1
EXHIBIT 10.3
AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
between
MARINER ENERGY, LLC,
a Delaware limited liability company,
MARINER HOLDINGS, INC.,
a Delaware corporation,
ENRON CAPITAL & TRADE RESOURCES CORP.,
a Delaware corporation,
JOINT ENERGY DEVELOPMENT INVESTMENTS LIMITED PARTNERSHIP,
a Delaware limited partnership,
and
Robert E. Henderson James M. Fitzpatrick III Laurence J. Lapeze
Richard R. Clark James L. Gregory Cory L. Loegering
Michael W. Strickler Alan K. Hadfield Richard A. Molohon
David S. Huber Gregory K. Harless Jerry L. Sheets
William J. Anderson William Hunt Hodge Clinton D. Smith
Thomas M. Campbell, Jr. William F. Howell Ward H. Taylor
Donald M. Clement Jacqueline S. Hudson Richard F. Weser
Ralph J. Dobbins Barbara C. Kyse Thomas E. Young
Frederic L. Lettieri D. Bruce Nevin Richard W. Webb
Frank A. Pici Steven W. Burt Lindell V. McGuire
Robert C. Strauss James W. Anderson
October 12, 1998
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TABLE OF CONTENTS
This Table of Contents is solely for convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.
Page
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A. MATTERS RELATING TO COMPANY GOVERNANCE,
MANAGEMENT AND OPERATION OF MARINER LLC AND ITS SUBSIDIARIES..................................-2-
A.1. CHARTER DOCUMENTS OF MARINER LLC AND SUBSIDIARIES AND RELATED
PROVISIONS....................................................................................-2-
(a)..................................................................................-2-
Existing Certificate of Formation and LLC Agreement of Mariner LLC and
Certificates of Incorporation and Bylaws of Mariner Holdings and
Mariner Energy.......................................................................-2-
(b) Indemnification and Director Quorum Provisions in Charter
Documents of New Subsidiaries........................................................-2-
(c) Changes to Indemnification and Director Quorum Provisions
....................................................................................-3-
(d) Indemnification and Director Quorum Provisions in Charter
Documents of Mariner LLC.............................................................-3-
A.2. BOARDS OF DIRECTORS OF MARINER LLC AND SUBSIDIARIES...........................................-6-
(a) Election of Management Nominees Generally...................................-6-
(b) Election of Replacement Directors...........................................-6-
(c) Removal of Directors........................................................-6-
(d) Selection of Management Directors...........................................-6-
(e) Election of Other Directors.................................................-7-
(f) Committees of the Board of Directors........................................-7-
(g) Election of Management Directors of Mariner LLC's
Subsidiaries.........................................................................-7-
A.3. CERTAIN BUSINESS OPPORTUNITIES................................................................-8-
B. MATTERS RELATING TO INDEMNIFICATION OF MANAGEMENT SHAREHOLDERS
REGARDING CERTAIN TAX MATTERS........................................-8-
B.1. INDEMNITY.....................................................................................-8-
(a) Obligations to Indemnify....................................................-8-
(b) Determination of Amounts....................................................-9-
(c) Timing of Payments..........................................................-9-
B.2. TAX REFUNDS AND TAX BENEFITS..................................................................-9-
(a) Tax Refunds.................................................................-9-
(b) Tax Benefits................................................................-9-
(c) Actually Realized...........................................................-9-
B.3. TAX REPORTING................................................................................-10-
B.4. CERTAIN PROCEDURES...........................................................................-10-
(a) Procedures Relating to Indemnification of Tax Claims.......................-10-
(i)
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(b) Settlement.................................................................-11-
(c) Definition of Tax..........................................................-11-
C. MATTERS RELATING TO CERTAIN EMPLOYMENT AGREEMENTS
AND BENEFITS................................................-11-
C.1. EMPLOYEE BENEFIT PLANS.......................................................................-11-
C.2. OVERRIDING ROYALTY INTERESTS.................................................................-12-
D. MATTERS RELATING TO ACQUISITION AND DISPOSITION OF SHARES........................-12-
D.1. COMPLIANCE WITH SECURITIES LAWS..............................................................-12-
(a) Representations............................................................-12-
(b) Agreements.................................................................-13-
(c) Stock Certificates.........................................................-13-
D.2. PREEMPTIVE RIGHTS TO ACQUIRE ADDITIONAL SECURITIES............................................-13-
(a) Offer to Certain Shareholders..............................................-13-
(b) Responses to Offer.........................................................-13-
(c) Compliance with Securities Laws............................................-14-
(d) Issuance of Unaccepted Securities..........................................-14-
(e) Exceptions.................................................................-14-
D.3. TRANSFERABILITY OF COMMON SHARES.............................................................-14-
(a) Transferability by Non-Management Shareholders.............................-14-
(b) Transferability by Management Shareholders.................................-14-
(c) Tagalong Rights............................................................-15-
D.4. REGISTRATION RIGHTS..........................................................................-19-
(a) Demand Registration Rights of JEDI.........................................-19-
(b) Piggy-Back Registration Rights of JEDI and the Management
Shareholders........................................................................-20-
(c) Special Demand Registration Right of JEDI..................................-20-
(d) Registration Responsibilities of Mariner LLC...............................-21-
(e) Indemnification by Mariner LLC.............................................-24-
(f) Indemnification by Selling Persons.........................................-24-
(g) Procedures for Indemnification.............................................-25-
(h) Mariner LLC's Indemnification of Underwriters..............................-25-
(i) Transferability of Registered Shares.......................................-25-
D.5. AGREEMENT TO APPLY TO TRANSFERRED AND NEWLY ISSUED SHARES....................................-25-
D.6. POWER OF ATTORNEY............................................................................-26-
E. GENERAL MATTERS RELATING TO THIS AGREEMENT...............................-26-
E.1. AMENDMENT....................................................................................-26-
E.2. WAIVER.......................................................................................-26-
E.3. INCLUSIVENESS................................................................................-26-
E.4. NOTICES......................................................................................-26-
E.5. ASSIGNABILITY AND BINDING EFFECT.............................................................-27-
E.6. NO THIRD PARTY BENEFICIARIES.................................................................-27-
E.7. SEVERABILITY.................................................................................-27-
(ii)
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E.8. HEADINGS.....................................................................................-27-
E.9. COUNTERPARTS.................................................................................-27-
E.10. GOVERNING LAW................................................................................-27-
E.11. TERMINATION..................................................................................-27-
E.12. AGREEMENT OF SPOUSES.........................................................................-28-
E.13. ARBITRATION..................................................................................-28-
(a) Conduct of Arbitration.....................................................-28-
(b) Injunctive Relief..........................................................-29-
(c) Payment of Expenses........................................................-29-
E.14. INDEMNIFICATION OF OFFICERS AND DIRECTORS......................................................-30-
(iii)
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INDEX TO DEFINITIONS
This Index to Definitions is solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.
Terms Defined in This Agreement Where Defined
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AAA ....................................................................................................... E.13(a)
Acquiring Persons ......................................................................................... D.3(c)
Acquisition Agreement .................................................................................... D.3(c)
Actually realized ......................................................................................... B.2(c)
Addendum Agreement ........................................................................................ D.5
Agreement .......................................................................................... [Introduction]
Business opportunity ......................................................................................... A.3
Capital stock equivalents ................................................................................. D.2(a)
Code....................................................................................................... B.1(a)
Commission ................................................................................................ D.4(d)
Common Shares............................................................................................[Recitals]
Conversion Shares............................................................................................D.2(e)
Disposition ............................................................................................... D.1(a)
Disputing Parties............................................................................................ E.13
ECT ................................................................................................ [Introduction]
Enron Directors ........................................................................................... A.2(e)
Exchange Offer...........................................................................................[Recitals]
Existing Shareholders....................................................................................[Recitals]
Financial Participant ..................................................................................... D.3(c)
Indemnified Management Shareholder......................................................................... B.1(a)
Initial Management Directors .............................................................................. A.2(d)
Initial Public Offering ................................................................................... D.2(e)
Issuance .................................................................................................. D.2(a)
JEDI ................................................................................................[Introduction]
Management Directors ...................................................................................... A.2(a)
Management Shareholders ............................................................................ [Introduction]
Mariner Energy ......................................................................................... [Recitals]
Mariner Holdings.........................................................................................[Recitals]
Mariner LLC..........................................................................................[Introduction]
Option Plan..................................................................................................A.2(f)
Original Agreement ......................................................................................[Recitals]
Other Common Shares ....................................................................................... D.4(b)
Parent..................................................................................................... A.1(b)
Registration Expenses ..................................................................................... D.4(d)
Relevant Transactions...................................................................................... B.1(b)
Representatives ........................................................................................ [Recitals]
Securities Act ............................................................................................ D.4(a)
Selling Expenses .......................................................................................... D.4(d)
Selling Shareholders ...................................................................................... D.3(c)
Shareholders ......................................................................................A.2(a), D.5, E.1
Subsidiary ................................................................................................ A.1(b)
Tagalong Notice ........................................................................................... D.3(c)
(iv)
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Terms Defined in This Agreement Where Defined
- ------------------------------- -------------
Tax......................................................................................... B.1(a), B.4(a), B.4(c)
Tax Benefit................................................................................................ B.2(b)
Tax Claim.................................................................................................. B.4(a)
Tax Refund................................................................................................. B.2(a)
30% Shareholder............................................................................................ D.4(c)
(v)
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INDEX TO EXHIBITS
This Index to Exhibits is solely for convenience of reference and shall
be given no effect in the construction or interpretation of this Agreement.
Exhibit Name Exhibit Description Where Referred To
- ------------ ------------------- -----------------
EXHIBIT 1 -- Certificate of Formation of Mariner LLC........................................ Sections A.1(a)
EXHIBIT 2 -- Limited Liability Company Agreement of
of Mariner LLC............................................................... Sections A.1(a)
EXHIBIT 3 -- Certificate of Incorporation of
Mariner Holdings..................................... Sections A.1(a), A.1(b), A.1(c), A.1(d)
EXHIBIT 4 -- Bylaws of Mariner Holdings............................. Sections A.1(a), A.1(b), A.1(c), A.1(d)
EXHIBIT 5 -- Certificate of Incorporation of Mariner Energy.................................. Section A.1(a)
EXHIBIT 6 -- Bylaws of Mariner Energy........................................................ Section A.1(a)
EXHIBIT 7 -- Employee benefit plans to be continued............................................. Section C.1
EXHIBIT 8 -- Form of Addendum Agreement......................................................... Section D.5
(vi)
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AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
THIS AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT dated October 12,
1998, (this "Agreement"), among MARINER ENERGY LLC, a Delaware limited liability
company ("Mariner LLC"), ENRON CAPITAL & TRADE RESOURCES CORP., a Delaware
corporation ("ECT"), JOINT ENERGY DEVELOPMENT LIMITED PARTNERSHIP, a Delaware
limited partnership ("JEDI"), and the following individuals (the "Management
Shareholders"): Robert E. Henderson, Richard R. Clark, Michael W. Strickler, D.
S. Huber, William J. Anderson, Thomas M. Campbell, Jr., Donald M. Clement, Ralph
J. Dobbins, James M. Fitzpatrick III, James L. Gregory, Alan K. Hadfield,
Gregory K. Harless, William Hunt Hodge, William F. Howell, Jacqueline S. Hudson,
Barbara C. Kyse, Laurence J. Lapeze, Cory L. Loegering, Richard A. Molohon,
Jerry L. Sheets, Clinton D. Smith, Ward H. Taylor, Richard F. Weser, Thomas E.
Young, Frederic L. Lettieri, Frank A. Pici, Robert C. Strauss, D. Bruce Nevin,
Steven W. Burt, James W. Anderson, Richard W. Webb and Lindell V. McGuire.
