CREDIT AGREEMENT

Exhibit 10.1

EXECUTION VERSION

$1,050,000,000

CREDIT AGREEMENT

dated as of July 11, 2007,

among

HERCULES OFFSHORE, INC.,

as Borrower,

THE SUBSIDIARIES PARTY HERETO,

as Guarantors,

THE LENDERS PARTY HERETO,

UBS SECURITIES LLC,

as Arranger and Bookmanager,

UBS AG, STAMFORD BRANCH,

as Issuing Bank, Administrative Agent and Collateral Agent,

DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH

and

JEFFERIES FINANCE LLC,

as Co-Documentation Agents,

AMEGY BANK, NATIONAL ASSOCIATION

and

COMERICA BANK,

as Co-Syndication Agents,

and

UBS LOAN FINANCE LLC,

as Swingline Lender

TABLE OF CONTENTS

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CREDIT AGREEMENT

This CREDIT AGREEMENT (this “ Agreement ”) dated as of July 11, 2007, among HERCULES OFFSHORE, INC., a Delaware corporation (“ Borrower ”), the Subsidiary Guarantors (such term and each other capitalized term used but not defined herein having the meaning given to it in Article I ), the Lenders, UBS SECURITIES LLC, as lead arranger (in such capacity, “ Arranger ”), DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH and JEFFERIES FINANCE LLC, as co-documentation agents (in such capacity, each a “Co-Documentation Agent” and collectively, the “Co-Documentation Agents” ), AMEGY BANK NATIONAL ASSOCIATION and COMERICA BANK, as co-syndication agents (in such capacity, each a “ Co-Syndication Agent ” and collectively, the “Co-Syndication Agents” ), UBS LOAN FINANCE LLC, as swingline lender (in such capacity, “ Swingline Lender ”), and UBS AG, STAMFORD BRANCH, as issuing bank (in such capacity, “ Issuing Bank ”), as administrative agent (in such capacity, “ Administrative Agent ”) for the Lenders and as collateral agent and instructing beneficiary under the Mortgage Trust Agreement (as hereinafter defined) (in such capacities, “ Collateral Agent ”) for the Secured Parties including the Issuing Bank.

WITNESSETH:

WHEREAS, Borrower, THE HERCULES OFFSHORE DRILLING COMPANY LLC, a Delaware limited liability company and a direct Wholly Owned Subsidiary of Borrower (“ Acquisition Co .”) and TODCO, a Delaware corporation (“ TODCO ”), have entered into an Amended and Restated Agreement and Plan of Merger, effective as of March 18, 2007 (as amended, supplemented or otherwise modified from time to time in accordance with the provisions hereof and thereof, the “ Acquisition Agreement ”), pursuant to which Borrower will acquire TODCO (the “ Acquisition ”).

WHEREAS, the Acquisition will be effected by a merger (the “ Merger ”) whereby TODCO will merge with and into Acquisition Co. and Acquisition Co. shall survive the merger.

WHEREAS, Borrower has requested the Lenders to extend credit in the form of (a) Term Loans on the Closing Date, in an aggregate principal amount not in excess of $900,000,000, and (b) Revolving Loans at any time and from time to time prior to the Revolving Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $150,000,000, available to be drawn beginning on the first Business Day after the Closing Date.

WHEREAS, Borrower has requested the Swingline Lender to make Swingline Loans, at any time and from time to time prior to the Revolving Maturity Date, in an aggregate principal amount at any time outstanding not in excess of $15,000,000.

WHEREAS, Borrower has requested the Issuing Bank to issue letters of credit, in an aggregate face amount at any time outstanding not in excess of $50,000,000, to support obligations of Borrower and its Subsidiaries.

WHEREAS, the proceeds of the Loans are to be used in accordance with Section 3.12 .

NOW, THEREFORE, the Lenders are willing to extend such credit to Borrower and the Issuing Bank is willing to issue letters of credit for the account of Borrower on the terms and subject to the conditions set forth herein. Accordingly, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

SECTION 1.01 Defined Terms . As used in this Agreement, the following terms shall have the meanings specified below :

“ ABR ”, when used in reference to any Loan or Borrowing, is used when such Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to the Alternate Base Rate.

“ ABR Borrowing ” shall mean a Borrowing comprised of ABR Loans.

“ ABR Loan ” shall mean any ABR Term Loan or ABR Revolving Loan.

“ ABR Revolving Loan ” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II .

“ ABR Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the Alternate Base Rate in accordance with the provisions of Article II .

“ Acceptable Flag Jurisdiction ” shall mean each of the United States of America, the Republic of Liberia, the Marshall Islands, Vanuatu, the Bahamas, Panama and any other jurisdiction reasonably acceptable to the Administrative Agent.

“ Acquisition ” shall have the meaning assigned to such term in the first recital hereto.

“ Acquisition Agreement ” shall have the meaning assigned to such term in the first recital hereto.

“ Acquisition Co. ” shall have the meaning assigned to such term in the first recital hereto.

“ Acquisition Consideration ” shall mean the purchase consideration for any Permitted Acquisition and all other payments (excluding brokers’ fees or commissions, legal, accounting and other professional and transaction fees, and transfer taxes and other similar taxes) by Borrower or any of its Subsidiaries in exchange for, or as part of, or in connection with, any Permitted Acquisition, whether paid in cash or by exchange of Equity Interests or of properties or otherwise and whether payable at or prior to the consummation of such Permitted Acquisition or deferred for payment at any future time, whether or not any such future payment is subject to the occurrence of any contingency, and includes any and all payments representing the purchase price and any assumptions of Indebtedness, “earn-outs” and other agreements to make any payment the amount of which is, or the terms of payment of which are, in any respect subject to or contingent upon the revenues, income, cash flow or profits (or the like) of any person or business; provided that any such future payment that is subject to a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if any, required under GAAP at the time of such sale to be established in respect thereof by Borrower or any of its Subsidiaries.

“ Acquisition Documents ” shall mean the collective reference to the Acquisition Agreement and (i) each material exhibit, schedule, annex or other attachment to the Acquisition Agreement and (ii) each material agreement, certificate, instrument, letter or other document

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contemplated by the Acquisition Agreement or any item referred to in subclause (i) to be entered into, executed or delivered or to become effective in connection with the Acquisition or otherwise entered into, executed or delivered in connection with the Acquisition.

“ Adjusted LIBOR Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, (a) an interest rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) determined by the Administrative Agent to be equal to the LIBOR Rate for such Eurodollar Borrowing in effect for such Interest Period divided by (b) 1 minus the Statutory Reserves (if any) for such Eurodollar Borrowing for such Interest Period.

“ Administrative Agent ” shall have the meaning assigned to such term in the preamble hereto and includes each other person appointed as the successor pursuant to Article IX .

“ Administrative Agent Fee ” shall have the meaning assigned to such term in Section 2.05(b) .

“ Administrative Questionnaire ” shall mean an Administrative Questionnaire in substantially the form of Exhibit A .

“ Affiliate ” shall mean, when used with respect to a specified person, another person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the person specified; provided, however , that, for purposes of Section 6.09 , the term “ Affiliate ” shall also include (i) any person that directly or indirectly owns more than 10% of any class of Equity Interests of the person specified or (ii) any person that is an executive officer or director of the person specified.

“ Agents ” shall mean the Administrative Agent and the Collateral Agent; and “ Agent ” shall mean any of them.

“ Agreement ” shall have the meaning assigned to such term in the preamble hereto.

“ Aggregate Mortgaged Vessel Value ” shall mean the aggregate fair market value of the Mortgaged Vessels as set forth on Schedule 1.01(a) or, if more recent, as determined by the most recent Desktop Appraisal required to be delivered hereunder; provided , however , that, if on any date of determination, (i) there exists a material defect in title with respect to a Mortgaged Vessel or the Mortgage Trustee does not have a perfected Lien in a Mortgaged Vessel, the fair market value of such Mortgaged Vessel for purposes of this definition shall be $0 or (ii) there exists a Lien (other than the Lien of the Mortgage Trustee, Liens permitted by Section 6.02(a) or (b)  (provided that, to the extent such Liens attach to a specific Mortgaged Vessel and reserves are required to be maintained with respect thereto, the amounts of such reserves shall be deducted from the fair market value of such Mortgaged Vessel), or a Permitted Lien that is subordinate to the Lien of the Mortgage Trustee) with respect to a Mortgaged Vessel, the fair market value of such Mortgaged Vessel for the purposes of this definition shall be reduced by the amount of the obligations secured by such Lien.

“ Alternate Base Rate ” shall mean, for any day, a rate per annum (rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the greater of (a) the Base Rate in effect on such day and (b) the Federal Funds Effective Rate in effect on such day plus 0.50%. If the Administrative Agent shall have determined (which determination shall be conclusive absent manifest error) that it is unable to ascertain the Federal Funds Effective Rate for any reason, including the inability or failure of the Administrative Agent to obtain sufficient quotations in accordance with the terms of the definition thereof, the Alternate Base Rate shall be determined without regard to clause (b)  of the

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preceding sentence until the circumstances giving rise to such inability no longer exist. Any change in the Alternate Base Rate due to a change in the Base Rate or the Federal Funds Effective Rate shall be effective on the effective date of such change in the Base Rate or the Federal Funds Effective Rate, respectively.

“ Anti-Terrorism Laws ” shall have the meaning assigned to such term in Section 3.22 .

“ Applicable Fee ” shall mean, for any day, with respect to any Commitment, the applicable percentage set forth in Annex I under the caption “Applicable Fee”.

“ Applicable Margin ” shall mean, for any day, with respect to any Revolving Loan or Term Loan, the applicable percentage set forth in Annex I under the appropriate caption.

“ Applicable Percentage ” shall mean, with respect to any Lender, the percentage of the total Loans and Commitments represented by such Lender’s Loans and Commitments.

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

“ Arranger ” shall have the meaning assigned to such term in the preamble hereto.

“ Asset Sale ” shall mean (a) any conveyance, sale, lease, sublease, assignment, transfer or other disposition (including by way of merger or consolidation and including any Sale and Leaseback Transaction) of any property by Borrower or any of its Subsidiaries, excluding (i) sales of inventory in the ordinary course of business, (ii) dispositions of cash and cash equivalents pursuant to transactions not prohibited by this Agreement, (iii) any issuance or sale of any Equity Interests of Borrower and (iv) any Asset Swap, and (b) any issuance or sale of any Equity Interests of any Subsidiary of Borrower, in each case, to any person other than (i) Borrower, (ii) any Subsidiary Guarantor or (iii) other than for purposes of Section 6.06 , any other Subsidiary; provided that the term Asset Sale shall not include any conveyance, sale, lease, sublease, assignment, transfer or other disposition of property to the extent such property, together with property conveyed, sold, leased, subleased, assigned, transferred or otherwise disposed of in each related transaction has a fair market value of less than $1,000,000.

“ Asset Swap ” shall mean the substantially concurrent purchase and sale of property between the Borrower or any of its Subsidiaries, on one hand, and another person that is not the Borrower or a Subsidiary of the Borrower, on the other hand; provided that (x) any cash received by the Borrower or any of its Subsidiaries shall be treated as the proceeds of an Asset Sale and be applied to the Obligations to the extent required by Section 2.10(c) and (y) any cash paid by the Borrower or any of its Subsidiaries shall, to the extent applicable, be treated as a Capital Expenditure hereunder; provided , further , (i) that the Borrower or such Subsidiary receives no less than fair market value in connection with such transaction, (ii) no Default exists or would exist after giving effect to such purchase and sale, (iii) if such purchase and sale involves the disposition of a Mortgaged Vessel, after giving effect to such purchase and sale, the Collateral Maintenance Ratio would exceed 1.25 to 1.00 and the Domestic Asset Percentage would exceed 50%, (iv) if such purchase and sale involves the disposition of a Mortgaged Vessel and the fair market value of the assets subject to such purchase and sale (inclusive of the fair market value of the assets subject to any related purchase and sale), would exceed $50.0 million, a Current Desktop Appraisal shall be in effect and (v) if the fair market value of such assets would exceed $25.0 million, Borrower shall have

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delivered to the Agents an Officer’s Certificate certifying that such purchase and sale complies with this proviso (which shall have attached thereto reasonably detailed back-up data and calculations showing such compliance).

“ Assignment and Assumption ” shall mean an assignment and assumption entered into by a Lender and an Eligible Assignee (with the consent of any party whose consent is required by Section 10.04(b) or the definition of Eligible Assignee), and accepted by the Administrative Agent, in substantially the form of Exhibit B , or any other form approved by the Administrative Agent.

“ Attributable Indebtedness ” shall mean, when used with respect to any Sale and Leaseback Transaction, as at the time of determination, the present value (discounted at a rate equivalent to Borrower’s then-current weighted average cost of funds for borrowed money as at the time of determination, compounded on a semi-annual basis) of the total obligations of the lessee for rental payments during the remaining term of the lease included in any such Sale and Leaseback Transaction.

“ Auto-Renewal Letter of Credit ” shall have the meaning assigned to such term in Section 2.18(c)(ii) .

“ Available Amount ” shall mean, at any time,

(a) the sum of (i) 50% of the Consolidated Net Income of the Borrower for the period (taken as one accounting period) from the beginning of the fiscal quarter commencing July 1, 2007 to the end of the Borrower’s most recently ended fiscal quarter for which financial statements were required to be delivered pursuant to Section 5.01 (or, if such Consolidated Net Income for such period is a deficit, less 100% of such deficit); plus (ii) 100% of the aggregate Net Cash Proceeds received by the Borrower since the Closing Date from Equity Issuances; plus (iii) $25,000,000; less (iv) payments made by Borrower pursuant to Section 6.08(c) ;

less

(b) the amount thereof theretofore utilized for Investments under clause (i)  of Section 6.04 and Dividends under clause (d)  of Section 6.08 .

“ Base Rate ” shall mean, for any day, a rate per annum that is equal to the corporate base rate of interest established by the Administrative Agent from time to time; each change in the Base Rate shall be effective on the date such change is effective. The corporate base rate is not necessarily the lowest rate charged by the Administrative Agent to its customers.

“ Board ” shall mean the Board of Governors of the Federal Reserve System of the United States.

“ Board of Directors ” shall mean, with respect to any person, (i) in the case of any corporation, the board of directors of such person, (ii) in the case of any limited liability company, the board of managers of such person, (iii) in the case of any partnership, the Board of Directors of the general partner of such person and (iv) in any other case, the functional equivalent of the foregoing.

“ Borrower ” shall have the meaning assigned to such term in the preamble hereto.

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“ Borrowing ” shall mean (a) Loans of the same Class and Type, made, converted or continued on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in effect, or (b) a Swingline Loan.

“ Borrowing Request ” shall mean a request by Borrower in accordance with the terms of Section 2.03 and substantially in the form of Exhibit C , or such other form as shall be approved by the Administrative Agent.

“ Business Day ” shall mean any day other than a Saturday, Sunday or other day on which banks in New York City are authorized or required by law to close; provided, however , that when used in connection with a Eurodollar Loan, the term “ Business Day ” shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.

“ Capital Assets ” shall mean, with respect to any person, all equipment, fixed assets and Real Property or improvements of such person, or replacements or substitutions therefor or additions thereto, that, in accordance with GAAP, have been or should be reflected as additions to property, plant or equipment on the balance sheet of such person.

“ Capital Expenditures ” shall mean, for any period, without duplication, all expenditures made directly or indirectly by the Companies during such period for Capital Assets (whether paid in cash or other consideration, financed by the incurrence of Indebtedness or accrued as a liability).

“ Capital Lease Obligations ” of any person shall mean the obligations of such person to pay rent or other amounts under any lease of (or other arrangement conveying the right to use) real or personal property, or a combination thereof, which obligations are required to be classified and accounted for as capital leases on a balance sheet of such person under GAAP, and the amount of such obligations shall be the capitalized amount thereof determined in accordance with GAAP.

“ Cash Equivalents ” shall mean, as to any person, (a) securities issued, or directly, unconditionally and fully guaranteed or insured, by the United States or any agency or instrumentality thereof ( provided that the full faith and credit of the United States is pledged in support thereof) having maturities of not more than one year from the date of acquisition by such person; (b) time deposits and certificates of deposit of any Lender or any commercial bank having, or which is the principal banking subsidiary of a bank holding company organized under the laws of the United States, any state thereof or the District of Columbia having, capital and surplus aggregating in excess of $500.0 million and a rating of “A” (or such other similar equivalent rating) or higher by at least one nationally recognized statistical rating organization (as defined in Rule 436 under the Securities Act) with maturities of not more than one year from the date of acquisition by such person; (c) repurchase obligations with a term of not more than 30 days for underlying securities of the types described in clause (a)  above entered into with any bank meeting the qualifications specified in clause (b)  above, which repurchase obligations are secured by a valid perfected security interest in the underlying securities; (d) commercial paper issued by any person incorporated in the United States rated at least A-1 or the equivalent thereof by Standard & Poor’s Ratings Group or at least P-1 or the equivalent thereof by Moody’s Investors Service Inc., and in each case maturing not more than one year after the date of acquisition by such person; (e) investments in money market funds substantially all of whose assets are comprised of securities of the types described in clauses (a)  through (d)  above; (f) demand deposit accounts maintained in the ordinary course of business; and (g) other Investments that are permitted by the Investment Policy.

