant to this
Section for any increased costs incurred or reductions suffered more than 270
days prior to the date that such Lender notifies the Borrower of the Change in
Law giving rise to such increased costs or reductions and of such Lender’s
intention to claim compensation therefor (except that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive
effect thereof).

     12.3 Interest Rate Determination. If on or prior to the first day of any Interest Period
(an “Affected Interest Period”):

	 	(a)	 	the Administrative Agent shall determine that, by reason of
circumstances affecting the London Interbank Market generally, adequate and
reasonable means do not or will not exist for ascertaining LIBOR pursuant to the
definition thereof, or
	 
	 	(b)	 	(i) with respect to the Senior Facility, Senior Lenders holding
more than 33% of the aggregate outstanding principal amount of the Advances
under the Senior Facility (for purposes of this Section 12.3, the “Required
Senior

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	 	 	 	Lenders”) or (ii) with respect to the Cost Overrun Term Loan, Cost Overrun Lenders holding more than 33% of the aggregate outstanding principal
amount of the Advances under the Cost Overrun Term Loan or, if no Advances under
the Cost Overrun Term Loan are outstanding, Cost Overrun Lenders having more
than 33% of the aggregate Cost Overrun Term Loan Commitments as most recently in
effect (for purposes of this Section 12.3, the “Required Cost Overrun Lenders”),
determine and notify the Administrative Agent not later than 5:00 p.m. London,
England time on the date two (2) Banking Days prior to such Interest Period that
the relevant rates of interest referred to in the definition of “LIBOR” in
Article 1 upon the basis of which the rate of interest for Advances under the
Senior Facility or Cost Overrun Term Loan, as the case may be, for such Affected
Interest Period is to be determined will not be adequate to cover the cost to
such Lenders of making or maintaining their Advances under the Senior Facility
or Cost Overrun Term Loan, as the case may be, for such Affected Interest
Period,

the Administrative Agent shall give notice thereof (a “Rate Determination Notice”) to the Borrower
and the Lenders as soon as practicable thereafter.

If such notice is given, during the fifteen (15) day period following such Rate Determination
Notice, the Administrative Agent shall notify (a “Substitute Basis Notice”) the Borrower of a
substitute interest rate basis for the Advances under the Senior Facility or Cost Overrun Term
Loan, as the case may be, determined by the Supermajority Lenders or Supermajority Cost Overrun
Lenders, as the case may be, which shall constitute for purposes of this Agreement the cost to the
Lenders of funding or maintaining their Advances under the Senior Facility or Cost Overrun Term
Loan, as the case may be (a “Substitute Basis”), and thereafter the Borrower and the Administrative
Agent shall consult in good faith regarding such Substitute Basis and if such Substitute Basis is
agreed to by the Borrower in writing within ten (10) Banking Days following delivery of the
Substitute Basis Notice, such Substitute Basis shall apply in lieu of LIBOR to all
Interest Periods under the applicable Facility commencing on or after the first day of the Affected
Interest Period, until notified by the Administrative Agent (acting on the behalf of the
Supermajority Lenders or Supermajority Cost Overrun Lenders, as the case may be) that the
circumstances giving rise to such notice have ceased to apply; provided that the Borrower may, at
least five (5) Banking Days prior to the end of each Affected Interest Period, request that the
Supermajority Lenders or Supermajority Cost Overrun Lenders, as the case may be, provide
confirmation that the circumstances giving rise to the applicable Substitute Basis continue and if
so whether the Substitute Basis will remain the same, increase or decrease for the immediately
subsequent Affected Interest Period. If the Borrower rejects the Substitute Basis or fails to
approve the Substitute Basis within the required ten (10) Banking Days, the Borrower may elect to
prepay the Advances under the Senior Facility or Cost Overrun Term Loan, as the case may be,
pursuant to Section 5.3, applying such Substitute Basis with respect to the calculation of interest
accrued on and after the first day of the Affected Interest Period until the date of such
prepayment; provided, however, that if the Borrower does not elect so to prepay, each Senior Lender
or Cost Overrun Term Loan, as applicable, shall determine (and shall certify from time to time in a
certificate delivered by such Lender to the Administrative Agent setting forth in

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reasonable detail the basis of the computation of such amount) the rate basis reflecting the cost to such Lender of
funding and maintaining, as applicable, its Advances for the Interest Period commencing on or after
the first day of the Affected Interest Period, until the circumstances giving rise to such notice
have ceased to apply, and such rate basis shall be binding upon the Borrower and such Lender and
shall apply in lieu of LIBOR for the relevant Interest Period. Solely for purposes of this
Section, at any time that there is more than one (1) Senior Lender but four (4) or less Senior
Lenders under this Agreement, the determination of the Required Senior Lender or Supermajority
Lender (as applicable) threshold shall require the approval of at least two (2) Senior Lenders in
addition to satisfaction of the percentage requirements for such voting threshold.

     12.4 Administrative Agent’s Certificate. A certificate or determination notice of the
Administrative Agent as to any of the matters referred to in this Article 12 shall, save for any
manifest error, be conclusive and binding on the Borrower.

     12.5 Break-Funding. The Borrower shall pay to the Administrative Agent for account of each
Lender, upon the request of such Lender through the Administrative Agent, such amount or amounts
(if any) as shall be sufficient to compensate it for any loss, cost or expense that such Lender
determines is attributable to:

	 	(a)	 	any prepayment of any Advance of such Lender for any reason on a
date other than the last day of an Interest Period in respect thereof; or
	 
	 	(b)	 	the failure by the Borrower for any reason (including the failure
of any of the conditions precedent specified in Article 4 to be satisfied) to
make the relevant borrowing on the Drawdown Date specified in the relevant
Drawdown Notice given pursuant to Section 3.4, or to prepay any Advance in
accordance with a notice of prepayment under Section 5.3.

Each Lender will furnish to the Borrower a certificate setting forth the basis and amount of each
request by such Lender for compensation under this Section 12.5, which certificate shall be
conclusive and binding on the Borrower in the absence of manifest error.

     12.6 Mitigation Obligations. If any Lender requests compensation under Section 12.2, or
requires the Borrower to pay any additional amount to any Lender or any Governmental Authority for
the account of any Lender pursuant to Section 11.7, then such Lender shall use reasonable efforts
to designate a different Applicable Lending Office for funding or booking its Advances hereunder or
to assign its rights and obligations hereunder to another of its offices, branches or affiliates,
if, in the judgment of such Lender, such designation or assignment (i) would eliminate or reduce
amounts payable pursuant to Section 11.7 or 12.2, as the case may be, in the future and (ii) would
not subject such Lender to any unreimbursed cost or expense and would not otherwise be materially
disadvantageous to such Lender. The Borrower hereby agrees to pay all reasonable costs and
expenses incurred by each Lender in connection with any such designation or assignment.

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13. CURRENCY INDEMNITY

     13.1 Judgment Currency. This is an international loan transaction in which the
specification of Dollars and payment in New York, New York, is of the essence, and the obligations
of the Borrower under this Agreement and the other Loan Documents to each Lender or the
Administrative Agent or the Collateral Agent (in this Section 13.1 called an “Entitled Person”) to
make payment in Dollars shall not be discharged or satisfied by any tender or recovery pursuant to
any judgment expressed in or converted into any other currency or in another place except to the
extent that on the Banking Day following receipt of any sum adjudged to be so due in the judgment
currency such Entitled Person may in accordance with normal banking procedures purchase, and
transfer to New York, New York, Dollars in the amount originally due to such Entitled Person with
the judgment currency. If for the purpose of obtaining judgment in any court it is necessary to
convert a sum due hereunder in Dollars into another currency (in this Section 13.1 called the
“judgment currency”), the rate of exchange that shall be applied shall be that at which in
accordance with normal banking procedures the Administrative Agent could purchase such Dollars at
New York, New York, with the judgment currency on the Banking Day immediately preceding the day on
which such judgment is rendered. The Borrower hereby, as a separate obligation and notwithstanding
any such judgment, agrees to indemnify such Entitled Person against, and to pay each Entitled
Person on demand, in Dollars, the amount (if any) by which the sum originally due to such Entitled
Person in Dollars hereunder exceeds the amount of the Dollars purchased and transferred as
aforesaid.

14. FEES AND EXPENSES

     14.1 Fee Letters.

          (a) Upfront Fee and Coordination Fee. The Borrower shall pay to SCB such fees as the
parties have agreed pursuant to (i) the Upfront Fee and Coordination Fee Letter and (ii) the
Additional Upfront Fee Letter in accordance with the terms therewith.

          (b) Agency and Depositary Fee. The Borrower shall pay to the Administrative Agent,
for its own account, the Agency and Depositary Fee commencing on the earlier to occur of (i) the
Initial Drawdown Date and (ii) the date occurring fifteen (15) days after the Closing Date, and
annually in advance on each anniversary of the Closing Date thereafter until the Termination Date
(as defined in the Collateral Agency Agreement) in the amounts set forth in the Agency and
Depositary Fee Letter. The Agency and Depositary Fee shall be payable in advance in accordance
with the terms and in the amounts as set forth in the Agency and Depositary Fee Letter.

     14.2 Commitment Fee. The Borrower shall pay to the Administrative Agent for the account of
each Lender (as applicable), for each day during the period from the date hereof until the last day
of (a) the Senior Revolver Availability Period, with respect to the unused Senior Revolver
Commitments at a rate equal to 1.25% per annum, (b) the Term Loan Availability Period, with respect
to the unused Senior Term Loan Commitments at a rate equal to 1.25% per annum and (c) the Term Loan
Availability Period, with respect to the unused Cost Overrun Term Loan Commitments at a rate equal
to 1.25% per annum, accrued commitment fees to be payable on each Quarterly Date and upon
termination or expiry of the Commitments.

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     14.3 Expenses.

          (a) Subject to Section 14.3(b) below, the Borrower shall pay (i) all reasonable out-of-pocket
expenses incurred by the Lead Arranger, member of the Joint Committee, Agent and its respective
Affiliates (including the reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP,
special New York counsel to the Administrative Agent, Stamford Law Corporation special Singapore
local counsel to the Administrative Agent and any other counsel to the Administrative Agent
retained in connection with Section 9.1(p)(v) and retained in connection with the review of a
Proposed Transaction by the Joint Committee), in connection with the syndication of the Facilities
provided for herein, the preparation, negotiation, execution, delivery and administration of this
Agreement and the other Loan Documents or any amendments, modifications or waivers of the
provisions hereof or thereof (including, without limitation, reasonable out-of-pocket expenses with
respect to the Technical and Environmental Consultant, Insurance Consultant, (whether or not the
transactions contemplated hereby or thereby shall be consummated) and (ii) all reasonable
out-of-pocket expenses incurred by the Lead Arranger, the Mandated Lead Arrangers, the Agents or
any Lender (including the fees, charges and disbursements of any counsel for the Agents or any
Lender) in connection with the enforcement or, during the continuance of an Event of Default,
protection of its rights (A) in connection with this Agreement and the other Loan Documents,
including its rights under this Section, or (B) in connection with the Advances made hereunder, including all such
out-of-pocket expenses incurred during any workout, restructuring or negotiations in respect of
such Advances.

          (b) Any out of pocket expenses of the Lead Arranger and member of the Joint Committee that are
reasonably expected to exceed $5,000 shall require the Borrower’s written consent, which shall not
be unreasonably withheld, prior to the Lead Arranger incurring such out of pocket expense;
provided that (i) the Borrower’s approval shall be deemed given if (1) the Borrower
does not respond within five Banking Days of the relevant request for approval, (2) such costs and
expenses are reasonably necessary to keep the Advances and/or the Lenders’ rights in respect
thereof unaffected and in full force and effect or (3) an Event of Default has occurred.

15. APPLICABLE LAW AND JURISDICTION

     15.1 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW
(EXCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     15.2 Submission to Jurisdiction; Process Agent; Alternative Process; Waiver of Venue, Etc.. The
Borrower hereby (i) irrevocably submits, for itself and its Property, to the non-exclusive
jurisdiction of the courts of the State of New York and of the United States District Court for the
Southern District of New York , and any applicable appellate court, in any action or proceeding
arising out of or relating to any Loan Document or any instrument delivered hereunder or
thereunder, or for recognition or enforcement of any judgment, and each of the parties hereto, (ii)
irrevocably and unconditionally agrees that all claims in respect of any such

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action or proceeding may be heard and determined in such New York State court or, to the fullest extent permitted by
applicable law, in such Federal court, (iii) irrevocably waives (to the fullest extent permitted by
applicable law) any objection which it now or hereafter may have to the laying of venue of any such
action or proceeding brought in any of the foregoing courts, and any objection on the ground that
any such action or proceeding in any such court has been brought in an inconvenient forum and (iv)
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner permitted by law.
The Borrower hereby irrevocably appoints, for the duration of this Agreement and until the Facility
has been repaid in full, C T Corporation System, with a place of business at 111 Eighth Avenue, New
York, New York 10011, its attorney-in-fact and agent for service of summons or other legal process
thereon, which service may be made by serving a copy of any summons or other legal process in any
such action or proceeding on such agent and such agent is hereby authorized and directed to receive
and forward by and on behalf of the Borrower, service of summons and other legal process in any
such action or proceeding against it. The service, as herein provided, of such summons or other
legal process in any such action or proceeding shall be deemed personal service and accepted by the
Borrower as such, and shall be legal and binding
upon the Borrower for all the purposes of any such action or proceeding. Nothing herein shall in
any way be deemed to limit the ability of the Administrative Agent, Collateral Agent or any Lender
to serve any such process or summonses in any other manner permitted by applicable law. Final
judgment (a certified or exemplified copy of which shall be conclusive evidence of the fact and of
the amount of any indebtedness of the Borrower to the Lenders) against the Borrower in any such
legal action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit
on the judgment. In the event that the Borrower shall not be conveniently available for such
service, the Borrower hereby irrevocably appoints the Person who then is the Secretary of State of
the State of New York as such attorney-in-fact and agent. Nothing in this Agreement or in any
other Loan Document shall affect any right that the Administrative Agent, the Collateral Agent or
any Lender may otherwise have to bring any action or proceeding relating to this Agreement or any
other Loan Document against the Borrower or its properties in the courts of any other appropriate
jurisdiction.

