Exhibit 10.1
EXECUTION COPY
 
(JPMORGAN LOGO) [h40882h4088201.gif]
5-YEAR REVOLVING CREDIT AGREEMENT
dated as of November 2, 2006
among
DIAMOND OFFSHORE DRILLING, INC.
The Lenders Party Hereto
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent
and
THE BANK OF TOKYO-MITSUBISHI UFJ, LTD. HOUSTON AGENCY,
FORTIS CAPITAL CORP.,
HSBC BANK USA, NATIONAL ASSOCIATION,
WELLS FARGO BANK, N.A.,
and
BAYERISCHE HYPO-UND VEREINSBANK AG, MUNICH BRANCH,
as Co-Syndication Agents
 
J.P. MORGAN SECURITIES INC.,
as Sole Lead Arranger and Sole Bookrunner
 

 

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TABLE OF CONTENTS

         
ARTICLE I
       
Definitions
       
 
       
Section 1.01 Defined Terms
    1  
Section 1.02 Classification of Loans and Borrowings
    15  
Section 1.03 Terms Generally
    15  
Section 1.04 Accounting Terms; GAAP
    16  
 
       
ARTICLE II
       
The Credits
       
 
       
Section 2.01 Commitments
    16  
Section 2.02 Commitment Increase
    16  
Section 2.03 Loans and Borrowings
    18  
Section 2.04 Requests for Borrowings
    19  
Section 2.05 Letters of Credit
    19  
Section 2.06 Funding of Borrowings
    23  
Section 2.07 Interest Elections
    24  
Section 2.08 Termination and Reduction of Commitments
    25  
Section 2.09 Repayment of Loans; Evidence of Debt
    26  
Section 2.10 Prepayment of Loans
    27  
Section 2.11 Fees
    27  
Section 2.12 Interest
    29  
Section 2.13 Alternate Rate of Interest
    29  
Section 2.14 Increased Costs
    30  
Section 2.15 Break Funding Payments
    31  
Section 2.16 Taxes
    32  
Section 2.17 Payments Generally; Pro Rata Treatment; Sharing of Set-offs
    33  
Section 2.18 Mitigation Obligations; Replacement of Lenders
    35  
Section 2.19 Illegality
    36  
 
       
ARTICLE III
       
Representations and Warranties
       
 
       
Section 3.01 Organization; Powers
    36  
Section 3.02 Authorization; Enforceability
    36  
Section 3.03 Governmental Approvals; No Conflicts
    37  
Section 3.04 Financial Condition; No Material Adverse Change
    37  
Section 3.05 Properties
    37  
Section 3.06 Litigation and Environmental Matters
    37  
Section 3.07 Compliance with Laws and Agreements
    38  
Section 3.08 Investment Company Status
    38  
Section 3.09 Taxes
    38  
Section 3.10 ERISA
    38  
Section 3.11 Disclosure
    38  

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ARTICLE IV
       
Conditions
       
 
       
Section 4.01 Effective Date
    39  
Section 4.02 Each Credit Event
    40  
 
       
ARTICLE V
       
Affirmative Covenants
       
 
       
Section 5.01 Financial Statements; Ratings Change and Other Information
    40  
Section 5.02 Notices of Material Events
    42  
Section 5.03 Existence; Conduct of Business
    42  
Section 5.04 Payment of Tax Obligations
    42  
Section 5.05 Maintenance of Properties; Insurance
    42  
Section 5.06 Books and Records; Inspection Rights
    43  
Section 5.07 Compliance with Laws
    43  
Section 5.08 Use of Proceeds and Letters of Credit
    43  
Section 5.09 Covenant Upon a Change in Control
    43  
 
       
ARTICLE VI
       
Negative Covenants
       
 
       
Section 6.01 Liens
    44  
Section 6.02 Fundamental Changes
    45  
Section 6.03 Swap Agreements
    45  
Section 6.04 Transactions with Affiliates
    46  
Section 6.05 Subsidiary Indebtedness
    46  
Section 6.06 Consolidated Indebtedness to Total Capitalization Ratio
    47    
ARTICLE VII
       
Events of Default
         
ARTICLE VIII
       
The Administrative Agent
         
ARTICLE IX
       
Miscellaneous
       
 
       
Section 9.01 Notices
    51  
Section 9.02 Waivers; Amendments
    52  
Section 9.03 Expenses; Indemnity; Damage Waiver
    53  
Section 9.04 Successors and Assigns
    55  
Section 9.05 Survival
    58  
Section 9.06 Counterparts; Integration; Effectiveness
    58  
Section 9.07 Severability
    58  
Section 9.08 Right of Setoff
    58  
Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process
    59  
Section 9.10 WAIVER OF JURY TRIAL
    59  
Section 9.11 Headings
    59  
Section 9.12 Confidentiality
    60  
Section 9.13 Interest Rate Limitation
    60  
Section 9.14 USA PATRIOT Act
    61  

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Section 9.15 Officer’s Certificates
    61  

SCHEDULES:
Schedule 2.01 – Commitments
Schedule 3.06 – Disclosed Matters
Schedule 6.01 – Existing Liens
Schedule 6.04 – Affiliate Transactions
Schedule 6.05 – Existing Indebtedness
EXHIBITS:
Exhibit A – Form of Assignment and Assumption
Exhibit B – Form of Commitment Increase
Exhibit C – Form of Borrowing Request
Exhibit D – Form of Promissory Note
Exhibit E – Form of Opinion of Borrower’s Counsel

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     5-YEAR REVOLVING CREDIT AGREEMENT dated as of November 2, 2006 among
DIAMOND OFFSHORE DRILLING, INC., a Delaware corporation; the LENDERS party
hereto; JPMORGAN CHASE BANK, N.A., as Administrative Agent; and THE BANK OF
TOKYO-MITSUBISHI UFJ, LTD. HOUSTON AGENCY, FORTIS CAPITAL CORP., HSBC BANK USA,
NATIONAL ASSOCIATION, WELLS FARGO BANK, N.A., and BAYERISCHE HYPO-UND
VEREINSBANK AG, MUNICH BRANCH, as Co-Syndication Agents.
     The parties hereto agree as follows:
ARTICLE I
Definitions
     Section 1.01 Defined Terms. As used in this Agreement, the following terms
have the meanings specified below:
     “ABR”, when used in reference to any Loan or Borrowing, refers to whether
such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
     “Act” has the meaning set forth in Section 9.14.
     “Adjusted LIBO Rate” means, with respect to any Eurodollar Borrowing for
any Interest Period, an interest rate per annum (rounded to the nearest 1/100 of
1%) equal to (a) the LIBO Rate for such Interest Period multiplied by (b) the
Statutory Reserve Rate.
     “Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder, or any successor administrative
agent.
     “Administrative Questionnaire” means an Administrative Questionnaire in a
form supplied by the Administrative Agent.
     “Affected Loans” has the meaning set forth in Section 2.19.
     “Affiliate” means, 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.
     “Agreement” means this 5-Year Revolving Credit Agreement, as the same may
from time to time be amended, modified, supplemented, extended or restated.
     “Alternate Base Rate” means, for any day, a rate per annum equal to the
greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the Alternate
Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective from and including the effective date of such change in the
Prime Rate or the Federal Funds Effective Rate, respectively.

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     “Applicable Percentage” means, with respect to any Lender, the percentage
of the total Commitments represented by such Lender’s Commitment. If the
Commitments have terminated or expired, the Applicable Percentages shall be
determined based upon the Commitments most recently in effect, giving effect to
any assignments, reductions or increases.
     “Applicable Rate” means, for any day, with respect to any ABR Loan,
Eurodollar Loan or Performance Letter of Credit, or with respect to the facility
fees or utilization fees payable hereunder, as the case may be, the applicable
rate per annum set forth below under the caption “ABR Spread”, “Eurodollar
Spread”, “Performance Letter of Credit Spread”, “Facility Fee Rate” or
“Utilization Fee Rate”, as the case may be, based upon the ratings (either
express or implied) by S&P, Fitch and/or Moody’s, respectively, applicable on
such date to the Index Debt:

                                                              Performance      
                      Letter of         Index Debt Ratings   ABR   Eurodollar  
Credit   Facility   Utilization (S&P/Fitch/Moody’s):   Spread   Spread   Spread
  Fee Rate   Fee Rate
Category 1
³A/A/A2
    0.00 %     0.200 %     0.075 %     0.05 %     0.05 %
 
                                       
Category 2
A-/A-/A3
    0.00 %     0.240 %     0.090 %     0.06 %     0.05 %
 
                                       
Category 3
BBB+/BBB+/Baa1
    0.00 %     0.270 %     0.095 %     0.08 %     0.05 %
 
                                       
Category 4
BBB/BBB/Baa2
    0.00 %     0.350 %     0.125 %     0.10 %     0.10 %
 
                                       
Category 5
<BBB/BBB/Baa2
    0.00 %     0.525 %     0.200 %     0.125 %     0.10 %

     The Applicable Rate shall be determined based upon the two highest ratings
for the Index Debt issued by S&P, Fitch and Moody’s. If such two highest ratings
differ (i) by one rating, the higher of such two highest ratings will apply to
determine the Applicable Rate so long as the higher rating is from either S&P or
Moody’s, otherwise the lower of such two highest ratings will apply, (ii) by two
ratings, the rating which falls between such two highest ratings will apply to
determine the Applicable Rate, or (iii) by more than two ratings, the rating
which is one level below the higher of such two higher ratings will apply to
determine the Applicable Rate. If only one such rating is issued by S&P, Fitch
or Moody’s, the Applicable Rate will be determined based on such one rating and
a deemed rating in Category 5. The Borrower shall give written notice to the
Administrative Agent of any changes to the ratings established by S&P, Fitch and
Moody’s, within five (5) Business Days thereof, and any change to the Applicable
Rate shall be effective on the date of the relevant change. Notwithstanding the
foregoing, if the Borrower shall at any time fail to have in effect at least two
ratings on the Index Debt, the Borrower shall use commercially reasonable
efforts to seek and obtain (if not already in effect), within thirty

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(30) days after such rating first ceases to be in effect, a corporate credit
rating or a bank loan rating from S&P, Fitch and/or Moody’s, and the Applicable
Rate shall thereafter be based on such ratings in the same manner as provided
herein with respect to the Index Debt. Each change in the Applicable Rate shall
apply during the period commencing on the effective date of such change and
ending on the date immediately preceding the effective date of the next such
change. If the rating system of S&P, Fitch or Moody’s shall change, or if any
such rating agency shall cease to be in the business of rating corporate debt
obligations, the Borrower and the Lenders shall negotiate in good faith to amend
this definition to reflect such changed rating system or the unavailability of
ratings from such rating agency and, pending the effectiveness of any such
amendment, the Applicable Rate shall be determined by reference to the rating
most recently in effect prior to such change or cessation.
     “Arranger” means J.P. Morgan Securities Inc., in its capacities as sole
lead arranger and sole bookrunner hereunder.
     “Assignment and Assumption” means an assignment and assumption entered into
by a Lender and a permitted assignee (with the consent of any party whose
consent is required by Section 9.04), and accepted by the Administrative Agent,
substantially in the form of Exhibit A or any other form approved by the
Administrative Agent and the Borrower.
     “Availability Period” means the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of the Commitments.
     “Board” means the Board of Governors of the Federal Reserve System of the
United States of America.
     “Borrower” means Diamond Offshore Drilling, Inc., a Delaware corporation.
     “Borrowing” means Loans of the same 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.
     “Borrowing Request” means a request by the Borrower for a Borrowing in
accordance with Section 2.04.
     “Business Day” means any day that is not a Saturday, Sunday or other day on
which commercial banks in either Houston, Texas or New York City are authorized
or required by law to remain closed; provided 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 Lease Obligations” of any Person means 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 recorded liability thereof determined in accordance
with GAAP.
     “Change in Control” means (a) any Person other than Permitted Holders owns,
directly or indirectly, beneficially or of record, or has the power to vote or
direct the voting of, Equity

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Interests representing more than 50% of the aggregate ordinary voting power
represented by the issued and outstanding Equity Interests of the Borrower or
(b) Permitted Holders cease to own, directly or indirectly, beneficially or of
record, or have the power to vote or direct the voting of, Equity Interests
representing more than 25% of the aggregate ordinary voting power represented by
the issued and outstanding Equity Interests of the Borrower.
     “Change in Law” means (a) the adoption of any law, rule or regulation after
the date of this Agreement, (b) any change in any law, rule or regulation or in
the interpretation or application thereof by any Governmental Authority having
authority over any Lender or any Issuing Bank after the date of this Agreement
or (c) compliance by any Lender or any Issuing Bank (or, for purposes of
Section 2.14(b), by any lending office of such Lender or by such Lender’s or
such Issuing Bank’s holding company, if any) with any request, guideline or
directive (whether or not having the force of law) of any Governmental Authority
having authority over such Lender or such Issuing Bank made or issued after the
date of this Agreement.
     “Charges” has the meaning set forth in Section 9.13.
     “CI Lender” has the meaning set forth in Section 2.02(a).
     “Co-Syndication Agents” means The Bank of Tokyo-Mitsubishi UFJ, Ltd.
Houston Agency, Fortis Capital Corp., HSBC Bank USA, National Association, Wells
Fargo Bank, N.A., and Bayerische Hypo-Und Vereinsbank AG, Munich Branch, each in
its capacity as a co-syndication agent for the Lenders hereunder, together with
its successors in such capacity.
     “Code” means the Internal Revenue Code of 1986, as amended from time to
time.
     “Commitment” means, with respect to each Lender, the commitment of such
Lender to make Loans and to acquire participations in Letters of Credit
hereunder, expressed as an amount representing the maximum aggregate amount of
such Lender’s Credit Exposure hereunder, as such commitment may be (a) increased
from time to time pursuant to Section 2.02, (b) reduced from time to time
pursuant to Section 2.08 and (c) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender’s Commitment is set forth on Schedule 2.01, or in the Assignment
and Assumption pursuant to which such Lender shall have assumed its Commitment,
as applicable. The initial aggregate amount of the Lenders’ Commitments is
$250,000,000.
     “Commitment Increase” has the meaning set forth in Section 2.02(a).
     “Commitment Increase Effective Date” has the meaning set forth in
Section 2.02(b).
     “Confidential Information Memorandum” means the Confidential Information
Memorandum dated September 26, 2006 relating to the Borrower and the
Transactions.
     “Consolidated Indebtedness” means, at the date of any determination
thereof, all Indebtedness of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.

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     “Consolidated Net Assets” means, at the date of any determination thereof,
an amount equal to the aggregate book value of the assets of the Borrower and
its Subsidiaries, minus all current liabilities of the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
     “Consolidated Net Worth” means, at the date of any determination thereof,
stockholders’ equity of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP.
     “Consolidated Tangible Net Worth” means, at the date of any determination
thereof, the sum of (a) Consolidated Net Worth, minus (b) the net book value of
all assets, after deducting any reserves applicable thereto, which would be
treated as intangible under GAAP.
     “Control” means 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 ability to exercise voting power, by contract or otherwise.
“Controlling” and “Controlled” have meanings correlative thereto.
     “Credit Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans and its LC Exposure at
such time.
     “Default” means any event or condition which constitutes an Event of
Default or which upon the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
     “Disclosed Matters” means the actions, suits and proceedings and the
environmental matters disclosed in the Borrower’s Annual Report on Form 10-K for
the year ended December 31, 2005, the Borrower’s Quarterly Reports on Form 10-Q
for the quarters ended March 31, 2006 and June 30, 2006, and as set forth in
Schedule 3.06.
     “dollars” or “$” refers to lawful money of the United States of America.
     “Effective Date” means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
     “Environmental Laws” means all laws, rules, regulations, codes, ordinances,
orders, decrees, judgments, injunctions, notices or binding agreements issued,
promulgated or entered into by any Governmental Authority, relating in any way
to the environment, preservation or reclamation of natural resources, the
management, release or threatened release of any Hazardous Materials or to
health and safety matters.
     “Environmental Liability” means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract,

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agreement or other consensual arrangement pursuant to which liability is assumed
or imposed with respect to any of the foregoing.
     “Equity Interests” means shares of capital stock, partnership interests,
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, and any warrants, options
or other rights entitling the holder thereof to purchase or acquire any such
equity interest.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
     “ERISA Affiliate” means any trade or business (whether or not incorporated)
that, together with the Borrower, is treated as a single employer under Section
414(b) or (c) of the Code or, solely for purposes of Section 302 of ERISA and
Section 412 of the Code, is treated as a single employer under Section 414 of
the Code.
     “ERISA Event” means (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); (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
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; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate 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.
     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Adjusted LIBO Rate.
     “Event of Default” has the meaning assigned to such term in Article VII.
     “Excluded Taxes” means, with respect to the Administrative Agent, any
Lender, any Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income, capital, profits or gains by
the United States of America, or by the jurisdiction under the laws of which
such recipient is organized or in which its principal office is located or, in
the case of any Lender, in which its applicable lending office or permanent
establishment is located, (b) any branch profits taxes imposed by the United
States of America or any similar tax imposed by any other jurisdiction in which
the Borrower is located, (c) in the case of a Foreign

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Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.18(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender’s
failure to comply with Section 2.16(e), except 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 the
Borrower with respect to such withholding tax pursuant to Section 2.16(a) and
(d) Taxes which would not have been imposed but for a determination by a
Governmental Authority or a court of competent jurisdiction that a form,
certification, documentation or other proof provided by such Lender, such
Issuing Bank or the Administrative Agent to establish an exemption from or
reduction in such tax, assessment or other governmental charge is false or not
properly completed.
     “FAS 133” means Statement 133, Accounting for Derivative Instruments and
Hedging Activities, of the Financial Accounting Standards Board, along with any
interpretations, implementation guides and technical or practice bulletins from
time to time relating thereto.
     “Federal Funds Effective Rate” means, for any day, a fluctuating interest
rate per annum equal for such day to the weighted average (rounded, if
necessary, to the nearest 1/100 of 1%) of the rates on overnight Federal funds
transactions with members of the Federal Reserve System 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 (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
     “Financial Officer” means the chief financial officer, principal accounting
officer, treasurer or controller of the Borrower.
     “Fitch” means Fitch, Inc., and any successor thereto that is a nationally
recognized rating agency.
     “Foreign Lender” means any Lender that is organized under the laws of a
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
     “GAAP” means generally accepted accounting principles in the United States
of America.
     “Governmental Authority” means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the “primary obligor”) in any manner,

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whether directly or indirectly, and including any obligation of the guarantor,
direct or indirect, (a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or other obligation or to purchase (or
to advance or supply funds for the purchase of) any security for the payment
thereof, (b) to purchase or lease property, securities or services for the
purpose of assuring the owner of such Indebtedness or other obligation of the
payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness or other obligation or
(d) as an account party in respect of any letter of credit or letter of guaranty
issued to support such Indebtedness or obligation; provided, that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business.
     “Hazardous Materials” means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
     “Indebtedness” of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding accounts payable and accrued expenses, liabilities or other
obligations to pay the deferred purchase price of property or services, from
time to time incurred in the ordinary course of business which are not
delinquent or which are being contested in good faith by appropriate action and
for which adequate reserves have been maintained in accordance with GAAP),
(e) all Indebtedness of others secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person,
(h) all obligations, contingent or otherwise, of such Person as an account party
in respect of letters of credit and letters of guaranty and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers’ acceptances. 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 to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
Notwithstanding the foregoing, the term “Indebtedness” shall exclude
Non-Recourse Indebtedness.
     “Indemnified Taxes” means Taxes other than Excluded Taxes.
     “Indemnitee” has the meaning set forth in Section 9.03(b).
     “Index Debt” means senior, unsecured, long-term indebtedness for borrowed
money of the Borrower that is not guaranteed by any other Person or subject to
any other credit enhancement.

