VESSEL PURCHASE AGREEMENT
THIS VESSEL PURCHASE AGREEMENT (this "Agreement") is entered into as
of May 5, 2005 (the "Effective Date"), by and between General Electric
Capital Corporation, a corporation organized under the laws of Delaware
(the "Buyer"), and Torch Offshore, Inc., a Delaware corporation ("Torch
Offshore"), Torch Offshore, LLC, a Delaware limited liability company
("Torch, LLC" and, jointly with Torch Offshore, the "Seller"), and Torch
Express, LLC ("Torch Express") a Louisiana limited liability company.
WHEREAS, Seller and Seller's affiliate, Torch Express (Torch
Express, together with Seller, "Debtors") are indebted to Buyer in the
amount of not less than $21,835,595.75 as of January 7, 2005 plus
attorneys' fees and related expenses (the "Debt"), which indebtedness is
represented by (i) that certain promissory note executed by Torch, LLC,
dated March 21, 2003 in the principal amount of $9,250,000.00, and
guaranteed by Torch Offshore and Torch Express, the payment of which is
secured by, among other things, that certain first preferred ship mortgage
in the principal amount of $9,250,000.00 executed by Torch, LLC, dated
March 21, 2003, on the vessel M/V Midnight Eagle, recorded with the U.S.
Coast Guard National Vessel Documentation Center ("NVDC") in Book 03-61,
page 292, and by that certain preferred fleet mortgage dated December 17,
2003 in the principal amount of $9,250,000.00 on the vessel M/V Midnight
Gator recorded with the NVDC on December 18, 2003 in Batch Number 181843,
Document ID No. 1598179, and by that certain financing statement recorded
with the Delaware Secretary of State at file number 3075660, all as more
fully set forth in the loan and security documentation pertaining thereto,
and (ii) that certain promissory note executed by Seller and Torch
Express, dated December 17, 2003 in the principal amount of $15,000,000,
the payment of which is secured by that certain first preferred ship
mortgage in the principal amount of $24,250,000.00 executed by Torch
Offshore, dated December 17, 2003, on the vessel M/V Midnight Wrangler,
recorded with the Vanuatu Maritime Authority on December 19, 2003 and
recorded at Book PM 24, page 86, and by a first preferred fleet mortgage
in the original principal amount of $15,000,000.00 executed by Torch, LLC,
dated December 17, 2003, on the vessels M/V Midnight Eagle and M/V
Midnight Gator, recorded with the NVDC on December 18, 2003 in Batch
Number 181834, Document ID No. 1598161, and by those certain financing
statements recorded with the Delaware Secretary of State at file numbers
33335240 and 33335661, all as more fully set forth in the loan and
security documentation pertaining thereto (collectively, all of the
foregoing are the "GE Capital Security Interests";
WHEREAS, certain of Buyer's collateral, the M/V Midnight Eagle and
M/V Midnight Wrangler, has been seized in an attempt by Buyer to cause the
satisfaction of Debtors' obligations to Buyer;
WHEREAS, on January 7, 2005 (the "Petition Date"), each of the
Debtors' petitioned for relief under chapter 11 of title 11 of the United
States Code; and
WHEREAS, Debtors have reached an arrangement whereby Seller will
sell to Buyer and Buyer will purchase from Seller all of Buyer's
collateral, subject to acquisition by a higher bidder at an auction
conducted in Debtors' bankruptcy case.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and of other valuable consideration, the
receipt of which is hereby acknowledged, the Parties hereby agree as
The following terms employed in this Agreement have the meanings set
forth as follows:
"Agreement" has the meaning set forth in the Preamble.
"Allowed Custodia Legis Expenses" means all allowed custodia legis
expenses directly related to the preservation of a Vessel from and after
the commencement of the Bankruptcy Cases, as determined by the Bankruptcy
"Allowed Secured Claims" means any Lien on a Vessel superior in rank
to the GE Capital Security Interests, as determined by the Bankruptcy
Court in a final non-appealable order.
"Approval Order" means an order of the Bankruptcy Court, in form and
substance reasonably acceptable to the Buyer in all material respects,
approving the Transaction and all of the terms and conditions contemplated
hereby, which order (i) shall be in full force and effect and (ii) shall
not have been stayed, reversed, modified or amended in any respect and, if
the Approval Order is the subject of a pending appeal, the consummation of
the Transaction shall not be the subject of a presently effective stay
"Auction" means the Bankruptcy Court auction for the Sale Assets to
be held in accordance with the Bidding Procedures Order.
"Bankruptcy Case" means Seller's chapter 11 cases currently pending
before the Bankruptcy Court.
"Bankruptcy Code" means title 11 of the United States Code, as
heretofore and hereafter amended, and codified as 11 U.S.C. sections 101,
"Bankruptcy Court" means the United States Bankruptcy Court for the
Eastern District of Louisiana and any other court having jurisdiction over
the Bankruptcy Case.
