Document:

SECURITIES AND EXCHANGE COMMISSION

 
EXHIBIT 10.1

FIRST AMENDMENT TO

CREDIT AGREEMENT, TERM LOAN NOTE, LINE OF CREDIT NOTE,

SECURITY AGREEMENT,

DEEDS OF TRUST AND ASSIGNMENTS OF RENTS AND LEASES,

PLEDGE AGREEMENT AND CONTINUING GUARANTY

BY AND AMONG

ACR GROUP, INC.

as Borrower,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION

as Lender

and 

SUBSIDIARIES OF BORROWER

Listed on the Signature Page Hereto

Effective as of August 31, 2005

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TABLE OF CONTENTS
Page 1

ARTICLE I DEFINITIONS; CONSTRUCTION

Section 1.01Terms Defined Above

Section 1.02Terms Defined in Credit Agreement

Section 1.03Other Provisions

ARTICLE II AMENDMENTS TO CREDIT AGREEMENT

Section 2.01Amendments to Section 1.1 -- DEFINITIONS

Section 2.02Amendments to Section 1.2 - LINE OF CREDIT

Section 2.03Amendment to Section 1.3 - TERM COMMITMENT

Section 2.04Amendment to Section 4.9 - FINANCIAL COVENANTS

ARTICLE III AMENDMENT TO TERM NOTE

ARTICLE IV AMENDMENT TO KATY DEED OF TRUST AND PASADENA DEED OF TRUST

Section 4.01Amendment to Katy Deed of Trust

Section 4.02Amendment to Pasadena Deed of Trust

ARTICLE V AMENDMENT TO PLEDGE AGREEMENT

Section 5.01Amendment to Preliminary Statements

ARTICLE VI AMENDMENT TO GUARANTY

Section 6.01Amendment to Paragraph 1

Section 6.02Amendment to Paragraph 2

 

ARTICLE VII CONDITIONS

Section 7.01Loan Documents

Section 7.02Corporate Proceedings of Loan Parties

Section 7.03Representations and Warranties

Section 7.04No Default

Section 7.05No Change

Section 7.06Security Instruments

Section 7.07Other Instruments or Documents

ARTICLE VIII MISCELLANEOUS

Section 8.01Adoption, Ratification and Confirmation

Section 8.02Ratification and Affirmation of Guaranty

Section 8.03Successors and Assigns

Section 8.04Counterparts; Delivery of Telecopy Signature Pages

Section 8.05Entire Agreement

Section 8.06Invalidity

Section 8.07Titles of Articles, Sections and Subsections

Section 8.08Governing Law

FIRST AMENDMENT TO

CREDIT AGREEMENT, TERM LOAN NOTE, LINE OF CREDIT NOTE, SECURITY AGREEMENT, DEEDS OF TRUST AND ASSIGNMENTS OF RENTS AND LEASES, PLEDGE AGREEMENT AND CONTINUING GUARANTY

This FIRST AMENDMENT TO CREDIT AGREEMENT , TERM LOAN NOTE, LINE OF CREDIT NOTE, SECURITY AGREEMENT, DEEDS OF TRUST AND ASSIGNMENTS OF RENTS AND LEASES, PLEDGE AGREEMENT AND CONTINUING GUARANTY (this "First Amendment") executed effective as of the 31st day of August, 2005 (the "Effective Date"), is by and among ACR GROUP, INC., a corporation formed under the laws of the State of Texas ("Borrower"), WELLS FARGO BANK, NATIONAL ASSOCIATION (together with its successors and assigns, "Lender"), and the Guarantors set forth on the signature pages hereto (collectively, the "Guarantors").

R E C I T A L S:

A.Borrower and Lender are parties to that certain Credit Agreement dated as of September 7, 2004 (the "Credit Agreement"), pursuant to which Lender agreed, subject to certain terms and conditions, to extend credit to Borrower.

B.Pursuant to the terms and conditions of the Credit Agreement, Borrower executed and delivered to Lender, among other things, (i) that certain Term Loan Note dated as of September 7, 2004 in an original principal amount of $5,000,000.00 (the "Term Note"), and (ii) that certain Line of Credit Note dated as of September 7, 2004 in the face amount of $30,000,000.00 (the "Line of Credit Note").

C.In connection with its execution of the Credit Agreement, and in order to secure Borrower's obligations under the Term Note and the Line of Credit Note, Borrower, certain Subsidiaries of Borrower, and Lender (as applicable) entered into (i) that certain Deed of Trust and Assignment of Rents and Leases dated as of September 7, 2004 by Lifetime Filter, Inc., a Texas corporation and Subsidiary of Borrower as Grantor, and Mr. Danny Oliver as Trustee for the benefit of Lender (the "Katy Deed of Trust"), (ii) that certain Deed of Trust and Assignment of Rents and Leases dated as of September 7, 2004 by ACR Supply, Inc., a Texas corporation and Subsidiary of Borrower as Grantor, and Mr. Danny Oliver as Trustee for the benefit of Lender (the "Pasadena Deed of Trust"), (iii) that certain Pledge Agreement dated as of September 7, 2004 between Borrower and Lender (the "Pledge Agreement"), and (iv) that certain Continuing Guaranty dated as of September 7, 2004, executed by Borrower and certain of its Subsidiaries (the "Guaranty", and together with the Katy Deed of Trust, the Pasadena Deed of Trust and the Pledge Agreement, the "Security Documents"); and

D.Borrower, and Lender desire to amend the Credit Agreement, the Term Note and the Security Documents, and Borrower desires to execute and deliver to Lender a Restated Line of Credit Note with a face amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00) payable to the order of Lender (the "Restated Line of Credit Note" and together with the Line of Credit Note and the Term Note the "Notes"), and Guarantors join in the execution of this First Amendment to evidence their ratification of the Guaranty, all in the particulars hereinafter provided;

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

DEFINITIONS; CONSTRUCTION

Terms Defined Above

.  As used in this First Amendment, each of the terms defined in the introductory paragraph and the Recitals above shall have the meaning assigned to such terms therein.

Terms Defined in Credit Agreement

.  Each term defined in the Credit Agreement and used herein without definition shall have the meaning assigned to such term in the Credit Agreement, unless provided to the contrary.

Other Provisions

.

The words "hereby", "herein", "hereinafter", "hereof", "hereto" and "hereunder" when used in this First Amendment shall refer to this First Amendment as a whole and not to any particular Article, Section, subsection or provision of this First Amendment, unless provided to the contrary.

Section, subsection and Exhibit references herein are to such Sections, subsections and Exhibits to this First Amendment unless otherwise specified.

Whenever the context requires, reference herein made to the single number shall be understood to include the plural; and likewise, the plural shall be understood to include the singular.  Words denoting gender shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration shall not exclude the general but shall be construed as cumulative.  Definitions of terms defined in the singular or plural shall be equally applicable to the plural or singular, as the case may be, unless otherwise indicated.

