UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
____________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
Date of Report (Date of earliest event reported):
December 22, 2003 (December 17, 2003)
___________________
TORCH OFFSHORE, INC.
(Exact Name of Registrant as Specified in its Charter)
000-32855
(Commission File Number)
Delaware 74-2982117
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
401 Whitney Avenue, Suite 400
Gretna, Louisiana 70056-2596
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code:
(504) 367-7030
ITEM 5. OTHER EVENTS.
On December 22, 2003, Torch Offshore, Inc. (the
"Company") issued a press release announcing that
it has refinanced the debt used to acquire the
Midnight Wrangler with General Electric Capital
Corporation with a secured term loan in the
principal amount of $15.0 million. A copy of this
press release is furnished as Exhibit 99.1 to this
report and incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS, PROFORMA FINANCIAL
INFORMATION AND EXHIBITS.
(a) Not applicable.
(b) Not applicable.
(c) Exhibits.
The following exhibits are filed herewith:
Exhibit No. Description
----------- -----------
99.1 Torch Offshore, Inc. Press Release, dated
December 22, 2003.
99.2 Loan Agreement among General Electric Capital
Corporation, Torch Offshore, L.L.C., Torch
Offshore, Inc. and Torch Express, L.L.C.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned hereunto duly
authorized.
TORCH OFFSHORE, INC.
By: /s/ ROBERT E. FULTON
Date: December 22, 2003 -------------------------
Robert E. Fulton
Chief Financial Officer
INDEX TO EXHIBITS
Exhibit No. Description
----------- -----------
99.1 Torch Offshore, Inc. Press Release, dated
December 22, 2003.
99.2 Loan Agreement among General Electric Capital
Corporation, Torch Offshore, L.L.C., Torch
Offshore, Inc. and Torch Express, L.L.C.
EXHIBIT 99.1
NEWS RELEASE
For immediate release Contact: Bob Fulton (1)504-367-7030
to: Analysts, Financial b.fulton@torchinc.com
Community, Media Bradley Lowe (1)504-367-7030
b.lowe@torchinc.com
Torch Offshore Announces Refinancing
of Midnight Wrangler Debt
New Orleans, Louisiana USA, December 22, 2003
Torch Offshore, Inc. (NASDAQ: TORC) (the "Company")
announced that it has refinanced the debt used to acquire
the Midnight Wrangler. The Company refinanced the debt with
General Electric Capital Corporation with a secured term
loan in the principal amount of $15.0 million. As a result
of this refinancing the Company received approximately $6.8
million which was utilized to fund the Company's
improvements to the Midnight Wrangler and other corporate
purposes.
Lyle G. Stockstill, Torch Offshore, Inc. Chairman and Chief
Executive Officer, commented, "This change in our capital
structure will assist us in moving forward with our growth.
We appreciate the confidence this creditor has in the vision
and future of Torch Offshore, Inc."
Established in 1978, Torch Offshore, Inc. is involved in
offshore pipeline installation and subsea construction for
the oil and natural gas industry. Torch Offshore, Inc. is
expanding beyond its established shallow water niche market
in order to serve the industry's worldwide growing needs in
the deep waters.
Any statements made in this news release, other than those
of historical fact, about an action, event or development,
which the Company hopes, expects, believes or anticipates
may or will occur in the future, are forward-looking
statements under the Private Securities Litigation Act of
1995. The forward-looking statements in this news release
include statements about our use of proceeds. Such
statements are subject to various assumptions, risks and
uncertainties, which are specifically described in the
Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 2002 filed with the Securities and
Exchange Commission, as well as other factors that may not
be within the Company's control, including, specifically,
oil and natural gas commodity prices, weather conditions and
offshore construction activity levels. Although the Company
believes its expectations are based on reasonable
assumptions, it gives no assurance that the Company's
assumptions and projections will prove to be correct. Actual
results may differ materially from those projected.
EXHIBIT 99.2
LOAN AGREEMENT
This Loan Agreement (this "Agreement") is effective as
of December 17, 2003 by and among GENERAL ELECTRIC CAPITAL
CORPORATION ("Lender"), a Delaware corporation, TORCH
OFFSHORE, L.L.C., a Delaware limited liability company,
TORCH OFFSHORE, INC., a Delaware corporation and TORCH
EXPRESS, L.L.C., a Louisiana limited liability company (all
and each of them referred to herein as "Borrower").
1. LOAN; PROMISSORY NOTE; MANDATORY AND VOLUNTARY
PREPAYMENT. (a) Lender hereby agrees, on or before December
31, 2003, to make a term loan to Borrower in an aggregate
principal amount not to exceed Fifteen Million Dollars
$15,000,000 (hereinafter, the "Loan"). Lender shall
disburse the principal on the Loan on the Acceptance Date
specified under the Lender's signature at the end of this
Agreement. Reference is made to the Promissory Note in the
original principal amount of $15,000,000, made by each
Borrower payable to the order of the Lender in substantially
the form of Exhibit "A" hereto (together with all amendments
and supplements thereto, the "Note"). Borrower promises to
pay all amounts due and payable under the Note to the order
of Lender.
