Document:

lochunt.htm

Exhibit 10.4

CREDIT AGREEMENT

dated as of July 27, 2009

BETWEEN

 

                            M/I
HOMES, INC.

 

Borrower

and

THE HUNTINGTON NATIONAL BANK

Lender

Porter, Wright, Morris & Arthur LLP

41 South High Street

Columbus, Ohio 43215

  

  

  

TABLE OF CONTENTS

SECTION                                           HEADING PAGE #

 

1.               DEFINITIONS.

 

1.1.        Certain Defined Terms.

1.2.        Other Definitional Provisions and Construction. 

 

2.               THE CREDIT EXTENSIONS AND TERMS OF REPAYMENT. 

 

2.1.        The Letters of Credit.

2.2.        Provisions Applicable to the Credit Extensions and the Letters of Credit.

2.3.        Pending Defaults.

2.4.        Increased Costs and Capital Requirements.

2.5.        Illegality and Impossibility.

2.6.        Survival of Obligations.

 

3.               FEES.

 

3.1.        Fees.

3.2.        Method of Payment.

 

4.               COLLATERAL.

 

4.1.        Collateral Deposit Account.  All Obligations under this Agreement shall be
secured by the Collateral.

 

5.               CONDITIONS PRECEDENT.

 

5.1.        Conditions Precedent to Initial Credit Extensions.

5.2.        Conditions Precedent to Subsequent Letter of Credit Issuances.

 

6.               WARRANTIES AND REPRESENTATIONS.

 

6.1.        Organization and Authority.

6.2.        Borrowing is Legal and Authorized.

6.3.        Margin Loans and Purchase of Ineligible Securities.

6.4.        Taxes.

6.5.        Compliance with Law.

6.6.        Financial Statements; Full Disclosure.

6.7.        Litigation; Adverse Effects.

6.8.        Solvency.

6.9.        Government Consent.

6.10.            No Liens on Collateral.

6.11.            No Defaults.

 

7.               BORROWER AFFIRMATIVE AND NEGATIVE COVENANTS.

 

7.1.        Payment of Taxes and Claims.

7.2.        Place of Business; Books and Records.

7.3.        Proper Books; Collateral.

7.4.        Restriction on Fundamental Changes; Conduct of Business.

7.5.        Negative Pledge.

 

8.               FINANCIAL INFORMATION AND REPORTING.

 

 

9.               DEFAULT.

 

9.1.        Events of Default.

9.2.        Default Remedies.

 

10.               GENERAL PROVISIONS.

 

10.1.            Notices.

10.2.            Costs and Expenses.

10.3.            Survival, Successors and Assigns.

10.4.            Amendment and Waiver.

10.5.            Enforceability and Governing Law.

10.6.            Confidentiality.

10.7.            Section Headings.

10.8.            Interpretation.

10.9.            Severability of Provisions.

10.10.            Counterparts; Facsimile Execution.

10.11.            Revival and Reinstatement of Obligations.

10.12.            Integration.

10.13.            Waiver of Right to Trial by Jury.

10.14.            No Consequential Damages.

10.15.            Indemnity. 

10.16.            Patriot Act Notice.

 

  

  

  

 

 

 

EXHIBITS AND SCHEDULES

 

Exhibit A                                - Application and Agreement for Letter of Credit

Exhibit B                                - Form of Compliance Certificate

Schedule 5.1                                - Conditions Precedent to Initial Letter of Credit Issuance

  

  

  

CREDIT AGREEMENT

This Credit Agreement (this “Agreement”) is entered into at Columbus, Ohio, between THE HUNTINGTON NATIONAL BANK, a national banking association with a place of business in Columbus, Ohio (“Lender”),
and M/I Homes, Inc., an Ohio corporation with its principal place of business in Columbus, Ohio (“Borrower”), as of July 27, 2009.

	
1.  
	
Definitions.

1.1. Certain Defined Terms.

The following terms used in this Agreement or in the other Loan Documents executed in connection herewith shall have the following meanings, applicable both to the singular and the plural forms of the terms defined.  As used in this Agreement:

“Affiliate” means, as applied to any Person, any other Person who, directly or indirectly, controls, is controlled by, or is under common control with, such Person, or is a family member related by birth or marriage.  For purposes
of this definition only, “control” means the possession, directly or indirectly, of the power to direct the management and policies of a Person, whether through the ownership of equity interests, by contract, or otherwise; provided, however, that, in any event: (i) any Person which owns directly or indirectly ten percent (10%) or more of the securities having ordinary voting
power for the election of directors or other members of the governing body of a Person or ten percent (10%) or more of the partnership, member or other ownership interests of a Person (other than as a limited partner of such Person) shall be deemed to control such Person; (ii) each director (or manager) of a Person shall be deemed to be an Affiliate of such Person; and (iii) each partnership or joint venture in which a Person is a partner or joint venturer shall be deemed to be an Affiliate of such Person.

“Agreement” means this Credit Agreement.

“Application and Agreement for Letter of Credit” shall mean an application and agreement for standby letter of credit by, between, and among Borrower and Lender, in a form provided by Lender substantially in the form attached hereto as Exhibit
A, either as originally executed or as it may from time to time be supplemented, modified, amended, renewed, or extended.

“Bankruptcy Code” means Title 11 of the United States Code (11 USC, § 101 et seq), as amended from time
to time, and any successor statute thereto, including (unless the context requires otherwise) any rules or regulations promulgated thereunder.

 

“Base Rate” means the rate established by The Huntington National Bank from time to time designated as its prime rate based on its consideration of economic, money market, business and competitive factors, and such rate is not necessarily the
most favored rate of such Person.  Each change in the Base Rate shall automatically and immediately change the interest rate on all applicable advances bearing the Base Rate without notice to Borrower, subject to any maximum or minimum interest rate limitation specified by applicable law.

 

“Borrower” is defined in the preamble.

“Business Day” means any day that is not a Saturday, Sunday, or other day on which national banks are authorized or required to close.

 

“Capital Lease” means a lease that is required to be capitalized for financial reporting purposes in accordance with GAAP.

 

“Change of Control” means the occurrence of any of the following: (a) any Person or group (as that term is understood under Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”) and the rules and regulations thereunder) shall have acquired beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of a percentage (based on voting power, in the event different classes of stock shall have different voting powers) of the voting stock of Borrower equal to at least fifty percent (50%); or (b) as of any date a majority of the board of Directors of Borrower Parent consists of individuals who were not either (i) directors of Borrower as of the corresponding
date of the previous year, (ii) selected or nominated to become directors by the Board of Directors of Borrower of which a majority consisted of individuals described in clause (b)(i) above or (iii) selected or nominated to become directors by the Board of Directors of Borrower of which a majority consisted of individuals described in clause (b)(i) above and individuals described in clause (b)(ii) above.

“Closing Date” means the date of the making of the initial Credit Extension hereunder.

 

“Collateral” means all now owned or hereafter acquired right, title and interest in property of Borrower in or upon which a first and exclusive security interest or Lien is granted to Lender, under this Agreement, any security agreement or under
any of the other Loan Documents and shall include without limitation all right, title and interest in any Deposit Account, monies, funds or other property in the Deposit Collateral Account and all Proceeds thereof.

“Commitment Fee” means a commitment fee equal to 15 basis points (0.15%) of the Letter of Credit Commitment, payable on the date hereof.

“Contingent Obligations” means any agreement, undertaking or arrangement by which any Person assumes, guaranties, endorses, agrees to provide funding, or otherwise becomes or is contingently liable upon the obligation or liability of any other
Person.

“Credit Extension” is defined in Section 2.1.

“Customs” is defined in Section 2.1(h)(iv).

“Default Rate” means, at any time, in respect of any Credit Extension, advance, fee or any other amount under this Agreement or any other Loan Document that is not paid when due to Lender (whether at stated maturity, by acceleration or mandatory
prepayment or otherwise), a rate per annum during the period from and including the due date to but excluding the date on which such amount is paid in full equal to the sum of (x) four percent (4%) per annum plus (y) the related fixed or variable interest rate or fee otherwise applicable to such Credit Extension, advance, fee or other amount.  In respect of failure to pay any Reimbursement Obligation, the Default Rate shall be five percent
(5.00%) per annum in excess of the Base Rate.

“Deposit Accounts” means “deposit accounts” (as defined in the UCC), all deposit accounts, whether general, special, time, demand, provisional, or final, all cash or monies wherever located, any and all deposits or other sums at
any time due to such Person, which now or hereafter are at any time in the possession or control of Lender or in the possession of any third party acting in Lender’s behalf, without regard to whether Lender received the same in pledge for safekeeping, as agent for collection or transmission or otherwise, or whether Lender has conditionally released the same.

“Deposit Collateral Account” is defined in Section 2.1(g).

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time, and any successor statute thereto, including without limitation (unless the context otherwise requires), any rules or regulations promulgated thereunder.

“Event of Default” means an event described in Section 9.1.

“Financial Officer” means the chief executive officer, president, chief financial officer or treasurer of Borrower.

“GAAP” means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board, the American Institute of Certified Public Accountants and the Financial Accounting Standards Board as in
effect from time to time in the United States consistently applied.

“Governmental Acts” is defined in Section 2.1(f).

 

“Governmental Authority” means any nation or government, any federal, state, local or other political subdivision thereof and any entity exercising executive, legislative, judicial, regulatory or administrative authority or functions of or pertaining
to government, including any authority or other quasi-governmental entity established to perform any of such functions.

 

“Indebtedness” means, at any time, (i) all indebtedness, obligations or other liabilities (other than accounts payable arising in the ordinary course of business payable on terms customary in the trade) which in accordance with GAAP should be
classified as liabilities on the balance sheet of such Person, including without limitation, (A) for borrowed money or evidenced by debt securities, debentures, acceptances, notes or other similar instruments, and any accrued interest, fees and charges relating thereto, (B) under profit payment agreements or in respect of obligations to redeem, repurchase or exchange any securities or to pay dividends in respect of any stock, (C) with respect to letters of credit, bankers acceptances, interest rate swaps or other
contracts, currency agreement or other financial products, (D) to pay the deferred purchase price of property or services, or (E) in respect of Capital Leases; (ii) all indebtedness, obligations or other liabilities secured by a lien on any property, whether or not such indebtedness, obligations or liabilities are assumed by the owner of the same; and (iii) all Contingent Obligations.

“Insolvency Proceeding” means any proceeding commenced by or against any Person under any provision of the Bankruptcy Code or under any other state or federal bankruptcy or insolvency law, receivership, assignment for the benefit of creditors,
formal or informal moratorium, forbearance, composition, extension generally with creditors, or proceedings seeking reorganization, arrangement, or other similar relief.

“IRC” means the Internal Revenue Code, as amended from time to time, and any successor statute thereto, including (unless the context requires otherwise) any rules or regulations promulgated thereunder.

“Land” means, in respect of any Person, all present and future plots or parcels of land, whether now owned,  leased or entitled or hereafter acquired (including, in respect of Borrower, as reflected in the most recent financial statements)
by such Person.

 

“Lender” is defined in the preamble and shall include The Huntington National Bank or any of its Affiliates in its capacity as an issuer of Letters of Credit under this Agreement.

“Letter of Credit” and “Letters of Credit” shall mean any letter of credit issued by Lender as issuing bank for the account of Borrower, either as originally issued or as the
same may, from time to time, be amended or otherwise modified, extended, or replaced.

“Letter of Credit Commitment” means the commitment of such Lender to provide Letter of Credit Exposure in an aggregate amount not to exceed $8,750,000.

“Letter of Credit Documents” is defined in Section 2.1(b).

“Letter of Credit Draft” means a draft drawn on Lender pursuant to a Letter of Credit.

“Letter of Credit Exposure” shall mean, as of any date of determination, the aggregate undrawn stated amount of all outstanding Letters of Credit plus the aggregate of all amounts
drawn under Letters of Credit for which Lender has not yet received payment or reimbursement; provided, however, that the Letter of Credit Exposure shall at no time exceed the aggregate sum of the Letter of Credit Commitment.

“Letter of Credit Fee” shall mean (i) a fee equal to one and one-half percent (1.50%) per annum of the stated amount of each Letter of Credit, due and payable in advance to Lender upon the issuance of each Letter of Credit.

“Letter of Credit Reimbursement Obligation” is defined in Section 2.1(d).

“Lien” means any interest in an asset securing an obligation owed to, or a claim by, any Person other than the owner of the asset, whether such interest shall be based on the common law, statute, or contract, whether such interest shall be recorded
or perfected, and whether such interest shall be contingent upon the occurrence of some future event or events or the existence of some future circumstance or circumstances, including the lien or security interest arising from any mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment (collateral or otherwise), hypothec, deposit arrangement, security agreement, conditional sale, trust receipt, lease, consignment, or bailment for security purposes, judgment, claim encumbrance or statutory trust
and also including reservations, exceptions, encroachments, easements, rights-of-way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting real property.

 

“Loan Documents” means this Agreement, each Application and Agreement for Letter of Credit, reimbursement agreements, any security agreement, any guaranties of the Credit Extensions, any cash management agreements, subordination and intercreditor
agreements, deposit account control agreements, collateral assignments, pledge agreements, security agreements, mortgages, deeds of trusts and collateral agreements executed in connection with this Agreement, and all other documents, instruments and agreements executed in connection therewith or contemplated thereby, as the same may be amended, restated or otherwise modified and in effect from time to time.

“Master Credit Facility” means that certain Second Amended and Restated Credit Agreement, effective as of October 6, 2006, by and among Borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as agent for the lenders party thereto and
the other agents party thereto, as amended, restated, supplemented or otherwise modified from time to time.

“Master Credit Facility Default” means a default or event of default by Borrower under the terms of the Master Credit Facility.

“Material Adverse Effect” means, at any time, a material adverse effect in respect of Borrower upon (i) the business, condition (financial or otherwise), operations, performance, properties or prospects of any such Person, (ii) the ability of
any such Person to perform its respective obligations under this Agreement, any Loan Document or any document, agreement, guaranty, or instrument executed in connection herewith, or (iii) the ability of Lender to enforce the terms of this Agreement, any other Loan Documents, or any document, agreement, guaranty, or instrument executed in connection herewith.

“Maturity Date” means August 31, 2011.

“Obligations” means all Credit Extensions, advances, Indebtedness, debts, principal, interest (including without limitation any interest that but for the provision of the Bankruptcy Code would have accrued), Contingent Obligations, obligations,
fees, charges, costs, expenses, indemnification obligations, lease payments, liabilities, owing, or due or payable or to become due and payable by Borrower to Lender or any affiliate of Lender of any kind or nature, present or future under this Agreement, whether or not evidenced by any Application and Agreement for Letter of Credit, note, draft, letter of credit, guaranty, instrument or other Loan Document, whether direct or indirect, acquired by assignment or otherwise, absolute or contingent, liquidated or
unliquidated, due or to become due, now existing or arising hereafter and however acquired or incurred (including principal, interest, late charges, collection costs, attorneys’ fees and other amounts chargeable under this Agreement or under any other Loan Document), and any and all amendments, extensions, modifications, supplements, renewals of or substitutes thereto, thereof and therefor, both prior to and subsequent to any Insolvency Proceeding.

“Pending Default” is defined in Section 2.3.