WHEREAS, Robert E. Henderson, Richard R. Clark, Michael W. Strickler
and D. S. Huber (together, the "Representatives"), ECT and MARINER HOLDINGS,
INC., a Delaware corporation ("Mariner Holdings"), entered into a Stockholders'
Agreement dated April 2, 1996 (the "Original Agreement"); and
WHEREAS, JEDI and the parties to the Original Agreement entered into
Amendment No. 1 dated May 16, 1996 to the Original Agreement; and
WHEREAS, JEDI, the parties to the Original Agreement and certain of
the Management Shareholders entered into Amendment No. 2 dated May 31, 1996, to
the amended Original Agreement; and
WHEREAS, effective April 1, 1996, Mariner Holdings purchased all of
the outstanding shares of stock of Mariner Energy, Inc., a Delaware corporation
formerly named "Hardy Oil & Gas USA Inc." ("Mariner Energy") pursuant to the
Stock Purchase Agreement dated as of April 1, 1996, between Hardy Oil & Gas plc,
a company incorporated in England as a public limited company, Hardy Holdings
Inc., a Delaware corporation, Holdings and ECT; and
WHEREAS, on June 27, 1996, JEDI, as ECT's assignee, and certain of
the Management Shareholders purchased shares of common stock, $.01 par value, of
Mariner Holdings, pursuant to the Original Agreement, as amended by Amendment
Nos. 1 and 2; and
WHEREAS, from time to time after June 27, 1996, certain additional
Management Shareholders purchased shares of the Common Stock from Mariner
Holdings and became parties to the Original Agreement, as amended; and
WHEREAS, ECT, Mariner Holdings, the Representatives and JEDI entered
into Amendment No. 3 dated September 2, 1998 to the amended Original Agreement;
and
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WHEREAS, on October 12, 1998, Mariner LLC consummated an exchange
offer (the "Exchange Offer") by which it issued 12 of its common shares, $.01
par value (the "Common Shares"), for each share of the Common Stock, with the
result that the stockholders of Mariner Holdings became the shareholders of
Mariner LLC (the "Existing Shareholders") and Mariner Holdings became a wholly
owned subsidiary of Mariner LLC; and
WHEREAS, ECT and the Existing Shareholders wish to amend and restate
the Original Agreement, as amended by Amendment Nos. 1, 2 and 3, to reflect the
purchase of stock of Mariner Energy by Mariner Holdings, the purchase of Common
Stock by JEDI and the Management Shareholders and the Exchange Offer (without
negating the effect of provisions relating to past actions); to continue to
provide for certain obligations, rights and restrictions with respect to each
Shareholder; and to provide for other matters as set forth below;
NOW, THEREFORE, in consideration of the premises, the Original
Agreement is amended and restated in its entirety as set forth below:
A. MATTERS RELATING TO COMPANY GOVERNANCE,
MANAGEMENT AND OPERATION OF MARINER LLC AND ITS SUBSIDIARIES
A.1. CHARTER DOCUMENTS OF MARINER LLC AND SUBSIDIARIES AND RELATED PROVISIONS.
(a) Existing Certificate of Formation and LLC Agreement of Mariner
LLC and Certificates of Incorporation and Bylaws of Mariner Holdings and Mariner
Energy. The certificate of formation and limited liability company agreement of
Mariner LLC are attached as EXHIBITS 1 and 2 to this Agreement and shall be
effective until amended in accordance with the Delaware Limited Liability
Company Act and any applicable provisions of the certificate of formation and
limited liability company agreement of Mariner LLC, subject to subsection A.1(d)
of this Agreement. The amended and restated certificates of incorporation and
bylaws of Holdings and Mariner Energy are attached as EXHIBITS 3, 4, 5 and 6 to
this Agreement and shall be effective until amended in accordance with the
General Corporation Law of the State of Delaware and any applicable provisions
of the applicable restated certificate of incorporation or bylaws, subject to
subsection A.1(c) of this Agreement.
(b) Indemnification and Director Quorum Provisions in Charter
Documents of New Subsidiaries. Upon the formation or acquisition of any new
direct or indirect subsidiary of Mariner or Holdings, the parties to this
Agreement will take all actions necessary to amend or adopt the certificate of
incorporation (or analogous document) and the bylaws (or analogous document) of
the new subsidiary so that the provisions of new Sections X.4, X.5, X.6 and X.7
of EXHIBIT 3 (relating to indemnification of certain persons) and Sections III.2
and IV.2 of EXHIBIT 4 (relating to the requirements for a quorum of a meeting of
the board of directors and committees) are included in the new subsidiary's
certificate of incorporation (or analogous document) and bylaws (or analogous
document) and so that this Agreement is referred to therein as appropriate. For
purposes of this Agreement a "subsidiary" shall mean, with respect to any person
(the "parent"), (i) any corporation, association, joint venture, partnership or
other business entity of which securities or other ownership
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interests representing more than 50% of the ordinary voting power or beneficial
interest are, at the time as of which any determination is being made, owned or
controlled by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent and (ii) any joint venture or
partnership of which the parent or any subsidiary of the parent is a general
partner or has responsibility for its management (provided, however, that the
term "subsidiary" shall not include joint operating agreements).
(c) Changes to Indemnification and Director Quorum Provisions. The
indemnification and director quorum provisions described in subsection A.1(b) to
this Agreement and contained in the certificate of incorporation (or analogous
document) or the bylaws (or analogous document) of Mariner Holdings, Mariner
Energy or any other direct or indirect subsidiary of Mariner Holdings or Mariner
Energy (i.e., those amendments related thereto described in EXHIBIT 3 and
EXHIBIT 4 and analogous provisions in the documents of any subsidiary) shall not
be amended without the written consent of a majority of the Management Directors
(as defined in Section A.2 of this Agreement). The amendments to new Articles
VII, X and XI of Mariner Holdings' certificate of incorporation reflected in
EXHIBIT 3 and to Articles III, IV, VII and VIII of Mariner Holdings' bylaws
reflected in EXHIBIT 4 (and analogous provisions in the documents of any
subsidiary) shall not be amended without the written consent of a majority of
the Management Directors.
(d) Indemnification and Director Quorum Provisions in Charter
Documents of Mariner LLC. In addition to any other indemnification rights of any
person under the limited liability company agreement of Mariner LLC, the
following indemnification provisions (which are intended to be analogous to
Sections X.4, X.5, X.6 and X.7 of EXHIBIT 3) shall apply:
"(i) Each person who was or is made a party or is threatened to be
made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or
investigative (hereinafter a "proceeding"), by reason of the
fact that he or she, or a person of whom he or she is the
legal representative, is or was a director, officer, employee
or consultant of Mariner LLC or is or was serving at the
request of Mariner LLC as a director, officer, employee,
consultant or agent of another business entity or of a
partnership, joint venture, trust or other enterprise,
including service with respect to employee benefit plans,
whether the basis of such proceeding is alleged action in an
official capacity as a director, officer, employee, consultant
or agent or in any other capacity while serving as a director,
officer, employee, consultant or agent, shall be indemnified
and held harmless by Mariner LLC to the fullest extent
permitted by the Delaware Limited Liability Company Act, as
the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment
permits Mariner LLC to provide broader indemnification rights
than said law permitted Mariner LLC to provide prior to such
amendment), against all expense, liability and loss (including
attorneys' fees, judgments, fines, ERISA, excise taxes or
penalties and amounts paid or to be paid in settlement)
reasonably incurred or suffered by such person in connection
therewith and such indemnification shall continue as to a
person who has ceased to be a director, officer, employee,
consultant or agent and shall inure to the benefit of his or
her heirs, executors and administrators; provided, however,
that, except as provided in paragraph (ii) below,
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Mariner LLC shall indemnify any such person seeking
indemnification in connection with a proceeding (or part
thereof) initiated by such person only if such proceeding (or
part thereof) was authorized by the board of directors of
Mariner LLC; provided further, however, that Mariner LLC shall
not be obligated to indemnify any employee of Mariner LLC who
is not an officer or director of Mariner LLC under this
paragraph (i) if the employee's involvement in the action,
suit or proceeding is determined by a court of competent
jurisdiction to have been due to the employee's gross
negligence or willful misconduct. The right to indemnification
conferred in this paragraph (i) shall be a contract right and
shall include the right to be paid by Mariner LLC the expenses
incurred in defending any such proceeding in advance of its
final disposition; provided, however, that, if applicable law
requires, the payment of such expenses incurred by a director,
officer, employee or consultant in such capacity (and not in
any other capacity in which service was or is rendered by such
person) in advance of the final disposition of a proceeding,
shall be made only upon delivery to Mariner LLC of an
undertaking, by or on behalf of such person, to repay all
amounts so advanced if it shall ultimately be determined that
such person is not entitled to be indemnified under this
paragraph (i) or otherwise.
"(ii) If a claim under paragraph (i) above is not paid in full by
Mariner LLC within 30 days after a written claim has been
received by Mariner LLC, the claimant may at any time
thereafter bring suit against Mariner LLC to recover the
unpaid amount of the claim, and, if successful in whole or in
part, the claimant shall be entitled to be paid also the
expense of prosecuting such claim. It shall be a defense to
any such action (other than an action brought to enforce a
claim for expenses incurred in defending any proceeding in
advance of its final disposition whether required undertaking,
if any is required, has been tendered to Mariner LLC) that the
claimant has not met the standards of conduct which make it
permissible under applicable law for Mariner LLC to indemnify
the claimant for the amount claimed, but the burden of proving
such defense shall be on Mariner LLC. Neither the failure of
Mariner LLC (including its board of directors, independent
counsel or shareholders) to have made a determination prior to
the commencement of such action that indemnification of the
claimant is proper in the circumstances because he or she has
met the applicable standard of conduct set forth in any
applicable statute, nor an actual determination by Mariner LLC
(including its board of directors, independent legal counsel
or its shareholders) that the claimant has not met such
applicable standard of conduct, shall be a defense to the
action or create a presumption that the claimant has not met
the applicable standard of conduct.
"(iii) The right to indemnification and the payment of expenses
incurred in defending a proceeding in advance of its final
disposition conferred in paragraphs (i) and (ii) above shall
not be exclusive of any other right which any person may have
or hereafter acquire under any statute, provision of the
certificate of formation, limited liability agreement, other
agreement, vote of shareholders or disinterested directors or
otherwise.
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"(iv) Mariner LLC may maintain insurance, at its expense, to protect
itself and any director, officer, employee, consultant or
agent of Mariner LLC or another business entity, partnership,
joint venture, trust or other enterprise against any such
expense, liability or loss, whether or not Mariner LLC would
have the power to indemnify such person against such expense,
liability or loss under applicable law."
In addition to any other requirements provided for in the limited liability
company agreement of Mariner LLC, the following provisions relating to the
requirements for a quorum of a meeting of the board of directors and committees
of Mariner LLC (which are intended to be analogous to Section III.2 and IV.2 of
EXHIBIT 4) shall apply:
"(v) A quorum of the board of directors of Mariner LLC shall be
deemed to be present at any meeting if (a) a majority of the
total number of directors are present at the meeting and (b)
either (y) at least one Management Director (as that term is
defined in this Agreement) is present at the meeting or (z)
all Management Directors (as that term is defined in this
Agreement) received at least 3 business days' written notice
of the meeting at their respective addresses for notice
described in this Agreement; for purposes of the foregoing, a
notice given by email or other electronic communication shall
not constitute a "written notice". The vote of a majority of
the directors present at a meeting at which a quorum is
present shall be the act of the board of directors of Mariner
LLC.
"(vi) Any committee designated pursuant to the Limited Liability
Company Agreement of Mariner LLC shall keep regular minutes of
its actions and proceedings in a book provided for that
purpose and report the same to the board of directors of
Mariner LLC at its meeting next succeeding such action, shall
fix its own rules or procedures, and shall meet at such time
and at such place or places as may be provided by such rules,
or by such committee or the board of directors. Should a
committee fail to fix its own rules, the provisions of the
Limited Liability Company Agreement of Mariner LLC pertaining
to the calling of meetings and conduct of business by the
board of directors of Mariner LLC shall apply as nearly as may
be possible. At every meeting of any such committee, a quorum
shall be present if (a) a majority of all the members of the
committee are present and (b) if one or more Management
Directors is a member of the committee pursuant to the
provisions of this Agreement, either (y) at least one
Management Director who is a member of the committee is
present at the meeting or (z) each Management Director who is
a member of the committee received at least 3 business days'
written notice of the meeting at his address for notice
described in this Agreement; for purposes of the foregoing, a
notice given by email or other electronic communication shall
not constitute a "written notice". The affirmative vote of a
majority of the members present at a meeting at which there is
a quorum shall be necessary for the adoption by it of any
resolution."
The indemnification and director quorum provisions described above shall not be
amended without the written consent of a majority of the Management Directors
(as defined in Section A.2 of this Agreement). The foregoing provisions are
intended to be in addition to the provisions of the Limited
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Liability Company Agreement of Mariner LLC. If there is any conflict between the
provisions of this Agreement and the provisions of the Limited Liability Company
Agreement of Mariner LLC, then the conflict shall be resolved in favor of the
provisions of this Agreement, which shall prevail; provided, however, that any
person entitled to indemnification pursuant to both the provisions of the
limited liability company agreement and of this subsection A.2(d) shall be
entitled to the maximum benefit of all such provisions, taken as a whole but
without duplication, regardless of such conflict.