(b) Borrower shall make mandatory prepayments of the
Note, as provided therein, in this Agreement and in the
preferred marine mortgages required hereby. Borrower may
voluntarily prepay all or any portion of the Note as
provided in the Note. If within three (3) years of the
Acceptance Date (i) an Event of Default (as hereinafter
defined) occurs and Lender has elected to accelerate payment
of the Note in accordance with Section 11(b) hereof, or (ii)
Borrower terminates or prepays all or any portion of the
Note, then without prejudice to any of Lender's other rights
and remedies hereunder or under the Debt Documents (as
hereinafter defined) or at law, Borrower shall be obligated
to immediately pay Lender an additional sum as a prepayment
premium equal to the following percentages of the amount pre-
paid: Prior to the first annual anniversary date of the
Note: Two percent (2%); thereafter and prior to the second
anniversary of the Note: One percent (1%); and thereafter,
Zero percent (0%), plus all other sums due under the Note
and the Debt Documents (as hereinafter defined).
2. PREFERRED MARINE MORTGAGES, SECURITY AGREEMENTS,
ASSIGNMENTS OF INSURANCE POLICIES AND CONTINUING GUARANTY.
In connection with the Note and the above-described Loan,
Borrower agrees to execute and deliver to Lender one or more
preferred marine mortgages (collectively, the "Mortgages"),
Master Security Agreements (collectively, the "Security
Agreements"), Assignments of Insurance Policies
(collectively, the "Assignments"), and Continuing Guaranty
("Continuing Guaranty"), under which Torch Express, L.L.C.
guaranties indebtedness in the original principal amount of
$9,250,000.00 incurred by Torch Offshore, L.L.C. to Lender
on or about March 21, 2003, each of which shall be in form
and substance acceptable to Lender (collectively, the Note,
the Mortgages, the Security Agreements, the Assignments, and
Continuing Guaranty as the same may be amended,
supplemented, extended or otherwise modified from time to
time are referred to as the "Debt Documents"). The term
"Vessels" as used herein shall refer collectively to all of
the vessels described in Mortgages and the term "Collateral"
as used herein shall refer collectively to the "Collateral"
as defined in the Security Agreements.
3. TAXES. Borrower will pay promptly when due all
taxes, assessments and governmental charges upon or against
Borrower or the property or operations of Borrower, in each
case before same becomes delinquent and before penalties
accrue thereon, unless and to the extent that same are being
contested in good faith by appropriate proceedings.
4. GENERAL INDEMNITY. Borrower assumes all risk and
liability for, and shall defend, indemnify and keep Lender
harmless on an after-tax basis from, any and all
liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs and expenses (collectively,
the "Claims"), including reasonable attorneys' fees and
expenses, of whatsoever kind and nature imposed on, incurred
by or asserted against Lender, in any way relating to or
arising out of the manufacture, purchase, acceptance,
rejection, ownership, possession, use, selection, delivery,
operation, condition, sale, return or other disposition of
the Vessels or any part thereof (including, without
limitation, any claim for latent or other defects, whether
or not discoverable by Borrower or any other person, any
claim for negligence, tort or strict liability, any claim
under any environmental protection or hazardous waste law
and any claim for patent, trademark or copyright
infringement and INCLUDING ANY AND ALL SUCH CLAIMS ARISING
AS A RESULT OF LENDER'S OWN NEGLIGENCE, but excluding any
such Claims caused by Lender's gross negligence or willful
misconduct). In this section, "Lender" also includes any
director, officer, employee, agent, successor or assign of
Lender. Borrower's obligations under this section shall
survive the expiration, cancellation or termination of this
Agreement.
5. FINANCIAL REPORTS. Borrower agrees to furnish to
Lender: (a) as soon as available, and in any event within
120 days after the end of each fiscal year of Borrower a
balance sheet of Borrower as of the end of such fiscal year
and the related statement of income and retained earnings
for such fiscal year, audited by independent public
accountants of nationally recognized standing selected by
Borrower, all in reasonable detail and setting forth in
comparative form the corresponding figures for the preceding
fiscal year; (b) all annual financial forecasts presented to
the board of directors of Torch Offshore, Inc. ("Parent");
(c) as soon as available, and in any event within 45 days
after the end of each of the first three quarters accounting
period in each fiscal year of Borrower, an unaudited balance
sheet of Borrower as of the end of such period and the
related statement of income and retained earnings for such
period, all in reasonable detail certified as true and
complete by the president, vice president, controller or the
chief financial officer of Borrower; and (d) such other
financial information as Lender may from time to time
reasonably request including, without limitation, financial
reports filed by Borrower with federal or state regulatory
agencies. All such financial information shall be prepared
in accordance with generally accepted accounting principles
except for certain adjustments for the quarterly financial
statements, and shall be prepared on a consolidated and
consolidating basis. Parent will deliver to Lender copies
of all Forms 10-K and 10-Q, if any, within 30 days after the
dates on which they are filed with the Securities and
Exchange Commission.
