EXHIBIT 4.2
SWIFT ENERGY COMPANY,
AS ISSUER
AND
BANK ONE, NA
AS TRUSTEE
FIRST SUPPLEMENTAL INDENTURE
DATED AS OF APRIL 16, 2002
TO INDENTURE DATED AS OF APRIL 16, 2002
PROVIDING FOR ISSUANCE OF
9 3/8% SENIOR SUBORDINATED NOTES DUE 2012
TABLE OF CONTENTS
Page
SECTION 1. Creation of 9 3/8% Notes....................................................................2
SECTION 2. Definitions.................................................................................3
SECTION 3. Amendments to Article III of the Original Indenture........................................32
SECTION 4. Amendments to Article IV of the Original Indenture.........................................33
SECTION 5. Amendments to Article V the Original Indenture.............................................47
SECTION 6. Amendments to Article VI the Original Indenture............................................48
SECTION 7. Amendments to Article VII of the Original Indenture........................................49
SECTION 8. Amendments to Article IX of the Original Indenture.........................................49
SECTION 9. Amendments to Article X of the Original Indenture..........................................50
SECTION 10. Applicability of and Amendments to Article XI of the Original Indenture....................51
SECTION 11. Applicability of and Amendments to Article XII of the Original Indenture...................53
SECTION 12. Subsidiary Guaranties......................................................................54
SECTION 13. Governing Law..............................................................................61
SECTION 14. Counterparts...............................................................................61
SECTION 15. Supplemental Indenture Controls............................................................61
EXHIBIT A. Form of 9 3/8% Note.......................................................................A-1
EXHIBIT B. Form of Supplemental Indenture............................................................B-1
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FIRST SUPPLEMENTAL INDENTURE, dated as of April 16, 2002 (this "First
Supplemental Indenture"), to the Indenture dated as of April 16, 2002 (the
"Original Indenture") between
SWIFT ENERGY COMPANY, a Texas corporation, as
issuer (the "Company"), and BANK ONE, NA, as trustee (the "Trustee"). WHEREAS,
the Company and the Trustee have heretofore executed and delivered the Original
Indenture to provide for the issuance of its securities to be issued in one or
more registered series;
WHEREAS, Section 9.01 of the Original Indenture provides, among other
things, that the Company and the Trustee may without the consent of Holders
enter into Indentures supplemental to the Original Indenture to, among other
things, (a) add to, change or eliminate any of the provisions of the Original
Indenture in respect of one or more series of Debt Securities; provided,
however, that any such addition, change or elimination not otherwise permitted
under Section 9.01 shall (i) neither (A) apply to any Debt Security of any
series created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (B) modify the rights of the
Holder of any such previously issued Debt Security with respect to such
provision or (ii) shall become effective only when there is no such Debt
Security Outstanding and (b) establish the form or terms of Debt Securities of
any series as permitted by Sections 2.01 and 2.03;
WHEREAS, the Company desires to provide for the issuance of a new
series of Debt Securities to be designated as the "9 3/8% Senior Subordinated
Notes due 2012" (the "9 3/8% Notes"), and to set forth the terms that will be
applicable thereto.
WHEREAS, all action on the part of the Company necessary to authorize
the issuance of the 9 3/8% Notes under the Original Indenture and this First
Supplemental Indenture (the Original Indenture, as amended and supplemented by
this First Supplemental Indenture, being hereinafter called the "Indenture") has
been duly taken; and
WHEREAS, all acts and things necessary to make the 9 3/8% Notes, when
executed by the Company and authenticated and delivered by the Trustee as
provided in the Original Indenture, the legal, valid and binding obligations of
the Company, and to constitute these presents a valid and binding supplemental
indenture according to its terms binding on the Company, have been done and
performed, and the execution of this First Supplemental Indenture and the
creation and issuance under the Indenture of the 9 3/8% Notes have in all
respects been duly authorized, and the Company in the exercise of the legal
right and power vested in it, executes this First Supplemental Indenture and
proposes to create, execute, issue and deliver the 9 3/8% Notes.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
That, in order to establish the designation, form, terms and provisions
of, and to authorize the authentication and delivery of the 9 3/8% Notes and in
consideration of the acceptance of the 9 3/8% Notes by the Holders thereof and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
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SECTION 1. Creation of 9 3/8% Notes. Pursuant to Sections 2.01 and 2.03
of the Original Indenture, there is hereby created a new series of Debt
Securities designated as the "9 3/8% Senior Subordinated Notes due 2012",
limited in aggregate principal amount to $200,000,000 (which are hereinafter
defined as the "9 3/8% Notes" for purposes this First Supplemental Indenture).
The Trustee shall authenticate 9 3/8% Notes for original issue in the aggregate
principal amount of $200,000,000 (the "Original 9 3/8% Notes"). The Original
9 3/8% Notes shall be in the form specified in Exhibit A to this First
Supplemental Indenture, shall have the terms set forth therein and shall be
entitled to the benefits of the other provisions of the Original Indenture as
modified by this First Supplemental Indenture and specified herein.
With respect to any 9 3/8% Notes issued after the Issue Date (except
for 9 3/8% Notes authenticated and delivered upon registration of transfer of,
or in exchange for, or in lieu of, other 9 3/8% Notes pursuant to Section 2.07,
2.08, 2.09, 2.15 or 3.03) (the "Additional 9 3/8% Notes"), there shall be
established in or pursuant to a resolution of the Board of Directors of the
Company:
(a) that such Additional 9 3/8% Notes shall be issued as part
of the same or a different series as the Original 9 3/8% Notes;
(b) the aggregate principal amount of such Additional 9 3/8%
Notes which may be authenticated and delivered under the Indenture, which may be
in an unlimited aggregate principal amount or which may be in a limited
principal amount (except for Additional 9 3/8% Notes authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu of, other
9 3/8% Notes pursuant to Section 2.07, 2.08, 2.09, 2.15 or 3.03 and except for
Additional 9 3/8% Notes which, pursuant to Section 2.04, are deemed never to
have been authenticated and delivered hereunder);
(c) the issue price and issuance date of such Additional
9 3/8% Notes, including the date from which interest on such Additional 9 3/8%
Notes shall accrue;
(d) if applicable, that such Additional 9 3/8% Notes shall be
issuable in whole or in part in the form of one or more Global Securities and,
in such case, the respective depositories for such Global Securities, the form
of any legend or legends that shall be borne by any such Global Security in
addition to or in lieu of that set forth in Section 2.15 or Exhibit A and any
circumstances in addition to or in lieu of those set forth in the Indenture in
which any such Global Security may be exchanged in whole or in part for 9 3/8%
Notes registered, and any transfer of such Global Security in whole or in part
may be registered, in the name or names of Persons other than the depository for
such Global Security or a nominee thereof; and
(e) if applicable, that such Additional 9 3/8% Notes shall not
be registered under the Securities Act, but shall be issued pursuant to an
exemption from registration under the Securities Act bearing additional
appropriate legends and shall have the benefit of registration rights. Except as
set forth above, such Additional 9 3/8% Notes shall have the terms set forth in
Exhibit A to this First Supplemental Indenture and shall be entitled to the
benefits of the other provisions of the Original Indenture as modified by the
First Supplemental Indenture and specified herein.
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SECTION 2. Definitions.
(a) Capitalized terms used herein and not otherwise defined
shall have the respective meanings assigned thereto in the Original Indenture.
(b) Section 1.01 of the Original Indenture is amended and
supplemented by inserting or restating, as the case may be, in their appropriate
alphabetical position, the following definitions:
"Additional Assets" means:
(a) any Property (other than cash, Permitted Short-Term
Investments or securities) used in the Oil and Gas Business or any business
ancillary thereto;
(b) Investments in any other Person engaged in the Oil and Gas
Business or any business ancillary thereto (including the acquisition from third
parties of Capital Stock of such Person) as a result of which such other Person
becomes a Restricted Subsidiary in compliance with Section 4.19;
(c) the acquisition from third parties of Capital Stock of a
Restricted Subsidiary; or
(d) Permitted Business Investments.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, the remainder of:
(a) the sum of:
(1) discounted future net revenues from proved oil
and gas reserves of the Company and its Restricted
Subsidiaries calculated in accordance with SEC guidelines
before any state, federal or foreign income taxes, as
estimated by the Company and confirmed by a nationally
recognized firm of independent petroleum engineers in a
reserve report prepared as of the end of the Company's most
recently completed fiscal year for which audited financial
statements are available, as increased by, as of the date of
determination, the estimated discounted future net revenues
from:
(A) estimated proved oil and gas reserves
acquired since such year end, which reserves were not
reflected in such year end reserve report, and
(B) estimated oil and gas reserves
attributable to upward revisions of estimates of
proved oil and gas reserves since such year end due
to exploration, development or exploitation
activities, in each case calculated in accordance
with SEC guidelines (utilizing the prices utilized in
such year end reserve report),
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and decreased by, as of the date of determination, the estimated
discounted future net revenues from:
(C) estimated proved oil and gas reserves
produced or disposed of since such year end, and
(D) estimated oil and gas reserves
attributable to downward revisions of estimates of
proved oil and gas reserves since such year end due
to changes in geological conditions or other factors
that would, in accordance with standard industry
practice, cause such revisions, in each case
calculated in accordance with SEC guidelines
(utilizing the prices utilized in such year end
reserve report),
provided that, in the case of each of the determinations made pursuant
to clauses (A) through (D), such increases and decreases shall be as estimated
by the Company's petroleum engineers, unless there is a Material Change as a
result of such acquisitions, dispositions or revisions, in which event the
discounted future net revenues utilized for purposes of this clause (a)(1) shall
be confirmed in writing by a nationally recognized firm of independent petroleum
engineers,
(2) the capitalized costs that are attributable to
oil and gas properties of the Company and its Restricted
Subsidiaries to which no proved oil and gas reserves are
attributable, based on the Company's books and records as of a
date no earlier than the date of the Company's latest annual
or quarterly financial statements,
(3) the Net Working Capital on a date no earlier than
the date of the Company's latest annual or quarterly financial
statements, and
(4) the greater of the net book value or the
appraised value as estimated by independent appraisers of
other tangible assets (including, without duplication,
Investments in unconsolidated Restricted Subsidiaries) of the
Company and its Restricted Subsidiaries, as of a date no
earlier than the date of the Company's latest audited
financial statements. For these purposes, net book value shall
be determined as of a date no earlier than the date of the
Company's latest annual or quarterly financial statements, and
on a date no earlier than the date of the Company's latest
annual or quarterly financial statements;
(b) minus the sum of:
(1) minority interests,
(2) any net gas balancing liabilities of the Company
and its Restricted Subsidiaries reflected in the Company's
latest audited financial statements,
(3) to the extent included in (a)(1) above, the
discounted future net revenues, calculated in accordance with
SEC guidelines (utilizing the prices utilized in the Company's
year end reserve report), attributable to reserves that are
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required to be delivered to third parties to fully satisfy the
obligations of the Company and its Restricted Subsidiaries
with respect to Volumetric Production Payments (determined, if
applicable, using the schedules specified with respect
thereto), and
(4) the discounted future net revenues, calculated in
accordance with SEC guidelines, attributable to reserves
subject to Dollar-Denominated Production Payments that, based
on the estimates of production and price assumptions included
in determining the discounted future net revenues specified in
(a)(1) above, would be necessary to fully satisfy the payment
obligations of the Company and its Restricted Subsidiaries
with respect to Dollar-Denominated Production Payments
(determined, if applicable, using the schedules specified with
respect thereto).
If the Company changes its method of accounting from the full cost
method to the successful efforts method or a similar method of accounting,
"Adjusted Consolidated Net Tangible Assets" will continue to be calculated as if
the Company were still using the full cost method of accounting.
"Affiliate" of any specified Person means any other Person:
(a) that directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
such specified Person; or
(b) that beneficially owns or holds directly or indirectly 10%
or more of any class of the Voting Stock of such specified Person or of any
Subsidiary of such specified Person.
For the purposes of this definition, "control," when used with respect
to any specified Person, means the power to direct the management and policies
of such Person directly or indirectly, whether through the ownership of Voting
Stock, by contract or otherwise; and the terms "controlling" and "controlled"
have meanings correlative to the foregoing.
"Asset Sale" means, with respect to any Person, any transfer,
conveyance, sale, lease or other disposition (collectively, "dispositions," and
including dispositions pursuant to any consolidation or merger) by such Person
or any of its Restricted Subsidiaries in any single transaction or series of
transactions of:
(a) shares of Capital Stock or other ownership interests of
another Person (including Capital Stock of Restricted Subsidiaries and
Unrestricted Subsidiaries); or
(b) any other Property of such Person or any of its Restricted
Subsidiaries;
provided, however, that the term "Asset Sale" shall not include:
(a) the disposition of Permitted Short-Term Investments,
inventory, accounts receivable, surplus or obsolete equipment or other Property
(excluding the disposition of oil and gas in place and other interests in real
property unless made in connection with a Permitted Business Investment) in the
ordinary course of business;
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(b) the abandonment, assignment, lease, sublease or farm-out
of oil and gas properties, or the forfeiture or other disposition of such
properties pursuant to standard form operating agreements, in each case in the
ordinary course of business in a manner that is customary in the Oil and Gas
Business;
(c) the disposition of Property received in settlement of
debts owing to the Company or any Restricted Subsidiary as a result of
foreclosure, perfection or enforcement of any Lien or debt, which debts were
owing to the Company or any Restricted Subsidiary in the ordinary course of
business of the Company or such Restricted Subsidiary;
(d) any disposition that constitutes a Restricted Payment made
in compliance with Section 4.12;
(e) when used with respect to the Company, any disposition of
all or substantially all of the Property of the Company and its Restricted
Subsidiaries taken as a whole permitted pursuant to Article X;
(f) the disposition of any Property by the Company or a
Restricted Subsidiary to the Company or a Wholly Owned Subsidiary;
(g) the disposition of any Property with a Fair Market Value
of less than $2.0 million; or
(h) any Production Payments and Reserve Sales, provided that
any such Production Payments and Reserve Sales, other than incentive
compensation programs on terms that are reasonably customary in the Oil and Gas
Business for geologists, geophysicists and other providers of technical services
to the Company or a Restricted Subsidiary, shall have been created, Incurred,
issued, assumed or Guaranteed in connection with the financing of, and within 60
days after the acquisition of, the Property that is subject thereto.
"Average Life" means, with respect to any Indebtedness, at any date of
determination, the quotient obtained by dividing:
(a) the sum of the products of:
(1) the number of years (and any portion thereof)
from the date of determination to the date or dates of each
successive scheduled principal payment (including any sinking
fund or mandatory redemption payment requirements) of such
Indebtedness, multiplied by
(2) the amount of each such principal payment,
(b) by the sum of all such principal payments.
"Bank Credit Facilities" means, with respect to any Person, one or more
debt facilities or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, receivables or
inventory financing (including through the sale of receivables or inventory
financing to such lenders or to special purpose entities formed to borrow
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from such lenders against such receivables or inventory) or trade letters of
credit, in each case together with any extensions, revisions, refinancings or
replacements thereof by a lender or syndicate of lenders.
"Capital Lease Obligations" means any obligation that is required to be
classified and accounted for as a capital lease obligation in accordance with
GAAP, and the amount of Indebtedness represented by such obligation shall be the
capitalized amount of such obligation determined in accordance with GAAP, and
the Stated Maturity thereof shall be the date of the last payment date of rent
or any other amount due in respect of such obligation.
"Capital Stock" means, with respect to any Person, any shares or other
equivalents (however designated) of any class of corporate stock or partnership
interests or any other participations, rights, warrants, options or other
interests in the nature of an equity interest in such Person, including
Preferred Stock, but excluding any debt security convertible or exchangeable
into such equity interest.
"Change of Control" means the occurrence of any of the following
events.
(a) any "person" or "group" (within the meaning of Section
13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to either
of the foregoing, including any group acting for the purpose of acquiring,
holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under
the Exchange Act) becomes the "beneficial owner" (as defined in Rules 13d-3 and
13d-5 under the Exchange Act, except that a Person will be deemed to have
"beneficial ownership" of all shares that any such Person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time) of 40 percent or more of the total voting power of all classes of the
Voting Stock of the Company;
(b) the sale, lease, transfer or other disposition, directly
or indirectly, of all or substantially all the Property of the Company and the
Restricted Subsidiaries taken as a whole (other than a disposition of such
Property as an entirety or virtually as an entirety to any Wholly Owned
Subsidiary) shall have occurred;
(c) the shareholders of the Company shall have approved any
plan of liquidation or dissolution of the Company;
(d) the Company consolidates with or merges into another
Person or any Person consolidates with or merges into the Company in any such
event pursuant to a transaction in which the outstanding Voting Stock of the
Company is reclassified into or exchanged for cash, securities or other
Property, other than any such transaction where the outstanding Voting Stock of
the Company is reclassified into or exchanged for Voting Stock of the surviving
Person and the holders of the Voting Stock of the Company immediately prior to
such transaction own, directly or indirectly, not less than a majority of the
Voting Stock of the surviving Person immediately after such transaction in
substantially the same proportion as before the transaction; or
(e) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Company's Board of Directors
(together with any new directors whose election or appointment by such Board of
Directors or whose nomination for
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election by the shareholders of the Company was approved by a vote of a majority
of the directors then still in office who were either directors at the beginning
of such period or whose election or nomination for election was previously
approved by such vote) cease for any reason to constitute a majority of the
Company's Board of Directors then in office.
"Consolidated Interest Coverage Ratio" means, as of the date of the
transaction (the "Transaction Date") giving rise to the need to calculate the
Consolidated Interest Coverage Ratio, the ratio of:
(a) the aggregate amount of EBITDA of the Company and its
consolidated Restricted Subsidiaries for the four full fiscal quarters
immediately prior to the Transaction Date for which financial statements are
available; to
(b) the aggregate Consolidated Interest Expense of the Company
and its Restricted Subsidiaries that is anticipated to accrue during a period
consisting of the fiscal quarter in which the Transaction Date occurs and the
three fiscal quarters immediately subsequent thereto (based upon the pro forma
amount and maturity of, and interest payments in respect of, Indebtedness of the
Company and its Restricted Subsidiaries expected by the Company to be
outstanding on the Transaction Date), assuming for the purposes of this
measurement the continuation of market interest rates prevailing on the
Transaction Date and base interest rates in respect of floating interest rate
obligations equal to the base interest rates on such obligations in effect as of
the Transaction Date; provided, that if the Company or any of its Restricted
Subsidiaries is a party to any Interest Rate Protection Agreement that would
have the effect of changing the interest rate on any Indebtedness of the Company
or any of its Restricted Subsidiaries for such four quarter period (or a portion
thereof), the resulting rate shall be used for such four quarter period or
portion thereof; provided further that any Consolidated Interest Expense with
respect to Indebtedness Incurred or retired by the Company or any of its
Restricted Subsidiaries during the fiscal quarter in which the Transaction Date
occurs shall be calculated as if such Indebtedness was so Incurred or retired on
the first day of the fiscal quarter in which the Transaction Date occurs.