A.2. BOARDS OF DIRECTORS OF MARINER LLC AND SUBSIDIARIES.
(a) Election of Management Nominees Generally. Membership on the
board of directors of Mariner LLC shall at all times include at least three
nominees of the group consisting of the Management Shareholders, subject to the
provisions of clause (d)(iv) of this Section A.2. At any annual or special
election of a new board of directors, the Management Shareholders shall nominate
three individuals to serve as directors of Mariner LLC (the "Management
Directors"), to be selected by the Management Shareholders in accordance with
subsection (d) of this Section A.2. JEDI, each Existing Shareholder and each
person who becomes a shareholder of Mariner LLC and a party to this Agreement
(together, the "Shareholders") shall vote all of its, his or her shares of
voting securities issued by Mariner LLC in favor of the nominees so nominated.
(b) Election of Replacement Directors. If any Management Director
shall cease to serve as a director as a result of his resignation, removal,
death or incapacity, then the vacancy created by that director's absence shall
be filled by an individual selected by the Management Shareholders in accordance
with subsection (d) of this Section A.2. Each Shareholder shall vote all of its,
his or her shares of voting securities issued by Mariner LLC in favor of the
nominees so nominated.
(c) Removal of Directors. The removal from office as a director of
any Management Director shall, in addition to any other requirement by Mariner
LLC's certificate of formation or limited liability company agreement, require
the approval of two of the Management Directors.
(d) Selection of Management Directors. The persons who shall
constitute the nominees for Management Directors shall be determined as follows:
(i) The initial Management Directors are Robert E. Henderson,
Richard R. Clark and Michael W. Strickler ("Initial Management
Directors");
(ii) As long as each Initial Management Director is an
employee of Mariner LLC, Mariner Holdings, Mariner Energy or a direct
or indirect subsidiary of Mariner LLC, Mariner Holdings or Mariner
Energy, is willing to serve as a director of Mariner LLC and is able
to serve as a director of Mariner LLC, he shall be named as a nominee
for election as a Management Director;
(iii) If any Initial Management Director (or his successor
selected in accordance with this subsection (d)) shall cease to serve
as a director as a result of his resignation, removal, death or
incapacity or because he no longer meets the requirements of
subparagraph (ii) above, then his directorship shall be filled by the
then-highest ranking
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executive officer of Mariner LLC who is not then serving as a
director of Mariner LLC; provided, however, that if as a result of
such selection there would then be no Management Director who was or
became a Management Shareholder as of June 27, 1996, then instead the
vacant directorship (and each successor) shall be filled by the
then-highest ranking executive officer of Mariner LLC who is not then
serving as a director and who was or became a Management Shareholder
as of June 27, 1996, and if there is no such person, then the vacant
directorship (and each successor) shall be filled by a person who is
then the holder of the highest number of Common Shares and who was or
became a Management Shareholder as of June 27, 1996 and is not
currently serving as a director of Mariner LLC; any such replacement
(or his successor) shall serve as long as he is willing to serve as a
director of Mariner LLC and is able to serve as a director of Mariner
LLC;
(iv) If any directorship to be held by a Management Director
cannot be filled as described above for any reason, then the
provisions of subparagraphs (a), (b) and (c) this Section A.2 shall
no longer apply to that directorship, which shall be filled by a
person nominated and elected in accordance with law and the
provisions of Mariner LLC's limited liability company agreement.
(e) Election of Other Directors. At any annual or special election of
directors and except with respect to the Management Directors, each Shareholder
shall vote all of its, his or her shares of voting securities issued by Mariner
LLC in favor of nominees (the "Enron Directors") named by JEDI. If any Enron
Director shall cease to serve as a director as a result of his resignation,
removal, death or incapacity, then each Shareholder shall vote all of its, his
or her shares of voting securities issued by Mariner LLC in favor of a
replacement nominee named by JEDI.
(f) Committees of the Board of Directors. If any executive committee
(or committee having similar functions) of the board of directors of Mariner LLC
is appointed, at least two members of that committee shall be Management
Directors. If any compensation committee (or committee having similar functions)
of the board of directors of Mariner LLC is appointed, at least one member of
that committee shall be a Management Director. At least one member of the
committee appointed pursuant to Mariner LLC's Share Option Plan (the "Option
Plan") shall be a person who is a Management Director. No Management Director
shall be appointed to any audit committee of the board of directors of Mariner
LLC.
(g) Election of Management Directors of Mariner LLC's Subsidiaries.
The provisions of this Section A.2 regarding the nomination, election,
replacement and removal of the Management Directors shall apply with respect to
each direct and indirect subsidiary of Mariner LLC, it being intended that the
Management Shareholders shall have the same representation on the boards of
directors of each such subsidiary as they have on the board of directors of
Mariner LLC. The provisions of this Section A.2 regarding the appointment of
Management Directors on committees of the board of directors of Holdings shall
apply with respect to each direct and indirect subsidiary of Mariner LLC, it
being intended that the Management Shareholders shall have the same
representation on committees of the boards of directors of each such subsidiary
as they have on the board of directors of Mariner LLC. For purposes of this
subsection A.2(g), references in subsections A.2(a)-(f) to Mariner LLC's
certificate of formation and limited liability company agreement shall
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be deemed to be references to the subject subsidiary's certification of
incorporation and bylaws, or analogous corporate governance documents.
A.3. CERTAIN BUSINESS OPPORTUNITIES.
Neither Mariner LLC nor any of its subsidiaries shall have any
obligation to bring, or otherwise share, any business opportunities with ECT,
Enron or any affiliate of ECT or Enron. Mariner LLC and its subsidiaries may
compete directly with ECT, Enron and their affiliates. ECT and each Shareholder
acknowledge that, and agree to and waive any right to complain as a result of
the fact that, Mariner LLC and its subsidiaries may, among other things, engage
in oil and gas exploration and development in competition with Enron, ECT and
their affiliates. For purposes of this Section A.3, a "business opportunity"
means any opportunity for a person (i) to enter into any transaction pursuant to
which the person would acquire (whether by purchase, lease or other
transaction), own, invest in, finance, lend funds to, contribute capital to,
manage, operate or otherwise participate in any person, assets or transaction,
or (ii) to act as a broker, finder, financial adviser or investment banker with
respect to any such transaction by any other person.
B. MATTERS RELATING TO INDEMNIFICATION OF MANAGEMENT SHAREHOLDERS
REGARDING CERTAIN TAX MATTERS
B.1. INDEMNITY.
(a) Obligations to Indemnify. Mariner LLC and each of its
subsidiaries shall, jointly and severally, indemnify, protect, save and hold
harmless, on a fully grossed-up, after tax basis, the Management Shareholders
(each an "Indemnified Management Shareholder") from and against any and all
federal, state and local income taxes, together with any interest thereon, any
penalties, additions to tax, fines and additional amounts with respect thereto
and any interest in respect of such penalties, additions to tax, fines or
additional amounts (each, a "Tax" and collectively, "Taxes") imposed on him or
her and caused by or resulting from (i) the failure of the transactions
described in Section B.1(c) of the Original Agreement to qualify for any reason
as a Tax-free exchange under Section 351 of the Internal Revenue Code of 1986,
as amended (the "Code") and (ii) the failure of the Exchange Offer to qualify
for any reason as a Tax-free exchange under Section 351 of the Code.
(b) Determination of Amounts. The amount of Taxes for which
indemnification is provided under subsection B.1(a): (i) shall be determined on
a marginal basis, by comparing the amount of Taxes that the Indemnified
Management Shareholder would have paid if the transactions described in Section
B.1(c) of the Original Agreement or consummated pursuant to the Exchange Offer
(as applicable, the "Relevant Transactions") had qualified as a Tax-free
exchange under Section 351 of the Code and the amount of Taxes that such
Indemnified Management Shareholder actually pays; and (ii) shall be increased to
take account of any net Tax cost incurred by the Indemnified Shareholder arising
from the receipt, payment or accrual of indemnity payments hereunder. In
computing the amount of any such Tax cost, the Indemnified Management
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Shareholder shall be deemed to recognize all other items of income, gain, loss,
deduction or credit before recognizing any item arising from the receipt or
accrual of any indemnity payment hereunder.
(c) Timing of Payments. Mariner LLC shall make indemnity payments
under this Section B.1 to the relevant Indemnified Management Shareholder five
days prior to the date on which the Indemnified Management Shareholder is
required to pay the relevant Tax to the relevant taxing authority, but in no
case earlier than 20 days after the date the relevant Indemnified Management
Shareholder notifies Mariner LLC in writing that such Tax is due and the amount
thereof.
B.2. TAX REFUNDS AND TAX BENEFITS.
(a) Tax Refunds. If a refund, credit or other offset to Tax (a "Tax
Refund") of any Taxes for which an Indemnified Management Shareholder has been
indemnified by Mariner LLC pursuant to subsection B.1(a) is actually realized by
such Indemnified Management Shareholder, such Indemnified Management Shareholder
shall pay over to Mariner LLC the amount of such Tax Refund (together with
interest received from the relevant taxing authority with respect thereto) no
later than five days after such Tax Refund is actually realized by such
Indemnified Management Shareholder.
(b) Tax Benefits. If the amount of Taxes payable by an Indemnified
Management Shareholder (or transferee of such Indemnified Management
Shareholder) with respect to a subsequent transaction or with respect to a
subsequent taxable period is less than the amount of Taxes such Indemnified
Management Shareholder (or transferee) would have paid absent the Relevant
Transactions as a result of a step-up in tax basis in the shares of common stock
of Mariner Holdings or the Common Shares resulting from the Relevant
Transactions failing to qualify as a tax-free exchange under Section 351 of the
Code (such reduction in Taxes payable, a "Tax Benefit"), then such Indemnified
Management Shareholder shall pay (or cause such transferee to pay) to Mariner
LLC the amount of such Tax Benefit no later than five days after the date such
Tax Benefit is actually realized by such Indemnified Management Shareholder (or
transferee, as the case may be).
(c) Actually Realized. For purposes of subsection B.2(b), an
Indemnified Management Shareholder shall be deemed to have "actually realized" a
Tax Refund, and an Indemnified Management Shareholder (or a transferee of an
Indemnified Management Shareholder, as the case may be), shall be deemed to have
"actually realized" a Tax Benefit, at the earlier of (i) the time such Tax
Refund or Tax Benefit is realized by such Indemnified Management Shareholder (or
transferee, as the case may be) in the form of a payment from the relevant
taxing authority or (ii) the time the Indemnified Management Shareholder (or
transferee, as the case may be) files a Tax return reflecting, or makes a
payment of, Taxes in an amount that is less than the amount of Taxes that would
have been payable by such Indemnified Management Shareholder (or transferee, as
the case may be).
B.3. TAX REPORTING. Except as otherwise provided in subsection B.4 with
respect to the resolution of a Tax Claim (as defined in subsection B.4) in
accordance with the procedures set forth therein, the parties jointly and
severally agree and acknowledge that the Relevant Transactions are
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intended to qualify as a tax-free exchange under Section 351 of the Code, and
shall not take any position before any taxing authority that is inconsistent
with such position.
B.4. CERTAIN PROCEDURES.