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“ Cash Interest Expense ” shall mean, for any period, Consolidated Interest Expense for such period, less, to the extent included in the calculation of Consolidated Interest Expense, the sum of (a) interest on any debt paid by the increase in the principal amount of such debt including by issuance of additional debt of such kind, (b) amortization of debt issuance costs, debt discount or premium and other financing fees and expenses incurred by Borrower or any of its Subsidiaries, (c) other than to the extent paid in cash, interest on any Indebtedness of Borrower or any of its Subsidiaries of the type described in clause (f) or (k) of the definition of “ Indebtedness ” and (d) gross interest income of Borrower and its Subsidiaries for such period.

“ Casualty Event ” shall mean any involuntary loss of title, any involuntary loss of, damage to or any destruction of, or any condemnation or other taking (including by any Governmental Authority) of, any property of Borrower or any of its Subsidiaries. “ Casualty Event ” shall include but not be limited to any taking of all or any part of any Real Property of any person or any part thereof, in or by condemnation or other eminent domain proceedings pursuant to any Requirement of Law, or by reason of the temporary requisition of the use or occupancy of all or any part of any Real Property of any person or any part thereof by any Governmental Authority, civil or military, or any settlement in lieu thereof.

“ CERCLA ” shall mean the Comprehensive Environmental Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. § 9601 et seq . and all implementing regulations.

A “ Change in Control ” shall be deemed to have occurred if:

(a) at any time a change of control occurs under any Material Indebtedness;

(b) any “ person ” or “ group ” (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for purposes of this clause such person or group shall be deemed to have “beneficial ownership” of all securities that such person or group has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of Voting Stock of Borrower representing more than 35% of the voting power of the total outstanding Voting Stock of Borrower; or

(c) during any period of two consecutive years, individuals who at the beginning of such period constituted the Board of Directors of Borrower (together with any new directors whose election to such Board of Directors or whose nomination for election was approved by a vote of a majority of the members of the Board of Directors of Borrower, which members comprising such majority are then still in office and were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors of Borrower.

For purposes of this definition, a person shall not be deemed to have beneficial ownership of Equity Interests subject to a stock purchase agreement, merger agreement or similar agreement until the consummation of the transactions contemplated by such agreement.

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

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“ Charges ” shall have the meaning assigned to such term in Section 10.14 .

“ Class ,” when used in reference to any Loan or Borrowing, refers to whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans, Term Loans, Incremental Term Loans of a new tranche or Swingline Loans and, when used in reference to any Commitment, refers to whether such Commitment is a Revolving Commitment, Term Loan Commitment or Swingline Commitment, in each case, under this Agreement as originally in effect or pursuant to Section 2.19 , of which such Loan, Borrowing or Commitment shall be a part.

“ Classification Society ” shall mean one of the members of the International Association of Classification Societies.

“ Closing Date ” shall mean the date of the initial Credit Extension hereunder.

“ Closing Material Adverse Effect ” shall mean a Company Material Adverse Effect (as defined in the Acquisition Agreement as in effect on March 18, 2007).

“ Code ” shall mean the Internal Revenue Code of 1986, as amended.

“Co-Documentation Agent” shall have the meaning assigned to such term in the preamble hereto.

“ Collateral ” shall mean, collectively, all of the Security Agreement Collateral, the Mortgaged Vessels and all other property of whatever kind and nature subject or purported to be subject from time to time to a Lien under any Security Document.

“ Collateral Agent ” shall have the meaning assigned to such term in the preamble hereto.

“ Collateral Maintenance Ratio ” shall mean, as of the applicable date of determination, the ratio of (a) the Aggregate Mortgaged Vessel Value to (b) the sum of all Loans outstanding, LC Exposure and unused Revolving Commitments.

“ Commercial Letter of Credit ” shall mean any letter of credit or similar instrument issued for the purpose of providing credit support in connection with the purchase of materials, goods or services by Borrower or any of its Subsidiaries.

“ Commitment ” shall mean, with respect to any Lender, such Lender’s Revolving Commitment, Term Loan Commitment or Swingline Commitment, and any Commitment to make Term Loans or Revolving Loans extended by such Lender as provided in Section 2.19 .

“ Commitment Fee ” shall have the meaning assigned to such term in Section 2.05(a) .

“ Companies ” shall mean Borrower and its Subsidiaries; and “ Company ” shall mean any one of them.

“ Compliance Certificate ” shall mean a certificate of a Financial Officer substantially in the form of Exhibit D .

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“ Confidential Information Memorandum ” shall mean that certain confidential information memorandum dated as of June, 2007.

“ Consolidated Amortization Expense ” shall mean, for any period, the amortization expense of Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“ Consolidated Current Assets ” shall mean, as at any date of determination, the total assets of Borrower and its Subsidiaries which may properly be classified as current assets on a consolidated balance sheet of Borrower and its Subsidiaries in accordance with GAAP, excluding cash, Cash Equivalents and short term investments (as determined in accordance with GAAP).

“ Consolidated Current Liabilities ” shall mean, as at any date of determination, the total liabilities of Borrower and its Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Loans) on a consolidated balance sheet of Borrower and its Subsidiaries in accordance with GAAP.

“ Consolidated Depreciation Expense ” shall mean, for any period, the depreciation expense of Borrower and its Subsidiaries for such period, determined on a consolidated basis in accordance with GAAP.

“ Consolidated EBITDA ” shall mean, for any period, Consolidated Net Income for such period, adjusted by

(a) excluding therefrom , in each case only to the extent (and in the same proportion) included in determining such Consolidated Net Income and without duplication (i) any gain (or loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), realized during such period by Borrower or any of its Subsidiaries upon any Asset Sale (other than any dispositions in the ordinary course of business) by Borrower or any of its Subsidiaries, and (ii) any extraordinary gain (or extraordinary loss), together with any related provisions for taxes on any such gain (or the tax effect of any such loss), recorded or recognized by Borrower or any of its Subsidiaries during such period,

(b) adding thereto , in each case only to the extent (and in the same proportion) deducted in determining such Consolidated Net Income and without duplication (and with respect to the portion of Consolidated Net Income attributable to any Non-Guarantor Subsidiary only if a corresponding amount would be permitted at the date of determination to be distributed to Borrower, directly or indirectly, by such Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its Organizational Documents and all agreements, instruments and Requirements of Law applicable to such Subsidiary or its equityholders):

(i) Consolidated Interest Expense for such period,

(ii) Consolidated Amortization Expense for such period,

(iii) Consolidated Depreciation Expense for such period,

(iv) Consolidated Tax Expense for such period,

(v) costs and expenses directly incurred in connection with the Transactions (not to exceed $60.0 million), and

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(vi) the aggregate amount of all other non-cash charges reducing Consolidated Net Income (excluding any non-cash charge that results in an accrual of a reserve for cash charges in any future period) for such period,

(c) subtracting therefrom the aggregate amount of all non-cash items increasing Consolidated Net Income (other than the accrual of revenue or recording of receivables in the ordinary course of business) for such period;

provided that, to the extent any such period includes (i) any fiscal quarter ending prior to the Closing Date, Consolidated EBITDA shall be deemed to be, other than for purposes of Sections 4.01(r) and 5.01 , $168.4 million for each such fiscal quarter or (ii) the period commencing on July 1, 2007 and ending on the date immediately preceding the Closing Date, Consolidated EBITDA shall be deemed to be, other than for purposes of Section 5.01 , an amount equal to the sum of $14.3 million plus the actual Consolidated EBITDA for such period.

Other than for purposes of calculating Excess Cash Flow, Consolidated EBITDA shall be calculated on a Pro Forma Basis to give effect to any Permitted Acquisition (other than the Acquisition) and Asset Sales (other than any dispositions in the ordinary course of business) consummated at any time on or after the first day of the Test Period and prior to the date of determination (including any related Incurrence and/or repayment of Indebtedness) as if the Acquisition and each such Permitted Acquisition (and any such related transaction) had been effected on the first day of such period and as if each such Asset Sale (and any such related transaction) had been consummated on the day prior to the first day of such period.

“ Consolidated Fixed Charge Coverage Ratio ” shall mean, for any Test Period, the ratio of (a) Consolidated EBITDA for such Test Period to (b) Consolidated Fixed Charges for such Test Period.

“ Consolidated Fixed Charges ” shall mean, for any period, the sum, without duplication, of

(a) Consolidated Interest Expense for such period;

(b) the aggregate amount of Capital Expenditures for such period (other than (i) Permitted Acquisitions or (ii) to the extent financed by (A) the Net Cash Proceeds of Equity Issuances or Indebtedness or (B) up to $110.0 million of unrestricted cash and Cash Equivalents of the Loan Parties;

(c) all cash payments in respect of income taxes made during such period (net of any cash refund in respect of income taxes actually received during such period), other than any such payments in respect of the Settlement Payments resulting from the consummation of the Acquisition;

(d) the principal amount of all scheduled amortization payments on all Indebtedness (including the principal component of all Capital Lease Obligations) of Borrower and its Subsidiaries for such period (as determined on the first day of the respective period);

(e) the product of (i) all dividend payments on any series of Disqualified Capital Stock of Borrower or any of its Subsidiaries (other than dividend payments to Borrower or any of its Subsidiaries) multiplied by (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of Borrower and its Subsidiaries, expressed as a decimal; and

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(f) the product of (i) all cash dividend payments on any Preferred Stock (other than Disqualified Capital Stock) of Borrower or any of its Subsidiaries (other than dividend payments to Borrower or any of its Subsidiaries) multiplied by (ii) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined federal, state and local statutory tax rate of Borrower and its Subsidiaries, expressed as a decimal;

provided that, to the extent any such period includes (i) any fiscal quarter ending prior to the Closing Date, Consolidated Fixed Charges shall be deemed to be $59.6 million for each such fiscal quarter or (ii) the period commencing on July 1, 2007 and ending on the date immediately preceding the Closing Date, Consolidated Fixed Charges shall be deemed to be an amount equal to the sum of $4.8 million plus the actual Consolidated Fixed Charges for such period.

“ Consolidated Indebtedness ” shall mean, as at any date of determination, the aggregate amount of all Indebtedness, determined on a consolidated basis in accordance with GAAP, other than (a) Indebtedness described in clause (h)  of the definition thereof to the extent the relevant Hedging Agreement has not terminated, (b) the undrawn or unmatured portion of Indebtedness described in clause (j)  of the definition thereof (other than bankers’ acceptances), and (c) Indebtedness permitted by Section 6.01(j) .

“ Consolidated Interest Expense ” shall mean, for any period, the total consolidated interest expense of Borrower and its Subsidiaries for such period determined on a consolidated basis in accordance with GAAP; provided that (a) to the extent directly related to the Transactions or the financing thereof, debt issuance costs, debt discount or premium and other financing fees and expenses shall be excluded from the calculation of Consolidated Interest Expense and (b) Consolidated Interest Expense shall be calculated after giving effect to Hedging Agreements related to interest rates (including associated costs), but excluding unrealized gains and losses with respect to Hedging Agreements related to interest rates.

Consolidated Interest Expense shall be calculated on a Pro Forma Basis to give effect to any Indebtedness (other than Indebtedness incurred for ordinary course working capital needs under ordinary course revolving credit facilities) incurred, assumed or permanently repaid or extinguished at any time on or after the first day of the Test Period and prior to the date of determination in connection with any Permitted Acquisitions (other than the Acquisition) and Asset Sales (other than any dispositions in the ordinary course of business) as if such incurrence, assumption, repayment or extinguishing had been effected on the first day of such period.

“ Consolidated Net Income ” shall mean, for any period, the consolidated net income (or loss) of Borrower and its Subsidiaries determined on a consolidated basis in accordance with GAAP; provided that there shall be excluded from such net income (to the extent otherwise included therein), without duplication:

(a) the net income (or loss) of any person (other than a Subsidiary of Borrower) in which any person other than Borrower and its Subsidiaries has an ownership interest, except to the extent that cash in an amount equal to that portion of such income that has actually been received by Borrower or (subject to clause (b)  below) any of its Subsidiaries during such period;

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(b) the net income of any Non-Guarantor Subsidiary during such period to the extent that the declaration or payment of dividends or similar distributions by such Subsidiary of that income is not permitted by operation of the terms of its Organizational Documents or any agreement, instrument or Requirement of Law applicable to that Subsidiary during such period, except that Borrower’s equity in net loss of any such Subsidiary for such period shall be included in determining Consolidated Net Income;

(c) unrealized gains and losses due solely to fluctuations in currency values and the related tax effects determined in accordance with GAAP for such period;

(d) earnings resulting from any reappraisal, revaluation or write-up of assets; and

(e) unrealized gains and losses with respect to Hedging Obligations for such period.

“ Consolidated Net Tangible Assets ” shall mean, with respect to any person (the “ Subject Person ”) and its applicable Subsidiaries, the total assets of such persons which would be shown as assets on a consolidated balance sheet of the Subject Person and such Subsidiaries, prepared in accordance with GAAP, after eliminating, without duplication, (i) goodwill, patents, trade names, trademarks, copyrights, unamortized debt discount, franchises and other assets which may be properly classified as intangible assets in accordance with GAAP, (ii) all reserves or other properly deductible items with respect to such assets, (iii) the total liabilities of the Subject Person and such Subsidiaries which may properly be classified as current liabilities (other than the current portion of any Loans) in accordance with GAAP and (iv) all amounts properly attributable to minority interest, if any, in the stock and surplus of such Subsidiaries.

“ Consolidated Tax Expense ” shall mean, for any period, the tax expense of Borrower and its Subsidiaries, for such period, determined on a consolidated basis in accordance with GAAP.

“ Contingent Obligation ” shall mean, as to any person, any obligation, agreement, understanding or arrangement of such person guaranteeing or intended to guarantee any Indebtedness, leases, dividends or other obligations (“ primary obligations ”) of any other person (the “ primary obligor ”) in any manner, whether directly or indirectly, including any obligation of such person, whether or not contingent, (a) to purchase any such primary obligation or any property constituting direct or indirect security therefor; (b) to advance or supply funds (i) for the purchase or payment of any such primary obligation or (ii) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor; (c) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation; (d) with respect to bankers’ acceptances, letters of credit and similar credit arrangements, until a reimbursement obligation arises (which reimbursement obligation shall constitute Indebtedness); or (e) otherwise to assure or hold harmless the holder of such primary obligation against loss in respect thereof; provided, however , that the term “ Contingent Obligation ” shall not include endorsements of instruments for deposit or collection in the ordinary course of business or any product warranties. The amount of any Contingent Obligation shall be deemed to be an amount equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made (or, if less, the maximum amount of such primary obligation for which such person may be liable, whether singly or jointly, pursuant to the terms of the instrument evidencing such Contingent Obligation) or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof (assuming such person is required to perform thereunder) as determined by such person in good faith.

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“ Control ” shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “ Controlling ” and “ Controlled ” shall have meanings correlative thereto.

“ Co-Syndication Agent ” shall have the meaning assigned to such term in the preamble hereto.

“ Credit Extension ” shall mean, as the context may require, (i) the making of a Loan by a Lender or (ii) the issuance of any Letter of Credit, or the increase, extension or renewal of any existing Letter of Credit, by the Issuing Bank.

“ Debt Issuance ” shall mean the incurrence by Borrower or any of its Subsidiaries of any Indebtedness after the Closing Date (other than as permitted by Section 6.01 ).

“ Debt Service ” shall mean, for any period, Cash Interest Expense for such period plus scheduled principal amortization of all Indebtedness for such period.

“ Default ” shall mean any event, occurrence or condition which is, or upon notice, lapse of time or both would constitute, an Event of Default.

“ Default Rate ” shall have the meaning assigned to such term in Section 2.06(c) .

“ Delta Towing Assets ” shall mean, collectively, the property used primarily in the furtherance of the business of Delta Towing Holdings, LLC, a Delaware limited liability company, and Delta Towing, LLC, a Delaware limited liability company.

“ Delta Towing Equity ” shall mean, collectively, the Equity Interests issued by Delta Towing Holdings, LLC, a Delaware limited liability company, and Delta Towing, LLC, a Delaware limited liability company.

“ Delta Towing Joint Venture ” shall mean any one or more persons that, collectively, acquire (whether by purchase, merger, capital contribution or otherwise), or are formed solely for the purpose of acquiring, all or substantially all of the Delta Towing Assets or the Delta Towing Equity, provided that the Borrower, directly or indirectly, owns (on a pro forma basis after giving effect to such acquisition) a portion of the Equity Interest of each such person.