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     “Interest Election Request” means a request by the Borrower to convert or
continue a Borrowing in accordance with Section 2.07.
     “Interest Payment Date” means (a) with respect to any ABR Loan, the last
day of each March, June, September and December and (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 Borrowing 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.
     “Interest Period” means 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 with the consent of each Lender, such other periods for which LIBO Rates are
available at such time) thereafter, as the Borrower may elect; provided, that
(i) 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
(ii) 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.
     “Issuing Bank” means JPMorgan Chase Bank, N.A. or any other Lender
designated as an Issuing Bank by the Borrower with the consent of such Lender
and the Administrative Agent (such consent of the Administrative Agent not to be
unreasonably withheld, conditioned or delayed), in each case, in its capacity as
an issuer of any Letter of Credit hereunder. Each Issuing Bank may, with the
consent of the Borrower, arrange for one or more Letters of Credit to be issued
by Affiliates of such Issuing Bank, in which case the term “Issuing Bank” shall
include any such Affiliate with respect to Letters of Credit issued by such
Affiliate.
     “Investment Grade Person” means, with respect to any Equity Interests of
the Borrower, a Person that has, at the time it acquires such Equity Interests
or the power to vote or direct the voting of such Equity Interests, issued
unsecured senior debt (that is not guaranteed or supported by third party credit
enhancement) that has (a) a rating from S&P of A or above and (b) a rating from
Moody’s of A or above.
     “LC Disbursement” means a payment made by any Issuing Bank pursuant to a
Letter of Credit issued by such Issuing Bank.
     “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Lender at any time shall be
its Applicable Percentage of the total LC Exposure at such time.

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     “Lenders” means the Persons listed on Schedule 2.01 and any other Person
that shall have become a party hereto pursuant to Section 2.02 or pursuant to an
Assignment and Assumption, other than any such Person that ceases to be a party
hereto pursuant to an Assignment and Assumption.
     “Letter of Credit” means any letter of credit issued pursuant to this
Agreement.
     “LIBO Rate” means, with respect to any Eurodollar Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Market Service
(or on any successor or substitute page of such Service providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent in its reasonable discretion from time
to time for purposes of providing quotations of interest rates applicable to
dollar deposits in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits with a maturity comparable to such
Interest Period. In the event that such rate is not available at such time for
any reason, then the “LIBO Rate” with respect to such Eurodollar Borrowing for
such Interest Period shall be the rate at which dollar deposits of $5,000,000
and for a maturity comparable to such Interest Period are offered by the
principal London office of the Administrative Agent in immediately available
funds in the London interbank market at approximately 11:00 a.m., London time,
two Business Days prior to the commencement of such Interest Period.
     “Lien” means, with respect to any asset, (a) any mortgage, deed of trust,
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (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 asset and (c) in the case of securities, any purchase option,
call or similar right of a third party with respect to such securities.
     “Loan Documents” means this Agreement and the Notes, if any.
     “Loan Exposure” means, with respect to any Lender at any time, the sum of
the outstanding principal amount of such Lender’s Loans at such time.
     “Loans” means the loans made by the Lenders to the Borrower pursuant to
this Agreement.
     “Material Adverse Effect” means a material adverse effect on (a) the
business, assets, operations or condition of the Borrower and the Subsidiaries
taken as a whole, or (b) the ability of the Borrower to perform any of its
payment obligations under any Loan Document.
     “Material Indebtedness” means Indebtedness (other than the Loans and
Letters of Credit), or obligations in respect of one or more Swap Agreements, of
any one or more of the Borrower and its Subsidiaries in an aggregate principal
amount exceeding $100,000,000. For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Borrower or any
Subsidiary in respect of any Swap Agreement at any time shall be the net
obligations in an amount equal to (i) if such Swap Agreement has been
terminated, the termination value thereof, or (ii) if such Swap Agreement has
not been terminated, the mark-to-market value thereof

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determined on the basis of readily available quotations provided by any
recognized dealer in such Swap Agreement.
     “Maturity Date” means the fifth anniversary of the Effective Date.
     “Maximum Rate” has the meaning set forth in Section 9.13.
     “Moody’s” means Moody’s Investors Service, Inc., and any successor thereto
that is a nationally recognized rating agency.
     “Multiemployer Plan” means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
     “Net Worth” means, with respect to any Subsidiary at the date of any
determination thereof, stockholders’ equity of such Subsidiary, determined in
accordance with GAAP.
     “New Funds Amount” has the meaning set forth in Section 2.02(d).
     “Non-Recourse Indebtedness” means any Indebtedness (for this purpose,
excluding the last sentence of the definition of “Indebtedness”) of any Person
in respect of which the holder or holders thereof (a) shall have recourse only
to, and shall have the right to require the obligations of such Person to be
performed, satisfied, and paid only out of, certain specified property or assets
of such Person and (b) shall have no direct or indirect recourse (including by
way of guaranty, support or indemnity) to the Borrower, any Subsidiary or any of
the property or assets of the Borrower, whether for principal, interest, fees,
expenses or otherwise.
     “Notice of Commitment Increase” has the meaning set forth in
Section 2.02(b).
     “Notes” means the promissory notes of the Borrower described in
Section 2.09(e) and being substantially in the form of Exhibit D, together with
all amendments, modifications, replacements, extensions and rearrangements
thereof.
     “Other Taxes” means any and 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 from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
     “Participant” has the meaning set forth in Section 9.04.
     “PBGC” means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
     “Performance Letter of Credit” means any Letter of Credit issued to support
contractual obligations for supply, service or construction contracts,
including, but not limited to, bid, performance, advance payment, warranty,
retention, availability and defects liability obligations.

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     “Permitted Encumbrances” means:
          (a) Liens imposed by law for Taxes that are not delinquent or which
thereafter can be paid without penalty, or which are being contested in good
faith by appropriate action and for which adequate reserves have been maintained
in accordance with GAAP;
          (b) carriers’, warehousemen’s, mechanics’, workmen’s materialmen’s,
maritime, landlord’s, repairmen’s and other like Liens imposed by law, arising
in the ordinary course of business (or deposits or pledges to obtain the release
of such obligation) and securing obligations that are not overdue by more than
30 days in regard to domestic assets or 90 days in regard to international
assets or which are being contested in good faith by appropriate action and for
which adequate reserves have been maintained in accordance with GAAP;
          (c) pledges, deposits or other Liens arising in the ordinary course of
business in compliance with workers’ compensation, unemployment insurance, old
age benefits, and other social security laws or regulations, or in connection
with obtaining or maintaining self-insurance or to obtain the benefits of any
law, regulation or arrangement pertaining to unemployment insurance, old age
pensions, social security or similar matters;
          (d) deposits, pledges and other Liens to secure the performance of
bids, trade contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case in the
ordinary course of business;
          (e) judgment liens in respect of judgments, or in connection with
surety or appeal or customs bonds or the like in connection with bonding such
judgments or awards, that do not constitute an Event of Default under clause
(l) of Article VII;
          (f) easements, zoning restrictions, planning or environmental laws and
municipal regulations, rights-of-way, servitudes, restrictions, conditions,
covenants, exceptions and reservations and similar encumbrances on real property
imposed by law or arising in the ordinary course of business and other
deficiencies in title of any property or right of way that do not secure any
monetary obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business of the
Borrower or any Subsidiary;
          (g) Liens of sellers of goods to the Borrower and any of its
Subsidiaries arising under Article 2 of the Uniform Commercial Code or similar
provisions of applicable law in the ordinary course of business, covering only
the goods sold and securing only the unpaid purchase price for such goods and
related expenses;
          (h) rights reserved to or vested in any Governmental Authority by the
terms of any right, power, franchise, grant, license or permit, or by any
provision of law to terminate such right, power, franchise, license or permit or
to purchase, condemn, expropriate or recapture or to designate a purchaser of
any of the property of a Person;
          (i) Liens imposed by ERISA (or comparable foreign laws) which are
being contested in good faith by appropriate proceedings and reserves in
conformity with GAAP have been provided therefor;

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          (j) Liens arising solely by virtue of any statutory or common law
provision relating to banker’s liens, rights of set-off or similar rights and
remedies and burdening only deposit accounts or other funds maintained with a
creditor depository institution, provided that no such deposit account is a
dedicated cash collateral account or is subject to restrictions against access
by the depositor in excess of those set forth by regulations promulgated by the
Board and no such deposit account is intended to provide collateral to the
depository institution;
          (k) any Lien arising hereunder; and
          (l) Liens created or evidenced or resulting from financing statements
regarding operating leases that are not synthetic leases filed by lessors of
property (but only with respect to the property so leased);
provided that, except as provided in clause (k) above, the term “Permitted
Encumbrances” shall not include any Lien securing Indebtedness.
     “Permitted Holder” means Loews Corporation, a Delaware corporation, any of
its subsidiaries, any Investment Grade Person, or any combination thereof.
     “Permitted Investment” means any of the following investments:
          (a) direct general obligations of, or obligations fully and
unconditionally guaranteed as to the timely payment of principal and interest
by, the United States or any agency or instrumentality thereof having maturities
of not more than six months from the date of acquisition, but excluding any such
securities whose terms do not provide for payment of a fixed dollar amount upon
maturity or call for redemption;
          (b) certificates of deposit and Eurodollar time deposits with
maturities of six months or less from the date of acquisition, bankers’
acceptances with maturities not exceeding six months, overnight bank deposits,
and other short-term deposit instruments, in each case with any domestic
commercial bank having capital and surplus in excess of $1,000,000,000 and
having a rating of at least “A2” (or the equivalent thereof) by Moody’s, at
least “A” (or the equivalent thereof) by S&P; or
          (c) any other short-term, marketable, investment-grade security or
obligation requested by the Borrower and acceptable to the Administrative Agent
in its sole discretion.
     “Person” means any natural person, corporation, limited liability company,
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
     “Plan” means 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, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.
     “Prime Rate” means the rate of interest per annum publicly announced from
time to time by JPMorgan Chase Bank, N.A. as its prime rate in effect at its
principal office in New York

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City; each change in the Prime Rate shall be effective from and including the
date such change is publicly announced as being effective.
     “Reducing Percentage Lender” has the meaning set forth in Section 2.02(d).
     “Reduction Amount” has the meaning set forth in Section 2.02(d).
     “Register” has the meaning set forth in Section 9.04.
     “Related Parties” means, with respect to any specified Person, such
Person’s Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person’s Affiliates.
     “Required Lenders” means, at any time, Lenders having Credit Exposures and
unused Commitments representing more than 50% of the sum of the total Credit
Exposures and unused Commitments at such time.
     “Responsible Officer” means, as to any Person, the Chief Executive Officer,
the President, any Financial Officer or any Vice President of such Person.
Unless otherwise specified, all references to a Responsible Officer herein shall
mean a Responsible Officer of the Borrower.
     “S&P” means Standard & Poor’s Rating Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto that is a nationally
recognized rating agency.
     “Significant Subsidiary” means any Subsidiary, the Net Worth of which
represents more than 10% of Consolidated Net Worth.
     “Statutory Reserve Rate” means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board to which the Administrative Agent is subject with
respect to the Adjusted LIBO Rate, for eurocurrency funding (currently referred
to as “Eurocurrency Liabilities” in Regulation D of the Board). Such reserve
percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute eurocurrency funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions or offsets that may be available from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.
     “subsidiary” means, with respect to any Person (the “parent”) at any date,
any corporation, limited liability company, partnership, association or other
entity 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, as well as any other
corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of
the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of

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the general partnership interests are, as of such date, owned, controlled or
held by the parent or one or more subsidiaries of the parent or by the parent
and one or more subsidiaries of the parent.
     “Subsidiary” means any subsidiary of the Borrower.
     “Swap Agreement” means any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no stock
option plan or stock appreciation right or phantom stock or similar plan
providing for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Borrower or any Affiliate
of the Borrower shall be a Swap Agreement.
     “Taxes” means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
     “Total Capitalization” means, at the date of any determination thereof, the
sum of (a) Consolidated Indebtedness plus (b) Consolidated Tangible Net Worth.
     “Transactions” means the execution, delivery and performance by the
Borrower of the Loan Documents, the borrowing of Loans, the use of the proceeds
thereof and the issuance of Letters of Credit hereunder.
     “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 LIBO Rate or the Alternate Base Rate.
     “Withdrawal Liability” means 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 Type (e.g., a “Eurodollar
Loan”). Borrowings also may be classified and referred to by Type (e.g., a
“Eurodollar 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
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

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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 rating by any rating agency shall be construed to refer to such rating or
its equivalent under any successor rating categories of such rating agency 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 terms of an accounting or financial nature shall be construed in
accordance with GAAP, as in effect from time to time; provided that, if the
Borrower notifies the Administrative Agent that the Borrower requests an
amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
     Section 2.01 Commitments. Subject to the terms and conditions set forth
herein, each Lender agrees to make Loans to the Borrower from time to time
during the Availability Period in an aggregate principal amount that will not
result in (a) such Lender’s Credit Exposure exceeding such Lender’s Commitment
or (b) the sum of the total Credit Exposures exceeding the total Commitments.
Within the foregoing limits and subject to the terms and conditions set forth
herein, the Borrower may borrow, prepay and reborrow Loans.
     Section 2.02 Commitment Increase.
          (a) Subject to the terms and conditions set forth herein, the Borrower
shall have the right, without the consent of the Lenders, from time to time to
cause an increase in the Commitments of the Lenders (a “Commitment Increase”) by
adding to this Agreement one or more additional lenders that are not already
Lenders hereunder and that are reasonably satisfactory to the Administrative
Agent and each Issuing Bank (each, a “CI Lender”) or by allowing one or more
existing Lenders to increase their respective Commitments; provided that
(i) both before and immediately after giving effect to such Commitment Increase,
no Event of Default shall have occurred and be continuing as of the relevant
Commitment Increase Effective Date, (ii) no such Commitment Increase shall be
less than $10,000,000, (iii) the aggregate amount of all such Commitment
Increases shall not exceed $100,000,000, (iv) no Lender’s Commitment shall be
increased without such Lender’s prior written consent (which consent may be
given or withheld in such Lender’s sole and absolute discretion) and (v) if, on
the effective date of such increase, any Loans have been funded, then the
Borrower shall be obligated to pay any breakage fees or costs that are payable
pursuant to Section 2.15 in connection with the reallocation of such outstanding
Loans.

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          (b) The Borrower shall provide the Administrative Agent with written
notice (a “Notice of Commitment Increase”) in the form of Exhibit B attached
hereto of its intention to increase the Commitments pursuant to this
Section 2.02. Each such Notice of Commitment Increase shall specify (i) the
proposed effective date of such Commitment Increase (each such date, a
“Commitment Increase Effective Date”), which date shall be no earlier than five
(5) Business Days after receipt by the Administrative Agent of such Notice of
Commitment Increase, (ii) the amount of the requested Commitment Increase
(provided that after giving effect to such requested Commitment Increase, the
aggregate amount of all Commitment Increases does not exceed the amount set
forth in subsection (a)(iii) above), (iii) the identity of each CI Lender or
Lender that has agreed in writing to increase its Commitment hereunder, and
(iv) the amount of the respective Commitments of the then existing Lenders and
the CI Lenders from and after the Commitment Increase Effective Date.
          (c) On each Commitment Increase Effective Date, to the extent that
there are Loans outstanding as of such date, (i) each CI Lender shall, by wire
transfer of immediately available funds, deliver to the Administrative Agent
such CI Lender’s New Funds Amount, which amount, for each such CI Lender, shall
constitute Loans made by such CI Lender to the Borrower pursuant to this
Agreement on such Commitment Increase Effective Date, (ii) each existing Lender
that has agreed to increase its Commitment shall, by wire transfer of
immediately available funds, deliver to the Administrative Agent such Lender’s
New Funds Amount, which amount, for each such Lender, shall constitute Loans
made by such Lender to the Borrower pursuant to this Agreement on such
Commitment Increase Effective Date, (iii) the Administrative Agent shall, by
wire transfer of immediately available funds, pay to each then Reducing
Percentage Lender its Reduction Amount, which amount, for each such Reducing
Percentage Lender, shall constitute a prepayment by the Borrower pursuant to
Section 2.10, ratably in accordance with the respective principal amounts
thereof, of the principal amounts of all then outstanding Loans of such Reducing
Percentage Lender, and (iv) the Borrower shall be responsible to pay to each
Lender any breakage fees or costs that are payable pursuant to Section 2.15 in
connection with the reallocation of any outstanding Loans.
          (d) For purposes of this Section 2.02 and Exhibit B, the following
defined terms shall have the following meanings: (i) “New Funds Amount” means,
on any Commitment Increase Effective Date, the amount equal to the product of a
Lender’s increased Commitment or a CI Lender’s Commitment (as applicable)
represented as a percentage of the aggregate Commitments after giving effect to
any Commitment Increase on such Commitment Increase Effective Date, times the
aggregate principal amount of the outstanding Loans immediately prior to giving
effect to such Commitment Increase, if any, as of such Commitment Increase
Effective Date (without regard to any increase in the aggregate principal amount
of Loans as a result of Borrowings made after giving effect to such Commitment
Increase on such Commitment Increase Effective Date); (ii) “Reducing Percentage
Lender” means each then existing Lender immediately prior to giving effect to
any Commitment Increase that does not increase its respective Commitment as a
result of such Commitment Increase and whose relative percentage of the
Commitments shall be reduced after giving effect to such Commitment Increase;
and (iii) “Reduction Amount” means the amount by which a Reducing Percentage
Lender’s outstanding Loans decrease as of any Commitment Increase Effective Date
as a result of the Commitment Increase occurring on such Commitment Increase
Effective Date (without regard to the effect of

