Document:

exv4w1

Exhibit 4.1

COMMON UNIT

REGISTRATION RIGHTS AGREEMENT

BY AND BETWEEN

PLAINS ALL AMERICAN PIPELINE, L.P.

AND

VULCAN GAS STORAGE LLC

 

 

REGISTRATION RIGHTS AGREEMENT

     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of
September 3, 2009, by and between PLAINS ALL AMERICAN PIPELINE, L.P., a Delaware limited
partnership (the “Partnership”) and Vulcan Gas Storage LLC, a Delaware limited liability
company (“Gas Storage”).

     WHEREAS, the Partnership and Gas Storage are parties to that certain Membership Interest
Purchase Agreement, dated August 27, 2009 (the “Purchase Agreement”), pursuant to which
Plains Marketing, L.P., a Texas limited partnership and subsidiary of the Partnership, will
purchase from Gas Storage, all of Gas Storage’s Membership Interests in PAA/Vulcan Gas Storage,
LLC, a Delaware limited liability company (the “Company”), as further described therein;

     WHEREAS, pursuant to the Purchase Agreement, a portion of the purchase price to be paid to Gas
Storage for all of Gas Storage’s Membership Interests in the Company shall be the Closing Common
Units; and

     WHEREAS, the Partnership has agreed to provide the registration and other rights set forth in
this Agreement for the benefit of Gas Storage.

     NOW THEREFORE, in consideration of the mutual covenants and agreements set forth herein and
for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged by
each party hereto, the parties hereby agree as follows:

ARTICLE I.

DEFINITIONS

     Section 1.01 Definitions. Capitalized terms used herein without definition shall have
the meanings given to them in the Purchase Agreement. The terms set forth below are used herein as
so defined:

     “Agreement” has the meaning specified therefor in the Recitals of this Agreement.

     “Closing Common Units” has the meaning specified therefor in the Purchase Agreement.

     “Commission” means the United States Securities and Exchange Commission.

     “Common Units” means the common units of the Partnership.

     “Company” has the meaning specified therefor in the Recitals of this Agreement.

     “Effectiveness Period” has the meaning specified therefore in Section 2.01(a) of this
Agreement.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations of the Commission promulgated thereunder.

 

 

     “Holder” means the record holder of any Registrable Securities.

     “Gas Storage” has the meaning specified therefor in the Recitals of this Agreement.

     “Losses” has the meaning specified therefor in Section 2.06(a) of this Agreement.

     “Managing Underwriter” means, with respect to any Underwritten Offering, the book
running lead manager of such Underwritten Offering.

     “Partnership” has the meaning specified therefor in the Recitals of this Agreement.

     “Person” means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated organization,
government or any agency, instrumentality or political subdivision thereof, or any other form of
entity.

     “Purchase Agreement” has the meaning specified therefor in the Recitals of this
Agreement.

     “Registrable Securities” means the Closing Common Units until such time as such
securities cease to be Registrable Securities pursuant to Section 1.02 hereof.

     “Registration Expenses” has the meaning specified therefor in Section 2.05(a) of this
Agreement.

     “Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.

     “Selling Expenses” has the meaning specified therefor in Section 2.05(a) of this
Agreement.

     “Selling Holder” means a Holder who is selling Registrable Securities pursuant to a
registration statement.

     “Shelf Registration” has the meaning specified therefor in Section 2.01(a) of this
Agreement.

     “Shelf Registration Statement” has the meaning specified therefor in Section 2.01(a)
of this Agreement.

     “Underwritten Offering” means an offering (including an offering pursuant to a Shelf
Registration Statement) in which Common Units are sold to an underwriter on a firm commitment basis
for reoffering to the public or an offering that is a “bought deal” with one or more investment
banks.

