1
EXHIBIT 10.2
REVOLVING CREDIT AGREEMENT
DATED AS OF APRIL 15, 1999
BETWEEN
MARINER ENERGY, INC.
AS BORROWER
AND
ENRON CAPITAL & TRADE RESOURCES CORP.,
AS LENDER
2
TABLE OF CONTENTS
Page
----
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................................................... 9
ARTICLE II
LOANS AND COMMITMENTS
Section 2.01 Loans................................................................................. 9
Section 2.02 Borrowing.............................................................................10
Section 2.03 Note..................................................................................10
Section 2.04 Prepayments...........................................................................10
Section 2.05 Fees..................................................................................11
Section 2.06 Borrowing Base........................................................................11
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans....................................................................12
Section 3.02 Interest..............................................................................12
ARTICLE IV
PAYMENTS; COMPUTATIONS; ETC.
Section 4.01 Payments..............................................................................13
Section 4.02 Computations..........................................................................13
Section 4.03 Taxes.................................................................................13
-i-
3
ARTICLE V
CAPITAL ADEQUACY
Section 5.01 Capital Adequacy; Additional Costs....................................................14
Section 5.02 Limitation on Eurodollar Loans........................................................15
Section 5.03 Illegality............................................................................16
Section 5.04 Base Rate Loans Pursuant to Sections 5.01, 5.02 and 5.03..............................16
Section 5.05 Compensation..........................................................................16
ARTICLE VI
COVENANTS
Section 6.01 Financial Covenants...................................................................16
Section 6.02 Limitation on Indebtedness............................................................17
Section 6.03 Use of Proceeds.......................................................................17
Section 6.04 Engineering Reports...................................................................17
ARTICLE VII
[RESERVED]
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES
Section 8.01 Events of Default.....................................................................18
Section 8.02 Remedies..............................................................................20
ARTICLE IX
MISCELLANEOUS
Section 9.01 Waiver................................................................................21
Section 9.02 Notices...............................................................................21
Section 9.03 Payment of Expenses, Indemnities, etc.................................................21
Section 9.04 Amendments, Etc.......................................................................23
Section 9.05 Successors and Assigns................................................................23
Section 9.06 Assignments and Participations........................................................23
-ii-
4
Section 9.07 Invalidity............................................................................24
Section 9.08 Counterparts..........................................................................24
Section 9.09 References............................................................................24
Section 9.10 Survival..............................................................................25
Section 9.11 Captions..............................................................................25
Section 9.12 NO ORAL AGREEMENTS....................................................................25
Section 9.13 GOVERNING LAW; WAIVERS; ARBITRATION...................................................25
Section 9.14 Interest..............................................................................26
Section 9.15 EXCULPATION PROVISIONS................................................................27
Exhibit A - Form of Note
-iii-
5
THIS REVOLVING CREDIT AGREEMENT dated as of April 15, 1999 is between
MARINER ENERGY, 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 provide certain loans to
the Borrower.
B. The Lender has agreed to make such loans subject to the terms and
conditions of this Agreement.
C. In consideration of the mutual covenants and agreements herein
contained and of the loans and commitments 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.
"Agreement" shall mean this Revolving Credit 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.
6
"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 Interest Payment Date" shall mean July 31, 1999, October 31,
1999 and the Termination Date; provided, however, that if any such day is not a
Business Day, such Base Rate Interest Payment Date shall be the next succeeding
Business Day, or, in the case of the Termination Date, the next preceding
Business Day.
"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."
"Borrowing Base" shall mean at any time an amount equal to the amount
determined in accordance with Section 2.06.
"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.
"Change of Control" means Enron Corp., an Oregon corporation, shall
cease to beneficially own, directly or indirectly, (i) at least 50% of the
outstanding shares of voting stock of the Borrower, (ii) at least 50% of the
outstanding shares of voting stock of Mariner Holdings, Inc., a Delaware
corporation, or (iii) at least 50% of the ownership interests in the Parent.
"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, at all times not to exceed the lesser of
$25,000,000 or the then effective Borrowing Base.