6. NO CHANGES IN BORROWER. Borrower shall not
without the prior written consent of Lender: (a) liquidate,
dissolve, terminate or suspend its business or enter into
any management agreements, service agreements or borrowing
transactions; provided, however, that a Borrower may enter
into management agreements, service agreements or borrowing
transactions with another Borrower without the prior written
consent of Lender; (b) transfer all or any substantial part
of its operations or assets outside of the United States of
America (except that the Vessels may be operated outside the
territorial waters of the United States as long as covered
by its insurance trading warranties and in accordance with
the requirements of the Mortgages and Security Agreements);
(c) sell, transfer or otherwise dispose of all or a majority
of its assets or pay any cash dividends or other
distributions of assets to equity holders in Borrower or
make any payments in respect of any subordinated debt, or
redeem any common or preferred stock or membership
interests, as applicable, of any Borrower; or (d) undergo
any change in the ownership of membership interests or
shares in Torch Offshore, L.L.C. and Torch Express, L.L.C.,
or Parent undergoes any event or series of events as a
result of which any "person" or "group" (as such terms are
used in Sections 13(d)(3) and 14(d) of the Securities
Exchange Act of 1934, as amended, and the rules and
regulations promulgated by the Securities Exchange
Commission (collectively, the "Exchange Act")) (excluding
Parent or any Subsidiary (as hereinafter defined)) is or
becomes, directly or indirectly, the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act,
whether or not applicable) of more than 45% of the combined
voting power of the then outstanding securities entitled to
vote generally in elections of directors, managers or
trustees, as applicable, of Parent or any successor entity;
provided, however, that any Borrower may undergo a change in
ownership as described in subsection (d) of this section 6
as long as on the date of such change in ownership the
Borrower makes a mandatory prepayment of the Note in the
amount of fifty percent (50%) of the Net Sale Proceeds (as
hereinafter defined), which Lender may apply to the
remaining principal installments due under the Note in
inverse order of maturity and any other amounts then due
Lender in such order as Lender may elect. The term "Net
Sale Proceeds" shall mean all amounts received in exchange
for the membership interests or shares, as applicable, less
customary and reasonable costs and expenses of sale. If
Borrower intends to enter into any merger, consolidation or
similar reorganization (each a "Merger") where Borrower will
not be the surviving business entity, then (i) Borrower
agrees that it will notify Lender in writing no less than 30
days before the intended effective date of such Merger and
such notice will include information about the parties to
such Merger, (ii) Borrower agrees that such Merger will be
subject to the prior written consent of Lender, and (iii)
Lender agrees that its consent to such Merger will not be
unreasonably denied or delayed; provided, if not given in 21
days or less, Lender's consent shall be deemed to be denied.
If Lender denies its consent (deemed or otherwise) to any
Merger as described above in this section and if Borrower
intends to complete any such Merger, then Borrower shall
prepay its obligations under the Note by paying to Lender on
the intended effective date of the applicable Merger (the
"Merger Payment Date") the total of the following: (1) all
accrued interest, taxes, late charges and other amounts then
due and payable under the Note and the other Debt Documents;
plus (2) the remaining principal balance payable by Borrower
under the Note as of said Merger Payment Date according to
the simple interest method together with any sales or
transfer taxes due in connection with such amounts (provided
however, that no prepayment premium shall accrue under the
Note in connection with a prepayment under this Section of
the Agreement).
7. REPRESENTATIONS. Borrower represents and warrants
that: (a) Borrower is duly organized and legally existing
under the laws of the state set forth above and is qualified
to do business in and is in good standing under the laws of
each other state in which it conducts its business; (b)
Borrower has the power and is duly authorized to enter into
the Debt Documents and to execute and deliver to Lender, now
and from time to time hereafter, additional instruments,
resolutions, agreements and other instruments or documents
relating to the foregoing agreements; (c) Borrower has, by
proper action, authorized and empowered those persons whose
signatures appear in the Debt Documents, and any
instruments, documents and exhibits that have been delivered
in connection herewith, to execute the same for and on its
behalf; (d) each of the Debt Document(s) constitute(s) the
legal, valid, and binding obligations of Borrower
enforceable in accordance with their terms, except as
limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable
principles relating to or affecting the enforcement of
creditors' rights generally, and by applicable laws
(including any applicable common law and equity) and
judicial decisions that may affect the remedies provided
therein; (e) this Agreement and the Note evidence a loan
made primarily for business, commercial or agricultural
purposes and not primarily for personal, family, or
household purposes; (f) Borrower is, and will continue to
be, the legal and beneficial owner of the Vessels (as
applicable), free and clear of any Lien (hereinafter
defined), except for the security interest created by any
agreement executed by Borrower for the benefit of Lender and
such Liens as are expressly permitted by the Mortgages.
"Lien" means any security interest, lien, mortgage, pledge,
encumbrance, judgment, execution, attachment, warrant, writ,
levy, other judicial process or claim of any nature
whatsoever by or of any person; and (g) as of the Acceptance
Date (i) since Borrower's last audited financial statements
there has been no material adverse change, individually or
in the aggregate, in the business, financial or other
condition of any Borrower or Borrowers, taken as a whole,
the industry in which any Borrower operates, or the Vessels
subject to the Mortgages or in the prospects or projections
of any Borrower or the Borrowers taken as a whole, (ii) no
litigation has commenced or been threatened which, if
successful, would have a material adverse impact on any
Borrower or the Borrowers, taken as a whole, any Borrower's
business, or any Borrower's ability to repay the Loan, or
which would prevent the transactions contemplated hereby,
and (iii) since Borrower's June 30, 2003 quarterly financial
statements, there has been no material increase in the
liabilities, liquidated or contingent, of any Borrower or
the Borrowers, taken as a whole, or a material decrease in
the assets of any Borrower or Borrowers, taken as a whole.
8. FINANCIAL COVENANTS. (a) Borrower will have and
maintain, as of the end of each fiscal quarter, beginning on
December 31, 2004:
(1) minimum EBITDA of $18,500,000.00;
(2) minimum Fixed Charge Coverage Ratio of 1.05:1.00;
and
(3) maximum Leverage Ratio as follows:
Quarterly Test Period Ratio
--------------------- -----
12/31/04-9/30/05 5.25:1.00
12/31/05-9/30/06 4.75:1.00
12/31/06-9/30/07 4.25:1.00
12/31/07-9/30/08 3.75:1.00
12/31/08 and thereafter 3.25:1.00;
(b) for purposes of this Section, the following
definitions shall apply:
(1) "Capitalized Lease Obligations" of any Person
shall mean, as of the date of any determination
thereof, the amount at which the aggregate rental
obligations due and to become due under all
Capitalized Leases under which such person is a
lessee would be reflected as a liability on a
balance sheet of such Person as determined in
accordance with GAAP.
