Commitment Letter with UBS



 Exhibit 10.27 
  

			
	UBS LOAN FINANCE LLC
677 Washington Boulevard
Stamford, Connecticut 06901	  	UBS SECURITIES LLC
299 Park Avenue
New York, New York 10171

 March 18, 2007 
 Hercules Offshore, Inc. 
 11 Greenway Plaza 
 Suite 2950 
 Houston, Texas 77046 
 Attention: Randall D. Stilley, Chief Executive Officer and President 
 Bank Facilities Commitment Letter 
 Ladies and Gentlemen: 
 You have advised UBS Loan Finance LLC
(“UBS”) and UBS Securities LLC (“UBSS” and, together with UBS, “we” or “us”) that a wholly-owned subsidiary corporation (“Acquisition Co.) of Hercules Offshore, Inc.
(“you” or “Borrower”), proposes to acquire (the “Acquisition”) an entity code-named Thor (the “Acquired Business”). The Acquisition will be effected pursuant to a merger agreement
(the “Acquisition Agreement”) among Acquisition Co., Borrower and the Acquired Business under which the stockholders of the Acquired Business would receive consideration comprised of common stock of the Borrower and cash (with cash
not expected to exceed 50% of such aggregate consideration). All references to “dollars” or “$” in this agreement and the attachments hereto (collectively, this “Commitment Letter”) are references
to United States dollars. All references to “Borrower and its subsidiaries” for any period from and after consummation of the Acquisition shall include the Acquired Business. 
 We understand that the sources of funds required to fund a portion of the Acquisition consideration, to repay existing indebtedness of Borrower and the
Acquired Business and their respective subsidiaries of up to $109.7 million (the “Refinancing”), to fund payments of up to $156.4 million relating to the settlement of certain amounts under agreement(s) to which the Acquired
Business is subject (the “Settlement Payments”), to pay fees, commissions and expenses of up to $60.0 million in connection with the Transactions (as defined below) and to provide ongoing working capital requirements of Borrower and
its subsidiaries following the Transactions will include: 
  

	 	•	 	 senior secured credit facilities consisting of (i) a senior secured term loan facility to Borrower of up to $1.1 billion (the “Term Loan
Facility”), as described in the Bank Facilities Summary of Principal Terms and Conditions attached hereto as Annex I (the “Term Sheet”) and (ii) a senior secured revolving credit facility to Borrower of up
to $150.0 million (the “Revolving Credit Facility” and, together with the Term Loan Facility, the “Facilities”), as described in the Term Sheet, which Revolving Credit Facility will be undrawn immediately after
giving effect to the Transactions; and 










	 	•	 	 existing cash balances of the Borrower of approximately $147.9 million. 


 No other financing will be required for the uses described above. Immediately following the Transactions, neither Borrower nor any of its subsidiaries will have any material indebtedness or preferred equity other than
the Facilities and other indebtedness acceptable to UBS. As used herein, the term “Transactions” means the Acquisition, the issuance by the Borrower of its common stock to the stockholders of the Acquired Business pursuant to the
Acquisition (the “Stock Issuance”), the Refinancing, the Settlement Payments, the initial borrowings under the Facilities, and the payments of fees, commissions and expenses in connection with each of the foregoing. The approximate
sources and uses for the Transactions are set forth in Annex II hereto. 
 Commitments. 
 You have requested that UBS commit to provide the Facilities and that UBSS agree to structure, arrange and syndicate the Facilities. 
 UBS is pleased to advise you of its commitment to provide the entire amount of the Facilities to Borrower upon the terms and subject to the conditions
set forth or referred to in this Commitment Letter. The commitment of UBS is subject to the negotiation, execution and delivery of definitive documentation (the “Financing Documentation”) with respect to the Facilities reasonably
satisfactory to UBS and the other Lenders reflecting, among other things, the terms and conditions set forth in the Term Sheet, in Annex III hereto (the “Conditions Annex”) and in the letter of even date herewith addressed to
you providing, among other things, for certain fees relating to the Facilities (the “Fee Letter”). You agree that the closing date of the Facilities (the “Closing Date”) shall be a date mutually agreed upon between
you and us, but in any event shall not occur until the terms and conditions hereof and in the Term Sheet and the Conditions Annex (including the conditions to initial funding) have been satisfied. 
 Syndication. 
 It is agreed that UBSS
will act as the lead advisor, arranger and bookmanager for the Facilities, and, in consultation with you, will manage the syndication of the Facilities, and will, in such capacities, perform the duties and exercise the authority customarily
associated with such roles. It is further agreed that additional advisors, agents, co-agents, arrangers or bookmanagers may be appointed in consultation with UBS; provided that (i) UBSS shall receive not less than 50% of the economics
under the Facilities where additional advisors, agents, co-agents, arrangers or bookmanagers are appointed, (ii) the additional advisors, agents, co-agents, arrangers or bookmanagers will assume their pro rata percentage of the Facilities,
which percentage shall be equal to or greater than their percentage of the economics hereunder, pursuant to an amendment hereto (or other documentation) reasonably satisfactory to UBSS executed within ten (10) business days of the announcement
of the Acquisition and (iii) UBSS shall have “left” placement in any and all marketing materials or documentation used in connection with the Facilities (and shall receive bookmanager and lead arranger league table credit for the
Facilities). Except as set forth above, you agree that no other titles or roles will be awarded and no compensation will be paid (other than as expressly contemplated by this Commitment Letter and the Fee Letter) in connection with the Facilities
unless you and we shall so agree. 
  

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 UBS reserves the right, prior to or after execution of the Financing Documentation, in consultation with
you, to syndicate all or a portion of its commitment to one or more institutions that will become parties to the Financing Documentation (UBS and the institutions becoming parties to the Financing Documentation with respect to all or a portion of
the Facilities, the “Lenders”). 
 UBSS will exclusively manage all aspects of the syndication of the Facilities, including
selection of additional Lenders, determination of when UBSS will approach potential additional Lenders, awarding of any naming rights and the final allocations of the commitments in respect of the Facilities among the additional Lenders. You agree
to, and to use commercially reasonable efforts to cause Borrower, Acquisition Co. and the Acquired Business to (including with a covenant to such effect in the Acquisition Agreement), actively assist UBSS in achieving a timely syndication of the
Facilities that is reasonably satisfactory to UBSS and the Lenders participating in such Facilities. To assist UBSS in its syndication efforts, you agree that you will, and will cause your representatives and advisors to, and will use commercially
reasonable efforts to cause Borrower, Acquisition Co. and the Acquired Business and their respective representatives and advisors to, (a) promptly prepare and provide all financial and other information as we may reasonably request with respect
to Borrower, Acquisition Co., the Acquired Business, their respective subsidiaries and the transactions contemplated hereby, including but not limited to financial projections (the “Projections”) relating to the foregoing,
(b) use commercially reasonable efforts to ensure that such syndication efforts benefit materially from existing lending relationships of Borrower, Acquisition Co., the Acquired Business and their respective subsidiaries, (c) make
available to prospective Lenders senior management and advisors of Borrower, Acquisition Co., the Acquired Business and their respective subsidiaries, (d) host, with UBSS, one or more meetings with prospective Lenders under each of the
Facilities, (e) assist UBSS in the preparation of one or more confidential information memoranda satisfactory to UBSS and other marketing materials to be used in connection with the syndication of each of the Facilities and (f) obtain, at
your expense, monitored public ratings of the Facilities from Moody’s Investors Service (“Moody’s”) and Standard & Poor’s Ratings Group (“S&P”) at least 30 days prior to the Closing Date
and to participate actively in the process of securing such ratings, including having senior management of Borrower meet with such rating agencies. 
 At our request, you agree to prepare a version of the information package and presentation and other marketing materials to be used in connection with the syndication that do not contain material non-public information concerning Borrower,
Acquisition Co. or the Acquired Business, their respective affiliates or their securities. In addition, with respect to all other written information, documentation and other data provided by you to us, we agree that, unless specifically labeled
“Public Information,” such information, documentation and other data shall be deemed to be private, non-public information and we shall use our reasonable efforts to notify prospective Lenders to whom such information, documentation and
other data is disseminated in connection with the syndication of such Facilities, whether disseminated through an Internet website (including, without limitation, an IntraLinks workspace), electronically, in presentations at meetings or otherwise,
of the confidential nature thereof. 
  