“Permitted Contest” means the right of Borrower to contest or protest any Lien (other than any such Lien that secures the Obligations), taxes (other than payroll taxes or taxes that are the subject of a United States federal tax lien), or rental
payment, provided that (i) a reserve with respect to such obligation is established on Borrower’s books and records in such amount as is required under GAAP, (ii) any such protest is instituted promptly and prosecuted diligently by Borrower in good faith, and (iii) Lender is satisfied in its sole, good faith discretion, that, while any such protest is pending, there will be no impairment of the enforceability, validity, or priority of any of Lender’s Liens.

 

“Permitted Liens” means any Lien on the Collateral held by Lender or Affiliates of Lender.

 

“Person” means any individual, corporation, firm, enterprise, partnership, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company or any other entity of any kind or any government or
political subdivision or any agency, department or instrumentality thereof.

“Proceeds” means, “proceeds” (as defined in the UCC), all cash and non-cash proceeds, substitutions, replacements, additions and accessions to any Collateral, all documents, negotiable documents, documents of title, warehouse receipts,
storage receipts, dock receipts, dock warrants, express bills, freight bills, airbills, bills of lading, and other documents relating thereto, all products thereof, including but not limited to, notes, drafts, checks, instruments, insurance proceeds, indemnity proceeds, warranty and guaranty proceeds.

“Real Property” means, in respect of any Person, the Land of such Person, together with the right, title and interest of such Person, if any, in and to the streets, the Land lying in the bed of any streets, roads or avenues, opened or proposed,
in front of, the air space and development rights pertaining to the Land and the right to use such air space and development rights, all rights of way, privileges, liberties, tenements, hereditaments and appurtenances belonging or in any way appertaining thereto, all fixtures, all easements now or hereafter benefiting the Land and all royalties and rights appertaining to the use and enjoyment of the Land, including all alley, vault, drainage, mineral, water, oil and gas rights, together with all of the buildings
and other improvements now or hereafter erected on the Land and any fixtures appurtenant thereto.

 

“Requirements of Law” means, as to any Person, the charter and by-laws or other organization or governing documents of such Person, and any law, rule or regulation, or determination of an arbitrator or a court or other Governmental Authority,
in each case applicable to or binding upon such Person or any of its property or to which such Person or any of its property is subject, including without limitation, the Securities Act of 1933, the Securities Exchange Act of 1934, Regulations T, U and X, ERISA, the Fair Labor Standards Act, the Worker Adjustment and Retraining Notification Act, Americans With Disabilities Act of 1990, and any certificate of occupancy, zoning ordinance, building, environmental or land use requirement or permit or environmental,
labor, employment, occupational safety or health law, rule or regulation.

“Solvent” means, with respect to any Person, that at the time of determination: (i) the fair market value of its assets is in excess of the total amount of its liabilities (including, without limitation, Contingent Obligations);  (ii)
the present fair saleable value of its assets is greater than its probable liability on its existing debts as such debts become absolute and matured; (iii) it is then able and expects to be able to pay its debts (including, without limitation, contingent debts and other commitments) as they mature; and (iv) it has capital sufficient to carry on its business as conducted and as proposed to be conducted,

“Subsidiary” of a Person means any corporation, partnership, limited liability company or other entity in which such Person directly or indirectly owns or controls the securities or
other ownership interests having ordinary voting power to elect a majority of the board of directors, or appoint managers or other persons performing similar functions.

 

“UCC” means the Ohio Uniform Commercial Code, as in effect from time to time; provided, however, that, in the event
that, by reason of mandatory provisions of law, any of the attachment, perfection or priority of Lender’s security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Ohio, the term “UCC” shall mean the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such attachment, perfection or priority and for purposes
of definitions related to such provisions.

 

“Unused Commitment Fee” means a commitment fee accruing at a rate equal to 15 basis points (0.15%) per annum on the amount by which the Letter of Credit Commitment exceeds the average daily Letter of Credit Exposure in effect from time to time.

 

“Voidable Transfer” is defined in Section 10.12.

 

1.2. Other Definitional Provisions and Construction.

(a)           Any terms used in this Agreement or in any Loan Document that are defined in the UCC shall have the meanings given such terms therein, unless otherwise defined herein.

(b)           Any accounting terms used in this Agreement or in any Loan Document and not specifically defined herein shall be construed in accordance with the respective meanings given to such terms under
GAAP. When used herein, the term “financial statements” shall include the notes and schedules thereto.

(c)           Unless the context of this Agreement or any other Loan Document clearly requires otherwise, references to the plural include the singular, references to the singular include the plural, and the
term “including” is not limiting, the words “hereof,” “herein,” “hereby,” “hereunder,” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document, as the case may be, as a whole and not to any particular provision of this Agreement or such other Loan Document, as the case may be.  Any reference in this Agreement or in the other Loan Documents to any agreement, instrument, or document shall
include all alterations, amendments, changes, extensions, modifications, renewals, replacements, substitutions, joinders, and supplements, thereto and thereof, as applicable.  Any reference herein to any Person shall be construed to include such Person’s successors and assigns.

(d)           All of the schedules and exhibits attached to this Agreement shall be deemed incorporated herein by reference.

	
2.  
	
The Credit Extensions and Terms of Repayment.

2.1. The Letters of Credit.

Lender, as issuing bank, subject to the terms and conditions hereof, will issue Letters of Credit and permit Letter of Credit Exposure for the account of Borrower in the aggregate up to the amount of the Letter of Credit Commitment (the “Credit Extensions”).  At
no time shall the aggregate Letter of Credit Exposure exceed the Letter of Credit Commitment.  Borrower unconditionally promises to pay when due the amount of each Letter of Credit Reimbursement Obligation, all unpaid interest and fees accrued thereon and all other Obligations incurred by it, in accordance with the terms of this Agreement and the other Loan Documents.  Each Letter of Credit shall be issued for the account of Borrower through one of Lender’s branches, denominated in U.S.
dollars, from time to time during the period commencing on the date hereof and ending on the date ninety-one (91) days prior to the Maturity Date.

(a)           Types and Amounts.  Lender shall not have any obligation to and shall not (i) issue (or amend) any Letter of Credit if on the date of issuance (or amendment), before
or after giving effect to the Letter of Credit requested hereunder, the aggregate outstanding dollar amount of Letters of Credit Exposure would exceed the Letter of Credit Commitment, calculated as of the date of issuance of any Letter of Credit; or (ii) issue any Letter of Credit which has an expiration date, or amend any Letter of Credit such that it has an expiration date, later than the date that is the earlier of twelve (12) months after the date of issuance thereof or the Maturity Date.  No Letters
of Credit with expiry dates of one year or longer shall be issued after August 30, 2010.

(b)           Conditions.  In addition to the satisfaction of the conditions contained in Sections 5.1 and 5.2,
the obligation of Lender to issue any Letter of Credit is subject to the satisfaction in full of the following conditions: (i) Borrower shall have delivered to the Lender at such times and in such manner as Lender may prescribe, a request for issuance of such Letter of Credit in form acceptable to Lender, a duly executed Application and Agreement for such Letter of Credit, and such other documents, instructions and agreements as may be required pursuant to the terms thereof (all such applications, documents,
instructions, and agreements being referred to herein as the “Letter of Credit Documents”), (ii) the proposed Letter of Credit shall be satisfactory to Lender as to form and content; and (iii) as of the date of issuance no order, judgment or decree of any court, arbitrator or Governmental Authority shall purport by its terms to enjoin or restrain Lender from issuing such Letter of Credit and no law, rule or regulation applicable to Lender and
no request or directive (whether or not having the force of law) from a Governmental Authority with jurisdiction over Lender shall prohibit or request that Lender refrain from the issuance of Letters of Credit generally or the issuance of that Letter of Credit.

(c)           Procedure for Issuance of Letters of Credit.  (i) Subject to the terms and conditions hereof and provided that the applicable conditions set forth in Sections
5.1 and 5.2 hereof have been satisfied, Lender, on the requested date, but no earlier than twenty-four (24) hours after receiving the application for issuance, shall issue a Letter of Credit on behalf of Borrower in accordance with Lender’s usual and customary business practices, and (ii) Lender shall not extend or amend any Letter of Credit unless the requirements of this Section 2.1(c) are met as though a new Letter of Credit was
being requested and issued.

(d)           Reimbursement Obligation.  Borrower agrees unconditionally, irrevocably and absolutely to pay immediately to Lender the amount of each advance drawn under or pursuant
to a Letter of Credit or an Letter of Credit Draft related thereto (such obligation of Borrower to reimburse Lender for an advance made under a Letter of Credit or Letter of Credit Draft being hereinafter referred to as a “Letter of Credit Reimbursement Obligation”), each such reimbursement to be made by Borrower no later than the Business Day on which Lender makes payment of each such Letter of Credit Draft. If, for any reason, Borrower fails
to repay an Letter of Credit Reimbursement Obligation on the day such Letter of Credit Reimbursement Obligation arises, then such Letter of Credit Reimbursement Obligation shall bear interest from and after such day, until paid in full, at the Default Rate.

(e)           Letter of Credit Fees Upon Issuance.  Borrower agrees to pay to Lender: (i) in advance, upon the first day of issuance of each Letter of Credit, a Letter of Credit
Fee and (ii) all customary fees and other issuance, amendment, document examination, negotiation and presentment expenses and related charges in connection with the issuance, amendment, presentation of Letter of Credit Drafts, and the like customarily charged by Lender with respect to Letters of Credit, including without limitation, standard commissions with respect to commercial Letters of Credit payable at the time of invoice of such amounts.

(f)           Indemnification; Exoneration.  (i) In addition to amounts payable as elsewhere provided in this Section 2.1,
Borrower hereby agrees to protect, indemnify, pay and save harmless Lender from and against any and all liabilities and costs which Lender may incur or be subject to as a consequence, direct or indirect, of (A) the issuance of any Letter of Credit other than as a result of Lender’s gross negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, or (B) the failure of Lender to honor a drawing under a Letter of Credit as a result of any act or omission, whether
rightful or wrongful, of any present or future de jure or de facto Governmental Authority (all such acts or omissions herein called “Governmental Acts”).

(ii)           As among Borrower and Lender, Borrower assumes all risks of the acts and omissions of, or misuse of such Letter of Credit by, the beneficiary of any Letters of Credit.  In furtherance and not in limitation of the foregoing, Lender
shall not be responsible, in the absence of gross negligence or willful misconduct in connection therewith, as determined by the final judgment of a court of competent jurisdiction, (i) for the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for and issuance of the Letters of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) for the validity
or sufficiency of any instrument transferring or assigning or purporting to transfer or assign a Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) for failure of the beneficiary of a Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; (iv) for errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph,
telex, or other similar form of transmission or otherwise; (v) for errors in interpretation of technical trade terms; (vi) for any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof; (vii) for the misapplication by the beneficiary of a Letter of Credit of the proceeds of any drawing under such Letter of Credit; and (viii) for any consequences arising from causes beyond the control of Lender, including without
limitation, any Governmental Acts.  None of the above shall affect, impair or prevent the vesting of Lender’s rights or powers under this Section 2.1.

(iii)           In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by Lender under or in connection with the Letters of Credit or any related certificates shall not, in the absence
of gross negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction, put Lender under any resulting liability to Borrower or relieve Borrower of any of its obligations hereunder to Lender or to any other Person.

(iv)           Without prejudice to the survival of any other agreement of Borrower hereunder, the agreements and obligations of Borrower contained this Section
2.1 shall survive the payment in full of principal and interest hereunder, the termination of the Letters of Credit and the termination of this Agreement.

(g)           Cash Collateral.  Notwithstanding anything to the contrary herein, in any Application and Agreement for Letter of Credit
or other Loan Document, prior to (i) the occurrence of a Master Credit Facility Default or Event of Default hereunder, or (ii) the termination, cancellation, payment in full on or other cessation of the Master Credit Facility, Borrower, not fewer than forty-eight (48) hours prior to any issuance of any Letter of Credit, shall deliver to Lender Collateral having a value, as determined by Lender, such that, when added to the aggregate cash or cash equivalents in the Deposit Collateral Account, such aggregate amount
equals not less than one hundred and two percent (102%) of the aggregate Letter of Credit Exposure.  Further, notwithstanding anything to the contrary herein, in any Application and Agreement for Letter of Credit or other Loan Document, after (i) the occurrence of a Master Credit Facility Default or an Event of Default hereunder, or (ii) the termination, cancellation, payment in full on or other cessation of the Master Credit Facility, Borrower, not fewer than forty-eight (48) hours prior to any issuance
of any Letter of Credit, shall deliver to Lender Collateral having a value, as determined by Lender, such that, when added to the aggregate cash or cash equivalents in the Deposit Collateral Account, such aggregate amount equals not less than one hundred and five percent (105%) of the aggregate Letter of Credit Exposure.  All such Collateral shall be subject to the first and exclusive Lien of Lender pursuant to an applicable Loan Document and shall be held by Lender in a separate Deposit Account maintained
at Lender designated as a cash collateral account pursuant to this Agreement to secure for Borrower’s Obligations in respect of this Agreement (such account herein called “Deposit Collateral Account”).  All increases and interest applicable to the Deposit Collateral Account shall be deposited in the Deposit Collateral Account and shall be applied to reimburse Lender for drawings or payments under or pursuant to Letters of Credit,
or if no such reimbursement is required, to payment of such of the other Obligations under this Agreement as Lender shall determine.  Any deposit held by Lender as collateral for the payment and performance of the obligations of Borrower under any outstanding Letter of Credit shall be under Lender’s exclusive dominion and control, including the exclusive right of withdrawal, over such account.  Moneys in such account shall be applied by Lender to reimburse Lender for Letter of Credit
Reimbursement Obligations or other disbursements for which it has not been reimbursed and, to the extent not so applied, shall be held for the satisfaction of the Letter of Credit Exposure or any other Obligations of Borrower under this Agreement.

(h)           Evidence of Letters of Credit.

(i)           The Letter of Credit Reimbursement Obligations shall also be evidenced by a an Application and Agreement for Letter of Credit or other reimbursement agreement substantially in the form of Exhibit
A attached hereto, completed to the satisfaction of Lender, and, such other certificates, documents and other papers and information as Lender may request.

(ii)           Each Letter of Credit shall, among other things, provide for the payment of sight drafts when presented for honor thereunder in accordance with the terms thereof and when accompanied by the
documents described therein and each Letter of Credit request and each Letter of Credit shall be subject to the Uniform Customs and Practice for Documentary Credits (1993 Revision), International Chamber of Commerce Publication No. 500 and any amendments or revisions thereof or International Standby Practices (promulgated by the International Chamber of Commerce) in effect as of the time of issuance of such Letter of Credit, and, to the extent not inconsistent therewith, the laws of the State of Ohio.

(iii)           Borrower shall authorize and direct Lender with respect to each Letter of Credit to name Borrower as the “Account Party” therein, shall deliver to Lender all instruments, documents
and other writings and property pursuant to the Letter of Credit and shall accept and rely upon Lender’s good faith instructions and agreements with respect to all matters arising in connection with the Letter of Credit or the application therefor.

(iv)           In connection with all Letters of Credit issued or caused to be issued by Lender under this Agreement, Borrower hereby appoints Lender, or its designee, as its attorney, with full power and
authority: (i) to sign or endorse Borrower’s name upon any warehouse or other receipts, letter of credit applications and acceptances; (ii) to sign Borrower’s name on bills of lading; (iii) to clear inventory through the United States of America Customs Department (“Customs”) in the name of Borrower or Lender or Lender’s designee, and to sign and deliver to Customs officials powers of attorney in the name of Borrower for such
purpose; and (iv) to complete in Borrower’s name, in Lender’s name or in the name of Lender’s designee, any order, sale or transaction, obtain the necessary documents in connection therewith, and collect the proceeds thereof.  Neither Lender nor its attorneys will be liable for any acts or omissions nor for any error of judgment or mistakes of fact or law, except for Lender’s gross negligence or willful misconduct, as determined by the final judgment of a court of competent jurisdiction.  This
power, being coupled with an interest, is irrevocable so long as any Letters of Credit remain outstanding.