In addition, if at any time since the beginning of the four full fiscal
quarter period preceding the Transaction Date through and including the
Transaction Date:
(a) the Company or any of its Restricted Subsidiaries shall
have engaged in any Asset Sale, EBITDA for such period shall be reduced by an
amount equal to the EBITDA (if positive), or increased by an amount equal to the
EBITDA (if negative), directly attributable to the Property that is the subject
of such Asset Sale for such period calculated on a pro forma basis as if such
Asset Sale and any related retirement of Indebtedness had occurred on the first
day of such period; or
(b) (1) the Company or any of its Restricted Subsidiaries
shall have acquired or made any Investment in any material assets, or
(2) the transaction giving rise to the need to
calculate the Consolidated Interest Coverage Ratio is such an Investment or
acquisition.
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EBITDA shall be calculated on a pro forma basis as if such Investments
or asset acquisitions had occurred on the first day of such four fiscal quarter
period.
"Consolidated Interest Expense" means, with respect to any Person for
any period, without duplication:
(a) the sum of:
(1) the aggregate amount of cash and noncash interest
expense (including capitalized interest) of such Person and
its Restricted Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP in respect of
Indebtedness, including:
(A) any amortization of debt discount,
(B) net costs associated with Interest Rate
Protection Agreements (including any amortization of
discounts),
(C) the interest portion of any deferred
payment obligation,
(D) all accrued interest, and
(E) all commissions, discounts, commitment
fees, origination fees and other fees and charges
owed with respect to Bank Credit Facilities and other
Indebtedness paid , accrued or scheduled to be paid
or accrued during such period,
(2) Disqualified Stock Dividends of such Person (and
of its Restricted Subsidiaries if paid to a Person other than
such Person or its Restricted Subsidiaries) and Preferred
Stock Dividends of such Person's Restricted Subsidiaries if
paid to a Person other than such Person or its other
Restricted Subsidiaries,
(3) the portion of any obligation of such Person or
its Restricted Subsidiaries in respect of any Capital Lease
Obligation allocable to interest expense in accordance with
GAAP,
(4) the portion of any rental obligation of such
Person or its Restricted Subsidiaries in respect of any Sale
and Leaseback Transaction that is Indebtedness allocable to
interest expense (determined as if such obligation were
treated as a Capital Lease Obligation), and
(5) to the extent any Indebtedness of any other
Person (other than Restricted Subsidiaries) is Guaranteed by
such Person or any of its Restricted Subsidiaries, the
aggregate amount of interest paid, accrued or scheduled to be
paid or accrued by such other Person during such period
attributable to any such Indebtedness;
9
less
(b) to the extent included in (a) above, amortization or
write-off of deferred financing costs (other than debt discounts) of such Person
and its Restricted Subsidiaries during such period;
in the case of both (a) and (b) above, after elimination of
intercompany accounts among such Person and its Restricted Subsidiaries and as
determined in accordance with GAAP.
"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or net loss, as the case may be) of such Person and its
Restricted Subsidiaries for such period on a consolidated basis, determined in
accordance with GAAP; provided that there shall be excluded therefrom, without
duplication:
(a) items classified as extraordinary gains or losses net of
tax (less all fees and expenses relating thereto);
(b) any gain or loss net of taxes (less all fees and expenses
relating thereto) realized on the sale or other disposition of Property,
including the Capital Stock of any other Person (but in no event shall this
clause (b) apply to any gains or losses on the sale in the ordinary course of
business of oil, gas or other hydrocarbons produced or manufactured);
(c) the net income of any Restricted Subsidiary of such
specified Person to the extent the transfer to that Person of that income is
restricted by contract or otherwise, except for any cash dividends or cash
distributions actually paid by such Restricted Subsidiary to such Person during
such period;
(d) the net income (or loss) of any other Person in which such
specified Person or any of its Restricted Subsidiaries has an interest (which
interest does not cause the net income of such other Person to be consolidated
with the net income of such specified Person in accordance with GAAP or is an
interest in a consolidated Unrestricted Subsidiary), except to the extent of the
amount of cash dividends or other cash distributions actually paid to such
Person or its consolidated Restricted Subsidiaries by such other Person during
such period;
(e) for the purposes of Section 4.12 only, the net income of
any Person acquired by such specified Person or any of its Restricted
Subsidiaries in a pooling-of-interests transaction for any period prior to the
date of such acquisition;
(f) any gain or loss, net of taxes, realized on the
termination of any employee pension benefit plan;
(g) any adjustments of a deferred tax liability or asset
pursuant to Statement of Financial Accounting Standards No. 109 that result from
changes in enacted tax laws or rates;
(h) the cumulative effect of a change in accounting
principles;
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(i) any write-downs of non-current assets, provided that any
ceiling limitation write-downs under SEC guidelines shall be treated as
capitalized costs, as if such write-downs had not occurred; and
(j) any non-cash compensation expense realized upon issuance
of stock under an employee stock purchase plan or for grants of performance
shares, stock options or stock awards to officers, directors and employees of
the Company or any of its Restricted Subsidiaries.
"Consolidated Net Worth" of any Person means the stockholders' equity
of such Person and its Restricted Subsidiaries, as determined on a consolidated
basis in accordance with GAAP, less (to the extent included in stockholders'
equity) amounts attributable to Disqualified Stock of such Person or its
Restricted Subsidiaries.
"Default" means any event, act or condition the occurrence of which is,
or after notice or the passage of time or both would be, an Event of Default.
"Designated Senior Indebtedness" means:
(a) the Bank Credit Facilities; and
(b) any other Senior Indebtedness of the Company that has, at
the time of determination, an aggregate principal amount outstanding of at least
$10.0 million that is specifically designated in the instrument evidencing such
Senior Indebtedness and is designated in a notice delivered by the Company to
the holders or a Representative of the holders of such Senior Indebtedness and
the Trustee as "Designated Senior Indebtedness" of the Company.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock that by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable, in either case at the option of the
holder thereof) or otherwise:
(a) matures or is mandatorily redeemable pursuant to a sinking
fund obligation or otherwise;
(b) is or may become redeemable or repurchasable at the option
of the holder thereof, in whole or in part; or
(c) is convertible or exchangeable at the option of the holder
thereof for debt or any other Disqualified Stock;
on or prior to, in the case of clause (a), (b) or (c), the first
anniversary of the Stated Maturity of the 9 3/8% Notes.
"Disqualified Stock Dividends" means all dividends with respect to
Disqualified Stock of the Company held by Persons other than a Wholly Owned
Subsidiary. The amount of any such dividend shall be equal to the quotient of
such dividend divided by the difference between one and the maximum statutory
federal income tax rate (expressed as a decimal number between 1 and 0) then
applicable to the Company.
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"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"EBITDA" means with respect to any Person for any period, the
Consolidated Net Income of such Person for such period:
(a) plus the sum of, to the extent reflected in the
consolidated income statement of such Person and its Restricted Subsidiaries for
such period from which Consolidated Net Income is determined and deducted in the
determination of such Consolidated Net Income, without duplication:
(1) income tax expense (but excluding income tax
expense relating to sales or other dispositions of Property,
including the Capital Stock of any other Person, the gains
from which are excluded in the determination of such
Consolidated Net Income),
(2) Consolidated Interest Expense,
(3) depreciation and depletion expense,
(4) amortization expense,
(5) exploration expense (if applicable to the Company
after the Issue Date), and
(6) any other noncash charges including unrealized
foreign exchange losses (excluding, however, any such other
noncash charge that requires an accrual of or reserve for cash
charges for any future period);
(b) less the sum of, to the extent reflected in the
consolidated income statement of such Person and its Restricted Subsidiaries for
such period from which Consolidated Net Income is determined and added in the
determination of such Consolidated Net Income, without duplication:
(1) income tax recovery (excluding, however, income
tax recovery relating to sales or other dispositions of
Property, including the Capital Stock of any other Person, the
losses from which are excluded in the determination of such
Consolidated Net Income), and
(2) unrealized foreign exchange gains.
"Equity Offering" means a bona fide underwritten sale to the public of
common stock of the Company pursuant to a registration statement (other than a
Form S-8 or any other form relating to securities issuable under any employee
benefit plan of the Company) that is declared effective by the SEC following the
Issue Date.
12
"Exchanged Properties" means Properties used or useful in the Oil and
Gas Business received by the Company or a Restricted Subsidiary in trade or as a
portion of the total consideration for other such Properties.
"Exchange Rate Contract" means, with respect to any Person, any
currency swap agreements, forward exchange rate agreements, foreign currency
futures or options, exchange rate collar agreements, exchange rate insurance and
other agreements or arrangements, or any combination thereof, entered into by
such Person in the ordinary course of its business for the purpose of limiting
or managing exchange rate risks to which such Person is subject.
"Exempt Foreign Subsidiary" means any Restricted Subsidiary that is a
foreign corporation if more than 50% of the (i) total combined voting power of
all Voting Stock of the corporation or (ii) the total value of all Capital Stock
of the corporation is owned or is considered as owned by United States
shareholders on any day during the taxable year of the foreign corporation and,
that, in any case, is so designated by the Company in an Officers' Certificate
delivered to the Trustee, and which Restricted Subsidiary is not a guarantor of,
and has no Lien (other than a Lien with respect to less than two-thirds of the
Capital Stock of an Exempt Foreign Subsidiary) to secure the Bank Credit
Facilities or any other Indebtedness of the Company or any Restricted Subsidiary
other than an Exempt Foreign Subsidiary. A United States shareholder, as used in
this definition, means any Person who owns or is considered as owning 10% or
more of the total combined voting power of all Voting Stock of the foreign
corporation. Ownership is determined by applying the attribution rules of
ownership in Internal Revenue Code Section 958. References to Internal Revenue
sections in this definition include such sections as amended or superceded,
including Treasury regulations promulgated thereunder. The Company may revoke
the designation of any Exempt Foreign Subsidiary by notice to the Trustee.
"Fair Market Value" means, with respect to any Property to be
transferred pursuant to any Asset Sale or Sale and Leaseback Transaction or any
noncash consideration or Property transferred or received by any Person, the
fair market value of such consideration or other Property as determined by:
(a) any officer of the Company if such fair market value is
less than $5.0 million; and
(b) the Board of Directors of the Company as evidenced by a
certified resolution delivered to the Trustee if such fair market value is equal
to or in excess of $5.0 million.
"GAAP" means United States generally accepted accounting principles as
in effect on the date of this Indenture, unless stated otherwise.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing or having the economic effect of
guaranteeing any Indebtedness of any other Person (a "primary obligor") in any
manner, whether directly or indirectly, and including any Lien on the assets of
such Person securing obligations to pay Indebtedness of the primary obligor, and
any obligation of such Person:
13
(a) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness or any security for the payment of
such Indebtedness;
(b) to purchase Property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness; or
(c) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Indebtedness (and "Guaranteed",
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing);
provided, however, that a Guarantee by any Person shall not include:
(a) endorsements by such Person for collection or deposit, in
either case, in the ordinary course of business; or
(b) a contractual commitment by one Person to invest in
another Person for so long as such Investment is reasonably expected to
constitute a Permitted Investment under clause (b) of the definition of
Permitted Investments.
"Holder" means the Person in whose name a Note is registered on the
Securities Register.
"Incur" means, with respect to any Indebtedness or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or become liable (including by reason of a merger or
consolidation) in respect of such Indebtedness or other obligation or the
recording, as required pursuant to GAAP or otherwise, of any such Indebtedness
or obligation on the balance sheet of such Person (and "Incurrence," "Incurred,"
"Incurrable" and "Incurring" shall have meanings correlative to the foregoing);
provided, however, that a change in GAAP that results in an obligation of such
Person that exists at such time, and is not theretofore classified as
Indebtedness, becoming Indebtedness shall not be deemed an Incurrence of such
Indebtedness; provided further, however, that solely for purposes of determining
compliance with Section 4.11 amortization of debt discount shall not be deemed
to be the Incurrence of Indebtedness, provided that in the case of Indebtedness
sold at a discount, the amount of such Indebtedness shall at all times be the
aggregate principal amount at Stated Maturity. For purposes of this definition,
Indebtedness of the Company or a Restricted Subsidiary held by a Wholly Owned
Subsidiary shall be deemed to be Incurred by the Company or such Restricted
Subsidiary in the event such Indebtedness is transferred to a Person other than
the Company or a Wholly Owned Subsidiary.
"Indebtedness" means at any time (without duplication), with respect to
any Person, whether recourse is to all or a portion of the assets of such
Person, and whether or not contingent:
(a) any obligation of such Person for borrowed money;
(b) any obligation of such Person evidenced by bonds,
debentures, notes, Guarantees or other similar instruments, including any such
obligations Incurred in connection with the acquisition of Property, assets or
business;
14
(c) any reimbursement obligation of such Person with respect
to letters of credit, bankers' acceptances or similar facilities issued for the
account of such Person;
(d) any obligation of such Person issued or assumed as the
deferred purchase price of Property or services (other than Trade Accounts
Payable);
(e) any Capital Lease Obligation of such Person;
(f) the maximum fixed redemption or repurchase price of
Disqualified Stock of such Person at the time of determination;
(g) any Preferred Stock of any Restricted Subsidiary, provided
that such Restricted Subsidiary is not a Subsidiary Guarantor;
(h) any payment obligation of such Person under Exchange Rate
Contracts, Interest Rate Protection Agreements, Oil and Gas Hedging Contracts or
under any similar agreements or instruments;
(i) any obligation to pay rent or other payment amounts of
such Person with respect to any Sale and Leaseback Transaction to which such
Person is a party;
(j) any obligation of the type referred to in clauses (a)
through (h) of this definition of another Person and all dividends of another
Person the payment of which, in either case, such Person has Guaranteed or is
responsible or liable, directly or indirectly, as obligor, Guarantor or
otherwise; and
(k) all obligations of the type referred to in clauses (a)
through (i) of this definition of another Person secured by any Lien on any
Property of such Person (whether or not such obligation is assumed by such
Person), the amount of such obligation being deemed to be the lesser of the
value of such Property or the amount of the obligation so secured;
provided, however, that Indebtedness shall not include Production
Payments and Reserve Sales. For purposes of this definition, the maximum fixed
repurchase price of any Disqualified Stock that does not have a fixed repurchase
price shall be calculated in accordance with the terms of such Disqualified
Stock as if such Disqualified Stock were repurchased on any date on which
Indebtedness shall be required to be determined pursuant to the Indenture;
provided, however, that if such Disqualified Stock is not then permitted to be
repurchased, the repurchase price shall be the book value of such Disqualified
Stock. The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability at such date in respect of any contingent
obligations described above.
"Interest Rate Protection Agreement" means, with respect to any Person,
any interest rate swap agreement, forward rate agreement, interest rate cap or
collar agreement or other financial agreement or arrangement entered into by
such Person in the ordinary course of its business for the purpose of limiting
or managing interest rate risks to which such Person is subject.
15
"Investment" means, with respect to any Person:
(a) any amount paid by such Person, directly or indirectly, to
any other Person for Capital Stock of, or as a capital contribution to, any
other Person; or
(b) any direct or indirect loan or advance to any other Person
(other than accounts receivable of such Person arising in the ordinary course of
business);
provided, however, that Investments shall not include:
(1) in the case of clause (a) as used in the
definition of "Restricted Payments" only, any such amount paid
through the issuance of Capital Stock of the Company (other
than Disqualified Stock); and
(2) in the case of clause (a) or (b), extensions of
trade credit on commercially reasonable terms in accordance
with normal trade practices and any increase in the equity
ownership in any Person resulting from retained earnings of
such Person.
"Issue Date" means the date on which the Original 9 3/8% Notes first
were issued under the Indenture.
"Lien" means, with respect to any Property, any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien (statutory or other), charge, easement, encumbrance, preference,
priority or other security or similar agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such Property (including any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing). For purposes of Section 4.10, a
Capital Lease Obligation shall be deemed to be secured by a Lien on the Property
being leased.
"Liquid Securities" means securities:
(a) of an issuer that is not an Affiliate of the Company;
(b) that are publicly traded on the
New York Stock Exchange,
the American Stock Exchange or the Nasdaq National Market; and
(c) as to which the Company is not subject to any restrictions
on sale or transfer (including any volume restrictions under Rule 144 under the
Securities Act or any other restrictions imposed by the Securities Act) or as to
which a registration statement under the Securities Act covering the resale
thereof is in effect for as long as the securities are held;
provided that securities meeting the requirements or clauses (a), (b)
and (c) above shall be treated as Liquid Securities from the date of receipt
thereof until and only until the earlier of:
(1) the date on which such securities are sold or
exchanged for cash or Permitted Short-Term Investments, and
16
(2) 240 days following the date of receipt of such
securities. If such securities are not sold or exchanged for
cash or Permitted Short-Term Investments within 240 days of
receipt thereof, for purposes of determining whether the
transaction pursuant to which the Company or the Restricted
Subsidiary received the securities was in compliance with
Section 4.14 such securities shall be deemed not to have been
Liquid Securities at any time.
"Material Change" means an increase or decrease (except to the extent
resulting from changes in prices) of more than 30% during a fiscal quarter in
the estimated discounted future net revenues from proved oil and gas reserves of
the Company and its Restricted Subsidiaries, calculated in accordance with
clause (a)(1) of the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the calculation of
Material Change:
(a) any acquisitions during the quarter of oil and gas
reserves with respect to which the Company's estimate of the discounted future
net revenues from proved oil and gas reserves has been confirmed by independent
petroleum engineers; and
(b) any dispositions of Properties during such quarter that
were disposed of in compliance with Section 4.14.
