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Exhibit 4.9
CREDIT AND SUBORDINATION AGREEMENT
DATED AS OF SEPTEMBER 2, 1998
BETWEEN
MARINER HOLDINGS, INC.
AS BORROWER
AND
ENRON CAPITAL & TRADE RESOURCES CORP.,
AS LENDER
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above.........................................1
Section 1.02 Certain Defined Terms.......................................1
Section 1.03 Accounting Terms and Determinations.........................8
ARTICLE II
LOANS AND COMMITMENTS
Section 2.01 Loans.......................................................8
Section 2.02 Borrowing...................................................8
Section 2.03 Fees........................................................9
Section 2.04 Note........................................................9
Section 2.05 Prepayments.................................................9
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans..........................................9
Section 3.02 Interest...................................................10
ARTICLE IV
PAYMENTS; COMPUTATIONS; ETC.
Section 4.01 Payments...................................................10
Section 4.02 Computations...............................................11
Section 4.03 Taxes......................................................11
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ARTICLE V
CAPITAL ADEQUACY
Section 5.01 Capital Adequacy; Additional Costs.........................12
Section 5.02 Limitation on Eurodollar Loans.............................13
Section 5.03 Illegality.................................................13
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03...14
Section 5.05 Compensation...............................................14
ARTICLE VI
COVENANTS
Section 6.01 Financial Covenants........................................14
Section 6.02 Limitation on Indebtedness.................................15
ARTICLE VII
SUBORDINATION
Section 7.01 Loans Subordinated to Senior Indebtedness..................15
Section 7.02. Borrower and its Subsidiaries Not to Make Payments with
Respect to Loans in Certain Circumstances..................15
Section 7.03. Loans Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization
for the Benefit of Creditors of the Borrower...............16
Section 7.04. Lender to be Subrogated to Rights of Holders of Senior
Indebtedness...............................................17
Section 7.05. Obligation of the Borrower Unconditional...................18
Section 7.06. Knowledge of Lender........................................18
Section 7.07. Application by Lender of Monies Deposited With It..........18
Section 7.08. Subordination Rights Not Impaired by Acts or Omissions
of Borrower or Holders of Senior Indebtedness..............19
Section 7.09. Article VII Not to Prevent Events of Default...............19
Section 7.10. Other Provisions Subject Hereto............................19
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ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default..........................................20
Section 8.02 Remedies...................................................21
ARTICLE IX
MISCELLANEOUS
Section 9.01 Waiver.....................................................22
Section 9.02 Notices....................................................22
Section 9.03 Payment of Expenses, Indemnities, etc......................23
Section 9.04 Amendments, Etc............................................24
Section 9.05 Successors and Assigns.....................................25
Section 9.06 Assignments and Participations.............................25
Section 9.07 Invalidity.................................................26
Section 9.08 Counterparts...............................................26
Section 9.09 References.................................................26
Section 9.10 Survival...................................................26
Section 9.11 Captions...................................................26
Section 9.12 NO ORAL AGREEMENTS.........................................26
Section 9.13 GOVERNING LAW; WAIVERS; ARBITRATION........................26
Section 9.14 Interest...................................................27
Section 9.15 EXCULPATION PROVISIONS.....................................28
Exhibit A - Form of Note
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THIS CREDIT AND SUBORDINATION AGREEMENT dated as of September 2, 1998
is between: MARINER HOLDINGS, INC., a Delaware corporation (together with its
permitted successors and assigns hereunder, the "Borrower") and ENRON CAPITAL &
TRADE RESOURCES CORP., a Delaware corporation (together with its permitted
successors and assigns hereunder, the "Lender").
R E C I T A L S
A. The Borrower has requested that the Lender lend certain funds to
the Borrower.
B. The Lender has agreed to make such loans subject to the terms and
conditions of this Agreement.
C. Contemporaneously with the funding of each loan hereunder, the
Borrower will apply the proceeds thereof for the purposes of (i) making
contributions to Mariner Energy, Inc., a Delaware corporation and a wholly
owned subsidiary of the Borrower ("Mariner Energy") for general corporate
purposes, or (ii) paying interest on the loans, or (iii) both of the foregoing.
D. In consideration of the mutual covenants and agreements herein
contained and of the loans hereinafter referred to, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used in this Agreement, the terms
"Borrower" and "Lender" shall have the meanings indicated above.
Section 1.02 Certain Defined Terms. As used herein, the following
terms shall have the following meanings (all terms defined in this Article I or
in other provisions of this Agreement in the singular to have the same meanings
when used in the plural and vice versa).
"Additional Costs" shall have the meaning assigned such term in
Section 5.01(a).
"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such first
Person, (ii) any director or officer of such first Person or of any Person
referred to in clause (i) above and (iii) if any Person in clause (i) above is
an individual, any member of the immediate family (including parents, spouse
and children) of such individual and any trust whose principal beneficiary is
such individual or one or more members of such immediate family and any Person
who is controlled by any such member or trust. As used in this definition,
"control" (including, with its correlative meanings, "controlled by" and "under
common control with") shall mean any Person which owns directly or indirectly
10% or more of the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 10% or more of the
partnership or other ownership interests of any other Person (other than as a
limited partner of such other Person) will be deemed to control such
corporation or other Person.
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"Agreement" shall mean this Credit and Subordination Agreement, as the
same may from time to time be amended or supplemented.
"Applicable Margin" shall mean (i) 0% per annum with respect to the
Base Rate Loans; and (ii) 2.50% per annum with respect to the Eurodollar Loans.
"Base Rate" at any time shall mean a fluctuating interest rate per
annum as shall be in effect from time to time which rate per annum shall at all
times be equal to the higher of (i) the Prime Commercial Lending Rate as in
effect from time to time and (ii) the Federal Funds Rate as in effect from time
to time plus one-half of one percent (1/2%) per annum.
"Base Rate Loan" shall mean the Loans during the period of time that
the interest rate is determined on the basis of the rate referred to in the
definition of "Base Rate."
"Business Day" shall mean any day other than a day on which commercial
banks are authorized or required to close in New York, New York and, if such
day relates to a borrowing or continuation of, a payment or prepayment of
principal of or interest on, or the Interest Period for, a Eurodollar Loan or a
notice by the Borrower with respect to any such borrowing, payment, prepayment,
or Interest Period, any day which is also a day on which dealings in Dollar
deposits are carried out in the London interbank market.
"Closing Date" shall mean the date the initial Loan is made.
"Commitment" shall mean the obligation of the Lender to make Loans to
the Borrower under Section 2.01 hereof, not to exceed $25,000,000.
"Dollars" and "$" shall mean lawful money of the United States of
America.
"EBITDA" shall mean, as to the Borrower and its Subsidiaries on a
consolidated basis, and for any twelve month period, the amount equal to net
income of the Borrower and its Subsidiaries, plus, to the extent deducted from
net income, interest expense, depreciation, depletion and impairment,
amortization of leasehold and intangibles, other non-cash expenses (including
deferred taxes), and cash taxes; provided, that, gains or losses on the
disposition of assets shall not be included in EBITDA.
"Environmental Laws" shall mean any and all Governmental Requirements
pertaining to health or the environment in effect in any and all jurisdictions
in which the Borrower or any of its Subsidiaries is conducting or at any time
has conducted business, or where any Property of the Borrower or any of its
Subsidiaries is located, including without limitation, the Oil Pollution Act of
1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and
Reauthorization Act of 1986, as amended, the Hazardous Materials Transportation
Act, as amended,
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and other environmental conservation or protection laws. The term "oil" shall
have the meaning specified in OPA, the terms "hazardous substance" and
"release" (or "threatened release") have the meanings specified in CERCLA, and
the terms "solid waste" and "disposal" (or "disposed") have the meanings
specified in RCRA; provided, however, that (i) in the event either OPA, CERCLA
or RCRA is amended so as to broaden the meaning of any term defined thereby,
such broader meaning shall apply subsequent to the effective date of such
amendment and (ii) to the extent the laws of the state in which any Property of
the Borrower or any of its Subsidiaries is located establish a meaning for
"oil," "hazardous substance," "release," "solid waste" or "disposal" which is
broader than that specified in either OPA, CERCLA or RCRA, such broader meaning
shall apply.
"Eurodollar Loan" shall mean a Loan during the period of time that the
interest rate is determined on the basis of the rate referred to in the
definition of "Eurodollar Rate."
"Eurodollar Rate" for each Interest Period shall mean an interest rate
per annum equal to the rate of interest per annum at which deposits in Dollars
in immediately available funds are offered to prime banks in the London
interbank market at 11:00 a.m. (London time) on the Interest Setting Date in an
amount substantially equal to the applicable Loan and for a period equal to
such Interest Period, determined on the basis of the provisions set forth
below:
(i) On the Interest Setting Date the Lender will determine
the interest rate for deposits in Dollars, for a period equal to that
of the Interest Period to which such Interest Setting Date relates,
which appears on the Bloomberg Financial Markets Services Display
Screen as of 11:00 a.m. (London time) on such date or if such screen
on such service ceases to display such information, such other screen
as may replace it on that service for the purpose of display of such
information (the "Bloomberg Rate"). If such rate does not appear on
the Bloomberg Financial Markets Services Display Screen, then the rate
will be determined in accordance with clause (ii) below.
(ii) If the Lender is unable to determine the Bloomberg Rate,
then on the Interest Setting Date, the Lender will determine the
arithmetic mean (rounded if necessary to the nearest one-hundredth
percent (1/100%)) of the interest rate for a period equal to that of
the Interest Period to which such Interest Setting Date relates quoted
on Reuters Screen page "LIBO" or (a) if such page on such service
ceases to display such information, such other page as may replace it
on that service for the purpose of displaying such information or (b)
if that service ceases to display such information, such page as
displays such information on such service (or, if more than one, that
one approved by the Lender as may replace the Reuters Screen) as at or
about 11:00 a.m. (London time) on that Interest Setting Date (the rate
quoted as aforesaid being the "LIBOR Screen Rate"). If the Lender is
to make a determination pursuant to this paragraph and one or more of
the LIBOR Screen Rates required for such determination shall be
unavailable, the determination shall be made on the basis of those
rates which are available.
"Event of Default" shall have the meaning set forth in Section 8.01.
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"Federal Funds Rate" shall mean, for any day, a fluctuating interest
rate per annum equal, for such day, to the weighted average of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published for such day (or, if such day
is not a Business Day, for the next preceding Business Day) by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
which is a Business Day, the average of the quotations for such day on such
transactions received by the Lender from three Federal funds brokers of
recognized standing selected by the Lender.
