Exhibit 99.2
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CREDIT AGREEMENT
Effective April 23, 2003
BY AND AMONG
TORCH OFFSHORE, INC.
as Borrower,
REGIONS BANK,
as Agent
and
REGIONS BANK and EXPORT DEVELOPMENT CANADA,
as Lenders,
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS 1
1.1 Definitions 1
1.2 Accounting Terms and Determinations 13
SECTION 2. LINE OF CREDIT LOANS 13
2.1 Line of Credit Commitments 13
2.2 Total Line of Credit Outstandings Shall Not Exceed Borrowing Base 13
2.3 Method of Borrowing 14
2.4 Line of Credit Notes 15
2.5 Maturity 16
SECTION 3. TERM LOANS 16
3.1 Term Loan Commitments 16
3.2 Method of Borrowing 16
3.3 Term Notes 17
SECTION 4. LETTERS OF CREDIT 17
4.1 Letter of Credit Commitment 17
4.2 Participation by Other Lenders 19
4.3 Disbursements 19
4.4 Reimbursement 19
4.5 Replacement or Collateralization of Letters of Credit 20
SECTION 5. GENERAL PROVISIONS FOR ALL LOANS 20
5.1 Determination of Interest Rates 20
5.2 Fees 20
5.3 Early Payments 21
5.4 General Provisions as to Payments 21
5.5 Changes in or Illegality with Respect to LIBOR Rate 21
5.6 Computation of Interest 22
5.7 Security 22
(a) Security Agreement; Quebec Security Documents;
Contribution Agreement Assignment 22
(b) Preferred Ship Mortgages 22
(c) Continuing Guarantees 23
(d) Subsidiary Pledge Documents 23
(e) New Subsidiaries 23
(f) Relocation of MIDNIGHT EXPRESS for
Performance of ▇▇▇▇▇▇▇ Contract 23
(g) Further Documents 23
(h) Contribution Agreement 24
5.8 Guaranty of Obligations of Subsidiaries 24
5.9 Torch Deepwater, Inc. 24
5.10 Form of Transaction Documents 24
5.11 Deposit Accounts 24
5.12 Subordination 24
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5.13 Insurance Proceeds 24
SECTION 6. PRECONDITIONS TO LOANS AND LETTERS OF CREDIT 25
6.1 Initial Line of Credit Loan or Initial Letter of Credit 25
6.2 All Line of Credit Loans 27
6.3 Letters of Credit 28
6.4 Term Loans 29
SECTION 7. REPRESENTATIONS AND WARRANTIES 30
7.1 Existence and Power 30
7.2 Authorization 30
7.3 Governmental Approvals 30
7.4 Binding Effect 30
7.5 ERISA 31
7.6 No Defaults 31
7.7 Liabilities, Litigation 31
7.8 Tax Payment 31
7.9 Title to Property 31
7.10 Compliance with Laws 32
7.11 Other Instruments; None Burdensome 32
7.12 Investments 32
7.13 Subsidiaries 32
7.14 Shipbuilding Contracts; Plans and Specifications 32
7.15 Net Worth of Torch Offshore, L.L.C. 32
SECTION 8. COVENANTS 32
8.1 Affirmative Covenants of Borrower 32
(a) Information 32
(b) Compliance with Laws 33
(c) Payment of Indebtedness 34
(d) Payment of Taxes 34
(e) Payment of Claims 34
(f) Insurance 34
(g) Maintenance of Property 35
(h) Maintenance of Intellectual Property 35
(i) Corporate Existence 35
(j) Notice of Claim 35
(k) Financial Covenants 35
(l) Maintenance of Books and Records, Consultations and Inspections 35
(m) Further Assurances 36
(n) Agreements 36
(o) Location of Chief Executive Office and Collateral 36
(p) Accountant 36
(q) Access to Other Credit 36
(r) Prosecution of Project 36
(s) Inspections of Project 36
(t) Cure of Deficiency 36
(u) Correction of Defects 37
(v) Performance of Contracts 37
(w) Tri-Party Agreement 37
8.2 Negative Covenants of Borrower 37
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(a) Limitation on Indebtedness 37
(b) Consolidation, Merger, Sale of Assets, Dissolution, Etc. 38
(c) Changes in Nature of Business 38
(d) Change in Control 38
(e) Ownership of Subsidiaries 38
(f) Liens 38
(g) Restricted Investments 38
(h) Change in Management 38
(i) Modify Agreements 39
(j) Consent to Sale of Interest 39
8.3 Use of Proceeds 39
SECTION 9. EVENTS OF DEFAULT 39
SECTION 10. AGENT 41
10.1 Appointment 41
10.2 Powers 41
10.3 General Immunity 42
10.4 No Responsibility for Loans, Recitals, etc. 43
10.5 Right to Indemnity 43
10.6 Action Upon Instructions of Required Lenders 43
10.7 Reliance on Documents; Employment of Agents and Counsel 44
10.8 May Treat Payee as Owner 44
10.9 Agent's Reimbursement 44
10.10 Rights as a Lender 44
10.11 Independent Credit Decision 44
10.12 Resignation of Agent 44
10.13 Duration of Agency 44
SECTION 11. GENERAL 45
11.1 No Waiver 45
11.2 Right of Setoff 45
11.3 Cost and Expenses 45
11.4 Environmental Indemnity 46
11.5 General Indemnity 46
11.6 Authority to Act 47
11.7 Notices 47
11.8 Consent to Jurisdiction, Waiver of Jury Trial 47
11.9 Sharing of Payments 47
11.10 Governing Law 48
11.11 Amendments and Waivers 48
11.12 References; Headings for Convenience 48
11.13 Successors and Assigns, Participations 48
11.14 Assignment Agreements 49
11.15 Withholding Tax 49
11.16 Purposes of Inspections; No Obligations to Determine
Validity of Conversion Contracts 50
11.17 Binding Agreement 50
11.18 No Oral Agreements, Entire Agreement 51
11.19 Severability 51
11.20 Counterparts 51
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11.21 Resurrection of the Obligations 51
11.22 No Third Parity Beneficiary 51
11.23 Independence of Covenants
11.24 Confidentiality 51
11.25 Conflicting Provisions 52
11.26 Judgment Currency; Indemnity 52
SCHEDULES
7.13 Subsidiaries
EXHIBITS
A Form of Line of Credit Note
B Form of Term Notes
C Form of Letter of Credit Application and Agreement
D Form of Letter of Credit Request
E Form of Letter of Warranty and Representation
F Form of Subsidiary Continuing Guarantee
G Security Agreement
H Form of Pledge Agreement
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is effective the 23rd day of
April, 2003, (the "Effective Date") and is made and entered into by and among
TORCH OFFSHORE, INC., a Delaware corporation ("Borrower"), and the undersigned
Lenders (as hereinafter defined), including Regions Bank in its capacity as a
Lender hereunder and as Agent for the Lenders under this Agreement.
WITNESSETH:
WHEREAS, Borrower has requested the Lenders (as hereinafter defined) to
make non-revolving line of credit loans to Borrower in an aggregate principal
amount not exceeding Sixty Million Dollars ($60,000,000.00);
WHEREAS, Borrower has requested the Lenders to make term loans upon the
expiration of the Line of Credit Period (as hereinafter defined) in an aggregate
principal amount not exceeding Sixty Million Dollars ($60,000,000.00);
WHEREAS, Borrower has requested that Regions (as hereinafter defined) issue
letters of credit for the account of Borrower or for the account of Borrower and
Torch Express, L.L.C. from time to time during the Letter of Credit Period (as
hereinafter defined) as part of the aggregate principal amount of the commitment
of the Lenders to Borrower hereunder, but such letters of credit shall not in
any event exceed in the aggregate face amount of Thirty Million Dollars
($30,000,000.00) at any one time outstanding; and
WHEREAS, the Lenders have severally agreed, upon the terms, provisions and
conditions set forth herein, to lend such amounts to, and take participations in
such letters of credit for the account of Borrower or for the account of
Borrower and Torch Express, L.L.C.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby mutually promise and agree as follows:
SECTION l. DEFINITIONS.
1.1 Definitions. In addition to the terms defined elsewhere in this
Agreement or in any Exhibit or Schedule hereto, when used in this Agreement, the
following terms shall have the following meanings (such meanings shall be
equally applicable to the singular and plural forms of the terms used, as the
context requires):
Acknowledgment Agreement shall mean the Acknowledgment and Agreement, dated
December 3, 2002, made by 6030963 Canada Inc. in favor of Torch Express, L.L.C.,
as the same may be amended, supplemented or otherwise modified from time to time
as may be permitted hereby.
Agent shall mean Regions Bank in its capacity as agent for the Lenders
hereunder (including, without limitation, as fonde de pouvoir pursuant to
Section 10.2(c) hereof) and its successors in such capacity.
Applicable Margin shall mean the rate of interest per annum shown in the
applicable column below:
1
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Level I Level II Level III
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If Consolidated ** 1.00 * 1 and * 1.50
Leverage Ratio as of the
end of the immediately ** 1.50
preceding fiscal quarter
is
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Applicable Margin 3.00% 3.25% 3.50%
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Unused Fee .50% .50% .50%
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* greater than
** less than or equal to
The Applicable Margin shall commence at Level II. Commencing on June 1, 2003,
the Applicable Margin will be adjusted on the first day of each March, June,
September and December, to become effective on the next Business Day thereafter,
based on the Consolidated Leverage Ratio as of the end of the immediately
preceding fiscal quarter. If Borrower should fail to deliver the certificate
required by Section 8.1(a)(iii) hereof within the time period set forth in
Section 8.1(a)(iii), then, until Borrower shall have provided such certificate,
it shall be presumed that the Consolidated Leverage Ratio as of the end of the
immediately preceding fiscal quarter was greater than 1.50 (and, from the date
of the delivery of such certificate, the Applicable Margin shall be determined
by reference to such certificate).
Assignment Agreement shall mean any of those certain Assignment Agreements
described in Section 11.14 herein.
Borrower's Representative shall mean any one of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ or
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ or any other person subsequently authorized by a corporate
resolution, duly authorized and adopted by the board of directors of Borrower in
form acceptable to Lenders.
Business Day shall mean any day except a Saturday, Sunday, or legal holiday
observed by any Lender and, with respect to the determination of the LIBOR Base
Rate, any day except a Saturday, Sunday, or legal holiday observed by any Lender
in which dealings in Dollars are carried on in the London interbank market.
Canadian Dollars and CAD each mean dollars of Canada.
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.
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.
Change in Control shall mean (i) an 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 Exchange Act) (excluding Borrower or any wholly owned
Subsidiary thereof) 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 Borrower or any successor entity
("Voting Stock"), (ii) the completion of any consolidation with or merger of
Borrower into any other Person, or sale,
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conveyance, transfer or lease by Borrower of all or substantially all of its
assets to any Person, or any merger of any other Person into Borrower in a
single transaction or series of related transactions, and, in the case of any
such transaction or series of related transactions, the outstanding common stock
of Borrower is changed or exchanged as a result, unless the stockholders of the
Borrower immediately before such transaction own, directly or indirectly,
immediately following such transaction, at least 55% of the combined voting
power of the outstanding voting securities of the Person resulting from such
transaction in substantially the same proportion as their ownership of the
Voting Stock immediately before such transaction, or (iii) the occurrence of any
event whereby less than a majority of the members of the Board of Directors of
Borrower shall be persons who either (a) were serving as directors on the
Effective Date or (b) were nominated as directors and approved by the vote of
the majority of the directors who are directors referred to in clause (a) or
this clause (b).
Code shall mean the Internal Revenue Code of 1986, as amended, and any
successor statute of similar import, together with the regulations thereunder,
in each case as in effect from time to time. References to sections of the Code
shall be construed to also refer to any successor sections.
Collateral shall mean all of the Property in respect of which a Lien has
been granted by Borrower or any Subsidiary in favor of the Agent for the benefit
of the Secured Parties under the terms of the Transaction Documents.
Commitment shall mean, with respect to each Lender, such Lenders's Line of
Credit Commitment and such Lender's Term Loan Commitment, if any.
Company Business shall mean (i) the offshore pipeline installation and
sub-sea construction for the oil and gas industry and (ii) any other activities
ancillary to the foregoing.
Consolidated Adjusted Tangible Net Worth shall mean, at a particular date,
(a) the Consolidated Tangible Net Worth of Borrower and its Subsidiaries as of
such date minus (b) all Indebtedness due to Borrower and its Subsidiaries as of
such date from any officer, shareholder or affiliate (other than a Subsidiary)
of Borrower or any Subsidiary; all determined on a consolidated basis in
accordance with GAAP.
Consolidated Current Ratio shall mean, as of any date for which its is
being determined, the ratio of (a) current assets of Borrower and its
Subsidiaries as of such date, as determined on a consolidated basis in
accordance with GAAP, to (b) current liabilities of Borrower and its
Subsidiaries as of such date, as determined on a consolidated basis in
accordance with GAAP; provided that, for purposes of determining the
Consolidated Current Ratio, (x) during the Line of Credit Period, the MIDNIGHT
EXPRESS will be classified as a current asset in an amount not to exceed the
principal amount of the Line of Credit Loans outstanding on such date (with any
residual amount to be classified in accordance with GAAP) and (y) the deposit
described in subparagraph (g) of the definition of "Permitted Liens" will be
classified as a current asset.
Consolidated Debt Service Coverage Ratio shall mean, as of any date for
which it is being determined, the ratio of (a) Consolidated Net Income for the
immediately preceding four (4) fiscal quarters (including any fiscal quarter
ending on such date of determination) plus all depreciation and amortization
expenses and all other non-cash items of Borrower and its Subsidiaries during
the immediately preceding four (4) fiscal quarters (including any fiscal quarter
ending on such date of determination) to the extent included in the computation
of Net Income, minus all cash Distributions made by Borrower or any Subsidiary
which is not wholly owed by Borrower during the immediately preceding four (4)
fiscal quarters (including any fiscal quarter ending on such date), to (b)
Consolidated Scheduled Principal Payments for the immediately preceding four (4)
fiscal quarters (including any fiscal
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quarter ending on such date) plus the principal portion of Capitalized Lease
Obligations payable by Borrower and its Subsidiaries in respect of the
immediately preceding four (4) fiscal quarters (including any fiscal quarter
ending on such date), determined on a consolidated basis in accordance with
GAAP.
Consolidated Indebtedness shall mean, as of the date of any determination
thereof, the sum of (a) all Indebtedness of Borrower and its Subsidiaries as of
such date, determined on a consolidated basis in accordance with GAAP plus (b)
all unfunded but available lines of credit of Borrower and its Subsidiaries as
of such date.
Consolidated Leverage Ratio shall mean, as of any date for which it is
being determined, the ratio of (a) Consolidated Indebtedness as of such date to
(b) Consolidated Adjusted Tangible Net Worth as of such date.
Consolidated Net Income shall mean, for the period in question, the
after-tax net income or loss of Borrower and its Subsidiaries during such
period, but excluding in any event the following to the extent included in the
computation of net income: (i) any gains or losses resulting from any
reappraisal, revaluation or write-up or write-down of assets; (ii) any equity of
Borrower or any Subsidiary 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 Consolidated 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.
Consolidated Scheduled Principal Payments shall mean, for the period in
question, without duplication, all scheduled principal payments of Borrower and
its Subsidiaries on Indebtedness for the applicable period, all determined on a
consolidated basis in accordance with GAAP; provided that any balloon principal
payment on Indebtedness of Borrower and its Subsidiaries which is extended to a
maturity date beyond the applicable period shall not be included in the
calculation of Consolidated Scheduled Principal Payments.
Consolidated Tangible Net Worth of any Person shall mean, at a particular
date, the excess, if any, of (a) all amounts which would be included under
shareholders' equity on a balance sheet of such Person as of such date,
determined on a consolidated basis in accordance with GAAP (including, without
limitation, capital stock, additional paid-in-capital and retained earnings)
minus (b) all assets of such Person as of such date, determined on a
consolidated basis in accordance with GAAP, that would be classified as
intangible assets in accordance with GAAP, but in any event including, without
limitation, the following intangible assets: unamortized organization and
reorganization expense, patents, trade or service marks, franchises, trade names
and goodwill; all determined on a consolidated basis in accordance with GAAP.
Continuing Guarantee shall mean a Continuing Guarantee substantially in the
form of Exhibit F executed now or at any time hereafter by a Subsidiary and
delivered to Agent, as the same may be amended, supplemented or otherwise
modified from time to time.
Contribution Agreement shall mean the Agreement, dated February 27, 2003,
between Her Majesty the Queen In Right of Canada, Torch Express, L.L.C. and
Lenders, as the same may be amended, supplemented or otherwise modified from
time to time as may be permitted hereby.
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Contribution Agreement Assignment Documents shall mean such documents as
may be required by the Lenders and their counsel in order to effect a valid
assignment or irrevocable direction by Torch Express, L.L.C. of its right, title
and interest in, to and under the Contribution Agreement, including such
assignments, notices, directions and other documents as may be prescribed by
applicable legislation, as each may be amended, supplemented or modified from
time to time.
Conversion Contracts shall collectively mean (a) the Davie Contract and (b)
the ▇▇▇▇▇▇▇ Contract, as the same may be amended, supplemented or otherwise
modified from time to time as may be permitted hereby.
Davie shall mean Davie Maritime, Inc., its successors and assigns.
Davie Contract shall mean the Conversion Contract, dated December 3, 2002,
between Davie, as builder, and Torch Express, L.L.C., as owner, as the same may
be amended, supplemented or otherwise modified from time to time as may be
permitted hereby.
Default shall mean the occurrence of any event or condition specified in
Section 9 hereof, whether or not any requirement for notice or lapse of time or
other condition precedent has been satisfied.
Deficiency shall mean at any time during the Line of Credit Period, the
deficiency arising from the costs to complete the Project exceeding the costs
delineated on the Project Expense Schedule such that the amount of Line of
Credit Loans available to be drawn hereunder is insufficient to pay the
remaining costs to complete the Project.
Disbursement Date shall have the meaning ascribed thereto in Section 4.3.
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 such 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 or granting of
stock, warrants, rights or other options to purchase stock of Borrower shall not
be considered a Distribution.
Dollars and $ shall mean, unless otherwise provided herein, dollars of the
United States of America.
Environmental Law shall mean any federal, state or local statute, law,
rule, regulation, order, consent decree, judgment, permit, license, code, deed
restriction, common law, treaty, convention, ordinance or other governmental
requirement, domestic or foreign, relating to public health, safety or the
environment, including, without limitation, those relating to releases,
discharges or emissions to air, water, land or groundwater, to the use of
groundwater, to the use and handling of polychlorinated biphenyls or asbestos,
to the disposal, treatment, storage or management of hazardous or solid waste,
hazardous substances or crude oil, or any fraction thereof, to exposure to toxic
or hazardous materials, to the handling, transportation, discharge or release of
gaseous or liquid hazardous substances, in each case applicable to any of the
Property owned, leased or operated by Borrower or any Subsidiary or the
operation, construction or modification of any such Property, including, without
limitation, the following: the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. (S)(S)9601 et seq., the Solid Waste
Disposal Act, as amended by the Resource Conservation and Recovery Act of 1976
and Hazardous and Solid Waste Amendments of 1984, 42 U.S.C. (S)(S)6901 et seq.,
the Hazardous Materials Transportation
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Act, the Federal Water Pollution Control Act, as amended by the Clean Water Act
of 1976, the Safe Drinking Water Control Act, the Clean Air Act of 1966, the
Toxic Substances Control Act of 1976, the Occupational Safety and Health Act of
1977, the Emergency Planning and Community Right-to-Know Act of 1986, the
National Environmental Policy Act of 1975, the Oil Pollution Act of 1990, the
Louisiana Environmental Quality Act (La. R.S. 30:2001 et seq.), and the
Louisiana Abandoned Oil field Waste Site Law, La. R.S. 30:71 et seq. and any
amendments to these laws and any rules and regulations promulgated thereunder.
ERISA shall mean the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time.
Event of Default shall have the meaning ascribed thereto in Section 9.
Exchange Act shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the Securities Exchange Commission.
Excluded Subsidiary shall mean any Foreign Subsidiary which does not at any
time have Consolidated Tangible Net Worth greater than $500,000.00.
Existing Regions Loan Agreement shall mean the Amended and Restated Loan
Agreement, dated December 20, 2002, by and between Regions and Borrower, as the
same may be amended, restated, modified or supplemented from time to time.
Existing Regions Security Documents shall mean the security documents
required by Section 3.09 of the Existing Regions Loan Agreement, as the same may
be amended, supplemented or otherwise modified from time to time.
Fed Funds Rate shall mean, for any day, the rate per annum (rounded
upwards, if necessary to the nearest 1/100th of 1%) equal to the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers on such day, as
published by the Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (a) if such day is not a Business Day, the
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Agent on such day on such transactions.
Foreign Subsidiary shall mean any Subsidiary which is a controlled foreign
corporation as defined in Section 957 of the Code and any regulations thereto,
and specifically excluding the Subsidiaries listed on Schedule 7.13.
GAAP shall mean generally accepted accounting principles at the time in the
United States of America.
▇▇▇▇▇▇▇ shall mean ▇▇▇▇▇▇▇ Special Lifting Equipment B.V., its successors
and assigns.
▇▇▇▇▇▇▇ Contract shall mean the Contract for the Supply of a Lay System,
dated June 27, 2002, between Torch Express, L.L.C. and ▇▇▇▇▇▇▇, as the same may
be amended, supplemented or otherwise modified from time to time as may be
permitted hereby.
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
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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 or endorsements, 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.
Indemnitees shall have the meaning ascribed thereto in Section 11.4.
Investment shall mean any investment by Borrower or any Subsidiary in any
Person, whether payment therefor is made in cash or capital stock of Borrower or
any Subsidiary, and whether such investment is by acquisition of stock or
Indebtedness, or by loan, advance, transfer of property out of the ordinary
course of business, capital contribution, equity or profit sharing interest,
extension of credit on terms other than those normal in the ordinary course of
business, guarantee or otherwise becoming liable (contingently or otherwise) in
respect of the Indebtedness of any Person, or otherwise.
Interest Rate Protection Agreement shall mean any interest rate exchange,
collar, cap or similar agreement providing interest rate protection, entered
into by Borrower in respect of the Loans.
Lenders shall collectively mean Regions and Export Development Canada, and
their respective successors and assigns, with each being a Lender.
Lenders' Inspector shall mean independent Person(s) designated and approved
by the Required Lenders to inspect and monitor the Project and the employees,
agents and representatives of such Person(s).
Letter of Credit and Letters of Credit shall have the meanings ascribed
thereto in Section 4.1(a).
Letter of Credit Application shall mean an application and agreement for
letters of credit substantially in the form of Exhibit C executed by Borrower or
by Borrower and Torch Express, L.L.C. (if the Letter of Credit is to be for the
account of Torch Express, L.L.C.) and delivered to Regions pursuant to Section
4.1(a), as the same may from time to time be amended, modified, extended or
renewed.
Letter of Credit Commitment shall have the meaning ascribed thereto in
Section 4.1(a).
Letter of Credit Commitment Fee shall have the meaning ascribed thereto in
Section 4.1(c).
Letter of Credit Loan and Letter of Credit Loans shall have the meaning
ascribed thereto in Section 4.3.
Letter of Credit Period shall mean, with respect to any Letter of Credit,
the period commencing on the Effective Date and ending upon the earlier of (a)
the fifth day prior to the expiration of the Line of Credit Period or (b) one
year after its issuance.
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Letter of Credit Request shall have the meaning ascribed thereto in Section
4.1(a).
LIBOR Base Rate shall mean the London interbank offered rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) for deposits in
Dollars for a period equal to one (1) month, as recorded by the Dow ▇▇▇▇▇
Telerate Service (or such other service used by Agent as an information vendor
for the purpose of displaying British Bankers' Association interest settlement
rates for Dollar Deposits) as of 9:00 a.m. (New Orleans time) or, if such rate
can not be so determined, the arithmetic average of the rates of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) at which
deposits in Dollars in immediately available funds are offered to Agent as of
the opening of business of Agent or as soon thereafter as practicable by two (2)
or more major banks in the London interbank market selected by Agent for a
period equal to one (1) month and in an amount equal or comparable to the
principal amount due on the Loans. The LIBOR Base Rate shall be adjusted monthly
on the last day of each month (or, if such day is not a Business Day, on the
next succeeding Business Day).
LIBOR Rate shall mean the LIBOR Base Rate plus the Applicable Margin.
Lien shall mean any interest in Property securing an obligation owed to, or
a claim by, a Person other than the owner of the Property, whether such interest
is based on common law, statute or contract, including, without limitation, any
security interest, mortgage, deed of trust, hypothec, prior claim, right of
retention, maritime lien or right in rem, pledge, assignment, judgment lien,
deemed trust or other lien or encumbrance of any kind or nature whatsoever, any
conditional sale or trust receipt, and any consignment or bailment for security
purposes. The term "Lien" shall include reservations, exceptions, encroachments,
easements, servitudes, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property.
Line of Credit Commitment shall mean, for each Lender, the principal amount
of $30,000,000.00.
Line of Credit Loan and Line of Credit Loans shall have the meanings
ascribed thereto in Section 2.1.
Line of Credit Notes shall have the meaning ascribed thereto in Section
2.4.
Line of Credit Period shall mean the period commencing on the Effective
Date and ending June 30, 2004.
Loans shall collectively mean the Line of Credit Loans, the Term Loans, and
the Letter of Credit Loans, with each being a Loan, and shall include all
principal, interest, attorneys' fees and costs owed thereon.
Material Adverse Effect shall mean a material adverse effect on the
Properties, assets, liabilities, business, operations, prospects, income or
condition (financial or otherwise) of Borrower and its Subsidiaries taken as a
whole.
Material Indebtedness shall have the meaning ascribed thereto in Section
8.1(c).
MIDNIGHT EXPRESS shall mean the vessel MIDNIGHT EXPRESS, Official Number
1450, documented under the laws of the Republic of Vanuatu, owned by Torch
Express, L.L.C.
Note shall mean each Line of Credit Note and each Term Note, with all such
notes being collectively referred to as the Notes.
8
Notice of Borrowing shall have the meaning ascribed thereto in Section
2.3(a).
Obligations shall mean, without duplication, any and all present and future
indebtedness (including, without limitation, principal, interest, fees,
collection costs and expenses, attorneys' fees and other amounts), liabilities
and obligations (including, without limitation, reimbursement obligations with
respect to Letters of Credit issued by Regions under this Agreement) of Borrower
and each Subsidiary, and of any one or more of them, to any one or more of the
Secured Parties evidenced by or arising under or in connection with this
Agreement, the Notes, the Letter of Credit Application(s), and/or any of the
other Transaction Documents, whether direct or contingent, due or to become due
or now existing or hereafter arising.
Obligor shall mean Borrower, each Subsidiary and each other Person who is
or shall at any time hereafter become primarily or secondarily liable on any of
the Obligations.
Operating Agreement shall mean the Operating Contract dated December 3,
2002 between Davie, as the Operator, and The Groupe ▇▇▇▇▇▇▇▇ Van Houtte & Ass.
Ltd., as Trustee, as the same may be amended, supplemented or otherwise modified
from time to time as may be permitted hereby.
Overadvance shall have the meaning ascribed thereto in Section 2.2.
Performance Bond shall mean a performance bond to be issued by
Investissement Quebec and Davie Maritime Inc. in favour of Torch Express L.L.C.
in connection with the conversion of the MIDNIGHT EXPRESS in form and substance
satisfactory to the Lenders, as the same may be amended, supplemented or
otherwise modified from time to time as may be permitted hereby.
Permitted Liens shall mean any of the following: (a) Liens for property
taxes and assessments or governmental charges or levies, provided that payment
thereof is not at the time required by Section 8.1(d); (b) (i) deposits to
secure the performance of bids, tenders, trade contracts or leases (other than
Capitalized Leases) or to secure statutory obligations, surety or appeal bonds
or other Liens of like general nature incurred in the ordinary course of
business and not in connection with the borrowing of money or the acquisition of
inventory or other Property and (ii) Liens (other than any Liens imposed by
ERISA) arising in the ordinary course of business or incidental to the ownership
of Properties and assets (including Liens in connection with worker's
compensation, unemployment insurance and other like laws, carrier's, mechanic's,
materialmen's, repairmen's, vendor's, warehousemen's and attorneys' liens and
statutory landlords' liens); provided in each case that payment thereof is not
at the time required by Section 8.1(d) or 8.1(e); (c) Survey exceptions, issues
with regard to the merchantability of title, easements or reservations, or
rights of others for rights-of-way, servitudes, utilities and other similar
purposes, or zoning or other restrictions as to the use of real properties,
which could not reasonably be expected to have a Material Adverse Effect; (d)
Liens permitted by the Required Lenders in writing; (e) Liens on Properties in
respect of judgments or awards, the Indebtedness with respect to which is
permitted by Section 8.2(a)(v); (f) Liens on the vessel MIDNIGHT WRANGLER (and
any equipment located thereon) securing Indebtedness permitted by Section
8.2(a)(xi); (g) Liens on the vessel MIDNIGHT EAGLE (and any equipment located
thereon) and on a $1,250,000.00 deposit securing Indebtedness permitted by
Section 8.2(a)(xii); (h) leases of or purchase money security interests against
specific equipment securing Indebtedness permitted under Section 8.2(a)(xiii);
(xiv) the Existing Regions Security Documents; (xv) Liens on the MIDNIGHT GATOR
(and any equipment located thereon) or the MIDNIGHT RUNNER (and any equipment
located thereon), securing Indebtedness permitted by Section 8.2(a)(xiii); and
(xv) Liens created under the Transaction Documents.
9
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).
Plans and Specifications shall mean the final drawings and specifications,
including any revisions, amendments and addenda, required to complete the
Project, including off-site and on-site.
Pledge Agreement shall mean a Pledge Agreement substantially in the form of
Exhibit H executed now or at any time hereafter by Borrower or a Subsidiary and
delivered to Agent, as the same may be amended, supplemented or otherwise
modified from time to time.
Preferred Ship Mortgages shall have the meaning ascribed thereto in Section
5.7(b).
Prime Rate shall mean the interest rate announced from time to time by
Citibank, N.A. at its main office in New York as its "prime rate" on commercial
loans (which rate shall fluctuate as and when said prime rate shall change).
Project shall mean conversion of the MIDNIGHT EXPRESS into a dynamically
positioned deep water pipe laying vessel in accordance with the Conversion
Contracts.
Project Costs shall mean the costs and expenses for the development and
completion of the Project, as itemized in the Project Expense Schedule.