(a) Procedures Relating to Indemnification of Tax Claims. If any
taxing authority shall notify a party hereto that it is making a claim which, if
successful, might result in an indemnity payment by Mariner LLC or a subsidiary
to an Indemnified Management Shareholder pursuant to Section B.1 (a "Tax
Claim"), then such party shall give notice to Mariner LLC (or, if such party is
Mariner LLC, Mariner LLC shall give notice to each Management Shareholder) in
writing of such Tax Claim within five days of becoming aware of the existence of
such Tax Claim. Mariner LLC shall thereafter control at its sole risk and
expense all proceedings and may make all decisions taken in connection with such
Tax Claim (including selection of counsel and settlement thereof) and, without
limiting the foregoing, may in its sole discretion and at its sole risk and
expense pursue or forego any and all administrative appeals, proceedings,
hearings and conferences with any taxing authority with respect thereto, and
may, in its sole discretion, either pay the Tax claimed on behalf of the
relevant Indemnified Management Shareholder and sue for a refund where
applicable law permits such refund suits or contest or settle such Tax Claim in
any other permissible manner; provided, however, that (i) Mariner LLC shall not
have the authority to extend the statute of limitations with respect to any Tax
without the relevant Indemnified Management Shareholder's consent (which consent
shall not be unreasonably withheld) and (ii) Mariner LLC's control of any
contest or proceeding shall be limited to issues with respect to the Tax Claim
and the relevant Indemnified Management Shareholder shall be entitled to settle
or contest, in his or her sole and absolute discretion, any other issue raised
by the Internal Revenue Service or any other taxing authority. If Mariner LLC
elects to pay the relevant Tax on behalf of an Indemnified Management
Shareholder and sue for a refund, Mariner LLC shall indemnify and hold harmless
the Indemnified Management Shareholder (on a fully grossed-up, after-tax basis,
determined in a manner analogous to that described in Section B.1) for any
"taxes" (as defined in subsection B.4(c)) arising from such payment on such
Indemnified Management Shareholder's behalf. In addition, Mariner LLC shall
indemnify and hold harmless the Indemnified Management Shareholder (on a fully
grossed-up, after-tax basis, determined in a manner analogous to that described
in Section B.1) for any taxes arising from the payment of expenses by Mariner
LLC incident to such contest or proceeding of such Tax Claim (including without
limitation fees and disbursements of counsel and experts retained by Mariner
LLC. If a claim by a taxing authority involves multiple issues, the contest of
some of which are controlled by Mariner LLC hereunder, and the contest of others
of which are controlled by an Indemnified Management Shareholder hereunder, and
it is impossible to sever such issues, the choice of whether to pay the taxes
relating to such multiple issues and sue for a refund (where available) or,
instead, to contest such multiple issues without payment (such as in United
States Tax Court), shall be made by the party (Mariner LLC or the Indemnified
Management Shareholder) controlling the contest of the issues involving the
larger potential liability for taxes.
(b) Settlement. An Indemnified Management Shareholder shall not
settle any Tax Claim without the prior written consent of Mariner LLC. Each
party hereunder shall cooperate with the others in contesting any Tax Claim,
which cooperation shall include the granting of appropriate powers of attorney
to Mariner LLC, the retention and, upon request, the provision of records and
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information that are relevant to such Tax Claim, and making himself or herself
available to provide additional information or explanation of any material
provided hereunder or to testify at proceedings relating to such Tax Claim, and
keeping the other parties reasonably informed of all developments, written
materials, and events relating to such Tax Claim. If Mariner LLC requests an
Indemnified Management Shareholder pursuant to this subsection B.4(b) to perform
a particular task, Mariner LLC shall reimburse such Indemnified Management
Shareholder (on a fully grossed-up, after-tax basis determined in a manner
analogous to that described in subsection B.1(a)) for any necessary, reasonable
and customary out-of-pocket expenses incurred by such Indemnified Management
Shareholder in complying with such request.
(c) Definition of Tax. For purposes of this Section B.4, the terms
"tax" and "taxes" mean any and all federal, state and local taxes of any kind
whatsoever (including, but in no way limited to, income taxes), together with
any interest thereon, any penalties, additions to tax, fines or additional
amounts with respect thereto and any interest in respect to such penalties,
additions to tax, fines or additional amounts.
C. MATTERS RELATING TO CERTAIN EMPLOYMENT AGREEMENTS
AND BENEFITS
C.1. EMPLOYEE BENEFIT PLANS. For at least three years after June 27, 1996, the
parties to this Agreement shall cause Mariner Energy to continue the employee
benefit plans described on EXHIBIT 7 to this Agreement on the same terms and
conditions as in effect on May 16, 1996; provided, however, that those plans may
be amended, revised, merged and replaced if such action is required (or required
to maintain the plan's qualified status, if applicable) under the Code, the
Employee Retirement Income Security Act or applicable federal or state law and
regulations promulgated thereunder; provided further, however, that if any such
amendment, revision, merger or replacement results in a reduction in,
discontinuance of or disallowance of any Management Shareholders' participation
in or continued participation in, any plan, Mariner LLC shall take such steps as
are necessary or advisable to provide such Management Shareholders, in the
aggregate, with benefits reasonably comparable to those provided to such
Management Shareholder prior to such reduction, discontinuance or disallowance.
C.2. OVERRIDING ROYALTY INTERESTS. At all times while this Agreement is in
effect, the aggregate overriding royalty interests to be held by or due to David
S. Huber and employees of Mariner Energy (excluding Alan K. Hadfield) pursuant
to their employment agreements with Mariner Energy or otherwise shall not exceed
an aggregate of 1-1/2% before Payout (as defined in such agreements) and an
aggregate of 6% after Payout, proportionately reduced to the Company Group's
Working Interest (as defined in such agreements), and the aggregate overriding
royalty interest to be held by or due to Alan K. Hadfield and other consultants
(excluding David S. Huber) pursuant to their consulting services agreement with
Mariner Energy or otherwise shall not exceed an aggregate of 1-1/2% before
Payout and an aggregate of 1-1/2% after Payout, proportionately reduced to the
Company Group's Working Interest, in each case subject to the adjustments,
including without limitation those described in Sections 9.4.8(a), 9.4.8(b),
9.4.9 and 9.5, provided for in such
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employment agreements and the comparable provisions in such consulting services
agreements; provided, however, that the aggregate overriding royalty interests
held by and due to employees and consultants in a prospect owned by Mariner
Energy as of April 2, 1996, shall not be increased except as provided in such
employment or consulting services agreement. The division from time to time
while this Agreement is in effect among employees and consultants of the
percentages described in the foregoing sentence will be determined by the
Compensation Committee of the board of directors of Mariner Energy based on the
recommendation of the chief executive officer of Mariner Energy.
D. MATTERS RELATING TO ACQUISITION AND DISPOSITION OF SHARES
D.1. COMPLIANCE WITH SECURITIES LAWS.
(a) Representations. Each of the Shareholders represents to Mariner
LLC and its subsidiaries and to all other Shareholders that as of the date the
Shareholder acquired or acquires any securities issued by Mariner LLC or its
subsidiaries, (i) those securities are and were acquired for that Shareholder's
own account, for investment and not with a view to any distribution (except as
set forth below with respect to JEDI's shares), (ii) the Shareholder's financial
and other circumstances are such that the Shareholder can foresee no situation
in which the Shareholder may be required to sell the securities, and (iii)
Mariner LLC or its subsidiaries have furnished the Shareholder with such
financial and other information as the Shareholder may reasonably request to
enable the Shareholder to make an informed decision concerning the acquisition.
Each Shareholder understands that no securities issued by Mariner LLC or any of
its subsidiaries have been registered under the Securities Act of 1933 or under
the securities laws of any other jurisdiction. Each Shareholder understands
that, except with respect of the provisions of Section D.4. of this Agreement,
neither Mariner LLC nor any of its subsidiaries is under any obligation to take
any action to register any securities under any securities laws and that
exemptions under applicable securities laws may not be available in connection
with any Disposition (as defined below) of these securities. For purposes of
this Agreement, a "Disposition" means any transfer, pledge, mortgage or other
encumbrance, or any other disposition, of securities issued by Mariner LLC or
its subsidiaries (or any interest in those securities), whether voluntary or
involuntary, whether during the lifetime of the Shareholder making the
Disposition or on the death of the Shareholder, as applicable. JEDI may make a
Disposition of its Common Shares from time to time in accordance with the
provisions of Section D.3. of this Agreement, but any such Disposition shall be
made in compliance with the provisions of this Section D.1.
(b) Agreements. No Shareholder shall make a Disposition of any Common
Shares unless there is furnished to Mariner LLC an opinion of counsel reasonably
satisfactory in form and substance to Mariner LLC that registration of the
Common Shares which are the subject of the Disposition is not required under
applicable securities laws or unless the requirement contained in this
subparagraph (b) is waived in writing by Mariner LLC.
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(c) Stock Certificates. Each certificate representing Common Shares
shall bear an appropriate legend covering the matters described in this Section
D.1. and other provisions of this Agreement.
D.2. PREEMPTIVE RIGHTS TO ACQUIRE ADDITIONAL SECURITIES.
(a) Offer to Certain Shareholders. If Mariner LLC proposes to issue,
sell or grant any of its capital shares or any right, warrant, option,
convertible security or exchangeable security, or indebtedness or other rights
exercisable for or convertible into, or exchangeable for, directly or
indirectly, any capital stock of Mariner LLC ("capital stock equivalents"), then
Mariner shall, no later than 16 days before the consummation of any such
issuance, sale or grant (collectively, any "Issuance") give written notice to
each Shareholder of the proposed Issuance. The notice shall describe the
proposed Issuance, identify the proposed purchasers, and contain an offer to
each Shareholder to sell to such Shareholder, at the same price and for the same
consideration to be paid by the proposed purchasers, the Shareholder's pro rata
portion (which is the ratio of the number of shares of fully diluted Common
Shares owned by the Shareholder immediately before such Issuance to the total
number of shares of fully diluted Common Shares owned by all Shareholders
immediately before such Issuance) of such capital shares and capital share
equivalents included in such Issuance, subject to the provisions of this Section
D.2. Each Shareholder shall have a right of over-allotment to the effect that if
any Shareholder fails to exercise its, his or her rights under this Section D.2.
to purchase its, his or her pro rata portion, the other Shareholders may
purchase the nonpurchasing Shareholder's portion on a pro rata basis or on such
other basis as the Shareholders who are purchasing securities pursuant to the
offer shall agree.
(b) Responses to Offer. Any Shareholder desiring to exercise an
over-allotment right shall so indicate in its response to Mariner LLC. Any
Shareholder desiring to purchase a portion or all of the Issuance shall indicate
its, his or her acceptance of Mariner LLC's offer by written notice within 15
days after its or his receipt of Mariner LLC's notice pursuant to this Section
D.2. The Issuance of and payment for the securities so accepted shall be
consummated at a time (but no more than 60 days following the expiration of such
15-day period) and place within Houston, Texas, to be designated by Mariner LLC.
(c) Compliance with Securities Laws. If any Shareholder who has
elected to purchase a portion or all of the Issuance is not an accredited
investor (as that term is defined by applicable federal securities laws), then
Mariner LLC shall use all reasonable efforts to permit that Shareholder to
exercise its, his or her rights under this Section D.2 in compliance with
applicable securities laws, but Mariner LLC shall not be required to register
the Issuance to permit that Shareholder to purchase any part of the Issuance. To
the extent a Shareholder who wishes to purchase part of the Issuance is not able
to do so notwithstanding such reasonable efforts by Mariner LLC, that
Shareholder will not have the right to purchase any part of the Issuance,
notwithstanding the provisions of this Section D.2.
(d) Issuance of Unaccepted Securities. If the Shareholders
collectively fail, after taking into account exercises of over-allotment rights,
to elect to purchase all of the capital shares proposed to be issued, then
Mariner LLC may, within the 60 days following the expiration of such 15-day
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period, proceed with that portion of the Issuance that the Shareholders did not
elect to purchase, free of any right on the part of such Shareholder under this
Section D.2. in respect thereof.
(e) Exceptions. This Section D.2. shall not apply to (i) Issuances of
options to employees pursuant to the Option Plan and the exercise of those
options, (ii) capital shares or capital share equivalents issued pursuant to the
acquisition of a business entity or assets by way of merger, purchase of assets
or otherwise, (iii) capital shares or other securities issued in connection with
the Credit and Subordination Agreement dated as of September 2, 1998 between
Mariner Holdings (or its successor, including Mariner LLC) and ECT whereby
Mariner Holdings may issue up to 142,858 shares of Common Shares (subject to
adjustment based on antidilution adjustments provided for therein (the
"Conversion Shares"), (iv) Common Shares issued pursuant to the Exchange Offer,
and (v) Common Shares issued in an offering that is underwritten on a firm
commitment basis by a nationally recognized investment banking firm or in a
merger or other business combination involving Mariner LLC if immediately
thereafter Mariner LLC (or its successor) is subject to the reporting
requirements of Section 13 or Section 15 of the Securities Exchange Act of 1934
(in either case, an "Initial Public Offering").
D.3. TRANSFERABILITY OF COMMON SHARES.
(a) Transferability by Non-Management Shareholders. Each Shareholder
who is not a Management Shareholder has the right to transfer Common Shares,
subject only to the provisions of Section D.1 of this Agreement.