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
"Net Available Cash" from an Asset Sale means cash proceeds received
therefrom, including:
(a) any cash proceeds received by way of deferred payment of
principal pursuant to a note or installment receivable or otherwise, but only as
and when received; and
(b) the Fair Market Value of Liquid Securities and Permitted
Short-Term Investments, and excluding:
(1) any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other
obligations relating to the Property that is the subject of
such Asset Sale, and
(2) except to the extent converted within 240 days
after such Asset Sale to cash, Liquid Securities or Permitted
Short-Term Investments, consideration constituting Exchanged
Properties or consideration other than as identified in the
immediately preceding clauses (a) and (b),
in each case net of:
(a) all legal, title and recording expenses, commissions and
other fees and expenses Incurred, and all federal, state, foreign and local
taxes required to be paid or accrued as a liability under GAAP as a consequence
of such Asset Sale;
17
(b) all payments made on any Indebtedness (but specifically
excluding Indebtedness of the Company and its Restricted Subsidiaries assumed in
connection with or in anticipation of such Asset Sale) that is secured by any
assets subject to such Asset Sale, in accordance with the terms of any Lien upon
such assets, or that must by its terms, or in order to obtain a necessary
consent to such Asset Sale or by applicable law, be repaid out of the proceeds
from such Asset Sale, provided that such payments are made in a manner that
results in the permanent reduction in the balance of such Indebtedness and, if
applicable, a permanent reduction in any outstanding commitment for future
Incurrences of Indebtedness thereunder;
(c) all distributions and other payments required to be made
to minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Sale; and
(d) the deduction of appropriate amounts to be provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the assets disposed of in such Asset Sale and retained by the Company or
any Restricted Subsidiary after such Asset Sale;
provided, however, that if any consideration for an Asset Sale (which
would otherwise constitute Net Available Cash) is required to be held in escrow
pending determination of whether a purchase price adjustment will be made, such
consideration (or any portion thereof) shall become Net Available Cash only at
such time as it is released to such Person or its Restricted Subsidiaries from
escrow.
"Net Working Capital" means:
(a) all current assets of the Company and its Restricted
Subsidiaries; less
(b) all current liabilities of the Company and its Restricted
Subsidiaries, except current liabilities included in Indebtedness,
in each case as set forth in consolidated financial statements of the
Company prepared in accordance with GAAP.
"Non-recourse Purchase Money Indebtedness" means Indebtedness (other
than Capital Lease Obligations) of the Company or any Restricted Subsidiary
Incurred in connection with the acquisition by the Company or such Restricted
Subsidiary in the ordinary course of business of fixed assets used in the Oil
and Gas Business (including office buildings and other real property used by the
Company or such Restricted Subsidiary in conducting its operations) with respect
to which:
(a) the holders of such Indebtedness agree that they will look
solely to the fixed assets so acquired that secure such Indebtedness, and
neither the Company nor any Restricted Subsidiary:
(1) is directly or indirectly liable for such
Indebtedness, or
18
(2) provides credit support, including any
undertaking, Guarantee, agreement or instrument that would
constitute Indebtedness (other than the grant of a Lien on
such acquired fixed assets); and
(b) no default or event of default with respect to such
Indebtedness would cause, or permit (after notice or passage of time or
otherwise), any holder of any other Indebtedness of the Company or a Restricted
Subsidiary to declare a default on such other Indebtedness or cause the payment,
repurchase, redemption, defeasance or other acquisition or retirement for value
thereof to be accelerated or payable prior to any scheduled principal payment,
scheduled sinking fund payment or maturity.
"Oil and Gas Business" means the business of exploiting, exploring for,
developing, acquiring, operating, producing, processing, gathering, marketing,
storing, selling, hedging, treating, swapping, refining and transporting
hydrocarbons and other related energy businesses.
"Oil and Gas Hedging Contract" means, with respect to any Person, any
agreement or arrangement, or any combination thereof, relating to oil and gas or
other hydrocarbon prices, transportation or basis costs or differentials or
other similar financial factors, that is customary in the Oil and Gas Business
and is entered into by such Person in the ordinary course of its business for
the purpose of limiting or managing risks associated with fluctuations in such
prices, costs, differentials or similar factors.
"Oil and Gas Liens" means:
(a) Liens on any specific Property or any interest therein,
construction thereon or improvement thereto to secure all or any part of the
costs incurred for surveying, exploration, drilling, extraction, development,
operation, production, construction, alteration, repair or improvement of, in,
under or on such Property and the plugging and abandonment of xxxxx located
thereon (it being understood that, in the case of oil and gas producing
properties, or any interest therein, costs incurred for "development" shall
include costs incurred for all facilities relating to such properties or to
projects, ventures or other arrangements of which such properties form a part or
which relate to such properties or interests);
(b) Liens on an oil or gas producing property to secure
obligations incurred or guarantees of obligations incurred in connection with or
necessarily incidental to commitments for the purchase or sale of, or the
transportation or distribution of, the products derived from such Property;
(c) Liens arising under partnership agreements, oil and gas
leases, overriding royalty agreements, net profits agreements, production
payment agreements, royalty trust agreements, incentive compensation programs
for geologists, geophysicists and other providers of technical services to the
Company or a Restricted Subsidiary, master limited partnership agreements,
farm-out agreements, farm-in agreements, division orders, contracts for the
sale, purchase, exchange, transportation, gathering or processing of oil, gas or
other hydrocarbons, unitizations and pooling designations, declarations, orders
and agreements, development agreements, operating agreements, production sales
contracts, area of mutual interest agreements, gas balancing or deferred
production agreements, injection, repressuring and
19
recycling agreements, salt water or other disposal agreements, seismic or
geophysical permits or agreements, and other agreements that are customary in
the Oil and Gas Business; provided, however, in all instances that such Liens
are limited to the assets that are the subject of the relevant agreement,
program, order or contract;
(d) Liens arising in connection with Production Payments and
Reserve Sales; and
(e) Liens on pipelines or pipeline facilities that arise by
operation of law.
"Pari Passu Indebtedness" means the 2009 Notes and any other
Indebtedness of the Company (or a Subsidiary Guarantor) that is pari passu in
right of payment to the 9 3/8% Notes (or a Subsidiary Guaranty, as appropriate).
"Pari Passu Offer" means an offer by the Company or a Subsidiary
Guarantor to purchase all or a portion of Pari Passu Indebtedness to the extent
required by the indenture or other agreement or instrument pursuant to which
such Pari Passu Indebtedness was issued.
"Permitted Business Investments" means Investments and expenditures
made in the ordinary course of, and of a nature that is or shall have become
customary in, the Oil and Gas Business as a means of actively engaging therein
through agreements, transactions, interests or arrangements that permit one to
share risks or costs, comply with regulatory requirements regarding local
ownership or satisfy other objectives customarily achieved through the conduct
of Oil and Gas Business jointly with third parties, including:
(a) ownership interests in oil and gas properties or
gathering, transportation, processing, storage or related systems; and
(b) Investments and expenditures in the form of or pursuant to
operating agreements, processing agreements, farm-in agreements, farm-out
agreements, development agreements, area of mutual interest agreements,
unitization agreements, pooling arrangements, joint bidding agreements, service
contracts, joint venture agreements, partnership agreements (whether general or
limited) and other similar agreements (including for limited liability
companies) with third parties, excluding, however, Investments in corporations
other than Restricted Subsidiaries.
"Permitted Hedging Agreements" means:
(a) Exchange Rate Contracts and Oil and Gas Hedging Contracts;
and
(b) Interest Rate Protection Agreements but only to the extent
that the stated aggregate notional amount thereunder does not exceed 100% of the
aggregate principal amount of the Indebtedness of the Company or a Restricted
Subsidiary covered by such Interest Rate Protection Agreements at the time such
agreements were entered into.
"Permitted Indebtedness" means any and all of the following:
20
(a) Indebtedness arising under the Indenture with respect to
the Original 9 3/8% Notes and any Subsidiary Guaranties relating thereto;
(b) Indebtedness under Bank Credit Facilities, provided that
the aggregate principal amount of all Indebtedness under Bank Credit Facilities,
at any one time outstanding does not exceed the greater of:
(1) $250.0 million, which amount shall be permanently
reduced by the amount of Net Available Cash used to
permanently repay Indebtedness under Bank Credit Facilities
and not subsequently reinvested in Additional Assets or used
to permanently reduce other Indebtedness pursuant Section
4.14, and
(2) an amount equal to the sum of:
(A) $150.0 million, and
(B) 25% of Adjusted Consolidated Net
Tangible Assets determined as of the date of
Incurrence of such Indebtedness,
and, in the case of either (1) or (2), plus all interest and fees and
other obligations thereunder and any Guarantee of such Indebtedness;
(c) Indebtedness of the Company owing to and held by any
Wholly Owned Subsidiary and Indebtedness of a Restricted Subsidiary owing to and
held by the Company or any Wholly Owned Subsidiary; provided, however, that any
subsequent issue or transfer of Capital Stock or other event that results in any
such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any
subsequent transfer of any such Indebtedness (except to the Company or a Wholly
Owned Subsidiary) shall be deemed, in each case, to constitute the Incurrence of
such Indebtedness by the issuer thereof;
(d) Indebtedness in respect of bid, performance, reimbursement
or surety obligations issued by or for the account of the Company or any
Restricted Subsidiary in the ordinary course of business, including Guarantees
and letters of credit functioning as or supporting such bid, performance,
reimbursement or surety obligations (in each case other than for an obligation
for money borrowed);
(e) Indebtedness under Permitted Hedging Agreements;
(f) in-kind obligations relating to oil or gas balancing
positions arising in the ordinary course of business;
(g) Indebtedness outstanding on the Issue Date not otherwise
permitted in clauses (a) through (f) above;
(h) Non-recourse Purchase Money Indebtedness;
(i) Indebtedness not otherwise permitted to be Incurred
pursuant to this definition (excluding any Indebtedness Incurred pursuant to
clause (a) of Section 4.11), provided
21
that the aggregate principal amount of all Indebtedness Incurred pursuant to
this clause (i), together with all Indebtedness Incurred pursuant to clause (j)
of this definition in respect of Indebtedness previously Incurred pursuant to
this clause (i), at any one time outstanding does not exceed $30.0 million;
(j) Indebtedness Incurred in exchange for, or the proceeds of
which are used to refinance:
(1) Indebtedness referred to in clauses (a), (g), (h)
and (i) of this definition (including Indebtedness previously Incurred pursuant
to this clause (j)), and
(2) Indebtedness Incurred pursuant to clause (a) of
Section 4.11,
provided that, in the case of each of the foregoing clauses
(1) and (2), such Indebtedness is Permitted Refinancing Indebtedness; and
(k) Indebtedness consisting of obligations in respect of
purchase price adjustments, indemnities or Guarantees of the same or similar
matters in connection with the acquisition or disposition of Property.
"Permitted Investments" means any and all of the following:
(a) Permitted Short-Term Investments;
(b) Investments in property, plant and equipment used in the
ordinary course of business and Permitted Business Investments;
(c) Investments by any Restricted Subsidiary in the Company;
(d) Investments by the Company or any Restricted Subsidiary in
any Restricted Subsidiary;
(e) Investments by the Company or any Restricted Subsidiary:
(1) in any Person that will, upon the making of such
Investment, become a Restricted Subsidiary, or
(2) if as a result of such Investment such Person is
merged or consolidated with or into, or transfers or conveys
all or substantially all its Property to, the Company or a
Restricted Subsidiary;
(f) Investments in the form of securities received from Asset
Sales, provided that such Asset Sales are made in compliance with Section 4.14;
(g) Investments in negotiable instruments held for collection;
lease, utility and other similar deposits; and stock, obligations or other
securities received in settlement of debts (including under any bankruptcy or
other similar proceeding) owing to the Company or any of its Restricted
Subsidiaries as a result of foreclosure, perfection or enforcement of any Liens
or
22
Indebtedness, in each of the foregoing cases in the ordinary course of business
of the Company or such Restricted Subsidiary;
(h) relocation allowances for, and advances and loans to,
officers, directors and employees of the Company or any of its Restricted
Subsidiaries made in the ordinary course of business, provided such items do not
exceed in the aggregate $2.0 million at any one time outstanding;
(i) Investments intended to promote the Company's strategic
objectives in the Oil and Gas Business in an amount not to exceed 5% of Adjusted
Consolidated Net Tangible Assets (determined as of the date of the making of any
such Investment) at any one time outstanding, which Investments shall be deemed
to be no longer outstanding only to the extent of dividends, repayments of loans
or advances or other transfers of Property or returns of capital received by the
Company or any Restricted Subsidiary from such Persons, provided that, for
purposes of Section 4.12 the receiving of such amounts by the Company or its
Restricted Subsidiaries does not increase the amount of Restricted Payments that
the Company and its Restricted Subsidiaries may make pursuant to Section
4.12(c)(5)(A);
(j) Investments made pursuant to Permitted Hedging Agreements
of the Company and its Restricted Subsidiaries; and
(k) Investments pursuant to any agreement or obligation of the
Company or any of its Restricted Subsidiaries as in effect on the Issue Date
(other than Investments described in clauses (a) through (j) above), provided
that Investments made pursuant to this clause (k) shall be included in the
calculation of Restricted Payments.
"Permitted Liens" means any and all of the following:
(a) Liens existing as of the Issue Date;
(b) Liens securing the 9 3/8% Notes, any Subsidiary Guaranties
and other obligations arising under this Indenture;
(c) any Lien existing on any Property of a Person at the time
such Person is merged or consolidated with or into the Company or a Restricted
Subsidiary or becomes a Restricted Subsidiary (and not incurred in anticipation
of or in connection with such transaction), provided that such Liens are not
extended to other Property of the Company or the Restricted Subsidiaries;
(d) any Lien existing on any Property at the time of the
acquisition thereof (and not incurred in anticipation of or in connection with
such transaction), provided that such Lien is not extended to other Property of
the Company or the Restricted Subsidiaries;
(e) any Lien incurred in the ordinary course of business
incidental to the conduct of the business of the Company or the Restricted
Subsidiaries or the ownership of their Property, including:
(1) easements, rights of way and similar
encumbrances,
23
(2) rights or title of lessors under leases (other
than Capital Lease Obligations),
(3) rights of collecting banks having rights of
setoff, revocation, refund or chargeback with respect to money
or instruments of the Company or the Restricted Subsidiaries
on deposit with or in the possession of such banks,
(4) Liens imposed by law, including Liens under
workers' compensation or similar legislation and mechanics',
carriers', warehousemen's, materialmen's, suppliers' and
vendors' Liens,
(5) Liens incurred to secure performance of
obligations with respect to statutory or regulatory
requirements, performance or return-of-money bonds, surety
bonds or other obligations of a like nature and incurred in a
manner consistent with industry practice, and
(6) Oil and Gas Liens,
in each case that are not incurred in connection with the
borrowing of money, the obtaining of advances or credit or the payment of the
deferred purchase price of Property (other than Trade Accounts Payable);
(f) Liens for taxes, assessments and governmental charges not
yet due or the validity of which is being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted, and for which
adequate reserves have been established to the extent required by GAAP as in
effect at such time;
(g) Liens incurred to secure appeal bonds and judgment and
attachment Liens, in each case in connection with litigation or legal
proceedings that are being contested in good faith by appropriate proceedings so
long as reserves have been established to the extent required by GAAP as in
effect at such time and so long as such Liens do not encumber assets by an
aggregate amount (together with the amount of any unstayed judgments against the
Company or any Restricted Subsidiary but excluding any such Liens to the extent
securing insured or indemnified judgments or orders) in excess of $20.0 million;
(h) Liens securing Permitted Hedging Agreements of the Company
and its Restricted Subsidiaries;
(i) Liens securing Capital Lease Obligations, provided that
such Capital Lease Obligations are permitted under Section 4.11 and the Liens
attach only to the Property acquired with the proceeds of such Capital Lease
Obligations;
(j) Liens securing Non-recourse Purchase Money Indebtedness
granted in connection with the acquisition by the Company or any Restricted
Subsidiary in the ordinary course of business of fixed assets used in the Oil
and Gas Business (including office buildings and other real property used by the
Company or such Subsidiary Guarantor in conducting its operations), provided
that:
24
(1) such Liens attach only to the fixed assets
acquired with the proceeds of such Non-recourse Purchase Money
Indebtedness, and
(2) such Non-recourse Purchase Money Indebtedness is
not in excess of the purchase price of such fixed assets;
(k) Liens resulting from the deposit of funds or evidences of
Indebtedness in trust for the purpose of decreasing or legally defeasing
Indebtedness of the Company or any of its Subsidiaries so long as such deposit
of funds is permitted under Section 4.12;
(l) Liens resulting from a pledge of Capital Stock of a Person
that is not a Restricted Subsidiary to secure obligations of such Person and any
refinancings thereof;
(m) Liens to secure any permitted extension, renewal,
refinancing, refunding or exchange (or successive extensions, renewals,
refinancings, refundings or exchanges), in whole or in part, of or for any
Indebtedness secured by Xxxxx referred to in clauses (a), (b), (c), (d), (i) and
(j) above; provided, however, that:
(1) such new Lien shall be limited to all or part of
the same Property (including future improvements thereon and
accessions thereto) subject to the original Lien, and
(2) the Indebtedness secured by such Lien at such
time is not increased to any amount greater than the sum of:
(A) the outstanding principal amount or, if
greater, the committed amount of the Indebtedness
secured by such original Lien immediately prior to
such extension, renewal, refinancing, refunding or
exchange, and
(B) an amount necessary to pay any fees and
expenses, including premiums, related to such
refinancing, refunding, extension, renewal or
replacement;
(n) Liens in favor of the Company or a Restricted Subsidiary;
and
(o) Liens not otherwise permitted by clauses (a) through (n)
above incurred in the ordinary course of business of the Company and its
Restricted Subsidiaries and encumbering Property having an aggregate Fair Market
Value not in excess of $5.0 million at any one time.
Notwithstanding anything in this definition to the contrary, the term
"Permitted Liens" does not include Liens resulting from the creation,
incurrence, issuance, assumption or Guarantee of any Production Payments and
Reserve Sales other than:
(a) any such Liens existing as of the Issue Date;
(b) Production Payments and Reserve Sales in connection with
the acquisition of any Property after the Issue Date, provided that any such
Lien created in connection therewith
25
is created, incurred, issued, assumed or guaranteed in connection with the
financing of, and within 60 days after the acquisition of, such Property;
(c) Production Payments and Reserve Sales, other than those
described in clauses (a) and (b) of this sentence, to the extent such Production
Payments and Reserve Sales constitute Asset Sales made pursuant to and in
compliance with Section 4.14; and
(d) incentive compensation programs for geologists,
geophysicists and other providers of technical services to the Company or a
Restricted Subsidiary;
provided, however, that, in the case of the immediately foregoing
clauses (a), (b), (c) and (d), any Lien created in connection with any such
Production Payments and Reserve Sales shall be limited to the Property that is
the subject of such Product Payments and Reserve Sales.