Project Expense Schedule shall mean the detailed line item cost breakdown
of the costs to complete the Project including the cost breakdown of the
purchase price of the MIDNIGHT EXPRESS, construction costs (hard costs) and all
other related indirect development costs (soft costs) submitted to and approved
by Lenders, as such schedule may be amended and modified from time to time as
approved by the Required Lenders.
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.
Pro Rata Share shall mean with respect to each Lender (i) with respect to
Line of Credit Loans or Letters of Credit, the percentage amount equal to the
sum of such Lender's Line of Credit Commitment divided by the sum of all of the
Lenders' Line of Credit Commitments and (ii) with respect to the Term Loans, the
percentage amount equal to the sum of such Lender's Term Loan Commitment divided
by the sum of all of the Lenders' Term Loan Commitments.
Quebec Security Documents shall mean the following documents to be executed
by Torch Express L.L.C. or any other Subsidiary having Collateral in the
Province of Quebec: (a) a Deed of Hypothec and Issue of Bonds charging a
universality of movable property for CAD 144,000,000; (b) a delivery order for a
bond in the amount of CAD 144,000,000; (c) a bond in the principal amount of CAD
144,000,000; and (d) a pledge of such bond, all in form and substance
satisfactory to the Lenders and their counsel, as the same may be amended,
supplemented, or otherwise modified from time to time.
Regions shall mean Regions Bank, an Alabama state bank, in its individual
corporate capacity as a Lender hereunder, including, without limitation, its
capacity as a Lender hereunder with respect to its Pro-Rata Share of the Line of
Credit Loans and Term Loans and with respect to its issuance of Letters of
Credit.
10
Required Lenders shall mean at any time Lenders having Fifty-One (51%)
Percent of the aggregate amount of the Line of Credit Loans, the Term Loans, the
Letter of Credit Loans and the face amount (or participation interest in the
face amount) of Letters of Credit then outstanding or, if no such Loans or
Letters of Credit are then outstanding, Fifty-One (51%) Percent of the total
Commitments of all of the Lenders; provided further that the Required Lenders
must in all instances be at least two Lenders.
Restricted Investment shall mean any Investment, or any expenditure or any
incurrence of any liability to make any expenditure for an Investment, other
than:
(a) Guarantees, loans or advances by Borrower or a Subsidiary to any
Subsidiary that is not an Excluded Subsidiary;
(b) Guarantees, loans or advances by any Subsidiary to Borrower which
are subordinated in writing to the payment of the Obligations in form and
substance satisfactory to Required Lenders;
(c) Direct obligations of the United States of America or any
instrumentality or agency thereof, the payment of which is unconditionally
guaranteed by the United States of America or any instrumentality or agency
thereof, all of which Investments must mature within twelve (12) months from the
time of acquisition thereof;
(d) Negotiable certificates of deposit or negotiable bankers
acceptances issued by (i) Regions or (ii) any other bank or trust company
organized under the laws of the United States of America or any state thereof,
which bank or trust company is a member of both the Federal Deposit Insurance
Corporation and the Federal Reserve System and is rated B or better by ▇▇▇▇▇▇▇▇
Bank Watch Service, all of which Investments must mature within twelve (12)
months from the time of acquisition thereof;
(e) Repurchase agreements providing for the purchase of securities of
a type described in clause (c) of this definition of Restricted Investment
having a value of not less than 100% of the amount owed by the counter party to
such agreement, issued by (i) Regions or (ii) any other bank or trust company
organized under the laws of the United States or any state thereof, which bank
or trust company is a member of both the Federal Deposit Insurance Corporation
and the Federal Reserve System and is rated B or better by ▇▇▇▇▇▇▇▇ Bank Watch
Service, all of which Investments must mature within twelve (12) months from the
time of acquisition thereof; and
(f) Investments in the Subsidiaries of Borrower as of the Effective
Date and Subsidiaries of Borrower formed after the date hereof, that are not
Excluded Subsidiaries, as may be permitted hereby, so long as Borrower and each
Subsidiary, that is not an Excluded Subsidiary, have executed the Transaction
Documents required by Section 5.7.
Secured Parties shall collectively mean Agent and the Lenders.
Security Agreement shall have the meaning ascribed thereto in Section
5.7(a).
Shipbuilding Contracts means, collectively the Acknowledgement Agreement,
the Conversion Contracts, the Operating Agreement, the Supply Contract and the
Trustee Agreement.
Shipyards shall collectively mean Davie and ▇▇▇▇▇▇▇.
Subordination Agreement shall have the meaning ascribed thereto in section
5.12.
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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, each of the entities described on Schedule 7.13.
Subsidiary Pledge Agreement shall have the meaning ascribed thereto in the
defined term Subsidiary Pledge Documents.
Subsidiary Pledge Documents shall mean, with respect to each Subsidiary,
the following documents: (a) a security agreement (a "Subsidiary Pledge
Agreement") in form and substance required by the Required Lenders granting
Lenders a pledge of and a security interest in all of the common stock,
membership interest, partnership interest or other equity interest in such
Subsidiary owned directly or indirectly by Borrower and/or any one or more
Subsidiaries, (b) executed stock powers covering all of the common stock of such
Subsidiary owned directly or indirectly by Borrower and/or any one or more
Subsidiaries, (c) such opinions of counsel for Borrower and/or any Subsidiaries
as the Required Lenders may reasonably require, and (d) such financing
statements, resolutions, certificates, approvals, documents and instruments as
the Required Lenders may reasonably require.
Supply Contract shall mean the Supply Contract, dated December 3, 2002,
between Davie and The Groupe ▇▇▇▇▇▇▇▇ Van Houtte & Ass. Ltd., as Trustee, as the
same may be amended, supplemented or otherwise modified from time to time as may
be permitted hereby.
Term Loans and Term Loan shall have the meanings ascribed thereto in
Section 3.1.
Term Loan Commitment shall mean for each Lender $30,000,000.00, which
commitments in the aggregate equal the principal amount of $60,000,000.00.
Total Line of Credit Outstandings shall mean the sum of (a) the aggregate
principal amount of all outstanding Line of Credit Loans plus (b) the aggregate
principal amount of all outstanding Letter of Credit Loans plus (c) the
aggregate undrawn face amount of all outstanding Letters of Credit.
Transaction Documents shall mean this Agreement, the Notes, the Letter of
Credit Application(s), the Continuing Guarantees, the Security Agreement, the
Subsidiary Pledge Agreements, the Quebec Security Documents, the Preferred Ship
Mortgages, and all other agreements, documents and instruments heretofore, now
or hereafter delivered to the Agent or any of the Lenders with respect to or in
connection with or pursuant to this Agreement, any Loans made hereunder or
thereunder, or any Letters of Credit issued hereunder or thereunder, and
executed by or on behalf of Borrower and/or any Subsidiary, all as the same may
from time to time be amended, modified, extended or renewed.
Trustee Agreement shall mean the Agreement, dated December 3, 2002, between
The Groupe ▇▇▇▇▇▇▇▇ Van Houtte & Ass. Ltd., as Trustee, and Torch Express,
L.L.C., as the same may be amended, supplemented or otherwise modified from time
to time as may be permitted hereby.
Vessels shall mean the following described vessels: MIDNIGHT EXPRESS,
MIDNIGHT CARRIER, Official Number 1208 (Vanuatu registered vessel); MIDNIGHT
BRAVE, Official Number 529263; MIDNIGHT FOX, Official Number 1065954; MIDNIGHT
DANCER, Official Number 586595; MIDNIGHT RIDER, Official Number 1035377; and
MIDNIGHT STAR, Official Number 398 (Vanuatu registered vessel) together with all
masts, boilers, cables, engines, machinery, bowsprits, sails, rigging, boats,
anchors, chains, tackle, apparel, furniture, fittings, tools, pumps, equipment,
fuel, supplies, spare parts and all other attachments, appurtenances,
accessories, additions, fixtures, equipment, appliances,
12
improvements and replacements now or hereafter belonging thereto, affixed
thereto, or used in connection therewith, whether because of repairs or
otherwise, whether or not removed therefrom.
1.2 Accounting Terms and Determinations. Except as otherwise specified
herein, all accounting terms used herein shall be interpreted, all accounting
determinations hereunder shall be made and all financial statements required to
be delivered hereunder shall be prepared in accordance with GAAP as in effect
from time to time, applied on a basis consistent (except for changes accompanied
by a concurrence from Borrower's independent certified public accountants) with
the most recent audited financial statements of Borrower delivered to the
Lenders.
SECTION 2. LINE OF CREDIT LOANS.
2.1 Line of Credit Commitments. Subject to the terms and conditions set
forth in this Agreement and so long as no Default or Event of Default has
occurred and is continuing, during the Line of Credit Period, each Lender
severally (and not jointly) agrees to lend to Borrower from time to time on a
non-revolving basis (individually, a "Line of Credit Loan" and collectively, the
"Line of Credit Loans") amounts not to exceed, in the aggregate at any one time
outstanding, the lesser of: (a) such Lender's Line of Credit Commitment, or (b)
such Lender's Pro Rata Share of the sum of the total Line of Credit Commitments
of all of the Lenders minus the aggregate principal amount of all outstanding
Letter of Credit Loans minus the aggregate undrawn face amount of all
outstanding Letters of Credit minus the aggregate principal amount of all
outstanding Line of Credit Loans; provided that, the Total Line of Credit
Outstandings shall not at any one time exceed $60,000,000.00. The amount of the
Line of Credit Commitments shall be reduced by the aggregate amount of principal
payments made on the Line of Credit Loans and the Line of Credit Commitments
shall terminate upon the making of any Term Loan. Loans under this Section 2.1
shall be made from the several Lenders ratably in proportion to their respective
Pro Rata Shares. The failure of any Lender to make any Line of Credit Loan
required under this Agreement shall not release any other Lender from its
obligation to make Line of Credit Loans as provided herein. Each Line of Credit
Loan shall bear interest on the outstanding principal amount thereof, for each
day from the date such Loan is made until it becomes due, at a rate per annum
equal to the LIBOR Rate. Such interest shall be payable on all such Line of
Credit Loans monthly in arrears on the last day of each month (or the immediate
subsequent Business Day if any such last day is not a Business Day) and at
maturity. Any overdue principal of and, to the extent permitted by law, overdue
interest on, any Line of Credit Loan shall bear interest, payable on demand, for
each day until paid at a rate per annum equal to the sum of three percent (3%)
plus the rate otherwise in effect for such day.
2.2 Total Line of Credit Outstandings Shall Not Exceed Borrowing Base. If
the Total Line of Credit Outstandings should at any time exceed $60,000,000.00
(such excess Loans being an "Overadvance"), such Overadvance shall nevertheless
constitute Indebtedness that is secured by the Collateral and entitled to all of
the benefits of this Agreement and the other Transaction Documents. Any such
Overadvance shall be payable by the Borrower on demand by the Agent and shall
bear interest at the LIBOR Rate. The Agent shall not be responsible or liable
for failure to make any demand for payment under this Section 2.2.
2.3 Method of Borrowing.
(a) With respect to each Line of Credit Loan, Borrower's
Representative shall give notice (a "Notice of Borrowing") to the Agent by 10:30
a.m. (New Orleans time) at least two (2) Business Days before each Line of
Credit Loan, specifying:
(i) the date of such Line of Credit Loan, which shall be a Business
Day,
13
(ii) the aggregate principal amount of such Line of Credit Loan,
(iii) that on the date of, and after giving effect to, such Line of
Credit Loan, no Default or Event of Default has occurred and is continuing,
(iv) that on the date of, and after giving effect to, such Line of
Credit Loan, all of the representations and warranties of Borrower contained in
Section 7 of this Agreement and of Borrower and its Subsidiaries contained in
the other Transaction Documents are true and correct in all material respects as
if made on and as of the date of such Line of Credit Loan (except to the extent
that such representations and warranties expressly relate solely to an earlier
date (in which case such representations and warranties shall have been true and
correct on and as of such earlier date)), and
(v) with respect to any new Line of Credit Loan requested in order to
make a payment under the Davie Contract, Agent has received a certificate from
Borrower's Chief Financial Officer, in form and substance satisfactory to Agent,
that, as of such date, based on the records of Davie made available or furnished
to Borrower or Torch Express, L.L.C., except as noted therein, Davie has made
full and timely payment for all labor, services, materials and equipment
provided by employees, suppliers, subcontractors, agents and governments in
connection with the work performed by Davie on the MIDNIGHT EXPRESS.
(b) Upon receipt of a Notice of Borrowing given to it, the Agent shall
notify each Lender by 2:00 p.m. (New Orleans time) on the date of receipt of
such Notice of Borrowing by the Agent (which must be a Business Day) of the
contents thereof and of such Lender's ratable share of such Line of Credit Loan.
A Notice of Borrowing shall not be revocable by Borrower.
(c) Not later than 3:00 p.m. (New Orleans time) on the date of each
Line of Credit Loan, each Lender shall make available its Pro Rata Share of such
Line of Credit Loan, in federal or other funds immediately available in New
Orleans, Louisiana, to the Agent at its address specified in or pursuant to
Section 11.7. Agent shall not be required to make any amount available to
Borrower hereunder except to the extent it shall have received such amounts from
the Lenders as set forth herein, provided, however, that unless the Agent shall
have been notified by a Lender prior to the date a Line of Credit Loan is to be
made hereunder that such Lender does not intend to make its Pro Rata Share of
such Line of Credit Loan available to the Agent, the Agent may assume that such
Lender has made such Pro Rata Share available to the Agent on such date, and the
Agent may in reliance upon such assumption make available to Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Lender and the Agent has made such amount available to
Borrower, the Agent shall be entitled to receive such amount from such Lender
forthwith upon its demand, together with interest thereon in respect of each day
during the period commencing on the date such amount was advanced to Borrower
and ending on but excluding the date the Agent recovers such amount from the
Lender at a rate per annum equal to the Fed Funds Rate. Unless the Agent
determines that any applicable condition specified in Section 6 has not been
satisfied, the Agent will make the funds so received from the Lenders available
to Borrower thereafter as of 3:30 p.m. New Orleans time on the date of such Line
of Credit Loan at the Agent's aforesaid address by crediting such funds to a
demand deposit account (or such other account mutually agreed upon in writing
between Agent and Borrower) of Borrower with the Agent; provided that (i) any
Line of Credit Loans made to pay for services performed or materials provided
relating to a Conversion Contract shall be made directly by Agent to the person
to whom such amounts are due and (ii) Agent is not obligated to send any
proceeds via wire transfer after 2:00 p.m. (New Orleans time).
(d) Lenders reserve the right to modify the procedures set forth in
this Section 2 and to disburse Line of Credit Loans as follows: At the option of
Lenders, upon the occurrence and during the continuance of any Event of Default,
Lenders may make Line of Credit Loans and pay the proceeds
14
thereof when due under any Conversion Contract directly to the Shipyard or to
subcontractors and suppliers, in the reasonable judgment of Lenders, to prevent
a default under any Conversion Contract. For these purposes only, upon the
occurrence and during the continuance of any Event of Default, Borrower hereby
irrevocably makes, nominates, constitutes, and appoints Lenders, in its place
and stead, acting through any of its directors or officers, as Borrower's true
and lawful agent and attorney in fact with full power of substitution, to make
Line of Credit Loans and to pay the proceeds thereto directly to the Shipyard,
subcontractors and suppliers; this mandate or agency shall be an irrevocable
power of attorney, that is, a power coupled with an interest which cannot be
revoked, Lenders having direction and authorization to so make such Line of
Credit Loans, and no further direction or authorization from the Borrower shall
be necessary to warrant such Line of Credit Loans, and all such Line of Credit
Loans shall satisfy pro tanto the obligations of Lenders hereunder and shall
constitute Line of Credit Loans hereunder and shall be secured by the
Transaction Documents as fully as if made upon the request of Borrower,
regardless of the disposition thereof by the Shipyard, subcontractors, or
suppliers.
2.4 Line of Credit Notes.
(a) The Line of Credit Loans of each Lender to Borrower shall be
evidenced by a promissory note of Borrower dated the Effective Date and payable
to the order of such Lender in a principal amount equal to its Line of Credit
Commitment in substantially the form of Exhibit A (with appropriate insertions)
(as such promissory notes may from time to time be amended, modified extended or
renewed, the "Line of Credit Notes").
(b) Each Lender shall record, and prior to any transfer of its Line of
Credit Note may endorse on the schedules forming a part thereof, appropriate
notations to evidence the date and amount of each Line of Credit Loan made by it
and the date and amount of each payment of principal made by Borrower with
respect thereto. Each Lender is hereby irrevocably authorized by Borrower so to
endorse its Line of Credit Note and to attach to and make a part of any such
Line of Credit Note a continuation of any such schedule as and when required;
provided, however that the obligation of Borrower to repay each Line of Credit
Loan actually made hereunder shall be absolute and unconditional,
notwithstanding any failure of any Lender to endorse or any mistake by any
Lender in connection with endorsement on the schedules attached to its
respective Line of Credit Note. The internal records of each Lender shall
constitute for all purposes prima facie evidence of (i) the amount of principal
and interest owing to such Lender on its Line of Credit Loans from time to time,
(ii) the amount of each Line of Credit Loan made by such Lender to Borrower and
(iii) the amount of each principal and/or interest payment received by such
Lender on its Line of Credit Loans.
2.5 Maturity. All Line of Credit Loans not paid prior to the last day of
the Line of Credit Period, together with all accrued and unpaid interest thereon
and all fees and other amounts owing by Borrower to the Lenders with respect
thereto, shall be due and payable by Borrower on the last day of the Line of
Credit Period.
SECTION 3. THE TERM LOANS
3.1 Term Loan Commitments. Subject to the terms and conditions set forth in
this Agreement and so long as no Default or Event of Default has occurred and is
continuing, on the last day of the Line of Credit Period, each Lender with a
Term Loan Commitment severally (and not jointly) agrees to lend to Borrower
(individually, a "Term Loan" and collectively, the "Term Loans") an amount not
to exceed the lesser of (a) such Lender's Term Loan Commitment or (b) the
aggregate outstanding principal amount of the Line of Credit Loans due and
payable to such Lender as of such date. Loans under this Section 3.1 shall be
made from the several Lenders ratably in proportion to their respective Pro Rata
Shares. The failure of any Lender to make any Term Loan under this Agreement
shall not release
15
any other Lender from its obligation to make a Term Loan as provided herein.
Each Term Loan shall be payable as follows: each Term Loan shall bear interest
on the outstanding principal balance thereof at a rate per annum equal to the
applicable LIBOR Base Rate plus 325 basis points (3.25%); provided that any
overdue principal of and, to the extent permitted by law, overdue interest on,
any Term Loan shall bear interest, payable on demand, for each day until paid at
a rate per annum equal to the sum of three percent (3%) plus the rate otherwise
in effect for such day; interest shall be payable monthly in arrears on the last
day of each month (or the immediate subsequent Business Day if any such last day
is not a Business Day) and at maturity; principal shall be payable in equal
semi-annual payments based on a ten (10) year amortization period, commencing
six (6) months after expiration of the Line of Credit Period and semi-annually
thereafter, with the entire outstanding balance of principal and interest being
due and payable three (3) years after the expiration of the Line of Credit
Period; and interest on the outstanding principal owed on such Term Loan shall
be computed and assessed on the basis of the actual number of days elapsed over
a year composed of 360 days.
3.2 Method of Borrowing.
(a) With respect to the Term Loans, Borrower's Representative shall
give notice (the "Term Loan Notice") to the Agent by 10:30 a.m. (New Orleans
time) at least thirty (30) days before the Term Loans, specifying:
(i) the date of the Term Loans, which shall be a Business Day,
(ii) the aggregate principal amount of the Term Loans,
(iii) that on the date of, and after giving effect to, the Term Loans,
no Default or Event of Default has occurred and is continuing, and
(iv) that on the date of, and after giving effect to, the Term Loans,
all of the representations and warranties of Borrower contained in Section 7 of
this Agreement and of Borrower and its Subsidiaries contained in the other
Transaction Documents are true and correct in all material respects as if made
on and as of the date of the Term Loans (except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and correct
on and as of such earlier date)).
(b) Upon receipt of the Term Loan Notice given to it, the Agent shall
notify each Lender by 2:00 p.m. (New Orleans time) on the date of receipt of the
Term Loan Notice by the Agent (which must be a Business Day) of the contents
thereof and of such Lender's ratable share of such Term Loans. The Term Loan
Notice shall not be revocable by Borrower.
(c) Not later than 11:00 a.m. (New Orleans time) on the date of the
Term Loans, each Lender shall make available its Pro Rata Share of the Term
Loans, in federal or other funds immediately available in New Orleans,
Louisiana, to the Agent at its address specified in or pursuant to Section 11.7.
Agent shall not be required to make any amount available to Borrower hereunder
except to the extent it shall have received such amounts from the Lenders as set
forth herein, provided, however, that unless the Agent shall have been notified
by a Lender prior to the date the Term Loans are to be made hereunder that such
Lender does not intend to make its Pro Rata Share of the Term Loans available to
the Agent, the Agent may assume that such Lender has made such Pro Rata Share
available to the Agent on such date, and the Agent may in reliance upon such
assumption make available to Borrower a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
and the Agent has made such amount available to Borrower, the Agent shall be
entitled to receive such amount from such Lender forthwith upon its demand,
together with interest thereon in respect of each day during
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the period commencing on the date such amount was advanced to Borrower and
ending on but excluding the date the Agent recovers such amount from the Lender
at a rate per annum equal to the Fed Funds Rate. Unless the Agent determines
that any applicable condition specified in Section 6 has not been satisfied, the
Agent will on the date of the Term Loans send each Lender (to the extent such
Lender has made its Term Loan) its Pro Rata Share of the funds so received as
payment on the Line of Credit Loans.
3.3 Term Notes.
(a) The Term Loan of each Lender to Borrower shall be evidenced by a
promissory note of Borrower dated the date of such Loan and payable to the order
of such Lender in a principal amount equal to its Term Loan in substantially the
form of Exhibit B (with appropriate insertions) (as such promissory notes may
from time to time be amended, modified extended or renewed, the "Term Notes").
(b) The internal records of each Lender shall constitute for all
purposes prima facie evidence of (i) the amount of principal and interest owing
on its Term Loan from time to time, (ii) the amount of each Term Loan made to
Borrower and (iii) the amount of each principal and/or interest payment received
by such Lender on its Term Loan.
SECTION 4. LETTERS OF CREDIT.
4.1 Letter of Credit Commitment.
(a) Subject to the terms and conditions of this Agreement, during the
Letter of Credit Period, and so long as no Default or Event of Default has
occurred and is continuing (provided, however, that Regions shall have no
liability to any of the other Lenders for issuing a Letter of Credit after the
occurrence of any Default or Event of Default unless Regions has previously
received notice in writing by Borrower, the Agent or any of the other Lenders of
the occurrence of such Default or Event of Default), Regions hereby agrees to
issue commercial letters of credit and irrevocable standby letters of credit for
the account of Borrower or for the account of Borrower and Torch Express, L.L.C.
(individually, a "Letter of Credit" and collectively, the "Letters of Credit")
(the "Letter of Credit Commitment") in an amount and for the term specifically
requested by Borrower by notice in writing to Regions in the form of Exhibit D
(a "Letter of Credit Request") at least three (3) Business Days prior to the
requested issuance thereof; provided, however, that:
(i) Borrower, and if the Letter of Credit is to be issued for the
account of Borrower and Torch Express, L.L.C., Torch Express, L.L.C., shall have
executed and delivered to Regions a Letter of Credit Application with respect to
such Letter of Credit, with Borrower and Torch Express, L.L.C. (if the Letter of
Credit will be issued for the account of Borrower and Torch Express, L.L.C.) to
be jointly, severally and solidarily liable thereunder;
(ii) the term of any such Letter of Credit shall not extend
beyond the last day of the Letter of Credit Period;
(iii) any Letter of Credit may only be utilized in the ordinary
course of business for the Project;
(iv) the Total Line of Credit Outstandings shall not at any one
time exceed $60,000,000.00;
(v) the sum of (A) the aggregate undrawn face amount of all
outstanding Letter(s) of Credit plus (B) the aggregate principal amount of all
outstanding Letter of Credit Loans shall not at any one time exceed the sum of
Thirty Million Dollars ($30,000,000.00); and
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(vi) the text of any such Letter of Credit is provided to Regions
no less than three (3) Business Days prior to the requested issuance date, the
terms and conditions of which must be acceptable to Regions.
Lenders and Borrower acknowledge and agree that the existing letter of
credit issued by Regions for the account of Borrower (or for the account of
Borrower and any Subsidiary of Borrower) to Hydralift AmClyde, Inc. in the face
amount of $2,726,400.00 shall be deemed an outstanding Letter of Credit under
this Agreement and shall be governed by the terms and provisions of this
Agreement.
(b) Regions will make available the original of each Letter of Credit
to the beneficiary thereof (and will promptly provide each of the other Lenders
and the Agent with a copy of such Letter of Credit).
(c) For each Letter of Credit, Borrower (and Torch Express, L.L.C. if
it executed the Letter of Credit Application) hereby further agrees, jointly,
severally and solidarily, to pay to the Agent for the account of Regions and the
other Lenders an annual nonrefundable commitment fee payable quarterly in an
amount equal to the rate per annum equal to the then current Applicable Margin
(calculated on an actual day, 360 day year basis) times the face amount (taking
into account any increases or decreases therein during the period in question)
of each such Letter of Credit issued hereunder ("Letter of Credit Commitment
Fee"), which Letter of Credit Commitment Fee shall be due and payable in arrears
with respect to each Letter of Credit on the last Business Day of each calendar
quarter during the term of each respective Letter of Credit and on the
termination thereof (whether at its stated maturity or earlier). In addition to
the Letter of Credit Commitment Fee, for each Letter of Credit, Borrower hereby
further agrees to pay (or arrange for Torch Express, L.L.C., if it executed the
Letter of Credit Application, to pay) to Regions, solely for the account of the
Regions, a facing fee in the amount of .12% of the face amount of each Letter of
Credit upon the issuance thereof. Borrower further agrees to pay Regions
standard negotiation charges upon demand from time to time. Each of the Lenders
shall be entitled to its Pro Rata Share of any Letter of Credit Commitment Fees,
but the other Lenders shall have no right to share in any facing fees or
negotiation fees paid by Borrower (or Torch Express, L.L.C.) to Regions in
connection with any of the Letters of Credit.
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4.2 Participation by Other Lenders.
(a) Upon the issuance of a Letter of Credit, each Lender shall share
the obligation represented by each such Letter of Credit so issued, in an amount
equal to such Lender's Pro Rata Share. The participation of each Lender in each
Letter of Credit shall be automatic. Each other Lender shall make available to
Regions, regardless of whether any Default or Event of Default shall have
occurred and is continuing, an amount equal to its respective Pro Rata Share of
each drawing on each Letter of Credit in same day or immediately available funds
not later than 11:00 a.m. New Orleans time on each Disbursement Date (as
hereinafter defined) for each such drawing. In the event that any Lender fails
to make available to Regions the amount of such Lender's Pro Rata Share of any
drawing on a Letter of Credit as provided herein, Regions shall be entitled to
recover such amount on demand from such Lender together with interest at the
daily average Federal Funds Rate for the first two Business Days after the
Disbursement Date and thereafter at the LIBOR Rate.
(b) Regions shall distribute to each Lender that has paid all amounts
payable by it under this Section 4.2 with respect to any Letter of Credit issued
by Regions such Lender's Pro Rata Share of all payments received by Regions from
Borrower in reimbursement of drawings honored by Regions under such Letter of
Credit when such payments are received (to the extent that such Lender has not
already received such amounts).
4.3 Disbursements. Regions shall notify Borrower promptly of the
presentment for payment of any Letter of Credit (on the date of presentment, if
possible, and otherwise on the next Business Day, it being agreed that such
notice may be made by phone), together with notice of the date (the
"Disbursement Date") such payment shall be made, and Regions will promptly
notify the other Lenders of such matters. Subject to the terms and provisions of
such Letter of Credit, Regions shall make such payment to the beneficiary (or
its designee) of such Letter of Credit. On the Disbursement Date, Borrower
shall, prior to or contemporaneous with a payment on such Letter of Credit,
reimburse (or cause any Subsidiary for which the Letter of Credit was issued to
reimburse) Regions and the other Lenders (to the extent each Lender has paid its
Pro Rata Share of such drawing) for all amounts which will be or have been
disbursed under such Letter of Credit. In the event a payment under a Letter of
Credit is made without contemporaneous receipt of payment from Borrower in
accordance with this Section 4.3, such payment shall constitute a loan
(individually a "Letter of Credit Loan" and collectively, the "Letter of Credit
Loans") by Regions and/or the other Lenders (to the extent each Lender has paid
its Pro Rata Share of such drawing) to Borrower. All Letter of Credit Loans
shall accrue interest at the LIBOR Rate and shall be payable on demand. Regions
shall distribute to each Lender that has paid all amounts payable by it under
Section 4.2 with respect to a Letter of Credit such Lender's Pro Rata share of
all interest and other amounts received by Regions from Borrower (or any
Subsidiary) under the Letter of Credit Loan relating to such Letter of Credit
(to the extent that such Lender has not already received such amounts).
4.4 Reimbursement. Borrower's obligation under Section 4.3 to reimburse
Regions and the other Lenders with respect to each drawing under each Letter of
Credit (including interest thereon) (to the extent each Lender has paid its Pro
Rata Share of such drawing), and each Lender's obligation to fund each drawing
shall, absent the gross negligence or wilful misconduct of Regions, be absolute
and unconditional under any and all circumstances and irrespective of any
setoff, counterclaim, or defense to payment which Borrower or any Lender may
have or have had against any Lender, Borrower or any beneficiary of a Letter of
Credit, including, without limitation, any defense based upon the occurrence of
any Default or Event of Default, any draft, demand or certificate or other
document presented under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient, or any failure to apply or misapplication by the
beneficiary of the proceeds of any disbursement, or the legality, validity,
form, regularity, or enforceability of such Letter of Credit.
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4.5 Replacement or Collateralization of Letters of Credit. Notwithstanding
any provision contained in this Agreement or any of the Letter of Credit
Applications to the contrary, upon the occurrence of any Event of Default, at
Agent's option, Borrower shall, upon Agent's demand, deliver to Agent cash or
other collateral acceptable to Agent having a value, as determined by Agent, at
least equal to the aggregate undrawn face amount of all outstanding Letters of
Credit issued by Regions. Any such collateral and/or any amounts received by
Agent pursuant to this Section 4.5 shall be held by Agent in a separate account
at Agent appropriately designated as a cash collateral account in relation to
this Agreement and the Letters of Credit and retained by Agent as collateral
security for the payment of the Obligations. Cash amounts delivered to Agent
pursuant to the foregoing requirements of this Section 4.5 shall be invested, at
the request and for the account of Borrower, in investments of a type and nature
and with a term acceptable to Agent. Such amounts, including in the case of cash
amounts invested in the manner set forth above, any investment realized thereon,
shall not be used by Agent to pay any amounts drawn or paid under or pursuant to
any Letter of Credit, but may be applied to reimburse Regions for drawings or
payments under or pursuant to the Letters of Credit which Regions has paid, or
if no such reimbursement is required shall be used by Agent for application to
such other of the Obligations as Agent shall determine. Any amounts remaining in
any cash collateral account established pursuant to this Section 4.5 after the
payment in full of all of the Obligations and the expiration or cancellation of
all of the Letters of Credit shall be returned to Borrower.