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 Information. 
 You hereby represent and covenant that (a) all written information (other than the Projections) that has been or will be made available to us or any of the Lenders by Borrower, Acquisition Co., the Acquired
Business or any of your or their respective representatives with respect to you or Acquisition Co. and, to the best of your knowledge, with respect to the Acquired Business in connection with the transactions contemplated hereby (the
“Information”), when taken as a whole, is and will be complete and correct in all material respects and does not and will not contain any untrue statement of a material fact or omit to state a material fact necessary to make the
statements contained therein, in the light of the circumstances under which such statements are made, not misleading and (b) the Projections that have been or will be made available to us or any of the Lenders by Borrower, Acquisition Co., the
Acquired Business or any of your or their respective representatives in connection with the transactions contemplated hereby have been and will be prepared in good faith based upon assumptions believed by you to be reasonable (it being understood
that projections by their nature are inherently uncertain and no assurances are being given that the results reflected in the Projections will be achieved). You agree to supplement the Information and the Projections from time to time upon our
reasonable request and agree to promptly advise us and the Lenders of all developments materially affecting Borrower, Acquisition Co. and their respective subsidiaries or affiliates, taken as a whole, or the Acquired Business (inclusive of its
subsidiaries, taken as a whole) or the transactions contemplated hereby or the accuracy of Information and Projections previously furnished to us or any of the Lenders. 
 Compensation. 
 As consideration for the commitments of the Lenders hereunder with respect to the
Facilities and the agreement of UBSS to structure, arrange and syndicate the Facilities and to provide advisory services in connection therewith, you agree to pay, or cause to be paid, the fees set forth in the Term Sheet and the Fee Letter. Once
paid, such fees shall not be refundable under any circumstances. 
 Conditions. 
 The commitment of UBS and the Lenders hereunder with respect to each of the Facilities and UBSS’s agreement to perform the services described herein
may be terminated by UBS if (i) any information submitted to UBS by or on behalf of Borrower, Acquisition Co., the Acquired Business or any of their respective subsidiaries or affiliates is inaccurate, incomplete or misleading in any respect
determined by UBS to be material; (ii) any change, effect, event, circumstance, occurrence, state of facts or development shall occur since December 31, 2006, or any additional information shall be disclosed to or discovered by UBS
(including, without limitation, information contained in any review or report required to be provided to it in connection herewith), which UBS determines has had or could reasonably be expected to have, individually or in the aggregate, a Company
Material Adverse Effect (as defined in the draft Acquisition Agreement referred to in paragraph 1 of the Conditions Annex); or (iii) any condition set forth in the Term Sheet or the Conditions Annex is not satisfied or any covenant or agreement
in this Commitment Letter or the Fee Letter is not complied with. 
  

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 Notwithstanding anything in this Commitment Letter, the Term Sheet, the Fee Letter, the Financing
Documentation or any other letter agreement or other undertaking concerning the financing of the Transactions to the contrary, (i) the only representations relating to the Acquired Business, its subsidiaries and its businesses, the making of
which shall be a condition to availability of the Facilities on the Closing Date, shall be (A) such of the representations made by the Acquired Business in the Acquisition Agreement as are material to the interests of the Lenders (it being
presumed that each such representation is material to the Lenders), but only to the extent that you have the right to terminate your obligations under the Acquisition Agreement as a result of a breach of such representations in the Acquisition
Agreement (the “Acquisition Agreement Representations”) and (B) the Specified Representations (as defined below) and (ii) the terms of the Financing Documentation shall be in a form such that they do not impair
availability of the Facilities on the Closing Date if the conditions set forth herein and in the Term Sheet and the Conditions Annex are satisfied. For purposes hereof, “Specified Representations” means the representations and
warranties relating to the Acquired Business set forth in the Term Sheet relating as to corporate power and authority, the due authorization, execution, delivery and enforceability of the Financing Documentation, the Financing Documentation not
conflicting with charter documents, law or material contracts, Federal Reserve margin regulations, validity, priority and perfection of security interests (subject to paragraph 11 of the Conditions Annex), status of debt under the applicable
Facility as senior debt, the Patriot Act and the Investment Company Act. 
 Clear Market. 
 From the date of this Commitment Letter and until the earlier to occur of (a) our completion of a “successful syndication” (as such term is
defined in the Fee Letter) of each of the Facilities and (b) sixty (60) days following the Closing Date, you will ensure that no financing for Borrower, Acquisition Co., the Acquired Business or any of your or their respective subsidiaries
or affiliates is announced, syndicated or placed without the prior written consent of UBS if such financing, syndication or placement would have, in the judgment of UBS, a detrimental effect upon the transactions contemplated hereby. 
 Indemnity and Expenses. 
 By your
acceptance below, you hereby agree to indemnify and hold harmless us and the other Lenders and our and their respective affiliates (including, without limitation, controlling persons) and the directors, officers, employees, advisors and agents of
the foregoing (each, an “Indemnified Person”) from and against any and all losses, claims, costs, expenses, damages or liabilities (or actions or other proceedings commenced or threatened in respect thereof) that arise out of or in
connection with this Commitment Letter, the Term Sheet, the Conditions Annex, the Fee Letter, the Facilities or any of the transactions contemplated hereby or thereby or the providing or syndication of the Facilities (or the actual or proposed use
of the proceeds thereof), and to reimburse each Indemnified Person promptly upon its written demand for any legal or other expenses incurred in connection with investigating, preparing to defend or defending against, or participating in, any such
loss, claim, cost, expense, damage, liability or action or other proceeding (whether or not such Indemnified Person is a party to any action or proceeding); provided that any such obligation to indemnify, hold harmless and reimburse an
Indemnified Person shall not be applicable to the extent determined by a final, non-appealable judgment of a court of competent jurisdiction to have resulted solely from the gross negligence or willful misconduct of such Indemnified Person. You
shall not be 

  

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liable for any settlement of any such proceeding effected without your written consent, but if settled with such consent or if there shall be a final
judgment against an Indemnified Person, you shall, subject to the proviso in the preceding sentence, indemnify such Indemnified Person from and against any loss or liability by reason of such settlement or judgment. You shall not, without the prior
written consent of any Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified
Person, unless such settlement (i) includes an unconditional release of such Indemnified Person from all liability or claims that are the subject matter of such proceeding and (ii) does not include a statement as to or an admission of
fault, culpability, or a failure to act by or on behalf of such Indemnified Person. None of us or any other Lender (or any of their respective affiliates) shall be responsible or liable to Borrower, Acquisition Co., the Acquired Business or any of
their respective subsidiaries, affiliates or stockholders or any other person or entity for any indirect, punitive or consequential damages which may be alleged as a result of this Commitment Letter, the Term Sheet, the Conditions Annex, the Fee
Letter, the Facilities or the transactions contemplated hereby or thereby. In addition, you hereby agree to reimburse us from time to time upon demand for all reasonable out-of-pocket costs and expenses (including, without limitation, reasonable
legal fees and expenses of UBS and UBSS, appraisal, consulting and audit fees, and printing, reproduction, document delivery, travel, communication and publicity costs) incurred in connection with the syndication and execution of the Facilities, and
the preparation, review, negotiation, execution and delivery of this Commitment Letter, the Term Sheet, the Conditions Annex, the Fee Letter, the Financing Documentation and the administration, amendment, modification or waiver thereof (or any
proposed amendment, modification or waiver), whether or not the Closing Date occurs or any Financing Documentation is executed and delivered or any extensions of credit are made under either of the Facilities. 
 Confidentiality. 
 This Commitment
Letter is delivered to you upon the condition that neither the existence of this Commitment Letter, the Term Sheet, the Conditions Annex or the Fee Letter nor any of their contents shall be disclosed by you or any of your affiliates, directly or
indirectly, to any other person, except that such existence and contents may be disclosed (i) other than the Fee Letter, in filings with the Securities and Exchange Commission (the “SEC”) and to Moody’s, S&P and other
applicable regulatory authorities and stock exchanges; provided, UBS has the reasonable opportunity to review such filings and seek confidential treatment with regard to such filings (if appropriate), (ii) as may be compelled in a
judicial or administrative proceeding or as otherwise required by law and (iii) to your directors, officers, employees, legal counsel and accountants, in each case on a confidential and “need-to-know” basis and only in connection with
the transactions contemplated hereby. In addition, this Commitment Letter, the Term Sheet and the Conditions Annex (but not the Fee Letter) may be disclosed to the Acquired Business and its directors, officers, employees, advisors and agents, in
each case on a confidential and “need-to-know” basis and only in connection with the transactions contemplated hereby. 
 We agree
to maintain the confidentiality of material non-public information provided by you to us with respect to you or the Acquired Business, except that such information may be disclosed (a) to our affiliates and to our affiliates’ respective
partners, directors, officers, employees, agents, advisors and other representatives, (b) to the extent requested by any governmental authority or 

  

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regulatory authority, (c) to the extent required by applicable requirements of law or by any subpoena or similar legal process, (d) to any other
party hereto, (e) in connection with any action or proceeding relating to this Commitment Letter or any other Financing Documentation, (f) to any prospective Lender or prospective assignee of our rights and obligations under this
Commitment Letter and their respective partners, directors, officers, employees, agents, advisors and other representatives, (g) to any rating agency for the purpose of obtaining a credit rating applicable to Borrower or the Facilities,
(h) with the consent of Borrower or (i) to the extent such information becomes available to UBS, any Lender or any of their respective affiliates on a non-confidential basis from a source other than Borrower. Any person required to
maintain the confidentiality of information as provided in this paragraph shall be considered to have complied with its obligation to do so if such person has exercised the same degree of care to maintain the confidentiality of such information as
such person would accord to its own confidential information. 
 Other Services. 
 You acknowledge and agree that we and/or our affiliates may be requested to provide additional services with respect to Borrower, Acquisition Co., the
Acquired Business and/or their respective affiliates or other matters contemplated hereby. Any such services will be set out in and governed by a separate agreement(s) (containing terms relating, without limitation, to services, fees and
indemnification) in form and substance satisfactory to the parties thereto. Nothing in this Commitment Letter is intended to obligate or commit us or any of our affiliates to provide any services other than as set out herein. 
 Conflicts of Interest. 
 You
acknowledge that (and waive any conflict of interest arising in connection with): 
 (a) UBSS, UBS and/or their respective affiliates (the
“UBS Group”), in its capacity as principal or agent, is involved in a wide range of commercial banking and investment banking activities globally (including investment advisory; asset management; research; securities issuance,
trading, and brokerage) from which conflicting interests or duties may arise and therefore, conflicts may arise between duties of UBSS or UBS hereunder and other duties or interests of UBSS, UBS or another member of the UBS Group; 
 (b) UBSS, UBS and any other member of the UBS Group may, at any time, (i) provide services to any other person, (ii) engage in any transaction
(on its own account or otherwise) with respect to you or any member of the same group as you or (iii) act in relation to any matter for any other person whose interests may be adverse to you or any member of your group (a “Third
Party”), and may retain for its own benefit any related remuneration or profit, notwithstanding that a conflict of interest exists or may arise and/or any member of the UBS Group is in possession or has come or comes into possession
(whether before, during or after the agreements hereunder) of information confidential to you; provided that such information shall not be shared with any Third Party. You accept that permanent or ad hoc arrangements/information barriers may
be used between and within divisions of UBSS, UBS or other members of the UBS Group for this purpose and that locating directors, officers or employees in separate workplaces is not necessary for such purpose; 
  