"Dollars" and "$" 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.
"Engineering Reports" shall have the meaning assigned such term in
Section 2.06.
-2-
7
"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 Interest Payment Date" shall mean July 31, 1999, October
31, 1999 and the Termination Date; provided, however, that if any such day is
not a Business Day, such Eurodollar Interest Payment Date shall be the next
succeeding Business Day, or , in case of the Termination Date, the next
preceding Business Day.
"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 Eurodollar Loan 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 the
applicable 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
-3-
8
nearest one-hundredth percent (1/100%)) of the interest rates 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.
"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.
"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.
-4-
9
"Hydrocarbon Interests" shall mean all rights, titles, interests and
estates now or hereafter acquired in and to oil and gas leases, oil, gas and
mineral leases, or other liquid or gaseous Hydrocarbon leases, mineral fee
interests, overriding royalty and royalty interests, net profit interests and
production payment interests, including any reserved or residual interests of
whatever nature.
"Hydrocarbons" shall mean oil, gas, casinghead gas, drip gasoline,
natural gasoline, condensate, distillate, liquid hydrocarbons, gaseous
hydrocarbons and all products refined or separated therefrom.
"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), 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.
-5-
10
"Initial Reserve Report" shall mean the report of ▇▇▇▇▇ ▇▇▇▇▇ Company,
dated February 1, 1999 with respect to the Oil and Gas Properties of the
Borrower as of January 1, 1999, a copy of which has been delivered to the
Lender.
"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 Eurodollar Loan if such 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 the third month
thereafter.
"Interest Setting Date" shall mean the date which is two Business Days
before the first day of a particular Interest Period.
"IPO Date" means the closing date of the initial public offering of
equity securities of the Parent in a firm commitment underwriting registered
under the Securities Act of 1933, as amended.
"Lien" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and including but not
limited to the lien or security interest arising from a mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien" shall include,
without limitation, reservations, exceptions, encroachments, easements, rights
of way, covenants, conditions, restrictions, leases and other title exceptions
and encumbrances affecting Property.
"Loan" shall have the meaning set forth in Section 2.01.
"NationsBank Credit Agreement" shall mean that certain Credit Agreement
dated June 28, 1996 among the Borrower, NationsBank of Texas, N.A., as agent,
and the banks party thereto, as amended and 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 and increased with different lenders under a different agreement.
"NationsBank Indebtedness" shall mean all indebtedness, liabilities and
obligations of the Parent or any of its Subsidiaries evidenced by the
NationsBank Credit Agreement.
"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.
"Oil and Gas Properties" shall mean Hydrocarbon Interests; the
Properties now or hereafter pooled or unitized with Hydrocarbon Interests; all
presently existing or future unitization, pooling agreements and declarations of
pooled units and the units created thereby (including without limitation all
units created under orders, regulations and rules of any Governmental Authority)
which may affect all or any portion of the Hydrocarbon Interests; all operating
agreements, contracts and other agreements which relate to any of the
Hydrocarbon Interests or the production, sale, purchase, exchange or processing
of Hydrocarbons from or attributable to such Hydrocarbon Interests; all
Hydrocarbons in and under and which may be produced and saved or attributable to
the Hydrocarbon
-6-
11
Interests, including all oil in tanks, the lands covered thereby and all rents,
issues, profits, proceeds, products, revenues and other incomes from or
attributable to the Hydrocarbon Interests; all tenements, hereditaments,
appurtenances and Properties in any manner appertaining, belonging, affixed or
incidental to the Hydrocarbon Interests; and all Properties, rights, titles,
interests and estates described or referred to above, including any and all
Property, real or personal, now owned or hereinafter acquired and situated upon,
used, held for use or useful in connection with the operating, working or
development of any of such Hydrocarbon Interests or Property (excluding drilling
rigs, automotive equipment or other personal property which may be on such
premises for the purpose of drilling a well or for other similar temporary uses)
and including any and all oil ▇▇▇▇▇, gas ▇▇▇▇▇, injection ▇▇▇▇▇ or other ▇▇▇▇▇,
buildings, structures, fuel separators, liquid extraction plants, plant
compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
"Other Taxes" shall have the meaning assigned such term in Section
4.03(b).