"Final Maturity Date" shall mean the earlier of (i) the date is Note
is prepaid pursuant to Section 2.05 (b) (i) hereof, (ii) the date the Loans
become due and payable pursuant to the provisions of Section 8.02, (iii) the
date that is one Business Day following the IPO Date, and (iv) March 1, 1999.
"GAAP" shall mean United States generally accepted accounting
principles as applied in accordance with Section 1.03.
"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property
is located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which
exercises valid jurisdiction over any such Person or such Person's Property.
Unless otherwise specified, all references to Governmental Authority herein
shall mean a Governmental Authority having jurisdiction over, where applicable,
the Borrower or any of its Subsidiaries or any of their respective Property or
the Lender.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement (whether or not having the force of law), including,
without limitation, environmental laws, energy regulations and occupational,
safety and health standards or controls, of any Governmental Authority.
"Highest Lawful Rate" shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the Note under laws applicable to the
Lender which are presently in effect or, to the extent allowed by law, under
such applicable laws which may hereafter be in effect and which allow a higher
maximum nonusurious interest rate than applicable laws now allow.
"Indebtedness" shall mean for any Person, without duplication, (i) all
indebtedness or other obligations of such Person for borrowed money and all
indebtedness of such Person with respect to any other items (other than
accounts payable, income taxes payable, deferred taxes and deferred credits)
which would, in accordance with GAAP, be classified as a liability on the
balance sheet of such Person, (ii) obligations of such Person to pay the
deferred purchase price of property or services (other than accounts payable in
the ordinary course of business), (iii) obligations of such Person (contingent
or otherwise) under reimbursement or similar agreements with respect to the
issuance of letters of credit, (iv) the aggregate of the present values
(discounted in accordance with sound
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financial practice at a rate of 10.00% per annum) of the net amount of all
rental and other minimum lease payments that such Person is obligated to pay,
or has guaranteed, during the remaining term of all Principal Operating Leases
(and, in the case of guarantees by such Person, all leases which would be
Principal Operating Leases if such Person were the lessee thereunder)
(including any period for which any such lease has been extended or may, at the
option of the lessor, be extended) (the net amount of rental and other minimum
lease payments required to be paid under any such lease for any such term shall
be the amount of the rent payable by the lessee with respect to such period,
after excluding amounts required to be paid on account of maintenance and
repairs, insurance, Taxes, assessments, water rates and similar charges and
contingent rents such as those based on sales), (v) all indebtedness or other
obligations of any other Person of the type specified in clause (i), (ii),
(iii), or (iv) above, the payment or collection of which such Person has
guaranteed (except by reason of endorsement for collection in the ordinary
course of business) or in respect of which such Person is liable, contingently
or otherwise, including, without limitation, liable by way of agreement to
purchase products or securities, to provide funds for payment, to maintain
working capital or other balance sheet conditions or otherwise to assure a
creditor against loss, and (vi) all indebtedness or other obligations of any
other Person of the type specified in clause (i), (ii), (iii), (iv), or (v)
above secured by (or for which the holder of such indebtedness has an existing
right, contingent or otherwise, to be secured by) any lien, upon or in property
(including, without limitation, accounts and contract rights) owned by such
Person, whether or not such Person has assumed or becomes liable for the
payment of such indebtedness or obligations.
"Indemnity Matters" shall mean any and all actions, suits, proceedings
(including any investigations, litigation or inquiries), claims, demands and
causes of action made or threatened against a Person and, in connection
therewith, all losses, liabilities, damages (including, without limitation,
consequential damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or concurrent
negligence of such Person seeking indemnification.
"Initial Date" shall have the meaning assigned to such term in Section
7.02(c).
"Interest Period" shall mean, with respect to Eurodollar Loans, the
period commencing on and including (i) the Closing Date, (ii) the date of
expiration of the then current Interest Period applicable thereto if any
Eurodollar Loan is continued pursuant to Section 2.02(b), or (iii) the date of
any conversion of the Base Rate Loan back to a Eurodollar Loan pursuant to
Section 5.04, and ending on but excluding the numerically corresponding day in
each month thereafter, provided that, each Interest Period which commences on
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month),
shall end on the last Business Day of the appropriate subsequent calendar
month, and provided further that, each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or, if such next succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day).
"Interest Setting Date" shall mean the date which is two Business Days
before the first day of a particular Interest Period.
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"IPO Date" means the closing date of the initial public offering of
equity securities of the Borrower in a firm commitment underwriting registered
under the Securities Act of 1933, as amended.
"Loan" shall have the meaning set forth in Section 2.01.
"Note" shall mean the Note provided for by Section 2.04, together with
any and all renewals, extensions for any period, increases, rearrangements,
substitutions or modifications thereof.
"Other Taxes" shall have the meaning assigned such term in Section
4.03(b).
"Payment Blockage Period" shall have the meaning assigned to such term
in Section 7.02(c).
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated organization or
government or any agency, instrumentality or political subdivision thereof, or
any other form of entity.
"Post-Default Rate" shall mean, in respect of any principal of the
Loans or any other amount payable by the Borrower under this Agreement or the
Note which is not paid when due (whether at stated maturity, by acceleration or
otherwise), a rate per annum during the period commencing on the due date until
such amount is paid in full or the default is cured or waived equal to 2% per
annum above the Base Rate or the Eurodollar Rate, as applicable, plus the
Applicable Margin, but in no event to exceed the Highest Lawful Rate.
"Prime Commercial Lending Rate" shall mean that per annum rate of
interest from time to time announced by The Chase Manhattan Bank, N.A. at its
principal office as its prime commercial lending rate (or comparable rate, if
The Chase Manhattan Bank, N.A. does not so designate a "prime commercial
lending rate"), the Prime Commercial Lending Rate to change when and as such
prime commercial lending rate changes. The Prime Commercial Lending Rate is a
reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer. The Chase Manhattan Bank, N.A. may make
commercial loans or other loans at rates of interest at, above or below the
Prime Commercial Lending Rate. For purposes hereof, the principal office of The
Chase Manhattan Bank, N.A. as the date hereof, is its office located at 4 Chase
Xxxxxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxxx, Xxx Xxxx 00000.
"Principal Office" shall mean the principal office of the Lender,
presently located at 0000 Xxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000.
"Principal Operating Lease" shall mean a lease (other than a capital
lease) of the Borrower or any of its Subsidiaries in respect of which lease the
aggregate of the present values (discounted in accordance with sound financial
practice at a rate of 10% per annum) of the net amount of all rental and other
minimum lease payments that the Borrower or any of its Subsidiaries is
obligated to pay during the remaining term of such lease (including any period
for which any such lease has been extended or may, at the option of the lessor,
be extended) is equal to or greater than five percent of the net worth of the
Borrower and its Subsidiaries on a consolidated basis at the time such
determination is made. The net amount of rental and other minimum lease
payments required to be
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paid under any Principal Operating Lease for any such term shall be the amount
of rent payable by the lessee with respect to such period, after excluding
amounts required to be paid on account of maintenance and repairs, insurance,
Taxes, assessments, water rates and similar charges and contingent rents such
as those based on sales; provided, that, in no event shall the Borrower's lease
of office space for its principal place of business be considered a Principal
Operating Lease.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"Refunding Debt" means Indebtedness for borrowed money incurred by the
Borrower or any of its Subsidiaries after the date hereof.
"Regulatory Change" shall mean any change after the Closing Date in
any Governmental Requirement or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders
(including the Lender) of or under any Governmental Requirement (whether or not
having the force of law) by any Governmental Authority charged with the
interpretation or administration thereof.
"Required Senior Lenders" shall mean with respect to any action to be
taken or proposed to be taken by holders of Senior Indebtedness, the requisite
number or percentage of holders of Senior Indebtedness necessary to approve
such action pursuant to the terms of the instruments governing such Senior
Indebtedness.
"Senior Credit Agreement" means the Credit Agreement dated June 28,
1996 among Mariner Energy and the banks party thereto.
"Senior Indebtedness" shall mean the Borrower's obligations in respect
of the Senior Loan and all indebtedness, liabilities and obligations of Mariner
Energy evidenced by the Senior Credit Agreement, as such agreement may be
amended, renewed, extended, supplemented, restated, refinanced, increased, or
otherwise modified from time to time, including without limitation, as such
agreement may be refinanced with different lenders under a different agreement.
"Senior Loan" means any and all of the loans to Mariner Energy
pursuant to the Senior Credit Agreement.
"Subordinate Obligations" shall mean all debts, liabilities and
obligations of the Borrower to the Lender arising under or pursuant to this
Agreement and all other documents, instruments or agreements evidencing,
securing, or otherwise pertaining to the Note or the Loans, including, without
limitation, all obligations to pay principal and interest on the Note and all
obligations to pay costs, fees, expenses and indemnification payments under
this Agreement and all other documents, instruments or agreements evidencing,
securing, or otherwise pertaining to the Note or the Loans.
"Subsidiary" shall mean, as to any Person, (i) any corporation more
than 50% of whose stock of any class or classes having by the terms thereof
ordinary voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any
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contingency) is at the time owned by such Person and/or one or more
Subsidiaries of such Person and (ii) any partnership, association, joint
venture or other entity in which such Person and/or one or more Subsidiaries of
such Person has more than a 50% equity interest at the time.
"Taxes" shall have the meaning assigned such term in Section 4.03(a).
Section 1.03 Accounting Terms and Determinations. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein,
all accounting determinations hereunder shall be made, and all financial
records shall be maintained in accordance with GAAP applied on a consistent
basis.
ARTICLE II
LOANS AND COMMITMENTS
Section 2.01 Loans. The Lender agrees, subject to the terms and
conditions of this Agreement, to advance funds (each such advance, a "Loan")
from time to time prior to the earlier of the IPO Date and the Final Maturity
Date to the Borrower in an aggregate principal amount not to exceed the
Commitment. The initial Loan shall be made by way of a single borrowing made on
the Closing Date. Whenever the Borrower desires that the Lender make an
additional Loan hereunder after the Closing Date, the Borrower shall give at
least three (3) Business Days advance written notice to the Lender specifying,
subject to the provisions hereof, (i) the aggregate principal amount of such
Loan to be made (which shall be in a minimum amount of $1,000,000 and in
integral amounts of $100,000) and (ii) the date of such Loan (which shall be a
Business Day). The Lender shall make such additional Loans to the Borrower in
an aggregate amount which, when added to the principal amount of all other
outstanding Loans, does not exceed the unused portion of the Commitment so long
as (A) no condition or event that constitutes or would, with notice or lapse of
time or both, constitute, an Event of Default has occurred and is continuing
and (B) there has been no material adverse change in (1) the assets,
liabilities, financial condition or operations of the Borrower and its
Subsidiaries taken as a whole or (2) the ability of the Borrower to carry out
its business or meet its obligations under this Agreement and the Note. Loans
that are prepaid pursuant to Section 2.05 (a) may be reborrowed. Loans that are
prepaid pursuant to Section 2.05 (b) may not be reborrowed.