(i)           Purpose of Letters of Credit.  Letters of Credit shall be solely for the account of Borrower and shall be used solely
for lawful corporate purposes.

2.2. Provisions Applicable to the Credit Extensions and the Letters of Credit.

(a)           Upon the occurrence of any Event of Default, Lender, at its option, to the extent not prohibited under applicable law, may impose the Default Rate as the applicable rate on all or any portion
of the Letter of Credit Exposure, the Letter of Credit Fee and the Unused Commitment Fee.

(b)           Interest, fees, other charges and all Obligations hereunder each shall be calculated on a 360-day year basis and shall be based on the actual number of days that elapse during the interest calculation
period.

(c)           In no event whatsoever shall the interest rate and other charges hereunder exceed the highest rate permissible under law that a court of competent jurisdiction, in a final determination, shall
deem applicable hereto.  In the event such a court determines that Lender has received interest or other charges hereunder in excess of the highest rate applicable thereto, Lender shall promptly refund such excess amount to Borrower, and the provisions hereof shall be deemed amended to provide for such permissible rate.

2.3. Pending Defaults.

Lender shall have no obligation to issue or renew any Letters of Credit at any time when a set of facts or circumstances exists, which, upon the giving of notice, the lapse of time, or both, would constitute an Event of Default under this Agreement (a “Pending
Default”).

2.4. Increased Costs and Capital Requirements.

In the event that any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect, or any interpretation or administration thereof by any Governmental Authority, or compliance by Lender or any Affiliate thereof with any
request or directive of any Governmental Authority, shall (a) affect the basis of taxation of payments to Lender of any amounts payable by Borrower for Credit Extensions under the Letters of Credit (other than taxes imposed on or measured by the overall net income of Lender by the Governmental Authority, in which Lender has its principal office), or (b) impose, modify or deem applicable any reserve, special deposit or similar requirement against assets of, deposits with or for the account of, or credit extended
by Lender, or (c) impose any other condition, requirement or charge with respect to this Agreement or the Credit Extensions (including without limitation any capital adequacy requirement, any requirement that affects the manner in which Lender allocates capital resources to its commitments or any similar requirement), and the result of any of the foregoing is to increase the cost to Lender or any Affiliate thereof of making or maintaining the Credit Extensions or Letters of Credit, to reduce the amount of any
sum receivable by Lender thereon, or to reduce the rate of return on Lender’s capital, then Borrower shall pay to Lender, from time to time, upon request of Lender, additional amounts sufficient to compensate Lender for such increased cost, reduced sum receivable or reduced rate of return to the extent Lender is not compensated therefor in the computation of the interest rates applicable to the Letters of Credit.  A detailed statement as to the amount of such increased cost, reduced sum receivable
or reduced rate of return, prepared in good faith and submitted by Lender to Borrower, shall be final and conclusive, absent manifest error in computation.

2.5. Illegality and Impossibility.

In the event that any applicable law, treaty, rule or regulation (whether domestic or foreign) now or hereafter in effect, or any interpretation or administration thereof by any Governmental Authority, or compliance by Lender with any request or directive of a
Governmental Authority, including without limitation, exchange controls, shall make it unlawful or impossible for Lender to maintain any advance under this Agreement, Borrower shall upon receipt of notice thereof from Lender, immediately repay in full any Obligations owing by Borrower to Lender under this Agreement, together with all accrued interest thereon to the date of payment, as applicable.  This Section 2.5 shall apply only as long
as such illegality exists.

2.6. Survival of Obligations.

The provisions of Section 2.4 shall survive the termination of this Agreement and the payment in full of all promissory notes outstanding pursuant hereto.

	
3.  
	
Fees.

3.1. Fees.

Borrower shall pay to Lender: (a) on the effective date of this Agreement, the Commitment Fee; and

(b) in arrears, beginning on the first day of October, 2009, and continuing on the first day of each calendar quarter thereafter, an Unused Commitment Fee.

3.2. Method of Payment.

All payments of principal, interest, fees and commissions hereunder shall be made, without setoff, deduction or counterclaim, in immediately available funds to Lender at Lender’s address specified in writing by Lender to Borrower, by 2:00 p.m. (Columbus, Ohio time) on the date when due.  Borrower
hereby irrevocably authorizes Lender to charge the Deposit Collateral Account and any other account of Borrower maintained with Lender or Affiliate thereof, for any payment of any Letter of Credit Reimbursement Obligation or Letter of Credit Exposure, interest, fees and commissions as it becomes due hereunder.

	
4.  
	
Collateral.

4.1. Collateral Deposit Account.  All Obligations under this Agreement shall be secured by the Collateral.

	
5.  
	
Conditions Precedent.

5.1. Conditions Precedent to Initial Credit Extensions.

This Agreement shall become effective, and Lender shall be obligated to make the initial advance hereunder only after Lender shall have received from Borrower each of following items in form and substance satisfactory to Lender: This Agreement, the Application
and Agreement for Letter of Credit, and the other Loan Documents, conditions and deliveries described in Schedule 5.1 attached hereto, each duly executed where appropriate and in form and substance satisfactory to Lender; and the fulfillment of all the conditions described thereon and the delivery of such additional documentation as Lender may reasonably request.

5.2. Conditions Precedent to Subsequent Letter of Credit Issuances.

Lender shall not be required to issue any Letters of Credit subsequent to the initial disbursement or initial issuance of a Letter of Credit, unless on the applicable date that each such issuance is to be made:

(a)           The warranties and representations set forth in Article 6 hereof and each of the representations and warranties contained in any Loan Document at any time pursuant to this Agreement
shall be true and correct on and as of such date with the same effect as though such warranty or representation had been made on and as of such date, except to the extent that such warranty or representation is stated to expressly relate solely to an earlier date;

(b)           Borrower shall have complied and shall then be in compliance with all the terms, covenants and conditions of this Agreement which are binding upon it, and no Event of Default or Pending Default shall have occurred and be continuing on such
date or after giving effect to the advances requested to be made; and

(c)           No Material Adverse Effect shall have occurred.

Each request for Credit Extension hereunder shall constitute a warranty and representation by Borrower making such request that each of the conditions contained in Sections 5.2(a), (b), and (c) have been satisfied.

	
6.  
	
Warranties and Representations.

In order to induce Lender to enter into this Agreement and to issue Letters of Credit and make the other financial accommodations to Borrower under this Agreement and the other Loan Documents, Borrower represents and warrants to Lender that each of the following statements is true and correct:

6.1. Organization and Authority.

Borrower (a) is a corporation, duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization, (b) has all requisite power and authority and all necessary licenses and permits to own and operate its properties and
to carry on its business as now conducted and as presently proposed to be conducted and (c) is not doing business or conducting any activity in any jurisdiction in which it is not duly qualified and authorized to do business, except where the failure to do so will not have a Material Adverse Effect.

6.2. Borrowing is Legal and Authorized.

(a) All necessary corporate action has been taken in order to duly authorize Borrower’s execution and delivery of this Agreement and the other Loan Documents; (b) this Agreement and the other Loan Documents constitute valid and binding obligations enforceable in accordance with their respective terms;
(c) the execution of this Agreement and the other Loan Documents and the compliance with all the provisions of the Loan Documents (i) are within the organizational powers of Borrower, and (ii) will not conflict with, result in any breach in any of the provisions of, constitute a default under, or result in the creation of any Lien (other than a Permitted Lien) upon any property of Borrower under the provisions of the Master Credit Facility or any other agreement, charter instrument, bylaw, or other instrument
to which Borrower is a party or by which it may be bound; and (d) there are no limitations in any indenture, contract, agreement, mortgage, deed of trust or other agreement or instrument to which Borrower is now a party or by which Borrower may be bound with respect to the payment of any Obligations under this Agreement, or, to the extent applicable, the ability of Borrower to incur the Indebtedness pursuant to this Agreement.

6.3. Margin Loans and Purchase of Ineligible Securities.

None of the transactions contemplated in this Agreement will violate or result in a violation of Section 7 of the Securities Exchange Act of 1934, as amended, or any regulation issued pursuant thereto, including without limitation, Regulation U of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Chapter II.

6.4. Taxes.

All tax returns and reports required to be filed by Borrower in any jurisdiction have been filed, and all taxes, assessments, fees and other governmental charges upon Borrower and upon any property, assets, income and franchises thereof, which are shown in such
returns or reports to be due and payable have been paid, except for Permitted Contests.  Borrower knows of no proposed additional tax assessment against it.  The accruals for taxes on the books of Borrower for the current fiscal period have been determined in accordance with GAAP, consistently applied, subject to year-end and audit adjustments.

6.5. Compliance with Law.

Borrower (a) is not in violation of any Requirements of Law, and (b) has not failed to obtain any licenses, permits, franchises or other governmental or environmental authorizations necessary to the ownership of Borrower’s properties or to the conduct of
its business, which violation or failure is reasonably likely to have a Material Adverse Effect.

6.6. Financial Statements; Full Disclosure.

The financial statements of Borrower for the fiscal year ending December 31, 2008, which have been supplied to Lender, have been prepared in accordance with GAAP and fairly represent Borrower’s financial condition as of such date.  The interim
financial statements of Borrower for the period ending March 31, 2009, respectively which have been supplied to Lender have been prepared in good faith and accurately represent Borrower’s financial condition as of the dates of such financial information, subject to year-end and audit adjustments.

6.7. Litigation; Adverse Effects.

There is no action, suit, audit, proceeding, investigation or arbitration (or series of related actions, suits, proceedings, investigations or arbitrations) pending before or by any Governmental Authority or private arbitrator or, to the knowledge of Borrower,
threatened against Borrower or any property thereof (i) challenging the validity or the enforceability of any provision of this Agreement, or any other Loan Document or (ii) which has had, shall have or is reasonably likely to have a Material Adverse Effect.  Borrower is not subject to or in default with respect to any final judgment, writ, injunction, restraining order or order of any nature, decree, rule or regulation of any court or Governmental Authority, which individually or in the aggregate shall
have or is likely to have a Material Adverse Effect.

6.8. Solvency.

After giving effect to all Indebtedness of Borrower on the Closing Date (including without limitation the Credit Extensions and all Contingent Obligations) and such other dates as Letter of Credit issuances are requested, Borrower is Solvent.

6.9. Government Consent.

Neither the nature of Borrower or its business or properties, nor any relationship between Borrower and any other entity or person, nor any circumstance in connection with the execution of this Agreement, is such as to require a consent, approval or authorization
of, or filing, registration or qualification with, any Governmental Authority on the part of Borrower as a condition to the execution and delivery of this Agreement and the other Loan Documents.

6.10. No Liens on Collateral.

Borrower (a) has an indefeasible interest in all Collateral free and clear of any Liens, and (b) has not agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of the Collateral whether now owned or hereafter
acquired to be subject to a Lien.

6.11. No Defaults.

No event has occurred and no condition exists which constitutes a Pending Default or an Event of Default pursuant to this Agreement.  Borrower is not in violation in any material respect of any term of any agreement, charter instrument, bylaw or other
instrument to which it is a party or by which it is bound.

	
7.  
	
Borrower Affirmative and Negative Covenants.

Borrower covenants that on and after the date of this Agreement until terminated pursuant to the terms of this Agreement, or so long as any Indebtedness provided for herein remains unpaid:

7.1. Payment of Taxes and Claims.

Borrower will pay all taxes, estimated payments, assessments and governmental charges or levies imposed upon it or its property or assets or in respect of any of its franchises, businesses, income or property when due; other than for Permitted Contests.

7.2. Place of Business; Books and Records.

Borrower shall (i) maintain the same principal place of business and chief executive office in existence as of the effective date of this Agreement; (ii) deliver to Lender at least thirty (30) days prior to the occurrence of any of the following events, written
notice of such impending events: (A) a change in the principal place of business or chief executive office, (B) the opening or closing of any place of business, or (C) a change in name, identity or structure; and (iii) remain organized in the state of its organization as of the effective date of this Agreement.

7.3. Proper Books; Collateral.

(a)           Borrower shall (i) reflect in its financial statements adequate accruals and appropriations to reserves and keep and maintain proper books of record and account in which entries in conformity
with GAAP shall be made of all dealings and transactions in relation to its businesses and activities; (ii) do or cause to be done all things reasonably necessary (A) to preserve and keep in full force and effect its existence, rights and franchises, and (B) to maintain its status as duly organized and existing, and in good standing, under the laws of the state of its organization; and (iii) not be in violation of any Requirements of Law, which violation
is reasonably likely to have a Material Adverse Effect.

(b)           Borrower shall (i) defend the right, title and interest of Lender in and to the Collateral against all claims and demands of all persons and entities at any time claiming the same or any interest therein; (ii) promptly perform, on request
of Lender, such acts as Lender may determine to be reasonably necessary or advisable to create, perfect, maintain, preserve, protect and continue the perfection of any Lien provided for in this Agreement or the Loan Documents or otherwise to carry out the intent of this Agreement; and (iii) advise Lender promptly, in writing and in reasonable detail of any material encumbrance or claim asserted against any of the Collateral, of any material change in the composition of the Collateral, and of the occurrence of
any other event that would have a material adverse effect upon the aggregate value of the Collateral or upon the security interest of Lender.

7.4. Restriction on Fundamental Changes; Conduct of Business.

Borrower shall not (a) enter into any merger or consolidation, or liquidate, wind up or dissolve (or suffer any liquidation or dissolution), or convey, lease, sell, transfer or otherwise dispose of, in one transaction or a series of transactions, any substantial
portion of Borrower’s business or property, whether now or hereafter acquired.

7.5. Negative Pledge.

Borrower will not cause or permit or permit to exist or agree or consent to cause or permit in the future (upon the happening of a contingency or otherwise), any of the Collateral, whether now owned or hereafter acquired, to become subject to a Lien.

	
8.  
	
Financial Information and Reporting.

Borrower shall deliver the following to Lender:

(a)           as soon as available, but in any event within one hundred twenty (120) days after the end of each fiscal year, a copy of the audited consolidated balance sheet of Borrower and its consolidated Subsidiaries as of the end of such year and the
related audited consolidated statements of income, of stockholders’ equity and of cash flows for such year, setting forth in each case in comparative form the figures for the previous year, together with the opinion of independent certified public accountants of nationally recognized standing, which opinion shall not contain a “going concern” or like qualification or exception, or qualification arising out of the scope of the audit, other than a qualification for consistency due to a change
in the application of GAAP with which Borrower’s independent certified public accountants concur;

(b)           as soon as available, but in any event within sixty (60) days after the end of each quarterly accounting period (excluding the quarterly accounting period for the last quarter of each fiscal year prior to the Maturity Date), the unaudited
consolidated balance sheet of Borrower and its consolidated Subsidiaries and the related unaudited consolidated statements of income and of stockholders’ equity of Borrower and its consolidated Subsidiaries for such quarter and the portion of the fiscal year through such date setting forth in each case in comparative form the figures for the previous year, and including in each case: (i) the relevant figures broken down with respect to each division of Borrower and its Subsidiaries and (ii) a summary of
all Land, Land under Contract, Lots, Lots under Development, Finished Lots and Lots under Contract (all as defined in the credit agreement for the Master Credit Facility);

(c)           within sixty (60) days after the end of each fiscal quarter, a compliance certificate, in form acceptable to Lender as attached hereto as Exhibit B, wherein a Financial Officer
of Borrower certifies that Borrower is in compliance with all covenants, terms and conditions of the Master Credit Facility; and

(d)           at the request of Lender, such other information as Lender may from time to time reasonably require;

all such financial statements to be complete and correct in all material respects and prepared in reasonable detail and in accordance with GAAP (except, in the case of financial statements referred to in subparagraph (b) of this Section 8, that
such financial statements need not contain footnotes and may be subject to year-end audit adjustments).