     15.3 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY EACH PARTY HERETO THAT EACH OF THEM
HEREBY IRREVOCABLY WAIVES , TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO ON
ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE
OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE NOTES BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

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16. THE ADMINISTRATIVE AGENT

     16.1 Appointment of Administrative Agent.

	 	(a)	 	Each of the Lenders appoints the Administrative Agent to act as
the administrative agent under and in connection with the Loan Documents.
	 
	 	(b)	 	Each of the Lenders authorizes the Administrative Agent to
exercise the rights, powers, authorities and discretions specifically given to
the Administrative Agent under or in connection with the Loan Documents together
with any other incidental rights, powers, authorities and discretions.

     16.2 Duties of the Administrative Agent.

	 	(a)	 	The Administrative Agent shall promptly forward to a Lender the
original or a copy of any document which is delivered to the Administrative
Agent for that Lender by any other party.
	 
	 	(b)	 	Except where a Loan Document specifically provides otherwise, the
Administrative Agent is not obligated to review or check the adequacy, accuracy
or completeness of any document it forwards to another party.
	 
	 	(c)	 	If the Administrative Agent receives notice from a party
referring to this Agreement, describing a Default and stating that the
circumstance described is a Default, it shall promptly notify the Lenders.
	 
	 	(d)	 	If the Administrative Agent is aware of the non-payment of any
principal, interest, commitment fee or other fee payable to a Lender (other than
the Administrative Agent, the Lead Arranger or the Collateral Agent) under this
Agreement it shall promptly notify the Lenders.
	 
	 	(e)	 	The Administrative Agent’s duties under the Loan Documents are
solely mechanical and administrative in nature.

     16.3 Role of the Lead Arranger; Mandated Lead Arrangers. Except as specifically provided
in the Loan Documents, the Lead Arranger has no obligations of any kind to any other party under or
in connection with any Loan Document. The Mandated Lead Arrangers and the Cost Overrun Term Loan
Lead Arranger have no obligations of any kind to any other party under or in connection with any
Loan Document.

     16.4 No Fiduciary Duties.

	 	(a)	 	Nothing in this Agreement constitutes the Administrative Agent as
a trustee or fiduciary of any other person.
	 
	 	(b)	 	The Administrative Agent, the Lead Arranger, the Mandated Lead
Arrangers and the Cost Overrun Term Loan Lead Arranger shall not be

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	 	 	 	bound to account to any Lender for any sum or the profit element of any sum received by
it for its own account.

     16.5 Business with the Borrower and the Joint Venturers. The Administrative Agent, the
Lead Arranger, the Mandated Lead Arrangers and the Cost Overrun Term Loan Lead Arranger may accept
deposits from, lend money to and generally engage in any kind of banking or other business with the
any Security Party.

     16.6 Rights and Discretions.

	 	(a)	 	The Administrative Agent may rely on:

	 	(i)	 	any representation, notice or document believed
by it to be genuine, correct and appropriately authorized; and
	 
	 	(ii)	 	any statement made by a director, authorized
signatory or employee of any person regarding any matters which may
reasonably be assumed to be within his knowledge or within his power to
verify.

	 	(b)	 	The Administrative Agent may assume (unless it has received
notice to the contrary in its capacity as agent for the Lenders) that:

	 	(i)	 	no Default has occurred (unless it has actual
knowledge of a Default arising under Section 8.1(a) and (b);
	 
	 	(ii)	 	any right, power, authority or discretion
vested in any party or the Lenders has not been exercised; and
	 
	 	(iii)	 	any notice or request made by the Borrower is
made on behalf of and with the consent and knowledge of all the Joint
Venturers.

	 	(c)	 	Subject to Section 14.3, the Administrative Agent may engage, pay
for and rely on the advice or services of any lawyers, accountants, surveyors or
other experts.
	 
	 	(d)	 	The Administrative Agent may act in relation to the Loan
Documents through its personnel and agents.
	 
	 	(e)	 	The Administrative Agent may disclose to any other party to this
agreement any information it reasonably believes it has received as agent under
this Agreement.
	 
	 	(f)	 	Notwithstanding any other provision of any Loan Document to the
contrary the Administrative Agent, the Lead Arranger, the Mandated Lead
Arrangers and the Cost Overrun Term Loan Lead Arranger are not obligated to do
or omit to do anything if it would or might in its reasonable

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	 		 	opinion constitute a breach of any law or regulation or a breach of a fiduciary duty or duty of
confidentiality.

     16.7 Required Lenders’ Instructions.

	 	(a)	 	Unless provided to the contrary in a Loan Document, the
Administrative Agent shall (i) exercise any right, power, authority or
discretion vested in it as Administrative Agent in accordance with any
instructions given to it by the requisite Lenders (or, if so instructed by the
requisite Lenders, refrain from exercising any right, power, authority or
discretion vested in it as Administrative Agent) and (ii) not be liable for any
act (or omission) if it acts (or refrains from taking any action) in accordance
with an instruction of the requisite Lenders.
	 
	 	(b)	 	Unless provided to the contrary in a Loan Document, any
instructions given by the requisite Lenders will be binding on all the Lenders
other than the Collateral Agent.
	 
	 	(c)	 	The Administrative Agent may refrain from acting in accordance
with the instructions of the requisite Lenders until it has received such
security as it may require for any cost, loss or liability which it may incur in
complying with the instructions.
	 
	 	(d)	 	In the absence of instructions from the requisite Lenders, the
Administrative Agent may act (or refrain from taking action) as it considers to
be in the best interest of the Lenders.
	 
	 	(e)	 	The Administrative Agent is not authorized to act on behalf of a
Lender (without first obtaining that Lender’s consent) in any legal or
arbitration proceedings relating to any Loan Document. This Section 16.7 shall
not apply to any legal or arbitration proceeding relating to the perfection,
preservation or protection of rights under the Security Documents or enforcement
of the Liens in favor of the Collateral Agent on the behalf of the Secured
Parties.

     16.8 Responsibility for Documentation. The Administrative Agent, the members of the Joint
Committee, the Lead Arranger, the Mandated Lead Arrangers and the Cost Overrun Term Loan Lead
Arranger shall not be:

	 	(a)	 	responsible for the adequacy, accuracy and/or completeness of any
information (whether oral or written) supplied by the Administrative Agent, the
Lead Arranger or any other person given in or in connection with any Loan
Document or the transactions contemplated in the Loan Documents; or
	 
	 	(b)	 	responsible for the legality, validity, effectiveness, adequacy
or enforceability of any Loan Document or the Liens in favor of the Collateral

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	 	 	 	Agent on the behalf of the Secured Parties or any other agreement,
arrangement or document entered into, made or executed in anticipation of or in
connection with any Loan Document or any Liens in favor of the Collateral Agent
on the behalf of the Secured Parties.

     16.9 Exclusion of Liability.

	 	(a)	 	Without limiting Section 16.9(b), the Administrative Agent will
not be liable for any action taken by it under or in connection with any Loan
Document or the Collateral, unless directly caused by its gross negligence or
willful misconduct.
	 
	 	(b)	 	No party to this Agreement (other than the Administrative Agent)
may take any proceedings against any officer, employee or agent of the
Administrative Agent in respect of any claim it might have against the
Administrative Agent or in respect of any act or omission of any kind by that
officer, employee or agent in relation to any Loan Document or any Transaction
Document and any officer, employee or agent of the Administrative Agent may rely
on this Section 16.9(b).
	 
	 	(c)	 	The Administrative Agent will not be liable for any delay (or any
related consequences) in crediting an account with an amount required under the
Loan Documents to be paid by the Administrative Agent if the Administrative
Agent has taken all necessary steps as soon as reasonably practicable to comply
with the regulations or operating procedures of any recognized clearing or
settlement system used by the Administrative Agent for that purpose.
	 
	 	(d)	 	Nothing in this Agreement shall obligate the Administrative
Agent, the Lead Arranger, the Mandated Lead Arrangers and the Cost Overrun Term
Loan Lead Arranger to carry out any “know your borrower” or other checks in
relation to any person on behalf of any Lender and each Lender confirms to the
Administrative Agent and the Lead Arranger that it is solely responsible for any
such checks it is required to carry out and that it may not rely on any
statement in relation to such checks made by the Administrative Agent or the
Lead Arranger.

     16.10 Resignation of the Administrative Agent.

	 	(a)	 	The Administrative Agent may resign and appoint one of its
Affiliates acting through an office in London or New York City, New York as
successor by giving notice to the Lenders and the Borrower.
	 
	 	(b)	 	Alternatively the Administrative Agent may resign by giving
notice to the Lenders and the Borrower, in which case the Majority Lenders
(after consultation with the Borrower) may appoint a successor Administrative
Agent reasonably acceptable to the Borrower.

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	 	(c)	 	If the Majority Lenders have not appointed a successor
Administrative Agent in accordance with Section 16.10(b) within 30 days after
notice of resignation was given, the Administrative Agent (after consultation
with the Borrower) may appoint a successor Administrative Agent (acting through
an office in New York City, New York) reasonably acceptable to the Borrower.
	 
	 	(d)	 	The retiring Administrative Agent shall, at its own cost, make
available to the successor Administrative Agent such documents and records and
provide such assistance as the successor Administrative Agent may reasonably
request for the purposes of performing its functions as Administrative Agent
under the Loan Documents.
	 
	 	(e)	 	The Administrative Agent’s resignation notice shall only take
effect upon the appointment of a successor.
	 
	 	(f)	 	Upon the appointment of a successor, the retiring Administrative
Agent shall be discharged from any further obligation in respect of the Loan
Documents but shall remain entitled to the benefit of this Article 16. Its
successor and each of the other parties to this Agreement shall have the same
rights and obligations amongst themselves as they would have had if such
successor had been an original party to this agreement.
	 
	 	(g)	 	After consultation with the Borrower, the Majority Lenders may,
by notice to the Administrative Agent, require it to resign in accordance with
Section 16.10(b) above. In this event, the Administrative Agent shall resign in
accordance with Section 16.10(b) above.

     16.11 Confidentiality.

	 	(a)	 	In acting as agent for the Lenders, the Administrative Agent
shall be regarded as acting through its agency division which shall be treated
as a separate entity from any other of its divisions or departments.
	 
	 	(b)	 	If information is received by another division or department of
the Administrative Agent, it may be treated as confidential to that division or
department and the Administrative Agent shall not be deemed to have notice of
it.
	 
	 	(c)	 	Notwithstanding any other provision of any Loan Document to the
contrary, none of the Administrative Agent or the Lead Arranger are obligated to disclose to any other person (i) any confidential information or
(ii) any other information if the disclosure would or might in its reasonable
opinion constitute a breach of any law or a breach of a fiduciary duty.

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     16.12 Relationship with the Lenders.

	 	(a)	 	The Administrative Agent may treat each Lender as a Lender,
entitled to payments under this Agreement unless it has received not less than
five Banking Days prior notice from that Lender to the contrary in accordance
with the terms of this Agreement.
	 
	 	(b)	 	Each Lender shall supply the Administrative Agent with any
information that the Collateral Agent may reasonably specify (through the
Administrative Agent) as being necessary or desirable to enable the Collateral
Agent to perform its functions as Collateral Agent. Each Lender shall deal with
the Collateral Agent exclusively through the Administrative Agent and shall not
deal directly with the Collateral Agent.

     16.13 Credit Appraisal by the Lenders.

          Without affecting the responsibility of the any Security Party for information supplied by it
or on its behalf in connection with any Loan Document, each Lender confirms to the Administrative
Agent, the Lead Arranger, the Mandated Lead Arrangers and the Cost Overrun Term Loan Lead Arranger
that it has been, and will continue to be, solely responsible for making its own independent
appraisal and investigation of all risks arising under or in connection with any Loan Document
including but not limited to:

	 	(a)	 	the financial condition, status and nature of the Borrower;
	 
	 	(b)	 	the legality, validity, effectiveness, adequacy or enforceability
of any Loan Document and the Liens and any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in
connection with any Loan Document or the Liens;
	 
	 	(c)	 	whether that Lender has recourse, and the nature and extent of
that recourse, against any party to this agreement or any of its respective
assets under or in connection with any Loan Document, the Liens in favor of the
Collateral Agent on the behalf of the Secured Parties, the transactions
contemplated by the Loan Documents or any other agreement, arrangement or
document entered into, made or executed in anticipation of, under or in
connection with any Loan Document;
	 
	 	(d)	 	the adequacy, accuracy and/or completeness of any information
provided by the Administrative Agent, any party hereto or by any other person
under or in connection with any Loan Document, the transactions contemplated by the
Loan Documents or any other agreement, arrangement or document entered into,
made or executed in anticipation of, under or in connection with any Loan
Document; and

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	 	(e)	 	the right or title of any Person in or to, or the value or
sufficiency of any part of the Collateral, the priority of any of the Liens or
the existence of any Liens affecting the Collateral.