SECTION 5. GENERAL PROVISIONS FOR ALL LOANS.
5.1 Determination of Interest Rates. The Agent shall (in accordance with
this Agreement) determine each interest rate applicable to the Loans hereunder.
The Agent shall give prompt notice to Borrower and the Lenders by telecopy of
each rate of interest so determined, and its determination thereof shall be
conclusive in the absence of manifest error.
5.2 Fees.
(a) Borrower shall pay to Agent for the account of the Lenders, an
unused fee (the "Unused Fee") calculated as of the last day of March, June,
September and December in each year and on the last day of the Line of Credit
Period equal to: (i) one fourth (1/4) of the rate per annum set forth in the
column labeled "Unused Fee" in the definition of "Applicable Margin" that
corresponds to the Consolidated Leverage Ratio as of the end of the immediately
preceding fiscal quarter (but excluding any fiscal quarter ending on such
calculation date) multiplied by (ii) the unused Line of Credit Commitments of
all of the Lenders during the fiscal quarter ending on such calculation date, or
portion thereof, which unused Line of Credit Commitments shall be arrived at by
dividing the sum of the unused Line of Credit Commitments of the Lenders for
each day of that quarter as of the close of each day, by the number of days in
that quarter; provided that the Unused Fee will be prorated for any fiscal
quarter for which the Line of Credit Commitments were available for only a part
of such fiscal quarter. The Unused Fee shall be payable by Borrower on the
following Business Day. Upon receipt, Agent shall promptly pay each Lender its
Pro Rata Share of any such Unused Fee paid by Borrower. The unused Line of
Credit Commitments shall be defined as (x) the total of the Line of Credit
Commitments of all of the Lenders minus (y) the sum of (1) the principal amount
of all outstanding Line of Credit Loans, (2) the principal amount of all
outstanding Letter of Credit Loans, and (3) the aggregate undrawn face amount of
all outstanding Letters of Credit.
(b) Borrower shall pay to Agent for the account of the Lenders, an
origination fee, due on the date hereof, in the amount of $300,000.00 and an
origination fee, due on the first anniversary date hereof, in the amount of
$50,000.00.
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(c) Borrower shall pay to Agent, for the benefit of Lenders, an
origination fee in the amount of $300,000.00, payable contemporaneous with
Lenders making any Term Loan. In the event that Borrower does not request Term
Loans in the aggregate amount of the Term Loan Commitments, Borrower shall pay
to Agent, for the benefit of the Lenders, a termination fee in the amount of
$600,000.00, payable on the last day of the Line of Credit Period.
(d) Borrower shall pay to Agent the agreed upon fees payable to Agent,
which shall be retained by Agent for its own account.
5.3 Early Payments.
(a) Borrower may, upon notice to the Agent, which notice shall be
irrevocable, specifying that it is paying its Line of Credit Loans, pay without
penalty or premium such Line of Credit Loans in whole at any time, or from time
to time in part in amounts aggregating $50,000.00, or any larger multiple of
$10,000.00; provided, however, that in no event may Borrower make a partial
payment of Line of Credit Loans which results in the total outstanding Line of
Credit Loans being greater than zero but less than $100,000.00. Each such
optional payment shall be applied to pay the Line of Credit Loans of the several
Lenders in proportion to their respective Line of Credit Commitments.
(b) Borrower shall have the right to prepay, without premium or
penalty, the Term Loans in whole or in part from time to time on the following
terms and conditions: (i) Borrower shall give the Agent written notice, which
notice shall be irrevocable, of its intent to prepay the Term Loans, at least
thirty (30) days prior to a prepayment, which notice shall specify the amount of
such prepayment and which notice the Agent shall promptly transmit to each of
the Lenders, (ii) no prepayment is permitted until after the first principal
repayment date, (iii) no prepayment will eliminate the requirement to make
regularly scheduled payments, and (iv) each prepayment of a Term Loan shall be
in an aggregate principal amount of the amount of a regularly scheduled
principal payment or any multiple thereof.
(c) Upon receipt of a notice of payment pursuant to any of Sections
5.3(a) through (b) above, the Agent shall promptly notify each Lender of the
contents thereof and of such Lender's ratable share of such payment.
5.4 General Provisions as to Payments. Borrower shall make each payment of
principal of, and interest on, the Loans and of fees and all other amounts
payable hereunder, not later than 12:00 noon (New Orleans time) on the date when
due, in federal or other funds immediately available in New Orleans, Louisiana,
to the Agent at its address referred to in Section 11.7. The Agent will promptly
distribute to each Lender in immediately available funds its ratable share of
each such payment received by the Agent for the account of the Lenders. Whenever
any payment of principal of, or interest on, the Loans or of fees shall be due
on a day which is not a Business Day, the date for payment thereof shall be
extended to the next succeeding Business Day. If the date for any payment of
principal is extended by operation of law or otherwise, interest thereon, at the
then applicable rate, shall be payable for such extended time.
5.5 Changes in or Illegality with Respect to LIBOR Rate. In the event that
any Lender shall have determined in good faith (which determination shall,
absent manifest error, be final and conclusive and binding upon all parties
hereto):
(a) at any time, that, by reason of any changes arising after the
date of this Agreement affecting the London interbank market,
adequate and fair means do not exist for ascertaining the
applicable interest rate on the basis provided for in the
definition of LIBOR Base Rate;
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(b) at any time, that any Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with
respect to the Loans because of any change since the date of this
Agreement in any applicable law or governmental rule, regulation,
order, guideline or request or in the interpretation or
administration thereof and including the introduction of any new
law or governmental rule, regulation, order, guideline or
request, such as, for example, but not limited to: (i) a change
in the basis of taxation of payment to any Lender of the
principal or interest on the Loans accruing interest based upon
the LIBOR Base Rate (except for changes in the rate of tax on, or
determined by reference to, the net income or profits of a
Lender) or (ii) a change in official reserve requirements; or
(c) at any time, that the making or continuance of a Loan accruing
interest based upon the LIBOR Base Rate has been made (x)
unlawful by any law or governmental rule, regulation or order,
(y) impossible by compliance by any Lender in good faith with any
governmental request (whether or not having force of law) or (z)
impracticable as a result of a contingency occurring after the
date of this Agreement which materially and adversely affects the
London interbank market;
then, and in any such event, such Lender shall promptly give notice (by
telephone confirmed in writing) to Agent and Borrower. Thereafter (i) in case of
clause (a) or (c) above, Borrower agrees that interest on the Loans shall
accrue, and Borrower agrees to pay interest, at a rate per annum equal to the
Prime Rate plus .50% until such time as such Lender notifies Agent and Borrower
that the circumstances giving rise to such notice no longer exist and (ii) in
the case of clause (b) above, Borrower agrees to pay to such Lender, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as agreed
to by such Lender and Borrower) as shall be required to compensate such Lender
for such increased costs or reductions in amounts received or receivable
hereunder (a written notice as to the additional amounts owed to such Lender,
showing the basis for the calculation thereof, submitted to Borrower by such
Lender in good faith shall, absent manifest error, be final and conclusive and
binding on all the parties hereto). Such Lender agrees that if it gives notice
to Borrower and Agent of any of the events described in clause (a), (b) or (c)
above, it shall promptly notify Borrower and Agent if such event ceases to
exist.
5.6 Computation of Interest. Interest on Loans hereunder shall be computed
on the basis of a year of 360 days and paid for the actual number of days
elapsed (including the first day but excluding the last day).
5.7 Security. In order to secure payment when due of the Obligations:
(a) Security Agreement; Quebec Security Documents; Contribution
Agreement Assignment Documents. Borrower shall cause Torch Express, L.L.C. to
execute a Security Agreement substantially in the form of Exhibit G (with
appropriate insertions) (the "Security Agreement") in favor of the Agent for the
benefit of the Secured Parties, as well as the Quebec Security Documents and the
Contribution Agreement Assignment Documents. Borrower shall cause Torch Express,
L.L.C. to execute any and all financing statements, continuation statements and
such other documents as may from time to time be requested by Agent or the
Required Lenders in order to create, perfect and maintain the security interest
created by the Security Agreement and the Quebec Security Documents or the
assignment evidenced by the Contribution Agreement Assignment Documents.
(b) Preferred Ship Mortgages. Borrower shall cause Torch Offshore,
L.L.C. and Torch Express, L.L.C. to execute preferred fleet mortgage(s) and
preferred ship mortgage(s) (the "Preferred Ship Mortgages") granting Lenders
preferred mortgages on the Vessels together with all proceeds thereof and to
execute Assignments of Earnings with respect to the Vessels, together with a
UCC-1 Financing Statement filed in connection therewith.
22
(c) Continuing Guarantees. Borrower shall cause each Subsidiary, that
is not an Excluded Subsidiary, to execute and deliver to Agent a Continuing
Guarantee substantially in the form of Exhibit F (with appropriate insertions).
(d) Subsidiary Pledge Documents. Borrower shall execute and deliver,
and cause each Subsidiary, that is not an Excluded Subsidiary, to execute and
deliver, to Agent Subsidiary Pledge Documents pertaining to the outstanding
stock or other equity interest of each Subsidiary. Within fifteen (15) days of
the creation or acquisition of any Subsidiary, that is not an Excluded
Subsidiary, in each case in accordance with the terms of this Agreement,
Borrower (i) shall execute and deliver, and cause such Subsidiary to execute and
deliver, to Agent Subsidiary Pledge Documents pertaining to the outstanding
stock of or other equity interest in such Subsidiary and (ii) shall deliver to
Agent, opinions of counsel for Borrower and any such Subsidiary relating to such
Transaction Documents and such other matters as Agent or the Required Lenders
may reasonably require and satisfactory in form and substance to the Agent and
the Required Lenders together with all resolutions, certificates, information,
approvals, documents or other instruments as Agent or the Required Lenders may
reasonably request.
(e) New Subsidiaries. Within fifteen (15) days of the creation or
acquisition of any Subsidiary, that is not an Excluded Subsidiary, in each case,
in accordance with the terms of this Agreement, Borrower shall cause such
Subsidiary to execute and deliver or cause to be delivered to Agent (i) a
Continuing Guarantee substantially in the form of Exhibit F (with appropriate
insertions), and (ii) opinions of counsel for Borrower and such Subsidiary
relating to such Transaction Documents and such other matters as Agent or the
Required Lenders may reasonably require and satisfactory in form and substance
to the Agent and the Required Lenders together with all resolutions,
certificates, information, approvals, documents or other instruments as the
Agent or the Required Lenders may reasonably request. Borrower shall also cause
such Subsidiary, within such time period, to execute any and all financing
statements, continuation statements and such other documents as may from time to
time be requested by Agent or the Required Lenders in order to create, perfect
and maintain the Liens created by such Transaction Documents.
(f) Relocation of MIDNIGHT EXPRESS for Performance of ▇▇▇▇▇▇▇
Contract. At least thirty (30) days prior to removal of the MIDNIGHT EXPRESS
from the territorial limits of Canada or the United States of America, Borrower
shall cause Torch Express, L.L.C. to (i) execute such other security documents
as the Required Lenders may reasonably require to insure that the Agent, for the
benefit of the Secured Parties, maintains a lien and preferred mortgage on the
MIDNIGHT EXPRESS (and any equipment located thereon) prior to any Liens other
than Permitted Liens, and (ii) deliver to Agent opinions of counsel for Torch
Express, L.L.C. relating thereto and to such other matters as Agent or the
Required Lenders may reasonably require and satisfactory in form and substance
to the Agent and the Required Lenders together with all resolutions,
certificates, information, approvals, documents or other instruments as Agent or
the Required Lenders may reasonably request. Borrower shall also cause Torch
Express, L.L.C., within such time period, to execute any and all financing
statements, continuation statements and such other documents as may from time to
time be requested by Agent or the Required Lenders in order to create, perfect
and maintain the preferred mortgage and lien created thereby.
(g) Further Documents. Upon the request of Lenders, Borrower shall
re-execute, and shall cause each Subsidiary to re-execute, any of the
Transaction Documents, with such modifications as the Agent or the Required
Lenders shall require, or to execute such amendments thereto as the Agent or the
Required Lenders shall require, at the time of and in connection with the Term
Loans made hereunder. Further, Borrower shall execute, and shall cause each
Subsidiary to execute, any and all documents as may from time to time be
reasonably requested by Agent or the Required Lenders in order to create,
perfect and maintain the Liens created by the Transaction Documents subject only
to Permitted Liens.
23
Upon demand, Borrower shall pay to Agent or to any other party designated by
Agent all filing fees incurred by Agent in the perfection of the Liens
contemplated by the Transaction Documents.
(h) Contribution Agreement. Each Lender shall receive directly from
Her Majesty the Queen In Right of Canada its Pro Rata Share (based on the Term
Loan Commitments) of the proceeds of the Contribution Agreement, which proceeds
shall, to the extent permitted by Contribution Agreement, be used in a manner
acceptable to each Lender as a credit against interest and/or fees due under the
Loans of such Lender. Funds received by Lenders in Canadian Dollars will be
converted into Dollars at the exchange rate then in effect for the Lenders.
5.8 Guaranty of Obligations of Subsidiaries. Borrower hereby
unconditionally, irrevocably, jointly, severally and solidarily guarantees the
due and punctual payment to the Agent for the benefit of the Secured Parties
when stated to be due of all present and future obligations and liabilities of
each Subsidiary evidenced by or arising under or in connection with the Security
Agreement, Preferred Ship Mortgages and/or any other security documents executed
by such Subsidiary in favor of Agent for the benefit of the Secured Parties,
whether direct or contingent, due or to become due or now existing or hereafter
arising.
5.9 Torch Deepwater, Inc. Borrower shall not be obligated to cause Torch
Deepwater, Inc. to grant a Continuing Guaranty to Lender unless and until such
Subsidiary acquires any Property.
5.10 Form of Transaction Documents. Borrower will agree to such
modifications to the form of the Continuing Guarantees, Security Agreement,
Preferred Ship Mortgages, Subsidiary Pledge Agreements and the other Transaction
Documents that are reasonably necessary to comply with applicable law or that
Agent may otherwise reasonably require.
5.11 Deposit Accounts. As security for the Obligations, Borrower shall, and
Borrower shall cause each Subsidiary, that is not an Excluded Subsidiary, to
maintain all of its primary operating accounts with Agent.
5.12 Subordination. The security documents executed pursuant to Section
3.09 of the Existing Regions Loan Agreement shall remain in force and effect.
Regions and the other Lender(s) shall execute a Subordination Agreement (the
"Subordination Agreement") subordinating the Existing Regions Security Documents
to the Transaction Documents provided that, Regions shall have and maintain a
first Lien upon (i) all accounts receivable and inventory of Borrower and its
Subsidiaries other than any accounts receivable or inventory relating to the
MIDNIGHT EXPRESS, (ii) all charter hire, freights, leases, rents, earnings,
revenues, proceeds, money, payments, accounts, contract rights, chattel paper,
documents and general intangibles affecting any of the Vessels other than the
MIDNIGHT EXPRESS, relating to any of the Vessels other than the MIDNIGHT
EXPRESS, or arising out of or from the sale, charter, lease, use or operation of
any of the Vessels other than the MIDNIGHT EXPRESS, and (iii) all proceeds of
any of the foregoing.
5.13 Insurance Proceeds.
(a) All policies of insurance on the Collateral shall designate Agent,
for the benefit of the Secured Parties, as lender loss payee pursuant to a
mortgagee's loss payable endorsement acceptable to Lenders. Such insurance
policies shall contain an agreement by the insurer not to cancel or reduce
coverage under the policies without giving Agent at least thirty (30) days prior
written notice of its intention to do so. Agent is hereby authorized and
empowered, at its option, to collect and receive the proceeds from any policy or
policies of insurance, and each insurance company is hereby authorized and
directed to make payment of all such losses directly to Agent instead of to
Borrower or any Subsidiary
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and Lenders jointly; provided that, so long as no Default or Event of Default
shall have occurred and be continuing, payments in respect to any hull losses
for a Vessel under $100,000.00 may be paid directly to Borrower or a Subsidiary.
(b) In the event that there is damage to a Vessel that does not
constitute a total loss or a constructive total loss of such Vessel, as
reasonably determined by the hull underwriter, which is covered by insurance, so
long as no Default or Event of Default shall have occurred and be continuing,
then, except as provided in Subsection 5.13(a) or 5.13(c), the proceeds of the
insurance shall be deposited into a cash collateral account at Agent and such
proceeds will be applied to the payment of the cost of restoration of the such
Vessel upon such terms and conditions as the Required Lenders may deem necessary
or appropriate in their reasonable discretion; provided, however, that (x) such
insurance proceeds must be adequate to cover the cost of restoration of such
Vessel, or if the proceeds are insufficient, then Borrower shall give the
Lenders such adequate protection and assurance as the Required Lenders may, in
their reasonable discretion, require that additional funds will be provided by
Borrower in order to complete the restoration of the Vessel, (y) Borrower shall
have provided Lenders with such adequate protection and assurance as the
Required Lenders may, in their reasonable discretion, require that Borrower has
sufficient funds on hand to pay all scheduled principal and interest payments on
the Loans during the restoration period, and (z) the Lenders' first priority
Lien on such Vessel is not impaired. In connection with any restoration of a
Vessel, Borrower shall provide Agent with a detailed cost breakdown showing by
line item all costs projected for such restoration and a revised and updated
cost breakdown shall be furnished by Borrower to Agent on a monthly basis.
(c) In the event of an actual, constructive, agreed, compromised or
arranged total loss or of any requisition of a Vessel, or if there is a partial
loss to a Vessel and Borrower decides not to restore such Vessel, or if not all
of the conditions set forth in subclause (x) through (z) of Subsection 5.13(b)
above are satisfied, then the proceeds of any insurance policy covering such
Vessel shall be applied first to the payment of the Loans and then to the
payment of the other Obligations, with any remaining funds to be remitted to
Borrower.
SECTION 6. PRECONDITIONS TO LOANS AND LETTERS OF CREDIT.
6.1 Initial Line of Credit Loan or Initial Letter of Credit.
Notwithstanding any provision contained herein to the contrary, none of the
Lenders shall have any obligation to make the initial Line of Credit Loan
hereunder and Regions shall have no obligation to issue a Letter of Credit
hereunder unless each of the following requirements is satisfied and Lender has
received each of the following documents:
(a) This Agreement, the Line of Credit Notes, the Security Agreement,
the Subsidiary Pledge Documents, the Preferred Ship Mortgages, the Continuing
Guarantee of each Subsidiary, that is not an Excluded Subsidiary, and the other
Transaction Documents required by Section 5.7, each duly authorized and
executed;
(b) A copy of resolutions of the Board of Directors of Borrower, duly
adopted, which authorize the execution, delivery and performance of the
Transaction Documents executed by Borrower and each Subsidiary, certified by the
Secretary or an Assistant Secretary of Borrower;
(c) A copy of the unanimous consent of the sole member of each
Subsidiary, which authorizes the execution, delivery and performance of the
Transaction Documents executed by such Subsidiary;
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(d) An incumbency certificate, executed by the Secretary or an
Assistant Secretary of Borrower, which shall identify by name and title and bear
the signatures of all of the officers of Borrower executing any of the
Transaction Documents delivered at or prior to the closing;
(e) Opinions of counsel for Borrower and the Subsidiaries satisfactory
to Agent relating to the Transaction Documents and such other matters as the
Lenders may reasonably require;
(f) Payment of Agent's reasonable costs and expenses as provided for
in Section 11.3 and payment to Agent for the ratable benefit of the Lenders of
the fees required under Section 5.2(b);
(g) Lenders have received (i) with respect to any advance made to make
a payment due under the Conversion Contracts, (x) a certificate from Lenders'
Inspector, in form and substance satisfactory to Lenders, that, as of such date,
all work under a Conversion Contract that necessitates the payment by Borrower
under such Conversion Contract has been satisfactorily performed in accordance
with such Conversion Contract and (y) a copy of each certificate or invoice
provided to Borrower in connection with any payment due under a Conversion
Contract, and (ii) with respect to any owner furnished equipment, a copy of the
contract or invoice relating thereto;
(h) Project Expense Schedule;
(i) Marine surveys acceptable to the Required Lenders by surveyors
selected by the Required Lenders reflecting that the fair market value of the
Vessels is at least $120,000,000.00 (with the survey of the MIDNIGHT EXPRESS to
be based on its as renovated condition);
(j) Marine survey acceptable to the Required Lenders by a surveyor
selected by the Required Lenders reflecting that the fair market value of the
MIDNIGHT EXPRESS after completion of the Project will be at least
$86,000,000.00;
(k) Final Plans and Specifications for Project;
(l) Evidence that appropriate insurance for the Vessels is in force;
(m) Tri-party agreement among Davie, Torch Express, L.L.C. and Agent
relating to the Davie Contract;
(n) Evidence that Borrower has furnished $30,000,000.00 toward the
Project with Borrower to be given credit for cash paid for the MIDNIGHT EXPRESS
and all other Project Costs reasonably acceptable to the Required Lenders;
(o) The Performance Bond;
(p) Opinion of counsel satisfactory to the Required Lenders as to
issues relating to the pending bankruptcy case of Davie;
(q) Opinion of Borrower's counsel or counsel satisfactory to the
Required Lenders that the Performance Bond and the Quebec Security Documents are
binding and enforceable in accordance with their respective terms and no further
consents, authorizations or approvals are necessary in connection therewith and
such other opinions relating thereto as the Required Lenders may reasonably
require;
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(r) Copy of court order under Article 45 of the Quebec labour code
regarding the continuance of employment arrangements at the Shipyard;
(s) Evidence that the CAD 20,000,000.00 line of credit in favor of
Davie is in effect, as required by the Davie Contract;
(t) Tri-party agreement among The Groupe ▇▇▇▇▇▇▇▇ Van Houtte & Ass.
Ltd., as Trustee, Torch Express, L.L.C. and Agent relating to the Acknowledgment
Agreement and the Trustee Agreement;
(u) All information, approvals, opinions, documents or other
instruments as the Required Lenders may reasonably request.
(v) On the date of and immediately after giving effect to such Line of
Credit Loan or Letter of Credit, no Default or Event of Default shall have
occurred and be continuing;
(w) No material adverse change in the Properties, assets, liabilities,
business, operations, prospects, income or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole shall have occurred since the
Effective Date and be continuing; and
(x) Except for subsequent changes consented to in writing by the
Required Lenders after the Effective Date, or as permitted pursuant to this
Agreement or the other Transaction Documents, all of the representations and
warranties of Borrower contained in Section 7 of this Agreement and of Borrower
and its Subsidiaries contained in the other Transaction Documents shall be true
and correct in all material respects on and as of the date of such Line of
Credit Loan or Letter of Credit, as the case may be, as if made on and as of the
date of such Line of Credit Loan or Letter of Credit (except to the extent that
such representations and warranties expressly relate solely to an earlier date
(in which case such representations and warranties shall have been true and
correct on and as of such earlier date)).
A request for a Line of Credit Loan or for the issuance of a Letter of
Credit by Borrower hereunder shall be deemed to be a representation and warranty
by Borrower on the date of such Line of Credit Loan or Letter of Credit, as the
case may be, as to the facts specified in clauses (v), (w) and (x) of this
Section 6.1.
All documents described above must be in form and substance and upon terms
and conditions satisfactory to the Required Lenders in their reasonable
discretion.
6.2 All Line of Credit Loans. Notwithstanding any provision contained
herein to the contrary, none of the Lenders shall have any obligation to make
any further Line of Credit Loan hereunder, unless each of the following
requirements is satisfied:
(a) Lenders have received (i) with respect to any advance made to make
a payment due under the Conversion Contracts, (x) a certificate from Lenders'
Inspector, in form and substance satisfactory to Lenders, that, as of such date,
all work under a Conversion Contract that necessitates the payment by Borrower
under such Conversion Contract has been satisfactorily performed in accordance
with such Conversion Contract and (y) a copy of each certificate or invoice
provided by to Borrower in connection with any payment due under a Conversion
Contract, and (ii) with respect to any owner furnished equipment, a copy of the
contract or invoice relating thereto;
(b) With respect to any new Line of Credit Loan, the Agent shall have
received a Borrowing Notice for such Line of Credit Loan as required by Section
2.3;
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(c) On the date of and immediately after giving effect to such Line of
Credit Loan, no Default or Event of Default shall have occurred and be
continuing;
(d) No material adverse change in the Properties, assets, liabilities,
business, operations, prospects, income or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole shall have occurred since the
Effective Date and be continuing; and
(e) Except for subsequent changes consented to in writing by the
Required Lenders after the Effective Date, or as permitted pursuant to this
Agreement or the other Transaction Documents, all of the representations and
warranties of Borrower contained in Section 7 of this Agreement and of Borrower
and its Subsidiaries contained in the other Transaction Documents shall be true
and correct in all material respects on and as of the date of such Line of
Credit Loan as if made on and as of the date of such Line of Credit Loan (except
to the extent that such representations and warranties expressly relate solely
to an earlier date (in which case such representations and warranties shall have
been true and correct on and as of such earlier date)).
Each request for a Line of Credit Loan by Borrower hereunder shall be
deemed to be a representation and warranty by Borrower on the date of such Line
of Credit Loan as to the facts specified in clauses (c), (d) and (e) of this
Section 6.2.
6.3 Letters of Credit. Notwithstanding any provision contained herein to
the contrary, Regions shall have no obligation to issue any Letter of Credit
hereunder unless each of the following requirements is satisfied:
(a) Regions shall have received a Letter of Credit Request for such
Letter of Credit as required by Section 4.1(a);
(b) Regions shall have received a Letter of Credit Application for
such Letter of Credit as required by Section 4.1(a), duly executed by an
authorized officer of Borrower and of Torch Express, L.L.C. (if such Letter of
Credit is for the account of Borrower and Torch Express, L.L.C.) as account
party;
(c) Borrower shall have complied with all of the procedures and
requirements set forth in Section 4.1;
(d) On the date of and immediately after the issuance of such Letter
of Credit, no Default or Event of Default shall have occurred and be continuing;
(e) No material adverse change in the Properties, assets, liabilities,
business, operations, prospects, income or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole shall have occurred since the
Effective Date and be continuing;
(f) Except for subsequent changes consented to in writing by the
Required Lenders after the Effective Date, or as permitted pursuant to this
Agreement or the other Transaction Documents, all of the representations and
warranties of Borrower contained in Section 7 of this Agreement and of Borrower
and its Subsidiaries contained in the other Transaction Documents shall be true
and correct in all material respects on and as of the date of the issuance of
such Letter of Credit as if made on and as of the date of the issuance of such
Letter of Credit (except to the extent that such representations and warranties
expressly relate solely to an earlier date (in which case such representations
and warranties shall have been true and correct on and as of such earlier
date)); and
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(g) Regions shall have received such other documents, certificates and
agreements as it may reasonably request.
Each request for the issuance of a Letter of Credit by Borrower hereunder
shall be deemed to be a representation and warranty by Borrower on the date of
the issuance of such Letter of Credit as to the facts specified in clauses (d),
(e) and (f) of this Section 6.3.
6.4 Term Loans. Notwithstanding any provision contained herein to the
contrary, none of the Lenders shall not have any obligation to make any Term
Loan hereunder unless each of the following requirements are satisfied and
Lenders have received each of the following documents:
(a) The Term Loan Notice from Borrower;
(b) Certificate from Lender's Inspector, in form and substance
satisfactory to Lenders, certifying to Lenders, that (i) Project has been
completed and the MIDNIGHT EXPRESS is fully functional including installation of
all major equipment, (ii) the appropriate Lloyd's Register certification has
been obtained for the MIDNIGHT EXPRESS, and (iii) the appropriate SOLAS
certification has been obtained for the MIDNIGHT EXPRESS;
(c) Certificates from each Shipyard certifying that it has received
full and final payment under its Conversion Contract, that all subcontractors,
labourers, and suppliers have been fully paid, that the MIDNIGHT EXPRESS has
been delivered free of Liens and such other matters as Lenders may reasonably
require;
(d) Marine surveys acceptable to the Required Lenders by surveyor(s)
selected by the Required Lenders reflecting that the ratio of the aggregate
principal amount of the Term Loans requested by Borrower as set forth in the
Term Loan Notice to the fair market value of the Vessels is no more than 50%;
(e) Marine survey by a surveyor selected by the Required Lenders
reflecting that the ratio of the aggregate principal amount of the Term Loans
requested by Borrower as set forth in the Term Loan Notice to the fair market
value of the MIDNIGHT EXPRESS after completion of the Project is no more than
70%;
(f) No Letters of Credit or Letter of Credit Loans are outstanding;
(g) Evidence that appropriate insurance is in place;
(h) Opinions of counsel for Borrower and the Subsidiaries satisfactory
to Agent relating to the Transaction Documents and such other matters as the
Lenders may reasonably require;
(i) All information, approvals, opinions, documents or other
instruments as the Lenders may reasonably request;
(j) On the date of and immediately after giving effect to the Term
Loans, no Default or Event of Default shall have occurred and be continuing;
(k) No material adverse change in the Properties, assets, liabilities,
business, operations, prospects, income or condition (financial or otherwise) of
Borrower and its Subsidiaries taken as a whole shall have occurred since the
Effective Date and be continuing; and
29
(l) Except for subsequent changes consented to in writing by the
Required Lenders after the Effective Date, or as permitted pursuant to this
Agreement or the other Transaction Documents, all of the representations and
warranties of Borrower contained in Section 7 of this Agreement and of Borrower
and its Subsidiaries contained in the other Transaction Documents shall be true
and correct in all material respects on and as of the date of the Term Loans as
if made on and as of the date of the Term Loans (except to the extent that such
representations and warranties expressly relate solely to an earlier date (in
which case such representations and warranties shall have been true and correct
on and as of such earlier date)).
The request for the Term Loans hereunder shall be deemed to be a
representation and warranty by Borrower on the date of the Term Loans as to the
facts specified in clauses (j), (k) and (l) of this Section 6.4.
All documents described above must be in form and substance and upon terms
and conditions satisfactory to the Required Lenders in their reasonable
discretion.
