Document:

exv10w1

Exhibit
10.1

FORBEARANCE AGREEMENT

     This Forbearance Agreement (this “Agreement”), dated as of July 28, 2009, is among
Zila, Inc., a Delaware corporation (“Borrower”), Zila Biotechnology, Inc., an Arizona
corporation (“ZB”), Zila Pharmaceuticals, Inc., a Nevada corporation (“ZP”), Zila
Technical, Inc., an Arizona corporation (“Zila Technical”), Zila Limited, a English company
(“ZL”), Professional Dental Technologies, Inc., a Nevada corporation (“PDT”), Zila
Therapeutics, Inc., a Nevada corporation (“Zila Therapeutics”), Zila Dental Technologies,
Inc., an Arkansas corporation (“ZDT”), Zila Canada, Inc., an Arkansas corporation
(“ZC” and together with ZB, ZP, Zila Technical, ZL, PDT, Zila Therapeutics and ZDT, the
“Subsidiary Guarantors”), and TOLMAR Holding, Inc., a Delaware corporation
(“Lender”).

RECITALS

     A. Lender has acquired from Visium Balanced Master Fund, Ltd. (“Visium”) and Atlas
Master Fund, Ltd. (“Atlas”) the Third Amended and Restated Senior Secured Convertible
Notes, dated November 28, 2006 (the “Notes”), made by Borrower, in the aggregate principal
amount of $12,000,001.20. In connection with such acquisition, the following agreements, among
others, were assigned to Lender: (i) the Pledge and Security Agreement, dated November 28, 2006, as
amended (the “Security Agreement”), among Borrower, the Subsidiary Guarantors and Balyasny
Asset Management, L.P., as agent, (ii) the Copyright Security Agreement (as defined in the Security
Agreement), (iii) the Trademark Security Agreement (as defined in the Security Agreement), (iv) the
Patent Security Agreement (as defined in the Security Agreement), (v) the Deposit Account Control
Agreement (as defined in the Security Agreement) and (vi) the Purchase Agreement, dated November
13, 2006, as amended (the “Original Purchase Agreement”), among, inter alia, Borrower,
Atlas and Visium.

     B. Borrower, Lender and Project Z Acquisition Sub, Inc., a Delaware corporation
(“Acquisition Sub”), are parties to the Agreement and Plan of Merger, dated June 25, 2009
(the “Merger Agreement”), which contemplates a transaction in which Lender will acquire all
of Borrower’s outstanding stock for cash through a reverse subsidiary merger of Acquisition Sub
with and into Borrower (the “Merger”). Concurrently with the execution and delivery of
this Agreement, Borrower, Lender and Acquisition Sub are entering into the First Amendment to
Agreement and Plan of Merger, of even date herewith, which amends the Merger Agreement to, among
other things, increase the per share consideration to be paid to Borrower’s stockholders in the
Merger.

     C. The Notes are secured by, among other documents, the Security Agreement and certain pledges
and guarantees executed by the Borrower and the Subsidiary Guarantors (individually, an
“Obligor” and, collectively, the “Obligors”) in connection with the Security
Agreement (the Notes, the Security Agreement, the Copyright Security Agreement, the Trademark
Security Agreement, the Patent Security Agreement, the Deposit Account Control Agreement, the
Original Purchase Agreement and all guarantees, security agreements and instruments, assignments,
certificates and other documents or agreements executed by the Obligors or any of their affiliates
evidencing, securing or otherwise relating to the Notes are collectively referred to in this
Agreement as the “Note Documents”).

     D. Except for Borrower’s failure to make the payments (due and payable on January 31, 2009 and
April 30, 2009, respectively) of accrued and unpaid interest on the principal amount of the Notes
(the “Prior Defaults”), the Obligors represent and warrant to Lender that no Event of
Default (as defined in the Notes) or event which, with the giving of notice, the lapse of time or
both would constitute such an Event of Default, has occurred and is continuing.

     E. To help facilitate consummation of the Merger, Lender desires to forbear, for a certain
period of time and subject to the terms and conditions set forth in this Agreement, from exercising
its

 

 

rights (“Acceleration Rights”) under the Note to accelerate the payment of all or
part, as the case may be, of the outstanding principal amount of the Notes and accrued and unpaid
interest thereon as a result of the Prior Defaults or as a result of Borrower’s (i) failure to make
the payments (due and payable on July 31, 2009 and October 31, 2009) of accrued and unpaid interest
then due and payable on the principal amount of the Notes and (ii) payments in order to cancel the
Target PIPE Warrants (as defined in the Merger Agreement) in accordance with and as contemplated by
the Merger Agreement (the “Prospective Defaults”).

AGREEMENT

     In consideration of the mutual covenants contained herein, for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

1. Acknowledgement of Recitals. Each of the above Recitals is incorporated herein and
deemed to be the agreement of Lender and the Obligors, and each of the Obligors acknowledges that
each Recital is true and correct, and that it is being relied upon by Lender in agreeing to the
terms of this Agreement.

2. Forbearance Period.

     (a) Until the expiration of the Forbearance Period (as defined below), Lender will forbear
from the exercise of its Acceleration Rights solely with respect to the Prior Defaults and the
Prospective Defaults; provided, however, that (i) the Obligors shall comply during the Forbearance
Period with all covenants, agreements, limitations, restrictions or prohibitions that would
otherwise be effective or applicable under the Note Documents during the continuance of any default
or event of default under the Note Documents, and (ii) nothing herein shall restrict, impair or
otherwise affect any of Lender’s rights and remedies under any agreements containing subordination
provisions in favor of Lender (including, without limitation, any rights or remedies available to
Lender as a result of the occurrence or continuation of the Prior Defaults, the Prospective
Defaults or otherwise) or to amend or modify any provision thereof. This Agreement does not
prohibit Lender from exercising any or all of the Acceleration Rights at any time on or after the
occurrence of a Termination Event.

     (b) As used herein, Forbearance Period, Termination Event and Forbearance Default have the
following meanings:

          “Forbearance Period” means the period beginning on the date hereof and ending on the
first to occur of the following events (each a “Termination Event”): (i) the termination
of the Merger Agreement, (ii) the consummation of the Merger or (iii) the occurrence of any
Forbearance Default (as defined below).

          “Forbearance Default” means the occurrence of any of the following: (i) any Obligor
fails to timely perform or observe any requirement of this Agreement or the documents, instruments
and agreements executed in connection herewith, (ii) a default or event of default occurs (other
than the Prior Defaults or the Prospective Defaults) under any Note Document, (iii) any
representation or warranty made by any Obligor in this Agreement is false, misleading or incorrect
when made or deemed to be made, (iv) any Obligor ceases or interrupts its on-going business
operations, (v) any Obligor denies any of its obligations under this Agreement or any Note
Document, (vi) an order, judgment or decree is entered adjudicating any Obligor as bankrupt or
insolvent, (vii) an order for relief with respect to any Obligor is entered under title 11 of the
United States Code or another bankruptcy or insolvency law, or (viii) any Obligor petitions or
applies to a tribunal for the appointment of a custodian, trustee, receiver or liquidator of an
Obligor or of any substantial part of the assets of an Obligor, or commences a proceeding

 

 

relating to an Obligor under a bankruptcy, reorganization, arrangement, insolvency,
readjustment of debt, dissolution or liquidation law of a jurisdiction, or any such petition or
application is filed, or any such proceeding is commenced, against an Obligor and either (x) an
Obligor by any act indicates its approval thereof, consents thereto or acquiescence therein or (y)
such petition application or proceeding is not dismissed within 60 days.

3. Acknowledgment of Debt; Ratification of the Note Documents.

     (a) Lender and each of the Obligors acknowledge and confirm that: (i) the outstanding
principal amount of the Notes is $12,000,001.20, and (ii) as of the date of this Agreement, the
accrued and unpaid interest with respect to the Notes is $1,104,666.84. Each of the Obligors
agrees that, as of the date hereof, none of the Obligors has any claim or defense of any kind, by
way of offset or otherwise, to the payment or performance of the Notes or any or all of the other
obligations under or evidenced by the Note Documents.

     (b) Each of the Obligors hereby ratifies, affirms, reaffirms, acknowledges, confirms and
agrees that the Note Documents represent valid, enforceable and collectible obligations of the
Obligors.

     (c) Each of the Obligors hereby expressly intends that this Agreement shall not in any manner
(i) constitute the refinancing, refunding, payment or extinguishment of the Notes or any of the
obligations evidenced or secured by the existing Note Documents, (ii) be deemed to evidence a
novation of the outstanding principal or interest due on the Notes or any of the other obligations
evidenced or secured by the existing Note Documents or (iii) affect, replace, impair, or extinguish
the creation, attachment, perfection or priority of the security interests in, and other liens on,
the collateral granted pursuant to the existing Note Documents.

4. Warranties and Representations. Each of the Obligors hereby warrants and represents to
Lender the following:

     (a) This Agreement, once executed, shall constitute a valid, binding and enforceable
obligation of such Obligor. Such Obligor is duly authorized to execute, deliver and perform its
obligations under this Agreement.

     (b) This Agreement in no way acts as a release or relinquishment of the liens, security
interest, rights and remedies provided by any of the Note Documents. The liens and security
interest granted under the Note Documents are hereby renewed, extended, ratified and approved by
the Obligors in all respects.

5. No Modifications; No Waiver or Default. Except for the matters specifically set forth
herein, this Agreement does not alter, amend, modify or release any right of Lender or any
obligations of the Obligors in connection with the Note Documents, including, without limitation,
their respective obligations to insure the collateral specified in the Note Documents. Other than
Lender’s agreement to forbear as described above, this Agreement does not constitute a waiver or
relinquishment of any other right or remedy Lender may have, including, without limitation,
defaults existing but unknown to Lender and future defaults. Nothing in this Agreement shall be
considered a novation of the Notes or any of the other obligations evidenced by the Note Documents.

6. Miscellaneous.

     (a) This Agreement may not be modified orally and shall be binding upon and inure to the
benefit of each of the parties hereto and their successors and assigns. This Agreement sets forth
the entire

 

 

understanding between and among the Lender and the Obligors regarding any agreement on the
part of Lender to forbear and supersedes any and all prior discussions between or among Lender and
the Obligors regarding the subject matter hereof.

     (b) No delay or omission on the part of Lender in exercising any rights herein or under the
Note Documents shall operate as a waiver of such rights. Any waiver on one or more occasions shall
not be construed as a bar to or a waiver of any rights and/or remedies on any future occasion.

     (c) This Agreement shall be governed by and construed in accordance with the laws of the State
of New York, including Section 5-1401 of the New York General Obligations Law, as applied to
contracts made and performed within the State of New York, without giving effect to a choice or
conflict of law provision or rule (whether of the State of New York or another jurisdiction) that
would cause the application of the laws of a jurisdiction other than the State of New York. The
Obligors, each irrevocably submits to the exclusive jurisdiction of the courts of the State of New
York located in New York County and the United States District Court for the Southern District of
New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of
this Agreement and the transactions contemplated hereby. Service of process in connection with any
such suit, action or proceeding may be served on each party hereto anywhere in the world by the
same methods as are specified for the giving of notices under this Note. Each of the Obligors and
Lender irrevocably consents to the jurisdiction of any such court in any such suit, action or
proceeding and to the laying of venue in such court. Each of the Obligors and Lender irrevocably
waives any objection to the laying of venue of any such suit, action or proceeding brought in such
courts and irrevocably waives any claim that any such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum.

     (d) This Agreement may be executed in any number of counterparts, and all counterparts taken
together shall constitute a single executed agreement. This Agreement may be delivered in the form
of a facsimile or electronic “pdf.” copy, subsequently confirmed by delivery of the original
executed document.

     (e) If a court of competent jurisdiction finds any provision of this Agreement to be invalid
or unenforceable as to any person or circumstances, such finding shall not render that provision
invalid or unenforceable as to any other persons or circumstances. If feasible, any such offending
provision shall be deemed to be modified to be within the limits of enforceability or validity;
however, if the offending provision cannot be so modified, it shall be stricken in all other
provisions of this Agreement and all other respects shall remain valid and enforceable.