     Section 1.02 Registrable Securities. Any Registrable Security will cease to be a
Registrable Security when (a) a registration statement covering such Registrable Security has been
declared effective by the Commission and such Registrable Security has been sold or disposed of
pursuant to such effective registration statement; (b) such Registrable Security has

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been disposed of pursuant to any section of Rule 144 (or any similar provision then in force
under the Securities Act); (c) such Registrable Security is held by the Partnership or one of its
subsidiaries; or (d) such Registrable Security becomes saleable under Rule 144 of the Securities
Act without regard to any volume limitation requirement under Rule 144 of the Securities Act.

ARTICLE II.

REGISTRATION RIGHTS

     Section 2.01 Shelf Registration.

          (a) Shelf Registration. As soon as practicable following the Closing of the purchase
of the Common Units pursuant to the terms of the Purchase Agreement, but in any event within 120
days of the Closing, the Partnership shall prepare and file a registration statement under the
Securities Act to permit the public resale of the Registrable Securities from time to time as
permitted by Rule 415 of the Securities Act (the “Shelf Registration Statement”). The
Partnership shall use its commercially reasonable efforts to cause the Shelf Registration Statement
to become effective no later than 240 days after the date of the Closing (the “Shelf
Registration”). The Shelf Registration Statement filed pursuant to this Section 2.01(a) shall
be on such appropriate registration form of the Commission as shall be selected by the Partnership;
provided, however, that if a prospectus supplement will be used in connection with
the marketing of an Underwritten Offering from the Shelf Registration Statement and the Managing
Underwriter at any time shall notify the Partnership in writing that, in the sole judgment of such
Managing Underwriter, inclusion of detailed information to be used in such prospectus supplement is
of material importance to the success of the Underwritten Offering of such Registrable Securities,
the Partnership shall use its commercially reasonable efforts to include such information in the
prospectus. The Partnership will cause the Shelf Registration Statement filed pursuant to this
Section 2.01(a) to be continuously effective under the Securities Act until all Registrable
Securities covered by the Shelf Registration Statement have been distributed in the manner set
forth and as contemplated in the Shelf Registration Statement or there are no longer any
Registrable Securities outstanding (the “Effectiveness Period”). The Shelf Registration
Statement when declared effective (including the documents incorporated therein by reference) will
comply as to form with all applicable requirements of the Securities Act and the Exchange Act and
will not contain an untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading.

          (b) Delay Rights. Notwithstanding anything to the contrary contained herein, the
Partnership may, upon written notice to any Selling Holder whose Registrable Securities are
included in the Shelf Registration Statement, suspend such Selling Holder’s use of any prospectus
which is a part of the Shelf Registration Statement (in which event the Selling Holder shall
discontinue sales of the Registrable Securities pursuant to the Shelf Registration Statement) if
(i) the Partnership is pursuing an acquisition, merger, reorganization, disposition or other
similar transaction and the Partnership determines in good faith that the Partnership’s ability to
pursue or consummate such a transaction would be materially adversely affected by any required
disclosure of such transaction in the Shelf Registration Statement or (ii) the Partnership has
experienced some other material non-public event the disclosure of which would, in the good faith
judgment of the Partnership, be materially detrimental to the Partnership or its business

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prospects. Upon disclosure of such information or the termination of the condition described
above, the Partnership shall provide prompt notice to the Selling Holders whose Registrable
Securities are included in the Shelf Registration Statement, and shall promptly terminate any
suspension of sales it has put into effect and shall take such other actions to permit registered
sales of Registrable Securities as contemplated in this Agreement.

     Section 2.02 Underwritten Offering.

          (a) Shelf Registration. In the event that a Selling Holder elects to dispose of
Registrable Securities under the Shelf Registration Statement pursuant to an Underwritten Offering,
the Partnership shall enter into an underwriting agreement in customary form with the Managing
Underwriter or Underwriters, which shall include, among other provisions, indemnities to the effect
and to the extent provided in Section 2.06, and shall take all such other reasonable actions as are
requested by the Managing Underwriter in order to expedite or facilitate the registration and
disposition of the Registrable Securities; provided, however, the participation of
the Partnership’s management in connection with an Underwritten Offering for the benefit of Selling
Holders shall consist of not more than sixteen hours of teleconferences for the benefit of Gas
Storage annually; and provided further, that these marketing obligations are not transferable to
any other Holders other than Affiliates of Gas Storage, notwithstanding the provisions of Section
2.08 hereof.