SECTION 7. REPRESENTATIONS AND WARRANTIES.
Borrower hereby represents and warrants to each of the Lenders that:
7.1 Existence and Power. Borrower and each Subsidiary, that is not an
Excluded Subsidiary,: (i) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization; (ii) has all
requisite powers and all governmental and regulatory licenses, authorizations,
consents and approvals required to carry on its business as now conducted; and
(iii) is qualified to transact business as a foreign entity in, and is in good
standing under the laws of, all states in which it is required by applicable law
to maintain such qualification and good standing except for those states in
which the failure to qualify or maintain good standing could not reasonably be
expected to have a Material Adverse Effect.
7.2 Authorization. The execution, delivery and performance by Borrower of
this Agreement and the other Transaction Documents are within the powers of
Borrower and have been duly authorized by all necessary action. The execution,
delivery and performance by each Subsidiary of any Continuing Guarantee and any
other Transaction Documents executed by such Subsidiary are within the powers of
such Subsidiary and have been duly authorized by all necessary action.
7.3 Governmental Approvals. No consent or approval of any governmental
agency or authority is required in connection with the execution, delivery and
performance by Borrower and the Subsidiaries of the Transaction Documents.
7.4 Binding Effect. All Transaction Documents are legal, valid and binding
obligations of Borrower and each Subsidiary, as applicable, enforceable
according to their terms and conditions, and all statements made in this
Agreement are true and correct as of the date hereof in all material respects,
except as such enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting creditors' rights generally and by general principles of
equity (regardless of whether such enforceability is considered in a proceeding
in equity or at law) and the Letter of Credit Application(s) and any future
Transaction Documents not executed contemporaneously with the execution of this
Agreement, when executed and delivered in accordance with this Agreement, will
constitute the legal, valid and binding obligations of Borrower and each
Subsidiary, as applicable, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency or
other similar laws affecting creditors' rights generally and by general
principles of equity (regardless of whether such
30
enforceability is considered in a proceeding in equity or at law). Each of the
Shipbuilding Contracts is a binding agreement of each Obligor that is a party
thereto and, to the best of the Borrower's knowledge, a binding agreement of
each other Person who is a party thereto, in each case enforceable in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency or other similar laws affecting creditors' rights generally and by
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
7.5 ERISA. To the extent applicable, Borrower and each Subsidiary has
fulfilled its obligations under the minimum funding standards of ERISA and the
Code with respect to each plan and is in compliance in all material respects
with the presently applicable provisions of ERISA and the Code, and has not
incurred any liability to the Pension Benefit Guaranty Corporation or to a plan
under Title IV of ERISA which the failure to comply with could have a Material
Adverse Effect.
7.6 No Defaults. Neither Borrower nor any Subsidiary is in default in the
performance, observance or fulfillment of (i) any of the obligations, covenants
or conditions contained in any indenture, agreement or other instrument to which
it is a party, and which could have a Material Adverse Effect or (ii) any
judgment, order, writ, injunction, decree or decision of any government agency
or authority, and which could have a Material Adverse Effect. To the knowledge
of Borrower, no event has occurred and is continuing which would constitute a
breach of any of the Shipbuilding Contracts which Borrower or any Subsidiary is
a party to, or a breach of the Performance Bond or a default thereunder which,
in either case, has had or is reasonably likely to have a Material Adverse
Effect.
7.7 Liabilities, Litigation. Neither Borrower nor any Subsidiary has any
material (individually or in the aggregate) liabilities, direct or contingent,
except as disclosed or referred to in the most recent balance sheet of Borrower
delivered to the Lenders and, except as described in the most recent balance
sheet of Borrower delivered to the Lenders or in the most recent quarterly 10Q
or annual 10K filing of Borrower with the Securities and Exchange Commission,
there is no material (individually or in the aggregate) litigation, legal or
administrative proceeding, investigation or other action of any nature pending
or, to the knowledge of Borrower, threatened against or affecting Borrower or
any Subsidiary.
7.8 Tax Payment. Borrower and each Subsidiary has filed all tax returns and
reports required to be filed, which the failure to file could have a Material
Adverse Effect, and has paid all taxes, assessments, fees and other governmental
charges levied upon Borrower or any Subsidiary or upon any property owned by
Borrower or any Subsidiary or upon any income of Borrower or any Subsidiary,
which are due and payable, including interest and penalties, which the failure
to pay could have a Material Adverse Effect, or has provided adequate reserves
for the payment thereof.
7.9 Title to Property. Borrower and each Subsidiary is the sole and
absolute owner of, or has the legal right to use and occupy, all Property it
claims to own or which is necessary for Borrower or such Subsidiary to conduct
its material businesses free and clear of all Liens other than Permitted Liens.
Borrower and each Subsidiary enjoys peaceful and undisturbed possession in all
material respects under all leases under which its is operating as lessee which
is necessary for Borrower or such Subsidiary to conduct its material businesses
free and clear of all Liens other than Permitted Liens.
7.10 Compliance With Laws. Borrower and each Subsidiary has complied in all
material respects with all valid laws, statutes, codes, acts, ordinances,
orders, judgments, decrees, injunctions, rules, regulations, certificates,
franchises, permits, licenses, authorizations, directions and requirements of
all federal, state, county, municipal and other governments, agencies,
departments, divisions, commissions, boards, courts, authorities, officials and
officers, domestic or foreign, including, without limitation, (i) all laws
regarding the collection, payment, and deposit of employees' income,
31
unemployment, social security, sales, and excise taxes, (ii) all requirements of
ERISA, (iii) all Environmental Laws and (iv) all laws pertaining to occupational
safety and health.
7.11 Other Instruments; None Burdensome. Neither Borrower nor any
Subsidiary is a party to any indenture, agreement or other instrument affecting
its business, properties or assets, operation or condition, whether financial or
otherwise, which could have a Material Adverse Effect.
7.12 Investments. Except as may be permitted by Section 8.2(g) neither
Borrower nor any Subsidiary has any Restricted Investments.
7.13 Subsidiaries. There are no Subsidiaries other than as specifically set
forth in Schedule 7.13. As of the Effective Date, the stock or other equity
interest of each Subsidiary is owned solely by Borrower and/or any one or more
Subsidiaries. Borrower may at any time amend, modify or supplement Schedule 7.13
by notifying Agent in writing of any changes thereto, including any formation,
acquisition, merger or liquidation of Subsidiaries or any change in the
capitalization of any Subsidiary, in each case, in accordance with the terms of
this Agreement and provided that any such new Subsidiary shall, within fifteen
(15) days of the creation or acquisition of such Subsidiary, execute and deliver
to Agent all documents required by Section 5.7.
7.14 Shipbuilding Contracts; Plans and Specifications. The Plans and
Specifications are in final form and are satisfactory to Borrower, the Shipyards
and all applicable certifying authorities. The Project Expense Schedule contains
a true and accurate estimate of the cost to complete the Project. Copies of each
of the Shipbuilding Contracts have been delivered to the Agent and are in full
force and are unamended except as may be permitted hereby and except for the
first, second and third amendments to the Davie Contract. All of the
representations and warranties of Borrower and Torch Express, L.L.C. under the
Shipbuilding Contracts and the Contribution Agreement are true and correct in
all material respects.
7.15 Net Worth of Torch Offshore, L.L.C. As of December 31, 2002, Torch
Offshore, L.L.C. had a net worth of approximately $79,867,000.00 and its net
worth has not materially declined since that date.
SECTION 8. COVENANTS.
8.1 Affirmative Covenants of Borrower. Borrower covenants and agrees that,
so long as (i) any of the Lenders has any obligation to make any Loan hereunder
or to issue any Letter of Credit hereunder, (ii) any Letter of Credit remains
outstanding or (iii) any of the Obligations remain unpaid:
(a) Information. Borrower will deliver to Agent:
(i) within 45 days after the close of each quarter of Borrower's
fiscal year, consolidated financial statements of Borrower
and its Subsidiaries consisting of a balance sheet as of the
end of such fiscal quarter, a statement of earnings and
surplus for such fiscal quarter, and a statement of cash
flow for such fiscal quarter certified by the Borrower's
Chief Financial Officer;
(ii) within 120 days after the close of Borrower's fiscal year, a
copy of annual consolidated financial statements of Borrower
and its Subsidiaries, including a balance sheet as of the
end of each such fiscal year, a statement of earnings and
surplus for such fiscal year, and a
32
statement of cash flow for such fiscal year, which
statements shall be audited by an independent certified
public accounting firm acceptable to the Required Lenders;
(iii)simultaneously with the delivery of each set of financial
statements of Borrower referred to above, a certificate of
the Borrower's Chief Financial Officer substantially in the
form of Exhibit E (with appropriate insertions), accompanied
by supporting financial work sheets where appropriate, (A)
evidencing Borrower's compliance with the financial
covenants contained in Sections 8.1(k) of this Agreement as
calculated on a consolidated basis for Borrower and its
Subsidiaries (and including, without limitation, a
computation of the Consolidated Leverage Ratio as of the end
of the immediately preceding fiscal quarter), (B) stating
whether there exists on the date of such certificate any
Default, and if a Default then exists, setting forth the
details thereof and the action which Borrower is taking or
proposes to take with respect thereto;
(iv) within thirty (30) days of filing, furnish Lenders with
copies of the state and federal tax returns filed by
Borrower, with all schedules and supporting documentation;
(v) promptly upon, and in any event within three business days
of, becoming aware of the occurrence of any event which
constitutes a Default, notice of such occurrence together
with a detailed statement by a responsible officer of
Borrower of the steps being taken by Borrower to cure the
effect of such event; and
(vi) with reasonable promptness, such further information
regarding the business, affairs and financial condition of
Borrower or any Subsidiary as the Required Lenders may from
time to time reasonably request.
(b) Compliance with Laws. Borrower will observe and comply, and cause
each of its Subsidiaries to observe and comply, with all valid laws, statutes,
codes, acts, ordinances, orders, judgments, decrees, injunctions, rules,
regulations, certificates, franchises, permits, licenses, authorizations,
directions and requirements of all federal, state, county, municipal and other
governments, agencies, departments, divisions, commissions, boards, courts,
authorities, officials and officers, domestic or foreign, including, without
limitation, (i) all laws regarding the collection, payment, and deposit of
employees' income, unemployment, social security, sales, and excise taxes, (ii)
all applicable requirements of ERISA, (iii) all applicable Environmental Laws
and (iv) all laws pertaining to occupational safety and health, which the
failure to comply with could have Material Adverse Effect.
(c) Payment of Indebtedness. Borrower will, and it will cause each of
its Subsidiaries to, pay and discharge any and all Material Indebtedness payable
by Borrower or a Subsidiary, as the case may be, and any interest or premium
thereon, when due in accordance with the agreement, document or instrument
relating to such Indebtedness, provided, however, that neither Borrower nor any
Subsidiary shall be required to pay any such Indebtedness (excluding the
Obligations) which is being contested in good faith and by appropriate
proceedings being diligently conducted and for which adequate provision in
accordance with GAAP has been made, except that Borrower or such Subsidiary, as
the case may be, shall pay or cause to be paid any such Indebtedness forthwith
upon the commencement of proceedings to foreclose any Lien which is attached as
security therefor, unless such foreclosure is stayed by the filing of an
appropriate bond. For purposes of this Section 8.1(c), "Material Indebtedness"
shall mean
33
Indebtedness of the nature described in subparagraphs (i), (ii), (iii), (iv),
(v), (vii), or (viii) of the definition of "Indebtedness" which exceeds
$10,000.00 in the aggregate.
(d) Payment of Taxes. Borrower will, and will cause each of its
Subsidiaries to, pay and discharge all taxes, assessments and governmental
charges or levies imposed upon it, or upon its income and profits, prior to the
date on which penalties might attach thereto and all lawful claims which, if
unpaid, might become a Lien upon the assets of Borrower or any Subsidiary and
which the failure to pay or discharge could have a Material Adverse Effect;
provided, however, that neither Borrower nor any Subsidiary shall be required to
pay and discharge any such tax, assessment, charge, levy or claim so long as the
legality thereof shall be contested in good faith and by appropriate proceedings
and for which adequate provision in accordance with GAAP has been made, except
that Borrower or such Subsidiary, as the case may be, shall pay or cause to be
paid all such taxes, assessments and governmental charges forthwith upon the
commencement of proceedings to sell, seize or collect any Property attached as
security therefor, unless such sale, seizure or collection is stayed by the
filing of an appropriate bond.
(e) Payment of Claims. Borrower will, and it will cause each of its
Subsidiaries to, promptly pay and discharge (i) all trade accounts payable in
accordance with usual and customary business practices and (ii) all claims for
work, labor or materials which if unpaid might become a Lien upon any of its
Property or assets, which the failure to pay or discharge could have a Material
Adverse Effect; provided, however, that neither Borrower nor any Subsidiary
shall be required to pay any such account payable or claim the payment of which
is being contested in good faith and by appropriate proceedings and for which
adequate provision as determined in accordance with GAAP has been made, except
that Borrower or such Subsidiary, as the case may be, shall pay or cause to be
paid all such accounts payable and claims forthwith upon the commencement of
proceedings to foreclose any Lien which is attached as security therefor, unless
such foreclosure is stayed by the filing of an appropriate bond.
(f) Insurance. Borrower shall maintain, and shall cause each of its
Subsidiaries to maintain, with financially sound and reputable insurance
companies, insurance on all its Property in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business. All such insurance may be
subject to reasonable deductible amounts. Borrower shall deliver to Agent
certificate(s) of insurance on the date hereof and upon the annual renewal of
such policies specifying the details of all insurance then in effect; together
with a certificate of an officer of Borrower that all premiums then due have
been paid. Borrower shall notify Agent immediately in writing of any material
fire or other casualty to or accident involving any of the Collateral, whether
or not such fire, casualty or accident is covered by insurance. Borrower shall
notify, and shall cause each of its Subsidiaries to notify, promptly the
insurance company and to submit an appropriate claim and proof of claim to the
insurance company if any Collateral is damaged or destroyed by fire or other
casualty. Borrower shall not, and shall not allow any Subsidiary to, declare or
agree with underwriters that any Collateral is a constructive or compromised,
agreed or arranged constructive total loss without the prior written consent of
the Required Lenders.
(g) Maintenance of Property. Borrower will, and will cause each of its
Subsidiaries to, at all times, maintain, protect and keep in good repair,
working order and condition (ordinary wear and tear excepted), all Property
necessary to the operation of Borrower and its Subsidiaries' material
businesses.
(h) Maintenance of Intellectual Property. Borrower will, and will
cause each of its Subsidiaries to, obtain or maintain in full force and effect,
all licenses, franchises, intellectual property, permits, authorizations and
other rights as are necessary for the conduct of its business and the failure of
which to obtain or maintain could have a Material Adverse Effect.
34
(i) Corporate Existence. Borrower will, and it will cause each of its
Subsidiaries to, do all things necessary to (i) preserve and keep in full force
and effect at all times its corporate or other existence and (ii) be duly
qualified to do business in all jurisdictions where the nature of its business
or its ownership of Property requires such qualification except for those
jurisdictions in which the failure to qualify could not reasonably be expected
to have a Material Adverse Effect.
(j) Notice of Claim. Borrower will, and will cause each of its
Subsidiaries to, promptly, and in any event within three business days, notify
Lenders of (i) the arising of any litigation or dispute, threatened against or
affecting assets of Borrower or any Subsidiary, which, if adversely determined,
could have a Material Adverse Effect, (ii) any notice of default received or
sent pertaining to any Shipbuilding Contract to which it is a party or of which
it is aware, the Contribution Agreement or the Performance Bond or (iii) any
default under any contract to which Borrower or any Subsidiary is a party which
could have a Material Adverse Effect.
(k) Financial Covenants.
(i) Borrower will have and maintain, as of the end of each
fiscal quarter, a Consolidated Current Ratio of at least
1.30.
(ii) Borrower will have and maintain, as of the end of each
fiscal quarter, a Consolidated Debt Service Coverage Ratio
of at least 1.20.
(iii) Borrower will have and maintain, as of the end of each
fiscal quarter, a Consolidated Leverage Ratio of no more
than 2.00.
(iv) Borrower will have and maintain, as of the end of each
fiscal quarter, Consolidated Adjusted Tangible Net Worth of
at least $60,000,000.00.
(l) Maintenance of Books and Records, Consultations and Inspections.
Borrower will, and it will cause each of its Subsidiaries to, maintain books and
records in accordance with GAAP and in which full, true and correct entries
shall be made of all dealings and transactions in relation to its business and
activities. Borrower will, and it will cause each of its Subsidiaries to, permit
Lenders (and any Person appointed by the Required Lenders to whom Borrower does
not reasonably object) to discuss the affairs, finances and accounts of Borrower
and each Subsidiary with the officers of Borrower and each Subsidiary and their
independent public accountants, all at such reasonable times and as often as the
Required Lenders may from time to time reasonably request. Borrower will also
permit, and will cause each Subsidiary to permit, inspection of its Property,
books and records by Lenders (and any Person appointed by the Required Lenders
to whom Borrower does not reasonably object) during normal business hours and at
other reasonable times.
(m) Further Assurances. Borrower will, and it will cause each of its
Subsidiaries to, execute and deliver to Lenders, at any time and from time to
time, any and all further agreements, documents and instruments, and take any
and all further actions which may be required under applicable law, or which
Lenders may from time to time reasonably request, in order to effectuate the
transactions contemplated by this Agreement and the other Transaction Documents.
(n) Agreements. Neither Borrower nor any Subsidiary will default under
any indenture, contract, agreement, lease or other instrument to which Borrower
or any Subsidiary is a party or by which Borrower, any Subsidiary or any
Property of Borrower or any Subsidiary is bound or affected, a default under
which could reasonably be expected to have a Material Adverse Effect. Without
limitation to the
35
foregoing, Borrower shall cause Torch Express, L.L.C. to perform all of its
duties and obligations under, comply with all the terms of, and enforce its
rights under, the Contribution Agreement and the Shipbuilding Contracts to which
it is a party, in all material respects.
(o) Location of Chief Executive Office and Collateral. Neither
Borrower nor any Subsidiary, that is not an Excluded Subsidiary, will change its
principal place of business or chief executive office from the State of
Louisiana, unless Borrower or such Subsidiary, as applicable, has obtained
Agent's prior written consent and has taken such action as is necessary to cause
the security interest of Secured Parties in the Collateral to continue to be a
first priority perfected security interest subject only to Permitted Liens,
which consent shall not be unreasonably conditioned, delayed or withheld.
(p) Accountant. Borrower shall give each of the Lenders prompt notice
of any change of Borrower's independent certified public accountants. Borrower
shall at all times utilize independent certified public accountants of
nationally recognized standing reasonably acceptable to the Required Lenders.
(q) Access to Other Credit. Borrower shall maintain the Receivables
Line of Credit provided for in the Existing Regions Loan Agreement or other
credit available for working capital in the amount of $10,000,000.00.
(r) Prosecution of Project. Borrower will cause the Project to be
prosecuted with diligence and continuity, and the Project will be completed in a
good and workmanlike manner in accordance with the Plans and Specifications on
or before the expiration of the Line of Credit Period.
(s) Inspections of Project. Borrower shall, and shall cause each of
its Subsidiaries to, permit or cause the Lenders' Inspector and Lenders and its
representatives to be permitted to enter upon the Project, inspect the MIDNIGHT
EXPRESS and the conversion thereof, and all materials, fixtures and articles
used or to be used in the conversion thereof, and to examine all detailed plans
and drawings which relate to the Project, and Borrower shall cooperate with, and
cause its Subsidiaries and the Shipyards to cooperate with, the Lender's
Inspector, Lenders and their representatives, to enable them to inspect and
evaluate the Project.
(t) Cure of Deficiency. If at any time during the term of this
Agreement and prior to the completion of the Project there is a Deficiency in
excess of $100,000.00, then, in such event, upon demand by Agent to Borrower,
Borrower shall deposit into a cash collateral account at Agent an amount equal
to the amount of such Deficiency.
(u) Correction of Defects. Borrower shall, upon demand in writing by
the Required Lenders, correct or cause to be corrected any material defect in
the MIDNIGHT EXPRESS or any departure from the Plans and Specifications.
Additionally, Borrower shall promptly correct any nonconforming work under the
Plans and Specifications as required by Lloyd's Register or SOLAS. Borrower
shall cause to be corrected, within a reasonable time of discovery thereof, the
failure of any materials, fixtures, or articles used in the conversion of the
MIDNIGHT EXPRESS and the appurtenances thereto, or to be used in the operation
thereof, to meet the specifications and requirements of, or to comply with, the
Plans and Specifications or the requirements of Lloyd's Register or SOLAS.
(v) Performance of Contracts. Borrower shall, and shall cause each of
its Subsidiaries to, cause to be observed and performed all of its material
rights and obligations under the Conversion Contracts, the Performance Bond and
the other Shipbuilding Contracts and shall promptly notify Agent of receipt of
any proposed amendment or modification thereto or a notice of default
thereunder.
36
(w) Tri-Party Agreement. Within fourty-five (45) days after the date
hereof, Borrower shall cause to be delivered to Agent in form and substance and
upon terms and conditions satisfactory to the Required Lenders: (i) a tri-party
agreement among ▇▇▇▇▇▇▇, Torch Express, L.L.C. and Agent relating to the ▇▇▇▇▇▇▇
Contract, to be executed and delivered to Agent, (ii) opinion of Borrower's
counsel or counsel satisfactory to the Required Lenders that the ▇▇▇▇▇▇▇
Contract and such tri-party agreement are binding and enforceable in accordance
with their respective terms and no further consents, authorizations or approvals
are necessary in connection therewith and such other opinions relating thereto
as the Required Lenders may reasonably require.
8.2 Negative Covenants of Borrower. Borrower covenants and agrees that, so
long as (i) any of the Lenders has any obligation to make any Loan hereunder or
to issue any Letter of Credit hereunder, (ii) any Letter of Credit remains
outstanding or (iii) any of the Obligations remain unpaid, unless the prior
written consent of the Required Lenders is obtained:
(a) Limitation on Indebtedness. Borrower will not, and it will not
cause or permit any of its Subsidiaries to, incur or be obligated on any
Indebtedness other than: (i) the Obligations to the Agent and the Lenders; (ii)
Indebtedness relating to employee benefit plans; (iii) Indebtedness described in
clause (a) or (b) of the defined term Restricted Investment; (iv) Indebtedness
in respect of taxes, assessments, governmental charges or levies and claims for
labor, materials and supplies to the extent that payment therefor shall not at
the time be required to be made in accordance with the provisions of Section
8.1(d) or Section 8.1(e); (v) Indebtedness in respect of judgments or awards
that have been in force for less than the applicable period for taking an appeal
and for which adequate provision as determined in accordance with GAAP has been
made so long as execution is not levied thereunder and in respect of which
Borrower or any Subsidiary shall at the time in good faith be prosecuting an
appeal or proceedings for review and a suspensive appeal bond in the full amount
of such judgment or award shall have been obtained by Borrower or such
Subsidiary with respect thereto; (vi) current liabilities of Borrower or any
Subsidiary incurred in the ordinary course of business not incurred through (A)
the borrowing of money, or (B) the obtaining of credit except for credit on an
open account basis customarily extended and in fact extended in connection with
normal purchases of goods and services; (vii) endorsements for collection,
deposits or negotiation and warranties of products or services, in each case
incurred in the ordinary course of business; (viii) Indebtedness in respect of
performance, surety or appeal bonds obtained in the ordinary course of
Borrower's or any Subsidiary's business; (ix) Indebtedness for any permitted
declared and unpaid Distributions on Borrower's stock; (x) Indebtedness under
any Interest Rate Protection Agreements consented to by the Required Lenders;
(xi) Indebtedness relating to the MIDNIGHT WRANGLER in a principal amount not
exceeding $9,731,417.00 in the aggregate at any one time outstanding; (xii)
Indebtedness relating to the MIDNIGHT EAGLE in a principal amount not exceeding
$12,000,000.00 in the aggregate at any one time outstanding; (xiii) other
Indebtedness in a principal amount not to exceed $8,00,000.00 in the aggregate
at any one time outstanding; (xiv) Indebtedness described in Section 8.1(q);
(xv) the guaranty by Borrower of the obligations of Torch Express, L.L.C. under
any Conversion Contract; and (xvi) guarantees by Borrower of the performance of
contracts by Subsidiaries entered into in the ordinary course of business.
(b) Consolidation, Merger, Sale of Assets, Dissolution, Etc. Borrower
will not, and will not cause or permit any of its Subsidiaries to, (i) directly
or indirectly, merge into or with or consolidate with any other Person or permit
any other Person to merge into or with or consolidate with it provided that
Borrower may cause a Subsidiary to merge or consolidate into Borrower or any
other Subsidiary provided further, however, that no Excluded Subsidiary may
merge or consolidate with another Subsidiary unless such other Subsidiary is the
survivor entity of such merger or consolidation, (ii) sell, assign, lease,
transfer, abandon or otherwise dispose of any of its Property (including,
without limitation, any shares of capital stock or other equity interest of a
Subsidiary owned by Borrower or another
37
Subsidiary), except for (A) sales in the ordinary course of business of those
items excluded from the definition of Restricted Investments, (B) sales of
inventory and equipment in the ordinary course of business or (C) sales of
vessels that are not Collateral so long as the proceeds thereof are used to pay
Indebtedness or purchase replacement vessels or equipment or (iii) undertake any
major expansion.
(c) Changes in Nature of Business. Borrower will not, and it will not
cause or permit any of its Subsidiaries to, engage in any business if, as a
result, the general nature of the business which would then be engaged in by
Borrower and its Subsidiaries, considered as a whole, would be substantially
changed from the Company Business.
(d) Change in Control. Borrower shall not allow any Change in Control
to occur.
(e) Ownership of Subsidiaries. Borrower will not cause or permit any
of its Subsidiaries to (i) authorize or issue any new types, varieties or
classes of capital stock, membership interest or any other equity interest or
any bonds or debentures, subordinated or otherwise, or any warrants or options
to purchase any stock, membership interest or any other equity interest, (ii)
authorize or issue any additional shares of capital stock, membership interest
or any other equity interest, (iii) declare any stock, membership interest or
other equity interest Distributions or stock, membership interest or other
equity interest splits or (iv) take any other action which could, directly or
indirectly, decrease Borrower's ownership interest in any of its Subsidiaries.
(f) Liens. Borrower will not, and will not cause or permit any of its
Subsidiaries to, mortgage or encumber any of its Property or suffer any Liens to
exist on any of its Property without the prior written consent of the Required
Lenders other than Permitted Liens.
(g) Restricted Investments. Borrower will not, and it will not cause
or permit any of its Subsidiaries to, directly or indirectly, make or hold any
Restricted Investments the original cost of which exceeds in the aggregate at
any one time, for Borrower and its Subsidiaries considered as a whole, five (5%)
percent of Consolidated Adjusted Tangible Net Worth.
(h) Change in Management. Borrower will not, and will not cause or
permit any of its Subsidiaries to, terminate or make any substantial change in
the duties of ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
(i) Modify Agreements. Borrower will not, and it will not cause or
permit any of its Subsidiaries to, modify or amend in any material respect or
terminate any of the Shipbuilding Contracts, the Contribution Agreement or the
Performance Bond.
(j) Consent to Sale of Interest. Borrower shall not cause or permit
Torch Express, L.L.C. to consent to the sale of an Interest (as such term is
defined in the Trustee Agreement) without the consent of the Required Lenders,
which consent shall not be unreasonably withheld.
8.3 Use of Proceeds. Borrower covenants and agrees that (i) the proceeds of
the Line of Credit Loans will be used solely to cover expenses relating to the
Project, (ii) the proceeds of the Term Loans will be used solely to pay the Line
of Credit Loans and (iii) no part of the proceeds of any Loan will be used in
violation of any applicable law or regulation.
SECTION 9. EVENTS OF DEFAULT.