"Parent" shall mean Mariner Energy LLC, a Delaware limited liability
company.
"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 of the date hereof, is its office located at 4
Chase ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Principal Office" shall mean the principal office of the Lender,
presently located at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
-7-
12
"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
Parent or any of its Subsidiaries after the date hereof, other than Indebtedness
under the Second Amended and Restated Credit Agreement or the NationsBank Credit
Facility.
"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.
"Reserve Report" shall mean a report, in customary form and substance
satisfactory to the Lender, setting forth, as of the date specified in Section
6.04(a); (i) the oil and gas reserves attributable to the Borrower's Oil and Gas
Properties together with a projection of the rate of production and future net
income, taxes, operating expenses and capital expenditures with respect thereto
as of such date, based upon the pricing assumptions consistent with SEC
reporting requirements at the time and (ii) such other information as the Lender
may reasonably request.
"Responsible Officer" shall mean, with respect to any corporation, the
chairman of the board, the president, any executive vice president, the vice
president of finance, the chief executive officer, the chief financial officer,
the chief operating officer or the treasurer of such corporation.
"Second Amended and Restated Credit Agreement" shall mean the Second
Amended and Restated Credit Agreement dated April 15, 1999 between the Parent
and the Lender, as such agreement may be amended, renewed, extended,
supplemented, restated, refinanced, increased, or otherwise modified from time
to time.
"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
-8-
13
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 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).
"Termination Date" shall mean, unless the Commitment is sooner
terminated pursuant to Section 8.02 hereof, December 31, 1999.
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 Termination Date
to the Borrower in an aggregate principal amount not to exceed the Commitment.
An initial Loan of $10,000,000 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, or, if the unused portion of the Commitment is
less than $1,000,000, in the amount of such remaining Commitment) 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. Subject to the terms and conditions of this Agreement, during the
period from the Closing Date to but excluding the Termination Date, the Borrower
may borrow, repay and reborrow (other than Loans prepaid pursuant to Section
2.04(b)) the amount described in this Section 2.01.
-9-
14
Section 2.02 Borrowing.
(a) Borrowing. Initially, each Loan shall be a Eurodollar Loan.
(b) Continuation. Each Eurodollar Loan shall expire on the next
succeeding Eurodollar Interest Payment Date, and subject to Section 3.01 and
except as otherwise provided in Article V, the entire amount of each Eurodollar
Loan shall be automatically continued beyond such expiration as a Eurodollar
Loan with interest calculated in accordance with Section 3.02(a)(i).
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 in a principal amount equal
to the Commitment and otherwise duly completed. The date, amount, and interest
rate 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 2.04 Prepayments.
(a) Optional Prepayments. The Borrower may prepay the Base Rate 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)
and the amount of the prepayment (which shall be at least $100,000 or the
remaining principal balance outstanding on the Note) and shall be irrevocable
and effective only upon receipt by the Lender, provided that interest on the
principal prepaid, accrued to the prepayment date, shall be paid on the
prepayment date. The Borrower may prepay Eurodollar Loans on the same conditions
as for Base Rate Loans and in addition such prepayments of Eurodollar Loans
shall be subject to the terms of Section 5.05.
(b) Mandatory Prepayments.
(i) The Borrower shall prepay the Loans, together with accrued
interest thereon, in whole or in part, in an amount at least equal to
the lesser of (A) the amount of the outstanding principal balance of
and accrued and unpaid interest on the Loans and (B) the net cash
proceeds received by the Parent with respect to the securities offering
effected on the IPO Date, within one Business Day after the IPO Date.
(ii) The Borrower shall prepay the Loans, together with
accrued interest thereon, in whole or in part, in an amount at least
equal to the lesser of (A) the amount of the outstanding principal
balance of and accrued and unpaid interest on the Loans and (B) the net
cash proceeds of each Refunding Debt or sale of equity by the Parent or
any of its Subsidiaries after the date hereof (other than in an initial
public offering) within one Business Day after the date any Refunding
Debt is incurred or such sale is consummated.