	
9.  
	
Default.

9.1. Events of Default.

Each of the following shall constitute an “Event of Default” hereunder:

(a)           Borrower fails to make payment on (i) any Letter of Credit Reimbursement Obligation on or before the date such payment is due or (ii) or any other Obligation under this Agreement on or before
five (5) days after the date such payment is due;

(b)           Borrower fails to perform or observe any covenant, agreement or duty contained in Articles 2, 7 or 8 of this Agreement;

           (c)           Borrower fails to comply with any other provision of this Agreement (other than as set forth in this Article 9 of this Agreement) or fails to perform or observe any covenant,
agreement or duty contained in any Loan Document, and such failure continues for more than thirty (30) days after the failure described in this Section 9.1(c) shall first become known or reasonably should have become known to any Financial Officer of Borrower, or ten (10) days after notice from Lender, if earlier;

(d)           any warranty, representation or other statement made or deemed to be made in this Agreement or in any Loan Document is false or misleading in any material respect;

(e)           Borrower becomes insolvent or commences any Insolvency Proceeding;

(f)           any Insolvency Proceeding is instituted against Borrower and continues for sixty (60) days undismissed or undischarged;

           (g)           one or more final orders, judgments or arbitration awards for (i) the payment of money aggregating in excess of $5,000,000 is or are outstanding against Borrower, or (ii) nonmonetary
relief or remedy which is reasonably likely to have a Material Adverse Effect, and any such order, judgment or award has not been discharged, bonded in full or stayed in all respects;

(h)           the occurrence of any event which allows the acceleration of the maturity of any Indebtedness of Borrower or any of its Subsidiaries to Lender or any of Lender’s affiliates (other than
evidenced by this Agreement);

(i)           the occurrence of (A) a Master Credit Facility Default or (B) any event which allows the acceleration of the maturity of any Indebtedness in excess of the amount of $5,000,000 of Borrower or
constitutes a default or breach under any material lease or material contract of any such Person, under any indenture, agreement or undertaking, unless waived, extended or otherwise consented to by the holder thereof;

(j)           the dissolution of any insurer or the default by any surety for Borrower with respect to any obligation or liability to Lender or any of Lender’s affiliates;

(k)           a Change of Control of Borrower shall have occurred; or

(l)           Lender, in its sole good faith discretion, determines that a Material Adverse Effect has occurred with respect to Borrower or that a material adverse change has occurred in the financial condition,
operations or business of Borrower, in the value of the Collateral or in Lender’s interest in the Collateral.

9.2. Default Remedies.

(a)           Acceleration.  Upon the occurrence and during the continuance of an Event of Default (other than an event described
in clause (e) or (f) of Section 9.1 hereof), Lender may (i) terminate all rights, if any, of Borrower to obtain issuances of Letters of Credit hereunder, and thereupon, any such right shall terminate immediately, (ii) declare any or all the Credit Extensions to be due and payable, and thereupon, the Credit Extensions, together with accrued interest thereon and all fees and other Obligations shall become due and payable immediately, (iii) immediately
exercise any right, power or remedy permitted to Lender by law or any provision of this Agreement, and (iv) demand that Borrower pay to Lender for deposit in a segregated non interest-bearing cash collateral account, as security for the Obligations, such amount that, when added to the aggregate cash or cash equivalents in the Deposit Collateral Account, equals not less than one hundred and five percent of 105% of the Letters of Credit Exposure then outstanding at the time such notice is given, in each case, without
any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower; provided, however, prior to presentment of a draft in connection with any irrevocable Letter of Credit or surrender or cancellation by a beneficiary of such Letter of Credit at any time when the aggregate cash or cash equivalents in the Deposit Collateral Account equals not less than one hundred and five percent of 105% of the Letters of Credit Exposure then outstanding, such Letter of Credit will
remain in full force and effect in accordance with its terms, subject to the terms of the Loan Documents.  Upon the occurrence of an Event of Default described in clause (e) or (f) of Section 9.1 hereof, all rights, if any, of Borrower to obtain Credit Extensions or advances hereunder shall automatically terminate and all Credit Extensions, together with accrued interest thereon and all fees and other Obligations shall automatically become
due and payable without any presentment, demand, protest or other notice of any kind, all of which are hereby expressly waived by Borrower.

(b)           Liquidation of Collateral.  Upon the occurrence and during the continuance of an Event of Default, Lender shall have
the rights and remedies of a secured party under this Agreement and the Loan Documents, under any other instrument or agreement securing, evidencing or relating to the Obligations and under the laws of the State in which the Collateral is located or any other applicable state law.  Lender shall apply the net proceeds of any such collection, recovery, receipt, appropriation or realization, after deducting all reasonable costs and expenses of every kind incurred in connection therewith or incidental to
the care or safekeeping of any or all of the Collateral or in any way relating to the rights of Lender hereunder, including reasonable attorneys’ fees and legal expenses, to the payment in whole or in part of the Obligations, in such order as Lender may elect, and only after so paying over such net proceeds and after the payment by Lender of any other amount required by any provision of law, need Lender account for the surplus, if any.  To the extent permitted by applicable law, Borrower waives
all claims, damages and demands against Lender arising out of the repossession or retention of the Collateral. Borrower shall remain liable for any deficiency if the proceeds of the Collateral are insufficient to pay all amounts to which Lender is entitled and shall also be liable for the costs of collecting any of the Obligations or otherwise enforcing the terms thereof or of this Agreement, including reasonable attorneys’ fees.

	
10.  
	
General Provisions.

10.1. Notices.

(a)           All communications under this Agreement or under the notes executed pursuant hereto shall be in writing and shall be sent by facsimile or by a nationally recognized overnight delivery service
(i) if to Lender, at the address set forth below Lender’s signature to this Agreement, or at such other address as may have been furnished in writing to Borrower, by Lender; and (ii) if to Borrower, at the address set forth below Borrower’s signature to this Agreement, or at such other address as may have been furnished in writing to Lender by Borrower.

(b)           Any notice so addressed and sent by telecopier shall be deemed to be given when confirmed, and any notice sent by nationally recognized overnight delivery service shall be deemed to be given
the next day after the same is delivered to such carrier.

10.2. Costs and Expenses.

Borrower agrees to pay service charges, analysis fees, and all costs and expenses incidental to or in connection with this Agreement, any Loan Document or any service provided by Lender, the enforcement of Lender’s rights in connection with any of the foregoing,
any amendment, supplement or modification of this Agreement or any other Loan Document, any sale or attempted sale of any interest herein to a participant or co-lender, any litigation, contest, dispute, proceeding or action in any way relating to the Collateral, to this Agreement or any Loan Document, whether any of the foregoing are incurred prior to or after maturity, the occurrence of an Event of Default, or the rendering of a judgment.  Such costs shall include, but not be limited to, fees and out-of-pocket
expenses of Lender’s counsel, recording fees, inspection fees, revenue stamps and note and mortgage taxes.  The provisions of this Section 10.2 shall survive the termination of this Agreement and the Loan Documents.

10.3. Survival, Successors and Assigns.

All warranties, representations, and covenants made by Borrower herein or on any certificate or other instrument delivered by it or on its behalf under this Agreement shall be considered to have been relied upon by Lender and shall survive the closing of the Credit
Extensions regardless of any investigation made by Lender on its behalf.  This Agreement shall inure to the benefit of and be binding upon the heirs, successors and assigns of each of the parties.

10.4. Amendment and Waiver.

All references to this Agreement shall also include all amendments, extensions, renewals, modifications, and substitutions thereto and thereof made in writing and executed by both Borrower and Lender.  This Agreement may be amended, and the observance
of any term of this Agreement may be waived, with (and only with) the written consent of Borrower and Lender; provided however that nothing herein shall change Lender’s sole discretion or good faith discretion (as set forth elsewhere in this Agreement) to make advances, determinations, decisions or to take or refrain
from taking other actions.  No delay or failure or other course of conduct by Lender in the exercise of any power or right shall operate as a waiver thereof; nor shall any single or partial exercise of the same preclude any other or further exercise thereof, or the exercise of any other power or right.

10.5. Enforceability and Governing Law.

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction, as to such jurisdiction, shall be inapplicable or ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof,
and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.  No delay or omission on the part of Lender in exercising any right shall operate as a waiver of such right or any other right.  All of Lender’s rights and remedies, whether evidenced hereby or by any other agreement or instrument, shall be cumulative and may be exercised singularly or concurrently.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Ohio (without giving effect to the conflict of laws rules thereof). Borrower agrees that any legal suit, action or proceeding arising out of or relating to this Agreement may be instituted in a state or federal court of appropriate subject matter jurisdiction in the State of Ohio, waives any objection which it may have now or hereafter to the venue of any suit, action or proceeding, and irrevocably submits to the jurisdiction of any such court
in any such suit, action or proceeding.

10.6. Confidentiality.

Lender shall hold all non-public information obtained pursuant to the requirements hereof and identified as such by Borrower in accordance with Lender’s customary procedures for handling confidential
information of this nature and in accordance with safe and sound banking practices, and in any event may make disclosures as required or requested by any governmental authority or any representative thereof, or pursuant to any legal process, or to its accountants, lawyers and other advisors.

10.7. Section Headings.

Headings and numbers have been set forth herein for convenience only.  Unless the contrary is compelled by the context, everything contained in each Section applies equally to this entire Agreement.

10.8. Interpretation.

Neither this Agreement nor any uncertainty or ambiguity herein shall be construed or resolved against Lender or Borrower, whether under any rule of construction or otherwise.  On the contrary, this Agreement has been reviewed by all parties and shall
be construed and interpreted according to the ordinary meaning of the words used so as to accomplish fairly the purposes and intentions of all parties hereto.

 

10.9. Severability of Provisions.

Each provision of this Agreement shall be severable from every other provision of this Agreement for the purpose of determining the legal enforceability of any specific provision.

 

10.10. Counterparts; Facsimile Execution.

This Agreement may be executed in any number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, shall be deemed to be an original, and all of which, when taken together, shall constitute but one and the
same Agreement.  Delivery of an executed counterpart of this Agreement by facsimile shall be equally as effective as delivery of an original executed counterpart of this Agreement.  Any party delivering an executed counterpart of this Agreement by facsimile also shall deliver an original executed counterpart of this Agreement but the failure to deliver an original executed counterpart shall not affect the validity, enforceability, and binding effect of this Agreement.  The foregoing
shall apply to each other Loan Document mutatis mutandis.

10.11. Revival and Reinstatement of Obligations.

If the incurrence or payment of the Obligations by Borrower or the transfer to Lender of any property should for any reason subsequently be declared to be void or voidable under any state or federal law relating to creditors’ rights, including provisions
of the Bankruptcy Code relating to fraudulent conveyances, preferences, or other voidable or recoverable payments of money or transfers of property (collectively, a “Voidable Transfer”), and if Lender is required to repay or restore, in whole or in part, any such Voidable Transfer, or elects to do so upon the reasonable advice of its counsel, then, as to any such Voidable Transfer, or the amount thereof that Lender is required or elects to repay
or restore, and as to all reasonable costs, expenses, and attorneys’ fees of Lender related thereto, the liability of Borrower automatically shall be revived, reinstated, and restored and shall exist as though such Voidable Transfer had never been made.

10.12. Integration.

This Agreement, together with the other Loan Documents, reflects the entire understanding of the parties with respect to the transactions contemplated hereby and shall not be contradicted or qualified by any other agreement, oral or written, before the date hereof.

10.13. Waiver of Right to Trial by Jury.

EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (1) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR (2)
IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR ANY OF THEM WITH RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL
WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

10.14. No Consequential Damages.

No claim may be made by Borrower, or any of its officers, directors, or agents against Lender or its affiliates, directors, officers, employees, attorneys or agents for any special, indirect, punitive, or consequential damages in respect of any breach or wrongful
conduct (whether the claim therefor is based in contract, tort or duty imposed by law) in connection with, arising out of or in any way related to the transactions contemplated and relationship established by this Agreement, or any act, omission or event occurring in connection therewith, and Borrower hereby waives, releases and agrees not to sue upon any such claim for any such damages, whether or not accrued and whether or not known or suspected to exist in its favor.

10.15. Indemnity.

Borrower agrees to indemnify Lender, its directors, officers, employees, agents, financial advisors, and consultants from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements
of any kind or nature whatsoever (including without limitation fees and disbursements of counsel) which may be imposed on, incurred by, or asserted against Lender in any litigation, proceeding or investigation instituted or conducted by any governmental agency or instrumentality or any other person or entity with respect to any aspect of, or any transaction contemplated by, or referred to in, or any matter related to, this Agreement or any Loan Document, whether or not Lender is a party thereto, except to the
extent that any of the foregoing arises out of the gross negligence or willful misconduct of Lender or such Person, as determined in a final, non-appealable judgment by a court of competent jurisdiction.  The indemnities provided for in this Section 10.15 shall survive the termination of this Agreement and the indefeasible payment of the Credit Extensions in full.

10.16. Patriot Act Notice.

Lender hereby notifies Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub.L.10756 (signed into law October 26, 2001)) (the “Act”), it is required to obtain, verify
and record information that identifies Borrower, which information includes the name and address of Borrower and other information that will allow Lender to identify Borrower in accordance with the Act.

[Signature pages follow.]

  

  

  

Each of the parties has signed this Agreement as of the date set forth in the preamble above.

BORROWER:

M/I HOMES, INC.

By:                                                                           

Name:  Phillip G. Creek

Title:     Executive Vice President and Chief Financial Officer

 

Notice Address:

M/I Homes, Inc.

3 Easton Oval

Suite 210

Columbus, Ohio 43219

Fax: (614) 418-8080

with a copy to:

Thomas O. Ruby

Vorys, Sater, Seymour & Pease, LLP

52 East Gay St.

P.O. Box 1008

Columbus, Ohio 43216

Fax: (614) 719-4934

Signature Page to Credit Agreement

  

  

  

LENDER:

THE HUNTINGTON NATIONAL BANK

By:                                                                           

Name:  Jeffrey D. Blendick

Title:           Vice President

Notice Address:

The Huntington National Bank

41 South High St.

HC 0735

Columbus, Ohio 43215

Attention:  Jeffrey D. Blendick

Fax:  (877) 274-8593

with a copy to:

Timothy E. Grady, Esq.

Porter, Wright, Morris & Arthur LLP

41 South High Street

Columbus, Ohio 43215

Fax: (614) 227-2100

Signature Page to Credit Agreement

  

  

  

EXHIBIT A

APPLICATION AND AGREEMENT FOR LETTER OF CREDIT

  

  

  

EXHIBIT B

FORM OF COMPLIANCE CERTIFICATEex4_1.htm

     

    
      

      

    

        EXHIBIT 4.1

    
EXECUTED VERSION

      
        

         

        

      

      PRIDE
INTERNATIONAL, INC.

