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                                                                    EXHIBIT 10.5

                           INDEMNIFICATION AGREEMENT

         This Indemnification Agreement is entered into and effective as of the
______ day of ____________________, 2002 (this "Agreement"), by and between
Mission Resources Corporation, a Delaware corporation (the "Company"), and
_____________ ("Indemnitee"):

         WHEREAS, highly competent persons have become more reluctant to serve
corporations as directors, executive officers or in other capacities unless they
are provided with adequate protection through insurance or adequate
indemnification against inordinate risks of claims and actions against them
arising out of their service to, and activities on behalf of, the corporation;

         WHEREAS, the Board of Directors of the Company (the "Board") has
determined that, in order to attract and retain qualified individuals, the
Company will attempt to maintain on an ongoing basis, at its sole expense,
liability insurance to protect persons serving the Company and its subsidiaries
from certain liabilities. Although the furnishing of such insurance has been a
customary and widespread practice among United States-based corporations and
other business enterprises, the Company believes that, given current market
conditions and trends, such insurance may be available to it in the future only
at higher premiums and with more exclusions. At the same time, directors,
officers and other persons in service to corporations or business enterprises
are being increasingly subjected to expensive and time-consuming litigation
relating to, among other things, matters that traditionally would have been
brought only against the corporation or business enterprise itself;

         WHEREAS, the uncertainties relating to such insurance and to
indemnification have increased the difficulty of attracting and retaining such
persons;

         WHEREAS, the Board has determined that the increased difficulty in
attracting and retaining such persons is detrimental to the best interests of
the Company's stockholders and that the Company should act to assure such
persons that there will be increased certainty of such protection in the future;

         WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and

         WHEREAS, Indemnitee is willing to serve, continue to serve and to take
on additional service for or on behalf of the Company on the condition that he
be so indemnified.

         NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:

         Section 1.  Services by Indemnitee. Indemnitee agrees to serve as a
director/executive officer of the Company and, as mutually agreed by Indemnitee
and the Company, as a director, officer, employee, agent or fiduciary of other
corporations, partnerships, joint ventures, trusts or other enterprises
(including, without limitation, employee benefit plans). Indemnitee may at any
time and for any reason resign from any such position (subject to any other
contractual

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obligation or any obligation imposed by operation of law), in which event the
Company shall have no obligation under this Agreement to continue Indemnitee in
that position. This Agreement shall not be deemed an employment contract between
the Company (or any of its subsidiaries) and Indemnitee. Indemnitee specifically
acknowledges that Indemnitee's employment with the Company (or any of its
subsidiaries), if any, is at will, and the Indemnitee may be discharged at any
time for any reason, with or without cause, except as may be otherwise provided
in any written employment contract between Indemnitee and the Company (or any of
its subsidiaries), other applicable formal severance policies duly adopted by
the Board or, with respect to service as a director of the Company, by the
Company's Certificate of Incorporation, Bylaws and the General Corporation Law
of the State of Delaware. Notwithstanding, the foregoing, this Agreement shall
continue in force after Indemnitee has ceased to serve as an officer or director
of the Company and no longer serves at the request of the Company as a director,
officer, employee or agent of the Company or any subsidiary of the Company.

         Section 2.  Indemnification--General. The Company shall indemnify, and
advance Expenses (as hereinafter defined) to, Indemnitee (a) as provided in this
Agreement and (b) to the fullest extent permitted by applicable law in effect on
the date hereof and as amended from time to time. The rights of Indemnitee
provided under the preceding sentence shall include, but shall not be limited
to, the rights set forth in the other Sections of this Agreement.

         Section 3.  Proceedings Other than Proceedings by or in the Right of
the Company. Indemnitee shall be entitled to the rights of indemnification
provided in Section 2 and this Section 3 if, by reason of his Corporate Status
(as hereinafter defined), he is, or is threatened to be made, a party to or a
participant in any threatened, pending, or completed Proceeding (as hereinafter
defined), other than a Proceeding by or in the right of the Company. Pursuant to
this Section 3, the Company shall indemnify Indemnitee against, and shall hold
Indemnitee harmless from and in respect of, all Expenses, judgments, penalties,
fines (including excise taxes) and amounts paid in settlement (including all
interest, assessments and other charges paid or payable in connection with or in
respect of such Expenses, judgments, penalties, fines or amounts paid in
settlement) actually and reasonably incurred by him or on his behalf in
connection with such Proceeding or any claim, issue or matter therein, if he
acted in good faith and in a manner he reasonably believed to be in or not
opposed to the best interests of the Company and, with respect to any criminal
Proceeding, had no reasonable cause to believe his conduct was unlawful.

         Section 4.  Proceedings by or in the Right of the Company. Indemnitee
shall be entitled to the rights of indemnification provided in Section 2 and
this Section 4 if, by reason of his Corporate Status, he is, or is threatened to
be made, a party to or a participant in any threatened, pending or completed
Proceeding brought by or in the right of the Company to procure a judgment in
its favor. Pursuant to this Section 4, the Company shall indemnify Indemnitee
against, and shall hold Indemnitee harmless from and in respect of, all Expenses
actually and reasonably incurred by him or on his behalf in connection with, and
any amounts paid in settlement of, such Proceeding if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Company. Notwithstanding the foregoing, no indemnification against such
Expenses shall be made in respect of any claim, issue or matter in such
Proceeding as to which Indemnitee shall have been adjudged to be liable to the
Company if applicable law prohibits such indemnification; provided, however, if
applicable law so permits, indemnification against such Expenses shall
nevertheless be made by the Company in

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such event if and only to the extent that the Court of Chancery (as hereinafter
defined), or the court in which such Proceeding shall have been brought or is
pending, shall determine.

         Section 5.  Indemnification for Expenses of a Party Who Is Wholly or
Partly Successful. Notwithstanding any other provision of this Agreement, to the
extent that Indemnitee is, by reason of his Corporate Status, a party to (or a
participant in) and is successful, on the merits or otherwise, in defense of any
Proceeding, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in defense of such Proceeding but is successful, on the merits
or otherwise, as to one or more but less than all claims, issues or matters in
such Proceeding, the Company shall indemnify Indemnitee against all Expenses
actually and reasonably incurred by him or on his behalf in connection with each
successfully resolved claim, issue or matter. For purposes of this Section and
without limitation, the termination of any claim, issue or matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such claim, issue or matter.

         Section 6.  Indemnification for Expenses as a Witness. Notwithstanding
any other provision of this Agreement, to the extent that Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding to which Indemnitee
is not a party, he shall be indemnified against all Expenses actually and
reasonably incurred by him or on his behalf in connection therewith.

         Section 7.  Advancement of Expenses. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within ten (10) days after the receipt by the Company of a
statement or statements from Indemnitee requesting such advance or advances from
time to time, whether prior to or after final disposition of such Proceeding.
Such statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it ultimately shall
be determined, in accordance with this Agreement, that Indemnitee is not
entitled to be indemnified against such Expenses.

         Section 8.  Procedure for Determination of Entitlement to
Indemnification.

                 (a) To obtain indemnification under this Agreement, Indemnitee
         shall submit to the Company a written request including therein or
         therewith such documentation and information as is reasonably available
         to Indemnitee and is reasonably necessary to determine whether and to
         what extent Indemnitee is entitled to indemnification. The Secretary of
         the Company shall, promptly upon receipt of such a request for
         indemnification, advise the Board in writing that Indemnitee has
         requested indemnification.

                 (b) On written request by Indemnitee for indemnification
         pursuant to the first sentence of Section 8(a), a determination, if
         required by applicable law, with respect to Indemnitee's entitlement
         thereto shall be made in the specific case: (i) if a Change of Control
         (as hereinafter defined) shall have occurred within two (2) years prior
         to the date of such written request, by Independent Counsel (as
         hereinafter defined) in a written opinion to the Board, a copy of which
         shall be

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         delivered to Indemnitee; or (ii) if a Change of Control shall not have
         occurred within two (2) years prior to the date of such written
         request, (A) by a majority vote of the Disinterested Directors (as
         hereinafter defined), even though less than a quorum of the Board, or
         (B) if there are no such Disinterested Directors, or if such
         Disinterested Directors so direct, by Independent Counsel in a written
         opinion to the Board, a copy of which shall be delivered to Indemnitee;
         and, if it is so determined that Indemnitee is entitled to
         indemnification, payment to Indemnitee shall be made within ten (10)
         days after such determination. Indemnitee shall cooperate with the
         person, persons or entity making such determination with respect to
         Indemnitee's entitlement to indemnification, including providing to
         such person, persons or entity on reasonable advance request any
         documentation or information which is not privileged or otherwise
         protected from disclosure and which is reasonably available to
         Indemnitee and reasonably necessary to such determination. Any costs or
         expenses (including attorneys' fees and disbursements) incurred by
         Indemnitee in so cooperating with the person, persons or entity making
         such determination shall be borne by the Company (irrespective of the
         determination as to Indemnitee's entitlement to indemnification) and
         the Company hereby indemnifies and agrees to hold Indemnitee harmless
         therefrom.

                 (c) In the event the determination of entitlement to
         indemnification is to be made by Independent Counsel pursuant to
         Section 8(b), the Independent Counsel shall be selected as provided in
         this Section 8(c). If a Change of Control shall not have occurred
         within two (2) years prior to the date of Indemnitee's written request
         for indemnification pursuant to Section 8(a), the Independent Counsel
         shall be selected by the Board, and the Company shall give written
         notice to Indemnitee advising him of the identity of the Independent
         Counsel so selected. If a Change of Control shall have occurred within
         two (2) years prior to the date of Indemnitee's written request for
         indemnification pursuant to Section 8(a), the Independent Counsel shall
         be selected by Indemnitee (unless Indemnitee shall request that such
         selection be made by the Board, in which event the preceding sentence
         shall apply), and Indemnitee shall give written notice to the Company
         advising it of the identity of the Independent Counsel so selected. In
         either event, Indemnitee or the Company, as the case may be, may,
         within ten (10) days after such written notice of selection shall have
         been given, deliver to the Company or to Indemnitee, as the case may
         be, a written objection to such selection. Such objection may be
         asserted only on the ground that the Independent Counsel so selected
         does not meet the requirements of "Independent Counsel" as defined in
         Section 17, and the objection shall set forth with particularity the
         factual basis of such assertion. If such written objection is so made
         and substantiated, the Independent Counsel so selected may not serve as
         Independent Counsel unless and until such objection is withdrawn or a
         court has determined that such objection is without merit. If, within
         twenty (20) days after submission by Indemnitee of a written request
         for indemnification pursuant to Section 8(a), no Independent Counsel
         shall have been selected and not objected to, either the Company or
         Indemnitee may petition the Court of Chancery or other court of
         competent jurisdiction for resolution of any objection which shall have
         been made

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         by the Company or Indemnitee to the other's selection of Independent
         Counsel and/or for the appointment as Independent Counsel of a person
         selected by the petitioned court or by such other person as the
         petitioned court shall designate, and the person with respect to whom
         all objections are so resolved or the person so appointed shall act as
         Independent Counsel under Section 8(b). The Company shall pay any and
         all reasonable fees and expenses of Independent Counsel incurred by
         such Independent Counsel in connection with acting pursuant to Section
         8(b), and the Company shall pay all reasonable fees and expenses
         incident to the procedures of this Section 8(c), regardless of the
         manner in which such Independent Counsel was selected and appointed. If
         (i) Independent Counsel does not make any determination respecting
         Indemnitee's entitlement to indemnification hereunder within ninety
         (90) days after receipt by the Company of a written request therefor
         and (ii) any judicial proceeding or arbitration pursuant to Section
         10(a)(iii) hereof is then commenced, Independent Counsel shall be
         discharged and relieved of any further responsibility in such capacity
         (subject to the applicable standards of professional conduct then
         prevailing).

         Section 9.  Presumptions and Effect of Certain Proceedings.

                 (a) In making a determination with respect to entitlement to
         indemnification hereunder, the Person, Persons or entity making such
         determination shall presume that Indemnitee is entitled to
         indemnification under this Agreement if Indemnitee has submitted a
         request for indemnification in accordance with Section 8(a), and the
         Company shall have the burden of proof to overcome that presumption in
         connection with the making by any Person, Persons or entity of any
         determination contrary to that presumption.

                 (b) The termination of any Proceeding or of any claim, issue or
         matter therein, by judgment, order, settlement or conviction, or on a
         plea of nolo contendere or its equivalent, shall not (except as
         otherwise expressly provided in this Agreement) of itself adversely
         affect the right of Indemnitee to indemnification or create a
         presumption that Indemnitee did not act in good faith and in a manner
         which he reasonably believed to be in or not opposed to the best
         interests of the Company or, with respect to any criminal Proceeding,
         that Indemnitee had reasonable cause to believe that his conduct was
         unlawful.

                 (c) Any action taken by Indemnitee in connection with any
         employee benefit plan shall, if taken in good faith by Indemnitee and
         in a manner Indemnitee reasonably believed to be in the interest of the
         participants in or beneficiaries of that plan, be deemed to have been
         taken in a manner "not opposed to the best interests of the Company"
         for all purposes of this Agreement.

         Section 10. Remedies of Indemnitee.

                 (a) In the event that (i) a determination is made pursuant to
         Section 8 that Indemnitee is not entitled to indemnification hereunder,
         (ii) advancement of Expenses is not timely made pursuant to Section 7,
         (iii) Independent Counsel is to

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         determine Indemnitee's entitlement to indemnification hereunder, but
         does not make that determination within ninety (90) days after receipt
         by the Company of the request for that indemnification, (iv) payment of
         indemnification is not made pursuant to Section 5 or 6 within ten (10)
         days after receipt by the Company of a written request therefor or (v)
         payment of indemnification is not made within ten (10) days after a
         determination has been made that Indemnitee is entitled to
         indemnification, Indemnitee shall be entitled to an adjudication from
         the Court of Chancery of his entitlement to such indemnification or
         advancement of Expenses. Alternatively, Indemnitee, at his option, may
         seek an award in arbitration to be conducted by a single arbitrator
         pursuant to the Commercial Arbitration Rules of the American
         Arbitration Association. Indemnitee shall commence such Proceeding
         seeking an adjudication or an award in arbitration within one hundred
         eighty (180) days following the date on which Indemnitee first has the
         right to commence such proceeding pursuant to this Section 10(a);
         provided, however, that the foregoing clause shall not apply in respect
         of a proceeding brought by Indemnitee to enforce his rights under
         Section 5.

                 (b) In the event that a determination shall have been made
         pursuant to Section 8(b) that Indemnitee is not entitled to
         indemnification, any judicial proceeding or arbitration commenced
         pursuant to this Section 10 shall be conducted in all respects as a de
         novo trial, or arbitration, on the merits and Indemnitee shall not be
         prejudiced by reason of that adverse determination. In any judicial
         proceeding or arbitration commenced pursuant to this Section 10, the
         Company shall have the burden of proving that Indemnitee is not
         entitled to indemnification or advancement of Expenses, as the case may
         be.