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 (c) information which is held elsewhere within UBSS, UBS or the UBS Group but of which none of the
individual directors, officers or employees having the conduct of transactions contemplated by this letter actually has knowledge (or can properly obtain knowledge without breach of internal procedures), shall not for any purpose be taken into
account in determining UBSS’s or UBS’s responsibilities to you hereunder; and 
 (d) neither UBSS or UBS nor any other member of
the UBS Group shall have any duty to disclose to, or utilize for the benefit of, you, any non-public information acquired in the course of providing services to any other person, engaging in any transaction (on its own account or otherwise) or
otherwise carrying on its business. 
 UBSS, UBS and the UBS Group operate rules, policies and procedures, including independence policies
and permanent and ad hoc information barriers between and within divisions of UBSS, UBS and other members of the UBS Group, directed to ensuring that (i) the individual directors, officers and employees involved in an assignment undertaken by a
member of the UBS Group (including the engagement hereunder) are not influenced by any such conflicting interest or duty and (ii) that any confidential information held by a member of the UBS Group is not disclosed or made available to any
other client. 
 Governing Law, Etc. 
 This Commitment Letter and the commitment of the Lenders shall not be assignable by you without the prior written consent of us and the Lenders, and any purported assignment without such consent shall be void. We
reserve the right to employ the services of our affiliates in providing services contemplated by this Commitment Letter and to allocate, in whole or in part, to our affiliates certain fees payable to us in such manner as we and our affiliates may
agree in our sole discretion. You also agree that UBS may at any time and from time to time assign all or any portion of its commitments hereunder to one or more of its affiliates. You further acknowledge that we may share with any of our
affiliates, and such affiliates may share with us, any information related to Borrower, Acquisition Co., the Acquired Business, or any of their respective subsidiaries or affiliates (including, without limitation, information relating to
creditworthiness) and the transactions contemplated hereby. We agree to treat, and cause any such affiliate to treat, all non-public information provided to us by you as confidential information in accordance with customary banking industry
practices and the terms of this Commitment Letter. 
 This Commitment Letter may not be amended or any provision hereof waived or modified
except by an instrument in writing signed by us and you. This Commitment Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute one agreement. Delivery of an
executed counterpart of a signature page of this Commitment Letter by facsimile transmission shall be effective as delivery of a manually executed counterpart of this Commitment Letter. Headings are for convenience of reference only and shall not
affect the construction of, or be taken into consideration when interpreting, this Commitment Letter. This Commitment Letter is intended to be for the benefit of the parties hereto and is not intended to confer any benefits upon, or create any
rights in favor of, and may not be relied on by, any persons other than the parties hereto, the Lenders and, with respect to the indemnification provided under the heading “Indemnity and Expenses,” each Indemnified Person. 
  

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 This Commitment Letter shall be governed by, and construed in accordance with, the laws of the State
of New York without regard to principles of conflicts of law to the extent that the application of the laws of another jurisdiction will be required thereby. Any right to trial by jury with respect to any claim or action arising out of this
Commitment Letter is hereby waived. You hereby submit to the non-exclusive jurisdiction of the federal and New York State courts located in The City of New York (and appellate courts thereof) in connection with any dispute related to this Commitment
Letter or any of the matters contemplated hereby, and agree that service of any process, summons, notice or document by registered mail addressed to you shall be effective service of process against you for any suit, action or proceeding relating to
any such dispute. You irrevocably and unconditionally waive any objection to the laying of such venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding has been brought in an
inconvenient forum. A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any other courts to whose jurisdiction you are or may be subject by suit upon judgment. 
 Patriot Act. 
 We hereby notify you
that pursuant to the requirements of the USA Patriot Act, Title III of Pub. L. 107-56 (signed into law October 26, 2001) (the “Patriot Act”), we and the other Lenders may be required to obtain, verify and record information
that identifies Borrower, Acquisition Co. and the Acquired Business, which information includes the name, address and tax identification number and other information regarding them that will allow us or such Lender to identify them in accordance
with the Patriot Act. This notice is given in accordance with the requirements of the Patriot Act and is effective as to us and the Lenders. 
 Please indicate your acceptance of the terms hereof and of the Term Sheet, the Conditions Annex and the Fee Letter by returning to us executed counterparts of this Commitment Letter and the Fee Letter not later than the earlier to occur of
(A) the execution and delivery of the Acquisition Agreement and (B) 5:00 p.m., New York City time, on March 30, 2007 (the “Deadline”). This Commitment Letter and the commitments of the Lenders hereunder and the
agreement of UBSS to provide the services described herein are also conditioned upon your acceptance hereof and of the Fee Letter, and our receipt of executed counterparts hereof and thereof on or prior to the Deadline. Upon the earliest to occur of
(A) the execution and delivery of the Financing Documentation by all of the parties thereto, (B) October 31, 2007, if the Financing Documentation shall not have been executed and delivered by all such parties prior to that date and
(C) if earlier than (B), the date of termination of the Acquisition Agreement, this Commitment Letter and the commitments of the Lenders hereunder and the agreement of UBSS to provide the services described herein shall automatically terminate
unless the Lenders and UBSS shall, in their discretion, agree to an extension. The compensation, expense reimbursement, confidentiality, indemnification, conflicts of interest and governing law and forum provisions hereof and in the Term Sheet and
the Fee Letter shall survive termination of (i) this Commitment Letter (or any portion hereof) and (ii) any or all of the commitments of the Lenders hereunder. The provisions under the headings “Syndication” and “Clear
Market” above shall survive the execution and delivery of the Financing Documentation. 
 [Signature Page Follows] 
  

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 We are pleased to have been given the opportunity to assist you in connection with the financing for the
Transactions. 
  

					
	Very truly yours,
	
	UBS LOAN FINANCE LLC
		
	By:	 	/s/ John K. McNulty
		 	Name:	 	John K. McNulty
		 	Title:	 	Director
		
	By:	 	/s/ Warren Jervey
		 	Name:	 	Warren Jervey
		 	Title:	 	Executive Director and Counsel
		 		 	Region Americas Legal
	
	UBS SECURITIES LLC
		
	By:	 	/s/ John K. McNulty
		 	Name:	 	John K. McNulty
		 	Title:	 	Director
		
	By:	 	/s/ Warren Jervey
		 	Name:	 	Warren Jervey
		 	Title:	 	Executive Director and Counsel
		 		 	Region Americas Legal


  

					
	Accepted and agreed to as of the date first written above:
	
	HERCULES OFFSHORE, INC.
		
	By:	 	/s/ Randall D. Stilley
		 	Name:	 	Randall D. Stilley
		 	Title:	 	Chief Executive Officer and President

  

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 ANNEX I 
 BANK FACILITIES 
 SUMMARY OF
PRINCIPAL TERMS AND CONDITIONS1 
  

			
	Borrower:	  	Hercules Offshore, Inc. (“Borrower”).
		
	Lead Arranger:	  	UBS Securities LLC (“UBSS” or the “Arranger”).
		
	Lenders:	  	A syndicate of banks, financial institutions and other entities, including UBS Loan Finance LLC (“UBS”), arranged by UBSS and reasonably acceptable to Borrower (collectively,
the “Lenders”).
		
	Administrative Agent, Collateral Agent and Issuing Bank:	  	  
 UBS AG, Stamford Branch, and/or one or more of its
affiliates.

		
		  	
		
	Swingline Lender:	  	UBS Loan Finance LLC.
		
	Type and Amount of Facilities:	  	Term Loan Facility:
		
		  	Term Loan Facility (the “Term Loan Facility”) in an aggregate principal amount of up to $1.1 billion.
		
		  	Revolving Credit Facility:
		
		  	A revolving credit facility (the “Revolving Credit Facility”) in an aggregate principal amount of $150.0 million.
		
		  	The Term Loan Facility and the Revolving Credit Facility are herein referred to collectively as the “Facilities.”
		