"Bidding Procedures" means bidding procedures established by the
Bankruptcy Court and set forth in the Bidding Procedures Order.
"Bidding Procedures Hearing" means the hearing to be scheduled and
conducted by the Bankruptcy Court to consider approval of the Bidding
"Bidding Procedures Order" means an order of the Bankruptcy Court in
the form of Exhibit "A" annexed here to or as otherwise agreed by Buyer,
establishing the Bidding Procedures.
"Business Days" are days on which banks are open in the place of
Closing provided in Section 2.2.
"Buyer" has the meaning set forth in the Preamble.
"Buyer's Authorized Representative" has the meaning set forth in
"Claimants" has the meaning set forth in Section 6.5.
"Closing" has the meaning set forth in Section 2.2.
"Closing Date" has the meaning set forth in Section 2.2.
"Competing Bidder" has the meaning set forth in Section 3.2(a).
"Debt" has the meaning set forth in the Recitals.
"Debtors" has the meaning set forth in the Recitals.
"Effective Date" has the meaning set forth in the Preamble.
"Equipment" means with respect to any vessel (i) said Vessel's
machinery, engines, lay installation equipment, tower, reels, cranes,
tensioners, spares, consumables, motors, generators, riggings,
attachments, accessories, fixtures, replacement parts and other
appurtenances and equipment associated therewith, whether on board or
ashore; (ii) all surveys, inspection records, safety logs and maintenance
and navigation records relating to the Vessel; and (iii) all owner's and
operator's manuals related to, or used or usable by the Vessel. Without
limitation of the foregoing, the meaning of term "Equipment" shall
include, (a) in the case of the MV Midnight Wrangler, the four (4) reels
and the modular lay system, including all components thereof, as further
described in Exhibit C hereto, (b) in the case of the M/V Midnight Eagle,
the American Crane, Model 5299 and the Gallion hydraulic pedestal crane as
further described in Exhibit C hereto to the extent deemed encumbered by
the GE Capital Security Interests, and (c) in the case of the M/V Midnight
Gator, the two (2) Caterpillar Model 3512-D1 (S/N 50Y00958 and S/N
50Y00962) engines driving skid mounted jet pumps as described in Exhibit C
"GE Capital Security Interests" shall have the meaning set forth in
"Governmental Approval" means any authorization, consent, approval,
license, franchise, ruling, permit, tariff, rate, certification,
exemption, filing or registration by or with any Governmental Authority
relating to the ownership of the Sale Assets or to the execution, delivery
or performance of this Agreement.
"Governmental Authority" means any national government, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government and any other governmental entity with authority
over the Buyer or Seller or the operation of the Vessels.
"Law" means any statute, law, rule, regulation, ordinance, order or
code, now or hereafter in effect, and any judicial or administrative
interpretation thereof by a Governmental Authority or otherwise, including
any judicial or administrative order, consent decree or judgment.
"Lien" or "Liens" means any mortgage, lien (statutory or other),
pledge, security interest, encumbrance, hypothecation, assignment for
security, or deposit arrangement or other security agreement or adverse
claim to ownership of the Vessels or the Equipment of any kind or nature
whatsoever, recorded or unrecorded.
"M/V Midnight Eagle" means that certain steel pipe laying/burying
barge Midnight Eagle including all of her Equipment, a vessel registered
and flagged under the laws of the United States of America, Official
Number 588872, and owned by Torch, LLC, as described on Exhibit "C"
attached hereto and made a part hereof.
"M/V Midnight Gator" means that certain shallow water jet/bury barge
Midnight Gator including all of her Equipment, a vessel registered and
flagged under the laws of the United States of America, Official Number
1131254, and owned by Torch, LLC, as described on Exhibit "C" attached
hereto and made a part hereof.
"M/V Midnight Wrangler" means that certain construction/pipe lay
vessel Midnight Wrangler including all of her Equipment, a vessel
registered and flagged under the laws of the Republic of Vanuatu, Official
Number 1480, and owned by Torch Offshore, as described on Exhibit "C"
attached hereto and made a part hereof
"Preferred Claims" has the meaning set forth in Section 3.1(a).
"Party" or "Parties" means, in the singular, Seller or Buyer as the
context requires, and, in the plural, Seller and Buyer.
"Person" means an individual, a partnership, a corporation, a joint
venture, an unincorporated association, a joint-stock company, a trust, a
limited liability company, or other entity or a government or any agency
or political subdivision thereof.
"Purchase Price" has the meaning set forth in Section 3.1.
"Requirement of Law" means, as to any Person, the certificate of
incorporation and by-laws or partnership agreement or other organizational
or governing documents of such Person, and any law applicable to or
binding upon such Person or any of its properties or to which such Person
or any of its properties is subject.