“ Desktop Appraisal ” shall mean a desktop appraisal performed by a third party selected by Borrower and reasonably acceptable to the Administrative Agent, and delivered to the Administrative Agent from time to time, as required hereunder, setting forth the fair market value of each of the Mortgaged Vessels, using consistent appraisal methodology reasonably satisfactory to the Administrative Agent, and a “ Current Desktop Appraisal ” means a Desktop Appraisal performed concurrently with or within twelve months prior to the date a Current Desktop Appraisal is required to be used to test Borrower’s compliance with the Collateral Maintenance Ratio hereunder.

“ Disqualified Capital Stock ” shall mean any Equity Interest which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, (a) matures (excluding any maturity as the result of an optional redemption

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by the issuer thereof) or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or is redeemable at the option of the holder thereof, in whole or in part, on or prior to the first anniversary of the Final Maturity Date, (b) is convertible into or exchangeable (unless at the sole option of the issuer thereof) for (i) debt securities or (ii) any Equity Interests referred to in clause (a)  above, in each case at any time on or prior to the first anniversary of the Final Maturity Date, or (c) contains any repurchase obligation which may come into effect prior to payment in full of all Obligations; provided, however , that any Equity Interests that would not constitute Disqualified Capital Stock but for provisions thereof giving holders thereof (or the holders of any security into or for which such Equity Interests is convertible, exchangeable or exercisable) the right to require the issuer thereof to redeem such Equity Interests upon the occurrence of a change in control or an asset sale occurring prior to the first anniversary of the Final Maturity Date shall not constitute Disqualified Capital Stock if such Equity Interests provide that the issuer thereof will not redeem any such Equity Interests pursuant to such provisions prior to the repayment in full of the Obligations.

“ Dividend ” with respect to any person shall mean that such person has declared or paid a dividend or returned any equity capital to the holders of its Equity Interests or made any other distribution, payment or delivery of property (other than Qualified Capital Stock of such person) or cash to the holders of its Equity Interests as such, or redeemed, retired, purchased or otherwise acquired, directly or indirectly, for consideration any of its Equity Interests outstanding (or any options or warrants issued by such person with respect to its Equity Interests), or shall have permitted any of its Subsidiaries to purchase or otherwise acquire for consideration any of the Equity Interests of such person outstanding (or any options or warrants issued by such person with respect to its Equity Interests). Without limiting the foregoing, “ Dividends ” with respect to any person shall also include all payments made by such person with respect to (A) any stock appreciation rights plans, equity incentive or achievement plans or any similar plans or (B) any Earn-out Obligation.

“ dollars ” or “ $ ” shall mean lawful money of the United States.

“ Domestic Asset Percentage ” shall mean, as of the applicable date of determination, the percentage obtained by dividing (a) Consolidated Net Tangible Assets of Borrower and the Subsidiary Guarantors as of the last day of the most recently completed Test Period by (b) Consolidated Net Tangible Assets of Borrower and all of its Subsidiaries as of such last day.

“ Domestic Subsidiary ” shall mean any Subsidiary that is organized or existing under the laws of the United States, any state thereof or the District of Columbia.

“ Earn-out Obligations ” shall mean, with respect to any person, obligations of such person arising from the acquisition of a business or a line of business (whether pursuant to an acquisition of Equity Interests or assets, the consummation of a merger or consolidation or otherwise) and payable to the seller or sellers thereof, that are contingent upon the attainment of certain financial thresholds (whether based on revenue or otherwise).

“ Eligible Assignee ” shall mean (a) if the assignment does not include assignment of a Revolving Commitment, (i) any Lender, (ii) an Affiliate of any Lender, (iii) an Approved Fund and (iv) any other person approved by the Administrative Agent and Borrower (such approvals not to be unreasonably withheld or delayed) and (b) if the assignment includes assignment of a Revolving Commitment, (i) any Revolving Lender and (ii) any other person approved by the Administrative Agent, the Issuing Bank, the Swingline Lender and Borrower (such approvals not to be unreasonably withheld or delayed); provided that (x) no approval of Borrower shall be required during the continuance of a Default, (y) “ Eligible Assignee ” shall not include Borrower or any of its Affiliates or Subsidiaries or any natural person and (z) subject to clause (x)  above, without Borrower’s

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approval (such approval not to be unreasonably withheld or delayed) “ Eligible Assignee ” shall not include any person that after such assignment would hold more than 15% of the sum of all Loans outstanding, LC Exposure and unused Revolving Loan Commitments.

“ Embargoed Person ” shall have the meaning assigned to such term in Section 6.19 .

“ Environment ” shall mean ambient air, indoor air, surface water and groundwater (including potable water, navigable water and wetlands), the land surface or subsurface strata, natural resources, the workplace or as otherwise defined in any Environmental Law.

“ Environmental Claim ” shall mean any written claim, notice, demand or order, action, suit, proceeding or other written communication alleging liability for or obligation with respect to any investigation, remediation, removal, cleanup, response, corrective action, damages to natural resources, personal injury, property damage, fines, penalties or other costs resulting from, related to or arising out of (i) the presence, Release or threatened Release in or into the Environment of Hazardous Material at any location or (ii) any violation or alleged violation of any Environmental Law, and shall include any claim seeking damages, contribution, indemnification, cost recovery, compensation or injunctive relief resulting from, related to or arising out of the presence, Release or threatened Release of Hazardous Material or alleged injury or threat of injury to health, safety or the Environment.

“ Environmental Law ” shall mean any and all Governmental Requirements pertaining in any way to public health or the Environment, in effect in any and all jurisdictions in which the Borrower or any Subsidiary is conducting or at any time has conducted business, or where any Property of the Borrower or any Subsidiary is located, including without limitation, the Oil Pollution Act of 1990 (“ OPA ”), as amended, the Clean Air Act, as amended, CERCLA, as amended, the Federal Water Pollution Control Act, as amended, the Occupational Safety and Health Act of 1970, as amended, the Resource Conservation and Recovery Act of 1976 (“ RCRA ”), as amended, the Safe Drinking Water Act, as amended, the Toxic Substances Control Act, as amended, the Superfund Amendments and Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended, and other environmental conservation or protection Governmental Requirements. The term “oil” shall have the meaning specified in OPA, the terms “hazardous substance” and “release” (or “threatened release”) have the meanings specified in CERCLA, the terms “solid waste” and “disposal” (or “disposed”) have the meanings specified in RCRA and the term “oil and gas waste” shall have the meaning specified in Section 91.1011 of the Texas Natural Resources Code (“ Section 91.1011 ”); provided , however , that (a) in the event either OPA, CERCLA, RCRA or Section 91.1011 is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and (b) to the extent the laws of the state or other jurisdiction in which any Property of the Borrower or any Subsidiary is located establish a meaning for “oil,” “hazardous substance,” “solid waste,” “disposal” or “oil and gas waste” which is broader than that specified in either OPA, CERCLA, RCRA or Section 91.1011, such broader meaning shall apply, and any and all Environmental Permits.

“ Environmental Permit ” shall mean any permit, license, approval, registration, notification, exemption, consent or other authorization required by or from a Governmental Authority under Environmental Law.

“ Equity Interest ” shall mean, with respect to any person, any and all shares, interests, participations or other equivalents, including membership interests (however designated, whether voting or nonvoting), of equity of such person, including, if such person is a partnership, partnership interests (whether general or limited) and any other interest or participation that confers

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on a person the right to receive a share of the profits and losses of, or distributions of property of, such partnership, whether outstanding on the date hereof or issued after the Closing Date, but excluding debt securities convertible or exchangeable into such equity.

“ Equity Issuance ” shall mean, without duplication, (i) any issuance or sale by Borrower after the Closing Date of any Equity Interests in Borrower (including any Equity Interests issued upon exercise of any warrant or option) or any warrants or options to purchase Equity Interests or (ii) any contribution to the capital of Borrower; provided, however , that an Equity Issuance shall not include any incurrence of Indebtedness or issuance of Disqualified Capital Stock.

“ ERISA ” shall mean the Employee Retirement Income Security Act of 1974, as the same may be amended from time to time.

“ ERISA Affiliate ” shall mean, with respect to any person, any trade or business (whether or not incorporated) that, together with such person, is treated as a single employer under Section 414 of the Code.

“ ERISA Event ” shall mean (a) any “reportable event,” as defined in Section 4043 of ERISA or the regulations issued thereunder, with respect to a Plan (other than an event for which the 30-day notice period is waived by regulation); (b) the existence with respect to any Plan of an “accumulated funding deficiency” (as defined in Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the failure to make by its due date a required payment under Section 412 of the Code with respect to any Plan or the failure to make any required contribution to a Multiemployer Plan; (d) the filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of the minimum funding standard with respect to any Plan; (e) the incurrence by any Company or any of its ERISA Affiliates of any liability under Title IV of ERISA with respect to the termination of any Plan; (f) the receipt by any Company or any of its ERISA Affiliates from the PBGC or a plan administrator of any notice relating to the intention to terminate any Plan or Plans or to appoint a trustee to administer any Plan, or the occurrence of any event or condition which could reasonably be expected to constitute grounds under ERISA for the termination of, or the appointment of a trustee to administer, any Plan; (g) the incurrence by any Company or any of its ERISA Affiliates of any liability with respect to the withdrawal from any Plan or Multiemployer Plan; (h) the receipt by any Company or its ERISA Affiliates of any notice, concerning the imposition of Withdrawal Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA; (i) the “substantial cessation of operations” within the meaning of Section 4062(e) of ERISA with respect to a Plan; (j) the making of any amendment to any Plan which could result in the imposition of a lien or the posting of a bond or other security; (k) the occurrence of a nonexempt prohibited transaction (within the meaning of Section 4975 of the Code or Section 406 of ERISA) with respect to a Plan which could reasonably be expected to result in liability to any Company and (l) on and after the effectiveness of the Pension Act, no Plan is, or is expected to be, in “at risk” status (within the meaning of Title IV of ERISA).

“ Eurodollar Borrowing ” shall mean a Borrowing comprised of Eurodollar Loans.

“ Eurodollar Loan ” shall mean any Eurodollar Revolving Loan or Eurodollar Term Loan.

“ Eurodollar Revolving Borrowing ” shall mean a Borrowing comprised of Eurodollar Revolving Loans.

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“ Eurodollar Revolving Loan ” shall mean any Revolving Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II .

“ Eurodollar Term Loan ” shall mean any Term Loan bearing interest at a rate determined by reference to the Adjusted LIBOR Rate in accordance with the provisions of Article II .

“ Events of Default ” shall have the meaning assigned to such term in Section 8.01 .

“ Excess Amount ” shall have the meaning assigned to such term in Section 2.10(h) .

“ Excess Cash Flow ” shall mean, for any Excess Cash Flow Period, Consolidated EBITDA for such Excess Cash Flow Period, minus , without duplication:

(a) Debt Service actually paid in cash for such Excess Cash Flow Period;

(b) any prepayments of Term Loans, and any prepayments of Revolving Loans and Swingline Loans to the extent accompanied by corresponding permanent reductions in the Revolving Commitments, during such Excess Cash Flow Period, in each case other than (i) any voluntary prepayments and (ii) amounts already reflected in Debt Service;

(c) Capital Expenditures during such Excess Cash Flow Period (excluding Capital Expenditures made in such Excess Cash Flow Period where a certificate in the form contemplated by the following clause (d)  was previously delivered) that are paid in cash to the extent not financed with the proceeds of Indebtedness or Equity Issuances or other proceeds that would not be included in Consolidated EBITDA;

(d) Capital Expenditures that Borrower or any of its Subsidiaries shall, during such Excess Cash Flow Period, become obligated to make but that are not made during such Excess Cash Flow Period; provided that Borrower shall deliver a certificate to the Administrative Agent not later than 90 days after the end of such Excess Cash Flow Period, signed by a Responsible Officer of Borrower and certifying that such Capital Expenditures were made during such 90-day period and were not financed with the proceeds of Indebtedness or Equity Issuances or other proceeds that would not be included in Consolidated EBITDA;

(e) the aggregate amount of expenditures made in cash during such period pursuant to Sections 6.04 (i)  and (k)  (excluding, for the avoidance of doubt, such investments in Subsidiaries), Section  6.07 and Section  6.08(d) to the extent not financed with the proceeds of Indebtedness or Equity Issuances or other proceeds that would not be included in Consolidated EBITDA;

(f) taxes of Borrower and its Subsidiaries that were paid in cash during such Excess Cash Flow Period or will be paid within six months after the end of such Excess Cash Flow Period and for which reserves have been established;

(g) the absolute value of the difference, if negative, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) over the amount of Net Working Capital at the end of such Excess Cash Flow Period;

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(h) losses excluded from the calculation of Consolidated EBITDA by operation of clause (a)  of the definition thereof that are paid in cash during such Excess Cash Flow Period; and

(i) to the extent added to determine Consolidated EBITDA, all items that did not result from a cash payment to Borrower or any of its Subsidiaries on a consolidated basis during such Excess Cash Flow Period;

provided that any amount deducted pursuant of any of the foregoing clauses that will be paid after the close of such Excess Cash Flow Period shall not be deducted again in a subsequent Excess Cash Flow Period; plus , without duplication:

(i) the difference, if positive, of the amount of Net Working Capital at the end of the prior Excess Cash Flow Period (or the beginning of the Excess Cash Flow Period in the case of the first Excess Cash Flow Period) over the amount of Net Working Capital at the end of such Excess Cash Flow Period;

(ii) any return on investments received in cash (other than from a Subsidiary) during such period, which investments were made pursuant to Section 6.04 (i)  or (k) ; and

(iii) income or gain excluded from the calculation of Consolidated EBITDA by operation of clause (a)  of the definition thereof that is realized in cash during such Excess Cash Flow Period (except to the extent such gain is subject to Section 2.10(c) , (d)  or (f) ).

“ Excess Cash Flow Period ” shall mean each fiscal year of Borrower, commencing with the fiscal year ending December 31, 2008.

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

“ Excluded Taxes ” shall mean, with respect to the Administrative Agent, any Lender, the Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of Borrower hereunder, (a) Taxes imposed on or measured by its overall net income (however denominated), net profits or net worth, and franchise and similar Taxes, imposed on it (in lieu of net income Taxes) and branch profits Taxes imposed on it by the United States or by a jurisdiction (or any political subdivision thereof) as a result of the recipient being organized, having its principal office or otherwise doing business or, in the case of any Lender, its applicable lending office in such jurisdiction and (b) in the case of a Foreign Lender, any U.S. federal withholding Tax that (i) is imposed on amounts payable to such Foreign Lender at the time such Foreign Lender becomes a party hereto (or designates a new lending office), except (x) to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of designation of a new lending office (or assignment), to receive additional amounts from Borrower with respect to such withholding tax pursuant to Sections 2.15(a) or 2.12(a) or (y) if such Foreign Lender is an assignee pursuant to a request by Borrower under Section 2.16 ; provided that this subclause (b)(i) shall not apply to any Tax imposed on a Lender in connection with an interest or participation in any Loan or other obligation that such Lender was required to acquire pursuant to Section 2.14(d) , or (ii) is attributable to such Foreign Lender’s failure to comply with Section 2.15(e) .

“ Executive Order ” shall have the meaning assigned to such term in Section 3.22 .

“ Existing Lien ” shall have the meaning assigned to such term in Section 6.02(c) .

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“ Federal Funds Effective Rate ” shall mean, for any day, the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System of the United States arranged by federal funds brokers, as published on the next succeeding Business Day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a Business Day, the average of the quotations for the day for such transactions received by the Administrative Agent from three federal funds brokers of recognized standing selected by it.

“ Fees ” shall mean the Commitment Fees, the Administrative Agent Fees, the LC Participation Fees and the Fronting Fees.

“ Final Maturity Date ” shall mean the latest of the Revolving Maturity Date, the Term Loan Maturity Date and any Incremental Term Loan Maturity Date applicable to existing Incremental Term Loans, as of any date of determination.

“ Financial Officer ” of any person shall mean the chief financial officer, principal accounting officer, treasurer or controller of such person.