     16.14 Administrative Agent’s and Joint Committee Management Time. Any amount payable to
the Administrative Agent under Article 14, Section 19.5(a) and Section 19.5(b) shall include any
reasonable costs in utilizing the Administrative Agent’s management time or other resources (as
shall be approved in writing by the Borrower (such approval not to be unreasonably withheld or
delayed)) and will be calculated on the basis of such reasonable daily or hourly rates as the
Administrative Agent and members of the Joint Committee may notify to the Borrower and the Lenders,
and is in addition to any fee paid or payable to the Administrative Agent under Article 14 or to
the Joint Committee.

     16.15 Deduction from Amounts payable by the Administrative Agent. If any party hereto
owes an amount to the Administrative Agent under the Loan Documents the Administrative Agent may,
after giving notice to that party, deduct an amount not exceeding that amount from any payment to
that party which the Administrative Agent would otherwise be obligated to make under the Loan
Documents and apply the amount deducted in or towards satisfaction of the amount owed. For the
purposes of the Loan Documents that party shall be regarded as having received any amount so
deducted.

     16.16 Reliance and Engagement Letters. Each Lender confirms that each of the Lead
Arranger and the Administrative Agent has authority to accept on its behalf (and ratifies the
acceptance on its behalf of any letters, engagement letters or reports from the Insurance
Consultant and Technical and Environmental Consultant already accepted by the Lead Arranger or
Administrative Agent) the terms of any letters, engagement letters or reports relating to the
Insurance Consultant and Technical and Environmental Consultant in connection with the Loan
Documents or the transactions contemplated in the Loan Documents and to bind it in respect of those
letters, engagement letters or reports and to sign such documents on its behalf and further
confirms that it accepts the terms and qualifications set out in such documents.

17. COLLATERAL AGENT

     17.1 Appointment by Administrative Agent. Each Lender hereby irrevocably authorizes
the Administrative Agent to act as its agent under the Collateral Agency Agreement to appoint the
Collateral Agent thereunder on behalf of such Lender and the other Secured Parties, such
appointment subject to the terms and conditions of such agreement.

18. NOTICES AND DEMANDS

     18.1 Addresses. Every notice or demand required or permitted under this Agreement
shall be in writing and may be given or made by facsimile, mail, prepaid overnight courier or other
means, sent as follows:

If to the Security Parties:

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	 	 	 	BULLY 2, LTD.

Appleby Trust (Cayman) Ltd.

Clifton House

75 Fort Street

P.O. Box 1350,

Grand Cayman KY1-1108, Cayman Islands

British West Indies

Facsimile No.: +1-345-949-4901

Attention: The Secretary
	 
	 	 	 	with a copy to:
	 
	 	 	 	FRONTIER DRILLING USA, INC.

1000 Louisiana, Suite 1210

Houston, TX 77002

Telephone No.: +1-713-481-7500

Attention: John Stevenson

If to the Administrative Agent:

	 	 	 	STANDARD CHARTERED BANK

6th Floor, 1 Aldermanbury Square

London

EC2V 7SB

Facsimile No.: +44-207-885-6460

Attention: Lisa Lee / Michelle Goodridge — Loans & Agency UK / Europe

If to the Joint Committee:

	 	 	 	STANDARD CHARTERED BANK

6th Floor, 1 Aldermanbury Square

London

EC2V 7SB

Facsimile No.: +44-207-885-6460

Attention: Lisa Lee / Michelle Goodridge — Loans & Agency UK / Europe

If to the Lenders:

          To their respective addresses set forth on Schedule 1 hereto or as otherwise set forth in any
Assignment and Assumption provided to the Administrative Agent by such Lender.

     18.2 Receipt. Every notice or demand required or permitted under this Agreement shall
except so far as otherwise expressly provided by this Agreement, be deemed to have been received in
the case of a facsimile at the time of dispatch thereof (provided that if the date
of dispatch is not a Banking Day in the locality of the party to whom such notice or demand is sent
it shall be deemed to have been received on the next following Banking Day in such locality), in

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the case of a letter delivered by hand or by courier, at the time of delivery and, in the case of a
letter, on the expiration of five (5) days after the same is put into the mail.

19. MISCELLANEOUS

     19.1 No Waiver. No failure or delay on the part of the Administrative Agent,
Collateral Agent or any Lender to exercise and no delay in exercising, and no course of dealing
with respect to, any right, remedy, power or privilege under any Loan Document shall operate or be
construed as a waiver thereof, nor shall any single or partial exercise of any right, remedy, power
or privilege under any Loan Document preclude any other or further exercise thereof or the exercise
of any other right, remedy, power or privilege. The remedies provided herein are cumulative and
are not exclusive of any remedies provided by law.

     19.2 Survival. The obligations of the Borrower under Sections 11.7, 12.2, 12.5 and
14.3, 19.5, and the obligations of the Lenders under Section 14.3, shall survive the repayment of
the Advances and the termination of the Commitments and, in the case of any Lender that may assign
any interest in its Commitment or Advances hereunder, shall survive, in the case of any event or
circumstance that occurred prior to the effective date of such assignment, the making of such
assignment, notwithstanding that such assigning Lender may cease to be a “Lender” hereunder. In
addition, each representation and warranty made, or deemed to be made by a notice of any Advance,
herein or pursuant hereto shall survive the making of such representation and warranty.

     19.3 Severability. In case any one or more of the provisions contained in this
Agreement or any other Loan Document is found by a court to be invalid or unenforceable, to the
fullest extent permitted by applicable law the parties agree that such invalidity or
unenforceability shall not impair the validity or enforceability of any other provision hereof.

     19.4 No Fiduciary Relationship. The Borrower acknowledges that the Lenders have no
fiduciary relationship with, or fiduciary duty to, the Borrower arising out of or in connection
with this Agreement or the other Loan Documents, and the relationship between each Lender and the Borrower is solely
that of creditor and debtor. This Agreement and the other Loan Documents do not create a joint
venture among the parties.

     19.5 Indemnification by Borrower.

          (a) Indemnification by Borrower. The Borrower shall indemnify each Agent, each member
of the Joint Committee, each Lender and each Related Party of any of the foregoing Persons (each
such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and
all losses, claims, damages, liabilities and related expenses (including the fees, charges and
disbursements of any counsel for any Indemnitee), incurred by any Indemnitee or asserted against
any Indemnitee by any third party or by any Security Party arising out of, in connection with, or
as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any
agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of
their respective obligations hereunder or thereunder or the consummation of the transactions
contemplated hereby or thereby, (ii) any Advance or the use or proposed use of the proceeds
therefrom, (iii) any actual or alleged

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presence or Release of Hazardous Materials on or from any property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental
Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or
prospective claim, litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory, whether brought by a third party or by the
Borrower and regardless of whether any Indemnitee is a party thereto, provided that
such indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses (x) are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or
willful misconduct of such Indemnitee or (y) result from a claim brought by the Borrower against an
Indemnitee for breach in bad faith of such Indemnitee’s obligations hereunder or under any other
Loan Document, if the Borrower has obtained a final and nonappealable judgment in its favor on such
claim as determined by a court of competent jurisdiction.

          (b) Reimbursement by Lenders. To the extent that the Borrower for any reason fails to
indefeasibly pay any amount required under Section 14.3 and Section 19.5(a) to be paid by it to
either Agent, member of the Joint Committee or any Related Party thereof, each Lender severally
agrees to pay to such Agent or such Related Party, as the case may be, pro rata in accordance with
such Lender’s Commitment (determined as of the time that the applicable unreimbursed expense or
indemnity payment is sought), such unpaid amount, provided that the unreimbursed
expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was
incurred by or asserted against either Agent in its capacity as such, or against any Related Party
of any of the foregoing acting for such Agent in connection with such capacity.

          (c) Waiver of Consequential Damages, Etc. To the fullest extent permitted by
applicable law, each party hereto agrees that it will not assert, and hereby waives, any claim
against any other party hereto, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with,
or as a result of, any Loan Document or any agreement or instrument contemplated hereby, the
transactions contemplated hereby or thereby, any Advance or the use of the proceeds thereof.

          (d) Payments. All amounts due under this Section 19.5 shall be payable not later than
ten days after demand therefor.

     19.6 Captions. The table of contents and captions and section headings appearing
herein are included solely for convenience of reference and shall not be taken into account in the
interpretation of any provisions of this Agreement.

     19.7 Amendments. Except as otherwise expressly provided in this Agreement, any
provision of this Agreement may be modified or supplemented only by an instrument in writing signed
by the Borrower and the Majority Lenders, or by the Borrower and the Administrative Agent acting
with the consent of the Majority Lenders, and any provision of this Agreement may be waived by the
Majority Lenders or by the Administrative Agent acting with the consent of the Majority Lenders;
provided that (a) no modification, supplement or waiver shall, unless by an
instrument signed by all of the Lenders or by the Administrative Agent acting with the consent of
all of the Lenders (i) increase or extend the term of the Commitments, (ii) extend the date fixed

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for the payment of principal of or interest on any Advance or any fee hereunder, (iii) reduce the
amount of any such payment of principal, (iv) reduce the rate at which interest is payable thereon
or any fee is payable hereunder, (v) release any Property covered by any Security Document, except
in connection with Dispositions permitted hereunder or as otherwise provided herein or in the
Security Documents, (vi) alter the terms of this Section 19.7, or (vii) subject to Section 19.12,
modify the definition of the term “Requisite Lenders” or modify in any other manner the number or
percentage of the Lenders required to make any determinations or waive any rights hereunder or to
modify any provision hereof, or (viii) alter the (1) terms of priority among the Secured Parties in
the Lien granted to the Collateral Agent or (2) the priority of payment of the Secured Obligations
to the Lenders as set forth in the Loan Documents and (b) any modification or supplement of Article
16, or of any of the rights or duties of an Agent hereunder, shall require the consent of such
Agent.

     19.8 Lender Confidentiality. The Lenders shall keep information provided by the
Borrower or relating to the Borrower confidential except that the Lenders may disclose such
information to:

	 	(a)	 	the Agents, any Lender or any of the Lender’s affiliates;
	 
	 	(b)	 	to the Agents’, any Lender’s or any Lender’s affiliates’ service
provider or professional advisor who is under a duty of confidentiality to the
discloser;
	 
	 	(c)	 	any actual or potential participant, sub-participant or
transferee of the Lender’s rights or obligations under this Agreement (or any of
its agents or professional advisors);
	 
	 	(d)	 	any rating agency, insurer or insurance broker, or direct or
indirect provider of credit protection; or
	 
	 	(e)	 	as required by law or any government, quasi-government,
administrative, regulatory or supervisory body or authority, court or tribunal.

     19.9 Entire Agreement. This Agreement and the other Loan Documents constitute the
entire agreement among the parties hereto (including all parties added hereto pursuant to any
assignment made pursuant to Section 11.2) relating to the subject matter hereof and supercede any
and all previous agreements and understandings, oral written, relating to the subject matter
hereof. This Agreement may be executed in any number of counterparts (and by different parties
hereto in different counterparts), each of which shall be deemed an original, but all such
counterparts when taken together shall constitute a single contract. This Agreement shall become
effective when it shall have been executed by the Administrative Agent and when the Administrative
Agent shall have received counterparts hereof that, when taken together, bear the signatures of
each of the other parties hereto. Delivery of an executed counterpart of a signature page of this
Agreement by telecopy or electronic transmission shall be effective as delivery of a manually
executed counterpart of this Agreement.

     19.10 WAIVER OF IMMUNITY. TO THE EXTENT THAT ANY SECURITY PARTY MAY BE OR BECOME
ENTITLED TO CLAIM ANY IMMUNITY FROM SUIT,

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JURISDICTION OF ANY COURT OR ANY LEGAL PROCESS (WHETHER THROUGH ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION, EXECUTION OF A JUDGMENT, OR
FROM ANY OTHER LEGAL PROCESS OR REMEDY) AND TO THE EXTENT THAT IN ANY SUCH JURISDICTION THERE MAY
BE ATTRIBUTED SUCH AN IMMUNITY (WHETHER OR NOT CLAIMED) WITH RESPECT TO ITSELF OR ITS PROPERTY OR
REVENUES, SUCH SECURITY PARTY HEREBY IRREVOCABLY AGREES NOT TO CLAIM AND HEREBY IRREVOCABLY WAIVES
SUCH IMMUNITY WITH RESPECT TO ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     19.11 USA Patriot Act Notice; OFAC and Bank Secrecy Act. The Administrative Agent
hereby notifies the Borrower and each other Security Party that pursuant to the requirements of the
USA Patriot Act (Title III of Pub. L. 107-56, signed into law October 26, 2001) (the “Act”), and
the Administrative Agent’s policies and practices, the Administrative Agent and each of the Lenders
is required to obtain, verify and record certain information and documentation that identifies each
Security Party, which information includes the name and address of each Security Party and such
other information that will allow the Administrative Agent and the Lenders to identify each
Security Party in accordance with the Act. In addition, each Security Party shall (a) ensure that
no Person who owns a controlling interest in or otherwise controls any Security Party or any subsidiary of
any thereof is or shall be listed on the Specially Designated Nationals and Blocked Person List or
other similar lists maintained by the Office of Foreign Assets Control (“OFAC”), the Department of
the Treasury or included in any Executive Orders, (b) not use or permit the use of the proceeds of
the Facilities to violate any of the foreign asset control regulations of OFAC or any enabling
statute or Executive Order relating thereto, and (c) comply, and cause any of its subsidiaries to
comply, with all applicable Bank Secrecy Act laws and regulations, as amended.