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any Borrowings made on such Commitment Increase Effective Date after giving
effect to the Commitment Increase occurring on such Commitment Increase
Effective Date).
          (e) Each Commitment Increase shall become effective on its Commitment
Increase Effective Date and upon such effectiveness (i) the Administrative Agent
shall record in the register each then CI Lender’s information as provided in
the applicable Notice of Commitment Increase and pursuant to an Administrative
Questionnaire that shall be executed and delivered by each CI Lender to the
Administrative Agent on or before such Commitment Increase Effective Date,
(ii) Schedule 2.01 hereof shall be amended and restated to set forth all Lenders
(including any CI Lenders) that will be Lenders hereunder after giving effect to
such Commitment Increase (which amended and restated Schedule 2.01 shall be set
forth in Annex I to the applicable Notice of Commitment Increase) and the
Administrative Agent shall distribute to each Lender (including each CI Lender)
a copy of such amended and restated Schedule 2.01, and (iii) each CI Lender
identified on the Notice of Commitment Increase for such Commitment Increase
shall be a “Lender” for all purposes under this Agreement.
          (f) Each Commitment Increase shall be deemed to constitute a
representation and warranty by the Borrower on the applicable Commitment
Increase Effective Date that, at the time of and immediately after giving effect
to such Commitment Increase, (i) the representations and warranties of the
Borrower set forth in this Agreement are true and correct in all material
respects on and as of such Commitment Increase Effective Date, except to the
extent any such representations and warranties are expressly limited to an
earlier date, in which case, on and as of such Commitment Increase Effective
Date, such representations and warranties shall continue to be true and correct
in all material respects as of such specified earlier date, and (ii) no Event of
Default shall have occurred and be continuing.
     Section 2.03 Loans and Borrowings.
          (a) Each Loan shall be made as part of a Borrowing consisting of Loans
made by the Lenders ratably in accordance with their respective Commitments. The
failure of any Lender to make any Loan required to be made by it shall not
relieve any other Lender of its obligations hereunder; provided that the
Commitments of the Lenders are several and no Lender shall be responsible for
any other Lender’s failure to make Loans as required.
          (b) Subject to Section 2.13, each Borrowing shall be comprised
entirely of ABR Loans or Eurodollar Loans as the Borrower may request in
accordance herewith. Each Lender at its option may 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 the Borrower to repay such Loan in accordance with the terms of this
Agreement.
          (c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $5,000,000. At the time that each ABR
Borrowing is made, such Borrowing shall be in an aggregate amount that is an
integral multiple of $1,000,000 and not less than $1,000,000. Notwithstanding
the foregoing, an ABR Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Commitments or that is required or

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requested to finance the reimbursement of an LC Disbursement as contemplated by
Section 2.05(e). Borrowings of more than one Type may be outstanding at the same
time; provided that there shall not at any time be more than a total of ten
(10) Eurodollar Borrowings outstanding.
          (d) Notwithstanding any other provision of this Agreement, the
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 Maturity Date.
     Section 2.04 Requests for Borrowings. To request a Borrowing, the Borrower
shall notify the Administrative Agent of such request by telephone (a) 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 or (b) in the case
of an ABR Borrowing, not later than 11:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in substantially the form of
Exhibit C. Each such telephonic and written Borrowing Request shall specify the
following information in compliance with Section 2.03:
               (i) the aggregate amount of the requested Borrowing;
               (ii) the date of such Borrowing, which shall be a Business Day;
               (iii) whether such Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing;
               (iv) 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”; and
               (v) the location and number of the Borrower’s account to which
funds are to be disbursed, which shall comply with the requirements of
Section 2.06(a).
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Borrowing, then the Borrower shall be deemed
to have selected an Interest Period of one 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 2.05 Letters of Credit.
          (a) General; Certain Conditions. Subject to the terms and conditions
set forth herein, each Issuing Bank agrees to issue dollar denominated Letters
of Credit for the Borrower’s own account, in a form reasonably acceptable to the
Administrative Agent and such Issuing Bank, at any time and from time to time
during the Availability Period; provided that a Letter of Credit shall be
issued, amended, renewed or extended only if (and upon issuance, amendment,
renewal or extension of each Letter of Credit the Borrower shall be deemed to
represent and warrant that), after giving effect to such issuance, amendment,
renewal or extension: (i) the LC

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Exposure shall not exceed an amount equal to the total Commitments, (ii) the sum
of the total Credit Exposures shall not exceed the total Commitments, and
(iii) the face amount of such Letter of Credit shall be at least $150,000. In
the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit
application or other agreement submitted by the Borrower to, or entered into by
the Borrower with, any Issuing Bank relating to any Letter of Credit issued by
such Issuing Bank, the terms and conditions of this Agreement shall control.
          (b) Notice of Issuance, Amendment, Renewal, Extension. To request the
issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or telecopy (or
transmit by electronic communication, if arrangements for doing so have been
approved by such Issuing Bank) to the relevant Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, which must be at least $150,000, the name and address of the
beneficiary thereof and such other information as shall be necessary to prepare,
amend, renew or extend such Letter of Credit. If requested by an Issuing Bank,
the Borrower also shall submit a letter of credit application on a form agreed
between the Borrower and such Issuing Bank in connection with any request for a
Letter of Credit.
          (c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the date that is five Business Days prior to the
Maturity Date.
          (d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank that issues such Letter of Credit
or the Lenders, each Issuing Bank hereby grants to each Lender, and each Lender
hereby acquires from such Issuing Bank, a participation in each Letter of Credit
issued by such Issuing Bank equal to such Lender’s Applicable Percentage of the
aggregate amount available to be drawn under such Letter of Credit. In
consideration and in furtherance of the foregoing, each Lender hereby absolutely
and unconditionally agrees to pay to the Administrative Agent, for the account
of each Issuing Bank, such Lender’s Applicable Percentage of each LC
Disbursement made by such Issuing Bank and not reimbursed by the Borrower on the
date due as provided in paragraph (e) of this Section, or of any reimbursement
payment required to be refunded to the Borrower for any reason. Each Lender
acknowledges and agrees that its obligation to acquire participations pursuant
to this paragraph in respect of Letters of Credit is absolute and unconditional
and shall not be affected by any circumstance whatsoever, including any
amendment, renewal or extension of any Letter of Credit or the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever.
          (e) Reimbursement. If any Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit issued by such Issuing Bank, the Borrower shall
reimburse such LC Disbursement by paying to the Administrative Agent an amount
equal to such LC Disbursement

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not later than 12:00 noon, New York City time, on the date that such LC
Disbursement is made, if the Borrower shall have received notice of such LC
Disbursement prior to 10:00 a.m., New York City time, on such date, or, if such
notice has not been received by the Borrower prior to such time on such date,
then not later than 12:00 noon, New York City time, on (i) the Business Day that
the Borrower receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Borrower receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that,
if such LC Disbursement is not less than $1,000,000, the Borrower may, subject
to the conditions to borrowing set forth herein, request in accordance with
Section 2.04 that such payment be financed with an ABR Borrowing in an
equivalent amount and, to the extent so financed, the Borrower’s obligation to
make such payment shall be discharged and replaced by the resulting ABR
Borrowing. If the Borrower fails to make such payment when due, the
Administrative Agent shall notify each Lender of the applicable LC Disbursement,
the payment then due from the Borrower in respect thereof and such Lender’s
Applicable Percentage thereof. Promptly following receipt of such notice, each
Lender shall pay to the Administrative Agent its Applicable Percentage of the
payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Lenders), and the
Administrative Agent shall promptly pay to the relevant Issuing Bank the amounts
so received by it from the Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the
relevant Issuing Bank or, to the extent that Lenders have made payments pursuant
to this paragraph to reimburse such Issuing Bank, then to such Lenders and such
Issuing Bank as their interests may appear. Any payment made by a Lender
pursuant to this paragraph to reimburse an Issuing Bank for any LC Disbursement
(other than the funding of ABR Loans as contemplated above) shall not constitute
a Loan and shall not relieve the Borrower of its obligation to reimburse such LC
Disbursement.
          (f) Obligations Absolute. The Borrower’s obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by any Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrower’s obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Banks, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of any
Issuing Bank;

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provided that the foregoing shall not be construed to excuse any Issuing Bank
from liability to the Borrower to the extent of any direct damages (as opposed
to consequential damages, claims in respect of which are hereby waived by the
Borrower to the extent permitted by applicable law) suffered by the Borrower
that are caused by such Issuing Bank’s failure to exercise care when determining
whether drafts and other documents presented under a Letter of Credit comply
with the terms thereof. The parties hereto expressly agree that, in the absence
of gross negligence, bad faith, an unlawful act or wilful misconduct on the part
of any Issuing Bank (as finally determined by a court of competent
jurisdiction), such Issuing Bank shall be deemed to have exercised care in each
such determination. In furtherance of the foregoing and without limiting the
generality thereof, the parties agree that, with respect to documents presented
which appear on their face to be in substantial compliance with the terms of a
Letter of Credit, the Issuing Bank that issued such Letter of Credit may, in its
sole discretion, either accept and make payment upon such documents without
responsibility for further investigation, regardless of any notice or
information to the contrary, or refuse to accept and make payment upon such
documents if such documents are not in strict compliance with the terms of such
Letter of Credit.
          (g) Disbursement Procedures. Each Issuing Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit issued by such Issuing Bank. Such
Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by telecopy) of such demand for payment and whether such
Issuing Bank has made or will make an LC Disbursement thereunder; provided that
any failure to give or delay in giving such notice shall not relieve the
Borrower of its obligation to reimburse such Issuing Bank and the Lenders with
respect to any such LC Disbursement.
          (h) Interim Interest. If any Issuing Bank shall make any LC
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Loans; provided that,
if the Borrower fails to reimburse or finance such LC Disbursement when due
pursuant to paragraph (e) of this Section, then Section 2.12(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of such
Issuing Bank, except that interest accrued on and after the date of payment by
any Lender pursuant to paragraph (e) of this Section to reimburse such Issuing
Bank shall be for the account of such Lender to the extent of such payment.
          (i) Replacement of an Issuing Bank. Any Issuing Bank may be replaced
at any time by written agreement among the Borrower, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the Lenders of any such replacement of an Issuing Bank. At
the time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.11(c). From and after the effective date of any such replacement,
(i) the successor Issuing Bank shall have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
by it thereafter and (ii) references herein to the term “Issuing Bank” shall be
deemed to refer to such successor or to any previous Issuing Bank, or to such
successor and all previous Issuing Banks, as the context shall require. After
the

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replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
          (j) Cash Collateralization. If any Event of Default shall occur and be
continuing (and the Borrower is not otherwise then required to provide
collateral pursuant to Section 5.09), on the Business Day that the Borrower
receives notice from the Administrative Agent or the Required Lenders (or, if
the maturity of the Loans has been accelerated, Lenders with LC Exposure
representing greater than 50% of the total LC Exposure) demanding the deposit of
cash collateral pursuant to this paragraph, the Borrower shall deposit in an
account with the Administrative Agent, in the name of the Administrative Agent
and for the benefit of the Lenders, an amount in cash equal to the LC Exposure
as of such date plus any accrued and unpaid interest thereon and fees; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrower described in clause (i) or (j) of Article VII
(unless the Borrower is otherwise then required to provide collateral pursuant
to Section 5.09). As collateral security for the payment and performance of the
obligations of the Borrower under this Agreement, the Borrower hereby grants to
the Administrative Agent, for the benefit of the Issuing Banks and the Lenders,
a first priority security interest in such account and all cash and other
property from time to time deposited or held in such account, and all proceeds
thereof, and any substitutions and replacements therefor. The Administrative
Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made, upon the direction
of the Borrower, in one or more Permitted Investments, at the Borrower’s risk
and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account
shall be applied by the Administrative Agent to reimburse ratably the Issuing
Banks for LC Disbursements for which they have not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Lenders with LC
Exposure representing greater than 50% of the total LC Exposure), be applied to
satisfy other obligations of the Borrower under this Agreement. If the Borrower
is required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Borrower within three Business Days after
all Events of Default have been cured or waived.
     Section 2.06 Funding of Borrowings.
          (a) Each Lender shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately available funds by 12:00
noon, New York City time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
designated by the Borrower to the Administrative Agent in the applicable
Borrowing Request; provided that ABR Loans made to finance the reimbursement of
an LC Disbursement

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as provided in Section 2.05(e) shall be remitted by the Administrative Agent to
the relevant Issuing Bank.
          (b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender’s share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) 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 or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans. If such Lender pays such amount to
the Administrative Agent, then such amount shall constitute such Lender’s Loan
included in such Borrowing.
     Section 2.07 Interest Elections.
          (a) Each 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, the 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. The 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.
          (b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.04 if the Borrower were
requesting a Borrowing of the Type resulting from such election to be made on
the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
          (c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.03:
               (i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated 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 the Borrower shall be deemed to have
selected an Interest Period of one month’s duration.
          (d) 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.
          (e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a Eurodollar Borrowing 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 converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing and (ii) unless repaid, each Eurodollar
Borrowing shall be converted to an ABR Borrowing at the end of the Interest
Period applicable thereto.
     Section 2.08 Termination and Reduction of Commitments.
          (a) Unless previously terminated, the Commitments shall terminate on
the Maturity Date.
          (b) The Borrower may at any time terminate, or from time to time
reduce, the Commitments; provided that (i) each reduction of the Commitments
shall be in an amount that is an integral multiple of $1,000,000 and not less
than $5,000,000 and (ii) the Borrower shall not terminate or reduce the
Commitments if, after giving effect to any concurrent payment or prepayment of
the Loans in accordance with Section 2.10, the sum of the Credit Exposures would
exceed the total Commitments.
          (c) The Borrower shall notify the Administrative Agent of any election
to terminate or reduce the Commitments under paragraph (b) of this Section 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 such notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each notice delivered by the Borrower pursuant
to this Section shall be irrevocable; provided that a notice of termination of
the Commitments delivered by the Borrower may state that such notice is
conditioned upon the effectiveness of other credit facilities, in which case
such notice may be revoked by the Borrower (by notice to

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the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments
shall be permanent and may not be reinstated except pursuant to Section 2.02.
Each reduction of the Commitments shall be made ratably among the Lenders in
accordance with their respective Commitments.
     Section 2.09 Repayment of Loans; Evidence of Debt.
          (a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Loan on the Maturity Date.
          (b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower to such
Lender resulting from each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
          (c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Type 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 the 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.
          (d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; 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 obligation of the Borrower to repay
the Loans in accordance with the terms of this Agreement.
          (e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the 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) and in
substantially the form of Exhibit D. Thereafter, the Loans evidenced by such
promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) 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).
          (f) With respect to each Lender holding a Note, upon the full and
final payment by the Borrower to each Lender (or to the Administrative Agent for
the account of such Lender) of all amounts due under any Note payable to such
Lender, and the termination of the Commitment of such Lender, such Lender agrees
to return such Note to the Borrower with reasonable promptness.

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     Section 2.10 Prepayment of Loans.
          (a) The Borrower shall have the right at any time and from time to
time to prepay any Borrowing in whole or in part, subject to prior notice in
accordance with paragraph (b) of this Section.
          (b) The Borrower shall notify the Administrative Agent by telephone
(confirmed by telecopy) of any prepayment hereunder (i) 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 or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
on the date of prepayment. Each such notice shall be irrevocable and shall
specify the prepayment date and the principal amount of each Borrowing or
portion thereof to be prepaid; provided that, if a notice of prepayment is given
in connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.08, then such notice of prepayment may be revoked if
such notice of termination is revoked in accordance with Section 2.08. Promptly
following receipt of any such notice relating to a Borrowing, 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 an
advance of a Borrowing of the same Type as provided in Section 2.03. Each
prepayment of a Borrowing shall be applied ratably to the Loans included in the
prepaid Borrowing. Prepayments shall be accompanied by accrued interest to the
extent required by Section 2.12 and any break funding payments to the extent
required by Section 2.15.
     Section 2.11 Fees.
          (a) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a facility fee, which shall accrue at the Applicable Rate
on the daily amount of the Commitment of such Lender (whether used or unused)
during the period from and including the Effective Date to but excluding the
date on which such Commitment terminates; provided that, if such Lender
continues to have any Credit Exposure after its Commitment terminates, then such
facility fee shall continue to accrue on the daily amount of such Lender’s
Credit Exposure from and including the date on which its Commitment terminates
to but excluding the date on which such Lender ceases to have any Credit
Exposure. Accrued facility fees shall be payable in arrears on the last day of
March, June, September and December of each year and on the date on which the
Commitments terminate, commencing on the first such date to occur after the date
hereof; provided that any facility fees accruing after the date on which the
Commitments terminate shall be payable on demand. All facility 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).
          (b) The Borrower agrees to pay to the Administrative Agent for the
account of each Lender a utilization fee, which shall accrue at the Applicable
Rate on the daily amount of such Lender’s Loan Exposure solely during the time
the sum of the total Loan Exposures equals or exceeds 50% of the total
Commitments during the period from and including the Effective Date to but
excluding the date on which the Commitments terminate (and during any time after
the date that the Commitments are terminated in which any Loan Exposure shall be
outstanding if the sum of the total Loan Exposures shall have equaled to or
exceeded 50% of the total

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Commitments in effect on such date of termination). Accrued utilization fees
shall be payable in arrears on the last day of March, June, September and
December of each year and on the date on which the Commitments terminate,
commencing on the first such date to occur after the date hereof; provided that
any utilization fees accruing after the date on which the Commitments terminate
shall be payable on demand. All utilization 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).
          (c) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Lender a participation fee with respect to its participations in
(A) Performance Letters of Credit, which shall accrue at the Applicable Rate on
the average daily amount of such Lender’s LC Exposure attributable to
Performance Letters of Credit (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender’s
Commitment terminates and the date on which such Lender ceases to have any LC
Exposure and (B) Letters of Credit other than Performance Letters of Credit,
which shall accrue at the same Applicable Rate used to determine the interest
rate applicable to Eurodollar Loans on the average daily amount of such Lender’s
LC Exposure attributable to such Letters of Credit (excluding any portion
thereof attributable to unreimbursed LC Disbursements) during the period from
and including the Effective Date to but excluding the later of the date on which
such Lender’s Commitment terminates and the date on which such Lender ceases to
have any LC Exposure, and (ii) to each Issuing Bank a fronting fee, which shall
accrue at the rate of 0.10% per annum on the average daily amount of the LC
Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) associated with Letters of Credit issued by such Issuing Bank
during the period from and including the Effective Date to but excluding the
later of the date of termination of the Commitments and the date on which there
ceases to be any LC Exposure, as well as such Issuing Bank’s standard fees with
respect to the issuance, amendment, renewal or extension of any Letter of Credit
or processing of drawings thereunder. Participation fees and fronting fees
accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the
Commitments terminate and any such fees accruing after the date on which the
Commitments terminate shall be payable on demand. Any other fees payable to any
Issuing Bank pursuant to this paragraph shall be payable within 10 days after
demand. All 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) The Borrower agrees to pay to the Administrative Agent, for its
own account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
          (e) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to each Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
facility fees, utilization fees and participation fees, to the Lenders. Fees
paid shall not be refundable under any circumstances.

