Exhibit 10.1
EXECUTION VERSION
Hercules Offshore, Inc.
$300,000,000 10.50% Senior Secured Notes due 2017
PURCHASE AGREEMENT
October 8, 2009
New York, New York
UBS Securities LLC
Banc of America Securities LLC
Deutsche Bank Securities Inc.
Morgan Stanley & Co. Incorporated
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171
Ladies and Gentlemen:
          Hercules Offshore, Inc., a Delaware corporation (the “Company”) and
each of the Guarantors (as defined herein) agree with you as follows:
          1. Issuance of Notes. The Company proposes to issue and sell to UBS
Securities LLC, Banc of America Securities LLC, Deutsche Bank Securities Inc.
and Morgan Stanley & Co. Incorporated (the “Representatives”) and the other
entities listed on Schedule I hereto (together with the Representatives, the
“Initial Purchasers”) $300,000,000 aggregate principal amount of 10.50% Senior
Secured Notes due 2017 (the “Original Notes”). The Company’s obligations under
the Original Notes and the Indenture (as defined below) will be, jointly and
severally, unconditionally guaranteed (the “Guarantees”), on a senior basis, by
each of the Subsidiaries (as defined below) listed on the signature pages hereto
(collectively, the “Guarantors,” and, together with the Company, the “Issuers”).
The Original Notes and the Guarantees are referred to herein as the
“Securities.” The Securities will be issued pursuant to an indenture (the
“Indenture”), to be dated the Closing Date (as defined herein), by and between
the Issuers and U.S. Bank National Association, as trustee (the “Trustee”) and
collateral agent (the “Collateral Agent”).
     The Securities will be offered and sold to the Initial Purchasers pursuant
to an exemption from the registration requirements under the Securities Act of
1933, as amended (the “Act”). The Issuers have prepared a preliminary offering
memorandum, dated as of October 5, 2009, (the “Preliminary Offering
Memorandum”), and a pricing supplement thereto dated the date hereof and
attached as Exhibit C hereto (the “Pricing Supplement”). The Preliminary
Offering Memorandum and the Pricing Supplement are herein referred to as the
“Pricing Disclosure Package.” Promptly after the execution of this Purchase
Agreement (this “Agreement”), the Issuers will prepare a final offering
memorandum dated the date hereof (the “Final Offering Memorandum”). Unless
stated to the contrary, any references herein to the terms “Pricing Disclosure
Package” and “Final Offering Memorandum” shall be deemed to refer to and include
any information filed under the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), prior to the date hereof and incorporated by reference therein,
and any references herein to the terms “amend,” “amendment” or “supplement” with
respect to the Final Offering Memorandum shall be deemed to refer to and include
any information filed under the Exchange Act subsequent to the date hereof that
is incorporated by reference therein. All references in this Agreement to
financial statements and schedules and other information which is “contained,”
“included” or “stated” (or other references of

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like import) in the Pricing Disclosure Package (including the Preliminary
Offering Memorandum) or Final Offering Memorandum shall be deemed to mean and
include all such financial statements and schedules and other information which
are incorporated by reference in the Pricing Disclosure Package or Final
Offering Memorandum, as the case may be.
     The Initial Purchasers have advised the Issuers that the Initial Purchasers
intend, as soon as they deem practicable after this Agreement has been executed
and delivered, to resell (the “Exempt Resales”) the Securities in private sales
exempt from registration under the Act on the terms set forth in the Pricing
Disclosure Package, solely to (i) persons whom the Initial Purchasers reasonably
believe to be “qualified institutional buyers” (“QIBs”), as defined in Rule 144A
under the Act (“Rule 144A”), in accordance with Rule 144A and (ii) other
eligible purchasers pursuant to offers and sales that occur outside the United
States within the meaning of Regulation S under the Act (“Regulation S”) in
accordance with Regulations S (the persons specified in clauses (i) and (ii),
the “Eligible Purchasers”).
     Holders (including subsequent transferees) of the Securities will have the
registration rights under the registration rights agreement (the “Registration
Rights Agreement”), among the Issuers and the Initial Purchasers, to be dated
the Closing Date, substantially in the form attached hereto as Exhibit A. Under
the Registration Rights Agreement, the Issuers will agree, under certain
circumstances set forth therein, (i) to file with the Securities and Exchange
Commission (the “Commission”) (a) a registration statement under the Act (the
“Exchange Offer Registration Statement”) relating to a new issue of debt
securities (collectively with the Private Exchange Notes (as defined in the
Registration Rights Agreement), the “Exchange Notes” and, together with the
Original Notes, the “Notes”), guaranteed by the guarantors under the Indenture,
to be offered in exchange for the Original Notes and the Guarantees thereof (the
“Exchange Offer”) and issued under the Indenture or an indenture substantially
identical to the Indenture and/or (b) under certain circumstances set forth in
the Registration Rights Agreement, a shelf registration statement pursuant to
Rule 415 under the Act (the “Shelf Registration Statement”) relating to the
resale by certain holders of the Original Notes and the Guarantees thereof,
(ii) to use its reasonable efforts to cause the Exchange Offer Registration
Statement and, if applicable, the Shelf Registration Statement to be declared
effective and (iii) to consummate the Exchange Offer, all within the time
periods specified in the Registration Rights Agreement.
     The Notes and the Guarantees will have the benefit of the security
agreements, ship mortgages and other collateral documents and related
agreements, including the Intercreditor Agreement (as defined below) and the
Mortgage Trust Agreement (as defined below), creating the security interests in
the Collateral (as defined below) as contemplated by the Indenture
(collectively, the “Security Documents”), pursuant to which the Issuers will,
among other things, grant security interests in and first-priority liens on
substantially all of the assets of the Company and the Guarantors securing the
Credit Facilities (as defined in the Disclosure Package) (collectively, the
“Collateral”).
     This Agreement, the Notes, the Guarantees, the Indenture, the Security
Documents and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the “Note Documents.” The issuance and sale of the
Securities (including the grant of security interests and liens pursuant to the
Security Documents) is referred to as the “Offering.”
          2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and covenants contained in this Agreement, the
Issuers agree to issue and sell to the Initial Purchasers, and on the basis of
the representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained in this Agreement, each of the
Initial Purchasers, severally and not jointly, agrees to purchase from the
Issuers, the aggregate principal amount of the

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Securities set forth opposite its name on Schedule I attached hereto. The
purchase price for the Securities shall be 95.133% of their principal amount.
          3. Delivery and Payment. Delivery of, and payment of the purchase
price for, the Securities shall be made at 9:00 a.m., Houston, Texas time, on
October 20, 2009 (such date and time, the “Closing Date”) at the offices of
Vinson & Elkins L.L.P., 2500 First City Tower, 1001 Fannin Street, Houston,
Texas 77002. The Closing Date and the location of delivery of and the form of
payment for the Securities may be varied by mutual agreement between the Initial
Purchasers and the Company.
          The Securities shall be delivered by the Issuers to the Initial
Purchasers (or as the Initial Purchasers direct) through the facilities of The
Depository Trust Company (“DTC”) against payment by the Initial Purchasers of
the purchase price therefor by means of wire transfer of immediately available
funds to such account or accounts specified by the Company in accordance with
Section 8(i) on or prior to the Closing Date, or by such means as the parties
hereto shall agree prior to the Closing Date. The Securities shall be evidenced
by one or more certificates in global form registered in such names as the
Initial Purchasers may request upon at least one business day’s notice prior to
the Closing Date and having an aggregate principal amount corresponding to the
aggregate principal amount of the Securities.
          4. Agreements of the Issuers. The Issuers jointly and severally,
covenant and agree with the Initial Purchasers as follows:
     (a) To furnish the Initial Purchasers and those persons identified by the
Initial Purchasers, without charge, as many copies of the Preliminary Offering
Memorandum, the Pricing Supplement, any Issuer Written Communication (as defined
below) and the Final Offering Memorandum, and any amendments or supplements
thereto, as the Initial Purchasers may reasonably request. The Issuers consent
to the use of the Preliminary Offering Memorandum, the Pricing Supplement and
the Final Offering Memorandum, and any amendments or supplements thereto, by the
Initial Purchasers in connection with Exempt Resales.
     (b) As promptly as practicable following the execution and delivery of this
Agreement and in any event not later than the second business day following the
date hereof, to prepare and deliver to the Initial Purchasers the Final Offering
Memorandum, which shall consist of the Preliminary Offering Memorandum as
modified only by the information contained in the Pricing Supplement. Not to
amend or supplement the Preliminary Offering Memorandum or the Pricing
Supplement without the written consent of the Representatives. Not to amend or
supplement the Final Offering Memorandum prior to the Closing Date unless the
Initial Purchasers shall previously have been advised of such proposed amendment
or supplement at least two business days prior to the proposed use, and shall
not have objected to such amendment or supplement.
     (c) Subject to Section 4(q), if, prior to the later of (x) the Closing Date
and (y) the time that the Initial Purchasers have completed their distribution
of the Securities, any event shall occur that, in the judgment of the Issuers or
in the judgment of counsel to the Initial Purchasers, makes any statement of a
material fact in the Final Offering Memorandum, as then amended or supplemented,
untrue or that requires the making of any additions to or changes in the Final
Offering Memorandum in order to make the statements in the Final Offering
Memorandum, as then amended or supplemented, in the light of the circumstances
under which they are made, not misleading, or if it is necessary to amend or
supplement the Final Offering Memorandum to comply with all applicable laws, the
Issuers shall promptly notify the Initial Purchasers of such event and (subject
to Section 4(b)) prepare an appropriate amendment or supplement to the Final
Offering Memorandum so that (i) the statements in the Final Offering Memorandum,
as amended

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or supplemented, will not contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances at the Closing Date and at the time of
the sale of Securities, not misleading and (ii) the Final Offering Memorandum
will comply with applicable law.
     (d) To qualify or register the Securities under the securities laws of such
jurisdictions as the Initial Purchasers may request and to continue such
qualification in effect so long as required for the Exempt Resales.
Notwithstanding the foregoing, no Issuer shall be required to qualify as a
foreign corporation in any jurisdiction in which it is not so qualified or to
execute a general consent to service of process in any such jurisdiction or
subject itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
     (e) To advise the Initial Purchasers promptly, and if requested by the
Initial Purchasers, to confirm such advice in writing, of the issuance by any
securities commission of any stop order suspending the qualification or
exemption from qualification of any of the Securities for offering or sale in
any jurisdiction, or the initiation of any proceeding for such purpose by any
securities commission or other regulatory authority. The Issuers shall use their
reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any of the Securities under any
securities laws, and if at any time any securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption of any of the Securities under any securities laws, the Issuers shall
use their reasonable best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
     (f) Whether or not the transactions contemplated by this Agreement are
consummated, to pay all costs, expenses, fees and disbursements (including fees
and disbursements of counsel and accountants for the Issuers) incurred and
stamp, documentary or similar taxes incident to and in connection with: (i) the
preparation, printing and distribution of the Preliminary Offering Memorandum,
the Pricing Supplement, any Issuer Written Communication (as defined below) and
the Final Offering Memorandum and any amendments and supplements thereto,
(ii) all expenses (including travel expenses) of the Issuers and the Initial
Purchasers in connection with any meetings with prospective investors in the
Securities, (iii) the preparation, notarization (if necessary) and delivery of
the Note Documents and all other agreements, memoranda, correspondence and
documents prepared and delivered in connection with this Agreement and with the
Exempt Resales, (iv) the issuance, transfer and delivery of the Securities by
the Issuers to the Initial Purchasers, (v) the qualification or registration of
the Securities for offer and sale under the securities laws of the several
states of the United States or provinces of Canada (including, without
limitation, the cost of printing and mailing preliminary and final Blue Sky or
legal investment memoranda and fees and disbursements of counsel (including
local counsel) to the Initial Purchasers relating thereto), (vi) the inclusion
of the Securities in the book-entry system of DTC, (vii) the rating of the
Securities by rating agencies, (viii) the fees and expenses of the Trustee and
its counsel, (ix) the creation and perfection of Liens on the Collateral
pursuant to the provisions of the Security Documents, including filing fees,
mortgage recording taxes, and the reasonable fees and expenses of counsel in
connection therewith and (x) the performance by the Company of its other
obligations under the Note Documents.
     (g) To use the proceeds from the sale of the Original Notes in the manner
described in the Preliminary Offering Memorandum under the caption “Use of
proceeds.”

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     (h) To do and perform all things required to be done and performed under
this Agreement by them prior to or after the Closing Date and to satisfy all
conditions precedent on their part to the delivery of the Securities.
     (i) Not to, and not to permit any Subsidiary to, sell, offer for sale or
solicit offers to buy any security (as defined in the Act) that would be
integrated with the sale of the Securities in a manner that would require the
registration under the Act of the sale of the Securities to the Initial
Purchasers or any Eligible Purchasers.
     (j) Not to, and to cause its affiliates (as defined in Rule 144 under the
Act) not to, resell any of the Securities that have been reacquired by any of
them.
     (k) Not to engage, not to allow any Subsidiary to engage, and to cause its
other affiliates and any person acting on their behalf (other than, in any case,
the Initial Purchasers and any of their affiliates, as to whom the Issuers make
no covenant) not to engage, in any form of general solicitation or general
advertising (within the meaning of Regulation D under the Act) in connection
with any offer or sale of the Securities in the United States.
     (l) Not to engage, not to allow any Subsidiary to engage, and to cause its
other affiliates and any person acting on their behalf (other than, in any case,
the Initial Purchasers and any of their affiliates, as to whom the Issuers make
no covenant) not to engage, in any directed selling effort with respect to the
Securities, and to comply with the offering restrictions requirement of
Regulation S. Terms used in this Section 4(l) have the meanings given to them by
Regulation S.
     (m) From and after the Closing Date, for so long as any of the Securities
remain outstanding and are “restricted securities” within the meaning of
Rule 144(a)(3) under the Act and during any period in which the Company is not
subject to Section 13 or 15(d) of the Exchange Act, to make available upon
request the information required by Rule 144A(d)(4) under the Act to (i) any
holder or beneficial owner of Securities in connection with any sale of such
Securities and (ii) any prospective purchaser of such Securities from any such
holder or beneficial owner designated by the holder or beneficial owner. The
Company will pay the expenses of preparing, printing and distributing such
documents.
     (n) To comply with their obligations under the Registration Rights
Agreement.
     (o) To comply with their obligations under the letter of representations to
DTC relating to the approval of the Securities by DTC for “book entry” transfer
and to use their best efforts to obtain approval of the Securities by DTC for
“book entry” transfer.
     (p) Prior to the Closing Date, to furnish without charge to the Initial
Purchasers, (i) all other reports and other communications (financial or
otherwise) that the Company mails or otherwise makes available to its security
holders and (ii) such other information as the Initial Purchasers shall
reasonably request.
     (q) Not to, and not to permit any of its affiliates or anyone acting on its
or its affiliates’ behalf to (other than the Initial Purchasers and their
affiliates), distribute prior to the Closing Date any offering material in
connection with the offer and sale of the Securities other than the Preliminary
Offering Memorandum, the Pricing Supplement, any electronic roadshow and the
Final Offering Memorandum. Before making, preparing, using, authorizing,
approving or referring to any Issuer Written Communication (as defined below),
the Company will furnish to the Representatives and counsel for the Initial
Purchasers a copy of such written communication

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for review and will not make, prepare, use, authorize, approve or refer to any
such written communication to which the Representatives reasonably object.
     (r) During the period of one year after the Closing Date or, if earlier,
until such time as the Securities are no longer restricted securities (as
defined in Rule 144 under the Act), not to be or become a closed end investment
company required to be registered, but not registered, under the Investment
Company Act of 1940.
     (s) In connection with the offering, until the Initial Purchasers shall
have notified the Company of the completion of the distribution of the
Securities, not to, and not to permit any of its affiliates (as such term is
defined in Rule 501(b) of Regulation D under the Act) to, either alone or with
one or more other persons, bid for or purchase for any account in which it or
any of its affiliates has a beneficial interest, for the purpose of creating
actual or apparent active trading in, or of raising the price of, the
Securities.
     (t) During the period from the date hereof through and including the date
that is 90 days after the date hereof, without the prior written consent of UBS
Securities LLC, offer, sell, contract to sell or otherwise dispose of any debt
securities issued or guaranteed by the Company or any Subsidiary and having a
tenor of more than one year.
          5. Representations and Warranties. (a) The Issuers represent and
warrant to the Initial Purchasers that, as of the date hereof and as of the
Closing Date (references in this Section 5 to the “Offering Memorandum” are to
(x) the Pricing Disclosure Package in the case of representations and warranties
made as of the date hereof and (y) the Final Offering Memorandum in the case of
representations and warranties made as of the Closing Date):
     (i) Neither the Pricing Disclosure Package, as of the date hereof or as of
the Closing Date, nor the Final Offering Memorandum, as of its date or (as
amended or supplemented in accordance with Section 4(b), if applicable) as of
the Closing Date, includes any untrue statement of a material fact or omits to
state any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. The
preceding sentence does not apply to statements in or omissions from the Pricing
Disclosure Package, the Final Offering Memorandum or any amendment or supplement
thereto based upon written information furnished to the Company by any Initial
Purchaser through the Representatives specifically for use therein, it being
understood and agreed that the only such information is that described in
Section 9. No order preventing the use of the Preliminary Offering Memorandum,
the Pricing Supplement or the Final Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act, has been issued or, to the knowledge of the Issuers, has been
threatened.
     (ii) The Company (including its agents and representatives, other than the
Initial Purchasers in their capacity as such) has not prepared, made, used,
authorized, approved or referred to and will not prepare, make, use, authorize,
approve or refer to any written communication that constitutes an offer to sell
or solicitation of an offer to buy the Securities (each such communication by
the Company or its agents and representatives an “Issuer Written Communication”)
other than (i) the Pricing Disclosure Package, (ii) the Final

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Offering Memorandum, (iii) the documents listed on Annex A hereto, including a
term sheet substantially in the form of Exhibit C hereto and (iv) any electronic
road show or other written communications, in each case used in accordance with
Section 4(q). Each such Issuer Written Communication, when taken together with
the Pricing Disclosure Package, did not, and at the Closing Date will not,
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
     (iii) Each document filed or to be filed pursuant to the Exchange Act and
incorporated by reference in the Offering Memorandum at the time they were or
hereafter are filed with the Commission complied or will comply in all material
respects with the Exchange Act and the rules and regulations of the Commission
(the “Rules and Regulations”).
     (iv) There are no securities of the Issuers that are listed on a national
securities exchange registered under Section 6 of the Exchange Act or that are
quoted in a United States automated interdealer quotation system of the same
class within the meaning of Rule 144A as the Securities.
     (v) The capitalization of the Company as of the Closing Date will be as set
forth in the as further adjusted column under the heading “Capitalization” in
the Offering Memorandum. All of the issued and outstanding equity interests of
the Company have been duly authorized and are validly issued, fully paid and
nonassessable and were not issued in violation of any preemptive or similar
right. Attached as Schedule II is a true and complete list of each entity in
which the Company has a direct or indirect majority equity or voting interest
(each, a “Subsidiary” and, together, the “Subsidiaries”), their jurisdictions of
organization, name of its equityholder(s) and percentage of outstanding equity
owned of record by each equityholder. All of the issued and outstanding equity
interests of each Subsidiary have been duly authorized and validly issued in
accordance with the organizational documents of such Subsidiary and are fully
paid (to the extent required under the applicable Subsidiary’s organizational
documents) and nonassessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware Limited Liability Company Act (the “Delaware LLC
Act”), in the case of limited liability company interests in a Delaware limited
liability company, and any similar foreign law), were not issued in violation of
any preemptive or similar right and the equity interests of each Subsidiary
owned by the Company, directly or indirectly through Subsidiaries, are owned
free and clear of all liens, encumbrances and defects, except to the extent that
such equity interests are subject to (A) transfer restrictions imposed by the
Act, the securities or Blue Sky laws of certain jurisdictions, (B) a lien or
encumbrance in connection with the Credit Agreement dated as of July 11, 2007,
as amended, (the “Credit Agreement”) among the Company, as borrower, the
Subsidiaries party thereto, as guarantors, UBS AG, Stamford Branch, as issuing
bank, administrative agent and collateral agent and the other lenders party
thereto or (C) a lien or encumbrance granted pursuant to the Indenture and the
Security Documents. Except as set forth in the Offering Memorandum, there are no
outstanding options, warrants or other rights to acquire or purchase, or
instruments convertible into or exchangeable for, any equity interests of the
Company or any of the Subsidiaries. No holder of any