       

      

       

      and

       

      

       

      THE BANK
OF NEW YORK MELLON,

       

      as
Trustee

       

      

       

      

       

      

       

      _________________________________

       

      

       

      

       

      Second
Supplemental Indenture

       

      

       

      Dated as
of June 2, 2009

       

      

       

      

       

      

       

      _________________________________

       

      

       

      

       

      

       

      to the
Indenture

       

      Dated as
of July 1, 2004

       

      

       

      

       

      

       

      _________________________________

       

      

       

      

       

      

       

      81⁄2%
Senior Notes due 2019

       

      
        

         

        

      

      

       

      
        
          
            HOU03:1203587

          

           

        

        
          1

          
            

          

        

        
           

        

      

      TABLE OF
CONTENTS

      Page

       

       

      ARTICLE 1
SUPPLEMENT OF THE ORIGINAL INDENTURE                                  1

       

      
        	
                 
      

              	
                SECTION
      1.01 Supplement to Article I of the Original Indenture                          
1

              

      

      
        	
                 
      

              	
                SECTION
      1.02 Supplement to Article III of the Original Indenture                          
       6

              

      

      
        	
                 
      

              	
                SECTION
      1.03 Supplement to Article IV of the Original Indenture                          10            

              

      

      
        	
                 
      

              	
                SECTION
      1.04 Supplement to Article IX of the Original
      Indenture                                                                         
      11 

              

      

      
        	
                 
      

              	
                SECTION
      1.05 Effect of Article
      1                                                                                                                                  
      12

              

      

       

      ARTICLE 2
THE NOTES                                                                                                                                    12

       

      
        	
                 
      

              	
                SECTION
      2.01 Form and
      Terms                                                                                                                                     
      12

              

      

      
        	
                 
      

              	
                SECTION
      2.02 Designation, Amount,
      etc                                                                                                                    
      12

              

      

      
        	
                 
      

              	
                SECTION
      2.03 Payment of Principal and
      Interest                                                                                                       
      12

              

      

      
        	
                 
      

              	
                SECTION
      2.04
      Denominations                                                                                                                                       
      13

              

      

      
        	
                 
      

              	
                SECTION
      2.05
      Legends                                                                                                                                                   
      13 

              

      

      
        	
                 
      

              	
                SECTION
      2.06 Redemption at the Option of the
      Company                                                                                       
      13

              

      

       

      ARTICLE 3
REPRESENTATIONS OF THE
COMPANY                                                                                                              
14

       

      
        	
                 
      

              	
                SECTION
      3.01 Authority of the
      Company                                                                                                                  
      14

              

      

      
        	
                 
      

              	
                SECTION
      3.02 Truth of Recitals and
      Statements                                                                                                       
      14

              

      

       

      ARTICLE 4
CONCERNING THE
TRUSTEE                                                                                                                                  
14

       

      
        	
                 
      

              	
                SECTION
      4.01 Acceptance of
      Trusts                                                                                                                         
      14

              

      

      
        	
                 
      

              	
                SECTION
      4.02 No Responsibility of Trustee for Recitals,
      Etc                                                                               
      14

              

      

       

      ARTICLE 5
MISCELLANEOUS
PROVISIONS                                                                                                                            
14

       

      
        	
                 
      

              	
                SECTION
      5.01 Succession of the
      Trustee                                                                                                                
      14

              

      

      
        	
                 
      

              	
                SECTION
      5.02 Address of Trustee for
      Notices                                                                                                       
      14

              

      

      
        	
                 
      

              	
                SECTION
      5.03 Relation to the Original
      Indenture                                                                                                   
      14

              

      

      
        	
                 
      

              	
                SECTION
      5.04 Meaning of
      Terms                                                                                                                              
      15

              

      

      
        	
                 
      

              	
                SECTION
      5.05 Counterparts of Supplemental
      Indenture                                                                                       
      15

              

      

      
        	
                 
      

              	
                SECTION
      5.06 Governing
      Law                                                                                                                                    15

              

      

      

       

      Exhibit
A                      Form
of Note

       

      
        

         

        This
Table of Contents does not constitute part of the Indenture or have any bearing
upon the interpretation of any of its terms and provisions.

         

        

      

      
        
          
                                                                                

          

           

        

        
          2

          
            

          

        

        
           

        

      

      THIS
SECOND SUPPLEMENTAL INDENTURE, dated as of June 2, 2009 is between Pride
International, Inc., a Delaware corporation (the “Company”), and The Bank of New
York Mellon, a New York banking corporation (as successor to JPMorgan Chase
Bank, N.A.), as trustee (the “Trustee”) under the Indenture (as defined
below).

       

      W I T N E
S S E T H:

       

      WHEREAS,
the Company has duly authorized the issuance from time to time of its unsecured
debentures, notes or other evidences of indebtedness (the “Securities”), which
are to be issued in one or more series, and the Company has heretofore made,
executed and delivered to the Trustee its Indenture dated as of July 1, 2004
(the “Original Indenture”) pursuant to which the Securities are
issuable;

       

      WHEREAS,
Sections 2.01, 2.03 and 9.01 of the Original Indenture provide that the form or
terms of any series of Securities may be established in an Indenture
supplemental thereto, and the Company desires to establish in this Second
Supplemental Indenture both the form and terms of a series of Securities
designated as its 81⁄2% Senior Notes due 2019 (the “Notes”); and

       

      WHEREAS,
all things necessary to authorize the execution and delivery of this Second
Supplemental Indenture, to establish the Notes as provided for in this Second
Supplemental Indenture, and to make the Original Indenture, as supplemented by
this Second Supplemental Indenture and as it may otherwise be supplemented
thereafter with applicability to the Notes (the Original Indenture, as so
supplemented, being sometimes referred to herein as the “Indenture”), a valid
agreement of the Company, in accordance with its terms, have been
done;

       

      NOW,
THEREFORE, THIS SECOND SUPPLEMENTAL INDENTURE WITNESSETH that, for and in
consideration of the premises and the purchase of the Notes by the Holders, the
Company and the Trustee mutually covenant and agree, solely for the equal and
proportionate benefit of the respective Holders from time to time of Notes and,
solely with respect to Sections 5.01 and 5.02 hereof, other series of Securities
issued pursuant to the Original Indenture from time to time, as
follows:

       

      ARTICLE
1

       

      SUPPLEMENT
OF THE ORIGINAL INDENTURE

       

      SECTION
1.01                                Supplement to Article I of the
Original Indenture

       

      .  Section 1.01
of the Original Indenture is supplemented or superseded with respect to the
Notes, in the case of definitional paragraphs that may be inconsistent, by
inserting therein, in alphabetical order, the following definitional
paragraphs:

       

      “2014
Notes” means the 7 3/8% Senior Notes due 2014 of the Company.

       

      “Attributable
Indebtedness,” when used with respect to any Sale/Leaseback Transaction, means,
as at the time of determination, the present value (discounted at the rate set
forth or implicit in the terms of the lease included in such transaction) of the
total obligations of the lessee for rental payments (other than amounts required
to be paid on account of taxes, maintenance, repairs, insurance, assessments,
utilities, operating and

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          3

          
            

          

        

        
           

        

      

      labor
costs and other items which do not constitute payments for property rights)
during the remaining term of the lease included in such Sale/Leaseback
Transaction (including any period for which such lease has been
extended).  In the case of any lease which is terminable by the lessee
upon the payment of a penalty, such net amount shall be the lesser of the net
amount determined assuming termination upon the first date such lease may be
terminated (in which case the net amount shall also include the amount of the
penalty, but no rent shall be considered as required to be paid under such lease
subsequent to the first date upon which it may be so terminated) or the net
amount determined assuming no such termination.

       

      “Capitalized
Lease Obligation” of any Person means any obligation of such Person to pay rent
or other amounts under a lease of property, real or personal, that is required
to be accounted for as a capital lease for financial reporting purposes in
accordance with GAAP; and the amount of such obligation shall be the capitalized
amount thereof determined in accordance with GAAP.

       

      “Change
in Control” shall have the meaning given to such term in the First Supplemental
Indenture.

       

      “Comparable
Treasury Issue” means the United States Treasury security selected by an
Independent Investment Banker that would be used, at the time of selection and
in accordance with customary financial practice, in pricing new issues of
corporate debt securities of comparable maturity to the remaining term of the
Notes.

       

      “Comparable
Treasury Price” means, with respect to any Redemption Date, (i) the average of
the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest of such Reference Treasury Dealer Quotations,
or (ii) if the Trustee obtains fewer than four such Reference Treasury Dealer
Quotations, the average of all such Quotations.

       

      “Consolidated
Net Tangible Assets” means the total amount of assets (less applicable reserves
and other properly deductible items) after deducting (1) all current liabilities
(excluding the amount of those which are by their terms extendable or renewable
at the option of the obligor to a date more than 12 months after the date as of
which the amount is being determined and current maturities of long-term debt)
and (2) all goodwill, tradenames, trademarks, patents, unamortized debt discount
and expense and other like intangible assets, all as set forth on the most
recent quarterly balance sheet of the Company and its consolidated subsidiaries
and determined in accordance with GAAP.

       

      “Corporate
Trust Office of the Trustee” means the principal office of the Trustee at which
at any particular time its corporate trust business shall be administered,
which, in the case of The Bank of New York Mellon, shall be 101 Barclay Street,
8W, New York, New York 10286.

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          4

          
            

          

        

        
           

        

      

      “First
Supplemental Indenture” means the First Supplemental Indenture, dated July 7,
2004 and as amended from time to time in accordance therewith, to the Original
Indenture between the Company and the Trustee in respect of the 2014
Notes.

       

      “Funded
Indebtedness” means all Indebtedness that matures on, or that is renewable at
the option of any obligor thereon to, a date more than one year after the date
on which such Indebtedness is originally incurred.

       

      “Indebtedness”
of any Person means, without duplication, (i) all indebtedness of such Person
for borrowed money (whether or not the recourse of the lender is to the whole of
the assets of such Person or only to a portion thereof), (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 (or reimbursement obligations
with respect thereto), other than standby letters of credit, performance bonds
and other obligations issued by or for the account of such Person in the
ordinary course of business, to the extent not drawn or, to the extent drawn, if
such drawing is reimbursed not later than the third Business Day following
demand for reimbursement, (iv) all obligations of such Person to pay the
deferred and unpaid purchase price of property or services, except trade
payables and accrued expenses incurred in the ordinary course of business, (v)
all Capitalized Lease Obligations of such Person, (vi) all Indebtedness of
others secured by a Lien on any asset of such Person, whether or not such
Indebtedness is assumed by such Person (provided that if the obligations so
secured have not been assumed in full by such Person or are not otherwise such
Person’s legal liability in full, then such obligations shall be deemed to be in
an amount equal to the greater of (a) the lesser of (1) the full amount of such
obligations and (2) the fair market value of such assets, as determined in good
faith by the Board of Directors of such Person, which determination shall be
evidenced by a Board Resolution, and (b) the amount of obligations as have been
assumed by such Person or which are otherwise such Person’s legal liability),
and (vii) all Indebtedness of others (other than endorsements in the ordinary
course of business) guaranteed by such Person to the extent of such
guarantee.

       

      “Independent
Investment Banker” means one of the Reference Treasury Dealers appointed by the
Company.

       

      “Joint
Venture” means any partnership, corporation or other entity, in which up to and
including 50% of the partnership interests, outstanding voting stock or other
equity interests is owned, directly or indirectly, by the Company and/or one or
more Subsidiaries.  A Joint Venture shall not be a
Subsidiary.

       

      “Lien”
means any mortgage, pledge, lien, charge, security interest or similar
encumbrance.  For purposes of this Indenture, the Company or any
Subsidiary of the Company shall be deemed to own subject to a Lien any asset
which it has acquired or holds subject to the interest of a vendor or lessor
under any conditional sale agreement, Capitalized Lease Obligation or other
title retention agreement relating to such asset.

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          5

          
            

          

        

        
           

        

      

      “Moody’s”
means Moody’s Investors Service, Inc. or any successor to the rating agency
business thereof.

       

      “Pari
Passu Indebtedness” means any Indebtedness of the Company, whether outstanding
on the Issue Date of the Notes or thereafter created, incurred or assumed,
unless, in the case of any particular Indebtedness, the instrument creating or
evidencing the same or pursuant to which the same is outstanding expressly
provides that such Indebtedness shall be subordinated in right of payment to the
Notes.

       

      “Permitted
Liens” shall mean (i) Liens existing on the Issue Date of the Notes; (ii) Liens
on property or assets of, or any shares of stock of, or other equity interests
in, or indebtedness of, any Person existing at the time such Person becomes a
Subsidiary of the Company or at the time such Person is merged into or
consolidated with the Company or any of its Subsidiaries or at the time of a
sale, lease or other disposition of the properties of a Person (or a division
thereof) as an entirety or substantially as an entirety to the Company or a
Subsidiary; (iii) Liens in favor of the Company or any of its Subsidiaries; (iv)
Liens in favor of governmental bodies to secure progress or advance payments;
(v) Liens securing industrial revenue, pollution control or other revenue bonds;
(vi) Liens on assets existing at the time of acquisition thereof, securing all
or any portion of the cost of acquiring, constructing, improving, developing,
expanding or repairing such assets or securing Indebtedness incurred prior to,
at the time of, or within 24 months after, the later of the acquisition, the
completion of construction, improvement, development, expansion or repair or the
commencement of commercial operation of such assets, for the purpose of (a)
financing all or any part of the purchase price of such assets or (b) financing
all or any part of the cost of construction, improvement, development, expansion
or repair of any such assets; (vii) statutory liens or landlords’, carriers’,
warehouseman’s, mechanics’, suppliers’, materialmen’s, repairmen’s or other like
Liens arising in the ordinary course of business and with respect to amounts not
yet delinquent or being contested in good faith by appropriate proceedings;
(viii) Liens in connection with legal proceedings or securing tax assessments;
(ix) Liens on the stock, partnership or other equity interest of the Company or
any Subsidiary in any Joint Venture or any Subsidiary that owns an equity
interest in such Joint Venture to secure Indebtedness, provided the amount of such
Indebtedness is contributed and/or advanced solely to such Joint Venture; and
(x) any extensions, substitutions, replacements or renewals in whole or in part
of a Lien enumerated in clauses (i) through (ix) above.

       

      “Principal
Property” means any drilling rig or drillship, or integral portion thereof,
owned or leased by the Company or any Subsidiary and used for drilling offshore
oil and gas wells, which, in the opinion of the Board of Directors, is of
material importance to the business of the Company and its Subsidiaries taken as
a whole, but no such drilling rig or drillship, or portion thereof, shall be
deemed of material importance if its net book value (after deducting accumulated
depreciation) is less than 2% of Consolidated Net Tangible Assets.

       

      “Reference
Treasury Dealer” means each of Goldman, Sachs & Co. (and its successors),
Citigroup Global Markets Inc. (and its successors), Banc of America Securities
LLC (and its successors), Wachovia Capital Markets, LLC (and its
successors)

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          6

          
            

          

        

        
           

        

      

      and one
other nationally recognized investment banking firm that is a primary U.S.
Government securities dealer (a “Primary Treasury Dealer”), specified from time
to time by the Company; provided, however, that if
any of the foregoing shall cease to be a nationally recognized investment
banking firm that is a Primary Treasury Dealer, the Company shall substitute
therefor another nationally recognized investment banking firm that is a Primary
Treasury Dealer.