                 (c) If a determination shall have been made pursuant to Section
         8(b) that Indemnitee is entitled to indemnification, the Company shall
         be bound by such determination in any judicial proceeding or
         arbitration commenced pursuant to this Section 10, absent (i) a
         misstatement by Indemnitee of a material fact, or an omission by
         Indemnitee of a material fact necessary to make Indemnitee's statement
         not materially misleading, in connection with the request for
         indemnification, or (ii) a prohibition of such indemnification under
         applicable law.

                 (d) In the event that Indemnitee, pursuant to this Section 10,
         seeks a judicial adjudication of or an award in arbitration to enforce
         his rights under, or to recover damages for breach of, this Agreement,
         Indemnitee shall be entitled to recover from the Company, and shall be
         indemnified by the Company against, any and all expenses (of the types
         described in the definition of Expenses in Section 17) actually and
         reasonably incurred by him in such judicial adjudication or
         arbitration, but only if he prevails therein. If it shall be determined
         in said judicial adjudication or arbitration that Indemnitee is
         entitled to receive part but not all of the indemnification or
         advancement of expenses sought, the expenses incurred by Indemnitee in
         connection with such judicial adjudication or arbitration shall be
         appropriately prorated.

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         Section 11. Non-Exclusivity; Survival of Rights; Insurance;
Subrogation.

                 (a) The rights of indemnification and to receive advancement of
         Expenses as provided by this Agreement shall not be deemed exclusive of
         any other rights to which Indemnitee may at any time be entitled under
         applicable law, the Certificate of Incorporation, the Bylaws, any
         agreement, a vote of stockholders or a resolution of directors, or
         otherwise. No amendment, alteration or repeal of this Agreement or of
         any provision hereof shall limit or restrict any right of Indemnitee
         under this Agreement in respect of any action taken or omitted by such
         Indemnitee in his Corporate Status prior to such amendment, alteration
         or repeal. To the extent that a change in Delaware law (whether by
         statute or judicial decision) permits greater indemnification by
         agreement than would be afforded currently under this Agreement, it is
         the intent of the parties hereto that Indemnitee shall enjoy by this
         Agreement the greater benefits so afforded by such change.

                 (b) To the extent that the Company maintains an insurance
         policy or policies providing liability insurance for directors,
         officers, employees, or agents of the Company or of any other
         corporation, partnership, joint venture, trust, employee benefit plan
         or other enterprise which such person serves at the request of the
         Company, Indemnitee shall be covered by such policy or policies in
         accordance with its or their terms to the maximum extent of the
         coverage available for any such director, officer, employee or agent
         under such policy or policies.

                 (c) In the event of any payment under this Agreement, the
         Company shall be subrogated to the extent of such payment to all the
         rights of recovery of Indemnitee, who shall execute all papers required
         and take all action necessary to secure such rights, including
         execution of such documents as are necessary to enable the Company to
         bring suit to enforce such rights.

                 (d) The Company shall not be liable under this Agreement to
         make any payment of amounts otherwise indemnifiable hereunder if and to
         the extent that Indemnitee has otherwise actually received such payment
         under any insurance policy, contract, agreement or otherwise.

                 (e) The Company's obligation to indemnify or advance Expenses
         hereunder to Indemnitee with respect to Indemnitee's service at the
         request of the Company as a director, officer, employee or agent of any
         other corporation, partnership, joint venture, trust, employee benefit
         plan or other enterprise shall be reduced by any amount Indemnitee has
         actually received as indemnification or advancement of Expenses from
         such other corporation, partnership, joint venture, trust, employee
         benefit plan or other enterprise.

         Section 12. Duration of Agreement. This Agreement shall continue until
and terminate upon the later of: (a) ten (10) years after the date that
Indemnitee shall have ceased to serve as a director or officer of the Company or
of any other corporation, partnership, joint

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venture, trust, employee benefit plan or other enterprise which Indemnitee
served on behalf of the Company; or (b) the final termination of any Proceeding
then pending in respect of which Indemnitee is granted rights of indemnification
or advancement of expenses hereunder and of any Proceeding commenced by
Indemnitee pursuant to Section 10 relating thereto. This Agreement shall be
binding upon the Company and its successors and assigns and shall inure to the
benefit of Indemnitee and his spouse (if Indemnitee resides in Texas or another
community property state), heirs, executors and administrators, and this
Agreement does not, and shall not be construed to confer any rights on any
person that is not a party to this Agreement, other than Indemnitee's spouse,
and his heirs, executors and assigns.

     Section 13.  Severability. If any provision or provisions of this Agreement
shall be held to be invalid, illegal or unenforceable for any reason whatsoever:
(a) the validity, legality and enforceability of the remaining provisions of
this Agreement (including, without limitation, each portion of any Section of
this Agreement containing any such provision held to be invalid, illegal or
unenforceable which is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby; (b) such provision or provisions
shall be deemed reformed to the extent necessary to conform to applicable law
and to give the maximum effect to the intent of the parties hereto; and (c) to
the fullest extent possible, the provisions of this Agreement (including,
without limitation, each portion of any Section of this Agreement containing any
such provision held to be invalid, illegal or unenforceable which is not itself
invalid, illegal or unenforceable) shall be construed so as to give effect to
the intent manifested thereby.

     Section 14.  Exception to Right of Indemnification or Advancement of
Expenses. Notwithstanding any other provision hereof, Indemnitee shall not be
entitled to indemnification or advancement of Expenses under this Agreement with
respect to any Proceeding brought by Indemnitee or any claim therein prior to a
Change of Control, unless the bringing of such Proceeding or making of such
claim shall have been approved by the Board.

     Section 15.  Identical Counterparts. This Agreement may be executed in one
or more counterparts by means of original or facsimile signatures, each of which
shall for all purposes be deemed to be an original but all of which together
shall constitute one and the same Agreement. Only one such counterpart signed by
the party against whom enforceability is sought needs to be produced to evidence
the existence of this Agreement.

     Section 16.  Headings. The headings of the Sections hereof are inserted for
convenience only and shall not be deemed to constitute part of this Agreement or
to affect the construction thereof.

     Section 17.  Definitions. For purposes of this Agreement:

          (a)     "Acquiring Person" means any Person who or which, together
     with all Affiliates and Associates of such Person, is or are the Beneficial
     Owner of twenty-five percent (25%) or more of the shares of Common Stock
     then outstanding, but does not include any Exempt Person; provided,
     however, that a Person shall not be or become an Acquiring Person if such
     Person, together with its Affiliates and Associates, shall become the
     Beneficial Owner of twenty-five percent (25%) or more of the shares of
     Common Stock then outstanding solely as

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     a result of a reduction in the number of shares of Common Stock outstanding
     due to the repurchase of Common Stock by the Company, unless and until such
     time as such Person or any Affiliate or Associate of such Person shall
     purchase or otherwise become the Beneficial Owner of additional shares of
     Common Stock constituting one percent (1%) or more of the then outstanding
     shares of Common Stock or any other Person (or Persons) who is (or
     collectively are) the Beneficial Owner of shares of Common Stock
     constituting one percent (1%) or more of the then outstanding shares of
     Common Stock shall become an Affiliate or Associate of such Person, unless,
     in either such case, such Person, together with all Affiliates and
     Associates of such Person, is not then the Beneficial Owner of twenty-five
     percent (25%) or more of the shares of Common Stock then outstanding.

            (b)   "Affiliate" has the meaning ascribed to that term in Exchange
     Act Rule 12b-2.

            (c)   "Associate" means, with reference to any Person, (i) any
     corporation, firm, partnership, association, unincorporated organization or
     other entity (other than the Company or a subsidiary of the Company) of
     which that Person is an officer or general partner (or officer or general
     partner of a general partner) or is, directly or indirectly, the Beneficial
     Owner of 10% or more of any class of its equity securities, (ii) any trust
     or other estate in which that Person has a substantial beneficial interest
     or for or of which that Person serves as trustee or in a similar fiduciary
     capacity and (iii) any relative or spouse of that Person, or any relative
     of that spouse, who has the same home as that Person.

            (d)   A specified Person is deemed the "Beneficial Owner" of, and is
     deemed to "beneficially own," any securities:

                  (i)  of which that Person or any of that Person's Affiliates
            or Associates, directly or indirectly, is the "beneficial owner" (as
            determined pursuant to Exchange Act Rule 13d-3) or otherwise has the
            right to vote or dispose of, including pursuant to any agreement,
            arrangement or understanding (whether or not in writing); provided,
            however, that a Person shall not be deemed the "Beneficial Owner"
            of, or to "beneficially own," any security under this subparagraph
            as a result of an agreement, arrangement or understanding to vote
            that security if that agreement, arrangement or understanding: (A)
            arises solely from a revocable proxy or consent given in response to
            a public (that is, not including a solicitation exempted by Exchange
            Act Rule 14a-2(b)(2)) proxy or consent solicitation made pursuant
            to, and in accordance with, the applicable provisions of the
            Exchange Act; and (B) is not then reportable by such Person on
            Exchange Act Schedule 13D (or any comparable or successor report);

                  (ii) which that Person or any of that Person's Affiliates or
            Associates, directly or indirectly, has the right or obligation to
            acquire

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            (whether that right or obligation is exercisable or effective
            immediately or only after the passage of time or the occurrence of
            an event) pursuant to any agreement, arrangement or understanding
            (whether or not in writing) or on the exercise of conversion rights,
            exchange rights, other rights, warrants or options, or otherwise;
            provided, however, that a Person shall not be deemed the "Beneficial
            Owner" of, or to "beneficially own," securities tendered pursuant to
            a tender or exchange offer made by that Person or any of that
            Person's Affiliates or Associates until those tendered securities
            are accepted for purchase or exchange; or

                  (iii)   which are beneficially owned, directly or indirectly,
            by (A) any other Person (or any Affiliate or Associate thereof) with
            which the specified Person or any of the specified Person's
            Affiliates or Associates has any agreement, arrangement or
            understanding (whether or not in writing) for the purpose of
            acquiring, holding, voting (except pursuant to a revocable proxy or
            consent as described in the proviso to subparagraph (i) of this
            definition) or disposing of any voting securities of the Company or
            (B) any group (as that term is used in Exchange Act Rule 13d-5(b))
            of which that specified Person is a member;

PROVIDED, HOWEVER, that nothing in this definition shall cause a Person engaged
in business as an underwriter of securities to be the "Beneficial Owner" of, or
to "beneficially own," any securities acquired through such Person's
participation in good faith in a firm commitment underwriting until the
expiration of forty (40) days after the date of that acquisition. For purposes
of this Agreement, "voting" a security shall include voting, granting a proxy,
acting by consent, making a request or demand relating to corporate action
(including, without limitation, calling a stockholder meeting) or otherwise
giving an authorization (within the meaning of Section 14(a) of the Exchange
Act) in respect of such security.

            (e)   "Change of Control" means the occurrence of any of the
     following events that occurs after the effective date of this Agreement:
     (i) any Person becomes an Acquiring Person; (ii) at any time the then
     Continuing Directors cease to constitute a majority of the members of the
     Board; (iii) a merger of the Company with or into, or a sale by the Company
     of its properties and assets substantially as an entirety to, another
     Person occurs and, immediately after that occurrence, any Person, other
     than an Exempt Person, together with all Affiliates and Associates of such
     Person, shall be the Beneficial Owner of twenty-five percent (25%) or more
     of the total voting power of the then outstanding Voting Shares of the
     Person surviving that transaction (in the case or a merger or
     consolidation) or the Person acquiring those properties and assets
     substantially as an entirety.

            (f)   "Common Stock" means the common stock, par value $.01 per
     share, of the Company.

            (g)   "Continuing Director" means at any time any individual who
     then (i) is a member of the Board and was a member of the Board as of the
     effective

                                       10

<PAGE>

     date of this Agreement or whose nomination for his first election, or that
     first election, to the Board following that date was recommended or
     approved by a majority of the then Continuing Directors (acting separately
     or as a part of any action taken by the Board or any committee thereof) and
     (ii) is not an Acquiring Person, an Affiliate or Associate of an Acquiring
     Person or a nominee or representative of an Acquiring Person or of any such
     Affiliate or Associate.

            (h)   "Corporate Status" describes the status of a Person who is or
     was a director, officer, employee or agent of the Company or of any other
     corporation, partnership, joint venture, trust, employee benefit plan or
     other enterprise which such person is or was serving at the request of the
     Company. For purposes of this Agreement, "serving at the request of the
     Company" includes any service by Indemnitee which imposes duties on, or
     involves services by, Indemnitee with respect to any employee benefit plan
     or its participants or beneficiaries.

            (i)   "Court of Chancery" means the Court of Chancery of the State
     of Delaware.

            (j)   "Disinterested Director" means a director of the Company who
     is not and was not a party to the Proceeding in respect of which
     indemnification is sought by Indemnitee hereunder.

            (k)   "Exchange Act" means the Securities Exchange Act of 1934, as
     amended.

            (l)   "Exempt Person" means (i), (A) the Company, any subsidiary of
     the Company, any employee benefit plan of the Company or of any subsidiary
     of the Company and (B) any Person organized, appointed or established by
     the Company for or pursuant to the terms of any such plan or for the
     purpose of funding any such plan or funding other employee benefits for
     employees of the Company or any subsidiary of the Company and (ii)
     Indemnitee, any Affiliate or Associate of Indemnitee or any group (as that
     term is used in Exchange Act Rule 13d-5(b)) of which Indemnitee or any
     Affiliate or Associate of Indemnitee is a member.

            (m)   "Expenses" include all attorneys' fees, retainers, court
     costs, transcript costs, fees of experts, witness fees, travel expenses,
     duplicating costs, printing and binding costs, telephone charges, postage,
     delivery service fees, all other disbursements or expenses of the types
     customarily incurred in connection with prosecuting, defending, preparing
     to prosecute or defend, investigating, being or preparing to be a witness
     in, or otherwise participating in, a Proceeding and all interest or finance
     charges attributable to any thereof. Should any payments by the Company
     under this Agreement be determined to be subject to any federal, state or
     local income or excise tax, "Expenses" also shall include such amounts as
     are necessary to place Indemnitee in the same after-tax position (after
     giving effect to all applicable taxes) he would have been in had no such
     tax been determined to apply to such payments.

                                       11

<PAGE>

            (n)   "Independent Counsel" means a law firm, or a member of a law
     firm, that is experienced in matters of corporation law and neither
     presently is, nor in the past five (5) years has been, retained to
     represent: (i) the Company, its Affiliates or Indemnitee in any matter
     material to either such party; or (ii) any other Party to the Proceeding
     giving rise to a claim for indemnification hereunder. Notwithstanding the
     foregoing. the term "Independent Counsel" shall not include any person who,
     under the applicable standards of professional conduct then prevailing,
     would have a conflict of interest in representing either the Company or
     Indemnitee in an action to determine Indemnitee's rights under this
     Agreement.

            (o)   "Person" means any natural person, sole proprietorship,
     corporation, partnership of any kind having a separate legal status,
     limited liability company, business trust, unincorporated organization or
     association, mutual company, joint stock company, joint venture, estate,
     trust, union or employee organization or governmental authority.