AMENDMENTS TO CREDIT AGREEMENT

Borrower and Lender agree that the Credit Agreement is hereby amended, effective as of the Effective Date, in the following particulars:

Amendments to Section 1.1 -- DEFINITIONS

.  The following terms, which are defined in Section 1.1(a) of the Credit Agreement, are hereby amended in their entirety to read as follows:
(a)"Line of Credit Note" means, that certain Line of Credit Note dated as of September 7, 2004 and made by Borrower payable to the order of the Bank with a face amount of Thirty Million Dollars ($30,000,000.00) and that certain Restated Line of Credit Note dated as of August 31, 2005 and made by Borrower payable to the order of the Bank with a face amount of Thirty-Five Million Dollars ($35,000,000.00), restating and amending in part the September 7, 2004 Line of Credit Note, and together evidencing the Line of Credit in an aggregate principal amount not to exceed Thirty-Five Million Dollars ($35,000,000.00) at any time outstanding, and any amendments and modifications to either, any substitutes therefore, and any replacements, restatements, renewals or extensions of either, in whole or in part.

(b)"Termination Date" means, the earlier to occur of (i) August 31, 2007 and (ii) the termination of Bank's obligation to extend further credit pursuant to Section 6.2 of this Agreement." 

Amendments to Section 1.2 -- LINE OF CREDIT

.

Section 1.2(b) of the Credit Agreement is hereby amended and supplemented by adding the following new sentence immediately following subsection 1.2(b)(v):
"Notwithstanding the foregoing (or any other provision hereof or elsewhere to the contrary), in no event shall the Value of Eligible Finished Goods Inventory ever exceed a maximum of fifty percent (50%) of the Line of Credit."

Amendment to Section 1.3 -- TERM COMMITMENT 

.  Section 1.3(c) of the Credit Agreement is hereby deleted in its entirety and replaced with the following:
"Borrowing and Repayment.  Borrower may from time to time during the period in which Bank will make advances under the Term Commitment borrow and partially or wholly repay its outstanding borrowings subject to all the limitations, terms and conditions contained herein; provided, however, and it is expressly agreed and understood by Borrower, that amounts repaid may not be reborrowed, and provided, further, that the total amount advanced under the Term Commitment shall not at any time exceed FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00), subject, however, to the limitations set forth in clause (b) above of this Section 1.3.  Repayment of the Term Loan Note shall be made in accordance with the following terms, as applicable (i) in the case of advances made for equipment purchases and in the case of the Existing B of A Indebtedness refinanced hereby to the extent such indebtedness was used to finance equipment purchases (together with accrued, unpaid interest thereon, if any), principal shall be amortized over seven (7) years from the date of the relevant advance and shall be repaid in equal monthly installments based on such amortization, plus interest, and with a balloon payment of all remaining principal together with all accrued, unpaid interest thereon, being due and payable in full in one lump sum payment on August 31, 2007; (ii) in the case of advances made for real estate purchases and in the case of the Existing B of A Indebtedness refinanced hereby to the extent such indebtedness was used to finance the purchase of real estate (together with accrued, unpaid interest thereon, if any), principal shall be amortized over fifteen years with a balloon payment of all remaining principal, together with all accrued, unpaid interest thereon, being due and payable in full in one lump sum payment on August 31, 2007; and shall be repaid in equal monthly installments based on such amortization, plus interest thereon, all as further set forth in the Term Loan Note.

Amendment to Section 4.9 -- FINANCIAL COVENANTS

.  Section 4.9(a) of the Credit Agreement is hereby amended by deleting the chart set forth therein in its entirety and replacing it with the following:

	

Fiscal Quarter Ending
	

Minimum Tangible Net Worth

	

8/31/2004
	

$8,450,000

	

11/30/2004
	

$8,825,000

	

2/28/2005
	

$9,200,000

	

5/31/2005
	

$9,575,000

	

8/31/2005
	

$9,950,000

	

11/30/2005
	

$10,325,000

	

2/28/2006
	

$10,700,000

	

5/31/2006
	

$11,075,000

	

8/31/2006
	

$11,450,000

	

11/30/2006
	

$11,825,000

	

2/28/2007
	

$12,200,000

	

5/31/2007
	

$12,575,000

	AMENDMENT TO TERM NOTE

Subpart (a) of the paragraph entitled "BORROWING AND REPAYMENT" in the Term Note is hereby amended by striking from the third sentence thereof the following words:

"upon the expiration of two (2) years from the date hereof."

and replacing such words with the following, which shall have the effect of extending the maturity date of the Term Note to August 31, 2007:

"on August 31, 2007."

	AMENDMENT TO KATY DEED OF TRUST AND PASADENA DEED OF TRUST

Amendment to Katy Deed of Trust

.  The Katy Deed of Trust is hereby amended by deleting Section 2.1(a) in its entirety and replacing it with the following:

"(a)payment to Beneficiary of all sums at any time owing and performance of all other obligations arising under or in connection with that certain (i) Line of Credit Note dated as of September 7, 2004, in the maximum principal amount of Thirty Million and 00/100 Dollars ($30,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2006, together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by said Line of Credit Note, whether or not specifically referenced therein, (ii) Restated Line of Credit Note dated as of August 31, 2005 in the maximum principal amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2007, together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by said Restated Line of Credit Note, whether or not specifically referenced therein, and (iii) the Term Loan Note dated as of September 7, 2004, as amended, in the maximum principal amount of Five Million and 00/100 Dollars ($5,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2007, together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by said Term Loan Note, whether or not specifically referenced therein (the Line of Credit Note, the Restated Line of Credit Note and the Term Loan Note together the "Notes") and all other obligations arising under or pursuant to that certain Credit Agreement dated as of September 7, 2004 by and between Beneficiary and said ACR Group, Inc., as amended from time to time (the "Credit Agreement"), pursuant to which the Notes are executed or any of the other "Loan Documents" (as defined in the Credit Agreement);" 

Amendment to Pasadena Deed of Trust

.  The Pasadena Deed of Trust is hereby amended by deleting Section 2.1(a) in its entirety and replacing it with the following:

"(a)payment to Beneficiary of all sums at any time owing and performance of all other obligations arising under or in connection with that certain (i) Line of Credit Note dated as of September 7, 2004, in the maximum principal amount of Thirty Million and 00/100 Dollars ($30,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2006, together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by said Line of Credit Note, whether or not specifically referenced therein, (ii) Restated Line of Credit Note dated as of August 31, 2005 in the maximum principal amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2007, together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by said Restated Line of Credit Note, whether or not specifically referenced therein, and (iii) the Term Loan Note dated as of September 7, 2004, as amended, in the maximum principal amount of Five Million and 00/100 Dollars ($5,000,000.00), with interest as provided therein, executed by ACR Group, Inc. and payable to Beneficiary or its order, and maturing on August 31, 2007, together with the payment and performance of any other indebtedness or obligations incurred in connection with the credit accommodation evidenced by said Term Loan Note, whether or not specifically referenced therein (the Line of Credit Note, the Restated Line of Credit Note and the Term Loan Note together the "Notes") and all other obligations arising under or pursuant to that certain Credit Agreement dated as of September 7, 2004 by and between Beneficiary and said ACR Group, Inc., as amended from time to time (the "Credit Agreement"), pursuant to which the Notes are executed or any of the other "Loan Documents" (as defined in the Credit Agreement);" 

