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EXHIBIT 10.1
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF APRIL 15, 1999
BETWEEN
MARINER ENERGY LLC
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................................................................... 2
Section 1.02 Certain Defined Terms................................................................. 2
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 Note.................................................................................. 9
Section 2.04 Prepayments........................................................................... 9
Section 2.05 Conversion Rights of the Lender.......................................................10
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans....................................................................10
Section 3.02 Interest..............................................................................10
ARTICLE IV
PAYMENTS; COMPUTATIONS; ETC.
Section 4.01 Payments..............................................................................11
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 Advances.....................................................13
Section 5.03 Illegality............................................................................14
Section 5.04 Base Rate Advances 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
Section 6.03 Limitation on Common Shares Issuance..................................................15
ARTICLE VII
[RESERVED]
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default.....................................................................15
Section 8.02 Remedies..............................................................................17
ARTICLE IX
MISCELLANEOUS
Section 9.01 Waiver................................................................................18
Section 9.02 Notices...............................................................................18
Section 9.03 Payment of Expenses, Indemnities, etc.................................................18
Section 9.04 Amendments, Etc.......................................................................20
Section 9.05 Successors and Assigns................................................................20
Section 9.06 Assignments and Participations........................................................20
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Section 9.07 Invalidity............................................................................21
Section 9.08 Counterparts..........................................................................21
Section 9.09 References............................................................................21
Section 9.10 Survival..............................................................................21
Section 9.11 Captions..............................................................................22
Section 9.12 NO ORAL AGREEMENTS....................................................................22
Section 9.13 GOVERNING LAW; WAIVERS; ARBITRATION...................................................22
Section 9.14 Interest..............................................................................23
Section 9.15 EXCULPATION PROVISIONS................................................................24
Exhibit A - Form of Note
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THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this "Agreement")
dated as of April 15, 1999 is between: MARINER ENERGY LLC, a Delaware limited
liability company (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 Lender and Mariner Holdings, Inc., a Delaware corporation (the
"Original Borrower"), previously entered into the Credit and Subordination
Agreement dated as of September 2, 1998 (the "Original Credit Agreement")
pursuant to which, and upon the terms and conditions stated therein, the Lender
made loans to the Original Borrower in the aggregate principal amount of
$25,000,000 (the "Original Loan") evidenced by a promissory note of the Original
Borrower dated September 2, 1998 (the "Original Loan Note"), subject to the
terms and conditions of the Original Credit Agreement and the Original Loan
Note.
B. Pursuant to the Assignment and Assumption of Liabilities and
Obligations and Release dated as of January 12, 1999 (the "Assignment"), the
Original Borrower assigned all of its right, title and interest in and to the
Original Credit Agreement to the Borrower and the Borrower assumed all of the
Original Borrower's obligations thereunder and under the Original Loan Note and
the Original Borrower was released from all liabilities and obligations under
the Original Credit Agreement and the Original Loan Note.
C. The Lender and the Borrower previously entered into the First
Amended and Restated Credit Agreement dated as of January 12, 1999 (the "First
Amended and Restated Credit Agreement") pursuant to which, and upon the terms
and conditions stated therein, (i) the Lender and the Borrower amended and
restated the terms and conditions of the Original Credit Agreement pursuant to
which the Lender made the Original Loan and (ii) the Lender made an additional
loan to the Borrower in the aggregate principal amount of $25,000,000 (the
"Additional Loan") as evidenced by a promissory note of the Borrower dated
January 12, 1999 (the "Additional Loan Note").
D. The Borrower has requested that the Lender modify, among other
things, the definition of Final Maturity Date as it relates to the Additional
Loan and the Original Loan.
E. The Lender has agreed to such modifications and to make the Loans
(as hereinafter defined) subject to the terms and conditions of this Agreement.
F. In consideration of the mutual covenants and agreements herein
contained and of the loans hereinafter referred to, the parties hereto agree to
amend and restate the First Amended and Restated Credit Agreement to read as
follows:
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ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01 Terms Defined Above. As used herein, the terms "Additional
Loan", "Additional Loan Note", "Assignment", "Borrower", "First Amended and
Restated Credit Agreement", "Lender", "Original Borrower", "Original Credit
Agreement", "Original Loan" and "Original Loan Note" 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).
"Advance" shall mean an advance made pursuant to Section 2.01 or
pursuant to the First Amended and Restated Credit Agreement, or a continuation
or a conversion thereof pursuant to Section 2.02 or Article V.
"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.