“ Flag Jurisdiction Transfer ” shall mean the transfer of the registration and flag of a Vessel (including a Mortgaged Vessel) from one Acceptable Flag Jurisdiction to another Acceptable Flag Jurisdiction, provided that the following conditions are satisfied with respect to such transfer:

(i) On each Flag Jurisdiction Transfer Date with respect to a Mortgaged Vessel, the Loan Party which is consummating a Flag Jurisdiction Transfer on such date shall have duly authorized, executed and delivered, and caused to be recorded (or made arrangements satisfactory to the Administrative Agent for the recording thereof) in the appropriate vessel registry a Ship Mortgage, substantially in the form of Exhibit N-1 or N-2 , as applicable (or such other form as shall be reasonably satisfactory to the Administrative Agent), with respect to the Mortgaged Vessel being transferred (the “ Transferred Vessel ”) and the Ship Mortgage shall be effective to create in favor of the Mortgage Trustee for the benefit of the Secured Parties a legal, valid and enforceable first priority security interest, in and lien upon such Transferred Vessel, subject only to Permitted Liens. All filings, deliveries of instruments and other actions necessary or desirable in the reasonable opinion of the Collateral Agent to perfect and preserve such security interests shall have been duly effected (or arrangements satisfactory to the Administrative Agent for the effectiveness thereof shall have been made) and the Collateral Agent shall have received evidence thereof in form and substance reasonably satisfactory to the Collateral Agent;

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

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(iii) On each Flag Jurisdiction Transfer Date (or such later date as is acceptable to the Administrative Agent) with respect to a Mortgaged Vessel, the Administrative Agent shall have received: (x) certificates of ownership or abstracts of title from appropriate authorities showing (or confirmation updating previously reviewed certificates and indicating) the registered ownership of the Transferred Vessel transferred on such date by the relevant Subsidiary Guarantor and (y) the results of maritime registry searches with respect to the Transferred Vessel transferred on such date, indicating no record liens other than Liens in favor of the Mortgage Trustee and Permitted Liens;

(iv) On or prior to each Flag Jurisdiction Transfer Date with respect to a Mortgaged Vessel, a certificate, dated as of a recent date, signed by the President, any Vice President, the Treasurer or an authorized manager, member or general partner of the Loan Party commencing such Flag Jurisdiction Transfer, certifying that (A) all necessary governmental (domestic and foreign) and third party approvals and/or consents in connection with the Flag Jurisdiction Transfer being consummated on such date and otherwise referred to herein shall have been obtained and remain in effect, (B) there exists no judgment, order, injunction or other restraint prohibiting or imposing materially adverse conditions upon such Flag Jurisdiction Transfer and (C) any other matters the Administrative Agent may reasonably request;

provided further that the conditions set forth in the foregoing clauses (i) , (ii) , (iii)  and (iv)  shall not be required for a Flag Jurisdiction Transfer (x) if, after giving effect to such Flag Jurisdiction Transfer, the Collateral Maintenance Ratio would exceed 1.25 to 1.00 and the Domestic Asset Percentage would exceed 50% and (y) if the fair market value of the Transferred Vessel or Transferred Vessels exceeds $25.0 million, the Agents shall have received an Officer’s Certificate certifying that such proposed Flag Jurisdiction Transfer complies with the conditions of this definition (with such detailed back-up data and calculations as the Agent may reasonably request).

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

“ Foreign Lender ” shall mean any Lender that is not a United States person (as such term is defined in Section 7701(a)(30) of the Code) for United States federal income tax purposes.

“ Foreign Plan ” shall mean any employee benefit plan, program, policy, arrangement or agreement maintained or contributed to by any Company with respect to employees employed outside the United States.

“ Foreign Subsidiary ” shall mean a Subsidiary that is organized under the laws of a jurisdiction other than the United States or any state thereof or the District of Columbia.

“ Fronting Fee ” shall have the meaning assigned to such term in Section 2.05(c) .

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

“ GAAP ” shall mean generally accepted accounting principles in the United States applied on a consistent basis.

“ Governmental Authority ” shall mean the government of the United States or any other nation, or of any political subdivision thereof, whether state, provincial or local, and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising

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executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank).

“ Governmental Real Property Disclosure Requirements ” shall mean any Requirement of Law of any Governmental Authority requiring notification of the buyer, lessee, mortgagee, assignee or other transferee of any Real Property, or notification, registration or filing to or with any Governmental Authority, in connection with the sale, lease, mortgage, assignment or other transfer (including any transfer of control) of any Real Property, of the actual or threatened presence or Release in or into the Environment, or the use, disposal or handling of Hazardous Material on, at, under or near the Real Property to be sold, leased, mortgaged, assigned or transferred.

“ Guaranteed Obligations ” shall have the meaning assigned to such term in Section 7.01 .

“ Guarantees ” shall mean the guarantees issued pursuant to Article VII by the Subsidiary Guarantors.

“ Guarantors ” shall mean the Subsidiary Guarantors.

“ Hazardous Materials ” shall mean the following: hazardous substances; hazardous wastes; polychlorinated biphenyls (“ PCBs ”) or any substance or compound containing PCBs; asbestos or any asbestos-containing materials in any form or condition; radon or any other radioactive materials including any source, special nuclear or by-product material; petroleum, crude oil or any fraction thereof; and any other pollutant or contaminant or chemicals, wastes, materials, compounds, constituents or substances, subject to regulation or which can give rise to liability under any Environmental Laws.

“ Hedging Agreement ” shall mean any swap, cap, collar, forward purchase or similar agreements or arrangements dealing with interest rates, currency exchange rates or commodity prices, either generally or under specific contingencies.

“ Hedging Obligations ” shall mean obligations under or with respect to Hedging Agreements.

“ Increase Effective Date ” shall have the meaning assigned to such term in Section 2.19(a) .

“ Incremental Term Loan ” shall have the meaning assigned to such term in Section 2.19(c) .

“ Incremental Term Loan Commitment ” shall have the meaning assigned to such term in Section 2.19(a) .

“ Incremental Term Loan Maturity Date ” shall have the meaning assigned to such term in Section 2.19(c) .

“ Increase Joinder ” shall have the meaning assigned to such term in Section 2.19(c) .

“ Incur ” shall have the meaning assigned to such term in Section 6.01 , and the terms “ Incurred ” and “ Incurrence ” shall have meanings correlative thereto.

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“ Indebtedness ” of any person shall mean, without duplication, (a) all obligations of such person for borrowed money or advances; (b) all obligations of such person evidenced by bonds, debentures, notes or similar instruments; (c) all obligations of such person upon which interest charges are customarily paid or accrued; (d) all obligations of such person under conditional sale or other title retention agreements relating to property purchased by such person; (e) all obligations of such person issued or assumed as the deferred purchase price of property or services (excluding trade accounts payable and accrued obligations incurred in the ordinary course of business and not overdue by more than 90 days); (f) all Indebtedness of others secured by any Lien on property owned or acquired by such person, whether or not the obligations secured thereby have been assumed, but limited to the fair market value of such property; (g) all Purchase Money Obligations (including Capital Lease Obligations) and synthetic lease obligations of such person; (h) net Hedging Obligations of such person; (i) all Attributable Indebtedness of such person; (j) all obligations (contingent or otherwise) of such person for the reimbursement of any obligor in respect of letters of credit, letters of guaranty, bankers’ acceptances and similar credit transactions; (k) Disqualified Capital Stock issued by such person; and (l) all Contingent Obligations of such person in respect of Indebtedness or obligations of others of the kinds referred to in clauses (a)  through (k)  above. The Indebtedness of any person shall include the Indebtedness of any other entity (including any partnership in which such person is a general partner) to the extent such person is liable therefor as a result of such person’s ownership interest in or other relationship with such entity, except (other than in the case of general partner liability) to the extent that terms of such Indebtedness expressly provide that such person is not liable therefor. Notwithstanding the foregoing or anything to the contrary contained herein, the Indebtedness of any person shall exclude all Earn-out Obligations of such person. For purposes of determining the amount of any Indebtedness in respect of any Hedging Obligations of any person at any time, such amount of Indebtedness shall be the maximum aggregate amount (giving effect to any netting agreements) that such person would be required to pay if the related Hedging Agreement were terminated at such time.

“ Indemnified Person ” shall mean the Mortgage Trustee and any other person constituting an “Indemnified Person” as defined in the Mortgage Trust Agreement.

“ Indemnified Taxes ” shall mean all Taxes other than Excluded Taxes.

“ Indemnitee ” shall have the meaning assigned to such term in Section 10.03(b) .

“ Information ” shall have the meaning assigned to such term in Section 10.12 .

“ Insurance Policies ” shall mean the insurance policies and coverages required to be maintained by each Loan Party which is an owner of a Mortgaged Vessel with respect to the applicable Mortgaged Vessels pursuant to Section 5.04 and all renewals and extensions thereof.

“ Insurance Requirements ” shall mean, collectively, all provisions of the Insurance Policies and all requirements of the issuer of any of the Insurance Policies.

“ Instructing Beneficiary ” shall mean Collateral Agent in its capacity as “Instructing Beneficiary” under the Mortgage Trust Agreement.

“ Intellectual Property ” shall have the meaning assigned to such term in Section 3.06(a) .

“ Intercompany Note ” shall mean a promissory note substantially in the form of Exhibit P , or such other form as is acceptable to Administrative Agent.

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“ Interest Election Request ” shall mean a request by Borrower to convert or continue a Revolving Borrowing or Term Borrowing in accordance with Section 2.08(b) , substantially in the form of Exhibit E .

“ Interest Payment Date ” shall mean (a) with respect to any ABR Loan (including Swingline Loans), the last Business Day of each March, June, September and December to occur during any period in which such Loan is outstanding, (b) with respect to any Eurodollar Loan, the last day of the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a Eurodollar Loan with an Interest Period of more than three months’ duration, each day prior to the last day of such Interest Period that occurs at intervals of three months’ duration after the first day of such Interest Period, (c) with respect to any Revolving Loan or Swingline Loan, the Revolving Maturity Date or such earlier date on which the Revolving Commitments are terminated and (d) with respect to any Term Loan, the Term Loan Maturity Date or an Incremental Term Loan Maturity Date, as the case may be.

“ Interest Period ” shall mean, with respect to any Eurodollar Borrowing, the period commencing on the date of such Borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or nine or twelve months if agreed to by all affected Lenders) thereafter, as Borrower may elect; provided that (a) if any Interest Period would end on a day other than a Business Day, such Interest Period shall be extended to the next succeeding Business Day unless such next succeeding Business Day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (b) any Interest Period that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last Business Day of the last calendar month of such Interest Period. For purposes hereof, the date of a Borrowing initially shall be the date on which such Borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such Borrowing.

“ Investment Policy ” means the Hercules Offshore, Inc. Investment Policy attached hereto as Schedule 1.01(b) , and such amendments thereto or replacements thereof as may be approved in writing by the Administrative Agent from time to time.

“ Investments ” shall have the meaning assigned to such term in Section 6.04 .

“ Issuing Bank ” shall mean, as the context may require, (a) UBS AG, Stamford Branch, in its capacity as issuer of Letters of Credit issued by it; (b) Nordea Bank Finland PLC, New York Branch, solely with respect to the Letter of Credit set forth on Schedule A (but not for the purposes of the definition of “Eligible Assignee”); (c) any other Lender that may become an Issuing Bank pursuant to Sections 2.18(j) and (k)  in its capacity as issuer of Letters of Credit issued by such Lender; or (d) collectively, all of the foregoing.

“ Joinder Agreement ” shall mean a joinder agreement substantially in the form of Exhibit F .

“ LC Commitment ” shall mean the commitment of the Issuing Bank to issue Letters of Credit pursuant to Section 2.18 . The amount of the LC Commitment shall initially be $50,000,000, but in no event exceed the Revolving Commitment.

“ LC Disbursement ” shall mean a payment or disbursement made by the Issuing Bank pursuant to a drawing under a Letter of Credit.

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“ LC Exposure ” shall mean at any time the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate principal amount of all Reimbursement Obligations outstanding at such time. The LC Exposure of any Revolving Lender at any time shall mean its Pro Rata Percentage of the aggregate LC Exposure at such time.

“ LC Participation Fee ” shall have the meaning assigned to such term in Section 2.05(c) .

“ LC Request ” shall mean a request by Borrower in accordance with the terms of Section 2.18(b) and substantially in the form of Exhibit H , or such other form as shall be approved by the Administrative Agent.

“ Leases ” shall mean any and all leases, subleases, tenancies, options, concession agreements, rental agreements, occupancy agreements, franchise agreements, access agreements and any other agreements (including all amendments, extensions, replacements, renewals, modifications and/or guarantees thereof), whether or not of record and whether now in existence or hereafter entered into, affecting the use or occupancy of all or any portion of any property.

“ Lender Addendum ” shall mean with respect to any Lender on the Closing Date, a lender addendum in the form of Exhibit I , to be executed and delivered by such Lender on the Closing Date as provided in Section 10.15 .

“ Lenders ” shall mean (a) the financial institutions that have become a party hereto pursuant to a Lender Addendum and (b) any financial institution that has become a party hereto pursuant to an Assignment and Assumption, other than, in each case, any such financial institution that has ceased to be a party hereto pursuant to an Assignment and Assumption. Unless the context clearly indicates otherwise, the term “ Lenders ” shall include the Swingline Lender.

“ Letter of Credit ” shall mean any (i) Standby Letter of Credit and (ii) Commercial Letter of Credit, in each case, issued or to be issued by an Issuing Bank for the account of Borrower pursuant to Section 2.18 .

“ Letter of Credit Expiration Date ” shall mean the date which is five days prior to the Revolving Maturity Date.

“ LIBOR Rate ” shall mean, with respect to any Eurodollar Borrowing for any Interest Period, the rate per annum determined by the Administrative Agent to be the arithmetic mean of the offered rates for deposits in dollars with a term comparable to such Interest Period that appears on the Telerate British Bankers Assoc. Interest Settlement Rates Page (as defined below) at approximately 11:00 a.m., London, England time, on the second full Business Day preceding the first day of such Interest Period; provided, however , that (i) if no comparable term for an Interest Period is available, the LIBOR Rate shall be determined using the weighted average of the offered rates for the two terms most nearly corresponding to such Interest Period and (ii) if there shall at any time no longer exist a Telerate British Bankers Assoc. Interest Settlement Rates Page, “ LIBOR Rate ” shall mean, with respect to each day during each Interest Period pertaining to Eurodollar Borrowings comprising part of the same Borrowing, the rate per annum equal to the rate at which the Administrative Agent is offered deposits in dollars at approximately 11:00 a.m., London, England time, two Business Days prior to the first day of such Interest Period in the London interbank market for delivery on the first day of such Interest Period for the number of days comprised therein and in an amount comparable to its portion of the amount of such Eurodollar Borrowing to be outstanding during such Interest Period. “ Telerate British Bankers Assoc. Interest Settlement Rates Page ”

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shall mean the display designated as Page 3750 on the Telerate System Incorporated Service (or such other page as may replace such page on such service for the purpose of displaying the rates at which dollar deposits are offered by leading banks in the London interbank deposit market).

“ Lien ” shall mean, with respect to any property, (a) any mortgage, deed of trust, lien, pledge, encumbrance, claim, charge, assignment, hypothecation, security interest or encumbrance of any kind, in each of the foregoing cases whether voluntary or imposed by law, and any agreement to give any of the foregoing; (b) the interest of a vendor or a lessor under any conditional sale agreement, capital lease or title retention agreement (or any financing lease having substantially the same economic effect as any of the foregoing) relating to such property; and (c) in the case of securities, any purchase option, call or similar right of a third party with respect to such securities, except to the extent permitted by Section 6.13 .

“ Lift Boats ” shall mean the self-propelled, self-elevating vessels of the Borrower and its Subsidiaries, together with related equipment and spare parts.

“ Loan Documents ” shall mean this Agreement, the Letters of Credit, the Notes (if any), the Security Documents, the Mortgage Trust Agreement and, solely for purposes of clause (e)  of Section 8.01 , the Confidential Fee Letter, dated March 18, 2007, among Borrower, the Arranger and UBS Loan Finance LLC.

“ Loan Parties ” shall mean Borrower and the Subsidiary Guarantors.

“ Loans ” shall mean, as the context may require, a Revolving Loan, a Term Loan or a Swingline Loan (and shall include any Loans contemplated by Section 2.19 ).

“ Margin Stock ” shall have the meaning assigned to such term in Regulation U.

“ Material Adverse Effect ” shall mean (a) a material adverse effect on the business, property, results of operations or financial condition of Borrower and its Subsidiaries, taken as a whole; (b) material impairment of the ability of the Loan Parties to fully and timely perform their obligations under the Loan Documents; (c) material impairment of the rights of or benefits or remedies available to the Lenders or the Collateral Agent under any Loan Document (other than any event described in the proviso in clause (k) or (l) of Section 8.01); or (d) a material adverse effect on the Collateral (taken as a whole) or the Liens in favor of the Collateral Agent or Mortgage Trustee, as applicable (for its benefit and for the benefit of the other Secured Parties) on the Collateral (taken as a whole) or the priority of such Liens.

“ Material Indebtedness ” shall mean any Indebtedness (other than the Loans and Letters of Credit) or Hedging Obligations of Borrower or any of its Subsidiaries in an aggregate outstanding principal amount exceeding $50.0 million. For purposes of determining Material Indebtedness, the “ principal amount ” in respect of any Hedging Obligations of any Loan Party at any time shall be the maximum aggregate amount (giving effect to any netting agreements) that such Loan Party would be required to pay if the related Hedging Agreement were terminated at such time.

“ Maximum Rate ” shall have the meaning assigned to such term in Section 10.14 .

“ Merger ” shall have the meaning assigned to such term in the second recital hereto.

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“ Minority Holder Acknowledgment, Consent and Waiver ” shall mean an agreement substantially in the form of Exhibit R , with such modifications to such form as may be reasonably approved by the Administrative Agent.

“ Mortgage Trust Agreement ” shall mean the Mortgage Trust Agreement substantially in the form of Exhibit S , by and among Collateral Agent, Mortgage Trustee and the Borrower, as amended, restated, supplemented or otherwise modified from time to time.