Section 2.02 Borrowing.
(a) Borrowing. Initially, each Loan shall be a Eurodollar Loan and the
Interest Period shall be one month.
(b) Continuation. Except as otherwise provided in Article V, the
entire amount of each Eurodollar Loan shall be automatically continued beyond
the expiration of the then current Interest Period relating thereto as a
Eurodollar Loan with an Interest Period of one month.
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Section 2.03 Fees. The Borrower shall pay to ECT Securities Limited
Partnership. the structuring fee in the amounts and at the times set forth in
the fee letter between ECT Securities Limited Partnership and the Borrower
dated the date hereof.
Section 2.04 Note. The Loans shall be evidenced by a single promissory
note of the Borrower in substantially the form of Exhibit A hereto, dated as of
the Closing Date, payable to the order of the Lender and otherwise duly
completed. The date, amount, interest rate, and Interest Period of each Loan
and all payments made on account of the principal thereof, shall be recorded by
the Lender on its books for the Note, and, prior to any transfer, endorsed by
the Lender on the schedule attached to the Note or any continuation thereof.
Such records shall be deemed conclusive absent manifest error.
Section 2.05 Prepayments.
(a) Optional Prepayments. Except as permitted by Section 2.05 (b), the
Borrower may not prepay, in whole or in part, the Loans.
(b) Mandatory Prepayments. The Borrower shall prepay the Loans:
(i) in whole or in part, together with interest accrued
thereon, from the net cash proceeds received by the Borrower with
respect to the securities offering effected on the IPO Date, within
one Business Day after the IPO Date; and
(ii) in whole or in part, together with interest accrued
thereon, from the net cash proceeds of Refunding Debt or sale of
equity (other than in an initial public offering) within one Business
Day after the date any Refunding Debt is incurred or such sale is
consummated.
Any partial prepayment shall be applied first to interest on and then to the
principal of the Note.
(c) Prepayments permitted or required under this Section 2.05 shall be
without premium or penalty, except as required under Section 5.05.
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans. Except as is otherwise provided in
the Note, the Borrower will pay to the Lender the entire outstanding principal
balance of the Loans on the Final Maturity Date.
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Section 3.02 Interest.
(a) The Borrower will pay to the Lender interest on the unpaid
principal amount of the Loans, for the period commencing on the Closing Date,
to but excluding, the date the Loans are paid in full, at the following rates
per annum:
(i) if such a Loan is a Eurodollar Loan, for each Interest
Period relating thereto, the Eurodollar Rate (as in effect from time
to time) plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate; and
(ii) if such a Loan is the Base Rate Loan, the Base Rate for
such Loan plus the Applicable Margin, but in no event to exceed the
Highest Lawful Rate.
(b) Notwithstanding the foregoing, the Borrower will pay to the Lender
interest at the applicable Post-Default Rate on any principal of the Loans, and
(to the fullest extent permitted by law) on any other amount payable by the
Borrower hereunder or under the Note which shall not be paid in full when due
(whether at stated maturity, by acceleration or otherwise), for the period
commencing on the due date thereof until the same is paid in full.
(c) Accrued interest on the Loans shall be payable as follows:
(i) if such Loan is a Eurodollar Loan, on the last day of
each Interest Period applicable thereto, at maturity (whether by
acceleration or otherwise), and after maturity, on demand; and
(ii) if such Loan is a Base Rate Loan, on the last day of
each month, at maturity (whether by acceleration or otherwise), and
after maturity, on demand.
(d) Promptly after the determination of any interest rate provided for
herein or any change therein, the Lender shall notify the Borrower thereof.
Each determination by the Lender of an interest rate or fee hereunder shall,
except in cases of manifest error, be final, conclusive and binding on the
parties.
ARTICLE IV
PAYMENTS; COMPUTATIONS; ETC.
Section 4.01 Payments. Except to the extent otherwise provided herein,
all payments of principal, interest and other amounts to be made by the
Borrower under this Agreement and the Note shall be made in Dollars, in
immediately available funds, to the Lender at CitiBank N.A., New York, New
York, ABA No. 000000000 for the account of ECT-Finance, Account No. 4067-3621,
Re: Mariner, not later than 11:00 a.m. (New York time) on the date on which
such payments shall become due (each such payment made after such time on such
due date to be deemed to have been made on the next succeeding Business Day).
Such payments shall be made without (to the fullest
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extent permitted by applicable law) defense, set-off or counterclaim. All
payments shall be applied first to interest and then to principal.
Section 4.02 Computations. Interest on Eurodollar Loans shall be
computed on the basis of a year of 360 days and actual days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable, unless such calculation would exceed the Highest Lawful Rate, in which
case interest shall be calculated on the per annum basis of a year of 365 or
366 days, as the case may be. Interest on the Base Rate Loan and fees shall be
computed on the basis of a year of 365 or 366 days, as the case may be.
Section 4.03 Taxes.
(a) Payments Free and Clear. Any and all payments by the Borrower
hereunder shall be made, in accordance with Section 4.01, free and clear of,
and without deduction for, any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, taxes imposed on Lender's income, and franchise or similar
taxes imposed on the Lender, by (i) any jurisdiction (or political subdivision
thereof) of which the Lender, is a citizen or resident, (ii) the jurisdiction
(or any political subdivision thereof) in which the Lender is organized, or
(iii) any jurisdiction (or political subdivision thereof) in which the Lender
is presently doing business which taxes are imposed solely as a result of doing
business in such jurisdiction (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrower shall be required by law to deduct any Taxes from
or in respect of any sum payable hereunder to the Lender (i) the sum payable
shall be increased by the amount necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 4.03) the Lender shall receive an amount equal to the sum it would
have received had no such deductions been made, (ii) the Borrower shall make
such deductions and (iii) the Borrower shall pay the full amount deducted to
the relevant taxing authority or other Governmental Authority in accordance
with applicable law.
(b) Other Taxes. In addition, to the fullest extent permitted by
applicable law, the Borrower agrees to pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement
(hereinafter referred to as "Other Taxes").
(c) INDEMNIFICATION. TO THE FULLEST EXTENT PERMITTED BY APPLICABLE
LAW, THE BORROWER WILL INDEMNIFY THE LENDER FOR THE FULL AMOUNT OF TAXES AND
OTHER TAXES (INCLUDING, BUT NOT LIMITED TO, ANY TAXES OR OTHER TAXES IMPOSED BY
ANY GOVERNMENTAL AUTHORITY ON AMOUNTS PAYABLE UNDER THIS SECTION 4.03) PAID BY
THE LENDER, AND ANY LIABILITY (INCLUDING PENALTIES, INTEREST AND EXPENSES)
ARISING THEREFROM OR WITH RESPECT THERETO, WHETHER OR NOT SUCH TAXES OR OTHER
TAXES WERE CORRECTLY OR LEGALLY ASSERTED UNLESS THE PAYMENT OF SUCH TAXES WAS
NOT CORRECTLY OR LEGALLY ASSERTED AND THE LENDER'S PAYMENT OF SUCH TAXES OR
OTHER TAXES WAS THE RESULT OF ITS GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. ANY
PAYMENT PURSUANT TO SUCH INDEMNIFICATION SHALL BE MADE WITHIN THIRTY (30) DAYS
AFTER THE DATE THE LENDER MAKES WRITTEN DEMAND THEREFOR. IF THE LENDER
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RECEIVES A REFUND OR CREDIT IN RESPECT OF ANY TAXES OR OTHER TAXES FOR WHICH
THE LENDER HAS RECEIVED PAYMENT FROM THE BORROWER IT SHALL PROMPTLY NOTIFY THE
BORROWER OF SUCH REFUND OR CREDIT AND SHALL, IF NO DEFAULT HAS OCCURRED AND IS
CONTINUING, WITHIN THIRTY (30) DAYS AFTER RECEIPT OF A REQUEST BY THE BORROWER
(OR PROMPTLY UPON RECEIPT, IF THE BORROWER HAS REQUESTED APPLICATION FOR SUCH
REFUND OR CREDIT PURSUANT HERETO), PAY AN AMOUNT EQUAL TO SUCH REFUND OR CREDIT
TO THE BORROWER WITHOUT INTEREST (BUT WITH ANY INTEREST SO REFUNDED OR
CREDITED), PROVIDED THAT THE BORROWER, UPON THE REQUEST OF THE LENDER, AGREES
TO RETURN SUCH REFUND OR CREDIT (PLUS PENALTIES, INTEREST OR OTHER CHARGES) TO
THE LENDER IN THE EVENT THE LENDER IS REQUIRED TO REPAY SUCH REFUND OR CREDIT.
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 Capital Adequacy; Additional Costs.
(a) Eurodollar Regulations, etc. The Borrower shall pay directly to
Lender from time to time such amounts as the Lender may determine to be
necessary to compensate the Lender for any costs which it determines are
attributable to its making or maintaining of Eurodollar Loans hereunder or its
obligation to make any Eurodollar Loans hereunder, or any reduction in any
amount receivable by the Lender hereunder in respect of any Eurodollar Loan or
such obligation (such increases in costs and reductions in amounts receivable
being herein called "Additional Costs"), resulting from any Regulatory Change
which: (i) changes the basis of taxation of any amounts payable to the Lender
under this Agreement or the Note in respect of the Eurodollar Loans (other than
taxes imposed on the overall net income of the Lender for the Eurodollar Loans
by the jurisdiction of the Principal Office); or (ii) imposes or modifies any
reserve, special deposit, minimum capital, capital ratio or similar
requirements relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of the Lender (including Eurodollar Loans or
any deposits referred to in the definition of "Eurodollar Rate" in Section 1.02
hereof), or the Eurodollar interbank market; or (iii) imposes any other
condition affecting this Agreement or the Note (or any of such extensions of
credit or liabilities). The Lender will notify the Borrower of any event
occurring after the Closing Date which will entitle the Lender to compensation
pursuant to this Section 5.01(a) as promptly as practicable after it obtains
knowledge thereof and determines to request such compensation.
(b) Regulatory Change. Without limiting the effect of the provisions
of Section 5.01(a), in the event that, by reason of any Regulatory Change or
any other circumstances arising after the Closing Date affecting the Lender,
the Eurodollar interbank market or the Lender's position in such market, the
Lender either (i) incurs Additional Costs or (ii) becomes subject to
restrictions on the amount of such a category of liabilities or assets which it
may hold, then, if the Lender so elects by notice to the Borrower, the
obligation of the Lender to continue Eurodollar Loans shall be terminated.