"Agreement" shall mean this Second Amended and Restated Credit
Agreement, as the same may from time to time be amended or supplemented.
"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 Advances" shall mean Advances that bear interest at the 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,
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a Eurodollar Advance 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 April 15, 1999.
"Common Shares" shall have the meaning assigned to such term in the
Note.
"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,
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 Advances" shall mean an Advance 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 four and one-half percent per annum (4 1/2%) plus 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
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applicable Advance 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.
"Existing Principal Amount" shall have the meaning set forth in Section
2.01(a).
"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 the Note
is prepaid pursuant to Section 2.04 (a) or (b) hereof, (ii) the date the Note
becomes 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) April 30, 2000.
"GAAP" shall mean United States generally accepted accounting
principles as applied in accordance with Section 1.03.
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"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 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),
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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.
"Interest Period" shall mean, with respect to Eurodollar Advances, 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 Advance is continued pursuant to Section 2.02(b), or (iii) the date
of any conversion of a Base Rate Advance back to a Eurodollar Advance 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.
"IPO Date" shall mean 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.
"Loans" shall mean the Original Loan and the Additional Loan, extended
hereunder as the Existing Principal Amount.
"Note" shall mean the note evidencing the Loans, substantially in the
form of Exhibit A hereto, 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).
"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.
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"Post-Default Rate" shall mean, in respect of any principal 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, 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 of 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 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. Provided, however,
the Loans (and any Advances pursuant thereto) and any Senior Indebtedness are
not Refunding Debt.
"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
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(whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.
"Senior Indebtedness" shall mean obligations in respect of any and all
of the loans to Mariner Energy, Inc. pursuant to (i) that certain Credit
Agreement dated June 28, 1996 among Mariner Energy, Inc. and the banks party
thereto, or (ii) that certain Revolving Credit Facility dated April 15, 1999
between Mariner Energy, Inc. and the Lender, and all indebtedness, liabilities
and obligations of Mariner Energy, Inc. evidenced by such credit agreements, as
such agreements 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 and increased by
different lenders under a different agreement.
"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 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, limited liability company 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.
(a) Existing Loans. Pursuant to the First Amended and Restated Credit
Agreement, the Lender has heretofore advanced $50,000,000 (the "Existing
Principal Amount") and such advances are deemed to be Loans and Advances
outstanding under this Agreement.
(b) Not a Revolving Facility. Advances that are prepaid may not be
reborrowed.
Section 2.02 Borrowing. (a) Borrowing. Initially, each Advance shall be
a Eurodollar Advance and the Interest Period shall be one month.
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(b) Continuation. Except as otherwise provided in Article V, the entire
amount of each Eurodollar Advance shall be automatically continued beyond the
expiration of the then current Interest Period relating thereto as a Eurodollar
Advance with an Interest Period of one month.
Section 2.03 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 Note shall be issued by the Borrower in exchange for the note of
the Borrower evidencing the Original Loan and the note of the Borrower
evidencing the Additional Loan, each of which shall be returned to the Borrower,
marked "Cancelled", upon execution and delivery by the Borrower to the Lender of
the Note. The date, amount, interest rate, and Interest Period of each Advance
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 2.04 Prepayments.
(a) Optional Prepayments. Subject to the terms of Section 5.05, the
Borrower may prepay the Loans upon not less than three (3) Business Day's prior
written notice to the Lender, which notice shall specify the prepayment date
(which shall be a Business Day). Such prepayments shall be in the minimum
principal amount of $1,000,000 and in integral multiples of $100,000, or in the
aggregate unpaid principal amount of the Loans outstanding. Upon such
prepayment, all accrued and unpaid interest with respect to the prepaid
principal amount of the Loans is due and payable by the Borrower to the Lender
on the date of such prepayment.
(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 accrued, unpaid interest on and
then to the principal of the Note.
(c) Prepayments permitted or required under this Section 2.04 shall be
without premium or penalty, except as required under Section 5.05.
(d) Prepayments permitted or required under this Section 2.04 shall be
subject to the conversion rights of the Lender under the Note, which, among
other things, allow the Lender to require any prepayment made by the Buyer to be
in Common Shares rather than in cash.
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Section 2.05 Conversion Rights of the Lender. To the extent that the
Lender has elected to convert all or any portion of the aggregate unpaid
principal amount of the Loans into Common Shares in accordance with the
provisions of the Note, such principal amount shall, upon such conversion, be
deemed to have been prepaid on the date of such conversion, and accrued and
unpaid interest on such amount shall be due and payable by the Borrower to the
Lender on the date of such conversion (except to the extent the Lender has
elected to convert such interest into Common Shares and in accordance with the
provisions of the Note).