“ Mortgage Trustee ” shall mean the Wilmington Trust Company and any of its successors or assigns, not in its individual capacity, but solely in its capacity as Mortgage Trustee under the Mortgage Trust Agreement.

“ Mortgaged Vessels ” shall mean, collectively, the Vessels of Borrower and its Subsidiaries that are subject to a Lien in favor of the Mortgage Trustee pursuant to one or more Security Documents, including, as of the Closing Date, the Vessels listed on Schedule 1.01(c).

“ Multiemployer Plan ” shall mean a multiemployer plan within the meaning of Section 4001(a)(3) or Section 3(37) of ERISA (a) to which any Company or any ERISA Affiliate is then making or accruing an obligation to make contributions; (b) to which any Company or any ERISA Affiliate has within the preceding five plan years made contributions; or (c) with respect to which any Company could incur liability.

“ Net Cash Proceeds ” shall mean:

(a) with respect to any Asset Sale (other than any issuance or sale of Equity Interests), the cash proceeds received by Borrower or any of its Subsidiaries (including cash proceeds subsequently received (as and when received by Borrower or any of its Subsidiaries) in respect of non-cash consideration initially received) net of (i) selling expenses (including reasonable brokers’ fees or commissions, legal, accounting and other professional and transactional fees, transfer and similar taxes and Borrower’s good faith estimate of income taxes paid or payable in connection with such sale); (ii) amounts provided as a reserve, in accordance with GAAP, against (x) any liabilities under any indemnification obligations associated with such Asset Sale or (y) any other liabilities retained by Borrower or any of its Subsidiaries associated with the properties sold in such Asset Sale ( provided that, to the extent and at the time any such amounts are released from such reserve, such amounts shall constitute Net Cash Proceeds); (iii) Borrower’s good faith estimate of payments required to be made with respect to unassumed liabilities relating to the properties sold within 90 days of such Asset Sale ( provided that, to the extent such cash proceeds are not used to make payments in respect of such unassumed liabilities within 90 days of such Asset Sale, such cash proceeds shall constitute Net Cash Proceeds); and (iv) the principal amount, premium or penalty, if any, interest and other amounts on any Indebtedness for borrowed money which is secured by a Lien on the properties sold in such Asset Sale (so long as such Lien was permitted to encumber such properties under the Loan Documents at the time of such sale) and which is repaid with such proceeds (other than any such Indebtedness assumed by the purchaser of such properties);

(b) with respect to any Debt Issuance, any Equity Issuance or any other issuance or sale of Equity Interests by Borrower or any of its Subsidiaries, the cash proceeds thereof, net of customary fees, commissions, costs and other expenses incurred in connection therewith; and

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(c) with respect to any Casualty Event, the cash insurance proceeds, condemnation awards and other compensation received in respect thereof, net of all reasonable costs and expenses incurred in connection with the collection of such proceeds, awards or other compensation in respect of such Casualty Event.

“ Net Working Capital ” shall mean, at any time, Consolidated Current Assets at such time minus Consolidated Current Liabilities at such time.

“ Non-Guarantor Subsidiary ” shall mean each Subsidiary that is not a Subsidiary Guarantor.

“ Non-Significant Subsidiary ” shall mean a Subsidiary that is not a Significant Subsidiary.

“ Notes ” shall mean any notes evidencing the Term Loans, Revolving Loans or Swingline Loans issued pursuant to this Agreement, if any, substantially in the form of Exhibit J-1 , J-2 or J-3 .

“ Obligations ” shall mean (a) obligations of Borrower and the other Loan Parties from time to time arising under or in respect of the due and punctual payment of (i) the principal of and premium, if any, and interest (including interest accruing during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding) on the Loans, when and as due, whether at maturity, by acceleration, upon one or more dates set for prepayment or otherwise, (ii) each payment required to be made by Borrower and the other Loan Parties under this Agreement in respect of any Letter of Credit, when and as due, including payments in respect of Reimbursement Obligations, interest thereon and obligations to provide cash collateral and (iii) all other monetary obligations, including fees, costs, expenses and indemnities, whether primary, secondary, direct, contingent, fixed or otherwise (including monetary obligations incurred during the pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such proceeding), of Borrower and the other Loan Parties under this Agreement and the other Loan Documents, and (b) the due and punctual performance of all covenants, agreements, obligations and liabilities of Borrower and the other Loan Parties under or pursuant to this Agreement and the other Loan Documents.

“ OFAC ” shall have the meaning assigned to such term in Section 3.22(b) .

“ Officers’ Certificate ” shall mean a certificate executed by the chairman of the Board of Directors (if an officer), the chief executive officer or the president or one of the Financial Officers, each in his or her official (and not individual) capacity.

“ Organizational Documents ” shall mean, with respect to any person, (i) in the case of any corporation, the certificate of incorporation and by-laws (or similar documents) of such person, (ii) in the case of any limited liability company, the certificate of formation and operating agreement (or similar documents) of such person, (iii) in the case of any limited partnership, the certificate of formation and limited partnership agreement (or similar documents) of such person, (iv) in the case of any general partnership, the partnership agreement (or similar document) of such person and (v) in any other case, the functional equivalent of the foregoing.

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

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“ Participant ” shall have the meaning assigned to such term in Section 10.04(d) .

“ Patriot Act ” shall have the meaning assigned to such term in Section 4.01(q) .

“ PBGC ” shall mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

“ Pension Act ” means the Pension Protection Act of 2006, as it presently exists or as it may be amended from time to time.

“ Perfection Certificate ” shall mean a certificate in the form of Exhibit K- or any other form approved by the Collateral Agent.

“ Permitted Acquisition ” shall mean any transaction for the (a) acquisition of one or more Vessels and related assets or of all or substantially all of the property of any person or of any business or division of any person; or (b) acquisition (including by merger or consolidation) of the Equity Interests of any person that becomes a Subsidiary after giving effect such transaction; provided that each of the following conditions shall be met:

(i) no Default exists immediately before or after such transaction, including under Sections 6.01 and 6.15 ;

(ii) after giving effect to such transaction on a Pro Forma Basis, Borrower shall be in compliance with all covenants set forth in Sections 6.10 (a)  and (b)  as of the most recent Test Period (assuming (x) for purposes of Section 6.10 , that such transaction (including all Incurrences of Indebtedness in connection therewith, and all other Permitted Acquisitions consummated since the first day of the relevant Test Period for each of the financial covenants set forth in Section 6.10 ending on or prior to the date of such transaction (including all Incurrences of Indebtedness in connection therewith), had occurred on the first day of such relevant Test Period and (y) if such transaction is to be consummated prior to the last day of the first Test Period for which the covenants in Sections 6.10 (a)  and (b)  are required to be satisfied, the levels required for such first Test Period shall be deemed to apply in determining compliance with such covenants for purposes of this clause );

(iii) the Board of Directors of the person to be acquired shall not have indicated publicly its opposition to the consummation of such acquisition (which opposition has not been publicly withdrawn);

(iv) all transactions in connection therewith shall be consummated in accordance with all applicable Requirements of Law;

(v) with respect to each such acquisition (including by merger or consolidation) of the Equity Interests of any person that becomes a Subsidiary after giving effect to such transaction, (x) such Subsidiary is a Wholly Owned Subsidiary or (y) to the extent such Subsidiary would not constitute a Wholly Owned Subsidiary, each holder of an Equity Interest therein (other than a Loan Party) shall have executed and delivered to the Collateral Agent a Minority Holder Acknowledgment, Consent and Waiver;

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(vi) with respect to each such acquisition being made by a Loan Party which includes the acquisition, directly or indirectly, of a person organized under the laws of a nation other than the United States or of assets that would not be subject to a Lien in favor of the Collateral Agent or Mortgage Trustee, as applicable, for the benefit of the Secured Parties, after giving effect to such transaction, the Collateral Maintenance Ratio would exceed 1.25 to 1.00 and the Domestic Asset Percentage would exceed 50%; and

(vii) if the Acquisition Consideration to be paid by the Companies in connection with such acquisition and any related acquisition or acquisitions exceeds $50.0 million, then, at least five Business Days (or such shorter period as is acceptable to Agents) prior to the proposed date of consummation of the transaction, Borrower shall have delivered to the Agents an Officers’ Certificate certifying that such transaction complies with this definition (which shall have attached thereto reasonably detailed backup data and calculations showing such compliance).

“ Permitted Liens ” shall have the meaning assigned to such term in Section 6.02 .

“ person ” shall mean any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority or other entity.

“ Plan ” shall mean any employee pension benefit plan (other than a Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code or Section 302 of ERISA which is maintained or contributed to by any Company or its ERISA Affiliate or with respect to which any Company could incur liability (including under Section 4069 of ERISA).

“ Post-Increase Revolving Lenders ” shall have the meaning assigned to such term in Section 2.19(d) .

“ Pre-Increase Revolving Lenders ” shall have the meaning assigned to such term in Section 2.19(d) .

“ Preferred Stock ” shall mean, with respect to any person, any and all preferred or preference Equity Interests (however designated) of such person whether now outstanding or issued after the Closing Date.

“ Preferred Stock Issuance ” shall mean the issuance or sale by Borrower or any of its Subsidiaries of any Preferred Stock after the Closing Date (other than the issuance of Disqualified Capital Stock permitted by Section 6.01(k) or (m) ).

“ Pro Forma Basis ” shall mean on a basis in accordance with GAAP and Regulation S-X or otherwise reasonably satisfactory to the Administrative Agent.

“ Pro Rata Percentage ” of any Revolving Lender at any time shall mean the percentage of the total Revolving Commitments of all Revolving Lenders represented by such Lender’s Revolving Commitment.

“ property ” shall mean any right, title or interest in or to property or assets of any kind whatsoever, whether real, personal or mixed and whether tangible or intangible and including Equity Interests or other ownership interests of any person and whether now in existence or owned or hereafter entered into or acquired, including all Real Property.

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“ Purchase Money Obligation ” shall mean, for any person, the obligations of such person in respect of indebtedness (including Capital Lease Obligations) incurred for the purpose of financing all or any part of the purchase price of any property (including Equity Interests of any person) or the cost of installation, construction or improvement of any property and any refinancing thereof; provided, however , that (i) such indebtedness is incurred within one year after such acquisition, installation, construction or improvement of such property by such person and (ii) the amount of such indebtedness does not exceed 100% of the cost of such acquisition, installation, construction or improvement, as the case may be.

“ Qualified Capital Stock ” of any person shall mean any Equity Interests of such person that are not Disqualified Capital Stock.

“ Real Property ” shall mean, collectively, all right, title and interest (including any leasehold, mineral or other estate) in and to any and all parcels of or interests in real property owned, leased or operated by any person, whether by lease, license or other means, together with, in each case, all easements, hereditaments and appurtenances relating thereto, all improvements and appurtenant fixtures and equipment, all general intangibles and contract rights and other property and rights incidental to the ownership, lease or operation thereof.

“ Refinancing ” shall mean the repayment in full and the termination of any commitment to make extensions of credit under all of the outstanding indebtedness listed on Schedule 1.01(d) of Borrower, TODCO or any of their respective Subsidiaries.

“ Register ” shall have the meaning assigned to such term in Section 10.04(c) .

“ Regulation D ” shall mean Regulation D of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation S-X ” shall mean Regulation S-X promulgated under the Securities Act.

“ Regulation T ” shall mean Regulation T of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation U ” shall mean Regulation U of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Regulation X ” shall mean Regulation X of the Board as from time to time in effect and all official rulings and interpretations thereunder or thereof.

“ Reimbursement Obligations ” shall mean Borrower’s obligations under Section 2.18(e) to reimburse LC Disbursements.

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

“ Release ” shall mean any spilling, leaking, seepage, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing, emanating or migrating of any Hazardous Material in, into, onto or through the Environment.

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“ Required Class Lenders ” shall mean (i) with respect to Term Loans, Lenders having more than 50% of all Term Loans outstanding and (ii) with respect to Revolving Loans, Required Revolving Lenders.

“ Required Lenders ” shall mean Lenders having more than 50% of the sum of all Loans outstanding, LC Exposure and unused Revolving and Term Loan Commitments.

“ Required Revolving Lenders ” shall mean Lenders having more than 50% of all Revolving Commitments or, after the Revolving Commitments have terminated, more than 50% of all Revolving Exposure.

“ Requirements of Law ” shall mean, collectively, any and all requirements of any Governmental Authority including any and all laws, judgments, orders, decrees, ordinances, rules, regulations, statutes or case law.

“ Response ” shall mean (a) “ response ” as such term is defined in CERCLA, 42 U.S.C. § 9601(24), and (b) all other actions required by any Governmental Authority or voluntarily undertaken to (i) clean up, remove, treat, abate or in any other way address any Hazardous Material in the Environment; (ii) prevent the Release or threat of Release, or minimize the further Release, of any Hazardous Material; or (iii) perform studies and investigations in connection with, or as a precondition to, or to determine the necessity of the activities described in, subclause (b)(i) or (b)(ii) above.

“ Responsible Officer ” of any person shall mean any executive officer or Financial Officer of such person and any other officer or similar official thereof with responsibility for the administration of the obligations of such person in respect of this Agreement.

“ Revolving Availability Period ” shall mean the period from and including the Business Day after the Closing Date to but excluding the earlier of (i) the Business Day preceding the Revolving Maturity Date and (ii) the date of termination of the Revolving Commitments.

“ Revolving Borrowing ” shall mean a Borrowing comprised of Revolving Loans.

“ Revolving Commitment ” shall mean, with respect to each Lender, the commitment, if any, of such Lender to make Revolving Loans hereunder up to the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Lender or by an Increase Joinder, or in the Assignment and Assumption pursuant to which such Lender assumed its Revolving Commitment, as applicable, as the same may be (a) reduced from time to time pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant to assignments by or to such Lender pursuant to Section 10.04 . The aggregate amount of the Lenders’ Revolving Commitments on the Closing Date is $150,000,000.

“ Revolving Exposure ” shall mean, with respect to any Lender at any time, the aggregate principal amount at such time of all outstanding Revolving Loans of such Lender, plus the aggregate amount at such time of such Lender’s LC Exposure, plus the aggregate amount at such time of such Lender’s Swingline Exposure.

“ Revolving Lender ” shall mean a Lender with a Revolving Commitment, an outstanding Revolving Loan or outstanding LC Exposure.

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“ Revolving Loan ” shall mean a Loan made by the Lenders to Borrower pursuant to Section 2.01(b) . Each Revolving Loan shall either be an ABR Revolving Loan or a Eurodollar Revolving Loan.

“ Revolving Maturity Date ” shall mean the date which is five years after the Closing Date or, if such date is not a Business Day, the first Business Day thereafter.

“ Sale and Leaseback Transaction ” has the meaning assigned to such term in Section 6.03 .

“ Sarbanes-Oxley Act ” shall mean the United States Sarbanes-Oxley Act of 2002, as amended, and all rules and regulations promulgated thereunder.

“ Secured Obligations ” shall mean (a) the Obligations, (b) the due and punctual payment and performance of all obligations of Borrower and the other Loan Parties under each Hedging Agreement entered into with any counterparty that is a Secured Party and (c) the due and punctual payment and performance of all obligations of Borrower and the other Loan Parties (including overdrafts and related liabilities) under each Treasury Services Agreement entered into with any counterparty that is a Secured Party.

“ Secured Parties ” shall mean, collectively, the Administrative Agent, the Collateral Agent, each other Agent, the Lenders, the Issuing Bank and each counterparty to a Hedging Agreement or Treasury Services Agreement if at the date of entering into such Hedging Agreement or Treasury Services Agreement such person was an Agent or a Lender or an Affiliate of an Agent or a Lender and such person executes and delivers to the Administrative Agent a letter agreement in form and substance acceptable to the Administrative Agent pursuant to which such person (i) appoints the Collateral Agent as its agent under the applicable Loan Documents and (ii) agrees to be bound by the provisions of Article IX and Sections 10.03 and 10.09 as if it were a Lender.

“ Securities Act ” shall mean the Securities Act of 1933.

“ Securities Collateral ” shall have the meaning assigned to such term in the Security Agreement.

“ Security Agreement ” shall mean a Security Agreement substantially in the form of Exhibit L among the Loan Parties and Collateral Agent for the benefit of the Secured Parties.

“ Security Agreement Collateral ” shall mean all property pledged or granted as collateral pursuant to the Security Agreement (a) on the Closing Date or (b) thereafter pursuant to Section 5.11 .

“ Security Documents ” shall mean the Security Agreement, the Ship Mortgages, the Trademark Security Agreement and each other security document or pledge agreement executed by a Loan Party and delivered in accordance with applicable local or foreign law to grant a valid, perfected security interest in any property as collateral for the Secured Obligations.

“ Settlement Payments ” shall mean the payments required to be made by TODCO pursuant to Section 5.17 , and related provisions of the TODCO Tax Sharing Agreement.