            (p)   "Proceeding" includes any action, suit, alternate dispute
     resolution mechanism, hearing or any other proceeding, whether civil,
     criminal, administrative, arbitrative, investigative or meditative, any
     appeal in any such action, suit, alternate dispute resolution mechanism,
     hearing or other proceeding and any inquiry or investigation that could
     lead to any such action, suit, alternate dispute resolution mechanism,
     hearing or other proceeding, except one (i) initiated by an Indemnitee
     pursuant to Section 10 to enforce his rights hereunder or (ii) pending on
     or before the date of this Agreement.

            (q)   "Voting Shares" means: (i) in the case of any corporation,
     stock of that corporation of the class or classes having general voting
     power under ordinary circumstances to elect a majority of that
     corporation's board of directors; and (ii) in the case of any other entity,
     equity interests of the class or classes having general voting power under
     ordinary circumstances equivalent to the Voting Shares of a corporation.

     Section 18.  Modification and Waiver. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provisions of this Agreement
shall be deemed or shall constitute a waiver of any other provisions hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.

     Section 19.  Notice by Indemnitee. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder; provided, however, failure to give such notice shall not
deprive Indemnitee of his rights to indemnification and advancement of Expenses
under this Agreement unless the Company is actually and materially prejudiced
thereby.

                                       12

<PAGE>

     Section 20.  Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (a) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed or (b) mailed by
certified or registered mail with postage prepaid, on the third (3rd) business
day after the date on which it is so mailed:

            (a)   If to Indemnitee, to:     _____________________

                                            _____________________

                                            _____________________

            (b)   If to the Company, to:    Mission Resources Corporation
                                            1331 Lamar, Suite 1455
                                            Houston, Texas 77010

or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case way be.

     Section 21.  Contribution. To the fullest extent permissible under
applicable law, if the indemnification provided for in this Agreement is
unavailable to Indemnitee for any reason whatsoever, the Company, in lieu of
indemnifying Indemnitee, shall contribute to the amount incurred by Indemnitee,
whether for judgments, fines, penalties, excise taxes, amounts paid or to be
paid in settlement and/or for Expenses, in connection with any claim relating to
an indemnifiable event under this Agreement, in such proportion as is deemed
fair and reasonable in light of all the circumstances of such Proceeding in
order to reflect: (a) the relative benefits received by the Company and
Indemnitee as a result of the event(s) and/or transaction(s) giving cause to
such Proceeding; and/or (b) the relative fault of the Company (and its
directors, officers, employees and agents) and Indemnitee in connection with
such event(s) and/or transaction(s).

     Section 22.  Governing Law; Submission to Jurisdiction. This Agreement and
the legal relations among the parties shall be governed by, and construed and
enforced in accordance with, the laws of the State of Delaware, without regard
to its conflict of laws rules. Except with respect to any arbitration commenced
by Indemnitee pursuant to Section 10(a), the Company and Indemnitee hereby
irrevocably and unconditionally (a) agree that any action or proceeding arising
out of or in connection with this Agreement shall be brought only in the Court
of Chancery and not in any other state or federal court in the United States of
America or any court in any other country, (b) consent to submit to the
exclusive jurisdiction of the Court of Chancery for purposes of any action or
proceeding arising out of or in connection with this Agreement, (c) waive any
objection to the laying of venue of any such action or proceeding in the Court
of Chancery, and (d) waive, and agree not to plead or to make, any claim that
any such action or proceeding brought in the Court of Chancery has been brought
in an improper or otherwise inconvenient forum.

     Section 23.  Miscellaneous. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate. When used in this
Agreement, the words "herein," "hereof" and words of similar import shall refer
to this Agreement as a whole and not to any provision of this Agreement, and the
word "Section" refers to a Section of this Agreement, unless otherwise
specified.

                                       13

<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first above written.

                                            MISSION RESOURCES CORPORATION

                                            By: ________________________________

                                            Name: ______________________________

                                            Title: _____________________________

                                            INDEMNITEE

                                            ____________________________________
                                            [Name]

                                       14Filing Services Provided by RR Donnelley Financial -- Loan Agreement

  
 Exhibit 10.1 
  
 LOAN AGREEMENT 
 BY AND BETWEEN 
 REGIONS BANK 
 AND 
 TORCH OFFSHORE, INC. 
  
 This Loan Agreement (the “Agreement”) is entered into on
this 19th day of July, 2002, by and between Regions Bank (“Bank”) and Torch Offshore, Inc. (“Borrower”). 
  
 I.    Definitions 
  
 1.01    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): 
  
 “Account Debtor” shall mean the person or entity obligated upon a
Receivable. 
  
 “Acquisition” shall mean the purchase or other acquisition by Borrower or any
Subsidiary, after the date hereof, of (i) the stock or other equity interest (in whole or in part) in any entity, which, after such Acquisition will be a Subsidiary and will be primarily engaged in the Company Business or (ii) all or substantially
all of the assets of any entity which will be used in the Company Business. 
  
 “Acquisition Borrowing
Base” shall mean, as of the date of determination thereof, an amount equal to the lesser of (a) $25,000,000.00 minus the aggregate original principal amount of the Term Loans or (b) seventy (70%) percent of the fair market value of the
Vessels as reflected by the most recent surveys of the Vessels directed and delivered to Bank by surveyor(s) acceptable to Bank. 
  
 “Acquisition Line of Credit” shall mean the credit facility made available by Bank to Borrower pursuant to Section 2.02. 
  
 “Acquisition Line of Credit Loan” shall mean a Loan made by the Bank to Borrower pursuant to the Acquisition Line of Credit. 
  
 “Acquisition Line of Credit Note” shall have the meaning ascribed thereto in Section 2.02(a). 
  
 “Acquisition Line of Credit Period” shall mean the period commencing on the date hereof and ending on July 19, 2003, which period shall be renewed annually for
additional one year periods with the last renewal period to commence on July 19, 2006 and end on July 19, 2007. 
  
 “Advance” shall mean a disbursement of a Loan in accordance herewith. 
  
 “Applicable
Margin” shall mean, the rate of interest per annum shown in the applicable column below: 

 

  
 
	
	
	
	
	
	
	

	  	    	 Level I
 	   
 	    	 Level II
 	   
 	    	 Level III
 	   
 
	
	
	
	
	
	
	

	 Consolidated
 Leverage Ratio
 	    	 £1.00
 	  
 	    	 >1.00
 £1.50
 	  
  
 	    	 >1.50
 	  
 
	
	
	
	
	
	
	

	 Applicable Margin for LIBOR Rate Loans
 	    	 1.75
 	 %
 	    	 2.00
 	 %
 	    	 2.25
 	 %
 
	
	
	
	
	
	
	

	 Origination Fee
 	    	 .150
 	 %
 	    	 .200
 	 %
 	    	 .250
 	 %
 
	
	
	
	
	
	
	

	 Unused Fee
 	    	 .200
 	 %
 	    	 .250
 	 %
 	    	 .250
 	 %
 
	
	
	
	
	
	
	

 
  
 The Applicable Margin shall commence at Level I and shall be adjusted on the first day of
each March, June, September and December (or, if such day is not a Business Day, on the next succeeding Business Day), 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 5.02(a)(vi) hereof within the time period set forth in Section 5.02(a)(vi), 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 1.5 (and, from the date of the delivery of such certificate, the Applicable Margin shall be determined by reference to such certificate). 
  
 “Borrower’s Agent” shall mean any one of Lyle Stockstill or William Blackwell 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 Bank. Until Borrower notifies Bank in writing of the withdrawal of Borrower’s Agent’s rights and powers, Bank shall be able
to rely conclusively upon Borrower’s Agent’s right to borrow and incur Loans on behalf of Borrower. 
  
 “Business Day” shall mean any day except a Saturday, Sunday, or legal holiday observed by Bank on which dealings in U.S. Dollars are carried on in the London interbank market. 
  
 “Capitalized Lease Obligations” shall mean, with respect to any Person, obligations of such Person with respect to leases which,
in accordance with GAAP, are required to be capitalized on the financial statements of such Person. 
  
 “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 30% 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, 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 70% 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 shall be persons who either (a) were serving as directors on the date of this 

 

  
 Agreement 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). 
  
 “Collateral” shall mean the property
mortgaged or encumbered by the Loan Documents. 
  
 “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 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. 
  
 “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 dividends 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 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, all Indebtedness of Borrower and its Subsidiaries as of such date, determined on a consolidated basis in accordance with GAAP. 
  
 “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 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 Tangible Net Worth” shall mean at a particular date, the excess, if any, of (a) all amounts which would be
included under shareholders’ equity on a consolidated balance sheet of Borrower and its Subsidiaries as of such date, determined on a consolidated basis as determined in accordance with 

 
 3 

  
 GAAP (including, without limitation, capital stock, additional paid-in-capital and retained earnings)
minus (b) the sum of (i) 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 plus (ii) all assets of Borrower and its
Subsidiaries as of such date, determined on a consolidated basis as determined 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. 
  

“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 as determined 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. 
  
 “Continuing Guaranty” shall mean a Continuing Guarantee substantially in the form of Exhibit E executed now or at any time hereafter by a Subsidiary and delivered to Bank, as the same may be amended, supplemented or
otherwise modified from time to time. 
  
 “Default” shall mean the occurrence of any event or condition
specified in Section VII hereof, whether or not any requirement for notice or lapse of time or other condition precedent has been satisfied. 
  
 “Eligible Receivables” shall mean all Receivables of Borrower and its Subsidiaries that are acceptable and approved by Bank from time to time as Receivables eligible to be used as a basis for
an Advance under the Receivables Line of Credit. Without limiting Bank’s discretion to deem a Receivable unacceptable, the following shall be ineligible to be used as a basis for an Advance: 
  

(i) Receivables that are not encumbered by a first priority perfected security interest granted in favor of Bank, where first priority perfection is confirmed by
evidence or opinions acceptable to Bank; 
  
 (ii) Receivables that are not free and clear of all Liens other than
Permitted Liens; 
  
 (iii) Receivables that have not been paid in full within (90) days from the invoice date;

  
 (iv) Receivables of any Account Debtor (including all subsidiaries and affiliates of an Account Debtor) with more
than twenty-five percent (25%) aggregate Receivables owed being due and payable for more than ninety (90) days from the invoice date, unless Bank, upon request of Borrower and in its sole discretion, agrees to allow inclusion of the Receivables from
any particular Account Debtor for a particular month as Eligible Receivables; 
  
 (v) Receivables of any single
Account Debtor (including all subsidiaries and affiliates of an Account Debtor) in excess of $2,500,000.00, unless Bank, upon request of Borrower and in its sole discretion, agrees to allow inclusion of the excess Receivables (or a portion thereof)
from any such Account Debtor for a particular month as Eligible Receivables; 
  
 (vi) Receivables with respect to
which the Account Debtor is partner, shareholder, member, director, officer, employee, or agent of Borrower or any Subsidiary; 

 
 4 

  
 (vii) Receivables with respect to which the Account Debtor is a subsidiary of, or
affiliated with or related to Borrower or any Subsidiary; 
  
 (viii) Receivables with respect to which goods are
placed on consignment, guaranteed sale, or other terms pursuant to which the payment by the Account Debtor may be conditional; 
  
 (ix) Receivables with respect to which the Account Debtor does not maintain its chief executive office in the United States of America or is not organized under the laws of the United States of America, except to the extent such
Receivables are supported by letters of credit satisfactory to Bank which letters of credit are subject to a first security interest in favor of Bank; provided that, Receivables due from Oceanografia, S.A. not exceeding $1,000,000.00 in the
aggregate at any one time outstanding will not be considered ineligible solely because such Account Debtor is a foreign company unless Bank notifies Borrower to the contrary; 
  
 (x) Receivables with respect to which Borrower or any Subsidiary owes or will owe any obligation to the Account Debtor of such account; 
  
 (xi) Receivables which are subject to dispute, counterclaim, or setoff; 
  
 (xii) Receivables with respect to which the goods have not been shipped or delivered, or the services have not been rendered, to the Account Debtor or Receivables with
respect to progress billings; 
  
 (xiii) Receivables which Bank, in its discretion, using reasonable credit judgment,
deems to be ineligible for any reason; 
  
 (xiv) Receivables due from the United States of America or any agency
thereof unless proper notices of assignment have been executed, delivered and acknowledged in accordance with the Assignment of Claims Act of 1940, as amended, 31 U.S.C. 3727, 41 C.F.R. 15, and as may be required by Bank; 
  
 (xv) Receivables arising out of bonded contracts or those subject to “super priority” liens under the U.S. Bankruptcy Code;

  
 (xvi) Receivables arising from retainage(s) against billing(s); 
  
 (xvii) Receivables with respect to which Borrower or any Subsidiary has not forwarded the invoice to the Account Debtor; 

 
 (xviii) Receivables with respect to which Borrower or any Subsidiary has extended the time for payment without the consent of
Bank; and 
  
 (xix) Receivables with respect to which the time for payment is more than thirty (30) days after the
invoice date. 
  
 “GAAP” shall mean generally accepted accounting principles at the time in the United
States. 
  
 “Indebtedness” shall mean, with respect to any Person, without duplication, the sum of (a) all
indebtedness, liabilities and obligations of such Person, but in any event including, without limitation, all 

 
 5 

  
 (i) obligations of such Person for borrowed money or for the deferred purchase price of Property or
services (including, without limitation, all notes payable and all obligations evidenced by bonds, debentures, notes or other similar instruments), (ii) obligations secured by any Lien on, or payable out of the proceeds of production from, any
Property or assets owned by such Person, whether or not such Person has assumed or become liable for the payment of such obligations, (iii) indebtedness, liabilities and obligations of third parties, including joint ventures and partnerships of
which such Person is a venturer or general partner, recourse to which may be had against such Person, (iv) obligations created or arising under any conditional sale or other title retention agreement with respect to Property acquired by such Person,
notwithstanding the fact that the rights and remedies of the seller, lender or lessor under such agreement in the event of default are limited to repossession or sale of such Property, (v) Capitalized Lease Obligations of such Person, (vi) all
accounts payables of such Person, (vii) all indebtedness, liabilities and obligations of such Person under guarantees, and (viii) all obligations of such Person, contingent or otherwise, relative to the face amount of letters of credit (as may be
reduced pursuant to their terms), whether or not drawn plus (b) all unfunded but available lines of credit. 
  
 “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. 
  
 “Letter of Credit” shall have the meaning ascribed thereto in Section 4.01. 
  
 “Letter of Credit Application and Agreement” shall have the meaning ascribed thereto in Section 4.03. 
  
 “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 U.S. dollars for a period equal to one (1) month, as recorded by the Dow
Jones Telerate Service (or such other service used by Bank as an information vendor for the purpose of displaying British Bankers’ Association interest settlement rates for U.S. 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 U.S. dollars in immediately available funds are offered to Bank as of the
opening of business of Bank or as soon thereafter as practicable by two (2) or more major banks in the London interbank market selected by Bank for a period equal to one (1) month and in an amount equal or comparable to the principal amount due on
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 for LIBOR Rate Loans. 
  
 “Lien” shall mean any mortgage, pledge, hypothecation, security interest, encumbrance, lien, judgment, garnishment, seizure, tax lien or levy (statutory or otherwise) or charge of any kind
(including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, or any capitalized lease, and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any
jurisdiction). 
  