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     Section 2.12 Interest.
          (a) The Loans comprising each ABR Borrowing shall bear interest at the
Alternate Base Rate plus the Applicable Rate.
          (b) The Loans comprising each Eurodollar Borrowing shall bear interest
at the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus the Applicable Rate.
          (c) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by the Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
          (d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and upon termination of the Commitments;
provided that (i) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (ii) in the event of any repayment or prepayment of
any Loan (other than a prepayment of an ABR Loan prior to the end of the
Availability Period), 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) 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
at times when the Alternate Base Rate is based on the Prime 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,
Adjusted LIBO Rate or LIBO Rate shall be determined by the Administrative Agent,
and such determination shall be conclusive absent manifest error.
     Section 2.13 Alternate Rate of Interest. If prior to the commencement of
any Interest Period for a Eurodollar Borrowing:
          (a) the Administrative Agent determines in good faith (which
determination shall be conclusive absent manifest error) that adequate and
reasonable means do not exist for ascertaining the Adjusted LIBO Rate or the
LIBO Rate, as applicable, for such Interest Period; or
          (b) the Administrative Agent is advised by the Required Lenders that
the Adjusted LIBO Rate or the LIBO Rate, as applicable, for such Interest Period
will not adequately and fairly reflect the cost to such Lenders (or Lender) of
making or maintaining their Loans included in such Borrowing for such Interest
Period;
then the Administrative Agent shall give notice thereof and the reason therefor
(in reasonable detail) to the Borrower and the Lenders by telephone or telecopy
as promptly as practicable

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thereafter and, until the Administrative Agent notifies the Borrower and the
Lenders that the circumstances giving rise to such notice no longer exist (which
the Administrative Agent shall use reasonable efforts to do promptly after such
circumstances cease to 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; provided that if the circumstances giving rise to such notice affect
only one Type of Borrowings, then the other Type of Borrowings shall be
permitted.
     Section 2.14 Increased Costs.
          (a) If any Change in Law shall:
               (i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
requirement reflected in the Adjusted LIBO Rate) or any Issuing Bank; or
               (ii) impose on any Lender or any Issuing Bank or the London
interbank market any other condition 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 or such
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or such
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing
Bank, as the case may be, for such additional costs incurred or reduction
suffered.
          (b) If any Lender or any Issuing Bank determines that any Change in
Law regarding capital requirements has or would have the effect of reducing the
rate of return on such Lender’s or such Issuing Bank’s capital or on the capital
of such Lender’s or such Issuing Bank’s holding company, if any, as a
consequence of this Agreement or the Loans made by, or participations in Letters
of Credit held by, such Lender, or the Letters of Credit issued by such Issuing
Bank, to a level below that which such Lender or such Issuing Bank or such
Lender’s or such Issuing Bank’s holding company could have achieved but for such
Change in Law (taking into consideration such Lender’s or such Issuing Bank’s
policies and the policies of such Lender’s or such Issuing Bank’s holding
company with respect to capital adequacy), then from time to time the Borrower
will pay to such Lender or such Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or such Issuing Bank
or such Lender’s or such Issuing Bank’s holding company for any such reduction
suffered.
          (c) A certificate of a Lender or an Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or such Issuing Bank or
its holding company, as the case may be, as specified in paragraph (a) or (b) of
this Section, which certificate shall

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describe in reasonable detail an explanation of the basis thereof, shall be
delivered to the Borrower and shall be conclusive absent manifest error. The
Borrower shall pay such Lender or such Issuing Bank, as the case may be, the
amount shown as due on any such certificate within 20 days after receipt
thereof.
          (d) Failure or delay on the part of any Lender or any Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender’s or such Issuing Bank’s right to demand such compensation; provided
that the Borrower shall not be required to compensate a Lender or an Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or such Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender’s or such Issuing Bank’s
intention to claim compensation therefor and provides a certificate in
accordance with Section 2.14(c); provided further that, if the Change in Law
giving rise to such increased costs or reductions is retroactive, then the
180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
     Section 2.15 Break Funding Payments. In the event of (a) the payment of any
principal of any Eurodollar Loan other than on 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 other than on the last day of the
Interest Period applicable thereto, (c) the failure to borrow, convert, continue
or prepay any Eurodollar Loan on the date specified in any notice delivered
pursuant hereto (regardless of whether such notice may be revoked under
Section 2.10(b) and is revoked in accordance therewith), other than by reason of
a default of such Lender, or (d) the assignment of any Eurodollar Loan other
than on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section 2.18, then, in any such event, the
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 which would have
accrued on the principal amount of such Loan had such event not occurred, at the
Adjusted LIBO 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. If any Lender makes such a
claim for compensation, pursuant to this Section 2.15, such Lender shall provide
to the Borrower a certificate executed by an officer of such Lender setting
forth the amount of such loss, cost or expense in reasonable detail (including
an explanation of the basis for and the computation of such loss, cost or
expense) no later than ninety (90) days after the event giving rise to the claim
for compensation, and the amounts shown on such certificate shall be prima facie
evidence of such Lender’s entitlement thereto. The Borrower shall pay such
Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

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     Section 2.16 Taxes.
          (a) Any and all payments by or on account of any obligation of the
Borrower hereunder shall be made free and clear of and without deduction for any
Indemnified Taxes or Other Taxes; provided that if the Borrower shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable shall be increased as necessary so that after making all
required deductions (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 Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
          (b) In addition, the Borrower shall, to the fullest extent permitted
by law, pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.
          (c) The Borrower shall indemnify the Administrative Agent, each Lender
and each Issuing Bank, within 20 days after written demand therefor, for the
full amount of any Indemnified Taxes or Other Taxes paid by the Administrative
Agent, such Lender or such Issuing Bank, as the case may be, on or with respect
to any payment by or on account of any obligation of the Borrower hereunder
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority, except as a result of the gross
negligence, bad faith, unlawful act or willful misconduct of such Lender.
Notwithstanding anything herein to the contrary, no Lender, Issuing Bank or the
Administrative Agent shall be indemnified for any Taxes hereunder unless such
Lender, Issuing Bank or the Administrative Agent, as applicable, shall make
written demand on the Borrower for reimbursement hereunder no later than
180 days after the earlier of (i) the date on which such Lender, such Issuing
Bank or the Administrative Agent makes payment of the Indemnified Taxes or Other
Taxes and (ii) the date on which the relevant taxing authority or other
governmental authority makes written demand upon such Lender, such Issuing Bank
or the Administrative Agent for payment of the Indemnified Taxes or Other Taxes
(for purposes of this clause (ii), “written demand” means a written notice that
includes the amount of such Indemnified Taxes or Other Taxes). Any such demand
shall be in writing and shall describe in reasonable detail any such Indemnified
Taxes and Other Taxes. In the event that such Lender, such Issuing Bank or the
Administrative Agent fails to give the Borrower timely notice as provided
herein, the Borrower shall not have any obligation to pay such claim for
reimbursement. A certificate as to the amount of such payment or liability
delivered to the Borrower by a Lender or an Issuing Bank, or by the
Administrative Agent on its own behalf or on behalf of a Lender or an Issuing
Bank, shall be conclusive absent manifest error.
          (d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by the Borrower to a Governmental Authority, the Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.

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          (e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax under the law of the jurisdiction in which the
Borrower is located, or any treaty to which such jurisdiction is a party, with
respect to payments under this Agreement shall deliver to the Borrower (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably requested by the Borrower as will permit such payments to be
made without withholding or at a reduced rate of withholding. In addition, such
Foreign Lender shall timely deliver updated versions of such documentation, as
applicable, whenever required by law or the previously submitted documentation
becomes obsolete or inaccurate in any material respect. Any Lender that is a
United States person (within the meaning of Section 7701(a)(30) of the Code)
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, an accurate and complete original
signed Internal Revenue Service Form W-9 or such other documentation prescribed
by law certifying that such Lender is not subject to back-up withholding.
          (f) If the Administrative Agent or a Lender determines, in its sole
discretion, that it has received a refund of any Taxes or Other Taxes as to
which it has been indemnified by the Borrower or with respect to which the
Borrower has paid additional amounts pursuant to this Section 2.16, it shall
promptly pay over such refund to the Borrower (but only to the extent of
indemnity payments made, or additional amounts paid, by the Borrower under this
Section 2.16 with respect to the Taxes or Other Taxes giving rise to such
refund), net of all out-of-pocket expenses of the Administrative Agent or such
Lender and without interest (other than any interest paid by the relevant
Governmental Authority with respect to such refund); provided, that the
Borrower, upon the request of the Administrative Agent or such Lender, agrees to
repay the amount paid over to the Borrower (plus any penalties, interest or
other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or
such Lender is required to repay such refund to such Governmental Authority.
This Section shall not be construed to require the Administrative Agent or any
Lender to make available its tax returns (or any other information relating to
its taxes which it deems confidential) to the Borrower or any other Person.
     Section 2.17 Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
          (a) The Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest, fees or reimbursement of LC
Disbursements, or of amounts payable under Section 2.14, Section 2.15 or
Section 2.16, or otherwise) prior to 12:00 noon, New York City time, on the date
when due, in immediately available funds, without deduction, set off or
counterclaim. Any amounts received after such time on any date may, in the
discretion of the Administrative Agent, 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 at its offices at 270
Park Avenue, New York, New York, except payments to be made directly to an
Issuing Bank as expressly provided herein and except that payments pursuant to
Section 2.14, Section 2.15, Section 2.16 and Section 9.03 shall be made directly
to the Persons entitled thereto. 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
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the

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case of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments hereunder shall be made in dollars.
          (b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards 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, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
          (c) If any Lender shall, by exercising any right of set off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans or participations in LC Disbursements resulting in
such Lender receiving payment of a greater proportion of the aggregate amount of
its Loans and participations in LC Disbursements and accrued interest thereon
than the proportion received by any other Lender, then the Lender receiving such
greater proportion shall purchase (for cash at face value) participations in the
Loans and participations in LC Disbursements of other Lenders to the extent
necessary 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 participations in LC
Disbursements; 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 (ii) the provisions of this paragraph
shall not be construed to apply to any payment made by the Borrower pursuant to
and in accordance with the express terms of this Agreement or 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 the Borrower or any Subsidiary or
Affiliate thereof (as to which the provisions of this paragraph shall apply).
The Borrower consents to the foregoing and agrees, to the extent it may
effectively do so under applicable law, that any Lender acquiring a
participation pursuant to the foregoing arrangements may exercise against the
Borrower rights of set-off and counterclaim with respect to such participation
as fully as if such Lender were a direct creditor of the Borrower in the amount
of such participation.
          (d) Unless the Administrative Agent shall have received notice from
the Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Banks hereunder that the
Borrower will not make such payment, the Administrative Agent may assume that
the Borrower has made such payment on such date in accordance herewith and may,
in reliance upon such assumption, distribute to the Lenders or the Issuing
Banks, as the case may be, the amount due. In such event, if the Borrower has
not in fact made such payment, then each of the Lenders or the Issuing Banks, as
the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or 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

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by the Administrative Agent in accordance with banking industry rules on
interbank compensation.
          (e) If any Lender shall fail to make any payment required to be made
by it pursuant to Section 2.05(d) or (e), Section 2.06(b), Section 2.17(d) or
Section 9.03(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 2.18 Mitigation Obligations; Replacement of Lenders.
          (a) If any Lender requests compensation under Section 2.14, or if the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the reasonable judgment of such Lender, such designation or assignment (i) would
eliminate or reduce amounts payable pursuant to Section 2.14 or Section 2.16, as
the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
          (b) If (i) any Lender requests compensation under Section 2.14,
(ii) the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.16,
(iii) any Lender defaults in its obligation to fund Loans hereunder, (iv) any
Lender has been declared insolvent or a receiver or conservator has been
appointed for a material portion of its assets, business or properties, (v) any
Lender gives notice pursuant to Section 2.19, or (vi) any Lender shall decline
to consent to a modification or waiver of the terms of this Agreement or any
other Loan Document requested by the Borrower, then the Borrower may, at its
sole expense and effort, upon notice to such Lender and the Administrative
Agent, require such Lender to assign and delegate, without recourse (in
accordance with and subject to the restrictions contained in Section 9.04), all
its interests, rights and obligations under this Agreement to an assignee
permitted by Section 9.04 that shall assume such obligations (which assignee may
be another Lender, if a Lender accepts such assignment); provided that (A) the
Borrower shall have received the prior written consent of each Issuing Bank, if
a Commitment is being assigned, which consent shall not unreasonably be
withheld, conditioned or delayed, (B) such Lender shall have received payment of
an amount equal to the outstanding principal of its Loans and participations in
LC Disbursements, accrued interest thereon, accrued fees and all other amounts
payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all
other amounts) and (C) in the case of any such assignment resulting from a claim
for compensation under Section 2.14 or payments required to be made pursuant to
Section 2.16, such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver

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by such Lender or otherwise, the circumstances entitling the Borrower to require
such assignment and delegation cease to apply.
     Section 2.19 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
applicable lending office to honor its obligation to make or maintain Eurodollar
Loans either generally or having a particular Interest Period hereunder, then
(a) such Lender shall promptly notify the Borrower and the Administrative Agent
thereof and such Lender’s obligation to make such Eurodollar Loans (the
“Affected Loans”) shall be suspended until such time as such Lender may again
make and maintain such Eurodollar Loans and (b) all Affected Loans which would
otherwise be made by such Lender shall be made instead as ABR Loans (and, if
such Lender so requests by notice to the Borrower and the Administrative Agent,
all Affected Loans of such Lender then outstanding shall be automatically
converted into ABR Loans either on the last day of the Interest Period therefor,
if such Lender may lawfully continue to maintain such Affected Loans to such
day, or, if such Lender may not lawfully continue to maintain such Affected
Loans, on the date specified by such Lender in such notice) and, to the extent
that Affected Loans are so made as (or converted into) ABR Loans, all payments
of principal which would otherwise be applied to such Lender’s Affected Loans
shall be applied instead to its ABR Loans. Each Lender shall use reasonable
efforts to designate a different lending office for funding or booking its Loans
hereunder or to assign its rights and obligations hereunder to another of its
offices, branches or affiliates, if, in the reasonable judgment of such Lender,
such designation or assignment (i) would avoid the need for such notice and
(ii) would not subject such Lender to any unreimbursed cost or expense and would
not otherwise be disadvantageous to such Lender. The Borrower hereby agrees to
pay all reasonable costs and expenses incurred by any Lender in connection with
any such designation or assignment.
ARTICLE III
Representations and Warranties
     The Borrower represents and warrants to the Lenders that:
     Section 3.01 Organization; Powers. Each of the Borrower and its Significant
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
     Section 3.02 Authorization; Enforceability. The Transactions are within the
Borrower’s corporate powers and have been duly authorized by all necessary
corporate action. Each Loan Document has been duly executed and delivered by the
Borrower and constitutes a legal, valid and binding obligation of the Borrower,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether
considered in a proceeding in equity or at law.

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     Section 3.03 Governmental Approvals; No Conflicts. The Transactions (a) do
not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect, or any filings that the Borrower or
its Affiliates may be required to make with the Securities and Exchange
Commission, (b) will not contravene in any material respect any applicable law
or regulation or any applicable order of any Governmental Authority, (c) will
not violate the charter, by-laws or other organizational documents of the
Borrower or any of its Subsidiaries, (d) will not violate or result in a default
under any indenture, material agreement or other material instrument binding
upon the Borrower or any of its Subsidiaries or its assets or give rise to a
right thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries, except to the extent that such violation, default or payment,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect and (e) will not result in the creation or imposition
of any Lien (other than a Permitted Encumbrance) on any asset of the Borrower or
any of its Subsidiaries.
     Section 3.04 Financial Condition; No Material Adverse Change.
          (a) The Borrower has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders equity and
cash flows (i) as of and for the fiscal year ended December 31, 2005, audited by
Deloitte & Touche LLP, independent public accountants, and (ii) as of and for
the fiscal quarter and the portion of the fiscal year ended June 30, 2006,
certified by its chief financial officer. Such financial statements present
fairly, in all material respects, the financial position and results of
operations and cash flows of the Borrower and its consolidated Subsidiaries as
of such dates and for such periods in accordance with GAAP (except as expressly
noted therein), subject to year end audit adjustments and the absence of
footnotes in the case of the statements referred to in clause (ii) above.
          (b) Since December 31, 2005, as of the Effective Date, there has been
no material adverse change in the business, assets, operations or condition of
the Borrower and its Subsidiaries, taken as a whole.
     Section 3.05 Properties. Each of the Borrower and its Subsidiaries has good
title to, or valid leasehold interests in, all its real and personal property
material to its business, except for Permitted Encumbrances or except where the
failure to have such title or leasehold interest could not reasonably be
expected to result in a Material Adverse Effect.
     Section 3.06 Litigation and Environmental Matters.
          (a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of the
Borrower, threatened against or affecting the Borrower or any of its
Subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other
than the Disclosed Matters) or (ii) that draws into question the validity or
enforceability of this Agreement or the Transactions.

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          (b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither the Borrower nor any of
its Subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability, (iii) has received notice of any claim with respect to any
Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
          (c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or could reasonably be expected to result in, a Material Adverse
Effect.
     Section 3.07 Compliance with Laws and Agreements. Each of the Borrower and
its Subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
material agreements and other material instruments binding upon it or its
property, except where the failure to do so, individually or in the aggregate,
could not reasonably be expected to result in a Material Adverse Effect.
     Section 3.08 Investment Company Status. Neither the Borrower nor any of its
Subsidiaries is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.
     Section 3.09 Taxes. Each of the Borrower and its Subsidiaries has timely
filed or caused to be filed all United States federal income tax returns and
reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, except (a) Taxes that are being contested in
good faith by appropriate proceedings and for which the Borrower or such
Subsidiary, as applicable, has set aside on its books adequate reserves or
(b) to the extent that the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
     Section 3.10 ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect.
     Section 3.11 Disclosure. All factual information (taken as a whole)
furnished by or on behalf of the Borrower in writing to the Administrative Agent
in connection with this Agreement or the Confidential Information Memorandum did
not, as of the date such information was furnished (or, if such information
expressly related to a specific date, as of such specific date), contain any
untrue statement of a material fact or omit to state a material fact necessary
to make the statements therein (taken as a whole), in the light of the
circumstances under which such information was furnished, not misleading, except
for such statements, if any, as have been updated, corrected, supplemented,
superseded or modified pursuant to a written correction or supplement furnished
or made available to the Administrative Agent prior to the date of this
Agreement.