     19.12 Defaulting Lenders.

	 	(a)	 	Anything herein to the contrary notwithstanding, during such
period as a Lender is a Defaulting Lender, such Defaulting Lender will not be
entitled:

	 	(i)	 	to any fees accruing during such period
pursuant to Section 14.2 of the Credit Agreement (without prejudice to
the rights of the Lenders other than Defaulting Lenders in respect of
such fees);
	 
	 	(ii)	 	to the fullest extent permitted by applicable
law, to vote in respect of amendments and waivers under the Credit
Agreement and the Commitment and the outstanding Advances or other
extensions of credit of such Lender under the Credit Agreement will not
be taken into account in determining whether the Requisite Lenders have
approved any such amendment or waiver (and the definition of “Requisite
Lenders” will automatically be deemed modified accordingly for the
duration of such period); provided, that any such amendment or waiver
that would (A) increase or extend the

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	 	 	 	term of the Commitments, (B)
extend the date fixed for the payment of principal of or interest on
any Advance or any fee under the Credit Agreement, (C) reduce the
amount of any such payment of principal, (D) reduce the rate at which
interest is payable thereon or any fee is payable under the Credit
Agreement, (E) release any Property covered by any Security Document,
except in connection with Dispositions permitted hereunder or as
otherwise provided herein or in the Security Documents; or (F) alter
the terms of this proviso, will require the consent of such Defaulting
Lender;

	 	(iii)	 	to act as a Reference Bank; and
	 
	 	(iv)	 	to enter into any Hedging Agreement as a
Permitted Hedging Counterparty; provided, that to the extent that such
Defaulting Lender has previously entered into a Hedging Agreement, it
shall continue to comply with its obligations thereunder.

	 	(b)	 	Anything herein to the contrary notwithstanding, if at any time
a Person acting as a member of the Joint Committee becomes a Defaulting Lender,
such Defaulting Lender shall resign from the Joint Committee.
	 
	 	(c)	 	Anything herein to the contrary notwithstanding, if at any time
the Requisite Lenders determine that the Person serving as Administrative Agent
is (without taking into account any provision in the definition of “Defaulting
Lender” or “Potential Defaulting Lender” requiring notice from the
Administrative Agent or any other party) a Defaulting Lender or a Potential
Defaulting Lender, the Majority Lenders (determined after giving effect to
Section 19.12(a)(ii) above) may by notice to the Borrower and such Person
remove such Person as Administrative Agent and, in consultation with the
Borrower, appoint a replacement Administrative Agent hereunder. Such removal
will, to the fullest extent permitted by applicable law, be effective on the
earlier of (i) the date a replacement Administrative Agent is appointed and
(ii) the date 30 Business Days after the giving of such notice by the Majority
Lenders (regardless of whether a replacement Administrative Agent has been
appointed).
	 
	 	(d)	 	If the Borrower and the Administrative Agent agree in writing
in their discretion that a Lender that is a Defaulting Lender or a Potential
Defaulting Lender should no longer be deemed to be a Defaulting Lender or
Potential Defaulting Lender, as the case may be, the Administrative Agent will
so notify the parties hereto, whereupon as of the effective date specified in
such notice and subject to any conditions set forth therein, such Lender will
cease to be a Defaulting Lender or Potential Defaulting Lender and will be a
Non-Defaulting Lender; provided that no adjustments will be made retroactively
with respect to fees accrued or payments made

140

 

	 	 	 	by or on behalf of the Borrower while such Lender was a Defaulting Lender; and provided, further, that except
to the extent otherwise expressly agreed by the affected parties, no change
hereunder from Defaulting Lender or Potential Defaulting Lender to
Non-Defaulting Lender will constitute a waiver or release of any claim of any
party hereunder arising from such Lender’s having been a Defaulting Lender or
Potential Defaulting Lender.

[SIGNATURES ON NEXT PAGE]

141

 

          IN WITNESS whereof the parties hereto have caused this Agreement to be executed by their
respective duly authorized representative on the day and year first above written.

	 	 	 	 	 
	 	BULLY 2, LTD.,

as Borrower

 	 
	 	By:  	/s/ Vernon G. Westerhout
 	 
	 	 	Name:  	Vernon G. Westerhout 	 
	 	 	Title:  	General Manager 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CHINA DEVELOPMENT BANK CORPORATION,

as Senior Lender

 	 
	 	By:  	/s/ Song Weinong
 	 
	 	 	Name:  	Song Weinong 	 
	 	 	Title:  	General Manager, Dalian Branch 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	THE EXPORT-IMPORT BANK OF CHINA,

as Senior Lender

 	 
	 	By:  	/s/ [Illegible]
 	 
	 	 	Name:  	[Illegible] 	 
	 	 	Title:  	General Manager, Transport Finance Department 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	STANDARD CHARTERED BANK,

as Senior Lender

 	 
	 	By:  	/s/ Paul Clifford
 	 
	 	 	Name:  	Paul Clifford 	 
	 	 	Title:  	Director, Head of Project Finance Americas 	 
	 
	 	 	 
	 	By:  	                                              /s/ Robert K. Reddington
 	 
	 	 	Name:  	Robert K. Reddington 	 
	 	 	Title:  	AVP/Credit Documentation 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	HSBC BANK PLC,

as Senior Lender

 	 
	 	By:  	/s/ M. Bonnici
 	 
	 	 	Name:  	M. Bonnici 	 
	 	 	Title:  	Director, Project & Export Finance 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	STANDARD CHARTERED BANK,

as Lead Arranger

 	 
	 	By:  	/s/ Paul Clifford
 	 
	 	 	Name:  	Paul Clifford 	 
	 	 	Title:  	Director, Head of Project Finance
Americas 	 
	 
	 	 	 
	 	By:  	                                              /s/ Robert K. Reddington
 	 
	 	 	Name:  	Robert K. Reddington 	 
	 	 	Title:  	Assistance Vice President, Credit Documentation 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CHINA DEVELOPMENT BANK CORPORATION,

as Mandated Lead Arranger

 	 
	 	By:  	/s/ Song Weinong
 	 
	 	 	Name:  	Song Weinong 	 
	 	 	Title:  	General Manager, Dalian Branch 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	THE EXPORT-IMPORT BANK OF CHINA,

as Mandated Lead Arranger

 	 
	 	By:  	/s/ [Illegible]
 	 
	 	 	Name:  	[Illegible] 	 
	 	 	Title:  	General Manager, Transport Finance Department 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	STANDARD CHARTERED BANK,

as Mandated Lead Arranger

 	 
	 	By:  	/s/ Paul Clifford
 	 
	 	 	Name:  	Paul Clifford 	 
	 	 	Title:  	Director, Head of Project Finance Americas 	 
	 
	 	 	 
	 	By:  	              /s/ Robert K. Reddington
 	 
	 	 	Name:  	Robert K. Reddington 	 
	 	 	Title:  	Assistance Vice President, Credit Documentation 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	HSBC BANK PLC.,

as Mandated Lead Arranger

 	 
	 	By:  	/s/ M. Bonnici
 	 
	 	 	Name:  	M. Bonnici 	 
	 	 	Title:  	Director, Project & Export Finance 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	RZB FINANCE LLC,

as Cost Overrun Lender

 	 
	 	By:  	/s/ Shirley Ritch
 	 
	 	 	Name:  	Shirley Ritch 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	                     /s/ John A. Valiska
 	 
	 	 	Name:  	John A. Valiska 	 
	 	 	Title:  	First Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	RZB FINANCE LLC,

as Cost Overrun Term Loan Lead Arranger

 	 
	 	By:  	/s/ Shirley Ritch
 	 
	 	 	Name:  	Shirley Ritch 	 
	 	 	Title:  	Vice President 	 
	 
	 	 	 
	 	By:  	                     /s/ John A. Valiska
 	 
	 	 	Name:  	John A. Valiska 	 
	 	 	Title:  	First Vice President 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	STANDARD CHARTERED BANK,

as Administrative Agent

 	 
	 	By:  	/s/ Charles Mildred
 	 
	 	 	Name:  	Charles Mildred 	 
	 	 	Title:  	Associate Director, Agency UK/Europe 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	STANDARD CHARTERED BANK,

as Collateral Agent

 	 
	 	By:  	/s/ Charles Mildred
 	 
	 	 	Name:  	Charles Mildred 	 
	 	 	Title:  	Associate Director, Agency UK/Europe 	 
	 

 

 

Remaining Schedules and Exhibits To Be Attached Separately

 

 

EXECUTION VERSION

 

OMNIBUS AMENDMENT AND CONSENT AGREEMENT

Dated as of July 28, 2010

among

BULLY 2, LTD.,

AND

STANDARD CHARTERED BANK,

AS ADMINISTRATIVE AGENT AND COLLATERAL AGENT

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE 1 DEFINITIONS
	 	 	1	 
	1.01     Certain Defined Terms
	 	 	1	 
	 
	ARTICLE 2 CREDIT AGREEMENT AMENDMENTS
	 	 	2	 
	2.01     Amendments to the Representations and Warranties
	 	 	2	 
	2.02     Amendments to Events of Default
	 	 	2	 
	2.03     Amendments to Loan Document Definition
	 	 	2	 
	2.04     Amendment to Notice Information
	 	 	2	 
	2.05     New Vessel Name
	 	 	3	 
	 
	ARTICLE 3 LENDER CONSENTS
	 	 	4	 
	3.01     Sponsor Purchase Agreement
	 	 	4	 
	3.02     Change of Office
	 	 	4	 
	3.03     Reflagging
	 	 	5	 
	 
	ARTICLE 4 EFFECTIVE DATE
	 	 	6	 
	4.01     Effectiveness
	 	 	6	 
	 
	ARTICLE 5 Representations and Warranties
	 	 	7	 
	5.01     Representations and Warranties
	 	 	7	 
	 
	ARTICLE 6 MISCELLANEOUS
	 	 	7	 
	6.01     Successors and Assigns Generally
	 	 	7	 
	6.02     Counterparts
	 	 	7	 
	6.03     GOVERNING LAW
	 	 	7	 
	6.04     WAIVER OF JURY TRIAL
	 	 	7	 
	6.05     SUBMISSION TO JURISDICTION
	 	 	8	 
	6.06     Severability
	 	 	8	 

 

 

          THIS OMNIBUS AMENDMENT AND CONSENT AGREEMENT dated as of July 28, 2010 (this
“Agreement”) is made between (i) BULLY 2, LTD., an exempt company incorporated in the
Cayman Islands (the “Borrower”) and (ii) STANDARD CHARTERED BANK, a company incorporated by
Royal Charter in England (with reference number ZC18, hereinafter “SCB”), as administrative
agent (in such capacity and any successor thereto, the “Administrative Agent”) acting on
the behalf of the Majority Lenders and as collateral agent (in such capacity and any successor
thereto, the “Collateral Agent”) for the Secured Parties.

          WHEREAS, the Borrower, the Administrative Agent, SCB, in its capacity as lead arranger, China
Development Bank Corporation, The Export-Import Bank of China, SCB and HSBC Bank PLC, as mandated
lead arrangers, RZB Finance LLC, as cost overrun term loan lead arranger, the Collateral Agent, and
the financial institutions identified therein as lenders party thereto (the “Lenders”) are
parties to that certain Term Loan and Revolving Loan Credit Facility Agreement dated as of October
21, 2008, and amended and restated as of October 9, 2009 (as amended, supplemented or modified from
time to time, the “Credit Agreement”);

          WHEREAS, FDR Holdings, certain shareholders of FDR Holdings and Noble Corporation
(“Noble”) intend to consummate a transaction whereby Noble shall acquire a 100% ownership
interest in FDR Holdings (the “Transaction”);

          WHEREAS, in connection with the Transaction, the Borrower desires to effectuate certain
amendments to the Credit Agreement, obtain certain consents from the required Lenders with respect
to certain actions to be taken in connection with the Transaction and terminate the Sponsor
Purchase Agreement;

          NOW, THEREFORE, in consideration of the foregoing premises and the covenants and agreements
contained herein, the parties hereto hereby enter into this Agreement in order to effectuate
certain amendments to the Credit Agreement and grant the referenced consents.

ARTICLE 1

DEFINITIONS

          1.01 Certain Defined Terms. Except as otherwise expressly provided herein,
capitalized terms used herein which are defined in the Credit Agreement shall have the same
meanings herein (including in the introductory paragraph and recitals hereto) as therein and the
principles of interpretation set forth therein shall apply herein.

          “Administrative Agent” has the meaning ascribed thereto in the recitals.

          “Agreement” has the meaning ascribed thereto in the recitals.

