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Actionable news in HERO: Hercules Offshore, Inc.,

Entry into a Material Definitive Agreement

New Credit Facility

On November6, 2015 (the Credit Agreement Closing Date), the Company entered into a Credit Agreement among the Company, as borrower, its subsidiaries party thereto, as guarantors, Jefferies Finance LLC, as administrative agent and as collateral agent (in such capacities, the Agent), and the financial institutions party thereto, as lenders (the Credit Agreement). The Credit Agreement provides for a $450.0 million senior secured credit facility consisting entirely of term loans that were made on the Credit Agreement Closing Date. The loans were issued with 3.0% original issue discount, and $200.0 million (the Escrowed Amount) of the proceeds were placed into an escrow account pursuant to an Escrow Agreement dated as of the Credit Agreement Closing Date, among the Company, the Agent and Wilmington Trust, National Association, and will be released pursuant to the terms thereof (the Escrow Conditions). The Escrowed Amount is to be used to finance the remaining installment payment on the

Hercules Highlander

and the expenses, costs and charges related to the construction and purchase of the

Hercules Highlander

. The remaining proceeds of the loans are being used to consummate the Plan, fund fees and expenses in connection therewith, and to provide for working capital and other general corporate purposes of the Company and its subsidiaries. All loans under the Credit Agreement mature on May6, 2020.

The Company may voluntarily prepay loans under the Credit Agreement, subject to customary notice requirements and minimum prepayment amounts, the payment of LIBOR breakage costs, if any, and (i)if such prepayment is made prior to the third anniversary of the Credit Agreement Closing Date, a prepayment premium of 3.0% of the principal amount of the loans being prepaid plus the present value of the sum of all required payments of interest on the aggregate principal amount of the loans being prepaid through the third anniversary of the Credit Agreement Closing Date, (ii)if such prepayment is made after the third anniversary of the Credit Agreement Closing Date but on or prior to the fourth anniversary of the Credit Agreement Closing Date, a prepayment premium of 3.0% of the aggregate principal amount of the loans being prepaid and (iii)if such prepayment is made after the fourth anniversary of the Credit Agreement Closing Date, without premium or penalty.

The Credit Agreement requires mandatory prepayments of amounts outstanding thereunder with (i)the net proceeds of certain asset sales and casualty events, subject to certain reinvestment rights, (ii)the net proceeds of certain equity issuances, subject to certain exceptions, including with respect to equity issuances used to finance acquisitions, (iii)the net proceeds of debt issuances not permitted by the Credit Agreement, (iv)any cancellation, termination or other fee received in connection with the cancellation or termination of the construction contract or drilling contract for the

Hercules Highlander

, and (v)the Escrowed Amount if the Escrow Conditions are not satisfied. No prepayment premium is payable in connection with any of these mandatory prepayments, unless the mandatory prepayment is a result of the issuance of debt not permitted by the Credit Agreement. In addition, if a change of control (as defined in the Credit Agreement) occurs, each lender will have the right to require the Company to prepay its loans at 101% of the principal amount of the loans requested to be prepaid.

Loans under the Credit Agreement bear interest, at the Companys option, at either (i)the ABR (the highest of the prime rate, the federal funds rate plus 0.5%, the one-month LIBOR rate plus 1.0%, and 2.0%), plus an applicable margin of 8.50%, or (ii)the LIBOR rate plus an applicable margin of 9.50%per annum. The LIBOR rate

includes a floor of 1.0%. In connection with entering into the Credit Agreement, the Company paid to the original commitment parties a put option premium equal to 2.0% of each such commitment partys commitment (one half of such fee was paid upon execution of the commitment letter, and the remaining half of such fee was paid on the Credit Agreement Closing Date), and the Company paid certain administrative and other fees to the Agent.

The Credit Agreement contains covenants that, among other things, limit the Companys ability and the ability of the Companys restricted subsidiaries to:

incur indebtedness;

create liens;

enter into sale and leaseback transactions;

pay dividends or make other distributions to equity holders;

prepay subordinated debt or unsecured debt;

make other restricted payments or investments (including investments in subsidiaries that are not guarantors);

consolidate, merge or transfer all or substantially all of its assets;

sell assets;

engage in transactions with its affiliates;

modify or terminate any material agreement;

enter into agreements that restrict dividends or other transfers of assets by restricted subsidiaries; and

engage in any new line of business.