(2) "Capitalized Lease" shall mean any lease of
Property, whether real and/or personal, by a
Person as lessee which as determined in
accordance with GAAP is required to be capitalized
on the balance sheet of such person.
(3) "Distribution" in respect of any Person shall mean
(a) dividends or other distributions of cash,
stock assets or other property on or in respect of
any shares of stock, membership interest or other
equity interest in such person; and (b) the
redemption, repurchase or other acquisition of any
shares of stock, membership interest or other
equity interest in such person or of any warrants,
rights or other options to purchase any stock,
membership interest or other equity interest
(except when solely in exchange for such stock,
membership interest or other equity interest);
provided that, the issuance of or granting of
warrants, rights or other options to purchase
stock of Borrower shall not be considered a
Distribution.
(4) The term "EBITDA" shall mean the consolidated Net
Income plus the amount reflected in the financial
statements of the Borrower as expenses incurred
for interest, income taxes, state franchise taxes,
depreciation, amortization of any intangible
assets, amortization of financing or related fees,
and non-cash charges.
(5) The term "GAAP" shall mean generally accepted
accounting principles at the time in the United
States of America.
(6) The term "Indebtedness" shall mean, with respect
to any Person, without duplication, all
indebtedness, liabilities and obligations of
such Person, but in any event including, without
limitation, all (i) obligations of such Person
for borrowed money or for the deferred purchase
price of Property or services (including, without
limitation, all notes payable and all obligations
evidenced by bonds, debentures, notes or other
similar instruments), (ii) obligations secured by
any lien on, or payable out of the proceeds of
production from, any Property or assets owned by
such Person, whether or not such Person has
assumed or become liable for the payment of such
obligations, (iii) indebtedness, liabilities and
obligations of third parties, including joint
ventures and partnerships of which such Person
is a venturer or general partner, recourse to
which may be had against such Person, (iv)
obligations created or arising under any
conditional sale or other title retention
agreement with respect to Property acquired by
such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or
lessor under such agreement in the event of
default are limited to repossession or sale of
such Property, (v) Capitalized Lease Obligations
of such Person,(vi) all accounts payables of such
Person, (vii) all indebtedness, liabilities and
obligations of such Person under guarantees, and
(viii) all obligations of such Person, contingent
or otherwise, relative to the face amount of
letters of credit (as may be reduced pursuant to
their terms), whether or not drawn.
(7) The term "Net Income" shall mean, for the period
in question, the after-tax net income or loss of
Borrower as reflected in the financial statements
of the Borrower for the relevant period, but
excluding in any event the following to the extent
included in the computation of net income on such
financial statements: (i) any gains or losses
resulting from any reappraisal, revaluation or
write-up or write-down of assets; (ii) any equity
of Borrower in the undistributed earnings of any
corporation which is not a Subsidiary and is
accounted for on the equity method; (iii) gains or
losses from the acquisition or disposition of
investments; (iv) gains from the retirement or
extinguishment of any Indebtedness; (v) gains on
collections from insurance policies or settlements
(net of premiums paid or other expenses incurred
with respect to such gains during the fiscal
period in which the gain occurs, to the extent
such premiums or other expenses are not already
reflected in Net Income for such period); (vi) any
gains or losses during such period from any change
in accounting principles, from any discontinued
operations or the disposition thereof or from any
prior period adjustments; and (vii) any
extraordinary gains or losses; all determined on a
consolidated basis in accordance with GAAP.
(8) The term "Fixed Charge Coverage Ratio" shall mean
the ratio of (a) EBITDA minus (i) capital
expenditures for maintenance of equipment and
facilities and (ii) dry docking costs incurred in
the ordinary course of business, to (b) Fixed
Charges.
(9) The term "Fixed Charges" shall mean Scheduled
Principal Payments plus (a) interest, income
taxes, state franchise taxes, paid in cash, and
(b) cash Distributions.
(10) The term "Leverage Ratio" shall mean the ratio
of Indebtedness to EBITDA.
(11) The term "Person" shall mean any individual,
sole proprietorship, partnership, joint venture,
trust, unincorporated organization, association,
corporation, limited liability company,
institution, entity or government (whether
national, federal, state, county, city, municipal
or otherwise, including, without limitation, any
instrumentality, division, agency, body or
department thereof).
(12) The term "Property" shall mean any interest in
any kind of property or asset, whether real,
personal or mixed, or tangible or intangible.
"Properties" shall mean the plural of Property.
(13) The term "Scheduled Principal Payments" shall
mean, for the period in question, without
duplication, all scheduled principal payments of
Borrower on Indebtedness for the applicable
period, all determined on a consolidated basis
as determined in accordance with GAAP; provided
that any balloon principal payment on Indebtedness
of Borrower which is extended to a maturity date
beyond the applicable period shall not be included
in the calculation of Scheduled Principal
Payments.
(14) The term "Subsidiary" shall mean (a) any
corporation of which more than fifty percent
(50%) of the issued and outstanding capital stock
entitled to vote for the election of directors is
at the time owned directly or indirectly by
Borrower and/or any one or more Subsidiaries, or
(b) any partnership, limited liability company,
business trust, or any other similar entity of
which more than fifty percent (50%) of the voting
interests is at the time owned directly or
indirectly by Borrower and/or any one or more
Subsidiaries, and specifically including, but not
limited to, Torch Offshore, L.L.C., a Delaware
limited liability company, Torch Express, L.L.C.,
a Louisiana limited liability company, and Torch
Deepwater, Inc., a Louisiana corporation.