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securities of the Company or any of the Subsidiaries is entitled to have such
securities (other than the Securities) registered under any registration
statement contemplated by the Registration Rights Agreement, except for any such
rights that have been validly waived or satisfied prior to the date hereof.
     (vi) The Company and each Subsidiary is a corporation, limited liability
company, or other entity duly organized and validly existing in good standing
under the laws of the jurisdiction of its organization, with power and authority
(limited liability, corporate and other) necessary to own its properties and
conduct its business as described in the Offering Memorandum. The Company is
duly qualified to do business as a foreign entity in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified or in good
standing would not, individually or in the aggregate, have a Material Adverse
Effect. A “Material Adverse Effect” means (x) a material adverse effect on the
condition (financial or other), business, properties, results of operations or
prospects of the Company and its Subsidiaries, taken as a whole or (y) a
material adverse effect on the ability of the Issuers to consummate the Offering
on a timely basis. Each Subsidiary is duly qualified or has made the necessary
filing requirements and received the necessary approvals, as the case may be, to
do business as a foreign limited liability company or corporation, as
applicable, in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification,
except where the failure to be so qualified or in good standing would not,
individually or in the aggregate, have a Material Adverse Effect.
     (vii) Each Issuer has all requisite corporate, limited liability company or
other power and authority to execute, deliver and perform all of its obligations
under the Note Documents to which it is a party and to consummate the
transactions contemplated hereby, and, without limitation, the Company has all
requisite corporate power and authority to issue, sell and deliver and perform
its obligations under the Notes.
     (viii) This Agreement has been duly authorized, executed and delivered by
each Issuer.
     (ix) The Indenture has been duly authorized by each Issuer and, when duly
executed and delivered by the Issuers (assuming the due authorization, execution
and delivery thereof by the Trustee), will be a legally binding and valid
obligation of each such Issuer, enforceable against it in accordance with its
terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or similar laws
affecting the enforcement of creditors’ rights generally and by general
principles of equity and the discretion of the court before which any proceeding
therefor may be brought (the “Bankruptcy Exceptions”). The Indenture, when
executed and delivered, will conform in all material respects to the description
thereof in the Offering Memorandum.
     (x) The Original Notes have been duly authorized for issuance and sale to
the Initial Purchasers by the Company, and when authenticated by the Trustee and
issued and delivered by the Company against payment therefor by

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the Initial Purchasers in accordance with the terms of this Agreement and the
Indenture, the Original Notes will be legally binding and valid obligations of
the Company, entitled to the benefits of the Indenture and enforceable against
the Company in accordance with their terms, except as the enforcement thereof
may be limited by the Bankruptcy Exceptions. The Original Notes, when issued,
authenticated and delivered, will conform in all material respects to the
description thereof in the Offering Memorandum. The Exchange Notes have been, or
on or before the Closing Date will be, duly and validly authorized for issuance
by the Company, and when authenticated by the Trustee and issued and delivered
by the Company in accordance with the terms of the Registration Rights
Agreement, the Exchange Offer and the Indenture, the Exchange Notes will be
legally binding and valid obligations of the Company, entitled to the benefits
of the Indenture and enforceable against the Company in accordance with their
terms, except as the enforcement thereof may be limited by the Bankruptcy
Exceptions.
     (xi) The Guarantees have been duly authorized by each of the Guarantors
and, when the Original Notes are authenticated by the Trustee and issued and
delivered by the Company against payment by the Initial Purchasers in accordance
with the terms of this Agreement and the Indenture, will be legally binding and
valid obligations of the Guarantors, enforceable against each of them in
accordance with their terms, except that enforceability thereof may be limited
by the Bankruptcy Exceptions. The Guarantees, when the Original Notes have been
authenticated by the Trustee and issued and delivered by the Company in
accordance with the terms of this Agreement and the Indenture, will conform in
all material respects to the description thereof in the Offering Memorandum. The
guarantees of the Exchange Notes have been, or on or before the Closing Date
will be, duly and validly authorized by each of the Guarantors and, when the
Exchange Notes are authenticated by the Trustee and issued and delivered by the
Company in accordance with the terms of the Registration Rights Agreement, the
Exchange Offer and the Indenture, will be legally binding and valid obligations
of the Guarantors, enforceable against each of them in accordance with their
terms, except that enforceability thereof may be limited by the Bankruptcy
Exceptions.
     (xii) The Registration Rights Agreement has been duly authorized by each
Issuer and, when duly executed and delivered by the Issuers (assuming the due
authorization, execution and delivery thereof by the Initial Purchasers), will
constitute a valid and legally binding obligation of each such Issuer,
enforceable against it in accordance with its terms, except that (A) the
enforcement thereof may be limited by the Bankruptcy Exceptions and (B) any
rights to indemnity or contribution thereunder may be limited by federal and
state securities laws and public policy considerations. The Registration Rights
Agreement, when executed and delivered, will conform in all material respects to
the description thereof in the Offering Memorandum.
     (xiii) Each of the Security Documents has been duly authorized by each
Issuer party thereto and, when duly executed and delivered by the Issuers
(assuming the due authorization, execution and delivery thereof by the other
parties thereto), will constitute a valid and legally binding obligation of each
such Issuer, enforceable against it in accordance with its terms, except as the

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enforcement thereof may be limited by the Bankruptcy Exceptions. The
Intercreditor Agreement, when executed and delivered, will conform in all
material respects to the description thereof in the Offering Memorandum.
     (xiv) Each of the representations and warranties of the Company or any
Subsidiary in any other Note Document is true and correct in all material
respects.
     (xv) Neither the Company nor any Subsidiary is (A) in violation of its
charter, bylaws or other organizational documents, (B) in default (or, with
notice or lapse of time or both, would be in default) in the performance or
observance of any obligation, agreement, covenant or condition contained in any
bond, debenture, note, indenture, mortgage, deed of trust, loan or credit
agreement, lease, license, franchise agreement, authorization, permit,
certificate or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them is bound or to which any of their
assets or properties is subject (collectively, “Agreements and Instruments”), or
(C) in violation of any law, statute, rule or regulation or any judgment, order
or decree of any domestic or foreign court or other governmental or regulatory
authority, agency or other body with jurisdiction over any of them or any of
their assets or properties (“Governmental Authority”), except, other than in the
case of clause (A), for such defaults or violations that would not have,
individually or in the aggregate, a Material Adverse Effect.
     (xvi) The execution, delivery and performance of the Note Documents, the
grant and perfection of the Liens on the Collateral pursuant to the Security
Documents and consummation of the Offering does not and will not (i) violate the
charter, bylaws or other organizational documents of the Company or any
Subsidiary, (ii) conflict with or constitute a breach of or a default under (or
an event that with notice or the lapse of time, or both, would constitute a
default), or require consent under, or result in a Repayment Event (as defined
below), or the creation or imposition of a lien, charge or encumbrance on any
property or assets of the Company or any Subsidiary (other than as created
pursuant to the Indenture and the Security Documents) under any of the
Agreements and Instruments or (iii) result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any statute, any
rule or regulation, including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System, or any judgment, order or
decree of any Governmental Authority, except (other than in the case of clause
(i)) for such defaults or violations that would not have, individually or in the
aggregate, a Material Adverse Effect. As used herein, a “Repayment Event” means
any event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder’s behalf) the
right to require the repurchase, redemption or repayment of all or a portion of
such indebtedness by the Company or any Subsidiary.
     (xvii) Assuming the accuracy of the representations and warranties of the
Initial Purchasers in Section 5(b) of this Agreement, no consent, approval,
authorization or order of, or filing, registration, qualification, license or
permit of or with, any Governmental Authority is required to be obtained or made
by the Company or any Subsidiary for the execution, delivery and performance by
the

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Company or any Subsidiary of the Note Documents, the grant and perfection of the
Liens on the Collateral pursuant to the Security Documents and the consummation
of the Offering, except (A) registration of the Exchange Offer or resale of the
Notes under the Act pursuant to the Registration Rights Agreement, (B) the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the “Trust Indenture Act”), in connection with the issuance of the Exchange
Notes, if applicable, (C) such consents, approvals and similar authorizations as
may be required under any applicable state securities or “Blue Sky” laws in
connection with the purchase and distribution of the Securities by the Initial
Purchasers, (D) such filings and recordings with Governmental Authorities as may
be required to perfect Liens granted pursuant to the Security Documents and
(E) such consents, which if not obtained, would not, individually or in the
aggregate, have a Material Adverse Effect. No consents or waivers from any other
person or entity are required for the execution, delivery and performance of the
Note Documents, the grant and perfection of the Liens on the Collateral pursuant
to the provisions of the Security Documents and the consummation of the
Offering, other than such consents and waivers as have been obtained or will be
obtained prior to the Closing Date and will be in full force and effect.
     (xviii) When executed and delivered to the Collateral Agent at the Closing,
the Security Documents will create, in favor of the Collateral Agent for the
benefit of the Secured Parties (as such term is defined in the Security
Agreement) as security for all of the Secured Obligations (as such term is
defined in the Security Agreement), a valid and enforceable Lien in the
Collateral described therein. When the UCC-1 financing statements delivered at
the closing pursuant to Section 8(h) and paragraph (iv) of Annex B hereof (the
“UCC Financing Statements”) have been filed with the Secretary of State (or
other authorized officer) of the jurisdiction of formation or organization for
each Pledgor (as such term is defined in the Security Agreement), such Liens
will be perfected Liens (subject only to Permitted Liens) on all Collateral
subject to Article 9 of the Uniform Commercial Code (“UCC”) on which a security
interest can be perfected by filing. The Company shall file each such UCC
Financing Statement in the appropriate governmental office referred to in the
preceding sentence. When the ship mortgages delivered at the closing pursuant to
Section 8(h) and paragraph (xi) of Annex B hereof (the “Ship Mortgages”) have
been filed in the appropriate registry, the Lien of the Ship Mortgages on the
Mortgaged Vessels (as defined in Section 8(h) and paragraph (xi) of Annex B
hereof) will be valid and enforceable Liens on the Mortgaged Vessels, subject
only to Permitted Liens. The Company shall file each such Ship Mortgage in the
appropriate vessel registry. With respect to that portion of the Collateral
consisting of Pledged Securities (as defined in the Security Agreement)
constituting Certificated Securities (as defined in the New York UCC) or
Intercompany Notes (as defined in the Security Agreement), upon the Bank
Collateral Agent (acting as bailee for the Collateral Agent pursuant to the
Intercreditor Agreement) taking possession in the State of New York of such
certificates and notes, which are endorsed to the Collateral Agent, its bailee
or in blank, the security interest of the Collateral Agent therein is perfected.
All such certificates and notes have been delivered to the Bank Collateral Agent
endorsed in blank.

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     (xix) The public accountants whose reports are included in the Offering
Memorandum are independent within the meaning of the Act. The financial
statements included in the Offering Memorandum (including the notes thereto)
present fairly the financial position of the Company and its consolidated
subsidiaries as of the dates shown and their results of operations and cash
flows for the periods shown, and such financial statements have been prepared in
conformity with the generally accepted accounting principles in the United
States (“GAAP”) applied on a consistent basis and in compliance with
Regulation S X under the Exchange Act, except that the interim financial
statements do not include full footnote disclosure. The information set forth
under the captions “Offering memorandum summary — Summary consolidated financial
data” and “Selected consolidated financial data” included in the Offering
Memorandum have been prepared on a basis consistent with that of the audited
financial statements of the Company.
     (xx) Except as disclosed in the Offering Memorandum, since the date of the
latest audited financial statements included in the Offering Memorandum
(A) there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company and its
Subsidiaries taken as a whole, (B) there has been no dividend or distribution of
any kind declared, paid or made by the Company on any class of its capital stock
and (C) there has not been any change in the long term debt of the Company or
any Subsidiary.
     (xxi) The assumptions used in the preparation of the pro forma and adjusted
financial information included in the Offering Memorandum are reasonable, and
the adjustments used therein are appropriate to give effect to the transactions
or circumstances referred to therein in the manner referred to therein.
     (xxii) The statistical and market related data and forward looking
statements included in the Offering Memorandum are based on or derived from
sources that the Issuers believe to be reliable and accurate in all material
respects and represent their good faith estimates that are made on the basis of
data derived from such sources. The Company has obtained the written consent to
the use of such data from such sources to the extent required or as would be
required if the offering of the Securities was being registered pursuant to the
rules and regulations of the Commission.
     (xxiii) As of the date hereof and as of the Closing Date, immediately prior
to and immediately following the consummation of the Offering, each Issuer is
and will be Solvent. As used herein, “Solvent” shall mean, for any person on a
particular date, that on such date (A) the fair value of the property of such
person is greater than the total amount of liabilities, including, without
limitation, contingent liabilities, of such person, (B) the present fair salable
value of the assets of such person is not less than the amount that will be
required to pay the probable liability of such person on its debts as they
become absolute and matured, (C) such person does not intend to, and does not
believe that it will, incur debts and liabilities beyond such person’s ability
to pay as such debts and liabilities mature, (D) such person is not engaged in a
business or a transaction, and is not about to engage in a business or a
transaction, for which such person’s

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property would constitute an unreasonably small capital and (E) such person is
able to pay its debts as they become due and payable.
     (xxiv) No Subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such Subsidiary’s capital stock, from repaying to the Company
any loans or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary’s property or assets to the Company or any other
Subsidiary of the Company, except as described in or contemplated in the Pricing
Disclosure Package or the Final Offering Memorandum.
     (xxv) Except as disclosed in the Offering Memorandum, there are no pending,
or, to the Company’s knowledge, threatened actions, suits or proceedings against
the Company, any of its Subsidiaries or to which any of their respective
properties are subject that, if determined adversely to the Company or any of
its Subsidiaries, would individually or in the aggregate have a Material Adverse
Effect.
     (xxvi) No labor dispute, strike or work stoppage with or by the employees
of the Company or any Subsidiary exists or, to the knowledge of the Company, is
imminent that would have a Material Adverse Effect.
     (xxvii) Except as disclosed in the Offering Memorandum, neither the Company
nor any of its Subsidiaries is in violation of any statute, rule, regulation,
decision or order of any Governmental Authority, relating to the use, disposal
or release of hazardous or toxic substances or relating to the protection or
restoration of the environment or human exposure to hazardous or toxic
substances (collectively, “environmental laws”), owns or operates any real
property contaminated with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any environmental
laws, which violation, contamination, liability or claim would individually or
in the aggregate have Material Adverse Effect; and the Company is not aware of
any pending investigation which might lead to such a claim.
     (xxviii) The Company and its Subsidiaries possess adequate certificates,
authorities or permits issued by appropriate Governmental Authorities necessary
to conduct the business now operated by them, except where the lack thereof
would not, individually or in the aggregate, have a Material Adverse Effect, and
have not received any notice of proceedings relating to the revocation or
modification of any such certificate, authority or permit that, if determined
adversely to the Company or any of its Subsidiaries, would individually or in
the aggregate have a Material Adverse Effect.
     (xxix) Except as disclosed in the Offering Memorandum, the Company and its
Subsidiaries (A) have good and indefeasible title to all real property and good
title to all other properties and assets owned by them, in each case free from
liens, encumbrances and defects that would affect the value thereof or interfere
with the use made or to be made thereof by them and, (B) hold any leased real or
personal property (including, without limitation, any Collateral that is leased)
under valid, subsisting and enforceable leases with no exceptions that would
interfere with the use made or to be made thereof by them, except, in each case,

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(A) for such liens, encumbrances, defects or exceptions that would not have a
Material Adverse Effect, (B) liens or encumbrances created pursuant to the
Indenture or Security Documents and (C) liens or encumbrances permitted by the
Indenture and Security Documents.
     (xxx) The Company and its Subsidiaries own, possess, license or can acquire
on reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, “intellectual property rights”) necessary
to conduct the business now operated by them, or presently employed by them,
except where the lack thereof would not, individually or in the aggregate, have
a Material Adverse Effect, and have not received any notice of infringement of
or conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material Adverse
Effect.
     (xxxi) All tax returns required to be filed by the Company or any
Subsidiary have been filed in all jurisdictions where such returns are required
to be filed; and all taxes, including withholding taxes, value added and
franchise taxes, penalties and interest, assessments, fees and other charges due
or claimed to be due from such entities or that are due and payable have been
paid, other than those being contested in good faith and for which reserves have
been provided in accordance with GAAP or those currently payable without penalty
or interest and except where the failure to make such required filings or
payments would not, individually or in the aggregate, have a Material Adverse
Effect.
     (xxxii) Neither the Company nor any Subsidiary has any liability for any
prohibited transaction or accumulated funding deficiency (within the meaning of
Section 412 of the Internal Revenue Code) or any complete or partial withdrawal
liability with respect to any pension, profit sharing or other plan which is
subject to the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”), to which the Company or any Subsidiary makes or ever has made a
contribution and in which any employee of the Company or any Subsidiary is or
has ever been a participant. With respect to such plans, the Company and each
Subsidiary is in compliance in all material respects with all applicable
provisions of ERISA.
     (xxxiii) Neither the Company nor any Subsidiary is, or after giving effect
to the offering and sale of the Notes and the application of the proceeds
thereof as described in the Offering Memorandum will be, required to register as
an “investment company” as defined in the Investment Company Act of 1940, as
amended.
     (xxxiv) Each Note Document conforms in all material respects to the
description thereof contained in each of the Pricing Disclosure Package and the
Offering Memorandum.
     (xxxv) The statements in the Preliminary Offering Memorandum and the Final
Offering Memorandum under the headings “Description of the notes,” “Exchange
offer; registration rights,” “Certain United States federal income tax
considerations,” “Legal matters” and under the subheading “Business—