If any of the following (each of the following herein sometimes called an
"Event of Default") shall occur and be continuing:
38
9.1 Borrower shall fail to pay any of the Obligations when due and such
failure shall continue unremedied for five (5) days after written or telegraphic
notice thereof shall have been given to Borrower by Agent;
9.2 Any representation or warranty of Borrower or any Subsidiary made in
this Agreement, in any other Transaction Document to which Borrower or any
Subsidiary is a party or in any certificate, agreement, instrument or statement
furnished or made or delivered pursuant hereto or thereto by Borrower or any
Subsidiary or in connection herewith or therewith, shall prove to have been
untrue or incorrect in any material respect when made or effected;
9.3 Borrower or any Subsidiary shall fail to perform or observe any term,
covenant, or agreement (other than failure to pay when due any of the
Obligations) contained in this Agreement or in any other Transaction Document,
and such failure shall continue unremedied for thirty (30) days after written or
telegraphic notice thereof shall have been given to Borrower by Agent;
9.4 This Agreement or any of the other Transaction Documents shall at any
time for any reason (other than cancellation by Agent) cease to be in full force
and effect or shall be declared to be null and void by a court of competent
jurisdiction, or if the validity or enforceability thereof shall be contested or
denied by Borrower or any Subsidiary, or if the transactions completed hereunder
or thereunder shall be contested by Borrower or any Subsidiary or if Borrower or
any Subsidiary shall deny that it has any or further liability or obligation
hereunder or thereunder;
9.5 Borrower, any Subsidiary or any other Obligor shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code or any other federal, state or foreign bankruptcy,
insolvency, receivership, liquidation or similar law, (ii) consent to the
institution of, or fail to contravene in a timely and appropriate manner, any
such proceeding or the filing of any such petition, (iii) apply for or consent
to the appointment of a receiver, trustee, custodian, sequestrator or similar
official of itself, himself or herself or of a substantial part of its Property
or assets, (iv) file an answer admitting the material allegations of a petition
filed against itself in any such proceeding, (v) make a general assignment for
the benefit of creditors, (vi) become unable, admit in writing its inability or
fail generally to pay its debts as they become due or (vii) take any corporate
or other action for the purpose of effecting any of the foregoing;
9.6 An involuntary proceeding shall be commenced or an involuntary petition
shall be filed in a court of competent jurisdiction seeking (i) relief in
respect of Borrower, any Subsidiary or any other Obligor, or of a substantial
part of the Property or assets of Borrower, any Subsidiary or any other Obligor,
under Title 11 of the United States Code or any other federal, state or foreign
bankruptcy, insolvency, receivership, liquidation or similar law, (ii) the
appointment of a receiver, trustee, custodian, sequestrator or similar official
of Borrower, any Subsidiary or any other Obligor or of a substantial part of the
Property or assets of Borrower, any Subsidiary or any other Obligor or (iii) the
winding-up or liquidation of Borrower, any Subsidiary or any other Obligor; and
such proceeding or petition shall continue undismissed for sixty (60)
consecutive days or an order or decree approving or ordering any of the
foregoing shall be entered;
9.7 Borrower, any Subsidiary or any other Obligor shall be declared by any
Lender to be in default on, or pursuant to the terms of, (1) any other present
or future obligation to such Lender, including, without limitation, any other
loan, line of credit, guaranty or letter of credit reimbursement obligation, or
(2) any other present or future agreement purporting to convey to such Lender a
Lien upon any Property or assets of Borrower, such Subsidiary, or such other
Obligor, as the case may be and such default shall continue unremedied for
thirty (30) days after written or telegraphic notice thereof shall have been
given to Borrower by Agent;
39
9.8 One or more judgments, decrees, arbitration awards or rulings shall be
entered against Borrower or any Subsidiary involving in the aggregate a
liability (not paid or covered by insurance) of $10,000.00 or more and all such
judgments, decrees, awards, and rulings shall not have been vacated, paid,
discharged, stayed or suspensively appealed within thirty (30) days from the
entry thereof;
9.9 The discontinuance of work on the Project for a period of thirty (30)
days, except for a cause or suspension specified in a Conversion Contract; or
9.10 The Performance Bond shall at any time for any reason cease to be in
full force and effect or shall be declared to be null and void by a court of
competent jurisdiction;
THEN, and in each such event (other than an event described in Sections 9.5
or 9.6), the Agent shall, if requested in writing by the Required Lenders, and
may, in its sole and absolute discretion, upon the oral request of the Required
Lenders, declare that the obligations of the Lenders to make Loans under this
Agreement and to issue Letters of Credit under this Agreement have terminated,
whereupon such obligations of the Lenders shall be immediately and forthwith
terminated, and the Agent shall, if requested in writing by the Required
Lenders, and may, in its sole and absolute discretion, upon the oral request of
the Required Lenders, declare the entire outstanding principal balance of and
all accrued and unpaid interest on the Notes and all of the other Loans under
this Agreement and all of the other Obligations to be forthwith due and payable,
whereupon all of the unpaid principal balance of and all accrued and unpaid
interest on the Notes and all of the other Loans under this Agreement and all
such other Obligations shall become and be immediately due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower, and the Agent and each of the Lenders may
exercise any and all other rights and remedies which they may have under any of
the Transaction Documents or under applicable law; provided, however, that upon
the occurrence of any event described in Sections 9.5 or 9.6, the obligations of
the Lenders to make Loans under this Agreement and to issue Letters of Credit
under this Agreement shall automatically terminate and the entire outstanding
principal balance of and all accrued and unpaid interest on the Notes and all of
the other Loans under this Agreement and all of the other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or further notice of any kind, all of which are hereby expressly waived
by Borrower, and the Agent and each of the Lenders may exercise any and all
other rights and remedies which they may have under any of the Transaction
Documents or under applicable law.
Agent upon the instructions of the Required Lenders and the Required
Lenders shall have the right, upon the occurrence and during the continuance of
any Event of Default, in addition to any and all other rights and remedies which
Agent and each of the Lenders may have under any of the Transaction Documents or
under applicable law, to enter into possession of the MIDNIGHT EXPRESS and the
Project and perform any and all work and labor necessary to complete the Project
and to perform such acts as the Required Lenders may deem desirable to secure,
protect, and complete the Project. All sums expended by Agent and each of the
Lenders for such purposes shall be deemed to have been advanced to Borrower as
Line of Credit Loans, shall satisfy pro tanto the obligations of Lenders
hereunder and shall be secured by the Transaction Documents as fully as if made
upon the request of Borrower.
SECTION 10. AGENT.
10.1 Appointment. Regions is hereby appointed by the Lenders as Agent under
and for purposes of this Agreement, the Notes and the other Transaction
Documents. The Agent agrees to act as such upon the express conditions contained
in this Agreement and the other Transaction Documents. The Agent shall hold all
Collateral as the agent for all of the Lenders and, except as provided by the
40
Subordination Agreement, all net proceeds of the Collateral shall be shared by
the Lenders ratably in accordance with their respective Pro Rata Shares.
10.2 Powers.
(a) The Agent shall have and may exercise such powers hereunder as are
specifically delegated to the Agent by the terms of this Agreement and the other
Transaction Documents, together with such powers as are reasonably incidental
thereto. Each Lender and the Agent hereby authorizes the Agent to enter into the
Transaction Documents to which Agent is a party and to take all actions
contemplated thereby and confirms its appointment of Regions Bank as Agent under
the terms and conditions of the Transaction Documents. Each Lender hereby
confirms its agreement to be bound by the terms and conditions of the security
documents included within the Transaction Documents. The Agent shall have no
implied duties to the Lenders, nor any obligation to the Lenders to take any
action under this Agreement or any of the other Transaction Documents, except
any action specifically provided by this Agreement or any of the other
Transaction Documents to be taken by the Agent. Without limiting the generality
of the foregoing, the Agent shall not be required to take any action with
respect to any Default or Event of Default, except as expressly provided in
Section 9. Each Lender and the Agent agree that no Lender shall have any right
individually to seek to realize upon the Collateral granted for the benefit of
the Agent and the Lenders pursuant to any of the Transaction Documents, it being
understood and agreed that such rights and remedies may be exercised by the
Agent as Agent for the benefit of the Secured Parties upon the terms of the
Transaction Documents.
(b) Each of the Lenders also hereby irrevocably appoints and
authorizes the Agent to act as security trustee on its behalf with regard to (i)
the security, powers, rights, titles, benefits and interests (both present and
future) constituted by and conferred on it or for its benefit under or pursuant
to this Agreement or any of the Transaction Documents (including, without
limitation, the benefit of all covenants, undertakings, representations,
warranties and obligations given, made or undertaken to it in this Agreement or
in any of the other Transaction Documents), (ii) all monies, property and other
assets paid or transferred to or vested in it or any agent thereof or received
or recovered by it or any agent thereof pursuant to, or in connection with, this
Agreement or any of the other Transaction Documents, whether from the Borrower,
any of the Subsidiaries or any other person, and (iii) all monies, investments,
property or other assets at any time representing or deriving from any of the
foregoing, including all interest, income and other sums at any time received or
receivable by it or any agent thereof in respect of the same (or any part
thereof). The Agent hereby accepts such appointment but shall have no
obligations under this Agreement or under any of the Transaction Documents
except those expressly set forth herein and therein.
(c) For greater certainty, and without limiting the powers or
immunities of the Agent, or any other Person acting as an agent or mandatary for
the Agent hereunder or under any of the other Transaction Documents, the
Borrower hereby acknowledges that, for purposes of holding any security granted
by any Obligor on property pursuant to the laws of the Province of Quebec to
secure obligations of any Obligor under any bond issued by any Obligor, the
Agent shall be the holder of an irrevocable power of attorney (i.e. "fonde de
pouvoir" within the meaning of the Civil Code of Quebec) for all present and
future Lenders. Each Lender hereby irrevocably constitutes, to the extent
necessary, the Agent as the holder of an irrevocable power of attorney (i.e.
"fonde de pouvoir" within the meaning of Article 2692 of the Civil Code of
Quebec) in order to hold security granted by any Obligor in the Province of
Quebec to secure the obligations of any Obligor under any bond issued by any
Obligor and as mandatory and custodian of any such bond. Each assignee of a
Lender shall be deemed to have confirmed and ratified the constitution of the
Agent as the holder of such irrevocable power of attorney (fonde de pouvoir), by
execution of an Assignment Agreement. Notwithstanding the provisions of Section
32 of An Act respecting the special powers of legal persons (Quebec), the Agent
may acquire and be the holder of any
41
bond issued by any Obligor. The Borrower hereby acknowledges that such bond
constitutes a title of indebtedness, as such term is used in Article 2692 of the
Civil Code of Quebec.
(d) Each Lender hereby agrees, and each holder of any Obligations by
the acceptance thereof will be deemed to agree, that, except as otherwise set
forth herein, any action taken by the Agent or the Required Lenders in
accordance with the provisions of this Agreement or the other Transaction
Documents, and the exercise by the Agent or the Required Lenders of the powers
set forth herein or therein, together with such other powers as are reasonably
incidental thereto, shall be authorized and binding upon all of the Lenders. The
Agent is hereby authorized on behalf of all of the Lenders, without the
necessity of any notice to or further consent from any Lender, from time to
time, to take any action with respect to any Collateral or Transaction Documents
which may be necessary to perfect and maintain perfected the Liens on the
Collateral granted by the Transaction Documents. The Lenders irrevocably
authorize the Agent at its option and in its discretion, to release any Lien
granted to or held by the Agent upon any Collateral (i) upon termination of the
Line of Credit Commitments, the Term Loan Commitments and the payment in full of
all Obligations; (ii) constituting property sold or to be sold or disposed of as
part of or in connection with any disposition permitted hereunder or by any
other Transaction Document; (iii) constituting property in which neither
Borrower nor any Subsidiary owned any interest at the time the Lien was granted
or at any time thereafter; (iv) constituting property leased to Borrower or any
Subsidiary under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been, and
is not intended by Borrower or any Subsidiary to be, renewed or extended; (v)
consisting of an instrument evidencing Indebtedness if the Indebtedness
evidenced thereby has been paid in full; or (vi) if approved, authorized or
ratified in writing by the Required Lenders. Upon request by the Agent at any
time, the Lenders will confirm in writing the Agent's authority to release
particular types or items of Collateral pursuant to this Section 10.2.
10.3 General Immunity. Neither the Agent nor any of its directors,
officers, employees, agents or advisors shall be liable to any of the Lenders
for any action taken or not taken by it (i) with the consent or at the request
of the Required Lenders or (ii) in the absence of its own gross negligence or
willful misconduct.
10.4 No Responsibility for Loans, Recitals, Etc. Neither the Agent nor any
of its directors, officers, employees, agents or advisors shall (i) be
responsible for or have any duty to ascertain, inquire into or verify any
recitals, reports, statements, representations or warranties contained in this
Agreement or any of the other Transaction Documents or furnished pursuant hereto
or thereto; (ii) be responsible for any Loans or Letters of Credit hereunder
(except in Agent's capacity as a Lender hereunder with respect to its Pro Rata
Share thereof pursuant to the terms of this Agreement), (iii) be bound to
ascertain or inquire as to the performance or observance of any of the terms of
this Agreement or any of the other Transaction Documents; (iv) be responsible
for the satisfaction of any condition specified in Section 6, except receipt of
items required to be delivered to the Agent; or (v) be responsible for the
validity, effectiveness, genuineness or enforceability of this Agreement or any
of the other Transaction Documents; or (vi) be responsible for the creation,
attachment or perfection of any security interests or liens purported to be
granted to the Agent or any of the Lenders pursuant to this Agreement or any of
the other Transaction Documents. The Agent shall not incur any liability by
acting in reliance upon any notice, consent, certificate, statement or other
writing (which may be a Lender wire, telex, telecopy or similar writing)
believed by it to be genuine or to be signed by the proper party or parties.
10.5 Right to Indemnity. Notwithstanding any other provision contained in
this Agreement to the contrary, to the extent Borrower fails to reimburse the
Agent pursuant to Section 11.3 or Section 11.5, the Lenders shall ratably in
accordance with their respective Pro Rata Shares of the aggregate amount of
Loans and Letters of Credit then outstanding, or if no Loans or Letters of
Credit are then outstanding, their respective Pro Rata Shares of the total
Commitments of all of the Lenders, indemnify
42
the Agent and hold it harmless from and against any and all liabilities, losses
(except losses occasioned solely by failure of Borrower to make any payments or
to perform any obligations required by this Agreement (other than those
described in Sections 11.3 and 11.5), the Notes, the Letter of Credit
Applications or any of the other Transaction Documents), costs and/or expenses,
including, without limitation, reasonable attorneys' fees and expenses, which
the Agent may incur, directly or indirectly, in connection with this Agreement,
the Notes or any of the other Transaction Documents, or any action or
transaction related hereto or thereto; provided only that the Agent shall not be
entitled to such indemnification for any losses, liabilities, costs and/or
expenses directly and solely resulting from its own gross negligence or willful
misconduct. This indemnity shall be a continuing indemnity, contemplates all
liabilities, losses, costs and expenses related to the execution, delivery and
performance of this Agreement, the Notes and the other Transaction Documents,
and shall survive the satisfaction and payment of the Loans, the expiration or
other termination of the Letters of Credit and the termination of this
Agreement.
10.6 Action Upon Instructions of Required Lenders. The Agent agrees, upon
the written request of the Required Lenders, to take any action of the type
specified in this Agreement or any of the other Transaction documents as being
within the Agent's rights, duties, powers or discretion. Notwithstanding the
foregoing, the Agent shall be fully justified in failing or refusing to take any
action hereunder, unless it shall first be indemnified to its satisfaction by
the Lenders pro rata against any and all liabilities, losses, costs and expenses
(including, without limitation, attorneys' fees and expenses) which may be
incurred by it by reason of taking or continuing to take any such action, other
than any liability which may arise out of Agent's gross negligence or willful
misconduct. The Agent shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with written instructions signed
by the Required Lenders, and such instructions and any action taken or failure
to act pursuant thereto shall be binding on all of the Lenders and on all
holders of the Notes. In the absence of a request by the Required Lenders, the
Agent shall have authority, in its sole discretion, to take or not to take any
action, unless this Agreement or any of the other Transaction Documents
specifically requires the consent of the Required Lenders or of all of the
Lenders.
10.7 Reliance on Documents; Employment of Agents and Counsel. The Agent
shall be entitled to rely upon any note, notice, consent, certificate,
affidavit, letter, telegram, statement, paper or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons. The Agent may execute any of its duties as Agent hereunder by or
through employees, agents, and attorneys-in-fact and shall not be answerable to
the Lenders for the default or misconduct of any such agents or
attorneys-in-fact selected by it in good faith and with reasonable care, except
as to money or securities received by it or its authorized agents. The Agent
shall be entitled to advice and opinion of legal counsel concerning all legal
matters and all matters pertaining to the duties of the Agent.
10.8 May Treat Payee as Owner. The Agent may deem and treat the payee of
any Note as the owner thereof for all purposes hereof unless and until a written
notice of the assignment or transfer thereof shall have been filed with the
Agent pursuant to Section 11.14. Any request, authority or consent of any
person, firm or corporation who at the time of making such request or giving
such authority or consent is the holder of any such Note shall be conclusive and
binding on any subsequent holder, transferee or assignee of such Note or of any
Note issued in exchange therefor.
10.9 Agent's Reimbursement. Each Lender agrees to reimburse the Agent pro
rata in accordance with its Pro Rata Share for any out-of-pocket expenses not
reimbursed by Borrower (a) for which the Agent is entitled to reimbursement by
Borrower under this Agreement or any of the other Transaction Documents and (b)
for any other out-of-pocket expenses incurred by the Agent on behalf of the
Lenders, in connection with the preparation, execution, delivery, amendment,
modification, extension,
43
renewal, administration and/or enforcement of this Agreement and/or any of the
other Transaction Documents.
10.10 Rights as a Lender. With respect to its commitment, the Loans made by
it and the Notes issued to it, Regions shall have the same rights and powers
hereunder as any Lender and may exercise the same as though it were not the
Agent, and the terms "Lender" and "Lenders" shall, unless the context otherwise
indicates, include Regions in its individual capacity. Regions may accept
deposits from, lend money to and generally engage in any kind of banking or
trust business with Borrower as if it were not the Agent.
10.11 Independent Credit Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Agent or any Lender and based on the
financial statements referred to in Section 7.7 and such other documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement and the other Transaction Documents. Each
Lender also acknowledges that it will, independently and without reliance upon
the Agent or any Lender and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Transaction
Documents.
10.12 Resignation of Agent. Subject to the appointment of a successor
Agent, the Agent may resign as Agent for the Lenders under this Agreement and
the other Transaction Documents at any time by thirty (30) days notice in
writing to the Lenders. Such resignation shall take effect upon appointment of
such successor Agent. The Required Lenders shall have the right to appoint a
successor Agent (and if no Default or Event of Default then exists hereunder,
such appointment shall be with the consent of Borrower, which consent shall not
be unreasonably withheld), and the successor Agent shall be entitled to all of
the rights of, and vested with the same powers as, the original Agent under this
Agreement and the other Transaction Documents. Resignation by the Agent shall
not affect or impair the rights of the Agent under Sections 10.5 and 10.9 hereof
with respect to all matters preceding such resignation.
10.13 Duration of Agency. The agency established by Section 10.1 hereof
shall continue, and Sections 10.1 through and including this Section 10.13 shall
remain in full force and effect, until all of the Obligations shall have been
paid in full and the Lenders' commitments to make Loans, issue Letters of Credit
and/or extend credit to or for the benefit of Borrower shall have terminated or
expired (and the provisions of Section 10.5 shall continue thereafter as
provided therein).
SECTION 11. GENERAL.
11.1 No Waiver. No failure or delay by the Agent or any of the Lenders in
exercising any right, remedy, power or privilege hereunder or under any other
Transaction Document shall operate as a waiver thereof; nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, remedy, power or privilege. The remedies provided
herein and in the other Transaction Documents are cumulative and not exclusive
of any remedies provided by law. Nothing herein contained shall in any way
affect the right of any of the Lenders to exercise any statutory or common law
right of Lender's lien or setoff.
11.2 Right of Setoff. Upon the occurrence and during the continuance of any
Event of Default, each of the Lenders is hereby authorized at any time and from
time to time, without notice to Borrower (any such notice being expressly waived
by Borrower) and to the fullest extent permitted by law, to setoff and apply any
and all deposits (general or special, time or demand, provisional or final) at
any time held by such Lender(s) and any and all other indebtedness at any time
owing by such Lender(s)
44
to or for the credit or account of Borrower against any and all of the
Obligations. Each of the Lenders agrees to promptly notify Borrower after any
such setoff and application made by such Lender(s), provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Lenders under this Section 11.2 are in addition
to any other rights and remedies (including, without limitation, other rights of
setoff) which the Lenders may have. Except as may be provided to the contrary in
the Subordination Agreement, nothing contained in this Agreement or any other
Transaction Document shall impair the right of any of the Lenders to exercise
any right of setoff or counterclaim it may have against Borrower and to apply
the amount subject to such exercise to the payment of indebtedness of Borrower
unrelated to this Agreement or the other Transaction Documents.
11.3 Cost and Expenses. Borrower agrees, whether or not any Loan is made
hereunder or any Letter of Credit is issued hereunder, to pay the Agent upon
demand (i) all out-of-pocket costs and expenses and all reasonable attorneys'
fees of the Agent and/or each of the Lenders in connection with the preparation,
documentation, negotiation, execution, amendment, modification, extension and/or
renewal of this Agreement, the Notes, the Letter of Credit Application(s) and
the other Transaction Documents, (ii) all out-of-pocket costs and expenses and
all reasonable attorneys' fees of the Agent and/or each of the Lenders in
connection with the preparation of any waiver or consent hereunder or under any
other Transaction Documents, (iii) if an Event of Default occurs, all
out-of-pocket costs and expenses and all reasonable attorneys' fees incurred by
the Agent and/or each of the Lenders in connection with such Event of Default
and collection and other enforcement proceedings resulting therefrom, (iv) all
out-of-pocket costs and expenses and all reasonable attorneys' fees incurred by
the Agent and/or each of the Lenders in connection with the enforcement of any
rights and/or remedies of the Agent or any of the Lenders to collect any of the
Obligations, and (v) all other reasonable attorneys' fees and out-of-pocket
costs and expenses incurred by the Agent and/or each of the Lenders relating to
or arising out of or in connection with this Agreement or any of the other
Transaction Documents, including, without limitation, the fees and costs for the
surveys on the Vessels completed prior to the date hereof, the fees and costs of
surveys on the Vessels (including the completed MIDNIGHT EXPRESS) contemplated
by Section 6.4, and the fees and costs of Lenders' Inspector. Borrower further
agrees to pay or reimburse the Agent and each of the Lenders for any stamp or
other taxes or costs which may be payable with respect to the execution,
delivery, recording and/or filing of this Agreement, the Notes, the Letter of
Credit Application(s) or any of the other Transaction Documents. All of the
obligations of Borrower under this Section 11.3 shall survive the satisfaction
and payment of the Obligations and the termination of this Agreement. As used
herein, "attorneys' fees" shall include, without limitation, fees on a solicitor
and its own client basis and extra-judicial fees.
11.4 Environmental Indemnity. Borrower hereby agrees to indemnify the Agent
and each of the Lenders and any holder(s) of the Notes, and the officers,
directors, employees, agents and affiliates of the Agent, each of the Lenders
and such holder(s) (collectively, the "Indemnitees") and hold the Indemnitees
harmless from and against any and all losses, liabilities, damages, injuries,
costs, expenses and claims of any and every kind whatsoever (including, without
limitation, reasonable court costs and attorneys' fees and expenses) which at
any time or from time to time may be paid, incurred or suffered by the
Indemnitees, with respect to or as a direct or indirect result of the violation
by Borrower or any Subsidiary of any Environmental Laws; or with respect to, or
as a direct or indirect result of the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission or release from, properties
owned or operated by Borrower and/or any Subsidiary of any hazardous substances
or any other hazardous or toxic waste, substance or constituent or other
substance (including, without limitation, any losses, liabilities, damages,
injuries, costs, expenses or claims asserted or arising under the Environmental
Laws); and the provisions of and undertakings and indemnification set out in
this Section 11.4 shall survive the satisfaction and payment of the Obligations
and the termination of this Agreement; provided that Borrower shall have no
obligation to an Indemnitee hereunder with respect to indemnified liabilities
arising from the gross negligence or willful misconduct of that Indemnitee.
45
11.5 General Indemnity. In addition to the payment of expenses pursuant to
Section 11.3, whether or not the transactions contemplated hereby shall be
consummated, Borrower hereby agrees to indemnify and pay Indemnitees and hold
Indemnitees harmless from and against any and all other liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs, expenses and disbursements of any kind or nature whatsoever (including,
without limitation, the reasonable fees and disbursements of counsel for such
Indemnitees in connection with any investigative, administrative or judicial
proceeding commenced or threatened, whether or not such Indemnitees shall be
designated a party thereto), that may be imposed on, incurred by or asserted
against the Indemnitees, in any manner relating to or arising out of this
Agreement, any of the other Transaction Documents or any other agreement,
document or instrument executed and delivered by Borrower or any other Obligor
in connection herewith or therewith, the statements contained in any commitment
letters delivered by the Agent or any of the Lenders, the agreement of any of
the Lenders to make the Loans hereunder, the agreement of Lenders to issue the
Letters of Credit hereunder or the use or intended use of the proceeds of any
Loan hereunder (collectively, the "Indemnified Liabilities"); provided that
Borrower shall have no obligation to an Indemnitee hereunder with respect to
Indemnified Liabilities arising from the gross negligence or willful misconduct
of that Indemnitee. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is violative of any law or public policy, Borrower shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them. The provisions of the undertakings and
indemnification set out in this Section 11.5 shall survive satisfaction and
payment of the Obligations and the termination of this Agreement. No provision
contained in this Section 11.5 shall affect any rights Borrower may have against
any Lender which defaults under this Agreement or is intended to indemnify any
such Agent or Lender which defaults under this Agreement (but only such Agent or
Lender that defaults under this Agreement) for any such Indemnified Liabilities
arising from such defaulting Lender's action.
11.6 Authority to Act. The Agent shall be entitled to act on any notices
and instructions (telephonic or written) believed by the Agent in good faith to
have been sent or delivered by any person identifying himself as Borrower's
Representative, regardless of whether such notice or instruction was in fact
delivered by such person, and Borrower hereby agrees to indemnify the Agent and
hold the Agent harmless from and against any and all losses and expenses, if
any, ensuing from any such action.
11.7 Notices. Any notice, request, demand, consent, confirmation or other
communication hereunder shall be in writing and delivered in person or sent by
telecopy or registered or certified mail, return receipt requested and postage
prepaid, to the applicable party at its address or telecopy number set forth on
the signature pages hereof, or at such other address or telecopy number as any
party hereto may designate as its address for communications hereunder by notice
so given. Such notices shall be deemed effective on the day on which delivered
or sent if delivered in person or sent by telecopy, or on the third (3rd)
Business Day after the day on which mailed, if sent by registered or certified
mail; provided, however, that notices to the Agent under Section 3 shall not be
effective until actually received by the Agent.
11.8 CONSENT TO JURISDICTION, WAIVER OF JURY TRIAL. BORROWER IRREVOCABLY
SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF ANY LOUISIANA STATE COURT OR ANY
UNITED STATES OF AMERICA COURT SITTING IN THE EASTERN DISTRICT OF LOUISIANA, AS
THE AGENT MAY ELECT, IN ANY SUIT, ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENTS. BORROWER HEREBY
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT TO SUCH SUIT, ACTION OR PROCEEDING
MAY BE HEARD AND DETERMINED IN ANY OF SUCH COURTS. BORROWER IRREVOCABLY WAIVES,
TO THE
46
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH BORROWER MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT, AND BORROWER FURTHER IRREVOCABLY WAIVES ANY CLAIM
THAT SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM. BORROWER AUTHORIZES THE SERVICE OF PROCESS UPON
BORROWER BY REGISTERED MAIL SENT TO BORROWER AT ITS ADDRESS SET FORTH IN SECTION
11.7. BORROWER, THE AGENT AND THE LENDERS IRREVOCABLY WAIVE THE RIGHT TO TRIAL
BY JURY WITH RESPECT TO ANY ACTION IN WHICH BORROWER AND THE AGENT AND/OR ANY OF
THE LENDERS ARE PARTIES RELATING TO OR ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS.
11.9 Sharing of Payments. The Lenders agree among themselves that except as
otherwise expressly set forth herein, in the event that any of the Lenders shall
directly or indirectly obtain any payment (whether voluntary, involuntary,
through the exercise of any right of setoff, banker's lien or counterclaim,
through the realization, collection, sale or liquidation of any collateral
(including, without limitation any proceeds from the Contribution Agreement) or
otherwise) on account of or in respect of any of the Loans or other Obligations
in excess of its Pro Rata Share of all such payments, such Lender(s) shall
immediately purchase from the other Lender(s) participations in the Loans or
other Obligations owed to such other Lender(s) in such amounts, and make such
other adjustments from time to time, as shall be equitable to the end that the
Lenders share such payment ratably in accordance with their respective Pro Rata
Shares of the outstanding Loans and other Obligations. (For purposes of
clarification, the provisions of this Section 11.9 shall not apply to any
payments received by Regions on Indebtedness relating to the Existing Regions
Loan Agreement). The Lenders further agree among themselves that if any such
excess payment to a Lender shall be rescinded or must otherwise be restored, the
other Lender(s) which shall have shared the benefit of such payment shall, by
repurchase of participation theretofore sold, or otherwise, return its share of
that benefit to the Lender whose payment shall have been rescinded or otherwise
restored. Borrower agrees, to the fullest extent it may effectively do so under
applicable law, that any holder of a participation in any of the Obligations,
whether or not acquired pursuant to the foregoing arrangements, may exercise
rights of setoff, banker's lien or counterclaim and other rights with respect to
such participation as fully as if such holder of a participation were a direct
creditor of Borrower in the amount of such participation. If under any
applicable bankruptcy, insolvency or other similar law any of the Lenders
receives a secured claim in lieu of a setoff to which this Section 11.9 would
apply, such Lender(s) shall, to the extent practicable, exercise their rights in
respect of such secured claim in a manner consistent with the rights of the
Lender(s) entitled under this Section 11.9 to share in the benefits of any
recovery of such secured claim.
11.10 Governing Law. This Agreement, the Notes, the Letter of Credit
Application(s) and all of the other Transaction Documents shall be governed by
and construed in accordance with the internal laws of the State of Louisiana and
United States federal maritime law, as applicable.
11.11 Amendments and Waivers. Any provision of this Agreement, the Notes,
the Letter of Credit Application(s) or any of the other Transaction Documents
may be amended or waived if, but only if, such amendment or waiver is in writing
and is signed by Borrower and the Required Lenders (and, if the rights or duties
of the Agent in its capacity as Agent are affected thereby, by the Agent);
provided that no such amendment or waiver shall, unless signed by all of the
Lenders, (i) increase the Commitment of any Lender, (ii) reduce the principal
amount of or rate of interest on any Loan or any fees hereunder or the amount
for which Borrower or any Subsidiary is obligated to reimburse Regions in
respect of a drawing under a Letter of Credit, (iii) postpone the date fixed for
any payment of principal of or interest on any Loan or any reimbursement
obligation in respect of a drawing under a Letter of Credit, or any fees
hereunder, (iv) change the Pro Rata Share of the Commitments or of the aggregate
principal amount of
47
Loans or Letters of Credit of any Lender, (v) change the number of Lenders which
shall be required for the Lenders or any of them to take any action or
obligations under this Section or under any other provision of this Agreement,
(vi) release any Collateral (including, without limitation, release of any
Continuing Guarantee) other than pursuant to Section 10.2; (vii) postpone the
scheduled expiration date of the Line of Credit Period or the Letter of Credit
Period hereunder or extend the expiry date of a Letter of Credit beyond the
Letter of Credit Period; or (viii) amend this Section 11.11.
11.12 References; Headings for Convenience. Unless otherwise specified
herein, all references herein to Section numbers refer to Section numbers of
this Agreement, all references herein to Exhibits ▇, ▇, ▇, ▇, ▇, ▇, ▇ and H
refer to annexed Exhibits ▇, ▇, ▇, ▇, ▇, ▇, ▇ and H which are hereby
incorporated herein by reference and all references herein to Schedule 7.13
refer to annexed Schedule 7.13 which is hereby incorporated herein by reference.
The Section headings are furnished for the convenience of the parties and are
not to be considered in the construction or interpretation of this Agreement.
The words "hereof," "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement.
11.13 Successors and Assigns, Participations.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that Borrower may not assign or otherwise transfer any of its
rights or delegate any of its obligations under this Agreement. Any Lender may
sell participations in its Notes and its rights under this Agreement in whole or
in part to any commercial Lender organized under the laws of the United States
or Canada or any state or providence thereof without the consent of Borrower or
the Agent so long as each agreement pursuant to which any such participation is
granted provides that no such participant shall have any rights under this
Agreement or any other Transaction Document (the participants' rights against
the Lender granting its participation to be those set forth in the Participation
Agreement between the participant and such Lender), and such selling Lender
shall retain the sole right to approve or disapprove any amendment, modification
or waiver of any provision of this Agreement or any of the other Transaction
Documents. Each such participant shall be entitled to the benefits of the yield
protection provisions hereof to the extent such Lender would have been so
entitled had no such participation been sold.