(c) Capital Adequacy. Without limiting the effect of the foregoing
provisions of this Section 5.01 (but without duplication), the Borrower shall
pay directly to the Lender from time to
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time on request such amounts as the Lender may reasonably determine to be
necessary to compensate it or its parent or holding company for any costs which
it determines are attributable to the maintenance by it or its parent or
holding company pursuant to any Governmental Requirement following any
Regulatory Change, of capital in respect of the Note or the Loans (such
compensation to include, without limitation, an amount equal to any reduction
of the rate of return on assets or equity of the Lender or its parent or
holding company to a level below that which the Lender or its parent or holding
company could have achieved but for such Governmental Requirement). The Lender
will notify the Borrower that the Lender is entitled to compensation pursuant
to this Section 5.01(c) as promptly as practicable after it determines to
request such compensation.
(d) Compensation Procedure. If Lender notifies the Borrower of the
incurrence of Additional Costs under this Section 5.01, such notice to the
Borrower shall set forth the basis and amount of its request for compensation.
Determinations and allocations by the Lender for purposes of this Section 5.01
of the effect of any Regulatory Change pursuant to Section 5.01(a) or (b), or
of the effect of capital maintained pursuant to Section 5.01(c), on its costs
or rate of return of maintaining the Loans or its obligation to make the Loans,
or on amounts receivable by it in respect of the Loans, and of the amounts
required to compensate the Lender under this Section 5.01, shall be conclusive
and binding for all purposes, provided that such determinations and allocations
are made on a reasonable basis. Any request for additional compensation under
this Section 5.01 shall be paid by the Borrower within thirty (30) days of the
receipt by the Borrower of the notice described in this Section 5.01(d).
Section 5.02 Limitation on Eurodollar Loans. Anything herein to the
contrary notwithstanding, if, on or prior to the determination of any
Eurodollar Rate for any Interest Period:
(i) the Lender determines (which determination shall be
conclusive absent manifest error) that quotations of interest rates
for the relevant deposits referred to in the definition of "Eurodollar
Rate" in Section 1.02 are not being provided in the relevant amounts
or for the relevant maturities for purposes of determining rates of
interest for the Eurodollar Loans as provided herein; or
(ii) the Lender determines (which determination shall be
conclusive absent manifest error) that the relevant rates of interest
referred to in the definition of "Eurodollar Rate" in Section 1.02
upon the basis of which the rate of interest for the Eurodollar Loans
for such Interest Period is to be determined are not likely to
adequately cover the cost to the Lender of making or maintaining the
Eurodollar Loans;
then the Lender shall give the Borrower prompt notice thereof, and the
obligation of the Lender to continue the Eurodollar Loans shall be terminated.
Section 5.03 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Lender to honor its
obligation to make or maintain the Eurodollar Loans hereunder, then the Lender
shall promptly notify the Borrower thereof and the Lender's obligation to
continue the Eurodollar Loans shall be terminated.
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Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03.
If the obligation of the Lender to make Eurodollar Loans shall be terminated
pursuant to Sections 5.01, 5.02 or 5.03, all Eurodollar Loans shall be
automatically converted to a Base Rate Loan. Notwithstanding anything to the
contrary contained in this Article V, the Lender agrees that it will
immediately notify the Borrower if any of the matters that were described in
any notice provided by the Lender pursuant to Section 5.01, 5.02 or 5.03 cease
to exist, and each such notice shall constitute a withdrawal of the notice
given by the Lender pursuant to such Section. Upon delivery of the notice
referred to in the immediately preceding sentence, the Base Rate Loan shall
automatically convert back to a Eurodollar Loan with an Interest Period of one
month, beginning on the date of conversion. If the Lender requests additional
compensation under Section 5.01, the Borrower shall have the right, if no Event
of Default then exists, to convert each of the Eurodollar Loans to a Base Rate
Loan on the last day of such Eurodollar Loan's current Interest Period, upon
payment of all such compensation accrued to the date of such conversion.
Section 5.05 Compensation. The Borrower shall pay to the Lender within
thirty (30) days of receipt of written request of the Lender (which request
shall set forth, in reasonable detail, the basis for requesting such amounts
and which shall be conclusive and binding for all purposes provided that such
determinations are made on a reasonable basis), such amount or amounts as shall
compensate it for any funding losses or other loss, cost, expense or liability
which the Lender may sustain as a result of any prepayment of the Eurodollar
Loans for any reason (including, without limitation, the acceleration of the
Loans pursuant to Section 8.02) on any day other than the last day of the
applicable Interest Period.
ARTICLE VI
COVENANTS
Section 6.01 Financial Covenants. So long as the Commitment is
outstanding hereunder or any Loan remains unpaid, the Borrower shall:
(a) Cash Flow Coverage Ratio. Maintain for itself and its
Subsidiaries on a consolidated basis and for each twelve month period
ending on the last day of each fiscal quarter, a ratio of (i) EBITDA
to (ii) the sum of (A) interest expense of the Borrower and its
Subsidiaries on a consolidated basis during such period plus (B)
maintenance capital expenditures of the Borrower and its Subsidiaries
on a consolidated basis during such twelve month period plus (C) cash
taxes paid by or on behalf of the Borrower and its Subsidiaries on a
consolidated basis during such period of at least 1.50 to 1.00. For
purposes of this Section 6.01(a), "maintenance capital expenditures"
shall mean the annual capital expenditures made by the Borrower and
its Subsidiaries on a consolidated basis as necessary to maintain
proved producing reserves at the levels set forth for the Properties
listed in the Xxxxx Xxxxx Reserve Report relating to the Company dated
December 31, 1997; and
(b) Interest Coverage Ratio. Maintain for itself and its
Subsidiaries on a consolidated basis and for each twelve month period
ending on the last day of each fiscal
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quarter, a ratio of (i) EBITDA to (ii) interest expense of the
Borrower and its Subsidiaries on a consolidated basis during such
period of at least 2.25 to 1.00.
Section 6.02 Limitation on Indebtedness. The Borrower shall not, and
shall not permit its Subsidiaries to, create, incur, assume or suffer to exist
any consolidated Indebtedness other than consolidated Indebtedness outstanding
on the Closing Date, Refunding Debt, the Loans and the Senior Indebtedness.
ARTICLE VII
SUBORDINATION
Section 7.01 Loans Subordinated to Senior Indebtedness. The Borrower
and the Lender agree that the payment of the Subordinate Obligations is
subordinated, to the extent and in the manner provided in this Article VII, to
the prior payment in full of all Senior Indebtedness. This Article is intended
for the benefit of all Persons who hold, or, in reliance on the provisions of
this Article, become holders of, or continue to hold, Senior Indebtedness, and
each such Person shall be entitled to enforce such provision. No amendment or
other modification of the provisions of this Article shall be effective against
any holder of Senior Indebtedness without the prior written consent of Required
Senior Lenders.
Section 7.02. Borrower and its Subsidiaries Not to Make Payments with
Respect to Loans in Certain Circumstances.
(a) Upon the maturity of any Senior Indebtedness by lapse of time,
acceleration (unless waived) or otherwise (including all installments of
principal and interest), all Senior Indebtedness then due and owing shall first
be paid in full, or such payment shall be duly provided for in cash in a manner
satisfactory to all of the holders of such Senior Indebtedness, before any
payment is made on account of the Subordinate Obligations.
(b) Upon the happening of any default in payment of any Senior
Indebtedness and the continuation of such default beyond any applicable period
of grace, then, unless and until such default shall have been cured to the
reasonable satisfaction of Required Senior Lenders or waived or shall have
ceased to exist, no payment shall be made by the Borrower or any of its
Subsidiaries with respect to the Subordinate Obligations.
(c) During the continuance of any default or other event (other than a
payment default) with respect to the Senior Indebtedness that will, with the
giving of notice, lapse of time, or both, unless cured or waived, permit the
holders of the Senior Indebtedness as to which such default relates to
accelerate its maturity, unless the representatives for the holders of such
Senior Indebtedness(or the holders of at least a majority in principal amount
of the aggregate amount of all the Senior Indebtedness then outstanding), have
failed, within thirty (30) days after the occurrence of such default or other
event, to instruct the Lender in writing to not receive such payment, no
payment may be made by the Borrower or any of its Subsidiaries in respect to
the Subordinate Obligations, for a period ("Payment Blockage Period")
commencing on the date of such notice (such
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date being the "Initial Date") and ending 179 days thereafter (unless such
Payment Blockage Period shall be terminated by written notice to the Lender
from such representative who commenced the Payment Blockage Period). No new
Payment Blockage Period may be commenced with respect to the Subordinate
Obligations unless and until (i) 360 consecutive days have elapsed since the
Initial Date of the immediately prior Payment Blockage Period and (ii) all
scheduled payments in respect of the Subordinate Obligations that have come
due, but that have not been paid as a result of the prior Payment Blockage
Period, have been paid in full. No nonpayment default that existed or was
continuing on the Initial Date of any Payment Blockage Period shall be, or be
made, the basis of a subsequent notice to the Lender for the commencement of a
subsequent Payment Blockage Period. Nothing contained in the proviso described
in this paragraph will limit the ability of the Lender to take any action to
accelerate the maturity of the Loans or pursue any rights or remedies
hereunder, provided that the Senior Indebtedness then and thereafter due or
declared to be due shall first be paid in full before the Lender is entitled to
receive any payment from the Borrower of principal of or interest on the Loans.
Notwithstanding the foregoing, it is expressly acknowledged and agreed that
should the holders of the Senior Indebtedness (or the representatives for such
holders) accelerate the maturity of the Senior Indebtedness, the provisions of
Section 7.02 (a) shall thereupon become applicable, in lieu of the provisions
of this Section 7.02 (c).
(d) In the event that notwithstanding the provisions of this Section
7.02 the Borrower or any of its Subsidiaries shall make any payment to the
Lender on account of the Subordinate Obligations or Lender shall receive or
retain any such payment at any time when such payment is prohibited pursuant to
clauses (a) through (c) of this Section 7.02, then, such payment (subject to
the provisions of Sections 7.06 and 7.07) shall be held by the Lender in trust
for the benefit of, and shall be paid forthwith over and delivered to, the
holders of Senior Indebtedness (pro rata as to each of such holders on the
basis of the respective amounts of Senior Indebtedness held by them) or their
representative under the credit agreement pursuant to which Senior Indebtedness
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Indebtedness remaining unpaid to the extent
necessary to pay all Senior Indebtedness in full in accordance with its terms,
after giving effect to any concurrent payment or distribution to or for the
holders of Senior Indebtedness.