	AMENDMENT TO PLEDGE AGREEMENT

Amendment to Preliminary Statements

.  The Pledge Agreement is hereby amended by deleting in its entirety the second paragraph of the Preliminary Statements set forth therein and replaced with the following:

"WHEREAS, Pledgor and Lender have entered into that certain Credit Agreement dated as of September 7, 2004, as amended (the "Credit Agreement"), pursuant to which Lender has agreed to extend to Pledgor (i) a revolving line of credit in an aggregate principal amount not to exceed at any time outstanding THIRTY-FIVE MILLION AND NO/100 DOLLARS ($35,000,000.00) (the "Line of Credit") and (ii) a term loan in an amount equal to FIVE MILLION AND NO/100 DOLLARS ($5,000,000.00) (the "Term Loan") under the terms, and subject to the conditions, set forth in the Credit Agreement and, as applicable, the Line of Credit Note dated September 7, 2004 in the face amount of $30,000,000.00 executed by Pledgor payable to the order of Lender (the "Line of Credit Note"), the Restated Line of Credit Note dated August 31, 2005 in the face amount of $35,000,000.00 executed by Pledgor payable to the order of Lender (the "Restated Line of Credit Note"), and the Term Loan Note dated September 7, 2004, as amended, in the original principal amount of $5,000,000.00 executed by Pledgor payable to the order of Lender (the "Term Note" and together with the Line of Credit Note and the Restated Line of Credit Note, the "Notes");"

	AMENDMENT TO GUARANTY

Amendment to Paragraph 1

.  The Guaranty is hereby amended by deleting the second sentence of Paragraph 1 in its entirety and replacing it with the following:

"The term Indebtedness is used herein in its most comprehensive sense and includes any and all advances, debts, obligations and liabilities of Borrower, heretofore, now or hereafter made, incurred or created, whether voluntary or involuntary and however arising, whether due or not due, absolute or contingent, liquidated or unliquidated, determined or undetermined, and whether Borrower may be liable individually or jointly with others, or whether recovery upon such Indebtedness may be or hereafter becomes unenforceable including, without limitation, all "Obligations" as said term is defined in that certain Credit Agreement dated as of September 7, 2004 by and between Borrower and Bank, as amended, including (without limitation) that certain $30,000,000.00 Line of Credit Note dated as of September 7, 2004 and that certain $35,000,000.00 Restated Line of Credit Note dated as of August 31, 2005 in respect of a $35,000,000.00 Line of Credit and that certain $5,000,000.00 Term Note dated as of September 7, 2004, as amended, in respect of a $5,000,000.00 Term Commitment."

Amendment to Paragraph 2

.  The Guaranty is hereby further amended by deleting the first sentence of Paragraph 2 in its entirety and replacing it with the following:

"The liability of Guarantors shall not exceed at any time the sum of Forty Million and 00/100 Dollars ($40,000,000.00) plus all interest thereon plus costs, expenses and all other amounts owing pursuant to the Credit Agreement or any other Loan Document plus all costs and expenses pertaining to the enforcement of this Guaranty and/or the collection of the Indebtedness of any of the Borrowers to Bank, provided that the obligations of each Guarantor hereunder shall be limited to an aggregate amount equal to the largest amount that would not render its obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provisions of any applicable state law for principal."

	CONDITIONS

Loan Documents

.  Lender shall have received:

(i) multiple original counterparts of this First Amendment executed and delivered by a duly authorized officer of Borrower; and

(ii) an original Restated Line of Credit Note dated as of the Effective Date reflecting a face amount of Thirty-Five Million and 00/100 Dollars ($35,000,000.00) payable to the order of Lender.

Corporate Proceedings of Borrower and Guarantors

.  Lender shall have received multiple copies of the resolutions, in form and substance reasonably satisfactory to Lender, of the Boards of Directors of Borrower and the Guarantors, authorizing the execution, delivery and performance of this First Amendment, each such copy being attached to an original certificate of the Secretary or an Assistant Secretary of Borrower or the Guarantors, as applicable, dated as of the Effective Date, certifying (i) that the resolutions attached thereto are true, correct and complete copies of resolutions duly adopted by written consents or at meetings of the Boards of Directors, (ii) that such resolutions constitute all resolutions adopted with respect to the transactions contemplated hereby, (iii) that such resolutions have not been amended, modified, revoked or rescinded as of the Effective Date, (iv) that the respective articles of incorporation and bylaws of Borrower and the Guarantors have not been amended or otherwise modified since the effective date of the Credit Agreement, except pursuant to any amendments attached thereto, and (v) as to the incumbency and signature of the officers of Borrower or the Guarantors, as applicable, executing this First Amendment.

Representations and Warranties

.  Each of the representations and warranties made by Borrower and the Guarantors in or pursuant to the Loan Documents shall be true and correct as of the Effective Date, as if made on and as of such date.

No Default

.  No Default or Event of Default shall have occurred and be continuing as of the Effective Date.

No Change

.

No event shall have occurred since May 31, 2005, which, in the reasonable opinion of Lender, could have a material adverse effect on the condition (financial or otherwise), business, operations or prospects of Borrower or the Guarantors.

Neither Borrower nor any of its Subsidiaries shall have sold, leased or otherwise disposed of any assets or other property since May 31, 2005, except in the ordinary course of business.

No charge off or write down in excess of $100,000.00 of any assets or other property of Borrower or any of its Subsidiaries reflected in the most recent financial statements of Borrower and its Subsidiaries provided to Lender shall have been taken.

Security Instruments

.  Each of the Security Documents shall be in full force and effect and provide to Lender the security intended thereby to secure the Obligations, as amended and supplemented hereby.

Other Instruments or Documents

.  Lender shall receive such other instruments or documents as it may reasonably request.

Fees

.  All fees of Lender's legal counsel shall be paid upon execution of this First Amendment, not to exceed $3,100.00.

MISCELLANEOUS

Adoption, Ratification and Confirmation

.  Each of Borrower, the Guarantors and Lender does hereby adopt, ratify and confirm the Credit Agreement, the Notes and the Security Documents, each as amended hereby, and acknowledges and agrees that the Credit Agreement, the Notes, and the Security Documents, each as amended hereby, are and remain in full force and effect.

Ratification and Affirmation of Guaranty

.  Each Guarantors hereby expressly (i) acknowledges the terms of this First Amendment, (ii) ratifies and affirms its obligations under the Guaranty, as amended, supplemented or otherwise modified hereby (the "Guaranty"), (iii) acknowledges, renews and extends its continued liability under the Guaranty and agrees that the Guaranty remains in full force and effect on and after the execution and delivery of this First Amendment; and (iv) guarantees to Lender to promptly pay when due all amounts owing or to be owing by it under the Guaranty pursuant to the terms and conditions thereof.