       

      “Reference
Treasury Dealer Quotations” means, with respect to each Reference Treasury
Dealer and any Redemption Date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue (expressed in each
case as a percentage of its principal amount) quoted in writing to the Trustee
by such Reference Treasury Dealer as of 3:30 p.m., New York time, on the third
Business Day preceding such Redemption Date.

       

      “Remaining
Scheduled Payments” means, with respect to each Note to be redeemed, the
remaining scheduled payments of the principal thereof and interest thereon that
would be due after the related Redemption Date but for such
redemption.

       

      “Sale/Leaseback
Transaction” means any arrangement with any Person pursuant to which the Company
or any Subsidiary leases any Principal Property that has been or is to be sold
or transferred by the Company or the Subsidiary to such Person, other than (1)
temporary leases for a term, including renewals at the option of the lessee, of
not more than five years; (2) leases between the Company and a Subsidiary or
between Subsidiaries; and (3) leases of Principal Property executed by the time
of, or within 12 months after the latest of, the acquisition, the completion of
construction, alteration, improvement or repair, or the commencement of
commercial operation of the Principal Property.

       

      “S&P”
means Standard & Poor’s Ratings Services, a division of The McGraw-Hill
Companies, Inc., or any successor to the rating agency business
thereof.

       

      “Subsidiary”
means a Person at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by the Company or by one or more other
Subsidiaries, or by the Company and one or more other
Subsidiaries.  For the purposes of this definition, “voting stock”
means stock that ordinarily has voting power for the election of directors,
whether at all times or only so long as no senior class of stock has such voting
power by reason of any contingency.  A Joint Venture shall not be a
Subsidiary.

       

      “Treasury
Rate” means, with respect to any Redemption Date, the rate per annum equal to
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated “H.15 (519)” or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption “Treasury Constant Maturities,” for the
maturity corresponding to the Comparable Treasury Issue; provided that if no maturity
is within three months before or after the

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          7

          
            

          

        

        
           

        

      

      Stated
Maturity for the Notes, yields for the two published maturities most closely
corresponding to the Comparable Treasury Issue will be determined and the
Treasury Rate will be interpolated or extrapolated from such yields on a
straight-line basis rounding to the nearest month; or (ii) if such release (or
any successor release) is not published during the week preceding such
calculation date or does not contain such yields, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Redemption Date.  The Treasury Rate shall be calculated on the
third Business Day preceding such Redemption Date.

       

      SECTION
1.02                                Supplement to Article III of the
Original Indenture

       

      .  New
Sections 3.12 through 3.18 are hereby added to Article III of the Original
Indenture, but only with respect to the Notes, as follows:

       

      SECTION
3.12.  Purchase of
Notes at Option of the Holder upon Change in Control.

       

      (a)           If
the Company shall become obligated to mail a notice to Holders of the 2014 Notes
pursuant to Section 3.12(b) included in Section 1.03 of the First Supplemental
Indenture (a “2014 Notes Offer”), the Company shall, at the option of each
Holder of the Notes, become obligated to repurchase the Notes held by such
Holder for cash at the purchase price specified in paragraph 7 of the Notes (the
“Change in Control Purchase Price”) as of the date specified as the “Change in
Control Purchase Date” in such 2014 Notes Offer (the “Change in Control Purchase
Date”), subject to satisfaction by or on behalf of such Holder of the Notes of
the requirements set forth in this Section 3.12.

       

      (b)           Concurrently
with the mailing of any 2014 Notes Offer pursuant to Section 3.12(b) included in
Section 1.03 of the First Supplemental Indenture, the Company shall mail a
written notice of the relevant Change in Control by first-class mail to the
Trustee and to each Holder of Notes (and to beneficial owners if required by
applicable law).  The notice shall include a form of Change in Control
Purchase Notice (as defined below) (substantially in the form of the Option of
Holder to Elect Purchase Upon Change in Control attached to the Form of Note (as
defined below)) to be completed by such Holder and shall state the following
(all of which, other than the Change in Control Purchase Price, shall be
substantially the same as for the 2014 Notes Offer):

       

      (1)           briefly,
the events causing a Change in Control and the date such Change in Control is
deemed to have occurred;

       

      (2)           the
date by which the Change in Control Purchase Notice pursuant to this
Section 3.12 must be given;

       

      (3)           the
Change in Control Purchase Date;

       

      (4)           the
Change in Control Purchase Price;

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          8

          
            

          

        

        
           

        

      

      (5)           the
name and address of the Paying Agent;

       

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

       

      (7)           that
the Change in Control Purchase Price for any Note as to which a Change in
Control Purchase Notice has been duly given and not withdrawn will be paid
promptly following the later of the Change in Control Purchase Date and the time
of surrender of such Note as described in clause (6) above;

       

      (8)           any
other procedures the Holder must follow to exercise rights under this
Section 3.12 and a brief description of those rights; and

       

      (9)           the
procedures for withdrawing a Change in Control Purchase Notice.

       

      (c)           A
Holder of Notes may exercise its rights specified in Section 3.12(a) upon
delivery of a written notice of purchase (a “Change in Control Purchase Notice”)
to the Paying Agent at any time prior to the close of business on the Change in
Control Purchase Date, stating:

       

      (1)           the
certificate number of any Note in certificated form which such Holder will
deliver to be purchased;

       

      (2)           the
portion of the principal amount of each Note which such Holder will deliver to
be purchased, which portion must be $1,000 or an integral multiple thereof;
and

       

      (3)           that
such Note shall be purchased as of the Change in Control Purchase Date pursuant
to the terms and conditions specified in paragraph 7 of the Notes and in this
Indenture.

       

      Receipt
of the Note, whether prior to, on or after the Change in Control Purchase Date
(together with all necessary endorsements), by the Paying Agent shall be a
condition to the receipt by such Holder of the Change in Control Purchase Price
therefor; provided,
however, that such Change in Control Purchase Price shall be so paid
pursuant to this Section 3.12 only if each Note so delivered to the Paying
Agent shall conform in all respects to the description thereof set forth in the
related Change in Control Purchase Notice.

       

      The
Company shall purchase from the Holder thereof, pursuant to this
Section 3.12, a portion of a Note if the principal amount of such portion
is $1,000 or an integral multiple of $1,000.  Provisions of this
Indenture that apply to the purchase of all of a Note also apply to the purchase
of such portion of such Note.

       

      Any
purchase by the Company contemplated pursuant to the provisions of this
Section 3.12 shall be consummated by the payment of cash to the Holder
according to the second sentence of the first paragraph of
Section 3.13.

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          9

          
            

          

        

        
           

        

      

      Notwithstanding
anything herein to the contrary, any Holder delivering to the Paying Agent the
Change in Control Purchase Notice contemplated by this Section 3.12(c)
shall have the right to withdraw such Change in Control Purchase Notice at any
time prior to the close of business on the Change in Control Purchase Date by
delivery of a written notice of withdrawal to the Paying Agent in accordance
with Section 3.13.

       

      The
Paying Agent shall promptly notify the Company of the receipt by it of any
Change in Control Purchase Notice or written withdrawal thereof.

       

      From and
after the time that there are no 2014 Notes outstanding under the First
Supplemental Indenture, Holders of the Notes will cease to have any right to
require the Company to purchase Notes pursuant to this Section 3.12 except to
the extent that a written notice of a Change in Control has been mailed to
Holders of the Notes pursuant to Section 3.12 hereof.

       

      SECTION
3.13.  Effect of
Change in Control Purchase Notice.

       

      Upon
receipt by the Paying Agent of the Change in Control Purchase Notice in
accordance with Section 3.12 and compliance by the Company with Section
3.14, the Holder of the Note in respect of which such Change in Control Purchase
Notice was given shall (unless such Change in Control Purchase Notice is
withdrawn as specified in the following paragraph) thereafter be entitled to
receive solely the Change in Control Purchase Price with respect to such Note.
Such Change in Control Purchase Price shall be paid to such Holder promptly
following the later of (x) the Business Day following the Change in Control
Purchase Date with respect to such Note and (y) the time of delivery of such
Note to the Paying Agent by the Holder thereof in the manner required by
Section 3.12.

       

      A Change
in Control Purchase Notice may be withdrawn by means of a written notice of
withdrawal delivered to the Paying Agent at any time prior to the close of
business on the Change in Control Purchase Date, specifying:

       

      (1)           the
certificate number of the Note in certificated form in respect of which such
notice of withdrawal is being submitted;

       

      (2)           the
principal amount of the Note with respect to which such notice of withdrawal is
being submitted; and

       

      (3)           the
principal amount, if any, of such Note (which must be $1,000 or an integral
multiple thereof) which remains subject to the original Change in Control
Purchase Notice and which has been or will be delivered for purchase by the
Company.

       

      The
Paying Agent will promptly return to the respective Holders thereof any Notes
(x) with respect to which a Change in Control Purchase Notice has been withdrawn
in compliance with this Indenture, or (y) held by it during the continuance of
an Event of Default (other than a default in the payment of the

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          10

          
            

          

        

        
           

        

      

      Change in
Control Purchase Price with respect to such Notes) in which case, upon such
return, the Change in Control Purchase Notice with respect thereto shall be
deemed to have been withdrawn.

       

      SECTION
3.14.  Deposit of
Change in Control Purchase Price.

       

      By 11:00
a.m., New York City time, on the Business Day following the Change in Control
Purchase Date, the Company shall deposit with the Paying Agent (or, if the
Company is acting as Paying Agent, shall segregate and hold in trust as provided
in Section 2.06) an amount of cash in immediately available funds
sufficient to pay the aggregate Change in Control Purchase Price of all the
Notes or portions thereof which are to be purchased as of the Change in Control
Purchase Date.

       

      SECTION
3.15.  Notes
Purchased in Part.

       

      Any Note
which is to be purchased under Section 3.12 only in part shall be
surrendered at the office of the Paying Agent (with, if the Company or the
Trustee so requires, due endorsement, or a written instrument of transfer in
form satisfactory to the Company and the Trustee executed by the Holder or such
Holder’s attorney duly authorized in writing), and the Company shall execute and
the Trustee shall authenticate and deliver to the Holder of such Note, without
service charge, a new Note or Notes, of any authorized denomination as requested
by such Holder in aggregate principal amount equal to, and in exchange for, the
portion of the principal amount of the Note so surrendered which is not
purchased.

       

      SECTION
3.16.  Covenant to
Comply with Securities Laws upon Purchase of Notes.

       

      In
connection with any offer to purchase or purchase of Notes under
Section 3.12, the Company shall (i) comply with the provisions of the
Exchange Act that may then be applicable, and (ii) file the related Schedule TO
(or any successor schedule, form or report) under the Exchange Act, if
required.

       

      SECTION
3.17.  Repayment to
the Company.

       

      The
Trustee and the Paying Agent shall return to the Company, upon written request,
any cash, together with interest on such cash as hereinafter provided (subject
to the provisions of Section 7.07) held by them for the payment of a Change
in Control Purchase Price or Redemption Price that remains unclaimed as provided
in Section 8.03, provided, however, that to
the extent that the aggregate amount of cash so deposited by the Company exceeds
the aggregate Change in Control Purchase Price or Redemption Price,
respectively, of the Notes or portions thereof to be purchased or redeemed, then
promptly after the Business Day following the Change in Control Purchase Date or
Redemption Date, as the case may be, the Trustee or the Paying Agent, as the
case may be, shall return any such excess to the Company together with interest
on any cash as hereinafter

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          11

          
            

          

        

        
           

        

      

      provided
(subject to the provisions of Section 7.07). Any cash deposited with the
Trustee or with the Paying Agent pursuant to this Article III shall be invested
by the Trustee or Paying Agent, as applicable, in short-term obligations of, or
fully guaranteed by, the United States of America, or commercial paper rated A-1
or better by S&P or P-1 or better by Moody’s as specifically directed in
writing by the Company. Interest earned on such investments shall be repaid to
the Company pursuant to this Section 3.17. Except as provided for in this
Section 3.17, neither the Paying Agent nor the Trustee shall be under any
liability for interest on any money received by it pursuant to this
Indenture.

       

      SECTION
3.18.  Outstanding
Notes.

       

      If the
Paying Agent holds, in accordance with this Indenture, by 11:00 a.m., New York
City time, on the Business Day following a Change in Control Purchase Date,
money sufficient to pay the Change in Control Purchase Price of the Notes to be
purchased as of the Change in Control Purchase Date, then (i) the Change in
Control Purchase Price for such Notes shall be deemed paid and (ii) after such
Change in Control Purchase Date, such Notes shall cease to be outstanding,
interest on such Notes shall cease to accrue and all other rights of the Holder
shall terminate (other than the right to receive the Change in Control Purchase
Price upon delivery of the Note in accordance with the terms of this Indenture),
whether or not such Notes are delivered to the Paying Agent.

       

      SECTION
1.03                                Supplement to Article IV of the
Original Indenture

       

      .  Article
IV of the Original Indenture is supplemented with respect to the Notes by
inserting the following new Sections at the end thereof:

       

      SECTION
4.08                                Limitation on
Liens.

       

      The
Company shall not, and shall not permit any of its Subsidiaries to, issue,
assume or guarantee any Indebtedness for borrowed money secured by any Lien upon
any Principal Property or any shares of stock or Indebtedness of any Subsidiary
that owns or leases a Principal Property (whether such Principal Property,
shares of stock or Indebtedness are now owned or hereafter acquired) without
making effective provision whereby the Notes (together with, if the Company
shall so determine, any other Indebtedness or other obligation of the Company or
any Subsidiary) shall be secured equally and ratably with (or, at the option of
the Company, prior to) the Indebtedness so secured for so long as such
Indebtedness is so secured.  The foregoing restrictions will not,
however, apply to Indebtedness secured by Permitted Liens.

       

      Notwithstanding
the foregoing, the Company and its Subsidiaries may, without securing the Notes,
issue, assume or guarantee Indebtedness that would otherwise be subject to the
foregoing restrictions in an aggregate principal amount that, together with all
other such Indebtedness of the Company and its Subsidiaries that would otherwise
be subject to the foregoing restrictions (not including Indebtedness permitted
to be secured under the definition of Permitted

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          12

          
            

          

        

        
           

        

      

      Liens)
and the aggregate amount of Attributable Indebtedness deemed outstanding with
respect to Sale/Leaseback Transactions (other than Sale/Leaseback Transactions
in connection with which the Company has voluntarily retired any of the
Securities, any Pari Passu Indebtedness or any Funded Indebtedness pursuant to
Section 4.09(c)) does not at any one time exceed 15% of Consolidated Net
Tangible Assets.

       

      SECTION
4.09                                Limitation on Sale/Leaseback
Transactions.