"Permitted Refinancing Indebtedness" means Indebtedness ("New
Indebtedness") Incurred in exchange for, or proceeds of which are used to
refinance, other Indebtedness ("Old Indebtedness"); provided, however, that:
(a) such New Indebtedness is in an aggregate principal amount
not in excess of the sum of:
(1) the aggregate principal amount then outstanding
of the Old Indebtedness (or, if such Old Indebtedness provides
for an amount less than the principal amount thereof to be due
and payable upon a declaration of acceleration thereof, such
lesser amount as of the date of determination), and
(2) an amount necessary to pay any fees and expenses,
including premiums, related to such exchange or refinancing;
(b) such New Indebtedness has a Stated Maturity no earlier
than the Stated Maturity of the Old Indebtedness;
(c) such New Indebtedness has an Average Life at the time such
New Indebtedness is Incurred that is equal to or greater than the Average Life
of the Old Indebtedness at such time;
(a) such New Indebtedness is subordinated in right of payment
to the 9 3/8% Notes (or, if applicable, the Subsidiary Guaranties) to at least
the same extent, if any, as the Old Indebtedness; and
(e) if such Old Indebtedness is Non-recourse Purchase Money
Indebtedness or Indebtedness that refinanced Non-recourse Purchase Money
Indebtedness, such New Indebtedness satisfies clauses (a) and (b) of the
definition of "Non-recourse Purchase Money Indebtedness."
"Permitted Short-Term Investments" means:
26
(a) Investments in U.S. Government Obligations maturing within
one year of the date of acquisition thereof;
(b) Investments in demand accounts, time deposit accounts,
certificates of deposit, bankers' acceptances and money market deposits maturing
within one year of the date of acquisition thereof issued by a bank or trust
company that is organized under the laws of the United States of America or any
State thereof or the District of Columbia that is a member of the Federal
Reserve System having capital, surplus and undivided profits aggregating in
excess of $500.0 million and whose long-term Indebtedness is rated "A" (or
higher) according to Moody's;
(c) Investments in deposits available for withdrawal on demand
with any commercial bank that is organized under the laws of any country in
which the Company or any Restricted Subsidiary maintains an office or is engaged
in the Oil and Gas Business, provided that:
(1) all such deposits have been made in such accounts
in the ordinary course of business, and
(2) such deposits do not at any one time exceed $15.0
million in the aggregate;
(d) repurchase and reverse repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clause (a) entered into with a bank meeting the qualifications described in
clause (b);
(e) Investments in commercial paper or notes, maturing not
more than one year after the date of acquisition, issued by a corporation (other
than an Affiliate of the Company) organized and in existence under the laws of
the United States of America or any State thereof or the District of Columbia
with a short-term rating at the time as of which any Investment therein is made
of "P-1" (or higher) according to Moody's or "A-1" (or higher) according to S&P
or a long-term rating at the time as of which any Investment is made of "A3" (or
higher) according to Xxxxx'x or "A-" (or higher) according to S&P;
(f) Investments in any money market mutual fund having assets
in excess of $250.0 million all of which consist of other obligations of the
types described in clauses (a), (b), (d) and (e) hereof; and
(g) Investments in asset-backed securities maturing within one
year of the date of acquisition thereof with a long-term rating at the time as
of which any Investment therein is made of "A3" (or higher) according to Moody's
or "A-" (or higher) according to S&P.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, unlimited liability company, trust, estate,
unincorporated organization or government or any agency or political subdivision
thereof.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the
27
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Preferred Stock Dividends" means all dividends with respect to
Preferred Stock of Restricted Subsidiaries held by Persons other than the
Company or a Wholly Owned Subsidiary. The amount of any such dividend shall be
equal to the quotient of such dividend divided by the difference between one and
the maximum statutory federal income rate (expressed as a decimal number between
1 and 0) then applicable to the issuer of such Preferred Stock.
"Principal" of any Indebtedness (including the 9 3/8% Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Production Payments and Reserve Sales" means the grant or transfer by
the Company or a Restricted Subsidiary to any Person of a royalty, overriding
royalty, net profits interest, production payment (whether volumetric or dollar
denominated), partnership or other interest in oil and gas properties, reserves
or the right to receive all or a portion of the production or the proceeds from
the sale of production attributable to such properties where the holder of such
interest has recourse solely to such production or proceeds of production,
subject to the obligation of the grantor or transferor to operate and maintain,
or cause the subject interests to be operated and maintained, in a reasonably
prudent manner or other customary standard or subject to the obligation of the
grantor or transferor to indemnify for environmental, title or other matters
customary in the Oil and Gas Business, including any such grants or transfers
pursuant to incentive compensation programs on terms that are reasonably
customary in the Oil and Gas Business for geologists, geophysicists and other
providers of technical services to the Company or a Restricted Subsidiary.
"Property" means, with respect to any Person, any interest of such
Person in any kind of property or asset, whether real, personal, or mixed, or
tangible or intangible, including Capital Stock and other securities issued by
any other Person (but excluding Capital Stock or other securities issued by such
first mentioned Person).
"Representative" means the trustee, agent or representative expressly
authorized to act in such capacity, if any, for an issue of Senior Indebtedness.
"Restricted Payment" means:
(a) a dividend or other distribution declared or paid on the
Capital Stock of the Company or to the Company's shareholders (other than
dividends, distributions or payments made solely in Capital Stock (other than
Disqualified Stock of the Company) of the Company or in options, warrants or
other rights to purchase or acquire Capital Stock (other than Disqualified
Stock)), or declared and paid to any Person other than the Company or any of its
Restricted Subsidiaries (and, if such Restricted Subsidiary is not a Wholly
Owned Subsidiary, to the other shareholders of such Restricted Subsidiary on a
pro rata basis or on a basis that results in the receipt by the Company or a
Restricted Subsidiary of dividends or distributions of greater value than it
would receive on a pro rata basis) on the Capital Stock of any Restricted
Subsidiary;
(b) a payment made by the Company or any of its Restricted
Subsidiaries (other than to the Company or any Restricted Subsidiary) to
purchase, redeem, acquire or retire
28
any Capital Stock, or any options, warrants or other rights to acquire Capital
Stock, of the Company or of a Restricted Subsidiary;
(c) a payment made by the Company or any of its Restricted
Subsidiaries to redeem, repurchase, legally defease or otherwise acquire or
retire for value (including pursuant to mandatory repurchase covenants), prior
to any scheduled maturity, scheduled sinking fund or scheduled mandatory
redemption, any Indebtedness of the Company or a Restricted Subsidiary that is
subordinate (whether pursuant to its terms or by operation of law) in right of
payment to the 9 3/8% Notes or the relevant Subsidiary Guaranty, as the case may
be, provided that this clause (c) shall not include any such payment with
respect to:
(1) any such subordinated Indebtedness to the extent
of Excess Proceeds (as defined in Section 4.14) remaining
after compliance with Section 4.14 and to the extent required
by the Indenture or other agreement or instrument pursuant to
which such subordinated Indebtedness was issued, or
(2) the purchase, repurchase or other acquisition of
any such subordinated Indebtedness purchased in anticipation
of satisfying a scheduled maturity, scheduled sinking fund or
scheduled mandatory redemption, in each case due within one
year of the date of acquisition; or
(d) an Investment (other than a Permitted Investment) by the
Company or a Restricted Subsidiary in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company that has
not been designated an Unrestricted Subsidiary pursuant Section 4.19.
"S&P" means Standard & Poor's Ratings Services, a division of The
XxXxxx-Xxxx Companies, Inc., and its successors.
"Sale and Leaseback Transaction" means, with respect to any Person, any
direct or indirect arrangement (excluding, however, any such arrangement between
such Person and a Wholly Owned Subsidiary of such Person or between one or more
Wholly Owned Subsidiaries of such Person) pursuant to which Property is sold or
transferred by such Person or a Restricted Subsidiary of such Person and is
thereafter leased back from the purchaser or transferee thereof by such Person
or one of its Restricted Subsidiaries.
"SEC" means the Securities and Exchange Commission.
"Senior Indebtedness" when used with respect to the Company means the
obligations of the Company with respect to Indebtedness of the Company, whether
outstanding on the date of the Indenture or thereafter Incurred, and any
renewal, refunding, refinancing, replacement or extension thereof, unless, in
the case of any particular Indebtedness, the instrument creating or evidencing
the same or pursuant to which the same is outstanding expressly provides that
such Indebtedness shall not be senior in right of payment to the 9 3/8% Notes;
provided, however, that Senior Indebtedness of the Company shall not include:
(a) Indebtedness of the Company to a Subsidiary of the
Company;
29
(b) Indebtedness Incurred in violation of this Indenture;
(c) amounts payable or any other Indebtedness to employees of
the Company or any Subsidiary of the Company;
(d) any Indebtedness of the Company that, when Incurred and
without regard to any election under Section 1111(b) of the United States
Bankruptcy Code, was without recourse to the Company;
(e) Pari Passu Indebtedness or Subordinated Indebtedness of
the Company;
(f) obligations with respect to any Capital Stock of the
Company;
(g) Indebtedness evidenced by the 9 3/8% Notes; and
(h) in-kind obligations relating to net oil and gas balancing
positions.
"Senior Indebtedness" of any Subsidiary Guarantor has a correlative
meaning.
"Significant Subsidiary" means, at any date of determination, any
Restricted Subsidiary that would be a "Significant Subsidiary" of the Company
within the meaning of Rule 1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" when used with respect to any security or any
installment of principal thereof or interest thereon, means the date specified
in such security as the fixed date on which the principal of such security or
such installment of principal or interest is due and payable, including pursuant
to any mandatory redemption provision (but excluding any provision providing for
the repurchase of such security at the option of the holder thereof upon the
happening of any contingency unless such contingency has occurred).
"Subordinated Indebtedness" means Indebtedness of the Company (or a
Subsidiary Guarantor) that is subordinated or junior in right of payment to the
9 3/8% Notes (or a Subsidiary Guaranty, as appropriate) pursuant to a written
agreement to that effect.
"Subsidiary" of a Person means:
(a) another Person that is a corporation a majority of whose
Voting Stock is at the time, directly or indirectly, owned or controlled by:
(1) the first Person,
(2) the first Person and one or more of its
Subsidiaries, or
(3) one or more of the first Person's Subsidiaries;
or
(b) another Person that is not a corporation (x) at least 50%
of the Capital Stock of which, and (y) the power to elect or direct the election
of a majority of the directors or other governing body of which are controlled
by Persons referred to in clause (1), (2) or (3) above.
30
"Subsidiary Guarantors" means, unless released from their Subsidiary
Guaranties as permitted by the Indenture, any Restricted Subsidiary that becomes
a guarantor of the 9 3/8% Notes in compliance with the provisions of the
Indenture and executes a supplemental indenture agreeing to be bound by the
terms of this Indenture.
"Subsidiary Guaranty" means an unconditional senior subordinated
guaranty of the 9 3/8% Notes given by any Restricted Subsidiary pursuant to the
terms of this Indenture.
"Trade Accounts Payable" means accounts payable or other obligations of
the Company or any Restricted Subsidiary to trade creditors created or assumed
by the Company or such Restricted Subsidiary in the ordinary course of business
in connection with the obtaining of goods or services.
"Unrestricted Subsidiary" means:
(a) each Subsidiary of the Company that the Company has
designated pursuant to Section 4.19 as an Unrestricted Subsidiary; and
(b) any Subsidiary of an Unrestricted Subsidiary.
"U.S. Government Obligations" means securities that are:
(a) direct obligations of the United States of America for the
timely payment of which its full faith and credit is pledged; or
(b) obligations of a Person controlled or supervised by and
acting as an agency or instrumentality of the United States of America, the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America
that, in either case, are not callable or redeemable at the
option of the issuer thereof, and shall also include a depository receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities Act), as custodian,
with respect to any such U.S. Government Obligation or a specific payment of
principal of or interest on any such U.S. Government Obligation held by such
custodian for the account of the holder of such depository receipt; provided,
however, that (except as required by law) such custodian is not authorized to
make any deduction from the amount payable to the holder of such depository
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment or principal of or interest on the
U.S. Government Obligation evidenced by such depository receipt.
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" of any Person means Capital Stock of such Person that
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person whether at all times or only so long as no
senior class of securities has such voting power by reason of any contingency.
31
"Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary
of the Company all the Voting Stock of which (other than directors' qualifying
shares) is at such time owned, directly or indirectly, by the Company and its
other Wholly Owned Subsidiaries.
SECTION 3. Amendments to Article III of the Original Indenture.
(a) The fourth paragraph of Section 3.02 of the Original
Indenture is amended in its entirety to read as follows:
On or prior to 11:00 a.m.,
New York City time, on the
redemption date for any Registered Securities, the Company shall
deposit with the Trustee or with a paying agent (or, if the Company is
acting as its own paying agent, segregate and hold in trust) an amount
of money in the Currency in which such Debt Securities are denominated
(except as provided pursuant to Section 2.03) sufficient to pay the
redemption price of and accrued interest on (subject to the right of
Holders of record on the relevant record date to receive interest due
on the relevant interest payment date that is on or prior to the
redemption date) such Registered Securities or any portions thereof
that are to be redeemed on that date.
(b) The first sentence of the fifth paragraph of Section 3.02
of the Original Indenture is amended in its entirety with respect to the 9 3/8%
Notes to read as follows:
If less than all the 9 3/8% Notes are to be redeemed at any
time, selection of 9 3/8% Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the 9 3/8% Notes are listed, or,
if the 9 3/8% Notes are not so listed, on a pro rata basis, by lot or
by such method as the Trustee shall deem fair and appropriate and in
accordance with methods generally used at the time of selection by
fiduciaries in similar circumstances.
(c) The first paragraph of Section 3.03 of the Original
Indenture is amended in its entirety to read as follows:
If notice of redemption has been given as provided in Section
3.02, the Debt Securities or portions of Debt Securities of the series
with respect to which such notice has been given shall become due and
payable on the date and at the Place or Places of Payment stated in
such notice at the applicable redemption price, together with any
interest accrued to the date fixed for redemption (subject to the right
of Holders of record on the relevant record date to receive interest
due on the related interest payment date that is on or prior to the
date of redemption), and on and after said date (unless the Company
shall default in the payment of such Debt Securities at the applicable
redemption price, together with any interest accrued to said date) the
interest on the Debt Securities or portions of Debt Securities of any
series so called for redemption shall cease to accrue and any original
issue discount in the case of Original Issue Discount Debt Securities
shall cease to accrue. On presentation and surrender of such Debt
Securities at the Place or Places of Payment in said notice specified,
the said Debt Securities or the
32
specified portions thereof shall be paid and redeemed by the Company at
the applicable redemption price, together with any interest accrued
thereon to the date fixed for redemption.
(d) Article III of the Original Indenture is amended with
respect to the 9 3/8% Notes by adding Section 3.06 and Section 3.07 as follows:
SECTION 3.06. Optional Redemption. Except as set forth in the
following paragraph, the 9 3/8% Notes will not be redeemable at the
option of the Company prior to May 1, 2007. Starting on that date, the
Company may redeem all or any portion of the 9 3/8% Notes, upon no less
than 30 nor more than 60 days prior notice, at the redemption prices
set forth below, plus accrued and unpaid interest, if any, to the
redemption date (subject to the right of Holders of record on the
relevant record date to receive interest due on the relevant interest
payment date). The following prices are for 9 3/8% Notes redeemed
during the 12-month period commencing on May 1 of the years set forth
below, and are expressed as percentages of principal amount:
Redemption
Year Price
---- ----------
2007 104.688%
2008 103.125%
2009 101.563%
2010 and thereafter 100.000%
The Company may on any one or more occasions prior to May 1,
2005, redeem up to 33 1/3% of the aggregate principal amount of the
9 3/8% Notes originally issued with the net proceeds of one or more
Equity Offerings of the Company at a redemption price of 109.375% of
the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of redemption, subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant
interest payment date, provided that at least 66 2/3% of the aggregate
principal amount of the 9 3/8% Notes originally issued remains
Outstanding after the occurrence of such redemption. Any such
redemption shall occur not later than 90 days after the date of the
closing of any such Equity Offering upon not less than 30 nor more than
60 days' prior notice. The redemption shall be made in accordance with
procedures set forth in the Indenture.
SECTION 3.07. No Mandatory Sinking Fund. There will be no
mandatory sinking fund payments for the 9 3/8% Notes.
SECTION 4. Amendments to Article IV of the Original Indenture.
(a) Sections 4.07, 4.08 and 4.09 of the Original Indenture
shall not be applicable to the 9 3/8% Notes.
(b) Section 4.10 of the Original Indenture is amended in its
entirety with respect to the 9 3/8% Notes to read as follows:
33
SECTION 4.10. Limitation on Liens. The Company will not, and
will not permit any Restricted Subsidiary to, directly or indirectly,
enter into, create, incur, assume or suffer to exist any Lien on or
with respect to any Property of the Company or such Restricted
Subsidiary, whether owned on the Issue Date or acquired after the Issue
Date, or any interest therein or any income or profits therefrom,
unless the 9 3/8% Notes or any Subsidiary Guaranty of such Restricted
Subsidiary are secured equally and ratably with, or prior to, any and
all other obligations secured by such Lien, except that the Company and
its Restricted Subsidiaries may enter into, create, Incur, assume or
suffer to exist Liens securing Senior Indebtedness and Permitted Liens.
(c) Article IV of the Original Indenture is amended with
respect to the 9 3/8% Notes by adding Sections 4.11 through 4.20, inclusive, as
follows:
SECTION 4.11. Limitation on Indebtedness. The Company will
not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, Incur any Indebtedness unless, after giving pro
forma effect to the Incurrence of such Indebtedness and the receipt and
application of the proceeds thereof, no Default or Event of Default
would occur as a consequence of, or be continuing following, such
Incurrence and application and either:
(a) after giving pro forma effect to such Incurrence
and application, the Consolidated Interest Coverage Ratio
would exceed 2.5 to 1.0; or
(b) such Indebtedness is Permitted Indebtedness.