[Signature Pages Follow]

 

 

The parties hereto have executed this Agreement as of the date first written above.

	 	 	 	 	 
	 	LENDER:

TOLMAR Holding, Inc.

 	 
	 	By:  	/s/
David Speights 	 
	 	 	Name:  	David Speights 	 
	 	 	Title:  	Vice President 	 
	 
	 	BORROWER:

Zila, Inc.

 	 
	 	By:  	/s/
David R. Bethune 	 
	 	 	Name:  	David R. Bethune 	 
	 	 	Title:  	Chairman and Chief Executive Officer 	 
	 
	 	SUBSIDIARY GUARANTORS:

Zila Biotechnology, Inc.

 	 
	 	By:  	/s/
Gary V. Klinefelter 	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 
	 	Zila Pharmaceuticals, Inc.

 	 
	 	By:  	/s/
Gary V. Klinefelter 	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 
	 	Zila Limited

 	 
	 	By:  	/s/
Gary V. Klinefelter 	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 

[Signature Page to Forbearance Agreement]

 

 

	 	 	 	 	 
	 	Zila Technical, Inc.

 	 
	 	By:  	/s/ Gary V. Klinefelter  	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 
	 	Professional Dental Technologies, Inc.

 	 
	 	By:  	/s/ Gary V. Klinefelter  	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 
	 	Zila Therapeutics, Inc.

 	 
	 	By:  	/s/ Gary V. Klinefelter  	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 
	 	Zila Dental Technologies, Inc.

 	 
	 	By:  	/s/ Gary V. Klinefelter  	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 
	 	Zila Canada, Inc.

 	 
	 	By:  	/s/ Gary V. Klinefelter  	 
	 	 	Name:  	Gary V. Klinefelter 	 
	 	 	Title:  	Secretary 	 
	 

[Signature Page to Forbearance Agreement]exv4w1

Exhibit 4.1

EXECUTION VERSION

AMENDMENT NO. 2

          AMENDMENT NO. 2 dated as of July 23, 2009 (this “Amendment No. 2”), among
HERCULES OFFSHORE, INC., a Delaware corporation (the “Borrower”), the SUBSIDIARY
GUARANTORS (as defined in the hereinafter described Credit Agreement), the ISSUING
BANKS (as defined in the Credit Agreement) executing this Amendment No. 2 on the
signature pages hereto, and UBS AG, STAMFORD BRANCH, as administrative agent (in
such capacity, the “Administrative Agent”) for the Lenders and as collateral agent
and instructing beneficiary under the Mortgage Trust Agreement (as defined in the
Credit Agreement) (in such capacities, the “Collateral Agent”) for the Secured
Parties (as defined in the Credit Agreement).

          The Borrower, the Subsidiary Guarantors, the Lenders, the Issuing Banks, the
Administrative Agent, the Collateral Agent and certain other parties are parties to
that certain Credit Agreement dated as of July 11, 2007 (as has been or may further
be amended, restated, amended and restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”), providing, subject to the terms and
conditions thereof, for extensions of credit to be made by the Lenders to the
Borrower. The Borrower, the Subsidiary Guarantors, the Administrative Agent, the
Collateral Agent and the Lenders and Issuing Banks party hereto wish to amend the
Credit Agreement in certain respects, and accordingly, the parties hereto hereby
agree as follows:

          SECTION 1. Definitions. Except as otherwise defined in this Amendment No. 2,
terms defined in the Credit Agreement are used herein as defined therein.

          SECTION 2. Amendments. Subject to the satisfaction of the conditions
precedent specified in Section 4 of this Amendment No. 2, but effective as of the
date hereof, the Credit Agreement shall be amended as follows:

          (a) References Generally. References in the Credit Agreement (including
references to the Credit Agreement as amended hereby) to “this Agreement” (and
indirect references such as “hereunder”, “hereby”, “herein” and “hereof”) shall be
deemed to be references to the Credit Agreement as amended hereby.

          (b) Revolving Commitment Reduction. As of the Amendment Effective Date (as
defined in Section 4 below), the Revolving Commitments shall be reduced by
$75,000,000 from $250,000,000 to $175,000,000. Such reduction of the Revolving
Commitments shall be made ratably among the Revolving Lenders in accordance with their respective
Revolving Commitments. Any requirement to provide advance written notice of such
reduction has been deemed satisfied.

          (c) Adjusted LIBOR Rate. Section 1.01 of the Credit Agreement is hereby
amended by adding the following proviso at the end of the definition of “Adjusted
LIBOR Rate”:

 

 

“; provided that the Adjusted LIBOR Rate shall be deemed to be not less than 2.00% per
annum.”

          (d) Aggregate Mortgaged Vessel Value. Section 1.01 of the Credit Agreement is
hereby amended by amending the definition of “Aggregate Mortgaged Vessel Value” by
(i) adding the phrase “Liens permitted by Section 6.02(q), Liens securing
obligations under Ship Mortgages or” immediately after the phrase “other than the
Lien of the Mortgage Trustee,” and (ii) adding the phrase “permitted by Section
6.02(a) or (b)” immediately after the phrase “provided that, to the extent such
Liens”.

          (e) Aggregate Non-Mortgaged Vessel Value. Section 1.01 of the Credit
Agreement is hereby amended by inserting the following definition of “Aggregate
Non-Mortgaged Vessel Value” in proper alphabetical order as follows:

     “‘Aggregate Non-Mortgaged Vessel Value’ shall mean, as of the applicable date
of determination, an amount equal to the sum (without duplication) of the amounts
(disregarding any such amount which is less than zero) determined by subtracting
the following clause (b) from the following clause (a) for each Pledged Subsidiary
(as defined below) that owns a Non-Mortgaged Vessel:

     (a) the Vessel Percentage (as defined below) of the aggregate fair market value of the Non-Mortgaged Vessels set
forth on Schedule I to the Second Amendment (or in a supplement thereto in form and
substance reasonably satisfactory to the Administrative Agent delivered to the
Administrative Agent by the Borrower in connection with a Permitted Acquisition)
or, if more recent, as determined by the most recent Desktop Appraisal required to
be delivered hereunder, so long as such Vessel is owned by a Wholly Owned
Subsidiary (a “Pledged Subsidiary”) (x) 100% of the Equity Interests of which have
been pledged to the Collateral Agent to secure the Obligations in accordance with
the terms of the Loan Documents or (y) if such Wholly Owned Subsidiary is a CFC (as
defined in Section 5.11(d)), at least 66% of the total voting power of all
outstanding Voting Stock of such CFC (or, if such CFC is the Wholly Owned
Subsidiary of a first-tier CFC, of such first-tier CFC) (the “Pledged CFC”) and
100% of the Equity Interests not constituting Voting Stock of the Pledged CFC have
been pledged to the Collateral Agent to secure the Obligations in accordance with
the terms of the Loan Documents

less

     (b) 100% of the aggregate amount of, without duplication, (i) Indebtedness for borrowed money of such Pledged Subsidiary
(including guarantees of Indebtedness for borrowed money) and, if such Vessel is
owned by a Subsidiary of such Pledged Subsidiary, the Subsidiaries of such Pledged
Subsidiary that are parent entities of such Subsidiary and (ii) liabilities that
would be required to be set forth on a balance sheet of such Pledged Subsidiary or,
if such Vessel is owned by a Subsidiary of such

2

 

Pledged Subsidiary, a balance sheet of such Pledged Subsidiary and the
Subsidiaries of such Pledged Subsidiary that are parent entities of such Subsidiary
on a consolidated basis, in each case, prepared in accordance with GAAP as of the
date of such date of determination, other than, in each case (without duplication),
(x) Indebtedness incurred and liabilities that would be included in determining the
amount under clause (b) of the definition of “Collateral Maintenance Ratio” and (y)
Indebtedness and liabilities owing to a Loan Party to the extent the Secured
Parties have a perfected security interest therein;

provided, however, that, if on any date of determination, there exists a material defect in title with respect to
any such Vessel, the fair market value of such Vessel for purposes of this
definition shall be $0.

For purposes of the definition of Aggregate Non-Mortgaged Vessel Value, “Vessel Percentage”
shall mean (i) 75% for a Pledged Subsidiary that satisfies the
requirements of subclause
(x) of clause (a) of the definition of Aggregate Non-Mortgaged Vessel Value and (ii) 50%
for a Pledged Subsidiary that satisfies the requirements of
subclause (y) of such clause
(a).”

          (f) Aggregate
Subject Collateral Value. Section 1.01 of the Credit Agreement
is hereby amended by inserting the following definition of “Aggregate Subject
Collateral Value” in proper alphabetical order as follows:

     “‘Aggregate Subject Collateral Value’ shall mean, as of the applicable date of
determination, the sum of (a) the Aggregate Mortgaged Vessel Value, (b) the
Aggregate Non-Mortgaged Vessel Value and (c) 75% of the book value of the Eligible
Accounts minus the aggregate amount of reserves established by Borrower as required
by GAAP in respect of the Eligible Accounts.

          (g) Alternate
Base Rate. Section 1.01 of the Credit Agreement is hereby
amended by amending the first sentence of the definition of “Alternate Base Rate”
in its entirety as follows:

     “‘Alternate Base Rate’ shall mean, for any day, a fluctuating rate per annum
(rounded upward, if necessary, to the nearest 1/100th of 1%) equal to the greatest
of (a) the Base Rate in effect on such day, (b) the Federal Funds Effective Rate in
effect on such day plus 0.50% and (c) the Adjusted LIBOR Rate for an Interest
Period of one-month beginning on such day (or if such day is not a Business Day, on the
immediately preceding Business Day) plus 100 basis points.”

          (h) Alternate
Covenant Period. Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definition of “Alternate Covenant Period” in proper alphabetical order as
follows:

     “‘Alternate Covenant Period’ shall mean the period commencing on October 1,
2009, and ending on June 30, 2010.”

3

 

          (i) Applicable
Margin; Applicable Fee. Section 1.01 of the Credit Agreement is hereby amended as follows:

          (i) Section 1.01 of the Credit Agreement is hereby amended by amending the definition of
“Applicable Margin” in its entirety to read as follows:

     “‘Applicable Margin’ shall mean, for any day, (a) with respect to any
Eurodollar Loan, 6.50%, and (b) with respect to any ABR Loan, 5.50%; provided that,
after the Amendment Effective Date, the Applicable Margin shall be subject to the
following pricing grid:

	 	 	 	 	 	 	 	 	 
	 	 	Eurodollar Loan	 	ABR Loan
	If the aggregate principal
amount of Term Loans
outstanding is less than or
equal to $684,250,000, but
greater than $484,250,000
	 	 	5.00	%	 	 	4.00	%
	 
	 	 	 	 	 	 	 	 
	If the aggregate principal
amount of Term Loans
outstanding is less than or
equal to $484,250,000
	 	 	4.00	%	 	 	3.00	%

Any change in the Applicable Margin resulting from a reduction of the aggregate principal
amount of Term Loans outstanding shall be effective on the date of such reduction.”.

          (ii) Section 1.01 of the Credit Agreement is hereby amended by amending the
definition of “Applicable Fee” in its entirety to read as follows:

     “‘Applicable Fee’ shall mean, for any day, with respect to any Commitment,
1.00%.”