(b) Transferability by Management Shareholders. On or after May 16,
2001, a Management Shareholder shall have the right to transfer his or her
shares, subject only to the provisions of Section D.1 of this Agreement. Until
the expiration of May 16, 2001, a Management Shareholder may not voluntarily
transfer his or her Common Shares unless they are transferred to a family member
or to another Management Shareholder. However, a Management Shareholder shall
have the right at any time to make a bona fide pledge or mortgage of his or her
shares. Any transfer of Common Shares resulting from the death, divorce,
bankruptcy or foreclosure of any pledged shares shall not be deemed to be a
voluntary transfer. The Management Shareholders may enter into any such
agreement among themselves regarding their rights to purchase and sell each
other's shares as they deem appropriate. The provisions of this subsection
D.3(b) shall not be deemed to have applied to the exchange of common stock of
Mariner Holdings for Common Shares pursuant to the Exchange Offer.
(c) Tagalong Rights.
1. Requirement to Send Tagalong Notice. If any Shareholder or
group of Shareholders proposes to sell or exchange Common Shares in
one transaction or a series of related transactions that will result
in any person who is not a Financial Participant (as defined below),
together with that person's affiliates, or any group (as such term is
used under Section 13(d)(3) of the Securities Exchange Act of 1934
and provided that no person shall be deemed a member of
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a group solely because he is a party to this Agreement) of persons
that has any member that is not a Financial Participant, together
with the affiliates of the members of the group (the "Acquiring
Persons"), beneficially owning at least 30 percent of the outstanding
Common Shares, then the proposing Shareholder or Shareholders (the
"Selling Shareholders") shall give a written notice (the "Tagalong
Notice") to each Management Shareholder describing the consideration
proposed to be paid per Common Share in the proposed transaction and
including a true and complete copy of the agreement (the "Acquisition
Agreement") pursuant to which the shares would be acquired. A
"Financial Participant" shall mean an entity that represents and
warrants in writing to the Selling Shareholders and to Mariner LLC
that (i) as to that part of the entity's business engaged in or
relating to, directly or indirectly, the oil and gas industry, the
entity is primarily engaged in investing, including without
limitation by way of purchase of debt or equity securities, in other
entities, which may include oil and gas companies, and (ii) the
entity is not the operator of any oil and gas wells and does not have
a significant oil and gas management team, including geologists and
production engineers.
2. Exceptions to Requirements. The provisions of this
subsection D.3(c) shall not apply (1) if the Acquiring Person is ECT
or Mariner LLC or any entity controlled, directly or indirectly, by
ECT or Mariner LLC or (2) if Mariner LLC has consummated an Initial
Public Offering.
3. Tagalong Rights. Notwithstanding Section D.3(b) hereof,
(1) If the proposed transaction would result
in the beneficial ownership by the Acquiring Persons
of at least 30 percent but less than 50 percent of
the outstanding Common Shares, then each Management
Shareholder shall have the right to include in the
proposed transaction a number of shares equal to the
product of (a) the aggregate number of shares to be
sold by the Selling Shareholders in the proposed
transaction and (b) a fraction with a numerator equal
to the number of shares of Common Shares owned by
such Management Shareholder plus the number of Common
Shares acquirable by such Management Shareholder upon
the
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exercise of share options granted to such Management
Shareholder under the Option Plan (whether then
vested or not) and a denominator equal to the number
of Common Shares owned in the aggregate by all
Shareholders plus all the shares acquirable by the
Management Shareholders under the Option Plan
(whether then vested or not); and
(2) if the proposed transaction would result
in the beneficial ownership by the Acquiring Persons
of at least 50 percent of the outstanding Common
Shares, then each Management Shareholder shall have
the right to include in the proposed transaction a
number of shares equal to the total number of Common
Shares owned by such Management Shareholder at the
time of the closing of the proposed transaction plus
the number of Common Shares acquirable by such
Management Shareholder upon the exercise of share
options granted to such Management Shareholder under
the Option Plan (whether vested or not), to the
extent such options are exercised at the time of the
closing of the proposed transaction; provided, that,
if the proposed transaction would result in the
beneficial ownership by the Acquiring Persons of at
least 50 percent of the outstanding Common Shares, in
no event shall a Management Shareholder be entitled
to sell more than the number of shares such that
after such sale such Management Shareholder would
beneficially own (after taking into account Common
Shares acquirable by such Management Shareholder upon
the exercise of share options granted to such
Management Shareholder under the Option Plan (whether
then vested or not)) less than the number of shares
that, when divided by the total number of Common
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Shares owned at the Management Closing Time or
thereafter acquired by such Management Shareholder
plus the number of Common Shares acquirable by such
Management Shareholder upon the exercise of options
granted to such Management Shareholder under the
Option Plan (whether then vested or not), would equal
the quotient of (x) the number of Common Shares owned
by ECT, JEDI or any entity controlled, directly or
indirectly, by ECT, immediately after the proposed
transaction, divided by (y) the number of Common
Shares owned by JEDI as of June 27, 1996.
4. Consideration in the Form of Securities. If the
consideration to be received in the proposed transaction includes any
securities and if any Management Shareholder who has exercised his
right to include Common Shares in the proposed transaction is not an
accredited investor (as that term is defined by applicable federal
securities laws), then Mariner LLC and the Shareholders who are
participating in the proposed transaction shall use all reasonable
efforts to permit that Management Shareholder to participate in the
proposed transaction in compliance with applicable securities laws;
to the extent such participation is not possible notwithstanding such
reasonable efforts, then Mariner LLC and the Shareholders who are
participating in the proposed transaction shall cause the shares to
be acquired by the Management Shareholder that is not an accredited
investor to be registered to enable the Management Shareholder to
acquire such securities. Notwithstanding the obligations described in
the immediately preceding sentence, the Shareholders participating in
the proposed transaction may, instead of satisfying such obligations,
require the purchaser in the proposed transaction to pay one or more
such nonaccredited investors the cash value of the securities
otherwise issuable in the proposed transaction, such value to be
determined by an independent investment banking company engaged by
Mariner LLC, at its expense.
5. Acceptance of Tagalong Offer. Each Management Shareholder
who wishes to include his or its Common Shares in the proposed
transaction in accordance with the terms of this Section D.3(c) shall
so notify the Selling Shareholders not more than 14 days after the
date the Tagalong Notice is sent to the Management
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Shareholders. The participation of any Management Shareholder in the
proposed transaction shall be conditioned upon the Management
Shareholder's (i) execution of an agreement substantially similar to
the Acquisition Agreement whereby the Management Shareholder would
make representations and warranties comparable to those to be made by
the Selling Shareholders, but with respect to representations and
warranties particular to the Selling Shareholders or the Common
Shares owned by them, a Management Shareholder shall be required only
to provide comparable representations and warranties concerning such
Management Shareholder and the shares owned by such Management
Shareholder and (ii) agreeing to use his reasonable efforts to assist
in consummating the proposed transaction.
6. Obligations of Selling Shareholders upon Acceptance of
Tagalong Offer. If any Management Shareholder elects to participate
in the proposed transaction, the Selling Shareholders shall use their
reasonable efforts to cause the other party or parties to the
transaction to acquire from such Management Shareholder the number of
Common Shares that such Management Shareholder is entitled to include
in the transaction under this Section D.3(c), on the same terms and
conditions applicable to the Selling Shareholders. If, however, such
other parties are for any reason unwilling or unable to purchase the
aggregate number of shares from the Selling Shareholders as well as
such Management Shareholder, then the Selling Shareholders shall
reduce, to the extent necessary, the number of shares they otherwise
would have sold in the proposed transaction so as to permit the
Management Shareholders who have properly elected to participate in
such transaction to sell the number of shares they are entitled to
sell under this Section D.3(c).
7. Alternative Pricing in Certain Events. If the proposed
transaction would result in the beneficial ownership by the Acquiring
Persons of 50 percent or more of the outstanding Common Shares, and
if that transaction is one of two or more related transactions, the
purpose of which is to minimize the benefits otherwise available to
the Management Shareholders under this Section D.3(c), then each
Management Shareholder participating in the proposed transaction
shall be entitled to receive, and the Selling Shareholders shall pay
to each Management Shareholder participating in the proposed
transaction, the excess, if any, of (a) the product of (i) the number
of shares to be acquired from a Management Shareholder in the
proposed transaction and (ii) the average per-share price (or value)
received or to be received by the Selling Shareholders for all Common
Shares sold or exchanged in all such related transactions, over (b)
the product of (i) the number of shares to be acquired from the
Management Shareholder
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in the proposed transaction and (ii) the per-share price (or value)
to be received by the Selling Shareholders in the proposed
transaction.
8. Closing. At the closing of the proposed transaction, each
participating Shareholder shall deliver to the acquiring party in the
transaction certificates representing the shares to be purchased duly
endorsed for transfer or accompanied by duly executed stock powers or
assignments, free and clear of all liens, encumbrances and adverse
claims with respect thereto.
9. Special Provisions for Options. Notwithstanding the terms
of the Option Plan or the option agreements issued thereunder, each
Management Shareholder shall be entitled to exercise unvested options
to the extent, but only to the extent, necessary to allow the
Management Shareholder to sell Common Shares such Management
Shareholder is actually selling pursuant to this Section D.3(c) (it
being the intent of the parties that a participating Management
Shareholder first sell Common Shares he already owns, then Common
Shares issuable on exercise of options then vested, and finally, if
necessary, Common Shares issuable on exercise of options not then
vested).
D.4. REGISTRATION RIGHTS.
(a) Demand Registration Rights of JEDI and ECT. At any time after the
expiration of 90 days after the consummation of an Initial Public Offering, JEDI
or ECT may request Mariner LLC to register under the Securities Act of 1933 (the
"Securities Act") all or any portion of its Common Shares. Promptly following
the receipt of a notice from JEDI or ECT pursuant to this subparagraph (a),
Mariner LLC shall notify each other Shareholder (including JEDI or ECT as the
case may be) of the receipt of the notice and shall use its best efforts to
register under the Securities Act the Common Shares specified in the notice from
JEDI or ECT and any Common Shares then held by the other Shareholders as
specified in any notices received from those other Shareholders not later than
the fifth day after receipt of the notice sent by Mariner LLC. Mariner LLC shall
be obligated to register Common Shares pursuant to this subparagraph (a) in
respect of a request by JEDI on three occasions only and in respect of a request
by ECT on one occasion only. However, Mariner LLC shall not be obligated to
prepare and file any registration statement pursuant to this subparagraph (a),
or to prepare or file any amendment or supplement thereto, at any time when
Mariner LLC, in the good faith judgment of its board of directors, expressed by
resolution specifying the reason therefor, reasonably believes that the filing
thereof at the time requested, or the offering of securities pursuant thereto,
would materially adversely affect a pending or proposed public offering of
Mariner LLC's securities, or an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction or negotiations,
discussions or pending proposals with respect thereto. The filing of a
registration statement, or any amendment or supplement thereto, by Mariner LLC
may not be deferred pursuant to the provisions of the preceding sentence on more
than one occasion with respect to each demand registration right, nor may it be
deferred for more than 30 days after the abandonment or consummation of any of
the foregoing proposals or transactions or, in any event,
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for more than 90 days after Mariner LLC's receipt of notice from JEDI or ECT
under this subparagraph (a). However, if the deferral is with respect to any
effective registration statement the deferral may not extend beyond such date as
would reasonably be necessary to permit any post-effective amendment thereto to
become effective, and the time period set forth in clause (vii) of subparagraph
(d) below shall be extended for a period equal to the length of time of that
deferral.