SECTION 4.12. Limitation on Restricted Payments. The Company
will not, and will not permit any of its Restricted Subsidiaries to,
directly or indirectly, make any Restricted Payment if, at the time of
and after giving effect to the proposed Restricted Payment:
(a) any Default or Event of Default would have occurred and be
continuing;
(b) the Company could not Incur at least $1.00 of additional
Indebtedness pursuant to clause (a) of Section 4.11; or
(c) the aggregate amount expended or declared for all
Restricted Payments from the Issue Date would exceed the sum of
(without duplication):
(1) 50% of the aggregate Consolidated Net Income of
the Company accrued during the period (treated as one
accounting period) commencing on the first day of the fiscal
quarter during which the Issue Date occurs, and ending on the
last day of the fiscal quarter immediately preceding the date
of such proposed Restricted Payment (or, if such aggregate
Consolidated Net Income shall be a loss, minus 100% of such
loss),
34
(2) the aggregate net cash proceeds, or the Fair
Market Value of Property other than cash (provided that, in
the case of Property that is Capital Stock, such Capital Stock
falls within the meaning of clause (b) of the definition of
"Additional Assets"), received by the Company from the
issuance or sale (other than to a Subsidiary of the Company or
an employee stock ownership plan or trust established by the
Company or any such Subsidiary for the benefit of their
employees) by the Company of its Capital Stock (other than
Disqualified Stock) after the Issue Date, net of attorneys'
fees, accountants' fees, underwriters' or placement agents'
fees, discounts or commissions and brokerage, consultant and
other fees actually Incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof,
(3) the aggregate net cash proceeds, or the Fair
Market Value of Property other than cash, received by the
Company as capital contributions to the Company (other than
from a Subsidiary of the Company) on or after the Issue Date,
(4) the aggregate net cash proceeds received by the
Company from the issuance or sale (other than to any
Subsidiary of the Company or an employee stock ownership plan
or trust established by the Company or any such Subsidiary for
the benefit of their employees) on or after the Issue Date of
convertible Indebtedness that has been converted into or
exchanged for Capital Stock (other than Disqualified Stock) of
the Company, together with the aggregate cash received by the
Company at the time of such conversion or exchange or received
by the Company from any conversion or exchange of convertible
Senior Indebtedness or convertible Pari Passu Indebtedness
issued or sold (other than to any Subsidiary of the Company or
an employee stock ownership plan or trust established by the
Company or any such Subsidiary for the benefit of their
employees) prior to the Issue Date, excluding:
(A) any such Indebtedness issued or sold to
the Company or a Subsidiary of the Company or an
employee stock ownership plan or trust established by
the Company or any such Subsidiary for the benefit of
their employees, and
(B) the aggregate amount of any cash or
other Property distributed by the Company or any
Restricted Subsidiary upon any such conversion or
exchange,
(5) to the extent not otherwise included in the
Company's Consolidated Net Income, an amount equal to the net
reduction in Investments made by the Company and its
Restricted Subsidiaries subsequent to the Issue Date in any
Person resulting from:
35
(A) payments of interest on debt, dividends,
repayments of loans or advances or other transfers or
distributions of Property, in each case to the
Company or any Restricted Subsidiary from any Person
other than the Company or a Restricted Subsidiary,
and in an amount not to exceed the book value of such
Investments previously made in such Person that were
treated as Restricted Payments, or
(B) the designation of any Unrestricted
Subsidiary as a Restricted Subsidiary, and in an
amount not to exceed the lesser of:
(i) the book value of all
Investments previously made in such
Unrestricted Subsidiary that
(ii) were treated as Restricted
Payments, and the Fair Market Value of the
Company's and its Restricted Subsidiaries'
interest in such Unrestricted Subsidiary,
and
(6) $15.0 million.
The limitations set forth in the preceding paragraph will not
prevent the Company or any Restricted Subsidiary from making the
following Restricted Payments so long as, at the time thereof, no
Default or Event of Default shall have occurred and be continuing:
(a) the payment of any dividend on Capital Stock of
the Company or any Restricted Subsidiary within 60 days after
the declaration thereof, if at such declaration date such
dividend could have been paid in compliance with the preceding
paragraph;
(b) the repurchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company or
any of its Subsidiaries pursuant to the terms of agreements
(including employment agreements) or plans (including employee
stock ownership plans but excluding other plans to purchase
such Capital Stock in open market transactions, together with,
in the case of employee stock ownership plans, loans to or
Investments therein in an amount sufficient to fund such
repurchase, redemption or other acquisition or retirement by
such plan) approved by the Company's Board of Directors,
including any such repurchase, redemption, acquisition or
retirement of shares of such Capital Stock that is deemed to
occur upon the exercise of stock options or similar rights if
such shares represent all or a portion of the exercise price
or are surrendered in connection with satisfying Federal
income tax obligations; provided, however, that the aggregate
amount of such repurchase, redemptions, acquisitions and
retirements shall not exceed the sum of:
(1) $5.0 million in any twelve-month period,
and
36
(2) the aggregate net proceeds, if any,
received by the Company during such twelve-month
period from any issuance of such Capital Stock
pursuant to such agreements or plans;
(c) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company or
any Restricted Subsidiary, in exchange for, or out of the
aggregate net cash proceeds of, a substantially concurrent
issuance and sale (other than to a Subsidiary of the Company
or an employee stock ownership plan or trust established by
the Company or any of its Subsidiaries, for the benefit of
their employees) of Capital Stock of the Company (other than
Disqualified Stock);
(d) the purchase, redemption, legal defeasance,
acquisition or retirement for value of any Subordinated
Indebtedness in exchange for, or out of the proceeds of the
substantially concurrent sale of, Capital Stock of the Company
(other than Disqualified Stock and other than Capital Stock
issued or sold to a Subsidiary of the Company or an employee
stock ownership plan or trust established by the Company or
any such Subsidiary for the benefit of their employees);
(e) the making of any principal payment on or the
repurchase, redemption, legal defeasance or other acquisition
or retirement for value of Subordinated Indebtedness in
exchange for, or out of the aggregate net cash proceeds of a
substantially concurrent Incurrence (other than a sale to a
Subsidiary of the Company) of Subordinated Indebtedness so
long as such new Indebtedness is Permitted Refinancing
Indebtedness;
(f) loans, in an aggregate principal amount at any
one time outstanding of not more than $2.0 million, made to
officers, directors or employees of the Company or any
Restricted Subsidiary approved by the Board of Directors (or
by a duly authorized officer), the net cash proceeds of which
are used solely:
(1) to purchase common stock of the Company
in connection with a restricted stock or employee
stock purchase plan, or to exercise stock options
received pursuant to an employee or director stock
option plan or other incentive plan, in a principal
amount not to exceed the purchase price of such
common stock or the exercise price of such stock
options, or
(2) to refinance loans, together with
accrued interest thereon, made pursuant to item (1)
of this clause (f).
The actions described in clauses (a) and (b) of this paragraph
shall be included in the calculation of the amount of Restricted
Payments. The actions described in clauses (c), (d), (e) and (f) of
this paragraph shall be excluded in the calculation of the amount of
Restricted Payments, provided that the net cash
37
proceeds from any issuance or sale of Capital Stock or Subordinated
Indebtedness of the Company pursuant to such clause (c), (d) or (e)
shall be excluded from any calculations pursuant to clause (2), (3) or
(4) under the immediately preceding paragraph.
SECTION 4.13. Limitation on Issuance or Sale of Capital Stock
of Restricted Subsidiaries. The Company will not:
(a) permit any Restricted Subsidiary to sell or otherwise
issue any Capital Stock other than to the Company or one of its Wholly
Owned Subsidiaries; or
(b) sell, hypothecate or otherwise dispose of any shares of
Capital Stock of any Restricted Subsidiary, or permit any Restricted
Subsidiary to do so, except, in each case, for:
(1) directors' qualifying shares, or
(2) a sale of all the Capital Stock of a Restricted
Subsidiary owned by the Company or its Subsidiaries effected
in accordance with Section 4.14.
In the event of the consummation of a sale of all the Capital
Stock of a Restricted Subsidiary pursuant to the foregoing clause (2)
and the execution and delivery of a supplemental indenture in form
satisfactory to the Trustee, any such Restricted Subsidiary that is
also a Subsidiary Guarantor shall be released from all its obligations
under its Subsidiary Guaranty.
For purposes of this covenant, the creation of a Lien on any
Capital Stock of a Restricted Subsidiary to secure Indebtedness of the
Company or any of its Restricted Subsidiaries will not be deemed to be
a violation of this covenant; provided that any sale or disposition by
the secured party of such Capital Stock following foreclosure of its
Lien will be subject to this covenant.
SECTION 4.14. Limitation on Asset Sales. The Company will not,
and will not permit any Restricted Subsidiary to, consummate any Asset
Sale unless:
(a) the Company or such Restricted Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least
equal to the Fair Market Value of the Property subject to such Asset
Sale; and
(b) all of the consideration paid to the Company or such
Restricted Subsidiary in connection with such Asset Sale is in the form
of cash, Permitted Short-Term Investments, Liquid Securities, Exchange
Properties or the assumption by the purchaser of liabilities of the
Company (other than liabilities of the Company that are by their terms
subordinated to the 9 3/8% Notes) or liabilities of any Subsidiary
Guarantor that made such Asset Sale (other than liabilities of a
Subsidiary Guarantor that are by their terms subordinated to such
Subsidiary
38
Guarantor's Subsidiary Guaranty), in each case as a result of which the
Company and its remaining Restricted Subsidiaries are no longer liable
for such liabilities, such consideration being defined as "Permitted
Consideration"; provided, however, that the Company and its Restricted
Subsidiaries shall be permitted to receive Property other than
Permitted Consideration, so long as the aggregate Fair Market Value of
all such Property other than Permitted Consideration received from
Asset Sales and held by the Company or any Restricted Subsidiary at any
one time shall not exceed 10.0% of Adjusted Consolidated Net Tangible
Assets.
The Net Available Cash from Asset Sales by the Company or a
Restricted Subsidiary may be applied by the Company or such Restricted
Subsidiary, to the extent the Company or such Restricted Subsidiary
elects (or is required by the terms of any Senior Indebtedness of the
Company or a Subsidiary Guarantor), to:
(a) prepay, repay or purchase Senior Indebtedness of the
Company or a Subsidiary Guarantor (in each case excluding Indebtedness
owed to the Company or an Affiliate of the Company);
(b) to reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net
Available Cash received by the Company or another Restricted
Subsidiary); or
(c) purchase 9 3/8% Notes or purchase both 9 3/8% Notes and
one or more series or issues of other Pari Passu Indebtedness on a pro
rata basis (excluding 9 3/8% Notes and Pari Passu Indebtedness owed by
the Company or an Affiliate of the Company).
Any Net Available Cash from an Asset Sale not applied in
accordance with the preceding paragraph within 365 days from the date
of such Asset Sale shall constitute "Excess Proceeds." When the
aggregate amount of Excess Proceeds exceeds $10.0 million, the Company
will be required to make an offer (a "Prepayment Offer") to purchase
9 3/8% Notes having an aggregate principal amount equal to the
aggregate amount of Excess Proceeds at a purchase price equal to 100%
of the principal amount of such 9 3/8% Notes plus accrued and unpaid
interest, if any, to the Purchase Date (as defined) in accordance with
the procedures (including proration in the event of oversubscription)
set forth in the Indenture, but, if the terms of any Pari Passu
Indebtedness require that a Pari Passu Offer be made contemporaneously
with the Prepayment Offer, then the Excess Proceeds shall be prorated
between the Prepayment Offer and such Pari Passu Offer in accordance
with the aggregate Outstanding principal amounts of the 9 3/8% Notes
and such Pari Passu Indebtedness, and the aggregate principal amount of
9 3/8% Notes for which the Prepayment Offer is made shall be reduced
accordingly. If the aggregate principal amount of 9 3/8% Notes tendered
by Holders thereof exceeds the amount of available Excess Proceeds,
then such Excess Proceeds will be allocated pro rata according to the
principal amount of the 9 3/8% Notes tendered and the Trustee will
select the 9 3/8% Notes to be purchased in accordance with this
Indenture. To the extent that any portion of the
39
amount of Excess Proceeds remains after compliance with the second
sentence of this paragraph and provided that all Holders of 9 3/8%
Notes have been given the opportunity to tender their 9 3/8% Notes for
purchase as described in the following paragraph in accordance with the
Indenture, the Company and its Restricted Subsidiaries may use such
remaining amount for purposes permitted by the Indenture and the amount
of Excess Proceeds will be reset to zero.
Within 30 days after the 365th day following the date of an
Asset Sale, the Company shall, if it is obligated to make an offer to
purchase the 9 3/8% Notes pursuant to the preceding paragraph, send a
written Prepayment Offer notice, by first-class mail, to the Holders of
the 9 3/8% Notes (the "Prepayment Offer Notice"), accompanied by such
information regarding the Company and its Subsidiaries as the Company
believes will enable such Holders of the 9 3/8% Notes to make an
informed decision with respect to the Prepayment Offer. The Prepayment
Offer Notice will state, among other things:
(a) that the Company is offering to purchase 9 3/8% Notes
pursuant to the provisions of the Indenture;
(b) that any 9 3/8% Note (or any portion thereof) accepted for
payment (and duly paid on the Purchase Date) pursuant to the Prepayment
Offer shall cease to accrue interest on the Purchase Date;
(c) that any 9 3/8% Notes (or portions thereof) not properly
tendered will continue to accrue interest;
(d) the purchase price and purchase date, which shall be,
subject to any contrary requirements of applicable law, no less than 30
days nor more than 60 days after the date the Prepayment Offer Notice
is mailed (the "Purchase Date");
(e) the aggregate principal amount of 9 3/8% Notes to be
purchased;
(f) a description of the procedure that Holders of 9 3/8%
Notes must follow in order to tender their 9 3/8% Notes for payment;
and
(g) all other instructions and materials necessary to enable
Holders to tender 9 3/8% Notes pursuant to the Prepayment Offer.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) under the Exchange Act and any other
securities laws or regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of 9 3/8%
Notes as described above. To the extent that the provisions of any
securities laws or regulations conflict with the provisions relating to
the Prepayment Offer, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached
its obligations described above by virtue thereof.
40
SECTION 4.15. Incurrence of Layered Indebtedness. The
Indenture provides that:
(a) the Company will not Incur any Indebtedness that is
subordinated or junior in right of payment to any Senior Indebtedness
of the Company unless such Indebtedness constitutes Indebtedness that
is junior to, or pari passu with, the 9 3/8% Notes in right of payment;
and
(b) no Subsidiary Guarantor will Incur any Indebtedness that
is subordinated or junior in right of payment to any Senior
Indebtedness of such Subsidiary Guarantor unless such Indebtedness
constitutes Indebtedness that in right of payment is junior to, or pari
passu with, such Subsidiary Guarantor's Subsidiary Guaranty.
SECTION 4.16. Limitation on Transactions with Affiliates. The
Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, conduct any business or enter
into any transaction or series of transactions (including the sale,
transfer, disposition, purchase, exchange or lease of Property, the
making of any Investment, the giving of any Guarantee or the rendering
of any service) with or for the benefit of any Affiliate of the Company
(other than the Company or a Wholly Owned Subsidiary), unless:
(a) such transaction is set forth in writing;
(b) such transaction or series of transactions is on terms no
less favorable to the Company or such Restricted Subsidiary than those
that could be obtained in a comparable arm's-length transaction with a
Person that is not an Affiliate of the Company or such Restricted
Subsidiary; and
(c) with respect to a transaction or series of transactions
involving aggregate payments by or to the Company or such Restricted
Subsidiary having a Fair Market Value equal to or in excess of:
(1) $1.0 million but less than $5.0 million, an
officer of the Company certifies that such transaction or
series of transactions complies with clause (b) of this
paragraph, as evidenced by an Officers' Certificate delivered
to the Trustee,
(2) $5.0 million but less than $20.0 million, the
Board of Directors of the Company (including a majority of the
disinterested members of such Board of Directors) approves
such transaction or series of transactions and certifies that
such transaction or series of transactions complies with
clause (b) of this paragraph, as evidenced by a certified
resolution delivered to the Trustee, or
(3) $20.0 million,
41
(A) the Company receives from an
independent, nationally recognized investment banking
firm or appraisal firm, in either case specializing
or having a specialty in the type and subject matter
of the transaction (or series of transactions) at
issue, a written opinion that such transaction (or
series of transactions) is fair, from a financial
point of view, to the Company or such Restricted
Subsidiary, and
(B) such Board of Directors (including a
majority of the disinterested members of the Board of
Directors of the Company) approves such transaction
or series of transactions and certifies that such
transaction or series of transactions complies with
clause (b) of this paragraph, as evidenced by a
certified resolution delivered to the Trustee.
The preceding limitations of this Section 4.16 do not apply to:
(a) the payment of reasonable and customary regular
fees to directors of the Company or any of its Restricted
Subsidiaries who are not employees of the Company or any of
its Restricted Subsidiaries;
(b) indemnities of officers and directors of the
Company or any Subsidiary consistent with such Person's
charter, bylaws and applicable statutory provisions;
(c) any issuance of securities, or other payments,
awards or grants in cash, securities or otherwise pursuant to,
or the funding of, employment arrangements, stock options and
employee stock purchase and ownership plans approved by the
Board of Directors of the Company;
(d) loans made to:
(1) officers, directors or employees of the
Company or any Restricted Subsidiary approved by the
Board of Directors of the Company, the net proceeds
of which are used solely to purchase common stock of
the Company in connection with a restricted stock or
employee stock purchase plan, or to exercise stock
options received pursuant to an employee or director
stock option plan or other incentive plan, in a
principal amount not to exceed the purchase price of
such common stock or the exercise price of such stock
options, or
(2) refinance loans, together with accrued
interest thereon, made pursuant to this clause (d);
(e) advances and loans to officers, directors and
employees of the Company or any Subsidiary in the ordinary
course of business (including, without limitation, non-cash
loans for the purchase of joint
42
interests in exploratory and developmental oil and gas
prospects or other similar ventures offered by the Company),
provided such loans and advances (excluding loans or advances
made pursuant to the preceding clause (d)) do not exceed $2.0
million at any one time outstanding;
(f) any Restricted Payment permitted to be paid
pursuant to Section 4.12.
(g) any transaction or series of transactions between
the Company and one or more Restricted Subsidiaries or between
two or more Restricted Subsidiaries in the ordinary course of
business, provided that no more than 10% of the total voting
power of the Voting Stock of any such Restricted Subsidiary is
owned by an Affiliate of the Company (other than a Restricted
Subsidiary); and
(h) any transaction or series of transactions
pursuant to any agreement or obligation of the Company or any
of its Restricted Subsidiaries in effect on the Issue Date.
SECTION 4.17. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company will not, and will not permit any
of its Restricted Subsidiaries to, directly or indirectly, create or
otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the legal right of any Restricted
Subsidiary to:
(a) pay dividends, in cash or otherwise, or make any
other distributions on or in respect of its Capital Stock, or
pay any Indebtedness or other obligation owed, to the Company
or any other Restricted Subsidiary;
(b) make loans or advances to the Company or any
other Restricted Subsidiary; or
(c) transfer any of its Property to the Company or
any other Restricted Subsidiary.