(b) Any Lender which, in accordance with Section 11.13(a), grants a
participation in any of its rights under this Agreement or its Notes shall give
prompt notice thereof to the Agent and Borrower.
(c) Unless otherwise agreed to by Borrower in writing, no Lender
shall, as between Borrower and that Lender, be relieved of any of its
obligations under this Agreement as a result of such Lender's granting of a
participation in all or any part of such Lender's Notes or all or any part of
such Lender's rights under this Agreement.
11.14 Assignment Agreements. Each Lender may, from time to time with the
consent of Borrower and Agent (which will not in any instance be unreasonably
withheld), sell or assign a pro rata part of all of the indebtedness evidenced
by the Notes then owed by it together with an equivalent proportion of its
obligation to make Loans hereunder and the credit risk incidental to the Letters
of Credit pursuant to an Assignment Agreement, in form and substance reasonably
acceptable to Agent and Borrower, executed by the assignor and the assignee,
which agreements shall specify in each instance the portion of the indebtedness
evidenced by the Notes which is to be assigned to each such assignee and the
portion of the Commitments of the assignor and the credit risk incidental to the
Letters of Credit (which portions shall be equivalent) to be assumed by it (an
"Assignment Agreement"); provided that (i) nothing herein contained shall
restrict, or be deemed to require any consent as a condition to, or require
payment
48
of any fee in connection with, any sale, discount or pledge by any Lender of any
Note or other obligation hereunder to a Federal reserve bank and (ii) the
consent of the Borrower shall not be required for assignments or sales to a
Lender or any affiliate of a Lender. Upon the execution of each Assignment
Agreement by the assignor and the assignee (i) such assignee shall thereupon
become a "Lender" for all purposes of this Agreement with a Commitment in the
amount set forth in such Assignment Agreement and with all the rights, powers
and obligations afforded a Lender hereunder, (ii) the assignor shall have no
further liability for funding the portion of its Commitments assumed by such
other Lender and (iii) the address for notices to such Lender shall be as
specified in the Assignment Agreement, and Borrower shall execute and deliver
Notes to the assignee Lender in the amount of its Commitments and new Notes to
the assignor Lender in the amount of its Commitments after giving effect to the
reduction occasioned by such assignment, all such Notes to constitute "Notes"
for all purposes of this Agreement, and there shall be paid to the Agent, as a
condition to such assignment, an administration fee of $2,500 plus any
out-of-pocket costs and expenses incurred by it in effecting such assignment,
such fee to be paid by the assignor or the assignee as they may mutually agree,
but under no circumstances shall any portion of such fee be payable by or
charged to Borrower.
11.15 Withholding Tax. At the time it becomes a party to this Agreement,
each Lender that is organized under the laws of a jurisdiction outside the
United States shall deliver to the Agent and Borrower either a valid and
currently effective Internal Revenue Service Form 1001 or Form 4224 or, in the
case of a bank claiming exemption from U.S. Federal withholding tax under
Section 871(h) or 881(c) of the Code with respect to payments of "portfolio
interest", a Form W-8, or any subsequent version thereof or successors thereto,
(and if such bank delivers a Form W-8, a certificate representing that such bank
is not a bank for purposes of Section 881(c) of the Code, is not a 10-percent
shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Borrower
and is not a controlled foreign corporation related to Borrower (within the
meaning of Section 864(d)(4) of the Code)), properly completed and duly executed
by such Lender, establishing that payments relating to this Agreement are (i)
not subject to United States Federal withholding tax under the Code because such
payments are effectively connected with the conduct by such Lender of a trade or
business in the United States or (ii) totally exempt from United States Federal
withholding tax.
11.16 Purposes of Inspections; No Obligation to Determine Validity of
Conversion Contracts. The sole purpose and function of the provisions of this
Agreement authorizing Lenders, Lenders' Inspector, or any agent, officer,
employee or representative of Lenders to enter upon the MIDNIGHT EXPRESS and the
Project to make inspections of the MIDNIGHT EXPRESS, materials, Plans and
Specifications, shop drawings and work or to enter into possession of the
MIDNIGHT EXPRESS and the Project upon any Event of Default and perform any work
necessary or desirable to complete the Project and to perform such acts as
Lenders may deem desirable to secure, protect, and complete the Project, is to
obtain information and to afford Lenders the opportunity to: (a) verify whether
Lenders are obligated to make any Line of Credit Loans hereunder and the correct
amount thereof; (b) determine whether there has been or may be any Default; and
(c) take any necessary or appropriate action to protect and preserve Lender's
security for the Obligations. None of the aforesaid actions by Agent, any
Lender, Lenders' Inspector, or any agent, officer, employee or representative of
any Lender, shall be or may be construed in such a manner as to impose any duty
or obligation whatsoever on Agent, Lenders, Lenders' Inspector, or any agent,
officer, employee or representative of any Lender, to protect or represent
Borrower or any Subsidiary, any Shipyard, any surety or any other person
whatsoever and shall not be considered or construed as having made any warranty
whatsoever, whether express or implied, as to the adequacy, quality of fitness
or purpose of any physical conditions, materials, workmanship, Plans and
Specifications, drawings or other requirements pertaining to the Project or
whether any such physical conditions, materials or workmanship comply with any
Plans and Specifications, drawings, ordinances, statutes or other requirements
pertaining to the Project. Lenders shall have no liability, obligation or
responsibility whatsoever with respect to the Project except to advance the
Loans pursuant to this
49
Agreement. Lenders shall not be obligated to inspect the Project or the MIDNIGHT
EXPRESS, nor be liable for the performance or default of Borrower or any
Subsidiary, or default of any Shipyard, any subcontractor or materialmen, or any
other Person, or for any failure to construct, complete, protect or insure the
MIDNIGHT EXPRESS, or for the payment of costs of labor, materials or services
supplied for the Project, or for the performance of any obligation of Borrower
whatsoever. Nothing, including without limitation, any Loan or acceptance of any
document or instrument, shall be construed as a representation or warranty,
express or implied, to any party by Agent or any Lender.
Notwithstanding that Loans under this Agreement are to be used to finance
sums due under the Conversion Contacts, Borrower agrees that Lenders are under
no obligation to determine the validity, legality, or enforceability of the
Conversion Contracts. If all or part of a Conversion Contract or any related
document is repudiated or proves to be void, invalid, illegal or unenforceable,
or if there is any dispute relating to a Conversion Contract, such event will
not in any way affect or impair the rights of the Lenders against the Borrower
under this Agreement or any other Transaction Document or affect or impair in
any way the obligation of Borrower or any Subsidiary to pay the Obligations.
11.17 Binding Agreement. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns;
provided, however, that Borrower may not assign or delegate any of its rights or
obligations under this Agreement.
11.18 NO ORAL AGREEMENTS, ENTIRE AGREEMENT. ORAL AGREEMENTS OR COMMITMENTS
TO LOAN MONEY, EXTEND CREDIT OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT,
INCLUDING PROMISES TO EXTEND OR RENEW SUCH DEBT, ARE NOT ENFORCEABLE. TO PROTECT
BORROWER, THE AGENT AND THE LENDERS FROM MISUNDERSTANDING OR DISAPPOINTMENT, ANY
AGREEMENT REACHED BY BORROWER, THE AGENT AND THE LENDERS COVERING SUCH MATTERS
ARE CONTAINED IN THIS AGREEMENT AND THE OTHER TRANSACTION DOCUMENTS, WHICH
AGREEMENT AND OTHER TRANSACTION DOCUMENTS ARE A COMPLETE AND EXCLUSIVE STATEMENT
OF THE AGREEMENT AMONG BORROWER, THE AGENT AND THE LENDERS, EXCEPT AS BORROWER,
THE AGENT AND THE LENDERS MAY LATER AGREE IN WRITING TO MODIFY THEM. THIS
AGREEMENT EMBODIES THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES
HERETO AND SUPERSEDES ALL PRIOR AGREEMENTS AND UNDERSTANDINGS (ORAL OR WRITTEN)
RELATING TO THE SUBJECT MATTER HEREOF.
11.19 Severability. In the event any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.
11.20 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
11.21 Resurrection of the Obligations. To the extent that any of the
Lenders receives any payment on account of any of the Obligations, and any such
payment(s) or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside, subordinated and/or required to be repaid
to a trustee, receiver or any other Person under any contract, bankruptcy act,
state or federal law, common law or equitable cause, then, to the extent of such
payment(s) received, the Obligations or part thereof intended to be satisfied
and any and all Liens upon or pertaining to any Property or assets of Borrower
and theretofore created and/or existing in favor of such Lender(s) as security
for the payment of
50
such Obligations shall be revived and continue in full force and effect, as if
such payment(s) had not been received by such Lender(s) and applied on account
of the Obligations.
11.22 No Third Party Beneficiary. This Agreement is solely for the benefit
of the parties and is not a stipulation for the benefit of any other Person
except for any approved assignee of Borrower and any assignee of the Lenders.
11.23 Independence of Covenants. All of the covenants contained in this
Agreement and the other Transaction Documents shall be given independent effect
so that if a particular action, event or condition is prohibited by any one of
such covenants, the fact that it would be permitted by an exception to, or
otherwise be in compliance within the provisions of, another covenant shall not
avoid the occurrence of a Default or Event of Default if such action is taken,
such event occurs or such condition exists.
11.24 Confidentiality. The Agent and each of the Lenders shall keep
confidential any information delivered, made available or otherwise conveyed by
Borrower or any of its Subsidiaries in connection with this Agreement and the
transactions contemplated hereby; provided that, the provisions of this Section
11.24 shall not be construed to prohibit Agent or any Lender from disclosing any
information to (i) Agent or any Lender (or any attorneys, agents or consultants
of Agent or any Lender), (ii) any participant or assignee or prospective
participant or assignee of any Lender (so long as such participant or assignee
or prospective participant or assignee agrees to be bound by the provisions of
this Section 11.24), (iii) any affiliate of Agent or any Lender or (iv) any
Person as required by law, regulation or court order. Notwithstanding anything
to the contrary herein, the Borrower agrees to Export Development Canada's
disclosure, following the Effective Date, of the following information: the name
of the Borrower, the Export Development Canada financial service provided and
the date of related agreement, a general description of the Project (including
country), the amount of Export Development Canada support in an approximate
dollar range, and the name of the Exporter.
11.25 Conflicting Provisions. In the event any of the terms and provisions
of this Agreement conflict with any terms and provisions contained in any other
Transaction Document, the terms and provisions of this Agreement shall govern
provided that, nothing in this Agreement shall be construed to limit the
Property encumbered by the Transaction Documents and provided further that, in
the event any terms and provisions of Section 5.13 conflict with any terms and
provisions contained in the Subordination Agreement, the terms and provisions of
the Subordination Agreement shall govern.
11.26 Judgment Currency; Indemnity. The obligation of Borrower under this
Agreement to make payments in Dollars will not be discharged or satisfied by any
payment or recovery, whether pursuant to any judgment or otherwise, expressed in
or converted into any other currency except to the extent of the amount of
Dollars that is actually received by Lenders as a result of such payment or
recovery. Accordingly, the obligation of Borrower to pay in Dollars will be
enforceable as an alternative or additional cause of action for the purpose of
recovery in such other currency of the amount by which such actual receipt by
the Lenders falls short of the full amount of Dollars payable under this
Agreement and such obligation will not be affected by judgment being obtained
for any other sums due under this Agreement.
[INTENTIONALLY LEFT BLANK]
51
IN WITNESS WHEREOF, Borrower, the Agent and the Lenders have executed this
Credit Agreement effective as of the 23rd day of April, 2003.
TORCH OFFSHORE, INC.
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its Chief Financial Officer
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy number: (▇▇▇) ▇▇▇-▇▇▇▇
REGIONS BANK
By:
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▇▇▇▇▇ ▇. ▇▇▇▇▇
Its Senior Vice President
▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
EXPORT DEVELOPMENT CANADA
By:
----------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Financial Services Manager
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Financial Services Manager
▇▇▇ ▇'▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇
(Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
52
EXHIBIT A
LINE OF CREDIT NOTE
$30,000,000.00 New Orleans, Louisiana
February , 2003
---
FOR VALUE RECEIVED, the undersigned, TORCH OFFSHORE, INC., a Delaware
corporation ("Borrower"), hereby promises to pay to the order of
("Lender," which term includes its transferees and assigns
----------------
which any transfer or assignment shall be governed by the Credit Agreement
referred to below), on the last day of the Line of Credit Period, or such
earlier date as may be determined pursuant to the Credit Agreement referred to
below, in lawful money of the United States of America and in immediately
available funds, the principal sum of THIRTY MILLION AND 00/100 Dollars
($30,000,000.00), or such lesser sum as may then constitute the aggregate unpaid
principal amount of all Line of Credit Loans made by Lender to Borrower pursuant
to the Credit Agreement referred to below. The aggregate principal amount of
Line of Credit Loans which Lender shall be committed to have outstanding
hereunder at any time shall not exceed THIRTY MILLION AND 00/100 Dollars
($30,000,000.00), which amount may be borrowed and paid, in whole or in part,
subject to the terms and conditions hereof and of the Credit Agreement referred
to below. Borrower further promises to pay to the order of Lender interest on
the aggregate unpaid principal amount of such Line of Credit Loans on the dates
and at the rate or rates provided for in the Credit Agreement referred to below,
until paid in full (both before and after judgment). The amount of interest
accruing hereunder shall be computed based on the actual days elapsed over a
year composed of 360 days. All such payments of principal and interest shall be
made at the office of Regions Bank (the "Agent"), ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
All Line of Credit Loans made by Lender and all repayments of the principal
thereof may be recorded by Lender and, prior to any transfer hereof, endorsed by
Lender on the schedule attached hereto, or on a continuation of such schedule
attached to and made a part hereof; provided, however, that the obligation of
Borrower to repay each Line of Credit Loan made hereunder shall be absolute and
unconditional, notwithstanding any failure of Lender to record or endorse or any
mistake by Lender in connection with recordation or endorsement on the schedules
attached to this Note. The internal records of Lender shall constitute for all
purposes prima facie evidence of (i) the amount of principal and interest owing
on this Note from time to time, (ii) the amount of each Line of Credit Loan made
to Borrower and (iii) the amount of each principal and/or interest payment
received by Lender on this Note.
This Note is one of the Line of Credit Notes referred to in the Credit
Agreement effective as of the date hereof by and among the Borrower, Agent and
the Lenders listed on the signature pages thereof (as the same may from time to
time be amended, restated, modified, extended or renewed, the "Credit
Agreement"). The Credit Agreement, among other things, contains provisions for
acceleration of the maturity hereof upon the occurrence of certain stated events
and also for prepayments on account of principal hereof and interest hereon
prior to the maturity hereof upon the terms and conditions specified therein.
Notwithstanding anything to the contrary contained herein, the obligation of
Lender to make a Line of Credit Loan shall be governed by
1
the terms and provisions of the Credit Agreement. All capitalized terms used and
not otherwise defined in this Note shall have the respective meanings ascribed
to them in the Credit Agreement.
Upon the occurrence of any Event of Default under the Credit Agreement, the
entire outstanding principal balance of this Note and all accrued and unpaid
interest hereon may be declared to be immediately due and payable in the manner
and with the effect as provided in the Credit Agreement.
In the event that any payment due hereunder shall not be paid when due,
whether by reason of acceleration or otherwise, and this Note shall be placed in
the hands of an attorney or attorneys for collection or if this Note shall be
placed in the hands of an attorney or attorneys for representation of Lender in
connection with bankruptcy or insolvency proceedings relating hereto, Borrower
hereby agrees to pay to the order of Lender, in addition to all other amounts
otherwise due hereon, the reasonable costs and expenses of such collection and
representation, including, without limitation, reasonable attorneys' fees and
expenses incurred by Lender (whether or not litigation shall be commenced in aid
thereof). Borrower hereby waives presentment for payment, demand, protest,
notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
substantive laws of the State of Louisiana (without reference to conflict of law
principles).
TORCH OFFSHORE, INC.
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Financial Officer
2
Line of Credit Note (cont'd)
LOANS AND PAYMENTS OF PRINCIPAL
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Amount of Unpaid
Amount of Principal Principal Notation
Date Loan Repaid Balance Made By
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3
EXHIBIT B
PROMISSORY NOTE
$ Date: April 30, 2004
--------------------
FOR VALUE RECEIVED, the undersigned, TORCH OFFSHORE, INC. ("Borrower"),
hereby promises to pay to the order of ("Lender," which
--------------------
term includes its transferees and assigns which any transfer or assignment shall
be governed by the Credit Agreement referred to below), at the office of Regions
Bank (the "Agent"), ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the
principal sum of ($________________) Dollars, together
-----------------------
with interest thereon, in accordance with the terms set forth in this Note.
Principal: Principal shall be payable in five (5) payments each in the
amount of ($___________) Dollars, payable on
--------------------
October 31, 2004, April 30, 2005, October 31, 2005, April 30,
2006 and October 31, 2006, with the entire unpaid balance of
principal and interest being payable on April 30, 2007.
Interest: Interest shall accrue on the outstanding principal amount at the
rate provided in the Credit Agreement referred to below and shall
be payable on the dates set forth in the Credit Agreement
referred to below. All interest shall be computed on the basis of
the actual number of days elapsed over a year composed of 360
days. Interest shall accrue from date of advance.
Each payment on this Note shall be evidenced by entries in Lender's
internal records, provided, however, that the obligation of Borrower to repay
the Term Loan made hereunder shall be absolute and unconditional,
notwithstanding any failure of Lender to record or endorse or any mistake by
Lender in connection with recordation or endorsement of payments in its internal
records. The internal records of Lender shall constitute for all purposes prima
facie evidence of (i) the amount of principal and interest owing on this Note
from time to time, and (ii) the amount of each principal and/or interest payment
received by Lender on this Note.
This Note is one of the Term Notes referred to in the Credit Agreement
effective as of February , 2003, by and among Borrower, Agent and the Lenders
---
listed on the signature pages thereof (as the same may from time to time be
amended, restated, modified, extended or renewed, the "Credit Agreement"). The
Credit Agreement, among other things, contains provisions for acceleration of
the maturity hereof upon the occurrence of certain stated events and also for
prepayments on account of principal hereof and interest hereon prior to the
maturity hereof upon the terms and conditions specified therein. All capitalized
terms used and not otherwise defined in this Note shall have the respective
meanings ascribed to them in the Credit Agreement.
1
Upon the occurrence of any Event of Default under the Credit Agreement, the
entire outstanding principal balance of this Note and all accrued and unpaid
interest hereon may be declared to be immediately due and payable in the manner
and with the effect as provided in the Credit Agreement.
In the event that any payment due hereunder shall not be paid when due,
whether by reason of acceleration or otherwise, and this Note shall be placed in
the hands of an attorney or attorneys for collection or if this Note shall be
placed in the hands of an attorney or attorneys for representation of Lender in
connection with bankruptcy or insolvency proceedings relating hereto, Borrower
hereby agrees to pay to the order of Lender, in addition to all other amounts
otherwise due hereon, the reasonable costs and expenses of such collection and
representation, including, without limitation, reasonable attorneys' fees and
expenses incurred by Lender (whether or not litigation shall be commenced in aid
thereof). Borrower hereby waives presentment for payment, demand, protest,
notice of protest and notice of dishonor.
This Note shall be governed by and construed in accordance with the
substantive laws of the State of Louisiana (without reference to conflict of law
principles).
TORCH OFFSHORE, INC.
By:
---------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Financial Officer
2
EXHIBIT C
APPLICATION AND AGREEMENT FOR IRREVOCABLE STANDBY LETTER OF CREDIT
, 20
----------------------------- ----
(Place and date)
THE UNDERSIGNED HEREBY REQUESTS YOU TO ISSUE YOUR IRREVOCABLE STANDBY LETTER OF
CREDIT AS FOLLOWS:
IN FAVOR OF
---------------------------------------------------------------------
(Name)
-------------------------------------
----------
--------------------------------------------------------------------------------
(Address)
NOT EXCEEDING IN THE AGGREGATE
-------------------------------------------------
(Amount of the Letter of Credit)
AVAILABLE BY DRAFTS AT SIGHT DRAWN, AT YOUR OPTION, ON YOU OR ANY OF YOUR
CORRESPONDENTS FOR ACCOUNT OF TORCH OFFSHORE, INC. AND
(Name and address of applicant)
PARTIAL DRAWINGS ARE ( ) PERMITTED ( ) NOT PERMITTED
DRAFTS MUST BE NEGOTIATED OR PRESENTED ON OR PRIOR TO
DRAFTS ARE TO BE ACCOMPANIED BY THE FOLLOWING DOCUMENTS:
( ) THIS STANDBY LETTER OF CREDIT IS TRANSFERABLE
THIS CREDIT IS SUBJECT TO THE RULES OF THE "UNIFORM CUSTOMS AND PRACTICE
FOR DOCUMENTARY CREDITS, INTERNATIONAL CHAMBER OF COMMERCE PUBLICATION"
CURRENTLY IN FORCE ON THE DATE OF ISSUANCE
================================================================================
UPON ISSUING THIS LETTER OF CREDIT PLEASE BE GUIDED BY WHICHEVER OF THE
FOLLOWING IS CHECKED:
( ) ORIGINAL OF THE LETTER OF CREDIT TO BE FORWARDED BY ( )COURIER SERVICE, ( )
AIR MAIL, DIRECTLY TO THE BENEFICIARY OR THROUGH YOUR CORRESPONDENT, AT YOUR
OPTION.
( ) NOTIFY THE BENEFICIARY BY BRIEF CABLE, DIRECTLY OR THROUGH YOUR
CORRESPONDENT, AT YOUR OPTION, THAT THIS LETTER OF CREDIT HAS BEEN ISSUED AND
THE ORIGINAL WITH COMPLETE DETAILS IS BEING SENT BY AIR MAIL.
( ) CABLE ALL THE TERMS AND CONDITIONS OF THIS LETTER OF CREDIT TO YOUR
CORRESPONDENTS REQUESTING THEY NOTIFY THE BENEFICIARY.
================================================================================
IN CONSIDERATION OF YOUR ISSUING, AT THE REQUEST OF THE UNDERSIGNED, YOUR LETTER
OF CREDIT (HEREINAFTER SOMETIMES REFERRED TO AS THE "CREDIT"), SUBSTANTIALLY IN
ACCORDANCE WITH THE FOREGOING APPLICATION, THE UNDERSIGNED, IF THE CREDIT IS
ISSUED, HEREBY AGREES TO ALL OF THE TERMS AND CONDITIONS OF THE CREDIT AND
PROMISES AND AGREES WITH YOU AS FOLLOWS:
1. Definitions.
(i) "Agreement" means the Applications, the terms and conditions set out below,
and the Credits, together with any and all amendments and modifications of any
thereof.
(ii) "Applicant" means, singularly or collectively, and if more than one,
jointly, severally, and solidarily, each person or entity who has executed or
joined in the Agreement as Applicant or Co-Applicant as set forth below or
pursuant to an Application, and the heirs, executors, administrators, successors
and assigns thereof.
(iii) "Application" means each application of Applicant relating to a Credit as
any such application may be amended or modified from time to time in accordance
herewith.
(iv) "Credit" means any one or more letters of credit, as the same may be
amended or modified with the consent of the Applicant, issued by Issuer, at its
option, upon application by Applicant from time to time.
(v) "Credit Agreement" means that certain Credit Agreement dated February ,
---
2003 by and among Torch Offshore, Inc., Regions Bank, as Agent, and the Lenders
listed on the signature pages thereof, as the same may from time to time be
amended, restated, modified or supplemented.
(vi) "Issuer" means Regions Bank.
(vii) "Property", as used in this Agreement, includes goods, merchandise, all
documents relating thereto, securities, funds, choses in action and any and all
other forms of property, whether real (immovable), personal (movable) or mixed,
and any right or interest therein.
(viii) "Uniform Commercial Code" as used in this Agreement, means the Louisiana
Uniform Commercial Code, as amended from time to time.
(ix) The words "party (or parties) hereto", as used in this Agreement, include
any individual, any firm, corporation, partnership or other entity and any
association of individuals or entities, who sign this document or become
obligated hereunder by reason of any other document.
(x) Any capitalized term used and not otherwise defined herein shall have the
meaning ascribed to it in the Credit Agreement.
2. Promise to Pay. Applicant shall pay to Issuer all amounts disbursed
under any Credit on demand. The Issuer shall notify Applicant promptly of the
presentment for payment of any Credit (on the date of presentment, if possible,
and otherwise on the next business day, it being agreed that such notice may be
made by phone), together with notice of the date (the "Disbursement Date") such
payment shall be made. On the Disbursement Date, Applicant shall, prior to or
contemporaneous with payment on any Credit, reimburse Issuer all amounts which
will be or have been disbursed under such Credit. In the event a payment under
the Credit is made by Issuer without contemporaneous receipt of payment from
Applicant, such payment shall constitute a loan by Issuer to Applicant and such
loan shall accrue interest at the LIBOR Rate and shall be payable on demand. In
addition to the foregoing, Issuer shall have such further rights, and Applicant
shall have such further obligations, as set forth in the Credit Agreement.
If payments or drafts under a Credit are payable by Issuer in other than
United States currency, Applicant shall reimburse Issuer, in accordance with
this Agreement, in United States currency (at its then selling rate for cable
transfer to the place of payment in the currency in which the payment is made or
such draft is drawn) the equivalent of the amount disbursed under the Credit.
If, for any cause whatsoever at the time in question, there is no rate of
exchange current in New Orleans for cable transfers of the sort above provided
for, Applicant shall pay to Issuer, in accordance with this Agreement, an amount
in United States currency equivalent to the actual cost to Issuer of settlement
of its obligation to the payor of the draft or any holder thereof, as the case
may be. Applicant shall comply with any and all governmental exchange
regulations now or hereafter applicable to the purchase of foreign exchange
relating to payments or drafts under or purporting to be under a Credit and to
pay to Issuer, in accordance with this Agreement, in United States currency such
amounts as Issuer may be required to expend on account of such regulations.
Issuer or any of Issuer's correspondents may receive, pay, accept, or honor
as complying with the terms of the Credit, any drafts or other documents
otherwise in order signed by or issued to any person who is, or is in good
faith, without independent investigation or inquiry believed by Issuer to be, an
administrator, executor, trustee in bankruptcy, debtor in possession,
conservator, assignee for the benefit of creditors, liquidator, receiver or
other legal representative or successor by operation of law of the party
authorized under such Credit to draw or issue such instruments or other
documents. Issuer or any of Issuer's correspondents may accept or pay any draft
dated on or before the expiration of any time limit expressed in the Credit,
regardless of when drawn and when or whether negotiated, provided the other
required documents are dated prior to the expiration of the Credit.
3. Promise to Examine Documents. Applicant shall examine immediately upon
receipt (a) any copies of the Credit and any amendments thereto that Issuer
sends to the Applicant and (b) all instruments and documents that Issuer may
deliver to the Applicant from time to time and agrees to notify Issuer within
twenty-four (24) hours of the receipt of any such Credits, amendments,
instruments or documents of any irregularity or claim of non-compliance with the
Applicant's instructions. The Applicant hereby waives any irregularity or claim
of non-compliance unless Issuer is notified of the
2
irregularity or claim within twenty-four (24) hours after receipt of the Credit,
amendment, instrument or document.
4. Promise to Pay Attorneys Fees, Costs, Expenses and Commissions.
Applicant shall pay (i) the reasonable fees of any attorney-at-law who may be
employed to protect any of Issuer's rights or interests hereunder or to
compromise or take other action with regard hereto, (ii) on demand all charges
and expenses incurred or paid by Issuer in connection with the Credit, together
with interest at the LIBOR Rate, and (iii) all fees provided in Section 4 of the
Credit Agreement.
5. Extension of Time for Payment. If the time for payment of any
obligation, indebtedness or liability of the Applicant to Issuer shall be
extended by any law relating to obligations payable on Sundays or holidays, such
extended time shall be included in the computation of interest or discount.
6. Modifications of Credit. In the event, at the written request of the
Applicant, (i) of any extension of the maturity or the time for payment or
presentation of any draft or document or (ii) of any other modification of the
terms of any Credit or (iii) of any increase in the amount of any Credit, this
Agreement shall be binding upon the Applicant with regard (a) to the Credit, as
so increased or otherwise modified, (b) to payments, drafts, documents and
property covered thereby, and (c) to any action taken by Issuer or any of
Issuer's correspondents in accordance with such extension, increase or other
modification.
7. Effect of Waivers. No delay, extension of time, renewal, compromise or
other indulgence which may occur or be granted by Issuer shall impair Issuer's
rights or powers hereunder. Issuer shall not be deemed to have waived any of its
rights hereunder, unless Issuer or its authorized agent shall have signed such
waiver in writing.
8. Uniform Customs and Practice. The Uniform Customs and Practice for
Documentary Credits, as published as of the date of issue of any Credit by the
International Chamber of Commerce (the "UCP") shall in all respects be deemed a
part hereof as fully as if incorporated herein and shall apply to each Credit.
Unless expressly provided otherwise in any Credit, in the event any provision of
the UCP is or is construed to vary from or be in conflict with the laws of the
United States of America, any State thereof, as from time to time amended and in
force, the UCP shall prevail.
9. Presentation without Drafts. If, at the request of the Applicant, the
Credit provides that it will be available by presentation to Issuer or to any of
Issuer's correspondents of the documents described in the Credit, unaccompanied
by drafts, all reference herein to drafts, documents relative to drafts and the
presentation or payment of drafts shall refer to documents presented for payment
without drafts, the presentation thereof and the payment upon such presentation,
and the obligations of the Applicant and Issuer's rights, privileges and
remedies hereunder shall be the same as though payments had been made upon
presentation of drafts drawn under the Credit accompanied by the documents.
10. Automatic Renewal. If any Credit provides for automatic renewal without
amendment, Applicant agrees that it will notify Issuer in writing at least sixty
(60) days prior to the last day specified in such Credit by which Issuer must
give notice of nonrenewal as to whether or not it wishes such Credit to be
renewed. Any decision to renew or not renew such Credit shall be in Issuer's
sole discretion. Applicant hereby acknowledges that in the event Issuer notifies
the beneficiary of such Credit that it has elected not to renew such Credit,
such Credit may be drawn on if permitted by the terms of such Credit and further
acknowledges and agrees that Applicant shall have no claim or cause of action
against Issuer or defense against payment under the Agreement for Issuer's
renewal or non-renewal of such Credit in the exercise of Issuer's discretion as
set forth above.
11. Joint and Several Liability. The Applicant, if more than one, shall be
liable hereunder jointly, severally, and solidarily, and the Applicant waives
all pleas of division and discussion and agrees that the payment of any amount
due hereunder at any time may be extended from time to time, one or more times,
without notice.