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans. Subject to the conversion rights of
the Lender under the Note, the Borrower will pay to the Lender the entire
outstanding principal balance of the Loans on the Final Maturity Date.
Section 3.02 Interest.
(a) The Borrower will pay to the Lender interest on the unpaid
principal amount of each Advance, for the period commencing on the date such
Advance is funded to but excluding the date such Advance plus interest thereon
shall be paid in full, at the following rates per annum:
(i) if such Advance is a Eurodollar Advance, for each Interest
Period relating thereto, the Eurodollar Rate (as in effect from time to
time), but in no event to exceed the Highest Lawful Rate; and
(ii) if such Advance is a Base Rate Advance, the Base Rate,
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) Subject to the terms and conditions of Section 2.05, accrued and
unpaid interest on the Loans shall be payable 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.
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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 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 a Eurodollar Advance 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 a Base Rate Advance 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 or hereafter 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
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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 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 Advances hereunder or
its obligation to make any Eurodollar Advance hereunder, or any reduction in any
amount receivable by the Lender hereunder in respect of any Eurodollar Advance
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 Eurodollar Advances (other than
taxes imposed on the overall net income of the Lender for the Eurodollar
Advances 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 Advances
or 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
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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 Advances 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 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 Advances (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 Advances or its obligation to make the
Advances, or on amounts receivable by it in respect of the Advances, 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 Advances. Notwithstanding
anything herein to the contrary, 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 Advances as
provided herein; or
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(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 Advances for such Interest Period is to be
determined are not likely to cover the cost to the Lender of making or
maintaining the Eurodollar Advances;
then the Lender shall give the Borrower prompt notice thereof, and the
obligation of the Lender to continue the Eurodollar Advances 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 Advances hereunder, then the
Lender shall promptly notify the Borrower thereof and the Lender's obligation to
continue the Eurodollar Advances shall be terminated.
Section 5.04 Base Rate Advances Pursuant to Sections 5.01, 5.02 and
5.03. If the obligation of the Lender to make or maintain Eurodollar Advances
shall be terminated pursuant to Sections 5.01, 5.02 or 5.03, all Eurodollar
Advances shall be automatically converted to a Base Rate Advance.
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 Advance
shall automatically convert back to a Eurodollar Advance 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 Advances
to a Base Rate Advance on the last day of such Eurodollar Advance'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 all or any portion
of the Eurodollar Advances for any reason (including, without limitation, the
acceleration of the Advances 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 any Loan remains unpaid,
the Borrower shall:
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(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 1.25 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 most recent annual Xxxxx Xxxxx Company Reserve Report relating to
the Company; 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 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 1.65 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.
Section 6.03 Limitation on Common Shares Issuance. The Borrower shall
reserve and refrain from issuing, other than in accordance with the terms and
conditions of this Agreement and the Note, a sufficient number of Common Shares
such that the Borrower may satisfy the conversion rights of the Lender under the
Note with authorized, unissued Common Shares. The initial number of such
reserved Common Shares shall be 3,800,000; provided that, such number may change
as a result of the exercise by the Lender of its conversion rights under the
Note or as a result of other events described in the Note. In the event that the
Common Shares are reclassified or replaced as described in the Note, the
Borrower shall reserve and refrain from issuing to any Person other than the
Lender replacement assets sufficient to satisfy the conversion rights of the
Lender under the Note.
ARTICLE VII
[RESERVED]
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
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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 from
the Lender 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 (as now or
hereafter in effect), 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 (as now or hereafter in
effect); 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 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
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(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.
(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.
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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.
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
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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 BY BORROWER, (III) THE OPERATIONS OF THE BUSINESS OF THE BORROWER
OR ANY OF ITS SUBSIDIARIES, OR (IV) THE FAILURE OF THE BORROWER OR ANY OF ITS
SUBSIDIARIES TO COMPLY WITH THE TERMS OF THIS AGREEMENT, OR WITH ANY
GOVERNMENTAL REQUIREMENT 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 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
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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.
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.
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. 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 a new Note to each of 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).
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(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.
(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 portion of 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.
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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.