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Regulation” fairly summarize the matters therein described in all material
respects.
     (xxxvi) Neither the Company nor any of its Subsidiaries or affiliates, nor,
to the Company’s knowledge, any director, officer, employee, agent or
representative of the Company or of any of its Subsidiaries or affiliates, has
taken or will take any action in furtherance of an offer, payment, promise to
pay, or authorization or approval of the payment or giving of money, property,
gifts or anything else of value, directly or indirectly, to any “government
official” (including any officer or employee of a government or government-owned
or controlled entity or of a public international organization, or any person
acting in an official capacity for or on behalf of any of the foregoing, or any
political party or party official or candidate for political office) to
influence official action or secure an improper advantage; and the Company and
its Subsidiaries and affiliates have conducted their businesses in compliance
with applicable anti-corruption laws and have instituted and maintain and will
continue to maintain policies and procedures designed to promote and achieve
compliance with such laws and with the representation and warranty contained
herein.
     (xxxvii) The operations of the Company and its Subsidiaries are and have
been conducted at all times in material compliance with all applicable financial
recordkeeping and reporting requirements, including those of the Bank Secrecy
Act, as amended by Title III of the Uniting and Strengthening America by
Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of
2001 (USA PATRIOT Act), and the applicable anti-money laundering statutes of
jurisdictions where the Company and its Subsidiaries conduct business, the rules
and regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental agency
(collectively, the “Anti-Money Laundering Laws”), and no action, suit or
proceeding by or before any Governmental Authority or any arbitrator involving
the Company or any of its Subsidiaries with respect to the Anti-Money Laundering
Laws is pending or, to the best knowledge of the Company, threatened.
     (xxxviii) (A) Neither the Company nor any of its Subsidiaries
(collectively, the “Entity”) or, to the knowledge of the Entity, any director,
officer, employee, agent, affiliate or representative of the Entity, is an
individual or entity (“Person”) that is, or is owned or controlled by a Person
that is: (1) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United
Nations Security Council (“UNSC”), the European Union (“EU”), Her Majesty’s
Treasury (“HMT”), or other relevant sanctions authority (collectively,
“Sanctions”), nor (2) located, organized or resident in a country or territory
that is the subject of Sanctions (including, without limitation, Burma/Myanmar,
Cuba, Iran, North Korea, Sudan and Syria).
     (B) The Entity represents and covenants that it will not, directly or
indirectly, use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other
Person: (i) to fund or facilitate any activities or business of or with any
Person or in any country or territory that, at the

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time of such funding or facilitation, is the subject of Sanctions; or (ii) in
any other manner that will result in a violation of Sanctions by any Person
(including any Person participating in the offering, whether as underwriter,
advisor, investor or otherwise).
     (C) The Entity represents and covenants that, for the past five years, it
has not knowingly engaged in, is not now knowingly engaged in, and will not
engage in, any dealings or transactions with any Person, or in any country or
territory, that at the time of the dealing or transaction is or was the subject
of Sanctions.
     (xxxix) The Company and its Subsidiaries maintain systems of internal
accounting controls sufficient to provide reasonable assurance that (A)
transactions are executed in accordance with management’s general or specific
authorizations; (B) transactions are recorded as necessary to permit preparation
of financial statements in conformity with GAAP and to maintain asset
accountability; (C) access to assets is permitted only in accordance with
management’s general or specific authorization; and (D) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
     (xl) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rules 13a-15 and 15d-14 under the
Exchange Act); such disclosure controls and procedures are designed to ensure
that material information relating to the Company and the Subsidiaries is made
known to the chief executive officer and chief financial officer of the Company
by others within the Company or any Subsidiary, and such disclosure controls and
procedures are reasonably effective to perform the functions for which they were
established subject to the limitations of any such control system; the Company’s
auditors and the audit committee of the board of directors of the Company have
been advised of: (A) any significant deficiencies in the design or operation of
internal controls which could adversely affect the Company’s ability to record,
process, summarize, and report financial data; and (B) any fraud, whether or not
material, that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most recent evaluation of
such disclosure controls and procedures, there have been no significant changes
in internal controls or in other factors that could significantly affect
internal controls, including any corrective actions with regard to significant
deficiencies and material weaknesses.
     (xli) Neither the Company nor any of its affiliates (as defined in Rule
501(b) of Regulation D under the Act) has, directly or through any person acting
on its or their behalf (other than any Initial Purchaser, as to which no
representation is made), (A) taken, directly or indirectly, any action that is
designed to or that has constituted or that would reasonably be expected to
cause or result in the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities,
(B) sold, bid for, purchased or paid any person any compensation for soliciting
purchases of the Securities in a manner that would require registration of the
Securities under the Act or paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of any Issuer in a
manner that would

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require registration of the Securities under the Act, (C) sold, offered for
sale, contracted to sell, pledged, solicited offers to buy or otherwise disposed
of or negotiated in respect of any security (as defined in the Act) that is
currently or will be integrated with the sale of the Securities in a manner that
would require the registration of the Securities under the Act or (D) engaged in
any directed selling effort (as defined by Regulation S) with respect to the
Securities, and each of them has complied with the offering restrictions
requirement of Regulation S.
     (xlii) No form of general solicitation or general advertising (prohibited
by the Act in connection with offers or sales such as the Exempt Resales) was
used by the Company or any person acting on its behalf (other than any Initial
Purchaser, as to which no representation is made) in connection with the offer
and sale of any of the Securities or in connection with Exempt Resales,
including, but not limited to, articles, notices or other communications
published in any newspaper, magazine or similar medium or broadcast over
television or radio or the Internet, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising within the
meaning of Regulation D under the Act. Neither the Company nor any of its
affiliates has entered into, or will enter into, any contractual arrangement
with respect to the distribution of the Securities except for this Agreement.
     (xliii) Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in each of the
Pricing Disclosure Package and the Offering Memorandum will violate
Regulation T, U or X of the Board of Governors of the Federal Reserve System or
any other regulation of such Board of Governors.
     (xliv) No forward-looking statement (within the meaning of Section 27A of
the Securities Act and Section 21E of the Exchange Act) contained in any of the
Pricing Disclosure Package or the Offering Memorandum has been made or
reaffirmed without a reasonable basis or has been disclosed other than in good
faith.
     (xlv) Except as described in the section entitled “Plan of distribution” in
the Offering Memorandum, there are no contracts, agreements or understandings
between the Company or any Subsidiary and any person that would give rise to a
valid claim against the Company, any Subsidiary or any of the Initial Purchasers
for a brokerage commission, finder’s fee or other like payment in connection
with the issuance, purchase and sale of the Securities.
     (xlvi) There is and has been no failure on the part of the Company and any
of the Company’s directors or officers, in their capacities as such, to comply
with any provision of the Sarbanes Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith, including Section 402 related
to loans and Sections 302 and 906 related to certifications.
          Each certificate signed by any officer of any Issuer and delivered to
the Initial Purchasers or counsel for the Initial Purchasers pursuant to, or in
connection with, this Agreement shall be deemed to be a representation and
warranty by the Issuers to the Initial Purchasers as to the matters covered by
such certificate.

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          The Company acknowledges that the Initial Purchasers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Section 8
of this Agreement, counsel to the Company and counsel to the Initial Purchasers
will rely upon the accuracy and truth of the foregoing representations and the
Company hereby consents to such reliance.
     (b) Each Initial Purchaser represents that it is an “accredited investor”
(as defined in Rule 501(a) of Regulation D under the Act) and acknowledges that
it is purchasing the Securities pursuant to a private sale exemption from
registration under the Act, and that the Securities have not been registered
under the Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an exemption from
the registration requirements of the Act. Each Initial Purchaser, severally and
not jointly, represents, warrants and covenants to the Issuers that:
     (i) Neither it, nor any person acting on its behalf, has or will solicit
offers for, or offer or sell, the Securities by any form of general solicitation
or general advertising (as those terms are used in Regulation D under the Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Act, and it has and will solicit offers for the Securities only from, and
will offer and sell the Securities only to, (1) persons whom such Initial
Purchaser reasonably believes to be QIBs or, if any such person is buying for
one or more institutional accounts for which such person is acting as fiduciary
or agent, only when such person has represented to such Initial Purchaser that
each such account is a QIB to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in reliance
on the exemption from the registration requirements of the Act pursuant to
Rule 144A, or (2) persons other than U.S. persons outside the United States in
reliance on, and in compliance with, the exemption from the registration
requirements of the Act provided by Regulation S.
     (ii) With respect to offers and sales outside the United States, such
Initial Purchaser has offered the Securities and will offer and sell the
Securities (1) as part of its distribution at any time and (2) otherwise until
40 days after the later of the commencement of the offering of the Securities
and the Closing Date, only in accordance with Rule 903 of Regulation S or
another exemption from the registration requirements of the Act. Accordingly,
neither such Initial Purchasers nor any person acting on their behalf has
engaged or will engage in any directed selling efforts (within the meaning of
Regulation S) with respect to the Securities, and any such persons have complied
and will comply with the offering restrictions requirements of Regulation S.
Terms used in this Section 5(b)(ii) have the meanings given to them by
Regulation S.
          Each Initial Purchaser severally agrees that, at or prior to
confirmation of a sale of Securities pursuant to Regulation S it will have sent
to each distributor, dealer or person receiving a selling concession, fee or
other remuneration that purchases Securities from it or through it during the
restricted period a confirmation or notice to substantially the following
effect:
     “The Securities covered hereby have not been registered under the United
States Securities Act of 1933, as amended (the “Securities Act”), and may not be
offered or sold within the United States or to or for the account or benefit of,
U.S. persons (i) as part of their distribution

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at any time and (ii) otherwise until forty days after the later of the date upon
which the offering of the Securities commenced and the date of closing, except
in either case in accordance with Regulation S or Rule 144A under the Securities
Act. Terms used above have the meaning given to them by Regulation S.”
          The Initial Purchasers understand that the Issuers and, for purposes
of the opinions to be delivered to them pursuant to Section 8 hereof, counsel to
the Issuers and counsel to the Initial Purchasers will rely upon the accuracy
and truth of the foregoing representations, and each Initial Purchaser hereby
consents to such reliance.
          6. Indemnification. (a) The Issuers, jointly and severally, agree to
indemnify and hold harmless the Initial Purchasers, each person, if any, who
controls any Initial Purchaser within the meaning of Section 15 of the Act or
Section 20(a) of the Exchange Act, the agents, employees, officers and directors
of any Initial Purchaser and the agents, employees, officers and directors of
any such controlling person from and against any and all losses, liabilities,
claims, damages and expenses whatsoever (including, but not limited, to
reasonable attorneys’ fees and any and all reasonable expenses whatsoever
incurred in investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all reasonable
amounts paid in settlement of any claim or litigation) (collectively, “Losses”)
to which they or any of them may become subject under the Act, the Exchange Act
or otherwise insofar as such Losses (or actions in respect thereof) arise out of
or are based upon any untrue statement or alleged untrue statement of a material
fact contained in the Pricing Disclosure Package, any Issuer Written
Communication (including, but not limited to, any electronic roadshow), the
Final Offering Memorandum, or in any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that none of
the Issuers will be liable in any such case to the extent, but only to the
extent, that any such Loss arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission relating
to an Initial Purchaser made therein in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Initial
Purchaser through the Representatives expressly for use therein. This indemnity
agreement will be in addition to any liability that the Issuers may otherwise
have, including, but not limited to, liability under this Agreement.
     (b) Each Initial Purchaser, severally, and not jointly, agrees to indemnify
and hold harmless the Issuers, and each person, if any, who controls any of the
Issuers within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, the agents, employees, officers and directors of any of the
Issuers and the agents, employees, officers and directors of any such
controlling person from and against any and all Losses to which they or any of
them may become subject under the Act, the Exchange Act or otherwise insofar as
such Losses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Pricing Disclosure Package or the Final Offering Memorandum, or in any amendment
or supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, in each case to the extent, but only to the extent, that any such
Loss arises out of or

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is based upon any untrue statement or alleged untrue statement or omission or
alleged omission relating to such Initial Purchaser made therein in reliance
upon and in conformity with information furnished in writing to the Company by
or on behalf of such Initial Purchaser through the Representatives expressly for
use therein.
     (c) Promptly after receipt by an indemnified party under subsection 6(a) or
6(b) above of notice of the commencement of any action, suit or proceeding
(collectively, an “action”), such indemnified party shall, if a claim in respect
thereof is to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in writing of the
commencement of such action (but the failure so to notify an indemnifying party
shall not relieve such indemnifying party from any liability that it may have
under this Section 6 except to the extent that it has been prejudiced in any
material respect by such failure). In case any such action is brought against
any indemnified party, and it notifies an indemnifying party of the commencement
of such action, the indemnifying party will be entitled to participate in such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense of such action with counsel
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such action, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) the named parties to such action (including any impleaded
parties) include such indemnified party and the indemnifying parties (or such
indemnifying parties have assumed the defense of such action), and such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them that are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such reasonable fees and expenses of counsel shall be borne by the indemnifying
parties. In no event shall the indemnifying parties be liable for the fees and
expenses of more than one counsel (together with appropriate local counsel) at
any time for all indemnified parties in connection with any one action or
separate but substantially similar or related actions arising in the same
jurisdiction out of the same general allegations or circumstances. An
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent, which consent may not be unreasonably
withheld. No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement (x) includes an unconditional release of such indemnified party
from all liability on claims that are the subject matter of such proceeding and
(y) does not include a

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statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
          7. Contribution. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 6 of this Agreement is for
any reason held to be unavailable from the indemnifying party, or is
insufficient to hold harmless a party indemnified under Section 6 of this
Agreement, each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such aggregate Losses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuers, on the one hand, and the Initial Purchasers, on the other hand,
from the offering of the Securities or (ii) if such allocation is not permitted
by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to above but also the relative fault of the Issuers,
on the one hand, and the Initial Purchasers, on the other hand, in connection
with the statements or omissions that resulted in such Losses, as well as any
other relevant equitable considerations. The relative benefits received by the
Issuers, on the one hand, and the Initial Purchasers, on the other hand, shall
be deemed to be in the same proportion as (x) the total proceeds from the
offering of Securities (net of discounts and commissions but before deducting
expenses) received by the Issuers are to (y) the total discount and commissions
received by the Initial Purchasers. The relative fault of the Issuers, on the
one hand, and the Initial Purchasers, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by an Issuer or the Initial Purchasers and the
parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission or alleged statement or omission.
          The Issuers and the Initial Purchasers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to above. Notwithstanding the
provisions of this Section 7, (i) in no case shall any Initial Purchaser be
required to contribute any amount in excess of the amount by which the total
discount and commissions applicable to the Securities purchased by such Initial
Purchaser pursuant to this Agreement exceeds the amount of any damages that such
Initial Purchaser has otherwise been required to pay by reason of any untrue or
alleged untrue statement or omission or alleged omission and (ii) no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls any Initial Purchaser within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act shall have the same rights to
contribution as the Initial Purchasers, and each person, if any, who controls an
Issuer within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each director, officer, employee and agent of an Issuer shall
have the same rights to contribution as the Issuers. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action against such party in respect of which a claim for contribution may be
made against another party or parties under this Section 7, notify such party or
parties from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom contribution
may be sought from any obligation it or they may have under this Section 7 or
otherwise, except to the extent that it has been prejudiced in any material
respect by such failure; provided, however, that no additional notice shall be
required with respect to any action for which notice has been given under
Section 6 for purposes of indemnification. Anything in this section to the
contrary notwithstanding, no party shall be liable for contribution with respect
to any action or claim settled without its written consent; provided, however,
that such written consent was not unreasonably withheld.

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          8. Conditions of Initial Purchasers’ Obligations. The obligations of
the Initial Purchasers to purchase and pay for the Securities, as provided for
in this Agreement, shall be subject to satisfaction of the following conditions
prior to or concurrently with such purchase:
     (a) All of the representations and warranties of the Issuers contained in
this Agreement shall be true and correct on the date of this Agreement and on
the Closing Date. The Issuers shall have performed or complied with all of the
agreements and covenants contained in this Agreement and required to be
performed or complied with by them at or prior to the Closing Date. The Initial
Purchasers shall have received a certificate, dated the Closing Date, signed by
the chief executive officer and chief financial officer of the Company,
certifying as to the foregoing and to the effect in Section 8(c).
     (b) The Final Offering Memorandum shall have been printed and copies
distributed to the Initial Purchasers as required by Section 4(b). No stop order
suspending the qualification or exemption from qualification of the Securities
in any jurisdiction shall have been issued and no proceeding for that purpose
shall have been commenced or shall be pending or threatened.
     (c) Since the execution of this Agreement, there shall not have been any
decrease in the rating of any debt or preferred stock of the Company or any
Subsidiary by any “nationally recognized statistical rating organization” (as
defined for purposes of Rule 436(g) under the Act), or any notice given of any
intended or potential decrease in any such rating or of a possible change in any
such rating that does not indicate the direction of the possible change.
     (d) The Initial Purchasers shall have received on the Closing Date opinions
dated the Closing Date, addressed to the Initial Purchasers, of (i) Andrews
Kurth LLP, counsel to the Company, (ii) James W. Noe, general counsel of the
Company, (iii) Maples and Calder, local counsel to the Company in the Cayman
Islands and (iv) Seward and Kissel, counsel to the Company, substantially in the
form of Exhibits B 1, B-2, B 3 and B-4 attached hereto.
     (e) The Initial Purchasers shall have received on the Closing Date an
opinion dated the Closing Date of Vinson & Elkins L.L.P., counsel to the Initial
Purchasers, in form and substance satisfactory to the Representatives. Such
counsel shall have been furnished with such certificates and documents as they
may reasonably request to enable them to review or pass upon the matters
referred to in this Section 8 and in order to evidence the accuracy,
completeness or satisfaction in all material respects of any of the
representations, warranties or conditions contained in this Agreement.
     (f) On the date hereof, the Initial Purchasers shall have received “comfort
letters” from (x) Ernst & Young LLP, the independent public accountants for the
Company, dated the date of this Agreement, addressed to the Initial Purchasers
and in form and substance satisfactory to the Representatives and counsel to the
Initial Purchasers, covering certain of the financial and accounting information
in the Preliminary Offering Memorandum and the Pricing Supplement and (y) Grant
Thornton LLP, the former independent public accountants for the Company, dated
the date of this Agreement, addressed to the Initial Purchasers and in form and
substance satisfactory to the Representatives

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and counsel to the Initial Purchasers, covering certain of the financial and
accounting information in the Preliminary Offering Memorandum and the Pricing
Supplement. In addition, the Initial Purchaser shall have received a “bring down
comfort letter” from each of Ernst & Young LLP and Grant Thornton LLP, each
dated as of the Closing Date, addressed to the Initial Purchasers and addressing
the matters in the “comfort letter” delivered on the date hereof pursuant to
clauses (x) and (y), respectively, of the preceding sentence, except that
(i) each “bring-down comfort letter” shall cover the financial and accounting
information in the Final Offering Memorandum and any amendment or supplement
thereto and (ii) procedures shall be brought down to a date no more than 5 days
prior to the Closing Date, and otherwise in form and substance satisfactory to
the Initial Purchasers and counsel to the Initial Purchasers.
     (g) The Issuers and the Trustee shall have executed and delivered the
Indenture and the Security Documents and the Initial Purchasers shall have
received copies thereof. The Issuers shall have executed and delivered the
Registration Rights Agreement and the Initial Purchasers shall have received
executed counterparts thereof.
     (h) In accordance with the terms of the Indenture, the Initial Purchasers
and the Trustee shall have received (or, in the case of possessory Collateral,
such documents shall be in the possession of the Bank Collateral Agent in
accordance with the terms of the Intercreditor Agreement) each of the documents
set forth on Annex B hereto which shall be reasonably satisfactory in form and
substance to the Initial Purchasers, the Trustee and each of their respective
counsel with respect to the Collateral, as appropriate, and shall have taken the
actions set forth on Annex B hereto:
     (i) The Initial Purchasers shall have been furnished with wiring
instructions for the application of the proceeds of the Securities in accordance
with this Agreement and such other information as they may reasonably request.
     (j) All agreements set forth in the blanket representation letter of the
Company to DTC relating to the approval of the Notes by DTC for “book entry”
transfer shall have been complied with.
     (k) The Trustee, as Collateral Agent, shall have entered into the
intercreditor agreement (the “Intercreditor Agreement”) among the Trustee, UBS
AG, Stamford Branch, as bank collateral agent, the Company and each Guarantor,
and the Initial Purchasers shall have received counterparts, conformed as
executed, thereof.
     (l) Wilmington Trust Company, as mortgage trustee for the benefit of the
Collateral Agent on behalf of the holders of the Notes (the “Mortgage Trustee”),
shall have entered into the mortgage trust agreement (the “Mortgage Trust
Agreement”) between the Mortgage Trustee and the Collateral Agent, and the
Initial Purchasers shall have received counterparts, conformed as executed,
thereof.
     If any of the conditions specified in this Section 8 shall not have been
fulfilled when and as required by this Agreement to be fulfilled (or waived by
the Initial Purchasers), this Agreement may be