 “Loans” shall mean the Receivables Line of Credit Loans, the Acquisition Line of Credit
Loans and the Term Loans, with each being a Loan, and shall include all principal, interest, attorney’s fees and costs owed thereon. 

 
 6 

  
 “Loan Documents” shall mean this Agreement, the Notes, the Preferred
Ship Mortgages, the Security Agreements, the Continuing Guarantees, the Subsidiary Pledge Documents, the Letter of Credit Application and Agreements and all other documents evidencing or securing any of the Secured Obligations. 

 
 “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. 
  
 “Notes” shall mean the Receivables Line of Credit Note, the Acquisition Line of Credit Note and the Term Notes. 
  
 “Permitted Acquisition” shall mean an Acquisition which will not cause a Default. 
  
 “Permitted Liens” shall mean (i) pledges or deposits by Borrower or any Subsidiary under workmen’s compensation laws, unemployment insurance laws or similar legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness of Borrower or any Subsidiary) or leases (other than capitalized leases) to which Borrower or any Subsidiary is a party, or deposits to secure statutory obligations of Borrower or any
Subsidiary or deposits of cash or U.S. Government Bonds to secure surety or appeal bonds to which Borrower or any Subsidiary is a party, or deposits as security for contested taxes or import duties or for the payment of rent; (ii) Liens imposed by
law, such as vendors’, carriers’, warehousemen’s, materialmen’s and mechanics’ liens, incurred in the ordinary course of business for sums not overdue or being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on the books of Borrower or any Subsidiary; (iii) Liens for taxes not yet delinquent and Liens for taxes the payment of which is being contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on the books of Borrower or a Subsidiary and with respect to which payment is not required by Section 5.02(d); and (iv) Liens in favor of Bank. 
  
 “Person” shall mean any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization, government or
agency or political subdivision thereof, or any other form of entity. 
  
 “Property” shall mean any
interest in any kind of property or asset, whether real, personal or mixed, or tangible or intangible. 
  
 “Preferred Ship Mortgages” shall have the meaning ascribed thereto in Section 3.09(a). 
  
 “Prime Rate” shall mean the interest rate per annum 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). 
  
 “Receivable” shall mean any right to payment owing to Borrower or any
Subsidiary for goods sold by or services rendered by Borrower or any Subsidiary or arising out of any license granted by Borrower or any Subsidiary. 
  
 “Receivables Borrowing Base” shall mean, as of the date of determination thereof, an amount equal to the lesser of (a) $10,000,000.00 or (b) eighty-five (85%) percent of the base amounts owed
on all Eligible Receivables as of such date. 

 
 7 

  
 “Receivables Line of Credit” shall mean the credit facility made
available by Bank to Borrower pursuant to Section 2.01(a). 
  
 “Receivables Line of Credit Note” shall have
the meaning ascribed thereto in Section 2.01(a). 
  
 “Receivables Line of Credit Loan” shall mean a Loan
made by the Bank to Borrower pursuant to the Receivables Line of Credit. 
  
 “Receivables Line of Credit
Period” shall mean the period commencing on the date hereof and ending on July 1, 2004. 
  
 “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; 
  
 (b) Guarantees, loans or advances by any Subsidiary to Borrower which are subordinated in writing to the payment of the Secured Obligations in form and
substance satisfactory to Bank; 
  
 (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) Bank 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 (other than Bank to which such restrictions shall not apply) is a member of both
the Federal Deposit Insurance Corporation and the Federal Reserve System and is rated B or better by Thompson 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) Bank 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 (other than Bank to which such restrictions shall not apply) is a member of both the Federal Deposit Insurance Corporation and the Federal Reserve System and is rated B or better by Thompson Bank Watch Service
(all of which Investments must mature within twelve (12) months from the time of acquisition thereof); and 
  
 (f) The Subsidiaries of Borrower as of the effective date hereof and Subsidiaries of Borrower formed after the date hereof pursuant to Section 5.01(l) so long as Borrower and each Subsidiary have executed the Loan Documents
required by Section 3.09(e). 
  
 “Security Agreement” shall mean a Security Agreement substantially in
the form of Exhibit D(1) executed now or at any time hereafter by Borrower or a Security Agreement substantially in the form of Exhibit D(2) executed now or at any time hereafter by a Subsidiary and delivered to Bank, as the same may be amended,
supplemented or otherwise modified from time to time. 
  
 “Secured Obligations” shall mean the Loans and
all obligations, indebtedness and liabilities of every kind, nature and character of Borrower to Bank, direct or contingent, due or to become due, now 

 
 8 

  
 existing or hereafter arising, including, without limitation, all future advances, together with all
interest, attorneys’ fees, expenses of collection and costs, and further including, without limitation, obligations to Bank on any promissory notes, overdrafts, endorsements, security documents, continuing guaranties and this Agreement.

  
 “Stated Amount” of each Letter of Credit shall, at any time, mean the maximum amount available to be
drawn thereunder. 
  
 “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 (other than by reason of default in the payment of dividends) 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 Persons listed on Schedule 5.01(l). 
  
 “Subsidiary Pledge
Documents” shall mean, with respect to each Subsidiary, the following documents: (a) a security agreement in form and substance required by Bank granting Bank 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 Bank may reasonably require, and (d) such financing statements, resolutions, certificates, approvals, documents and instruments as
Bank may reasonably require. 
  
 “Term Loan” shall have the meaning ascribed to such term in Section
2.02(c). 
  
 “Term Note” shall have the meaning ascribed to such term in Section 2.02(c). 

 
 “Tier 1 Advance” shall mean any Advance under the Acquisition Line of Credit such that, after giving effect to such
Advance, the then aggregate outstanding principal amount of the Acquisition Line of Credit Loans plus the aggregate original principal amount of the Term Loans is less than or equal to $15,000,000.00. 
  
 “Tier 2 Advance” shall mean any Advance under the Acquisition Line of Credit which does not constitute a Tier 1 Advance.

  
 “Vessels” shall mean the following described vessels: 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).

  
 1.02    Other Definitional Provisions. 
  
 (a)    All terms defined in this Agreement shall have the defined meanings when used in any certificates or other
document made or delivered pursuant hereto unless the context shall otherwise require. 
  
 (b)    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. 

 
 9 

  
 (c)    Section, subsection, schedule and exhibit references
are to this Agreement unless otherwise specified. 
  
 (d)    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 on a consolidated basis 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
Bank. 
  
 II.    Loans To Borrower 
  
 2.01    (a)    Receivables Line of Credit.    Subject to the due and faithful performance of the terms
and conditions of this Agreement and in any instrument or agreement executed contemporaneous herewith or as a consequence hereof and in accordance with the terms and conditions of this Agreement, Bank may, in its discretion, make loans to Borrower
from time to time during the Receivables Line of Credit Period provided that the aggregate outstanding principal amount of such loans plus the Stated Amount of all outstanding Letters of Credit shall not at any one time exceed the Receivables
Borrowing Base. Each Receivables Line of Credit Loan shall bear interest on the outstanding principal amount thereof at the rate equal to the LIBOR Rate and shall be payable interest only 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) commencing on August 31, 2002, with the balance of all outstanding principal and interest being due and payable on the expiration of the Receivables Line of Credit Period.
Interest on the outstanding principal owed on the Loans will be computed and assessed on the basis of the actual number of days elapsed over a year composed of 360 days. The obligation of the Borrower to repay the Receivables Line of Credit Loans
shall be evidenced by a promissory note made payable to the order of Bank in the principal sum of $10,000,000.00, a copy of which is attached hereto as Exhibit A (as the same may from time to time be amended, modified extended or renewed, the
“Receivables Line of Credit Note”). 
  
 (b)    Loans and Letters of Credit Shall
Never Exceed Borrowing Base.    The aggregate outstanding principal amount of the Receivables Line of Credit Loans plus the Stated Amount of all outstanding Letters of Credit shall not at any one time exceed the
Receivables Borrowing Base. To the extent that the aggregate outstanding principal amount of the Receivables Line of Credit Loans plus the Stated Amount of all outstanding Letters of Credit exceed, at any one time, the Receivables Borrowing
Base, Borrower shall, within ten (10) days of written notice from Bank, pay such excess amounts to Bank as a payment on the Receivables Line of Credit Loans. 
  
 (c)    Default Interest Rate.    Notwithstanding any provisions of this Agreement to the contrary, any overdue principal of and, to the extent permitted
by law, overdue interest on, any Receivables Line of Credit Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to twelve percent (12%). 
  
 (d)    Use of Proceeds.    The Borrower shall use the proceeds of the Receivables Line of Credit for working capital
and for the purpose of making loans to Subsidiaries for such purpose. 
  
 2.02    (a)    Acquisition Line of Credit.    Subject to the due and faithful performance of the terms and conditions of this Agreement and in any instrument or
agreement executed contemporaneous herewith or as a consequence hereof and in accordance with the terms and conditions of this Agreement, Bank may, in its discretion, make loans to Borrower from time to time during the Acquisition Line of Credit
Period provided that (i) the aggregate outstanding principal amount of such loans shall not at any 

 
 10 

  
 one time exceed the Acquisition Borrowing Base and (ii) no Tier 2 Advance shall be made unless (A) as of
such date, after giving effect to such Advance, the Consolidated Leverage Ratio will be less than or equal to 1.0 and (B) if the proceeds of the Tier 2 Advance will be used to make a Permitted Acquisition, such Acquisition is approved by Bank, in
its sole discretion. Each Acquisition Line of Credit Loan shall bear interest on the outstanding principal amount thereof at the rate equal to the LIBOR Rate and shall be payable interest only 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) commencing on August 31, 2002, with the balance of all outstanding principal and interest being due and payable on the expiration of the Acquisition Line of Credit Period.
Interest on the outstanding principal owed on the Loans will be computed and assessed on the basis of the actual number of days elapsed over a year composed of 360 days. The obligation of the Borrower to repay the Acquisition Line of Credit Loans
shall be evidenced by a promissory note substantially in the form of Exhibit B annexed hereto (as the same may from time to time be amended, modified extended or renewed, the “Acquisition Line of Credit Note”). 
  
 (b)    Loans Shall Never Exceed Borrowing Base.    The aggregate outstanding principal
amount of the Acquisition Line of Credit Loans shall not at any one time exceed the Acquisition Borrowing Base. To the extent that the aggregate outstanding principal amount of the Acquisition Line of Credit Loans exceed, at any one time, the
Acquisition Borrowing Base, Borrower shall, within ten (10) days of written notice from Bank, pay such excess amounts to Bank as a payment on the Acquisition Line of Credit Loans. 
  
 (c)    Term Loans.    On each anniversary date of this Agreement (other than the last anniversary date), the aggregate
outstanding principal amount of the Acquisition Line of Credit Loans as of such date will be converted to a term loan (each being a “Term Loan”) upon the following terms: (a) such Term Loan will bear interest at the rate set forth in
Section 2.01(a), (b) interest on such Term Loan shall be payable monthly in arrears on the last day of each month, (c) principal on such Term Loan shall be payable in equal quarterly payments based on an amortization period ending on July 19, 2007,
(d) the entire unpaid balance of principal and interest on such Term Loan shall be payable on July 19, 2007, and (e) such Term Loan shall be represented by a promissory note in favor of Bank in substantially the same form as Exhibit C annexed hereto
(as the same may from time to time be amended, modified extended or renewed, a “Term Note”) . 
  
 (d)    Default Interest Rate.    Notwithstanding any provisions of this Agreement to the contrary, any overdue principal of and, to the extent permitted by law, overdue interest on, any
Acquisition Line of Credit Loan shall bear interest, payable on demand, for each day until paid at a rate per annum equal to twelve percent (12%). 
  
 (e)    Use of Proceeds.    The Borrower shall use the proceeds of the Acquisition Line of Credit for Permitted Acquisitions and the purchase of equipment
and for the purpose of making loans to Subsidiaries for such purposes. 
  
 III.     Provisions Applicable to all
Loans 
  
 3.01    Advance Request.    Upon the terms and
subject to the conditions hereof, Borrower may request an Advance under the Acquisition Line of Credit or the Receivables Line of Credit during a Business Day between the hours of 9:00 a.m. and 2:00 p.m. (New Orleans time). If Bank receives the
Borrower’s proper request for an Advance by no later than 2:00 p.m. (New Orleans time), then Bank shall make the Advance in accordance herewith on the same Business Day. If Bank receives the Borrower’s proper request for an Advance later
than 2:00 p.m. (New Orleans time), then Bank shall make the Advance in accordance herewith on the next Business Day. Each request for an Advance shall be made either by telephone calls to Bank or in writing, by delivering to Bank by mail,
hand-delivery, or facsimile 

 
 11 

  
 a request (i) specifying the amount to be borrowed, (ii) specifying the date the funds will be advanced
and (iii) complying with the requirements of this Section. Bank shall have the right to verify the telephone requests by calling the person who made the request at the telephone number identified by the Borrower. If the Advance request is by
telephone, the Borrower will confirm said request in writing within two (2) Business Days. All such Advance requests shall be made by the Borrower’s Agent. Borrower agrees that only its duly authorized Borrower’s Agent shall make an
Advance request. 
  
 3.02    Credit Advice.    All Advances shall be
credited to a demand deposit account maintained by the Borrower with Bank. After the borrowing of any Advance in accordance with this Agreement, Bank will mail to the Borrower an advice showing the amount of the Advance and the amount of funds
credited into the Borrower’s account. Bank’s failure to mail the credit advice shall not alter the Borrower’s obligation to repay the Loans or make the Bank liable to the Borrower for failure to mail the credit advice. 

 
 3.03    Internal Records Shall Control.    The principal amount shown on the
face of the Notes evidencing the Loans evidences the maximum aggregate principal amount that may be outstanding from time to time under the Loans. The Borrower agrees that the internal records of Bank shall constitute for all purposes prima facie
evidence of (i) the amount of principal and interest owing on the Loans from time to time, (ii) the amount of each Advance or Loan made to the Borrower and (iii) the amount of each principal and interest payment received by Bank on the Loans.

  
 3.04    Reliance on Communications.    Borrower hereby authorizes
Bank to rely on telephonic, telegraphic, telecopy, telex or written or oral instructions believed by Bank in good faith to have been sent, delivered or given by Borrower’s Agent with respect to any request to make a Loan or a repayment
hereunder, and on any signature which Bank in good faith believes to be genuine. 
  
 3.05    Prepayment.    Borrower shall have the right at any time and from time to time to prepay the Loans in whole or in part without penalty by paying all or a portion of the unpaid
principal balance of the Loans, as applicable, plus accrued interest through the date of prepayment. 
  
 3.06    Changes in or Illegality with Respect to LIBOR Rate.    In the event that Bank 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; 
  
 (b)    at any time, that Bank 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 Bank of the
principal or interest on the Loans accruing interest based upon the LIBOR Rate (except for changes in the rate of tax on, or determined by reference to, the net income or profits of Bank) 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 Rate has been made (x) unlawful by any law or governmental 

 
 12 

  
 rule, regulation or order, (y) impossible by compliance by Bank 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, Bank shall promptly give notice (by telephone confirmed in writing) to 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 equal to the Prime Rate plus 50 basis points until such time as Bank notifies 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 Bank, 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 Bank and Borrower) as shall be required to compensate Bank for such increased costs or reductions in amounts received or receivable hereunder (a written notice as to the additional amounts owed to Bank, showing the basis
for the calculation thereof, submitted to Borrower by Bank in good faith shall, absent manifest error, be final and conclusive and binding on all the parties hereto). Bank agrees that if it gives notice to Borrower of any of the events described in
clause (a), (b) or (c) above, it shall promptly notify Borrower if such event ceases to exist. 
  