(e) The Borrower shall give prompt written notice to the Lender of any
default in the payment of principal of or interest on any Senior Indebtedness;
provided, however that the failure by the Borrower to provide such notice shall
not affect the rights of the holders of the Senior Indebtedness.
Section 7.03. Loans Subordinated to Prior Payment of All Senior
Indebtedness on Dissolution, Liquidation or Reorganization for the Benefit of
Creditors of the Borrower. Upon any distribution of assets of the Borrower or
any of its Subsidiaries in any dissolution, winding up, liquidation or
reorganization for the benefit of creditors of the Borrower or any of its
Subsidiaries (whether in bankruptcy, insolvency or receivership proceedings or
upon an assignment for the benefit of creditors or otherwise):
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payments in full of all Senior Indebtedness (including without
limitation interest accruing after the
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commencement of any such proceeding at the rate specified in the documentation
governing the terms of the respective Senior Indebtedness) in cash or in a
manner satisfactory to all of its holders before the Lender is entitled to
receive any payment on account of the Subordinate Obligations;
(b) any payment or distribution of assets of the Borrower or any of
its Subsidiaries of any kind or character, whether in cash, property or
securities, to which the Lender would be entitled except for the provisions of
this Article VII, including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness of
the Borrower being subordinated to the payment of the Subordinated Obligations,
shall be paid by the liquidating trustee or agent or other person making such
payment or distribution directly to the holders of the Senior Indebtedness or
their representative under the credit agreement under which Senior Indebtedness
may have been issued (pro rata as to each such holder, on the basis of the
respective amounts of unpaid Senior Indebtedness held by each), to the extent
necessary to make payment in full of all Senior Indebtedness remaining unpaid,
after giving effect to any concurrent payment or distribution or provision
therefor to the holders of such Senior Indebtedness, except that the Lender
would be entitled to receive securities that are subordinated to Senior
Indebtedness remaining outstanding after such proceeding to at least the same
extent as the Subordinate Obligations; and
(c) in the event that notwithstanding the foregoing provisions of this
Section 7.03, any payment or distribution of assets of the Borrower or any of
its Subsidiaries of any kind or character, whether in cash, property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Borrower
being subordinated to the payment of the Subordinate Obligations, shall be
received by the Lender on account of the Subordinate Obligations before all
Senior Indebtedness is paid in full, such payment or distribution (subject to
the provisions of Sections 7.06 and 7.07) shall be received and held in trust
for and shall be paid over to the holders of the Senior Indebtedness remaining
unpaid or unprovided for or their representative under the credit agreement
under which such Senior Indebtedness may have been issued (pro rata as provided
in subsection (b) above), for application to the payment of such Senior
Indebtedness until all such Senior Indebtedness shall have been paid in full,
after giving effect to any concurrent payment or distribution or provision
therefor to the holders of such Senior Indebtedness, except that the Lender
would be entitled to receive securities that are subordinated to Senior
Indebtedness to at least the same extent as the Subordinate Obligations.
(d) The Borrower shall give prompt written notice to the
Lender of any dissolution, winding up, liquidation or reorganization of the
Borrower or any of its Subsidiaries.
Section 7.04. Lender to be Subrogated to Rights of Holders of Senior
Indebtedness. Subject to the payment in full of all Senior Indebtedness, the
Lender shall be subrogated equally and ratably to the rights of the holders of
the Senior Indebtedness to receive payments or distributions of assets of the
Borrower or any of its Subsidiaries, whether in cash, property or securities,
applicable to the Senior Indebtedness until all amounts owing on the Loans
shall be paid in full, and for the purpose of such subrogation no payments or
distributions to the holders of the Senior Indebtedness by or on behalf of the
Borrower or any of its Subsidiaries or by or on behalf of the Lender by virtue
of this Article which otherwise would have been made to the Lender shall, as
between the Borrower, its
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creditors other than holders of the Senior Indebtedness, and the Lender be
deemed to be payment by the Borrower or such Subsidiary to or on account of the
Senior Indebtedness.
Section 7.05. Obligation of the Borrower Unconditional. The provisions
of this Article VII are intended solely for the purpose of defining the
relative rights of the Lender, on the one hand, and the holders of the Senior
Indebtedness, on the other hand, and nothing contained in this Article VII or
elsewhere in this Agreement is intended to or shall impair as between the
Borrower, its creditors other than holders of Senior Indebtedness, and the
Lender, the obligation of the Borrower, which is absolute and unconditional, to
pay to the Lender the principal of, interest or premium, if any, on the Loans
as and when the same shall become due and payable in accordance with their
terms, or is intended to or shall affect the relative rights of the Lender and
creditors of the Borrower other than the holders of the Senior Indebtedness,
nor shall anything herein or therein prevent the Lender from exercising all
remedies otherwise permitted by applicable law upon default under this
Agreement, subject to the rights, if any, under this Article VII of the holders
of Senior Indebtedness in respect of cash, property or securities of the
Borrower received upon the exercise of any such remedy. Upon any distribution
of assets of the Borrower or any of its Subsidiaries referred to in this
Article VII, the Lender shall be entitled to rely upon any order or decree made
by any court of competent jurisdiction in which such dissolution, winding up,
liquidation or reorganization proceedings are pending, or a certificate of the
liquidating trustee or agent or other person making any distribution of the
Lender for the purpose of ascertaining the Persons entitled to participate in
such distribution, the holders of the Senior Indebtedness and other
indebtedness of the Borrower, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon, and all other facts pertinent thereto
or to this Article VII. Nothing contained in this Article VII or elsewhere in
this Agreement is intended to or shall affect the obligation of the Borrower to
make, or prevent the Borrower from making, at any time except during the
pendency of any dissolution, winding up, liquidation or reorganization
proceeding, and except during the continuance of any default specified in
Section 7.02 (not cured or waived), payments at any time of the principal of,
interest or premium, if any, on the Loans.
Section 7.06. Knowledge of Lender. Notwithstanding any provision of
this Agreement, the Lender shall not be charged with knowledge of the existence
of any facts which would prohibit the making of any payment of monies to or by
the Lender, or the taking of any other action by the Lender, in the case of any
matter other than default in the payment of any Senior Indebtedness, until the
earlier to occur of (i) receipt of actual knowledge of any such fact by any
officer of the Lender, any officer of any partner of the Lender or any officer
of any partner of a partner of the Lender, or (ii) receipt by the Lender of
written notice of the existence of such facts from the Borrower or any holder,
or the representative of any holder, of Senior Indebtedness.
Section 7.07. Application by Lender of Monies Deposited With It. If
prior to the date on which by the terms of this Agreement any monies deposited
with the Lender may become payable for any purpose (including, without
limitation, the payment of either the principal of or the interest on the
Loans) the Lender shall not have received either (i) the actual notice provided
for in Section 7.06(i) or, if the Lender shall have received such notice, shall
have notified in writing the representative of the holders of the Senior
Indebtedness of such default, and neither such representative nor the holders
of at least a majority in principal amount of the aggregate amount of
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all Senior Indebtedness then outstanding shall have given, within thirty (30)
days after receipt by such representative or such holders of such written
notice, a notice of the commencement of a Payment Blockage Period in accordance
with Section 7.02(c), or (ii) the written notice provided for in Section
7.06(ii), then the Lender shall have the full power and authority to receive
such monies and to apply the same to the purpose for which they were received
and shall not be affected by any notice to the contrary which may be received
by it on or after such date. This Section 7.07 shall be construed solely for
the benefit of the Lender.
Section 7.08. Subordination Rights Not Impaired by Acts or Omissions
of Borrower or Holders of Senior Indebtedness. The right or interest of any
present or future holders of any Senior Indebtedness, and all agreements and
obligations of the Lender under this Article VII, shall remain in full force
and effect irrespective of: (a) any change in the time, manner or place of
payment of, or in any other term in respect of, all or any of the Senior
Indebtedness, or any amendment or waiver of any agreement or instrument related
thereto; (b) any exchange or release of, or non-perfection of any lien on or
security interest in, any collateral, or any release from, amendment or waiver
of or consent to departure from any guaranty or other obligation, for all or
any of the Senior Indebtedness; (c) any other circumstance which might
otherwise constitute a defense available to or discharge of the Lender in
respect of the provisions of this Article VII; or (d) any act or failure to act
on the part of the Borrower or any of its Subsidiaries or by any act or failure
to act, in good faith, by any holder of the Senior Indebtedness, or by any
noncompliance by the Borrower with the terms of the Agreement, regardless of
any knowledge thereof which any holder of Senior Indebtedness may have or be
otherwise charged with.
Section 7.09. Article VII Not to Prevent Events of Default. The
failure to make a payment on account of principal or interest by reason of any
provision in this Article VII shall not be construed as preventing the
occurrence of an Event of Default described under Section 8.01.
Section 7.10. Other Provisions Subject Hereto. Except as expressly
stated in this Article VII, notwithstanding anything contained in this
Agreement to the contrary, all provisions of the Agreement are subject to the
provisions of this Article VII. The provisions of the Article VII shall
continue to be effective or shall be reinstated, as the case may be, if at any
time any payment in respect of Senior Indebtedness is rescinded or must
otherwise be returned on the insolvency, bankruptcy or reorganization of the
Borrower or any of its Subsidiaries or otherwise, all as though such payment
had not been made.
Section 7.11. Payment of Loans with Borrower's Stock. The provisions
of this Article VII will not preclude the payment of the Loans with shares of
the Borrower's stock as provided in the Note.