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terminated by the Initial Purchasers on notice to the Company at any time at or
prior to the Closing Date, and such termination shall be without liability of
any party to any other party.
     The documents required to be delivered by this Section 8 will be delivered
at the office of counsel for the Initial Purchasers on the Closing Date.
          9. Initial Purchasers Information. The Company and the Initial
Purchasers severally acknowledge that, for all purposes (including
Sections 5(a)(i) and 6), the statements relating to stabilizing transactions,
syndicate covering transactions and penalty bids set forth in the seventh and
eighth paragraphs under “Plan of distribution” in the Preliminary Offering
Memorandum and the Final Offering Memorandum constitute the only information
furnished in writing by or behalf of any Initial Purchaser expressly for use in
the Pricing Disclosure Package or the Final Offering Memorandum.
          10. Survival of Representations and Agreements. All representations
and warranties, covenants and agreements contained in this Agreement, including
the agreements contained in Sections 4(f) and 11(d), the indemnity agreements
contained in Section 6 and the contribution agreements contained in Section 7,
shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of the Initial Purchasers or any controlling
person thereof or by or on behalf of the Company or any controlling person
thereof, and shall survive delivery of and payment for the Original Notes to and
by the Initial Purchasers. The agreements contained in Sections 4(f), 6, 7, 9
and 11(d) shall survive the termination of this Agreement, including pursuant to
Section 11.
          11. Effective Date of Agreement; Termination. (a) This Agreement shall
become effective upon execution and delivery of a counterpart hereof by each of
the parties hereto.
     (b) The Initial Purchasers shall have the right to terminate this Agreement
at any time prior to the Closing Date by notice to the Company from the Initial
Purchasers, without liability (other than with respect to Sections 6 and 7) on
the Initial Purchasers’ part to the Company or any affiliate thereof if, on or
prior to such date, (i) the Company shall have failed, refused or been unable to
perform any agreement on its part to be performed under this Agreement when and
as required; (ii) any other condition to the obligations of the Initial
Purchasers under this Agreement to be fulfilled by the Issuers pursuant to
Section 8 is not fulfilled when and as required in any material respect;
(iii) trading in any securities of the Company shall be suspended or limited by
the Commission or The NASDAQ Global Select Market, or (iv) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
Nasdaq Global Select Market shall have been suspended or materially limited, or
minimum prices shall have been established thereon by the Commission, or by such
exchange or other regulatory body or governmental authority having jurisdiction;
(v) a general moratorium shall have been declared by either Federal, New York
State, or Texas State authorities or a material disruption in commercial banking
or securities settlement or clearance services in the United States shall have
occurred; (vi) there is an outbreak or escalation of hostilities or national or
international calamity in any case involving the United States, on or after the
date of this Agreement, or if there has been a declaration by the United States
of a national emergency or war or other national or international calamity or
crisis

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(economic, political, financial or otherwise) which affects the U.S. and
international markets, making it, in the judgment of UBS Securities LLC,
impracticable to proceed with the offering or delivery of the Securities on the
terms and in the manner contemplated in the Pricing Disclosure Package; or
(vii) there shall have been such a material adverse change in general economic,
political or financial conditions or the effect (or potential effect if the
financial markets in the United States have not yet opened) of international
conditions on the financial markets in the United States shall be such as, in
the judgment of UBS Securities LLC, to make it inadvisable or impracticable to
proceed with the offering or delivery of the Securities on the terms and in the
manner contemplated in the Pricing Disclosure Package.
     (c) Any notice of termination pursuant to this Section 11 shall be given at
the address specified in Section 12 below by telephone or facsimile, confirmed
in writing by letter.
     (d) If this Agreement shall be terminated pursuant to Section 11(b)(other
than solely pursuant to clauses (iv), (v), (vi) or (vii) thereof), or if the
sale of the Securities provided for in this Agreement is not consummated because
of any refusal, inability or failure on the part of the Issuers to satisfy any
condition to the obligations of the Initial Purchasers set forth in this
Agreement to be satisfied or because of any refusal, inability or failure on the
part of the Issuers to perform any agreement in this Agreement or comply with
any provision of this Agreement, the Issuers, jointly and severally, will
reimburse the Initial Purchasers for all of their reasonable out of pocket
expenses (including, without limitation, the fees and expenses of the Initial
Purchasers’ counsel) incurred in connection with this Agreement and the
transactions contemplated hereby.
     (e) If any one or more Initial Purchasers shall fail to purchase and pay
for any of the Securities agreed to be purchased by such Initial Purchaser
hereunder and such failure to purchase shall constitute a default in the
performance of its or their obligations under this Agreement, the remaining
Initial Purchasers shall be obligated severally to take up and pay for (in the
respective proportions which the principal amount of Securities set forth
opposite their names in Schedule I hereto bears to the aggregate principal
amount of Securities set forth opposite the names of all the remaining Initial
Purchasers) the Securities which the defaulting Initial Purchaser or Initial
Purchasers agreed but failed to purchase; provided, however, that in the event
that the aggregate principal amount of Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10%
of the aggregate principal amount of Securities set forth in Schedule I hereto,
the remaining Initial Purchasers shall have the right to purchase all, but shall
not be under any obligation to purchase any, of the Securities, and if such
nondefaulting Initial Purchasers do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Initial
Purchaser or the Company. In the event of a default by any Initial Purchaser as
set forth in this Section 11(e), the Closing Date shall be postponed for such
period, not exceeding seven Business Days, as UBS Securities LLC shall determine
in order that the required changes in the Final Offering Memorandum or in any
other documents or arrangements may be effected. Nothing contained in this
Agreement shall relieve any

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defaulting Initial Purchaser of its liability, if any, to the Company or any
nondefaulting Initial Purchaser for damages occasioned by its default hereunder.
          12. Notice. All communications with respect to or under this
Agreement, except as may be otherwise specifically provided in this Agreement,
shall be in writing and, if sent to the Initial Purchasers, shall be mailed,
delivered or telecopied and confirmed in writing to c/o UBS Securities LLC, 677
Washington Blvd., Stamford, Connecticut 06901 (fax number: 203 719 3667),
Attention: High Yield Syndicate Department, with a copy for information purposes
only to UBS Securities LLC, 677 Washington Blvd., Stamford, Connecticut 06901
(fax number: 203-719-0680), Attention: Legal and Compliance Department; and if
sent to the Issuers, shall be mailed, delivered or telecopied and confirmed in
writing to Hercules Offshore, Inc. 9 Greenway Plaza, Suite 2200 Houston, Texas
(fax: 713-350-5105), Attention: Chief Financial Officer.
          All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged by telecopier machine, if telecopied; and one business day after
being timely delivered to a next day air courier.
          13. Parties. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Initial Purchasers, the Issuers and the other
indemnified parties referred to in Sections 6 and 7, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The term “successors
and assigns” shall not include a purchaser, in its capacity as such, of Notes
from the Initial Purchasers.
          14. Construction. This Agreement shall be construed in accordance with
the internal laws of the State of New York (without giving effect to any
provisions thereof relating to conflicts of law).
          15. Submission to Jurisdiction; Waiver of Jury Trial. No proceeding
related to this Agreement or the transactions contemplated hereby may be
commenced, prosecuted or continued in any court other than the courts of the
State of New York located in the City and County of New York or in the United
States District Court for the Southern District of New York, which courts shall
have jurisdiction over the adjudication of such matters, and the Issuers hereby
consent to the jurisdiction of such courts and personal service with respect
thereto. The Issuers hereby waive all right to trial by jury in any proceeding
(whether based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. The Issuers agree that a final judgment in any such
proceeding brought in any such court shall be conclusive and binding upon the
Issuers and may be enforced in any other courts in the jurisdiction of which the
Issuers are or may be subject, by suit upon such judgment.
          16. Captions. The captions included in this Agreement are included
solely for convenience of reference and are not to be considered a part of this
Agreement.
          17. Counterparts. This Agreement may be executed in various
counterparts that together shall constitute one and the same instrument.

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          18. No Fiduciary Relationship. The Issuers hereby acknowledge that the
Initial Purchasers are acting solely as initial purchasers in connection with
the purchase and sale of the Securities. The Issuers further acknowledge that
each of the Initial Purchasers is acting pursuant to a contractual relationship
created solely by this Agreement entered into on an arm’s length basis and in no
event do the parties intend that any Initial Purchaser act or be responsible as
a fiduciary to the Issuers, their management, stockholders, creditors or any
other person in connection with any activity that such Initial Purchaser may
undertake or has undertaken in furtherance of the purchase and sale of the
Securities, either before or after the date hereof. The Initial Purchasers
hereby expressly disclaim any fiduciary or similar obligations to the Issuers,
either in connection with the transactions contemplated by this Agreement or any
matters leading up to such transactions, and the Issuers hereby confirm their
understanding and agreement to that effect. The Issuers and each Initial
Purchaser agree that they are each responsible for making their own independent
judgments with respect to any such transactions, and that any opinions or views
expressed by any Initial Purchaser to the Issuers regarding such transactions,
including but not limited to any opinions or views with respect to the price or
market for the Securities, do not constitute advice or recommendations to the
Issuers. The Issuers hereby waive and release, to the fullest extent permitted
by law, any claims that such Issuers may have against the Initial Purchasers
with respect to any breach or alleged breach of any fiduciary or similar duty to
the Issuers in connection with the transactions contemplated by this Agreement
or any matters leading up to such transactions.
[Signature Pages Follow]

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          If the foregoing Purchase Agreement correctly sets forth the
understanding among the Issuers and the Initial Purchasers, please so indicate
in the space provided below for the purpose, whereupon this letter and your
acceptance shall constitute a binding agreement among the Issuers and the
Initial Purchasers.

            HERCULES OFFSHORE, INC.
      By:   /s/ James W. Noe         Name:   James W. Noe        Title:   Senior
Vice President, General Counsel,
Chief Compliance Officer and Secretary        CLIFFS DRILLING COMPANY
CLIFFS DRILLING TRINIDAD L.L.C.
HERCULES DRILLING COMPANY, LLC
THE HERCULES OFFSHORE DRILLING
     COMPANY LLC
THE OFFSHORE DRILLING COMPANY
THE ONSHORE DRILLING COMPANY
TODCO AMERICAS INC.
TODCO INTERNATIONAL INC.
TODCO MANAGEMENT SERVICES, INC.
TODCO MEXICO INC.
      By:   /s/ James W. Noe         Name:   James W. Noe        Title:   Vice
President and Secretary        HERCULES LIFTBOAT COMPANY, LLC
HERCULES OFFSHORE SERVICES LLC
      By:   /s/ James W. Noe         Name:   James W. Noe        Title:  
Secretary        HERCULES OFFSHORE HOLDINGS, LTD.
HERCULES OFFSHORE MIDDLE EAST, LTD.
      By:   /s/ Don P. Rodney         Name:   Don P. Rodney        Title:  
President   

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            DELTA TOWING HOLDINGS, LLC
DELTA TOWING, LLC
      By:   /s/ James W. Noe         Name:   James W. Noe        Title:  
President and Chief Executive Officer   

Signature Page

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-3-

Confirmed and accepted as of the date first above written:
UBS Securities LLC
Banc of America Securities LLC
Deutsche Bank Securities Inc.
Morgan Stanley & Co. Incorporated
Capital One Southcoast, Inc.
Credit Suisse Securities (USA) LLC
Goldman, Sachs & Co.
Mizuho Securities USA Inc.
Fortis Securities LLC
Comerica Securities, Inc.
Natixis Bleichroeder Inc.

          By:   UBS SECURITIES LLC         BANC OF AMERICA SECURITIES LLC       
DEUTSCHE BANK SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED, as Representatives of the several Initial
Purchasers        UBS SECURITIES LLC
      By:   /s/ Francisco Pino-Leite         Name:   Francisco Pinto-Leite     
  Title:   Executive Director              By:   /s/ Michele R. Cousins        
Name:   Michele R. Cousins        Title:   Director        BANC OF AMERICA
SECURITIES LLC
      By:   /s/ Lex Maultsby         Name:   Lex Maultsby        Title:  
Managing Director        DEUTSCHE BANK SECURITIES INC.
      By:   /s/ Sten L. Gustafson         Name:   Sten L. Gustafson       
Title:   Managing Director            By:   /s/ Jim Rodgers         Name:   Jim
Rodgers        Title:   Managing Director     

Signature Page

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          MORGAN STANLEY & CO. INCORPORATED
      By:   /s/ John T. Roche         Name:   John T. Roche        Title:   Vice
President       

Signature Page

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Annex A
Term sheet containing the terms of the securities, substantially in the form of
Exhibit C.

Annex A-1

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Annex B
In accordance with the terms of the Indenture, the Initial Purchasers and the
Trustee shall have received (or, in the case of possessory Collateral, such
documents shall be in the possession of the Bank Collateral Agent in accordance
with the terms of the Intercreditor Agreement).each of the following documents
which shall be reasonably satisfactory in form and substance to the Initial
Purchasers, the Trustee and each of their respective counsel with respect to the
Collateral, as appropriate, and shall have taken the following actions:
     (i) policies or certificates of insurance as required by the Security
Documents, which policies or certificates shall bear endorsements of the
character required pursuant to the Security Documents;
     (ii) a Perfection Certificate containing information about the Pledgors and
the Collateral needed in order to perfect a security interest in the Collateral
(the “Perfection Certificate”);
     (iii) the intercompany notes executed by and among the Company and certain
of its Subsidiaries identified in the Perfection Certificate, which shall have
been duly and validly pledged thereunder to the Collateral Agent for the benefit
of the holders of the Notes, and shall have been delivered to the Collateral
Agent (or the Bank Collateral Agent, as agent or gratuitous bailee, pursuant to
the Intercreditor Agreement), accompanied by instruments of transfer undated and
endorsed in blank;
     (iv) UCC-1 financing statements for each of the Pledgors (as such term is
defined in the Security Agreement), together with all schedules and exhibits to
such financing statements, in appropriate form for filing with the Secretary of
State (or other authorized officer) of the jurisdiction of formation or
organization for such Pledgor, covering the Collateral described therein as
being covered thereby, filings with the United States Patent and Trademark
Office and United States Copyright Office and such other documents under
applicable requirements of law in each jurisdiction as may be necessary or
appropriate or, in the reasonable opinion of any of the Initial Purchasers, the
Trustee and their respective counsel, desirable to perfect the Liens created, or
purported to be created, by the Security Documents;
     (v) termination statements (or copies of authorizations to file termination
statements) with respect to filings under the UCC necessary to release all Liens
(other than Permitted Liens) of any person in any Collateral described in the
Security Documents previously granted by any person;
     (vi) copies of UCC, United States Patent and Trademark Office and United
States Copyright Office tax and judgment lien searches, and pending lawsuit
searches or equivalent reports or searches, each of a recent date listing all
effective financing statements, lien notices or comparable documents that name
any Issuer (under its present name and any previous names used in the preceding
five years) as debtor and that are filed in those states in which any Issuer is
organized and such other searches that the Initial Purchasers deem necessary or
appropriate, none of which shall encumber the Collateral covered or intended to
be covered by the Security Documents (other than Permitted Liens);

Annex B-1

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     (vii) evidence acceptable to the Initial Purchasers of payment or
arrangements for payment by the Issuers of all applicable recording taxes, fees,
charges, costs and expenses required for the recording of the Security
Documents;
     (viii) certificates of ownership or abstracts of title or comparable
documents from appropriate authorities showing (or confirmation updating
previously reviewed certificates and indicating) (A) the registered ownership of
each Mortgaged Vessel (as defined below) by the relevant Issuer and (B) all
effective mortgages, lien notices or comparable documents that name any Issuer
as debtor and that are filed in those jurisdictions in which a vessel of such
Issuer is registered, none of which encumber the Collateral covered or intended
to be covered by the Security Documents (other than Permitted Liens);
     (ix) a copy of the Certificate of Financial Responsibility for each
Mortgaged Vessel required by the Minerals Management Service or the United
States Coast Guard to be covered by such a certificate;
     (x) other searches that the Initial Purchasers deem necessary or
appropriate, none of which encumber the Collateral covered or intended to be
covered by the Security Documents (other than Permitted Liens);
     (xi) with respect to each Issuer which owns a vessel that is subject to a
Lien securing the Credit Agreement (each such vessel, a “Mortgaged Vessel” and,
collectively, the “Mortgaged Vessels”), a preferred mortgage or preferred fleet
mortgage of such vessel satisfying the requirements set forth in the Indenture,
duly authorized, executed and delivered by such Issuer, and recorded (or subject
to arrangements satisfactory to the Initial Purchasers for the recording
thereof) in the appropriate vessel registry, which Ship Mortgage shall be
effective to create in favor of the Mortgage Trustee, for the benefit of the
Trustee and/or the Collateral Agent and the holders of the Notes, a legal, valid
and enforceable security interest, in and lien upon such vessels, subject only
to Permitted Liens;
     (xii) all certificates or instruments (if any) representing or evidencing
the Collateral in suitable form to transfer by delivery or accomplished by duly
executed instruments of transfer or assignment in blank;
     (xiii) a certificate of the Company, signed by its chief executive officer
and chief financial officer, to the effect that the Issuers have performed, in
all material respects, all covenants and agreements described in Section 8(h)
and this Annex B and satisfied, in all material respects, all conditions on its
part to be performed or satisfied hereunder;
     (xiv) the certificates representing all the outstanding equity interests
owned by any Issuer in each Domestic Subsidiary (as defined in the Pricing
Disclosure Package) identified in the Perfection Certificate, which shall have
been duly and validly pledged thereunder to the Collateral Agent for the benefit
of the holders of the Notes, have been delivered to the Bank Collateral Agent in
accordance with the Intercreditor Agreement, accompanied by instruments of
transfer and stock powers endorsed in blank;

Annex B-2

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     (xv) (a) each Issuer shall have authorized, executed and delivered all
documents and taken all actions necessary or appropriate to grant in favor of
the Collateral Agent for the benefit of the Secured Parties a fully perfected
pledge of and security interest in 66% of the equity interests owned by any
Issuer in each existing direct Foreign Subsidiary (as defined in the Pricing
Disclosure Package), under the laws of the jurisdiction of organization of the
applicable Subsidiary (including, without limitation, the filing of
registrations and financing statements (or the foreign equivalent, if
applicable), and the delivery of all certificates, agreements or instruments
representing such equity interests, accompanied by instruments of transfer
endorsed in blank to the extent required or permitted under the jurisdiction of
organization of the applicable Issuer of such Equity Interests) and (b) the
Collateral Agent shall have received, on behalf of itself and the holders of the
Notes, a favorable written opinion of each of outside counsel, substantially to
the extent set forth in Exhibits B-1, B-3 and B-4, (1) dated as of the Closing
Date and (2) addressed to the Trustee, the Collateral Agent and the Initial
Purchasers;
     (xvi) all Security Documents shall have been executed by the respective
parties thereto in form and substance reasonably satisfactory to the Initial
Purchasers; and
     (xvii) such other documents, approvals, affidavits, opinions or
certificates as the Trustee or the Initial Purchasers may reasonably request in
form and substance reasonably satisfactory to the Trustee or the Initial
Purchasers, as the case may be.