          (j) Available
Amount; Available Equity Proceeds Amount. (i) Section 1.01 of
the Credit Agreement is hereby amended by amending the definition of “Available
Amount” in its entirety as follows:

          “‘Available Amount’ shall mean, at any time,

     (a) the sum of (i) 50% of the Consolidated Net Income of the Borrower for the
period (taken as one accounting period) from the beginning of the fiscal quarter
commencing July 1, 2009 (the “Basket Restart Date”) to the end of the Borrower’s
most recently ended fiscal quarter for which financial statements were required to
be delivered pursuant to Section 5.01 (or, if such Consolidated Net

4

 

Income for such period is a deficit, less 100% of such deficit); plus (ii) 100% of the
aggregate Net Cash Proceeds received by the Borrower since the Basket Restart Date from
Equity Issuances that are not applied or required to be applied towards mandatory
prepayments pursuant to Section 2.10(e) (the “Equity Component Amount”); less (iii)
payments made by Borrower pursuant to Section 6.08(c);

     less

     (b) the Equity Component Amount theretofor utilized to (i) pay any amounts in
connection with a Permitted Stock Acquisition, (ii) pay, prepay, redeem or acquire
any Permitted Senior Secured Notes, any Indebtedness incurred under
Section 6.01(k)
or any other Material Indebtedness (including, without limitation or duplication, a
Specified Existing Notes Payment (as defined in 6.11(a)) or (iii) cause compliance
with Section 6.10(a)(ii) as set forth in
Section 2.10(e); and

     (c) the amount thereof theretofor utilized for Investments under clause (i) of
Section 6.04 and Dividends under clause (d) of
Section 6.08.”

          (ii) Section 1.01 of the Credit Agreement is hereby further amended by
inserting the following definition of “Available Equity Proceeds Amount” in proper
alphabetical order as follows:

          “‘Available Equity Proceeds Amount’ shall mean, at any time, the excess of (a)
the Equity Component Amount at such time over (b) the aggregate amount of payments
described in clauses (b)  and (c)  of the definition of “Available Amount” that were
made on account of such Equity Component Amount (assuming for the purpose of this
definition that payments described in such clause (c)  were made first on account of
amounts determined pursuant to clause (a)(i) of the definition of “Available
Amount”).”

          (k) Basket
Restart Date. Section 1.01 of the Credit Agreement is hereby amended by inserting
the following definition of “Basket Restart Date” in proper alphabetical order as follows:

     “‘Basket
Restart Date’ shall have the meaning assigned to such term
in clause
(a) of the definition of “Available Amount”.”

          (l) Change
in Control. Section 1.01 of the Credit Agreement is hereby amended
by: (A) replacing each reference to the word “approved” with the word “recommended” in clause (c) of the definition of
“Change in Control” and (B) amending clause (a) of the definition of “Change in
Control” in its entirety as follows:

          “(a) at any time a change of control, fundamental change or similar event
occurs under any Permitted Senior Secured Notes, Indebtedness incurred under
Section 6.01(k) or other Material Indebtedness if the effect of such change or
event is to cause, or to permit the holder or holders of such Material Indebtedness
or a trustee or other representative on its or their behalf to cause, such Material
Indebtedness to become due

5

 

prior to its stated maturity or become subject to a mandatory offer to purchase by the obligor;”.

          (m) Collateral
Maintenance Ratio. Sections 1.01, 2.10, 5.11 and 6.06 of the
Credit Agreement are hereby amended as follows:

          (i) Section 1.01 of the Credit Agreement is hereby amended by deleting each
reference to “1.25 to 1.00” in the definitions of “Asset Swap”, “Flag Jurisdiction
Transfer” and “Permitted Acquisition” and replacing each such reference with “1.50
to 1.00”.

          (ii) Section 1.01 of the Credit Agreement is hereby further amended by
amending the definition of “Collateral Maintenance Ratio” in its entirety as
follows:

     “‘Collateral Maintenance Ratio’ shall mean, as of the applicable date of
determination, the ratio of (a) the Aggregate Subject Collateral Value to (b) the
sum, without duplication, of (i) the sum of all Loans outstanding, LC Exposure and
unused Revolving Commitments, (ii) the sum of all other obligations secured by a
Ship Mortgage that are then due and payable, and (iii) the aggregate amount of
obligations secured by a Lien on a Mortgaged Vessel that is permitted pursuant to
Section 6.02(q) (it being understood that the amount determined pursuant to
subclauses (ii) and (iii) shall not have been deducted in determining the Aggregate
Mortgaged Vessel Value).”

          (iii) Clause (ii) of Section 2.10(c) of the Credit Agreement is hereby amended
by (A) adding the phrase “and to the extent the aggregate of such Net Cash Proceeds
of Asset Sales does not exceed $25,000,000 in the fiscal year of Borrower in which
such Net Cash Proceeds are received by Borrower or any of its Subsidiaries”
immediately after the phrase “so long as no Default has occurred and is
continuing”, (B) replacing the phrase “clauses
(iii) and (iv) of Section 6.13” with
the phrase “clauses (iii), (iv),
(v) and (vi) of Section 6.13” and (C) deleting the
reference to “1.25 to 1.00” therein and replacing such reference with “1.50 to
1.00”.

          (iv) Clause (i) of Section 2.10(f) of the Credit Agreement is hereby amended
by deleting the reference to “1.25 to 1.00” therein and replacing such reference
with “1.50 to 1.00”.

          (v) Clause (e) of Section 5.11 of the Credit Agreement is hereby amended by
deleting the reference to “1.25 to 1.00” therein and replacing such reference with
“1.50 to 1.00”.

          (vi) Clause (b) of Section 6.06 of the Credit Agreement is hereby amended by
deleting the phrase “the Collateral Maintenance Ratio would exceed 1.25 to 1.00
and”.

6

 

          (vii) Clause (k) of Section 6.06 of the Credit Agreement is hereby amended by
deleting the reference to “1.25 to 1.00” therein and replacing such reference with
“1.50 to 1.00”.

          (n) Consolidated
EBITDA. Section 1.01 of the Credit Agreement is hereby
amended by amending the definition of “Consolidated EBITDA” by: (A) amending
subclause (i) of clause (b) thereof by replacing the reference to “Consolidated
Interest Expense” therein with a reference to “consolidated interest expense” and
(B) adding the phrase “, the Second Amendment and the transactions contemplated
thereby, any Equity Issuance, any sale of Delta Towing Assets and any offering of
Permitted Senior Secured Notes” immediately prior to the “,” at the end of
subclause (v) of clause (b) thereof.

          (o) Consolidated
Fixed Charge Coverage Ratio. Section 1.01 of the Credit
Agreement is hereby amended by amending the definition of “Consolidated Fixed
Charge Coverage Ratio” in its entirety as follows:

     “‘Consolidated Fixed Charge Coverage Ratio’ shall mean, for any Test Period,
the ratio of

     (a) the sum of (i) Consolidated EBITDA for such Test Period plus (ii) the
amount indicated in the Compliance Certificate delivered with respect to such Test
Period as the amount to be added to Consolidated EBITDA for purposes of the
Consolidated Fixed Charge Coverage Ratio for such Test Period (provided that the
sum of all such amounts during the term of the Agreement shall not exceed
$130,000,000 or, if different (i.e., either higher or lower) than $130,000,000, the
Cash Component of the Liquidity Amount as of June 30, 2009)

     to

          (b) Consolidated Fixed Charges for such Test Period.”

          (p) Consolidated
Interest Expense. Section 1.01 of the Credit Agreement is
hereby amended by amending the definition of “Consolidated Interest Expense” by (i) deleting the “and” at the end of clause
(a) of the proviso to such definition, (ii) re-lettering clause (b) of the proviso
to such definition as new clause (c), and (iii) adding a new clause (b) as follows:

“, (b) to the extent directly related to the Second Amendment or the issuance of any
Permitted Senior Secured Notes, debt issuance costs, debt discount or premium and other
financing fees and expenses (including any amortization with respect thereto) shall be
excluded from the calculation of Consolidated Interest Expense and”

          (q) Defaulting
Lenders. Section 1.01 and Article II of the Credit Agreement
are hereby amended as follows:

7

 

          (i) Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definition of “Defaulting Lender” in proper alphabetical order as
follows:

     “‘Defaulting Lender’ shall mean any Revolving Lender, as reasonably determined
by the Administrative Agent, that (a) has failed to fund any portion of its Loans
or participations in Letters of Credit or Swingline Loans required to be funded by
it hereunder within two Business Days of the date required to be funded by it
hereunder, (b) has notified the Administrative Agent, any Issuing Bank, the
Swingline Lender, any Lender and/or Borrower in writing that it does not intend to
comply with any of its funding obligations under this Agreement or has made a
public statement to the effect that it does not intend to comply with its funding
obligations under this Agreement or under agreements that would include this
Agreement, (c) has failed, within three Business Days after request by the
Administrative Agent, to confirm that it will comply with the terms of this
Agreement relating to its obligations to fund prospective Loans and participations
in then outstanding Letters of Credit and Swingline Loans, (d) has otherwise failed
to pay over to the Administrative Agent or any other Lender any other amount
required to be paid by it hereunder within three Business Days of the date when
due, unless the subject of a good faith dispute, or (e) in the case of a Revolving
Lender that has a Commitment, LC Exposure or Swingline Exposure outstanding at such
time, shall take any action or be (or is) the subject of any action or proceeding
of a type described in Section 8.01(g) or (h) (or any comparable proceeding
initiated by a regulatory authority having jurisdiction over such Revolving
Lender).”

          (ii) Section 1.01 of the Credit Agreement is hereby amended by adding the
following proviso at the end of the definition of “Required Lenders”:

“; provided that the Loans, LC Exposure and unused Commitments held or deemed held by any
Defaulting Lender shall be excluded for purposes of making
a determination of Required Lenders.”

          (iii) Section 1.01 of the Credit Agreement is hereby amended by adding the
following proviso at the end of the definition of “Required Revolving Lenders”:

“; provided that the Revolving Commitments held or deemed held by any Defaulting Lender
shall be excluded for purposes of making a determination of Required Revolving Lenders.”

          (iv) Section 2.16(b) of the Credit Agreement is hereby amended by replacing
the words “or if any Lender defaults in its obligation to fund Loans hereunder”
with the words “or if any Revolving Lender becomes a Defaulting Lender”.

          (v) A new Section 2.20 of the Credit Agreement is hereby added to the Credit
Agreement as follows:

8

 

     “SECTION
2.20 Defaulting Lenders. Notwithstanding any provision of this Agreement to
the contrary, if any Revolving Lender becomes a Defaulting Lender, then the following
provisions shall apply for so long as such Revolving Lender is a Defaulting Lender:

     (a) if any LC Exposure exists at the time a Revolving Lender becomes a
Defaulting Lender, then Borrower shall within fifteen Business Days (or such longer
period as the Administrative Agent and relevant Issuing Banks may agree to)
following written notice by the Administrative Agent (A) cash collateralize such
Defaulting Lender’s LC Exposure in accordance with the procedures set forth in
Section 2.18(i) for so long as such LC Exposure is outstanding, or (B) enter into
other arrangements reasonably satisfactory to the Administrative Agent, the Issuing
Banks, the Swingline Lender and the Borrower;

     (b) so long as any Revolving Lender is a Defaulting Lender, the Swingline
Lender shall not be required to fund any Swingline Loan and no Issuing Bank shall
be required to issue, amend or increase any Letter of Credit, unless such Swingline
Lender or Issuing Bank is satisfied that the related exposure will be cash
collateralized in accordance with Section 2.20(a) (or such other arrangements as
are reasonably satisfactory to the Administrative Agent, the Issuing Banks, the
Swingline Lender and the Borrower).

The
rights and remedies against a Defaulting Lender under this
Section 2.20 are in addition
to other rights and remedies that Borrower, the Administrative Agent, the Issuing Banks,
the Swingline Lender and the non-Defaulting Lenders may have against such Defaulting
Lender. The arrangements permitted or required by this
Section 2.20 shall be permitted
under this Agreement, notwithstanding any limitation on Liens or otherwise.”

          (r) Eligible
Accounts. Section 1.01 and Annex I of the Credit Agreement are
hereby amended as follows:

          (i) Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definition of “Eligible Accounts” in proper alphabetical order as
follows:

          “‘Eligible
Accounts’ shall have the meaning set forth on Annex I hereto.”