Borrower covenants and agrees that, so long as any
portion of the Loan remains outstanding Borrower will
deliver to Lender simultaneously with the delivery of each
set of financial statements of Borrower referred to above, a
certificate of Borrower's Chief Financial Officer in
substantially the form of Exhibit "B" hereto, accompanied by
supporting financial worksheets where appropriate, (A)
evidencing Borrower's compliance with the financial
covenants contained in this Section 8 as calculated on a
consolidated basis for Borrower and its Subsidiaries, and
(B) stating whether there exists on the date of such
certificate any Event of Default, and if an Event of Default
then exists, setting forth the details thereof and the
action which Borrower is taking or proposes to take with
respect thereto.
9. OTHER DOCUMENTS; EXPENSES; CLOSING FEE;
APPOINTMENT OF ATTORNEY-IN-FACT. Borrower hereby
irrevocably appoints Lender and any designee of Lender as
Borrower's attorney in fact, with full authority in the
place and stead of Borrower, from time to time in Lender's
discretion upon the occurrence and during the continuance of
an Event of Default, to take any action and to execute any
instrument which Lender may deem reasonably necessary or
advisable to accomplish the purposes of this Agreement.
Borrower shall pay upon Lender's request any out-of-pocket
costs and expense paid or incurred by Lender in connection
with this Agreement or the funding and closing of this
Agreement and the Loan. In addition, Borrower shall pay
Lender on the Acceptance Date a Closing Fee in the amount of
$150,000, plus all attorneys,' consultants' and surveyors'
fees incurred by the Lender in connection with making the
Loan. Borrower authorizes Lender and Lender's agents to
correct any typographical errors in Borrower's name in any
documents to be filed in public records and to conform the
dates of this Agreement, the Note, the Mortgages, the
Security Agreements and/or any document executed in
connection therewith.
10. EVENTS OF DEFAULT. Each of the following events
shall constitute an "Event of Default" hereunder and under
the Debt Documents: (a) Borrower fails to pay any amount due
under the Note when due, subject to the grace period
provided in the Note; or (b) there shall be an event of
default under any of the Debt Documents; or (c) Borrower
fails to pay any amount due under this Agreement within ten
(10) days of request by Lender; or (d) Borrower fails to
perform or observe any of its other obligations in this
Agreement for more than 30 days after Lender notifies
Borrower of such failure; or (e) Borrower defaults (and such
default shall not have been waived or cured) in the payment,
performance or observance of any obligation under any loan,
credit agreement or lease in which Lender, the parent
company of Lender, or any subsidiary (direct or indirect) of
Lender (or its successors or assigns) is the creditor or
lessor, including, without limitation, all obligations of
the Borrower under that certain Loan Agreement dated March
21, 2003, as amended by Waiver and Amendment No. 1 thereto
dated August 12, 2003 as amended by Waiver and Amendment No.
2 thereto dated November 11, 2003, as same may be amended
and/or replaced from time to time including, or under any
note, mortgage, security agreement or guaranty described
therein; or (f) Borrower defaults (and such default shall
not have been waived or cured) in the payment, performance
or observance of any obligation under any other loan, credit
agreement or lease; (g) any statement, representation or
warranty made by Borrower in this Agreement or in any
document, certificate or financial statement in connection
with this Agreement, including the Debt Documents, proves at
any time to have been untrue or misleading in any material
respect as of the time when made; or (h) Borrower becomes
insolvent or bankrupt, or Borrower admits its inability to
pay its debts as they mature, or Borrower makes an
assignment for the benefit of creditors, or Borrower applies
for, institutes or consents to the appointment of a
receiver, trustee or similar official for Borrower or any
substantial part of its respective property or any such
official is appointed without the consent of Borrower, or
Borrower applies for, institutes or consents to any
bankruptcy, insolvency, reorganization, debt moratorium,
liquidation or similar proceeding relating to Borrower or
any substantial part of its respective property under the
laws of any jurisdiction or any such proceeding is
instituted against Borrower without stay or dismissal for
more than 30 days, or Borrower commences any act amounting
to a business failure or a winding up of its affairs, or
Borrower ceases to do business as a going concern; or (i)
any of the Mortgages shall be declared to be null, void,
invalid or unenforceable by Borrower; or (j) there shall be
any change in the ownership of membership interests or
shares in Torch Offshore, L.L.C. or Torch Express, L.L.C. or
Parent shall undergo any event described in Section 6(d) of
this Agreement; or (l) Borrower defaults (and such default
shall not have been waived or cured) in the payment,
performance or observance of any obligation under that
certain Credit Agreement, as amended by the First Amendment
to Credit Agreement effective as of April 23, 2003, as
further amended by the Waiver and Second Amendment to Credit
Agreement dated on or about August 8, 2003 and the Waiver
and Third Amendment to Credit Agreement dated on or about
November 7, 2003 ("Credit Agreement"), by and among
Borrower, Regions Bank (as Agent) and Regions Bank and
Export Development Canada (as Lenders), as same may be
amended and/or replaced from time to time.