          “Collateral Agent” has the meaning ascribed thereto in the recitals.

          “Borrower” has the meaning ascribed thereto in the recitals.

          “Credit Agreement” has the meaning ascribed thereto in the recitals.

 

 

          “Effective Date” has the meaning ascribed thereto in Section 4.01.

          “Lenders” has the meaning ascribed thereto in the recitals.

          “Mortgagee” has the meaning ascribed thereto in the Mortgage.

          “Noble” has the meaning ascribed thereto in the recitals.

          “SCB” has the meaning ascribed thereto in the recitals.

          “Transaction” has the meaning ascribed thereto in the recitals.

          “Transaction Closing Date” means the date of consummation of the Transaction as
confirmed in writing by the Borrower to the Administrative Agent.

ARTICLE 2

CREDIT AGREEMENT AMENDMENTS

          2.01 Amendments to the Representations and Warranties.

          (a) Ownership. Subject to Section 4.01, Section 2.1(q) of the Credit Agreement is
hereby amended by deleting the words “and the Purchasers” in clause (iii) thereof and by deleting
the words “the Sponsor Purchase Agreement or” in the second sentence thereof.

          (b) Sponsor Purchase Agreement. Subject to Section 4.01, Section 2.1(bb) of the
Credit Agreement is hereby deleted in its entirety and replaced with the word “Reserved”.

          2.02 Amendments to Events of Default. Subject to Section 4.01, Section 8.1(n) of the
Credit Agreement is hereby deleted in its entirety and replaced with the word “Reserved.”

          2.03 Amendments to Loan Document Definition. Subject to Section 4.01, the definition
of “Loan Documents” in Section 1.1 of the Credit Agreement is hereby amended by (i) deleting the
phrase “and the Fee Letters” in its entirety and (ii) inserting the phrase “, the Fee Letters and
the Omnibus Amendment and Consent Agreement dated as of July 28, 2010 among the Borrower and SCB,
as Administrative Agent and Collateral Agent” immediately after words “the Fee Letters” in place
thereof.

          2.04 Amendment to Notice Information.

          (a) Subject to Section 4.01, the notice information for the Security Parties contained in
Section 18.1 of the Credit Agreement is hereby deleted in its entirety and replaced with the
following (the “New Notice Information”):

“BULLY 2, LTD.

c/o Maples and Calder

PO Box 309, Ugland House

South Church Street, George Town

- 2 -

 

Grand Cayman KY1-1104

Cayman Islands

with a copy to:

BULLY 2, LTD.

c/o Noble Drilling Services Inc.

13135 South Dairy Ashford, Suite 800

Sugar Land, TX 77478

Attn: Steve Donley

Facsimile No.: 281.276.6344”

          (b) Subject to Section 4.01, Section 18.1 of the Credit Agreement is hereby amended to add
the following sentence directly at the end thereof:

“Any party hereto may change its address or facsimile number for notices and other
communications hereunder by providing prior written notice to the other parties hereto.”

          (c) Subject to Section 4.01, the Borrower hereby notifies the Administrative Agent and the
Collateral Agent that, pursuant to each of Section 20 of the Mortgage, Section 23 of the
Assignment of Earnings, Section 19 of the Assignment of Insurances, Section 21 of each Assignment
of Construction Contract, Section 21 of the Assignment of Drilling Contract, Section 21 of the
Assignment of Management Contract, Section 5.04 of the Security Agreement, Section 7.04 of the
Collateral Agency Agreement, Section 6.2 of the Depositary Agreement, Section 7(b) of the Direct
Agreement, Section 8(b) of the Consent and Agreement in respect of the Management Agreement,
Section 7(b) of the Consent and Agreement in respect of the Shanghai Construction Contract, and
Section 18 of the Control Agreement with Wells Fargo Bank, National Association and with respect
to the notice information of the Borrower in any other Loan Document, on and after the Effective
Date, it designates the New Notice Information as its address for notices delivered pursuant to
any of the foregoing Loan Documents.

          2.05 New Vessel Name.

          (a) The Borrower hereby informs the Administrative Agent that, at or after the consummation of
the Transaction, the name of the Vessel may be changed to a new name (the “New Vessel
Name”).

          (b) The Borrower hereby agrees to (i) deliver written notice from the Borrower to the
Administrative Agent specifying the New Vessel Name, (ii) execute an amendment to the Mortgage in
form and substance reasonably acceptable to the Administrative Agent and the Mortgagee effectuating
such change in vessel name, (iii) deliver evidence reasonably requested
and satisfactory to the Administrative Agent, Collateral Agent and Mortgagee that all actions
required by applicable law for effectuating such amendment to the Mortgage and change in vessel
name have been completed and (iv) pay all reasonable out-of-pocket expenses incurred by the Agents
and their respective Affiliates (including the reasonable fees and expenses of

- 3 -

 

Milbank, Tweed,
Hadley & McCloy LLP, special New York counsel to the Administrative Agent, Holland and Knight,
special maritime counsel to the Administrative Agent and any other counsel to the Administrative
Agent) in connection with the transactions contemplated by this Section 2.05.

          (c) The Administrative Agent (acting on the behalf of the Majority Lenders) hereby
acknowledges and agrees that upon satisfaction of the requirements set forth in Section 2.05(b),
(i) the Credit Agreement (as amended hereby) and each other Loan Document (other than the Mortgage)
shall be automatically amended without any further action by any party thereto to replace the
phrase “Frontier Bully II” in each instance where such phrase appears therein with the New Vessel
Name and (ii) the defined term “Vessel” in the Credit Agreement (as amended hereby) shall be
automatically amended without any further action by any party thereto to reflect the New Vessel
Name.

ARTICLE 3

LENDER CONSENTS

          3.01 Sponsor Purchase Agreement.

          (a) Subject to Section 4.01, the Borrower hereby requests, and the Administrative Agent
(acting on the behalf of the Majority Lenders) hereby consents to, the termination of the Sponsor
Purchase Agreement, and the Administrative Agent (acting on the behalf of the Majority Lenders)
agrees that such termination shall not constitute an Event of Default under Section 8.1(n) of the
Credit Agreement.

          3.02 Change of Office.

          (a) The Borrower hereby informs the Administrative Agent that, at or after the consummation
of the Transaction, the registered office of the Borrower may be changed to Maples & Calder, PO
Box 309, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, Cayman Islands
(the “New Registered Office”).

          (b) In connection with the change of the Borrower’s registered office to the New Registered
Office, the Borrower hereby agrees to: (i) deliver written notice from the Borrower to the
Administrative Agent that the registered office shall be changed to the New Registered Office,
(ii) execute an amendment to the Mortgage in form and substance reasonably acceptable to the
Administrative Agent and the Mortgagee evidencing such change in registered office and deliver
such evidence as is reasonably requested and satisfactory to the Administrative Agent and
Mortgagee that all actions required by applicable law for
effectuating such amendment to the Mortgage have been completed, (iii) deliver evidence
reasonably requested and satisfactory to the Administrative Agent that all actions required by
applicable law for effectuating such change in registered office have been completed, including
but not limited to (A) that the register of mortgages and charges and register of directors and
officers are maintained at the New Registered Office and (B) notifications with respect to such
change in registered office have been made in accordance with applicable law and within the
statutory time limits for such notification and (iv) pay all reasonable out-of-pocket expenses

- 4 -

 

incurred by the Agents and their respective Affiliates (including the reasonable fees and expenses
of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to the Administrative Agent,
Holland and Knight, special maritime counsel to the Administrative Agent and any other counsel to
the Administrative Agent) in connection with the transactions contemplated by this Section 3.02.

          (c) The Administrative Agent (acting on the behalf of the Majority Lenders) hereby
acknowledges and agrees that upon satisfaction of the requirements set forth in Section 3.02(b),
(i) Section 2.1(s) of the Credit Agreement (as amended hereby) shall be automatically amended and
restated as follows:

“(s) Offices. The registered office of the Borrower is located at Maples & Calder,
PO Box 309, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, Cayman
Islands”

and (ii) each reference to the Borrower’s registered office in each of the Security Documents
(other than the Mortgage) shall be automatically amended and restated to refer to “Maples & Calder,
PO Box 309, Ugland House, South Church Street, George Town, Grand Cayman KY1-1104, Cayman Islands”.

          (d) Notwithstanding anything contained in the Credit Agreement (as amended hereby), the Notes
or any Security Document to the contrary, the Administrative Agent (acting on the behalf of the
Majority Lenders) hereby (i) subject to the satisfaction of the requirements set forth in Section
3.02(b), consents to the change in the location of the Borrower’s registered office to the New
Registered Office pursuant to this Section 3.02, and (ii) agrees that the change in the location
of the Borrower’s registered office to the New Registered Office pursuant to this Section 3.02
shall not result in an Event of Default under the Credit Agreement, any Notes or any of the
Security Documents.

          3.03 Reflagging.

          (a) The Borrower hereby informs the Administrative Agent that, at or after the consummation
of the Transaction but in any event no later than within one (1) calendar year after the date
hereof, the Vessel may be reflagged in Liberia (the “Vessel Reflagging”).

          (b) The Administrative Agent (acting on the behalf of the Majority Lenders) hereby consents
to the Vessel Reflagging, provided that the Borrower shall, prior to giving effect to the Vessel
Reflagging, (i) give, execute, deliver, file and record any financing
statement, notice, instrument, document (including Security Document), agreement, legal
opinions or other papers that may be necessary or desirable or that may be reasonably requested by
the Administrative Agent, Collateral Agent or Mortgagee in form and substance reasonably
satisfactory to the Administrative Agent, Collateral Agent and Mortgagee with respect to the
Vessel and the creation and perfection, in favor of the Collateral Agent for the benefit of the
Secured Parties, of a legal, valid and enforceable first priority Lien on and security interest in
all right, title and interest of the Borrower in the Vessel, (ii) take such necessary and
appropriate actions with respect to the Vessel Reflagging (and provide evidence thereof) as may be
reasonably requested by the Administrative Agent and (iii) pay all

- 5 -

 

reasonable out-of-pocket
expenses incurred by the Agents and their respective Affiliates (including the reasonable fees and
expenses of the Insurance Consultant, Milbank, Tweed, Hadley & McCloy LLP, special New York
counsel to the Administrative Agent, Holland and Knight, special maritime counsel to the
Administrative Agent and any other counsel to the Administrative Agent) in connection with the
transactions contemplated by this Section 3.03. The Borrower shall deliver certified copies of
such documents and instruments as are required by applicable law to evidence the reflagging of the
Vessel in Liberia promptly after receipt thereof.

          (c) Upon receipt by the Administrative Agent of written notice from the Borrower of the
consummation of the Vessel Reflagging and satisfaction of the requirements set forth in Section
3.03(b), the Credit Agreement (as amended hereby), the Notes and each Security Document shall be
automatically amended without any further action by any party thereto to reflect the Vessel
Reflagging. The Administrative Agent (acting on the behalf of the Majority Lenders) hereby agrees
that the Vessel Reflagging shall not result in an Event of Default under the Credit Agreement, any
Notes or any of the Security Documents.

ARTICLE 4

EFFECTIVE DATE

          4.01 Effectiveness.

          (a) The parties hereto acknowledge and agree that for all purposes under the Loan Documents
this Agreement shall become effective upon (a) the Transaction Closing Date and (b) delivery of
evidence of payment by the Borrower to the Administrative Agent for all reasonable and documented
out-of-pocket expenses incurred by the Agents and their respective Affiliates (including the
reasonable fees and expenses of Milbank, Tweed, Hadley & McCloy LLP, special New York counsel to
the Administrative Agent, Holland and Knight, special maritime counsel to the Administrative Agent
and any other counsel to the Administrative Agent) in connection with the negotiation, execution,
delivery and administration of this Agreement and the provisions hereof (the “Effective
Date”).

          (b) The amendments in Articles 2 and 3 shall be applicable solely with respect to those
matters expressly provided herein and no other amendments may be construed or implied. Each
reference in the Credit Agreement and each of the other Loan Documents to
“the Credit Agreement”, “hereunder”, “hereof”, “thereunder”, “thereof” or words of like
import referring to the Credit Agreement, shall mean and be a reference to the Credit Agreement as
amended by this Agreement. Except as modified pursuant hereto, each of the Loan Documents are and
shall continue to be in full force and effect and are hereby in all respects ratified and
confirmed. The execution, delivery and effectiveness of this Agreement shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of any Secured Party
under any of the Loan Documents nor constitute a waiver of any provision of any of the Loan
Documents.

          (c) The Borrower hereby agrees that this Agreement shall constitute a “Loan Document” for
purposes of the Credit Agreement.

- 6 -

 

ARTICLE 5

REPRESENTATIONS AND WARRANTIES

          5.01 Representations and Warranties. The Borrower represents and warrants to the
Administrative Agent that (a) the representations and warranties set forth in Article 2 of the
Credit Agreement are true and complete on the date hereof as if made on and as of the date hereof
(or, if any such representation or warranty is expressly stated to have been made as of a specific
date, such representation or warranty shall be true and correct as of such specific date), and (b)
no Default or Event of Default has occurred and is continuing. No Default or Event of Default will
occur under the Loan Documents as a result of the execution, delivery and performance by the
Borrower of this Agreement.