Such limitation will not apply:
(1) with respect to clauses (a), (b) and (c), to
encumbrances and restrictions:
(A) in agreements and instruments as in
effect on the Issue Date,
(B) relating to Indebtedness of a Restricted
Subsidiary and existing at the time it became a
Restricted Subsidiary if such encumbrance or
restriction was not created in anticipation of or in
43
connection with the transactions pursuant to which
such Restricted Subsidiary became a Restricted
Subsidiary, or
(C) that result from the renewal,
refinancing, extension or amendment of an agreement
that is the subject of clause (c)(1)(A) or (B) above
or clause (c)(2)(A) or (B) below, provided that such
encumbrance or restriction is not materially less
favorable to the Holders of 9 3/8% Notes than those
under or pursuant to the agreement so renewed,
refinanced, extended or amended, and,
(2) with respect to clause (c) only, to:
(A) restrictions pursuant to Liens permitted
to be Incurred and secured without also securing the
9 3/8% Notes under Section 4.10 and that limit the
right of the debtor to dispose of the Property
subject to such Lien,
(B) any encumbrance or restriction
applicable to Property at the time it is acquired by
the Company or a Restricted Subsidiary, so long as
such encumbrance or restriction relates solely to the
Property so acquired and was not created in
anticipation of or in connection with such
acquisition,
(C) customary provisions restricting
subletting or assignment of leases and customary
provisions in other agreements that restrict
assignment of such agreements or rights thereunder,
and
(D) customary restrictions contained in
asset sale agreements limiting the transfer of such
assets pending the closing of such sale.
SECTION 4.18. Future Subsidiary Guarantors. The Company shall
cause each Restricted Subsidiary (except an Exempt Foreign Subsidiary)
that:
(a) Incurs Indebtedness or issues Preferred Stock
following the Issue Date; or
(b) has Indebtedness or Preferred Stock outstanding
on the date on which such Restricted Subsidiary becomes a
Restricted Subsidiary,
to execute and deliver to the Trustee a supplemental indenture
providing for a Subsidiary Guaranty pursuant to Section 14.06 at the
time such Restricted Subsidiary Incurs such Indebtedness or becomes a
Restricted Subsidiary; provided, however, that such Restricted
Subsidiary shall not be required to deliver a supplemental indenture
providing for a Subsidiary Guaranty if the aggregate amount of such
Indebtedness or Preferred Stock, together with all other
44
Indebtedness and Preferred Stock then outstanding among Restricted
Subsidiaries (including Exempt Foreign Subsidiaries) that are not
Subsidiary Guarantors, is less than $10.0 million.
Any Subsidiary Guarantor that no longer has any outstanding
Indebtedness or Preferred Stock or that again qualifies as an Exempt
Foreign Subsidiary shall be released from and relieved of its
obligations under its Subsidiary Guaranty upon execution and delivery
of a supplemental indenture in form satisfactory to the Trustee.
SECTION 4.19. Restricted and Unrestricted Subsidiaries. Unless
defined or designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company or any of its Restricted
Subsidiaries shall be classified as a Restricted Subsidiary subject to
the provisions of the next paragraph. The Company may designate a
Subsidiary (including a newly formed or newly acquired Subsidiary) of
the Company or any of its Restricted Subsidiaries as an Unrestricted
Subsidiary if:
(a) such Subsidiary does not at such time own any
Capital Stock or Indebtedness of, or own or hold any Lien on
any Property of, the Company or any other Restricted
Subsidiary;
(b) such Subsidiary does not at such time have any
Indebtedness or other obligations that, if in default, would
result (with the passage of time or notice or otherwise) in a
default on any Indebtedness of the Company or any Restricted
Subsidiary; and
(c) (1) such designation is effective immediately
upon such Subsidiary becoming a Subsidiary of the Company or
of a Restricted Subsidiary,
(2) the Subsidiary to be so designated has
total assets of $1,000 or less, or
(3) if such Subsidiary has assets greater
than $1,000, then such redesignation as an
Unrestricted Subsidiary is deemed to constitute a
Restricted Payment in an amount equal to the Fair
Market Value of the Company's direct and indirect
ownership interest in such Subsidiary, and such
Restricted Payment would be permitted to be made at
the time of such designation under Section 4.12.
Except as provided in the immediately preceding sentence, no
Restricted Subsidiary may be redesignated as an Unrestricted
Subsidiary. The designation of an Unrestricted Subsidiary or removal of
such designation shall be made by the Board of Directors of the Company
or a committee thereof pursuant to a certified resolution delivered to
the Trustee and shall be effective as of the date specified in the
applicable certified resolution, which shall not be prior to the date
such
45
certified resolution is delivered to the Trustees. Any Subsidiary
Guarantor that is designated an Unrestricted Subsidiary in accordance
with the terms of this Section 4.19 shall be released from and relieved
of its obligations under its Subsidiary Guaranty upon execution and
delivery of a supplemental indenture in form satisfactory to the
Trustee.
The Company will not, and will not permit any of its
Unrestricted Subsidiaries to, take any action or enter into any
transaction or series of transactions that would result in a Person
becoming a Restricted Subsidiary (whether through an acquisition or
otherwise) unless, after giving effect to such action, transaction or
series of transactions, on a pro forma basis:
(a) the Company could Incur at least $1.00 of
additional Indebtedness pursuant to clause (a) of the first
paragraph of Section 4.11 and
(b) no Default or Event of Default would occur or be
continuing.
SECTION 4.20. Change of Control. Upon the occurrence of a
Change of Control, each Holder of 9 3/8% Notes shall have the right to
require the Company to repurchase all or any part (equal to $1,000 in
principal amount or an integral multiple thereof) of such Holder's
9 3/8% Notes pursuant to the offer described below (the "Change of
Control Offer") at a purchase price in cash (a "Change of Control
Payment") equal to 101% of the principal amount of the 9 3/8% Notes
repurchased, plus accrued and unpaid interest, if any, to the date of
purchase, subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment
date.
Within 30 days following any Change of Control, the Company
shall:
(a) cause a notice of the Change of Control Offer to
be sent at least once to the Dow Xxxxx News Service or similar
business news service in the United States; and
(b) send, by first-class mail, with a copy to the
Trustee, to each Holder of 9 3/8% Notes, at such Xxxxxx's
address appearing in the Debt Security Register, a notice
stating, among other things:
(1) that a Change of Control has occurred
and a Change of Control Offer is being made pursuant
to the Indenture and that all 9 3/8% Notes (or
portions thereof) properly tendered will be accepted
for payment,
(2) the Change of Control Purchase Price and
the purchase date, which shall be, subject to any
contrary requirements of applicable law, a business
day no earlier than 30 days nor later
46
than 60 days from the date the Company mails such
notice (the "Change of Control Payment Date"),
(3) that any 9 3/8% Note (or portion
thereof) accepted for payment (and duly paid on the
Change of Control Payment Date) pursuant to the
Change of Control Offer shall cease to accrue
interest on the Change of Control Payment Date,
(4) that any 9 3/8% Note (or portions
thereof) not properly tendered will continue to
accrue interest,
(5) a description of the transaction or
transactions constituting the Change of Control,
(6) the procedures that the Holders of the
9 3/8% Notes must follow in order to tender their
9 3/8% Notes (or portions thereof) for payment and
the procedures that Holders of 9 3/8% Notes must
follow in order to withdraw an election to tender
9 3/8% Notes (or portions thereof) for payment, and
(7) all other instructions and materials
necessary to enable Holders to tender 9 3/8% Notes
pursuant to the Change of Control Offer.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) under the Exchange Act and any other
securities laws and regulations thereunder to the extent such laws and
regulations are applicable in connection with the purchase of 9 3/8%
Notes pursuant to a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with the
provisions relating to the Change of Control Offer, the Company will
comply with the applicable securities laws and regulations and will not
be deemed to have breached its obligations described above by virtue of
such compliance.
The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the Change of
Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in the Indenture applicable to a Change
of Control Offer made by the Company and purchases all 9 3/8% Notes
validly tendered and not withdrawn under such Change of Control Offer.
SECTION 5. Amendments to Article V the Original Indenture.
(a) Section 5.03 of the Original Indenture is amended in its
entirety with respect to the 9 3/8% Notes to read as follows:
Notwithstanding that the Company may not be subject to the
reporting requirements of Sections 13 and 15(d) of the Exchange Act,
the Company shall
47
file with the SEC and provide the Trustee and Holders with such annual
reports and such information, documents and other reports as are
specified in Sections 13 and 15(d) of the Exchange Act and applicable
to a United States corporation subject to such Sections, such
information, documents and reports to be so filed and provided at the
times specified for the filing of such information, documents and
reports under such Sections; provided, however, that the Company shall
not be so obligated to file such information, documents and reports
with the SEC if the SEC does not permit such filings.
SECTION 6. Amendments to Article VI the Original Indenture.
(a) Section 6.01(e) of the Original Indenture is amended with
respect to the 9 3/8% Notes by deleting the number "60" and substituting the
number "30" in its place.
(b) Section 6.01(f) of the Original Indenture is amended in
its entirety with respect to the 9 3/8% Notes to read as follows: (f) a default
by the Company or any Restricted Subsidiary under any Indebtedness for borrowed
money (other than Non-recourse Purchase Money Indebtedness) that results in
acceleration of the maturity of such Indebtedness, or failure to pay any such
Indebtedness at maturity, in an amount greater than $5.0 million if such
Indebtedness is not discharged or such acceleration is not rescinded or annulled
within 10 days after written notice as provided in the Indenture;
(c) Sections 6.01(g) and 6.01(h) of the Original Indenture are
amended with respect to the 9 3/8% Notes by deleting each reference to
"Restricted Subsidiary" and "Restricted Subsidiaries" therein and substituting
"Significant Subsidiary" or "Significant Subsidiaries", respectively, in its
place.
(d) Section 6.01 of the Original Indenture is amended with
respect to the 9 3/8% Notes by deleting the word "or" from the end of clause (h)
of the first paragraph thereof and by adding the following provisions after
clause (i) of the first paragraph thereof:
(j) one or more final judgments or orders by a court of
competent jurisdiction are entered against the Company or any
Restricted Subsidiary in an uninsured or unindemnified aggregate amount
outstanding at any time in excess of $5.0 million and such judgments or
orders are not discharged, waived, stayed, satisfied or bonded for a
period of 60 consecutive days; or
(k) a Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of the Indenture and
such Subsidiary Guaranty) or a Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guaranty.
(e) Section 6.01 of the Original Indenture is amended by
adding the following sentence to the end of the first paragraph thereof:
Notwithstanding anything to the contrary herein, if an Event of Default
described under clauses (g) or (h) of this paragraph shall occur, the principal
amount of all Debt Securities of any series then Outstanding will automatically,
and without any action by the Trustee or any Holder, become immediately due and
payable.
48
(f) Article VI of the Original Indenture is amended by adding
Section 6.09 as follows:
SECTION 6.09. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist
upon, or plead, or in any manner whatsoever claim or take the benefit
or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the
performance of the Indenture; and the Company (to the extent that it
may lawfully do so) hereby expressly waives all benefit or advantage of
any such law, and shall not hinder, delay or impede the execution of
any power herein granted to the Trustee, but shall suffer and permit
the execution of every such power as though no such law had been
enacted.
SECTION 7. Amendments to Article VII of the Original Indenture.
(a) Section 7.08 of the Original Indenture is amended by
deleting the number "25%" in the fourth paragraph thereof and substituting "10%"
in its place.
SECTION 8. Amendments to Article IX of the Original Indenture.
(a) Section 9.01 of the Original Indenture is amended with
respect to the 9 3/8% Notes by (i) deleting the final clause of paragraph (c)
thereof, beginning with the words ", or to make", (ii) deleting the word "and"
from the end of clause (j) of the first paragraph thereof, (iii) substituting a
";" for the "." at the end of clause (k) of the first paragraph thereof and (iv)
adding the following provisions to the end of the first paragraph thereof:
(l) to provide for uncertificated 9 3/8% Notes in addition to
or in place of certificated 9 3/8% Notes;
(m) to make any change that does not adversely affect the
rights of any Holder of 9 3/8% Notes in any material respect;
(n) to add or remove any Subsidiary Guarantors pursuant to the
procedures set forth herein; and
(o) to provide for the issuance pursuant to an exemption from
registration under the Securities Act of additional Debt Securities of
a series after the original date of issuance of such series; provided
that such additional Debt Securities bear appropriate legends and have
the benefit of registration rights; provided, further, that the
supplemental indenture pursuant to which such series was established
provides for the issuance of additional Debt Securities of such series
pursuant to an exemption from registration under the Securities Act.
(b) Section 9.01 of the Original Indenture is further amended
by adding the word "adversely" immediately after the word "which" and
immediately before the words "affects the Trustee's own rights" in the first
sentence of the second paragraph of Section 9.01.
49
(c) Section 9.02 of the Original Indenture is amended with
respect to the 9 3/8% Notes by deleting the word "or" from the end of clause
(vii) of the first paragraph thereof, deleting the "." at the end of clause
(viii) of the first paragraph thereof and by adding the following provisions to
the end of the first paragraph thereof:
; (ix) at any time after a Change of Control has occurred,
change the time at which the Change of Control Offer relating thereto
must be made or at which the 9 3/8% Notes must be repurchased pursuant
to such Change of Control Offer or (x) impair the right of any Holder
to receive payment of principal of and interest on such Holder's Debt
Securities on or after the due dates therefor or to institute suit for
the enforcement of any payment on or with respect to such Holder's Debt
Securities or any Subsidiary Guaranty.
(d) Section 9.02 of the Original Indenture is further amended
by adding the words "in the Trustee's opinion adversely" immediately after the
third occurrence of the word "Indenture" and immediately before the words
"affects the Trustee's own rights" in the first sentence of the third paragraph
of Section 9.02.
(e) Article IX of the Original Indenture is amended by adding
Section 9.05 as follows:
SECTION 9.05. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to
be paid any consideration, whether by way of interest, fee or
otherwise, to any Holder of Debt Securities of a series for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of the Indenture or the Debt Securities of such series
unless such consideration is offered to be paid to all Holders of such
series that so consent, waive or agree to amend in the time frame set
forth in solicitation documents relating to such consent, waiver or
agreement.
(f) The first sentences of both Section 9.01 and 9.02 of the
Original Indenture are amended with respect to the 9 3/8% Notes by adding the
words "any Subsidiary Guarantors" immediately before the words "and the
Trustee."
SECTION 9. Amendments to Article X of the Original Indenture.
(a) Section 10.01 of the Original Indenture is amended in its
entirety with respect to the 9 3/8% Notes to read as follows:
SECTION 10.01. Consolidations and Mergers of the Company. The
Company shall not consolidate with or merge with or into any Person, or
sell, transfer, lease or otherwise dispose of, in one transaction or
series of transactions, all or substantially all of the Property of the
Company and the Restricted Subsidiaries taken as whole, unless:
(a) the resulting, surviving or transferee Person
(the "Successor Company") shall be a Person organized or
existing under the laws of the United States of America, any
State thereof or the District of Columbia
50
and the Successor Company (if not the Company) shall expressly
assume, by a supplemental indenture, executed and delivered to
the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the 9 3/8% Notes and the
Indenture;
(b) in the case of a disposition of all or
substantially all the Property of the Company and the
Restricted Subsidiaries taken as a whole, such Property shall
have been so disposed of, as an entirety or virtually as an
entirety to one Person;
(c) immediately after giving effect to such
transaction (and treating, for purposes of this clause (c) and
clauses (d) and (e) below, any Indebtedness that becomes or is
anticipated to become an obligation of the Successor Company
or any Restricted Subsidiary as a result of such transaction
as having been Incurred by such Successor Company or such
Restricted Subsidiary at the time of such transaction), no
Default or Event of Default shall have occurred and be
continuing;
(d) immediately after giving effect to such
transaction, the Successor Company would be able to Incur an
additional $1.00 of Indebtedness pursuant to clause (a) of the
first paragraph under Section 4.11;
(e) immediately after giving effect to such
transaction, the Successor Company shall have Consolidated Net
Worth in an amount that is not less than the Consolidated Net
Worth of the Company immediately prior to such transaction;
and
(f) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or disposition and
such supplemental indenture (if any) comply with the
Indenture.
(b) Section 10.02 of the Original Indenture is amended by
deleting the period at the end of the first sentence of the first paragraph
thereof and by substituting the following in its place:
"; provided, however, that in the case of a lease of all or
substantially all of the Company's Property, the Company shall not be
released from any of the obligations or covenants under the Indenture,
including the obligation to pay the principal of and interest on the
Debt Securities."
SECTION 10. Applicability of and Amendments to Article XI of the
Original Indenture.
(a) Article XI of the Original Indenture shall be applicable
to the 9 3/8% Notes.
(b) Section 11.02(b) of the Original Indenture is superseded
with respect to the 9 3/8% Notes by the following provisions:
51
(b) Subject to Sections 11.02(c) and 11.03, the Company at any
time may terminate (i) all its obligations under the 9 3/8% Notes and
the Indenture with respect to the 9 3/8% Notes ("legal defeasance
option") or (ii) its obligations under Sections 4.10, 4.11, 4.12, 4.13,
4.14, 4.15, 4.16, 4.17, 4.18, 4.19, 4.20, 10.01(d) and 10.01(e), the
operation of Sections 6.01(d) (to the extent relating to Sections
10.01(d) and 10.01(e)), 6.01(e) (to the extent relating to Sections
4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20),
6.01(f), 6.01(g) (to the extent relating to Significant Subsidiaries),
6.01(h) (to the extent relating to Significant Subsidiaries), 6.01(j)
and 6.01(k) ("covenant defeasance option"). The Company may exercise
its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the 9 3/8% Notes may not be accelerated because of an Event of
Default. If the Company exercises its covenant defeasance option,
payment of the 9 3/8% Notes may not be accelerated because of an Event
of Default specified in Sections 6.01(d) and 6.01(e) (with respect to
the provisions of Articles 4 and 10 referred to in the immediately
preceding paragraph) and Sections 6.01(f), 6.01(g) and 6.01(h) (in each
case to the extent relating to Significant Subsidiaries), 6.01(j) and
6.01(k). If the Company exercises its legal defeasance option or its
covenant defeasance option, each Subsidiary Guarantor, if any, shall be
released from all its obligations under its Subsidiary Guaranty.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(c) Section 11.02(c) of the Original Indenture is amended in
its entirety with respect to the 9 3/8% Notes to read as follows:
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.07, 2.09, 4.02, 4.04, 5.01, 7.06, 7.08, 7.10,
11.05, 11.06 and 11.07 shall survive until the 9 3/8% Notes have been
paid in full. Thereafter, the Company's obligations in Sections 7.06,
11.05 and 11.06 shall survive.