	Purpose:	  	Proceeds of the Term Loan Facility will be used on the Closing Date to finance a portion of the Acquisition consideration, the Refinancing and the Settlement Payment and to pay fees, commissions
and expenses in connection therewith. Following the Closing Date, the Revolving Credit Facility will be used by Borrower and its subsidiaries for working capital and general corporate purposes.



	 1
	 All capitalized terms used but not defined herein shall have the meanings provided in the Commitment
Letter to which this summary is attached. 










			
		
	Closing Date:	  	The date of the closing of the Acquisition, but not later than October 31, 2007.
		
	 Maturity Dates:
	  	Term Loan Facility: six (6) years from the Closing Date.
		
		  	Revolving Credit Facility: five (5) years from the Closing Date.
		
	Availability:	  	Term Loan Facility: Upon satisfaction or waiver of conditions precedent to drawing to be specified in the Financing Documentation, a single drawing may be made on the Closing Date of up
to the full amount of the Term Loan Facility.
		
		  	Revolving Credit Facility: Upon satisfaction or waiver of conditions precedent to drawing to be specified in the Financing Documentation, borrowings may be made at any time after the
Closing Date to but excluding the business day preceding the maturity date of the Revolving Credit Facility.
		
	Letters of Credit:	  	Up to $50.0 million of the Revolving Credit Facility will be available for letters of credit, on terms and conditions to be set forth in the Financing Documentation. Each letter of credit shall
expire not later than the earlier of (i) 12 months after its date of issuance and (ii) the fifth day prior to the Maturity Date of the Revolving Credit Facility; provided, Borrower may extend letters of credit beyond the Maturity Date of
the Revolving Credit Facility (but not beyond the fifth day prior to the first anniversary of such Maturity Date) on terms and conditions to be agreed upon between Borrower, the Administrative Agent and the Issuing Bank.
		
		  	Drawings under any letter of credit shall be reimbursed by Borrower on the same business day (provided that Borrower receives notice of such draw by 12:00 PM (EST) on such day, otherwise on the
next business day). To the extent that Borrower does not reimburse the Issuing Bank on the same business day, the Lenders under the Revolving Credit Facility shall be irrevocably obligated to reimburse the Issuing Bank pro rata based upon their
respective Revolving Credit Facility commitments.
		
		  	The issuance of all letters of credit shall be subject to the customary procedures of the Issuing Bank.
		
	Swingline Facility:	  	Up to $15.0 million of the Revolving Credit Facility will be available for swingline borrowings, on terms and conditions to be set forth in the Financing Documentation.

  

 -2- 









			
		  	Except for purposes of calculating the commitment fee described below, any swingline borrowings will reduce availability under the Revolving Credit Facility on a dollar-for-dollar
basis.
		
	Uncommitted Increase
in Facilities:	  	  
 The Financing Documentation will permit Borrower to incur up to $500 million
(less the aggregate increase of the Revolving Credit Facility pursuant to the immediately succeeding paragraph) aggregate principal amount of additional term loans under an existing tranche under the Facilities or under a new tranche under the
Facilities having the same guarantees as, and secured on a pari passu basis by the same collateral securing, the Facilities (the “Additional Term Loans”), provided that (i) no event of default or default exists or would exist
after giving effect thereto, (ii) all financial covenants would be satisfied on a pro forma basis on such date and for the most recent determination period, after giving effect to such Additional Term Loans and other customary and appropriate pro
forma adjustment events, including any acquisitions or dispositions after the beginning of the relevant determination period but prior to or simultaneous with the borrowing of such Additional Term Loans, (iii) if the Additional Term Loans are not
part of any existing tranche of the Facilities, the maturity date of the Additional Term Loans shall not be prior to the latest Maturity Date of the Facilities, (iv) amortization payments shall be no more than ratable with the amortization payments
under any existing tranche of term loans under the Facilities, and the Additional Term Loans shall otherwise be no more than pari passu with the then existing term loans under the Facilities with respect to mandatory prepayments and other payment
rights, and (v) in the event that the Interest Margins for any Additional Term Loans are greater than the Interest Margins for the Term Loan Facility made on the Closing Date by more than 25 basis points, then the Interest Margins for the existing
Term Loan Facility shall be increased to the extent necessary such that the Interest Margins for the Additional Term Loans are equal to the Interest Margins for the existing Term Loan Facility; provided that in determining the Interest Margin
applicable to the existing Term Loan Facility and the Additional Term Loans, (x) original issue discount (“OID”) or upfront fees (which shall be deemed to constitute like amounts of OID) payable by the Borrower
to


  

 -3- 









			
		
		  	the Lenders of the existing Term Loan Facility or the Additional Term Loans in the primary syndication thereof shall be included (with OID being equated to interest based on an assumed four-year
life to maturity) and (y) customary arrangement or commitment fees payable to the Arranger (or its affiliates) in connection with the Term Loan Facility or to one or more arrangers (or their affiliates) of the Additional Term Loans shall be
excluded. Borrower may seek commitments from existing Lenders (each of which shall be entitled to agree or decline to participate in its sole discretion) and additional financial institutions reasonably acceptable to the Arranger and the
Administrative Agent who shall thereupon become Lenders. The Facilities Documentation shall be amended to give effect to the Additional Term Loans by documentation executed by the Lender or Lenders making the commitments with respect to the
Additional Term Loans, the Administrative Agent and Borrower, and without the consent of any other Lender.
		
		  	The Financing Documentation will also permit Borrower to increase the aggregate commitment with respect to the Revolving Credit Facility by up to $500 million (less the aggregate amount of
Additional Term Loans borrowed or committed to, as described in the immediately preceding paragraph), provided that (i) no event of default or default exists or would exist after giving effect thereto, and (ii) such increased commitments
shall be on terms and conditions identical as those under the Revolving Credit Facility immediately prior to such increase. Borrower shall seek commitments first from existing Lenders under Revolving Credit Facility (each of which shall be entitled
to agree or decline to participate in its sole discretion) and, thereafter, additional financial institutions reasonably acceptable to the Arranger and the Administrative Agent who shall thereupon become Lenders. The Facilities Documentation shall
be amended to give effect to such increased commitments by documentation executed by the Lender or Lenders making such commitments, the Administrative Agent and Borrower, and without the consent of any other Lender.
		
	Amortization:	  	Term Loan Facility: The Term Loan Facility will amortize in equal quarterly installments in annual amounts equal to 1.0% of the original principal amount of the Term Loan Facility, with
the balance payable on the Maturity Date.
		
		  	Revolving Credit Facility: None.

  

 -4- 









			
		
	Interest:	  	At Borrower’s option, loans will bear interest based on the Base Rate or LIBOR, as described below (except that all swingline borrowings will accrue interest based on the Base
Rate):
		
		  	A. Base Rate Option
		
		  	Interest will be at the Base Rate plus the applicable Interest Margin, calculated on the basis of the actual number of days elapsed in a year of 365 days and payable quarterly in arrears. The
Base Rate is defined as the higher of the Federal Funds Rate, as published by the Federal Reserve Bank of New York, plus 1/2 of 1% and the prime commercial lending rate of UBS AG, as established from time to time at its Stamford
Branch.
		
		  	Base Rate borrowings will be in minimum amounts to be agreed upon and (other than swingline borrowings) will require one business day’s prior notice.
		
		  	B. LIBOR Option
		
		  	Interest will be determined for periods to be selected by Borrower (“Interest Periods”) of one, two, three or six months (or such other periods as are available to all the
Lenders) and will be at an annual rate equal to the London Interbank Offered Rate (“LIBOR”) for the corresponding deposits of U.S. dollars, plus the applicable Interest Margin. LIBOR will be determined by the Administrative Agent at
the start of each Interest Period and will be fixed through such period. Interest will be paid at the end of each Interest Period or, in the case of Interest Periods longer than three months, quarterly, and will be calculated on the basis of the
actual number of days elapsed in a year of 360 days. LIBOR will be adjusted for maximum statutory reserve requirements (if any).
		
		  	LIBOR borrowings will require three business days’ prior notice and will be in minimum amounts to be agreed upon.
		
	Default Interest and Fees:	  	During the continuance of a monetary event of default, interest will accrue (i) in the case of principal or interest on any loan at a rate of 2.0% per annum plus the rate otherwise applicable to
such loan and (ii) in the case of any other amount, at a rate of 2.0% per annum plus the non-default interest rate then applicable to Base Rate loans under the Revolving Credit Facility. Default interest shall be payable on demand.

  

 -5- 









			
		
	Interest Margins:	  	The applicable Interest Margin will be the percentage set forth in the following table, based on the corporate or issuer ratings in effect for the Borrower on the Closing Date:

  

							
	 Corporate/Issuer
 Ratings
	  	Applicable Margin	 
	 	  	LIBOR Loans	 	 	Base Rate Loans	 
	 Level I
	  	1.75	%	 	0.75	%
	 Level II
	  	2.00	%	 	1.00	%
	 Level III
	  	2.25	%	 	1.25	%
	 Otherwise
	  	2.50	%	 	1.50	%


  

			
		
		  	Where:
		  	Level I shall mean corporate or issuer ratings for the Borrower of Ba2 (stable or positive outlook) or better from Moody’s or BB (stable or positive outlook) or better from
S&P.
		