11. RIGHTS UPON DEFAULT. If any Event of Default
exists, Lender may exercise in any order one or more of the
remedies described in the lettered subparagraphs of this
section, and Borrower shall perform its obligations imposed
thereby:
(a) Lender may require Borrower to perform any
obligation required to be performed under the Mortgages, the
Security Agreements, and the other documents evidencing or
securing the Loan.
(b) Lender may require Borrower to pay to Lender on a
date specified by Lender, (i) all accrued and unpaid
interest, late charges and other amounts due under this
Agreement and the Note, as of such date, plus (ii) the
remaining principal balance due under the Note as of such
date, plus (iii) interest at the Overdue Rate on the total
of the foregoing ("Overdue Rate" means an interest rate per
annum equal to the greater of 18% per annum or 2% over the
Interest Rate (as defined in the Note), but not to exceed
the highest rate permitted by applicable law). If an Event
of Default under Section 10(h) of this Agreement exists,
then Borrower will be automatically liable to pay Lender the
foregoing amounts as of the next installment payment date
under the Note unless Lender otherwise elects in writing.
(c) Borrower shall pay all reasonable costs, expenses
and damages incurred by Lender because of the Event of
Default or its actions under this section, including,
without limitation any reasonable collection agency and/or
attorneys' fees incurred in collection efforts.
(d) Lender may sue to enforce Borrower's performance
of its obligations under the Note and this Agreement and/or
may exercise any other right or remedy then available to
Lender under the Debt Documents, at law or in equity.
Except as otherwise expressly required by the terms of
this Agreement or the Debt Documents or by applicable law,
Lender is not required to take any legal process or give
Borrower any notice before exercising any of the above
remedies. If Lender is required to give notice, ten (10)
calendar days advance notice is reasonable notification.
None of the above remedies is exclusive, but each is
cumulative and in addition to any other remedy available to
Lender. Lender's exercise of one or more remedies shall not
preclude its exercise of any other remedy. No action taken
by Lender shall release Borrower from any of its obligations
to Lender. No delay or failure on the part of Lender to
exercise any right hereunder shall operate as a waiver
thereof, nor as an acquiescence in any default, nor shall
any single or partial exercise of any right preclude any
other exercise thereof or the exercise of any other right.
After any default, Lender's acceptance of any payment by
Borrower under this Agreement or any of the Debt Documents,
or any related agreement shall not constitute a waiver by
Lender of such default, regardless of Lender's knowledge or
lack of knowledge at the time of such payment, and shall not
constitute a reinstatement of this Agreement, or any of the
Debt Documents, or any related agreement if this Agreement
has been declared in default by Lender, unless Lender has
agreed in writing to reinstate this Agreement and to waive
the default.
12. LATE CHARGES. If any installment payment or other
amount payable under this Agreement, the Mortgages, the
Security Agreements, or the Note is not paid within ten days
of its due date, then as compensation for the administration
and enforcement of Borrower's obligation to make timely
payments, Borrower shall pay with respect to each overdue
payment on demand interest at the Overdue Rate (as defined
in clause (b) of Section 11 hereof) on each overdue payment
for the time period from the due date until such overdue
payment is made.
13. LENDER'S RIGHT TO PERFORM. If Borrower fails to
make any payment under this Agreement or any of the Debt
Documents, or fails to perform any of its other obligations
in this Agreement or any of the Debt Documents (including,
without limitation, its agreement to provide insurance
coverage), Lender may itself make such payment or perform
such obligation, and the amount of such payment and the
amount of the expenses of Lender incurred in connection with
such payment or performance shall be deemed to be additional
principal under the Note which is payable by Borrower on
demand.
14. NOTICES; POWER OF ATTORNEY. (a) All notices,
requests and other communications hereunder shall be in
writing and shall be sufficient if delivered in person,
telegraphed, telefaxed, telecopied, cabled, sent by
overnight courier or sent by registered or certified mail,
return receipt requested, postage prepaid to Lender or
Borrower, as follows:
Lender: General Electric Capital Corporation
401 Merritt Seven, 2nd Floor
Norwalk, CT 06856
Attn: Portfolio Manager
Fax No. (203) 229-1980
With a copy to:
General Electric Capital Corporation
8400 Normandale Lake Boulevard
Suite 470
Minneapolis, MN 55437
Attn: Risk Analyst
Fax No.: (952) 897-5601
Borrower: Torch Offshore, L.L.C.
c/o Torch Offshore, Inc.
401 Whitney Avenue
Suite 400
Gretna, Louisiana 70056
Attn: Chief Financial Officer
Fax No.: (504) 367-7075
Torch Offshore, Inc.
401 Whitney Avenue
Suite 400
Gretna, Louisiana 70056
Attn: Chief Financial Officer
Fax No.: (504) 367-7075
Torch Express, L.L.C.
c/o Torch Offshore, Inc.
401 Whitney Avenue
Suite 400
Gretna, Louisiana 70556
Attn: Chief Financial Officer
Fax No.: (504) 367-7075
Any such notice mailed to such address shall be effective
upon its delivery to the applicable party. (b) With respect
to any power of attorney covered by this Agreement or any of
the Debt Documents, the powers conferred on Lender thereby:
are powers coupled with an interest; are irrevocable; are
solely to protect Lender's interests under this Agreement;
and do not impose any duty on Lender to exercise such
powers. Lender shall be accountable solely for amounts it
actually receives as a result of its exercise of such
powers.