Successors and Assigns

.  This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns permitted pursuant to the Credit Agreement.

Counterparts; Delivery of Telecopy Signature Pages

.  This First Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument and shall be enforceable as of the Effective Date upon the execution of one or more counterparts hereof by Borrower, the Guarantors and Lender.  In this regard, each of the parties hereto acknowledges that a counterpart of this First Amendment containing a set of counterpart executed signature pages reflecting the execution of each party hereto shall be sufficient to reflect the execution of this First Amendment by each necessary party hereto and shall constitute one instrument.  Delivery of an executed signature page of this First Amendment by facsimile transmission shall be effective as delivery of an original executed signature page of this First Amendment.

Entire Agreement

.  This First Amendment constitutes the entire agreement among the parties hereto with respect to the subject matter hereof.  All prior understandings, statements and agreements, whether written or oral, relating to the subject hereof are superseded by this First Amendment.

Invalidity

.  In the event that any one or more of the provisions contained in this First Amendment shall for any reason be held invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this First Amendment.

Titles of Articles, Sections and Subsections

.  All titles or headings to Articles, Sections, subsections or other divisions of this First Amendment or the exhibits hereto, if any, are only for the convenience of the parties and shall not be construed to have any effect or meaning with respect to the other content of such Articles, Sections, subsections, other divisions or exhibits, such other content being controlling as the agreement among the parties hereto.

Governing Law

.  This First Amendment shall be deemed to be a contract made under and shall be governed by and construed in accordance with the internal laws of the State of Texas.
This First Amendment, the Credit Agreement, as amended hereby, the Notes, as amended hereby, and the Security Documents, as amended hereby, represent the final agreement Among the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties.

There are no unwritten oral agreements Among the parties.

 

 

[Remainder of Page Intentionally Left Blank.  Signatures on Following Pages.]

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed and delivered by their proper and duly authorized officers as of the Effective Date.

	

 
	 	

ACR GROUP, INC.

	 	 	

By:

Name:

Title:

	 	 	 
	

 

 
	 	

WELLS FARGO BANK, NATIONAL ASSOCIATION

	 	 	 
	
	
	

By: 

Name:

Title:

	
	
	

	

 
	
	

ACR SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	

 
	
	

ACR SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	

 
	
	

TOTAL SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	

 
	
	

CONTRACTORS HEATING & SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	

 
	
	

	

 

 
	
	

FLORIDA COOLING SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	
	
	

HEATING AND COOLING SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	
	
	

VALLEY SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	
	
	

WEST COAST HVAC SUPPLY, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	
	
	

ETI TEXAS, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	
	
	

LIFETIME FILTER, INC.

	
	
	

	
	
	

By: 

Name:

Title:

	
	
	

	
	
	

CAC DISTRIBUTORS, INC.

	
	
	

	
	
	

By: 

Name:

Title:Vessel Purchase Agreement dated 08/04/05

 Exhibit 10.14 
  
 VESSEL PURCHASE AGREEMENT 
  
 by and between 
  
 C.S. LIFTBOATS, INC. 
  
 and 
  
 HERCULES
OFFSHORE, LLC 
  

  
 In respect of the 
  
 MIV JOSHUA 
  
 (U.S. COAST GUARD OFFICIAL NUMBER 
  
 1164414) 
  

 TABLE OF CONTENTS 
  

					
	 ARTICLE 1 SALE AND PURCHASE OF THE VESSEL
	  	1
			
	 Section 1.1.
	  	Sale and Purchase of the Vessel	  	1
			
	 Section 1.1(a)
	  	Payment of the Purchase Price	  	1
			
	 Section 1.2.
	  	Closing	  	2
			
	 Section 1.3.
	  	“As Is, Where Is” Sale Language	  	4
		
	 ARTICLE 2 REPRESENTATIONS AND WARRANTIES OF SELLER
	  	5
			
	 Section 2.1.
	  	Organization, Existence and Corporate Power	  	5
			
	 Section 2.2.
	  	Authorization and Execution	  	5
			
	 Section 2.3.
	  	No Conflict	  	5
			
	 Section 2.4.
	  	Title; No Encumbrances	  	5
			
	 Section 2.5.
	  	Litigation	  	5
			
	 Section 2.6.
	  	Taxes	  	6
			
	 Section 2.7.
	  	Condition of Vessel	  	6
			
	 Section 2.8.
	  	Brokers	  	6
		
	 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE BUYER
	  	6
			
	 Section 3.1.
	  	Organization, Existence and Corporate Power	  	6
			
	 Section 3.2.
	  	Authorization and Execution	  	6
			
	 Section 3.3.
	  	No Conflict	  	6
			
	 Section 3.4.
	  	Litigation	  	6
		
	 ARTICLE 4 TERMINATION
	  	7
			
	 Section 4.1.
	  	Termination	  	7
			
	 Section 4.2.
	  	Effect of Termination; Survival	  	7
		
	 ARTICLE 5 MISCELLANEOUS
	  	7
			
	 Section 5.1.
	  	Indemnities	  	7
			
	 Section 5.2.
	  	Due Diligence	  	8
			
	 Section 5.3.
	  	Usage of Vessel Prior to Closing	  	9
			
	 Section 5.4.
	  	Further Cooperation	  	9
			
	 Section 5.5.
	  	Expenses	  	9
			
	 Section 5.6.
	  	Amendments and Waivers	  	9
			
	 Section 5.7.
	  	Notices	  	9
			
	 Section 5.8.
	  	Survival	  	9

  

 i 

					
	 Section 5.9.
	  	Severability; Counterparts	  	9
			
	 Section 5.10.
	  	Governing Law	  	10
			
	 Section 5.11.
	  	Venue	  	10
			
	 Section 5.12.
	  	Successors and Assigns	  	10
			
	 Section 5.13.
	  	Entire Agreement and Cancellation of Prior Agreements	  	10

  
 EXHIBITS 
  

			
	 EXHIBIT A:
	  	Definitions
	 EXHIBIT B:
	  	Specifications of the Vessel
	 EXHIBIT C:
	  	Certificate of Acceptance of Delivery

  

 ii 

 THIS VESSEL PURCHASE AGREEMENT (this “Agreement”), dated as of August 4, 2005, is entered into by
and between C.S. Liftboats, Inc., a Louisiana corporation (the “Seller”), whose principle place of business is 13933 Pumping Plant Road, Abbeville, Louisiana 70510, and Hercules Offshore, LLC., a Delaware limited
liability company, (the “Buyer”), whose principle place of business is 2929 Briarpark Drive, Suite 435, Houston, Texas, 77042 (each of the Buyer and the Seller, being referred to individually as a “Party” and
collectively as the “Parties”). 
  
 WITNESSETH

  
 WHEREAS, the Seller is the owner of the liftboat M/V Joshua, United
States Coast Guard Official Number 1164414 (the “M/V Joshua”); 
  
 WHEREAS, the Seller desires to sell to the Buyer the M/V Joshua together with its engines, tackle, general outfit, navigational, electronic, radar, communication and other associated equipment, appliances, spare parts and other items
appurtenant or related to the Vessel, whether on board or ashore, as set out on Exhibit B hereto (the M/V Joshua and all such equipment and spare parts being referred to collectively as the “Vessel”) upon the terms and conditions
set forth herein; and 
  
 WHEREAS, the Buyer desires to purchase the Vessel
on the terms set forth herein. 
  