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ARTICLE IV
Conditions
     Section 4.01 Effective Date. The obligations of the Lenders to make Loans
and of each Issuing Bank to issue Letters of Credit hereunder shall not become
effective until the date on which each of the following conditions is satisfied
(or waived in accordance with Section 9.02):
          (a) The Administrative Agent (or its counsel) shall have received from
each party hereto either (i) a counterpart of this Agreement signed on behalf of
such party or (ii) written evidence satisfactory to the Administrative Agent
(which may include telecopy transmission of a signed signature page of this
Agreement) that such party has signed a counterpart of this Agreement.
          (b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated the
Effective Date) of Duane Morris LLP, counsel for the Borrower, substantially in
the form of Exhibit E, and covering such other matters relating to the Borrower,
the Loan Documents or the Transactions as the Required Lenders shall reasonably
request. The Borrower hereby requests such counsel to deliver such opinion to
the Administrative Agent and the Lenders.
          (c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably request
relating to the organization, existence and good standing of the Borrower, the
authorization of the Transactions and any other legal matters relating to the
Borrower, this Agreement or the Transactions, all in form and substance
reasonably satisfactory to the Administrative Agent and its counsel.
          (d) The Administrative Agent shall have received the financial
statements referred to in Section 3.04(a).
          (e) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a Financial
Officer of the Borrower, confirming compliance with the conditions set forth in
paragraphs (a) and (b) of Section 4.02.
          (f) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to the
extent invoiced, reimbursement or payment of all out of pocket expenses required
to be reimbursed or paid by the Borrower hereunder.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans and of the Issuing
Banks to issue Letters of Credit hereunder shall not become effective unless
each of the foregoing conditions is satisfied (or waived pursuant to
Section 9.02) at or prior to 3:00 p.m., New York City time, on November 3, 2006
(and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).

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     Section 4.02 Each Credit Event. The obligation of each Lender to make a
Loan on the occasion of any Borrowing, and of each Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to the satisfaction of the
following conditions:
          (a) The representations and warranties of the Borrower set forth in
this Agreement and in the other Loan Documents shall be true and correct in all
material respects on and as of the date of such Borrowing or the date of
issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, except to the extent any such representations and warranties are
expressly limited to an earlier date, in which case, on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of such
Letter of Credit, as applicable, such representations and warranties shall
continue to be true and correct in all material respects as of such specified
earlier date; provided that the representation and warranty contained in
Section 3.04(b) shall only be made by the Borrower on and as of the Effective
Date.
          (b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter of
Credit, as applicable, no Default shall have occurred and be continuing.
          (c) The Administrative Agent shall have received a Borrowing Request
in accordance with Section 2.04.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Borrower on the date thereof as to the matters specified in paragraphs (a) and
(b) of this Section.
ARTICLE V
Affirmative Covenants
     Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees due and payable hereunder shall have been
paid in full and all Letters of Credit shall have expired or terminated and all
LC Disbursements shall have been reimbursed, the Borrower covenants and agrees
with the Lenders that:
     Section 5.01 Financial Statements; Ratings Change and Other Information.
The Borrower will furnish to the Administrative Agent and each Lender:
          (a) within 105 days after the end of each fiscal year of the Borrower,
its audited consolidated balance sheet and related statements of operations,
stockholders’ equity and cash flows as of the end of and for such year, setting
forth in each case in comparative form the figures for the previous fiscal year,
all reported on by Deloitte & Touche LLP or other independent public accountants
of recognized national standing (without a “going concern” qualification and
without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial position and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP;
          (b) within 55 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, its consolidated balance sheet and
related statements of

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operations, stockholders’ equity and cash flows as of the end of and for such
fiscal quarter and the then elapsed portion of the fiscal year, setting forth in
each case in comparative form the figures for the corresponding period or
periods of (or, in the case of the balance sheet, as of the end of) the previous
fiscal year, all certified by one of its Financial Officers as presenting fairly
in all material respects the financial position and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP, subject to normal year-end audit adjustments and the absence of
footnotes;
          (c) concurrently with any delivery of financial statements under
clause (a) or (b) above, a certificate of a Financial Officer of the Borrower
(i) certifying as to whether a Default has occurred and, if a Default has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Section 6.06 and (iii) stating whether any change
in GAAP or in the application thereof affecting the Borrower has occurred since
the date of the audited financial statements referred to in Section 3.04 and, if
any such change has occurred, specifying the effect of such change on the
financial statements accompanying such certificate;
          (d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of said
Commission, or with any national securities exchange, or distributed by the
Borrower to its shareholders generally, as the case may be;
          (e) promptly after Moody’s, S&P or Fitch shall have announced a change
in the rating established or deemed to have been established for the Index Debt,
written notice of such rating change; and
          (f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Subsidiary, or compliance with the terms of this Agreement, as
the Administrative Agent or any Lender may reasonably request.
Documents required to be delivered pursuant to Section 5.01(a), Section 5.01(b)
or Section 5.01(d) (to the extent any such documents are included in materials
otherwise filed with the Securities and Exchange Commission) may be delivered
electronically and, in such case, shall be deemed to have been delivered on the
earlier of the date (i) on which the Borrower posts such documents, or provides
a link thereto on the Borrower’s website on the Internet at
www.diamondoffshore.com; or (ii) on which such documents are posted on the
Borrower’s behalf on the website of the Securities and Exchange Commission or
any other Internet or intranet website, if any, to which each Lender and the
Administrative Agent have access (whether a commercial, third-party website or
whether sponsored by the Administrative Agent). Notwithstanding anything
contained herein, in every instance the Borrower shall be required to provide
paper copies of the compliance certificate required by Section 5.01(c) to the
Administrative Agent, which shall then promptly furnish such compliance
certificate to the Lenders. Except for such compliance certificates, the
Administrative Agent shall have no obligation to request the delivery or to
maintain copies of the documents referred to above, and in any event shall have
no responsibility to monitor compliance by the Borrower with any such

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request for delivery, and each Lender shall be solely responsible for requesting
delivery to it or maintaining its copies of such documents.
     Section 5.02 Notices of Material Events. Within thirty (30) days after a
Responsible Officer of the Borrower has knowledge thereof, the Borrower will
furnish to the Administrative Agent (and the Administrative Agent will provide
to each Lender) written notice of the following:
          (a) the occurrence of any Default;
          (b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Subsidiary thereof that, if adversely determined, could
reasonably be expected to result in a Material Adverse Effect;
          (c) the occurrence of any ERISA Event that, alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$100,000,000; and
          (d) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
     Section 5.03 Existence; Conduct of Business. The Borrower will, and will
cause each of its Significant Subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business; provided that the foregoing shall not prohibit
any merger, consolidation, liquidation, dissolution or other action permitted
under Section 6.02; and provided further that neither the Borrower nor any
Significant Subsidiary shall be required to maintain the existence of any right,
license, permit, privilege or franchise where the failure to preserve, renew or
keep the same in full force and effect could not reasonably be expected to have
a Material Adverse Effect.
     Section 5.04 Payment of Tax Obligations. The Borrower will, and will cause
each of its Subsidiaries to, pay its obligations for Taxes within thirty
(30) days of becoming due or, if later, prior to the date on which penalties are
imposed for such unpaid Taxes, except where (a) the validity or amount thereof
is being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
     Section 5.05 Maintenance of Properties; Insurance. The Borrower will, and
will cause each of its Significant Subsidiaries to, (a) keep and maintain all
property material to the conduct

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of its business in good working order and condition, ordinary wear and tear
excepted, and (b) maintain self insurance reserves to the extent required by
GAAP.
     Section 5.06 Books and Records; Inspection Rights. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Administrative Agent, upon reasonable prior notice, to visit and inspect its
chief executive office during normal business hours (and any other property
subject to compliance with applicable safety rules, and at such Person’s sole
risk) at such Person’s sole expense (unless an Event of Default has occurred and
is continuing), to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and, in the
presence of the Borrower, its independent accountants, all at such reasonable
times and as often as reasonably requested.
     Section 5.07 Compliance with Laws. The Borrower will, and will cause each
of its Subsidiaries to, comply with all laws, rules, regulations and orders of
any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
     Section 5.08 Use of Proceeds and Letters of Credit. The proceeds of the
Loans will be used only for general corporate purposes. No part of the proceeds
of any Loan will be used, whether directly or indirectly, for any purpose that
entails a violation of any of the Regulations of the Board, including
Regulations T, U and X. Letters of Credit will be requested only for general
corporate purposes.
     Section 5.09 Covenant Upon a Change in Control. Within 90 days after the
occurrence of a Change in Control, the Borrower shall formally request a rating
for the Index Debt from both S&P and Moody’s. If the higher of such two ratings
is BBB- or lower by S&P or Baa3 or lower by Moody’s, then the Borrower shall
deposit in an account with, or pledge for the benefit of, the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, pursuant to documentation in form and substance reasonably satisfactory
to the Administrative Agent, as collateral security for the prompt and complete
payment when due and performance of the obligations of the Borrower under this
Agreement, (a) if the higher of such two ratings is BBB- by S&P or Baa3 by
Moody’s, an amount in cash (or such other property as the Administrative Agent
and the Required Lenders may agree to in their sole discretion) equal to 50% of
the total Credit Exposures from time to time outstanding; and (b) if the higher
of such two ratings is below BBB- by S&P or Baa3 by Moody’s, an amount in cash
(or such other property as the Administrative Agent and the Required Lenders may
agree to in their sole discretion) equal to 100% of the total Credit Exposures
from time to time outstanding; provided that (i) if the Borrower fails to obtain
at least one such rating from S&P or Moody’s within 90 days after the occurrence
of a Change in Control, then the Borrower shall on the date that is not later
than 90 days after such Change in Control (until such time as at least one such
rating is so obtained) be required to deposit collateral pursuant to clause
(b) above; and (ii) if at any time any such rating is BBB or above by S&P or
Baa2 or above by Moody’s, then the Borrower shall have no further obligation to
post collateral under this Section (even if at any time thereafter such rating
is withdrawn or falls below BBB by S&P or Baa2 by Moody’s). The Administrative

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Agent shall have exclusive dominion and control, including the exclusive right
of withdrawal, over such account. Other than any interest earned on the
investment of such deposits, which investments shall be made, upon the direction
of the Borrower, in one or more Permitted Investments, at the Borrower’s risk
and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Notwithstanding anything
to the contrary contained herein, the Administrative Agent shall return any
amount of collateral deposited by the Borrower pursuant to this Section in
excess of the amount from time to time expressly required to be delivered by the
Borrower pursuant to clauses (a) or (b) above (and, for the avoidance of doubt,
the Administrative Agent shall return all such collateral to the Borrower if at
any time any such rating is BBB or above by S&P or Baa2 or above by Moody’s), in
each case, within three (3) Business Days of the Borrower’s written demand to
the Administrative Agent therefor. If the maturity of the Loans has been
accelerated in accordance with Article VII, any and all collateral held by the
Administrative Agent pursuant to this Section may be applied by the
Administrative Agent to satisfy the obligations of the Borrower under this
Agreement.
ARTICLE VI
Negative Covenants
     Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees due and payable hereunder have been paid in
full and all Letters of Credit have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:
     Section 6.01 Liens. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it, except:
          (a) Permitted Encumbrances;
          (b) any Lien existing on the date hereof (each such Lien, to the
extent it secures Indebtedness or other obligations in an aggregate amount of
$10,000,000 (or, if denominated in a currency other than dollars, the dollar
equivalent of $10,000,000) or more, being described and set forth in
Schedule 6.01); provided that such Lien shall secure only those obligations
which it secures on the date hereof and extensions, renewals and replacements
thereof that do not materially increase the outstanding principal amount
thereof;
          (c) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on any
property or asset of any Person that becomes a Subsidiary after the date hereof
prior to the time such Person becomes a Subsidiary; provided that (i) such Lien
is not created in contemplation of or in connection with such acquisition or
such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not
apply to any other property or assets of the Borrower or any Subsidiary and
(iii) such Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, as the case
may be, and extensions, renewals and replacements thereof that do not materially
increase the outstanding principal amount thereof;

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          (d) Liens on fixed or capital assets acquired, constructed, improved
or repaired by the Borrower or any Subsidiary and related contracts, intangibles
and other assets that are incidental thereto (including accessions thereto and
replacements thereof); provided that (i) such Liens secure Indebtedness and/or
Non-Recourse Indebtedness permitted by this Agreement, (ii) such Liens and the
Indebtedness and/or Non-Recourse Indebtedness secured thereby are incurred prior
to or within 365 days after such acquisition or the later of the completion of
such construction, improvement or repair, or date of commercial operation of the
assets constructed, improved, altered or repaired, (iii) the Indebtedness and/or
Non-Recourse Indebtedness secured thereby does not exceed the cost of acquiring,
constructing, improving or repairing such fixed or capital assets, as the case
may be, and (iv) such Liens shall not apply to any other property or assets of
the Borrower or any Subsidiary; and
          (e) other Liens (not otherwise permitted by the foregoing clauses of
this Section 6.01) securing Indebtedness or obligations; provided that on the
date such Person creates, incurs, assumes or otherwise permits to exist any such
Lien, and immediately after giving effect thereto the total amount of all
Indebtedness and obligations secured by Liens pursuant to this clause (e) does
not exceed ten percent (10%) of Consolidated Tangible Net Worth as of the then
most recently ended fiscal quarter of the Borrower for which financial
statements are available.
     Section 6.02 Fundamental Changes.
          (a) The Borrower will not merge into or consolidate with any other
Person, or cause or permit any dissolution of the Borrower or liquidation of its
assets, or sell, transfer or otherwise dispose of all or substantially all of
the Borrower’s assets, except that: (i) the Borrower may merge into, or
consolidate with, any other Person if upon the consummation of any such merger
or consolidation the Borrower is the surviving Person in any such merger or
consolidation; and (ii) the Borrower may sell, transfer or otherwise dispose of
all or substantially all of its assets (including stock in its Subsidiaries) to
any Person if such Person is a wholly-owned Subsidiary of the Borrower (or a
Person who will contemporaneously therewith become a wholly-owned Subsidiary of
the Borrower); provided in the case of any transaction described in the
preceding clauses (i) and (ii), no Default shall exist immediately prior to, or
immediately after giving effect to, such transaction.
          (b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Borrower and its Subsidiaries on the date of execution of
this Agreement and businesses reasonably related thereto.
     Section 6.03 Swap Agreements. The Borrower will not, and will not permit
any of its Subsidiaries to, enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which the Borrower or any
Subsidiary has actual exposure, including, without limitation, in connection
with foreign currency exposure or risks relating to weather related events
(regardless of whether such Swap Agreement qualifies for hedge accounting
treatment under FAS 133), and (b) Swap Agreements entered into in order to
effectively cap, collar or exchange interest rates (from fixed to floating
rates, from one floating rate to another floating rate or otherwise) with
respect to any interest-bearing liability or investment of the

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Borrower or any Subsidiary (regardless of whether such Swap Agreement qualifies
for hedge accounting treatment under FAS 133).
     Section 6.04 Transactions with Affiliates. Except for transactions
disclosed on Schedule 6.04 or otherwise in writing to the Administrative Agent
and the Lenders on the date hereof, or as otherwise permitted herein, the
Borrower will not, and will not permit any of its Subsidiaries to, engage in any
material transaction with (including any sale, lease or other transfer any
property or assets to, or purchase, lease or other acquisition of any property
or assets from) any of its Affiliates, except (a) at prices and on terms and
conditions substantially as favorable to the Borrower or such Subsidiary as
could be obtained on an arm’s-length basis from unrelated third parties, (b) any
transactions between or among the Borrower and/or any of its wholly owned
Subsidiaries (or any Subsidiaries that would be wholly owned by the Borrower
except for the ownership of directors’ qualifying shares) not involving any such
transaction with any other Affiliate and (c) compensation, indemnification and
reimbursement of expenses of officers and directors.
     Section 6.05 Subsidiary Indebtedness. The Borrower will not permit any
Subsidiary to create, incur, assume or permit to exist any Indebtedness
(including any Guarantee by a Subsidiary of Indebtedness of the Borrower),
except:
          (a) Indebtedness created hereunder;
          (b) Indebtedness existing on the date hereof (unless disclosed in the
Borrower’s financial statements, such Indebtedness, to the extent the principal
amount thereof is $10,000,000 or more, being described on Schedule 6.05) and
extensions, renewals and replacements of any such Indebtedness that do not
increase the outstanding principal amount thereof;
          (c) Indebtedness of any Subsidiary owed to the Borrower or any other
Subsidiary;
          (d) Indebtedness of any Person existing at the time such Person
becomes a Subsidiary or at the time such Person is merged with or into the
Borrower or any Subsidiary, in each case, after the date hereof; provided that
such Indebtedness is not created in contemplation of or in connection with such
transaction;
          (e) Indebtedness of any Subsidiary as an account party in respect of
performance letters of credit or under performance guarantees; and
          (f) Indebtedness of a Subsidiary in addition to that otherwise
permitted by the foregoing clauses of this Section 6.05, provided that on the
date such Subsidiary incurs or otherwise becomes liable with respect to any such
additional Indebtedness and immediately after giving effect thereto and the
concurrent retirement of any other Indebtedness: (A) no Default exists, and (B)
the total amount of all Indebtedness incurred pursuant to this clause (f) does
not exceed ten percent (10%) of Consolidated Net Assets as of the then most
recently ended fiscal quarter of the Borrower for which financial statements are
available, and extensions, renewals and replacements of any such Indebtedness
that do not increase the outstanding principal amount thereof.