These covenants are subject to a number of important qualifications and limitations. In addition, the Company has to maintain compliance with (i)a maximum senior secured first lien leverage ratio (as defined in the Credit Agreement, being generally computed as the ratio of secured first lien debt to consolidated net income before interest, taxes, depreciation and amortization, which EBITDA amount will be annualized for any test period during 2017) commencing from the fiscal quarter ending March31, 2017 and (ii)a minimum liquidity amount, consisting of unrestricted cash and cash equivalents, commencing from the Credit Agreement Closing Date. The maximum secured leverage ratio is 6.0 to 1.0 for the fiscal quarter ending March31, 2017, 5.0 to 1.0 for the fiscal quarter ending June30, 2017, 4.0 to 1.0 for the fiscal quarter ending September30, 2017, and 3.50 to 1.0 for the fiscal quarter ending December31, 2017 and thereafter. The minimum liquidity is $100.0 million for the period beginning on the Credit Agreement Closing Date and ending on June30, 2016, $75.0 million for the period beginning July1, 2016 and ending December31, 2016, $50.0 million for the period beginning January1, 2016 and ending June30, 2017, and $25.0 million for the period beginning July1, 2017 and thereafter.

The Companys obligations under the Credit Agreement are guaranteed by substantially all of its domestic and foreign subsidiaries, and the obligations of the Company and the guarantors are secured by liens on substantially all of their respective assets, including their current and future vessels (including the

Hercules Highlander

when it is delivered), bank accounts, accounts receivable, and equity interests in subsidiaries.

Upon an event of default under the Credit Agreement, the Agent may, or at the direction of lenders holding a majority of the loans under the Credit Agreement shall, declare all amounts owing under the Credit Agreement to be due and payable. In addition, upon an event of default under the Credit Agreement the Agent is empowered to exercise all rights and remedies of a secured party and foreclose upon the collateral securing the Credit Agreement, in addition to all other rights and remedies under the security documents described in the Credit Agreement. Upon any acceleration of the loans under the Credit Agreement, the prepayment premiums described above that are otherwise applicable to voluntary prepayments shall become due and payable to the lenders.

The foregoing description of the Credit Agreement is not complete and is qualified by reference to the complete document. A copy of the Credit Agreement is filed as Exhibit 10.1 hereto and is incorporated herein by reference.

Warrant Agreement

General.

On the Effective Date, the Company entered into a warrant agreement (the Warrant Agreement) with American Stock Transfer and Trust Company, LLC (the Warrant Agent). The below

description of the Warrant Agreement is qualified in its entirety by reference to the Warrant Agreement, which is incorporated by reference herein. A copy of the Warrant Agreement is attached hereto as Exhibit 4.1.

In accordance with the Plan, the Company will issue warrants (the Warrants) to the holders of certain HERO Equity Interests (as defined in the Plan) (the Initial Beneficial Holders), totaling 5,000,000 Warrants outstanding, exercisable until the Expiration Date, to purchase up to an aggregate of 5,000,000 shares of New Common Stock (as defined below) at an initial exercise price of $70.50 per share. All unexercised Warrants shall expire, and the rights of Initial Beneficial Holders of such Warrants to purchase New Common Stock shall terminate at the close of business on the first to occur of (i)November8, 2021 or (ii)the date of completion of (A)any Affiliated Asset Sale or (B)a Change of Control.

No Rights As Stockholders.

Pursuant to Article 5, Section5.01 of the Warrant Agreement, nothing contained in the Warrant Agreement shall be construed as conferring upon any holder of Warrants, by virtue of holding or having a beneficial interest in the Warrants, the right to vote, to consent, to receive any Cash dividends, stock dividends, allotments or rights or other distributions paid, allotted or distributed or distributable to the holders of shares of New Common Stock, or to exercise any rights whatsoever as a stockholder of the Company unless, until and only to the extent such holder of Warrants becomes a holder of record of shares of New Common Stock issued upon settlement of Warrants.

Adjustments.

The number of shares of New Common Stock for which a Warrant is exercisable, and the exercise price per share of such Warrant are subject to adjustment from time to time pursuant to Article 4 of the Warrant Agreement upon the occurrence of...


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