ARTICLE 6

MISCELLANEOUS

          6.01 Successors and Assigns Generally. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby.

          6.02 Counterparts. This Agreement may be executed in any number of counterparts, all
of which taken together shall constitute one and the same instrument and any of the parties hereto
may execute this Agreement by signing any such counterpart.

          6.03 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO PRINCIPLES OF CONFLICTS OF LAW
(EXCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

          6.04 WAIVER OF JURY TRIAL. IT IS MUTUALLY AGREED BY EACH PARTY HERETO THAT EACH OF
THEM HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY ANY PARTY HERETO AGAINST ANY OTHER PARTY HERETO
ON ANY MATTER WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT AND THE NOTES BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.

- 7 -

 

          6.05 SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY SUBMITS TO THE NONEXCLUSIVE
JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY
NEW YORK STATE COURT SITTING IN NEW YORK COUNTY (INCLUDING ANY APPELLATE DIVISION THEREOF), AND OF
ANY OTHER APPELLATE COURT IN THE STATE OF NEW YORK, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT
MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.

          6.06 Severability. In case any one or more of the provisions contained in this
Agreement is found by a court to be invalid or unenforceable, to the fullest extent permitted by
applicable law the parties agree that such invalidity or unenforceability shall not impair the
validity or enforceability of any other provision hereof.

[REMAINDER OF THIS PAGE INTENTIONALLY BLANK]

- 8 -

 

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

	 	 	 	 	 
	 	BULLY 2, LTD.

 	 
	 	By:  	/s/ Vern Westerhout
 	 
	 	 	Name:  	Vern Westerhout 	 
	 	 	Title:  	General Manager 	 

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	STANDARD CHARTERED BANK,

as Administrative Agent and as Collateral Agent

 	 
	 	By:  	/s/ Charles Mildred
 	 
	 	 	Name:  	Charles Mildred 	 
	 	 	Title:  	Associate Director, Agency UK/Europeex4-8forms3_080210.htm

Exhibit 4.8

 

 

REGISTRATION RIGHTS AGREEMENT

 

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of —, 2010 by and among Oilsands Quest Inc., a Colorado corporation (the “Company”), and the several holders who are signatories to this Agreement (each a “Holder,” and together the “Holder”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to them in Section 1.1 hereof.

 

RECITALS

 

WHEREAS, pursuant to multiple Subscription Agreements, each dated as of —, 2010 (collectively, the “Subscription Agreements”), each between the Company and a Holder, the Company has agreed to issue and sell to the Holders an aggregate of — shares (the “Securities”) of the Company’s common stock, $0.001 par value per share;

 

WHEREAS, the obligations of the Company and the Holders under the Subscription Agreements are conditioned upon, among other things, the execution and delivery of this Agreement by the Company and the Holders.

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:

 

AGREEMENT

 

ARTICLE I                        DEFINITIONS

 

1.1      Definitions.  As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:

 

“Affiliate” means any Person who is an “affiliate” as defined in Rule 12b-2 of the General Rules and Regulations under the Exchange Act.

 

“Agreement” means this Agreement as the same may be amended, supplemented or modified in accordance with the terms hereof.

 

“Allowable Suspension Period” has the meaning set forth in Section 4.4.

 

“Board of Directors” means the Board of Directors of the Company.

 

“Closing Date” has the meaning set forth in the Subscription Agreements.

 

“Common Stock” means the Company’s common stock, $0.001 par value per share, and any securities into which such shares of common stock may hereinafter be reclassified.

 

“Company” has the meaning set forth in the preamble to this Agreement.

 

“Holders” has the meaning set forth in the preamble to this Agreement.

 

“Effectiveness Period” has the meaning set forth in Section 3.2(a).

 

“Event” has the meaning set forth in Section 3.3.

 

  

  

  

 

“Event Payment Date” has the meaning set forth in Section 3.3.

 

“Event Payment Shares” means shares of Common Stock, if any, issued by the Company as Event Payments, or as interest on Event Payments, pursuant to Section 3.3.

 

“Event Payments” has the meaning set forth in Section 3.3.

 

“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the SEC thereunder.

 

“FINRA” means the Financial Industry Regulatory Authority (or any successor entity thereto).

 

“Governmental Authority” means the government of any nation, state, province, city, locality or other political subdivision thereof, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, and any corporation or other entity owned or

 

“Indemnified Party” has the meaning set forth in Section 5.3.

 

“Loss” has the meaning set forth in Section 5.1.

 

“Person” means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, Governmental Authority or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.

 

“Subscription Agreements” has the meaning set forth in the recitals to this Agreement.

 

“Registrable Securities” means, subject to Section 2.2 below (a) the Securities; (b) any Event Payment Shares; and (c) any Common Stock issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of the Securities or Event Payment Shares.

 

“Registration Expenses” has the meaning set forth in Section 4.3.

 

“Registration Statement” means a registration statement filed pursuant to the Securities Act.

 

“Required Effectiveness Date” means the earlier of (i) the date that is thirty (30) days from the Required Filing Date (or sixty (60) days from the Required Filing Date in the event that the Registration Statement filed by the Company pursuant to Section 3.1 is subject to review by the SEC) and (ii) the fifth (5th) business day after the Company is notified (orally or in writing, whichever is earlier) by the SEC that a Registration Statement will not be “reviewed” or will not be subject to further review, unless the Registration Statement has been declared effective prior to such date.

 

“Required Filing Date” has the meaning set forth in Section 3.1.

 

“SEC” means the United States Securities and Exchange Commission or any similar or successor agency then having jurisdiction to enforce the Securities Act.

 

“SEC Guidance” means (i) any publicly-available written or oral guidance, comments, requirements or requests of the Staff and (ii) the Securities Act.

 

“Securities” has the meaning set forth in the preamble to this Agreement.

 

  

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“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder.

 

“Staff” means the staff of the SEC.

 

ARTICLE II                        GENERAL; SECURITIES SUBJECT TO THIS AGREEMENT

 

2.1      Grant of Rights.  The Company hereby grants registration rights to the Holders upon the terms and conditions set forth in this Agreement.

 

2.2      Registrable Securities.  For the purposes of this Agreement, securities of the Company listed in clauses (a), (b) and (c) of the definition of “Registrable Securities” in Section 1.1 hereof will cease to be Registrable Securities, when (i) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the SEC and all such Registrable Securities have been disposed of pursuant to such effective Registration Statement, (ii) the entire amount of the Registrable Securities owned by a Holders may be sold in a single sale, in the opinion of counsel satisfactory to the Company and such Holders, each in their reasonable judgment (it being agreed that Paul, Weiss, Rifkind, Wharton & Garrison LLP shall be satisfactory counsel), pursuant to Rule 144 (or any successor provision then in effect) under the Securities Act without any limitation as to volume and without the requirement for the Company to be in compliance with the current public information required under Rule 144 or (iii) such Registrable Securities have been sold pursuant to Rule 144 under the Securities Act.

 

ARTICLE III                        SHELF REGISTRATION

 

3.1      Shelf Registration Statement.  Not later than July 31, 2010 (or, if such date is not a business day, the next succeeding business day) (the “Required Filing Date”), the Company shall file with the SEC a registration statement on Form S-3 (or any successor form thereto) with respect to the resale (or Form S-1 if Form S-3 is not available), from time to time, on a continuous basis pursuant to Rule 415 of the Securities Act of all of the Registrable Securities held by the Holders.  The Registration Statement shall contain substantially the “Plan of Distribution” attached hereto as Annex A.  The disposition of Registrable Securities from the Registration Statement may occur, at any time, in one or more underwritten offerings, block transactions, broker transactions, at-market transactions or in such other manner or manners as may be specified in the Plan of Distribution or by the applicable Holders.  Notwithstanding the registration obligations set forth in this Section 3.1, in the event the SEC informs the Company that all of the Registrable Securities cannot, as a result of the application of Rule 415, be registered for resale as a secondary offering on a single registration statement, the Company agrees to promptly (i) inform each of the Holders thereof and use its commercially reasonable efforts to file amendments to the initial Registration Statement as required by the SEC and/or (ii) withdraw the initial Registration Statement and file a new Registration Statement, in either case covering the maximum number of Registrable Securities permitted to be registered by the SEC as a secondary offering on a single registration statement; provided, however, that prior to filing such amendment or new Registration Statement, the Company shall be obligated to use its commercially reasonable efforts to advocate with the SEC for the registration of all of the Registrable Securities in accordance with the SEC Guidance, including without limitation, Compliance and Disclosure Interpretation 612.09.  Notwithstanding any other provision of this Agreement and subject to the payment of Event Payments in Section 3.3, if any SEC Guidance sets forth a limitation of the number of Registrable Securities or other shares of Common Stock permitted to be registered on a particular Registration Statement as a secondary offering (and notwithstanding that the Company used diligent efforts to advocate with the SEC for the registration of all or a greater number of Registrable Securities), the number of Registrable Securities or other shares of Common Stock to be registered on such Registration Statement will be reduced as follows: first, the Company shall reduce or eliminate the shares of Common Stock to be included by any Person other than 

 

  

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a Holder; second, the Company shall reduce or eliminate any shares of Common Stock to be included by any Affiliate of the Company; and third, the Company shall reduce the number of Registrable Securities to be included by all other Holders on a pro rata basis based on the total number of unregistered Registrable Securities held by such Holders, subject to a determination by the SEC that certain Holders must be reduced before other Holders based on the number of Registrable Securities held by such Holders.  In the event the Company amends the initial Registration Statement or files a new Registration Statement, as the case may be, under clauses (i) or (ii) above, the Company will use its commercially reasonable efforts to file with the SEC, as promptly as allowed by the SEC or SEC Guidance provided to the Company or to registrants of securities in general, one or more Registration Statements on such form available to the Company to register for resale those Registrable Securities that were not registered for resale on the initial Registration Statement, as amended, or the new Registration Statement.  No Holder shall be named as an “underwriter” in any Registration Statement without such Holder’s prior written consent.

 

3.2      Effective Shelf Registration Statement.

 

(a)      The Company shall use its commercially reasonable efforts to cause each Registration Statement to become effective as soon as practicable, but not later than the Required Effectiveness Date, and shall use its commercially reasonable efforts to keep the Registration Statement continuously effective under the Securities Act, subject to the provisions of Section 4.4 hereof, until the earlier of (i) such time as the Company delivers an opinion of counsel reasonably acceptable to the Holders (it being agreed that Paul, Weiss, Rifkind, Wharton & Garrison LLP shall be satisfactory counsel) that each Holder may sell in the open market in a single transaction all Registrable Securities then held by each such Holder pursuant to Rule 144 of the Securities Act (or any similar provision then in force) without being subject to the volume limitations thereof and without the requirement for the Company to be in compliance with the current public information required under Rule 144 or (ii) all Registrable Securities covered by such Registration Statement have been sold pursuant to such Registration Statement or pursuant to Rule 144 (such period being the “Effectiveness Period”).  The Required Effectiveness Date shall be extended without default or Event Payments hereunder in the event the Company’s failure to obtain effectiveness of the Registration Statement on a timely basis results from the failure of a Holder to timely provide the Company with information requested by the Company and necessary to complete the Registration Statement in accordance with the requirements of the Securities Act (in which case the Required Effectiveness Date would be extended with respect to Registrable Securities held by such Holder).  The Company shall promptly notify the Holders via facsimile or electronic mail of a “.pdf” format data file of the effectiveness of a Registration Statement within one (1) business day of the effective date of such Registration Statement. The Company shall, by 9:30 a.m. New York City time on the first trading day after such effective date, file a final prospectus with the SEC, as required by Rule 424(b).

 

3.3      Event Payments.  Should an Event (as defined below) occur then the Company shall pay to each Holder (i) an amount in cash or in additional shares of Common Stock (the form of such payment to be at the Company’s option) as liquidated damages and not as a penalty, equal to five percent (5.0%) of the purchase price paid by such Holder pursuant to its Subscription Agreement for any Registrable Securities then held, which amount shall be immediately due and payable; and (ii) upon each monthly anniversary of the occurrence of such Event (each date in (i) and (ii) above, an “Event Payment Date”) unless or until the Event is cured, the Company shall pay to each Holder an amount in cash or in additional shares of Common Stock (the form of such payment to be at the Company’s option) as liquidated damages and not as a penalty, equal to two percent (2.0%) of the purchase price paid by such Holder pursuant to its Subscription Agreement for any Registrable Securities then held as relief for the damages suffered therefrom by the Holders (the parties hereto agreeing that the liquidated damages provided for in this Section 3.3 constitute a reasonable estimate of the damages that may be incurred by the Holders by reason of such Event and that such liquidated damages represent the exclusive monetary remedy for the Holders 

 

  

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for damages suffered due to such Event; provided, however, that this shall in no manner limit the Holders’ entitlement to specific performance as provided for in Section 6.1).  The payments to which a Holder shall be entitled pursuant to this Section 3.3 are referred to herein as “Event Payments.”  In the event the Company fails to make Event Payments to a Holder within five (5) business days after an Event Payment Date, such Event Payments owed to such Holder shall bear interest in the form of cash or additional shares of Common Stock (the form of such payment to be at the Company’s option) at the rate of one percent (1.0%) per month (prorated for partial months) until paid in full.  The liquidated damages pursuant to the terms hereof shall apply on a daily pro rata basis for any portion of a month prior to the cure of an Event, except in the case of the first Event date.  All pro rated calculations made pursuant to this paragraph shall be based upon the actual number of days in such pro rated month.  Notwithstanding the foregoing provisions, in no event shall the Company be obligated to pay such liquidated damages (a) to more than one Holder in respect of the same Registrable Securities for the same period of time, (b) in an aggregate amount that exceeds fifteen percent (15.0%) of the purchase price paid by such Holder for its Registrable Securities pursuant to its Subscription Agreement or (c) with respect to more than one Event at the same time.  In the event the Company elects to make an Event Payment or interest payment under this Section 3.3 in shares of Common Stock, the number of shares of Common Stock to be issued to a Holder hereunder shall equal the quotient determined by dividing (i) the cash value of the Event Payment or interest payment, as applicable, due to such Holder by (ii) the lesser of (A) the purchase price per share of Common Stock under its Subscription Agreement and (B) the average closing price of the Common Stock for the five (5) trading days immediately preceding the date of the Event.  The additional shares of Common Stock, if any, payable as Event Payments shall, if permissible, be added to the Registration Statement prior to being declared effective by the SEC; if it is not permissible to add such shares of Common Stock to an existing Registration Statement, then the Company shall use commercially reasonable efforts to include such shares on a new Registration Statement as promptly as practicable.  Notwithstanding anything to the contrary set forth in this Section 3.3, the Company shall not, without the prior written consent of a Holder, be able to elect to make an Event Payment or interest payment to such Holder in shares of Common Stock to the extent that, if after giving effect to such issuance, the Holder, together with any person that shares a common investment adviser with such Holder, would beneficially own, in the aggregate, in excess of 9.9% of the outstanding shares of Common Stock immediately after giving effect to such issuance.  For purposes of the foregoing, beneficial ownership and all determinations and calculations shall be determined by the Holder in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder.