          (b) General Procedures. In connection with any Underwritten Offering under this
Agreement, the Partnership shall be entitled to select the Managing Underwriter or Underwriters.
In connection with an Underwritten Offering under Section 2.01 hereof, each Selling Holder and the
Partnership shall be obligated to enter into an underwriting agreement which contains such
representations, covenants, indemnities and other rights and obligations as are customary in
underwriting agreements for firm commitment offerings of securities. No Selling Holder may
participate in such Underwritten Offering unless such Selling Holder agrees to sell its Registrable
Securities on the basis provided in such underwriting agreement and completes and executes all
questionnaires, powers of attorney, indemnities and other documents reasonably required under the
terms of such underwriting agreement. Each Selling Holder may, at its option, require that any or
all of the representations and warranties by, and the other agreements on the part of, the
Partnership to and for the benefit of such underwriters also be made to and for such Selling
Holder’s benefit and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement also be conditions precedent to its obligations. No
Selling Holder shall be required to make any representations or warranties to or agreements with
the Partnership or the underwriters other than representations, warranties or agreements regarding
such Selling Holder and its ownership of the securities being registered on its behalf and its
intended method of distribution and any other representation required by law. If any Selling
Holder disapproves of the terms of an underwriting, such Selling Holder may elect to withdraw
therefrom by notice to the Partnership and the Managing Underwriter; provided,
however, that such withdrawal must be made during the time period up to and including the
time of pricing of such offering to be effective. No such withdrawal or abandonment shall affect
the Partnership’s obligation to pay Registration Expenses.

     Section 2.03 Registration Procedures. In connection with its obligations contained in
Section 2.01, the Partnership will, as expeditiously as possible:

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          (a) prepare and file with the Commission such amendments and supplements to the Shelf
Registration Statement and the prospectus used in connection therewith as may be necessary to keep
the Shelf Registration Statement effective for the Effectiveness Period and as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition of all securities
covered by the Shelf Registration Statement;

          (b) furnish to each Selling Holder (i) as far in advance as reasonably practicable before
filing the Shelf Registration Statement or any supplement or amendment thereto, upon request,
copies of reasonably complete drafts of all such documents proposed to be filed (including exhibits
and each document incorporated by reference therein to the extent then required by the rules and
regulations of the Commission), and provide each such Selling Holder the opportunity to object to
any information pertaining to such Selling Holder and its plan of distribution that is contained
therein and make the corrections reasonably requested by such Selling Holder with respect to such
information prior to filing the Shelf Registration Statement or supplement or amendment thereto,
and (ii) such number of copies of the Shelf Registration Statement and the prospectus included
therein and any supplements and amendments thereto as such Persons may reasonably request in order
to facilitate the public sale or other disposition of the Registrable Securities covered by such
Shelf Registration Statement or other registration statement;

          (c) if applicable, use its commercially reasonable efforts to register or qualify the
Registrable Securities covered by the Shelf Registration Statement under the securities or blue sky
laws of such jurisdictions as the Selling Holders or, in the case of an Underwritten Offering, the
Managing Underwriter, shall reasonably request, provided that the Partnership will not be required
to qualify generally to transact business in any jurisdiction where it is not then required to so
qualify or to take any action which would subject it to general service of process in any such
jurisdiction where it is not then so subject;

          (d) promptly notify each Selling Holder and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of (i) the filing of the
Shelf Registration Statement or any prospectus or prospectus supplement to be used in connection
therewith, or any amendment or supplement thereto, and, with respect to such Shelf Registration
Statement, when the same has become effective; and (ii) any written comments from the Commission
with respect to any filing referred to in clause (i) and any written request by the Commission for
amendments or supplements to the Shelf Registration Statement or any prospectus or prospectus
supplement thereto;