(b) Piggy-Back Registration Rights of JEDI and the Management
Shareholders. If Mariner LLC proposes to register any Common Shares under the
Securities Act (except with the respect to registration statements filed on Form
S-8 or Form S-4 or such other forms as shall be prescribed under the Securities
Act for the same purposes as of those forms), it will at each such time, before
the filing of a registration statement in connection therewith give written
notice to all of the Shareholders of its intention so to do and, on the written
request (which must specify the number of Common Shares and the proposed manner
of their distribution for inclusion in the registration) of any of the
Shareholders delivered to Mariner LLC within five days of receipt of Mariner
LLC's notice, Mariner LLC will use its best efforts to cause any Common Shares
then held by the requesting Shareholders to be included in the shares to be
registered by the registration statement proposed to be filed by Mariner LLC,
all to the extent requisite to permit the sale or other disposition (in
accordance with the written request of the requesting shareholders) by such of
the Shareholders as have so requested registration. Nothing contained in this
subparagraph (b) shall, however, limit Mariner LLC's right to cancel, postpone
or withdraw any proposed registration. If any registration pursuant to this
subparagraph (b) shall be, in whole or in part, in connection with an
underwritten offering of Common Shares, any request by the Shareholders to
register Common Shares may, but need not, request that the Common Shares be
included in the underwriting on the same terms and conditions as the Common
Shares to be registered, if any, and sold through underwriters under the
registration. However, as a condition to that inclusion the requesting
Shareholders shall execute an underwriting agreement having such customary terms
as the underwriters shall request and if the managing underwriter determines and
advises in writing that the inclusion in the underwriting of all Common Shares
proposed to be included by the requesting Shareholders and any other Common
Shares sought to be registered by any other Shareholder of Mariner LLC
exercising rights comparable to those of the Shareholders under this subsection
(b) ("Other Common Shares") would interfere with the successful marketing of the
securities proposed to be registered for underwriting by Mariner LLC or by any
holder of Common Shares having the right to require Mariner LLC to file a
registration statement to register Common Shares, then the number of Common
Shares and Other Common Shares requested to be included in the underwriting
shall be reduced pro rata among the Shareholders and the holders of Other Common
Shares requesting such registration and inclusion in the underwriting and may,
in the determination of the managing underwriter and consistent with the pro
rata reduction, be reduced to zero. If Mariner LLC has an underwritten offering
of Common Shares and the requesting Shareholders' Common Shares is registered in
the registration statement for the offering but the requesting Shareholders do
not for any reason sell any of their Common Shares to the underwriter for
Mariner LLC in connection with the offering, the Shareholders shall refrain from
selling their Common Shares during the period of distribution of Mariner LLC's
equity securities by the underwriter and the period in which the underwriter
participates in the after-market. However, any such Shareholders shall be
entitled to sell their shares in connection with the registration commencing on
the 90th day after the effective date of the registration.
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(c) Special Demand Registration Right of JEDI. If no Initial Public
Offering has been consummated by the fifth anniversary of [April 1, 1996], then
at any time thereafter, any person who at the time of the request described
below owns at least 30% of the outstanding Common Shares and who is JEDI or an
assignee of JEDI (the "30% Shareholder") may request Mariner LLC to register
under the Securities Act all or any portion of its Common Shares. Promptly
following receipt of a notice from the 30% Shareholder pursuant to this
subparagraph (c), Mariner LLC shall notify each other Shareholder of the receipt
of the notice and shall use its best efforts to register under the Securities
Act, for public sale pursuant to such distribution, the Common Shares specified
in the notice from the 30% Shareholder and any Common Shares issued to the other
Shareholders as specified in any notices received from the other Shareholders no
later than the fifth day after receipt of the notice sent by Mariner LLC.
Mariner LLC shall be obligated to register stock pursuant to this subparagraph
(c) on one occasion only. However, Mariner LLC shall not be obligated to prepare
any registration statement pursuant to this subparagraph (c) or to prepare or
file any amendment or supplement thereto, at any time when Mariner LLC, in the
good faith judgment of its board of directors, expressed by resolutions
specifying the reason therefor, reasonably believes that the filing thereof at
the time of request, or the offering of securities pursuant thereto, would
materially adversely affect a pending or proposed public offering of Mariner
LLC's securities, or an acquisition, merger, recapitalization, consolidation,
reorganization or similar transaction or negotiations, discussions, or pending
proposals with respect thereto. The filing of a registration statement, or any
amendment or supplement thereto, by Mariner LLC may not be deferred pursuant to
the provisions of the preceding sentence on more than one occasion nor may it be
deferred for more than 30 days after the abandonment or consummation of any of
the foregoing proposals or transactions or, in any event, for more than 90 days
after Mariner LLC's receipt of notice from the 30% Shareholder under this
subparagraph (c). However, if the deferral is with respect to any effective
registration statement the deferral may not extend beyond such date as would
reasonably be necessary to permit any post-effective amendment thereto to become
effective, and the time period set forth in clause (vii) of subparagraph (d)
below shall be extended for a period equal to the length of time of that
deferral.
(d) Registration Responsibilities of Mariner LLC. Whenever Mariner
LLC is required by the provisions of this Section D.4 to use its best efforts to
effect the registration of stock under the Securities Act, Mariner LLC will,
subject to the other provisions of this Section D.4:
(i) as expeditiously as practicable, prepare and file with
the Securities and Exchange Commission (the "Commission") a
registration statement on the appropriate form with respect to the
shares to be registered and seek to cause the registration statement
to become and remain effective;
(ii) as expeditiously as practicable, prepare and file with
the Commission such amendments and supplements to the registration
statement and the prospectus used in connection therewith as may be
necessary to keep the registration statement effective and to comply
with the provisions of the Securities Act;
(iii) as expeditiously as practicable, furnish to each of the
persons registering shares pursuant to the registration statement and
to each underwriter, if any, such number of copies of a prospectus
and a preliminary prospectus in conformity with the requirements
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of the Securities Act, and such other documents as such persons and
underwriter may reasonably request to facilitate the public sale or
other disposition of the stock to be sold; however, the obligation of
Mariner LLC to deliver copies of prospectuses or preliminary
prospectuses to the sellers shall be subject to the receipt by
Mariner LLC of reasonable assurances from them that they will comply
with the applicable provisions of the Securities Act and of such
other securities laws as may be applicable in connection with any use
by them of any prospectuses or preliminary prospectuses;
(iv) as expeditiously as practicable, furnish at the request
of the Shareholders requesting registration, on the date that the
Common Shares are to be delivered to the underwriters for sale
pursuant to the registration or if the Common Shares are not being
sold through underwriters, on the date the registration statement
with respect to the Common Shares becomes effective (A) an opinion,
dated such date, of the independent counsel representing Mariner LLC
for the purposes of the registration, addressed to the underwriters,
if any, and to the Shareholders making the request, stating that the
registration statement has become effective under the Securities Act
and that (1) to the best of counsel's notice, no stop order
suspending the effectiveness of the registration statement has been
instituted or is pending or contemplated under the Securities Act;
(2) the registration statement, the related prospectus and each
amendment or supplement thereto, including all documents incorporated
by reference therein, comply as to form in all material respects with
the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder (except that counsel need
express no opinion as to financial statements or other financial or
reserve data contained or incorporated by reference therein); (3) no
facts have come to the attention of counsel that cause counsel to
believe (with customary qualifications) that either the registration
statement or the prospectus, or amendment or supplement thereto,
including all documents incorporated by reference therein, in light
of the circumstances under which they were made, contains any untrue
statement of a material fact or omits to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading (except that counsel need express no belief as
to financial statements or other financial or reserve data contained
or incorporated by reference therein or as to any information
provided by the selling Shareholders or any underwriter for inclusion
therein); (4) counsel does not know of any legal or governmental
proceedings, pending or contemplated required to be described in the
registration statement or prospectus, or any amendment or supplement
thereto, including all documents incorporated by reference therein,
that are not described as required, or of any contracts or documents
or instruments of a character required to be described in the
registration statement or prospectus, or any amendment or supplement
thereto, including all documents incorporated by reference therein,
or to be filed as exhibits to the registration statement that are not
described and filed as required; and (5) as to such other customary
matters as the underwriter or the selling Shareholders shall
reasonably request; and (B) a letter dated such date, from the
independent certified public accountants of Mariner LLC, addressed to
the underwriters, if any, and to the selling Shareholders making the
request, stating that they are independent certified public
accountants within the meaning of the Securities Act and that in the
opinion of the accountants, the financial statements and other
financial data of Mariner LLC included in the registration statement
or the prospectus, or
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any amendment or supplement thereto, including all documents
incorporated by reference therein, comply as to form in all material
respects with the applicable accounting requirements of the
Securities Act. The letter from the independent certified public
accountants shall cover also such other customary financial matters
(including information as to the period ending not more than five
business days before the date of the letter) with respect to the
registration in respect of which the letter is being given as the
underwriters, if any, or the selling Shareholders making request may
reasonably request;
(v) as expeditiously as practicable, use its best efforts to
register or qualify the Common Shares registered by the registration
statement under such other securities laws of such U.S. jurisdictions
as the underwriters, if any, or the selling Shareholders making the
request shall reasonably request (considering the nature and size of
the offering) and do any and all other acts and things that may be
necessary or desirable to enable the selling Shareholders making the
request to consummate the public sale or other disposition of the
Common Shares being registered in those jurisdictions. However,
Mariner LLC shall not be required to qualify to transact business as
a foreign corporation in any jurisdiction in which it otherwise would
not be required to be so qualified or to take any action that would
subject it to general service of process in any jurisdiction in which
it has not been so subject;
(vi) bear all Registration Expenses (as defined below) in
connection with all registrations under this Section D.4. However,
all Selling Expenses (as defined below) of Common Shares held by
selling Shareholders and all fees and disbursements of counsel for
selling Shareholders in connection with each registration pursuant to
this Section D.4 shall be born by the selling Shareholders pro rata
in proportion to the number of Common Shares covered by the
registration or in such other proportion as the selling Shareholders
may agree. For purposes of this subparagraph (d), expenses incurred
by Mariner LLC in complying with this Section D.4, including without
limitation all registration and filing fees, all printing expenses,
all fees and disbursements of counsel for Mariner LLC, all blue sky
fees and expenses and all fees and expenses of accountants for
Mariner LLC are referred to as "Registration Expenses". All
underwriting fees and discounts and selling commissions and fees and
expenses of any underwriters applicable to the sales in connection
with the registration are referred to as "Selling Expenses";
(vii) keep each registration pursuant to this Section D.4
effective for a period of 90 days or such shorter period of time
until the transfer or sale of all Common Shares so registered has
been completed; and
(viii) take such other action as is customary and reasonable in
connection with such registration.
(e) Indemnification by Mariner LLC. If Mariner LLC registers any
Common Shares under the Securities Act pursuant to this Section D.4, Mariner LLC
will indemnify and hold harmless each selling Shareholder, and any other person
who controls a selling Shareholder within the meaning of Section 15 of the
Securities Act, against any losses, claims, damages or liabilities, joint
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or severally, to which the selling Shareholder or the controlling person may
become subject under the Securities Act or otherwise, insofar as the losses,
claims, damages or liabilities or actions in respect thereof arise out of or are
based on any untrue statement or alleged statement of any material fact
contained, on the effective date thereof, in any registration statement under
which the Common Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained therein, or any amendment
thereof or supplement thereto, including all documents incorporated by reference
therein, or arise out of or are based on the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements not misleading, and will reimburse each such Shareholder and each
such controlling person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; however, Mariner LLC will not be liable in any such
case to the extent that such loss, claim, damage, or liability arises out of or
is based on an untrue statement or alleged untrue statement or omission or
alleged omission made in the registration statement, preliminary prospectus,
final prospectus or amendment or supplement, including all documents
incorporated by reference therein, in reliance on and in conformity with written
information furnished to Mariner LLC through an instrument duly executed by or
on behalf of any of the selling Shareholders or a controlling person of any of
the selling Shareholders specifically for use in the preparation thereof.
(f) Indemnification by Selling Persons. If Mariner LLC registers
Common Shares under the Securities Act pursuant to this Section D.4, each
selling Shareholder will severally indemnify and hold harmless Mariner and each
person, if any, who controls Mariner LLC within the meaning of Section 15 of the
Securities Act, each officer of Mariner LLC who signs the registration
statement, each director of Mariner LLC, and each underwriter, and each person
who controls any underwriter within the meaning of Section 15 of the Securities
Act, against any and all such losses, claims, damages, liabilities or actions
that Mariner LLC or such officer, director, underwriter or controlling person
may become subject to under the Securities Act or otherwise, and will reimburse
Mariner LLC, each such officer, director, underwriter and controlling person for
any legal or other expenses reasonably incurred by such party in connection with
investigating or defending such loss, claim, damage, liability or action, if
such loss, claim, damage, liability or action relates to a statement or omission
that was made in reliance on and in conformity with information furnished in
writing to Mariner LLC by or on behalf of such selling Shareholder specifically
for use in connection with the preparation of the registration statement or
prospectus. The selling Shareholders shall also indemnify each such underwriter
and each person who controls any such underwriter within the meaning of Section
15 of the Securities Act as may reasonably and customarily be requested by the
underwriters in connection with any underwritten offering of Common Shares, but
in no event shall any selling Shareholder be required to pay more under any
circumstances than the amount he or it receives from the proceeds of the sale of
his or its Common Shares pursuant to such indemnification provisions.