 

For such purposes, each of the following shall constitute an “Event”: (i) a Registration Statement covering all of the Registrable Securities is not filed with the SEC on or prior to the Required Filing Date; (ii) a Registration Statement covering all of the Registrable Securities is not declared effective on the Required Effectiveness Date; (iii) after its effective date, (A) such Registration Statement ceases for any reason (including without limitation by reason of a stop order, or the Company’s failure to update the Registration Statement), to remain continuously effective as to all Registrable Securities for which it is required to be effective or (B) the Holders are not permitted to utilize the prospectus therein to resell such Registrable Securities, in the case of (A) and (B) (other than during an Allowable Suspension Period (as defined in Section 4.4)); (iv) a suspension period under Section 4.4 exceeds the length of an Allowable Suspension Period; or (v) after the date six months following the Closing Date, and only in the event the Registration Statement is not available to sell Registrable Securities, the Company fails to file with the SEC any required reports under Section 13 or 15(d) of the Exchange Act such that it is not in compliance with Rule 144(c)(1) as a result of which the Holders who are not affiliates are unable to sell Registrable Securities without restriction under Rule 144.

 

3.4      Expenses.  The Company shall bear all Registration Expenses in connection with this ARTICLE III, whether or not the Registration Statement becomes effective.

 

  

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ARTICLE IV                        REGISTRATION PROCEDURES

 

4.1      Obligations of the Company.  The Company shall:

 

(a)      not less than three (3) business days prior to the filing of a Registration Statement and not less than one (1) business day prior to the filing of any related prospectus or any amendment or supplement thereto (except for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and any similar or successor reports), furnish to the Holders copies of such Registration Statement, prospectus or amendment or supplement thereto, as proposed to be filed, which documents will be subject to the review of such Holder (it being acknowledged and agreed that if a Holder does not object to or comment on the aforementioned documents within such three (3) business day or one (1) business day period, as the case may be, then the Holder shall be deemed to have consented to and approved the use of such documents).  The Company shall not file any Registration Statement or amendment or supplement thereto in a form to which a Holder reasonably objects in good faith, provided that, the Company is notified of such objection in writing within the three (3) business days or one (1) business day period described above, as applicable;

 

(b)      prepare and file with the SEC such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be reasonably necessary to keep such Registration Statement effective for the Effectiveness Period, and shall comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the Holders set forth in such Registration Statement;

 

(c)      furnish to each Holder, prior to filing a Registration Statement relating to Registrable Securities, at least one executed copy of such Registration Statement as is proposed to be filed, and thereafter such number of conformed copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto), the prospectus included in such Registration Statement (including each preliminary prospectus and any summary prospectus) and such other documents or prospectus as each such Holder may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such Holder;

 

(d)      register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any Holder may reasonably request, and continue such registration or qualification in effect in such jurisdiction for as long as permissible pursuant to the laws of such jurisdiction, or for as long as any such Holder reasonably requests or until all of such Registrable Securities are sold, whichever is shortest, and do any and all other acts and things which may be reasonably necessary or advisable to enable any such Holder to consummate the disposition in such jurisdictions of the Registrable Securities owned by such Holder; provided, however, that the Company shall not be required to (A) qualify generally to do business as a foreign entity in any jurisdiction where it would not otherwise be required to qualify but for this Section 4.1(d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general service of process in any such jurisdiction;

 

(e)      promptly notify each seller of Registrable Securities: (i) when a prospectus, any prospectus supplement, a Registration Statement or a post-effective amendment to a Registration Statement (but only if relating to Registrable Securities) has been filed with the SEC, and, with respect to a Registration Statement or any post-effective amendment (but only if relating to Registrable Securities), when the same has become effective; (ii) of any comments or request by the SEC or any other federal or state Governmental Authority for amendments or supplements to a Registration Statement or related prospectus or for additional information (but only if relating to Registrable Securities); (iii) of the issuance by the SEC or any other Governmental Authority of any stop order suspending the effectiveness 

 

  

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of a Registration Statement relating to Registrable Securities or of any order suspending or preventing the use of any related prospectus or the initiation or threatening of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; (v) of the existence of any fact or happening of any event (including the passage of time) of which the Company has knowledge which makes any statement of a material fact in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue or which would require the making of any changes to the Registration Statement or prospectus in order that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of such prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; and (vi) determination by counsel of the Company that a post-effective amendment or supplement to a Registration Statement relating to Registrable Securities is advisable; provided, however, in no event shall any such notice under this Section 4.1(e) contain any information which would constitute material, non-public information regarding the Company or any of its subsidiaries;

 

(f)      upon the occurrence of any event contemplated by clause (v) or (vi) of Section 4.1(e), as promptly as practicable, prepare a supplement, amendment or post-effective to such Registration Statement or related prospectus and furnish to each Holder a reasonable number of copies of such supplement to or an amendment or post-effective amendment of such Registration Statement or prospectus as may be necessary so that, after delivery to the purchasers of such Registrable Securities, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of such prospectus, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading.

 

(g)      Upon the occurrence of any event contemplated by clauses (iii) or (iv) of Section 4.1(e), as promptly as practicable, the Company shall use its commercially reasonable efforts to promptly obtain the withdrawal of any such order or suspension and shall immediately notify each seller of Registrable Securities of any such withdrawal;

 

(h)      cause all such Registrable Securities to be listed on each securities exchange on which similar securities issued by the Company are then listed; provided, that the applicable listing requirements are satisfied;

 

(i)      provide reasonable cooperation to each Holder and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the FINRA; provided, that the Company shall not be required to incur material expenses or obligations in connection with its obligations under this Section 4.1(i); and

 

(j)      cooperate with the Holders to facilitate the timely preparation and delivery of certificates (or book-entry shares) representing such Registrable Securities to be delivered to a transferee pursuant to a Registration Statement, which certificates (or book-entry shares) shall be free of any restrictive legends and in such denominations and registered in such names as such Holders may request.  Certificates for Registrable Securities free from all restrictive legends may be transmitted by the transfer agent to a transferee by crediting the account of such transferee’s prime broker with the Depository Trust Company as directed by such transferee.

 

  

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4.2      Seller Information.  The Company may require each Holder of Registrable Securities as to which any registration is being effected to furnish, and such Holder shall furnish, to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing in response to requests made by the Staff or to permit the Company to comply with the rules and regulations of the SEC.  The furnishing of such information shall be a condition to the inclusion of the Holder’s Registrable Securities in such Registration Statement.

 

4.3      Registration Expenses.  The Company shall pay all expenses arising from or incident to its performance of, or compliance with, this Agreement, including, without limitation, (i) SEC, stock exchange and FINRA registration and filing fees, (ii) all fees and expenses incurred in complying with securities or “blue sky” laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with “blue sky” qualifications of the Registrable Securities as may be set forth in any underwriting agreement), (iii) all printing, messenger and delivery expenses, (iv) the reasonable fees, charges and expenses of the Holders’ counsel (including without limitation the fees charges and expenses incurred in connection with any amendments to a Registration Statement), and (v) the reasonable fees, charges and expenses of counsel to the Company and of its independent certified public accountants and any other accounting fees, charges and expenses incurred by the Company (including, without limitation, any expenses arising from any “cold comfort” letters or any special audits incident to or required by any registration or qualification), regardless of whether such Registration Statement is declared effective.  All of the expenses described in the preceding sentence of this Section 4.3 are referred to herein as “Registration Expenses.”  The Holders of Registrable Securities sold pursuant to a Registration Statement shall bear the expense of any broker’s commission or underwriter’s discount or commission relating to registration and sale of such Holders’ Registrable Securities.

 

4.4      Notice to Discontinue.  Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in clause (v) or (vi) of Section 4.1(e), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 4.1(f) and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities which is current at the time of receipt of such notice.  If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including, without limitation, the period referred to in Section 4.1(b)) by the number of days during the period from and including the date of the giving of such notice pursuant to clause (v) or (vi) of Section 4.1(e) to and including the date when Holders of such Registrable Securities under such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by, and meeting the requirements of, Section 4.1(f); provided, that, no single suspension under this Section 4.4 shall exceed thirty (30) days in any one hundred and eighty (180) day period and in no event shall more than one suspension event exceed, in the aggregate, sixty (60) days in any twelve (12) month period (each suspension period complying with this provision being an “Allowable Suspension Period”).  In no event shall any such notice under this Section 4.4 contain any information that would constitute material, non-public information regarding the Company or any of its subsidiaries. The Company will use its commercially reasonable efforts to minimize periods during which the Registration Statement is not effective.  Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended Common Stock (in certificated or book-entry form) to a transferee of a Holder in connection with any sale of Registrable Securities with respect to which a Holder has entered into a contract for sale prior to the Holder’s receipt of the suspension notice and for which the Holder has not yet settled.

 

  

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ARTICLE V                        INDEMNIFICATION; CONTRIBUTION

 

5.1      Indemnification by the Company.  The Company shall, notwithstanding any termination of this Agreement, indemnify, defend and hold harmless each Holder, the officers, directors, agents, partners, members, managers, stockholders, Affiliates and employees of each of them, each Person who controls any such Holder (within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act) and the officers, directors, partners, members, managers, stockholders, agents and employees of each such controlling Person, to the fullest extent permitted by applicable law, from and against any and all losses, claims, damages, liabilities, costs (including, without limitation, reasonable costs of preparation and investigation and reasonable attorneys’ fees) and expenses (collectively, “Losses”), as incurred, that arise out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus or any form of prospectus or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission to state a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus or form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading, except to the extent, but only to the extent, that (A) such untrue statements, alleged untrue statements, omissions or alleged omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein, or to the extent that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and approved by such Holder expressly for use in the Registration Statement, such prospectus or such form of prospectus or in any amendment or supplement thereto (it being understood that each Holder has approved Annex A hereto for this purpose), or (B) in the case of an occurrence of an event of the type specified in Section 4.1(e)(iii)-(v), related to the use by a Holder of an outdated or defective prospectus after the Company has notified such Holder in writing that the prospectus is outdated or defective and prior to the receipt by such Holder of written notice by the Company that the applicable prospectus (as it may be supplemented or amended) may be resumed, but only if and to the extent that following the receipt of such written notice the misstatement or omission giving rise to such Loss would have been corrected.  The Company shall notify the Holders promptly of the institution, threat or assertion of any proceeding arising from or in connection with the transactions contemplated by this Agreement of which the Company is aware.  Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of an Indemnified Party.

 

5.2      Indemnification by Purchasers.  Each Holder shall, severally and not jointly, indemnify and hold harmless the Company, its directors, officers, agents and employees, each Person who controls the Company (within the meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act), and the directors, officers, agents or employees of such controlling Persons, to the fullest extent permitted by applicable law, from and against all Losses, as incurred, arising out of or are based upon any untrue or alleged untrue statement of a material fact contained in any Registration Statement, any prospectus, or any form of prospectus, or in any amendment or supplement thereto or in any preliminary prospectus, or arising out of or relating to any omission or alleged omission of a material fact required to be stated therein or necessary to make the statements therein (in the case of any prospectus, or any form of prospectus or supplement thereto, in light of the circumstances under which they were made) not misleading (i) to the extent, but only to the extent, that such untrue statements or omissions are based solely upon information regarding such Holder furnished in writing to the Company by such Holder expressly for use therein or (ii) to the extent, but only to the extent, that such information relates to such Holder or such Holder’s proposed method of distribution of Registrable Securities and was reviewed and approved by such Holder expressly for use in a Registration Statement (it being understood that the Holder has approved Annex A hereto for this purpose), such prospectus or such form of prospectus or in any amendment or supplement thereto or (iii) in the case of an occurrence of an event of the type specified in Section 4.1(e)(iii)-(v), to the extent, but only to the extent, related to the use by such Holder of an outdated or defective prospectus after the Company has notified such Holder in writing that the prospectus is outdated or defective and prior to the receipt by such Holder of written notice by the 

 

  

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Company that the applicable prospectus (as it may be supplemented or amended) may be resumed, but only if and to the extent that following the receipt of such written notice the misstatement or omission giving rise to such Loss would have been corrected.  In no event shall the liability of any selling Holder hereunder be greater in amount than the dollar amount of the net proceeds received by such Holder upon the sale of the Registrable Securities giving rise to such indemnification obligation.