 3.07    Unused Fee.    Borrower shall pay to Bank, in arrears, on the first day of each March, June, September and December (or, if such day is not a Business Day, on the next succeeding
Business Day) and on the last day of the Receivables Line of Credit Period and the Acquisition Line of Credit Period, as applicable, a commitment fee (the “Unused Fee”) 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 Borrower’s Consolidated Leverage Ratio as of the end of the immediately preceding fiscal quarter multiplied by (ii) the sum of
(A) the unused Receivables Line of Credit during the preceding fiscal quarter, or portion thereof, which unused Receivables Line of Credit shall be arrived at by dividing the sum of the unused Receivables Line of Credit for each day of that quarter
as of the close of each day, by the number of days in that quarter (or portion thereof) plus (B) the unused Acquisition Line of Credit during the immediately preceding fiscal quarter, or portion thereof, which unused Acquisition Line of
Credit shall be arrived at by dividing the sum of the unused Acquisition Line of Credit for each day of that quarter as of the close of each day, by the number of days in that quarter (or portion thereof). The unused Receivables Line of Credit shall
be defined as (x) $10,000,000.00 minus (y) the sum of (1) the aggregate outstanding principal amount of the Receivables Line of Credit Loans and (2) the Stated Amount of all outstanding Letters of Credit. The unused Acquisition Line of Credit
shall be defined as $25,000,000.00 minus the aggregate outstanding principal amount of the Acquisition Line of Credit Loans minus the aggregate original principal amount of the Term Loans. 
  
 3.08    Origination Fee.    Borrower shall pay to Bank an origination fee (the
“Origination Fee”) on the date hereof and on each anniversary date of this Agreement equal to: (i) the rate per annum set forth in the column labeled “Origination Fee” in the definition of “Applicable Margin” that
corresponds to Borrower’s Consolidated Leverage Ratio as of the end of the immediately preceding fiscal quarter multiplied by (ii) $35,000,000.00 minus the aggregate original principal amount of the Term Loans as of the date such
fee is payable. Any commitment fee collected by Bank in connection the existing $10,000,000.00 credit facility evidenced by letter agreement dated July 1, 2002, will be credited against the initial Origination Fee. 
  
 3.09    Security Documents.    In order to secure payment when due of the Secured
Obligations: 
  
 (a)    Preferred Ship Mortgages.    Borrower shall
cause Torch Offshore, L.L.C. to execute and deliver to Bank preferred ship mortgages (the “Preferred Ship Mortgages”) granting Bank preferred ship mortgages on the Vessels and a security interest in all present and future charter hire,

 
 13 

 freights, leases, rents, earnings, revenues, proceeds, money, payments, accounts, contract rights, chattel paper, documents and general
intangibles affecting the Vessels, relating to the Vessels, or arising out of or from the sale, charter, lease, use or operation of the Vessels, together with all proceeds thereof, together with a UCC-1 Financing Statement filed in connection
therewith. The Preferred Ship Mortgages shall be in form and substance required by Bank. 
  
 (b)    Security Agreements.    Borrower shall execute and deliver to Bank a Security Agreement substantially in the form of Exhibit D(1) and Borrower shall cause each Subsidiary to
execute and deliver to Bank a Security Agreement substantially in the form of Exhibit D(2) in favor of Bank. Borrower shall execute and deliver to Bank and cause each Subsidiary to execute and deliver to Bank any and all financing statements,
continuation statements and such other documents as may from time to time be requested by Bank in order to create, perfect and maintain the security interest created by the Security Agreements. 
  

(c)    Continuing Guarantees.    Borrower shall cause each Subsidiary to execute and deliver to Bank a Continuing
Guarantee substantially in the form of Exhibit E. 
  
 (d)    Subsidiary Pledge
Documents.    Borrower shall execute and deliver to Bank, and cause each Subsidiary to execute and deliver to Bank, Subsidiary Pledge Documents pertaining to the outstanding stock of each Subsidiary or other equity interest
of each Subsidiary. 
  
 (e)    New Subsidiaries.    Contemporaneous
with the creation or acquisition of any Subsidiary, in each case, in accordance with the terms of this Agreement, Borrower shall cause such Subsidiary to execute and deliver to Bank (i) a Continuing Guarantee substantially in the form of Exhibit E,
(ii) a Security Agreement substantially in the form of Exhibit D(2), and (iii) opinions of counsel for Borrower and such Subsidiary relating to such Loan Documents and such other matters as Bank may reasonably require and satisfactory in form and
substance to Bank together with all resolutions, certificates, information, approvals, documents or other instruments as Bank 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 Bank in order to create, perfect and maintain the Liens created by such Loan Documents. Further, contemporaneous with the creation or
acquisition of any Subsidiary, in each case in accordance with the terms of this Agreement, Borrower (i) shall execute and deliver to Bank, and cause each Subsidiary to execute and deliver to Bank, Subsidiary Pledge Documents pertaining to the
outstanding stock or other equity interest of such Subsidiary and (ii) shall deliver to Bank, opinions of counsel for Borrower and such Subsidiary relating to such Loan Documents and such other matters as Bank may reasonably require and satisfactory
in form and substance to the Bank together with all resolutions, certificates, information, approvals, documents or other instruments as the Bank may reasonably request. 
  
 3.10    Further Documents.    Should Bank choose to make any Loan or issue any Letter of Credit prior to obtaining all of the
Loan Documents and other documents required hereby, Borrower shall deliver or arrange to have delivered such Loan Documents and other documents upon the request of Bank. Borrower and each Subsidiary will promptly cure any defects in the creation,
execution and delivery of the Loan Documents. Borrower will promptly execute and deliver, and arrange for each Subsidiary to execute and deliver, to Bank upon request all such other and further documents, agreements and instruments in compliance
with or accomplishment of the covenants and agreements of Borrower and its Subsidiaries in the Loan Documents or to further evidence and more fully describe the Collateral, or to correct any omissions in the Loan Documents, or more fully to state
the obligations set out in any of the Loan Documents, or to make, perfect, protect or preserve any liens created pursuant to any of the Loan Documents, or to make any recordings, to file any notices, or to obtain any contracts, all as may be
necessary or appropriate in connection therewith. 

 
 14 

  
 3.11    Guaranty of Obligations of
Subsidiaries.    Borrower hereby unconditionally, irrevocably, jointly, severally and solidarily guarantees the due and punctual payment to Bank 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 Preferred Ship Mortgages, Security Agreements and/or any other security documents executed by such Subsidiary in favor of Bank, whether direct or contingent, due or to become
due or now existing or hereafter arising. 
  
 3.12    Form of Loan
Documents.    Borrower will agree to such modifications to the form of the Continuing Guarantees, Security Agreements and Pledge Agreements that are reasonably necessary to comply with applicable law or that Bank may
otherwise reasonably require. 
  
 3.13    Reimbursement of
Expenses.    Borrower agrees (i) to promptly pay or reimburse Bank for all of Bank’s reasonable out-of-pocket costs, expenses and attorneys’ fees incurred in connection with the preparation, execution and delivery
of this Agreement and the other Loan Documents, (ii) to promptly pay or reimburse Bank for all of Bank’s reasonable out-of-pocket costs and expenses incurred in connection with the preparation, execution and delivery of any amendment,
supplement or modification to this Agreement or any other Loan Documents and (iii) to promptly pay or reimburse Bank the reasonable fees and disbursements of counsel to Bank and the reasonable costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement and any other Loan Documents. 
  
 3.14    Opinion of Borrower’s Counsel.    At Closing or at such other time satisfactory to Bank, Borrower shall have counsel satisfactory to Bank provide opinions to Bank in form
and substance satisfactory to Bank relating to the Loan Documents. Upon the execution of additional Loan Documents pursuant to Section 3.09(e), Borrower shall have counsel satisfactory to Bank provide an opinion to Bank in form and substance
satisfactory to Bank relating to such additional Loan Documents. 
  
 3.15    Surveys.    Bank shall have the right to obtain new surveys of the Vessels from time to time in its reasonable discretion; provided that, Bank shall not have the right to obtain
new surveys more often than once a year unless a Default has occurred and is continuing. Borrower shall, upon demand, reimburse Bank for the cost of such surveys. 
  
 3.16    Verification and Audits.    Bank has the right to perform such verifications and audits with respect to the
Receivables of Borrower and its Subsidiaries as Bank deems appropriate. Without limiting the generality of the foregoing, Bank or Bank’s agents may contact individual Account Debtors to verify the amounts then owing under the Receivables, to
determine whether any Account Debtors have any offsets or counterclaims against the Receivables, Borrower or any Subsidiary, and to inquire about such other matters as Bank may deem necessary or desirable. Without limiting the generality of the
foregoing, Bank will conduct customary audits of the Receivables reports provided by Borrower and its Subsidiaries and verify (in a customary manner) the Receivables annually or at such other times as Bank deems appropriate. Said audits and
verifications will be solely for Bank’s information and Borrower and its Subsidiaries may not place any reliance thereon. 
  
 3.17    Proceeds of Receivables and Lock Box.    All proceeds of Receivables will be deposited in designated operating account(s) of Borrower or a Subsidiary at Bank. Upon the written
request of Bank, Borrower and its Subsidiaries will notify all Account Debtors to pay the proceeds of the Receivables and any proceeds of letters of credit to lock box(es) located at Bank and shall furnish a copy of the notifications to Bank. The
provisions of Bank standard form of Lock Box Agreement shall apply to the lock box(es). Bank shall also have the right to notify the Account Debtors to pay the proceeds of the Receivables directly to Bank. In the event that Bank requests a lock box
arrangement, all proceeds of 

 
 15 

  
 the Receivables shall be placed in collateral account(s) of Borrower or a Subsidiary at Bank
(collectively, the “Collateral Account”) and Bank will apply the proceeds in the Collateral Account to payment of the Receivables Line of Credit with any remaining balance deposited to operating account(s) of Borrower or a Subsidiary at
Bank; provided that, upon the occurrence of a Default, Bank is entitled to apply the entire proceeds in the Collateral Account towards payment of the Loans and any of the other Secured Obligations. If checks written on the designated operating
account(s) exceed the balance in such account(s), or if a sweep account is tied to such account(s), subject to the terms and conditions of this Agreement, Bank will make an Advance on the Receivables Line of Credit to cover the shortfall. Bank shall
not be obligated to credit any bank account until the items deposited with respect thereto have been collected. 
  
 3.18    Operating Accounts.    As security for the Secured Obligations, Borrower and its Subsidiaries shall maintain all of their primary operating accounts with Bank. 

 
 3.19    Torch Deepwater, Inc.    Borrower shall not be obligated to cause Torch
Deepwater, Inc. to grant a Continuing Guaranty and Security Agreement to Bank unless and until such Subsidiary acquires any Property. 
  
 IV.     Letters of Credit 
  
 4.01    Issuance of Letters of Credit.    Subject to the due and faithful performance of the terms and conditions of this Agreement and in any instrument or agreement executed
contemporaneous herewith or as a consequence hereof and in accordance with the terms and conditions of this Agreement, Bank shall issue, from time to time prior to the expiration of the Receivables Line of Credit Period for the account of Borrower
or for the account of Borrower and any Subsidiary and for the benefit of any holder, irrevocable stand-by letters of credit up to an aggregate total Stated Amount of $5,000,000.00 at any one time outstanding (each a “Letter of Credit”),
each for a maximum term not to extend beyond the earlier of (a) one year from the date of issuance which may be renewable for additional one year periods or (b) five (5) days prior to the expiration of the Receivables Line of Credit Period; provided
that the aggregate outstanding principal amount of the Receivables Line of Credit Loans plus the Stated Amount of all outstanding Letters of Credit shall not at any one time exceed the Receivables Borrowing Base. A Letter of Credit may only
be utilized to guaranty or support the payment of obligations of Borrower or any Subsidiary to third parties incurred in the ordinary course of business. 
  
 4.02    Existing Application.    Assuming that all other terms and conditions for issuance thereof are satisfied, the Letter of Credit applied for by
Borrower in connection with the acquisition of the vessel MIDNIGHT HUNTER is approved notwithstanding the limitations on the term of Letters of Credit set forth in Section 4.01. 
  
 4.03    Letter of Credit Application and Agreement.    Prior to the issuance of any Letter of Credit hereunder, Borrower, and
if the Letter of Credit is to be issued for the account of Borrower and a Subsidiary, such Subsidiary, shall have executed and delivered to Bank a Letter of Credit Application and Agreement (a “Letter of Credit Application and Agreement”)
for the issuance thereof on Bank’s standard forms and in accordance with Bank’s usual procedures, with Borrower and any Subsidiary executing same to be jointly, severally and solidarily liable thereunder. 
  
 4.04    Commitment Fee.    For each Letter of Credit, Borrower (and any Subsidiary that
executed the Letter of Credit Application) hereby further agrees, jointly, severally and solidarily, to pay to Bank an annual nonrefundable commitment fee in an amount equal to the rate per annum equal to the then current Applicable Margin for LIBOR
Rate Loans (calculated on an actual day, 360 day year basis) times the face amount of each such Letter of Credit issued hereunder (“Letter of Credit Commitment Fee”), 

 
 16 

  
 which Letter of Credit Commitment Fee shall be due and payable on the date of issuance of such Letter of
Credit and annually thereafter. Borrower further agrees to pay (or cause any Subsidiary for which the Letter of Credit was issued to pay) to Bank all reasonable and customary administrative fees of Bank in connection with the issuance, maintenance,
modification (if any) and administration of each Letter of Credit and standard negotiation charges upon demand from time to time. 
  
 4.05    Payment or Disbursement.    Any payment or disbursement made by Bank with respect to a Letter of Credit shall be deemed to be an Advance by Bank of a Receivables Line of Credit
Loan, and shall be subject to all of the terms and conditions applicable to such Loans. 
  
 4.06    Replacement or Collateralization of Letters of Credit.    Notwithstanding any provision contained in this Agreement or any of the Letter of Credit Application and Agreement to
the contrary, upon the occurrence of any Default, at Bank’s option, Borrower shall, upon Bank’s demand, deliver to Bank cash or other collateral acceptable to Bank having a value, as determined by Bank, at least equal to the aggregate
undrawn face amount of all outstanding Letters of Credit. Any such collateral received by Bank pursuant to this Section 4.06 shall be held by Bank in a separate account at Bank appropriately designated as a cash collateral account in relation to
this Agreement and the Letters of Credit and retained by Bank as collateral security for the payment of the Secured Obligations. Cash amounts delivered to Bank pursuant to the foregoing requirements of this Section 4.06 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 Bank. 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 Bank to pay any amounts drawn or paid under or pursuant to any Letter of Credit, but may be applied to reimburse Bank for drawings or payments under or pursuant to the Letters of Credit which Bank has paid, or if no such reimbursement is
required shall be used by Bank for application to such other of the Secured Obligations as Bank shall determine. Any amounts remaining in any cash collateral account established pursuant to this Section 4.06 after the payment in full of all of the
Secure Obligations and the expiration or cancellation of all of the Letters of Credit shall be returned to Borrower (after deduction of Bank’s expenses, if any). 
  