Annex B-3

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Schedule I

              Principal Amount of   Initial Purchaser   Notes to Be Purchased  
UBS Securities LLC
  $ 75,000,000  
Banc of America Securities LLC
    75,000,000  
Deutsche Bank Securities Inc.
    37,500,000  
Morgan Stanley & Co. Incorporated
    24,000,000  
Capital One Southcoast, Inc.
    18,000,000  
Credit Suisse Securities (USA) LLC
    18,000,000  
Goldman, Sachs & Co.
    18,000,000  
Mizuho Securities USA Inc.
    12,000,000  
Fortis Securities LLC
    7,500,000  
Comerica Securities, Inc.
    7,500,000  
Natixis Bleichroeder Inc.
    7,500,000  
 
       
Total
  $ 300,000,000  
 
     

 

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Schedule II

              Jurisdiction of   Equity Holder Subsidiary   Organization   and %
Held by each Cliffs Drilling (Barbados) Holdings SRL   Barbados  
TODCO Trinidad Ltd. (99.99%); Cliffs Drilling Trinidad, L.L.C. (0.01%)
Cliffs Drilling (Barbados) SRL   Barbados  
Cliffs Drilling (Barbados) Holdings SRL (99.99%); Cliffs Drilling Trinidad,
L.L.C. (0.01%)
Cliffs Drilling Company   Delaware  
THE Hercules Offshore Drilling Company LLC (100%)
Cliffs Drilling Trinidad L.L.C.   Delaware  
Cliffs Drilling Company (100%)
Cliffs Drilling Trinidad Offshore Limited   Trinidad  
Cliffs Drilling (Barbados) SRL (100%)
Delta Towing Holdings, LLC   Delaware  
THE Offshore Drilling Company (100%)
Delta Towing, LLC   Delaware  
Delta Towing Holdings, LLC (100%)
Hercules Drilling Company, LLC   Delaware  
Hercules Offshore, Inc. (100%)
Hercules International Asset Company, Ltd.   Cayman Islands  
Hercules Oilfield Services Ltd. (100%)
Hercules International Drilling Ltd.   Cayman Islands  
Hercules International Management Company Ltd. (100%)
Hercules International Finance Company, Ltd.   Cayman Islands  
Hercules Offshore Services LLC (100%)
Hercules International Holdings, Ltd.   Cayman Islands  
Hercules Offshore Services LLC (100%)
Hercules International Management Company Ltd.   Cayman Islands  
Hercules International Holdings, Ltd. (100 ordinary shares);Hercules Oilfield
Services Ltd. (1,000 preferred shares) (collectively constituting 100% of the
outstanding equity)
Hercules International Offshore, Ltd.   Cayman Islands  
Hercules Offshore Services LLC (100%)
Hercules Liftboat Company, LLC   Delaware  
Hercules Offshore, Inc. (100%)
Hercules Marketing International, Ltd.   Cayman Islands  
Hercules Oilfield Services Ltd. (100%)
Hercules Offshore (Nigeria) Limited   Nigeria  
Hercules Offshore International, LLC (100%)
Hercules Offshore Arabia, Ltd.   Cayman Islands  
Hercules Offshore Middle East Ltd. (100%)
Hercules Offshore Disaster Relief Fund   Texas  
No shareholders
Hercules Offshore Holdings Ltd.   Cayman Islands  
Hercules Offshore Services LLC (100%)
Hercules Offshore International, LLC   Delaware  
Hercules Oilfield Services Ltd. (100%)
Hercules Offshore Labuan Corporation   Malaysia  
Hercules International Drilling Ltd. (100%)
Hercules Offshore Liftboat Company, LLC   Delaware  
Hercules Offshore, Inc. (100%)
Hercules Offshore Middle East Ltd.   Cayman Islands  
Hercules Offshore Holdings Ltd. (100%)
Hercules Offshore Services LLC   Delaware  
Hercules Offshore, Inc. (100%)
Hercules Oilfield Services Ltd.   Cayman Islands  
Hercules International Holdings, Ltd. (100%)
Hercules Tanjung Asia Sdn. Bhd.   Malaysia  
Hercules International Holdings, Ltd. (49%); Tanjung Offshore Services Sdn.
Bhd.(51%)
HQ Ltd.   Cayman Islands  
 
Offshore Towing, Inc.   Louisiana  
Delta Towing, LLC (100%)

 

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              Jurisdiction of   Equity Holder Subsidiary   Organization   and %
Held by each Servicios TODCO S. de R.L. de C.V.   Mexico  
TODCO Mexico Inc. (100%)
THE Hercules Offshore Drilling Company LLC   Delaware  
Hercules Offshore, Inc. (100%)
THE Offshore Drilling Company   Delaware  
THE Hercules Offshore Drilling Company LLC (100%)
THE Onshore Drilling Company   Delaware  
Cliffs Drilling Company (100%)
TODCO Americas Inc.   Delaware  
Cliffs Drilling Company (100%)
TODCO International Inc.   Delaware  
THE Hercules Offshore Drilling Company LLC (100%)
TODCO Management Services, Inc.   Delaware  
THE Hercules Offshore Drilling Company LLC (100%)
TODCO Mexico Inc.   Delaware  
THE Offshore Drilling Company (100%)
TODCO Servicios de Apóio Marítima Ltda.   Brazil  
THE Offshore Drilling Company (100%)
TODCO Trinidad Ltd.   Cayman Islands  
Cliffs Drilling Company (100%)

 

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Schedule III
Local and Vessel Mortgage Counsel
Cayman Islands — Maples and Calder
Vessel Mortgages — Seward and Kissel

 

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Exhibit A
FORM OF REGISTRATION RIGHTS AGREEMENT

A-1

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REGISTRATION RIGHTS AGREEMENT
Dated as of October [___], 2009
By and Among
Hercules Offshore, Inc.,
the Guarantors named herein
and
UBS SECURITIES LLC,
BANC OF AMERICA SECURITIES LLC,
DEUTSCHE BANK SECURITIES INC.,
MORGAN STANLEY & CO. INCORPORATED,
CAPITAL ONE SOUTHCOAST, INC.,
CREDIT SUISSE SECURITIES (USA) LLC,
GOLDMAN, SACHS & CO.,
MIZUHO SECURITIES USA INC.,
COMERICA SECURITIES, INC.,
FORTIS SECURITIES LLC
and
NATIXIS BLEICHROEDER INC.,
as Initial Purchasers
10.50% Senior Secured Notes due 2017
 
 

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-i-

TABLE OF CONTENTS

                              Page   1.   Definitions     1   2.   Exchange
Offer     4   3.   Shelf Registration     7   4.   Liquidated Damages     8   5.
  Registration Procedures     9   6.   Registration Expenses     16   7.  
Indemnification     17   8.   Rules 144 and 144A     20   9.   Underwritten
Registrations     20   10.   Miscellaneous     20  
 
               
 
  (a)   No Inconsistent Agreements     20  
 
  (b)   Adjustments Affecting Registrable Notes     20  
 
  (c)   Amendments and Waivers     20  
 
  (d)   Notices     21  
 
  (e)   Successors and Assigns     22  
 
  (f)   Counterparts     22  
 
  (g)   Headings     22  
 
  (h)   Governing Law     22  
 
  (i)   Severability     22  
 
  (j)   Securities Held by the Issuers or Their Affiliates     22  
 
  (k)   Third-Party Beneficiaries     22  
 
  (l)   Attorneys' Fees     22  
 
  (m)   Entire Agreement     23  
 
                SIGNATURES     S-1  

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REGISTRATION RIGHTS AGREEMENT
          This Registration Rights Agreement (this “Agreement”) is dated as of
October [___], 2009, by and among Hercules Offshore, Inc. a Delaware corporation
(the “Company”), and each of the Guarantors (as defined herein) (the Company and
the Guarantors are referred to collectively herein as the “Issuers”), on the one
hand, and UBS Securities LLC, Banc of America Securities LLC, Deutsche Bank
Securities Inc. and Morgan Stanley & Co. Incorporated (the “Representatives”)
and Capital One Southcoast, Inc., Credit Suisse Securities (USA) LLC, Goldman,
Sachs & Co., Mizuho Securities USA Inc., Comerica Securities, Inc., Fortis
Securities LLC and Natixis Bleichroeder Inc. (together with the Representatives,
the “Initial Purchasers”), on the other hand.
          This Agreement is entered into in connection with the Purchase
Agreement, dated as of October 8, 2009, by and among the Issuers and the Initial
Purchasers (the “Purchase Agreement”), relating to the offering of $300,000,000
aggregate principal amount of 10.50% Senior Secured Notes due 2017 of the
Company (including the guarantees thereof by the Guarantors, the “Notes”). The
execution and delivery of this Agreement is a condition to the Initial
Purchasers’ obligation to purchase the Notes under the Purchase Agreement.
          The parties hereby agree as follows:
     Section 1. Definitions. As used in this Agreement, the following terms
shall have the following meanings:
          “action” shall have the meaning set forth in Section 7(c) hereof.
          “Advice” shall have the meaning set forth in Section 5 hereof.
          “Affiliate” of any specified Person shall mean any other Person that,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified Person. For purposes of this definition, control of
a Person shall mean the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by contract or
otherwise; and the terms “controlling” and “controlled” shall have meanings
correlative to the foregoing.
          “Agreement” shall have the meaning set forth in the first introductory
paragraph hereto.
          “Applicable Period” shall have the meaning set forth in Section 2(b)
hereof.
          “Board of Directors” shall have the meaning set forth in Section 5
hereof.
          “Business Day” shall mean a day that is not a Legal Holiday.
          “Commission” shall mean the U.S. Securities and Exchange Commission.
          “Company” shall have the meaning set forth in the introductory
paragraph hereto and shall also include the Company’s permitted successors and
assigns.
          “Damages Payment Date” shall have the meaning set forth in Section
4(b) hereof.
          “day” shall mean a calendar day.

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-2-

          “Delay Period” shall have the meaning set forth in Section 5 hereof.
          “Effectiveness Period” shall have the meaning set forth in Section
3(b) hereof.
          “Exchange Act” shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
          “Exchange Date” shall have the meaning set forth in Section 2(a)
hereof.
          “Exchange Notes” shall have the meaning set forth in Section 2(a)
hereof.
          “Exchange Offer” shall have the meaning set forth in Section 2(a)
hereof.
          “Exchange Offer Registration Statement” shall have the meaning set
forth in Section 2(a) hereof.
          “FINRA” shall have the meaning set forth in Section 5(s) hereof.
          “Free Writing Prospectus” shall mean each free writing prospectus (as
defined in Rule 405 under the Securities Act) prepared by or on behalf of the
Company or used by the Company in connection with the sale of the Notes or the
Exchange Notes.
          “Freely Tradable” shall mean, with respect to any Note, a Note
(i) that, at the time of determination, would be permitted to be sold to the
public without limitation in accordance with Rule 144 by a Person who is not an
Affiliate of the Company, (ii) with respect to which the Company has enabled the
applicable Holder to have any restrictive legends relating to the Securities Act
removed and (iii) that bears an unrestricted CUSIP number.
          “Guarantors” means each subsidiary of the Company listed on the
signature page to this Agreement and each Person who executes and delivers a
counterpart of this Agreement after the date hereof pursuant to Section 11(e)
hereof.
          “Holder” shall mean any holder of a Registrable Note or Registrable
Notes.
          “Indenture” shall mean the Indenture, dated as of [October [___],
2009, by and among the Issuers and US Bank National Association as trustee,
pursuant to which the Notes are being issued, as amended or supplemented from
time to time in accordance with the terms thereof.
          “Initial Purchasers” shall have the meaning set forth in the first
introductory paragraph hereof.
          “Inspectors” shall have the meaning set forth in Section 5(n) hereof.
          “Issue Date” shall mean October [___], 2009, the date of original
issuance of the Notes.
          “Issuers” shall have the meaning set forth in the first introductory
paragraph hereto and shall also include the Issuers’ permitted successors and
assigns.
          “Legal Holiday” shall mean a Saturday, a Sunday or a day on which
banking institutions in New York, New York are required by law, regulation or
executive order to remain closed.

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-3-

          “Liquidated Damages” shall have the meaning set forth in Section 4(a)
hereof.
          “Losses” shall have the meaning set forth in Section 7(a) hereof.
          “Notes” shall have the meaning set forth in the second introductory
paragraph hereto.
          “Participant” shall have the meaning set forth in Section 7(a) hereof.
          “Participating Broker-Dealer” shall have the meaning set forth in
Section 2(b) hereof.
          “Person” shall mean an individual, trustee, corporation, partnership,
joint venture association, joint stock company, trust, unincorporated limited
liability company, government or any agency or political subdivision thereof or
any other entity.
          “Private Exchange” shall have the meaning set forth in Section 2(b)
hereof.
          “Private Exchange Notes” shall have the meaning set forth in Section
2(b) hereof.
          “Prospectus” shall mean the prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act), as amended or supplemented by
any prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
          “Purchase Agreement” shall have the meaning set forth in the second
introductory paragraph hereof.
          “Records” shall have the meaning set forth in Section 5(n) hereof.
          “Registrable Notes” shall mean each Note upon its original issuance
and at all times subsequent thereto, each Exchange Note as to which
Section 2(c)(iii) hereof is applicable upon original issuance and at all times
subsequent thereto and each Private Exchange Note upon original issuance thereof
and at all times subsequent thereto, in each case until (i) a Registration
Statement (other than, with respect to any Exchange Note as to which
Section 2(c)(iii) hereof is applicable, the Exchange Offer Registration
Statement) covering such Note, Exchange Note or Private Exchange Note has been
declared effective by the Commission and such Note, Exchange Note or such
Private Exchange Note, as the case may be, has been disposed of in accordance
with such effective Registration Statement, (ii) such Note has been exchanged
pursuant to the Exchange Offer for an Exchange Note or Exchange Notes that may
be resold without restriction under state and federal securities laws,
(iii) such Note, Exchange Note or Private Exchange Note, as the case may be,
ceases to be outstanding for purposes of the Indenture or (iv) such Note is
Freely Tradable.
          “Registration Default” shall have the meaning set forth in Section
4(a) hereof.
          “Registration Statement” shall mean any appropriate registration
statement of the Issuers covering any of the Registrable Notes filed with the
Commission under the Securities Act, and all amendments and supplements to any
such Registration Statement, including post-effective amendments,

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-4-

in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
          “Representatives” shall have the meaning set forth in the first
introductory paragraph hereto.
          “Requesting Participating Broker-Dealer” shall have the meaning set
forth in Section 2(b) hereof.
          “Rule 144” shall mean Rule 144 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144A) or regulation hereafter adopted by the Commission providing for
offers and sales of securities made in compliance therewith resulting in offers
and sales by subsequent holders that are not Affiliates of an issuer of such
securities being free of the registration and prospectus delivery requirements
of the Securities Act.
          “Rule 144A” shall mean Rule 144A promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule (other than
Rule 144) or regulation hereafter adopted by the Commission.
          “Rule 415” shall mean Rule 415 promulgated under the Securities Act,
as such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
          “Securities Act” shall mean the Securities Act of 1933, as amended,
and the rules and regulations of the Commission promulgated thereunder.
          “Shelf Filing Event” shall have the meaning set forth in Section 2(c)
hereof.
          “Shelf Registration” shall have the meaning set forth in Section 3(a)
hereof.
          “Shelf Registration Statement” shall mean a Registration Statement
filed in connection with a Shelf Registration.
          “TIA” shall mean the Trust Indenture Act of 1939, as amended.
          “Trustee” shall mean the trustee under the Indenture and the trustee
(if any) under any indenture governing the Exchange Notes and Private Exchange
Notes.
          “underwritten registration or underwritten offering” shall mean a
registration in which securities of the Issuers are sold to an underwriter for
reoffering to the public.
     Section 2. Exchange Offer
          (a) The Issuers shall (i) file a Registration Statement (the “Exchange
Offer Registration Statement”) with the Commission on an appropriate
registration form with respect to a registered offer (the “Exchange Offer”) to
exchange any and all of the Registrable Notes for a like aggregate principal
amount of notes (including the guarantees with respect thereto, the “Exchange
Notes”) that are identical in all material respects to the Notes (except that
the Exchange Notes shall not contain restrictive legends, terms with respect to
transfer restrictions or Liquidated Damages upon a Registration Default),
(ii) use their reasonable efforts to cause the Exchange Offer Registration
Statement to be declared effective under the Securities Act, (iii) upon the
Exchange Offer Registration Statement being declared effective by the

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-5-

Commission, offer the Exchange Notes in exchange for surrender of the Notes,
(iv) keep the Exchange Offer open for not less than 20 Business Days (or longer
if required by applicable law) after the date the notice of the Exchange Offer
is mailed to Holders, and (v) use their reasonable efforts to consummate the
Exchange Offer within 220 days after the Issue Date (the “Exchange Date”);
provided, however, that, subject to Section 2(c) and Section 4(a), the Issuers
shall not be required to file the Exchange Offer Registration Statement,
commence the Exchange Offer or consummate the Exchange Offer if all of the Notes
held by Holders eligible to participate in such Exchange Offer are Freely
Tradable on the Exchange Date.
          Each Holder that participates in the Exchange Offer will be required
to represent to the Issuers in writing that (i) any Exchange Notes to be
received by it will be acquired in the ordinary course of its business, (ii) it
has no arrangement or understanding with any Person to participate in the
distribution (within the meaning of the Securities Act) of the Exchange Notes in
violation of the provisions of the Securities Act, (iii) it is not an affiliate
of the Company or any Guarantor as defined by Rule 405 of the Securities Act,
or, if it is an affiliate, it will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such Holder is not a broker-dealer, it is not engaged in, and does not intend to
engage in, a distribution of Exchange Notes and (v) if such Holder is a
broker-dealer that will receive Exchange Notes for its own account in exchange
for Notes that were acquired as a result of market-making or other trading
activities, it will deliver a prospectus in connection with any resale of such
Exchange Notes.
          (b) The Issuers and the Initial Purchasers acknowledge that the staff
of the Commission has taken the position that any broker-dealer that elects to
exchange Notes that were acquired by such broker-dealer for its own account as a
result of market-making or other trading activities for Exchange Notes in the
Exchange Offer (a “Participating Broker-Dealer”) may be deemed to be an
“underwriter” within the meaning of the Securities Act and must deliver a
prospectus meeting the requirements of the Securities Act in connection with any
resale of such Exchange Notes (other than a resale of an unsold allotment
resulting from the original offering of the Notes).
          The Issuers and the Initial Purchasers also acknowledge that the staff
of the Commission has taken the position that if the Prospectus contained in the
Exchange Offer Registration Statement includes a plan of distribution containing
a statement to the above effect and the means by which Participating
Broker-Dealers may resell the Exchange Notes, without naming the Participating
Broker-Dealers or specifying the amount of Exchange Notes owned by them, such
Prospectus may be delivered by Participating Broker-Dealers to satisfy their
prospectus delivery obligations under the Securities Act in connection with
resales of Exchange Notes for their own accounts, so long as the Prospectus
otherwise meets the requirements of the Securities Act.
          In light of the foregoing, if requested by a Participating
Broker-Dealer (a “Requesting Participating Broker-Dealer”), the Issuers agree to
use their reasonable efforts to keep the Exchange Offer Registration Statement
continuously effective for a period of 180 days after the date on which the
Exchange Registration Statement is declared effective, or such longer period if
extended pursuant to any Delay Period in accordance with the last paragraph of
Section 5 hereof (such period, the “Applicable Period”), or such earlier date as
all Requesting Participating Broker-Dealers shall have notified the Company in
writing that such Requesting Participating Broker-Dealers have resold all
Exchange Notes acquired in the Exchange Offer. The Issuers shall include a plan
of distribution in such Exchange Offer Registration Statement that meets the
requirements set forth in the preceding paragraph.
           If, prior to consummation of the Exchange Offer, any Initial
Purchaser or any Holder, as the case may be, holds any Notes acquired by it that
have, or that are reasonably likely to be determined