          (ii) Annex I to the Credit Agreement is hereby amended in its entirety by
replacing Annex I to the Credit Agreement in its entirety with
Annex B attached
hereto.

          (s) Excess
Cash Flow. Sections 1.01 and 2.10 of the Credit Agreement are
hereby amended as follows:

9

 

          (i) Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definition of “ECF Percentage” in proper alphabetical order as follows:

     “‘ECF Percentage’ shall mean (a) with respect to the fiscal year of the
Borrower that ends during the Alternate Covenant Period, 100% and (b) otherwise,
50%.”

          (ii) Section 1.01 of the Credit Agreement is hereby amended by amending clause (b) of
the definition of “Excess Cash Flow” in its entirety as follows:

     “(b) any prepayments of Term Loans, and any prepayments of Revolving Loans and
Swingline Loans to the extent accompanied by corresponding permanent reductions in
the Revolving Commitments, during such Excess Cash Flow Period, in each case other
than (i) any voluntary prepayments, (ii) amounts already reflected in Debt Service
and (iii) prepayments required by Section 2.10(g), in each case to the extent not
financed with the proceeds of Indebtedness permitted pursuant to
Section 6.01(k),
(n) or (o);”

          (iii) Section 2.10(g) of the Credit Agreement is hereby amended by (A)
deleting the phrase “an aggregate amount equal to 50%” and substituting therefor
the phrase “an aggregate amount equal to the ECF Percentage”, (B) amending the
first proviso therein in its entirety as follows: “; provided, however, that, to
the extent Borrower has made a voluntary prepayment of Term Loans pursuant to
Section 2.10(a) during the applicable Excess Cash Flow Period or, without
duplication, following the last day of such Excess Cash Flow Period but on or prior
to the date any payment in respect of such Excess Cash Flow Period is required to
be made pursuant to this Section 2.10(g) (and such payment was not previously used
to reduce the prepayment required by this Section 2.10(g)), the amount required to
be paid under this Section 2.10(g) with respect to such Excess Cash Flow Period
shall be reduced by the amount of such voluntary prepayment;” and (C) deleting the following proviso:

“provided, further, however, that no prepayment or portion of a prepayment shall be
required pursuant to this Section 2.10(g) if the aggregate outstanding amount of Term Loans
shall be less than $550.0 million or to the extent such prepayment would cause the
aggregate outstanding amount of Term Loans to be reduced to less than $550.0 million”.

          (t) Indebtedness. Section 1.01 of the Credit Agreement is hereby amended by
amending the definition of “Indebtedness” by amending the penultimate sentence
thereof in its entirety as follows:

“Notwithstanding the foregoing or anything to the contrary contained herein, the
Indebtedness of any person shall exclude indemnification, adjustment of purchase price,
earn-out or similar obligations (including any Earn Out Obligations) of such person, in
each case, incurred or assumed in connection with the acquisition or

10

 

disposition of any business or assets of the Borrower or any Subsidiary or Equity Interests
of a Subsidiary, other than guarantees of Indebtedness incurred by any person acquiring all
or any portion of such business, assets or Equity Interests for the purpose of financing or
in contemplation of any such acquisition; provided that in the case of a disposition, the
maximum aggregate liability in respect of all such obligations shall at no time exceed the
gross proceeds actually received by the Borrower and its Subsidiaries in connection with
such disposition.”.

          (u) Sale
or Joint Venture of Inland Barge Business. Sections 1.01, 2.10,
5.11, 6.06, 6.13 and 6.14 of the Credit Agreement are hereby amended as follows:

          (i) Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definitions in proper alphabetical order:

     “‘Inland Barge Assets’ shall mean, collectively, the business conducted by the
fleet of six conventional and eleven posted barge rigs owned by THE Offshore
Drilling Company that operate inland in marshes, rivers, lakes and shallow bay or
coastal waterways along the U.S. Gulf Coast.

     ‘Inland Barge Joint Venture’ shall mean any one or more persons that,
collectively, acquire (whether by purchase, merger, capital contribution or
otherwise), or are formed solely for the purpose of acquiring, all or substantially
all of the Inland Barge Assets, provided that the Borrower, directly or indirectly,
owns (on a pro forma basis after giving effect to such acquisition) a portion of
the Equity Interest of each such person.”

     ‘Permitted Joint Venture’ shall mean any joint venture involving any Company
(which joint venture may be a Subsidiary) created in connection with any Asset Sale
or Investment otherwise permitted under this Agreement.”

          (ii) Clause (b) of Section 5.11 of the Credit Agreement is hereby amended by
adding the words “, the Inland Barge Joint Venture or any Permitted Joint Venture,
as applicable” after each instance of the words “the Delta Towing Joint Venture”.

          (iii) Clause (c) of Section 5.11 of the Credit Agreement is hereby amended by
inserting the parenthetical “(unless such Subsidiary is the Delta Towing Joint
Venture, the Inland Barge Joint Venture or any Permitted Joint Venture, as
applicable, and Borrower owns (directly or indirectly) less than 80% of the Equity
Interests of the Delta Towing Joint Venture, the Inland Barge Joint Venture or such
Permitted Joint Venture, as applicable, in which case Borrower shall use
commercially reasonable efforts to cause the Delta Towing Joint Venture, the Inland
Barge Joint Venture or such Permitted Joint Venture, as applicable, to take the
actions set forth in this clause)” after the phrase “the Closing Date” therein.

          (iv) Section 6.06 of the Credit Agreement is hereby amended by (A) deleting
the “and” at the end of clause (j) thereof, (B) deleting the “.” at the end of
clause

11

 

(k) thereof and replacing it with the word “; and” and (C) adding a new clause (l) as follows:

     “(l) an Asset Sale involving all or any portion of the Inland Barge Assets or
any Equity Interests of the Inland Barge Joint Venture, in each case to the extent
that (i) the consideration received by Borrower or the relevant Subsidiary in such
Asset Sale is equal to or greater than the fair market value of the assets subject
to such Asset Sale, (ii) no Default exists or would exist after giving effect to
such Asset Sale, (iii) after giving effect to such Asset Sale the Domestic Asset
Percentage would exceed 50%, (iv) if such Asset Sale involves the disposition of a
Mortgaged Vessel, after giving effect to such Asset Sale the Collateral Maintenance
Ratio would exceed 1.50 to 1.00, (v) if such Asset Sale involves the disposition of
a Mortgaged Vessel and the fair market value of the assets subject to such Asset
Sale (inclusive of the fair market value of the assets subject to any related Asset
Sale) would exceed $50.0 million, a Current Desktop Appraisal shall be in effect,
(vi) if the fair market value of such assets would exceed $25.0 million, Borrower
shall have delivered to the Agents an Officer’s Certificate certifying that such
Asset Sale complies with this clause (l) (which shall have attached thereto
reasonably detailed back-up data and calculations showing such compliance) and
(vii) if, after giving effect to such Asset Sale involving Equity Interests of the
Inland Barge Joint Venture, the Inland Barge Joint Venture is a Subsidiary
Guarantor (or is required to be a Subsidiary Guarantor), then each person (other
than a Company) owning Equity Interests of the Inland Barge Joint Venture shall
have executed and delivered to Agents a Minority Holder Acknowledgment, Consent and Waiver.”

          (v) Section 6.13 of the Credit Agreement is hereby amended by: (A) replacing
in clause (iii) thereof the phrase “issuances described in the proviso to the
immediately succeeding clause (iv)” with the phrase “issuances described in the
provisos to the immediately succeeding clauses (iv),
(v) and (vi)”, (B) adding in
clause (iv) thereof immediately after the phrase “issuances described in the
proviso to the immediately preceding clause (iii)” the phrase “and the proviso to
the immediately succeeding clauses (v) and (vi)”, (C) deleting the “and” at the end
of clause (iii) thereof, (D) deleting the “.” at the end of clause (iv) thereof and
(E) adding the following new clauses (v) and (vi) as follows:

     “(v) the Inland Barge Joint Venture may issue Equity Interests to persons
other than a Company, provided that (A) neither the issuer of such Equity Interests
nor any of its Subsidiaries owns any Mortgaged Vessel, (B) such issuance would be
permitted as an Asset Sale (regardless of whether the proceeds of such issuance are
less than $1.0 million) under Section 6.06(l), (C) each such person executes and
delivers to the Agents a Minority Holder Acknowledgment, Consent and Waiver prior
to such issuance, unless the issuer of such Equity Interests (after giving effect
to such issuance) is not a Subsidiary of Borrower and (D) for the avoidance of
doubt, the Net Cash Proceeds of each such issuance are applied in accordance with
the terms of Section 2.10(c); provided, however, that the Net Cash Proceeds of such
issuances shall not be required to be applied as a mandatory prepayment in

12

 

accordance
with Section 2.10(c) until the aggregate amount of such Net Cash Proceeds and
the Net Cash Proceeds of issuances described in the provisos to the immediately preceding
clauses (iii) and (iv) of this
Section 6.13, in each case not theretofor applied in
accordance with Section 2.10(c),exceeds $2.5 million, at which time all such Net Cash
Proceeds shall be promptly applied by Borrower as a mandatory prepayment in accordance with
Section 2.10(c); and

     (vi) any Permitted Joint Venture may issue Equity Interests to persons other
than a Company, provided that (A) neither the issuer of such Equity Interests nor
any of its Subsidiaries owns any Mortgaged Vessel, (B) such issuance would be
permitted as an Asset Sale (regardless of whether the proceeds of such issuance are
less than $1.0 million) under Section 6.06(a),
(b), (c) or (g), (C) each such
person executes and delivers to the Agents a Minority Holder Acknowledgment,
Consent and Waiver prior to such issuance, unless the issuer of such Equity
Interests (after giving effect to such issuance) is not a Subsidiary of Borrower
and (D) for the avoidance of doubt, the Net Cash Proceeds of each such issuance are
applied in accordance with the terms of Section 2.10(c); provided, however, that
the Net Cash Proceeds of such issuances shall not be required to be applied as a
mandatory prepayment in accordance with Section 2.10(c) until the aggregate amount of such Net Cash Proceeds and the
Net Cash Proceeds of issuances described in the provisos to the immediately
preceding clauses (iii), (iv) and (v) of this
Section 6.13, in each case not
theretofor applied in accordance with Section 2.10(c), exceeds $2.5 million, at
which time all such Net Cash Proceeds shall be promptly applied by Borrower as a
mandatory prepayment in accordance with Section 2.10(c).”

          (vi) Section 6.14 of the Credit Agreement is hereby amended by: (A) deleting
the word “or” at the end of clause (i)(B) thereof, (B) adding the following new
clause (i)(D) immediately after clause (i)(C) thereof:

“(D) the Inland Barge Joint Venture, so long as the Equity Interests of the Inland Barge
Joint Venture held by persons other than a Company were issued in a transaction that would
comply with clause (v) of Section 6.13 or (E) any Permitted Joint Venture, so long as the
Equity Interests of such Permitted Joint Venture were issued in a transaction that would
comply with clause (vi) of Section 6.13, or”

          (v) Intercreditor
Agreement. Section 1.01 of the Credit Agreement is hereby
amended by inserting the following definition of “Intercreditor Agreement” in
proper alphabetical order as follows:

     “‘Intercreditor Agreement’ shall have the meaning assigned to such term in
clause (q) of Section 6.02.”

          (w) LIBOR
Rate. Section 1.01 of the Credit Agreement is hereby amended by
amending the definition of “LIBOR Rate” by (i) replacing the words “Page 3750 on
the Telerate System Incorporated Service” with the words “Reuters Screen LIBOR1
Page” and (ii) adding the following as the penultimate sentence:

13

 

“Notwithstanding
the foregoing, for purposes of clause (c) of the definition of Alternate
Base Rate, the rates referred to above shall be the rates as of 11:00 a.m., London, England
time, on the date of determination (rather than the second London Business Day preceding
the date of determination).”