		  	Level II shall mean corporate or issuer ratings for the Borrower of Ba3 (stable or positive outlook) or better from Moody’s or BB- (stable or positive outlook) or better from S&P, but
not satisfying the criteria for Level I.
		
		  	Level III shall mean corporate or issuer ratings for the Borrower of B1 (stable or positive outlook) or better from Moody’s or B+ (stable or positive outlook) or better from S&P, but
not satisfying the criteria for Level I or Level II.
		
	Commitment Fee:	  	A Commitment Fee shall accrue on the unused amounts of the commitments under the Revolving Credit Facility. Such Commitment Fee will be 0.50% per annum. For the avoidance of doubt, outstanding
letters of credit are considered “used” portions of the commitment for calculating the Commitment Fee. Accrued Commitment Fees will be payable quarterly in arrears (calculated on a 360-day basis) for the account of the Lenders from the
Closing Date.

  

 -6- 









			
		
	Changes in Interest Rate Margins and Commitment Fees:	  	  
 From and after the date of delivery of the Borrower’s financial statements
covering a period of at least six full months after the Closing Date, and so long as no default shall have occurred and be continuing, interest rate margins under the Revolving Credit Facility and the commitment fee under the Revolving Credit
Facility will be subject to change in increments to be agreed upon based upon leverage ratio levels to be agreed upon.

		
	Letter of Credit Fees:	  	Borrower will pay (i) the Issuing Bank a fronting fee equal to 12.5 basis points per annum and (ii) the Lenders under the Revolving Credit Facility letter of credit participation fees equal to
the Interest Margin for LIBOR Loans under the Revolving Credit Facility, in each case, on the undrawn amount of all outstanding letters of credit. In addition, Borrower will pay the Issuing Bank customary issuance fees.
		
	Mandatory Prepayments:	  	Term Loans shall be prepaid in an amount equal to (a) 100% of the net proceeds received from the sale or other disposition of all or any part of the assets of Borrower or any of its
subsidiaries after the Closing Date in excess of amounts not reinvested in the business within 365 days after such disposition, other than sales of inventory in the ordinary course of business and other exceptions to be agreed (including, without
limitation, exceptions for dispositions below a threshold amount and dispositions between or among Borrower and its subsidiaries, whether or not (to the extent permitted under “Negative Covenants”) such subsidiaries are Guarantors),
(b) 100% of the net proceeds received by Borrower or any of its subsidiaries from the issuance of debt (inclusive of redeemable preferred stock) that is not permitted by the Financing Documentation, (c) 50% of the net proceeds received
from the issuance of non-redeemable preferred stock, (d) 100% of all casualty and condemnation proceeds in excess of amounts applied to replace or restore any properties in respect of which such proceeds are paid to Borrower and its
subsidiaries and (e) 50% of excess cash flow of Borrower and its subsidiaries until such time as the balance of the Term Loan Facility has been reduced to $550.0 million and thereafter 0%.
		
		  	There will be no prepayment penalties (except LIBOR breakage costs) for mandatory prepayments.
		
	Optional Prepayments:	  	Permitted in whole or in part, with prior notice but without premium or penalty (except LIBOR breakage costs) and including accrued and unpaid interest, subject to limitations as to minimum
amounts of prepayments.

  

 -7- 









			
		
	Application of Prepayments:	  	Mandatory and optional prepayments of the Term Loan Facility will be applied to scheduled amortization thereof on a pro rata basis.
		
	Guarantees:	  	The Facilities will be fully and unconditionally guaranteed on a joint and several basis by all of the existing and future direct and indirect subsidiaries of Borrower (collectively, the
“Guarantors”), subject to exceptions for certain foreign subsidiaries to the extent such guarantees would be prohibited by applicable law or would result in adverse tax consequences.
		
	Security:	  	The Facilities and any hedging or treasury management obligations to which a Lender or an affiliate of a Lender is a counterparty will be secured by perfected (subject to clause 11 of Annex
III to the Commitment Letter) first priority (subject to permitted liens) pledges of all of the equity interests of each of Borrower’s direct and indirect subsidiaries, and perfected (subject to clause 11 of Annex III to the
Commitment Letter) first priority (subject to permitted liens) security interests in and mortgages on all tangible and intangible assets (including, without limitation, accounts receivable, inventory, equipment (including material ships and rigs),
general intangibles, intercompany notes, insurance policies, investment property, intellectual property and proceeds of the foregoing) of Borrower and the Guarantors, wherever located, now or hereafter owned, except, in the case of any foreign
subsidiary, to the extent such pledge and/or security interest would be prohibited by applicable law or would result in materially adverse tax consequences, and subject to such other exceptions as are agreed (including, without limitation,
exceptions for all real property, securities accounts, deposit accounts, commodity accounts and those assets as to which the collateral agent has determined that the costs of obtaining a security interest are excessive in relation to the value of
the security to be afforded thereby).
		
	Conditions to Initial Borrowings:	  	Conditions precedent to initial borrowings under the Facilities will include (without limitation) those set forth in the Commitment Letter and in Annex III to the Commitment
Letter.
		
	Conditions to Each Borrowing:	  	Conditions precedent to each borrowing or issuance under the Facilities will be those customary for a transaction of this

  

 -8- 









			
		
		  	type and others determined by UBS to be appropriate, including, (1) the absence of any continuing default or event of default, (2) the accuracy in all material respects (but with no
“double materiality”) of all representations and warranties, (3) receipt of a customary borrowing notice or letter of credit request, as applicable, and (4) there being no legal bar to the lenders making the loan or the
issuance.
		
	Representations and Warranties:	  	Representations and warranties will apply to Borrower and its subsidiaries, and will include (subject to materiality levels and/or exceptions to be negotiated and reflected in the Financing
Documentation):
		
		  	Accuracy and completeness of financial statements (including pro forma financial statements); absence of undisclosed liabilities; no material adverse change; corporate existence; compliance with
law; corporate power and authority; enforceability of the Financing Documentation; no conflict with law or contractual obligations; no material litigation; no default; ownership of property; liens; intellectual property; taxes; Federal Reserve
regulations; ERISA; Investment Company Act; subsidiaries; environmental matters; solvency; accuracy and completeness of disclosure; Patriot Act and anti-terrorism law compliance; and creation and perfection of security interests.
		
	Affirmative Covenants:	  	Affirmative covenants will apply to Borrower and its subsidiaries, and will include (subject to thresholds and/or exceptions to be negotiated and reflected in the Financing
Documentation):
		
		  	Delivery of certified quarterly and audited annual financial statements (provided that Borrower’s timely 10-K and 10-Q filings shall satisfy this requirement), fleet status reports, reports
to shareholders, notices of defaults, litigation and other material events, and other information customarily supplied in a transaction of this type; continuation of business and maintenance of existence and material rights and privileges;
compliance with all applicable laws and regulations (including, without limitation, environmental matters, taxation and ERISA) and material contractual obligations; maintenance of property and insurance as is customary within the industry after
taking into account the particular regions in which Borrower and its subsidiaries operate (provided that the Administrative Agent may consent to the maintenance of other insurance coverage in the event Borrower provides a substantiation that such
other coverage

  

 -9- 









			
		
		  	is more cost effective); maintenance of books and records; right of the Lenders to inspect property and books and records; further assurances (including, without limitation, with respect to
security interests in after-acquired property); and agreement to establish an interest rate protection program and/or have fixed rate financing on terms reasonably satisfactory to the Administrative Agent.
		
	Negative Covenants:	  	Negative covenants will apply to Borrower and its subsidiaries, and will include (subject to thresholds and/or exceptions to be negotiated and reflected in the Financing
Documentation):
		
		  	 1.      Limitation on dispositions of assets and changes of business and ownership.

		
		  	 2.      Limitation on mergers and acquisitions (subject only to pro forma compliance and other customary
conditions (such as absence of default, no hostile takeovers and no “end-run” around investments in non-Guarantors)).

		
		  	 3.      Limitations on dividends, stock repurchases and redemptions and other restricted payments (with a basket
based on 50% of cumulative consolidated net income (to be defined) plus 100% of cash proceeds of issuances of Borrower’s common stock, subject to customary conditions, such as absence of default and pro forma compliance with
covenants).

		
		  	 4.      Limitation on indebtedness (including guarantees and other contingent obligations) and preferred stock
and prepayment, amendment and redemption thereof; provided that Borrower shall have the ability to issue unsecured senior and subordinated debt (not capped) on terms comparable for similarly situated issuers (as determined by the Agent), and subject
to customary conditions, such as absence of default and pro forma compliance with covenants.

		
		  	 5.      Limitation on loans and investments.

		
		  	 6.      Limitation on liens and further negative pledges.

		
		  	 7.      Limitation on transactions with affiliates.

		
		  	 8.      Limitation on sale and leaseback transactions.


  

 -10- 









			
		
		  	 9.      No modification or waiver of material debt documents and charter documents of Borrower and its
subsidiaries in any manner materially adverse to the Lenders without the consent of the Requisite Lenders.