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-6-

to have, the status of an unsold allotment in an initial distribution, or if any
Holder is not entitled to participate in the Exchange Offer, the Issuers upon
the request of any such Initial Purchaser or any such Holder, as the case may
be, shall simultaneously with the delivery of the Exchange Notes in the Exchange
Offer, issue and deliver to any such Initial Purchaser or any such Holder, as
the case may be, in exchange (the “Private Exchange”) for such Notes held by any
such Initial Purchaser or any such Holder, as the case may be, a like principal
amount of notes (the “Private Exchange Notes”) of the Issuers that are identical
in all material respects to the Exchange Notes except that the Private Exchange
Notes may be subject to restrictions on transfer and bear a legend to such
effect. The Private Exchange Notes shall be issued pursuant to the same
indenture as the Exchange Notes and bear the same CUSIP number as the Exchange
Notes.
          For each Note surrendered in the Exchange Offer, the Holder will
receive an Exchange Note having a principal amount equal to that of the
surrendered Note. Interest on each Exchange Note and Private Exchange Note
issued pursuant to the Exchange Offer and in the Private Exchange will accrue
from the last interest payment date on which interest was paid on the Notes
surrendered in exchange therefor or, if no interest has been paid on the Notes,
from the Issue Date.
          Upon consummation of the Exchange Offer in accordance with this
Section 2, the Issuers shall have no further registration obligations other than
the Issuers’ continuing registration obligations with respect to (i) Private
Exchange Notes, (ii) Exchange Notes held by Participating Broker-Dealers and
(iii) Notes or Exchange Notes as to which clause (c)[(iv)] of this Section 2
applies.
          In connection with the Exchange Offer, the Issuers shall:
     (1) mail or cause to be mailed to each Holder entitled to participate in
the Exchange Offer a copy of the Prospectus forming part of the Exchange Offer
Registration Statement, together with an appropriate letter of transmittal and
related documents;
     (2) utilize the services of a depositary for the Exchange Offer with an
address in the Borough of Manhattan, The City of New York;
     (3) permit Holders to withdraw tendered Notes at any time prior to the
close of business, New York time, on the last Business Day on which the Exchange
Offer shall remain open; and
     (4) otherwise comply in all material respects with all applicable laws,
rules and regulations.
     As soon as practicable after the close of the Exchange Offer and the
Private Exchange, if any, the Issuers shall:
     (1) accept for exchange all Notes validly tendered and not validly
withdrawn by the Holders pursuant to the Exchange Offer and the Private
Exchange, if any;
     (2) deliver or cause to be delivered to the Trustee for cancelation all
Notes so accepted for exchange; and
     (3) cause the Trustee to authenticate and deliver promptly to each such
Holder of Notes, Exchange Notes or Private Exchange Notes, as the case may be,
equal in principal amount to the Registrable Notes of such Holder so accepted
for exchange.

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          The Exchange Offer and the Private Exchange shall not be subject to
any conditions, other than that (i) the Exchange Offer or Private Exchange, as
the case may be, does not violate applicable law or any applicable
interpretation of the staff of the Commission, (ii) no action or proceeding
shall have been instituted or threatened in any court or by any governmental
agency which might materially impair the ability of the Issuers to proceed with
the Exchange Offer or the Private Exchange, and no material adverse development
shall have occurred in any existing action or proceeding with respect to the
Issuers and (iii) all governmental approvals shall have been obtained, which
approvals the Company deems necessary for the consummation of the Exchange Offer
or Private Exchange.
          The Exchange Notes and the Private Exchange Notes shall be issued
under (i) the Indenture or (ii) an indenture identical in all material respects
to the Indenture (in either case, with such changes as are necessary to comply
with any requirements of the Commission to effect or maintain the qualification
thereof under the TIA) and which, in either case, has been qualified under the
TIA and shall provide that (a) the Exchange Notes shall not be subject to the
transfer restrictions set forth in the Indenture and (b) the Private Exchange
Notes shall be subject to the transfer restrictions set forth in the Indenture.
The Indenture or such indenture shall provide that the Exchange Notes, the
Private Exchange Notes and the Notes shall vote and consent together on all
matters as one class and that none of the Exchange Notes, the Private Exchange
Notes or the Notes will have the right to vote or consent as a separate class on
any matter.
          (c) In the event that (i) the applicable law or the interpretations of
the staff of the Commission do not permit the Issuers to effect the Exchange
Offer, (ii) for any reason the Exchange Offer is not consummated by the Exchange
Date and any Notes are not Freely Tradable at any time thereafter, (iii) any
Holder, other than any Initial Purchaser, notifies the Company prior to the
twentieth Business Day following the consummation of the Exchange Offer that it
is prohibited by law or the applicable interpretations of the staff of the
Commission from participating in the Exchange Offer, (iv) in the case of any
Holder who participates in the Exchange Offer, such Holder does not receive
Exchange Notes on the date of the exchange that may be sold without restriction
under state and federal securities laws (other than due solely to the status of
such Holder as an affiliate of any Issuer within the meaning of the Securities
Act) or (v) any Initial Purchaser so requests with respect to Notes or Private
Exchange Notes that have, or that are reasonably likely to be determined to
have, the status of unsold allotments in an initial distribution (each such
event referred to in clauses (i) through (v) of this sentence, a “Shelf Filing
Event”), then the Issuers shall file a Shelf Registration pursuant to Section 3
hereof.
     Section 3. Shelf Registration
          If at any time a Shelf Filing Event shall occur, then:
          (a) Shelf Registration. The Issuers shall file with the Commission a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Registrable Notes not exchanged in the Exchange
Offer, Private Exchange Notes and Exchange Notes as to which Section 2(c)(iv) is
applicable (the “Shelf Registration”). The Issuers shall file with the
Commission the Shelf Registration as promptly as practicable. The Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Registrable Notes for resale by Holders in the manner or
manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
the Registrable Notes to be included in the Shelf Registration.
          (b) The Issuers shall (x) use their reasonable efforts to cause the
Shelf Registration to be declared effective under the Securities Act on or prior
to the later of (A) 220 calendar days after the

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Issue Date and (B) 90 days after the Shelf Registration is required to be filed
with the Commission and (y) keep the Shelf Registration continuously effective
under the Securities Act for the period ending on the date which is two years
from the Issue Date, subject to extension pursuant to the penultimate paragraph
of Section 5 hereof (the “Effectiveness Period”), or such shorter period ending
when all Registrable Notes covered by the Shelf Registration have been sold in
the manner set forth and as contemplated in the Shelf Registration or become
Freely Tradable; provided, however, that (i) the Effectiveness Period in respect
of the Shelf Registration shall be extended to the extent required to permit
dealers to comply with the applicable prospectus delivery requirements of
Rule 174 under the Securities Act and as otherwise provided herein and (ii) the
Company may suspend the effectiveness of the Shelf Registration Statement by
written notice to the Holders solely as a result of the filing of a
post-effective amendment to the Shelf Registration Statement to incorporate
annual audited financial information with respect to the Company where such
post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related Prospectus.
          (c) Supplements and Amendments. The Issuers agree to supplement or
make amendments to the Shelf Registration Statement as and when required by the
rules, regulations or instructions applicable to the registration form used for
such Shelf Registration Statement or by the Securities Act or rules and
regulations thereunder for shelf registration, or if reasonably requested by the
Holders of a majority in aggregate principal amount of the Registrable Notes
covered by such Shelf Registration Statement or by any underwriter of such
Registrable Notes.
     Section 4. Liquidated Damages
          (a) The Issuers and the Initial Purchasers agree that the Holders will
suffer damages if the Issuers fail to fulfill their obligations under Section 2
or Section 3 hereof and that it would not be feasible to ascertain the extent of
such damages with precision. Accordingly, the Issuers agree that if the Notes
are not Freely Tradable at any time on or after the Exchange Date and either:
          (i) the Exchange Offer is not consummated on or prior to the Exchange
Date, or, if that day is not a Business Day, the next day that is a Business
Day; or
          (ii) the Shelf Registration Statement is required to be filed but is
not declared effective by the later of 220 calendar days after the Issue Date or
90 days after the Shelf Registration is required to be filed with the
Commission, or, if either such day is not a Business Day, the next day that is a
Business Day or is declared effective by such date but thereafter ceases to be
effective or usable (unless the Shelf Registration ceases to be effective or
usable as specifically permitted by the penultimate paragraph of Section 5
hereof);
(each such event referred to in clauses (i) and (ii) a “Registration Default”),
liquidated damages in the form of additional cash interest (“Liquidated
Damages”) will accrue on the affected Notes and the affected Exchange Notes, as
applicable. The rate of Liquidated Damages will be 0.25% per annum for the first
90-day period immediately following the occurrence of a Registration Default,
increasing by an additional 0.25% per annum with respect to each subsequent
90-day period up to a maximum amount of Liquidated Damages of 1.00% per annum,
from and including the date on which any such Registration Default shall occur
to, but excluding, the earlier of (1) the date on which all Registration
Defaults have been cured or (2) the date on which all the Notes and Exchange
Notes otherwise become Freely Tradable.
Notwithstanding the foregoing, (1) the amount of Liquidated Damages payable
shall not increase because more than one Registration Default has occurred and
is pending and (2) a Holder of Notes or Exchange Notes who is not entitled to
the benefits of the Shelf Registration Statement (i.e., such Holder has not

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elected to include information) shall not be entitled to Liquidated Damages with
respect to a Registration Default that pertains to the Shelf Registration
Statement.
          (b) So long as Notes remain outstanding, the Company shall notify the
Trustee within five Business Days after each and every date on which an event
occurs in respect of which Liquidated Damages is required to be paid. Any
amounts of Liquidated Damages due pursuant to clauses (a)(i) or (a)(ii) of this
Section 4 will be payable in cash semi-annually on each October [___] and April
[___] (each a “Damages Payment Date”), commencing with the first such date
occurring after any such Liquidated Damages commence to accrue, to Holders to
whom regular interest is payable on such Damages Payment Date with respect to
Notes that are Registrable Securities. The amount of Liquidated Damages for each
Registrable Note will be determined by multiplying the applicable rate of
Liquidated Damages by the aggregate principal amount of such Registrable Note
outstanding on the Damages Payment Date following such Registration Default in
the case of the first such payment of Liquidated Damages with respect to a
Registration Default (and thereafter at the next succeeding Damages Payment Date
until the cure of such Registration Default), and multiplying the product of the
foregoing by a fraction, the numerator of which is the number of days such
Liquidated Damages rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months and, in the case of a
partial month, the actual number of days elapsed), and the denominator of which
is 360.
     Section 5. Registration Procedures.
          In connection with the filing of any Registration Statement or
Registration Statements pursuant to Section 2 or 3 hereof, the Issuers shall
effect such registrations to permit the sale of the securities covered thereby
in accordance with the intended method or methods of disposition thereof, and
pursuant thereto and in connection with any Registration Statement filed by the
Issuers hereunder, the Issuers shall:
     (a) Prepare and file with the Commission the Registration Statement or
Registration Statements prescribed by Section 2 or 3 hereof, and use their
reasonable efforts to cause each such Registration Statement to become effective
and remain effective as provided herein; provided, however, that if (1) such
filing is pursuant to Section 3 hereof, or (2) a Prospectus contained in the
Exchange Offer Registration Statement filed pursuant to Section 2 hereof is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period
relating thereto, before filing any Registration Statement or Prospectus or any
amendments or supplements thereto, the Issuers shall furnish to and afford the
Holders of the Registrable Notes covered by such Registration Statement or each
such Participating Broker-Dealer, as the case may be, their counsel (if
requested by any such person) and the managing underwriters, if any, a
reasonable opportunity to review copies of all such documents (including copies
of any documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at least five Business Days prior to
such filing). The Issuers shall not file any Registration Statement or
Prospectus or any amendments or supplements thereto if the Holders of a majority
in aggregate principal amount of the Registrable Notes covered by such
Registration Statement, or any such Participating Broker-Dealer, as the case may
be, their counsel, or the managing underwriters, if any, shall reasonably
object.
     (b) Prepare and file with the Commission such amendments and post-effective
amendments to each Shelf Registration Statement or Exchange Offer Registration
Statement, as the case may be, as may be necessary to keep such Registration
Statement continuously effective for the Effectiveness Period or the Applicable
Period, as the case may be; cause the related Prospectus to be supplemented by
any prospectus supplement required by applicable law, and as

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so supplemented to be filed pursuant to Rule 424 (or any similar provisions then
in force) promulgated under the Securities Act; and comply with the applicable
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such Registration Statement as so
amended or in such Prospectus as so supplemented and with respect to the
subsequent resale of any securities being sold by a Participating Broker-Dealer
covered by any such Prospectus, in each case, in accordance with the intended
methods of distribution set forth in such Registration Statement or Prospectus,
as so amended or supplemented.
     (c) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period relating thereto from whom the Company has received
written notice that such Broker-Dealer will be a Participating Broker-Dealer in
the applicable Exchange Offer, notify the selling Holders of Registrable Notes,
or each such Participating Broker-Dealer, as the case may be, their counsel and
the managing underwriters, if any, as promptly as possible, and, if requested by
any such Person, confirm such notice in writing, (i) when a Prospectus or any
prospectus supplement or post-effective amendment has been filed, and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective under the Securities Act (including in such notice a
written statement that any Holder may, upon request, obtain, at the sole expense
of the Issuers, one conformed copy of such Registration Statement or
post-effective amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits), (ii) of
the issuance by the Commission of any stop order suspending the effectiveness of
a Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus or the initiation of any proceedings for that purpose,
(iii) if at any time when a Prospectus is required by the Securities Act to be
delivered in connection with sales of the Registrable Notes or resales of
Exchange Notes by Participating Broker-Dealers the representations and
warranties of the Issuers contained in any agreement (including any underwriting
agreement) contemplated by Section 5(m)(i) hereof cease to be true and correct
in all material respects, (iv) of the receipt by any of the Issuers of any
notification with respect to the suspension of the qualification or exemption
from qualification of a Registration Statement or any of the Registrable Notes
or the Exchange Notes for offer or sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, (v) of the happening of any
event, the existence of any condition or any information becoming known to any
Issuer that makes any statement made in such Registration Statement or related
Prospectus or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of any
changes in or amendments or supplements to such Registration Statement,
Prospectus or documents so that, in the case of the Registration Statement, it
will not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
and (vi) of the Company’s determination that a post-effective amendment to a
Registration Statement would be appropriate.
     (d) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, use their reasonable efforts to

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prevent the issuance of any order suspending the effectiveness of a Registration
Statement or of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any of the
Registrable Notes or the Exchange Notes, as the case may be, for sale in any
jurisdiction, and, if any such order is issued, to use their reasonable efforts
to obtain the withdrawal of any such order at the earliest practicable moment.
     (e) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or
(2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period and if requested by the managing underwriter or
underwriters (if any), the Holders of a majority in aggregate principal amount
of the Registrable Notes covered by such Registration Statement or any
Participating Broker-Dealer, as the case may be, (i) promptly incorporate in
such Registration Statement or Prospectus a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters (if any), such Holders or any Participating Broker-Dealer, as the
case may be (based upon advice of counsel), determine is reasonably required to
be included therein and (ii) make all required filings of such prospectus
supplement or such post-effective amendment as soon as practicable after the
Company has received notification of the matters to be incorporated in such
prospectus supplement or post-effective amendment; provided, however, that the
Issuers shall not be required to take any action hereunder that would, in the
written opinion of counsel to the Issuers, violate applicable laws.
     (f) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or
(2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, furnish to each selling Holder of Registrable Notes or
each such Participating Broker-Dealer, as the case may be, who so requests,
their counsel and each managing underwriter, if any, at the sole expense of the
Issuers, one conformed copy of the Registration Statement or Registration
Statements and each post-effective amendment thereto, including financial
statements and schedules, and, if requested, all documents incorporated or
deemed to be incorporated therein by reference and all exhibits.
     (g) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, deliver to each selling Holder of Registrable Notes or
each such Participating Broker-Dealer, as the case may be, their respective
counsel, and the underwriters, if any, at the sole expense of the Issuers, as
many copies of the Prospectus or Prospectuses (including each form of
preliminary prospectus) and each amendment or supplement thereto and any
documents incorporated by reference therein as such Persons may reasonably
request; and, subject to the last paragraph of this Section 5, the Issuers
hereby consent to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Registrable Notes or each such
Participating Broker-Dealer, as the case may be, and the underwriters or agents,
if any, and dealers (if any), in connection with the offering and sale of the
Registrable Notes covered by, or the sale by Participating Broker-Dealers of the
Exchange Notes pursuant to, such Prospectus and any amendment or supplement
thereto.
     (h) Prior to any public offering of Registrable Notes or Exchange Notes or
any delivery of a Prospectus contained in the Exchange Offer Registration
Statement by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period, use

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their reasonable efforts to register or qualify, and to cooperate with the
selling Holders of Registrable Notes or each such Participating Broker-Dealer,
as the case may be, the managing underwriter or underwriters, if any, and their
respective counsel in connection with the registration or qualification (or
exemption from such registration or qualification) of such Registrable Notes or
Exchange Notes, as the case may be, for offer and sale under the securities or
Blue Sky laws of such jurisdictions within the United States as any selling
Holder, Participating Broker-Dealer, or the managing underwriter or underwriters
reasonably request; provided, however, that where Exchange Notes or Registrable
Notes are offered other than through an underwritten offering, the Issuers agree
to cause the Issuers’ counsel to perform Blue Sky investigations and file
registrations and qualifications required to be filed pursuant to this
Section 5(h); keep each such registration or qualification (or exemption
therefrom) effective during the period such Registration Statement is required
to be kept effective and do any and all other acts or things reasonably
necessary or advisable to enable the disposition in such jurisdictions of such
Exchange Notes or Registrable Notes covered by the applicable Registration
Statement; provided, however, that no Issuer shall be required to (A) qualify
generally to do business in any jurisdiction where it is not then so qualified,
(B) take any action that would subject it to general service of process in any
such jurisdiction where it is not then so subject or (C) subject itself to
taxation in excess of a nominal dollar amount in any such jurisdiction where it
is not then so subject.
     (i) If a Shelf Registration is filed pursuant to Section 3 hereof,
cooperate with the selling Holders of Registrable Notes and the managing
underwriter or underwriters, if any, to facilitate the timely preparation and
delivery of certificates representing Registrable Notes to be sold, which
certificates shall not bear any restrictive legends and shall be in a form
eligible for deposit with The Depository Trust Company and enable such
Registrable Notes to be in such denominations and registered in such names as
the managing underwriter or underwriters, if any, or selling Holders may request
at least two Business Days prior to any sale of such Registrable Notes or
Exchange Notes.
     (j) Use their reasonable efforts to cause the Registrable Notes or Exchange
Notes covered by any Registration Statement to be registered with or approved by
such other governmental agencies or authorities as may be reasonably necessary
to enable the seller or sellers thereof or the underwriter or underwriters, if
any, to consummate the disposition of such Registrable Notes or Exchange Notes,
except as may be required solely as a consequence of the nature of such selling
Holder’s business, in which case the Issuers will cooperate in all reasonable
respects with the filing of such Registration Statement and the granting of such
approvals.
     (k) If (1) a Shelf Registration is filed pursuant to Section 3 hereof, or
(2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes during
the Applicable Period, upon the occurrence of any event contemplated by
Section 5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) and the penultimate paragraph of this Section 5) file
with the Commission, at the sole expense of the Issuers, a supplement or
post-effective amendment to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Notes being sold thereunder or to
the purchasers of the Exchange Notes to whom such Prospectus will be delivered
by a Participating Broker-Dealer, any such Prospectus will not contain an untrue
statement of a material fact or omit