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ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default. One or more of the following events
shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or prepayment when due
of (i) any principal of the Loans or any fees; or (ii) any interest on the
Loans or any other amount payable by the Borrower hereunder, and such failure
to pay interest or other amounts continues unremedied for a period of five (5)
Business Days; or
(b) the Borrower shall default in the performance of any other
covenant on the part of the Borrower to be performed hereunder, and such
default continues for a period of thirty (30) days after receipt of written
notice of such default; or
(c) the Borrower or any of its Subsidiaries shall admit in writing its
inability to, or be generally unable to, pay their respective debts as such
debts become due; or
(d) the Borrower or any of its Subsidiaries shall (i) apply for or
consent to the appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a substantial part of
its Property, (ii) make a general assignment for the benefit of its creditors,
(iii) commence a voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (iv) file a petition seeking to take advantage of any
other law relating to bankruptcy, insolvency, reorganization, winding-up,
liquidation or composition or readjustment of debts, (v) fail to controvert in
a timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case under the Federal Bankruptcy Code, or (vi)
take any corporate action for the purpose of effecting any of the foregoing; or
(e) a proceeding or case shall be commenced, without the application
or consent of the Borrower or any of its Subsidiaries, as applicable, in any
court of competent jurisdiction, seeking (i) its liquidation, reorganization,
dissolution or winding-up, or the composition or readjustment of its debts,
(ii) the appointment of a trustee, receiver, custodian, liquidator or the like
of the Borrower or such Subsidiary of all or any substantial part of its
assets, or (iii) similar relief in respect of the Borrower or such Subsidiary
under any law relating to bankruptcy, insolvency, reorganization, winding-up,
or composition or adjustment of debts, and such proceeding or case shall
continue undismissed, or an order, judgment or decree approving or ordering any
of the foregoing shall be entered and continue unstayed and in effect, for a
period of 60 days; or (iv) an order for relief against the Borrower or such
Subsidiary shall be entered in an involuntary case under the Federal Bankruptcy
Code; or
(f) a judgment or judgments for the payment of money in excess of
$5,000,000 in the aggregate shall be rendered by a court against the Borrower
or any of its Subsidiaries and the same shall not be discharged (or provision
shall not be made for such discharge), or a stay of execution thereof shall not
be procured, within thirty (30) days from the date of entry thereof and the
Borrower
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or such Subsidiary shall not, within said period of 30 days, or such longer
period during which execution of the same shall have been stayed, appeal
therefrom and cause the execution thereof to be stayed during such appeal; or
(g) proceeds from the issuance of any Refunding Debt are not used to
repay the Loans; or
(h) the Borrower or any of its Subsidiaries becomes an "investment
company" within the meaning of the Investment Company Act of 1940, as amended;
or
(i) the Borrower or any of its Subsidiaries becomes a "holding
company", a "subsidiary company" of a "holding company", an "affiliate" of a
"holding company", or an "affiliate" of a "subsidiary company" of a "holding
company", in each case, as such terms are defined in the Public Utility Holding
Company Act of 1935, as amended; or
(j) the Borrower or any of its Subsidiaries shall:
(i) fail to make any payment or payments of any Indebtedness
when due (whether by scheduled maturity, required prepayment,
acceleration, demand or otherwise) and such failure shall continue
after the applicable grace period, if any, specified in the agreement
or instrument relating to such Indebtedness, or
(ii) fail to perform or observe any term, covenant or
condition on its part to be performed or observed under any agreement
or instrument evidencing Indebtedness (other than any failure to
perform any term contemplated by subclause (i) hereof) and such
failure shall continue after the applicable grace period, if any,
specified in the agreement or instrument relating to such
Indebtedness,
if, in either case, the effect of such failure to perform or observe is to
accelerate, or to permit the acceleration of, the maturity of any Indebtedness
(other than Indebtedness in respect of the Loans or this Agreement), and any
obligee (or obligees) of such Indebtedness has or have claimed a default
thereunder, and has or have not waived in writing the Borrower's or the
Borrower's Subsidiaries' obligation to such performance or observance.
Section 8.02 Remedies.
(a) In the case of an Event of Default other than one referred to in
clauses (c), (d) or (e) of Section 8.01, the Lender may, by notice to the
Borrower, declare the principal amount then outstanding of, and the accrued
interest on, the Loans and all other amounts payable by the Borrower hereunder
and under the Note to be forthwith due and payable, whereupon such amounts
shall be immediately due and payable without presentment, demand, protest,
notice of intent to accelerate, notice of acceleration or other formalities of
any kind, all of which are hereby expressly waived by the Borrower.
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(b) In the case of the occurrence of an Event of Default referred to
in clauses (c), (d) or (e) of Section 8.01, the principal amount then
outstanding of, and the accrued interest on, the Loans and all other amounts
payable by the Borrower hereunder and under the Note shall become automatically
immediately due and payable without presentment, demand, protest, notice of
intent to accelerate, notice of acceleration or other formalities of any kind,
all of which are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Note, whether by
acceleration or otherwise shall be applied first to reimbursement of expenses
and indemnities provided for in this Agreement; second to accrued interest on
the Note; third to principal outstanding on the Note; and, to the extent of any
excess, to the Borrower or as otherwise required by any Governmental
Requirement.
(d) The Lender and the Borrower acknowledge and agree that the
occurrence of an Event of Default will constitute a default under the Senior
Indebtedness of the type described in Section 7.02 (as to which the Lender
acknowledges and agrees it will have actual knowledge for purposes of Section
7.06), which occurrence will invoke the subordination provisions of Section
7.02 and the other applicable provisions of Article VII.
ARTICLE IX
MISCELLANEOUS
Section 9.01 Waiver. No failure on the part of the Lender to exercise
and no delay in exercising, and no course of dealing with respect to, any
right, power or privilege under this Agreement or the Note shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
privilege under this Agreement or the Note preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. The
remedies provided herein are cumulative and not exclusive of any remedies
provided by law.
Section 9.02 Notices. All notices and other communications provided
for herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made by telex, telecopy,
courier or U.S. Mail or in writing and telexed, telecopied, mailed or delivered
to the intended recipient at the "Address for Notices" specified below its name
on the signature pages hereof or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. Except as
otherwise provided in this Agreement, all such communications shall be deemed
to have been duly given when transmitted, if transmitted before 1:00 p.m. local
time on a Business Day (otherwise on the next succeeding Business Day) by telex
or telecopier and evidence or confirmation of receipt is obtained, or
personally delivered or, in the case of a mailed notice, on the date deposited
in the mails, postage prepaid, in each case given or addressed as aforesaid.
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Section 9.03 Payment of Expenses, Indemnities, etc. The Borrower
agrees:
(a) To pay all reasonable expenses of the Lender, in its capacity as
Lender hereunder, but not in any other capacity, in the administration (both
before and after the execution hereof and including advice of counsel as to the
rights and duties of the Lender with respect thereto) of, and in connection
with the negotiation, syndication, investigation, preparation, execution and
delivery of, recording or filing of, preservation of rights under, enforcement
of, and refinancing, renegotiation or restructuring of, this Agreement and any
amendment, waiver or consent relating thereto (including, without limitation,
travel, photocopy, mailing, courier, telephone and other similar expenses of
the Lender, the cost of environmental audits, surveys and appraisals at
reasonable intervals, the reasonable fees and disbursements of counsel and
other outside consultants for the Lender and, in the case of enforcement, the
reasonable fees and disbursements of counsel for the Lender), and to reimburse
promptly the Lender for all amounts expended, advanced or incurred by the
Lender to satisfy any obligation of the Borrower under this Agreement;
(b) TO INDEMNIFY THE LENDER AND ITS AFFILIATES (OTHER THAN THE
BORROWER AND ITS SUBSIDIARIES) AND EACH OF THEIR OFFICERS, DIRECTORS,
EMPLOYEES, REPRESENTATIVES, AGENTS, ATTORNEYS, ACCOUNTANTS AND EXPERTS
("INDEMNIFIED PARTIES") FROM, HOLD EACH OF THEM HARMLESS AGAINST AND PROMPTLY
UPON DEMAND PAY OR REIMBURSE EACH OF THEM FOR, THE INDEMNITY MATTERS WHICH MAY
BE INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM (WHETHER OR NOT ANY
OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF, ARISING OUT OF OR IN ANY
WAY RELATED TO (I) ANY ACTUAL OR PROPOSED USE BY THE BORROWER OR ANY OF ITS
SUBSIDIARIES OF THE PROCEEDS OF THE LOANS, OTHER THAN INDEMNITY MATTERS SOUGHT
AGAINST THE INDEMNIFIED PARTIES BY ANY THIRD PARTY FOR USURPATION OF A
CORPORATE OPPORTUNITY OF SUCH THIRD PARTY, (II) THE EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT, (III) THE OPERATIONS OF THE BUSINESS OF THE
BORROWER OR ANY OF ITS SUBSIDIARIES, (IV) THE FAILURE OF THE BORROWER OR ANY OF
ITS SUBSIDIARIES TO COMPLY WITH THE TERMS OF THIS AGREEMENT, OR WITH ANY
GOVERNMENTAL REQUIREMENT, OR (V) ANY OTHER ASPECT OF THIS AGREEMENT, INCLUDING,
WITHOUT LIMITATION, THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND ALL
OTHER EXPENSES INCURRED IN CONNECTION WITH INVESTIGATING, DEFENDING OR
PREPARING TO DEFEND ANY SUCH ACTION, SUIT, PROCEEDING (INCLUDING ANY
INVESTIGATIONS, LITIGATION OR INQUIRIES) OR CLAIM AND INCLUDING ALL INDEMNITY
MATTERS ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF ANY INDEMNIFIED PARTY,
BUT EXCLUDING ALL INDEMNITY MATTERS ARISING SOLELY BY REASON OF CLAIMS OF THE
LENDER'S SHAREHOLDERS AGAINST THE LENDER OR BY REASON OF THE GROSS NEGLIGENCE
OR WILLFUL MISCONDUCT ON THE PART OF THE INDEMNIFIED PARTY; AND
(c) TO INDEMNIFY AND HOLD HARMLESS FROM TIME TO TIME THE INDEMNIFIED
PARTIES FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS, COST RECOVERY ACTIONS,
ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND LIABILITIES TO WHICH ANY SUCH
PERSON MAY BECOME SUBJECT (I) UNDER ANY ENVIRONMENTAL LAW APPLICABLE TO THE
BORROWER, ANY OF ITS SUBSIDIARIES OR ANY OF THEIR RESPECTIVE PROPERTIES,
INCLUDING WITHOUT LIMITATION, THE TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES
ON ANY OF THEIR RESPECTIVE PROPERTIES, (II) AS A RESULT OF THE BREACH OR
NON-COMPLIANCE BY THE BORROWER OR ANY OF ITS SUBSIDIARIES WITH ANY
ENVIRONMENTAL LAW APPLICABLE TO THE BORROWER OR SUCH SUBSIDIARY, (III) DUE TO
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PAST OWNERSHIP BY THE BORROWER OR ANY OF ITS SUBSIDIARIES OF ANY OF THEIR
RESPECTIVE PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR RESPECTIVE PROPERTIES
WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME, COULD RESULT IN PRESENT
LIABILITY, (IV) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR DISPOSAL OF
HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR OPERATED BY THE
BORROWER OR ANY OF ITS SUBSIDIARIES, OR (V) ANY OTHER ENVIRONMENTAL, HEALTH OR
SAFETY CONDITION IN CONNECTION WITH THIS AGREEMENT, PROVIDED, HOWEVER, NO
INDEMNITY SHALL BE AFFORDED UNDER THIS SECTION 9.03(C) IN RESPECT OF ANY
PROPERTY FOR ANY OCCURRENCE ARISING FROM THE ACTS OR OMISSIONS OF THE LENDER
DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR ASSIGNS SHALL HAVE
OBTAINED POSSESSION OF SUCH PROPERTY (WHETHER BY FORECLOSURE OR DEED IN LIEU OF
FORECLOSURE, AS MORTGAGEE- IN-POSSESSION OR OTHERWISE).