		
		  	 10.    No change to fiscal year.

		
		  	Notwithstanding the limitations in paragraphs 1 and 5, Borrower and Guarantors may transfer assets to (and otherwise make investments in) non-Guarantor subsidiaries (which shall include cash
investments, whether by loan or by purchase of/contribution to equity), so long as (a) immediately before and after giving effect thereto, there shall be no default, and Borrower shall be in pro forma compliance with its covenants after giving
effect to such transfer or investment; and (b) after giving effect thereto, not more than 50% of the consolidated assets of the Borrower shall be owned by non-Guarantor subsidiaries. The aggregate amount of assets (or percentage of the
Borrower’s consolidated assets) transferred to non-Guarantor subsidiaries will be subject to additional limitations to be agreed upon, but the Borrower and Guarantors will generally have the ability to transfer assets to non-Guarantor
subsidiaries so long as the Lenders’ overall collateral coverage is not materially reduced from that on the Closing Date.
		
	Financial Covenants:	  	Financial covenants will be tested quarterly and will apply to Borrower and its consolidated subsidiaries and will include (without limitation):
		
		  	 1.      Maximum leverage ratio.

		
		  	 2.      Minimum fixed charge coverage ratio.

		
	Events of Default:	  	Events of default will include (without limitation) the following: nonpayment (subject to customary grace periods), material breach of representations, breach of covenants (subject to customary
grace periods), cross-defaults, loss of lien on collateral, invalidity of guarantees, bankruptcy and insolvency events, ERISA events, judgments and change of ownership or control (to be defined based on (i) any “Person” or
“Group” acquiring 35% or more of the voting stock of the Borrower and (ii) the continuity of a majority of the board of directors of the Borrower).

  

 -11- 









			
		
	Assignments and Participations:	  	Each Lender may assign all or, subject to minimum amounts to be agreed, a portion of its loans and commitments under one or more of the Facilities. Assignments will require payment by the
assignor or assignee of an administrative fee to the Administrative Agent and the consents of the Administrative Agent and Borrower, which consents shall not be unreasonably withheld; provided that (i) no consents shall be required for an
assignment to an existing Lender or an affiliate of an existing Lender (unless, after giving effect to such assignment, such assignee would hold more than 15% of the aggregate amount of the loans and commitments outstanding under the Facilities) and
(ii) no consent of Borrower shall be required during a default. In addition, each Lender may sell participations in all or a portion of its loans and commitments under one or more of the Facilities; provided that no purchaser of a
participation shall have the right to exercise or to cause the selling Lender to exercise voting rights in respect of the Facilities (except as to certain basic issues).
		
	Expenses and Indemnification:	  	All reasonable out-of-pocket expenses (including but not limited to reasonable legal fees and expenses and expenses incurred in connection with due diligence and travel, courier, reproduction,
printing and delivery expenses) of UBS, UBSS, the Administrative Agent and the Collateral Agent associated with the syndication of the Facilities and with the preparation, execution and delivery, administration, amendment, waiver or modification
(including proposed amendments, waivers or modifications) of the documentation contemplated hereby are to be paid by Borrower. In addition, all out-of-pocket expenses (including but not limited to reasonable legal fees and expenses) of the Lenders
and the Administrative Agent for workout proceedings, enforcement costs and documentary taxes associated with the Facilities are to be paid by Borrower.
		
		  	Borrower will indemnify the Lenders, UBS, UBSS, the Administrative Agent, the Collateral Agent and the Issuing Bank and their respective affiliates, and hold them harmless from and against all
reasonable out-of-pocket costs, expenses (including but not limited to reasonable legal fees and expenses) and liabilities arising out of or relating to the transactions contemplated hereby and any actual or proposed use of the proceeds of any loans
made under the Facilities; provided, however, that no such person will be indemnified for costs, expenses or liabilities to the extent determined by a final, non-appealable judgment of a court of competent jurisdiction to have been incurred
solely by reason of the gross negligence or willful misconduct of such person.

  

 -12- 









			
		
	Yield Protection, Taxes and
Other Deductions:	  	  
 The Financing Documentation will contain yield protection provisions, customary
for facilities of this nature, protecting the Lenders in the event of unavailability of LIBOR, breakage losses, reserve and capital adequacy requirements.

		
		  	All payments are to be free and clear of any present or future taxes, withholdings or other deductions whatsoever (other than income taxes in the jurisdiction of the Lender’s applicable
lending office). The Lenders will use commercially reasonable efforts to minimize to the extent possible any applicable taxes and Borrower will indemnify the Lenders and the Administrative Agent for such taxes paid by the Lenders and the
Administrative Agent, as the case may be. Borrower shall be permitted to replace any Lender requesting reimbursement under these provisions in accordance with customary “yank-a-bank” provisions.
		
	Required Lenders:	  	Lenders holding at least a majority of total loans and commitments under the Facilities, with certain amendments requiring the consent of Lenders holding a greater percentage (or all) of the
total loans and commitments under the Facilities and amendments prior to completion of the primary syndication of the Facilities (as determined by UBSS) also requiring the consent of UBS. The Facilities shall be subject to customary
“yank-a-bank” provisions.
		
	Governing Law and Forum:	  	The laws of the State of New York. Each party to the Financing Documentation will waive the right to trial by jury and will consent to jurisdiction of the state and federal courts located in The
City of New York.
		
	Counsel to UBS, UBSS, the Administrative Agent, the Issuing Bank and the Collateral Agent:	  	Skadden, Arps, Slate, Meagher & Flom LLP.

  

 -13- 








 ANNEX II 
 SOURCES AND USES 
  

									
	 Sources of Funds
	  	($mm)	  	 Uses of Funds
	  	($mm)
	 New Hercules Common Stock
	  	$	1,523.0	  	Purchase of Thor Equity	  	$	2,448.6
	 New Revolver
	  	 	—  	  	Advisory and Financing Fees	  	 	38.2
	 New Term Loan
	  	 	1,100.0	  	Refinancing of Existing Debt	  	 	109.7
	 Existing Cash
	  	 	147.9	  	Cost of Refinancing	  	 	3.0
		  			  	Change in Control	  	 	15.0
		  			  	Settlement Payments	  	 	156.4
		  	 	 	  		  	 	 
	 Total Sources
	  	$	2,770.9	  	 Total Uses
	  	$	2,770.9
		  	 	 	  		  	 	 

 Note: 
  

	1.	Revolving credit facility of $150.0 mm (estimated to be undrawn at close) 








 ANNEX III 
 CONDITIONS TO CLOSING1 
 The commitment of the Lenders under
the Commitment Letter with respect to each of the Facilities, the agreements of UBS and UBSS to perform the services described in the Commitment Letter, the consummation of the Transactions and the funding of the Facilities are subject to the
conditions set forth in the Commitment Letter and satisfaction of each of the conditions precedent set forth below. 
 1. UBS shall be
reasonably satisfied with the final structure, terms and conditions and the documentation relating to the Acquisition, including the Acquisition Agreement (collectively, the “Acquisition Documents”), and each of the other
Transactions (it being acknowledged by UBS that the draft Acquisition Agreement, dated March 18, 2007 (AM), is satisfactory to UBS). The Acquisition and the other Transactions shall be consummated concurrently with the initial funding of the
Facilities in accordance with the Acquisition Documents and such other documentation without waiver or amendment thereof which is materially adverse to the interests of the Lenders unless consented to by UBS. 
 2. UBS shall be reasonably satisfied with the ownership, corporate, legal, tax, management and capital structure of Borrower and its subsidiaries (after
giving effect to the Transactions) and any securities issued, and any indemnities, employment and other arrangements entered into, in connection with the Transactions (it being acknowledged by UBS that the ownership, corporate, legal, tax,
management and capital structure of Borrower and its subsidiaries and the related employment arrangements presented to it on or prior to March 17, 2007, are satisfactory to it). 
 3. UBS shall have received, (i) audited consolidated balance sheets and related statements of income, stockholders’ equity and cash flows of
each of Borrower and the Acquired Business for their 2006 fiscal year (the “Audited Financial Statements”), (ii) unaudited consolidated and consolidating balance sheets and related statements of income, stockholders’
equity and cash flows of each of Borrower and the Acquired Business for each of their fiscal quarters in 2007 ending more than 40 days prior to the Closing Date and, in each case, for the comparable periods of the preceding fiscal year (the
“Unaudited Financial Statements”) (with respect to which the independent auditors shall have performed an SAS 100 review), (iii) a pro forma consolidated and consolidating balance sheet and related statement of income for
Borrower (the “Pro Forma Financial Statements”), as well as pro forma levels of EBITDA (“Pro Forma EBITDA”), for the last fiscal year covered by the audited consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows of each of Borrower and the Acquired Business for the fiscal year ending December 31, 2006 and for the latest four-quarter period ending more than 40 days prior to the Closing Date, in each
case after giving effect to the Transactions and (iv) forecasts of the financial performance of Borrower and its subsidiaries (x) on an annual basis, through 2014 and (y) on a quarterly basis, through 2008, which 
  


	 1
	 All capitalized terms used but not defined herein shall have the meanings provided in the Commitment
Letter to which this Annex III is attached. 










 
forecasts shall be in form substantially similar to forecasts that have been provided by the Borrower to UBS prior to the date of the Commitment Letter. The
financial statements referred to in clause (i) shall be prepared in accordance with accounting principles generally accepted in the United States. The Pro Forma Financial Statements and the Pro Forma EBITDA shall be in form consistent with the
forecasts thereof that have been provided by the Borrower to UBS prior to the date of the Commitment Letter. The Pro Forma Financial Statements shall be prepared on a basis consistent with pro forma financial statements set forth in a registration
statement filed with the Securities and Exchange Commission. 
 4. Sources and uses of funds and the assumptions relating thereto (including
indebtedness or preferred equity of Borrower, Acquisition Co., the Acquired Business or any of their respective subsidiaries after giving effect to the Transactions) shall be in all material respects as set forth in the Commitment Letter.