15. PARTICIPATION AND ASSIGNMENT BY LENDER. Lender
may, without the consent of or notice to the Borrower, in
the ordinary course of its commercial banking business and
in accordance with applicable law, at any time sell to one
or more banks or other entities ("Participant")
participating interests in any Loan or any other interest of
Lender hereunder and under any documents relating to the
Loan ("Loan Documents"). In the event of any such sale by
Lender of a participating interest to a Participant,
Lender's obligations under this Agreement to the other
parties to this Agreement shall remain unchanged, Lender
shall remain solely responsible for the performance thereof,
Lender shall remain the holder of any such Loan for all
purposes under this Agreement and the other Loan Documents,
and the Borrower shall continue to deal solely and directly
with Lender in connection with Lender's rights and
obligations under this Agreement and the other Loan
Documents. Borrower agrees that if amounts outstanding
under this Agreement are due or unpaid, or shall have been
declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participant shall,
to the maximum extent permitted by applicable law, be deemed
to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement to the same
extent as if the amount of its participating interest were
owing directly to it as Lender under this Agreement.
Borrower authorizes Lender to disclose to any
Participant and any prospective Participant any and all
financial information in Lender's possession concerning
Borrower which has been delivered to Lender by or on behalf
of the Borrower pursuant to this Agreement or which has been
delivered to Lender by or on behalf of the Borrower in
connection with Lender's credit evaluation of Borrower prior
to becoming a party to this Agreement.
In addition, all rights of Lender hereunder and under
the Debt Documents, and in the Vessels may be assigned,
pledged, mortgaged, transferred or otherwise disposed in
whole or in part, without notice to Borrower; provided that,
Borrower shall not be under any obligation to any assignee
of Lender except upon receipt of written notice of such
assignment from Lender. Upon notice to Borrower of any such
assignment, the principal, interest and other sums payable
by Borrower hereunder and under the Debt Documents which are
the subject matter of the assignment shall be paid to or
upon the written order of the assignee; provided that, no
such assignment of Lender's rights shall alter in any way
the obligations of Borrower under this Agreement or the Debt
Documents. No such assignee shall be obligated to perform
any duty, covenant or condition required to be performed by
Lender under the terms of this Agreement or under the Debt
Documents unless such assignee expressly assumes such
obligation, and, if all of Lender's obligations hereunder
and thereunder are assumed by such assignee, then Lender
shall be relieved of any further liability hereunder and
thereunder. Any such assignee upon assignment and assumption
of this Agreement shall become the "Lender" hereunder and
shall have all rights, powers and remedies given to Lender
by this Agreement and the Debt Documents, and shall be named
as loss payee or additional insured under all policies of
insurance maintained by the Borrower pursuant to the
Mortgages and Security Agreements. Borrower agrees to
execute related acknowledgements and other documents that
may be reasonably requested by Lender or any assignee.
16. NO ASSIGNMENT OR LEASING BY BORROWER. BORROWER
SHALL NOT, DIRECTLY OR INDIRECTLY, MORTGAGE, ASSIGN, SELL,
TRANSFER, OR OTHERWISE DISPOSE OF ANY INTEREST IN THIS
AGREEMENT, THE NOTE, THE MORTGAGES, THE SECURITY AGREEMENTS
OR THE VESSELS, OR ANY PART THEREOF, EXCEPT FOR TIME
CHARTERS OF THE VESSELS ENTERED INTO IN THE ORDINARY COURSE
OF BORROWER'S BUSINESS AND PURSUANT TO THE TERMS OF THE
MORTGAGES.
17. DEFINITIONS. All terms defined herein are equally
applicable to both the singular and plural form of such
terms.
18. CONDITIONS. Lender is not obligated to make any
loan or disburse any principal hereunder unless: (a) Lender
has received evidence of all required insurance; (b) in
Lender's sole judgment, there has been no material adverse
change in the financial condition or business of Borrower;
(c) Borrower has signed and delivered to Lender this
Agreement and the Note and Lender has received and accepted
the same; (d) Lender has received resolutions or appropriate
authorization and incumbency certificates from Borrower, all
of which shall be satisfactory to Lender in form and
substance; (e) Lender has received satisfactory United
States Coast Guard lien searches and Republic of Vanuatu
Certificates of Ownership and Encumbrance, as applicable,
and Uniform Commercial Code lien searches of state and local
lien records on the Vessels and the Borrower; (f) Lender has
received terminations or releases of lien in recordable form
from all creditors with a lien on any part of the Vessels as
shown in United States Coast Guard, Republic of Vanuatu,
state or local lien records; (g) Lender has received copies
of documentation satisfactory to Lender that evidences that
Borrower possesses good and marketable title to the Vessels
free and clear of any liens other than liens in favor of
Lender or liens to be released contemporaneously herewith;
(h) Lender has received such documentation as Lender
reasonably requests regarding the documentation of the
Vessels with the United States Coast Guard or the Republic
of Vanuatu, as applicable, and the recording of the
Mortgages with the United States Coast Guard or the Republic
of Vanuatu, as applicable; and (i) Lender has received, in
form and substance satisfactory to Lender, such other
documents and information as Lender shall reasonably
request.