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     Section 6.06 Consolidated Indebtedness to Total Capitalization Ratio. The
Borrower will not permit, as of the last day of any fiscal quarter, the ratio of
Consolidated Indebtedness to Total Capitalization to exceed 60%.
ARTICLE VII
Events of Default
     If any of the following events (“Events of Default”) shall occur:
          (a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;
          (b) the Borrower shall fail to pay any interest on any Loan or any
interest on any reimbursement obligation in respect of any LC Disbursement
payable under any Loan Document, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of three
Business Days;
          (c) the Borrower shall fail to pay any fee or any other amount (other
than an amount referred to in clause (a) or (b) of this Article) payable under
any Loan Document, when and as the same shall become due and payable, and such
failure shall continue unremedied for a period of five Business Days;
          (d) any representation or warranty made or deemed made by the Borrower
in or in connection with any Loan Document or any amendment or modification
hereof or waiver hereunder, or in any report, certificate, financial statement
or other document furnished pursuant to or in connection with any Loan Document
or any amendment or modification hereof or waiver hereunder, shall prove to have
been incorrect when made or deemed made in any material respect;
          (e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, Section 5.09, Section 6.01,
Section 6.02 or Section 6.06;
          (f) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b), (c) or (e) of this Article), and such failure
shall continue unremedied for a period of 30 consecutive days after the
Borrower’s receipt of written notice thereof from the Administrative Agent to
the Borrower;
          (g) the Borrower or any Subsidiary shall fail to make any payment at
maturity in respect of any Material Indebtedness, when and as the same shall
become due and payable (after giving effect to any applicable grace period
specified in the agreement or instrument relating to such Material
Indebtedness);
          (h) any default shall occur that (i) results in any Material
Indebtedness being declared due prior to its scheduled maturity or (ii) permits
the holder or holders of any Material Indebtedness or any trustee or agent on
its or their behalf to accelerate the maturity of such

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Material Indebtedness or requires the prepayment, repurchase, redemption or
defeasance thereof, prior to its scheduled maturity;
          (i) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Significant Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Significant Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed and unstayed for 60 days or an order or
decree approving or ordering any of the foregoing shall be entered;
          (j) the Borrower or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (i) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Significant Subsidiary
or for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors or (vi) take any
action for the purpose of effecting any of the foregoing;
          (k) the Borrower or any Significant Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due;
          (l) one or more judgments for the payment of money in an aggregate
amount in excess of $100,000,000 (to the extent such judgment or judgments are
not covered by (i) independent third party insurance as to which the respective
insurer does not dispute coverage and is not subject to an insolvency proceeding
or (ii) a valid indemnity from a third party that is not the subject of any
insolvency proceeding and that has the financial capability or insurance to
perform such indemnity) shall be rendered against the Borrower, any Subsidiary
or any combination thereof and the same shall remain undischarged for a period
of 30 consecutive days (with respect to any such judgment rendered in the United
States) or 60 consecutive days (with respect to any such judgment rendered
outside of the United States) during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to attach or
levy upon any assets of the Borrower or any Subsidiary to enforce any such
judgment; or
          (m) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse Effect;
then, and in every such event (other than an event with respect to the Borrower
described in clause (i) or (j) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and

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(ii) declare the Loans then outstanding to be due and payable in whole (or in
part, in which case any principal not so declared to be due and payable may
thereafter be declared to be due and payable), and thereupon the principal of
the Loans so declared to be due and payable, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall become due and payable immediately, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower; and
in case of any event with respect to the Borrower described in clause (i) or
(j) of this Article, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and all fees and other obligations of the Borrower accrued hereunder, shall
automatically become due and payable, without presentment, demand, protest or
other notice of any kind, all of which are hereby waived by the Borrower. In
addition, upon the occurrence and during the continuance of an Event of Default,
the Administrative Agent may, and at the request of the Required Lenders, shall,
by notice to the Borrower, require the cash collateralization described in
Section 2.05(j).
ARTICLE VIII
The Administrative Agent
     Each of the Lenders and each Issuing Bank hereby irrevocably appoints the
Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
     The bank serving as the Administrative Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
     The Administrative Agent shall not have any duties or obligations except
those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise as directed in writing by the Required Lenders (or such
other number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 9.02) and in all cases the Administrative
Agent shall be fully justified in failing or refusing to act hereunder or under
any other Loan Documents unless it shall (i) receive written instructions from
the Required Lenders or the Lenders, as applicable, (or such other number or
percentage of the Lenders as shall be necessary under the circumstances as
provided in Section 9.02) specifying the action to be taken and (ii) be
indemnified to its satisfaction by the Lenders against any and all liability and
expenses which may be incurred by it by reason of taking or continuing to take
any such action, and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Borrower or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. If a Default
has occurred and is

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continuing, then the Administrative Agent shall take such action with respect to
such Default as shall be directed by the requisite Lenders in the written
instructions (with indemnities) described in this Article VIII, provided that,
unless and until the Administrative Agent shall have received such directions,
the Administrative Agent may (but shall not be obligated to) take such action,
or refrain from taking such action, with respect to such Default as it shall
deem advisable in the best interests of the Lenders. In no event, however, shall
the Administrative Agent be required to take any action which exposes the
Administrative Agent to personal liability or which is contrary to any Loan
Document or applicable law. The instructions as aforesaid and any action taken
or failure to act pursuant thereto by the Administrative Agent shall be binding
on all of the Lenders. The Administrative Agent shall not be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or willful misconduct. The Administrative Agent
shall be deemed not to have knowledge of any Default unless and until written
notice thereof is given to the Administrative Agent by the Borrower or a Lender,
and the Administrative Agent shall not be responsible for or have any duty to
ascertain or inquire into (i) any statement, warranty or representation made in
or in connection with this Agreement, (ii) the contents of any certificate,
report or other document delivered hereunder or in connection herewith,
(iii) the performance or observance of any of the covenants, agreements or other
terms or conditions set forth herein, (iv) the validity, enforceability,
effectiveness or genuineness of this Agreement or any other agreement,
instrument or document, or (v) the satisfaction of any condition set forth in
Article IV or elsewhere herein, other than to confirm receipt of items expressly
required to be delivered to the Administrative Agent.
     The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and believed
by it to be made by the proper Person, and shall not incur any liability for
relying thereon. The Administrative Agent may consult with legal counsel (who
may be counsel for the Borrower), independent accountants and other experts
selected by it, and shall not be liable for any action taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.
     The Administrative Agent may perform any and all its duties and exercise
its rights and powers by or through any one or more sub-agents appointed by the
Administrative Agent. The Administrative Agent and any such sub-agent may
perform any and all its duties and exercise its rights and powers through their
respective Related Parties. The exculpatory provisions of the preceding
paragraphs shall apply to any such sub-agent and to the Related Parties of the
Administrative Agent and any such sub-agent, and shall apply to their respective
activities in connection with the syndication of the credit facilities provided
for herein as well as activities as Administrative Agent.
     Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time, and shall resign upon any removal thereof as a Lender pursuant to the
terms of this Agreement, upon at least thirty (30) days’ prior written notice to
the Lenders, the Issuing Banks and the Borrower. Any

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resignation of the Administrative Agent shall not be effective until a
replacement therefor is appointed pursuant to the terms hereof. Upon any such
resignation, the Required Lenders shall have the right, with the consent of the
Borrower (which shall not be unreasonably withheld, conditioned or delayed), to
appoint a successor. If no successor shall have been so appointed by the
Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the
retiring Administrative Agent may, with the consent of the Borrower (which shall
not be unreasonably withheld, conditioned or delayed), on behalf of the Lenders
and the Issuing Banks, appoint a successor Administrative Agent which shall be
any Lender hereunder or any commercial bank organized under the laws of the
United States of America or of any State thereof and having a combined capital
and surplus of at least $1,000,000,000 and a rating of no less than A- from S&P,
with an office in New York, New York. Upon the acceptance of its appointment as
Administrative Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Administrative Agent, and the retiring Administrative Agent shall be
discharged from its duties and obligations hereunder. The fees payable by the
Borrower to a successor Administrative Agent shall be the same as those payable
to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Administrative Agent’s resignation hereunder, the
provisions of this Article and Section 9.03 shall continue in effect for the
benefit of such retiring Administrative Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Administrative Agent.
     The Arranger and the Co-Syndication Agents shall have no duties,
responsibilities or liabilities under any Loan Document other than their duties,
responsibilities and liabilities in their capacity as Lenders (or Issuing Banks,
if applicable) hereunder.
     Each Lender acknowledges that it has, independently and without reliance
upon the Administrative Agent or any other Lender and based on such documents
and information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Administrative Agent or any
other Lender and based on such documents and information as it shall from time
to time deem appropriate, continue to make its own decisions in taking or not
taking action under or based upon this Agreement, any related agreement or any
document furnished hereunder or thereunder.
ARTICLE IX
Miscellaneous
     Section 9.01 Notices.
          (a) Except in the case of notices and other communications expressly
permitted to be given by telephone (and subject to paragraph (b) below), all
notices and other communications provided for herein shall be in writing and
shall be delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
               (i) if to the Borrower, to it at Diamond Offshore Drilling, Inc.,
15415 Katy Freeway, Houston, Texas 77094, Attention of Treasurer (Telecopy No.
(281) 647-2297);

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with a copy to Diamond Offshore Drilling, Inc., 15415 Katy Freeway, Houston,
Texas 77094, Attention of General Counsel (Telecopy No. (281) 647-2223); and
with a copy to Duane Morris LLP, 3200 Southwest Freeway, Suite 3150, Houston,
Texas 77027, Attention of Shelton M. Vaughan (Telecopy No. (713) 402-3901).
               (ii) if to the Administrative Agent or to JPMorgan Chase Bank,
N.A., as an Issuing Bank, to JPMorgan Chase Bank, N.A., Loan and Agency
Services, 1111 Fannin Street, 10th Floor, Houston, Texas 77002, Attention of
Claudette Reid (Facsimile No. (713) 427-6307), with a copy to JPMorgan Chase
Bank, N.A., 600 Travis, 20th Floor, Houston, Texas 77002, Attention of Bob
Mertensotto (Facsimile No. (713) 216-8870); and
               (iii) if to any other Lender or Issuing Bank, to it at its
address (or telecopy number) set forth in its Administrative Questionnaire.
          (b) Notices and other communications to the Lenders hereunder may be
delivered or furnished by electronic communications pursuant to procedures
approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the
Administrative Agent and the applicable Lender. The Administrative Agent or the
Borrower may, in its discretion, agree to accept notices and other
communications to it hereunder by electronic communications pursuant to
procedures approved by it; provided that approval of such procedures may be
limited to particular notices or communications.
     Unless the Administrative Agent otherwise prescribes, (i) notices and other
communications sent to an email address shall be deemed received upon the
sender’s receipt of an acknowledgement from the intended recipient (such as by
the “return receipt requested” function, as available, return e-mail or other
written acknowledgement), provided that if such notice or other communication is
not sent during the normal business hours of the recipient, such notice or
communication shall be deemed to have been sent at the opening of business on
the next business day for the recipient, and (ii) notices or communications
posted to an Internet or intranet website shall be deemed received upon the
deemed receipt by the intended recipient at its email address as described in
the foregoing clause (i) of notification that such notice or communication is
available and identifying the website address therefor.
          (c) Any party hereto may change its address or telecopy number for
notices and other communications hereunder by notice to the other parties
hereto. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given on the date of receipt.
     Section 9.02 Waivers; Amendments.
          (a) No failure or delay by the Administrative Agent, any Issuing Bank
or any Lender in exercising any right or power hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Administrative Agent, the
Issuing Banks and the Lenders hereunder are cumulative and are not exclusive of
any rights or

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remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Borrower therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, any Lender or any Issuing Bank may have had notice or
knowledge of such Default at the time.
          (b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or by the Borrower and the
Administrative Agent with the consent of the Required Lenders; provided that no
such agreement shall (i) increase or extend the Commitment of any Lender without
the written consent of such Lender, (ii) reduce the principal amount of any Loan
or LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration or termination of any Commitment, without the
written consent of each Lender affected thereby, (iv) change Section 2.17(b) or
(c) in a manner that would alter the pro rata treatment of Lenders or the pro
rata sharing of payments required thereby, without the written consent of each
Lender, (v) alter the manner in which payments or prepayments of principal,
interest or other amounts hereunder shall be applied as among the Lenders or
Types of Loans, without the written consent of each Lender, or (vi) change
Section 4.01 or any of the provisions of this Section or the definition of
“Required Lenders” or any other provision hereof specifying the number or
percentage of Lenders required to waive, amend or modify any rights hereunder or
make any determination or grant any consent hereunder, without the written
consent of each Lender; provided further that no such agreement shall amend,
modify or otherwise affect the rights or duties of the Administrative Agent or
any Issuing Bank hereunder without the prior written consent of the
Administrative Agent or such Issuing Bank, as the case may be.
     Section 9.03 Expenses; Indemnity; Damage Waiver.
          (a) The Borrower shall pay (i) all reasonable out of pocket expenses
incurred by the Administrative Agent and its Affiliates, including the
reasonable fees, charges and disbursements of counsel for the Administrative
Agent, in connection with the syndication of the credit facilities provided for
herein, the preparation and administration of this Agreement or any amendments,
modifications or waivers of the provisions hereof (whether or not the
transactions contemplated hereby or thereby shall be consummated), (ii) all
reasonable out-of-pocket expenses incurred by each Issuing Bank in connection
with the issuance, amendment, renewal or extension of any Letter of Credit or
any demand for payment thereunder and (iii) all out-of-pocket expenses incurred
by the Administrative Agent, any Issuing Bank or any Lender, including the fees,
charges and disbursements of any counsel for the Administrative Agent, any
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with this Agreement following a Default by the Borrower
hereunder, including its rights under this Section, or in connection with the
Loans made or Letters of Credit issued

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hereunder, including all such out-of pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
          (b) The Borrower shall indemnify the Administrative Agent, the
Arranger, each Issuing Bank and each Lender, and each Related Party of any of
the foregoing Persons (each such Person being called an “Indemnitee”) against,
and hold each Indemnitee harmless from, any and all losses, claims, damages,
liabilities and related expenses, including the reasonable fees, charges and
disbursements of any counsel for any Indemnitee, incurred by or asserted against
any Indemnitee arising out of, in connection with, or as a result of (i) the
execution or delivery of this Agreement or any agreement or instrument
contemplated hereby, the performance by the parties hereto of their respective
obligations hereunder or the consummation of the Transactions or any other
transactions contemplated hereby, (ii) any Loan or Letter of Credit or the use
of the proceeds therefrom (including any refusal by any Issuing Bank to honor a
demand for payment under a Letter of Credit if the documents presented in
connection with such demand do not strictly comply with the terms of such Letter
of Credit), (iii) any actual or alleged presence or release of Hazardous
Materials on or from any property owned or operated by the Borrower or any of
its Subsidiaries, or any Environmental Liability related in any way to the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment (A) to have resulted from the
gross negligence, bad faith, willful misconduct or unlawful act of such
Indemnitee or (B) arise out of a dispute solely between two or more Indemnitees
not caused by or involving in any way the Borrower or any Subsidiary.
          (c) To the extent that the Borrower fails to pay any amount required
to be paid by it to the Administrative Agent, the Arranger or any Issuing Bank
under paragraph (a) or (b) of this Section, each Lender severally agrees to pay
to the Administrative Agent, the Arranger or such Issuing Bank, as the case may
be, such Lender’s Applicable Percentage (determined as of the time that the
applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent, the Arranger or such Issuing Bank in
its capacity as such.
          (d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
To the extent permitted by applicable law, no Indemnitee shall assert, and the
Administrative Agent, each Issuing Bank and each Lender, hereby waives, any
claim against the Borrower, any Subsidiary or any of their respective Related
Parties, on any theory of liability, for special, indirect, consequential or
punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or

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instrument contemplated hereby, the Transactions, any Loan or Letter of Credit
or the use of the proceeds thereof.
          (e) All amounts due under this Section shall be payable promptly after
written demand therefor.
     Section 9.04 Successors and Assigns.
          (a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and assigns
permitted hereby (including any Affiliate of an Issuing Bank that issues any
Letter of Credit), except that (i) the Borrower may not assign or otherwise
transfer any of its rights or obligations hereunder without the prior written
consent of each Lender (and any attempted assignment or transfer by the Borrower
without such consent shall be null and void) and (ii) no Lender may assign or
otherwise transfer its rights or obligations hereunder except in accordance with
this Section. Nothing in this Agreement, expressed or implied, shall be
construed to confer upon any Person (other than the parties hereto, their
respective successors and assigns permitted hereby (including any Affiliate of
an Issuing Bank that issues any Letter of Credit), Participants (to the extent
provided in paragraph (c) of this Section) and, to the extent expressly
contemplated hereby, the Related Parties of each of the Borrower, the
Administrative Agent, the Issuing Banks and the Lenders) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
          (b)
               (i) Subject to the conditions set forth in paragraph (b)(ii)
below, any Lender may assign to one or more assignees all or a portion of its
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it) with the prior written consent
(such consent not to be unreasonably withheld) of:
                    (A) the Borrower, provided that no consent of the Borrower
shall be required for an assignment to a Lender, an Affiliate of a Lender
(provided that such Affiliate, on the effective date of assignment, has a rating
of A- or higher by S&P or Moody’s and is subject to Regulation U of the Board)
or, if an Event of Default has occurred and is continuing, any other assignee;
                    (B) the Administrative Agent, provided that no consent of
the Administrative Agent shall be required for an assignment of any Commitment
to an assignee that is a Lender with a Commitment immediately prior to giving
effect to such assignment; and
                    (C) each Issuing Bank.
               (ii) Assignments shall be subject to the following additional
conditions:
                    (A) except in the case of an assignment to a Lender or an
Affiliate of a Lender or an assignment of the entire remaining amount of the
assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Assumption with respect

55

--------------------------------------------------------------------------------

 

to such assignment is delivered to the Administrative Agent) shall not be less
than $5,000,000 unless each of the Borrower and the Administrative Agent
otherwise consents, provided that no such consent of the Borrower shall be
required if an Event of Default has occurred and is continuing;
                    (B) each partial assignment shall be made as an assignment
of a proportionate part of all the assigning Lender’s rights and obligations
under this Agreement;
                    (C) the parties to each assignment shall execute and deliver
to the Administrative Agent an Assignment and Assumption, together with a
processing and recordation fee of $3,500; and
                    (D) the assignee, if it shall not be a Lender, shall deliver
to the Administrative Agent an Administrative Questionnaire.
               (iii) Subject to acceptance and recording thereof pursuant to
paragraph (b)(iv) of this Section, from and after the effective date specified
in each Assignment and Assumption the assignee thereunder shall be a party
hereto and, to the extent of the interest assigned by such Assignment and
Assumption, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Assumption, be released from its obligations
under this Agreement (and, in the case of an Assignment and Assumption covering
all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Section 2.14, Section 2.15, Section 2.16 and 9.03). Any assignment
or transfer by a Lender of rights or obligations under this Agreement that does
not comply with this Section 9.04 shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.
               (iv) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Assumption delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitment of, and principal
amount of the Loans and LC Disbursements owing to, each Lender pursuant to the
terms hereof from time to time (the “Register”). The entries in the Register
shall be conclusive, and the Borrower, the Administrative Agent, the Issuing
Banks and the Lenders may treat each Person whose name is recorded in the
Register pursuant to the terms hereof as a Lender hereunder for all purposes of
this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, any Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
               (v) Upon its receipt of a duly completed Assignment and
Assumption executed by an assigning Lender and an assignee, the assignee’s
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by
paragraph (b) of this Section, the Administrative Agent shall accept such
Assignment and Assumption and record the information contained therein in the
Register; provided that if either the assigning Lender or the assignee shall
have failed to make any

56

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payment required to be made by it pursuant to Section 2.05(d) or (e),
Section 2.06(b), Section 2.17(d) or Section 9.03(c), the Administrative Agent
shall have no obligation to accept such Assignment and Assumption and record the
information therein in the Register unless and until such payment shall have
been made in full, together with all accrued interest thereon. No assignment
shall be effective for purposes of this Agreement unless it has been recorded in
the Register as provided in this paragraph.
          (c)
               (i) Any Lender may, without the consent of the Borrower, the
Administrative Agent or any Issuing Bank, sell participations to one or more
banks or other entities (a “Participant”) in all or a portion of such Lender’s
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (A) such Lender’s
obligations under this Agreement shall remain unchanged (and if such Lender
holds a Note hereunder, it will remain the holder of such Note for purposes of
this Agreement), (B) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations and (C) the Borrower, the
Administrative Agent, each Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender’s
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce this Agreement and to approve any
amendment, modification or waiver of any provision of this Agreement; provided
that such agreement or instrument may provide that such Lender will not, without
the consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (c)(ii) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Section 2.14, Section 2.15 and
Section 2.16 to the same extent as if it were a Lender and had acquired its
interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of
Section 9.08 as though it were a Lender, provided such Participant agrees to be
subject to Section 2.17(c) as though it were a Lender.
               (ii) A Participant shall not be entitled to receive any greater
payment under Section 2.14, Section 2.15 or Section 2.16 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower’s prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.16 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.16(e) as though it were a Lender.
          (d) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender to secure obligations to a Federal Reserve Bank, and this Section
shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such pledgee or
assignee for such Lender as a party hereto.

