Common use of Transaction Overview Clause in Contracts

Transaction Overview. Strict Foreclosure Transaction The Restructuring shall be effected as follows promptly after the occurrence of one or more Events of Default under the 2019 and 2020 Indentures: The following NewCo entities shall have been formed prior to the consummation of the Strict Foreclosure Transaction: (i) a limited liability company (“Bondholder NewCo”), which, if desired, could be classified as a C-corporation, (ii) a direct subsidiary of Bondholder NewCo, which will also be a holding company, and may be an LLC (including an LLC classified as a corporation) or a C-Corp (“Bondholder Intermediate Holdco”), and (iii) a direct subsidiary of Bondholder Intermediate Holdco, which may be a C-Corp or an LLC classified as a corporation (“Bondholder OpCo”) (the parties agreeing that they will work cooperatively with each other in performing additional tax, securities and corporate law analysis necessary to determine the most efficacious form of entities to ultimately use to effectuate the Restructuring); At the direction of the respective Indenture Trustees, who in turn shall be acting at the direction of the respective holders of a majority of the 2019 and 2020 Notes, and with the consent of the Revolver Administrative Agent, the Collateral Agent under, and as defined in, that certain Collateral Agreement, dated as of April 29, 2011 (the “Collateral Agreement”), among the Company, certain of its direct and indirect subsidiaries, the Revolver Administrative Agent, the Indenture Trustee under the 2019 Indenture, and ComputerShare Trust Company, N.A., as successor to U.S. Bank National Association, as Collateral Agent (together with any sub-collateral agent appointed by such collateral agent, the “Collateral Agent”), and CCFI shall enter into and consummate a strict foreclosure agreement (the “Strict Foreclosure Agreement”), substantially in the form attached hereto as Exhibit A, pursuant to which the Collateral Agent shall acquire, in full satisfaction of all 2019 and 2020 Note Claims, the transferrable right to acquire all right, title and interest in and to, all of the pledged equity interests in the first-tier subsidiaries of CCFI and all other assets of CCFI, free and clear of all liens, claims and encumbrances, (the “Specified Collateral”), and, if Required Consenting Noteholders have consented to such merger, thereafter CCFI shall merge with and into Bondholder NewCo, or a direct or indirect subsidiary thereof, at a time to be determined; The Collateral Agent shall transfer its right to acquire ownership of the Specified Collateral to Bondholder OpCo; Bondholder OpCo shall assume responsibility, as borrower, for all of the New Revolving Credit Facility Claims of CCF Issuer (the New Revolving Credit Facility Claims so assumed, the “Assumed New Revolving Credit Facility Claims”), and Bondholder Intermediate Holdco shall guarantee the Assumed New Revolving Credit Facility Claims and each of Bondholder OpCo and Bondholder Intermediate Holdco shall grant first-priority liens on all or substantially all of their assets to secure their respective obligations under or in respect of the Assumed New Revolving Credit Facility Claims. All of the direct and indirect subsidiaries of Bondholder Intermediate Holdco (other than the SPV Subsidiaries) shall continue to guarantee the Assumed New Revolving Credit Facility Claims, and their guarantee obligations shall continue to be secured by first-priority liens on all or substantially all of their assets. The terms of the Assumed New Revolving Credit Facility Claims will be amended and restated consistent with the terms described herein under the caption “Amended and Restated Revolving Credit Facility. To effectuate Bondholder OpCo’s assumption of the Assumed New Revolving Credit Facility Claims, CCFI shall transfer all of the equity interests in CCF Issuer to Bondholder OpCo, subject to the liens securing the New Revolving Credit Facility Claims. In addition, as consideration for the consent of the applicable Revolving Lenders and the New Noteholders to the foregoing and to the Restructuring, Bondholder NewCo shall issue the Class B Units (as defined below) to the New Noteholders; As consideration for acquiring the ownership of the Specified Collateral in the Strict Foreclosure Transaction, Bondholder NewCo and Bondholder OpCo, as applicable, shall deliver (via the Collateral Agent) on a ratable basis to the 2019 Noteholders and 2020 Noteholders (i) 100% percent of the common units of Bondholder NewCo (“Common Units”) issued on the Effective Date,2 and (ii) the New PIK Notes (as defined below) in the aggregate principal amount equal to the aggregate principal amount of the 2019 and 2020 Notes Claims, plus interest accrued thereon through November 15, 2018; The foregoing transactions shall be collectively referred to as the “Strict Foreclosure Transaction,” and the term “Restructuring” shall include the Strict Foreclosure Transaction and all other transactions contemplated in this Term Sheet. Amendment of New Revolving Credit Facility Claims and New Secured Notes Claims Concurrently with the consummation of the Strict Foreclosure Transaction, and as a condition precedent to obtaining the consent of the Revolver Administrative Agent to the Strict Foreclosure Transaction, and with the consent of the Bondholder Designee and the New Notes Indenture Trustee, (a) CCFI (or Bondholder OpCo, as applicable) and CCF Issuer shall (i) cause to be paid in full in cash all accrued interest, fees, costs and expenses in respect of the New Revolving Credit Facility Claims (the “New Revolver Cash Payoff Amount”), (ii) amend and restate the New Revolving Credit Facility consistent with the terms described herein under the caption “Amended and Restated Revolving Credit Facility”, and (iii) amend the New Notes Indenture consistent with the terms described herein under the caption “Amended Notes Indenture”, and (b) Bondholder NewCo shall issue ratably to the New Noteholders (excluding the VPC Revolving Lenders), a number of common units of Bondholder NewCo (the “Class B Units”) equal to 12.3% of the total number of outstanding Common Units (other than Class C Units) as of the Effective Date; provided, however, that in the event that Bondholder NewCo shall issue after the Effective Date Common Units in consideration of the redemption of the New PIK Notes (the “Redemption Units”) or Common Units in connection with the issuance of any additional debt securities (the “Additional Financing Units”), the number of Class B Units shall be adjusted such that the aggregate number of all Class B Units continues to be equal, in the aggregate, to 12.3% of the sum of all Common Units, including Class B Units, the Redemption Units and the Additional Financing Units, but excluding Class C Units; provided, further, that all such Class B Units shall be subject to dilution from the MIP. For avoidance of doubt, the portion of the New Revolver Cash Payoff Amount allocable to the payment of the fees, costs and expenses of the New Notes Indenture Trustee and the Bondholder Designee shall be remitted to those entities.