          (e) immediately notify each Selling Holder and each underwriter, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of (i) the happening of any
event as a result of which the prospectus or prospectus supplement contained in the Shelf
Registration Statement, as then in effect, includes an untrue statement of a material fact or omits
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing; (ii) the issuance or threat
of issuance by the Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement, or the initiation of any proceedings for that purpose; or (iii) the receipt
by the Partnership of any notification with respect to the suspension of the qualification of any
Registrable Securities for sale under the applicable securities or blue sky laws of any

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jurisdiction. Following the provision of such notice, the Partnership agrees to as promptly
as practicable amend or supplement the prospectus or prospectus supplement or take other
appropriate action so that the prospectus or prospectus supplement does not include an untrue
statement of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the circumstances then
existing and to take such other action as is necessary to remove a stop order, suspension, threat
thereof or proceedings related thereto;

          (f) furnish to each Selling Holder copies of any and all transmittal letters or other
correspondence with the Commission or any other governmental agency or self-regulatory body or
other body having jurisdiction (including any domestic or foreign securities exchange) relating to
such offering of Registrable Securities;

          (g) in the case of an Underwritten Offering, furnish upon request, (i) an opinion of counsel
for the Partnership, dated the effective date of the applicable registration statement or the date
of any amendment or supplement thereto, and a letter of like kind dated the date of the closing
under the underwriting agreement, and (ii) a “cold comfort” letter, dated the effective date of the
applicable registration statement or the date of any amendment or supplement thereto and a letter
of like kind dated the date of the closing under the underwriting agreement, in each case, signed
by the independent public accountants who have certified the Partnership’s financial statements
included or incorporated by reference into the applicable registration statement, and each of the
opinion and the “cold comfort” letter shall be in customary form and covering substantially the
same matters with respect to such registration statement (and the prospectus and any prospectus
supplement included therein) and as are customarily covered in opinions of issuer’s counsel and in
accountants’ letters delivered to the underwriters in Underwritten Offerings of securities, such
other matters as such underwriters may reasonably request;

          (h) otherwise use its commercially reasonable efforts to comply with all applicable rules and
regulations of the Commission, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering the period of at least 12 months, but not more than 18
months, beginning with the first full calendar month after the effective date of such registration
statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 promulgated thereunder;

          (i) make available to the appropriate representatives of the Managing Underwriter and Selling
Holders access to such information and Partnership personnel as is reasonable and customary to
enable such parties to establish a due diligence defense under the Securities Act; provided that
the Partnership need not disclose any information to any such representative unless and until such
representative has entered into a confidentiality agreement with the Partnership;

          (j) cause all such Registrable Securities registered pursuant to this Agreement to be listed
on each securities exchange or nationally recognized quotation system on which similar securities
issued by the Partnership are then listed;

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          (k) use its commercially reasonable efforts to cause the Registrable Securities to be
registered with or approved by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Partnership to enable the Selling Holders to
consummate the disposition of such Registrable Securities;

          (l) provide a transfer agent and registrar for all Registrable Securities covered by such
registration statement not later than the effective date of such registration statement; and

          (m) enter into customary agreements and take such other actions as are reasonably requested by
the Selling Holders or the underwriters, if any, in order to expedite or facilitate the disposition
of such Registrable Securities.

     Each Selling Holder, upon receipt of notice from the Partnership of the happening of any event
of the kind described in subsection (e) of this Section 2.03, shall forthwith discontinue
disposition of the Registrable Securities until such Selling Holder’s receipt of the copies of the
supplemented or amended prospectus contemplated by subsection (e) of this Section 2.03 or until it
is advised in writing by the Partnership that the use of the prospectus may be resumed, and has
received copies of any additional or supplemental filings incorporated by reference in the
prospectus, and, if so directed by the Partnership, such Selling Holder will, or will request the
managing underwriter or underwriters, if any, to deliver to the Partnership (at the Partnership’s
expense) all copies in their possession or control, other than permanent file copies then in such
Selling Holder’s possession, of the prospectus covering such Registrable Securities current at the
time of receipt of such notice.