 NOW THEREFORE, in consideration of the
mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Buyer and the Seller hereby agree as follows: 
  
 ARTICLE 1 
  
 SALE AND PURCHASE OF THE VESSEL 
  
 Section 1.1 Sale and Purchase of the Vessel. Upon the terms and subject to the conditions of this Agreement,
the Seller hereby agrees to sell to the Buyer, and the Buyer hereby agrees to purchase from the Seller, all right, title and interest in and to the Vessel for the cash sum of Twelve Million Five Hundred Thousand U.S. Dollars (US$12,500,000.00) (the
“Purchase Price”). The Seller shall be liable for any and all taxes, fees, levies and other charges that may be payable, assessed or levied by any Government Authority as a result of the sale and purchase of the Vessel
(collectively, the “Taxes”). 
  
 Section 1.1(a)
Payment of the Purchase Price. 
  

	 	(i)	Upon execution of the Main Terms Summary by the Buyer and the Seller on July 28, 2005, Buyer delivered to Seller a non-refundable deposit in the sum of One Million Two Hundred Fifty
Thousand U.S. Dollars (US$1,250,000.00) (“the Deposit”). This deposit was paid by wire transfer of same day funds in accordance with the following wire transfer instructions: 

  

			
	 Receiving Bank ABA:
	  	062005690
	 Receiving Bank:
	  	Regions Bank
	 	  	800 South Lewis Street
	 	  	New Iberia, LA 70560
	
	 Beneficiary: Account Name — C.S. Liftboats, Inc.
 Account Number — 4701146765

  

 1 

	 	(ii)	Upon closing of the Purchase of the Vessel the Deposit will be credited toward the Purchase Price. The balance of the Purchase Price in the amount of Eleven Million Two Hundred
Fifty Thousand US Dollars ($11,250,000.00 US dollars) shall be paid to the Seller concurrently with the Closing by way of wire transfer of same day funds wired to the Seller’s account referred to in paragraph 1.1(a) above when the closing
conditions set out in Section 1.2(b) have been met; 

  
 Section 1.2 Closing. 
  
 (a) The closing (the
“Closing”) of the purchase and sale of the Vessel shall take place in accordance with the terms of this Agreement at New Iberia, Louisiana at the Regions Bank, located at 800 South Lewis Street, New Iberia, Louisiana, on a business
day to be mutually agreed by the Buyer and the Seller (the “Closing Date”) on or before August 28, 2005. On or before the Closing Date, the Buyer and the Seller shall comply with their respective obligations set out in this
Section 1.2. 
  
 (b) Closing Conditions and Deliveries of the
Buyer. The obligation of the Buyer to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or waiver, at or prior to the Closing, of the following closing conditions: (i) the Seller has completed
its closing deliveries set out in Section 1.2(c); (ii) the representations and warranties of the Seller shall have been true and correct when made and shall be true and correct as of the Closing with the same force and effect as if made as of the
Closing, and the covenants and agreements contained in this Agreement to be complied with by the Seller on or before the Closing shall have been complied with in all material respects; Upon satisfaction of the above, the Buyer shall deliver to the
Seller: (A) the Purchase Price less the Deposit; and (B) a certificate from the Buyer dated the Closing Date and signed by a duly authorized officer thereof certifying that: (1) the representations and warranties of the Buyer were true and correct
when made and are true and correct as of the Closing Date; and (2) the Buyer has complied in all material respects with all of its covenants and agreements contained in this Agreement. 
  
 (c) Closing Deliveries of the Seller. At the Closing, the Seller shall deliver, or shall cause to be
delivered: 
  

	 	(i)	 a bill of sale fully executed by the Seller and notarized (the “Bill of Sale”), as required, pursuant to which the Seller shall or shall cause to
be transferred, sold, conveyed, assigned and delivered to the Buyer all right, title and interest in and to the Vessel free and clear of all Encumbrances 

  

 2 

	 	 
(as hereinafter defied) and in such form as is required by the United States Coast Guard National Vessel Documentation Center (the “NVDC”);

  

	 	(ii)	a “Satisfaction of Mortgage” or other release document executed by Regions Bank, P.O. Box 11240, New Iberia, La. U.S.A. (“Regions Bank”), discharging
fully the $50,000,000.00 mortgage (the “Mortgage”) granted in favor of Regions Bank on the Vessel in such form as is satisfactory to the Buyer and is required by the NVDC; 

  

	 	(iii)	a release document discharging UCC lien numbers 47-205-0475; and 47-205-0476 on the Vessel in favor of Regions Bank in such form as is satisfactory to the Buyer;

  

	 	(iv)	any other document, instrument or action required to cancel any and all other Encumbrances on the Vessel or any collateral relating to the Vessel in favor of any person, including,
without limitation, Regions Bank; 

  

	 	(v)	a good standing certificate from the Secretary of State for the State of Louisiana dated as of the Closing Date certifying that the Buyer is in good standing and is authorized to do
business in Louisiana; 

  

	 	(vi)	a certificate from the Seller and the shareholders of the Seller dated the Closing Date and signed by a duly authorized officer and the shareholders thereof certifying that: (A) the
representations and warranties of the Seller were true and correct when made and are true and correct as of the Closing Date; and (B) the Seller has complied in all material respects with all of its covenants and agreements contained in this
Agreement; 

  

	 	(vii)	executed copies of such documents, if any, provided prior to the Closing Date by the Buyer to the Seller to facilitate the Buyer’s registration of the Vessel with the United
States Coast Guard or such other jurisdiction chosen by the Buyer; 

  

	 	(viii) 	the Vessel safely afloat at a dockside at or near the Port of New Iberia, Louisiana, or such other location to be mutually agreed by the Parties; 

  

	 	(ix)	a receipt for the Purchase Price upon issuance of the Closing Certificate; 

  

	 	(x)	a true and complete certified copy of the resolution(s) duly and validly adopted by the shareholders and Board of Directors of the Seller evidencing their authorization of the
execution and delivery of this Agreement and the consummation of the transactions contemplated hereby; 

  

	 	(xi)	 Any technical or regulatory documentation pertaining to the Vessel which the Seller may have in its possession and which is not already aboard the Vessel,
including, without limitation, ABS certificates, loadline certificates, radio licenses, operating manuals and engineering drawings. 

  

 3 

	 	 
The Buyer shall also be entitled to retain a hard copy of the Vessel’s preventative maintenance records, provided that this documentation may be
provided to the Buyer onboard the Vessel; 

  

	 	(xii)	A fax copy or original of a Certificate of Ownership from the NVDC dated on the Closing Date showing the Vessel to be free from Encumbrances; and 

  

	 	(xiii) 	All documentation necessary to transfer any warranties on any of the equipment comprising the Vessel to the extent that the Seller has the benefit of any such warranties.