(iii) The Borrower shall prepay the Loans in whole, together
with accrued interest thereon, within one Business Day after the date
of a Change of Control.
-10-
15
(iv) Upon any redetermination of the Borrowing Base in
accordance with Section 2.06, if the redetermined Borrowing Base is
less than the aggregate outstanding principal amount of the Loans, then
the Borrower shall within thirty (30) days of receipt of written notice
thereof prepay the Loans in an aggregate principal amount equal to such
excess, together with interest on the principal amount accrued to the
date of such prepayment.
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.
Section 2.05 Fees. The Borrower shall pay to ECT Securities Limited
Partnership for its account the structuring fee in the amount and at the time
set forth in the fee letter between ECT Securities Limited Partnership and the
Borrower dated the date hereof.
Section 2.06 Borrowing Base.
(a) During the period from and after the Closing Date until the first
redetermination pursuant to Section 2.06(b), the amount of the Borrowing Base
shall be $25,000,000. The Borrowing Base is subject to redetermination by the
Lender in accordance with Section 2.06(b). Such a redetermined Borrowing Base
shall become effective in accordance with Section 2.06(d), and shall remain
effective until the next successive redetermination becomes effective. So long
as the Commitment is in effect or Loans are outstanding hereunder, this facility
shall be governed by the then effective Borrowing Base.
(b) So long as the Commitment is in effect and until payment in full of
all Loans hereunder, the Lender may, at any time in its discretion, initiate a
redetermination of the Borrowing Base. The Lender will initiate the
redetermination by making a written request to the Borrower for the reports
required by Section 6.04. Upon receipt of the reports required by Section 6.04
and such other reports, data and supplemental information as may from time to
time be reasonably requested by the Lender (the "Engineering Reports"), the
Lender will redetermine the Borrowing Base. The Lender, in its sole discretion,
may make adjustments to the rates, volumes and prices and other assumptions set
forth in the Engineering Reports.
(c) The Lender may exclude any Oil and Gas Property or portion of
production therefrom or any income from any other Property from the Borrowing
Base, at any time, because title information with respect to such Oil Gas
Property or such other Property is not reasonably satisfactory.
(d) The Lender shall promptly notify in writing the Borrower of the new
Borrowing Base. Any redetermination of the Borrowing Base shall not be in effect
until written notice is received by the Borrower.
-11-
16
ARTICLE III
PAYMENTS OF PRINCIPAL AND INTEREST
Section 3.01 Repayment of Loans. The Borrower will pay to the Lender
the entire outstanding principal balance of and accrued and unpaid interest on
the Loans on the Termination Date.
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, the Eurodollar Rate
(as determined on the Interest Setting Date applicable to the Interest
Period commencing simultaneously with such Eurodollar Loan) plus the
Applicable Margin, but in no event to exceed the Highest Lawful Rate;
and
(ii) if such a Loan is a 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 each Eurodollar
Interest Payment Date, at maturity (whether by acceleration or
otherwise), and after maturity, on demand; and
(ii) if such Loan is a Base Rate Loan, on each Base Rate
Interest Payment Date, 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.
-12-
17
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.
▇▇▇▇▇▇▇▇▇ 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 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 a 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 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 the
-13-
18
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 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
-14-
19
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 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. 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 Loans as provided herein; or
-15-
20
(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.
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:
-16-
21
(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 most recent annual ▇▇▇▇▇ ▇▇▇▇▇ 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 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 NationsBank Indebtedness.
Section 6.03 Use of Proceeds. The proceeds of the Loans will be used
only for general working capital purposes, including expenses associated with
the acquisition, exploration and development of oil and gas properties. No part
of the proceeds of any Loan will be used, directly or indirectly, to pay any
Indebtedness (other than Indebtedness in respect of the Loans or this
Agreement).
Section 6.04 Engineering Reports.