(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 FAILS TO DESIGNATE A THIRD ARBITRATOR
WITHIN THIRTY (30) DAYS AFTER THEIR APPOINTMENTS, SUCH PARTY-APPOINTED
ARBITRATOR AND THE THIRD ARBITRATOR, AS APPLICABLE, SHALL BE APPOINTED
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BY THE AAA. ANY 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 ARBITRATORS SHALL MAKE SPECIFIC WRITTEN
FINDINGS OF FACT AND CONCLUSIONS OF LAW. THE DECISION OF THE ARBITRATORS 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 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 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). 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 9.14 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
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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 ENERGY LLC
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: President
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: /s/ [ILLEGIBLE]
--------------------------------
Name:
Title:
Address for Notices:
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Telecopier No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xxxxx Xxxxx
30
EXHIBIT A
FORM OF NOTE
$50,000,000 April 15, 1999
FOR VALUE RECEIVED, MARINER ENERGY LLC, a Delaware limited liability
company (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
FIFTY MILLION DOLLARS ($50,000,000), 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 Second Amended and
Restated Credit 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. This Note is being issued in exchange
for those two certain promissory notes of the Borrower dated as of January 12,
1999.
Notwithstanding the foregoing, the Lender shall have the right at any
time to convert all or any portion (the "Conversion Amount") of the aggregate
unpaid principal amount of the Loans and the accrued and unpaid interest
thereunder into fully paid and nonassessable Common Shares (as defined below),
free of any preemptive rights not validly waived. This conversion right may be
exercised one or more times until all of the aggregate unpaid principal amount
of the Loans and the accrued and unpaid interest thereunder has been so
converted or otherwise paid. The number of Common Shares into which the
Conversion Amount shall be converted shall be determined by dividing (rounding
up to next integer) the Conversion Amount on the date of conversion (as
designated by the Lender) by the Conversion Price (as defined below). "Common
Shares" shall have the meaning ascribed to that term in the Borrower's Limited
Liability Company Agreement dated as of September 2, 1998, as amended.
"Conversion Price" shall mean $14.5833; provided, however that (i) if the
Borrower shall (a) pay a dividend, or make a distribution, in shares of its
Common Shares (or its equivalent), (b) subdivide its outstanding Common Shares
(or its equivalent) into a
A-1
31
greater number of shares, (c) combine its outstanding Common Shares (or its
equivalent) into a smaller number of shares or (d) issue by reclassification of
its Common Shares (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
Common Shares or other securities or assets which it would have owned
immediately following such action had the Conversion Amount been converted
immediately prior thereto and (ii) if any event shall occur as to which the
provisions of clause (i) of this sentence is 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. In addition, if any of the following shall
occur after the date of the Credit Agreement: (a) any consolidation or merger of
the Borrower or share exchange involving the Borrower as a result of which the
holders of Common Shares shall be entitled to receive stock, other securities or
other assets (including cash) with respect to or in exchange for Common Shares;
or (b) any conveyance, transfer or lease of the properties and assets of the
Borrower 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 Common Shares issuable upon conversion of the
Conversion Amount immediately prior to such consolidation, merger, share
exchange, conveyance, transfer or lease. Upon the receipt of any Common Shares
hereunder, the Lender shall become entitled to the benefits (as a non-Management
Shareholder) under, and shall be subject to the restrictions provided in, the
Amended and Restated Shareholders' Agreement, as amended, among the Borrower and
the shareholders of Borrower. As promptly as practicable after the conversion of
the Conversion Amount, the Borrower at its expense will issue and deliver to the
Lender a certificate or certificates for the number of full Common Shares or
other securities issuable upon such conversion. No certificates representing
fractional Common Shares or other securities shall be issued upon such
conversion. In lieu of any fractional Common Share or other securities, the
Borrower will pay to the Lender, in lawful money of the United States of America
and in immediately available funds, an amount equal to the fraction of the
Common Share (or the Common Share equivalent of the fraction of the other
security) multiplied by $14.5833.
The Lender is hereby authorized by the Borrower to endorse on Schedule A
(or a continuation thereof) attached to this Note the date and the amount of
each payment or prepayment of principal of the Loans received by the Lender, and
the interest rates applicable to the Loans; 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 the 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 events, for prepayments of the Loans upon the terms and conditions
specified therein and other provisions relevant to this Note.
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THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK.
MARINER ENERGY LLC
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxxxx
------------------------------
Title: President
-----------------------------
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SCHEDULE A
This Note evidences Advances made by the Lender with respect to the Original
Loan under the within-described Credit Agreement to the Borrower, in the
principal amounts set forth below, which Advances 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 Advance Interest Rate Prepayment or Prepaid Outstanding
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