57

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     Section 9.05 Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, any Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect in
accordance with their respective terms as long as the principal of or any
accrued interest on any Loan or any fee payable under this Agreement is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated. The provisions of Section 2.14,
Section 2.15, Section 2.16 and Section 9.03 and Article VIII shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Letters of Credit and the Commitments or the termination of
this Agreement or any provision hereof.
     Section 9.06 Counterparts; Integration; Effectiveness. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns. Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.
     Section 9.07 Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
     Section 9.08 Right of Setoff. If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time to
time, to the fullest extent permitted by law, to set off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other obligations at any time owing by such Lender to or for the credit
or the account of the Borrower against any of and all the obligations of the
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.

58

--------------------------------------------------------------------------------

 

     Section 9.09 Governing Law; Jurisdiction; Consent to Service of Process.
          (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
          (b) Each party hereto hereby irrevocably and unconditionally submits,
for itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or relating
to this Agreement, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of any such action or proceeding may be heard and determined
in such New York State court or, to the extent permitted by law, in such Federal
court. Each of the parties hereto agrees that a final judgment in any such
action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Administrative Agent,
any Issuing Bank or any Lender may otherwise have to bring any action or
proceeding relating to this Agreement against the Borrower or its properties in
the courts of any jurisdiction.
          (c) Each party hereto hereby irrevocably and unconditionally waives,
to the fullest extent it may legally and effectively do so, any objection which
it may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement in any court referred to
in paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
          (d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
     Section 9.10 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON
CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
     Section 9.11 Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.

59

--------------------------------------------------------------------------------

 

     Section 9.12 Confidentiality. Each of the Administrative Agent, the Issuing
Banks and the Lenders agrees to maintain (and to cause their respective Related
Parties to maintain) the confidentiality of the Information (as defined below),
except that Information may be disclosed (a) to its and its Affiliates’
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential and that the Administrative
Agent, each Issuing Bank and the Lenders as applicable, shall be responsible for
any violation of this Section 9.12 by such Persons), (b) to the extent requested
by any regulatory authority or self-regulatory authority exercising jurisdiction
over such Person, (c) to the extent required by applicable laws or regulations
or by any subpoena or similar legal process, (d) to any other party to this
Agreement, (e) to the extent reasonably required in connection with the exercise
of any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to an executed
written agreement containing provisions substantially the same as those of this
Section, to (i) any eligible assignee of or Participant in, or any prospective
eligible assignee of or prospective Participant in, any of its rights or
obligations under this Agreement or (ii) any actual or prospective counterparty
(or its advisors) to any swap, securitization or derivative transaction relating
to the Borrower and its obligations, (g) with the prior written consent of the
Borrower or (h) to the extent such Information (i) becomes publicly available
other than as a result of a breach of this Section or (ii) becomes available to
the Administrative Agent, any Issuing Bank or any Lender on a nonconfidential
basis from a source other than the Borrower (excluding any Information from a
source which the Administrative Agent, Issuing Bank or Lender knows has been
disclosed by such source in violation of a duty of confidentiality to the
Borrower or any of its Affiliates). For the purposes of this Section,
“Information” means all information received from or on behalf of the Borrower
relating to the Borrower or any Affiliate of the Borrower or their business,
other than any such information that is available to the Administrative Agent,
any Issuing Bank or any Lender on a nonconfidential basis prior to disclosure by
the Borrower (excluding any Information from a source which the Administrative
Agent, Issuing Bank or Lender knows has been disclosed by such source in
violation of a duty of confidentiality to the Borrower or any of its
Affiliates); provided that, in the case of information received from the
Borrower after the date hereof, such information is clearly identified at the
time of delivery as confidential. Any Person required to maintain the
confidentiality of Information as provided in this Section shall be considered
to have complied with its obligation to do so if such Person has exercised the
same degree of care to maintain the confidentiality of such Information as such
Person would accord to its own confidential information. This Section shall
survive and remain in full force and effect for a period of one year after the
date that the Loans have been repaid, no LC Exposure is outstanding and all of
the Commitments have terminated or expired.
     Section 9.13 Interest Rate Limitation. Notwithstanding anything herein to
the contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum Rate”) which may be contracted for, charged, taken,
received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the

60

--------------------------------------------------------------------------------

 

interest and Charges payable to such Lender in respect of other Loans or periods
shall be increased (but not above the Maximum Rate therefor) until such
cumulated amount, together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.
     Section 9.14 USA PATRIOT Act. Each Lender that is subject to the
requirements of the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Pub. L. 107-56
(signed into law October 26, 2001)), as amended from time to time (the “Act”),
hereby notifies the Borrower that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies the Borrower,
which information includes the name and address of the Borrower and other
information that will allow such Lender to identify the Borrower in accordance
with the Act.
     Section 9.15 Officer’s Certificates. It is not intended that any
certificate of any officer or director of the Borrower delivered to the
Administrative Agent, any Issuing Bank or any Lender pursuant to this Agreement
shall give rise to any personal liability on the part of such officer or
director.

61

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

                  DIAMOND OFFSHORE DRILLING, INC.    
 
           
 
  By:
Name:   /s/ Lester L. Thomas
 
Lester L. Thomas    
 
  Title:   Treasurer    

Signature Page to
5-Year Revolving Credit Agreement
S-1

 

--------------------------------------------------------------------------------

 

                  JPMORGAN CHASE BANK, N.A., individually and as
Administrative Agent    
 
           
 
  By:
Name:   /s/ Robert W. Traband
 
Robert W. Traband    
 
  Title:   Vice President    

Signature Page to
5-Year Revolving Credit Agreement
S-2

 

--------------------------------------------------------------------------------

 

                  THE BANK OF TOKYO-MITSUBISHI UFJ, LTD.
HOUSTON AGENCY, individually and as Co-Syndication Agent    
 
           
 
  By:
Name:   /s/ Kelton Glasscock
 
Kelton Glasscock    
 
  Title:   Vice President and Manager    

Signature Page to
5-Year Revolving Credit Agreement
S-3

 

--------------------------------------------------------------------------------

 

                  FORTIS CAPITAL CORP., individually and as
Co-Syndication Agent    
 
           
 
  By:
Name:   /s/ Svein Engh
 
Svein Engh    
 
  Title:   Managing Director    
 
           
 
  By:
Name:   /s/ Joseph Maxwell
 
Joseph Maxwell    
 
  Title:   Senior Vice President    

Signature Page to
5-Year Revolving Credit Agreement
S-4

 

--------------------------------------------------------------------------------

 

                  HSBC BANK USA, NATIONAL ASSOCIATION,
individually and as Co-Syndication Agent    
 
           
 
  By:
Name:   /s/ Jose Aldeanueva
 
Jose Aldeanueva    
 
  Title:   Senior Vice President    

Signature Page to
5-Year Revolving Credit Agreement
S-5

 

--------------------------------------------------------------------------------

 

                  WELLS FARGO BANK, N.A., individually and as
Co-Syndication Agent    
 
           
 
  By:
Name:   /s/ Michael G. Janak
 
Michael G. Janak    
 
  Title:   Vice President    

Signature Page to
5-Year Revolving Credit Agreement
S-6

 

--------------------------------------------------------------------------------

 

                  BAYERISCHE HYPO-UND
VEREINSBANK AG, MUNICH BRANCH,
individually and as
Co-Syndication Agent    
 
           
 
  By:
Name:   /s/ Girait Marquart
 
Girait Marquart    
 
  Title:   Managing Director    
 
           
 
  By:
Name:   /s/ Jeus Taubken
 
Jeus Taubken    
 
  Title:   Authorized Signatory    

Signature Page to
5-Year Revolving Credit Agreement
S-7

 

--------------------------------------------------------------------------------

 

                  AMEGY BANK NATIONAL ASSOCIATION    
 
           
 
  By:
Name:   /s/ Brian Duncan
 
Brian Duncan    
 
  Title:   Senior Vice President    

Signature Page to
5-Year Revolving Credit Agreement
S-8

 

--------------------------------------------------------------------------------

 

                  COMERICA BANK    
 
           
 
  By:
Name:   /s/ Charles Johnson
 
Charles Johnson    
 
  Title:   Vice President    

Signature Page to
5-Year Revolving Credit Agreement
S-9

 

--------------------------------------------------------------------------------

 

                  MIZUHO CORPORATE BANK (USA)    
 
           
 
  By:
Name:   /s/ Leon Mo
 
Leon Mo    
 
  Title:   Senior Vice President    

Signature Page to
5-Year Revolving Credit Agreement
S-10

 

--------------------------------------------------------------------------------

 

SCHEDULE 2.01

         
LENDER
  COMMITMENT
JPMorgan Chase Bank, N.A.
  $ 35,000,000  
The Bank of Tokyo-Mitsubishi UFJ, Ltd. Houston Agency
  $ 35,000,000  
Fortis Capital Corp.
  $ 35,000,000  
HSBC Bank USA, National Association
  $ 35,000,000  
Wells Fargo Bank, N.A.
  $ 35,000,000  
Bayerische Hypo-Und Vereinsbank AG, Munich Branch
  $ 35,000,000  
Amegy Bank National Association
  $ 25,000,000  
Comerica Bank
  $ 25,000,000  
Mizuho Corporate Bank (USA)
  $ 25,000,000  
Total
  $ 285,000,000  

Schedule 2.01

--------------------------------------------------------------------------------

 

SCHEDULE 3.06
Disclosed Matters
None.

Schedule 3.06

--------------------------------------------------------------------------------

 

SCHEDULE 6.01
Existing Liens
None.

Schedule 6.01

--------------------------------------------------------------------------------

 

SCHEDULE 6.04
Affiliate Transactions
     Prior to the initial public offering of our common stock in October 1995,
or the Initial Public Offering, we were a wholly owned subsidiary of Loews
Corporation, or Loews. In connection with the Initial Public Offering, we
entered into agreements with Loews pursuant to which Loews provides certain
management, administrative and other services to us and certain other
obligations were assumed by the parties. These agreements were not the result of
arm’s length negotiations between the parties.
     Services Agreement. We entered into a services agreement with Loews
effective upon consummation of the Initial Public Offering pursuant to which
Loews agreed to continue to perform certain administrative and technical
services on our behalf. These services include personnel, telecommunications,
purchasing, internal auditing, accounting, data processing and cash management
services, in addition to advice and assistance with respect to preparation of
tax returns and obtaining insurance. Under the services agreement, we reimburse
Loews for (i) allocated personnel costs (such as salaries, employee benefits and
payroll taxes) of the Loews personnel actually providing such services and
(ii) all out-of-pocket expenses related to the provision of such services. The
services agreement may be terminated at our option upon 30 days’ notice to Loews
and at the option of Loews upon six months’ notice to us. In addition, we have
agreed to indemnify and hold harmless Loews for all claims and damages arising
from the provision of services by Loews under the services agreement, unless due
to the gross negligence or willful misconduct of Loews. Under the services
agreement, we paid Loews approximately $429,000 for services performed by Loews
in 2005.
     Registration Rights Agreement. Under a Registration Rights Agreement dated
as of October 16, 1995, as amended, between us and Loews, subject to certain
limitations, we will file, upon the request of Loews, one or more registration
statements under the Securities Act of 1933, as amended, subject to a maximum of
two remaining requests, in order to permit Loews to offer and sell any of our
common stock that Loews may hold. Loews will bear the costs of any such
registered offering, including any underwriting commissions relating to shares
it sells in any such offering, any related transfer taxes and the costs of
complying with non-U.S. securities laws, and any fees and expenses of separate
counsel and accountants retained by Loews. We have the right to require Loews to
delay any exercise by Loews of its rights to require registration and other
actions for a period of up to 90 days if, in our judgment, any offering by us
then being conducted or about to be conducted would be adversely affected. In
addition, we have the right to require Loews to suspend the use of any resale
prospectus or prospectus supplement included in a “shelf” registration statement
for a reasonable period of time, not to exceed 90 days in any one instance or an
aggregate of 120 days in any 12-month period, if we are conducting or about to
conduct an underwritten public offering of our securities for our own account,
or would be required to disclose information regarding our company not otherwise
then required by law to be publicly disclosed where such disclosure would
reasonably be expected to adversely affect any material business transaction or
negotiation in which we are then engaged. Subject to certain conditions, we have
also granted Loews the right to include its shares of our common stock in

Schedule 6.04

--------------------------------------------------------------------------------

 

any registration statements covering offerings of our common stock by us, and we
will pay all costs of such offerings other than underwriting commissions and
transfer taxes attributable to the shares sold on behalf of Loews. We will
indemnify Loews, and Loews will indemnify us, against certain liabilities in
respect of any registration statement or offering covered by the registration
rights agreement, as amended.
     Other. During 2005 we made payments of $1.2 million to Ernst & Young LLP
for tax and other consulting services. The wife of Lawrence R. Dickerson, our
President and Chief Operating Officer and one of our directors, is an audit
partner at this firm.
     For purposes of this Schedule, the words “we”, “us” and “our” refer to the
Borrower.

Schedule 6.04

--------------------------------------------------------------------------------

 

SCHEDULE 6.05
Existing Indebtedness
None.

Schedule 6.05

--------------------------------------------------------------------------------

 

EXHIBIT A
ASSIGNMENT AND ASSUMPTION
     This Assignment and Assumption (the “Assignment and Assumption”) is dated
as of the Effective Date set forth below and is entered into by and between
[Insert name of Assignor] (the “Assignor”) and [Insert name of Assignee] (the
“Assignee”). Capitalized terms used but not defined herein shall have the
meanings given to them in the Credit Agreement identified below (as amended, the
“Credit Agreement”), receipt of a copy of which is hereby acknowledged by the
Assignee. The Standard Terms and Conditions set forth in Annex 1 attached hereto
are hereby agreed to and incorporated herein by reference and made a part of
this Assignment and Assumption as if set forth herein in full.
     For an agreed consideration, the Assignor hereby irrevocably sells and
assigns to the Assignee, and the Assignee hereby irrevocably purchases and
assumes from the Assignor, subject to and in accordance with the Standard Terms
and Conditions and the Credit Agreement, as of the Effective Date inserted by
the Administrative Agent as contemplated below (i) all of the Assignor’s rights
and obligations in its capacity as a Lender under the Credit Agreement and any
other documents or instruments delivered pursuant thereto to the extent related
to the amount and percentage interest identified below of all of such
outstanding rights and obligations of the Assignor under the respective
facilities identified below (including any letters of credit and guarantees
included in such facilities) and (ii) to the extent permitted to be assigned
under applicable law, all claims, suits, causes of action and any other right of
the Assignor (in its capacity as a Lender) against any Person, whether known or
unknown, arising under or in connection with the Credit Agreement, any other
documents or instruments delivered pursuant thereto or the loan transactions
governed thereby or in any way based on or related to any of the foregoing,
including contract claims, tort claims, malpractice claims, statutory claims and
all other claims at law or in equity related to the rights and obligations sold
and assigned pursuant to clause (i) above (the rights and obligations sold and
assigned pursuant to clauses (i) and (ii) above being referred to herein
collectively as the “Assigned Interest”). Such sale and assignment is without
recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

             
1.
  Assignor:        
 
     
 
   
 
           
2.
  Assignee:        
 
     
 
[and is an Affiliate of [identify Lender]1]    
 
           
3.
  Borrower(s):   Diamond Offshore Drilling, Inc.    
 
            4.   Administrative Agent:JPMorgan Chase Bank, N.A., as the
administrative agent under the Credit Agreement

 

1   Select as applicable.

Exhibit A-1

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5.   Credit Agreement: 5-Year Revolving Credit Agreement dated as of November 2,
2006 among Diamond Offshore Drilling, Inc., the Lenders parties thereto, and
JPMorgan Chase Bank, N.A., as Administrative Agent.   6.   Assigned Interest:

                              Aggregate Amount of   Amount of   Percentage
Assigned     Commitment/Loans   Commitment/Loans   of Facility Assigned2   for
all Lenders   Assigned   Commitment/Loans3
 
  $       $         %  
 
  $       $         %  
 
  $       $         %  

Effective Date:                      ___, 20___ [ TO BE INSERTED BY
ADMINISTRATIVE AGENT AND WHICH SHALL BE THE EFFECTIVE DATE OF RECORDATION OF
TRANSFER IN THE REGISTER THEREFOR.]
The terms set forth in this Assignment and Assumption are hereby agreed to:

                  ASSIGNOR:    
 
                [NAME OF ASSIGNOR]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
   
 
          ASSIGNEE:    
 
                [NAME OF ASSIGNEE]    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

[Consented to and]4 Accepted:
 

2   Fill in the appropriate terminology for the types of facilities under the
Credit Agreement that are being assigned under this Assignment (e.g.
“Commitment,” etc.)   3   Set forth, to at least 9 decimals, as a percentage of
the Commitment/Loans of all Lenders thereunder.

Exhibit A-2

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          [NAME OF ADMINISTRATIVE AGENT], as
Administrative Agent    
 
       
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   
 
        [Consented to:]5    
 
        [NAME OF RELEVANT PARTY]    
 
       
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   

 

4   To be added only if the consent of the Administrative Agent is required by
the terms of the Credit Agreement.   5   To be added only if the consent of the
Borrower and/or other parties (e.g., Issuing Bank) is required by the terms of
the Credit Agreement.