 V.     Warranties, Representations and Covenants of Borrower 
  
 5.01    Representations and Warranties.    Borrower hereby represents, warrants and covenants to Bank, the following: 
  
 (a)    Corporate Existence and Power.    Borrower and each 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. 
  
 (b)    Corporate Authorization.    The execution, delivery and performance by Borrower of this Agreement and the other Loan Documents are within the
corporate powers of Borrower and have been duly authorized by all necessary corporate action. The execution, delivery and performance by each Subsidiary of any Continuing Guarantee and any other Loan Documents executed by such Subsidiary are within
the corporate powers of such Subsidiary and have been duly authorized by all necessary corporate action. 

 
 17 

  
 (c)    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 Loan Documents. 

 
 (d)    Binding Effect.    All Loan 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. 
  
 (e)    ERISA.    To the extent applicable, Borrower and each Subsidiary has fulfilled its
obligations under the minimum funding standards of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Internal Revenue Code with respect to each plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Internal Revenue 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. 
  
 (f)    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 or (ii) with respect to any judgment,
order, writ, injunction, decree or decision of any government agency or authority, and which could have a Material Adverse Effect. 
  
 (g)    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 Bank and, except as described in the most recent balance sheet of Borrower delivered to the Bank or in the most recent quarterly 10Q filing of Borrower with the Securities
and Exchange Commission, there is no 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. 

 
 (h)    Tax Payment.    Borrower and each Subsidiary has filed all tax returns
and reports required to be filed 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 a Subsidiary,
which are due and payable, including interest and penalties, or has provided adequate reserves for the payment thereof. 
  
 (i)    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. 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. 
  
 (j)    Compliance With
Laws.    Borrower and each Subsidiary has complied in all material respects with all laws that are applicable to all or any part of the operation of its business activities which the failure to comply with could have a
Material Adverse Effect, including, without limitation, (i) all laws regarding the collection, payment, and deposit of employees’ income, unemployment, social security, sales, and excise taxes and all laws with respect to pension liabilities,
and (ii) all laws pertaining to environmental protection and occupational safety and health which the failure to comply with could have a Material Adverse Effect. 

 
 18 

  
 (k)    Other Instruments; None
Burdensome.    Neither Borrower nor any Subsidiary is a party to any indenture, agreement or other instrument materially and adversely affecting its business, properties or assets, operation or condition, whether financial or
otherwise. 
  
 (l)    Subsidiaries.    There are no Subsidiaries
other than as specifically set forth in Schedule 5.01(l). 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 5.01(l) by
notifying Bank 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, contemporaneous with the creation or acquisition of such Subsidiary, execute and deliver to Bank all documents required by Section 3.09. 
  
 (m)    Investments.    Except as disclosed on Schedule 5.01(m) neither Borrower nor any Subsidiary has any Restricted
Investments. 
  
 5.02    Affirmative Covenants.    Borrower covenants
and agrees that, so long as (i) Bank 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 Secured Obligations remain unpaid: 

 
 (a)    Information.    Borrower shall furnish to Bank: 
  
 (i)    upon the request of Bank, a Compliance Certificate and Borrowing Base Report certified by its
Chief Financial Officer in the form annexed hereto as Exhibit F; 
  
 (ii)   no later
than 10 days after month end, a Compliance Certificate and Borrowing Base Report certified by its Chief Financial Officer in the form annexed hereto as Exhibit F; 
  
 (iii)  no later than 10 days after the close of each month of Borrower’s fiscal year, a Receivables report of Borrower and its Subsidiaries
including for each Receivable the name of the Account Debtor, the balance due on the Receivable, and an aging for the Receivable. The report shall be in such form and shall contain such information as Bank may require and shall be certified by
Borrower’s Chief Financial Officer; 
  
 (iv)   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; 
  
 (v)    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 statement of cash flow for such fiscal year, which statements shall be audited by an independent certified public accounting firm acceptable to Bank; 

 

 
 19 

  
 (vi)  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 G annexed hereto, accompanied by supporting financial work sheets where appropriate, (A) evidencing
Borrower’s compliance with the financial covenants contained in Sections 5.02(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; 
  
 (vii) simultaneously with a request for a
Tier 2 Advance, a certificate of Borrower’s Chief Financial Officer, accompanied by supporting financial work sheets where appropriate, (A) evidencing Borrower’s compliance with the requirements contained in Section 2.02(a) and (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; 
  
 (viii) within 120 days after the close of Borrower’s fiscal year, a copy of the federal tax returns for the
prior year filed by Borrower and each Subsidiary, with all schedules and supporting documentation; 
  
 (ix)  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 
  
 (x)    with reasonable promptness, such further information regarding the business, affairs and financial condition of Borrower or any Subsidiary as Bank 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 and all laws with respect to pension liabilities, and (ii) all laws pertaining to environmental protection and
occupational safety and health with which the failure to comply could have a 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 Secured 

 
 20 

  
 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 5.02(c), “Material Indebtedness” shall mean Indebtedness of the nature
described in subparagraphs (i), (ii), (iv) or (v) 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, and 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 or charge upon
the assets of Borrower or any Subsidiary; 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; 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 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; and furnish to Bank, upon written request of Bank, full information as to the
insurance carried. 
  
 (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. 
  
 (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 

 
 21 

  
 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 Bank 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; or (ii) 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 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 Bank (and any Person appointed by Bank
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 Bank may from time to time reasonably request. Borrower will also permit, and will cause each Subsidiary to permit, inspection of its properties, books and records by Bank 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 Bank, 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 Bank
may from time to time reasonably request, in order to effectuate the transactions contemplated by this Agreement and the other Loan Documents. 
  
 5.03    Negative Covenants.    Borrower covenants and agrees that, so long as (i) Bank 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 Secured Obligations remain unpaid, unless the prior written consent of the Bank is obtained: 
  
 (a)    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 two or more Subsidiaries to merge or
consolidate into Borrower, one another, or any other Subsidiary, (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 Subsidiary), except for (A) sales in the ordinary course of 

 
 22 

  
 business of those items excluded from the definition of Restricted Investments and (B) sales of
inventory and equipment in the ordinary course of business or (iii) undertake any major expansion. 
  
 (b)    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. 
  
 (c)    Change in Control.    Borrower shall not allow any Change in Control to occur. 
  
 (d)    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 or any bonds or debentures, subordinated or otherwise, or any stock warrants or options, (ii) authorize or issue any additional shares of any existing class of capital stock, (iii) declare any stock
dividends or stock splits or (iv) take any other action which could, directly or indirectly, decrease Borrower’s ownership interest in any of its Subsidiaries. 
  
 (e)    Liens.    Borrower will not cause or permit any of its Subsidiaries to mortgage or encumber any of the Collateral or
suffer any Liens to exist on any of the Collateral without the prior written consent of Bank other than Permitted Liens, or cause or permit any Subsidiary so to do. 
  
 (f)    Restricted Investments.    Borrower will not, and it will not cause or permit any of its Subsidiaries to,
directly or indirectly, make 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 Tangible Net Worth. 

 
 (g)    Change in Management.    Borrower will not terminate or make any
substantial change in the duties of Lyle Stockstill. 
  
 VI.     Extension of Credit 

 
 Bank will not be obligated to make any Advance or to issue any Letter of Credit, unless: 
  
 (a)    Performance of Agreements.    Borrower and each Subsidiary has observed and
performed all of its covenants, obligations and agreements under this Agreement and under the other Loan Documents, including but not limited to the delivery to Bank of all Loan Documents and other documents required hereby; 
  
 (b)    No Default.    No Default or Event of Default shall have occurred and be
continuing; 
  
 (c)    No Material Adverse Change.    No 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 date of this Agreement and be continuing; and

  
 (d)    Representations and Warranties.    All of the
representations and warranties of Borrower contained in Section 5.01 of this Agreement and of Borrower and each Subsidiary in the other Loan Documents shall be true and correct in all material respects on and as of the date of such Loan or Letter of
Credit as if made on and as of the date of such Loan or Letter of Credit. 

 
 23 

  
 VII.     Defaults 
  
 7.01    Event of Default.    The occurrence of any of the following events or conditions
shall be considered an “Event of Default” as that term is used herein: 
  
 (a)    Borrower shall fail to pay any of the Secured Obligations when due and such failure shall continue unremedied for ten (10) days after written or telegraphic notice thereof shall have been given to Borrower
by Bank; 
  
 (b)    Any representation or warranty of Borrower or any Subsidiary made in this
Agreement, in any other Loan 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; 
  
 (c)    Borrower or any Subsidiary shall fail to perform or observe any term, covenant, or agreement contained in this Agreement or in any other Loan Document, and such failure shall continue unremedied for ten
(10) days after written or telegraphic notice thereof shall have been given to Borrower by Bank; 
  
 (d)    This Agreement or any of the other Loan Documents shall at any time for any reason (other than cancellation by Bank) cease to be in full force and effect or shall be declared to be null and void by a court
of competent jurisdiction, or the validity or enforceability thereof shall be contested or denied by Borrower or any Subsidiary, or the transactions completed hereunder or thereunder shall be contested by Borrower or any Subsidiary or Borrower or
any Subsidiary shall deny that it has any or further liability or obligation hereunder or thereunder; 
  
 (e)    Borrower or any Subsidiary 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; 
  
 (f)    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 or any Subsidiary, or of a substantial part of the Property or assets of Borrower or any Subsidiary, 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 or any Subsidiary or of a
substantial part of the Property or assets of Borrower or any Subsidiary or (iii) the winding-up or liquidation of Borrower or any Subsidiary; 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; 
  
 (g)    any garnishment,
seizure, sequestration or attachment of any assets of Borrower or any Subsidiary having a value of at least $50,000.00, including without limitation, those assets that are Collateral, and such garnishment, seizure, sequestration or attachment is not
vacated, released or stayed 

 
 24 

  
 within the earlier of (i) sixty (60) days after its issuance or entry or (ii) prior to any foreclosure
sale relating thereto; or 
  
 (h)    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. 
  
 7.02    Event of Default and Remedies.    Upon the occurrence of an Event of Default, Bank may, in its sole and absolute discretion, declare the entire outstanding principal balance of
and all accrued and unpaid interest on the Loans and all of the other Secured Obligations to be forthwith due and payable, whereupon all of the unpaid principal balance of and all accrued and unpaid interest on the Loans and all of the other Secured
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 Bank may exercise any and all other rights and remedies it has
under any of the Loan Documents or under applicable law. Nothing contained herein shall be construed to prohibit Bank from exercising any of its rights under any of the Loan Documents, whether or not there has been a Default, that Bank has the right
to exercise under any of the Loan Documents even in the absence of a Default. 
  
 7.03    No
Obligation to Lend or issue any Letter of Credit.    In the event of a Default, Bank shall have no obligation to make any Loan or to issue any Letter of Credit. 
  
 VIII.    Miscellaneous 
  
 8.01    Amendments and Waivers.    Neither this Agreement, nor any provisions hereof, may be changed, waived, discharged or terminated orally, or in any manner other than by an
instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought. 
  
 8.02    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 or entity except for any
approved assignee of Borrower and any assignee of Bank. 
  
 8.03    Independence
of Covenants.    All of the covenants contained in this Agreement and the other Loan 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 if such action is taken, such event occurs or such condition exists.

  
 8.04    Governing Law.    This Agreement has been delivered to
Bank and accepted by Bank in the State of Louisiana. This Agreement shall be governed by and construed in accordance with the laws of the State of Louisiana. 
  
 8.05    Caption Headings.    Caption headings of the sections of this Agreement are for convenience purposes only and are not to be used to
interpret or to define their provisions. 
  
 8.06    Conflict.    In
the event any of the provisions of this Agreement conflict with any provisions contained in any other Loan Documents, the provisions of this Agreement shall govern. This Agreement supersedes and replaces any existing loan agreements and commitment
letters between Bank and Borrower. Nothing in this Agreement shall be construed to limit the Property encumbered by the Loan Documents. 

 
 25 

  
 8.07    Jurisdiction.    Borrower
hereby irrevocably submits to the non-exclusive 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 Bank may elect, in any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document. Borrower irrevocably agrees that all claims in respect of such suit, action or proceeding may be heard and determined in any such courts. Borrower irrevocably waives, to the
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 the address set forth herein or such other address as Borrower may
specify in writing to Bank and in the manner specified in Section 8.07 hereof. NOTHING HEREIN SHALL AFFECT THE RIGHT OF BANK TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST BORROWER AND ITS SUBSIDIARIES IN ANY OTHER JURISDICTION. THE
BORROWER 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 AND THE OTHER LOAN DOCUMENTS OR ANY AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR
THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 
  
 8.08    Invalidity.    In the event that any one or more of the provisions contained in this Agreement or the other Loan Documents shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement or the Loan Documents. 
  
 8.09    Notices.    All communications under or in connection with this Agreement shall be in writing and shall be mailed by first class mail or express
delivery, postage prepaid, or otherwise sent by telex, telegram, telecopy or other similar form of rapid transmission, or personally delivered to an officer of the receiving party. All such communications shall be mailed, sent or delivered:

  
 
	         To Bank:
 	  	 Regions Bank
 
	  	  	 301 St. Charles Avenue
 
	  	  	 New Orleans, LA 70130
 
	  	  	 Attn: Mr. Jorge E. Goris
 
	  	  	 Telecopier: (504) 584-2165
 
	 
	         With a copy to:
 	  	 William T. Finn
 
	  	  	 Carver, Darden, Koretzky, Tessier, Finn,
 
	  	  	 Blossman & Areaux, L.L.C.
 
	  	  	 1100 Poydras Street, Suite 2700
 
	  	  	 New Orleans, LA 70130
 
	  	  	 Telecopier: (504) 585-3801
 
	 
	         To Borrower:
 	  	 Torch Offshore, Inc.
 
	  	  	 401 Whitney Avenue, Suite 400
 
	  	  	 Gretna, Louisiana 70056
 
	  	  	 Attn: Lyle Stockstill
 
	  	  	 Telecopier:                 
 
	 
	         With a copy to:
 	  	 Adams and Reese, LLP
 
	  	  	 4500 One Shell Square
 
	  	  	 New Orleans, LA 70139
 
	  	  	 Attn: Kenneth F. Tamplain, Jr.
 
	  	  	 Telecopier: (504) 566-0210
 

 

 
 26 

  
 8.10    Counterparts.    This
Agreement may be executed in several counterparts and if executed shall constitute the agreement, binding upon all the parties hereto, notwithstanding all the parties are not signatories to the original and same counterparts. 

 
 IN WITNESS WHEREOF, the parties have executed this Agreement on the date hereinabove set forth. 
  