19. USURY. It is not the intention of the parties to
this Agreement or the Debt Documents to make an agreement
violative of the laws of any applicable jurisdiction
relating to usury ("Usury Laws"). Regardless of any
provision in this Agreement or the Debt Documents, Lender
shall not be entitled to receive, collect or apply, as
interest on any indebtedness, any amount in excess of the
Maximum Amount (the "Excess"). As used herein, "Maximum
Amount" shall mean the maximum amount of interest that would
have accrued if the unpaid principal amount of the
indebtedness outstanding from time to time had borne
interest each day at the maximum amount of interest that
Lender is permitted to charge on the indebtedness under the
Usury Laws. If Lender ever receives, collects or applies as
interest any Excess, such Excess shall be deemed a partial
repayment of principal and treated hereunder as such; and if
principal is paid in full, any remaining Excess shall be
paid to Borrower. In determining whether or not the interest
paid or payable under any specific contingency exceeds the
Maximum Amount, Borrower and Lender shall, to the maximum
extent permitted under the Usury Laws, (i) characterize any
nonprincipal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the
effect thereof, and (iii) amortize, prorate, allocate and
spread in equal parts, the total amount of interest
throughout the entire contemplated term of the indebtedness
so that the interest rate is uniform throughout the entire
term of the indebtedness; provided that if the indebtedness
is paid and performed in full prior to the full contemplated
term thereof, and if the interest received for the actual
period of existence thereof exceeds the Maximum Amount,
Lender shall refund to Borrower the Excess, and such event
shall not be subject to any penalties provided by the Usury
Laws.
20. GOVERNING LAW. THE INTERPRETATION, CONSTRUCTION
AND VALIDITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK.
21. MISCELLANEOUS. (a) Subject to the limitations
herein, this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective
heirs, administrators, successors and assigns. (b) This
Agreement may be executed in any number of counterparts,
which together shall constitute a single instrument. (c)
Section and paragraph headings in this Agreement are for
convenience only and have no independent meaning. (d) The
terms of this Agreement shall be severable and if any term
thereof is declared unconscionable, invalid, illegal or
void, in whole or in part, the decision so holding shall not
be construed as impairing the other terms of this Agreement
and this Agreement shall continue in full force and effect
as if such invalid, illegal, void or unconscionable term
were not originally included herein. (e) All indemnity
obligations of Borrower under this Agreement or the Debt
Documents and all rights, benefits and protections provided
to Lender by warranty disclaimers shall survive the
cancellation, expiration or termination of this Agreement or
the Debt Documents. (f) Lender shall not be liable to
Borrower for any indirect, consequential or special damages
for any reason whatsoever. (g) This Agreement may be
amended, but only by a written amendment signed by the
parties hereto. (h) EXCEPT FOR THE DEBT DOCUMENTS AND EXCEPT
FOR ANY OTHER WRITTEN INSTRUMENTS SIGNED BY THE PARTIES TO
BE BOUND, THIS AGREEMENT REPRESENTS THE FINAL, COMPLETE AND
ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO, AND THERE ARE
NO ORAL OR UNWRITTEN AGREEMENTS OR UNDERSTANDINGS AFFECTING
THIS AGREEMENT OR THE VESSELS. (i) Borrower agrees that
Lender is not the agent of any manufacturer or supplier of
the Vessels, that no such manufacturer or supplier is an
agent of Lender, and that any representation, warranty or
agreement made by any such manufacturer, supplier or by
their employees, sales representatives or agents shall not
be binding on Lender.
22. PROHIBITION OF FUNDAMENTAL CHANGES. Borrower
shall not, without the prior written consent of Lender
engage in any business activities substantially different
that those in which the Borrower are presently engaged.
Parent shall not , without the prior written consent of
Lender pay any dividends or distributions on Parent's stock
(other than dividends payable in the Parent's stock or
membership interests) or purchase or retire any of the
Parent's outstanding shares or alter or amend the Parent's
capital structure; provided, that the Parent may, as long as
no Default has occurred and is continuing, make investments
in any other Borrower and any Borrower other than Parent may
pay dividends or distributions to Parent.
23. FLAG; HAILING PORT. Without the prior written
consent of Lender, Borrower shall not change the flag of the
Vessels. In addition, without the prior written consent of
Lender, Borrower shall not change the name of the Vessels or
the hailing port and port of documentation of the Vessels,
and any such written consent to any one change of the name
of the Vessels or the hailing port or port of documentation
shall not be construed to be a waiver of this provision with
respect to any subsequent proposed change of the name of the
Vessels or the hailing port or port of documentation.
THE PARTIES IRREVOCABLY CONSENT TO THE JURISDICTION AND
VENUE OF ANY STATE OR FEDERAL COURT IN NEW YORK COUNTY, CITY
OF NEW YORK.
BORROWER HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF, DIRECTLY OR INDIRECTLY, THE DEBT DOCUMENTS, ANY
AMOUNTS SECURED THEREBY, ANY DEALINGS BETWEEN BORROWER AND
LENDER RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT OR
ANY RELATED TRANSACTIONS. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS). THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, OR TO ANY OTHER DOCUMENTS
OR GUARANTY RELATING TO THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY. IN THE EVENT OF
LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT
TO A TRIAL BY THE COURT.
EXECUTED as of the date first set forth above.
TORCH OFFSHORE, L.L.C.
(Borrower)
By: Torch Offshore, Inc., its sole member
By: -------------------------------------------
Robert E. Fulton, Chief Financial Officer
TORCH OFFSHORE, INC.
(Borrower)
By: -------------------------------------------
Robert E. Fulton, Chief Financial Officer
TORCH EXPRESS, L.L.C.
(Borrower)
By: Torch Offshore, Inc., its sole member
By: -------------------------------------------
Robert E. Fulton, Chief Financial Officer
GENERAL ELECTRIC CAPITAL CORPORATION
By: -------------------------------------------
Acceptance Date: -----------------------------
EXHIBIT A
FORM OF PROMISSORY NOTE
[See attached.]
EXHIBIT B
FORM OF COMPLIANCE CERTIFICATE
[See attached.]