exv10w1



 





Exhibit 10.1




EXECUTION COPY




 










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




 





 









 





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




iii









 





     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.



1









 





     “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



2









 




(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



3









 




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.



4









 





     “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,



5









 




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



6









 




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,



7









 




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.



8









 





     “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.



9









 





     “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



10









 




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.



11









 





     “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;




12









 








          (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



13









 




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



14









 




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



15









 




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.




16









 








          (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

17









 








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

18









 








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

20









 








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;




21









 







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

22









 








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

23









 








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);



24









 





               (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

25









 








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.




26









 








     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

27









 








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.




28









 








     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

30









 








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

33









 








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

34









 








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

35









 








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.



36









 





     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.




37









 








          (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





40









 







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





41









 




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



42









 







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



43









 







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;




44









 








          (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



45









 







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.




46









 









     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




47









 







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




48









 








(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



49









 







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



50









 









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

52









 








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




53









 







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




54









 







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









 




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









 








     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









 








     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









 






	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









 










	 	 	 	 	 
	[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









 










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









 









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









 








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









 





     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









 








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









 








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









 








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









 








          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









 







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









 








          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









 






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