Exhibit A-3

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ANNEX 1
[                    ]1
STANDARD TERMS AND CONDITIONS FOR
ASSIGNMENT AND ASSUMPTION
     1. Representations and Warranties.
          1.1 Assignor. The Assignor (a) represents and warrants that (i) it is
the legal and beneficial owner of the Assigned Interest, (ii) the Assigned
Interest is free and clear of any lien, encumbrance or other adverse claim and
(iii) it has full power and authority, and has taken all action necessary, to
execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect
to (i) any statements, warranties or representations made in or in connection
with the Credit Agreement or any other Loan Document7, (ii) the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Loan Documents or any collateral thereunder, (iii) the financial condition of
the Borrower, any of its Subsidiaries or Affiliates or any other Person
obligated in respect of any Loan Document or (iv) the performance or observance
by the Borrower, any of its Subsidiaries or Affiliates or any other Person of
any of their respective obligations under any Loan Document.
          1.2 Assignee. The Assignee (a) represents and warrants that (i) it has
full power and authority, and has taken all action necessary, to execute and
deliver this Assignment and Assumption and to consummate the transactions
contemplated hereby and to become a Lender under the Credit Agreement, (ii) it
satisfies the requirements, if any, specified in the Credit Agreement that are
required to be satisfied by it in order to acquire the Assigned Interest and
become a Lender, (iii) from and after the Effective Date, it shall be bound by
the provisions of the Credit Agreement as a Lender thereunder and, to the extent
of the Assigned Interest, shall have the obligations of a Lender thereunder,
(iv) it has received a copy of the Credit Agreement, together with copies of the
most recent financial statements delivered pursuant to Section ___thereof, as
applicable, and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Assumption and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance
on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender8, attached to the Assignment and Assumption is any documentation required
to be delivered by it pursuant to the terms of the Credit Agreement, duly
completed and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or
any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in
 

1   Describe Credit Agreement at option of Administrative Agent.   2   The term
“Loan Document” should be conformed to that used in the Credit Agreement.   3  
The concept of “Foreign Lender” should be conformed to the section in the Credit
Agreement governing withholding taxes and gross-up.

Exhibit A-4

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taking or not taking action under the Loan Documents, and (ii) it will perform
in accordance with their terms all of the obligations which by the terms of the
Loan Documents are required to be performed by it as a Lender.
     2. Payments. From and after the Effective Date, the Administrative Agent
shall make all payments in respect of the Assigned Interest (including payments
of principal, interest, fees and other amounts) to the Assignor for amounts
which have accrued to but excluding the Effective Date and to the Assignee for
amounts which have accrued from and after the Effective Date.
     3. General Provisions. This Assignment and Assumption shall be binding
upon, and inure to the benefit of, the parties hereto and their respective
successors and assigns. This Assignment and Assumption may be executed in any
number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Assumption
by telecopy shall be effective as delivery of a manually executed counterpart of
this Assignment and Assumption. This Assignment and Assumption shall be governed
by, and construed in accordance with, the law of the State of New York.

Exhibit A-5

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EXHIBIT B
FORM OF
NOTICE OF COMMITMENT INCREASE
[Date]
JPMorgan Chase Bank, N.A.
1111 Fannin Street, 10th Floor
Houston, Texas, 77002
Attention: [                    ]
Ladies and Gentlemen:
     The undersigned, Diamond Offshore Drilling, Inc. (the “Borrower”), refers
to the 5-Year Revolving Credit Agreement dated as of November 2, 2006 (as
amended, supplemented or otherwise modified from time to time, the “Credit
Agreement”, with terms defined in the Credit Agreement and not otherwise defined
herein being used herein as therein defined) among the Borrower, JPMorgan Chase
Bank, N.A., as Administrative Agent, and the Lenders party thereto. The Borrower
hereby notifies you, pursuant to Section 2.02 of the Credit Agreement, that it
has arranged for the aggregate amount of the Commitments under the Credit
Agreement to be increased by adding to the Credit Agreement the CI Lenders
referenced below and/or by allowing one ore more existing Lenders to increase
their respective Commitments. In that connection, the Borrower sets forth below
the information relating to such proposed Commitment Increase as required by
Section 2.02(b) of the Credit Agreement:
     (a) the effective date of such increase of aggregate amount of the Lenders’
Commitments is                     ;
     (b) the amount of the requested increase of the Commitments is
$                    ;
     (c) the CI Lenders that have agreed with the Borrower to provide their
respective Commitments are                      [INSERT NAMES OF THE CI
LENDERS];
     (d) the existing Lenders that have agreed with the Borrower to increase
their respective Commitments are                      [INSERT NAMES OF THE
LENDERS]; and
     (e) set forth on Annex I attached hereto is the amount of the respective
Commitments of all Reducing Percentage Lenders, all CI Lenders and all existing
Lenders increasing their respective Commitments as of effective date of such
Commitment Increase.

EXHIBIT B-1

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     Delivery of an executed counterpart of this Notice of Commitment Increase
by telecopier shall be effective as delivery of an original executed counterpart
of this Notice of Commitment Increase.

                  Very truly yours,    
 
                DIAMOND OFFSHORE DRILLING, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

Acknowledged by:
JPMORGAN CHASE BANK, N.A.,
as Administrative Agent

         
By:
       
Name:
 
 
   
Title:
 
 
   
 
 
 
   

EXHIBIT B-2

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EXHIBIT C
FORM OF
BORROWING REQUEST
JPMorgan Chase Bank, N.A., as Administrative Agent
for the Lenders parties to the
Credit Agreement referred to below
270 Park Avenue
New York, New York 10017
[Date]
Reference: Diamond Offshore Drilling, Inc.
Ladies and Gentlemen:
     The undersigned, Diamond Offshore Drilling, Inc., refers to the 5-Year
Revolving Credit Agreement, dated as of November 2, 2006 (the “Credit
Agreement,” the terms defined therein being used herein as therein defined),
among the Borrower, JPMorgan Chase Bank, N.A., as Administrative Agent, and the
Lenders party thereto, and hereby gives you notice, irrevocably, pursuant to
Section 2.04 of the Credit Agreement, that the Borrower hereby requests a
Borrowing under the Credit Agreement, and in that connection sets forth below
the information relating to such Borrowing (the “Proposed Borrowing”) as
required by Section 2.04 of the Credit Agreement:
     (a) The aggregate amount of the Proposed Borrowing is
$                    .
     (b) The Business Day of the Proposed Borrowing is                     ,
200_.
     (c) The Type of the Proposed Borrowing is [an ABR Borrowing] [a Eurodollar
Borrowing].
     (d) The Interest Period for each Eurodollar Borrowing made as part of the
Proposed Borrowing is [                     month[s]].
     (e) The Borrower’s transit routing and bank account for loan funding is
                    .
     The undersigned certifies that he is the [          ] of the Borrower, and
that as such he is authorized to execute this certificate on behalf of the
Borrower. The undersigned further certifies, represents and warrants on behalf
of the Borrower that the Borrower is entitled to receive the requested Borrowing
under the terms and conditions of the Credit Agreement.

                  Very truly yours,    
 
                DIAMOND OFFSHORE DRILLING, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

EXHIBIT C-1

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EXHIBIT D
FORM OF
PROMISSORY NOTE

$[          ]   November [     ], 2006

     FOR VALUE RECEIVED, Diamond Offshore Drilling, Inc., a Delaware corporation
(the “Borrower”), hereby promises to pay to [                    ] (the
“Lender”), or its registered assigns, at the principal office of JPMorgan Chase
Bank, N.A. (the “Administrative Agent”), at 270 Park Avenue, New York, New York
10017, the principal sum of                      and ___/100 Dollars
($                    ) (or such lesser amount as shall equal the aggregate
unpaid principal amount of the Loans made by the Lender to the Borrower under
the Credit Agreement, as hereinafter defined), in lawful money of the United
States of America and in immediately available funds, on the dates and in the
principal amounts provided in the Credit Agreement, and to pay interest on the
unpaid principal amount of each such Loan, at such office, in like money and
funds, for the period commencing on the date of such Loan until such Loan shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
     The date, amount, Type, interest rate, Interest Period and maturity of each
Loan made by the Lender to the Borrower, and each payment made on account of the
principal thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Promissory Note, may be endorsed by the Lender on schedules
to be attached hereto or any continuation thereof or on any separate record
maintained by the Lender. Failure to make any such notation or to attach a
schedule shall not affect any Lender’s or the Borrower’s rights or obligations
in respect of such Loans or affect the validity of such transfer by any Lender
of this Promissory Note.
     This Promissory Note is one of the promissory notes referred to in the
5-Year Revolving Credit Agreement dated as of November 2, 2006 among the
Borrower, the Administrative Agent, and the lenders signatory thereto (including
the Lender), and evidences Loans made by the Lender thereunder (such Credit
Agreement as the same may be amended, supplemented or restated from time to
time, the “Credit Agreement”). Capitalized terms used in this Promissory Note
have the respective meanings assigned to them in the Credit Agreement.
     This Promissory Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement. The Credit
Agreement provides for the acceleration of the maturity of this Promissory Note
upon the occurrence of certain events, for prepayments of Loans upon the terms
and conditions specified therein and other provisions relevant to this
Promissory Note.
     THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.

EXHIBIT D-1

--------------------------------------------------------------------------------

 

     IN WITNESS WHEREOF, the Borrower has caused this Promissory Note to be duly
executed as of the day and year first above written.

                  DIAMOND OFFSHORE DRILLING, INC.    
 
           
 
  By:        
 
  Name:  
 
   
 
  Title:  
 
   
 
     
 
   

EXHIBIT D-2

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EXHIBIT E
FORM OF
OPINION OF COUNSEL FOR THE BORROWER
[LETTERHEAD OF DUANE MORRIS LLP]
November [     ], 2006
To the Lenders party to the Credit Agreement
referred to below and JPMorgan Chase Bank, N.A.,
as Administrative Agent for the Lenders
Ladies and Gentlemen:
          We have acted as counsel to Diamond Offshore Drilling, Inc., a
Delaware corporation (the “Company”), in connection with the preparation,
authorization, execution and delivery of, and the consummation of the
transactions contemplated by, the 5-Year Revolving Credit Agreement, dated as of
November 2, 2006 (the “Credit Agreement”), among the several lenders party
thereto (the “Lenders”), JPMorgan Chase Bank, N.A., as Administrative Agent (in
such capacity, the “Administrative Agent”), and the Company, as Borrower.
Capitalized terms defined in the Credit Agreement and used (but not otherwise
defined) herein are used herein as so defined.
          In so acting, we have examined originals or executed copies (certified
or otherwise identified to our satisfaction) of (a) the Credit Agreement and the
Notes issued by the Company on the date hereof (collectively, the “Loan
Documents”) and (b) such corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and have made such inquiries
of such officers and representatives, as we have deemed relevant and necessary
as a basis for the opinions hereinafter set forth.
          In such examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to us as certified, conformed or photostatic copies and
the authenticity of the originals of such latter documents. As to all questions
of fact material to these opinions that have not been independently established,
we have relied solely upon certificates or comparable documents of officers and
representatives of the Company and upon the representations and warranties of
the Company contained in the Loan Documents and have assumed that certificates
of public officials dated prior to the date hereof remain accurate as of the
date hereof. As used herein, “of which we are aware” means the conscious
awareness of facts or other information by any lawyer in our firm actively
involved in the transactions contemplated by the Loan Documents.

EXHIBIT F-1

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          Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
          1. The Company is a corporation validly existing and in good standing
under the laws of the State of Delaware and has all requisite corporate power
and authority to own, lease and operate its properties and to carry on its
business as now being conducted.
          2. The Company has all requisite corporate power and authority to
execute and deliver the Loan Documents and to perform its obligations
thereunder. The execution, delivery and performance of the Loan Documents by the
Company have been duly authorized by all necessary corporate action on the part
of the Company. Each of the Loan Documents has been duly and validly executed
and delivered by the Company and (assuming the due authorization, execution and
delivery thereof by each of the other parties thereto) constitutes the legal,
valid and binding obligation of the Company, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except that (A) rights to indemnification,
reimbursement and contribution thereunder may be limited by federal or state
securities laws or public policy and (B) no opinion is expressed with respect to
(i) any set-off provision contained in any Loan Document including, without
limitation, Section 9.08 (Setoff) of the Credit Agreement, (ii) provisions that
purport to waive rights to notices, objections, demands, legal defenses,
statutes of limitation, rights to trial by jury, or other benefits that cannot
be waived under applicable law, (iii) provisions that decisions by a party are
conclusive and (iv) provisions purporting to establish evidentiary standards for
suits or proceedings to enforce a Loan Document.
          3. The execution and delivery by the Company of the Loan Documents and
the performance by the Company of its obligations thereunder will not conflict
with, constitute a default under or violate (i) any of the terms, conditions or
provisions of the Amended and Restated Certificate of Incorporation or Amended
and Restated Bylaws of the Company, (ii) any of the terms, conditions or
provisions of any agreement listed on Schedule A hereto, (iii) any Applicable
Laws or (iv) any judgment, writ, injunction, decree, order or ruling of any
court or governmental authority binding on the Company of which we are aware.
          4. No consent, approval, waiver, license or authorization or other
action by or filing with any New York, Delaware corporate or federal
governmental authority is required in connection with the execution and delivery
by the Company of the Loan Documents, the consummation by the Company of the
transactions contemplated thereby or the performance by the Company of its
obligations thereunder, except for (i) any consent, approval, waiver, license or
authorization or other action or filing required by federal and state securities
or blue sky laws and the rules and regulations thereunder, and any maritime law
or regulations, as to which we express no opinion, (ii) those required by the
Shipping Act, 1916, as amended, as to which we express no opinion, and
(iii) those already obtained.
          5. The Company is not an “investment company” as such term is defined
in the Investment Company Act of 1940, as amended. In rendering the opinion in
this paragraph

EXHIBIT F-2

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5, we have assumed with your permission that Loews Corporation, a Delaware
corporation, is not and is not controlled by an “investment company” as such
term is defined in the Investment Company Act of 1940, as amended.
          The opinions expressed herein are subject in all respects to the
following qualifications, assumptions, exceptions, limitations and comments:
     (i) We express no opinion as to the enforceability of any provisions in the
Loan Documents providing for (a) collection of fees, late charges, default rate
interest, interest on interest or other penalties, or reimbursement of court
costs and legal fees, (b) the right of any person to declare a default,
accelerate obligations of any other person or exercise remedies based on
non-material breaches of any of the Loan Documents, (c) any obligation or
liability contained therein to survive the repayment of the Loan, (d) the
negation or limitation of liabilities, duties and obligations of any Lender,
(e) the ability of any party to collect attorneys’ fees and costs in an action
involving the Company if such party is not the prevailing party in such action
or to the extent such fees and costs are greater than such fees and costs as may
be determined to be reasonable by a court or other tribunal or (f) the
establishment of methods of proof.
     (ii) We assume that each of the parties to the Loan Documents other than
the Company will seek to enforce its rights thereunder in good faith and in a
commercially reasonable manner.
          For purposes of paragraph 3 of this opinion, “Applicable Laws” means
those laws and regulations of the State of New York and the United States of
America that, in our experience, are normally applicable to transactions of the
type contemplated by the Loan Documents; provided, however, that the term
“Applicable Laws” does not include, and we express no opinion with regard to
(i) any state or federal laws, rules or regulations relating to: (A) pollution
or protection of the environment; (B) zoning, land use, building or
construction; (C) occupational safety and health or other similar matters;
(D) labor, employee rights and benefits, including, without limitation, the
Employment Retirement Income Security Act of 1974, as amended; (E) antitrust and
trade regulation; (F) tax; (G) securities, including, without limitation,
federal and state securities or blue sky laws, rules or regulations; (H) corrupt
practices, including, without limitation, the Foreign Corrupt Practices Act of
1977, as amended; and (I) copyrights, patents and trademarks, (ii) any maritime
laws or regulations, or the Shipping Act, 1916, as amended and (iii) any laws,
rules or regulations of any county, municipality or similar political
subdivision or any agency or instrumentality thereof.
          The opinions expressed herein are limited to the laws of the State of
New York, the General Corporation Law of the State of Delaware, and the federal
laws of the United States which in our opinion are normally applicable to
transactions of this nature, and we express no opinion as to the effect on the
matters covered by this letter of the laws of any other jurisdiction. We have
not been called upon to, and accordingly do not, express any opinion as to the
various state and federal laws regulating banks or the conduct of their business
that may relate to the Loan Documents or the transactions contemplated thereby.

EXHIBIT F-3

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          We have assumed that your counsel has not given you any advice that is
contrary to any opinion rendered herein and that neither you nor your counsel
has any actual knowledge that causes you to reasonably believe that any of the
opinions expressed herein are incorrect. If, to your actual knowledge,
circumstances are such that our reliance on the assumptions in this paragraph is
inappropriate, and you have not informed us thereof in writing prior to our
delivery to you of this opinion, any of our opinions included herein that
specifically relate to or are affected by such circumstances shall be deemed not
to have been so included herein.
          The opinions expressed herein are based on an analysis of existing
laws. Such opinions may be affected by actions taken or omitted or events
occurring after the date hereof and by changes in existing law. We have not
undertaken to determine, or to inform any person, whether any such actions or
events are taken or do occur or for any such changes in law, and we disclaim any
obligation to update this opinion letter for any such changes or events
occurring or coming to our attention after the date hereof.
          The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. Those opinions may not be
used or relied upon by any other person, nor may this letter or any copies
hereof be furnished to a third party, filed with a governmental agency, quoted,
cited or otherwise referred to without our prior written consent, other than to
permitted assigns of any Lender.

     
 
  Very truly yours,

EXHIBIT F-4

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Schedule A

1.   Indenture, dated as of February 4, 1997, between Diamond Offshore Drilling,
Inc. and The Chase Manhattan Bank, as Trustee   2.   Second Supplemental
Indenture, dated as of June 6, 2000, between Diamond Offshore Drilling, Inc. and
The Chase Manhattan Bank, as Trustee   3.   Third Supplemental Indenture, dated
as of April 11, 2001, between Diamond Offshore Drilling, Inc. and The Chase
Manhattan Bank, as Trustee   4.   Fourth Supplemental Indenture, dated as of
August 27, 2004, between Diamond Offshore Drilling, Inc. and JPMorgan Chase
Bank, as Trustee   5.   Fifth Supplemental Indenture, dated as of June 14, 2005,
between Diamond Offshore Drilling, Inc. and JPMorgan Chase Bank, National
Association, as Trustee   6.   Registration Rights Agreement (the “Registration
Rights Agreement”) dated October 16, 1995 between Loews Corporation and Diamond
Offshore Drilling, Inc.   7.   Amendment to the Registration Rights Agreement,
dated September 16, 1997, between Loews Corporation and Diamond Offshore
Drilling, Inc.   8.   Services Agreement, dated October 16, 1995, between Loews
Corporation and Diamond Offshore Drilling, Inc.

EXHIBIT F-5