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to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
     (l) Prior to the effective date of the first Registration Statement
relating to the Registrable Notes, (i) provide the Trustee with certificates for
the Registrable Notes in a form eligible for deposit with The Depository Trust
Company and (ii) provide a CUSIP number for the Registrable Notes.
     (m) In connection with any underwritten offering of Registrable Notes
pursuant to a Shelf Registration, enter into an underwriting agreement as is
customary in underwritten offerings of debt securities similar to the Notes and
take all such other actions as are reasonably requested by the managing
underwriter or underwriters in order to expedite or facilitate the registration
or the disposition of such Registrable Notes and, in such connection, (i) make
such representations and warranties to the underwriter or underwriters (and to
any Holder that has advised the Company that such Holder may have a “due
diligence” defense under Section 11 of the Securities Act), and covenants with,
the underwriters with respect to the business of the Issuers and their
subsidiaries, as then conducted (including any acquired business, properties or
entity, if applicable), and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings of debt securities similar to the Notes, and confirm the
same in writing if and when requested; (ii) use their reasonable efforts to
obtain the written opinions of counsel to the Issuers and written updates
thereof in form, scope and substance reasonably satisfactory to the managing
underwriter or underwriters, addressed to the underwriters (and to any Holder
that has advised the Company that such Holder may have a “due diligence” defense
under Section 11 of the Securities Act) covering the matters customarily covered
in opinions requested in underwritten offerings and such other matters as may be
reasonably requested by the managing underwriter or underwriters; (iii) use
their reasonable efforts to obtain “cold comfort” letters and updates thereof in
form, scope and substance reasonably satisfactory to the managing underwriter or
underwriters from the independent certified public accountants of the Issuers
(and, if necessary, any other independent certified public accountants of any
subsidiary of the Company or of any business acquired by the Company for which
financial statements and financial data are, or are required to be, included or
incorporated by reference in the Registration Statement), addressed to each of
the underwriters (and to any Holder that has advised the Company that such
Holder may have a “due diligence” defense under Section 11 of the Securities
Act), such letters to be in customary form and covering matters of the type
customarily covered in “cold comfort” letters in connection with underwritten
offerings; and (iv) if an underwriting agreement is entered into, the same shall
contain indemnification provisions and procedures no less favorable than those
set forth in Section 7 hereof (or such other provisions and procedures
acceptable to Holders of a majority in aggregate principal amount of Registrable
Notes covered by such Registration Statement and the managing underwriter or
underwriters or agents) with respect to all parties to be indemnified pursuant
to said Section; provided that the Issuers shall not be required to provide
indemnification to any underwriter selected in accordance with the provisions of
Section 9 hereof with respect to information relating to such underwriter
furnished in writing to the Company by or on behalf of such underwriter
expressly for inclusion in such Registration Statement. The above shall be done
at each closing under such underwriting agreement, or as and to the extent
required thereunder.
     (n) If (1) a Shelf Registration is filed pursuant to Section 3 hereof or
(2) a Prospectus contained in the Exchange Offer Registration Statement filed
pursuant to Section 2 hereof is

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required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable Period,
make available for inspection by any selling Holder of such Registrable Notes
being sold or each such Participating Broker-Dealer, as the case may be, any
underwriter participating in any such disposition of Registrable Notes, if any,
and any attorney, accountant or other agent retained by any such selling Holder
or each such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the “Inspectors”), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and instruments of the Company and its subsidiaries (collectively, the
“Records”) as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers, directors and
employees of the Company and its subsidiaries to supply all information
reasonably requested by any such Inspector in connection with such Registration
Statement and Prospectus. Each Inspector shall agree in writing that it will
keep the Records confidential and that it will not disclose, or use in
connection with any market transactions in violation of any applicable
securities laws, any Records that the Company determines, in good faith, to be
confidential and that it notifies the Inspectors in writing are confidential
unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in such Registration Statement or Prospectus, (ii) the
release of such Records is ordered pursuant to a subpoena or other order from a
court of competent jurisdiction, (iii) disclosure of such information is
necessary or advisable in the opinion of counsel for an Inspector in connection
with any action, claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon, relating
to, or involving this Agreement or the Purchase Agreement, or any transactions
contemplated hereby or thereby or arising hereunder or thereunder, or (iv) the
information in such Records has been made generally available to the public;
provided, however, that (i) each Inspector shall agree to use reasonable efforts
to provide notice to the Company of the potential disclosure of any information
by such Inspector pursuant to clause (i), (ii) or (iii) of this sentence to
permit the Issuers to obtain a protective order (or waive the provisions of this
paragraph (n)) and (ii) each such Inspector shall take such actions as are
reasonably necessary to protect the confidentiality of such information (if
practicable) to the extent such action is otherwise not inconsistent with, an
impairment of or in derogation of the rights and interests of the Holder or any
Inspector.
     (o) Provide an indenture trustee for the Registrable Notes or the Exchange
Notes, as the case may be, and cause the Indenture or the trust indenture
provided for in Section 2(a) hereof to be qualified under the TIA not later than
the effective date of the Exchange Offer or the first Registration Statement
relating to the Registrable Notes; and in connection therewith, cooperate with
the trustee under any such indenture and the Holders of the Registrable Notes or
Exchange Notes, as applicable, to effect such changes to such indenture as may
be required for such indenture to be so qualified in accordance with the terms
of the TIA; and execute, and use their reasonable efforts to cause such trustee
to execute, all documents as may be required to effect such changes, and all
other forms and documents required to be filed with the Commission to enable
such indenture to be so qualified in a timely manner.
     (p) Comply with all applicable rules and regulations of the Commission and
make generally available to the Company’s securityholders earnings statements
satisfying the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder (or any similar rule promulgated under the Securities Act) no later
than 45 days after the end of any 12-month period (or 90 days after the end of
any 12-month period if such period is a fiscal year) (i) commencing at the end
of any fiscal quarter in which Registrable Notes or Exchange Notes are sold to
underwriters in a firm commitment or best efforts underwritten offering and
(ii) if not sold to

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underwriters in such an offering, commencing on the first day of the first
fiscal quarter of the Company after the effective date of a Registration
Statement, which statements shall cover said 12-month periods consistent with
the requirements of Rule 158.
     (q) Upon the request of a Holder, upon consummation of the Exchange Offer
or a Private Exchange, use their reasonable efforts to obtain an opinion of
counsel to the Issuers, in a form customary for underwritten transactions,
addressed to the Trustee for the benefit of all Holders of Registrable Notes
participating in the Exchange Offer or the Private Exchange, as the case may be,
that the Exchange Notes or Private Exchange Notes, as the case may be, and the
related indenture constitute legal, valid and binding obligations of the
Issuers, enforceable against the Issuers in accordance with its respective
terms, subject to customary exceptions and qualifications.
     (r) If the Exchange Offer or a Private Exchange is to be consummated, upon
delivery of the Registrable Notes by Holders to the Company (or to such other
Person as directed by the Company) in exchange for the Exchange Notes or the
Private Exchange Notes, as the case may be, mark, or cause to be marked, on such
Registrable Notes that such Registrable Notes are being cancelled in exchange
for the Exchange Notes or the Private Exchange Notes, as the case may be;
provided that in no event shall such Registrable Notes be marked as paid or
otherwise satisfied.
     (s) Cooperate with each seller of Registrable Notes covered by any
Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Notes and their respective counsel in connection
with any filings required to be made with the Financial Industry Regulatory
Authority (the “FINRA”).
     (t) Use their reasonable efforts to take all other steps reasonably
necessary or advisable to effect the registration of the Exchange Notes and/or
Registrable Notes covered by a Registration Statement contemplated hereby.
          The Company may require each seller of Registrable Notes or Exchange
Notes as to which any registration is being effected to furnish to the Company
such information regarding such seller and the distribution of such Registrable
Notes or Exchange Notes as the Company may, from time to time, reasonably
request. The Company may exclude from such registration the Registrable Notes of
any seller so long as such seller fails to furnish such information within a
reasonable time after receiving such request and in the event of such an
exclusion, the Company shall have no further obligation under this Agreement
(including, without limitation, the obligations under Section 4) with respect to
such seller or any subsequent Holder of such Registrable Notes. Each seller as
to which any Shelf Registration is being effected agrees to furnish promptly to
the Company all information required to be disclosed in order to make any
information previously furnished to the Company by such seller not materially
misleading.
          If any such Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Issuers, then such Holder shall
have the right to require (i) the insertion therein of language, in form and
substance reasonably satisfactory to such Holder, to the effect that the holding
by such Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the securities covered thereby and that
such holding does not imply that such Holder will assist in meeting any future
financial requirements of the Issuers, or (ii) in the event that such reference
to such Holder by name or otherwise is not required by the Securities Act or any
similar federal statute then in force, the deletion of the reference to such
Holder in any amendment or supplement to the

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applicable Registration Statement filed or prepared subsequent to the time that
such reference ceases to be required.
          Each Holder of Registrable Notes and each Participating Broker-Dealer
agrees by acquisition of such Registrable Notes or Exchange Notes that, upon
actual receipt of any notice from the Company (x) of the happening of any event
of the kind described in Section 5(c)(ii), 5(c)(iii), 5(c)(iv), or 5(c)(v)
hereof, or (y) that the Board of Directors of the Company (the “Board of
Directors”) has resolved that the Company has a bona fide business purpose for
doing so, then, upon providing such notice (which shall refer to this
penultimate paragraph of this Section 5 and comply with the provisions of the
last paragraph of this Section 5), the Issuers may delay the filing or the
effectiveness of the Exchange Offer Registration Statement or the Shelf
Registration Statement (if not then filed or effective, as applicable) and shall
not be required to maintain the effectiveness thereof or amend or supplement the
Exchange Offer Registration Statement or the Shelf Registration, in all cases,
for a period (a “Delay Period”) expiring upon the earlier to occur of (i) in the
case of the immediately preceding clause (x), such Holder’s or Participating
Broker-Dealer’s receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 5(k) hereof or until it is advised in writing (the
“Advice”) by the Company that the use of the applicable Prospectus may be
resumed, and has received copies of any amendments or supplements thereto or
(ii) in the case of the immediately preceding clause (y), the date which is the
earlier of (A) the date on which such business purpose ceases to interfere with
the Issuers’ obligations to file or maintain the effectiveness of any such
Registration Statement pursuant to this Agreement or (B) 60 days after the
Company notifies the Holders of such good faith determination. There shall not
be more than 90 days of Delay Periods during any 12-month period. Each of the
Effectiveness Period and the Applicable Period, if applicable, shall be extended
by a number of days equal to the number of days during any Delay Period. Any
Delay Period will not alter the obligations of the Issuers to pay Liquidated
Damages under the circumstances set forth in Section 4 hereof.
          In the event of any Delay Period pursuant to clause (y) of the
preceding paragraph, notice shall be given as soon as practicable after the
Board of Directors makes such a determination of the need for a Delay Period and
shall state, to the extent practicable, an estimate of the duration of such
Delay Period and shall advise the recipient thereof of the agreement of such
Holder provided in the next succeeding sentence. Each Holder, by his acceptance
of any Registrable Note, agrees that during any Delay Period, each Holder will
discontinue disposition of such Notes or Exchange Notes covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such Holder
or Participating Broker-Dealer, as the case may be.
     Section 6. Registration Expenses
          All fees and expenses incident to the performance of or compliance
with this Agreement by the Issuers (other than any underwriting discounts or
commissions) shall be borne by the Issuers, whether or not the Exchange Offer
Registration Statement or the Shelf Registration is filed or becomes effective
or the Exchange Offer is consummated, including, without limitation, (i) all
registration and filing fees (including, without limitation, (A) fees with
respect to filings required to be made with the FINRA in connection with an
underwritten offering and (B) fees and expenses of compliance with state
securities or Blue Sky laws (including, without limitation, reasonable fees and
disbursements of counsel in connection with Blue Sky qualifications of the
Registrable Notes or Exchange Notes and determination of the eligibility of the
Registrable Notes or Exchange Notes for investment under the laws of such
jurisdictions (x) where the holders of Registrable Notes are located, in the
case of an Exchange Offer, or (y) as provided in Section 5(h) hereof, in the
case of a Shelf Registration or in the case of Exchange Notes to be sold by a
Participating Broker-Dealer during the Applicable Period)), (ii) printing
expenses, including, without limitation, expenses of printing certificates for
Registrable Notes or Exchange Notes in

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a form eligible for deposit with The Depository Trust Company and of printing
prospectuses if the printing of prospectuses is requested by the managing
underwriter or underwriters, if any, or by the Holders of a majority in
aggregate principal amount of the Registrable Notes included in any Registration
Statement or in respect of Exchange Notes to be sold by any Participating
Broker-Dealer during the Applicable Period, as the case may be, (iii) messenger,
telephone and delivery expenses, (iv) fees and disbursements of counsel for the
Issuers and reasonable fees and disbursements of one special counsel for all of
the sellers of Registrable Notes (exclusive of any counsel retained pursuant to
Section 7 hereof), (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(m)(iii) hereof (including, without
limitation, the expenses of any special audit and “cold comfort” letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Issuers desire such insurance, (vii) fees and expenses of all
other Persons retained by any of the Issuers, (viii) internal expenses of the
Issuers (including, without limitation, all salaries and expenses of officers
and employees of the Company or its subsidiaries performing legal or accounting
duties), (ix) the expense of any annual audit, (x) the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange, and the obtaining of a rating of the securities, in
each case, if applicable, and (xi) the expenses relating to printing, word
processing and distributing all Registration Statements, underwriting
agreements, indentures and any other documents necessary in order to comply with
this Agreement. Notwithstanding the foregoing or anything to the contrary, each
Holder shall pay all underwriting discounts and commissions of any underwriters
with respect to any Registrable Notes sold by or on behalf of it.
     Section 7. Indemnification
          (a) The Issuers, jointly and severally, agree to indemnify and hold
harmless each Holder of Registrable Notes and each Participating Broker-Dealer
selling Exchange Notes during the Applicable Period, each Person, if any, who
controls any such Person within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, the agents, employees, officers and
directors of each Holder and each such Participating Broker-Dealer and the
agents, partners, members, employees, officers, managers and directors of any
such controlling Person (each, a “Participant”) from and against any and all
losses, liabilities, claims, damages and expenses whatsoever (including, but not
limited to, reasonable attorneys’ fees and any and all reasonable expenses
whatsoever actually incurred in investigating, preparing or defending against
any litigation, commenced or threatened, or any claim whatsoever, and any and
all reasonable amounts paid in settlement of any claim or litigation (in the
manner set forth in clause (c) below)) (collectively, “Losses”) to which they or
any of them may become subject under the Securities Act, the Exchange Act or
otherwise insofar as such Losses (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto) or
Prospectus (as amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) or any preliminary prospectus or Free Writing
Prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, provided that the foregoing
indemnity shall not be available to any Participant insofar as such Losses are
caused by any untrue statement or omission or alleged untrue statement or
omission made in reliance upon and in conformity with information relating to
such Participant furnished to the Company in writing by or on behalf of such
Participant expressly for use therein. This indemnity agreement will be in
addition to any liability that the Issuers may otherwise have, including, but
not limited to, liability under this Agreement.

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          (b) Each Participant agrees, severally and not jointly, to indemnify
and hold harmless each Issuer, each Person, if any, who controls any Issuer
within the meaning of Section 15 of the Securities Act or Section 20(a) of the
Exchange Act, and each of their respective agents, partners, members, employees,
officers and directors and the agents, employees, officers and directors of any
such controlling Person from and against any Losses to which they or any of them
may become subject under the Securities Act, the Exchange Act or otherwise
insofar as such Losses (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in any Registration Statement (or any amendment thereto) or Prospectus
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus or Free Writing
Prospectus, or caused by, arising out of or based upon any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only
to the extent, that any such Loss arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information relating to such Participant
furnished in writing to the Company by or on behalf of such Participant
expressly for use therein.
          (c) Promptly after receipt by an indemnified party under subsection
7(a) or 7(b) above of notice of the commencement of any action, suit or
proceeding (collectively, an “action”), such indemnified party shall, if a claim
in respect thereof is to be made against the indemnifying party under such
subsection, notify each party against whom indemnification is to be sought in
writing of the commencement of such action (but the failure so to notify an
indemnifying party shall not relieve such indemnifying party from any liability
that it may have under this Section 7 except to the extent that it has been
prejudiced in any material respect by such failure). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement of such action, the indemnifying party will be entitled to
participate in such action, and to the extent it may elect by written notice
delivered to the indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense of such action with counsel
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such action, but the reasonable fees and expenses of such counsel
shall be at the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing by the
indemnifying parties in connection with the defense of such action, (ii) the
indemnifying parties shall not have employed counsel to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action, or (iii) the named parties to such action (including any impleaded
parties) include such indemnified party and the indemnifying party or parties
(or such indemnifying parties have assumed the defense of such action), and such
indemnified party or parties shall have reasonably concluded, that there may be
defenses available to it or them that are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such reasonable fees and expenses of counsel shall be borne by the indemnifying
parties. In no event shall the indemnifying party be liable for the fees and
expenses of more than one counsel (together with appropriate local counsel) at
any time for all indemnified parties in connection with any one action or
separate but substantially similar or related actions arising in the same
jurisdiction out of the same general allegations or circumstances. Any such
separate firm for the Participants shall be designated in writing by
Participants who sold a majority in interest of Registrable Notes sold by all
such Participants and shall be reasonably acceptable to the Company and any such
separate firm for the Issuers, their Affiliates, officers, directors,
representatives, employees and agents and such control Person of the Issuers
shall be designated in writing by the Issuers and shall be reasonably acceptable
to the Holders. An indemnifying party shall not be liable for any

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settlement of any claim or action effected without its written consent, which
consent may not be unreasonably withheld. No indemnifying party shall, without
the prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement (x) includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such proceeding and (y) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
          (d) In order to provide for contribution in circumstances in which the
indemnification provided for in this Section 7 is for any reason held to be
unavailable from the indemnifying party, or is insufficient to hold harmless a
party indemnified under this Section 7, each indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such
aggregate Losses (i) in such proportion as is appropriate to reflect the
relative benefits received by each indemnifying party, on the one hand, and each
indemnified party, on the other hand, from the sale of the Notes to the Initial
Purchasers or the resale of the Registrable Notes by such Holder, as applicable,
or (ii) if such allocation is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of each indemnified party, on
the one hand, and each indemnifying party, on the other hand, in connection with
the statements or omissions that resulted in such Losses, as well as any other
relevant equitable considerations. The relative benefits received by the
Issuers, on the one hand, and each Participant, on the other hand, shall be
deemed to be in the same proportion as (x) the total proceeds from the sale of
the Notes to the Initial Purchasers (net of discounts and commissions but before
deducting expenses) received by the Issuers are to (y) the total net profit
received by such Participant in connection with the sale of the Registrable
Notes. The relative fault of the parties shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuers or such Participant and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission or alleged statement or omission.
          (e) The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 7, (i) in no case shall any Participant be required to contribute
any amount in excess of the amount by which the net profit received by such
Participant in connection with the sale of the Registrable Notes exceeds the
amount of any damages that such Participant has otherwise been required to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 7, notify such party or parties from whom contribution may be
sought, but the omission to so notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation it
or they may have under this Section 7 or otherwise, except to the extent that it
has been prejudiced in any material respect by such failure; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under this Section 7 for purposes of indemnification.
Anything in this section to the contrary notwithstanding, no party shall be
liable for contribution with respect to any action or claim settled without its
written consent, provided, however, that such written consent was not
unreasonably withheld.