“ Ship Mortgage ” shall mean any of the first preferred mortgages or first preferred fleet mortgages of a vessel or vessels registered in an Acceptable Flag Jurisdiction in the form of Exhibit N-1 or N-2 , as applicable, and with the additional requirement that such mortgage satisfies the definition of “ preferred mortgage ” under 46 USC Section 31301(6).

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“ Significant Subsidiary ” shall mean any Subsidiary of Borrower that would be a “significant subsidiary” as defined in Article 1, Rule 1-02 of Regulation S-X, assuming each reference therein to “10 percent” is a reference to “five percent.”

“ Standby Letter of Credit ” shall mean any standby letter of credit or similar instrument issued for the purpose of supporting (a) workers’ compensation liabilities of Borrower or any of its Subsidiaries, (b) the obligations of third-party insurers of Borrower or any of its Subsidiaries or (c) performance, payment, deposit or surety obligations of Borrower or any of its Subsidiaries.

“ Statutory Reserves ” shall mean for any Interest Period for any Eurodollar Borrowing, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the United States Federal Reserve System in New York City with deposits exceeding one billion dollars against “ Eurocurrency liabilities ” (as such term is used in Regulation D). Eurodollar Borrowings shall be deemed to constitute Eurocurrency liabilities and to be subject to such reserve requirements without benefit of or credit for proration, exceptions or offsets which may be available from time to time to any Lender under Regulation D.

“ Subordinated Indebtedness ” shall mean Indebtedness of Borrower or any Guarantor that is by its terms subordinated in right of payment to the Obligations of Borrower and such Guarantor, as applicable, on terms and conditions reasonably satisfactory to Administrative Agent.

“ Subsidiary ” shall mean, with respect to any person (the “ parent ”) at any date, (i) any person the accounts of which would be consolidated with those of the parent in the parent’s consolidated financial statements if such financial statements were prepared in accordance with GAAP as of such date, and (ii) any other corporation, limited liability company, partnership, association or other business entity of which securities or other ownership interests representing more than 50% of the voting power of all Equity Interests entitled (without regard to the occurrence of any contingency) to vote in the election of the Board of Directors or other governing body thereof are, as of such date, owned, controlled or held by the parent and/or one or more subsidiaries of the parent. Unless the context requires otherwise, “ Subsidiary ” refers to a Subsidiary of Borrower.

“ Subsidiary Guarantor ” shall mean, as of the Closing Date, each Subsidiary listed on Schedule 1.01(e) , and each other Subsidiary that is or becomes a party to this Agreement pursuant to Section 5.11 .

“ Swingline Commitment ” shall mean the commitment of the Swingline Lender to make loans pursuant to Section 2.17 , as the same may be reduced from time to time pursuant to Section 2.07 or Section 2.17 . The amount of the Swingline Commitment shall initially be $15,000,000, but shall in no event exceed the Revolving Commitment.

“ Swingline Exposure ” shall mean at any time the aggregate principal amount at such time of all outstanding Swingline Loans. The Swingline Exposure of any Revolving Lender at any time shall equal its Pro Rata Percentage of the aggregate Swingline Exposure at such time.

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“ Swingline Lender ” shall have the meaning assigned to such term in the preamble hereto.

“ Swingline Loan ” shall mean any loan made by the Swingline Lender pursuant to Section 2.17 .

“ Tax Return ” shall mean all returns, statements, filings, attachments and other documents or certifications required to be filed in respect of Taxes.

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

“ Term Borrowing ” shall mean a Borrowing comprised of Term Loans.

“ Term Loan Commitments ” shall mean with respect to each Lender, the commitment, if any, of such Lender to make a Term Loan hereunder on the Closing Date or by an Increase Joinder in the amount set forth on Schedule I to the Lender Addendum executed and delivered by such Lender. The aggregate amount of the Lenders’ Term Loan Commitments on the Closing Date is $900,000,000.

“ Term Loan Lender ” shall mean a Lender with a Term Loan Commitment or an outstanding Term Loan.

“ Term Loan Repayment Date ” shall have the meaning assigned to such term in Section 2.09 .

“ Term Loan Maturity Date ” shall mean the date which is six years after the Closing Date or, if such date is not a Business Day, the first Business Day thereafter.

“ Term Loans ” shall mean a Loan made by the Lenders to Borrower pursuant to Section 2.01(a) or an Incremental Term Loan made to Borrower pursuant to an Increase Joinder. Each Term Loan shall either be an ABR Term Loan or a Eurodollar Term Loan.

A “ Test Period ” in effect at any time shall mean the period of four consecutive fiscal quarters of Borrower ended on or prior to such time (taken as one accounting period) in respect of which financial statements for each quarter or fiscal year in such period have been or were required to be delivered pursuant to Section 5.01(a) or (b) , without giving effect to any grace period applicable thereto (or, solely for purposes of determining pro forma compliance with the covenants contained in Sections 6.10(a) and (b) , in connection with a Permitted Acquisition, Section 2.19 , Section 6.01(k) or Section 6.08(c) , prior to the date the first such financial statements are required to be so delivered without giving effect to any grace period applicable thereto, the most recent period of four fiscal quarters of TODCO and Borrower ended on or prior to the Closing Date).

“ TODCO ” shall have the meaning assigned to such term in the first recital hereto.

“ TODCO Tax Sharing Agreement ” shall mean that certain Amended and Restated Tax Sharing Agreement, dated November 2006 (effective February 4, 2004) by and between Transocean Holdings, Inc. and TODCO.

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“ Total Leverage Ratio ” shall mean, at any date of determination, the ratio of Consolidated Indebtedness on such date to Consolidated EBITDA for the Test Period then most recently ended.

“ Transaction Documents ” shall mean the Acquisition Documents and the Loan Documents.

“ Transactions ” shall mean, collectively, the transactions to occur on or prior to the Closing Date (other than the making of the Settlement Payments) pursuant to the Transaction Documents, including (a) the consummation of the Acquisition; (b) the execution and delivery of the Loan Documents and the initial borrowings hereunder; (c) the Refinancing; (d) the issuance by Borrower of approximately 56.6 million shares of its common stock to stockholders of TODCO in respect of the Merger, (e) the making of the Settlement Payments and (f) the payment of all fees and expenses to be paid on or prior to the Closing Date and owing in connection with the foregoing.

“ Transferred Guarantor ” shall have the meaning assigned to such term in Section 7.09 .

“ Trademark Security Agreement ” shall mean the Trademark Security Agreement dated as of July 11, 2007 by and among Collateral Agent, the Borrower, Acquisition Co. and Cliffs Drilling Company, as amended, restated, supplemented or otherwise modified from time to time.

“ Treasury Services Agreement ” shall mean any agreement relating to commercial credit cards, stored value cards, treasury management services, depositary management services and cash management services (including controlled disbursement, automated clearinghouse transactions, return items, overdraft and interstate depository network services).

“ Type ,” when used in reference to any Loan or Borrowing, refers to whether the rate of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the Adjusted LIBOR Rate or the Alternate Base Rate.

“ UCC ” shall mean the Uniform Commercial Code as in effect from time to time (except as otherwise specified) in any applicable state or jurisdiction.

“ United States ” shall mean the United States of America.

“ United States Citizen ” or “ US Citizen ” shall mean any person who is a US citizen by birth or who has been naturalized or any entity qualifying as such under the Shipping Act, 1916, as amended, or as it may hereafter be amended, the regulations of the United States Coast Guard and other requirements which must be satisfied to entitle vessels owned by any such person or entity to receive coastwise endorsements on their documents of registration.

“ Vessels ” shall mean, collectively, all Lift Boats and all drilling rigs, including jackup rigs, submersible rigs, semi-submersible rigs, barge rigs, drill ships and any other maritime drilling rig, at any time owned by Borrower and its Subsidiaries, and, individually, any of such vessels.

“ Voting Stock ” shall mean, with respect to any person, any class or classes of Equity Interests pursuant to which the holders thereof have the general voting power under ordinary circumstances to elect at least a majority of the Board of Directors of such person.

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“ Wholly Owned Subsidiary ” shall mean, as to any person, (a) any corporation 100% of whose capital stock (other than directors’ qualifying shares) is at the time owned by such person and/or one or more Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or other entity in which such person and/or one or more Wholly Owned Subsidiaries of such person have a 100% equity interest at such time.

“ Withdrawal Liability ” shall mean liability to a Multiemployer Plan as a result of a complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.

SECTION 1.02 Classification of Loans and Borrowings . For purposes of this Agreement, Loans may be classified and referred to by Class ( e.g ., a “ Revolving Loan ”) or by Type ( e.g ., a “ Eurodollar Loan ”) or by Class and Type ( e.g ., a “ Eurodollar Revolving Loan ”). Borrowings also may be classified and referred to by Class ( e.g ., a “ Revolving Borrowing ,” “ Borrowing of Term Loans ”) or by Type ( e.g ., a “ Eurodollar Borrowing ”) or by Class and Type ( e.g ., a “ Eurodollar Revolving Borrowing ”).

SECTION 1.03 Terms Generally . The definitions of terms herein shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The words “include,” “includes” and “including” shall be deemed to be followed by the phrase “without limitation.” The word “will” shall be construed to have the same meaning and effect as the word “shall.” Unless the context requires otherwise (a) any definition of or reference to any Loan Document, agreement, instrument or other document herein shall be construed as referring to such agreement, instrument or other document as from time to time amended, supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set forth herein), (b) any reference herein to any person shall be construed to include such person’s successors and assigns, (c) the words “herein,” “hereof” and “hereunder,” and words of similar import, shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof, (d) all references herein to Articles, Sections, Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and Schedules to, this Agreement, (e) any reference to any law or regulation herein shall refer to such law or regulation as amended, modified or supplemented from time to time, and (f) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights.

SECTION 1.04 Accounting Terms; GAAP . Except as otherwise expressly provided herein, all financial statements to be delivered pursuant to this Agreement shall be prepared in accordance with GAAP as in effect from time to time and all terms of an accounting or financial nature shall be construed and interpreted in accordance with GAAP, as in effect on the date hereof unless otherwise agreed to by Borrower and the Required Lenders. In the event that any “ Accounting Change ” (as defined below) shall occur and such change results in a change in the method of calculation of financial covenants, standards or terms in this Agreement, then Borrower and the Administrative Agent agree to enter into negotiations in order to amend such provisions of this Agreement so as to reflect equitably such Accounting Changes with the desired result that the criteria for evaluating Borrower’s financial condition shall be the same after such Accounting Changes as if such Accounting Changes had not been made. Until such time as such an amendment shall have been executed and delivered by Borrower, the Administrative Agent and the Required Lenders, (i) all financial covenants, standards and terms in this Agreement shall continue to be calculated or construed as if such Accounting Changes had not occurred and (ii) Borrower will

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furnish to each Lender and the Administrative Agent, in addition to the financial statements required to be furnished pursuant to Section 5.01 (the “ Current GAAP Financials ”), (A) the financial statements described in such Section based upon GAAP as in effect at the time the relevant financial covenant, standard or term was agreed to (the “ Prior GAAP Financials ”) and (B) a reconciliation between the Prior GAAP Financials and the Current GAAP Financials. “ Accounting Changes ” refers to changes in accounting principles required by the promulgation of any rule, regulation, pronouncement or opinion by the Financial Accounting Standards Board (the “ FASB ”), the Emerging Issues Task Force (“ EITF ”) of the FASB or, if applicable, the SEC.

SECTION 1.05 Resolution of Drafting Ambiguities . Each Loan Party acknowledges and agrees that it was represented by counsel in connection with the execution and delivery of the Loan Documents to which it is a party, that it and its counsel reviewed and participated in the preparation and negotiation hereof and thereof and that any rule of construction to the effect that ambiguities are to be resolved against the drafting party shall not be employed in the interpretation hereof or thereof.

ARTICLE II

THE CREDITS

SECTION 2.01 Commitments . Subject to the terms and conditions and relying upon the representations and warranties herein set forth, each Lender agrees, severally and not jointly:

(a) to make a Term Loan to Borrower on the Closing Date in the principal amount equal to its Term Loan Commitment; and

(b) to make Revolving Loans to Borrower, at any time and from time to time during the Revolving Availability Period in accordance with the terms hereof, in an aggregate principal amount at any time outstanding that will not result in such Lender’s Revolving Exposure exceeding such Lender’s Revolving Commitment.

Amounts paid or prepaid in respect of Term Loans may not be reborrowed. Within the limits set forth in clause (b)  above and subject to the terms, conditions and limitations set forth herein, Borrower may borrow, pay or prepay and reborrow Revolving Loans.

SECTION 2.02 Loans .

(a) Each Loan (other than Swingline Loans) shall be made as part of a Borrowing consisting of Loans made by the Lenders ratably in accordance with their applicable Commitments; provided that the failure of any Lender to make its Loan shall not in itself relieve any other Lender of its obligation to lend hereunder (it being understood, however, that no Lender shall be responsible for the failure of any other Lender to make any Loan required to be made by such other Lender). Except for Loans deemed made pursuant to Section 2.18(e)(ii) , (x) ABR Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1.0 million and not less than $5.0 million or (ii) equal to the remaining available balance of the applicable Commitments and (y) the Eurodollar Loans comprising any Borrowing shall be in an aggregate principal amount that is (i) an integral multiple of $1.0 million and not less than $5.0 million or (ii) equal to the remaining available balance of the applicable Commitments.

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(b) Subject to Sections 2.11 and 2.12 , each Borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as Borrower may request pursuant to Section 2.03 . Each Lender may at its option make any Eurodollar Loan by causing any domestic or foreign branch or Affiliate of such Lender to make such Loan; provided that any exercise of such option shall not affect the obligation of Borrower to repay such Loan in accordance with the terms of this Agreement. Borrowings of more than one Type may be outstanding at the same time; provided that Borrower shall not be entitled to request any Borrowing that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. For purposes of the foregoing, Borrowings having different Interest Periods, regardless of whether they commence on the same date, shall be considered separate Borrowings.

(c) Except with respect to Loans deemed made pursuant to Section 2.18(e)(ii) , each Lender shall make each Loan to be made by it hereunder on the proposed date thereof by wire transfer of immediately available funds to such account in New York City as the Administrative Agent may designate not later than 12:00 (noon), New York City time, and the Administrative Agent shall promptly credit the amounts so received to an account as directed by Borrower in the applicable Borrowing Request or, if a Borrowing shall not occur on such date because any condition precedent herein specified shall not have been met, return the amounts so received to the respective Lenders.

(d) Unless the Administrative Agent shall have received notice from a Lender prior to the date (in the case of any Eurodollar Borrowing), and at least 2 hours prior to the time (in the case of any ABR Borrowing), of any Borrowing that such Lender will not make available to the Administrative Agent such Lender’s portion of such Borrowing, the Administrative Agent may assume that such Lender has made such portion available to the Administrative Agent at the time of such Borrowing in accordance with clause (c)  above, and the Administrative Agent may, in reliance upon such assumption, make available to Borrower on such date a corresponding amount. If the Administrative Agent shall have so made funds available, then, to the extent that such Lender shall not have made such portion available to the Administrative Agent, each of such Lender and Borrower severally agrees to repay to the Administrative Agent forthwith on demand such corresponding amount together with interest thereon, for each day from the date such amount is made available to Borrower until the date such amount is repaid to the Administrative Agent at (i) in the case of Borrower, the interest rate applicable at the time to the Loans comprising such Borrowing and (ii) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. If such Lender shall repay to the Administrative Agent such corresponding amount, such amount shall constitute such Lender’s Loan as part of such Borrowing for purposes of this Agreement, and Borrower’s obligation to repay the Administrative Agent such corresponding amount pursuant to this Section 2.02(d) shall cease.

(e) Notwithstanding any other provision of this Agreement, Borrower shall not be entitled to request, or to elect to convert or continue, any Borrowing if the Interest Period requested with respect thereto would end after the Revolving Maturity Date or the Term Loan Maturity Date, as applicable.

SECTION 2.03 Borrowing Procedure . To request a Revolving Borrowing or Term Borrowing, Borrower shall deliver, by hand delivery or telecopier, a duly completed and executed Borrowing Request to the Administrative Agent (i) in the case of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of the proposed Borrowing; provided , however , for purposes of the initial Borrowing on the Closing Date, not later than 9:00 am, New York City time, on the Closing Date, or (ii) in the case of an ABR Borrowing, not later than 9:00 a.m., New York City time, on the date of the proposed Borrowing. Each Borrowing Request shall be irrevocable and shall specify the following information in compliance with Section 2.02 :

(a) whether the requested Borrowing is to be a Borrowing of Revolving Loans or Term Loans;

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(b) the aggregate amount of such Borrowing;

(c) the date of such Borrowing, which shall be a Business Day;

(d) whether such Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing;

(e) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable thereto, which shall be a period contemplated by the definition of the term “ Interest Period ”;

(f) the location and number of Borrower’s account to which funds are to be disbursed; and

(g) that the conditions set forth in Sections 4.02(b) through (d)  have been satisfied as of the date of the notice.