(d) No Indemnified Party may settle any claim to be indemnified
without the consent of the indemnitor, such consent not to be unreasonably
withheld; provided, that the indemnitor may not reasonably withhold consent to
any settlement that an Indemnified Party proposes, if the indemnitor does not
have the financial ability to pay all its obligations outstanding and asserted
against the indemnitor at that time, including the maximum potential claims
against the Indemnified Party to be indemnified pursuant to this Section 9.03.
(e) In the case of any indemnification hereunder, the Lender shall
give notice to the Borrower of any such claim or demand being made against the
Indemnified Party and the Borrower shall have the non-exclusive right to join
in the defense against any such claim or demand provided that if the Borrower
provides a defense, the Indemnified Party shall bear its own cost of defense
unless there is a conflict between the Borrower and such Indemnified Party.
(f) THE FOREGOING INDEMNITIES SHALL EXTEND TO THE INDEMNIFIED PARTIES
NOTWITHSTANDING THE SOLE OR CONCURRENT NEGLIGENCE OF EVERY KIND OR CHARACTER
WHATSOEVER, WHETHER ACTIVE OR PASSIVE, WHETHER AN AFFIRMATIVE ACT OR AN
OMISSION, INCLUDING WITHOUT LIMITATION, ALL TYPES OF NEGLIGENT CONDUCT
IDENTIFIED IN THE RESTATEMENT (SECOND) OF TORTS OF ONE OR MORE OF THE
INDEMNIFIED PARTIES OR BY REASON OF STRICT LIABILITY IMPOSED WITHOUT FAULT ON
ANY ONE OR MORE OF THE INDEMNIFIED PARTIES. TO THE EXTENT THAT AN INDEMNIFIED
PARTY IS FOUND TO HAVE COMMITTED AN ACT OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT, THIS CONTRACTUAL OBLIGATION OF INDEMNIFICATION SHALL CONTINUE BUT
SHALL ONLY EXTEND TO THE PORTION OF THE CLAIM THAT IS DEEMED TO HAVE OCCURRED
BY REASON OF EVENTS OTHER THAN THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF
THE INDEMNIFIED PARTY.
(g) The Borrower's obligations under this Section 9.03 shall survive
any termination of this Agreement and the payment of the Note and shall
continue thereafter in full force and effect.
(h) The Borrower shall pay any amounts due under this Section 9.03
within thirty (30) days of the receipt by the Borrower of notice of the amount
due.
Section 9.04 Amendments, Etc. Any provision of this Agreement may be
amended, modified or waived with the Borrower's and the Lender's prior written
consent; provided, however,
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no amendment, modification or waiver with respect to the subordination
provisions contained herein (and related definitions) shall be permitted
without the prior written consent of Required Senior Lenders.
Section 9.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns, and with respect to the subordination
provisions contained herein, any holder at any time of the Senior Indebtedness.
Section 9.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations hereunder or
under the Note without the prior consent of the Lender.
(b) The Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement; provided, that any such
assignee shall expressly acknowledge in writing that such assignee is bound by
the terms of the subordination provisions contained herein. Any assignment will
become effective upon the execution and delivery of the assignment to the
Borrower. Upon receipt and acceptance of such executed assignment, the
Borrower, will, at the Lender's expense, execute and deliver new Notes to the
assignor and/or assignee, as appropriate, in accordance with their respective
interests as they appear. Upon the effectiveness of any assignment pursuant to
this Section 9.06(b), the assignee will become a "Lender," if not already a
"Lender," for all purposes of this Agreement. The assignor shall be relieved of
its obligations hereunder to the extent of such assignment (and if the
assigning Lender no longer holds any rights or obligations under this
Agreement, such assigning Lender shall cease to be a "Lender" hereunder except
that its rights under Sections 5.01, 5.05 and 9.03 shall not be affected); or
provided, however, that Lender shall not be relieved of its obligations with
respect to any payments received and retained by Lender in contravention of the
provisions contained in Article VII hereof.
(c) The Lender may transfer, grant or assign participations in all or
any part of its interests hereunder pursuant to this Section 9.06(c) to any
Person, provided that: (i) the Lender shall remain the "Lender" for all
purposes of this Agreement and the transferee of such participation shall not
constitute a "Lender" hereunder; and (ii) no participant under any such
participation shall have rights to approve any amendment to or waiver of any
provision of this Agreement or the Note, except to the extent such amendment or
waiver would (x) extend the Final Maturity Date or (y) reduce the interest rate
(other than as a result of waiving the applicability of any post-default
increases in interest rates) or fees applicable to the Loans in which such
participant is participating, or postpone the payment of any thereof. In the
case of any such participation, the participant shall not have any rights under
this Agreement (the participant's rights against the Lender in respect of such
participation to be those set forth in the agreement creating such
participation), and all amounts payable by the Borrower hereunder shall be
determined as if the Lender had not sold such participation, provided that such
participant shall be entitled to receive additional amounts under Article V on
the same basis as if it were a Lender and be indemnified under Section 9.03 as
if it were a Lender.
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(d) The Lender may furnish any information concerning the Borrower in
its possession from time to time to assignees and participants (including
prospective assignees and participants).
Section 9.07 Invalidity. In the event that any one or more of the
provisions contained in the Agreement or the Note 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 such
documents.
Section 9.08 Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 9.09 References. The words "herein," "hereof," "hereunder" and
other words of similar import when used in this Agreement refer to this
Agreement as a whole, and not to any particular article, section or subsection.
Any reference herein to a Section shall be deemed to refer to the applicable
Section of this Agreement unless otherwise stated herein. Any reference herein
to an exhibit or schedule shall be deemed to refer to the applicable exhibit or
schedule attached hereto unless otherwise stated herein.
Section 9.10 Survival. The obligations of the parties under Section
4.03, Article V, and Section 9.03 shall survive the repayment of the Loans. To
the extent that any payments of the Loans or proceeds of any collateral are
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to a trustee, debtor in possession, receiver or other
Person under any bankruptcy law, common law or equitable cause, then to such
extent, the Loans so satisfied shall be revived and continue as if such payment
or proceeds had not been received and the Lender's liens, security interests,
rights, powers and remedies under this Agreement shall continue in full force
and effect.
Section 9.11 Captions. Captions and section headings appearing herein
are included solely for convenience of reference and are not intended to affect
the interpretation of any provision of this Agreement.
Section 9.12 NO ORAL AGREEMENTS. THIS AGREEMENT AND THE NOTE EMBODY
THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL
OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE
SUBJECT MATTER HEREOF AND THEREOF. THIS AGREEMENT AND THE NOTE REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THE SUBJECT MATTER
OF THIS AGREEMENT AND THE NOTE.
Section 9.13 GOVERNING LAW; WAIVERS; ARBITRATION.
(a) THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
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(b) EACH OF THE BORROWER AND THE LENDER HEREBY (I) IRREVOCABLY WAIVE,
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES; (II) CERTIFY THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR
COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR
IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVERS, AND (III) ACKNOWLEDGE THAT IT HAS BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION 9.13.
(c) ANY ACTION, DISPUTE, CLAIM OR CONTROVERSY OF ANY KIND BETWEEN THE
BORROWER AND THE LENDER ARISING OUT OF, OR PERTAINING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY (A "DISPUTE") SHALL BE RESOLVED BY BINDING
ARBITRATION IN ACCORDANCE WITH THE TERMS HEREOF. ANY PARTY MAY, BY SUMMARY
PROCEEDINGS, BRING AN ACTION IN COURT TO COMPEL ARBITRATION OF ANY DISPUTE. ANY
ARBITRATION SHALL BE ADMINISTERED BY THE AMERICAN ARBITRATION ASSOCIATION
("AAA") IN ACCORDANCE WITH THE TERMS OF THIS SECTION, THE COMMERCIAL
ARBITRATION RULES OF THE AAA, AND, TO THE MAXIMUM EXTENT APPLICABLE, THE
FEDERAL ARBITRATION ACT. JUDGMENT ON ANY AWARD RENDERED BY AN ARBITRATOR MAY BE
ENTERED IN ANY COURT HAVING JURISDICTION. ANY ARBITRATION SHALL BE CONDUCTED
BEFORE A THREE PERSON PANEL OF ARBITRATORS. SUCH PANEL SHALL CONSIST OF ONE
PERSON DESIGNATED BY THE BORROWER, ONE DESIGNATED BY THE LENDER AND ONE
DESIGNATED BY THE NOMINEES OF THE BORROWER AND THE LENDER (COLLECTIVELY, THE
"ARBITRATORS"). SUCH ARBITRATORS DESIGNATED BY EACH OF THE BORROWER AND THE
LENDER DO NOT HAVE TO BE NEUTRAL. IF EITHER OF THE BORROWER OR THE LENDER FAILS
TO DESIGNATE AN ARBITRATOR WITHIN TEN (10) DAYS AFTER THE FILING OF THE DISPUTE
WITH THE AAA, OR EITHER OF THE BORROWER'S OR THE LENDER'S ARBITRATORS FAIL TO
DESIGNATE A THIRD ARBITRATOR WITHIN THIRTY (30) DAYS AFTER THEIR APPOINTMENTS,
THE THIRD ARBITRATOR SHALL BE APPOINTED BY THE AAA. AN ARBITRATION PROCEEDING
HEREUNDER SHALL BE CONDUCTED IN HOUSTON, TEXAS AND SHALL BE CONCLUDED WITHIN
180 DAYS OF THE FILING OF THE DISPUTE WITH THE AAA. THE ARBITRATORS SHALL BE
EMPOWERED TO AWARD SANCTIONS AND TO TAKE SUCH OTHER ACTIONS AS THEY DEEM
NECESSARY, TO THE SAME EXTENT A JUDGE COULD IMPOSE SANCTIONS OR TAKE SUCH OTHER
ACTIONS PURSUANT TO THE FEDERAL RULES OF CIVIL PROCEDURE AND APPLICABLE LAW. NO
AWARD BY THE ARBITRATORS SHALL ASSESS CONSEQUENTIAL, PUNITIVE OR EXEMPLARY
DAMAGES BUT MAY ASSESS COSTS AND EXPENSES IN A MANNER DEEMED EQUITABLE. THE
ARBITRATOR SHALL MAKE SPECIFIC WRITTEN FINDINGS OF FACT AND CONCLUSIONS OF LAW.
THE DECISION OF THE ARBITRATOR SHALL BE FINAL AND BINDING ON EACH PARTY. ALL
FEES OF THE ARBITRATORS AND ANY ENGINEER, ACCOUNTANT OR OTHER CONSULTANT
ENGAGED BY THE ARBITRATORS, SHALL BE PAID BY THE BORROWER AND THE LENDER AS
AWARDED BY THE ARBITRATORS.