     Section 2.04 Cooperation by Holders. The Partnership shall have no obligation to
include in the Shelf Registration Statement units of a Holder who has failed to timely furnish such
information which, in the opinion of counsel to the Partnership, is reasonably required in order
for the Shelf Registration Statement or any prospectus or prospectus supplement thereto, as
applicable, to comply with the Securities Act.

     Section 2.05 Expenses.

          (a) Certain Definitions. “Registration Expenses” means all expenses incident
to the Partnership’s performance under or compliance with this Agreement to effect the registration
of Registrable Securities in a Shelf Registration, and the disposition of such securities,
including, without limitation, all registration, filing, securities exchange listing and NYSE fees,
all registration, filing, qualification and other fees and expenses of complying with securities or
blue sky laws, fees of the Financial Industry Regulatory Authority, transfer taxes and fees of
transfer agents and registrars, all word processing, duplicating and printing expenses, the fees
and disbursements of counsel and independent public accountants for the Partnership, including the
expenses of any special audits or “cold comfort” letters required by or incident to such
performance and compliance. Except as otherwise provided in Section 2.06 hereof, the Partnership
shall not be responsible for legal fees incurred by Holders in connection with the exercise of such
Holders’ rights hereunder. In addition, the Partnership shall not be responsible for any
“Selling Expenses,” which means all underwriting fees, discounts and selling commissions
allocable to the sale of the Registrable Securities.

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          (b) Expenses. The Partnership will pay all Registration Expenses in connection with
the Shelf Registration Statement filed pursuant to Section 2.01(a) of this Agreement, whether or
not the Shelf Registration Statement becomes effective or any sale is made pursuant to the Shelf
Registration Statement. Each Selling Holder shall pay all Selling Expenses in connection with any
sale of its Registrable Securities hereunder.

     Section 2.06 Indemnification.

          (a) By the Partnership. In the event of a registration of any Registrable Securities
under the Securities Act pursuant to this Agreement, the Partnership will indemnify and hold
harmless each Selling Holder thereunder, its directors and officers, and each underwriter, pursuant
to the applicable underwriting agreement with such underwriter, of Registrable Securities
thereunder and each Person, if any, who controls such Selling Holder or underwriter within the
meaning of the Securities Act and the Exchange Act, against any losses, claims, damages, expenses
or liabilities (including reasonable attorneys’ fees and expenses) (collectively,
“Losses”), joint or several, to which such Selling Holder or underwriter or controlling
Person may become subject under the Securities Act, the Exchange Act or otherwise, insofar as such
Losses (or actions or proceedings, whether commenced or threatened, in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any material fact
contained in the Shelf Registration Statement, any preliminary prospectus or final prospectus
contained therein, or any “issuer free writing prospectus” (as defined in Securities Act Rule 433),
or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or necessary to make the
statements therein (in the case of a prospectus, in light of the circumstances under which they
were made) not misleading, and will reimburse each such Selling Holder, its directors and officers,
each such underwriter and each such controlling Person for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such Loss or actions or
proceedings; provided, however, that the Partnership will not be liable in any such
case if and to the extent that any such Loss arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity with information
furnished by such Selling Holder, such underwriter or such controlling Person in writing
specifically for use in the Shelf Registration Statement or any prospectus contained therein or any
amendment or supplement thereof. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Selling Holder or any such director, officer or
controlling Person, and shall survive the transfer of such securities by such Selling Holder.

          (b) By Each Selling Holder. Each Selling Holder agrees severally and not jointly to
indemnify and hold harmless the Partnership, its directors and officers, and each Person, if any,
who controls the Partnership within the meaning of the Securities Act or of the Exchange Act to the
same extent as the foregoing indemnity from the Partnership to the Selling Holders, but only with
respect to information regarding such Selling Holder furnished in writing by or on behalf of such
Selling Holder expressly for inclusion in the Shelf Registration Statement or any prospectus
contained therein or any amendment or supplement thereof relating to the Registrable Securities;
provided, however, that the liability of each Selling Holder shall not be greater
in amount than the dollar amount of the proceeds (net of any Selling Expenses) received

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by such Selling Holder from the sale of the Registrable Securities giving rise to such
indemnification.