 
	 BANK:
 
	 REGIONS BANK
 
	 
	 By:
 	 	  
 

	  	 	 Jorge E. Goris
 
	  	 	 Its Senior Vice President
 
	 
	 BORROWER:
 
	 TORCH OFFSHORE, INC.
 
	 
	 By:
 	 	  
 

	  	 	 Lyle Stockstill
 
	  	 	 Its Chairman of the Board and
 
	  	 	 Chief Executive Officer
 

 
  

 
 27 

  
 EXHIBIT A 
  
 PROMISSORY NOTE 
  

	$10,000,000.00 
 	July 19, 2002 
 

 
 FOR VALUE RECEIVED, the undersigned, TORCH OFFSHORE, INC. (“Borrower”), hereby promises to pay to the order of REGIONS BANK (“Bank”), on the last day of the Receivables Line of Credit Period, or such earlier date
as may be determined pursuant to the Loan Agreement referred to below, in lawful money of the United States of America and in immediately available funds, the principal sum of Ten Million and No/100 ($10,000,000.00) Dollars, or such lesser sum as
may then constitute the aggregate unpaid principal amount of all Receivables Line of Credit Loans made by Bank to Borrower pursuant to the Loan Agreement referred to below. The aggregate principal amount of the Receivables Line of Credit Loans which
Bank shall be committed to have outstanding hereunder at any time shall not exceed Ten Million and No/100 ($10,000,000.00) Dollars, which amount may be borrowed, paid, reborrowed and repaid, in whole or in part, subject to the terms and conditions
hereof and of the Loan Agreement referred to below. Borrower further promises to pay to the order of Bank interest on the aggregate unpaid principal amount of such Receivables Line of Credit Loans on the dates and at the rate or rates provided for
in the Loan Agreement, 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, 301 St. Charles Avenue, New Orleans, Louisiana 70130. 
  
 All
Receivables Line of Credit Loans made by Bank and all repayments of the principal thereof may be recorded by Bank and, prior to any transfer hereof, endorsed by Bank 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 Receivables Line of Credit Loan made hereunder shall be absolute and unconditional, notwithstanding any failure of Bank to record or endorse or any mistake by
Bank in connection with recordation or endorsement on the schedules attached to this Note. The internal records of Bank 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 Receivables Line of Credit Loan made to Borrower and (iii) the amount of each principal and/or interest payment received by Bank on this Note. 
  
 This Note is the Receivables Line of Credit Note referred to in the Loan Agreement, dated July 19, 2002, by and between Bank and Borrower (as the same may from time to time
be amended, restated, modified or renewed, the “Loan Agreement”). The Loan Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the occurrence of certain stated events. Notwithstanding anything to
the contrary contained herein, the obligation of Bank to make a Receivables Line of Credit Loan shall be governed by the terms and provisions of the Loan Agreement. All capitalized terms used and not otherwise defined in this Note shall have the
respective meanings ascribed to them in the Loan Agreement. 

 
 1 

  
 Upon the occurrence of any Event of Default under the Loan 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 Loan 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 Bank in connection with bankruptcy or insolvency proceedings relating hereto,
Borrower hereby agrees to pay to the order of Bank, 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 Bank (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:
 	 	  
 

 
  

 
 2 

 Promissory Note(cont’d) 
  
 RECEIVABLES LINE OF CREDIT LOANS AND PAYMENTS OF PRINCIPAL 
  
 
	
	
	
	
	
	
	
	
	

	 Date
 	    	 Amount of Loan
 	    	 Amount of Principal
 Repaid
 	    	 Unpaid
 Principal Balance
 	    	 Notation
 Made
 By
 
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

 
  

 
 3 

  
 EXHIBIT B 
  
 PROMISSORY NOTE 
  

	$                     
 	Date:                 
 

 
 FOR VALUE RECEIVED, the undersigned, TORCH OFFSHORE, INC. (“Borrower”), hereby promises to pay to the order of REGIONS BANK
(“Bank”), on                             , or such earlier date as may be determined
pursuant to the Loan Agreement referred to below, in lawful money of the United States of America and in immediately available funds, the principal sum of
                            
($            ) Dollars, or such lesser sum as may then constitute the aggregate unpaid principal amount of all Acquisition Line of Credit Loans made by Bank to Borrower pursuant
to the Loan Agreement referred to below. The aggregate principal amount of the Acquisition Line of Credit Loans which Bank shall be committed to have outstanding hereunder at any time shall not exceed
                                
($            ) Dollars, which amount may be borrowed, paid, reborrowed and repaid, in whole or in part, subject to the terms and conditions hereof and of the Loan Agreement referred to
below. Borrower further promises to pay to the order of Bank interest on the aggregate unpaid principal amount of such Acquisition Line of Credit Loans on the dates and at the rate or rates provided for in the Loan Agreement, 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,
301 St. Charles Avenue, New Orleans, Louisiana 70130. 
  
 All Acquisition Line of Credit Loans made by Bank and all
repayments of the principal thereof may be recorded by Bank and, prior to any transfer hereof, endorsed by Bank 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 Acquisition Line of Credit Loan made hereunder shall be absolute and unconditional, notwithstanding any failure of Bank to record or endorse or any mistake by Bank in connection with recordation or endorsement on
the schedules attached to this Note. The internal records of Bank 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 Acquisition Line of
Credit Loan made to Borrower and (iii) the amount of each principal and/or interest payment received by Bank on this Note. 
  
 This Note is the Acquisition Line of Credit Note referred to in the Loan Agreement, dated July 19, 2002, by and between Bank and Borrower (as the same may from time to time be amended, restated, modified or renewed, the “Loan
Agreement”). The Loan Agreement, among other things, contains provisions for acceleration of the maturity hereof upon the occurrence of certain stated events. Notwithstanding anything to the contrary contained herein, the obligation of Bank to
make an Acquisition Line of Credit Loan shall be governed by the terms and provisions of the Loan Agreement. All capitalized terms used and not otherwise defined in this Note shall have the respective meanings ascribed to them in the Loan Agreement.

 
 1 

  
 Upon the occurrence of any Event of Default under the Loan 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 Loan 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 Bank in connection with bankruptcy or insolvency proceedings relating hereto,
Borrower hereby agrees to pay to the order of Bank, 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 Bank (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:
 	 	  
 

 
  

 
 2 

  
 Promissory Note (cont’d) 
  
 ACQUISITION LINE OF CREDIT LOANS AND PAYMENTS OF PRINCIPAL 
  
  
 
	
	
	
	
	
	
	
	
	

	 Date
 	    	 Amount of Loan
 	    	 Amount of Principal
 Repaid
 	    	 Unpaid
 Principal Balance
 	    	 Notation
 Made By
 
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

	  	    	  	    	  	    	  	    	  
	
	
	
	
	
	
	
	
	

 

 
 3 

  
 EXHIBIT C 
  
 PROMISSORY NOTE 
  

	$                             
 
 	Date: July 19,                           
 

 
 FOR VALUE RECEIVED, the undersigned, TORCH OFFSHORE, INC. (“Borrower”), hereby promises to pay to the order of REGIONS BANK
(“Bank”), at its office located at 301 St. Charles Avenue, New Orleans, Louisiana 70130, 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                   (
                 ) payments of principal each in the amount of                 
($                  ) Dollars, beginning October 19,                  ,
and quarterly on the same day thereafter, with the entire unpaid balance of principal and interest being payable on July 19, 2007.
 
	 
	 Interest:
 	  	 Interest shall accrue on the outstanding principal amount at the rate provided in the Loan Agreement referred to below and shall be payable on the dates set
forth in the Loan 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
Bank’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 Bank to record or endorse or any mistake by Bank in connection
with recordation or endorsement of payments in its internal records. The internal records of Bank 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 Bank on this Note. 
  
 This Note is one of the Term
Notes referred to in the Loan Agreement, dated July 19, 2002, by and between Bank and Borrower (as the same may from time to time be amended, restated, modified or renewed, the “Loan Agreement”). The Loan Agreement, among other things,
contains provisions for acceleration of the maturity hereof upon the occurrence of certain stated events. All capitalized terms used and not otherwise defined in this Note shall have the respective meanings ascribed to them in the Loan Agreement.

  
 Upon the occurrence of any Event of Default under the Loan 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 Loan Agreement. 

 
 1 

  
 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 Bank in connection with
bankruptcy or insolvency proceedings relating hereto, Borrower hereby agrees to pay to the order of Bank, 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 Bank (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:
 	 	 

 
  

 
 2 

  
 EXHIBIT D(1) 
  

SECURITY AGREEMENT 
  
 This Security Agreement is made this
             day of             , 20             ,
by TORCH OFFSHORE, INC. (hereinafter referred to as “Grantor,” which term means individually, collectively, and interchangeably any, each and/or all of them) in favor of REGIONS BANK (“Secured Party”). Grantor’s
social security number or taxpayer identification number is             . Additional information relating to Grantor is set forth on Schedule 1 to this Security Agreement.
“Borrower” shall mean individually, collectively, and interchangeably any, each and/or all of TORCH OFFSHORE, INC. 
  
 To
secure payment of all obligations and liabilities of Grantor and Borrower, and of any one or more of them, to Secured Party, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future
advances, with interest, attorneys’ fees, expenses of collection and costs, and further including, without limitation, obligations to Secured Party on promissory notes, checks, overdrafts, letter-of-credit agreements, loan agreements, security
documents, endorsements, continuing guarantees and this Security Agreement (collectively, the “Obligations”), Grantor pledges and pawns to Secured Party, and grants to Secured Party 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 Secured Party, 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 IRA, pension, and other tax-deferred retirement accounts) and (b) the following described property, now or hereafter owned by Grantor and wherever located: 
  
 all accounts, all inventory, all chattel paper and all general intangibles 
  
 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 any of the foregoing (collectively, “Collateral”). The terms “accounts,” “instruments,” “account debtor,” “documents,” “inventory,” “chattel
paper,” “general intangibles,” “investment property,” “deposit accounts,” “securities accounts,” “financial assets,” “fixtures” and “proceeds” shall have the meanings
provided in the Louisiana Commercial Laws. 
  
 Grantor authorizes Secured Party 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. Secured Party 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 Secured Party, that Secured Party may request. Grantor represents and warrants that (a) Secured Party shall at all times have a
first priority perfected security interest in the Collateral free of all other security interests, liens and claims, and (b) the description and identification of the Collateral, Grantor’s name, taxpayer identification number and chief
executive office, and the location of Grantor’s inventory 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 interest of Secured Party in the Collateral. Grantor authorizes Secured Party, in its sole discretion (a) to notify the obligor
on any Collateral to make payments directly to Secured Party; (b) 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; and (c) to settle, adjust and compromise, in Secured Party’s sole discretion, all present and future claims arising with respect to the Collateral. Secured Party 

 
 1 

  
 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 Secured Party with respect to the Collateral, whether arising contractually or
as a matter of law, is hereby expressly waived. 
  
 Grantor agrees to administer its accounts and the proceeds thereof in a fiduciary
capacity for Secured Party, take all actions necessary to collect the accounts, and immediately deposit all proceeds of the accounts into Grantor’s deposit account with Secured Party. Upon request, Grantor shall at any time mark on all bills,
invoices and statements issued in connection with the accounts that the account is subject to a security agreement with Secured Party and is payable to Secured Party at Secured Party’s address. If Grantor accepts chattel paper or instruments in
payment of accounts, goods or services, Grantor shall promptly deliver all such chattel paper and instruments to Secured Party in negotiable form. 
  
 Grantor shall at all times permit Secured Party, 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 Secured Party may require to conduct such inspections and verifications. Grantor will furnish to Secured Party from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party 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 Secured Party, designating Secured Party as lender loss payee. Grantor
shall not, without the prior written consent of Secured Party (a) change Grantor’s domicile, 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 the state of Louisiana. 
  
 Upon the occurrence of an Event of Default (as such term is defined in that certain Loan
Agreement by and between Secured Party and Borrower, dated July 19, 2002 (as the same may be amended, restated, modified or supplemented from time to time, the “Loan Agreement”)), then, at the option of Secured Party, the Obligations shall
be immediately due and payable in full without notice or demand, and Secured Party (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 Secured Party 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. Secured Party 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 Secured Party an irrevocable mandate and power of attorney (coupled with an interest) to exercise, after default, at Secured Party’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 or other interest in the Collateral. If the
proceeds from the sale or enforcement of the Collateral are insufficient to satisfy all of the Obligations in full, all parties obligated thereon shall remain fully obligated for any deficiency. The rights and remedies of Secured Party hereunder are
cumulative, may be exercised singly or concurrently, and are in addition to any rights and remedies of Secured Party under applicable law. 
  
 Pursuant to Louisiana Revised Statutes 9:5136, et seq., Grantor hereby designates Secured Party or any employee, agent, or other person named by Secured Party at the time any seizure of the Collateral is effected by Secured
Party to serve as a keeper of the Collateral pending the judicial sale thereof. The 

 
 2 

  
 keeper’s fees 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 its rights, Secured Party may,
one or more times, in its 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 Secured Party’s 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 its agreements with Grantor or Borrower; (e) change its 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. The obligations of Grantor hereunder shall be joint, several and solidary and shall bind and obligate Grantor’s successors, heirs and assigns. Secured Party may assign
and transfer the Collateral to an assignee of any of the Obligations, whereupon such transferee shall become vested with all powers and rights granted to Secured Party under 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 Secured Party hereunder and under the laws of such jurisdiction shall be available to Secured Party
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 non-exclusive 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 Secured Party may elect, in any suit, action or proceeding arising out of or relating to this Security Agreement or the Obligations. 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 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 Secured Party. NOTHING HEREIN SHALL AFFECT THE RIGHT OF SECURED
PARTY TO COMMENCE LEGAL PROCEEDINGS OR OTHER WISE 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 THE OBLIGATIONS OR ANY AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 
  
 Secured Party hereby accepts this Security Agreement. 
  
  
 
	 REGIONS BANK,
 	  	 TORCH OFFSHORE, INC.
 
	     SECURED PARTY
 	  	     GRANTOR
 
	 
	 By:             
 
	  	 By:             
 

	 Title:             
 
	  	 Title:             
 

 
  

 
 3 

  
 SCHEDULE 1 
  
 Grantor’s legal status: Corporation 
  
 State or jurisdiction of Grantor’s
organization: Delaware 
  
 Grantor’s organizational number issued by the Delaware Secretary of State is: 3342712 

 
 Grantor’s mailing address: 401 Whitney Avenue, Suite 400, Gretna, LA 70056-2596 
  
 Grantor’s chief executive office: 401 Whitney Avenue, Suite 400, Gretna, LA 70056-2596 
  
 Location of Grantor’s books and records: 401 Whitney Avenue, Suite 400, Gretna, LA 70056-2596 
  
 Location of
Grantor’s inventory: 401 Whitney Avenue, Suite 400, Gretna, LA 70056-2596 
  
 Other names and legal forms used by Grantor to conduct
business within last ten years: none 

 
 4 

  
 EXHIBIT D(2) 
  
 SECURITY AGREEMENT 
  
 This Security Agreement is made this
             day of             ,
20            , by
                                     (hereinafter
referred to as “Grantor,” which term means individually, collectively, and interchangeably any, each and/or all of them) in favor of REGIONS BANK (“Secured Party”). Grantor’s social security number or taxpayer identification
number is             . Additional information relating to Grantor is set forth on Schedule 1 to this Security Agreement. “Borrower” shall mean individually, collectively,
and interchangeably any, each and/or all of TORCH OFFSHORE, INC. 
  