  
 (d) Risk of Loss. Risk of loss or
damage to the Vessel shall pass to the Buyer at the Closing Time. Prior to the Closing Time, the Seller shall be responsible for and shall bear any and all risk of loss or damage to the Vessel. If during the period between the date hereof and the
Closing Time, there is an actual total casualty loss, constructive total casualty loss or compromised total casualty loss (collectively, a “Total Loss”) of the Vessel, the Seller shall provide written notice to the Buyer of such
Total Loss. In such event, this Agreement shall terminate entirely upon written notice from Buyer to Seller electing to terminate, which notice must be delivered to Seller by 5:00 PM, Houston, Texas time, on the fifth Business Day after Seller has
notified Buyer of such Total Loss. 
  
 (e) Delivery.
Concurrently with the delivery of the Bill of Sale, (i) the Seller shall deliver to the Buyer, and the Buyer shall accept from the Seller, the Vessel free from Encumbrances, and (ii) each party shall acknowledge such delivery and acceptance by
executing and delivering the Certificate of Acceptance and Delivery, attached hereto as Exhibit C (the “Certificate of Acceptance”). Title to the Vessel shall pass to the Buyer as of the time specified in the Certificate of
Acceptance (the “Closing Time”). In respect of that property, if any, forming part of the Rig which does not fall within the Bill of Sale, the Seller and the Buyer hereby agree that title shall be deemed to pass to Buyer as of the
Closing Time without further documentation or action by either party. 
  
 Section 1.3 “As Is, Where Is” Sale Language. The Vessel shall be sold on an “as is, where is” basis and the Buyer shall be required to, and shall, accept delivery of the Vessel from the Seller in such
condition; provided, however, that the Vessel shall be in the Condition set forth in Section 2.7. Additionally, the Buyer acknowledges that the Vessel in not currently United States Coast Guard approved or ABS Class certified and the Buyer
shall be required to accept delivery of the Vessel from the Seller in such condition. Except as set forth in Subsections 2.4 and 2,7 and herein, no representations or warranties, either expressed or implied, are made with respect to the maintenance,
repair, condition, design, operation, seaworthiness, value, marketability, merchantability, usefulness or suitability, for any purpose, of the Vessel, including without limitation, (a) any implied or expressed warranty of merchantability, (b) any
implied or expressed warranty of fitness for a particular purpose, and (c) any claim by the Buyer for damages because of or related to any defects, whether known or unknown, with respect to the physical condition of the Vessel. 
  

 4 

 ARTICLE 2 
  

REPRESENTATIONS AND WARRANTIES OF SELLER 
  
 As an inducement to the Buyer to enter into this Agreement, the Seller represents and warrants to the Buyer as of the date hereof and as of the Closing
Date that: 
  
 Section 2.1 Organization, Existence and
Corporate Power. The Seller is a corporation duly organized and validly existing under the laws of the State of Louisiana and has all requisite power and authority to execute, deliver and perform its obligations under this Agreement and
the other documents, certificates and instruments contemplated hereby and thereby. 
  
 Section 2.2 Authorization and Execution. The execution, delivery and performance of this Agreement and the other documents, certificates and instruments contemplated hereby and thereby and the
consummation of the transactions contemplated hereby and thereby have been duly authorized and approved by all requisite action on the part of the Seller. This Agreement has been, and when executed and delivered, each other document, certificate and
instrument required to be executed will have been, duly executed and delivered by the Seller and constitutes the legal, valid and binding obligation of the Seller enforceable against it in accordance with the terms hereof and thereof. 
  
 Section 2.3 No Conflict. Neither the execution, delivery or
performance by the Seller of this Agreement, nor the consummation of the transactions contemplated hereby will violate or contravene the Seller’s articles of incorporation, by-laws or other constituent documents, or any judgment, decree, order
or award of any court or other governmental agency or any law, rule or regulation applicable to the Seller or any of its property or assets or conflict with result in a breach of, or constitute a default under, any agreement, instrument or
contractual obligation to which the Seller is a party or by which it or its properties and assets (including the Vessel) are bound. 
  
 Section 2.4 Title; No Encumbrances. The Seller has good, valid, indefeasible and merchantable title to the Vessel and the Vessel is free and
clear of all mortgages, security interests, debts, claims, liens, libels and encumbrances of any kind whatsoever, including, without limitations, any charter or other similar agreement whether recorded or unrecorded (collectively, the
“Encumbrances”) except for the Mortgage which shall be discharged by the Seller on the Closing Date in accordance with Section 1.2(c). 
  
 The Seller hereby agrees to defend, protect, indemnify and hold harmless the Buyer against any and all costs, expenses, losses, damages, suits, claims or proceedings
arising from any Encumbrance, including the Mortgage, that (i) exists prior to the Closing; or (ii) exists prior to the Closing and, notwithstanding the Seller’s covenants, representations and warranties herein, still exists after the Closing,
in both instances, irrespective of when such costs, expenses, losses, damages, suits, claims or proceedings are incurred or raised, as applicable. 
  
 Section 2.5 Litigation. There is no legal action, suit, arbitration, government investigation or other legal or administrative proceedings,
nor any order, decree or judgment 

  

 5 

 
pending, in effect, or threatened against or relating to the Vessel or the Seller, which in any manner would impair or impede the transactions contemplated
by this Agreement. 
  
 Section 2.6 Taxes. The Seller
has duly and timely prepared and filed with the appropriate Governmental Authorities all returns, reports, information returns, or other documents filed or required to be filed with such governmental authorities and has paid any taxes or other
amounts due in respect thereof that if unpaid could result in a claim by any Governmental Authority against the Vessel or the Buyer. 
  
 Section 2.7 Condition of Vessel. The Vessel is in the same condition it was in on July 28, 2005, normal wear and tear excepted. 

 
 Section 2.8 Brokers. Other than Bassoe Offshore, the Seller
has not, directly or indirectly, employed any broker, finder or intermediary that might be entitled to any brokerage, finder’s or similar fee or commission in connection with the transactions contemplated by this Agreement, and the Seller shall
be responsible for all fees of Bassoe Offshore. 
  
 ARTICLE 3

  
 REPRESENTATIONS AND WARRANTIES OF THE BUYER

  
 As an inducement to the Seller to enter into this
Agreement, the Buyer represents and warrants to the Seller as of the date hereof and as of the Closing Date that: 
  
 Section 3.1 Organization, Existence and Corporate Power. The Buyer is a limited liability company duly organized and validly existing under
the laws of the State of Delaware, and has all requisite power and is authority to execute, deliver and perform its obligation under this Agreement. 
  
 Section 3.2 Authorization and Execution. The execution, delivery and performance of this Agreement and the consummation of the transaction
contemplated hereby have been duly authorized and approved by all requisite actions of the Buyer. This Agreement has been duly executed and delivered by the Buyer and constitutes the legal, valid and binding obligation of the Buyer enforceable
against it in accordance with its terms. 
  