          (c) Notice. Promptly after receipt by an indemnified party hereunder of notice of the
commencement of any action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party hereunder, notify the indemnifying party in writing thereof,
but the omission so to notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party other than under this Section 2.06. In any action brought
against any indemnified party, it shall notify the indemnifying party of the commencement thereof.
The indemnifying party shall be entitled to participate in and, to the extent it shall wish, to
assume and undertake the defense thereof with counsel reasonably satisfactory to such indemnified
party and, after notice from the indemnifying party to such indemnified party of its election so to
assume and undertake the defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 2.06 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable costs of
investigation and of liaison with counsel so selected; provided, however, that, (i)
if the indemnifying party has failed to assume the defense and employ counsel or (ii) if the
defendants in any such action include both the indemnified party and the indemnifying party and
counsel to the indemnified party shall have concluded that there may be reasonable defenses
available to the indemnified party that are different from or additional to those available to the
indemnifying party, or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, then the indemnified party shall have the
right to select a separate counsel and to assume such legal defense and otherwise to participate in
the defense of such action, with the reasonable expenses and fees of such separate counsel and
other reasonable expenses related to such participation to be reimbursed by the indemnifying party
as incurred. Notwithstanding any other provision of this Agreement, no indemnified party shall
settle any action brought against it with respect to which it is entitled to indemnification
hereunder without the consent of the indemnifying party, unless the settlement thereof imposes no
liability or obligation on, and includes a complete and unconditional release from all liability
of, the indemnifying party.

          (d) Contribution. If the indemnification provided for in this Section 2.06 is held by
a court or government agency of competent jurisdiction to be unavailable to the Partnership or any
Selling Holder or is insufficient to hold them harmless in respect of any Losses, then each such
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such Losses as between the Partnership on
the one hand and such Selling Holder on the other, in such proportion as is appropriate to reflect
the relative fault of the Partnership on the one hand and of such Selling Holder on the other in
connection with the statements or omissions which resulted in such Losses, as well as any other
relevant equitable considerations; provided, however, that in no event shall such
Selling Holder be required to contribute an aggregate amount in excess of the dollar amount of
proceeds (net of Selling Expenses) received by such Selling Holder from the sale of Registrable
Securities giving rise to such indemnification. The relative fault of the Partnership on the one
hand and each Selling Holder on the other 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 has been made by, or relates to, information supplied by such
party, and the parties’ relative intent, knowledge, access to

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information and opportunity to correct or prevent such statement or omission. The parties
hereto agree that it would not be just and equitable if contributions pursuant to this paragraph
were to be determined by pro rata allocation or by any other method of allocation which does not
take account of the equitable considerations referred to in the first sentence of this paragraph.
The amount paid by an indemnified party as a result of the Losses referred to in the first sentence
of this paragraph shall be deemed to include any legal and other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any Loss which is the subject
of this paragraph. 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 is not guilty of
such fraudulent misrepresentation.

          (e) Other Indemnification. The provisions of this Section 2.06 shall be in addition
to any other rights to indemnification or contribution which an indemnified party may have pursuant
to law, equity, contract or otherwise.

     Section 2.07 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission that may permit the sale of the Registrable
Securities to the public without registration, the Partnership agrees to use its commercially
reasonable efforts to:

          (a) Make and keep public information regarding the Partnership available, as those terms are
understood and defined in Rule 144 of the Securities Act, at all times from and after the date
hereof;

          (b) File with the Commission in a timely manner all reports and other documents required of
the Partnership under the Securities Act and the Exchange Act at all times from and after the date
hereof; and

          (c) So long as a Holder owns any Registrable Securities, furnish to such Holder forthwith upon
request a copy of the most recent annual or quarterly report of the Partnership, and such other
reports and documents so filed as such Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing such Holder to sell any such securities without
registration.