12. Liability for Taxes. With regard to the Credit, the Applicant assumes
all risk, liability and responsibility for (a) all present and future taxes,
levies or embargoes of any governmental authority of any country, state, city or
other political subdivision, wherein any payment is to be made or any draft may
be drawn, negotiated or paid, and (b) any law, custom or regulation which may be
effective in any such place. The laws of any such country, state, city or other
political subdivision, for the purpose of the Credit, shall be deemed to include
all acts, decrees and regulations promulgated or enforced by a governmental
authority asserting governmental powers, whether or not such governmental
authority is recognized as a de facto or as a de jure government.
13. Assumption of Risk and Limitation of Liability. Any person acting on
behalf of Applicant with respect to the Credit shall be deemed to be the agent
of the Applicant, and the Applicant assumes all risks of any acts or omissions
of any such user. Should the beneficiary under the Credit, upon receipt of
advice by cable or otherwise of the issuance of the Credit, negotiate any drafts
by virtue of such advice prior to actual receipt of the Credit, such negotiation
shall be considered a proper one and shall be included under the terms and
subject to all conditions hereof, and in addition thereto, the Applicant assumes
all the risk of the misuse of the Credit. Except to the extent of its own gross
negligence or wilful misconduct, Issuer, Issuer's correspondents and affiliates
shall not be liable or responsible in any respect for, nor shall the obligation
of the Applicant to place Issuer in funds be affected or impaired by, (a) the
validity, sufficiency or genuineness of any document, draft, signature, or
endorsement thereon, even if such document, draft, signature, or endorsement
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged, (b) any breach of contract between any
3
shipper or vendor and the Applicant, (c) failure of any draft to bear any
reference or adequate reference to the Credit, (d) failure of any document to
accompany any draft at negotiation, (e) failure of any person to note the amount
of any draft on the reverse of the Credit, to surrender or take up the Credit or
to send forward any document apart from any draft, as required by the terms of
the Credit, (f) any error, omission, interruption, loss or delay in
transmission, dispatch or delivery of any one or more messages, advises or other
documents in connection with the Credit whether transmitted by mail, cable,
telegraph, wireless, teletransmission or otherwise, and despite any cipher or
code which may be employed, (g) any error, neglect or default of any of Issuer's
correspondents, (h) any action, inaction or omission, which may be taken or
suffered by it or them in good faith or through inadvertence in identifying or
failing to identify any beneficiary(ies) or otherwise in connection with the
Credit, or (i) any deviation from instructions, breach, failure, delay, default,
fraud, error or omission by any person or entity in connection with any
transaction in which the Credit may be used, or any non-documentary
requirements, in the event the Credit is considered to impose on you any
non-documentary requirements. None of the above shall affect, impair or prevent
the vesting of any of Issuer's rights or powers hereunder. If Applicant includes
any language describing events or conditions in any Application that would not
be possible for Issuer to verify from the documents required to be presented
under the Credit relating to such Application, Applicant acknowledges and agrees
that Issuer has no obligation to verify compliance with such requirements. Any
condition in the Credit or any related draft or document shall be binding on the
Applicant and shall not impose on Issuer or any of Issuer's correspondents any
liability. The Applicant agrees to protect, defend, hold harmless and indemnify
Issuer and any of Issuer's correspondents or affiliates and their respective
officers, directors, and agents, from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
attorneys' fees) which Issuer may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of the Credit, other than as a result of
(y) the gross negligence or wilful misconduct of the Issuer or (z) the Issuer's
failure to pay under any Credit after the presentation to it of a request
complying with the terms and conditions of the Credit, or (ii) the failure of
the Issuer to honor a draft under any Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
governmental authority of any country, state, city or other political
subdivision.
14. Representations and Warranties of Applicant. The Applicant represents,
warrants and covenants to Issuer that (a) it is duly organized, validly existing
and in good standing; (b) it has the power to execute, and deliver and perform
this Agreement; (c) the execution, delivery and performance of this Agreement
has been duly authorized by all requisite action; and (d) the execution,
delivery and performance of this Agreement will not violate any provision of
law, or of any court or other agency of government, the articles of
incorporation of the Applicant, or any indenture, agreement or other instrument
to which it is a party, or by which it is bound, or be in conflict with, result
in a breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or result in
the creation or imposition of any lien, charge or encumbrance of any nature
whatsoever upon any of the Property of the Applicant (other than in Issuer's
favor) or the acceleration of any of the Obligations.
15. Binding on Successors and Assigns. The obligations hereunder shall
continue in force and be applicable to all transactions hereunder,
notwithstanding any change in the composition of any firm, corporation,
partnership, or other entity, any association, the parties hereto or the user of
the Credit, whether such change shall arise from the addition of one or more new
partners from the death, withdrawal, termination or expulsion of one or more
partners. No such changes shall prejudice Issuer's rights under law against such
entity or any heir, successor, or assignee of any entity or any shareholder,
partner or member thereof.
16. Miscellaneous. (a) Except as may otherwise be expressly provided
herein, any demand or notice to be made or given in connection with this
Agreement shall be sufficiently made upon, or given to, the Applicant, if left
at, or mailed to, the last address of the Applicant known to Issuer, or if made
or given in any other manner reasonably calculated to come to the attention of
the Applicant, whether or not in fact received by the Applicant.
(b) If, at the Applicant's special request, Issuer has issued the
Credit in transferable form, it is understood and agreed that Issuer shall have
no duty to determine the proper identity of anyone appearing in the draft or
documents as transferee, that Issuer shall not be charged with responsibility or
liability of any nature or character for the validity or correctness of any
transfer or successive transfers, and that Issuer's payment to any purported
transferee or transferees as determined by Issuer is hereby authorized and
approved. Further, the Applicant agrees to hold Issuer harmless and to indemnify
Issuer against any liability or claim in connection with, or arising out of, the
foregoing.
(c) All rights, duties and obligations arising hereunder shall be
determined according to the laws of the State of Louisiana, U.S.A., and the
Applicant understands all the terms and conditions hereof, and agrees that no
modifications hereof shall be binding unless executed in writing and signed by
Issuer and the Applicant. Any conflict between this Agreement and the Credit
Agreement shall be resolved in favor of the Credit Agreement.
(d) In the event of an implementation of, or a subsequent increase in,
a reserve requirement on the Credit, the Applicant shall, at Issuer's request,
reimburse Issuer on demand for lost earnings on such required reserves. For this
purpose such lost earnings shall be deemed to accrue at the LIBOR Rate.
4
(e) If any provision or provisions of this Agreement are found to be
void and unenforceable, the remaining provisions and any instruments or
agreements delivered pursuant hereto shall, nevertheless, be binding, and this
Agreement and such instruments or agreements shall be enforceable as if the void
or unenforceable provision hereof had not been included herein.
17. Jurisdiction and Waiver. The Applicant hereby irrevocably submits to
the nonexclusive jurisdiction of any court of the State of Louisiana or any
court of the United States of America sitting in the Eastern District of
Louisiana, as the Agent may elect, in any suit, action or proceeding arising out
of or relating to this Agreement or any of the other Transaction Documents. The
Applicant irrevocably agrees that all claims in respect of such suit, action or
proceeding may be heard and determined in any such courts. The Applicant
irrevocably waives, to the fullest extent permitted by law, any objection which
the Applicant may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in any such court, and the Applicant further
irrevocably waives any claim that such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. The Applicant authorizes
the service of process upon the Applicant by registered mail sent to the
Applicant as the last address of the Applicant known to Issuer. Nothing herein
shall affect the right of the Agent to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed against
the Applicant in any other jurisdiction. THE APPLICANT HEREBY WAIVES TRIAL BY
JURY IN ANY ACTION OR PROCEEDING (INCLUDING ANY COUNTERCLAIM) IN ANY COURT
ARISING ON, OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT OR ANY OF THE OTHER
TRANSACTION DOCUMENTS OR ANY AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
THIS WRITTEN AGREEMENT MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Date:
TORCH OFFSHORE, INC.
-------------------------------------- ------------------------------------
Print or Type Applicant's Name Print or Type Co-Applicant's Name
By: By:
-----------------------------------
-------------------------------------
Its: Its:
---------------------------------- --------------------------------
5
EXHIBIT D
LETTER OF CREDIT REQUEST
, 20
------------------ ---
Gentlemen:
Reference is hereby made to that certain Credit Agreement effective as of
February , 2003 by and among the undersigned, the Lenders listed therein and
---
you as Agent for the Lenders (as from time to time amended, restated, modified
or supplemented, the "Credit Agreement"). All capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Credit Agreement.
Pursuant to Section 4.1 of the Credit Agreement, the undersigned hereby
requests that you issue an irrevocable standby Letter of Credit in the amount of
$ for the account of Torch Offshore, Inc. and
--------------- -------------------
and for the benefit of upon the
---------- -------------------------------------
terms and conditions set forth in
the attached Letter of Credit Application. The obligation to be supported by the
Letter of Credit is described as follows:
The undersigned hereby represents and warrants to you that, except for
subsequent changes consented to in writing by the Required Lenders after the
effective date of the Credit Agreement, or as permitted pursuant to the Credit
Agreement or the other Transaction Documents, as of the date hereof all of the
representations and warranties of the undersigned contained in Section 7 of the
Credit Agreement are true and correct in all material respects as if made on and
as of the date hereof (except to the extent that such representations and
warranties expressly relate solely to an earlier date (in which case such
representations and warranties were true and correct on and as of such earlier
date)) and no Default or Event of Default has occurred and is continuing and
that no such Default or Event of Default will result from the issuance of the
Letter of Credit requested hereby.
TORCH OFFSHORE, INC.
By:
------------------------------
Its:
-----------------------------
EXHIBIT E
, 20
---------------- ----
Gentlemen:
Reference is hereby made to that certain Credit Agreement effective as of
February , 2003, by and among the undersigned, the Lenders listed therein and
---
you as Agent for the Lenders (as from time to time amended, restated, modified
or supplemented, the "Credit Agreement"). All capitalized terms used and not
otherwise defined herein shall have the respective meanings ascribed to them in
the Credit Agreement.
The undersigned hereby certifies to the Agent and each of the Lenders that
as of the date hereof that:
(a) all of the representations and warranties set forth in Section 7 of the
Credit Agreement, except for subsequent changes consented to in writing by the
Required Lenders after the effective date of the Credit Agreement, or as
permitted pursuant to the Credit Agreement or the other Transaction Documents,
are true and correct in all material respects as if made on and as of the date
hereof (except to the extent that such representations and warranties expressly
relate solely to an earlier date (in which case such representation and
warranties were true and correct on and as of such earlier date));
(b) no violation or breach of any of the affirmative covenants set forth in
Sections 8.1 of the Credit Agreement has occurred and is continuing;
(c) no violation or breach of any of the negative covenants set forth in
Sections 8.2 of the Credit Agreement has occurred and is continuing;
(d) no Default or Event of Default under or within the meaning of the
Credit Agreement has occurred and is continuing;
(e) the financial statements of Borrower and its consolidated Subsidiaries
delivered to you with this letter are true, correct and complete, present fairly
the financial information of the Borrower and have been prepared in accordance
with GAAP; and
(f) the financial covenant information set forth in Schedule 1 to this
letter is true and correct for Borrower and its consolidated Subsidiaries.
TORCH OFFSHORE, INC.
By:
-------------------------------
Title:
---------------------------
EXHIBIT F
CONTINUING GUARANTEE
This Continuing Guarantee, dated , 20 , is made by
--------------- ---
, a (the "Guarantor"), in favor of
---------------------- --------------------
REGIONS BANK, as Agent for the benefit of the Agent and the Lenders (as such
terms are defined in the Credit Agreement, dated February , 2003, (as the
---
same may be amended, restated, modified or supplemented from time to time, the
"Credit Agreement") by and among Torch Offshore, Inc. (the "Company"), Regions
Bank, in its capacity as Agent for the Lenders, and the Lenders). The Lenders
and the Agent shall hereinafter be collectively referred to as the "Secured
Parties."
WHEREAS, the Guarantor is a subsidiary of the Company; and
WHEREAS, the Guarantor acknowledges that it has and will receive
substantial direct and indirect benefit from the execution and delivery of the
Credit Agreement by the Company and the extension of credit provided for
therein.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration (the receipt and adequacy of which are hereby
acknowledged), the Guarantor hereby agrees with the Secured Parties, as follows:
1. Definitions. Capitalized terms used in this Continuing Guarantee and not
otherwise defined herein shall have the meanings ascribed to them in the Credit
Agreement.
2. Guarantee. Guarantor hereby unconditionally, irrevocably, jointly,
severally and solidarily guarantees the due and punctual payment to the Agent
for the benefit of the Secured Parties when stated to be due of any and all of
the Obligations. The Guarantor also agrees to pay any and all expenses
(including, without limitation, all reasonable attorneys' fees and costs) which
may be paid or incurred by any one or more of the Secured Parties in
administering, amending or enforcing any of its respective rights in connection
with, or collecting against Guarantor under, this Continuing Guarantee.
3. Guarantee Absolute. Guarantor guarantees that the Obligations will be
paid strictly in accordance with the terms of the Notes and the Credit Agreement
regardless of any laws in effect in any jurisdiction affecting any of such terms
or the rights of the Secured Parties. The liability of the Guarantor hereunder
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any of the Transaction
Documents or any other agreement relating to the advance of monies or other
extensions of credit by the Secured Parties to the Company;
(b) any change in the time, manner, or place of payment or in any other
term of, or any other amendment or waiver of, or any consent to departure from,
any of the Transaction Documents or any of the Obligations;
(c) any change in the name, capital stock, Articles of Organization,
Certificate of Formation, operating agreement, Certificate of Incorporation or
by-laws, as the case may be, of the Guarantor or the Company;
(d) the insolvency of, or the voluntary or involuntary bankruptcy,
assignment for the benefit of creditors, reorganization or other similar
proceedings affecting the Company or the Guarantor or any of its or their
respective assets; or
(e) any other circumstance or claim which might otherwise constitute a
defense available to, or a discharge of, the Company in respect of the
Obligations or of the Guarantor in respect of this Continuing Guarantee.
No payment made by the Guarantor, any other guarantor or any other Person,
or received or collected by any of the Secured Parties, from the Guarantor, any
other guarantor or any other Person by virtue of any action or proceeding or
set-off or application at any time in reduction of or in payment of the
Obligations shall be deemed to modify, release or otherwise affect the liability
of Guarantor under this Continuing Guarantee. Notwithstanding any such payments
received or collected by any of the Secured Parties in connection with the
Obligations, Guarantor shall remain liable for the Obligations until all
Obligations are paid in full. This Continuing Guarantee shall continue to be
effective or be reinstated, as the case may be, if at any time any payment of
any of the Obligations is rescinded or must otherwise be returned by the Secured
Parties upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, all as though such payment had not been made.
None of the Secured Parties shall be required to see or inquire into the
powers of the Company or any of its partners, directors, officers, managers or
other agents, acting or purporting to act on behalf of the Company; and monies
or credit in fact obtained from the Secured Parties in professed exercise of
such power, shall be deemed to form part of the Obligations hereby guaranteed,
notwithstanding that such borrowing shall be in excess of the powers of the
Company or of its respective partners, directors, officers, managers or other
agents aforesaid, or be in any way irregular, defective or informal.
4. Dealing with the Company and Others.
(a) The obligations and liabilities of Guarantor hereunder shall not be
released, discharged, limited or in any way affected by anything done, suffered
or permitted by the Secured Parties in connection with any monies or credit
advanced by the Secured Parties to the Company or any security therefor,
including, without limitation, any loss of, or in respect of, any security
received by Secured Parties from the Company, the Guarantor or others. It is
agreed that the Secured Parties, without releasing, discharging, limiting or
otherwise affecting in whole or in part Guarantor's obligations and liabilities
hereunder, may, without limiting the generality of the foregoing:
(i) grant time, renewals, extensions, indulgences, releases and
discharges to the Company;
(ii) take or abstain from taking security or collateral for the
Obligations or from perfecting security or collateral for the Obligations;
(iii) release, discharge, compromise or otherwise deal with (with or
without consideration) any and all collateral, mortgages, indemnities,
guaranties or other security given by the Guarantor, the Company or any
other Person with respect to the Obligations;
(iv) accept compromises from the Company;
(v) apply all monies at any time received from the Company or from any
guaranties, indemnities or any collateral upon such part of the Obligations
as the Agent may see fit or change any such application in whole or in part
from time to time as the Agent may see fit; or
(vi) otherwise deal with the Company and all other Persons and any
collateral as the Agent may see fit.
(b) None of the Secured Parties shall be bound or obliged to exhaust
recourse against the Company or other Persons or any security, guarantee,
indemnity, mortgage or collateral it may hold or take any other action (other
than make demand pursuant to Section 7 of this Continuing Guarantee) before
being entitled to payment from the Guarantor hereunder; and
(c) any amount settled by or between the Secured Parties and the Company
shall be accepted by the Guarantor as conclusive evidence that the balance or
amount thereby appearing due to the Secured Parties is so due.
5. Right of Set-Off. Upon the occurrence and during the continuation of any
Event of Default, Guarantor hereby irrevocably authorizes each of the Secured
Parties, at any time and without notice to Guarantor (any such notice being
expressly waived by Guarantor) to compensate, set-off and apply any deposits of
any kind, in any currency, and any other credits, in such amounts as the Agent
may in its sole discretion elect, against the obligations and liabilities of
Guarantor to the Secured Parties under this Continuing Guarantee then due,
regardless of whether the Agent has made any demand for payment.
6. Subrogation. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS OF
SUBROGATION (WHETHER CONTRACTUAL, UNDER ▇▇▇▇▇▇▇ ▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
BANKRUPTCY CODE, UNDER LOUISIANA LAW, COMMON LAW OR OTHERWISE) TO THE CLAIMS OF
THE SECURED PARTIES AGAINST THE COMPANY AND ALL CONTRACTUAL, STATUTORY OR COMMON
LAW RIGHTS OF CONTRIBUTION, REIMBURSEMENT, INDEMNIFICATION AND SIMILAR RIGHTS
AND "CLAIMS" (AS SUCH TERM IS DEFINED IN THE UNITED STATES BANKRUPTCY CODE)
AGAINST THE COMPANY WHICH ARISE IN CONNECTION WITH, OR AS A RESULT OF, THIS
CONTINUING GUARANTEE.
7. Demand for Payment. Guarantor shall make payment to the Secured Parties
of the then amount of the liability of Guarantor hereunder forthwith after each
demand therefor is made
3
by the Agent to Guarantor in writing. All payments by the Guarantor hereunder
shall be made without any set-off, deduction or withholding. In the event the
Guarantor is obligated by law to withhold taxes or other amounts for or on
account of levies, imposts, duties, deductions, withholdings or other charges of
whatsoever nature, imposed, levied, collected, withheld or assessed by any
governmental authority from payments by the Guarantor made hereunder, the
obligations of the Guarantor under this Continuing Guarantee shall be, and be
deemed to be, increased by the amount necessary so that the amounts actually
received by the Agent for the benefit of the Secured Parties shall be the
amounts they would have received had no such withholding been imposed or
withheld. The Guarantor will promptly provide the Agent official tax receipts or
other evidence of payment of such withholding tax. In the event the Guarantor
shall not pay any amount due under this Continuing Guarantee upon demand, such
unpaid amount shall bear interest from the date so demanded until paid in full
at the default rate of interest specified in the Credit Agreement.
8. Representations and Warranties. Guarantor hereby represents and warrants
to each of the Secured Parties that:
(a) Guarantor (i) is duly organized, validly existing and, if it is a
corporation, in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the power and authority to own and operate its property,
to lease the property it operates as lessee and to conduct the business in which
it is currently engaged, and (iii) is duly qualified as a foreign corporation,
limited liability company or partnership and, if it is a corporation, is in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification;
(b) Guarantor has the power and authority to make, deliver and perform this
Continuing Guarantee and the other Transaction Documents executed by the
Guarantor and has taken all necessary action to authorize the execution,
delivery and performance of this Continuing Guarantee and the other Transaction
Documents executed by the Guarantor. No further vote or consent of its
shareholders, members, managers or partners is necessary to authorize the
execution, delivery and performance of this Continuing Guarantee and the other
Transaction Documents executed by the Guarantor. No consent or authorization of,
filing with or other act by or in respect of any governmental authority is
required in connection with the execution, delivery, performance, validity or
enforceability of this Continuing Guarantee and the other Transaction Documents
executed by the Guarantor. This Continuing Guarantee and the other Transaction
Documents executed by the Guarantor have been duly executed and delivered on
behalf of Guarantor. This Continuing Guarantee and the other Transaction
Documents executed by the Guarantor constitute legal, valid and binding
obligations of the Guarantor enforceable against the Guarantor in accordance
with their terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law);
(c) the execution, delivery and performance of this Continuing Guarantee
and the other Transaction Documents executed by the Guarantor will not violate
any law, rule or regulation or any indenture, contract, agreement, lease or
other instrument to which Guarantor is a party and
4
will not result in, or require, the creation or imposition of any Lien on any of
its properties or assets;
(d) all of the representations, warranties and covenants made by the
Company in the Credit Agreement which pertain or are applicable to Guarantor are
true, correct and complete;
(e) all of the representations, warranties and covenants made by the
Guarantor in the Transaction Documents executed by the Guarantor are true,
correct and complete; and
(f) as defined under applicable law, Guarantor is not insolvent and will
not be made insolvent by entering into this Continuing Guarantee.
9. Covenants of the Guarantor. So long as any of the Transaction Documents
are in full force and effect or any of the Obligations remain unpaid and except
as otherwise permitted by the prior written consent of the Secured Parties, the
Guarantor hereby covenants that:
(a) the Guarantor shall forthwith notify the Agent of the occurrence of any
Default or Event of Default of which it has knowledge; and
(b) any loan, guarantee and/or advance made by Guarantor to the Company
shall be subordinate in rank, payment, preference and priority to the
Obligations and Guarantor agrees to execute any documents and agreements which
the Secured Parties deem necessary to further evidence this subordination.
10. Waiver of Guarantor. Guarantor hereby waives acceptance and notice of
acceptance of this Continuing Guarantee. Guarantor hereby also waives
presentment or notice or protest with respect to the Obligations, and demand for
payment and notice of default or nonpayment or any other notice of any kind to
or upon the Guarantor with respect to the Obligations except for demand pursuant
to Section 7 hereof. No amendment or waiver of any provision of the Continuing
Guarantee nor consent to any departure by the Guarantor therefrom, shall be
effective unless the same shall be in writing and signed by the Agent on behalf
of the Secured Parties.
11. Additional Guarantees. This Continuing Guarantee is in addition and
without prejudice to any guaranties, indemnities or security of any kind
(including, without limitation, indemnities and guaranties whether or not in the
same form as this instrument) now or hereafter held by the Agent for the benefit
of the Secured Parties. The Agent shall not be obligated to proceed under any
other indemnity, guarantee or security relating to any or all of the Obligations
before being entitled to payment under this Continuing Guarantee.
12. Severability. Any provision of this Continuing Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
5
13. GOVERNING LAW AND JURISDICTION. THIS CONTINUING GUARANTEE SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF LOUISIANA.
14. Notices. All notices, demands, and other communications provided for
hereunder shall be in writing and shall be provided in the manner specified in
the Credit Agreement addressed to Guarantor at the address set forth under the
signature of Guarantor herein or such other address as Guarantor may specify in
writing to the Agent.
15. No Waiver Remedies. No failure on the part of the Secured Parties to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
16. Benefit and Binding Nature. This Continuing Guarantee is a continuing
guarantee and shall (a) remain in full force and effect until the irrevocable
and final payment in full of the Obligations and all other amounts payable
hereunder, (b) be binding upon Guarantor, its successors and assigns, and (c)
enure to the benefit of the Agent and the other Secured Parties and their
respective successors and assigns and be enforceable by the Agent and its
respective successors and assigns. Any time or times, the Agent and/or the other
Secured Parties may appoint one or more other Persons, either to act as co-agent
or co-agents, jointly with the Agent, or to act as separate agent or agents on
behalf of the Lenders with such power and authority as may be necessary for the
effectual operation of the provisions of this Continuing Guarantee.
17. Jurisdiction. The Guarantor hereby irrevocably submits to the
nonexclusive jurisdiction of any court of the State of Louisiana or any court of
the United States of America sitting in the Eastern District of Louisiana, as
the Agent may elect, in any suit, action or proceeding arising out of or
relating to this Continuing Guarantee or any of the other Transaction Documents.
Guarantor irrevocably agrees that all claims in respect of such suit, action or
proceeding may be heard and determined in any such courts. Guarantor irrevocably
waives, to the fullest extent permitted by law, any objection which Guarantor
may now or hereafter have to the laying of venue of any such suit, action or
proceeding brought in any such court, and Guarantor further irrevocably waives
any claim that such suit, action or proceeding brought in any such court has
been brought in an inconvenient forum. Guarantor authorizes the service of
process upon Guarantor by registered mail sent to Guarantor at the address set
forth under the signature of Guarantor herein or such other address as Guarantor
may specify in writing to Agent and in the manner specified in Section 14
hereof. Nothing herein shall affect the right of the Agent to serve process in
any other manner permitted by law or to commence legal proceedings or otherwise
proceed against Guarantor in any other jurisdiction. THE GUARANTOR HEREBY WAIVES
TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING ANY COUNTERCLAIM) IN ANY
COURT ARISING ON, OUT OF, OR IN ANY WAY RELATING TO THIS CONTINUING GUARANTEE OR
ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY AMENDMENT OR SUPPLEMENT HERETO OR
THERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
6
IN WITNESS WHEREOF, Guarantor has caused this Continuing Guarantee to be
executed by its duly authorized officer as the day and year first written above.
----------------------------------
By:
------------------------------
Its:
-----------------------------
Address:
7
EXHIBIT G
SECURITY AGREEMENT
This Security Agreement (the "Security Agreement") is made this day of
---
February, 2003, by TORCH EXPRESS, L.L.C. (hereinafter referred to as "Grantor")
in favor of Regions Bank, as Agent for the benefit of the Agent and the Lenders
(as such terms are defined in the Credit Agreement, dated February , 2003,
----
(as the same may be amended, restated, modified or supplemented from time to
time, the "Credit Agreement") by and among Torch Offshore, Inc. ("Borrower"),
Regions Bank, in its capacity as Agent for the Lenders, and the Lenders). The
Agent and the Lenders shall hereinafter be collectively referred to as the
"Secured Parties." Additional information relating to Grantor is set forth on
Schedule 1 to this Security Agreement.
Capitalized terms used in this Security Agreement and not otherwise defined
herein shall have the meanings ascribed to them in the Credit Agreement.
Grantor acknowledges that (i) Grantor is a subsidiary of Borrower and (ii)
Grantor has and will receive substantial direct and indirect benefit from the
execution and delivery of the Credit Agreement by the Borrower and the extension
of credit provided for therein.
To secure the prompt and complete payment to the Agent, for the benefit of
the Secured Parties, when stated to be due of any and all present and future
indebtedness (including, without limitation, principal, interest, fees,
collection costs and expenses, attorneys' fees and other amounts), liabilities
and obligations (including, without limitation, reimbursement obligations with
respect to Letters of Credit issued by Regions under the Credit Agreement) of
Borrower and each Subsidiary, and of any one or more of them, to any one or more
of the Secured Parties evidenced by or arising under or in connection with the
Credit Agreement, the Notes, the Letter of Credit Application(s), and/or any of
the other Transaction Documents, whether direct or contingent, due or to become
due or now existing or hereafter arising (all such amounts and obligations being
hereinafter collectively referred to as "Obligations"), Grantor pledges and
pawns to the Agent, for the benefit of the Secured Parties, and grants to the
Agent, for the benefit of the Secured Parties, a continuing security interest
in, and a right of set-off and compensation against, (a) all property of Grantor
or in which Grantor has an interest that is now or hereafter on deposit with, in
the possession of, under the control of or held by any Lender or any other
financial institution, including, without limitation, all cash, deposit
accounts, funds on deposit, stocks, bonds, treasury obligations, and other
securities, investment property, financial assets, securities accounts, notes,
documents, instruments, certificates of deposit, items, chattel paper, and other
property (except ▇▇▇, pension, and other tax-deferred retirement accounts) and
(b) all of Grantor's right, title and interest in, to and under the following
described property, now or hereafter owned by Grantor and wherever located:
(i) (a) that certain Conversion Contract, dated December 3, 2002, between
Davie Maritime, Inc., as Builder, and Grantor, (b) that certain Supply
Contract, dated December 3, 2002, between Davie Maritime, Inc. and The
Groupe ▇▇▇▇▇▇▇▇ Van Houtee & Ass. Ltd., as Trustee, (c) that certain
Agreement, dated December 3,
1
2002, between The Groupe ▇▇▇▇▇▇▇▇ Van Houtee & Ass. Ltd., as Trustee,
and Grantor, (d) that certain Acknowlegement and Agreement, dated
December 3, 2002, made by 6030963 Canada Inc. in favor of Grantor, (e)
that certain Agreement, dated February , 2003, between Her Majesty
----
the Queen In Right of Canada, Grantor and Lenders, and (f) that
certain Performance Bond, dated February , 2003, issued by
---
Investissement Quebec in favor of Grantor, together with any
amendments, modifications or supplements to any of the foregoing;
(ii) the vessel MIDNIGHT EXPRESS, registered under the laws of the Republic
of Vanuatu, bearing Official No. 8116049, together with all masts,
boilers, cables, engines, machinery, bowsprits, sails, rigging, boats,
anchors, chains, tackle, apparel, furniture, fittings, tools, pumps,
equipment, fuel, supplies, spare parts and all other attachments,
appurtenances, accessories, additions, fixtures, equipment,
appliances, improvements and replacements now or hereafter belonging
thereto, affixed thereto, or used in connection therewith, whether
because of repairs or otherwise, and whether or not removed therefrom
(collectively, the "Vessel"); and
(iii) all construction contracts, architect contracts, supply contracts,
insurance, plans and specifications, payment and performance bonds,
engineering reports, licenses, permits, approvals and all other
general intangibles in any way relating to the Vessel;
together with all property added to or substituted for any of the foregoing, and
all interest, dividends, income, fruits, returns, accessions, profits, corporate
distributions (including, without limitation, stock splits and stock dividends),
products and proceeds of and from any of the foregoing (collectively,
"Collateral"). The terms "account," "account debtor," "instruments,"
"documents," "equipment," "general intangibles," "chattel paper," "investment
property," "deposit accounts," "securities accounts," "financial assets" and
"proceeds" shall have the meanings provided in the Louisiana Commercial Laws.