(d) Section 11.03(3) of the Original Indenture is amended by
deleting each instance of the number "91" and substituting "123" in its place.
(e) Section 11.07 of the Original Indenture is amended by
deleting the "." at the end thereof and by substituting the following in its
place:
; provided, however, that, if the Company has made any
payment of interest on or principal of any Debt Securities because of
the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Debt Securities to receive such
payment from the money or U.S. Government Obligations held by the
Trustee or paying agent.
52
SECTION 11. Applicability of and Amendments to Article XII of the
Original Indenture.
(a) Article XII of the Original Indenture shall be applicable
to the 9 3/8% Notes, which shall be subordinated to Senior Indebtedness as
provided therein.
(b) Section 12.03 of the Original Indenture is amended in its
entirety to read as follows:
SECTION 12.03. Default on Senior Indebtedness. The Company may
not pay the principal of, or premium, if any, or interest on, the
Subordinated Debt Securities or make any deposit pursuant to Article XI
and may not repurchase, redeem or otherwise retire (except, in the case
of Subordinated Debt Securities that provide for a mandatory sinking
fund pursuant to Section 3.04, by the delivery of Subordinated Debt
Securities by the Company to the Trustee pursuant to the first
paragraph of Section 3.05) any Subordinated Debt Securities
(collectively, "pay the Subordinated Debt Securities") if (i) any
principal, premium or interest or other amounts due in respect of
Senior Indebtedness is not paid within any applicable grace period
(including at maturity) or (ii) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (x)
the default has been cured or waived and any such acceleration has been
rescinded or (y) such Senior Indebtedness has been paid in full in
cash; provided, however, that the Company may pay the Subordinated Debt
Securities without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the
Representative of each issue of Designated Senior Indebtedness. During
the continuance of any default (other than a default described in
clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration), the Company may
not pay the Subordinated Debt Securities for a period (a "Payment
Blockage period") commencing upon the receipt by the Company and the
Trustee of written notice of such default from the Representative of
any Designated Senior Indebtedness specifying an election to effect a
Payment Blockage Period (a "Blockage Notice") and ending 179 days
thereafter (or earlier if such Payment Blockage Period is terminated
(i) by written notice to the Trustee and the Company from the Person or
Persons who gave such Blockage Notice, (ii) by repayment in full in
cash of such Designated Senior Indebtedness or (iii) because the
default giving rise to such Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding
sentence (but subject to the provisions contained in the first sentence
of this Section 12.03), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness and not
rescinded such acceleration, the Company may resume payments on the
Subordinated Debt Securities after the end of such Payment Blockage
Period. Not more than one Blockage Notice may
53
be given in any consecutive 360-day period, irrespective of the number
of defaults with respect to any number of issues of Senior Indebtedness
during such period.
(c) Section 12.04 of the Original Indenture is amended in its
entirety to read as follows:
SECTION 12.04. Acceleration of Payment of Debt Securities. If
payment of the Subordinated Debt Securities is accelerated when any
Designated Senior Indebtedness is outstanding, the Company may not pay
the Subordinated Debt Securities until three Business Days after the
Representatives of all issues of Designated Senior Indebtedness receive
notice of such acceleration and, thereafter, may pay the Subordinated
Debt Securities only if the Indenture otherwise permits payment at that
time.
SECTION 12. Subsidiary Guaranties.
(a) The Original Indenture is amended with respect to the
9 3/8% Notes by adding Article XIV and Article XV as follows:
ARTICLE XIV
Subsidiary Guaranties
SECTION 14.01. Subsidiary Guaranties. Each Subsidiary
Guarantor hereby unconditionally Guaranties, jointly and severally, to
each Holder and to the Trustee and its successors and assigns (a) the
full and punctual payment of principal of and interest on the 9 3/8%
Notes when due, whether at maturity, by acceleration, by redemption or
otherwise, and all other monetary obligations of the Company under the
Indenture and the 9 3/8% Notes and (b) the full and punctual
performance within applicable grace periods of all other obligations of
the Company under the Indenture and the 9 3/8% Notes (all the foregoing
being hereinafter collectively called the "Obligations"). Each
Subsidiary Guarantor further agrees that the Obligations may be
extended or renewed, in whole or in part, without notice or further
assent from such Subsidiary Guarantor, and that such Subsidiary
Guarantor will remain bound under this Article XIV notwithstanding any
extension or renewal of any Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Obligations and
also waives notice of protest for nonpayment. Each Subsidiary Guarantor
waives notice of any Default under the 9 3/8% Notes or the Obligations.
The obligations of each Subsidiary Guarantor hereunder shall not be
affected by (a) the failure of any Holder or the Trustee to assert any
claim or demand or to enforce any right or remedy against the Company
or any other Person under the Indenture, the 9 3/8% Notes or any other
agreement or otherwise; (b) any extension or renewal of any thereof;
(c) any rescission, waiver, amendment or modification of any of the
terms or provisions of the Indenture, the 9 3/8% Notes or any other
agreement; (d) the release of any security held by any Holder or the
Trustee for the Obligations or
54
any of them; (e) the failure of any Holder or the Trustee to exercise
any right or remedy against any other Guarantor of the Obligations; or
(f) any change in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein constitutes a Guarantee of payment, performance and
compliance when due (and not a Guarantee of collection) and waives any
right to require that any resort be had by any Holder or the Trustee to
any security held for payment of the Obligations.
Each Subsidiary Guaranty is, to the extent and in the manner
set forth in Article XV, subordinated and subject in right of payment
to the prior payment in full of all Senior Indebtedness of the
Subsidiary Guarantor giving such Subsidiary Guaranty and each
Subsidiary Guarantor and is made subject to such provisions of the
Indenture.
Except as expressly set forth in Sections 4.13, 4.18, 4.19 and
11.02, the obligations of each Subsidiary Guarantor hereunder shall not
be subject to any reduction, limitation, impairment or termination for
any reason, including any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense of
setoff, counterclaim, recoupment or termination whatsoever or by reason
of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Subsidiary Guarantor herein shall
not be discharged or impaired or otherwise affected by the failure of
any Holder or the Trustee to assert any claim or demand or to enforce
any remedy under the Indenture, the 9 3/8% Notes or any other
agreement, by any waiver or modification of any thereof, by any
Default, failure or delay, willful or otherwise, in the performance of
the obligations, or by any other act or thing or omission or delay to
do any other act or thing which may or might in any manner or to any
extent vary the risk of such Subsidiary Guarantor or would otherwise
operate as a discharge of such Subsidiary Guarantor as a matter of law
or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty herein shall continue to be effective or be reinstated, as the
case may be, if at any time payment, or any part thereof, of principal
of or interest on any Obligation is rescinded or must otherwise be
restored by any Holder or the Trustee upon the bankruptcy or
reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity
against any Subsidiary Guarantor by virtue hereof, upon the failure of
the Company to pay the principal of or interest on any Obligation when
and as the same shall become due, whether at maturity, by acceleration,
by redemption or otherwise, or to perform or comply with any other
Obligation, each Subsidiary Guarantor hereby promises to and will, upon
receipt of written demand by the Trustee, forthwith pay, or cause to be
paid, in cash, to the Holders or the Trustee an amount equal to the sum
of (i) the
55
unpaid amount of such Obligations, (ii) accrued and unpaid interest on
such Obligations (but only to the extent not prohibited by law) and
(iii) all other monetary Obligations of the Company to the Holders and
the Trustee. Each Subsidiary Guarantor agrees that it shall not be
entitled to any right of subrogation in respect of any Obligations
Guaranteed hereby until payment in full in cash of all Obligations and
all obligations to which the Obligations are subordinated as provided
in Article XV. Each Subsidiary Guarantor further agrees that, as
between it, on the one hand, and the Holders and the Trustee, on the
other hand, (x) the maturity of the Obligations Guaranteed hereby may
be accelerated as provided in Article VI for the purposes of such
Subsidiary Guarantor's Subsidiary Guaranty herein, notwithstanding any
stay, injunction or other prohibition preventing such acceleration in
respect of the Obligations Guaranteed hereby, and (y) in the event of
any declaration of acceleration of such Obligations as provided in
Article VI, such Obligations (whether or not due and payable) shall
forthwith become due and payable by such Subsidiary Guarantor for the
purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the
Trustee or any Holder in enforcing any rights under this Section 14.01.
SECTION 14.02. Contribution. Each of the Company and any
Subsidiary Guarantor (a "Contributing Party") agrees (subject to
Articles XII and XV) that, in the event a payment shall be made by any
other Subsidiary Guarantor under any Subsidiary Guaranty (the "Claiming
Guarantor"), the Contributing Party shall indemnify the Claiming
Guarantor in an amount equal to the amount of such payment multiplied
by a fraction, the numerator of which shall be the net worth of the
Contributing Party on the date hereof and the denominator of which
shall be the aggregate net worth of the Company and all the Subsidiary
Guarantors on the date hereof (or, in the case of any Subsidiary
Guarantor becoming a party hereto pursuant to Section 9.01(n), the
determination of indemnification amounts shall be based upon net worth
on the date of the supplemental indenture executed and delivered by
such Subsidiary Guarantor.)
SECTION 14.03. Successors and Assigns. This Article XIV shall
be binding upon each Subsidiary Guarantor and its successors and
assigns and shall inure to the benefit of the successors and assigns of
the Trustee and the Holders and, in the event of any transfer or
assignment of rights by any Holder or the Trustee, the rights and
privileges conferred upon that party in the Indenture and in the 9 3/8%
Notes shall automatically extend to and be vested in such transferee or
assignee, all subject to the terms and conditions of the Indenture.
SECTION 14.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right,
power or privilege under this Article XIV shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any
other or further exercise of any right, power or privilege. The rights,
remedies and benefits of the Trustee and the Holders herein
56
expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article
XIV at law, in equity, by statute or otherwise.
SECTION 14.05. Modification. No modification, amendment or
waiver of any provision of this Article XIV, nor the consent to any
departure by any Subsidiary Guarantor therefrom, shall in any event be
effective unless the same shall be in writing and signed by the
Trustee, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given. No notice to or
demand on any Subsidiary Guarantor in any case shall entitle such
Subsidiary Guarantor to any other or further notice or demand in the
same, similar or other circumstances.
SECTION 14.06. Execution of Supplemental Indenture for Future
Subsidiary Guarantors. Each Subsidiary which is required to become a
Subsidiary Guarantor pursuant to Section 4.18 shall promptly execute
and deliver to the Trustee a supplemental indenture in the form of
Exhibit B hereto pursuant to which such Subsidiary shall become a
Subsidiary Guarantor under this Article XIV and shall Guarantee the
Obligations. Concurrently with the execution and delivery of such
supplemental indenture, the Company shall deliver to the Trustee an
Opinion of Counsel to the effect that such supplemental indenture has
been duly authorized, executed and delivered by such Subsidiary and
that, subject to the application of bankruptcy, insolvency, moratorium,
fraudulent conveyance or transfer and other similar laws relating to
creditors' rights generally and to the principles of equity, whether
considered in a proceeding at law or in equity, the Subsidiary Guaranty
of such Subsidiary Guarantor is a legal, valid and binding obligation
of such Subsidiary Guarantor, enforceable against such Subsidiary
Guarantor in accordance with its terms.
ARTICLE XV
Subordination of Subsidiary Guaranties
SECTION 15.01. Agreement To Subordinate. Each Subsidiary
Guarantor agrees, and each Holder by accepting a 9 3/8% Note agrees,
that the Obligations of such Subsidiary Guarantor are subordinated in
right of payment, to the extent and in the manner provided in this
Article XV, to the payment when due of all Senior Indebtedness of such
Subsidiary Guarantor and that the subordination is for the benefit of
and enforceable by the holders of such Senior Indebtedness. The
Obligations of a Subsidiary Guarantor shall in all respects rank pari
passu with any guarantee of the Company's 10.25% senior subordinated
notes due 2009 (the "2009 Notes") and any future Senior Subordinated
Indebtedness of such Subsidiary Guarantor and senior to all existing
and future junior subordinated Indebtedness of such Subsidiary
Guarantor, and only Senior Indebtedness shall rank senior to the
Obligations of such Subsidiary Guarantor in accordance with the
provisions set forth herein.
57
SECTION 15.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of any Subsidiary Guarantor to
creditors upon a total or partial liquidation or a total or partial
dissolution of such Subsidiary Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating
to such Subsidiary Guarantor or its property:
(1) holders of Senior Indebtedness of such Subsidiary
Guarantor shall be entitled to receive payment in full of such
Senior Indebtedness before holders shall be entitled to
receive any payment pursuant to any Obligations of such
Subsidiary Guarantor; and (2) until the Senior Indebtedness of
any Subsidiary Guarantor is paid in full, any distribution
made by or on behalf of such Subsidiary Guarantor to which
Holders would be entitled but for this Article XV shall be
made to holders of the Senior Debt as their interests may
appear, except that all Holders may receive and retain shares
of stock and any debt securities of such Subsidiary Guarantor
that are subordinated to Senior Indebtedness of such
Subsidiary Guarantor to at least the same extent as the
Obligations of such Subsidiary Guarantor are subordinated to
Senior Indebtedness of such Subsidiary Guarantor.
SECTION 15.03. Default on Senior Indebtedness of Subsidiary
Guarantor. No Subsidiary Guarantor may make any payment pursuant to any
of its Obligations or repurchase, redeem or otherwise retire or defease
any 9 3/8% Notes or other Obligations (collectively, "pay its
Subsidiary Guaranty") if (i) any Senior Indebtedness of such Subsidiary
Guarantor is not paid within any applicable grace period (including at
maturity) or (ii) any other default on Senior Indebtedness of such
Subsidiary Guarantor occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in
either case, (x) the default has been cured or waived and any such
acceleration has been rescinded or (y) such Senior Indebtedness has
been paid in full; provided, however, that any Subsidiary Guarantor may
pay its Subsidiary Guaranty without regard to the foregoing if such
Subsidiary Guarantor and the Trustee receive written notice approving
such payment from the Representatives of each issue of Senior
Indebtedness of such Subsidiary Guarantor. No Subsidiary Guarantor may
pay its Subsidiary Guaranty during the continuance of any Payment
Blockage Period after receipt by the Company and the Trustee of a
Payment Blockage Notice under Section 12.03. Notwithstanding the
provisions described in the immediately preceding sentence, unless the
holders of Senior Indebtedness of such Subsidiary Guarantor giving such
Payment Blockage Notice or the Representative of such holders shall
have accelerated the maturity of such Senior Indebtedness and not
rescinded such acceleration, any Subsidiary Guarantor may resume
(unless otherwise prohibited as described in the first sentence of this
paragraph) payments pursuant to its Subsidiary Guaranty after such
Payment Blockage Period.
SECTION 15.04. Demand for Payment. If a demand for payment is
made on a Subsidiary Guarantor pursuant to Article XIV, such Subsidiary
Guarantor
58
may not pay its Subsidiary Guaranty until three Business Days after the
Representatives of all issues of Senior Indebtedness of such Subsidiary
Guarantor receive notice of such acceleration and, thereafter, may pay
its Subsidiary Guaranty only if the Indenture otherwise permits payment
at that time.
SECTION 15.05. When Distribution Must Be Paid Over. If a
distribution is made to Holders that because of this Article XV should
not have been made to them, the Holders who receive the distribution
shall hold it in trust for holders of the relevant Senior Indebtedness
and pay it over to them or their Representatives as their interests may
appear.
SECTION 15.06. Subrogation. After all Senior Indebtedness of a
Subsidiary Guarantor is paid in full and until the 9 3/8% Notes are
paid in full, Holders shall be subrogated to the rights of holders of
Senior Indebtedness to receive distributions applicable to Senior
Indebtedness. A distribution made under this Article XV to holders of
such Senior Indebtedness that otherwise would have been made to Holders
is not, as between the relevant Subsidiary Guarantor and Holders, a
payment by such Subsidiary Guarantor on such Senior Indebtedness.
SECTION 15.07. Relative Rights. This Article XV defines the
relative rights of Holders and holders of Senior Indebtedness of a
Subsidiary Guarantor. Nothing in the Indenture shall:
(1) impair, as between a Subsidiary Guarantor and
Holders, the obligation of such Subsidiary Guarantor, which is
absolute and unconditional, to pay the Obligations to the
extent set forth in Article XIV or the relevant Subsidiary
Guaranty; or (2) prevent the Trustee or any Holder from
exercising its available remedies upon a default by such
Subsidiary Guarantor under the Obligations, subject to the
rights of holders of Senior Indebtedness of such Subsidiary
Guarantor to receive distributions otherwise payable to
Holders.
SECTION 15.08. Subordination May Not Be Impaired by Subsidiary
Guarantor. No right of any holder of Senior Indebtedness of any
Subsidiary Guarantor to enforce the subordination of the Obligation of
such Subsidiary Guarantor shall be impaired by any act or failure to
act by such Subsidiary Guarantor or by its failure to comply with the
Indenture.
SECTION 15.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 15.03, the Trustee or paying agent may continue
to make payments on any Subsidiary Guaranty and shall not be charged
with knowledge of the existence of facts that would prohibit the making
of any such payments unless, not less than two Business Days prior to
the date of such payment, a responsible trust officer receives written
notice satisfactory to it that payments may not be made under this
Article XV. The Company, the relevant Subsidiary Guarantor, the
Registrar, any paying agent, a Representative or a holder of Senior
59
Indebtedness of any Subsidiary Guarantor may give the notice; provided,
however, that, if an issue of Senior Indebtedness of any Subsidiary
Guarantor has a Representative, only the Representative may give the
notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness with the same rights it would have if it were not
Trustee. The Registrar and any paying agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in
this Article XV with respect to any Senior Indebtedness of any
Subsidiary Guarantor that may at any time be held by it, to the same
extent as any other holder of Senior Indebtedness; and nothing in
Article XV shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article XV shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.06.
SECTION 15.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of
Senior Indebtedness of any Subsidiary Guarantor, the distribution may
be made and the notice given to their Representative (if any).
SECTION 15.11. Article XV Not To Prevent Events of Default
Under a Subsidiary Guaranty or Limit Right To Demand Payment. The
failure to make a payment pursuant to a Subsidiary Guaranty by reason
of any provision in this Article XV shall not be construed as
preventing the occurrence of a Default under such Subsidiary Guaranty.
Nothing in this Article XV shall have any effect on the right of the
Holders or the Trustee to make a demand for payment on any Subsidiary
Guarantor pursuant to Article XIV or the relevant Subsidiary Guaranty.