(g) Procedures for Indemnification. Promptly after receipt by any
indemnified person of notice of any claim or commencement of any action in
respect of which indemnity is to be sought against an indemnifying person
pursuant to subparagraph (e) or subparagraph (f) under this Section D.4, the
indemnified person shall notify the indemnifying person in writing of the claim
or commencement of an action and, subject to the provisions hereinafter stated,
in case any such action
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shall be brought against an indemnified person and the indemnifying person shall
have been notified of the same, the indemnifying person shall be entitled to
participate therein and, to the extent it shall wish to assume the defense
thereof, with counsel reasonably satisfactory to the indemnified person, and
after notice from the indemnifying person to the indemnified person of its
election to assume the defense thereof, the indemnifying person shall not be
liable to the indemnified person in connection with the defense thereof.
However, if there exists or will exist a conflict of interest that would make it
inappropriate in the reasonable judgment of the indemnified person for the same
counsel to represent both the indemnified person and the indemnifying person,
then the indemnified person shall be entitled to retain its own counsel at the
expense of the indemnifying person.
(h) Mariner LLC's Indemnification of Underwriters. To the extent
necessary to facilitate the sale of Common Shares and an underwritten offering
pursuant to a registration statement registering shares pursuant to this Section
D.4, Mariner LLC shall, in connection with any such sale, enter into an
agreement indemnifying the underwriter or underwriters and each other person, if
any, who controls the underwriter or underwriters in the registration from
liability under the Securities Act; however, the agreement shall be reasonable
and customary in scope and effect.
(i) Transferability of Registered Shares. The provisions of Section
D.1 of this Agreement relating to the transfer of Common Shares shall cease and
terminate as to any Common Shares that have been effectively registered under
the Securities Act and sold or otherwise disposed of in accordance with the
intended method of disposition by the selling Shareholder set forth in the
registration statement covering those shares. Whenever the time period
limitations and other conditions imposed by Rule 144 promulgated under the
Securities Act or any successor or similar rule or statute shall allow free
transferability of Common Shares, the Shareholder holding the Common Shares
bearing the restrictive legend as to which such conditions have terminated shall
be entitled to receive from Mariner LLC, without expense, a new stock
certificate not bearing the restrictive legend representing the Common Shares,
and the rights of the Shareholders as to registration provided for in this
Section D.4 shall terminate immediately upon their becoming so entitled with
respect to those shares.
D.5. AGREEMENT TO APPLY TO TRANSFERRED AND NEWLY ISSUED SHARES. No transfer of
any Common Shares shall be effected and no capital shares of Mariner LLC or
capital share equivalents shall be issued unless the transferee or issuee shall
have simultaneously entered into an addendum agreement in substantially the form
attached to this Agreement as EXHIBIT 8 ("Addendum Agreement") with Mariner LLC
on its own behalf and on behalf of the other Shareholders pursuant to the power
of attorney granted in Section D.6. of this Agreement. All provisions of this
Agreement shall continue to apply to any holders of those securities, it being
the intention of the parties to this Agreement that the provisions of this
Agreement shall be applicable to the securities issued by Mariner LLC, as well
as to the holders of those securities. However, the foregoing sentence shall not
apply to JEDI's right to name non-Management Directors pursuant to subsection
(e) of Section A.2 of this Agreement. All references to "Shareholder" in this
Agreement, shall include ECT, and ECT agrees to be bound as a non-Management
Stockholder, if and as long as ECT owns Common Shares, and the execution and
delivery of this Agreement by ECT shall be deemed to satisfy the requirements of
Subsection D.5 of this Agreement with respect to the issuance of the Conversion
Shares.
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D.6. POWER OF ATTORNEY. For the purpose of executing an Addendum Agreement, the
Shareholders appoint Mariner LLC as their agent and attorney to execute the
Addendum Agreement on their behalf and expressly bind themselves to the Addendum
Agreement by Mariner LLC's execution of that Agreement without further action on
their part.
E. GENERAL MATTERS RELATING TO THIS AGREEMENT
E.1. AMENDMENT. This Agreement may be amended by the parties only by an
instrument in writing signed by (a) the holders of two-thirds of the outstanding
Common Shares, (b) each Shareholder who holds, as of the effective date of the
amendment, at least ten percent of the then-outstanding Common Shares, (c) a
majority of the Management Directors and (d) at least one Management Director
who was or became a Management Shareholder as of June 27, 1996, and, if there is
no such person, at least one Management Shareholder who was or became a
Management Shareholder as of June 27, 1996 (unless no such person exists, in
which case the amendment need not be signed by the person described in this
clause (d)). However, no amendment shall impose any additional material
obligation on any party to this Agreement without that party's written consent.
For purposes of this Section E.1, a person who held shares of Mariner Holdings
common stock as of a specified date shall be a "Shareholder".
E.2. WAIVER. A party to this Agreement may (without the consent of any other
person) waive in writing any (i) obligation owed to him, her or it under this
Agreement by any other party to this Agreement or (ii) right he or it has in
this Agreement. A waiver may be made prospectively or retroactively. Any term or
provision of this Agreement may be waived in writing at any time by the party
entitled to its benefits. Any waiver of any term or condition of this Agreement
by any party shall not be construed as a waiver of any subsequent breach or
failure of the same term or condition, or waiver of any other term or condition
of this Agreement.
E.3. INCLUSIVENESS. This Agreement and the exhibits to this Agreement set forth
the entire understanding of the parties to this Agreement with respect to the
subject matter of this Agreement. This Agreement and the exhibits to this
Agreement supersede all existing agreements concerning the subject matter of
this Agreement.
E.4. NOTICES. Any notice or other communication required or permitted to be
given under this Agreement shall be in writing and may be mailed by certified
mail, return receipt requested (or by the most nearly comparable method if
mailed from or to a location outside of the United States), to the party to whom
it is to be given at the address of that party set forth at the end of this
Agreement under the signature of that party (or to another address that the
party shall have furnished in writing in accordance with the provisions of this
Section E.4), or sent by other means, with a copy to each of the other parties
to this Agreement. Any notice or other communication shall be dated as of the
date it is sent and shall be deemed given when sent in accordance with the
provisions of this Agreement.
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E.5. ASSIGNABILITY AND BINDING EFFECT. JEDI and the Management Shareholders may
transfer their Common Shares pursuant to the provisions of Section D.3 of this
Agreement, subject only to the provisions of Section D.1 of this Agreement
(relating to compliance with securities laws) and Section D.5 of this Agreement
(relating to transferees' execution and delivery of Addendum Agreements). Any
person becoming a holder of Common Shares shall be subject to the provisions of
this Agreement, in accordance with the terms of Section D.5 of this Agreement.
The provisions of this Agreement shall be binding on and inure to the benefit of
the successors and assigns of the parties to this Agreement.
E.6. NO THIRD PARTY BENEFICIARIES. This Agreement does not create, and shall not
be construed as creating, any rights enforceable by any person who is not or has
not become a party to this Agreement, except with respect to Enron and its
affiliates pursuant to subsection A.3(a) of this Agreement.
E.7. SEVERABILITY. If any provision of this Agreement is invalid, illegal or
unenforceable, the balance of this Agreement shall remain in full force and
effect, and if any provision is inapplicable to any person or circumstance, it
shall, nevertheless, remain applicable to all other persons and circumstances.
E.8. HEADINGS. The headings in this Agreement are solely for convenience of
reference and shall be given no effect in the construction or interpretation of
this Agreement.
E.9. COUNTERPARTS. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which shall constitute one
and the same instrument.
E.10. GOVERNING LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of Texas, without giving effect to
principles of conflict of laws (recognizing that Delaware corporate law or
limited liability company law, as applicable, will apply to matters relating to
the internal affairs of each party that is a Delaware entity).
E.11. TERMINATION. This Agreement shall terminate automatically upon (a) the
bankruptcy (whether by a court of competent jurisdiction or voluntarily) or
dissolution of Mariner LLC, (b) the occurrence of any event that reduces the
number of Shareholders to one, (c) the merger or consolidation of Mariner LLC
with a corporation or other business entity, if Mariner LLC is not the surviving
entity and if the Shareholders do not hold, directly or indirectly, at least 50%
of the outstanding voting stock of the surviving corporation, (d) the sale of
substantially all of the assets of Mariner LLC, Mariner Holdings or Mariner
Energy, (e) the acquisition by one person (or group of affiliated persons), not
affiliated with JEDI, of more than two-thirds of the outstanding Common Shares
unless (i) the holders of at least 90 percent of the then-outstanding Common
Shares elect not to terminate this Agreement and (ii) the non-termination of
this Agreement is approved by the Management Directors, (f) the consummation of
an Initial Public Offering, (g) the consummation of a business combination
pursuant to which Mariner LLC (or its successor) becomes (or its successor
becomes or is) a reporting company under Section 13 or Section 15 of the
Securities Exchange Act of 1934, or (h) May 16, 2006; provided, however, that if
this Agreement is terminated pursuant to clause (f) above, then Sections D.4
(regarding registration rights) and, to the extent
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applicable, this Section E shall continue in full force and effect until
terminated pursuant to another clause of this Section E.11; and provided further
that if this Agreement is terminated pursuant to any of clauses (a) through (h)
above, then Section B (relating to certain tax payments) and, to the extent
applicable, this Section E shall continue in full force and effect. No
termination of this Agreement shall affect any other agreement (including
without limitation any employment agreements with employees of Mariner Energy
and any stock option agreements with employees of Mariner Energy), except
pursuant to the specific terms of such other agreement.
E.12. AGREEMENT OF SPOUSES. The spouses of the Shareholders who are individuals
are fully aware of, understand and fully consent and agree to the provisions of
this Agreement and its binding effect on any community property interests they
may now or hereafter own, and agree that the termination of their marital
relationship for any reason shall not have the effect of removing any Common
Shares otherwise subject to the coverage this Agreement and that their
awareness, understanding, consent and agreement are evidenced by their signing
this Agreement.
E.13. ARBITRATION. If a dispute arises between any two or more parties to this
Agreement ("Disputing Parties") with respect to matters related to this
Agreement and the dispute cannot be settled through direct discussions, the
Disputing Parties shall first endeavor to settle the dispute in an amicable
fashion. If such efforts fail to resolve the dispute, the dispute shall, except
as otherwise provided in Section B.4 of this Agreement, be resolved as follows:
(a) Conduct of Arbitration. Except as provided in subsection (b)
below, any and all claims, demands, causes of action, disputes, controversies
and other matters in question arising out of or relating to this Agreement, any
provision hereof, the alleged breach thereof, or in any way relating to the
subject matter of this Agreement, whether such claims sound in contract, tort or
otherwise, at law or in equity, under state or federal law, whether provided by
statute or the common law, for damages or any other relief, shall be resolved by
binding arbitration pursuant to the Federal Arbitration Act in accordance with
the Commercial Arbitration Rules then in effect with the American Arbitration
Association (the "AAA"). The arbitration proceeding shall be conducted in
Houston, Texas. The arbitration may be initiated by any Disputing Party by
providing to the other Disputing Party or Parties a written notice of
arbitration specifying the claims, and the parties shall thereafter endeavor to
agree on an arbitrator. If within 30 days of the notice of initiation of the
arbitration procedure, the parties are unable to agree on an arbitrator, the
party requesting arbitration shall file a request with the AAA that the Houston
office of the AAA provide a list of potential arbitrators to each Disputing
Party. The Disputing Parties shall thereafter have 60 days to select an
arbitrator from such list, with such selection to be by mutual agreement. If the
Disputing Parties fail to select an arbitrator within such time by mutual
agreement, then any Disputing Party may request that the Chief Judge of the U.S.
District Court for the Southern District of Texas appoint an arbitrator and any
such appointment shall be binding. The arbitrator, utilizing the Commercial
Arbitration Rules of the AAA, shall within 120 days of his or her selection,
resolve all disputes between the parties. There shall be no transcript of the
hearings before the arbitrator. The arbitrator's decision shall be in writing,
but shall be as brief as possible. The arbitrator shall not assign the reasons
for his or her decision. The arbitrators' decision shall be final and
non-appealable to the maximum extent permitted by law. Judgment upon any award
rendered in any such arbitration proceeding may be entered by any federal or
state court having jurisdiction. This agreement to arbitrate shall be
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enforceable in either federal or state court. The enforcement of this agreement
to arbitrate and all procedural aspects of this agreement to arbitrate,
including but not limited to, the construction and interpretation of this
agreement to arbitrate, the issues subject to arbitration (i.e., arbitrability),
the scope of the arbitrable issues, allegations of waiver, delay or defenses to
arbitrability and the rules governing the conduct of the arbitration, shall be
governed by and construed pursuant to the Federal Arbitration Act and shall be
decided by the arbitrator. In deciding the substance of any such claims, the
arbitrator shall apply the substantive laws of the State of Texas (excluding
Texas choice-of-law principles that might call for the application of some other
State's law). It is expressly agreed that the arbitrator shall have no authority
to award treble, exemplary, or punitive damages under any circumstances
regardless of whether such damages may be available under Texas law, the parties
hereby waiving their right, if any, to recover treble, exemplary or punitive
damages in connection with any such claims.