          (x) Liquidity
Amount. Section 1.01 of the Credit Agreement is hereby amended by inserting the
definition of “Liquidity Amount” in proper alphabetical order as follows:

     “‘Liquidity Amount’ shall mean, at any time, the sum of (a) cash and Cash
Equivalents on hand of Borrower and its Subsidiaries that is not Restricted Cash
(less the aggregate amount of checks, wires and other transfers written or made
against such cash and Cash Equivalents, but which have not been theretofor
deducted) (the “Cash Component”) and (b) availability of Revolving Commitments for
making Revolving Loans.”

          (y) Non-Mortgaged
Vessels. Section 1.01 of the Credit Agreement is hereby amended by inserting the following definition of “Non-Mortgaged Vessels” in proper alphabetical order as
follows:

     “‘Non-Mortgaged Vessels’ shall mean the Vessels set forth on Schedule I to the
Second Amendment (or in a supplement thereto in form and substance reasonably
satisfactory to the Administrative Agent delivered to the Administrative Agent by
the Borrower in connection with a Permitted Acquisition).”

          (z) Permitted
Acquisition; Specified Existing Notes Payment. Section 1.01 of
the Credit Agreement is hereby amended as follows:

          (i) The definition of “Permitted Acquisition” is amended by adding the
parenthetical “(as in effect immediately prior to the amendments made thereto
pursuant to the Second Amendment, except in the case of a Permitted Stock
Acquisition, in which case, such covenants shall be the covenants as in effect as
of the date of such Permitted Stock Acquisition)” immediately after each reference
to “Sections 6.10(a) and (b)” or
“Section 6.10” set forth therein;

          (ii) Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definitions in proper alphabetical order:

     “‘Permitted Stock Acquisition’ shall mean any transaction for (a) the
acquisition of one or more Vessels and related assets or all or substantially all
of the property of any person or of any business or division of any person or (b)
the acquisition (including by merger or consolidation) of the Equity Interests of
any person that becomes a Subsidiary after giving effect to such transaction, in
each case, so long as the consideration in connection with such transaction
consists solely of (i) Qualified Capital Stock of Borrower, (ii) the Net Cash
Proceeds of an

14

 

Equity Issuance in an aggregate amount not exceeding the Available Equity Proceeds Amount
that is then in effect or (iii) a combination of the foregoing.’

     ‘Specified Existing Notes Payment’ shall have the meaning assigned to such
term in Section 6.11(a).’”

          (aa) Permitted
Refinancing; Permitted Debt Requirements. Section 1.01 of the
Credit Agreement is hereby amended by inserting the following definitions in proper
alphabetical order:

     “‘Permitted Debt Maturity Requirements’ shall have the meaning assigned to
such term in Section 6.01(k).

     ‘Permitted Refinancing’ shall mean, as to any Indebtedness, the Incurrence of
other Indebtedness to refinance, extend, renew, defease, restructure, replace or refund (collectively, “refinance”) such existing
Indebtedness; provided that, in the case of such other Indebtedness, the following
conditions are satisfied:

     (a) any such refinancing Indebtedness is in an aggregate principal
amount not greater than the aggregate principal amount of the Indebtedness
being refinanced, plus the amount of any premiums, interest and/or
discounts required to be paid thereon and reasonable fees and expenses
associated therewith;

     (b) such refinancing Indebtedness has a later or equal final maturity
and longer or equal weighted average life to maturity than the
Indebtedness being refinanced;

     (c) the respective obligor or obligors shall be the same on the
refinancing Indebtedness as on the Indebtedness being refinanced (except
for newly formed or acquired Subsidiaries which also become obligors in
respect of the Obligations);

     (d) the security, if any, for the refinancing Indebtedness shall be
of the same type as that for the Indebtedness being refinanced (except to
the extent that less security is granted to holders of refinancing
Indebtedness), and, in the event the holders of such Indebtedness being
refinanced (or any agent or trustee on their behalf) were at the time of
such refinancing subject to an intercreditor or similar agreement with the
Secured Parties and/or the Agents, the holders of such refinancing
Indebtedness shall become subject to such intercreditor or similar
agreement on terms and conditions satisfactory to the Agents; provided
that, if after the incurrence of such refinancing Indebtedness, additional
types of Collateral or additional assets are granted as Collateral for the
Obligations, such additional types of Collateral or additional assets may
also secure such refinancing

15

 

Indebtedness to the extent the Indebtedness being refinanced was required to be
secured by the same Collateral securing the Obligations;

     (e) the refinancing Indebtedness is subordinated in right of payment
to the Obligations to the same degree, if any, or to a greater degree as
the Indebtedness being refinanced; and

     (f) in the event any term or terms of the Indebtedness being
refinanced were required hereunder to be consented to by the Required
Lenders or the Administrative Agent, the equivalent term or terms in the
refinancing Indebtedness shall be, in the aggregate, not materially less
favorable to the Lenders than those contained in the Indebtedness being
refinanced, unless otherwise consented to by the Required Lenders (such
consent not to be unreasonably withheld), in the case where Required Lenders consented with respect
to the prior Indebtedness, or the Administrative Agent (such consent not
to be unreasonably withheld), in the case where the Administrative Agent
consented with respect to the prior Indebtedness.”

          (bb) Permitted
Senior Secured Notes. Section 1.01 of the Credit Agreement is
hereby amended by inserting the following definition of “Permitted Senior Secured
Notes” in proper alphabetical order as follows:

     “‘Permitted Senior Secured Notes’ shall have the meaning assigned to such term
in clause (n) of Section 6.01.”

          (cc) Preferred
Stock Issuance. Section 1.01 of the Credit Agreement is hereby
amended by amending the definition of “Preferred Stock Issuance” by replacing the
reference to “(m)” therein with a reference to
“(o)”.

          (dd) Restricted
Cash. Section 1.01 of the Credit Agreement is hereby amended
by inserting the following definition of “Restricted Cash” in proper alphabetical
order as follows:

     “‘Restricted Cash’ shall mean, when referring to cash or Cash Equivalents of
Borrower and its Subsidiaries, that such cash or Cash Equivalents (a) appear (or
would be required to appear) as “restricted” on a consolidated balance sheet of
Borrower and its Subsidiaries (unless such appearance is related to the Loan
Documents or Liens created thereunder) or (b) are subject to any Lien in favor of
any person (other than Permitted Liens described in clauses (a), (j), (l)
(including cash collateral provided under Section 2.20)
and (q) of Section 6.02).”

          (ee) Retained
Excess Cash Flow. Section 1.01 of the Credit Agreement is
hereby amended by inserting the following definition of “Retained Excess Cash Flow”
in proper alphabetical order as follows:

16

 

     “‘Retained Excess Cash Flow’ shall mean, initially, zero,

as increased from time to time, for the fiscal year ending on (or about) December 31, 2010
and each fiscal year thereafter, on each date that the Borrower has made the prepayment
required under Section 2.10(g) with respect to such fiscal year, the amount of Excess Cash
Flow for the fiscal year with respect to which such prepayment was made multiplied by 50%,

and as decreased from time to time, at any time a payment, prepayment, redemption or
acquisition is made pursuant to clause (a)(ii)(A) of Section 6.11, by the amount expended
with respect thereto.”

          (ff) Second Amendment. Section 1.01 and Article IX of the Credit Agreement are hereby amended as follows:

          (i) Section 1.01 of the Credit Agreement is hereby amended by inserting the
following definitions in proper alphabetical order as follows:

          “‘Amendment Effective Date’ shall have the meaning set forth in the Second
Amendment.

     ‘Second Amendment’ shall mean that certain Amendment No. 2 to this Agreement,
dated as of July 23, 2009, among the Borrower, the Subsidiary Guarantors, the
Issuing Banks executing such Amendment No. 2 on the signature pages thereto, and
UBS AG, STAMFORD BRANCH, as the Administrative Agent, the Collateral Agent and an
Issuing Bank.”

          (ii) A new Section 9.10 of the Credit Agreement is hereby added to the Credit
Agreement as follows:

     “SECTION 9.10 Second Amendment. The Lenders and the Issuing Banks authorize
the Administrative Agent and the Collateral Agent , as applicable, to enter into
and execute such agreements and documents to effect the transactions contemplated
by the Second Amendment, including execution of the Intercreditor Agreement on
behalf of the Lenders and the Issuing Banks, and the Lenders and the Issuing Banks
agree to be bound by the terms of such Intercreditor Agreement. Notwithstanding
anything to the contrary in this Agreement or in any other Loan Document, the Liens
granted to the Collateral Agent in favor of the Secured Parties pursuant to this
Agreement and the other Loan Documents and the exercise of any right related to any
Collateral shall be subject, in each case, to the terms of the Intercreditor
Agreement.”

          (gg) Test Period. Section 1.01 of the Credit Agreement is hereby amended by
amending the definition of “Test Period” in its entirety as follows:

17

 

     “A ‘Test Period’ in effect at any time shall mean the period of four
consecutive fiscal quarters of Borrower ended on or prior to such time (taken as
one accounting period) in respect of which financial statements for each quarter or
fiscal year in such period have been or were required to be delivered pursuant to
Section 5.01(a) or (b), without giving effect to any grace period applicable
thereto.”

          (hh) Wholly Owned Subsidiary. Section 1.01 of the Credit Agreement is hereby
amended by amending the definition of “Wholly Owned Subsidiary” in its entirety as
follows:

     “‘Wholly Owned Subsidiary’ shall mean, as to any person, (a) any corporation
100% of whose capital stock is at the time owned by such person and/or one or more
Wholly Owned Subsidiaries of such person and (b) any partnership, association, joint venture, limited liability company or
other entity in which such person and/or one or more Wholly Owned Subsidiaries of
such person have a 100% equity interest at such time, in each case, other than (i)
directors’ qualifying shares or (ii) shares or other equity interests required by
law to be held by a resident of the relevant jurisdiction (except, in the case of
clauses (i) and (ii), for directors’ qualifying shares or such other shares or
equity interests that confer on the person owning such qualifying shares or equity
interests Control of any such corporation, partnership, association, joint venture,
limited liability company or other entity referenced in clauses (a) or (b) above).”

          (ii) GAAP Terms. Section 1.04 of the Credit Agreement is hereby amended by
(A) inserting the parenthetical “(including Capital Lease Obligations and Capital
Expenditures)” immediately following the phrase “financial covenants, standards or
terms in this Agreement” in the second and third sentences therein and (B) adding
the following proviso at the end of the first sentence of such Section 1.04:

“; provided that if for purposes of determining the outstanding amount of any Indebtedness
(including, for the avoidance of doubt, any determination of Consolidated Indebtedness),
(x) any election by the Borrower to measure an item of Indebtedness using fair value (as
permitted by SFAS 159 issued by the Financial Accounting Standards Board in February 2007,
or any similar accounting standard) shall be disregarded and such determination shall be
made as if such election had not been made and (y) any original issue discount with respect
to such Indebtedness shall not be deducted in determining the outstanding amount of such
Indebtedness.”

          (jj) Incremental Facilities. Section 2.19 of the Credit Agreement is hereby
amended by: (A) deleting the reference to “the Revolving Maturity Date” occurring
in clause (a) thereof and inserting in its place the phrase “the Amendment
Effective Date”, and (B) inserting the phrase “prior to the Amendment Effective
Date,” immediately after the reference to “(y)” in clause (a) thereof.

          (kk) Representations and Warranties.

18

 

          (i) Section 3.04(b) of the Credit Agreement is hereby amended by deleting the
reference to “December 31, 2006” therein and replacing it with a reference to
“March 31, 2009”.

          (ii) Section 3.10 of the Credit Agreement is hereby amended by inserting the
following immediately after the last sentence thereof:

“The Secured Parties are not directly or indirectly secured, as such terms are used in
Regulation U, by any Margin Stock owned by a Company in violation of, or in a manner that
is inconsistent with, the provisions of the regulations of the Board,
including Regulation T, U or X. No Company owns any Margin Stock, except to the extent
Borrower has reported such ownership in writing to the Administrative Agent for
distribution to the Lenders.”