"Sale Assets" has the meaning set forth in Section 2.1.
"Sale Hearing" means the hearing to be scheduled and conducted by
the Bankruptcy Court to consider approval and entry of the Approval Order.
"Sale Motion" means the motion or motions of Seller, in form and
substance reasonably acceptable to Buyer, seeking approval and entry of
the Bidding Procedures Order and the Approval Order and scheduling of the
Bidding Procedures Hearing and the Sale Hearing.
"Security Deposit" has the meaning set forth in Section 3.2(a).
"Security Deposit Escrow Agent" means J.P. Morgan Trust Company,
National Association, or such other entity agreed to by the parties.
"Security Deposit Escrow Agreement" means that certain Security
Deposit Escrow Agreement, substantially in the form attached hereto as
"Seller" has the meaning set forth in the Preamble.
"Torch Express" has the meaning given to it in the Recitals.
"Transaction" means the purchase and sale of the Sale Assets, along
with any other transactions contemplated in this Agreement or related
"Vessels" means, collectively, the M/V MIDNIGHT WRANGLER, the M/V
MIDNIGHT EAGLE, vessel M/V MIDNIGHT GATOR, as identified on Exhibit "C"
attached hereto and made a part hereof, and "Vessel" means, individually,
any one of the Vessels.
PURCHASE AND SALE OF SALE ASSETS; THE CLOSING
2.1 Sale and Purchase. Seller hereby agrees to sell to Buyer, and
Buyer hereby agrees to purchase from the Seller, effective as of the
Closing Date, the Vessels (collectively, the "Sale Assets"). Any
equipment, machinery or other items currently leased or rented by Seller
shall be excluded from the Sale Assets and shall not form a part of this
2.2 The Closing. The closing of the purchase and sale of the Sale
Assets (the "Closing") will take place as soon as reasonably practicable
after entry of the Approval Order, during normal business hours at the
offices of Heller, Draper, Hayden, Patrick & Horn, L.L.C. in New Orleans,
Louisiana or at such other venue as the Seller may select. The Parties
shall use all reasonable efforts to cause the Closing to occur within ten
(10) Business Days following the entry of the Approval Order (such date,
the "Closing Date").
PURCHASE PRICE; ADJUSTMENTS
3.1 Purchase Price.
(a) The aggregate amount (such amount, as adjusted pursuant to any
other provisions of this Agreement, referred to as the "Purchase Price")
to be paid by Buyer to Seller for the Sale Assets is U.S. $18,360,000.00,
allocated as follows: (i) $11,520,000.00 to M/V Midnight Wrangler; (ii)
$5,760,000.00 to M/V Midnight Eagle; and (iii) $1,080,000.00 to M/V
Midnight Gator, or such higher amount as may be bid by Buyer or a
competing bidder at the Auction. Seller acknowledges and agrees that (1)
Buyer shall be entitled to bid in its Debt in lieu of cash at the Auction
with respect to any one or more of the Vessels, (2) in the event Buyer is
the successful bidder with respect to any Vessel, Buyer shall be obligated
to pay the following expenses (collectively, the "Preferred Claims"): (i)
all Allowed Custodia Legis Expenses; (ii) all Allowed Secured Claims; and
(iii) an administrative fee to Seller of $75,000 for services rendered in
maintaining and in marketing the sale and soliciting of bids for the
Vessels (the "Administrative Fee"), which shall be allocated as follows:
(i) $47,058.82 to M/V Midnight Wrangler; (ii) $23,529.41 to M/V Midnight
Eagle; and (iii) $4,411.76 to M/V Midnight Gator. In the event Buyer is
the successful bidder with respect to any Vessel, Debtors shall receive a
credit against the Debt equal to Buyer's approved bid price for the Vessel
less the amount of all Preferred Claims. Such credit shall be applied
against the Debt in the following manner: (x) first against the
outstanding balance of principal and interest due by Debtors to Seller as
of the commencement of the Bankruptcy Case; (y) second, against any unpaid
post-petition interest (including any penalties and/or default interest);
and (z) third, against reasonable attorneys' fees and all other expenses
incurred by Seller in connection with the collection of the Debt and
foreclosure and sale of the Vessels, in each case, as approved by the
(b) In the event a person other than Buyer is the successful bidder
at the Auction with respect to one or more of the Vessels, the Purchase
Price shall be paid in cash at the Closing, the cash proceeds of the
Purchase Price shall be deposited into the registry of the Bankruptcy
Court and the amount thereof, plus any accrued interest, shall be
distributed first to the payment of all Preferred Claims, and second to
the Buyer until the Debt has been fully satisfied, and the balance shall
remain in the registry of the Bankruptcy Court to be distributed as the
Bankruptcy Court may order.