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     Section 8. Rules 144 and 144A
          The Issuers covenant that they will file the reports required, if any,
to be filed by them under the Securities Act and the Exchange Act and the rules
and regulations adopted by the Commission thereunder in a timely manner in
accordance with the requirements of the Securities Act and the Exchange Act and,
if at any time the Issuers are not required to file such reports, they will,
upon the request of any Holder or beneficial owner of Registrable Notes, make
available such information necessary to permit sales pursuant to Rule 144A under
the Securities Act. The Issuers further covenant that for so long as any
Registrable Notes remain outstanding they will take such further action as any
Holder of Registrable Notes may reasonably request from time to time to enable
such Holder to sell Registrable Notes without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 and
Rule 144A under the Securities Act, as such Rules may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the Commission.
     Section 9. Underwritten Registrations
          If any of the Registrable Notes covered by any Shelf Registration are
to be sold in an underwritten offering, the investment banker or investment
bankers and manager or managers that will manage the offering will be selected
by the Holders of a majority in aggregate principal amount of such Registrable
Notes included in such offering and shall be reasonably acceptable to the
Company.
          No Holder of Registrable Notes may participate in any underwritten
registration hereunder if such Holder does not (a) agree to sell such Holder’s
Registrable Notes on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and
(b) complete and execute all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents required under the terms of such
underwriting arrangements.
     Section 10. Miscellaneous
          (a) No Inconsistent Agreements. The Issuers have not, as of the date
hereof, and shall not, after the date of this Agreement, enter into any
agreement with respect to any of their securities that is inconsistent with the
rights granted to the Holders of Registrable Notes in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not conflict with and are not inconsistent with, in any
material respect, the rights granted to the holders of any of the Issuers’ other
issued and outstanding securities under any such agreements. The Issuers have
not entered and will not enter into any agreement with respect to any of their
securities which will grant to any Person piggy-back registration rights with
respect to any Registration Statement.
          (b) Adjustments Affecting Registrable Notes. The Issuers shall not,
directly or indirectly, take any action with respect to the Registrable Notes as
a class that would adversely affect the ability of the Holders of Registrable
Notes to include such Registrable Notes in a registration undertaken pursuant to
this Agreement.
          (c) Amendments and Waivers. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given except pursuant to a written agreement
duly signed and delivered by (I) the Company on behalf of all Issuers and
(II)(A) the Holders of not less than a majority in aggregate principal amount of
the then outstanding Registrable Notes and (B) in circumstances that would
adversely affect the Participating Broker-Dealers, the Participating
Broker-Dealers holding not less than a majority in aggregate principal

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amount of the Exchange Notes held by all Participating Broker-Dealers; provided,
however, that Section 7 and this Section 10(c) may not be amended, modified or
supplemented except pursuant to a written agreement duly signed and delivered by
the Company on behalf of all Issuers and each Holder and each Participating
Broker-Dealer (including any Person who was a Holder or Participating
Broker-Dealer of Registrable Notes or Exchange Notes, as the case may be,
disposed of pursuant to any Registration Statement) affected by any such
amendment, modification, supplement or waiver. Notwithstanding the foregoing, a
waiver or consent to depart from the provisions hereof with respect to a matter
that relates exclusively to the rights of Holders of Registrable Notes whose
securities are being sold pursuant to a Registration Statement and that does not
directly or indirectly affect, impair, limit or compromise the rights of other
Holders of Registrable Notes may be given by Holders of at least a majority in
aggregate principal amount of the Registrable Notes being sold pursuant to such
Registration Statement.
          (d) Notices. All notices and other communications (including, without
limitation, any notices or other communications to the Trustee) provided for or
permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or telecopier:
          (i) if to a Holder of the Registrable Notes or any Participating
Broker-Dealer, at the most current address of such Holder or Participating
Broker-Dealer, as the case may be, set forth on the records of the registrar
under the Indenture.
          (ii) if to any Issuer, at the address as follows:
c/o Hercules Offshore, Inc.
9 Greenway Plaza, Suite 220
Houston, Texas 77046
Telephone: (713) 350-5100
Fax: 713-350-5105
Attention: James W. Noe
     (iii) if to the Initial Purchasers, at the address as follows:
UBS Securities LLC
677 Washington Boulevard
Stamford, Connecticut 06901
Telephone: (203) 719-3000
Fax: (212) 719-3667
Attention: Leveraged Capital Markets
With a copy at such address to the attention of Legal Department,
Fax: (203) 719-1075
          All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five Business Days after
being deposited in the mail, postage prepaid, if mailed; when receipt is
acknowledged by the recipient’s telecopier machine, if telecopied; and on the
next Business Day, if timely delivered to an air courier guaranteeing overnight
delivery.
          Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address and in the manner specified in such Indenture.

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          (e) Guarantors. So long as any Registrable Notes remain outstanding,
the Issuers shall cause each Person that becomes a guarantor of the Notes under
the Indenture to execute and deliver a counterpart to this Agreement which
subjects such Person to the provisions of this Agreement as a Guarantor. Each of
the Guarantors agrees to join the Issuers in all of their undertakings hereunder
to effect the Exchange Offer for the Exchange Notes and the filing of any Shelf
Registration required hereunder.
          (f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto,
the Holders and the Participating Broker-Dealers; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign holds
Registrable Notes.
          (g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
          (h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
          (i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS
MADE AND PERFORMED WHOLLY WITHIN THE STATE OF NEW YORK.
          (j) Severability. If any term, provision, covenant or restriction of
this Agreement is held by a court of competent jurisdiction to be invalid,
illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
          (k) Securities Held by the Issuers or Their Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Registrable Notes is
required hereunder, Registrable Notes held by the Issuers or any of their
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
          (l) Third-Party Beneficiaries. Holders and beneficial owners of
Registrable Notes and Participating Broker-Dealers are intended third-party
beneficiaries of this Agreement, and this Agreement may be enforced by such
Persons. No other Person is intended to be, or shall be construed as, a
third-party beneficiary of this Agreement.
          (m) Attorneys’ Fees. As between the parties to this Agreement, in any
action or proceeding brought to enforce any provision of this Agreement, or
where any provision hereof is validly asserted as a defense, the successful
party shall be entitled to recover reasonable attorneys’ fees actually incurred
in addition to its costs and expenses and any other available remedy.

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          (n) Entire Agreement. This Agreement, together with the Purchase
Agreement and the Indenture, is intended by the parties as a final and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein and any and all prior oral or
written agreements, representations, or warranties, contracts, understandings,
correspondence, conversations and memoranda between the Holders on the one hand
and the Issuers on the other, or between or among any agents, representatives,
parents, subsidiaries, Affiliates, predecessors in interest or successors in
interest with respect to the subject matter hereof and thereof are merged herein
and replaced hereby.

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          IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.

            HERCULES OFFSHORE, INC.
      By:           Name:   James W. Noe        Title:   Senior Vice President,
General Counsel,
Chief Compliance Officer and Secretary        CLIFFS DRILLING COMPANY
CLIFFS DRILLING TRINIDAD L.L.C.
HERCULES DRILLING COMPANY, LLC
THE HERCULES OFFSHORE DRILLING COMPANY LLC
THE OFFSHORE DRILLING COMPANY
THE ONSHORE DRILLING COMPANY
TODCO AMERICAS INC.
TODCO MANAGEMENT SERVICES, INC.
TODCO INTERNATIONAL INC.
TODCO MEXICO INC.
      By:           Name:   James W. Noe        Title:   Vice President &
Secretary        HERCULES LIFTBOAT COMPANY, LLC
HERCULES OFFSHORE HOLDINGS, LTD.
HERCULES OFFSHORE MIDDLE EAST, LTD.
HERCULES OFFSHORE SERVICES LLC
      By:           Name:   James W. Noe        Title:   Secretary     

[Signature Page to
Registration Rights Agreement]

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            DELTA TOWING HOLDINGS, LLC
DELTA TOWING, LLC
      By:           Name:   James W. Noe        Title:   President and Chief
Executive Officer     

[Signature Page to
Registration Rights Agreement]

         

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            UBS SECURITIES, LLC
BANC OF AMERICA SECURITIES LLC
DEUTSCHE BANK SECURITIES INC.
MORGAN STANLEY & CO. INCORPORATED
CAPITAL ONE SOUTHCOAST, INC.
CREDIT SUISSE SECURITIES (USA) LLC
GOLDMAN, SACHS & CO.
MIZUHO SECURITIES USA INC.
COMERICA SECURITIES, INC.
FORTIS SECURITIES LLC
NATIXIS BLEICHROEDER INC.
      By:   UBS SECURITIES LLC               By:           Name:          
Title:           By:           Name:           Title:                 By:   BANC
OF AMERICA SECURITIES LLC               By:           Name:           Title:    
      By:   DEUTSCHE BANK SECURITIES INC.               By:           Name:    
      Title:        

[Signature Page to
Registration Rights Agreement]

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                  By:   MORGAN STANLEY & CO. INCORPORATED               By:    
      Name:           Title:      

[Signature Page to
Registration Rights Agreement]

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Exhibit C
PRICING SUPPLEMENT
dated as of October 8, 2009
relating to the
Preliminary Offering Memorandum
(the “Preliminary Offering Memorandum”)
of Hercules Offshore, Inc.
dated as of October 5, 2009
$300,000,000
Hercules Offshore, Inc.
10.50% Senior Secured Notes due 2017
     This Pricing Supplement should be read in conjunction with the Preliminary
Offering Memorandum. This Pricing Supplement is qualified in its entirety by
reference to the Preliminary Offering Memorandum, which is hereby incorporated
by reference.
     The information in this Pricing Supplement supplements the Preliminary
Offering Memorandum and supersedes the information in the Preliminary Offering
Memorandum to the extent inconsistent with the information in the Preliminary
Offering Memorandum.
     Unless otherwise indicated, terms used but not defined herein have the
meanings assigned to such terms in the Preliminary Offering Memorandum.
     The notes have not been registered under the Securities Act of 1933 and are
being offered only to (1) “qualified institutional buyers” as defined in
Rule 144A under the Securities Act and (2) outside the United States to non-U.S.
persons in compliance with Regulation S under the Securities Act.

     
Issuer:
  Hercules Offshore, Inc.
 
   
Security Description:
  10.50% Senior Secured Notes due 2017
 
   
Principal Amount:
  $300,000,000
 
   
Final Maturity Date:
  October 15, 2017
 
   
Issue Price:
  97.383%, plus accrued interest, if any, from October 20, 2009
 
   
Coupon:
  10.50%
 
   
Yield to Maturity:
  11.00%
 
   
Interest Payment Dates:
  April 15 and October 15
 
   
First Interest Payment
Date:
  April 15, 2010
 
   
Ratings (Moody’s/S&P):
  B2/B

C-1

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CUSIP:
  427093AB5 (144A); U42714AA0 (Reg. S)
 
   
ISIN:
  US427093AB59 (144A); USU42714AA00 (Reg. S)
 
   
Optional Redemption after October 15, 2013:
  At any time or from time to time on or after October 15, 2013, the Issuer, at
its option, may redeem the Notes, in whole or in part, at the redemption prices
(expressed as percentages of the principal amount) set forth below, together
with accrued and unpaid interest and Liquidated Damages thereon, if any, to the
applicable redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date), if redeemed during the 12-month period beginning October 15 of the years
indicated:

         
Date
  Price    
2013
  105.250%    
2014
  102.625%    
2015
  101.3125%    
2016 and thereafter
  100.000%    

     
Redemption with
Proceeds from Equity
Offerings:
  At any time or from time to time prior to October 15, 2012, the Issuer, at its
option, may on any one or more occasions redeem Notes issued under the Indenture
with the net cash proceeds of one or more Qualified Equity Offerings at a
redemption price equal to 110.50% of the principal amount of the Notes to be
redeemed, plus accrued and unpaid interest and Liquidated Damages thereon, if
any, to the date of redemption (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest payment
date); provided that:
 
   
 
 
(1)  at least 65% of the aggregate principal amount of the Notes originally
issued on the Issue Date remains outstanding immediately after giving effect to
any such redemption; and
 
   
 
 
(2)  the redemption occurs not more than 90 days after the date of the closing
of such Qualified Equity Offering.
 
   
Redemption at
Applicable Premium:
  The Notes may also be redeemed, in whole or in part, at any time or from time
to time prior to October 15, 2013 at the option of the Issuer at a redemption
price equal to 100% of the principal amount of the Notes redeemed plus the
Applicable Premium as of, and accrued and unpaid interest and Liquidated
Damages, if any, to the applicable redemption date (subject to the right of
Holders of record on the relevant record date to receive interest due on the
relevant interest payment date).
 
   
 
  “Applicable Premium” means, with respect to any Note on any applicable
redemption date, the greater of:

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(1)  1.0% of the principal amount of such Note; and
 
   
 
 
(2)  the excess, if any, of:
 
   
 
 
(a)  the present value at such redemption date of (i) the redemption price of
such Note at October 15, 2013 (such redemption price being set forth in the
table appearing above under the caption “—Optional Redemption after October 15,
2013”) plus (ii) all required interest payments (excluding accrued and unpaid
interest to such redemption date) due on such Note through October 15, 2013,
computed using a discount rate equal to the Treasury Rate as of such redemption
date plus 50 basis points; over
 
   
 
 
(b) the principal amount of such Note.
 
   
 
  “Treasury Rate” means, as of any redemption date, the weekly average yield to
maturity at the time of computation of United States Treasury securities with a
constant maturity (as compiled and published in the most recent Federal Reserve
Statistical Release H.15 (519) which has become publicly available at least two
Business Days prior to the redemption date (or, if such Statistical Release is
no longer published, any publicly available source of similar market data))
equal to the period from the redemption date to October 15, 2013; provided,
however, that if the period from the redemption date to October 15, 2013 is not
equal to the constant maturity of a United States Treasury security for which a
weekly average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of United States Treasury securities that have a constant
maturity closest to and greater than the period from the redemption date to
October 15, 2013 and the United States Treasury securities that have a constant
maturity closest to and less than the period from the redemption date to
October 15, 2013 for which such yields are given, except that if the period from
the redemption date to October 15, 2013 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.

         
Initial Purchasers:
  Name   Title
 
  UBS Securities LLC   Joint Book Running Manager
 
  Banc of America Securities LLC   Joint Book Running Manager
 
  Deutsche Bank Securities Inc.   Joint Book Running Manager
 
  Morgan Stanley & Co. Incorporated   Joint Book Running Manager
 
  Capital One Southcoast, Inc.   Co Manager
 
  Credit Suisse Securities (USA) LLC   Co Manager

C-3

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  Goldman, Sachs & Co.   Co Manager
 
  Mizuho Securities USA Inc.   Co Manager
 
  Comerica Securities, Inc.   Co Manager
 
  Fortis Securities LLC   Co Manager
 
  Natixis Bleichroeder Inc.   Co Manager

     
Trade Date:
  October 8, 2009
 
   
Settlement Date:
  October 20, 2009 (T+7)
 
   
Use of Proceeds:
  We will receive net proceeds of approximately $284.4 million, after deducting
the initial purchasers’ discount and estimated offering expenses. We will use
the net proceeds from this offering to repay a portion of the indebtedness
outstanding under our term loan facility. Pending such repayment, we may
initially invest the net proceeds in short-term marketable securities.

Revised Capitalization Table:
The following table sets forth our cash and cash equivalents and our
capitalization as of June 30, 2009 on an:

•   actual basis;   •   as adjusted basis to give effect our recently completed
offering of 17,500,000 shares of common stock (excluding any exercise of the
underwriters’ over-allotment option); and   •   as further adjusted basis to
give effect to the sale of the notes and the application of the net proceeds
therefrom.

                              As of June 30, 2009               As     As
further       Actual     adjusted(1)(2)     adjusted(1)(2)       (in thousands
except par values)  
Cash and cash equivalents
  $ 129,880     $ 171,052     $ 171,052  
 
                 
Long-term debt, including current portion:
                       
Term loan facility, due July 2013
    884,250       843,078       558,679  
3.375% Convertible Senior Notes, due June 2038
    81,460       81,460       81,460  
7.375% Senior Notes, due April 2018
    3,512       3,512       3,512  
10.5% Senior Secured Notes due 2017 offered hereby
    —       —       292,149 (3)
 
                 
Total long-term debt, including current portion
    969,222       928,050       935,800  
Stockholders’ equity:
                       
Common stock, par value $0.01 per share
    973       1,148       1,148  
Capital in excess of par value
    1,827,663       1,909,832       1,909,832  
Treasury stock, at cost
    (50,128 )     (50,128 )     (50,128 )
Accumulated other comprehensive loss
    (13,350 )     (13,350 )     (13,350 )
Retained deficit
    (813,002 )     (813,002 )     (813,002 )
 
                 
Total stockholders’ equity
    952,156       1,034,500       1,034,500  
 
                 
Total capitalization
  $ 1,921,378     $ 1,962,550     $ 1,970,300  
 
                 

C-4

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(1)   Assumes that 50% of the net proceeds of our recently completed offering of
17,500,000 shares of our common stock were used to repay a portion of the
indebtedness outstanding under our term loan facility. The remainder of the net
proceeds will be used for general corporate purposes, which may in the future
include repaying indebtedness, among other things, and are reflected in cash and
cash equivalents.   (2)   Does not reflect aggregate repayments of approximately
$66.7 million of indebtedness under our term loan facility from proceeds related
to asset sales and cash on hand since June 30, 2009. In addition, the table does
not reflect aggregate repayments of $7.7 million of indebtedness under our term
loan facility that the Company intends to remit with cash on hand in
October 2009 which will reduce the balance under our term loan facility to
$484.25 million.   (3)   The $300 million of notes are recorded at their
discounted amount, with the discount to be amortized over the life of the notes.

As of June 30, 2009, on a pro forma basis after giving effect to (i) the sale of
the notes and the application of the net proceeds therefrom as described under
“Use of Proceeds” above, (ii) our recently completed offering of 17,500,000
shares of our common stock and the use of the proceeds therefrom (excluding any
exercise of the underwriters’ over-allotment option), and (iii) the amendment of
our credit agreement, we would have had $935.8 million aggregate principal
amount of senior indebtedness outstanding, including $558.7 million of senior
secured indebtedness outstanding under our credit facility, and we would have
had $160.9 million of undrawn borrowing capacity under our credit facility.
Recent Development
On September 30, 2009, we completed an underwritten public offering of
17,500,000 shares of our common stock, par value $0.01 per share. On October 7,
2009, the underwriters notified us that they were partially exercising their
over-allotment option and would purchase 1,313,590 additional shares of our
common stock. The closing of the purchase of shares pursuant to the
underwriters’ partial exercise of their over-allotment option is scheduled to
occur on October 9, 2009, subject to customary closing conditions. We expect to
receive total net proceeds of approximately $6.3 million from the underwriters’
partial exercise of their over-allotment option. We intend to use 50% of the net
proceeds from the underwriters’ partial exercise of their over-allotment option
to repay a portion of the indebtedness outstanding under our term loan facility
and intend to use any remainder for general corporate purposes, which may in the
future include repaying indebtedness, among other things.

C-5