 Section 3.3 No
Conflict. Neither the execution, delivery or performance by the Buyer of this Agreement nor the consummation of the transactions contemplated hereby will violate or contravene the Certificate of Formation or limited liability company
agreement of the Buyer or any judgment, decree, order or award of any court or other governmental agency or any law, rule or regulation applicable to the Buyer or any of its property or assets, or conflict with, result in a breach of, or constitute
a default under, any agreement, instrument or contractual obligation to which the Buyer is a party or by which it or its property are bound. 
  
 Section 3.4 Litigation. There are no legal actions, suits, arbitrations, government investigations on or other legal or administrative
proceedings, nor any order, decree or judgment pending, in effect, or threatened against the Buyer, which in any manner would impair or impede the transactions contemplated by the Agreement. 
  

 6 

 ARTICLE 4 
  

TERMINATION 
  
 Section 4.1 Termination. This Agreement may, by written notice given at or prior to the Closing, be terminated: (a) by mutual consent of the
Seller and the Buyer; (b) by the Seller or the Buyer if there has been a material breach by the other of any representation, warranty, covenant or agreement contained in this Agreement that shall not have been cured or waived by the other Party by
the Closing Date; provided, that such breaching Party shall have up to thirty (30) days beyond the Closing Date to cure any such material breach; or (c) by the Buyer if there is a Total Loss to the Vessel pursuant to Section 1.2(d).

  
 Section 4.2 Effect of Termination; Survival.

  
 (a) Upon the termination of this Agreement pursuant to Section
4.1(a) or (c) hereof, this Agreement shall be void and of no effect and there shall be no liability by reason of this Agreement or the termination thereof on either Party except for any liability arising out of a breach of any representation,
warranty, agreement or covenant of this Agreement prior to the date of termination or any representation warranty, agreement or covenant that survives the termination of this Agreement. 
  
 (b) The provisions of this Subsection 4.2 shall survive any termination of this Agreement. 
  
 ARTICLE 5 
  
 MISCELLANEOUS 
  
 Section 5.1 Indemnities. 
  
 (a) Indemnification of the Buyer by the Seller. 
  

	 	(i)	 The Seller hereby agrees to pay and assume liability for, and does hereby agree to indemnify, defend, protect, save and hold harmless the Buyer and the Vessel from
and against all liabilities, obligations, losses, damages, penalties, claims (including claims by any employee of the Seller, or any of its servants, crew or agents), actions, suits and related costs, expenses and disbursements, of whatsoever kind
and nature, imposed on, asserted against, or incurred by, the Buyer or the Vessel, in any way relating to or arising out of or alleged to be attributable to, related to or arising out of: (A) any breach of representation or warranty of the Seller
under this Agreement or any breach or non-fulfillment of any covenant, agreement or other obligation of the Seller as set forth in this Agreement; (B) Encumbrances or other losses, claims, damages or liabilities of any kind or nature whatsoever
related to the Seller’s ownership or operation of the Vessel prior to the Closing Time; or (C) any Taxes imposed on the Seller, the Buyer or the Vessel by any Governmental Authority or other U.S. taxes, U.S. fees, U.S. levies and other
governmental charges imposed by 

  

 7 

	 	 
any Governmental Authority on the Seller, the Buyer or the Vessel that relate to the Seller’s period of ownership of the Vessel.

  

	 	(ii)	The Seller shall not be liable to the Buyer for any consequential damages of any kind or nature whatsoever, including but not limited to loss of profits, revenue or cost of
transportation, arising from the Seller’s failure to comply with its obligations hereunder. 

  
 (b) Indemnification of the Seller by the Buyer. 
  

	 	(i)	The Buyer hereby agrees to pay and assume liability for, and does hereby agree to indemnify, defend, protect, save and hold harmless the Seller from and against any and all
liabilities, obligations, losses, damages, penalties, claims (including claims by any employee of the Buyer or any of its servants, crew or agents), actions, suits and related costs and expenses and disbursements, including reasonable legal fees and
expenses of whatsoever kind and nature, imposed on, asserted against or incurred by the Seller or the Vessel, in any way relating to or arising out of or alleged to be attributable to, related to or arising out of: (A) any breach of representation
or warranty of the Buyer under this Agreement or any breach or non-fulfillment of any covenant, agreement or other obligation of the Buyer as set forth in this Agreement; and (B) any Encumbrances or other losses, claims, damages or liabilities of
any kind or nature whatsoever related to the Buyer’s inspection or operation of the Vessel from July 28, 2005 until the Closing Date. 

  

	 	(ii)	The Buyer shall not be liable to the Seller for any consequential damages of any kind or nature whatsoever, including but not limited to loss of profits or revenue, arising from the
Buyer’s failure to comply with its obligations hereunder; provided that the Buyer has used its best efforts to comply with its obligations hereunder. 

  
 (c) Survival of Indemnities. Not withstanding the termination of this Agreement, the indemnities and hold
harmless obligations provided for herein, shall survive the Closing and/or the termination of the Agreement, and shall continue in full force and effect for applicable claims or causes of action until the expiration of the applicable statute of
limitations with respect to claims of that type. 
  
 Section 5.2
Due Diligence. The Seller shall, and shall cause each of its officers, employees, agents, accountants and counsel to (I) afford the officers, employees, agents, counsel, other representatives of the Buyer full access to the Vessel and
its related books and records; and (ii) furnish to the officers, employees, agents, counsel of the Buyer such additional information regarding the Vessel and the transactions contemplated by this Agreement as the Buyer or any of such persons may
from time to time reasonably request. 
  

 8 

 Section 5.3 Usage of Vessel Prior to Closing. The Seller shall not, from the date of this
Agreement, use the Vessel except as required by the U.S. Coast Guard or a Governmental Authority or as otherwise agreed with the Buyer, unless this Agreement is terminated. 
  
 Section 5.4 Further Cooperation. The Seller shall cooperate with the Buyer in seeking to obtain all approvals
required for this Agreement, including cooperating in any application for such approval on behalf of the Buyer, as may be requested by the Buyer. In addition, each of the Parties hereto shall use its reasonable best efforts to take, or cause to be
taken, all appropriate action, and to do, or cause to be done, all things necessary, proper or advisable under applicable laws or otherwise to consummate and make effective the transaction contemplated by this Agreement. In case, at any time after
the Closing Date, any further action is necessary or desirable to carry out the purposes of this Agreement, the proper officers and directors of each Party to this Agreement shall use their reasonable best efforts to take all such action.

  
 Section 5.5 Expenses. The Buyer and the Seller
shall each pay their own out-of-pocket fees and expenses, including, without limitation, all legal, advisory or other fees and expenses, arising in connection with any transactions contemplated by this Agreement. 
  
 Section 5.6 Amendments and Waivers. No Modification, waiver or
amendment of this Agreement shall be effective unless such modification, waiver or amendment is in writing and executed by the Parties hereto. 
  