 5. The ratio of (x) pro forma total consolidated indebtedness of Borrower and the Acquired Business as of the Closing Date after
giving effect to the Transactions to (y) the Pro Forma EBITDA (calculated in a manner acceptable to UBSS) for the latest four-quarter period ending more than 45 days prior to the Closing Date shall not be greater than 2.75x. 
 6. The Borrower, the Acquired Business and their respective subsidiaries and the transactions contemplated by the Commitment Letter shall be in
compliance, in all material respects, with all applicable foreign and U.S. federal, state and local laws and regulations, including all applicable environmental laws and regulations. All necessary governmental and material third party approvals in
connection with the Transactions shall have been obtained and shall be in effect. 
 7. The Lenders shall have received all opinions,
certificates (including, without limitation, as to solvency) and closing documentation as UBS shall reasonably request, in form and substance reasonably satisfactory to UBS. 
 8. Borrower and each of the Guarantors shall have provided the documentation and other information to the Lenders that is required by regulatory
authorities under applicable “know your customer” and anti-money-laundering rules and regulations, including, without limitation, the Patriot Act. 
 9. All costs, fees, expenses (including, without limitation, legal fees and expenses and the fees and expenses of appraisers, consultants and other advisors) and other compensation payable to the Lenders, UBSS, UBS,
the Administrative Agent or the Collateral Agent shall have been paid to the extent due. 
 10. All of the requirements referred to the
Commitment Letter under “Syndication” shall have been satisfied in all material respects, and the Closing Date shall not occur less than 30 days after the delivery to UBSS of the final confidential information memorandum referred to
therein. 
 11. All documents and instruments required to perfect the Collateral Agent’s security interest in the collateral described
under the heading “Security” in the Term Sheet shall have been executed and delivered and, if applicable, be in proper form for filing, and none of such collateral shall be subject to any other pledges, security interests or mortgages,
except customary permitted liens and other limited exceptions permitted under the Facilities Documentation; provided, however, that, with respect to any such collateral the security interest in which may not be perfected by filing of a
UCC financing statement or possession of such collateral or, in the case of foreign collateral, making of a similar filing in a foreign jurisdiction, if the perfection of the Collateral Agent’s security interest in such collateral may not be
accomplished prior to the Closing Date without undue burden or expense, then delivery of documents and instruments for perfection of such security interest shall not constitute a condition precedent to the initial borrowings under the Facilities if
the Borrower agrees to deliver or cause to be delivered such documents and instruments, and take or cause to be taken such other actions as may be required to perfect such security interests, within a period after the Closing Date reasonably
acceptable to the Administrative Agent. 
  

 -2- 








 April 5, 2007 
 Joinder to Commitment Letter 
 To Whom It May Concern: 
 1. Reference to Commitment Letter and Fee Letter. Reference is hereby made to the Commitment Letter and the Fee Letter, each dated March 18,
2007 (including the exhibits, annexes and other attachments thereto, the “Commitment Letter” and the “Fee Letter”, respectively) among UBS Loan Finance LLC (“UBS Loan”), UBS Securities LLC
(“UBSS” and, together with UBS Loan, “UBS”), and Hercules Offshore, Inc. (the “Company”). Capitalized terms used herein that are not defined herein shall have the meanings assigned to such terms in
the Commitment Letter. 
 Each of the parties hereto agrees that from and after the execution of this joinder letter (this “Joinder
Letter”): 
 (i) The first sentence of the second paragraph of the Commitments section of the Commitment Letter (page
2 thereof) shall be restated in its entirety and shall read: 
 “In connection with the syndication of the Facilities, (a) UBS is
pleased to advise you of its commitment to provide its Applicable Percentage (as defined below) under each of the Term Loan Facility and the Revolving Credit Facility, (b) Amegy Bank National Association is pleased to advise you of its
commitment to provide its Applicable Percentage under each of the Term Loan Facility and the Revolving Credit Facility, (c) Comerica Bank is pleased to advise you of its commitment to provide its Applicable Percentage under each of the Term
Loan Facility and the Revolving Credit Facility, (d) Credit Suisse, Cayman Islands Branch is pleased to advise you of its commitment to provide its Applicable Percentage under each of the Term Loan Facility and the Revolving Credit Facility,
(e) Deutsche Bank AG Cayman Islands Branch is pleased to advise you of its commitment to provide its Applicable Percentage under each of the Term Loan Facility and the Revolving Credit Facility, (f) Jefferies Finance LLC is pleased to
advise you of its commitment to provide its Applicable Percentage under each of the Term Loan Facility and the Revolving Credit Facility and (g) JPMorgan Chase Bank, N.A. is pleased to advise you of its commitment to provide its Applicable
Percentage under each of the Term Loan Facility and the Revolving Credit Facility (each of UBS, Amegy Bank National Association, Comerica Bank, Credit Suisse, Cayman Islands Branch, Deutsche Bank AG Cayman Islands Branch, Jefferies Finance LLC, and
JPMorgan Chase Bank, N.A., in their capacity as parties providing such commitments hereunder, the “Commitment Parties”), in each case, on a several and not joint basis and upon the terms and subject to the conditions set forth or
referred to in this Commitment Letter. “Applicable Percentage” shall mean, with respect to each Commitment Party, the percentage set forth opposite its name under the column “Term Loan Facility Commitment Percentage” or
“Revolving Credit Facility Commitment Percentage”, as applicable, on Schedule 1 to the Joinder Letter, dated April 5, 2007, to this Commitment Letter.” 
  







 (ii) The second sentence of the second paragraph of the Commitments section of the
Commitment Letter (page 2 thereof) shall be restated in its entirety and shall read: 
 “The commitments of the Commitment Parties are
subject to the negotiation, execution and delivery of definitive documentation (the “Financing Documentation”) with respect to the Facilities reasonably satisfactory to the Commitment Parties and the other Lenders reflecting, among
other things, the terms and conditions set forth in the Term Sheet, in Annex III hereto (the “Conditions Annex”) and in the letter of even date herewith addressed to you providing, among other things, for certain fees
relating to the Facilities (the “Fee Letter”).” 
 (iii) The underwriting fee under the Fee Letter (the
“Underwriting Fee”) otherwise payable to UBS shall be allocated as follows: 
 (a) with respect to the Term Loan Facility, to
each of UBS and the other Commitment Parties an amount equal to the product of each such Commitment Party’s Applicable Percentage of the Term Loan Facility multiplied by the aggregate Underwriting Fee allocable to the Term Loan Facility (it
being understood that such fees shall only be paid on the actual amount funded under the Term Loan Facility), and 
 (b) with respect to the
Revolving Credit Facility, to each of UBS and the other Commitment Parties an amount equal to the product of each such Commitment Party’s Applicable Percentage of the Revolving Credit Facility multiplied by the aggregate Underwriting Fee
allocable to the Revolving Credit Facility. 
 All fees shall be payable in U.S. dollars in immediately available funds to each of the
Commitment Parties for its own account or as directed by such Commitment Party, free and clear of and without deduction for any and all present or future applicable taxes, levies, imposts, deductions, charges or withholdings, and all liabilities
with respect thereto (with appropriate gross-up for withholding taxes) (it being understood that each Commitment Party acknowledges to the Company that it is not subject to any such deductions or withholding as of the date hereof). 
 (iv) Any fee payable under the second paragraph of the Facility Fees section of the Fee Letter and otherwise payable to UBS shall be
allocated to UBS and the other Commitment Parties in accordance with the percentages set forth under the column “Aggregate Facilities Commitment Percentage” on Schedule 1 hereto. 
 (v) Additional commitments received in connection with the syndication of the Term Loan Facility shall reduce the commitments of the
Commitment Parties in respect thereof pro rata. 
 (vi) For the avoidance of doubt, each of the Commitment Parties is a
“Lender” as such term is defined in the Commitment Letter. 
 2. Commitments of the Additional Parties. Amegy Bank
National Association, Comerica Bank, Credit Suisse, Cayman Islands Branch, Deutsche Bank AG Cayman Islands Branch, Jefferies Finance LLC, JPMorgan Chase Bank, N.A., and any of their affiliates as may be appropriate to consummate the transactions
contemplated in the Commitment Letter and the Fee Letter (the “Additional Parties”) hereby agree to become a “Commitment Party.” The Additional Parties hereby agree to be bound by the obligations as set forth in the
Commitment Letter and the Fee Letter as if they were original signatories thereto. Any and all obligations of, and services to be provided by, any Additional Party hereunder or under the Commitment Letter (after giving effect to this Joinder Letter)
including, without limitation, such Additional Party’s commitment, may be performed and any and all rights of such 