If no election as to the Type of Borrowing is specified, then the requested Borrowing shall be deemed to be a Eurodollar Borrowing, and the Borrower shall be deemed to have selected an Interest Period of three month’s duration. If no Interest Period is specified with respect to any requested Eurodollar Borrowing, then Borrower shall be deemed to have selected an Interest Period of three month’s duration. Promptly following receipt of a Borrowing Request in accordance with this Section, the Administrative Agent shall advise each Lender of the details thereof and of the amount of such Lender’s Loan to be made as part of the requested Borrowing.

SECTION 2.04 Evidence of Debt; Repayment of Loans .

(a) Promise to Repay . Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for the account of each Term Loan Lender, the principal amount of each Term Loan of such Term Loan Lender as provided in Section 2.09 , (ii) to the Administrative Agent for the account of each Revolving Lender, the then unpaid principal amount of each Revolving Loan of such Revolving Lender on the Revolving Maturity Date and (iii) to the Swingline Lender, the then unpaid principal amount of each Swingline Loan on the earlier of the Revolving Maturity Date and the first date after such Swingline Loan is made that is the 15th or last day of a calendar month and is at least two Business Days after such Swingline Loan is made; provided that on each date that a Revolving Borrowing is made, Borrower shall repay all Swingline Loans that were outstanding on the date such Borrowing was requested.

(b) Lender and Administrative Agent Records . Each Lender shall maintain in accordance with its usual practice an account or accounts evidencing the Indebtedness of Borrower to such Lender resulting from each Loan made by such Lender from time to time, including the amounts of principal and interest payable and paid to such Lender from time to time under this Agreement. The Administrative Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder, the Type and Class thereof and the Interest Period applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from

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Borrower to each Lender hereunder; and (iii) the amount of any sum received by the Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof. The entries made in the accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Administrative Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of Borrower to repay the Loans in accordance with their terms.

(c) Promissory Notes . Any Lender by written notice to Borrower (with a copy to the Administrative Agent) may request that Loans of any Class made by it be evidenced by a promissory note. In such event, Borrower shall prepare, execute and deliver to such Lender a promissory note payable to the order of such Lender (or, if requested by such Lender, to such Lender and its registered assigns) in the form of Exhibit J-1 , J-2 , or J-3 , as the case may be. Thereafter, the Loans evidenced by such promissory note and interest thereon shall at all times (including after assignment pursuant to Section 10.04 ) be represented by one or more promissory notes in such form payable to the order of the payee named therein (or, if such promissory note is a registered note, to such payee and its registered assigns).

SECTION 2.05 Fees .

(a) Commitment Fee . Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee (a “ Commitment Fee ”) equal to the Applicable Fee per annum on the average daily unused amount of each Revolving Commitment of such Revolving Lender during the period from and including the date hereof to but excluding the date on which such Commitment terminates. Accrued Commitment Fees shall be payable in arrears (A) on the last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the date hereof, and (B) on the date on which such Commitment terminates. Commitment Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day). For purposes of computing Commitment Fees, a Revolving Commitment of a Lender shall be deemed to be used to the extent of the outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline Exposure of such Lender shall be disregarded for such purpose).

(b) Administrative Agent Fees . Borrower agrees to pay to the Administrative Agent, for its own account, the administrative fees payable in the amounts and at the times separately agreed upon between Borrower and the Administrative Agent (the “ Administrative Agent Fees ”).

(c) LC and Fronting Fees . Borrower agrees to pay (i) to the Administrative Agent for the account of each Revolving Lender a participation fee (“ LC Participation Fee ”) with respect to its participations in Letters of Credit, which shall accrue at a rate equal to the Applicable Margin from time to time used to determine the interest rate on Eurodollar Revolving Loans pursuant to Section 2.06 on the average daily amount of such Lender’s LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date on which such Lender’s Revolving Commitment terminates and the date on which such Lender ceases to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee (“ Fronting Fee ”), which shall accrue at the rate of 0.125% per annum on the average daily amount of the LC Exposure (excluding any portion thereof attributable to Reimbursement Obligations) during the period from and including the Closing Date to but excluding the later of the date of termination of the Revolving Commitments and the date on which there ceases to be any LC Exposure, as well as the Issuing Bank’s customary fees with respect to the issuance, amendment, renewal or extension of any Letter of Credit or processing of drawings thereunder. Accrued LC Participation Fees and Fronting Fees shall be payable in arrears (i) on the

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last Business Day of March, June, September and December of each year, commencing on the first such date to occur after the Closing Date, and (ii) on the date on which the Revolving Commitments terminate. Any such fees accruing after the date on which the Revolving Commitments terminate shall be payable on demand. Any other fees payable to the Issuing Bank pursuant to this paragraph shall be payable within 10 Business Days after demand therefor. All LC Participation Fees and Fronting Fees shall be computed on the basis of a year of 360 days and shall be payable for the actual number of days elapsed (including the first day but excluding the last day).

(d) All Fees shall be paid on the dates due, in immediately available funds in dollars, to the Administrative Agent for distribution, if and as appropriate, among the Lenders, except that Borrower shall pay the Fronting Fees directly to the Issuing Bank. Once paid, none of the Fees shall be refundable under any circumstances.

SECTION 2.06 Interest on Loans .

(a) ABR Loans . Subject to the provisions of Section 2.06(c) , the Loans comprising each ABR Borrowing, including each Swingline Loan, shall bear interest at a rate per annum equal to the Alternate Base Rate plus the Applicable Margin in effect from time to time.

(b) Eurodollar Loans . Subject to the provisions of Section 2.06(c) , the Loans comprising each Eurodollar Borrowing shall bear interest at a rate per annum equal to the Adjusted LIBOR Rate for the Interest Period in effect for such Borrowing plus the Applicable Margin in effect from time to time.

(c) Default Rate . Notwithstanding the foregoing, if any principal of or interest on any Loan or any fee or other amount payable by Borrower hereunder is not paid when due, whether at stated maturity, upon acceleration or otherwise, such overdue amount shall, to the extent permitted by applicable law, bear interest, after as well as before judgment, at a rate per annum equal to (i) in the case of amounts constituting principal of or interest on any Loan, 2% plus the rate otherwise applicable to such Loan as provided in the preceding paragraphs of this Section 2.06 or (ii) in the case of any other amount, 2% plus the rate applicable to ABR Revolving Loans as provided in Section 2.06(a) (in either case, the “ Default Rate ”).

(d) Interest Payment Dates . Accrued interest on each Loan shall be payable in arrears on each Interest Payment Date for such Loan; provided that (i) interest accrued pursuant to Section 2.06(c) shall be payable on demand, (ii) in the event of any repayment or prepayment of any Loan (other than a prepayment of an ABR Revolving Loan or a Swingline Loan without a permanent reduction in Revolving Commitments), accrued interest on the principal amount repaid or prepaid shall be payable on the date of such repayment or prepayment and (iii) in the event of any conversion of any Eurodollar Loan prior to the end of the current Interest Period therefor, accrued interest on such Loan shall be payable on the effective date of such conversion.

(e) Interest Calculation . All interest hereunder shall be computed on the basis of a year of 360 days, except that interest computed by reference to the Alternate Base Rate shall be computed on the basis of a year of 365 days (or 366 days in a leap year), and in each case shall be payable for the actual number of days elapsed (including the first day but excluding the last day). The applicable Alternate Base Rate or Adjusted LIBOR Rate shall be determined by the Administrative Agent in accordance with the provisions of this Agreement and such determination shall be conclusive absent manifest error.

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SECTION 2.07 Termination and Reduction of Commitments .

(a) Termination of Commitments . The Term Loan Commitments shall automatically terminate at 5:00 p.m., New York City time, on the Closing Date. The Revolving Commitments, the Swingline Commitment and the LC Commitment shall automatically terminate one Business Day prior to the Revolving Maturity Date. Notwithstanding the foregoing, all the Commitments shall automatically terminate at 5:00 p.m., New York City time, on October 31, 2007, if the initial Credit Extension shall not have occurred by such time.

(b) Optional Terminations and Reductions . At its option, Borrower may at any time terminate, or from time to time permanently reduce, the Commitments of any Class; provided that (i) each reduction of the Commitments of any Class shall be in an amount that is an integral multiple of $1.0 million and not less than $5.0 million and (ii) the Revolving Commitments shall not be terminated or reduced if, after giving effect to any concurrent prepayment of the Revolving Loans in accordance with Section 2.10 , the aggregate amount of Revolving Exposures would exceed the aggregate amount of Revolving Commitments.

(c) Borrower Notice . Borrower shall notify the Administrative Agent in writing of any election to terminate or reduce the Commitments under Section 2.07(b) at least three Business Days prior to the effective date of such termination or reduction, specifying such election and the effective date thereof. Promptly following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents thereof. Each notice delivered by Borrower pursuant to this Section shall be irrevocable; provided that a notice of termination of the Commitments delivered by Borrower may state that such notice is conditioned upon the effectiveness of other credit facilities, in which case such notice may be revoked by Borrower (by notice to the Administrative Agent on or prior to the specified effective date) if such condition is not satisfied. Any termination or reduction of the Commitments of any Class shall be permanent. Each reduction of the Commitments of any Class shall be made ratably among the Lenders in accordance with their respective Commitments of such Class.

SECTION 2.08 Interest Elections .

(a) Generally . Each Revolving Borrowing and Term Borrowing initially shall be of the Type specified in the applicable Borrowing Request and, in the case of a Eurodollar Borrowing, shall have an initial Interest Period as specified in such Borrowing Request. Thereafter, Borrower may elect to convert such Borrowing to a different Type or to continue such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest Periods therefor, all as provided in this Section. Borrower may elect different options with respect to different portions of the affected Borrowing, in which case each such portion shall be allocated ratably among the Lenders holding the Loans comprising such Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing. Notwithstanding anything to the contrary, Borrower shall not be entitled to request any conversion or continuation that, if made, would result in more than ten Eurodollar Borrowings outstanding hereunder at any one time. This Section shall not apply to Swingline Borrowings, which may not be converted or continued.

(b) Interest Election Notice . To make an election pursuant to this Section, Borrower shall deliver, by hand delivery or telecopier, a duly completed and executed Interest Election Request to the Administrative Agent not later than the time that a Borrowing Request would be required under Section 2.03 if Borrower were requesting a Revolving Borrowing or Term Borrowing of the Type resulting from such election to be made on the effective date of such election. Each Interest Election Request shall be irrevocable. Each Interest Election Request shall specify the following information in compliance with Section 2.02 :

(i) the Borrowing to which such Interest Election Request applies and, if different options are being elected with respect to different portions thereof, or if outstanding Borrowings are being combined, allocation to each resulting Borrowing (in which case the information to be specified pursuant to clauses (iii)  and (iv)  below shall be specified for each resulting Borrowing);

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(ii) the effective date of the election made pursuant to such Interest Election Request, which shall be a Business Day;

(iii) whether the resulting Borrowing is to be an ABR Borrowing or a Eurodollar Borrowing; and

(iv) if the resulting Borrowing is a Eurodollar Borrowing, the Interest Period to be applicable thereto after giving effect to such election, which shall be a period contemplated by the definition of the term “Interest Period.”

If any such Interest Election Request requests a Eurodollar Borrowing but does not specify an Interest Period, then Borrower shall be deemed to have selected an Interest Period of three month’s duration. Promptly following receipt of an Interest Election Request, the Administrative Agent shall advise each Lender of the details thereof and of such Lender’s portion of each resulting Borrowing.

(c) Automatic Continuation of Eurodollar Borrowings; Conversion to ABR Borrowings . If an Interest Election Request with respect to a Eurodollar Borrowing is not timely delivered prior to the end of the Interest Period applicable thereto, then, unless such Borrowing is repaid as provided herein, at the end of such Interest Period such Borrowing shall be continued, assuming an Event of Default has not occurred and is then continuing, as a Eurodollar Borrowing with an Interest Period of three month’s duration. Notwithstanding any contrary provision hereof, if an Event of Default has occurred and is continuing, the Administrative Agent or the Required Lenders may require, by notice to Borrower, that no outstanding Borrowing may be converted to or continued as a Eurodollar Borrowing.

SECTION 2.09 Amortization of Term Borrowings . Borrower shall pay to the Administrative Agent, for the account of the Term Loan Lenders, on the dates set forth on Annex II , or if any such date is not a Business Day, on the immediately preceding Business Day (each such date, a “ Term Loan Repayment Date ”), a principal amount of the Term Loans equal to the amount set forth on Annex II for such date (as adjusted from time to time pursuant to Section 2.10(h)) , together in each case with accrued and unpaid interest on the principal amount to be paid to but excluding the date of such payment. To the extent not previously paid, all Term Loans shall be due and payable on the Term Loan Maturity Date.

SECTION 2.10 Optional and Mandatory Prepayments of Loans .

(a) Optional Prepayments . Borrower shall have the right at any time and from time to time to prepay any Borrowing, in whole or in part, subject to the requirements of this Section 2.10 ; provided that each partial prepayment shall be in an amount that is an integral multiple of $1.0 million and not less than $5.0 million or, if less, the outstanding principal amount of such Borrowing.

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(b) Revolving Loan Prepayments .

(i) In the event of the termination of all the Revolving Commitments, Borrower shall, on the date of such termination, repay or prepay all its outstanding Revolving Borrowings and all outstanding Swingline Loans and replace all outstanding Letters of Credit or cash collateralize all outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i) .

(ii) In the event of any partial reduction of the Revolving Commitments, then (x) at or prior to the effective date of such reduction, the Administrative Agent shall notify Borrower and the Revolving Lenders of the sum of the Revolving Exposures after giving effect thereto and (y) if the sum of the Revolving Exposures would exceed the aggregate amount of Revolving Commitments after giving effect to such reduction, then Borrower shall, on the date of such reduction, first , repay or prepay Swingline Loans, second , repay or prepay Revolving Borrowings and third, replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i) , in an aggregate amount sufficient to eliminate such excess.

(iii) In the event that the sum of all Lenders’ Revolving Exposures exceeds the Revolving Commitments then in effect, Borrower shall, without notice or demand, immediately first, repay or prepay Swingline Loans, second , repay or prepay Revolving Borrowings, and third , replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i) , in an aggregate amount sufficient to eliminate such excess.

(iv) In the event that the aggregate LC Exposure exceeds the LC Commitment then in effect, Borrower shall, without notice or demand, immediately replace outstanding Letters of Credit or cash collateralize outstanding Letters of Credit in accordance with the procedures set forth in Section 2.18(i) , in an aggregate amount sufficient to eliminate such excess.

(v) In the event that the aggregate Swingline Exposure exceeds the Swingline Commitment then in effect, Borrower shall, without notice or demand, immediately repay or prepay Swingline Loans in an aggregate amount sufficient to eliminate such excess.

(c) Asset Sales . Not later than 10 Business Days following the receipt of any Net Cash Proceeds of any Asset Sale by Borrower or any of its Subsidiaries (excluding any Asset Sale to the Borrower or any Subsidiary permitted hereunder), Borrower shall make prepayments in accordance with Sections 2.10(h) and (i)  in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:

(i) no such prepayment shall be required under this Section 2.10(c) with respect to any Asset Sale permitted by Section 6.06(a) , (c) , (d) , (e)  (except to the extent reliant on Section 6.06 (b) ), (f) , (g) , (h) , (i)  or (j) ; and

(ii) so long as no Default has occurred and is continuing, such proceeds shall not be required to be so applied on such date to the extent that Borrower shall have delivered an Officers’ Certificate to the Administrative Agent

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on or prior to such date stating that such Net Cash Proceeds are expected to be reinvested in the Borrower’s business within 12 months following the date of such Asset Sale (which Officers’ Certificate shall set forth the estimates of the proceeds to be so expended); provided that if all or any portion of such Net Cash Proceeds is not so reinvested within such 12 month period, such unused portion (subject to the provisos set forth in clauses (iii) and (iv) of Section 6.13 ) shall be applied on or before the last day of such period as a mandatory prepayment as provided in this Section 2.10(c) ; provided , further , that if the property subject to such Asset Sale constituted (i) Collateral consisting of Mortgaged Vessels and the Collateral Maintenance Ratio is less than 1.25 to 1.00 after such Asset Sale, or (ii) Collateral other than Mortgaged Vessels, then all or substantially all (as determined by Collateral Agent) property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent or Mortgage Trustee, as applicable, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12 .

(d) Debt Issuance or Preferred Stock Issuance . Not later than 10 Business Days following the receipt of any Net Cash Proceeds of any Debt Issuance or Preferred Stock Issuance by Borrower or any of its Subsidiaries, Borrower shall make prepayments in accordance with Sections 2.10(h) and (i)  in an aggregate amount equal to 100% of such Net Cash Proceeds in the case of a Debt Issuance, and 50% of such Net Cash Proceeds in the case of a Preferred Stock Issuance.

(e) [ Reserved .]