 

5.3      Conduct of Indemnification Proceedings.  Any Person entitled to indemnification hereunder (the “Indemnified Party”) agrees to give prompt written notice to the indemnifying party (the “Indemnifying Party”) after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of any liability or obligation that it may have to the Indemnified Party hereunder (except to the extent that it shall be finally judicially determined by a court of competent jurisdiction (which determination is not subject to appeal or further review) that the Indemnifying Party has been materially prejudiced or otherwise forfeited substantive rights or defenses by reason of such failure).  If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party.  The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to promptly assume the defense of such action with counsel reasonably satisfactory to the Indemnified Party or (iii) such parties have been advised in writing by such counsel that either (x) representation of such Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (y) there may be one or more legal defenses available to the Indemnified Party which are different from or additional to those available to the Indemnifying Party, in any of such cases, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all similarly-situated Indemnified Parties.  No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld.  No Indemnifying Party shall, without the consent of such Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Party is a party and indemnity has been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability for claims that are the subject matter of such proceeding.

 

5.4      Contribution.

 

(a)      If the indemnification provided for in this ARTICLE V from the Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Losses referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Losses in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Losses, as well as any other relevant equitable considerations.  The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action.  The amount paid or payable by a 

 

  

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party as a result of the Losses referred to above shall be deemed to include, subject to the limitations set forth in Sections 5.1 and 5.2, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding; provided, that the total amount to be contributed by a Holder shall be limited to the net proceeds (after deducting the underwriters’ discounts and commissions) received by such Holder in the offering.  No Person involved in the sale of Registrable Securities who is guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) in connection with such sale shall be entitled to indemnification or contribution from any Person involved in such sale of Registrable Securities who is not guilty of fraudulent misrepresentation.

 

(b)      The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 5.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in Section 5.4(a).  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.

 

5.5      The indemnity and contribution agreements contained in this Article V are in addition to any liability that the Indemnifying Parties may have to the Indemnified Parties and are not in diminution or limitation of the indemnification provisions under the Subscription Agreements.

 

ARTICLE VI                        MISCELLANEOUS

 

6.1      Remedies.  The Holders, in addition to being entitled to exercise all rights granted by law, including recovery of damages, shall be entitled to specific performance of their rights under this Agreement.  The Company agrees that monetary damages alone (including those specified in Section 3.3) would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate.

 

6.2      No Piggyback on Registrations.  Neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in a Registration Statement other than the Registrable Securities without the consent of the Holders holding at least a majority of the then outstanding Registrable Securities (such consent not to be unreasonably withheld or delayed).

 

6.3      Notices.  All notices, demands and other communications provided for or permitted hereunder shall be made in the manner provided for under the Subscription Agreements.

 

6.4      Successors and Assigns; Third Party Beneficiaries.  This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto; provided, that the rights of the Holders contained in this Agreement shall be automatically transferred to the transferee of any Registrable Security provided that (i) such transferee agrees to become a party to this Agreement and be fully bound by, and subject to, all of the terms and conditions of the Agreement as though an original party hereto; (ii) the Company is furnished with written notice of (a) the name and address of such transferee, and (b) the securities with respect to which such registration rights are being transferred; (iii) immediately following such transfer the further disposition of such securities by the transferee is restricted under the Securities Act or applicable state securities laws if so required; and (iv) such transfer shall have been conducted in accordance with all applicable federal and state securities laws.  All of the obligations of the Company hereunder shall survive any transfer.  Except as provided in ARTICLE V, no Person other than the parties hereto and their successors and permitted assigns are intended to be a beneficiary of this Agreement.

 

  

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6.5      Amendments and Waivers.  Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless consented to in writing by (i) the Company and (ii) the Holders holding at least two-thirds of the then outstanding Registrable Securities; provided, that if any such amendment, modification, supplement, waiver, consent or departure would adversely affect the rights, preferences or privileges of any Holder disproportionately with respect to the rights, preferences and privileges of the other Holders, such Holder’s consent in writing shall be required; provided further, any party hereto may give a waiver in writing as to itself.

 

6.6      Counterparts.  This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.  The parties hereto confirm that any facsimile copy of another party’s executed counterpart of this Agreement (or its signature page thereof) will be deemed to be an executed original thereof.

 

6.7      Headings.  The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.

 

6.8      GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE PRINCIPLES OF CONFLICTS OF LAW THEREOF THAT WOULD IMPLICATE OR CAUSE THE LAWS OF ANOTHER JURISDICTION TO APPLY.

 

6.9      Severability.  If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.

 

6.10                 Entire Agreement.  This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto with respect to the subject matter contained herein.  There are no restrictions, promises, representations, warranties or undertakings with respect to the subject matter contained herein, other than those set forth or referred to herein.  This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter.

 

6.11                 Further Assurances.  Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any governmental authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.

 

6.12                 Other Agreements.  Nothing contained in this Agreement shall be deemed to be a waiver of, or release from, any obligations any party hereto may have under any other agreement including, but not limited to, the Subscription Agreements.

 

6.13                 Termination.  Except for the liabilities or obligations under Section 4.3 or ARTICLE V, all of which shall remain in effect in accordance with their terms, this Agreement and the obligations of the parties hereunder (other than liability for the breach by any party hereto of any of the terms of this Agreement) shall terminate upon the end of the Effectiveness Period.

 

  

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6.14                 Independent Nature of Holders’ Obligations and Rights.  The obligations of each Holder under this Agreement are several and not joint with the obligations of any other Holder hereunder, and no Holder shall be responsible in any way for the performance of the obligations of any other Holder hereunder.  The decision of each Holder to purchase the Securities pursuant to its Subscription Agreement has been made independently of any other Holder. Nothing contained herein or in any other agreement or document delivered at any closing, and no action taken by any Holder pursuant hereto or thereto, shall be deemed to constitute the Holders as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Holders are in any way acting in concert with respect to such obligations or the transactions contemplated by this Agreement.  Each Holder acknowledges that no other Holder has acted as agent for such Holder in connection with making its investment and that no Holder will be acting as agent of such Holder in connection with monitoring its investment in the Securities or enforcing its rights under this Agreement or any Subscription Agreement. Each Holder shall be entitled to protect and enforce its rights, including, without limitation, the rights arising out of this Agreement, and it shall not be necessary for any other Holder to be joined as an additional party in any proceeding for such purpose.

 

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IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.

 

	  	
COMPANY:

 

	  	  
	  	
OILSANDS QUEST INC.

	  	  
	  	
By:

	  
	  	  	  
	  	
Name:

	  
	  	  	  
	  	
Title:

	  
	  	  
	  	  

  

  

  

IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.

 

	  	
PURCHASERS:

 

	  	  
	  	
[INSERT NAME]

	  	  
	  	
By:

	  
	  	  	  
	  	
Name:

	  
	  	  	  
	  	
Title:

	  
	  	  
	  	
Address:

[INSERT ADDRESS]

	  	  

 

 

  

  

  

ANNEX A

 

PLAN OF DISTRIBUTION

 

We are registering the Common Stock issued to the selling stockholder to permit the resale of these shares of Common Stock by the holders of the Common Stock from time to time after the date of this prospectus.  We will not receive any of the proceeds from the sale by the selling stockholders of the Common Stock.  We will bear all fees and expenses incident to our obligation to register the Common Stock.

The selling stockholders may sell all or a portion of the Common Stock beneficially owned by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents.  If the Common Stock is sold through underwriters or broker-dealers, the selling stockholders will be responsible for underwriting discounts or commissions or agent's commissions.  The Common Stock may be sold on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale, in the over-the-counter market or in transactions otherwise than on these exchanges or systems or in the over-the-counter market and in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions.  The selling stockholders may use any one or more of the following methods when selling shares:

 

	
  

	
·

	
ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;

 

	
  

	
·

	
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;

 

	
  

	
·

	
purchases by a broker-dealer as principal and resale by the broker-dealer for its account;

 

	
  

	
·

	
an exchange distribution in accordance with the rules of the applicable exchange;

 

	
  

	
·

	
privately negotiated transactions;

 

	
  

	
·

	
settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;

 

	
  

	
·

	
broker-dealers may agree with the selling stockholders to sell a specified number of such shares at a stipulated price per share;

 

	
  

	
·

	
through the writing or settlement of options or other hedging transactions, whether such options are listed on an options exchange or otherwise;

 

	
  

	
·

	
a combination of any such methods of sale; and

 

	
  

	
·

	
any other method permitted pursuant to applicable law.

 

The selling stockholders also may resell all or a portion of the shares in open market transactions in reliance upon Rule 144 under the Securities Act, as permitted by that rule, or Section 4(1) under the Securities Act, if available, rather than under this prospectus, provided that they meet the criteria and conform to the requirements of those provisions.

 

  

  

  

Broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate in sales. If the selling stockholders effect such transactions by selling Common Stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling stockholders or commissions from purchasers of the Common Stock for whom they may act as agent or to whom they may sell as principal. Such commissions will be in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction will not be in excess of a customary brokerage commission in compliance with NASD Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with NASD IM-2440.

 

In connection with sales of the Common Stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the Common Stock in the course of hedging in positions they assume.  The selling stockholders may also sell Common Stock short and if such short sale shall take place after the date that this Registration Statement is declared effective by the Commission, the selling stockholders may deliver Common Stock covered by this prospectus to close out short positions and to return borrowed shares in connection with such short sales.  The selling stockholders may also loan or pledge Common Stock to broker-dealers that in turn may sell such shares, to the extent permitted by applicable law. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction). Notwithstanding the foregoing, the selling stockholders have been advised that they may not use shares registered on this registration statement to cover short sales of our Common Stock made prior to the date the registration statement, of which this prospectus forms a part, has been declared effective by the SEC.

 

The selling stockholders may, from time to time, pledge or grant a security interest in some or all of the Common Stock owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the Common Stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act of 1933, as amended, amending, if necessary, the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.  The selling stockholders also may transfer and donate the Common Stock in other circumstances in which case the transferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus.

 

The selling stockholders and any broker-dealer or agents participating in the distribution of the Common Stock may be deemed to be “underwriters” within the meaning of Section 2(11) of the Securities Act in connection with such sales.  In such event, any commissions paid, or any discounts or concessions allowed to, any such broker-dealer or agent and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Selling Stockholders who are "underwriters" within the meaning of Section 2(11) of the Securities Act will be subject to the applicable prospectus delivery requirements of the Securities Act and may be subject to certain statutory liabilities of, including but not limited to, Sections 11, 12 and 17 of the Securities Act and Rule 10b-5 under the Securities Exchange Act of 1934, as amended, or the Exchange Act.

 

Each selling stockholder has informed the Company that it is not a registered broker-dealer and does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the Common Stock.  Upon the Company being notified in writing by a selling stockholder that 

 

  

  

  

any material arrangement has been entered into with a broker-dealer for the sale of Common Stock through a block trade, special offering, exchange distribution or secondary distribution or a purchase by a broker or dealer, a supplement to this prospectus will be filed, if required, pursuant to Rule 424(b) under the Securities Act, disclosing (i) the name of each such selling stockholder and of the participating broker-dealer(s), (ii) the number of shares involved, (iii) the price at which such the Common Stock was sold, (iv) the commissions paid or discounts or concessions allowed to such broker-dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any investigation to verify the information set out or incorporated by reference in this prospectus, and (vi) other facts material to the transaction.  In no event shall any broker-dealer receive fees, commissions and markups, which, in the aggregate, would exceed eight percent (8%).

 

Under the securities laws of some states, the Common Stock may be sold in such states only through registered or licensed brokers or dealers.  In addition, in some states the Common Stock may not be sold unless such shares have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.

 

There can be no assurance that any selling stockholder will sell any or all of the Common Stock registered pursuant to the shelf registration statement, of which this prospectus forms a part.

 

Each selling stockholder and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the Common Stock by the selling stockholder and any other participating person.  To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the Common Stock to engage in market-making activities with respect to the Common Stock.  All of the foregoing may affect the marketability of the Common Stock and the ability of any person or entity to engage in market-making activities with respect to the Common Stock.

 

We will pay all expenses of the registration of the Common Stock pursuant to the registration rights agreement, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance with state securities or “blue sky” laws; provided, however, that each selling stockholder will pay all underwriting discounts and selling commissions, if any and any related legal expenses incurred by it.  We will indemnify the selling stockholders against certain liabilities, including some liabilities under the Securities Act, in accordance with the registration rights agreement, or the selling stockholders will be entitled to contribution.  We may be indemnified by the selling stockholders against civil liabilities, including liabilities under the Securities Act, that may arise from any written information furnished to us by the selling stockholders specifically for use in this prospectus, in accordance with the related registration rights agreements, or we may be entitled to contribution.

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