 Section 5.7 Notices. Any notice provided for by the terms and condition of this Agreement shall be in writing and shall be deems effective
as follows: (a) if delivered personally, upon delivery; (b) if sent by post, upon certified receipt; (c) if sent by a courier service, upon receipt; or (d) if sent by facsimile to have been received by the recipient. Notices shall be addressed to
the relevant Party’s signatory at the address of such Party set forth opposite each Party’s name on the signature page hereof (until notice of a change thereof is delivered as provided in this Section 5.11) 
  
 Section 5.8 Survival. All agreements, indemnities, covenants,
representations and warranties made herein shall survive the execution and delivery of this Agreement and the Closing. 
  
 Section 5.9 Severability; Counterparts. In case any provision of or obligation under this Agreement shall be declared invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provision or obligation, or of such provision or obligation in any other jurisdiction shall not in any way be affected or impaired thereby. Upon such
determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in
an acceptable manner in order that the transaction contemplated by this Agreement are consummated as originally contemplated to the greatest extent possible. This Agreement may be executed by the Parties hereto in separate counterparts, each of
which when so executed and delivered shall be an original, but all of such counterparts shall together constitute one and the same instrument. 
  

 9 

 Section 5.10 Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the United States, the United States General Maritime Law and the substantive law of the State of Louisiana without regard to any laws, rules or regulation concerning conflict of laws that might result in the application of the laws
of any other jurisdiction. 
  
 Section 5.11 Venue.
Any dispute, claim or lawsuit arising out of or relating to this agreement shall be filed in the United States District Court in and for the Eastern District of Louisiana, located in New Orleans, Louisiana. 
  
 Section 5.12 Successors and Assigns. This Agreement shall be
binding upon and shall inure to the Parties hereto and their respective successors and assigns; provided, however, that neither the Buyer nor the Seller shall be permitted to assign its rights under this Agreement without the prior written
consent of the other Party, except that either Party may assign its rights and interests under this Agreement to one or more of its subsidiaries without the consent of the other. 
  
 Section 5.13 Entire Agreement and Cancellation of Prior Agreements. This Agreement contains the entire
agreement between the Parties. All prior proposals, negotiations and agreements prior to the execution of this Agreement are not included in this Agreement and are hereby voided. 
  
 IN WITNESS WHEREOF, the Parties have executed this Agreement through their duly authorized officers as of the date set forth
in the preamble to this Agreement. 
  

	
	Signed for and on behalf of:
	
	 C.S. LIFTBOATS, INC.
 13933 Pumping Plant Road
 Abbeville, Louisiana 70510
 U.S.A.

	
	/S/    CHESTER J.
SMITH        
	 By: Chester J. Smith

	 Title: President

  

			
	Signed for and on behalf of:
	
	 HERCULES OFFSHORE, LLC.
 2929 Briarpark Drive, Suite 435
 Houston, Texas 77042

	
	/S/    RANDALL D.
STILLEY        
	By:	 	 Randall D. Stilley

	 Title:
	 	 Authorized Manager

  

 10 

  
 EXHIBIT A 

 
 DEFINITIONS 
  
 “Additional Parts” has the meaning specified in Section 5.8. 
  
 “Agreement” has the meaning specified in the Recitals. 
  
 “Bill of Sale” has the meaning specified in Section 1.2(c)(i). 

 
 “Buyer” means Hercules Offshore, LLC 
  
 “Business Day” means a day on which banks are open for business in Houston,
Texas. 
  
 “Certificate of Acceptance” has the meaning specified
in Section 1.2(e). 
  
 “Closing” has the meaning specified in
Section 1.2(a). 
  
 “Closing Date” has the meaning specified in
Section 1.2(a). 
  
 “Closing Time” has the meaning specified in
Section 1.2(e). 
  
 “Deposit” has the meaning specified in
Section 1.1(a)(i). 
  
 “Governmental Authority” means any local,
national or state agency or institution, authority, department, directorate, inspectorate, minister, ministry, municipality, official or public statutory persons of, any judicial body of or the government or legislature of, the United States of
America. 
  
 “Mortgage” has the meaning specified in Section
1.2(c). 
  
 “M/V Joshua” has the meaning specified in the
Recitals. 
  
 “NVDC” has the meaning specified in Section
1.2(c)(i). 
  
 “Party” and “Parties” has the
meaning specified in the Recitals. 
  
 “Purchase Price” has the
meaning specified in Section 1.1. 
  
 “Regions Bank” has the
meaning specified in Section 1.2(c). 
  
 “Seller” means C.S.
Liftboats, Inc. 
  
 “Taxes” has the meaning specified in Section
1.1. 
  
 “Total Loss” has the meaning specified in Section
1.2(d). 
  
 “Vessel” has the meaning specified in the Recitals.

  

 A-1 

  
 EXHIBIT B 

 
 Specifications of the Vessel 
  
 Specification: 
  

			
	L.O.A.	  	133’
	Molded Beam:	  	100’
	Molded Depth:	  	11’
	Outside of Towers Beam:	  	100’
	Forward Deck Area	  	7,600’ Working Area
	Leg Length:	  	260’
	Pads:	  	35 x 17 with % Plating
	Leg Diameter:	  	99” x 1
	Deck Load:	  	400 Short Tons
	Working Water Depth:	  	@180 of water w/ 25’ wave action
	Cranes: E.B.I. (Boom Extension Available)	  	1 ~ 100 ton with 100’ Boom Length
	 	  	1 ~ 15 ton with 60’ Length
	 	  	Planetarys - 10 per leg - 5 per slide
	Main Engines:	  	2 ~ 3508 CAT with 5-1 Gear
	 	  	(2000 HP comb @ 1800 RPM)
	Power Pack:	  	Engine 280 HP at 1800 RPM
	 	  	Powered by two 40 HP pumps
	Generators:	  	2-3306 CAT Engines
	 	  	(180 kW each) at 1800 RPM
	Air Manifold on Deck:	  	With 3 outlets
	2 Fire Monitors Forward on Port and Starboard Side
	2-Drop Pumps:	  	15 HP each
	Forward Working Deck Area	  	6500
	Bow Thruster	  	150 HP

  
 Capacities: 
  

			
	 Water Maker
	  	2,000 Gallons Per Day
	 Fuel Oil:
	  	10,000 US Gallons
	 Fresh Water:
	  	29,000 US Gallons
	 Lube Oil:
	  	1,500 US Gallons
	 Hydraulic Oil:
	  	2,000 US Gallons

  

 B-1 

 Accommodations: 
  

			
	 Crewmen:
	  	12, Pilot House Level
	 Charter Co. Personnel:
	  	30 on Focsle Deck

  
 Electronics: 
  

	
	 1-Furuno 24 Miles radar installed

	 1-J.R.C. 24 Mile Color Radar

	 1-Loud Hailer Intercom with six speakers

	 2-VHF Marine Radios (one to be battery emergency as per U.S.C.G.)

	 1-Single Sideband

	 1-Digital Depth Finder

	 1-GPS

  
 Classifications: 
  
 Vessel is classified — A.B.S. #
100 Al world wide service class liftboat — U.S. Flagged with Al loadline and U.S.C.G approved. 
  

 B-2

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