     Section 2.08 Transfer or Assignment of Registration Rights. The rights to cause the
Partnership to register Registrable Securities granted to Gas Storage by the Partnership under this
Article II may be transferred or assigned by Gas Storage to one or more transferee(s) or
assignee(s) of such Registrable Securities, provided that (a) unless such transferee is an
Affiliate of Gas Storage, each such transferee or assignee, collectively with its or their
affiliates after giving effect to any transfer or assignment or series of transfers or assignments,
holds Registrable Securities representing at least 15% of the number of Closing Common Units sold
to Gas Storage pursuant to the terms of the Purchase Agreement, (b) the Partnership is given
written notice prior to any said transfer or assignment, stating the name and address of each such
transferee and identifying the securities with respect to which such registration rights are being
transferred or assigned, and (c) each such transferee assumes in writing responsibility for its
portion of the obligations of Gas Storage under this Agreement.

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ARTICLE III.

MISCELLANEOUS

     Section 3.01 Communications. All notices and other communications provided for or
permitted hereunder shall be made in writing by facsimile, courier service or personal delivery:

          (a) if to Gas Storage, at the most current address given by Gas Storage to the Partnership in
accordance with the provisions of this Section 3.01, which addresses initially are, with respect to
Gas Storage, the address set forth in the Purchase Agreement,

          (b) if to a transferee of Gas Storage, to such Holder at the address provided pursuant to
Section 2.08 above, and

          (c) if to the Partnership, at 333 Clay Street, Suite 1600, Houston, Texas, 77002, Attention:
Tim Moore, with a copy which shall not constitute notice to D. Alan Beck, Jr., 1001 Fannin Street,
Suite 2500, Houston, Texas 77002, notice of which is given in accordance with the provisions of
this Section 3.01.

     All such notices and communications shall be deemed to have been received at the time
delivered by hand, if personally delivered; when receipt acknowledged, if sent via facsimile or
sent via Internet electronic mail; and when actually received, if sent by any other means.

     Section 3.02 Successor and Assigns. This Agreement shall inure to the benefit of and
be binding upon the successors and assigns of each of the parties, including subsequent Holders of
Registrable Securities to the extent permitted herein.

     Section 3.03 Assignment of Rights. All or any portion of the rights and obligations
of Gas Storage under this Agreement may be transferred or assigned by Gas Storage in accordance
with Section 2.08 hereof.

     Section 3.04 Recapitalization, Exchanges, etc. Affecting the Closing Common Units.
The provisions of this Agreement shall apply to the full extent set forth herein with respect to
any and all units of the Partnership or any successor or assign of the Partnership (whether by
merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in exchange
for or in substitution of, the Registrable Securities, and shall be appropriately adjusted for
combinations, recapitalizations and the like occurring after the date of this Agreement.

     Section 3.05 Specific Performance. Damages in the event of breach of this Agreement
by a party hereto may be difficult, if not impossible, to ascertain, and it is therefore agreed
that each such Person, in addition to and without limiting any other remedy or right it may have,
will have the right to an injunction or other equitable relief in any court of competent
jurisdiction, enjoining any such breach, and enforcing specifically the terms and provisions
hereof, and each of the parties hereto hereby waives any and all defenses it may have on the ground
of lack of jurisdiction or competence of the court to grant such an injunction or other equitable
relief. The existence of this right will not preclude any such Person from pursuing any other
rights and remedies at law or in equity which such Person may have.

11

 

     Section 3.06 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.

     Section 3.07 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     Section 3.08 Governing Law. The laws of the State of Delaware shall govern this
Agreement without regard to principles of conflict of laws.

     Section 3.09 Severability of Provisions. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the remaining provisions
hereof or affecting or impairing the validity or enforceability of such provision in any other
jurisdiction.

     Section 3.10 Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other than those set
forth or referred to herein with respect to the rights granted by the Partnership set forth herein.
This Agreement supersedes all prior agreements and understandings between the parties with respect
to such subject matter.