(c) Except for the Administrative Fee, in no event shall Debtors or
any successor in interest of Debtors including, without limitation, any
trustee in bankruptcy in the Bankruptcy Case, seek or be entitled to costs
or expenses of administration of Debtors' Bankruptcy Case against any of
the Vessels pursuant to Section 506 (c) of the Bankruptcy Code or
3.2 Security Deposit.
(a) In the event that a Person other than Buyer wishes to submit a
competing bid to purchase one or more of the Vessels for cash at the
Auction pursuant to the
Bidding Procedures Order, such Person (a "Competing Bidder") shall execute
the Security Deposit Escrow Agreement with Seller and shall pay a deposit
(the "Security Deposit") equal to 10% Purchase Price allocated to each
Vessel bid upon by such Person by wire transfer to an escrow account in
the U.S. to be established with the Security Deposit Escrow Agent and held
pursuant to the Bidding Procedures Order. The Competing Bidder shall be
responsible for all costs and fees of the Security Deposit Escrow Agent.
Buyer shall not be required to execute a Security Deposit Escrow Agreement
or place a Security Deposit.
(b) Upon the termination of this Agreement for any reason other than
a breach by the Competing Bidder of its obligations hereunder, the
Competing Bidder shall be entitled to the return of the Security Deposit
plus any interest earned thereon pursuant to the terms of the Security
Deposit Escrow Agreement, and the Parties shall provide joint written
instructions to the Security Deposit Escrow Agent to such effect.
(c) In the event of a termination of the Agreement due to a breach
by a Competing Bidder of said Competing Bidder's obligations under this
Agreement, the Competing Bidder shall forfeit its Security Deposit (plus
any interest earned thereon). The forfeited Security Deposit shall be
considered as a portion of the sale proceeds with respect to one or more
of the Vessels (as applicable) and shall be distributed as follows: [One
of the following alternatives, as approved by the Court:
to the Seller.
to satisfy the Allowed Secured Claims, if any, and GE Capital Security
Interests pertaining to each Vessel, with the balance, if any, distributed
to the Seller.
(d) If a Closing occurs with a Competing Bidder, then at the
Closing, the Seller and the Competing Bidder shall provide joint written
instructions to the Security Deposit Escrow Agent to release the Security
Deposit and Seller shall credit the Security Deposit plus any accrued
interest thereon against the Purchase Price paid at Closing.
4.1 Closing Deliveries of Seller. On the Closing Date, in exchange for the
Purchase Price, Seller shall deliver the following to Buyer:
(a) A certificate evidencing resolutions of the Board of Directors
of the Seller, certified by the Secretary or other appropriate officer or
agent of the Seller, duly authorizing the execution, delivery and
performance of this Agreement and other transaction documents;
(b) A bill of sale for the Vessels in a form recordable in the U.S.
Coast Guard National Vessel Documentation Center with respect to M/V
Midnight Eagle and M/V Midnight Gator and in the Vanuatu Maritime Ship
Registry with respect to M/V Midnight Wrangler, duly notarially attested,
transferring the Vessels free and clear of all Liens ;
(c) A current Certificate of Ownership and Encumbrances issued by
the appropriate Governmental Authorities of the United States of America
(with respect to M/V Midnight Eagle and M/V Midnight Gator) and the
Republic of Vanuatu (with respect to M/V Midnight Wrangler) showing the
current record owners of the Vessels and stating that the Vessels are free
from all registered Liens; and
(d) Any additional documents reasonably required by the appropriate
Governmental Authorities for the purpose of re-documenting Seller's
ownership of the Vessels with the Vanuatu Ship Registry (with respect to
the M/V Midnight Wrangler) and with the U.S. Coast Guard National Vessel
Documentation Center (with respect to the M/V Midnight Eagle and the M/V
Midnight Gator) free and clear of all Liens, claims and interests,
provided Buyer notifies the Seller of any such documents as soon as
possible after the date of this Agreement.
4.2 Closing Deliveries of Buyer. On the Closing Date, in exchange for the
Sale Assets, Buyer shall deliver the following to Seller:
(a) A certificate evidencing resolutions of the Board of Directors
of the Buyer, certified by the Secretary or other appropriate officer or
agent of the Buyer, duly authorizing the execution, delivery and
performance of this Agreement and other documents relating hereto.
Notwithstanding the preceding sentence, Debtors shall waive the delivery
requirement of this subsection (a) on the Closing Date with respect to
General Electric Capital Corporation; and
(b) The Purchase Price, which shall be paid in accordance with
Section 3.1 hereof.
REPRESENTATIONS OF BUYER
5.1 Organization, Power and Status of the Buyer. Buyer is (i) an entity
duly formed, validly existing and in good sta