       

      The
Company shall not, and shall not permit any Subsidiary to, enter into any
Sale/Leaseback Transaction with any Person (other than the Company or a
Subsidiary) unless:

       

      (a)           the
Company or such Subsidiary would be entitled to incur Indebtedness in a
principal amount equal to the Attributable Indebtedness with respect to such
Sale/Leaseback Transaction secured by a Lien on the property subject to such
Sale/Leaseback Transaction pursuant to Section 4.08 without equally and ratably
securing the Notes pursuant to Section 4.08;

       

      (b)           after
the Issue Date of the Notes and within a period commencing nine months prior to
the consummation of such Sale/Leaseback Transaction and ending nine months after
such consummation, the Company or any Subsidiaries shall have expended for
property used or to be used in the ordinary course of business of the Company
and its Subsidiaries an amount equal to all or a portion of the net proceeds of
such Sale/Leaseback Transaction and the Company shall have elected to designate
such amount as a credit against such Sale/Leaseback Transaction (with any such
amount not being so designated to be applied as set forth in clause (c) below or
as otherwise permitted); or

       

      (c)           the
Company, during the nine-month period after the effective date of such
Sale/Leaseback Transaction, shall have applied to the voluntary defeasance or
retirement of any Securities, any Pari Passu Indebtedness or any Funded
Indebtedness an amount equal to the greater of the net proceeds of the sale or
transfer of the property leased in such Sale/Leaseback Transaction and the fair
value, as determined by the Board of Directors of the Company and evidenced by a
Board Resolution, of such property at the time of entering into such
Sale/Leaseback Transaction (in either case adjusted to reflect the remaining
term of the lease and any amount expended by the Company as set forth in clause
(b) above).

       

      SECTION
1.04                                Supplement to Article IX of the
Original Indenture

       

      .  Section 9.02
of the Original Indenture is supplemented with respect to the Notes by deleting
the word “or” at the end of clause (9) thereof, replacing the period at the end
of clause (10) thereof with “; or” and adding the following new clause (11) to
such Section:

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          13

          
            

          

        

        
           

        

      

      (11)           materially
and adversely affect the right provided in Article III to require the Company to
repurchase Notes in accordance with Section 3.12.

       

      

      SECTION
1.05                                Effect of Article
1

       

      .  The
supplements to the Original Indenture set forth in Article 1 of this Second
Supplemental Indenture affect only the provisions of the Original Indenture as
such provisions relate to the Notes, the series of Securities comprised of the
Notes and the rights, remedies and obligations of the Company, the Holders of
Notes, the Trustee and other Persons set forth in the Original Indenture as such
rights, remedies and obligations relate to the Notes.

       

      ARTICLE
2

       

      THE
NOTES

       

      SECTION
2.01                                Form and Terms

       

      .  The
Notes shall be issued upon original issuance in whole in the form of one or more
Global Securities (the “Global Notes”).  The Depository Trust Company
and the Trustee are hereby designated as the Depositary and the Security
Custodian, respectively, for the Global Notes under the
Indenture.  The Notes and the Trustee’s certificate of authentication
shall be substantially in the form of Exhibit A hereto (the “Form
of Note”).  The terms of the Notes set forth on Exhibit A hereto are
incorporated by reference herein as if set forth herein in their
entirety.

       

      SECTION
2.02                                Designation, Amount,
etc

       

      .

       

      (a)           The
Notes shall be entitled the “81⁄2% Senior Notes due 2019” of the
Company.

       

      (b)           The
limit upon the aggregate principal amount of the Notes that may be authenticated
and delivered under the Indenture (except for Notes authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other Notes
pursuant to Section 2.08, 2.09, 2.12, 2.17, 3.07 or 9.05 of the Indenture
and except for any Notes which, pursuant to Section 2.04 or 2.17 of the
Indenture, are deemed never to have been authenticated and delivered thereunder)
is $500,000,000; provided,
however, that the authorized aggregate principal amount of the Notes may
be increased before or after the issuance of any Notes by a Board Resolution (or
action pursuant to a Board Resolution) to such effect; provided further, however,
that the authorized aggregate principal amount of the Notes may be
increased only if the additional Notes issued will be fungible with the original
Notes for United States federal income tax purposes.  The Notes issued
on the Issue Date and any such additional Notes subsequently issued shall be
treated as a single series for all purposes under the Indenture, including,
without limitation, waivers, amendments, redemptions and offers to
purchase.

       

      (c)           The
Notes shall not be entitled to the benefit of Section 4.03(b) of the Original
Indenture (and shall not constitute Rule 144A Securities).

       

      SECTION
2.03                                Payment of Principal and
Interest

       

      .

       

      (a)           The
date on which the principal of the Notes is payable shall be June 15,
2019.

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          14

          
            

          

        

        
           

        

      

      (b)           The
rate at which the Notes shall bear interest shall be 81⁄2% per
annum.  Interest on the Notes shall be computed on the basis of a
360-day year of twelve 30-day months.  The Interest Payment Dates on
which such interest shall be payable shall be June 15 and December 15 of each
year, commencing December 15, 2009.  The record dates for the interest
payable on the Notes on any Interest Payment Date shall be the December 1 and
June 1, as the case may be, next preceding such Interest Payment
Date.

       

      (c)           No
Additional Amounts with respect to the Notes shall be payable.

       

      (d)           The
place or places where the principal of, premium (if any) on and interest on the
Notes shall be payable shall be the office or agency of the Company maintained
for that purpose, initially the office of the Trustee in The City of New York,
and any other office or agency maintained by the Company for such
purpose.  Payments in respect of Global Notes (including principal,
premium, if any, and interest) shall be made by wire transfer of immediately
available funds to the accounts specified by the Holder of such
Notes.  In all other cases, at the option of the Company, payment of
interest may be made by check mailed to the address of the person entitled
thereto as such address shall appear in the register of the Notes maintained by
the Registrar.

       

      (e)           The
Paying Agent and Registrar for the Notes initially shall be the
Trustee.

       

      SECTION
2.04                                Denominations

       

      .  The
Notes shall be issued in denominations of $2,000 or any integral multiple of
$1,000 above such amount.

       

      SECTION
2.05                                Legends

       

      . Each
Global Note shall bear the legend set forth on the face of the Form of
Note.

       

      SECTION
2.06                                Redemption at the Option of the
Company

       

      .

       

      (a)           The
Notes are subject to redemption, in whole at any time and in part from time to
time, at the option of the Company, in principal amounts of $1,000 and integral
multiples of $1,000 above such amount (provided that the unredeemed portion of
any Note redeemed in part may not be less than $2,000), upon not less than 30
nor more than 60 days’ prior notice as provided in the Indenture, at a
Redemption Price equal to the sum of (i) 100% of the principal amount of the
Notes to be redeemed, (ii) the amount, if any, by which the sum of the present
values of the Remaining Scheduled Payments thereon (excluding accrued and unpaid
interest to the Redemption Date), discounted to the Redemption Date on a
semi-annual basis (assuming a 360-day year consisting of twelve 30-day months)
at the Treasury Rate plus 50 basis points, exceeds the principal amount of the
Notes to be redeemed, and (iii) accrued and unpaid interest thereon to the
Redemption Date.

       

      (b)           The
Company shall have no obligation to redeem, purchase or repay Notes pursuant to
any sinking fund or analogous provision or, except as provided in Section 3.12
of the Indenture, at the option of a Holder thereof.

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          15

          
            

          

        

        
           

        

      

      ARTICLE
3

       

      REPRESENTATIONS
OF THE COMPANY

       

      SECTION
3.01                                Authority of the
Company

       

      .  The
Company is duly authorized to execute and deliver this Second Supplemental
Indenture, and all corporate action on its part required for the execution and
delivery of this Second Supplemental Indenture has been duly and effectively
taken.

       

      SECTION
3.02                                Truth of Recitals and
Statements

       

      .  The
Company warrants that the recitals of fact and statements contained in this
Second Supplemental Indenture are true and correct, and that the recitals of
fact and statements contained in all certificates and other documents furnished
thereunder will be true and correct.

       

      ARTICLE
4

       

      CONCERNING
THE TRUSTEE

       

      SECTION
4.01                                Acceptance of
Trusts

       

      .  The
Trustee accepts the trusts hereunder and agrees to perform the same, but only
upon the terms and conditions set forth in the Original Indenture and in this
Second Supplemental Indenture, to all of which the Company and the respective
Holders of the Notes at any time hereafter outstanding agree by their acceptance
thereof.

       

      SECTION
4.02                                No Responsibility of Trustee for
Recitals, Etc

       

      .  The
recitals and statements contained in this Second Supplemental Indenture shall be
taken as the recitals and statements of the Company, and the Trustee assumes no
responsibility for the correctness of the same.  The Trustee makes no
representations as to the validity or sufficiency of this Second Supplemental
Indenture, except that the Trustee is duly authorized by all necessary corporate
actions to execute and deliver this Second Supplemental Indenture.

       

      ARTICLE
5

       

      MISCELLANEOUS
PROVISIONS

       

      SECTION
5.01                                Succession of the
Trustee

       

      .  The
Bank of New York Mellon hereby expressly assumes all of the liabilities of
JPMorgan Chase Bank under the Original Indenture for purposes of Section 7.09
thereof.

       

      SECTION
5.02                                Address of Trustee for
Notices

       

      .  The
address of the Trustee for notices set forth in Section 10.02 of the Original
Indenture shall be as follows:

       

      The Bank
of New York Mellon

      101
Barclay Street, 8W

      New York,
New York 10286

      Attention:  Corporate
Finance Group

      Telephone:                                (212)
815-5995

      Facsimile:                                (212)
815-5704

       

      SECTION
5.03                                Relation to the Original
Indenture

       

      .  The
provisions of this Second Supplemental Indenture shall become effective
immediately upon the execution and delivery hereof.  This Second
Supplemental Indenture and all the terms and provisions herein contained shall
form a part of the Original Indenture as fully and with the same effect as if
all such terms and provisions

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          16

          
            

          

        

        
           

        

      

      had been
set forth in the Original Indenture; provided, however, such terms
and provisions shall be so included in this Second Supplemental Indenture solely
for the benefit of the Company, the Trustee and the Holders of the Notes and,
solely with respect to Sections 5.01 and 5.02 hereof, other series of Securities
issued pursuant to the Original Indenture from time to time.  The
Original Indenture is hereby ratified and confirmed and shall remain and
continue in full force and effect in accordance with the terms and provisions
thereof, as supplemented by this Second Supplemental Indenture, and the Original
Indenture and this Second Supplemental Indenture shall be read, taken and
construed together as one instrument.

       

      SECTION
5.04                                Meaning of Terms

       

      .  Any
term used in this Second Supplemental Indenture which is defined in the Original
Indenture shall have the meaning specified in the Original Indenture, unless the
context shall otherwise require.

       

      SECTION
5.05                                Counterparts of Supplemental
Indenture

       

      . This
Second Supplemental Indenture may be executed in several counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one instrument.

       

      SECTION
5.06                                Governing Law

       

      .  This
Second Supplemental Indenture and the Notes shall be governed by and construed
in accordance with the internal laws of the State of New York, except to the
extent the laws of the State of New York require the application of the laws of
another jurisdiction.

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          17

          
            

          

        

        
           

        

      

      IN
WITNESS WHEREOF, Pride International, Inc. has caused this Second Supplemental
Indenture to be executed in its corporate name by a duly authorized officer, and
The Bank of New York Mellon has caused this Second Supplemental Indenture to be
executed by a duly authorized officer, all as of the date first above
written.

       

       

      PRIDE
INTERNATIONAL, INC.

       

       

      

       

       

      

       

       

      By:  /s/ Steven D.
Oldham         

                                         Steven D.
Oldham

                                         Vice President and
Treasurer

       

       

      THE BANK
OF NEW YORK MELLON,

       

       

      as
Trustee

       

       

      

       

       

      

       

       

      By:     /s/ Laurence J.
O'Brien      

                                          Laurence J.
O’Brien

                                          Vice
President

       

      

       

      
        
          
            HOU03:1203587                                                                    

          

           

        

        
          18

          
            

          

        

        
           

        

      

      Exhibit
A

       

      [FORM OF
FACE OF SECURITY]

       

      [Unless
and until it is exchanged in whole or in part for Securities in definitive form,
this Security may not be transferred except as a whole by the Depositary to a
nominee of the Depositary or by a nominee of the Depositary to the Depositary or
another nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.  The
Depository Trust Company (55 Water Street, New York, New York), a New York
corporation (“DTC”), shall act as the Depositary until a successor shall be
appointed by the Company and the Registrar.  Unless this certificate
is presented by an authorized representative of DTC to the issuer or its agent
for registration of transfer, exchange or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is requested
by an authorized representative of DTC (and any payment is made to Cede &
Co. or to such other entity as is requested by an authorized representative of
DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO
ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co.,
has an interest herein.]*

       

      PRIDE
INTERNATIONAL, INC.

       

      

       

      81⁄2%
SENIOR NOTE DUE 2019

       

      CUSIP No.
_____________

       

      No.___________                                                                                                                             $_____________

       

      Pride
International, Inc., a Delaware corporation (the “Company,” which term includes
any successor Person under the Indenture hereinafter referred to), for value
received, promises to pay to ____________ or registered assigns, the principal
sum of ______________________ Dollars[, or such greater or lesser amount as
indicated on the Schedule of Exchanges of Securities hereto,]* on June 15,
2019.

       

      Interest
Payment
Dates:                                                      June
15 and December 15

       

      Record
Dates:                                           June
1 and December 1

       

      Reference
is hereby made to the further provisions of this Security set forth on the
reverse hereof, which further provisions shall for all purposes have the same
effect as if set forth at this place.

       

      
        
          
            HOU03:1203587                                                                
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      IN
WITNESS WHEREOF, the Company has caused this Security to be signed manually or
by facsimile by its duly authorized officers.

       

      
        	
                 
      

              	
                Dated:

              

      

       

      PRIDE
INTERNATIONAL, INC.

       

       

      

       

       

      

       

       

      By:           

       

       

      Name:

       

       

      Title:

       

       

      By:           

       

       

      Name:

       

       

      Title:

       

      Certificate
of Authentication:

       

      This is
one of the Securities of the series

       

      designated
therein referred to in the within-

       

      mentioned
Indenture.

       

      THE BANK
OF NEW YORK MELLON,

       

      as
Trustee

       

      

       

      

       

      By:                                                                

       

      Authorized Signatory

       

      

       

      
        
          
            * To be
included only if the Security is a Global Security

             

            HOU03:1203587 

             

            

             

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      [FORM OF
REVERSE OF SECURITY]

       

      

       

      PRIDE
INTERNATIONAL, INC.

       

      

       

      81⁄2%
SENIOR NOTE DUE 2019

       

      This
Security is one of a duly authorized issue of 81⁄2% Senior Notes due 2019 (the
“Securities”) of Pride International, Inc., a Delaware corporation (the
“Company”).

       

      1.           Interest.  The
Company promises to pay interest on the principal amount of this Security at 81⁄2%
per annum.  The Company will pay interest semiannually on June 15 and
December 15 of each year (each an “Interest Payment Date”), or if any such day
is not a Business Day, on the next succeeding Business Day.  Interest
on the Securities will accrue from the most recent Interest Payment Date on
which interest has been paid or, if no interest has been paid, from June 2,
2009; provided that if
there is no existing Default in the payment of interest, and if this Security is
authenticated between a record date referred to on the face hereof (each, a
“Record Date”) and the next succeeding Interest Payment Date, interest shall
accrue from such next succeeding Interest Payment Date; provided, further, that the
first Interest Payment Date shall be December 15, 2009.  The Company
shall pay interest on overdue principal and premium (if any) from time to time
at a rate equal to the interest rate then in effect; it shall pay interest on
overdue installments of interest (without regard to any applicable grace
periods) from time to time at the same rate to the extent
lawful.  Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.