(a) In the event of a redetermination of the Borrowing Base pursuant to
Section 2.06(b), the Borrower shall furnish to the Lender a Reserve Report
prepared by or under the supervision of the chief engineer of the Borrower who
shall certify such Reserve Report to be true and accurate and to have been
prepared in accordance with the procedures used in the Initial Reserve Report.
The Borrower shall provide such Reserve Report with an "as of" date as required
by the Lender as soon as possible, but in no event later than 15 calendar days
following the receipt of the request by the Lender for such Reserve Report.
(b) With the delivery of each Reserve Report, the Borrower shall
provide to the Lender a certificate from a Responsible Officer certifying that,
to the best of his knowledge and in all material respects: (i) the information
contained in the Reserve Report and any other information delivered in
connection therewith is true and correct, (ii) the Borrower owns good and
indefeasible title to the Oil and Gas Properties evaluated in such Reserve
Report and such Properties are free and clear of all Liens except for Liens
identified on an exhibit to the certificate, (iii) except as set forth on an
exhibit to the certificate, on a net basis there are no gas imbalances, take or
pay or other prepayments with respect to its Oil and Gas Properties evaluated in
such Reserve Report which
-17-
22
would require the Borrower to deliver Hydrocarbons produced from such Oil and
Gas Properties at some future time without then or thereafter receiving full
payment therefor, (iv) none of its Oil and Gas Properties have been sold since
the date of the last Borrowing Base determination except as set forth on an
exhibit to the certificate, which certificate shall list all of its Oil and Gas
Properties sold and in such detail as reasonably required by the Lender, (v)
attached to the certificate is a list of its Oil and Gas Properties added to and
deleted from the immediately prior Reserve Report and a list showing any change
in working interest or net revenue interest in its Oil and Gas Properties
occurring and the reason for such change, and (vi) attached to the certificate
is a list of all Persons disbursing proceeds to the Borrower from its Oil and
Gas Properties.
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 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, the Parent or any of their 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, the Parent or any of their 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
-18-
23
(e) a proceeding or case shall be commenced, without the application or
consent of the Borrower, the Parent or any of their 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, the Parent or such Subsidiary of all or any
substantial part of its assets, or (iii) similar relief in respect of the
Borrower, the Parent 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, the Parent 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,
the Parent or any of their 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, the Parent 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.
-19-
24
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.
(k) the Parent shall:
(i) fail to make any payment or payments of any Indebtedness
under the Second Amended and Restated Credit Agreement 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 the Second
Amended and Restated Credit Agreement (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 Second Amended and Restated Credit Agreement.
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
under the Second Amended and Restated Credit 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 Parent's 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, cancel the Commitment and/or 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 Commitment shall be automatically
canceled and 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
-20-
25
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.
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,
-21-
26
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, 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
-22-
27
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. No provision of this Agreement shall be
amended, modified or waived without both 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 not assign its rights or obligations hereunder or
under the Note without the prior written consent of the Borrower; provided that,
the Lender may assign to one or more Persons described in clause (i) of the
definition of "Affiliates" in Section 1.02 all or a portion of its rights and
obligations under this Agreement without the prior written consent of the
Borrower. 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
-23-
28
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).
(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 Termination 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.
-24-
29
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.
(b) EACH OF THE BORROWER AND THE LENDER HEREBY (I) IRREVOCABLY WAIVES,
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)
CERTIFIES 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) ACKNOWLEDGES 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
-25-
30
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, 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
the 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
-26-
31
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 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; THAT IT 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."
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]
-27-
32
The parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BORROWER: MARINER ENERGY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name:
Title:
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.:(▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.:(▇▇▇) ▇▇▇-▇▇▇▇
Attention: VP, Finance and CFO
LENDER: ENRON CAPITAL & TRADE RESOURCES CORP.
By:
----------------------------------
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
-28-
33
EXHIBIT A
FORM OF NOTE
$25,000,000 April 15, 1999
FOR VALUE RECEIVED, MARINER ENERGY, 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
Termination 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 Revolving 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.
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 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.
34
MARINER ENERGY, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: President
-2-
35
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 Advance Interest Rate Prepayment or Prepaid Outstanding
--------- ------- ------------- ---------- ---------- -----------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------