(f) Casualty Events . Not later than 10 Business Days following the receipt of any Net Cash Proceeds from a Casualty Event by Borrower or any of its Subsidiaries, Borrower shall make prepayments in accordance with Sections 2.10(h) and (i)  in an aggregate amount equal to 100% of such Net Cash Proceeds; provided that:

(i) so long as no Default has occurred and is continuing, such proceeds shall not be required to be so applied on such date to the extent that Borrower shall have delivered an Officers’ Certificate to the Administrative Agent on or prior to such date stating that such proceeds are expected to be used to repair, replace or restore any property in respect of which such Net Cash Proceeds were paid, no later than 12 months following the date of receipt of such proceeds; provided that if the property subject to such Casualty Event constituted (i) Collateral consisting of Mortgaged Vessels and the Collateral Maintenance Ratio is less than 1.25 to 1.00 after such Casualty Event, or (ii) Collateral other than Mortgaged Vessels, then all or substantially all (as determined by the Collateral Agent) property purchased with the Net Cash Proceeds thereof pursuant to this subsection shall be made subject to the Lien of the applicable Security Documents in favor of the Collateral Agent or Mortgage Trustee, as applicable, for its benefit and for the benefit of the other Secured Parties in accordance with Sections 5.11 and 5.12 ; and

(ii) if any portion of such Net Cash Proceeds shall not be so applied within such 12-month period, such unused portion shall be applied on or before the last day of such period as a mandatory prepayment as provided in this Section 2.10(f) .

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(g) Excess Cash Flow . No later than 10 Business Days after the date on which the financial statements with respect to such fiscal year in which such Excess Cash Flow Period occurs are or are required to be delivered pursuant to Section 5.01(a) , Borrower shall make prepayments in accordance with Sections 2.10(h) and (i)  in an aggregate amount equal to 50% of Excess Cash Flow for the Excess Cash Flow Period then ended; provided, however, that, to the extent Borrower has made a voluntary prepayment of Term Loans pursuant to Section 2.10(a) during the applicable Excess Cash Flow Period, the amount required to be paid under this Section 2.10(g) with respect to such Excess Cash Flow Period shall be reduced by the amount of such voluntary prepayment; provided , further, however , that no prepayment or portion of a prepayment shall be required pursuant to this Section 2.10(g) if the aggregate outstanding amount of Term Loans shall be less than $550.0 million or to the extent such prepayment would cause the aggregate outstanding amount of Term Loans to be reduced to less than $550.0 million.

(h) Application of Prepayments . Prior to any optional or mandatory prepayment hereunder, Borrower shall select the Borrowing or Borrowings to be prepaid and shall specify such selection in the notice of such prepayment pursuant to Section 2.10(i) , subject to the provisions of this Section 2.10(h) . Notwithstanding the foregoing any Term Loan Lender (each a “Declining Lender”) may elect, by written notice to the Administrative Agent at least three Business Days prior to the prepayment date, to decline all or any portion of any mandatory prepayment of its Term Loans, pursuant to Section 2.10(c), (d), (f) or (g) (each a “Declined Amount”) and Administrative Agent shall give notice to all Term Loan Lenders that are not Declining Lenders of the availability of such Declined Amount for application as an additional prepayment to the outstanding Term Loans held by such Term Loan Lenders, and within one Business Day’s receipt of such notice from Administrative Agent, each Term Loan Lender electing to receive all or a portion of the Declined Amount shall give Administrative Agent written notice of such election, and, on the prepayment date the Declined Amount shall be applied by Administrative Agent among such electing Term Loan Lenders on a pro rata basis (with pro rata being based on the percentage obtained by dividing the principal amount of Term Loans held immediately prior to such mandatory prepayment by the relevant Term Loan Lender by the aggregate principal amount of Term Loans held immediately prior to such mandatory prepayment by Term Loan Lenders that are not Declining Lenders and that have not declined to receive a portion of the Declined Amount); provided that, in the event any portion of the Declined Amount remains unapplied after any such application, such portion shall be retained by Borrower. Any prepayments of Term Loans pursuant to Section 2.10(a) , (c) , (d) , (f)  or (g)  shall be applied to reduce scheduled prepayments required under Section 2.09 on a pro rata basis among the prepayments to be made on each remaining Term Loan Repayment Date.

Amounts to be applied pursuant to this Section 2.10 to the prepayment of Term Loans and Revolving Loans shall be applied, as applicable, first to reduce outstanding ABR Term Loans and ABR Revolving Loans, respectively. Any amounts remaining after each such application shall be applied to prepay Eurodollar Term Loans or Eurodollar Revolving Loans, as applicable. Notwithstanding the foregoing, if the amount of any prepayment of Loans required under this Section 2.10 shall be in excess of the amount of the ABR Loans at the time outstanding (an “ Excess Amount ”), only the portion of the amount of such prepayment as is equal to the amount of such outstanding ABR Loans shall be immediately prepaid and, at the election of Borrower, the Excess Amount shall be either (A) deposited in an escrow account on terms satisfactory to the Collateral Agent and applied to the prepayment of Eurodollar Loans on the last day of the then next-expiring Interest Period for Eurodollar Loans; provided that (i) interest in respect of such Excess Amount shall continue to accrue thereon at the rate provided hereunder for the Loans which such Excess Amount is intended to repay until such Excess Amount shall have been used in full to repay such Loans and (ii) at any time while a Default has occurred and is continuing, the Administrative Agent may, and upon written direction from the Required Lenders shall, apply any or all proceeds then on deposit to the payment of such Loans in an amount equal to such Excess Amount or (B) prepaid immediately, together with any amounts owing to the Lenders under Section 2.13 .

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(i) Notice of Prepayment . Borrower shall notify the Administrative Agent (and, in the case of prepayment of a Swingline Loan, the Swingline Lender) by written notice of any prepayment hereunder (i) in the case of a mandatory prepayment under Section 2.10(c), (d), (f) or (g), not later than 11:00 a.m., New York City time, seven Business Days before the date of prepayment, and (ii) in the case of each other prepayment, (A) in the case of prepayment of a Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three Business Days before the date of prepayment, (B) in the case of prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business Day before the date of prepayment and (C) in the case of prepayment of a Swingline Loan, not later than 11:00 a.m., New York City time, on the date of prepayment. Each such notice shall be irrevocable; provided that, if a notice of prepayment is given in connection with a conditional notice of termination of the Commitments as contemplated by Section 2.07 , then such notice of prepayment may be revoked if such termination is revoked in accordance with Section 2.07 . Each such notice shall specify the prepayment date, the principal amount of each Borrowing or portion thereof to be prepaid and, in the case of a mandatory prepayment, a reasonably detailed calculation of the amount of such prepayment. Promptly following receipt of any such notice (other than a notice relating solely to Swingline Loans), the Administrative Agent shall advise the Lenders of the contents thereof. Each partial prepayment of any Borrowing shall be in an amount that would be permitted in the case of a Credit Extension of the same Type as provided in Section 2.02 , except as necessary to apply fully the required amount of a mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to the Loans included in the prepaid Borrowing and otherwise in accordance with this Section 2.10 . Prepayments shall be accompanied by accrued interest to the extent required by Section 2.06 .

SECTION 2.11 Alternate Rate of Interest . If prior to the commencement of any Interest Period for a Eurodollar Borrowing:

(a) the Administrative Agent determines (which determination shall be final and conclusive absent manifest error) that adequate and reasonable means do not exist for ascertaining the Adjusted LIBOR Rate for such Interest Period; or

(b) the Administrative Agent is advised in writing by the Required Lenders that the Adjusted LIBOR Rate for such Interest Period will not adequately and fairly reflect the cost to such Lenders of making or maintaining their Loans included in such Borrowing for such Interest Period;

then the Administrative Agent shall give written notice thereof to Borrower and the Lenders as promptly as practicable thereafter and, until the Administrative Agent notifies Borrower and the Lenders that the circumstances giving rise to such notice no longer exist, (i) any Interest Election Request that requests the conversion of any Borrowing to, or continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such Borrowing shall be made as an ABR Borrowing.

SECTION 2.12 Yield Protection .

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

(i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of,

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deposits with or for the account of, or credit extended or participated in, by any Lender (except any reserve requirement reflected in the Adjusted LIBOR Rate) or the Issuing Bank;

(ii) subject any Lender or the Issuing Bank to any Tax of any kind whatsoever with respect to this Agreement, any Letter of Credit, any participation in a Letter of Credit or any Eurodollar Loan made by it, or change the basis of taxation of payments to such Lender or the Issuing Bank in respect thereof (except for Indemnified Taxes or Other Taxes covered by Section 2.15 and the imposition of, or any change in the rate of, any Excluded Tax payable by such Lender or the Issuing Bank); or

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

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

(b) Capital Requirements . If any Lender or the Issuing Bank determines (in good faith, but in its sole absolute discretion) that any Change in Law affecting such Lender or the Issuing Bank or any lending office of such Lender or such Lender’s or the Issuing Bank’s holding company, if any, regarding capital requirements has or would have the effect of reducing the rate of return on such Lender’s or the Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swingline Loans held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company could have achieved but for such Change in Law (taking into consideration such Lender’s or the Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company with respect to capital adequacy), then within 10 Business Days after receipt of a written demand therefor Borrower will pay to such Lender or the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such reduction suffered.

(c) Certificates for Reimbursement . A certificate of a Lender or the Issuing Bank setting forth the amount or amounts necessary to compensate such Lender or the Issuing Bank or its holding company, as the case may be, as specified in clause (a)  or (b)  of this Section 2.12 and delivered to Borrower shall be conclusive absent manifest error. Borrower shall pay such Lender or the Issuing Bank, as the case may be, the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

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(d) Delay in Requests . Failure or delay on the part of any Lender or the Issuing Bank to demand compensation pursuant to this Section 2.12 shall not constitute a waiver of such Lender’s or the Issuing Bank’s right to demand such compensation; provided that Borrower shall not be required to compensate a Lender or the Issuing Bank pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Bank, as the case may be, notifies Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine-month period referred to above shall be extended to include the period of retroactive effect thereof).

SECTION 2.13 Breakage Payments . In the event of (a) the payment or prepayment, whether optional or mandatory, of any principal of any Eurodollar Loan earlier than the last day of an Interest Period applicable thereto (including as a result of an Event of Default), (b) the conversion of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or prepay any Revolving Loan or Term Loan on the date specified in any notice delivered pursuant hereto (whether or not such notice has been revoked under Section 2.07) or (d) the assignment of any Eurodollar Loan earlier than the last day of the Interest Period applicable thereto as a result of a request by Borrower pursuant to Section 2.16(b) or an assignment pursuant to Section 2.19(d) , then, in any such event, Borrower shall compensate each Lender for the loss, cost and expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if any, of (i) the amount of interest (excluding the Applicable Margin) which would have accrued on the principal amount of such Loan had such event not occurred, at the Adjusted LIBOR Rate that would have been applicable to such Loan, for the period from the date of such event to the last day of the then current Interest Period therefor (or, in the case of a failure to borrow, convert or continue, for the period that would have been the Interest Period for such Loan), over (ii) the amount of interest which would accrue on such principal amount for such period at the interest rate which such Lender would bid were it to bid, at the commencement of such period, for dollar deposits of a comparable amount and period from other banks in the Eurodollar market. A certificate of any Lender setting forth in reasonable detail any amount or amounts that such Lender is entitled to receive pursuant to this Section 2.13 shall be delivered to Borrower (with a copy to the Administrative Agent) and shall be conclusive and binding absent manifest error. Borrower shall pay such Lender the amount shown as due on any such certificate within 10 Business Days after receipt thereof.

SECTION 2.14 Payments Generally; Pro Rata Treatment; Sharing of Setoffs .

(a) Payments Generally . Borrower shall make each payment required to be made by it hereunder or under any other Loan Document (whether of principal, interest, fees or Reimbursement Obligations, or of amounts payable under Section 2.12 , 2.13 , 2.15 or 10.03 , or otherwise) on or before the time expressly required hereunder or under such other Loan Document for such payment (or, if no such time is expressly required, prior to 2:00 p.m., New York City time), on the date when due, in immediately available funds, without setoff, deduction or counterclaim. Any amounts received after such time on any date shall (unless the Administrative Agent determines, in its discretion, that the Lenders received, such amounts on such day with sufficient time to invest such amounts overnight), be deemed to have been received on the next succeeding Business Day for purposes of calculating interest thereon. All such payments shall be made to the Administrative Agent to an account specified by it to Borrower, except payments to be made directly to the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant to Sections 2.12 , 2.13 , 2.15 and 10.03 shall be made directly to the persons entitled thereto and

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payments pursuant to other Loan Documents shall be made to the persons specified therein. The Administrative Agent shall distribute any such payments received by it for the account of any other person to the appropriate recipient promptly following receipt thereof. If any payment under any Loan Document shall be due on a day that is not a Business Day, unless specified otherwise, the date for payment shall be extended to the next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon shall be payable for the period of such extension. All payments under each Loan Document shall be made in dollars, except as expressly specified otherwise.

(b) Pro Rata Treatment .

(i) Each payment by Borrower of interest in respect of the Loans shall be applied to the amounts of such obligations owing to the Lenders pro rata according to the respective amounts then due and owing to the Lenders.

(ii) Except as otherwise provided in Section 2.10(h) , each payment on account of principal of the Term Loans shall be allocated among the Term Loan Lenders pro rata based on the principal amount of the Term Loans held by the Term Loan Lenders. Each payment by Borrower on account of principal of the Revolving Borrowings shall be made pro rata according to the respective outstanding principal amounts of the Revolving Loans then held by the Revolving Lenders.

(c) Insufficient Funds . If at any time insufficient funds are received by and available to the Administrative Agent to pay fully all amounts of principal, Reimbursement Obligations, interest and fees then due hereunder, such funds shall be applied (i)  first , toward payment of interest and fees then due hereunder, ratably among the parties entitled thereto in accordance with the amounts of interest and fees then due to such parties and (ii)  second , toward payment of principal and Reimbursement Obligations then due hereunder (including and together with, any obligation to cash collateralize Letters of Credit), ratably among the parties entitled thereto in accordance with the amounts of principal and Reimbursement Obligations then due to such parties; provided , that the Administrative Agent may, subject to any applicable federal, state or foreign bankruptcy, insolvency, receivership or similar orders, distribute any adequate protection payments it receives on behalf of the Lenders to the Lenders in its sole discretion ( i.e. , whether to pay the earliest accrued interest, all accrued interest on a pro rata basis or otherwise).

(d) Sharing of Set-Off . If any Lender (and/or the Issuing Bank, which shall be deemed a “ Lender ” for purposes of this Section 2.14(d)) shall, by exercising any right of setoff or counterclaim or otherwise, obtain payment in respect of any principal of or interest on any of its Loans or other Obligations resulting in such Lender’s receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other Obligations greater than its pro rata share thereof as provided herein, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that:

(i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, without interest; and

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(ii) the provisions of this paragraph shall not be construed to apply to (x) any payment made by Borrower pursuant to and in accordance with the express terms of this Agreement or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or participations in LC Disbursements to any assignee or participant, other than to Borrower or any Subsidiary thereof (as to which the provisions of this paragraph shall apply).

Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Requirements of Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against such Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of such Loan Party in the amount of such participation. If under applicable bankruptcy, insolvency or any similar law any Secured Party receives a secured claim in lieu of a setoff or counterclaim to which this Section 2.14(d) applies, such Secured Party shall to the extent practicable, exercise its rights in respect of such secured claim in a manner consistent with the rights to which the Secured Party is entitled under this Section 2.14(d) to share in the benefits of the recovery of such secured claim.

(e) Borrower Default . Unless the Administrative Agent shall have received notice from Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Bank hereunder that Borrower will not make such payment, the Administrative Agent may assume that Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be, the amount due. In such event, if Borrower has not in fact made such payment, then each of the Lenders or the Issuing Bank, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Bank with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation.

(f) Lender Default . If any Lender shall fail to make any payment required to be made by it pursuant to Section 2.02(c) , 2.14(e) , 2.17(d) , 2.18(d) , 2.18(e) or 10.03(c) , then the Administrative Agent may, in its discretion (notwithstanding any contrary provision hereof), apply any amounts thereafter received by the Administrative Agent for the account of such Lender to satisfy such Lender’s obligations under such Sections until all such unsatisfied obligations are fully paid.

SECTION 2.15 Taxes .

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

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(b) Payment of Other Taxes by Borrower . Without limiting the provisions of clause (a)  above, Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in accordance with applicable Requirements of Law.

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

(d) Evidence of Payments . As soon as practicable after any payment of Indemnified Taxes or Other Taxes by Borrower to a Governmental Authority pursuant to this Section 2.15 , Borrower shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent.

(e) Status of Lenders . Each Foreign Lender shall, to the extent it may lawfully do so, deliver to Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of Borrower or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable:

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

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

(iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate, in substantially the form of Exhibit Q , or any other form approved by the Administrative Agent, to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 871(h)(3)(B) of the Code, (B) a “10 percent shareholder” of Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or

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

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(f) Treatment of Certain Refunds . If the Administrative Agent, a Lender or the Issuing Bank determines, in its good faith sole discretion, that it has received a refund of any Indemnified Taxes or Other Taxes as to which it has been indemnified by Borrower or with respect to which Borrower has