(b) Injunctive Relief. Notwithstanding the agreement to arbitrate
contained in subsection (a) above, if any party wishes to seek a temporary
restraining order, a preliminary or temporary injunction or other injunctive
relief in connection with any or all such claims, demands, cause of action,
disputes, controversies and other matters in question arising out of or relating
to this Agreement, any provision hereof, the alleged breach thereof, or in any
way relating to the subject matter of this Agreement, whether such claims sound
in contract, tort or otherwise, at law or in equity, under state or federal law,
whether provided by statute or the common law, for damages or any other relief,
each party shall have the right to pursue such injunctive relief in court,
rather than by arbitration. The parties agree that such action for a temporary
restraining order, a preliminary or temporary injunction or other injunctive
relief will be brought in the State or federal courts residing in Houston,
Harris County, Texas.
(c) Payment of Expenses. Mariner LLC shall pay all costs and expenses
of any party to this Agreement (including, but not limited to, attorneys' fees,
the fees of the arbitrator and the AAA and any other related costs) for any
arbitration proceeding or legal action; provided, however, that if in any such
arbitration proceeding or legal action, the arbitrator or court, respectively,
determines that a Disputing Party has prosecuted or defended any issue in such
proceeding or action in bad faith, the arbitrator or court, respectively, may
allocate the portion of such costs and expenses relating to such issue between
the parties in any other manner deemed fair, equitable and reasonable by the
arbitrator or court, respectively.
E.14. INDEMNIFICATION OF OFFICERS AND DIRECTORS. Mariner LLC shall indemnify
each of the Representatives for all reasonable expenses incurred by him in
defending any suit, action or proceeding (or any suit, action or proceeding
threatened to be made) brought by or in the right of Hardy Oil & Gas plc, any of
its affiliates or any of their stockholders, whether civil, administrative or
investigative, by reason of the fact that the Representatives entered into this
Agreement or otherwise participated in the transactions contemplated by this
Agreement or the purchase by Mariner Holdings of shares of the common stock of
Mariner Energy from Hardy Oil & Gas plc. In no event shall Mariner LLC be
responsible for (a) any judgments, losses, damages, fines and penalties actually
incurred by the Representatives in connection with any such suit, action or
proceeding, except as expressly stated in the preceding sentence or (b) the
payment of any of the expenses contemplated by the preceding sentence if the
Representative is found guilty of, or pleads
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no contest to, or is finally determined to be liable in, an action for willful
misconduct, gross negligence or a knowing violation of any duty, contractual or
otherwise, owing by the Representative to Hardy Oil & Gas plc or any of its
affiliates. Expenses incurred by a Representative may be paid in advance of the
final disposition of any action, suit or proceeding, but it shall be a condition
to receipt of any amounts paid or payable in advance pursuant to this Section
E.14 that the Representative to whom the advance is to be made undertake to
repay all amounts so advanced if it shall ultimately be determined that the
Representative is not entitled to be indemnified hereunder. If more than one
Representative is involved in the same suit, action or proceeding, the
Representatives so involved will endeavor to use the same legal counsel in that
suit, action or proceeding insofar as practicable, as long as no conflict of
interest exists as a result thereof and as long as such counsel would not be
ethically prohibited from representing more than one Representative.
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IN WITNESS WHEREOF, the parties to this Agreement have caused this
Agreement to be executed on the date first above written.
ENRON CAPITAL & TRADE
Address for delivery RESOURCES CORP. ("ECT")
of Notice:
By: /s/ illegible
--------------------------------------------
1400 Smith Street Name:
Houston, Texas 77002 --------------------------------------
Attention: Brenda McGee, Specialist Title:
-------------------------------------
Address for delivery JOINT ENERGY DEVELOPMENT
of Notice: INVESTMENTS LIMITED PARTNERSHIP
c/o Enron Corp. By: ENRON CAPITAL MANAGEMENT LIMITED
1400 Smith Street PARTNERSHIP, ITS GENERAL PARTNER
Houston, Texas 77002
Telecopier No. (713) 646-3602 By: ENRON CAPITAL CORP.,
Telephone No. (713) 853-5259 ITS GENERAL PARTNER
Attention: Brenda McGee - 29th Floor
By: /s/ illegible
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
MARINER ENERGY LLC ("Mariner LLC")
Address for delivery
of Notice:
By: /s/ Robert E. Henderson
--------------------------------------------
580 WestLake Park Boulevard Name: Robert E. Henderson
Suite 1300 ------------------------------------------
Houston, Texas 77079-2638 Title: President
-----------------------------------------
MARINER HOLDINGS, INC. ("Mariner Holdings")
Address for delivery
of Notice:
By: /s/ Robert E. Henderson
--------------------------------------------
580 WestLake Park Boulevard Name: Robert E. Henderson
Suite 1300 ------------------------------------------
Houston, Texas 77079-2638 Title: President
-----------------------------------------
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Address for delivery
of Notice
580 WestLake Park Boulevard /s/ Robert E. Henderson
Suite 1300 -------------------------------
Houston, Texas 77079-2638 ROBERT E. HENDERSON
/s/ Michele Henderson
--------------------------------
Michele Henderson
Address for delivery
of Notice:
580 WestLake Park Boulevard /s/ Richard R. Clark
Suite 1300 --------------------------------
Houston, Texas 77079-2638 RICHARD R. CLARK
/s/ Stacy Clark
--------------------------------
Stacy Clark
Address for delivery
of Notice:
580 WestLake Park Boulevard /s/ Michael W. Strickler
Suite 1300 --------------------------------
Houston, Texas 77079-2638 MICHAEL W. STRICKLER
/s/ Juanita Strickler
--------------------------------
Juanita Strickler
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Address for delivery
of Notice:
580 WestLake Park Boulevard /s/ D. S. Huber
Suite 1300 --------------------------------
Houston, Texas 77079-2638 D. S. HUBER
/s/ Cynthia K. Huber
--------------------------------
Cynthia K. Huber
Address for delivery
of Notice:
/s/ William J. Anderson
- -------------------- --------------------------------
- -------------------- WILLIAM J. ANDERSON
- --------------------
- --------------------
/s/ Mary L. Lamont Anderson
--------------------------------
Mary L. Lamont Anderson
Address for delivery
of Notice:
/s/ Thomas M. Campbell
- -------------------- --------------------------------
- -------------------- THOMAS M. CAMPBELL
- --------------------
- --------------------
/s/ Ana L. Campbell
--------------------------------
Ana L. Campbell
Address for delivery
of Notice:
/s/ Donald M. Clement
- -------------------- --------------------------------
- -------------------- DONALD M. CLEMENT
- --------------------
- --------------------
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/s/ Allison S. Clement
--------------------------------
Allison S. Clement
Address for delivery
of Notice:
/s/ Ralph J. Dobbins
--------------------------------
RALPH J. DOBBINS
- --------------------
- --------------------
- -------------------- /s/ Linda N. Dobbins
- -------------------- --------------------------------
Linda N. Dobbins
Address for delivery
of Notice:
/s/ James M. Fitzpatrick III
- -------------------- --------------------------------
- -------------------- JAMES M. FITZPATRICK III
- --------------------
- --------------------
Address for delivery
of Notice:
/s/ James L. Gregory
--------------------------------
JAMES L. GREGORY
- --------------------
- --------------------
- -------------------- /s/ Gladys J. Gregory
- -------------------- --------------------------------
Gladys J. Gregory
Address for delivery
of Notice:
/s/ Alan K. Hadfield
- -------------------- --------------------------------
- -------------------- ALAN K. HADFIELD
- --------------------
- --------------------
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Address for delivery
of Notice:
/s/ Gregory K. Harless
--------------------------------
GREGORY K. HARLESS
- --------------------
- --------------------
- -------------------- /s/ Jill Carter Harless
- -------------------- --------------------------------
Jill Carter Harless
Address for delivery
of Notice:
/s/ William Hunt Hodge
- -------------------- --------------------------------
- -------------------- WILLIAM HUNT HODGE
- --------------------
- --------------------
/s/ Georgia Hodge
--------------------------------
Georgia Hodge
Address for delivery
of Notice:
/s/ William F. Howell
--------------------------------
- -------------------- WILLIAM F. HOWELL
- --------------------
- --------------------
- -------------------- /s/ Suzanne Howell
--------------------------------
Suzanne Howell
Address for delivery
of Notice:
- -------------------- /s/ Jacqueline S. Hudson
- -------------------- --------------------------------
- -------------------- JACQUELINE S. HUDSON
- --------------------
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Address for delivery
of Notice:
/s/ Barbara C. Kyse
- -------------------- --------------------------------
- -------------------- BARBARA C. KYSE
- --------------------
- --------------------
Address for delivery
of Notice:
/s/ Laurence J. Lapeze
--------------------------------
- -------------------- LAURENCE J. LAPEZE
- --------------------
- --------------------
- -------------------- /s/ Alisa Wynne Young
--------------------------------
Alisa Wynne Young
Address for delivery
of Notice:
/s/ Cory L. Loegering
- -------------------- --------------------------------
- -------------------- CORY L. LOEGERING
- --------------------
- --------------------
Address for delivery
of Notice:
/s/ Richard A. Molohon
--------------------------------
- -------------------- RICHARD A. MOLOHON
- --------------------
- --------------------
- -------------------- /s/ Nora Ann Molohon
--------------------------------
Nora Ann Molohon
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Address for delivery
of Notice:
/s/ Jerry L. Sheets
- -------------------- --------------------------------
- -------------------- JERRY L. SHEETS
- --------------------
- --------------------
/s/ Sonya M. Sheets
--------------------------------
Sonya M. Sheets
Address for delivery
of Notice:
/s/ Clinton D. Smith
- -------------------- --------------------------------
- -------------------- CLINTON D. SMITH
- --------------------
- --------------------
/s/ Linda A. Smith
--------------------------------
Linda A. Smith
Address for delivery
of Notice:
/s/ Ward H. Taylor
--------------------------------
- -------------------- WARD H. TAYLOR
- --------------------
- --------------------
- -------------------- /s/ Annelisi M. Taylor
--------------------------------
Annelisi M. Taylor
Address for delivery
of Notice:
/s/ Richard F. Weser
--------------------------------
- -------------------- RICHARD F. WESER
- --------------------
- --------------------
- -------------------- /s/ Joan Weser
--------------------------------
Joan Weser
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Address for delivery
of Notice:
/s/ Thomas E. Young
- -------------------- --------------------------------
- -------------------- THOMAS E. YOUNG
- --------------------
- --------------------
Address for delivery
of Notice:
/s/ Frederic L. Lettieri
- -------------------- --------------------------------
- -------------------- FREDERIC L. LETTIERI
- --------------------
- --------------------
--------------------------------
Address for delivery
of Notice:
/s/ Frank A. Pici
- -------------------- --------------------------------
- -------------------- FRANK A. PICI
- --------------------
- --------------------
--------------------------------
Address for delivery
of Notice:
/s/ Robert C. Strauss
--------------------------------
ROBERT C. STRAUSS
- --------------------
- --------------------
- --------------------
- --------------------
--------------------------------
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Address for delivery
of Notice:
/s/ D. Bruce Nevin
- -------------------- --------------------------------
- -------------------- D. BRUCE NEVIN
- --------------------
- --------------------
--------------------------------
Address for delivery
of Notice:
/s/ Steven W. Burt
- -------------------- --------------------------------
- -------------------- STEVEN W. BURT
- --------------------
- --------------------
--------------------------------
Address for delivery
of Notice:
/s/ James W. Anderson
- -------------------- --------------------------------
- -------------------- JAMES W. ANDERSON
- --------------------
- --------------------
--------------------------------
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Address for delivery
of Notice:
/s/ Richard W. Webb
- -------------------- --------------------------------
- -------------------- RICHARD W. WEBB
- --------------------
- --------------------
Address for delivery
of Notice:
/s/ Lindell V. McGuire
- -------------------- --------------------------------
- -------------------- LINDELL V. McGUIRE
- --------------------
- --------------------
--------------------------------
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