 To secure payment of all obligations and liabilities of Grantor
and Borrower, and of any one or more of them, to Secured Party, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future advances, with interest, attorneys’ fees, expenses of
collection and costs, and further including, without limitation, obligations to Secured Party on promissory notes, checks, overdrafts, letter-of-credit agreements, loan agreements, security documents, endorsements, continuing guarantees and this
Security Agreement (collectively, the “Obligations”), Grantor pledges and pawns to Secured Party, and grants to Secured Party 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 Secured Party, 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 IRA, pension, and other tax-deferred retirement
accounts) and (b) the following described property, now or hereafter owned by Grantor and wherever located: 
  
 all accounts, all inventory, all chattel paper and all general intangibles 
  
 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 any of the foregoing
(collectively, “Collateral”). The terms “accounts,” “instruments,” “account debtor,” “documents,” “inventory,” “chattel paper,” “general intangibles,” “investment
property,” “deposit accounts,” “securities accounts,” “financial assets,” “fixtures” and “proceeds” shall have the meanings provided in the Louisiana Commercial Laws. 
  
 Grantor authorizes Secured Party 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. Secured Party 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 Secured Party, that Secured Party may request. Grantor represents and warrants that (a) Secured Party shall at all times have a first priority perfected security interest in the Collateral free
of all other security interests, liens and claims, and (b) the description and identification of the Collateral, Grantor’s name, taxpayer identification number and chief executive office, and the location of Grantor’s inventory 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 interest of Secured Party in the Collateral. Grantor authorizes Secured Party, in its sole discretion (a) to notify the obligor on any Collateral to make payments directly to Secured
Party; (b) 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; and (c) to settle, adjust and compromise, in
Secured Party’s sole discretion, all present and future claims arising with resp 
  

 
 1 

  
 ect to the Collateral. Secured Party 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 Secured Party with respect to the
Collateral, whether arising contractually or as a matter of law, is hereby expressly waived. 
  
 Grantor agrees to administer its accounts
and the proceeds thereof in a fiduciary capacity for Secured Party, take all actions necessary to collect the accounts, and immediately deposit all proceeds of the accounts into Grantor’s deposit account with Secured Party. Upon request,
Grantor shall at any time mark on all bills, invoices and statements issued in connection with the accounts that the account is subject to a security agreement with Secured Party and is payable to Secured Party at Secured Party’s address. If
Grantor accepts chattel paper or instruments in payment of accounts, goods or services, Grantor shall promptly deliver all such chattel paper and instruments to Secured Party in negotiable form. 
  

Grantor shall at all times permit Secured Party, 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 Secured Party may require to conduct such inspections and verifications. Grantor will furnish to Secured Party from time
to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as Secured Party 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 Secured Party, designating
Secured Party as lender loss payee. Grantor shall not, without the prior written consent of Secured Party (a) change Grantor’s domicile, 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 the state of Louisiana. 
  
 Upon the occurrence of an Event of Default (as such term is
defined in that certain Loan Agreement by and between Secured Party and Borrower, dated July 19, 2002 (as the same may be amended, restated, modified or supplemented from time to time, the “Loan Agreement”)), then, at the option of Secured
Party, the Obligations shall be immediately due and payable in full without notice or demand, and Secured Party (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 Secured Party 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. Secured Party 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 Secured Party an irrevocable mandate and power of attorney (coupled with an interest) to exercise, after default, at Secured Party’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 or other
interest in the Collateral. If the proceeds from the sale or enforcement of the Collateral are insufficient to satisfy all of the Obligations in full, all parties obligated thereon shall remain fully obligated for any deficiency. The rights and
remedies of Secured Party hereunder are cumulative, may be exercised singly or concurrently, and are in addition to any rights and remedies of Secured Party under applicable law. 
  
 Pursuant to Louisiana Revised Statutes 9:5136, et seq., Grantor hereby designates Secured Party or any employee, agent, or other person named by Secured Party at the time any seizure of the
Collateral is effected by Secured Party to serve as a keeper of the Collateral pending the judicial sale thereof. The 

 
 2 

  
 keeper’s fees 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 its rights, Secured Party may,
one or more times, in its 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 Secured Party’s 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 its agreements with Grantor or Borrower; (e) change its 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. The obligations of Grantor hereunder shall be joint, several and solidary and shall bind and obligate Grantor’s successors, heirs and assigns. Secured Party may assign
and transfer the Collateral to an assignee of any of the Obligations, whereupon such transferee shall become vested with all powers and rights granted to Secured Party under 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 Secured Party hereunder and under the laws of such jurisdiction shall be available to Secured Party
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 non-exclusive 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 Secured Party may elect, in any suit, action or proceeding arising out of or relating to this Security Agreement or the Obligations. 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 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 Secured Party. NOTHING HEREIN SHALL AFFECT THE RIGHT OF SECURED
PARTY TO COMMENCE LEGAL PROCEEDINGS OR OTHER WISE 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 THE OBLIGATIONS OR ANY AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 
  
 Secured Party hereby accepts this Security Agreement. 
  
  
 
	 REGIONS BANK,
 	  	 

	     SECURED PARTY
 	  	     GRANTOR
 
	 
	 By:             
 
	  	 By:             
 

	 Title:             
 
	  	 Title:             
 

 

 
 3 

  
 SCHEDULE 1 
  
 Grantor’s legal status: 
  
 State
or jurisdiction of Grantor’s organization: 
  
 Grantor’s organizational number issued by the
                             Secretary of State is: 
  
 Grantor’s mailing address: 
  
 Grantor’s chief executive office: 
  
 Location of Grantor’s
books and records: 
  
 Location of Grantor’s inventory: 
  

Other names and legal forms used by Grantor to conduct business within last ten years: 

 
 4 

 EXHIBIT E 
  
 CONTINUING GUARANTEE 
  
 This Continuing Guarantee, dated as of
                                    ,
20        , is made by
                                    , a
                             (the “Guarantor”), in favor of REGIONS BANK (the
“Bank”). 
  
 WHEREAS, the Guarantor is a subsidiary of Torch Offshore, Inc. (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 Loan Agreement by and between the Bank and the Company, dated July 19, 2002, (as the same may be amended, restated, modified or supplemented from time to time, the “Loan Agreement”) 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 Bank, 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 Loan Agreement. 
  
 2. Guarantee. Guarantor hereby unconditionally, irrevocably, jointly, severally and solidarily guarantees the due and punctual payment when stated to be due of the
Loans and all obligations, indebtedness and liabilities of every kind, nature and character of the Company to the Bank, direct or contingent, due or to become due, now existing or hereafter arising, including, without limitation, all future
advances, together with all interest, attorneys’ fees, expenses of collection and costs, and further including, without limitation, obligations to the Bank on any promissory notes, checks, overdrafts, letter-of-credit agreements, security
documents, endorsements, continuing guaranties and the Loan Agreement (collectively, 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 the Bank in administering, amending or enforcing any of its respective rights in connection with, or collecting against the 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 Loan Agreement regardless of any laws in effect in any jurisdiction affecting any of such terms or the rights of the Bank. The liability of the Guarantor hereunder shall be absolute and unconditional irrespective of: 
  
 (a) any lack of validity or enforceability of any of the Loan Documents or any other agreement relating to the advance of monies or other
extensions of credit by the Bank 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 Loan 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 the Bank, 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 the Bank 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 Bank upon the insolvency, bankruptcy or reorganization of the Company or otherwise, all as though such payment had not been made. 
  

The Bank shall not be required to see or inquire into the powers of the Company or any of its partners, directors, officers or managers, acting or purporting to act on
behalf of the Company; and monies or credit in fact obtained from the Bank 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 or managers, 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 Bank in connection with any monies or credit advanced by the Bank to the Company or any security therefor, including, without
limitation, any loss of, or in respect of, any security received by the Bank from the Company, the Guarantor or others. It is agreed that the Bank, 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 Bank may see fit or change any such application
in whole or in part from time to time as the Bank may see fit; or 
  
 (vi) otherwise deal with the
Company and all other Persons and any collateral as the Bank may see fit. 
  
 (b) the Bank shall not 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 Bank and the
Company shall be accepted by the Guarantor as conclusive evidence that the balance or amount thereby appearing due to the Bank is so due. 
  
 5. Right of Set-Off. Upon the occurrence and during the continuation of any Event of Default, Guarantor hereby irrevocably authorizes the Bank, 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 Bank may in its sole discretion elect, against the obligations and liabilities of Guarantor to
the Bank under this Continuing Guarantee then due, regardless of whether the Bank has made any demand for payment. 
  
 6. Subrogation. THE GUARANTOR HEREBY IRREVOCABLY WAIVES ALL RIGHTS OF SUBROGATION (WHETHER CONTRACTUAL, UNDER SECTION 509 OF THE UNITED STATES BANKRUPTCY CODE, UNDER LOUISIANA LAW, COMMON LAW OR OTHERWISE) TO THE CLAIMS OF THE
BANK 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 Bank of the then amount of the liability of Guarantor hereunder forthwith after each demand therefor is made by the Bank 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 

 
 3 

  
 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 Bank shall be the amounts they would have received had no such withholding been imposed or withheld. The Guarantor will promptly provide the Bank official tax receipts or other evidence of
payment of such withholding tax. 
  
 8. Representations and Warranties. Guarantor hereby represents and
warrants to the Bank that: 
  
 (a) Guarantor (i) is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (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 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 Loan 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 Loan Documents executed by the Guarantor. No further vote or consent of its shareholders,
partners, managers or members is necessary to authorize the execution, delivery and performance of this Continuing Guarantee and the other Loan 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 Loan Documents executed by the Guarantor. This Continuing Guarantee and
the other Loan Documents executed by the Guarantor have been duly executed and delivered on behalf of Guarantor. This Continuing Guarantee and the other Loan 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 Loan 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 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 Loan 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 Loan 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. 

 
 4 

  
 9. Covenants of the Guarantor. So long as any of the Loan 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 Bank, the Guarantor hereby covenants that: 
  
 (a) the Guarantor shall forthwith notify the Bank of the occurrence of any Default; 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 Bank deems 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 Bank. 
  
 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 Bank. The Bank 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. 
  
 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 Loan 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 Bank. 
  
 15. No Waiver Remedies. No failure on the part of the Bank 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. 

 
 5 

  
 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 Bank and its respective successors and assigns and be enforceable by the Bank and its respective successors and assigns. 
  
 17. Jurisdiction. The Guarantor hereby irrevocably submits to the non-exclusive 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 Bank may elect, in any suit, action or proceeding arising out of or relating to this Continuing Guarantee or any other Loan Document. 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 Bank and in the manner specified in Section 14 hereof. NOTHING HEREIN SHALL AFFECT THE RIGHT OF BANK TO COMMENCE
LEGAL PROCEEDINGS OR OTHER WISE 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 AND THE OTHER LOAN DOCUMENTS OR ANY AMENDMENT OR SUPPLEMENT HERETO OR THERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. 
  
 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:        
                                        
                                        
     
  
 Name:
                                        
                                 
 Title:                                    
                                        
                          
 Address:            
                                        
                                 
  

 
 6 

 EXHIBIT F 
  
 COMPLIANCE CERTIFICATE AND BORROWING BASE REPORT 
  
 Date:
                                        

  
 Reference is hereby made to that certain Loan Agreement dated July 19, 2002 by and between Regions Bank and Torch
Offshore, Inc. (the “Loan Agreement”). All capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Loan Agreement. The undersigned Chief Financial Officer of Torch Offshore, Inc.
hereby certifies to Bank that the following information is true and correct for the period commencing on
                                        
and ending on
                                        :

  
 A.    RECEIVABLES 
  
 1.    Balance at beginning of period:
                                        

  
 2.    Plus billings during period:
                                        
         
  
 3.    Less collections during period:
                                        
     
  
 4.    Less write-offs during period:
                                        
      
  
 5.    Total Receivables as of date of this report:
                                        
         
  
 6.    Less ineligible Receivables:
                                        
     
  
 7.    Eligible Receivables:
                                        
     
  
 8.    Receivables Borrowing Base:
                                     
         (85% of Eligible Receivable but not 
         greater than $10,000,000.00) 
  
 B.    AVAILABILITY
UNDER RECEIVABLES LINE OF CREDIT 
  
 1.    Receivables Borrowing Base (line 8 above):
                                        
     
  
 2.    Less principal balance on outstanding 
         Receivables Line of Credit Loans 
         as of date of this report:
                                        
         
  
 3.    Less Stated Amount of 

        outstanding Letters of Credit:
                                 
  
 4.    Availability under Receivables Line of Credit:
                                 

 
 1 

  
 The undersigned further certifies to Bank that as of the date hereof:

  
 (a) all of the representations and warranties contained in the Loan Agreement are true and correct in all
material respects as if made on and as of the date hereof; 
  
 (b) no violation or breach of any of the covenants,
obligations and agreements contained in the Loan Documents has occurred and is continuing; 
  
 (c) no Default or
Event of Default has occurred and is continuing; and 
  
 (d) the Loan Agreement remains in full force and effect,
binding upon Borrower and enforceable against Borrower in accordance with its terms. 
  
 TORCH
OFFSHORE, INC. 
  
 By:
                                        
                     
  
 Its: Chief Financial Officer 
  

 
 2 

 EXHIBIT G 
  
 COMPLIANCE CERTIFICATE 
  
 Date:
                                        

  
 Reference is hereby made to that certain Loan Agreement dated July 19, 2002 by and between Regions Bank and Torch
Offshore, Inc. (the “Loan Agreement”). All capitalized terms used and not otherwise defined herein shall have the respective meanings ascribed to them in the Loan Agreement. The undersigned Chief Financial Officer of Torch Offshore, Inc.
hereby certifies to Bank that as of the date hereof: 
  
 (a)    all of the representations and
warranties contained in the Loan Agreement are true and correct in all material respects as if made on and as of the date hereof; 
  
 (b)    no violation or breach of any of the covenants, obligations and agreements contained in the Loan Documents has occurred and is continuing; 
  
 (c)    no Default or Event of Default has occurred and is continuing; 
  
 (d)    the Loan Agreement remains in full force and effect, binding upon Borrower and enforceable against Borrower in accordance with its terms;

  
 (e)    the financial statements of Borrower and its consolidated Subsidiaries delivered to
you with this certificate 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 data and computations set forth in Schedule A to this certificate for determining compliance with the financial covenants
contained in the Loan Agreement are true, correct and complete for Borrower and its consolidated Subsidiaries. 
  
 TORCH OFFSHORE, INC. 
  
 By:
                                        
                                 
  

Its: Chief Financial Officer 
  

 SCHEDULE 5.01(l) 
  
 SUBSIDIARIES 
  
 Torch Offshore, L.L.C., a Delaware limited liability company

  
 Torch Express, L.L.C., a Louisiana limited liability company 

 SCHEDULE 5.01(m) 
  
 RESTRICTED INVESTMENTS 
  
 None

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