Section 9.14 Interest. It is the intention of the parties hereto that
Lender shall conform strictly to usury laws applicable to it. Accordingly, if
the transactions contemplated hereby would be usurious as to the Lender under
laws applicable to it (including the laws of the United States of America or
any other jurisdiction whose laws may be mandatorily applicable to the Lender
notwithstanding the other provisions of this Agreement), then, in that event,
notwithstanding anything to the contrary in this Agreement or the Note or any
agreement entered into in connection
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with or as security for the Note, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under law applicable to the Lender
that is contracted for, taken, reserved, charged or received by the Lender in
connection with the Note shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by the Lender on the principal amount
of the Loans (or, to the extent that the principal amount of the Loans shall
have been or would thereby be paid in full, refunded by the Lender to the
Borrower); and (ii) in the event that the maturity of the Note is accelerated
by reason of an election of the holder thereof resulting from any Event of
Default under this Agreement or otherwise, or in the event of any required or
permitted prepayment, then such consideration that constitutes interest under
law applicable to the Lender may never include more than the maximum amount
allowed by such applicable law, and excess interest, if any, provided for in
this Agreement or otherwise shall be canceled automatically by the Lender as of
the date of such acceleration or prepayment and, if theretofore paid, shall be
credited by the Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Loans shall have been or would thereby
be paid in full, refunded by the Lender to the Borrower). All sums paid or
agreed to be paid to the Lender for the use, forbearance or detention of sums
due hereunder shall, to the extent permitted by law applicable to the Lender,
be amortized, prorated, allocated and spread throughout the full term of the
Loans evidenced by the Note until payment in full so that the rate or amount of
interest on account of the Loans hereunder does not exceed the maximum amount
allowed by such applicable law. If at any time and from time to time (i) the
amount of interest payable to the Lender on any date shall be computed at the
Highest Lawful Rate applicable to the Lender pursuant to this Section 10.14 and
(ii) in respect of any subsequent interest computation period the amount of
interest otherwise payable to the Lender would be less than the amount of
interest payable to the Lender computed at the Highest Lawful Rate applicable
to the Lender, then the amount of interest payable to the Lender in respect of
such subsequent interest computation period shall continue to be computed at
the Highest Lawful Rate applicable to the Lender until the total amount of
interest payable to the Lender shall equal the total amount of interest which
would have been payable to the Lender if the total amount of interest had been
computed without giving effect to this Section 9.14.
Section 9.15 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND AGREES THAT
IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF THE TERMS OF THIS AGREEMENT; THAT IT
HAS IN FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND
KNOWLEDGE OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS
BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE
NEGOTIATIONS PRECEDING ITS EXECUTION OF THIS AGREEMENT; AND HAS RECEIVED THE
ADVICE OF ITS ATTORNEY IN ENTERING INTO THIS AGREEMENT; AND THAT IT RECOGNIZES
THAT CERTAIN OF THE TERMS OF THIS AGREEMENT RESULT IN ONE PARTY ASSUMING THE
LIABILITY INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER
PARTY OF ITS RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND
COVENANTS THAT IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY
EXCULPATORY PROVISION OF THIS AGREEMENT ON THE BASIS THAT THE PARTY HAD NO
NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
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The parties hereto have caused this Agreement to be duly executed as
of the day and year first above written.
BORROWER: MARINER HOLDINGS, INC.
By:
--------------------------------
Name:
Title:
Address for Notices:
000 XxxxXxxx Xxxx Xxxx.
Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopier No.:(000) 000-0000
Telephone No.: (000) 000-0000
Attention: VP, Finance and CFO
LENDER: ENRON CAPITAL & TRADE RESOURCES CORP.
By:
--------------------------------
Name:
Title:
Address for Notices:
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx Xxxxxx
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34
THE RIGHTS, TITLE AND INTERESTS OF ANY HOLDER OF THIS
PROMISSORY NOTE ARE SECONDARY, SUBORDINATE AND INFERIOR TO
THE RIGHTS, TITLE AND INTERESTS OF THE HOLDERS OF SENIOR
INDEBTEDNESS (AS SUCH TERM IS DEFINED IN THE CREDIT AGREEMENT
REFERRED TO BELOW).
EXHIBIT A
FORM OF NOTE
$25,000,000 September __, 1998
FOR VALUE RECEIVED, MARINER HOLDINGS, INC., a Delaware corporation
(the "Borrower") hereby promises to pay to the order of ENRON CAPITAL & TRADE
RESOURCES CORP. or its designees (the "Lender"), at New York, New York, or such
other location as the Lender may hereafter specify, the principal sum of
TWENTY-FIVE MILLION DOLLARS ($25,000,000.00), or such lesser amount as shall
equal the aggregate unpaid principal amount of the Loans made by the Lender
hereunder to the Borrower pursuant to the Credit Agreement, as defined below,
in lawful money of the United States of America and in immediately available
funds, on the dates and in the principal amounts provided in the Credit
Agreement (hereinafter defined), and to pay interest at such location, in like
money and funds, at the rates per annum and on the dates provided in the Credit
Agreement.
In addition to and cumulative of any payments required to be made
against this Note pursuant to the Credit Agreement, this Note, including all
principal and accrued interest then unpaid, shall be due and payable on the
Final Maturity Date. All payments shall be applied first to accrued interest
and the balance to principal, except as otherwise expressly provided in the
Credit Agreement. Prepayments on this Note shall be applied in the manner set
forth in the Credit Agreement.
This Note is the Note referred to in that certain Credit and
Subordination Agreement of even date herewith between the Borrower and the
Lender and evidences the Loans made by the Lender thereunder (such Agreement as
the same may be amended or supplemented from time to time, the "Credit
Agreement"). Capitalized terms used in this Note have the respective meanings
assigned to them in the Credit Agreement.
Notwithstanding the foregoing, if the IPO Date shall not have occurred
on or before the day next preceding the Final Maturity Date, then on the Final
Maturity Date the then aggregate unpaid principal amount of the Loans shall be
automatically converted into fully paid and nonassessable shares of Common
Stock (as defined below), free of any preemptive rights not validly waived, and
the unpaid accrued interest thereon shall be paid as provided above in
immediately available funds. The number of shares of Common Stock into which
the principal of the Loans shall be converted shall be determined by dividing
(rounding up to next integer) the aggregate unpaid principal amount of the
Loans on the Final Maturity Date by the Conversion Price (as defined below).
"Common Stock" shall mean shares of the common stock, $.01 par value, of
Mariner Holdings, Inc. "Conversion Price" shall mean $175.00; provided, however
that (i) if the Borrower shall (a) pay a dividend or make a distribution in
shares of its common stock (or its equivalent), (b) subdivide its
35
outstanding shares of common stock (or its equivalent) into a greater number of
shares, (c) combine its outstanding shares of common stock (or its equivalent)
into a smaller number of shares or (d) issue by reclassification of its common
stock (or its equivalent) any shares of its capital stock (or its equivalent),
the Conversion Price in effect immediately prior to such action shall be
adjusted so that the Lender shall be entitled to receive the number of shares
of Common Stock or other securities or assets which it would have owned
immediately following such action had this Note been converted immediately
prior thereto (assuming this Note was then convertible on the terms applicable
on the Final Maturity Date based on the aggregate unpaid principal amount of
the Loans as of the Final Maturity Date), (ii) if any event shall occur as to
which the provisions of clause (i) or (iii) of this sentence are not applicable
but the failure to make an adjustment to the Conversion Price would not fairly
protect the Lender against dilution, then the Conversion Price shall be
adjusted to fairly protect the Lender against such dilution and (iii) if after
the date of the Credit Agreement, there shall have occurred any material
adverse effect on the business, operations or condition (financial or
otherwise) of Borrower and its subsidiaries taken as a whole, the Conversion
Price shall be reduced to the then fair market value of one share of Common
Stock after taking into account appropriate liquidity and other discounts. In
addition, if any of the following shall occur after the date of the Credit
Agreement: (a) any consolidation or merger of the Company or share exchange
involving the Borrower as a result of which the holders of Common Stock shall
be entitled to receive stock, other securities or other assets (including cash)
with respect to or in exchange for Common Stock; or (b) any conveyance transfer
or lease of the properties and assets of the Company substantially as an
entirety to any entity, then the Lender shall receive upon any conversion
hereunder the kind and amount of shares of stock and other securities and
assets (including cash) receivable upon or in connection with such
consolidation, merger, share exchange, conveyance, transfer or lease by a
holder of the number of shares of Common Stock issuable upon conversion of this
Note immediately prior to such consolidation, merger, share exchange,
conveyance, transfer or lease (assuming the Note was then convertible on the
terms applicable on the Final Maturity Date based on the aggregate unpaid
principal amount of the Loans as of the Final Maturity Date). Upon the receipt
of any Common Stock hereunder, the Lender shall become entitled to the benefits
under, and shall be subject to the restrictions provided in, the Amended and
Restated Stockholders' Agreement, as amended, among the Borrower and the
stockholders of Borrower. As promptly as practicable after the conversion of
the principal of the Loans, the Borrower at its expense will issue and deliver
to the Lender a certificate or certificates for the number of full shares of
Common Stock or other securities issuable upon such conversion.
The Lender is hereby authorized by the Borrower to endorse on Schedule
A (or a continuation thereof) attached to this Note, the amount and date of
each Loan, the date and the amount of each payment or prepayment of principal
of each Loan received by the Lender, and the interest rates applicable to each
Loan; provided that any failure by the Lender to make any such endorsement
shall not affect the obligations of the Borrower under the Credit Agreement or
under this Note in respect of such Loans.
This Note is issued pursuant to the Credit Agreement and is entitled
to the benefits provided for in the Credit Agreement. All of the terms of the
Credit Agreement, including without limitation, the usury savings provisions
thereof, are incorporated herein by this reference. The Credit Agreement
provides for the acceleration of the maturity of this Note upon the occurrence
of certain
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36
events, for prepayments of the Loans upon the terms and conditions specified
therein and other provisions relevant to the Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
MARINER HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxxxxx
-----------------------------------
Name: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------
Title: President and Chief Executive
Officer
--------------------------------
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SCHEDULE A
This Note evidences Loans made by the Lender under the within-described Credit
Agreement to the Borrower, in the principal amounts set forth below, which
Loans are at the interest rate and were made on the dates set forth below,
subject to the payments of principal set forth below:
Principal Date of
Amount of Payment or Amount Paid Balance
Date Made Loan Interest Rate Prepayment or Prepaid Outstanding
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