          (iii) Section 3.12 of the Credit Agreement is hereby amended by inserting the
following proviso immediately after the reference to “on the Closing Date)”:

“; provided that in no event shall the proceeds of any concurrent or substantially
concurrent borrowing of Revolving Loans or Swingline Loans be used to prepay the Term
Loans”.

          (ll) Conditions to Credit Extensions. Clause (c)(i) of Section 4.02 of the
Credit Agreement is hereby amended by adding the following parenthetical at the end
thereof: “(in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date)”.

          (mm) Affirmative Covenants. Sections 5.01, 5.02 and 5.12 and Article V of the
Credit Agreement are hereby amended as follows:

          (i) Section 5.01 of the Credit Agreement is hereby amended by: (A) by deleting
the word “and” at the end of clause (e) thereof, (B) re-lettering clause (f) of
such Section 5.01 as a new clause (g) and (C) adding a new clause (f) as follows:

          “(f) Annual Budgets. Within 60 days after the beginning of each fiscal year
commencing with the fiscal year ending December 31, 2010, a detailed budget for
Borrower in form reasonably satisfactory to the Administrative Agent, but to
include estimated balance sheets, statements of income and statements of cash flow,
for each fiscal quarter of such fiscal year prepared in summary form, in each case,
with appropriate presentation and discussion of the principal assumptions upon
which such budgets are based, accompanied by the statement of a Financial Officer
of Borrower to the effect that the budget of Borrower is based upon assumptions
believed to be reasonable at the time of preparation thereof (it being recognized
by the Agents and the Lenders that any results of operation forecasted therein are
not to be viewed as facts and that the actual results of operation during the
period or periods covered by such budget may differ from the amounts set forth in
such budget, and such differences may be material); and”.

19

 

          (ii) Section 5.02 of the Credit Agreement is hereby amended by amending clause
(iv) thereof in its entirety as follows:

     “(iv) the occurrence of a Casualty Event in respect of which the damage to any
property or properties of Borrower or any of its Subsidiaries is in excess of $10.0 million in the aggregate; and”.

          (iii) Section 5.12 of the Credit Agreement is hereby amended by inserting the
following parenthetical immediately after the phrase “any document” in the first
sentence thereof:

“(including opinions of counsel with respect to Ship Mortgages and other matters that are
not covered by the UCC)”.

          (iv) Article V of the Credit Agreement is hereby amended by inserting the
following new Section 5.18 in the proper numerical order:

     “SECTION 5.18 Additional Mortgaged Vessels. As soon as reasonably practicable, but in
no event later than September 30, 2009 (or such later date that the Administrative Agent
may agree in its sole discretion), (i) execute and deliver to the Administrative Agent and
the Collateral Agent a new Ship Mortgage or amendments or supplements to an existing Ship
Mortgage as the Administrative Agent or the Collateral Agent shall deem reasonably
necessary or advisable to grant to the Mortgage Trustee, for its benefit and for the
benefit of the other Secured Parties, a Lien on each Vessel listed on Annex C to the Second
Amendment, subject to no Liens other than Permitted Liens, (ii) take all actions reasonably
requested by the Collateral Agent or the Administrative Agent to cause such Lien to be duly
perfected to the extent required by such Ship Mortgage in accordance with all applicable
Requirements of Law, including the filing of such Ship Mortgage or amendment or supplement
to an existing Ship Mortgage in the appropriate vessel registry and (iii) deliver such
other documentation as the Administrative Agent may reasonably request in connection with
the foregoing, including, certificates, copies of searches and filings and favorable
written opinions of counsel and other items of the types required to have been delivered
pursuant to Section 4.01(o), all in form, content and scope reasonably satisfactory to the
Administrative Agent.”.

          (nn) Negative Covenants. Sections 6.01, 6.02, 6.08, 6.11 and 6.12 of the
Credit Agreement are hereby amended as follows:

          (i) Section 6.01 of the Credit Agreement is hereby amended by amending clause
(b) thereof in its entirety as follows:

     ”(b) (i) Indebtedness outstanding on the Closing Date and listed on Schedule
6.01(b), and (ii) Permitted Refinancings thereof;”

20

 

          (ii) Clause (g) of Section 6.01 of the Credit Agreement is hereby amended by
inserting the following proviso immediately after the reference to “this Section
6.01”:

“; provided that any Subsidiary which incurs a Contingent Obligation in respect of
Indebtedness of Borrower or any other Loan Party shall be (or shall simultaneously
therewith become) a Subsidiary Guarantor;”

          (iii) Section 6.01 of the Credit Agreement is hereby further amended by
amending clause (k) thereof in its entirety to read as follows:

     “(k) (A) unsecured Indebtedness of Borrower Incurred on terms comparable to
similarly situated issuers (as reasonably determined by the Administrative Agent);
provided that

     (i) the Administrative Agent shall have been provided the terms of
such Indebtedness no less than five Business Days prior to the incurrence
thereof,

     (ii) no Default exists immediately before or after the incurrence of
such Indebtedness,

     (iii) after giving effect to such Incurrence on a Pro Forma Basis,
Borrower shall be in compliance with all covenants set forth in Sections
6.10(a) and (b) as of the most recent Test Period (assuming for purposes
of Section 6.10, that such Incurrence, all other Incurrences of
Indebtedness, and the use of the proceeds of such Incurrence (including
the repayment or refinancing of other Indebtedness) since the first day of
the relevant Test Period for each of the financial covenants set forth in
Section 6.10 ending on or prior to the date of such transaction, had
occurred on the first day of such relevant Test Period);

     (iv) with respect to any such Indebtedness incurred on or after the
Amendment Effective Date, such Indebtedness (1) does not have a final
maturity date that is prior to, and does not require any scheduled
amortization of principal prior to, the date falling 91 days after the
Term Loan Maturity Date, and (2) is not mandatorily redeemable or
redeemable at the option of the holder thereof, in whole or in part, prior
to the date falling 91 days after the Term Loan Maturity Date (excluding
for purposes of this subclause (iv), (x) any mandatory redemption
resulting from a change in control (or other fundamental change) or an
asset sale offer requirement (provided that Borrower shall have complied
with the terms of this Agreement with respect to any Asset Sale resulting
in such asset sale offer, including any prepayment required under Section
2.10(c) hereof) and (y) any conversion of any such Indebtedness solely
into Qualified Capital Stock

21

 

of Borrower) (the requirements set forth in this subclause (iv), the “Permitted
Debt Maturity Requirements”),

     (v) with respect to any such Indebtedness incurred on or after the
Amendment Effective Date, 100% of the Net Cash Proceeds of such
Indebtedness shall be applied to prepay the Term Loans in accordance with
Section 2.10(d) or be applied to pay, prepay or redeem other Indebtedness
of Borrower substantially concurrently with the incurrence of such
Indebtedness; and

     (vi) Borrower shall have delivered to the Administrative Agent an
Officer’s Certificate certifying that such Incurrence complies with this
clause (k) (which shall have attached thereto reasonably detailed
calculations showing such compliance); and

     (B) Permitted Refinancings thereof; provided that the resulting
refinancing Indebtedness satisfies the Permitted Debt Maturity
Requirements;”

          (iv) Section 6.01 of the Credit Agreement is hereby further amended by: (A)
deleting the word “and” at the end of clause (l) thereof, (B) re-lettering clause
(m) of such Section 6.01 as new clause (o), and (C) adding the following new
clauses (m) and (n) as follows:

     “(m) Indebtedness of Borrower and its Subsidiaries representing deferred
compensation to employees of Borrower and its Subsidiaries incurred in the ordinary
course of business;

     (n) (A) Indebtedness of Borrower Incurred on or after the Amendment Effective
Date on terms comparable to similarly situated issuers (as reasonably determined by
the Administrative Agent), 100% of the Net Cash Proceeds of which shall be solely
applied to prepay the Term Loans in accordance with Section 2.10(d); provided that

     (i) the Administrative Agent shall have been provided the terms of
such Indebtedness no less than five Business Days (or, in the case of
pricing terms, three Business Days) prior to the incurrence thereof,

     (ii) no Default exists immediately before or after the incurrence of
such Indebtedness,

     (iii) after giving effect to such Incurrence on a Pro Forma Basis,
Borrower shall be in compliance with all covenants set forth in Sections
6.10(a) and (b) as of the most recent Test Period (assuming for purposes
of Section 6.10, that such Incurrence, all other Incurrences of
Indebtedness, and the use of the proceeds of such Incurrence (including
the repayment or

22

 

refinancing of other Indebtedness) since the first day of the relevant Test Period
for each of the financial covenants set forth in Section 6.10 ending on or prior to
the date of such transaction, had occurred on the first day of such relevant Test
Period),

     (iv) such Indebtedness shall comply with the Permitted Debt Maturity
Requirements, and

     (v) Borrower shall have delivered to the Administrative Agent an
Officer’s Certificate certifying that such Incurrence complies with this
clause (n) (which shall have attached thereto reasonably detailed
calculations showing such compliance) (any such notes issued pursuant to
this clause (n) being referred to herein as “Permitted Senior Secured
Notes”), and

     (B) Permitted Refinancings thereof; and”

          (v) Section 6.02 of the Credit Agreement is hereby amended by (A) deleting the
word “and” at the end of clause (o) thereof, (B) re-lettering clause (p) of such
Section 6.02 as new clause (r), and (C) adding the following new clauses (p) and
(q) as follows:

     “(p) Liens incurred in the ordinary course of business arising
from contractual rights of setoff, which Liens do not secure Indebtedness for
borrowed money;

     (q) Liens securing Indebtedness incurred pursuant to Section 6.01(n)
(including all obligations (including interest, premiums, fees, costs, expenses and
other monetary amounts related thereto) arising from the documentation relating to
such Indebtedness); provided that each party in whose favor such Liens were created
(or an agent or trustee on its behalf) shall have entered into an intercreditor
agreement with the Collateral Agent, in form and substance reasonably acceptable to
the Administrative Agent and the Collateral Agent (such intercreditor agreement,
the “Intercreditor Agreement”); and”

          (vi) Section 6.02 of the Credit Agreement is hereby further amended by adding
the phrase “or permitted under clause (q) of this Section 6.02” to the end of the
proviso set forth at the end of such Section 6.02.

          (vii) Clause (c) of Section 6.08 of the Credit Agreement is hereby amended by
deleting each reference to “$10.0 million” occurring therein and inserting in its
place the phrase “$5.0 million”.

          (viii) Clause (d) of Section 6.08 of the Credit Agreement is hereby amended by
adding the parenthetical “(as in effect immediately prior to the amendments made
thereto pursuant to the Second Amendment)” immediately after each reference to
“Sections 6.10(a) and (b)” or “Section 6.10” set forth therein.