Grantor authorizes the Agent at any time and without further consent from
Grantor to file a carbon, photographic, facsimile, or other reproduction of this
Security Agreement or Grantor's financing statement as a financing statement.
All Collateral shall remain subject to this Security Agreement until all of the
Obligations have been paid and any financing statements filed in connection with
this Security Agreement have been terminated. The Agent may renew certificates
of deposit or other renewable items included in the Collateral. Grantor shall
execute any endorsements, assignments, stock powers and financing statements
with respect to the Collateral, in form and substance satisfactory to the Agent,
that the Agent may request. Grantor represents and warrants that (a) the Agent,
for the benefit of the Secured Parties, shall at all times have a perfected
security interest in the Collateral free and clear of all Liens other than
Permitted Liens, and (b) the description and identification of the Collateral,
Grantor's name, and Grantor's taxpayer identification number and place of
business or chief executive office are correctly stated herein. Grantor shall
prevent the accrual of prescription or statute of limitations with respect to
the Collateral no later than sixty (60) days prior to the date on which
enforcement would be barred, and shall execute any additional documents
reasonably required to perfect the security
2
interest of the Agent, for the benefit of the Secured Parties, in the
Collateral. Grantor authorizes the Agent, in the Agent's sole discretion, (a) to
receive and recover any money or other property at any time due with respect to
the Collateral and in connection therewith, endorse notes, checks, drafts or
other evidence of payments, (b) to notify the obligor on any Collateral to make
payments directly to the Agent, and (c) to settle, adjust and compromise all
present and future claims arising with respect to the Collateral. The Agent is
not obligated to take any of the foregoing actions or to preserve Grantor's
rights with respect to the Collateral including, without limitation, rights
against prior parties and shall not be liable in any manner with respect to the
Collateral. Any responsibility of the Secured Parties with respect to the
Collateral, whether arising contractually or as a matter of law, is hereby
expressly waived.
Grantor shall at all times permit the Agent, its officers and agents,
access to the Collateral and to all books, records and data relating to the
Collateral, for inspection and for verification of the existence, condition and
value of the Collateral. Grantor shall furnish all assistance and information
that the Agent may require to conduct such inspections and verifications.
Grantor will furnish to Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Agent may reasonably request, all in reasonable
detail.
All corporeal Collateral shall be insured by solvent insurance companies
for full replacement value under policies acceptable to the Agent, designating
the Agent, for the benefit of the Secured Parties, as lender loss payee. Grantor
shall not, without the prior written consent of the Agent (a) change Grantor's
name, legal form or taxpayer identification number, (b) move the location of its
place of business or chief executive office, or (c) move the Collateral from
Canada or the United States of America.
Upon the occurrence of an Event of Default, at the option of the Agent, the
Agent, for the benefit of the Secured Parties, (a) may sell, assign, transfer
and effectively deliver all or any part of the Collateral at public or private
sale, without recourse to judicial proceedings and without demand, appraisement
or advertisement, all of which are hereby expressly waived by Grantor to the
fullest extent permitted by law, and (b) may cause all or any part of the
Collateral to be seized and sold, under executory process, under writ of fieri
facias issued in execution of an ordinary judgment obtained upon the
Obligations, or under other legal procedure. For purposes of executory process,
Grantor acknowledges the indebtedness owed under the Obligations, confesses
judgment in favor of the Secured Parties for the full amount of the Obligations,
and agrees to enforcement by executory process. Grantor waives (a) the benefit
of appraisal provided in Art. 2723 of the Louisiana Code of Civil Procedure and
(b) the demand and three (3) days delay provided by Articles 2639 and 2721,
Louisiana Code of Civil Procedure. The Agent may, at its option, enforce any
mortgage note pledged hereby and cause the mortgaged property to be seized and
sold by executory or other process in accordance with law and the terms of the
mortgage. Grantor grants to the Agent an irrevocable mandate and power of
attorney (coupled with an interest) to exercise, after an Event of Default, at
the Agent's sole discretionary option and without any obligation to do so, all
rights that Grantor has with respect to the Collateral, including, without
limitation, the right to exercise all rights of inspection, deriving from
Grantor's ownership of the Collateral. If the funds received by Secured Parties
from the sale or enforcement of the Collateral are insufficient to satisfy all
of the Obligations in full, all parties
3
obligated thereon shall remain fully obligated for any deficiency. The rights
and remedies of the Agent hereunder are cumulative, may be exercised singly or
concurrently, and are in addition to any rights and remedies of the Secured
Parties under applicable law.
Grantor hereby designates the Agent or any employee, agent, or other person
named by the Agent at the time any seizure of the Collateral is effected by the
Agent, for the benefit of the Secured Parties, to serve as a keeper or receiver
of the Collateral pending the judicial sale thereof. The fees of the keeper or
receiver shall be determined by the Court before which the proceedings are
pending, and the payment of such fees shall be secured by this Security
Agreement.
Without releasing or affecting any of their rights, the Secured Parties
may, one or more times, in their sole discretion, without notice to or the
consent of Grantor or Borrower, take any one or more of the following actions:
(a) release, renew or modify the obligations of Grantor, Borrower or any other
party; (b) release, exchange, modify, or surrender in whole or in part the
Secured Parties' rights with respect to any collateral for the Obligations; (c)
modify or alter the term, interest rate or due date of any payment of any of the
Obligations; (d) grant any postponements, compromises, indulgences, waivers,
surrenders or discharges or modify the terms of their agreements with Grantor or
Borrower; (e) change their manner of doing business with Grantor, Borrower or
any other party; or (f) impute payments or proceeds of any collateral furnished
for any of the Obligations, in whole or in part, to any of the Obligations, or
retain the payments or proceeds as collateral for the Obligations without
applying same toward payment of the Obligations, and Grantor hereby expressly
waives any defenses arising from any such actions. This Security Agreement shall
be binding upon the successors and assigns of Grantor and shall enure to the
benefit of the Secured Parties and their respective successors and assigns and
be enforceable by the Agent and its respective successors and assigns. At any
time or times, the Agent and/or the other Secured Parties may appoint one or
more other Persons, either to act as co-agent or co-agents, jointly with the
Agent, or to act as separate agent or agents on behalf of the Lenders with such
power and authority as may be necessary for the effectual operation of the
provisions of this Security Agreement. This Security Agreement shall be governed
by the internal laws of the State of Louisiana, provided that where Collateral
is located in a jurisdiction other than Louisiana, remedies available to the
Secured Parties hereunder and remedies available to the Secured Parties under
the laws of such jurisdiction shall be available to the Secured Parties without
regard to any restriction of Louisiana law. If any provision of this Security
Agreement shall be held to be legally invalid or unenforceable by any court of
competent jurisdiction, all remaining provisions of this Security Agreement
shall remain in full force and effect.
Grantor hereby irrevocably submits to the nonexclusive jurisdiction of any
court of the State of Louisiana or any court of the United States of America
sitting in the Eastern District of Louisiana, as the Agent may elect, in any
suit, action or proceeding arising out of or relating to this Security Agreement
or any of the other Transaction Documents. Grantor irrevocably agrees that all
claims in respect of such suit, action or proceeding may be heard and determined
in any such courts. Grantor irrevocably waives, to the fullest extent permitted
by law, any objection which Grantor may now or hereafter have to the laying of
venue of any such suit, action or proceeding brought in any such court, and
Grantor further irrevocably waives any claim that such suit, action or
proceeding brought in any such court has been brought in an inconvenient
4
forum. Grantor authorizes the service of process upon Grantor by registered mail
sent to Grantor at the address set forth herein or such other address as Grantor
may specify in writing to Agent. Nothing herein shall affect the right of the
Agent to serve process in any other manner permitted by law or to commence legal
proceedings or otherwise proceed against Grantor in any other jurisdiction.
GRANTOR HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR PROCEEDING (INCLUDING ANY
COUNTERCLAIM) IN ANY COURT ARISING ON, OUT OF, OR IN ANY WAY RELATING TO THIS
SECURITY AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR ANY AMENDMENT OR
SUPPLEMENT HERETO OR THERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
The Agent on behalf of the Secured Parties hereby accepts this Security
Agreement.
REGIONS BANK, AS AGENT TORCH EXPRESS, L.L.C.
By: By:
--------------------------------- -----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Senior Vice President Its: Manager
5
SCHEDULE 1
Grantor's legal status: limited liability company
State or jurisdiction of Grantor's organization: Louisiana
Grantor's organizational number issued by the Louisiana Secretary of State is:
35245774K
Grantor's tax payer identification number:
--------------------------
Grantor's mailing address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Grantor's chief executive office: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇-▇▇▇▇
Location of Grantor's books and records: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Other names and legal forms used by Grantor to conduct business within last ten
years: none
6
EXHIBIT H
PLEDGE AGREEMENT
This PLEDGE AGREEMENT (the "Agreement") is dated February , 2003 and is
----
made by TORCH OFFSHORE, INC. ("Pledgor" or "Borrower") in favor of REGIONS BANK,
as Agent for the benefit of the Agent and the Lenders (as such terms are defined
in the Credit Agreement, dated February , 2003, (as the same may be amended,
----
restated, modified or supplemented from time to time, the "Credit Agreement") by
and among Borrower, Regions Bank, in its capacity as Agent for the Lenders, and
the Lenders). The Agent and the Lenders shall hereinafter be collectively
referred to as the "Secured Parties."
W I T N E S S E T H :
WHEREAS, the Pledgor is the legal and beneficial owner of the membership
interests described on Schedule I in the companies listed therein (hereinafter
sometimes collectively referred to as the "Companies" or individually as a, the,
each or any "Company") (such membership interests, together with any membership
interests, options or rights received pursuant to Section 3 of this Agreement,
being hereinafter called the "Pledged Interests").
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration the receipt and adequacy of which is hereby acknowledged,
the Pledgor hereby agrees with Agent as follows:
Section 1. Capitalized Terms. Capitalized terms used herein and not
otherwise defined herein shall have the meaning ascribed to such terms in the
Credit Agreement.
Section 2. Pledge. To secure the prompt and complete payment to the Agent,
for the benefit of the Secured Parties, when stated to be due of any and all
present and future indebtedness (including, without limitation, principal,
interest, fees, collection costs and expenses, attorneys' fees and other
amounts), liabilities and obligations (including, without limitation,
reimbursement obligations with respect to Letters of Credit issued by Regions
under the Credit Agreement) of Borrower and each Subsidiary, and of any one or
more of them, to any one or more of the Secured Parties evidenced by or arising
under or in connection with the Credit Agreement, the Notes, the Letter of
Credit Application(s), and/or any of the other Transaction Documents, whether
direct or contingent, due or to become due or now existing or hereafter arising
(all such amounts and obligations being hereinafter collectively referred to as
"Obligations"), Pledgor hereby pledges and pawns to Agent, for the benefit of
the Secured Parties, and hereby grants in favor of Agent, for the benefit of the
Secured Parties, a continuing security interest in, and a right of set-off and
compensation against, the following described property now or hereafter owned by
Pledgor (collectively, the "Pledged Collateral"):
(a) All of Pledgor's right, title and interest in, to, and under each
Company, including, but not limited to, all of Pledgor's membership
interest in each Company; and
(b) (1) all of the fruits, profits, revenues, returns, distributions and
interest produced by, derived from or attributable to Pledgor's
interest in each Company; (2) all rights of Pledgor as a member of
each Company, including, but not limited to, the right to receive all
distributions of capital, profits, returns and revenues from the sale,
lease, improvement, operation or disposal of any and all property
owned by such Company; and (3) all accessions to, substitutions and
replacements for, and all rents, fruits, issues, increases, profits,
revenues, returns, dividends, distributions, payments, proceeds, goods
acquired with cash proceeds and products of or from any of the
property described in subparagraph (a) above. (The fruits, revenues,
distributions, payments, proceeds and other Pledged Collateral
described in this subparagraph (b) shall be collectively referred to
as the "Distributions".)
Section 3. Purchases, Distributions, etc. Subject to the provisions of
Section 6 hereof, if, while this Agreement is in effect, the Pledgor shall
become entitled to receive or shall receive any membership certificate
(including, without limitation, any certificate representing a Distribution in
connection with any reclassification, increase or reduction of capital, or
issued in connection with any reorganization), option or rights, whether as an
addition to, in substitution of, or in exchange for any Pledged Interests, or by
transfer, or otherwise, the Pledgor agrees to accept the same as the agent for
and to hold the same in trust on behalf of and for the benefit of the Secured
Parties and to deliver the same forthwith to the Agent in the exact form
received, with the endorsement of the Pledgor when necessary and/or appropriate,
together with undated assignment separate from the certificate duly executed in
blank, to be held by the Agent for the benefit of the Secured Parties, subject
to the terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in connection with the Pledged Interests upon the liquidation
or dissolution of any Company shall be paid over to the Agent for the benefit of
the Secured Parties to be held by the Agent as additional collateral security
for the Obligations; and in case any distribution of capital shall be made on or
in connection with the Pledged Interests or any property shall be distributed
upon or with respect to the Pledged Interests pursuant to the recapitalization
or reclassification of the capital of any Company or pursuant to the
reorganization thereof, the property so distributed shall be delivered to the
Agent for the benefit of the Secured Parties to be held by the Agent as
additional collateral security for the Obligations. All sums of money and
property so paid or distributed in respect of the Pledged Interests which are
received by the Pledgor shall, until paid or delivered to the Agent, be held by
the Pledgor in trust as additional collateral security for the Obligations.
Section 4. Voting Rights.
(a) Unless an Event of Default shall have occurred and be continuing, the
Pledgor shall be entitled to vote the Pledged Interests and to give consents,
waivers and ratifications in respect of the Pledged Interests; provided,
however, that the Pledgor shall not give any proxies to vote the Pledged
Interests or enter into any new operating agreements, voting trusts or similar
arrangements with respect thereto, and no vote shall be cast or consent, waiver
or ratification given or action taken which would impair the Pledged Collateral
or be inconsistent with or violate any provision of this Agreement, the Credit
Agreement or any other Transaction Documents.
(b) Upon the occurrence and during the continuance of an Event of Default,
all rights of the Pledgor to exercise the voting and other rights which the
Pledgor would otherwise be entitled to exercise pursuant hereto shall cease and
all such rights shall thereupon become vested in the Agent (or its nominee or
trustee pursuant to Section 6 hereof) which shall thereupon have the sole right
to exercise such voting and other rights.
Section 5. Distributions.
(a) So long as no Event of Default shall have occurred and be continuing,
the Pledgor shall be entitled to receive and retain or otherwise deal with any
and all Distributions attributable to the Pledged Collateral, provided, however,
that any and all:
(i) Distributions paid or payable other than in cash in connection
with, and instruments and other property received, receivable or otherwise
distributed in connection with, or in exchange for, any Pledged Collateral,
2
(ii) Distributions and other distributions paid or payable in cash in
respect of any Pledged Collateral in connection with a partial or total
liquidation or dissolution of such Pledged Collateral or in connection with a
reduction of capital any Company, and
(iii) cash paid, payable or otherwise distributed in redemption of, or
in exchange for, any Pledged Collateral,
shall be forthwith delivered to the Agent to hold as Pledged Collateral for the
benefit of the Secured Parties and shall, if received by the Pledgor, be
received in trust for the benefit of the Secured Parties and be segregated from
the other property or funds of the Pledgor, and be forthwith delivered to the
Agent as Pledged Collateral in the same form as so received (with any necessary
endorsement). Cash which is held by the Agent and which the Agent is entitled to
retain hereunder shall be applied under the Credit Agreement to the payment of
the outstanding Obligations.
(b) Upon the occurrence and during the continuance of an Event of Default:
(i) all rights of the Pledgor to receive the Distributions and other
payments which it would otherwise be authorized to receive and retain pursuant
to this Section 5 shall cease, and all such rights shall thereupon become vested
in the Agent which shall thereupon have the sole right to apply such
Distributions and other payments pursuant to the Credit Agreement to the payment
of the outstanding Obligations; and
(ii) all Distributions and other payments which are received by the
Pledgor contrary to the provisions of paragraph (i) of this Section 5(b) shall
be received by the Pledgor in trust for the Secured Parties, shall be segregated
from other funds of the Pledgor and shall be forthwith paid over to the Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
(c) Nothing in this Section 5 shall be construed to alter any limitations
on the permissibility of Distributions as set forth in the Credit Agreement.
Section 6. Rights of the Agent. Any or all shares of the Pledged Interests
held by the Agent hereunder may, if an Event of Default has occurred and is
continuing, without notice, be registered in the name of the Agent as agent for
the benefit of the Secured Parties, or their nominee or trustee, and the Agent
or such nominee or trustee may thereafter exercise any and all rights of
conversion, exchange, subscription or any other rights, privileges or options
pertaining to any shares of the Pledged Interests as if it were the absolute
owner thereof, including without limitation, the right to exchange at its
discretion any and all of the Pledged Interests upon the merger, consolidation,
reorganization, recapitalization or other readjustment of any Company or upon
the exercise by any Company of any right, privilege or option pertaining to any
Pledged Interests, and in connection therewith, to deposit and deliver any and
all of the Pledged Interests with any committee, depositary, transfer agent,
registrar or other designated agency upon such terms and conditions as it may
determine, all without liability except to account for property actually
received by it, but the Agent or such aforesaid nominee or trustee shall have no
duty to exercise any of the aforesaid rights, privileges or options and shall
not be responsible for any failure to do so or delay in so doing.
Section 7. Remedies. If an Event of Default shall have occurred and be
continuing, the Agent, without demand of performance or other demand,
appraisement, advertisement or notice of any kind (except the notice specified
below in this Section 7 of the time and place of public or private sale) to or
upon the Pledgor or any other Person (all and each of which demands,
appraisements, advertisements and/or notices are hereby expressly waived), may
forthwith collect, receive, appropriate and realize upon the Pledged Collateral,
or any part thereof, and/or may forthwith sell, assign, give option or options
to purchase, contract to sell or otherwise dispose of and deliver said Pledged
Collateral, or any part thereof,
3
in one or more parcels at public or private sale or sales, at any exchange,
broker's board or at any of the Agent's offices or elsewhere upon such terms and
conditions as the Agent may deem advisable and at such prices as the Agent may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. The Agent shall apply the net proceeds of any such collection,
recovery, receipt, appropriation, realization or sale, after deducting all
reasonable costs and expenses of every kind incurred therein or incidental to
the care, safekeeping or otherwise of any and all of the Pledged Collateral or
in any way relating to the rights of the Secured Parties, including, without
limitation, reasonable attorneys' fees and legal expenses, to the payment in
whole or in part, of the Obligations, but only after the payment by the Agent of
any other amount required by any provision of law. For purposes of executory
process, the Pledgor acknowledges the indebtedness owed under the Obligations,
confesses judgment in favor of the Secured Parties for the full amount of the
Obligations, and agrees to enforcement by executory process. The Pledgor waives
(a) the benefit of appraisal provided in Art. 2723 of the Louisiana Code of
Civil Procedure and (b) the demand and three (3) days delay provided by Articles
2639 and 2721, Louisiana Code of Civil Procedure. The Pledgor agrees that the
Agent need not give more than ten (10) days' notice of the time and place of any
public sale or of the time after which a private sale or other intended
disposition is to take place and that such notice is reasonable notification of
such matters. In addition to the rights and remedies granted to the Agent in
this Agreement and in any other instrument or agreement securing, evidencing or
relating to any of the Obligations, the Agent for the benefit of the Secured
Parties shall have all the rights and remedies of a secured party under the
Louisiana Commercial Laws and any other applicable law.
Section 8. Representations, Warranties and Covenants of the Pledgor. The
Pledgor represents and warrants to the Secured Parties that: (a) the Pledgor is
the legal record and beneficial owner of, and has good title to, the Pledged
Interests and the Pledged Interests are subject to no other pledge, lien,
mortgage, hypothecation, security interest, charge, shareholders agreement,
voting trust or similar arrangement, proxy, option or other encumbrance
whatsoever, except the security interest created by this Agreement and the
Existing Regions Security Documents; (b) the Pledged Interests constitute all of
the outstanding membership interests of the Companies and have been duly and
validly issued, are fully paid and non-assessable; (c) the Pledgor has full
power, authority and legal right to pledge all the Pledged Interests pursuant to
this Agreement; (d) this Agreement has been duly executed and delivered by the
Pledgor and constitutes a legal, valid and binding obligation of the Pledgor
enforceable in accordance with its terms; (e) no consent of any other party
(including, without limitation, creditors of the Pledgor) and no consent,
license, permit, approval or authorization of, exemption by, notice or report
to, or registration, filing or declaration with, any governmental authority or
any other Person or entity is required to be obtained by the Pledgor in
connection with the execution, delivery or performance of this Agreement; and
(f) this Agreement creates a valid security interest in the Pledged Collateral,
subject to no prior pledge, lien, mortgage, hypothecation, security interest,
charge, option or encumbrance except the Existing Regions Security Documents.
Section 9. No Disposition, etc. The Pledgor agrees that, without the prior
written consent of the Agent, the Pledgor will not sell, assign, transfer,
exchange, or otherwise dispose of, or grant any option with respect to, the
Pledged Collateral, nor will it create, incur, enter into or permit to exist any
pledge, lien, mortgage, hypothecation, security interest, charge, voting trust
or similar arrangement, proxy, option, or any other encumbrance with respect to
any of the Pledged Collateral, or any interest therein, or any proceeds thereof,
except for the lien and security interest provided for by this Agreement and the
Existing Regions Security Documents. Without the prior written consent of the
Agent, the Pledgor agrees that it will not vote to enable any Company to create,
and will use its best efforts to prevent each Company from creating, any
membership interests of any nature in addition to or in exchange or substitution
for the Pledged Interests except as may be expressly permitted herein.
Section 10. Resale.
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(a) The Pledgor recognizes that the Agent may be unable to effect a public
sale of any or all of the Pledged Interests by reason of certain prohibitions
contained in the Securities Act of 1933, as amended (the "Securities Act"), and
applicable state securities laws but may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers who will be obliged to
agree, among other things, to acquire such interests for their own account for
investment and not with a view to the distribution or resale thereof. The
Pledgor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable to the seller than if such sale were a public
sale and, notwithstanding such circumstances, agrees that any such private sale
shall not be deemed to have been made in a commercially unreasonable manner
solely by reason of its being a private sale. The Agent shall not be under an
obligation to delay a sale of any of the Pledged Interests for the period of
time necessary to permit any Company to register such interests for public sale
under the Securities Act, or under applicable state securities laws, even if the
Pledgor and such Company would agree to do so.
(b) The Pledgor further agrees to do or cause to be done all such other
acts and things as may be necessary to make such sale or sales of any portion or
all of the Pledged Interests valid and binding and in compliance with any and
all applicable laws, regulations, orders, writs, injunctions, decrees or awards
of any and all courts, arbitrators or governmental authorities having
jurisdiction over any such sale or sales, all at the Pledgor's expense. The
Pledgor further agrees that a breach of any of the covenants contained in this
Section 10 will cause irreparable injury to the Secured Parties, that the
Secured Parties have no adequate remedy at law in respect of such breach and, as
a consequence, agrees that each and every covenant contained in this Section
shall be specifically enforceable against the Pledgor and the Pledgor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no default of the
covenants, terms or conditions of the Credit Agreement or any of the Transaction
Documents has occurred.
Section 11. Further Assurances; Further Documentation. The Pledgor agrees
that at any time and from time to time upon the written request of the Agent,
the Pledgor will promptly execute and deliver such further documents and do such
further acts and things as the Agent may reasonably request in order to effect
the purposes of this Agreement.
Section 12. Limitation on Duties Regarding Pledged Collateral. The Agents's
sole duty with respect to the custody, safekeeping and physical preservation of
the Pledged Collateral shall be to use reasonable care in the physical
preservation of the Pledged Collateral that is in the actual possession of the
Agent. Neither the Agent nor any of the Lenders, nor any of their directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Pledged Collateral or for any delay in doing so or shall
be under any obligation to sell or otherwise dispose of any Pledged Collateral
upon the request of the Pledgor or otherwise.
Section 13. Payment of Taxes. The Pledgor agrees to pay, and to save the
Secured Parties harmless from, any and all liabilities with respect to, or
resulting from, any delay in paying any and all stamp, excise, sales or other
taxes that may be payable or determined to be payable with respect to any of the
Pledged Collateral or in connection with any of the transactions contemplated by
this Agreement.
Section 14. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 15. No Waiver; Cumulative Remedies. The Agent shall not by any act,
delay, omission or otherwise be deemed to have waived any of its rights or
remedies or those of the Lenders, and no waiver shall be valid unless in writing
and signed by the Agent and then only to the extent therein set
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forth. A waiver by the Agent of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which the Agent
would otherwise have on any future occasion on its own behalf and on behalf of
the Lenders. No failure to exercise nor any delay in exercising on the part of
the Agent, any right, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, power or
privilege hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided are cumulative and may be exercised singly or concurrently, and are not
exclusive of any rights or remedies provided by law.
Section 16. Modifications; Amendments; Applicable Law. None of the terms or
provisions of this Agreement may be altered, modified or amended except by an
instrument in writing, duly executed by the Agent and the Pledgor. This
Agreement and all obligations of the Pledgor hereunder shall be binding upon the
Pledgor and Pledgor's successors and assigns, and shall, together with the
respective rights and remedies exercisable by the Agent on its own behalf and on
behalf of the Lenders, inure to the benefit of the Secured Parties and their
successors and assigns.
Section 17. Notice. All notices hereunder shall be in writing and shall be
given in the manner set forth in the Credit Agreement.
Section 18. Power of Attorney. To effect the terms and provisions hereof,
the Pledgor hereby designates and appoints the Agent as attorney-in-fact of the
Pledgor, irrevocably and with power of substitution, with authority to endorse
the name of the Pledgor on any notes, acceptances, checks, drafts, money orders,
instruments or other evidences of payment or proceeds of the Pledged Collateral
that may come into the Agent's possession, to execute any endorsements,
assignments, or other instruments of conveyance or transfer; and to do all other
acts and things necessary and advisable in the sole discretion of the Agent to
carry out and enforce this Agreement. All acts of said attorney are hereby
ratified and approved and said attorney shall not be liable for any acts of
commission or omission, nor for any error of judgment or mistake of fact or law,
except for acts by said attorney constituting gross negligence or willful
misconduct. This power of attorney being coupled with an interest is irrevocable
for so long as any of the Obligations whatsoever shall remain unpaid.
Section 19. Irrevocable Authorization and Instructions. The Pledgor hereby
authorizes and instructs the Companies to comply with any instruction received
by it from the Agent in writing that (a) states that an Event of Default has
occurred and (b) is otherwise in accordance with the terms of this Agreement,
without any other or further instructions from the Pledgor, and the Pledgor
agrees that the Companies shall be fully protected in so complying.
Section 20. Pledge and Assignment Absolute. All rights of the Agent and the
Lenders, the pledge and assignment hereunder and all obligations of the Pledgor
hereunder, shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Credit Agreement or
any other Transaction Documents;
(ii) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations;
(iii) any exchange, release or amendment or waiver of or consent to
departure from this Agreement or any other Transaction Documents; or
(iv) any other circumstance that might otherwise constitute a defense
available to, or a discharge of, the Pledgor.
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Section 21. Indemnity and Expenses. (a) The Pledgor agrees to indemnify
each of the Secured Parties from and against any and all claims, losses and
liabilities growing out of or resulting from this Agreement (including, without
limitation, enforcement of this Agreement), except claims, losses or liabilities
resulting from any of the Secured Parties' gross negligence or willful
misconduct.
(b) The Pledgor will upon demand pay to the Agent the amount of any
and all reasonable expenses, including the reasonable fees and disbursements of
its counsel and of any experts and agents, which any of the Secured Parties may
incur in connection with (i) the administration of this Agreement, (ii) the
custody, preservation, or use of, or the sale of, collection from, or other
realization upon, any of the Pledged Collateral, (iii) the exercise or
enforcement of any of the rights of the Agent or the Lenders hereunder, or (iv)
the failure by the Pledgor to perform or observe any of the provisions hereof.
Section 22. Governing Law. This Agreement shall, except to the extent that
the laws of another state apply to the Pledged Collateral or any part thereof,
be governed by and construed in accordance with the laws of the State of
Louisiana.
Section 23. Jurisdiction and Waiver of Jury. The Pledgor hereby irrevocably
submits to the nonexclusive jurisdiction of any court of the State of Louisiana
or any court of the United States of America sitting in the Eastern District of
Louisiana, as the Agent may elect, in any suit, action or proceeding arising out
of or relating to this Agreement or any of the other Transaction Documents. The
Pledgor irrevocably agrees that all claims in respect of such suit, action or
proceeding may be heard and determined in any such courts. The Pledgor
irrevocably waives, to the fullest extent permitted by law, any objection which
the Pledgor may now or hereafter have to the laying of venue of any such suit,
action or proceeding brought in any such court, and the Pledgor further
irrevocably waives any claim that such suit, action or proceeding brought in any
such court has been brought in an inconvenient forum. The Pledgor authorizes the
service of process upon the Pledgor by registered mail sent to Pledgor at the
address set forth in the Credit Agreement or such other address as the Pledgor
may specify in writing to the Agent. Nothing herein shall affect the right of
the Agent to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Pledgor in any other
jurisdiction. THE PLEDGOR HEREBY WAIVES TRIAL BY JURY IN ANY ACTION OR
PROCEEDING (INCLUDING ANY COUNTERCLAIM) IN ANY COURT ARISING ON, OUT OF, OR IN
ANY WAY RELATING TO THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION DOCUMENTS OR
ANY AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered on the date first above written.
TORCH OFFSHORE, INC.
By:
-----------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Chief Financial Officer
REGIONS BANK, AS AGENT
By:
-----------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
Its: Senior Vice President
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SCHEDULE I
COMPANY MEMBERSHIP INTEREST
--------------------------------------------
Torch Express, L.L.C. 100%
Torch Offshore, L.L.C. 100%
9
ACKNOWLEDGMENT AND CONSENT
Each of the undersigned hereby acknowledges receipt of a copy of the
foregoing Pledge Agreement and agrees to be bound thereby and to comply with the
terms thereof insofar as such terms are applicable to it. Each of the
undersigned agrees to notify the Agent promptly in writing of the occurrence of
any of the events described in Section 3 of the Pledge Agreement. Each of the
undersigned further agrees that the terms of subsection 10(b) of the Pledge
Agreement shall apply to it, mutatis mutandis, with respect to all actions that
may be required of it under or pursuant to or arising out of Section 10 of the
Pledge Agreement.
TORCH OFFSHORE, L.L.C.
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Manager
TORCH EXPRESS, L.L.C.
By:
-------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Its: Manager
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