       

      2.           Method of
Payment.  The Company will pay interest on the Securities
(except defaulted interest) to the Persons who are registered Holders of
Securities at the close of business on the Record Date next preceding the
Interest Payment Date, even if such Securities are canceled after such Record
Date and on or before such Interest Payment Date.  The Holder must
surrender this Security to a Paying Agent to collect principal
payments.  The Company will pay the principal of, premium (if any) on
and interest on the Securities in money of the United States of America that at
the time of payment is legal tender for payment of public and private
debts.  Such amounts shall be payable at the offices of the Trustee
(as defined below); provided that, at the option
of the Company, the Company may pay such amounts (1) by wire transfer with
respect to Global Securities or (2) by check payable in such money mailed to a
Holder’s registered address with respect to any Securities.

       

      3.           Paying Agent and
Registrar.  Initially, The Bank of New York Mellon (the
“Trustee”), the trustee under the Indenture (as defined below), will act as
Paying Agent and Registrar.  The Company may change any Paying Agent,
Registrar, co-registrar or additional paying agent without notice to any
Holder.  The Company or any Subsidiary of the Company may act in any
such capacity.

       

      4.           Indenture.  The
Company issued the Securities under an Indenture, dated as of July 1, 2004 (the
“Base Indenture”), between the Company and the Trustee, as amended and
supplemented by the Second Supplemental Indenture thereto, dated as of June 2,
2009 and as it may otherwise be supplemented thereafter with applicability to
the Securities (the Base Indenture, as so amended and supplemented, the
“Indenture”).  The terms of the Securities

       

      
        
          
            HOU03:1203587                                                                
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      include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (the “TIA”), as in effect on the
date of execution of the Indenture.  The Securities are subject to all
such terms, and Holders are referred to the Indenture and the TIA for a
statement of such terms and for the definitions of capitalized terms used but
not defined herein.  The Securities are unsecured general obligations
of the Company limited to $500,000,000 in aggregate principal amount; provided, however, that the
authorized aggregate principal amount of the Securities may be increased before
or after the issuance of any Securities by a Board Resolution (or action
pursuant to a Board Resolution) to such effect; provided further, however,
that the authorized aggregate principal amount of the Securities may be
increased only if the additional Securities issued will be fungible with the
original Securities for United States federal income tax
purposes.  The Base Indenture provides for the issuance of other
series of debt securities (including the Securities, the “Debt Securities”)
thereunder.

       

      5.           Denominations, Transfer,
Exchange.  The Securities are in registered form without
coupons in minimum denominations of $2,000 and any integral multiples of
$1,000.  The transfer of Securities may be registered and Securities
may be exchanged as provided in the Indenture.  The Registrar and the
Trustee may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay any taxes and fees required by
law or permitted by the Indenture.  Neither the Company, the Trustee
nor the Registrar shall be required to register the transfer or exchange of (a)
any Security selected for redemption in whole or in part, except the unredeemed
portion of any Security being redeemed in part, or (b) any Security during the
period beginning 15 Business Days before the mailing of notice of redemption of
Securities to be redeemed and ending at the close of business on the day of
mailing.

       

      6.           Persons Deemed
Owners.  The registered Holder of a Security shall be treated
as its owner for all purposes.

       

      7.           Purchase by the Company at the
Option of the Holder upon a Change in Control.  Upon the terms
and subject to the conditions of the Indenture, if the Company shall become
obligated to mail a notice to Holders of the Company’s 7 3/8% Senior Notes due
2014 pursuant to Section 3.12(b) included in Section 1.03 of the First
Supplemental Indenture, the Company shall, at the option of each Holder of the
Securities, purchase all Securities for which a Change in Control Purchase
Notice shall have been delivered as provided in the Indenture and not withdrawn,
as of the Change in Control Purchase Date specified therein, for a Change in
Control Purchase Price equal to 101% of the principal amount of such Securities,
plus accrued and unpaid interest, if any, thereon through and including the
Change in Control Purchase Date (subject to the right of Holders on a Record
Date to receive interest due on the relevant Interest Payment
Date).  The Change in Control Purchase Price shall be paid in
cash.

       

      Holders
of Securities have the right to withdraw any Change in Control Purchase Notice
by delivering to the Paying Agent a written notice of withdrawal prior to the
close of business on the Change in Control Purchase Date in accordance with the
provisions of the Indenture.

       

      
        
          
            HOU03:1203587                                                                
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      If cash
sufficient to pay the Change in Control Purchase Price of all Securities or
portions thereof to be purchased as of the Change in Control Purchase Date is
deposited with the Paying Agent on the Business Day following the Change in
Control Purchase Date, then interest ceases to accrue on such Securities (or
portions thereof) after the Change in Control Purchase Date and the Holders
thereof shall have no other rights as such (other than the right to receive the
Change in Control Purchase Price upon surrender of such Security).  No
interest on the Securities to be purchased will be payable by the Company on any
Interest Payment Date subsequent to the Business Day following the Change in
Control Purchase Date, if the requirements of the immediately preceding sentence
are satisfied.

       

      8.           Redemption.  The
Securities are subject to redemption, in whole at any time and in part from time
to time, at the option of the Company, in principal amounts of $1,000 and
integral multiples of $1,000 above such amount (provided that the unredeemed
portion of any Security redeemed in part may not be less than $2,000), upon not
less than 30 nor more than 60 days’ prior notice as provided in the Indenture,
at a Redemption Price equal to the sum of (i) 100% of the principal amount of
the Securities to be redeemed, (ii) the amount, if any, by which the sum of the
present values of the Remaining Scheduled Payments thereon (excluding accrued
and unpaid interest to the Redemption Date), discounted to the Redemption Date
on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day
months) at the Treasury Rate plus 50 basis points, exceeds the principal amount
of the Securities to be redeemed, and (iii) accrued and unpaid interest thereon
to the Redemption Date.

       

      9.           Amendments and
Waivers.  Subject to certain exceptions and limitations, the
Indenture or the Securities may be amended or supplemented with the consent of
the Holders of at least a majority in principal amount of the then outstanding
Debt Securities of all series affected by such amendment or supplement (acting
as one class), and any existing or past Default or Event of Default under, or
compliance with any provision of, the Indenture may be waived (other than any
continuing Default or Event of Default in the payment of the principal of,
premium (if any) on or interest on the Securities) by the Holders of at least a
majority in principal amount of the then outstanding Debt Securities of any
series or of all series (acting as one class) in accordance with the terms of
the Indenture.  Without the consent of any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Securities or waive any
provision of either: (i) to cure any ambiguity, omission, defect or
inconsistency; (ii) if required, to provide for the assumption of the
obligations of the Company under the Indenture in the case of the merger,
consolidation or sale, lease, conveyance, transfer or other disposition of all
or substantially all of the assets of the Company; (iii) to provide for
uncertificated Securities in addition to or in place of certificated Securities
or to provide for the issuance of bearer Securities (with or without coupons);
(iv) to provide any security for, or to add any guarantees of or additional
obligors on, the Securities; (v) to comply with any requirement in order to
effect or maintain the qualification of the Indenture under the TIA;
(vi) to add to the covenants of the Company for the benefit of the Holders
of the Securities, or to surrender any right or power conferred by the Indenture
upon the Company; (vii) to add any additional Events of Default with
respect to all or any series of the Debt Securities; (viii) to change or
eliminate any of the provisions of the Indenture, provided that no outstanding
Security is adversely affected in any material respect; (ix) to supplement
any of the provisions of the Indenture to such extent as shall be necessary to
permit or facilitate the defeasance and discharge of the Securities pursuant to
the Indenture; or (x) to evidence and provide for the acceptance of
appointment under the Indenture

       

      
        
          
            HOU03:1203587                                                                
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      by a
successor Trustee with respect to the Securities and to add to or change any of
the provisions of the Indenture as shall be necessary to provide for or
facilitate the administration of the trusts thereunder by more than one Trustee,
pursuant to the requirements of the Indenture.

       

      The right
of any Holder to participate in any consent required or sought pursuant to any
provision of the Indenture (and the obligation of the Company to obtain any such
consent otherwise required from such Holder) may be subject to the requirement
that such Holder shall have been the Holder of record of any Securities with
respect to which such consent is required or sought as of a date identified by
the Company in a notice furnished to Holders in accordance with the terms of the
Indenture.

       

      Without
the consent of each Holder affected, the Company may not (i) reduce the
amount of Debt Securities whose Holders must consent to an amendment, supplement
or waiver; (ii) reduce the rate of or change the time for payment of
interest, including default interest, on any Security; (iii) reduce the
principal of or premium on, or change the Stated Maturity of, any Security;
(iv) reduce the premium, if any, payable upon the redemption of any
Security or change the time at which any Security may or shall be redeemed;
(v) change the coin or currency in which any Security or any premium or
interest with respect thereto is payable; (vi) impair the right to
institute suit for the enforcement of any payment of principal of or premium (if
any) or interest on any Security, except as provided in the Indenture;
(vii) make any change in the percentage of principal amount of Debt
Securities necessary to waive compliance with certain provisions of the
Indenture or make any change in the provision for modification;
(viii) waive a continuing Default or Event of Default in the payment of
principal of or premium (if any) or interest on the Securities or (ix)
materially and adversely affect the right provided in the Indenture to require
the Company to repurchase Securities as described in paragraph 7 of this
Security.

       

      A
supplemental indenture that changes or eliminates any covenant or other
provision of the Base Indenture, as supplemented from time to time, which has
expressly been included solely for the benefit of one or more particular series
of Debt Securities under the Base Indenture, or which modifies the rights of the
Holders of Debt Securities of such series with respect to such covenant or other
provision, shall be deemed not to affect the rights under the Indenture of the
Holders of Debt Securities of any other series.

       

      10.           Defaults and
Remedies.  Events of Default are defined in the Indenture and
generally include: (i) default for 30 days in payment of any interest on
the Securities; (ii) default in any payment of principal of or premium, if
any, on the Securities when due and payable; (iii) default by the Company
in compliance with any of its other covenants or agreements in, or provisions
of, the Securities or in the Indenture which shall not have been remedied within
60 days after written notice by the Trustee or by the holders of at least 25% in
principal amount of the Securities then outstanding (or, in the event that other
Debt Securities issued under the Base Indenture are also affected by the
default, then 25% in principal amount of all outstanding Debt Securities so
affected); or (iv) certain events involving bankruptcy, insolvency or
reorganization of the Company.  If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the then outstanding Securities (or, in the case of an Event of Default
described in clause (iii) above, if outstanding Debt

       

      
        
          
            HOU03:1203587                                                                
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      Securities
of other series are affected by such Default, then at least 25% in principal
amount of the then outstanding Debt Securities so affected), may declare the
principal of and interest on all the Securities (or such Debt Securities) to be
immediately due and payable, except that in the case of an Event of Default
arising from certain events of bankruptcy, insolvency or reorganization of the
Company, all outstanding Debt Securities under the Base Indenture become due and
payable immediately without further action or notice.  The amount due
and payable upon the acceleration of any Security is equal to 100% of the
principal amount thereof plus accrued interest to the date of
payment.  Holders may not enforce the Indenture or the Securities
except as provided in the Indenture.  The Trustee may require
indemnity satisfactory to it before it enforces the Indenture or the
Securities.  Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Securities (or affected Debt
Securities) may direct the Trustee in its exercise of any trust or
power.  The Trustee may withhold from Holders notice of any continuing
default (except a default in payment of principal, premium or interest) if it
determines that withholding notice is in their interests.  The Company
must furnish annual compliance certificates to the Trustee.

       

      11.           Discharge Prior to
Maturity.  The Indenture with respect to the Securities shall
be discharged and canceled upon the payment of all of the Securities and shall
be discharged except for certain obligations upon the irrevocable deposit with
the Trustee of any combination of funds and U.S. Government Obligations
sufficient for such payment.

       

      12.           Trustee Dealings with
Company.  The Trustee, in its individual or any other capacity,
may become the owner or pledgee of Securities and may make loans to, accept
deposits from, and perform services for the Company or any of its Affiliates,
and may otherwise deal with the Company or any such Affiliates, as if it were
not Trustee.

       

      13.           No Recourse Against Others. A
director, officer, employee, stockholder, partner or other owner of the Company
or the Trustee, as such, shall not have any liability for any obligations of the
Company under the Securities or for any obligations of the Company or the
Trustee under the Indenture or for any claim based on, in respect of or by
reason of such obligations or their creation.  Each Holder by
accepting a Security waives and releases all such liability.  The
waiver and release shall be part of the consideration for the issue of
Securities.

       

      14.           Authentication.  This
Security shall not be valid until authenticated by the manual signature of the
Trustee or an authenticating agent.

       

      15.           CUSIP
Numbers.  Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Company has caused
CUSIP numbers to be printed on the Securities as a convenience to the Holders of
the Securities.  No representation is made as to the accuracy of such
numbers as printed on the Securities and reliance may be placed only on the
other identification numbers printed thereon.

       

      16.           Abbreviations.  Customary
abbreviations may be used in the name of a Holder or an assignee, such
as:  TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).

       

      
        
          
            HOU03:1203587                                                                
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      The
Company will furnish to any Holder upon written request and without charge a
copy of the Indenture.  Request may be made to:

       

      Pride
International, Inc.

       

      5847 San
Felipe, Suite 3300

       

      Houston,
Texas  77057

       

      Attention:  General
Counsel

       

      
        
          
            HOU03:1203587                                                                
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      OPTION OF
HOLDER TO ELECT PURCHASE

       

      UPON
CHANGE IN CONTROL

       

      If you
want to elect to have this Security purchased by the Company pursuant to
Section 3.12 of the Indenture, check this box:

       

      If you
want to elect to have only part of this Security purchased by the Company
pursuant to Section 3.12 of the Indenture, state the principal amount you
elect to have purchased:  $_____________________ (in multiples of
$1,000)

       

      This
Security (or the portion thereof specified above) shall be purchased as of the
Change in Control Purchase Date pursuant to the terms and conditions specified
in paragraph 7 of this Security and in the Indenture.

       

      Date:                                           Your
Signature:                                                                           

       

      (Sign exactly as your name appears on
the Security)

       

      Tax
Identification
No.:                                                                                                                                          

       

      Signature
Guarantee:                                                                                                                                          

      (Participant
in a Recognized Signature

       

      Guarantee
Medallion Program)

       

      

       

      
        
          
            HOU03:1203587                                                                
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      SCHEDULE
OF EXCHANGES OF SECURITIES*

       

      The
following exchanges of a part of this Global Security for other Securities have
been made:

       

      
        	
                Date of Exchange

              	
                Amount
      of

                Decrease
      in

                Principal
      Amount

                of this Global Security

              	
                Amount
      of

                Increase
      in

                Principal
      Amount

                of this Global Security

              	
                Principal
      Amount

                of
      this Global

                Security
      Following

                Such
      Decrease

                or Increase

              	
                Signature
      of

                Authorized
      Officer

                of
      Trustee or

                Security Custodian

              
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      

      

      

       

      
        
          
            HOU03:1203587
                                           

             

            * To be
included only if the Security is a Global Security

             

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      ASSIGNMENT
FORM

       

      To assign
this Security, fill in the form below: (I) or (we) assign and transfer this
Security to:

       

      
            (Insert assignee’s
social security or tax I.D. number)

       

      

      

                  (Print or type
assignee’s name, address and zip code)

       

      and
irrevocably
appoint                                                                                                                                          

      as agent
to transfer this Security on the books of the Company.  The agent may
substitute another to act for him.

       

      Date:                                           Your
Signature:                                                                           

          

          (Sign exactly as your
name appears onthe face
of this Security))

       

      Signature
Guarantee:                                                                                                                                       

                  (Participant
in a Recognized Signature Guarantee
Medallion Program)

       

      

       

      
        
          
            HOU03:1203587                                                               
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