Transaction Overview. Strict Foreclosure Transaction The Restructuring Parties: Hercules Offshore, Inc. (“HERO”) and its subsidiaries that are party to the First Lien Credit Agreement (as defined below), each of which shall be effected as follows promptly after the occurrence of one or more Events of Default under the 2019 and 2020 Indentures: The following NewCo entities shall have been formed prior a party to the consummation of RSA (collectively with HERO, the Strict Foreclosure Transaction: (i) a limited liability company (“Bondholder NewCoHERO Entities”), which, if desired, could be classified as a C-corporation, (ii) a direct subsidiary of Bondholder NewCo, which will also be a holding company, and may be an LLC (including an LLC classified as a corporation) or a C-Corp (“Bondholder Intermediate Holdco”), and (iii) a direct subsidiary of Bondholder Intermediate Holdco, which may be a C-Corp or an LLC classified as a corporation (“Bondholder OpCo”) (the parties agreeing that they will work cooperatively with each other in performing additional tax, securities and corporate law analysis necessary to determine the most efficacious form of entities to ultimately use to effectuate the Restructuring); At the direction of the respective Indenture Trustees, who in turn shall be acting at the direction of the respective holders of a majority of the 2019 and 2020 Notes, and with the consent of the Revolver Administrative Agent, the Collateral Agent under, and as defined in, that certain Collateral Agreement, dated as of April 29, 2011 . The ad hoc group (the “Collateral AgreementAd Hoc Group”), among the Company, ) comprised of certain of its direct and indirect subsidiaries, the Revolver Administrative Agent, the Indenture Trustee under the 2019 Indenture, and ComputerShare Trust Company, N.A., as successor to U.S. Bank National Association, as Collateral Agent (together with any sub-collateral agent appointed by such collateral agent, the “Collateral Agent”), and CCFI shall enter into and consummate a strict foreclosure agreement (the “Strict Foreclosure Agreement”), substantially in the form attached hereto as Exhibit A, pursuant to which the Collateral Agent shall acquire, in full satisfaction of all 2019 and 2020 Note Claims, the transferrable right to acquire all right, title and interest in and to, all of the pledged equity interests in the first-tier subsidiaries of CCFI and all other assets of CCFI, free and clear of all liens, claims and encumbrances, (the “Specified Collateral”), and, if Required Consenting Noteholders have consented to such merger, thereafter CCFI shall merge with and into Bondholder NewCo, or a direct or indirect subsidiary thereof, at a time to be determined; The Collateral Agent shall transfer its right to acquire ownership of the Specified Collateral to Bondholder OpCo; Bondholder OpCo shall assume responsibility, as borrower, for all of the New Revolving Credit Facility Claims of CCF Issuer (the New Revolving Credit Facility Claims so assumed, the “Assumed New Revolving Credit Facility Claims”), and Bondholder Intermediate Holdco shall guarantee the Assumed New Revolving Credit Facility Claims and each of Bondholder OpCo and Bondholder Intermediate Holdco shall grant first-priority liens on all or substantially all of their assets to secure their respective obligations under or in respect of the Assumed New Revolving Credit Facility Claims. All of the direct and indirect subsidiaries of Bondholder Intermediate Holdco (other than the SPV Subsidiaries) shall continue to guarantee the Assumed New Revolving Credit Facility Claims, and their guarantee obligations shall continue to be secured by first-priority liens on all or substantially all of their assets. The terms of the Assumed New Revolving Credit Facility Claims will be amended and restated consistent with the terms described herein under the caption “Amended and Restated Revolving Credit Facility. To effectuate Bondholder OpCo’s assumption of the Assumed New Revolving Credit Facility Claims, CCFI shall transfer all of the equity interests in CCF Issuer to Bondholder OpCo, subject to the liens securing the New Revolving Credit Facility Claims. In addition, as consideration for the consent of the applicable Revolving First Lien Lenders and the New Noteholders to the foregoing and to the Restructuring, Bondholder NewCo shall issue the Class B Units (as defined below) and listed on the signature pages attached to the New Noteholders; As consideration for acquiring RSA. Transaction Summary: Subject to the ownership terms and conditions of this Term Sheet, the RSA and Definitive Documentation, HERO, each of the Specified Collateral other HERO Entities that is a domestic United States entity (other than Hercules Liftboat Company, LLC and Hercules Offshore International, LLC) (collectively, the “Debtors”) shall restructure and implement a process to monetize their assets and wind-down their operations through a “pre-packaged” chapter 11 plan (the “Plan”), which shall be filed with the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”), in cases (the “Chapter 11 Cases”) commenced by the Debtors by no later than June 6, 2016 (the date on which the Chapter 11 Cases are commenced, the “Petition Date”) under chapter 11 of title 11 of the United States Code (the “Bankruptcy Code”). Agreements entered into or terminated by the HERO Entities contemplating the sale of any of the HERO Entities’ vessels that secure the First Lien Claims shall be subject to the approval of the Requisite Consenting Lenders, whether entered into before, or during the Chapter 11 Cases, which consent of the Requisite Consenting Lenders shall not be unreasonably withheld. In connection with that certain Amended and Restated Forbearance Agreement, dated May 26, 2016, by and between the HERO Entities, the Administrative Agent, and certain of the First Lien Lenders (the “Amended and Restated Forbearance Agreement”), the Escrow Agent (as defined in the Strict Foreclosure Transaction, Bondholder NewCo and Bondholder OpCo, as applicable, shall deliver (via the Collateral Agent) on a ratable basis to the 2019 Noteholders and 2020 Noteholders (i) 100% percent of the common units of Bondholder NewCo (“Common Units”) issued on the Effective Date,2 and (ii) the New PIK Notes First Lien Credit Agreement (as defined below)) shall distribute all the funds in the aggregate principal amount equal Escrow Account (as defined in the First Lien Credit Agreement) to the aggregate principal amount First Lien Agent to prepay amounts due under the First Lien Credit Agreement pursuant to Section III(d) of the 2019 Escrow Agreement (as defined in the First Lien Credit Agreement) and 2020 Notes Claims, plus interest accrued thereon through November 15, 2018; The foregoing transactions shall be collectively referred to as the “Strict Foreclosure Transaction,” and the term “Restructuring” shall include the Strict Foreclosure Transaction and all other transactions contemplated in this Term Sheet. Amendment of New Revolving Credit Facility Claims and New Secured Notes Claims Concurrently with the consummation Section 2.10(a)(i) of the Strict Foreclosure Transaction, and as a condition precedent to obtaining the consent of the Revolver Administrative Agent to the Strict Foreclosure Transaction, and with the consent of the Bondholder Designee and the New Notes Indenture Trustee, (a) CCFI (or Bondholder OpCo, as applicable) and CCF Issuer shall (i) cause to be paid in full in cash all accrued interest, fees, costs and expenses in respect of the New Revolving First Lien Credit Facility Claims Agreement (the “New Revolver Cash Payoff AmountEscrow Release Payment”), (ii) amend and restate . If the New Revolving Credit Facility consistent with First Lien Agent shall not have received the terms described herein under Escrow Release Payment by the caption “Amended and Restated Revolving Credit Facility”, and (iii) amend date that is 3 business days after the New Notes Indenture consistent with delivery by the terms described herein under the caption “Amended Notes Indenture”, and (b) Bondholder NewCo shall issue ratably First Lien Agent of a written instruction to the New Noteholders (excluding the VPC Revolving Lenders), a number of common units of Bondholder NewCo (the “Class B Units”) equal Escrow Agent to 12.3% distribute all of the total number of outstanding Common Units (other than Class C Units) as of the Effective Date; provided, however, that funds in the event that Bondholder NewCo shall issue after Escrow Account to the Effective Date Common Units in consideration of First Lien Agent to prepay the redemption of the New PIK Notes (the “Redemption Units”) or Common Units in connection with the issuance of any additional debt securities (the “Additional Financing Units”)Loans, the number of Class B Units RSA shall be adjusted such that terminable by the aggregate number of all Class B Units continues to be equal, in the aggregate, to 12.3% of the sum of all Common Units, including Class B Units, the Redemption Units Requisite Consenting Lenders. The Plan and the Additional Financing Units, but excluding Class C Units; provided, further, that all such Class B Units other Definitive Documents shall be subject to dilution from the MIP. For avoidance of doubt, the portion of the New Revolver Cash Payoff Amount allocable substantially consistent in all respects with this Term Sheet and otherwise reasonably acceptable to the payment of the fees, costs and expenses of the New Notes Indenture Trustee HERO Entities and the Bondholder Designee shall be remitted to those entitiesRequisite Consenting Lenders.