     Section 3.11 Amendment. This Agreement may be amended only by means of a written
amendment signed by the Partnership and the Holders of a majority of the then outstanding
Registrable Securities; provided, however, that no such amendment shall materially
and adversely affect the rights of any Holder hereunder without the consent of such Holder.

     Section 3.12 No Presumption. In the event any claim is made by a party relating to
any conflict, omission, or ambiguity in this Agreement, no presumption or burden of proof or
persuasion shall be implied by virtue of the fact that this Agreement was prepared by or at the
request of a particular party or its counsel.

[The remainder of this page is intentionally left blank.]

12

 

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

	 	 	 	 	 
	 	PLAINS ALL AMERICAN PIPELINE, LP.

	 
	 	By:  	PAA GP LLC

its General Partner
 	 
	 	By:  	Plains AAP, L.P.,

its Sole Member
 	 
	 	By:  	Plains All American GP LLC,
its General Partner

 	 
	 	By:  	/s/ Greg L. Armstrong
 	 
	 	 	Name:  	Greg L. Armstrong 	 
	 	 	Title:  	Chief Executive Officer 	 
	 
	 
	 	VULCAN GAS STORAGE LLC

	 
	 	By:  	Vulcan Capital Private Equity I LLC,

its Manager
 	 
	 	By:  	Vulcan Capital Private Equity Management I LLC,

its Manager
 	 
	 	By:  	Vulcan Capital Private Equity Inc.,

its Managing Member
 	 
	 	By:  	/s/ William L. McGrath
 	 
	 	 	Name:  	William L.  McGrath 	 
	 	 	Title:  	Vice President 	 
	 

[Signature Page to Common Unit Registration Rights Agreement]exv10w1

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

 

-4-

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.”

 

-5-

     (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

 

-6-

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

 

-8-

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

 

-10-

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

 

-11-

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.

 

-12-

     (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

 

-13-

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,

 

-14-

(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—

 

-15-

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

 

-16-

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

 

-17-

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.

 

-18-

          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

 

-19-

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

 

-20-

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

 

-21-

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.

 

-22-

          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

 

-23-

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

 

-24-

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

 

-25-

(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

 

-26-

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.

 

-27-

          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]

 

 

          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 	 

 

-2-

	 	 	 	 	 

	 	 	 	 	 
	 	DELTA TOWING HOLDINGS, LLC

DELTA TOWING, LLC

 	 
	 	By:  	/s/ James W. Noe
 	 
	 	 	Name:  	James W. Noe 	 
	 	 	Title:  	President and Chief Executive Officer 	 

Signature Page

 

-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

 

Annex A

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

Annex A-1

 

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

 

     (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

 

     (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

 

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	 
	 
	 	 	 

 

 

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%)

 

 

	 	 	 	 	 
	 	 	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%)

 

 

Schedule III

Local and Vessel Mortgage Counsel

Cayman Islands — Maples and Calder

Vessel Mortgages — Seward and Kissel

 

 

Exhibit A

FORM OF REGISTRATION RIGHTS AGREEMENT

A-1

 

 

 

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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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	 

 

 

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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          “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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          “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,

 

-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

 

-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

 

-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.

 

-7-

          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

 

-8-

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

 

-9-

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

 

-10-

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

 

-11-

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

 

-12-

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

 

-13-

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.

 

 

          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]

 

 

	 	 	 	 	 
	 	DELTA TOWING HOLDINGS, LLC

DELTA TOWING, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	James W. Noe 	 
	 	 	Title:  	President and Chief Executive Officer 	 
	 

[Signature Page to

Registration Rights Agreement]

	 	 	 	 	 

 

 

	 	 	 	 	 
	 	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]

 

 

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

[Signature Page to

Registration Rights Agreement]

 

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

 

	 	 	 
	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:

C-2

 

	 	 	 
	 

	 	(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

 

	 	 	 	 	 
	 

	 	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

 

 

			
	(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

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