23

 

          (ix) Clause (a) of Section 6.11 of the Credit Agreement is hereby amended in
its entirety to read as follows:

     “(a) make any voluntary or optional payment or prepayment on or redemption or
acquisition for value of, or any prepayment or redemption as a result of any asset sale,
change of control or similar event of,

     (i) any Indebtedness under any Subordinated Indebtedness, except as
otherwise permitted by an Intercompany Note or this Agreement;

     (ii) any Indebtedness incurred under Section 6.01(k) (other than
payments, prepayments, redemptions or acquisitions of such Indebtedness
made (1) in connection with a Permitted Refinancing of such Indebtedness
under Section 6.01(k)(B) or (2) solely with Qualified Capital Stock of
Borrower), unless:

     (A) after giving effect to such payment, prepayment,
redemption or acquisition on a Pro Forma Basis, Borrower shall be in
compliance with all covenants set forth in Sections 6.10(a) and (b)
(as in effect immediately prior to the amendments made thereto
pursuant to the Second Amendment, except in the case of a payment,
prepayment, redemption or acquisition of Borrower’s 3.375%
Convertible Senior Notes due 2038 made solely with the Net Cash
Proceeds from Equity Issuances in an amount not to exceed the
Available Equity Proceeds Amount that is then in effect (such
payment, prepayment, redemption or acquisition, a “Specified
Existing Notes Payment”), in which case, such covenants shall be the
covenants as in effect as of the date of such Specified Existing
Notes Payment) as of the most recent Test Period (assuming for
purposes of Section 6.10 (as in effect immediately prior to the
amendments made thereto pursuant to the Second Amendment, except in
the case of a Specified Existing Notes Payment, in which case, such
covenants shall be the covenants as in effect as of the date of such
Specified Existing Notes Payment), that such payment, prepayment,
redemption or acquisition (including all Incurrences of Indebtedness
in connection therewith and all Dividends consummated since the
first day of the relevant Test Period ending on or prior to the date
of such payment, prepayment, redemption or acquisition), had
occurred on the first day of such relevant Test Period),

     (B) the aggregate amount of such payment, prepayment,
redemption or acquisition does not exceed the Available Amount that
is then in effect;

24

 

     (C) no Default exists immediately before or after such
payment, prepayment, redemption or acquisition; and

     (D) Borrower shall have delivered to the Administrative Agent
an Officer’s Certificate certifying that such payment, prepayment,
redemption or acquisition has been made under, and in compliance
with, this subclause (ii) (which shall have attached thereto
reasonably detailed calculations showing such compliance, with such
backup information as the Administrative Agent may reasonably
request); or

     (iii) any Indebtedness incurred under Section 6.01(n), except (A) in
an amount not exceeding Retained Excess Cash Flow so long as no Default
exists immediately before or after such payment, prepayment, redemption or
acquisition, (B) with the Net Cash Proceeds from Equity Issuances in an
amount not to exceed the Available Equity Proceeds Amount that is then in
effect, so long as (1) Borrower shall have delivered to the Administrative
Agent an Officers’ Certificate certifying as to the aggregate amount of
such Net Cash Proceeds applied to pay, prepay, redeem or acquire such
Indebtedness, and (2) no Default exists immediately before or after such
payment, prepayment, redemption or acquisition, (C) in connection with a
Permitted Refinancing of such Indebtedness, (D) in the case of any
prepayment or redemption as a result of any asset sale, change of control
or similar event, to the extent permitted by the Intercreditor Agreement,
(E) redemptions thereof made solely with Qualified Capital Stock of
Borrower and (F) to the extent that (1) the Term Loans and (2) any
Indebtedness secured on a pari passu basis with the Term Loans incurred to
refinance (as defined in the definition of “Permitted Refinancing”) the
Term Loans (or any portion thereof) to the extent the terms of such
Indebtedness described in this subclause (2) would require a proportional
payment described in this subclause (F) are substantially concurrently
prepaid in a proportional amount (as determined by the Administrative
Agent based on the then-outstanding Term Loans and then-outstanding
principal amount of the Permitted Senior Secured Notes and, if applicable,
any such other Indebtedness requiring a proportional payment, as set forth
in an Officers’ Certificate delivered by Borrower in connection with such
payment, prepayment, redemption or acquisition), so long as no Default
exists immediately before or after such payment, prepayment, redemption or
acquisition;”

          (x) Clause (b) of Section 6.11 of the Credit Agreement is
hereby further amended by (A) adding the words “or Section 6.01(n)”
immediately after the reference to “Section 6.01(k)” and (B) adding the following
parenthetical at the end of such clause:

25

 

     “(it being understood that, for purposes of this clause (b), the provisions of any
Indebtedness incurred to refinance (as defined in the definition of Permitted Refinancing)
any other Indebtedness shall be subject to the terms set forth in the definition of
Permitted Refinancing and shall not be deemed to be amendments or modifications of the
provisions of the Indebtedness being refinanced).”

          (xi) Section 6.12 of the Credit Agreement is hereby amended by adding the
words “or Section 6.01(n)” immediately after the reference to “Section 6.01(k)”.

          (oo)
Financial Covenants. Section 6.10 of the Credit Agreement is hereby
amended as follows:

          (i) Clause (a) of Section 6.10 of the Credit Agreement is hereby amended in its
entirety to read as follows:

     “(a) Maximum Total Leverage Ratio/Liquidity. (i) Permit the Total Leverage
Ratio, as of the last day of any Test Period occurring during a period set forth
below, to exceed the ratio set forth opposite such period below:

	 	 	 
	Period	 	Total Leverage Ratio
	 
	Closing Date - June 30, 2010

	 	3.75 to 1.00
	July 1, 2010 - September 30, 2010

	 	8.00 to 1.00
	October 1, 2010 - December 31, 2010

	 	7.50 to 1.00
	January 1, 2011 - March 31, 2011

	 	7.00 to 1.00
	April 1, 2011 - June 30, 2011

	 	6.75 to 1.00
	July 1, 2011 - September 30, 2011

	 	6.00 to 1.00
	October 1, 2011 - December 31, 2011

	 	5.50 to 1.00
	January 1, 2012 - March 31, 2012

	 	5.25 to 1.00
	April 1, 2012 - June 30, 2012

	 	5.00 to 1.00
	July 1, 2012 - September 30, 2012

	 	4.75 to 1.00
	October 1, 2012 - December 31, 2012

	 	4.50 to 1.00
	January 1, 2013 - March 31, 2013

	 	4.25 to 1.00
	April 1, 2013 and thereafter

	 	4.00 to 1.00

provided that, notwithstanding anything to the contrary herein, solely with respect to
compliance with this Section 6.10(a) that is required to be demonstrated pursuant to Sections
5.01(c), 6.01(k), and 6.01(n) and for purposes of determining the permissibility of a
Permitted Stock Acquisition, compliance with this Section

26

 

6.10(a)(i) shall not be required for any Test Period ending during the Alternate Covenant
Period; and

               (ii) Permit the Liquidity Amount (x) for the period commencing on October 1,
2009 and ending on December 31, 2010, to be less than $100,000,000, (y) for the
period commencing on January 1, 2011 and ending on December 31, 2011, to be less
than $75,000,000 and (z) at any time on or after January 1, 2012, to be less than
$50,000,000, in each case, at the close of business for any three (3) consecutive
Business Days during such period; provided that it shall not be a breach of this
covenant if the failure to comply with this covenant resulted solely from a Lender
becoming a Defaulting Lender (including because the Revolving Commitment of such
Lender is not available for borrowing) unless the Borrower is in breach of this
covenant on the thirtieth day following the date such Lender became a Defaulting
Lender or at any time thereafter.”

          (ii) Clause (b) of Section 6.10 of the Credit
Agreement is hereby amended in its entirety to read as follows:

     “(b) Minimum Fixed Charge Coverage Ratio. Permit the Consolidated Fixed
Charge Coverage Ratio, as of the last day of any Test Period occurring during a
period set forth below, to be less than the ratio set forth opposite such period
below:

	 	 	 
	 	 	Consolidated Fixed
	 	 	Charge
	Period	 	Coverage Ratio
	 
	Closing Date - June 30, 2009

	 	1.15 to 1.00
	July 1, 2009 - December 31, 2011

	 	1.00 to 1.00
	January 1, 2012 - March 31, 2012

	 	1.05 to 1.00
	April 1, 2012 - June 30, 2012

	 	1.10 to 1.00
	July 1, 2012 and thereafter

	 	1.15 to 1.00

“

          (iii) The Compliance Certificate shall be amended in substantially the form of
Exhibit A hereto.

          (pp) Notice. Section 10.01 of the Credit Agreement is hereby amended by
amending clause (i) thereof in its entirety as follows:

          “(i) if to any Loan
Party, to Borrower at:

Hercules Offshore, Inc.

9 Greenway Plaza

Suite 2200

Houston, TX 77046

27

 

Attention: Stephen M. Butz

Telecopier No.: (713) 350-5109

Email: sbutz@herculesoffshore.com

with a copy to:

Hercules Offshore, Inc.

9 Greenway Plaza

Suite 2200

Houston, TX 77046

Attention: Jim Noe

Telecopier No.: (713) 350-5109

Email: jnoe@herculesoffshore.com”.

          (qq) No Fiduciary Duty. Article X of the Credit Agreement is hereby amended by
inserting the following new Section 10.18 in the proper numerical order:

          “10.18 No
Fiduciary Duty. Each Agent, each Lender and their respective Affiliates
(collectively, solely for purposes of this paragraph, the “Lenders”), may have
economic interests that conflict with those of Borrower, its stockholders and/or
its Affiliates. Borrower agrees that nothing in the Loan Documents will be deemed
to create a fiduciary relationship or fiduciary or other implied duty between any
Lender, on the one hand, and Borrower, its stockholders or its Affiliates, on the
other. The Loan Parties acknowledge and agree that (i) the transactions
contemplated by the Loan Documents (including the exercise of rights and remedies
hereunder and thereunder) are arm’s-length commercial transactions between the
Lenders, on the one hand, and Borrower, on the other, and (ii) in connection
therewith and with the process leading thereto, (x) no Lender has assumed a
fiduciary or similar responsibility in favor of Borrower, its stockholders or its
Affiliates with respect to the transactions contemplated hereby (or the exercise of
rights or remedies with respect thereto) or the process leading thereto
(irrespective of whether any Lender has advised, is currently advising or will
advise Borrower, its stockholders or its Affiliates on other matters) except the
obligations expressly set forth in the Loan Documents and (y) each Lender is acting
solely as principal and not as the agent or fiduciary of Borrower, its management,
stockholders, creditors or any other Person. Borrower acknowledges and agrees that
Borrower has consulted its own legal and financial advisors to the extent it deemed
appropriate and that it is responsible for making its own independent judgment with
respect to such transactions and the process leading thereto. Borrower agrees that
it will not claim that any Lender owes a fiduciary or similar duty to Borrower, in
connection with such transaction or the process leading thereto.”.

          (rr) Current Desktop Appraisal. Upon the effectiveness of
the foregoing amendments, references to “Current Desktop Appraisal” shall mean
the desktop appraisal, dated July 7, 2009, by BASSØE Offshore (USA) Inc. furnished
to UBS Securities LLC until such time, after the Amendment Effective Date, that a
new Desktop Appraisal shall become a “Current Desktop Appraisal” in accordance with
the provisions set forth in the definition of “Desktop Appraisal”.

28

 

          (ss) Mandatory Prepayments from Equity Issuances. Section 2.10 of the Credit
Agreement is hereby amended as follows:

          (i) The reference to “[Reserved]” in clause
(e) thereof shall be amended in its entirety to read as follows:

          “Not later than
forty-five days following the receipt of any Net Cash Proceeds of any Equity
Issuance after the Amendment Effective Date (other than Net Cash Proceeds that are
(i) applied to pay consideration in connection with a Permitted Stock Acquisition
prior to such forty-fifth day or (ii) applied to cause Borrower to be in compliance
with the covenants set forth in Section 6.10(a)(ii) prior to such forty-fifth day;
provided that (A) the amount applied at any time pursuant to this subclause (ii)
shall not exceed the amount necessary to cause Borrower to be in compliance with
Section 6.10(a)(ii) as of the date such amount is so applied and (B) any such
application shall be designated in an Officer’s Certificate of Borrower to the
Administrative Agent (with such backup information as the Administrative Agent may
reasonably request) as being for the purpose of being applied in accordance with
this subclause (ii) at the time of such application), Borrower shall make
prepayments of the Term Loans in accordance with Sections 2.10(h) and (i) in an
aggregate amount equal to 50% of such Net Cash Proceeds; provided further, that no
prepayment shall be required under this Section 2.10(e) if the Total Leverage Ratio
of the Borrower is less than or equal to 3.75 to 1.00 (as set forth in a Compliance
Certificate delivered for the most recently ended Test Period).”;

          (ii) Each
reference to “(d), (f)” occurring in clause (h) thereof shall be replaced with the
phrase “(d), (e), (f)”; and

          (iii) The reference to “(d), (f)” occurring in clause
(i) thereof shall be replaced with the phrase “(d), (e), (f)”.