 
Additional Party hereunder or thereunder may be exercised by or through any of their respective affiliates or branches. 
 3. Confidentiality. Each Commitment Party agrees to maintain the confidentiality of material non-public information provided by the Company to
such Commitment Party with respect to the Company or the Acquired Business, except that such information may be disclosed (a) to affiliates of such Commitment Party and to their affiliates’ respective partners, directors, officers,
employees, agents, advisors and other representatives, (b) to the extent requested by any governmental authority or regulatory authority, (c) to the extent required by applicable requirements of law or by any subpoena or similar legal
process, (d) to any other party hereto, (e) in connection with any action or proceeding relating to this Joinder Letter, the Commitment Letter or any other Financing Documentation, (f) to any prospective Lender or prospective assignee
of a Commitment Party’s rights and obligations under this Joinder Letter or the Commitment Letter and their respective partners, directors, officers, employees, agents, advisors and other representatives, (g) to any rating agency for the
purpose of obtaining a credit rating applicable to the Company or the Facilities, (h) with the consent of the Company or (i) to the extent such information becomes available to any of the Commitment Parties, any Lender or any of their
respective affiliates on a non-confidential basis from a source other than the Company. Any person required to maintain the confidentiality of information as provided in this paragraph shall be considered to have complied with its obligation to do
so if such person has exercised the same degree of care to maintain the confidentiality of such information as such person would accord to its own confidential information. Notwithstanding anything herein to the contrary, any party to this Joinder
Letter (and any employee, representative or other agent of such party) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of the transactions contemplated hereby or by the Commitment Letter and
the Fee Letter and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax treatment and tax structure, except that (i) tax treatment and tax structure shall not include the identity of
any existing or future party (or any affiliate of such party) to the Commitment Letter or the Fee Letter, and (ii) no party shall disclose any information relating to such tax treatment and tax structure to the extent nondisclosure is
reasonably necessary in order to comply with applicable securities laws. For this purpose, the tax treatment of the transactions contemplated hereby or by the Commitment Letter and the Fee Letter is the purported or claimed U.S. Federal income tax
treatment of such transaction and the tax structure of such transactions is any fact that may be relevant to understanding the purported or claimed U.S. Federal income tax treatment of such transactions. The confidentiality provisions set forth
herein shall be superseded by the confidentiality provisions set forth in the Financing Documentation or, if such Financing Documentation is not executed and delivered, the confidentiality provisions set forth herein shall expire on the third
anniversary of the Commitment Letter. 
 4. Indemnification, Etc. The Additional Parties and their affiliates and controlling persons
and their respective directors, officers, employees, advisors and agents of the foregoing will constitute “Indemnified Persons” under, and shall be entitled to the benefits of, the indemnification provisions contained in the Commitment
Letter. Each party hereto confirms that the Additional Parties shall be beneficiaries of all representations and warranties made by, and agreements, covenants, acknowledgements, authorizations, consents, waivers and obligations of, the Company in
the Commitment Letter and the Fee Letter including, without limitation, those contained in the Commitment Letter under the caption “Conflict of Interest”, mutatis mutandis, as if each reference to UBS or UBSS were a reference to the
applicable Additional Party. 
 5. Independent Investigation. Each Additional Party acknowledges that it has, independently and
without any reliance upon any of UBS, any of the other Additional Parties or any of their respective affiliates (including, without limitation, controlling persons), or any of their respective officers, directors, employees, agents or advisors, and
based on the financial statements of the Company and its subsidiaries and such other documents as it has deemed appropriate, made its own credit analysis and 








 
decision to enter into the commitment evidenced by this Joinder Letter, the Commitment Letter and the Fee Letter. 
 6. Amendments; Counterparts. Neither this Joinder Letter, the Commitment Letter nor the Fee Letter may be amended or any provision hereof or
thereof waived or modified except by an instrument in writing signed by each party hereto. This Joinder Letter may be executed in any number of counterparts, each of which shall be an original and all of which, when taken together, shall constitute
one agreement. Delivery of an executed signature page of this Joinder Letter by facsimile transmission shall be effective as delivery of a manually executed signature page of this Joinder Letter. 
 7. Amendment to Commitment Letter and Fee Letter. Except as expressly amended hereby, the terms of the Commitment Letter (and any exhibit thereto)
and the Fee Letter remain in full force and effect. 
 8. Governing Law; Waiver of Jury Trial. This Joinder Letter shall be governed
by, and construed in accordance with, the laws of the State of New York without regard to principles of conflicts of law to the extent that the application of the laws of another jurisdiction will be required thereby. EACH PARTY HERETO IRREVOCABLY
AND UNCONDITIONALLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY, ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS JOINDER LETTER, THE ACQUISITION AND THE OTHER TRANSACTIONS
CONTEMPLATED BY THE COMMITMENT LETTER OR THE FEE LETTER. 
 9. Submission to Jurisdiction. Each party hereto irrevocably and
unconditionally submits to the non-exclusive jurisdiction of the federal and New York State courts located in The City of New York (and appellate courts thereof) in connection with any dispute related to the Commitment Letter, the Fee Letter, this
Joinder Letter or any of the matters contemplated hereby. Service of any process, summons, notice or document by registered mail addressed to any party hereto shall be effective service of process against such person for any suit, action or
proceeding relating to any such dispute. Each party hereto irrevocably and unconditionally waives any objection to the laying of venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or
proceeding has been brought in any such court and any claim that any such suit, action or proceeding has been brought in an inconvenient forum. A final judgment in any such suit, action or proceeding brought in any such court may be enforced in any
other courts to whose jurisdiction any party hereto is or may be subject, by suit upon judgment. 
 10. Miscellaneous. Notwithstanding
anything to the contrary in this Joinder Letter, the execution hereof by the Company shall not decrease the aggregate amount available to it and its affiliates under the Facilities, all as in effect prior to the execution of this Joinder Letter.
Except as expressly provided for herein, the execution hereof by the Company shall not increase its or its affiliates’ aggregate obligations under the Commitment Letter or the Fee Letter. 
 [SIGNATURE PAGES FOLLOW] 
  








			
	 Very Truly Yours,
  
 AMEGY BANK NATIONAL ASSOCIATION

		
	By:	 	/s/ C. Ross Bartley
	Name:	 	C. Ross Bartley
	Title:	 	Vice-President


  

 S-1 









			
	COMERICA BANK
		
	By:	 	/s/ S. John Castellano
	Name:	 	S. John Castellano
	Title:	 	Senior Vice President


  

 S-2 









			
	CREDIT SUISSE, CAYMAN ISLANDS BRANCH
		
	By:	 	/s/ Doreen Barr
	Name:	 	Doreen Barr
	Title:	 	Vice-President


  

			
	
		
	By:	 	/s/ Shaheen Malik
	Name:	 	Shaheen Malik
	Title:	 	Associate


  

 S-3 









			
	DEUTSCHE BANK AG CAYMAN ISLANDS BRANCH
		
	By:	 	/s/ Albert Fischetti
	Name:	 	Albert Fischetti
	Title:	 	Director


  

			
	
		
	By:	 	/s/ Stephen Cayer
	Name:	 	Stephen Cayer
	Title:	 	Director


  

 S-4 









			
	JEFFERIES FINANCE LLC
		
	By:	 	/s/ E. J. Hess
	Name:	 	E. J. Hess
	Title:	 	Managing Director


  

 S-5 









			
	JPMORGAN CHASE BANK, N.A.
		
	By:	 	/s/ Mona M. Foch
	Name:	 	Mona M. Foch
	Title:	 	Managing Director


  

 S-6 









			
	UBS LOAN FINANCE LLC
		
	By:	 	/s/ John McNulty
	Name:	 	John McNulty
	Title:	 	Executive Director
		
	By:	 	/s/ Warren Jervey
	Name:	 	Warren Jervey
	Title:	 	Region Americas Counsel
	
	UBS SECURITIES LLC
		
	By:	 	/s/ John McNulty
	Name:	 	John McNulty
	Title:	 	Executive Director
		
	By:	 	/s/ Warren Jervey
	Name:	 	Warren Jervey
	Title:	 	Region Americas Counsel


  

 S-7 









			
	 Acknowledged and agreed as of the date
 first
written above:
  
 HERCULES OFFSHORE, INC.

		
	By:	 	/s/ Stephen Butz
	Name:	 	Stephen Butz
	Title:	 	Vice President and Treasurer


  

 S-8 








 SCHEDULE 1 – COMMITMENT PARTIES APPLICABLE PERCENTAGES 
  

										
	 Commitment Party
	  	Term Loan Facility
Commitment
Percentage	 	 	Revolving Credit
Facility
Commitment
Percentage	 	 	Aggregate Facilities
Commitment
Percentage	 
	 UBS
	  	61.818181818	%	 	40.000000000	%	 	59.200000000	%
	 Amegy Bank National Association
	  	6.363636363	%	 	10.000000000	%	 	6.800000000	%
	 Comerica Bank
	  	6.363636363	%	 	10.000000000	%	 	6.800000000	%
	 Credit Suisse, Cayman Islands Branch
	  	6.363636363	%	 	10.000000000	%	 	6.800000000	%
	 Deutsche Bank AG Cayman Islands Branch
	  	6.363636363	%	 	10.000000000	%	 	6.800000000	%
	 Jefferies Finance LLC
	  	6.363636363	%	 	10.000000000	%	 	6.800000000	%
	 JPMorgan Chase Bank, N.A.
	  	6.363636363	%	 	10.000000000	%	 	6.800000000	%