     SECTION 3. Representations and Warranties. Each Loan Party represents and warrants
to the Agents, the Issuing Banks and each of the Lenders that, as of the date hereof and as
of the Amendment Effective Date (as defined below, and, with respect to the Amendment
Effective Date, after giving effect to this Amendment):

          (a) The representations and
warranties of such person set forth in the Credit Agreement and the other Loan Documents
(other than Section 3.04(b) of the Credit Agreement) are true and correct in all material
respects (except that any representation and warranty that is qualified as to “materiality”
or “Material Adverse Effect” is true and correct in all respects) on and as of the date
hereof, except to the extent such representations and warranties expressly relate to an
earlier date, in which case such representations and warranties are true and correct in all
material respects as of such earlier date, and as if each reference therein to “this
Agreement” or “the Credit Agreement” (or words of similar import) included reference to
this Amendment No. 2.

          (b) No Default has occurred that is continuing.

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          (c) This Amendment No. 2 has been duly executed and delivered by each Loan
Party and constitutes a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or other
laws affecting creditors’ rights generally and subject to general principles of
equity, regardless of whether considered in a proceeding in equity or at law.

          (d) Execution and delivery by the Loan Parties of this Amendment No. 2, and
consummation of the transactions contemplated hereby, (i) do not require any
consent or approval of, registration or filing with, or any other action by, any
Governmental Authority, except such as have been obtained or made and are in full
force and effect, (ii) will not violate the Organizational Documents of any
Company, (iii) will not violate any Requirement of Law, (iv) will not violate or
result in a default or require any consent or approval under any indenture,
agreement or other instrument binding upon any Company or its property, or give
rise to a right thereunder to require any payment to be made by any Company, except
for violations, defaults or the creation of such rights that could not reasonably
be expected to result in a Material Adverse Effect, and (v) will not result in the
creation or imposition of any Lien on any property of any Company, except Liens
created by the Loan Documents and Permitted Liens.

          (e) Since March 31, 2009, there has been no event, change, circumstance or
occurrence that, individually or in the aggregate, has had or could reasonably be
expected to result in a Material Adverse Effect.

          (f) The forecasts of financial performance of the Borrower and its
Subsidiaries on a quarterly basis, through December 31, 2011, as furnished to the
Administrative Agent, have been prepared in good faith by the Borrower and based on
assumptions believed by the Borrower to be reasonable at the time furnished to the
Administrative Agent (it being recognized that such projections are not to be
viewed as facts and that actual results during the period or periods covered by any
such projections may differ from the projected results, and such differences may be
material).

          (g) Except as set forth on Schedule II hereto, as of the date hereof no
Company owns Real Property with a fair market value in excess of $5.0 million, and
no Company has leased any Real Property that requires annual lease payments in
excess of $1.0 million.

          (h) The name, registered owner, official number, and jurisdiction of
registration of each Vessel owned by the Companies as of the date hereof are set
forth on Schedule III hereto.

          (i) Schedule IV hereto sets forth a list of (A) all the Subsidiaries of the
Borrower and their jurisdictions of organization as of the date hereof and (B) the
number of each class of Equity Interests of the Subsidiaries of the Borrower as of
the date hereof and the number of shares covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights as of the date hereof. Each Loan Party is the record
and beneficial owner of, and has good and marketable title to, the Equity Interests
pledged by it

30

 

under the Security Agreement, free of any and all Liens, rights or claims of other persons (except
the security interest created by the Security Agreement, non-consensual Permitted Liens and, as of
the Amendment Effective Date, to the extent that the Permitted Senior Secured Notes are issued on
such date, liens securing such Permitted Senior Secured Notes) and there are no outstanding
warrants, options or other rights to purchase, or shareholder, voting trust or similar agreements
outstanding with respect to, or property that is convertible into, or that requires the issuance or
sale of, any such Equity Interests, other than with respect to transactions permitted under Section
6.12, 6.13 or 6.14 of the Credit Agreement.

          (j) An accurate organizational chart showing the ownership structure of each
Subsidiary of the Borrower as of the date hereof is set forth on Schedule V hereto.
As of the date hereof, the Borrower has no Subsidiaries other than Wholly Owned
Subsidiaries.

     SECTION 4. Conditions Precedent. This Amendment No. 2 (other than Section 2
and the amendments described therein) shall become effective as of the date first
written above upon receipt by the Administrative Agent of (i) one or more
counterparts of this Amendment No. 2, executed and delivered by the Borrower, the
Subsidiary Guarantors and the Administrative Agent and (ii) written consents to
this Amendment No. 2, in the form of Annex A hereto, duly executed and delivered by
the Required Lenders. Section 2 and the amendments described therein shall become
effective as of the date each of the following conditions precedent have been
satisfied or waived (such date, the “Amendment Effective Date”), which date shall
in no event be later than September 30, 2009:

          (a) Revolving Exposure Reduction. In
the event that, after giving effect to the reduction of the Revolving Commitments
set forth in Section 2(b) of this Amendment No. 2, the sum of the Revolving
Exposures would exceed $175,000,000, the Administrative Agent shall have received
the prepayments, repayments, replacements and/or cash collateralization that would
be required by Section 2.10(b) of the Credit Agreement.

          (b) Amendment Fee. The Administrative Agent, on behalf of itself and the
Lenders executing this Amendment No. 2, shall have received the amendment fee due
and payable pursuant to Section 5(b) of this Amendment No. 2 and all fees and other
amounts (if any) separately agreed by the Administrative Agent and the Borrower to
be payable in connection with this Amendment No. 2.

          (c) Opinions of Counsel. The Administrative Agent shall have received, on
behalf of itself, the other Agents, the Lenders and the Issuing Bank, a customary
written opinion of Weil, Gotshal & Manges
LLP, counsel for the Loan Parties, (i) dated as of the Amendment Effective
Date, (ii) addressed to the Agents, the Issuing Banks and the Lenders and (iii)
covering such matters relating to this Amendment No. 2 and the Loan Documents as
the Administrative Agent shall reasonably request.

          (d) Collateral Maintenance Ratio. The Administrative Agent shall have
received from the Borrower an Officer’s Certificate certifying that the Collateral

31

 

Maintenance Ratio (as amended by this Amendment and assuming for purposes of this clause (d) that
(x) the Vessels listed on Annex C attached hereto constitute Mortgaged Vessels as of the Amendment
Effective Date and (y) the desktop appraisal, dated July 7, 2009, by BASSØE Offshore (USA) Inc.
furnished to UBS Securities LLC is the Current Desktop Appraisal), exceeds 1.25 to 1.00 (which
shall have attached thereto reasonably detailed calculations showing such compliance, with such
backup information as the Administrative Agent may reasonably request).

          (e) Costs and Expenses. The Borrower shall have paid all other fees and
expenses due and payable pursuant to Section 5(c) of this Amendment No. 2.

          (f) Officer’s Certificate. The Administrative Agent shall have received a
certificate, in form and substance reasonably satisfactory to it, from a Financial
Officer of the Borrower, dated the Amendment Effective Date, certifying that the
representations and warranties set forth in Section 3 of this Amendment No. 2 are
true and correct as of the Amendment Effective Date.

     SECTION 5. Miscellaneous. (a) This Amendment No. 2 is a Loan Document executed
pursuant to the Credit Agreement and shall be construed, administered and applied in
accordance with all of the terms and provisions of the Credit Agreement. Except as herein
provided, the Credit Agreement and the other Loan Documents shall remain unchanged and in
full force and effect, and each Loan Party (i) ratifies and confirms all provisions of the
Credit Agreement as amended by this Amendment No. 2 and the other Loan Documents, and (ii)
ratifies and confirms that all Liens granted by such Loan Party and all obligations of such
Loan Party under the Credit Agreement as amended by this Amendment No. 2 and the Loan
Documents are not released, reduced, or otherwise adversely affected by this Amendment No.
2.

          (b) Upon the satisfaction of the conditions set forth in clauses (a), (c), (d) and (f)
of Section 4 of this Amendment, the Borrower shall pay, without setoff, deduction or
counterclaim, a non-refundable amendment fee to the Administrative Agent for the account of
each Lender that has duly executed and delivered a written consent to this Amendment in the
form of Annex A hereto via facsimile or email (in portable document format (“PDF”) or
similar format) to the attention of Vincenzo Lucibello at Skadden, Arps, Slate, Meagher &
Flom LLP, telecopy no. 917-777-3415, email Vincenzo.Lucibello@skadden.com, at or prior to
6:00 p.m.,
New York time, on or before July 22, 2009 (as such time may be extended by the
Borrower in its sole discretion) in the amount of (i) in the case of a Revolving Lender, 50
basis points of such Lender’s Revolving Commitment (based on Revolving Commitments of
$250,000,000) and (ii) in the case of a Term Loan Lender, 50 basis points of such Lender’s
aggregate unpaid principal amount of Term Loans outstanding as of the date thereof.

          (c) The Borrower shall pay all reasonable fees and out-of-pocket expenses paid or
incurred by the Agents incident to this Amendment No. 2, including, without limitation, the
reasonable fees and out-of-pocket expenses of the Agent’s counsel in connection with the
negotiation, preparation, delivery and execution of this Amendment

32

 

No. 2 and any related documents, in each case, for which the Borrower has received an invoice on or
prior to the day immediately preceding the Amendment Effective Date.

          (d) This Amendment No. 2 may be executed in any number of counterparts and by
different 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. Delivery of an executed counterpart of a signature page to this Amendment No. 2
by telecopier or other electronic means, including by PDF, shall be effective as delivery
of a manually executed counterpart of this Amendment No. 2.

          (e) This Amendment No. 2 shall be governed by, and construed in accordance with, the
laws of the State of New York.

          (f) This Amendment No. 2 constitutes the entire agreement and understanding among the
parties hereto relating to the subject matter hereof and supersedes any and all prior
agreements and understandings, oral or written, relating to the subject matter hereof.

[remainder of page intentionally left blank; signature pages follow]

33

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to Credit Agreement to
be duly executed and delivered as of the day and year first above written.

	 	 	 	 	 
	 	Hercules Offshore, Inc.

 	 
	 	By  	/s/  Stephen M. Butz
 	 
	 	 	Name:    Stephen M. Butz 	 
	 	 	Title:  	Vice President, Finance and Treasurer 	 
	 

	 	 	 	 	 
	 	Hercules Drilling Company, LLC

THE Offshore Drilling Company

TODCO Mexico Inc.

TODCO Management Services, Inc.

Cliffs Drilling Company

TODCO Americas Inc.

TODCO International Inc.

Cliffs Drilling Trinidad L.L.C.

THE Onshore Drilling Company

THE Hercules Offshore Drilling Company LLC

 	 
	 	By  	
 /s/ James W. Noe	 
	 	 	Name:  	James W. Noe 	 
	 	 	Title:  	Vice President and Secretary 	 
	 

	 	 	 	 	 
	 	Hercules Liftboat Company, LLC 

Hercules Offshore Services LLC 

Hercules Offshore Holdings Ltd.

Hercules Offshore Middle East Ltd.

 	 
	 	By  	
 /s/ James W. Noe	 
	 	 	Name:  	James W. Noe  	 
	 	 	Title:  	Secretary 	 
	 

signature page
to amendment no. 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 to amendment no. 2

 

	 	 	 	 	 
	 	UBS AG, Stamford Branch, as

Administrative Agent, as Collateral Agent

and as an Issuing Bank

 	 
	 	By  	/s/ Mary E. Evans
 	 
	 	 	Name:  	Mary E. Evans 	 
	 	 	Title:  	Associate Director

Banking Products

Services, US 	 
	 

	 	 	 	 	 
	 	 	 
	 	By  	                                          /s/ Marie A. Haddad
 	 
	 	 	Name:  	Marie A. Haddad 	 
	 	 	Title:  	Associate Director

Banking Products

Services, US 	 
	 

signature page to amendment no. 2

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