SECTION 15.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article XV, the Trustee and the Holders
shall be entitled to rely (i) upon any order or decree of a court of
competent jurisdiction in which any proceedings of the nature referred
to in Section 15.02 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Holders or (iii) upon the
Representatives for the holders of Senior Indebtedness of any
Subsidiary Guarantor for the purpose of ascertaining the Persons
entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other Indebtedness of such Subsidiary
Guarantor, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to
this Article XV. In the event that the Trustee determines, in good
faith, that evidence is required with respect to the right of any
Person as a holder of Senior Indebtedness of any Subsidiary Guarantor
to participate in any payment or distribution pursuant to this Article
XV, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior
Indebtedness of such Subsidiary Guarantor held by such Person, the
extent to which such Person is entitled to participate in such payment
or distribution and other facts pertinent to the rights of such Person
under this Article
60
XV, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right
of such Person to receive such payment. The provisions of Sections 7.01
and 7.02 shall be applicable to all actions or omissions of actions by
the Trustee pursuant to this Article XV.
SECTION 15.13. Trustee To Effectuate Subordination. Each
Holder by accepting a 9 3/8% Note authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holders and the
holders of Senior Indebtedness of any Subsidiary Guarantor as provided
in this Article XV and appoints the Trustee as attorney-in-fact for any
and all such purposes.
SECTION 15.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Subsidiary Guarantor. The Trustee shall not be deemed
to owe any fiduciary duty to the holders of Senior Indebtedness of any
Subsidiary Guarantor and shall not be liable to any such holders if it
shall mistakenly pay over or distribute to Holders or the Company or
any other Person, money or assets to which any holders of such Senior
Indebtedness shall be entitled by virtue of this Article XV or
otherwise.
SECTION 15.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a 9 3/8% Note
acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each
holder of any Senior Indebtedness of any Subsidiary Guarantor, whether
such Senior Indebtedness was created or acquired before or after the
issuance of the 9 3/8% Notes, to acquire and continue to hold, or to
continue to hold, such Senior Indebtedness and such holder of Senior
Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
SECTION 13. Governing Law. This First Supplemental Indenture and the
9 3/8% Notes shall be governed by and construed in accordance with the laws of
the State of
New York. The Trustee, the Company and each of the Subsidiary
Guarantors agree to submit to the non-exclusive jurisdiction of the competent
courts of the State of
New York sitting in
New York City in any action or
proceeding arising out of or relating to the Indenture or the 9 3/8% Notes.
SECTION 14. Counterparts. This First Supplemental Indenture may be
executed in any number of counterparts, each of which shall be an original but
such counterparts shall together constitute but one and the same instrument.
SECTION 15. Supplemental Indenture Controls. In the event there is any
conflict or inconsistency between the Original Indenture and this First
Supplemental Indenture, the provisions of this First Supplemental Indenture
shall control.
61
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed as of the day and year first above
written.
SWIFT ENERGY COMPANY
By:
--------------------------------------
Name:
Title:
BANK ONE, NA, as Trustee
By:
--------------------------------------
Name:
Title:
62
Exhibit A
[FORM OF THE FACE OF 9 3/8% NOTES]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION, ("DTC"), TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF,
CEDE & Co., HAS AN INTEREST HEREIN.
THIS SECURITY IS A GLOBAL SECURITY AS REFERRED TO IN THE INDENTURE
HEREINAFTER REFERENCED. UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR
THE INDIVIDUAL SECURITIES REPRESENTED HEREBY, THIS GLOBAL SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY
OR BY A NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY OR BY THE DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITORY.
SWIFT ENERGY COMPANY
9 3/8% SENIOR SUBORDINATED NOTE DUE 2012
REGISTERED CUSIP No. 870738 AD 3
No. ___ $200,000,000
Swift Energy Company, a Texas corporation (the "Company", which term
includes any successor under the Indenture hereinafter referred to), for value
received, promises to pay to Cede & Co., or its registered assigns, the
principal sum of Two Hundred Million United States Dollars ($200,000,000) on May
1, 2012.
Interest Payment Dates: May 1, and November 1, commencing November 1,
2002.
Regular Record Dates: April 15 and October 15.
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Reference is hereby made to the further provisions of this 9 3/8% Note
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
IN WITNESS WHEREOF, the Company has caused this 9 3/8% Note to be
signed manually or by facsimile by its duly authorized officers under its
corporate seal.
Date:
SWIFT ENERGY COMPANY
By:
--------------------------------------
Name:
Title:
Attest:
----------------------------------
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Debt Securities of the series designated therein
referred to in the within-mentioned Indenture.
BANK ONE, NA,
as Trustee
By:
--------------------------------------
Authorized Signatory
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[FORM OF THE REVERSE OF 9 3/8% NOTES]
SWIFT ENERGY COMPANY
9 3/8% SENIOR SUBORDINATED NOTE DUE 2012
1. Indenture; Limitations.
The Company issued the 9 3/8% Notes under an Indenture dated as of
April 16, 2002 (the "Original Indenture") and a First Supplemental Indenture
dated as of April 16, 2002 (the "Supplemental Indenture") (the Original
Indenture, as supplemented by the Supplemental Indenture being hereinafter
referred to as the "Indenture"), between the Company and Bank One, NA, as
trustee (the "Trustee") . Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. The terms of the 9 3/8% Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The 9 3/8% Notes are subject to all such terms, and
Holders are referred to the Indenture and the Trust Indenture Act for a
statement of all such terms. To the extent permitted by applicable law, in the
event of any inconsistency between the terms of this 9 3/8% Note and the terms
of the Indenture, the terms of the Indenture shall control.
The 9 3/8% Notes are unsecured senior subordinated obligations of the
Company and the aggregate principal amount of the 9 3/8% Notes which may be
issued, executed, authenticated, delivered and outstanding is unlimited (subject
to Section 1 of the Supplemental Indenture). The Company may, subject to Article
IV of the Indenture, issue Additional 9 3/8% Notes under the Indenture in either
a limited or an unlimited aggregate principal amount. This 9 3/8% Note is one of
the Original 9 3/8% Notes referred to in the Indenture issued in an aggregate
principal amount of $200,000,000. The Additional 9 3/8% Notes may be issued as
part of the same or a different series of Debt Securities as the Original 9 3/8%
Notes. The 9 3/8% Notes include the Original Notes and any Additional 9 3/8%
Notes that may be issued under the Indenture as part of the same series.
2. Principal and Interest.
The Company will pay the principal of this 9 3/8% Note on May 1, 2012.
The Company promises to pay interest on the principal amount of this
9 3/8% Note on each May 1 and November 1 (each an "Interest Payment Date"), as
set forth below, at the rate per annum shown above.
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Interest will be payable semiannually (to the holders of record of the
9 3/8% Notes at the close of business on the April 15 or October 15 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
November 1, 2002.
Interest on the 9 3/8% Notes will accrue from the most recent date to
which interest has been paid or, if no interest has been paid, from April 16,
2002, provided that, if there is no existing Default in the payment of interest
and this 9 3/8% Note is authenticated between a Regular Record Date referred to
on the face hereof and the next succeeding Interest Payment Date, interest shall
accrue from such Interest Payment Date. Interest will be computed on the basis
of a 360-day year of twelve 30-day months.
The Company shall pay interest on overdue principal at the rate borne
by the 9 3/8% Notes plus 1% per annum, and it shall pay interest on overdue
installments of interest, to the extent lawful, at the rate borne by the 9 3/8%
Notes.
3. Method of Payment.
The Company will pay interest (except defaulted interest) on the
principal amount of the 9 3/8% Notes as provided above on each Interest Payment
Date to the persons who are Holders (as reflected in the Debt Security Register
at the close of business on the April 15 and October 15 immediately preceding
the relevant Interest Payment Date), in each case, even if the 9 3/8% Note is
canceled on registration of transfer, registration of exchange, redemption or
repurchase after such record date and on or before the Interest Payment Date,
provided that, with respect to the payment of principal, the Company will make
payment to the Holder that surrenders this 9 3/8% Note to a paying agent on or
after May 1, 2012.
The Company will pay principal, premium, if any, and as provided above,
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts. However, the Company, at its
option, may pay principal, premium, if any, and interest by its check payable in
such money. It may mail an interest check to a Holder's registered address (as
reflected in the Debt Security Register) . Payments in respect of 9 3/8% Notes
represented by a Global Security (including principal, premium and interest)
will be made by wire transfer of immediately available funds to the accounts
specified by The Depository Trust Company. If a payment date is a date other
than a Business Day at a place of payment, payment may be made at that place on
the next succeeding day that is a Business Day and no interest shall accrue for
the intervening period.
4. Paying Agent and Registrar.
Initially, the Trustee will act as authenticating agent, paying agent
and Registrar. The Company may change any authenticating agent, paying agent or
Registrar without
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notice. The Company, any Subsidiary or any Affiliate of any of them may act as
paying agent, Registrar or co-Registrar.
5. Optional Redemption.
Except as set forth in the following paragraph, the 9 3/8% Notes will
not be redeemable at the option of the Company prior to May 1, 2007. Starting on
that date, the Company may redeem all or any portion of the 9 3/8% Notes upon
not less than 30 nor more than 60 days' prior notice, at the redemption prices
set forth below, plus accrued and unpaid interest, if any, to the redemption
date (subject to the right of Holders of record on the relevant record date to
receive interest due on the relevant Interest Payment Date) . The following
prices are for 9 3/8% Notes redeemed during the 12-month period commencing on
May 1 of the years set forth below, and are expressed as percentages of
principal amount:
YEAR REDEMPTION PRICE
---- ----------------
2007 104.688%
2008 103.125%
2009 101.563%
2010 and thereafter 100.000%
The Company may on any one or more occasions prior to May 1, 2005,
redeem up to 33 1/3% of the aggregate principal amount of the 9 3/8% Notes
originally issued with the net proceeds of one or more Equity Offerings of the
Company at a redemption price of 109.375% of the principal amount thereof, plus
accrued and unpaid interest, if any, to the date of redemption (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant Interest Payment Date), provided that at least 66 2/3% of the
aggregate principal amount of the 9 3/8% Notes originally issued remains
Outstanding after the occurrence of such redemption. Any such redemption shall
occur not later than 90 days after the date of the closing of any such Equity
Offering upon not less than 30 or more than 60 days' prior notice. The
redemption shall be made in accordance with procedures set forth in the
Indenture.
If less than all the 9 3/8% Notes are to be redeemed at any time,
selection of 9 3/8% Notes for redemption will be made by the Trustee in
compliance with the requirements of the principal national securities exchange,
if any, on which the 9 3/8% Notes are listed, or, if the 9 3/8% Notes are not so
listed, on a pro rata basis, by lot or by such method as the Trustee shall deem
fair and appropriate.
6. Sinking Fund
The 9 3/8% Notes are not subject to any sinking fund.
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7. Subordination
The 9 3/8% Notes are subordinated to Senior Indebtedness of the
Company. To the extent provided in the Indenture, Senior Indebtedness of the
Company must be paid before the 9 3/8% Notes may be paid. The Company and each
Subsidiary Guarantor agree, and each Holder by accepting a 9 3/8% Note agrees,
to the subordination provisions contained in the Indenture and authorize the
Trustee to give it effect and appoint the Trustee as attorney-in-fact for such
purpose.
8. Repurchase upon a Change of Control.
Upon the occurrence of a Change of Control, each Holder of 9 3/8% Notes
shall have the right to require the Company to repurchase all or any part (equal
to $1,000 in principal amount or an integral multiple thereof) of such Holder's
9 3/8% Notes pursuant to the Change of Control Offer as provided in, and subject
to the terms of, the Indenture at a purchase price in cash equal to 101% of the
principal amount of the 9 3/8% Notes repurchased, plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
Interest Payment Date)
9. Denominations; Transfer; Exchange.
The 9 3/8% Notes are in registered form without coupons in
denominations of $1,000 of principal amount and multiples of $1,000 in excess
thereof. A Holder may register the transfer or exchange of 9 3/8% Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay
any taxes and fees required by law or permitted by the Indenture. The Registrar
need not register the transfer or exchange of any 9 3/8% Notes selected or
called for redemption (except in the case of a 9 3/8% Note redeemed in part, the
portion of the 9 3/8% Note not to be redeemed). Also, it need not register the
transfer or exchange of any 9 3/8% Notes for a period of 15 days before the day
of the mailing of a notice of redemption of 9 3/8% Notes selected for
redemption.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a 9 3/8% Note for all
purposes.
11. Unclaimed Money.
If money for the payment of principal, premium, if any, or interest
remains unclaimed for two years, the Trustee and the paying agent will pay the
money back to the Company at its written request. After that, Holders entitled
to the money must look to the
A-6
Company for payment, unless an abandoned property law designates another Person,
and all liability of the Trustee and such paying agent with respect to such
money shall cease.
12. Discharge Prior to Redemption or Maturity.
Subject to certain conditions, if the Company deposits with the Trustee
money or U.S. Government Obligations sufficient to pay the then outstanding
principal of, premium, if any, and accrued interest on the 9 3/8% Notes to
redemption or maturity, as applicable, the Company and the Subsidiary
Guarantors, if any, may terminate some of or all of their obligations under the
Indenture and the 9 3/8% Notes, except in certain circumstances for certain
sections thereof.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the 9 3/8% Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the 9 3/8% Notes then Outstanding, and any existing
Default or compliance with any provision may be waived with the consent of the
Holders of at least a majority in principal amount of the 9 3/8% Notes then
Outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the 9 3/8% Notes to, among other
things, cure any ambiguity, defect or inconsistency and make any change that
does not adversely affect the interests of any Holder.
14. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the Company
and its Restricted Subsidiaries, among other things, to Incur additional
Indebtedness, make Restricted Payments, use the proceeds from Asset Sales,
suffer to exist restrictions on the ability of Restricted Subsidiaries to make
certain payments to the Company, issue Capital Stock of Restricted Subsidiaries,
engage in transactions with Affiliates, suffer to exist or incur Liens, Incur
layered Indebtedness or merge, consolidate or transfer substantially all of
their assets. Within 120 days after the end of each fiscal year, the Company
shall deliver to the Trustee an Officers' Certificate stating whether or not the
signers know of any Default or Event of Default under such restrictive
covenants.
15. Successor Persons.
Subject to certain exceptions, when a successor Person assumes all the
obligations of its predecessor under the 9 3/8% Notes and the Indenture, the
predecessor Person will be released from those obligations.
A-7
16. Defaults and Remedies.
The following are summaries of Events of Default under the Indenture
with respect to the 9 3/8% Notes:
(a) failure to pay any interest on the 9 3/8% Notes when due,
continued for 30 days;
(b) failure to pay principal of (or premium, if any, on) the
9 3/8% Notes when due;
(c) failure to comply with Article X of the Indenture;
(d) failure to perform any other covenant of the Company or
any Subsidiary Guarantor in the Indenture, continued for 30
days after written notice to the Company from the Trustee or
the Holders of at least 25% in aggregate principal amount of
the Outstanding 9 3/8% Notes;
(e) a default by the Company or any Restricted Subsidiary
under any Indebtedness for borrowed money in an aggregate
amount greater than $5.0 million (other than Non-recourse
Purchase Money Indebtedness) that results in acceleration of
the maturity of such Indebtedness, or failure to pay any such
Indebtedness at maturity, if such Indebtedness is not
discharged or such acceleration is not rescinded or annulled
within 10 days after written notice as provided in the
Indenture;
(f) one or more final judgments or orders by a court of
competent jurisdiction are entered against the Company or any
Restricted Subsidiary in an uninsured or unindemnified
aggregate amount outstanding at any time in excess of $5.0
million and such judgments or orders are not discharged,
waived, stayed, satisfied or bonded for a period of 60
consecutive days;
(g) certain events of bankruptcy, insolvency or reorganization
with respect to the Company or any Significant Subsidiary; or
(h) a Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of the
Indenture and such Subsidiary Guaranty) or a Subsidiary
Guarantor denies or disaffirms its obligations under its
Subsidiary Guaranty.
The Indenture provides that if an Event of Default (other than an Event
of Default described in clause (g) above) with respect to the 9 3/8% Notes at
the time Outstanding shall occur and be continuing, either the Trustee or the
Holders of at least 25% in aggregate principal amount of the Outstanding 9 3/8%
Notes by notice as provided in the Indenture may declare the principal amount of
the 9 3/8% Notes to be due and payable immediately. If an
A-8
Event of Default described in clause (g) above with respect to the 9 3/8% Notes
at the time Outstanding shall occur, the principal amount of all the 9 3/8%
Notes will automatically, and without any action by the Trustee or any Holder,
become immediately due and payable. After any such acceleration, but before a
judgment or decree based on acceleration, the Holders of at least a majority in
aggregate principal amount of the Outstanding 9 3/8% Notes may, under certain
circumstances, rescind and annul such acceleration if all Events of Default,
other than the nonpayment of accelerated principal (or other specified amount),
have been cured or waived as provided in the Indenture.
Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case of an Event of Default shall occur and be continuing, the
Trustee will be under no obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the Holders of the
9 3/8% Notes, unless such Holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the Holders of at least a majority in aggregate principal amount of the
Outstanding 9 3/8% Notes will have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee with respect to the
9 3/8% Notes.
No Holder of 9 3/8% Notes will have any right to institute any
proceeding with respect to the Indenture, or for the appointment of a receiver
or a trustee, or for any other remedy thereunder, unless:
(a) such Holder has previously given to the Trustee written notice of a
continuing Event of Default with respect to the 9 3/8% Notes;
(b) the Holders of at least 25% in aggregate principal amount of the
Outstanding 9 3/8% Notes have made written request, and such Holder or Holders
have offered reasonable indemnity, to the Trustees to institute such proceeding
as trustee; and
(c) the Trustee has failed to institute such proceeding and has not
received from the Holders of at least a majority in aggregate principal amount
of the Outstanding 9 3/8% Notes a direction inconsistent with such request,
within 60 days after such notice, request and offer.
However, such limitations do not apply to a suit instituted by a Holder of
9 3/8% Notes for the enforcement of payment of the principal of or any premium
or interest on such 9 3/8% Notes on or after the applicable due date specified
in such 9 3/8% Notes.
17. Trustee Dealings with the Company or the Guarantors.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from and perform services for the
Subsidiary Guarantors, if any, or
A-9
the Company or their Affiliates and may otherwise deal with the Subsidiary
Guarantors, if any, or the Company or their Affiliates as if it were not the
Trustee.
18. No Recourse Against Others.
No incorporator or any past, present or future partner, shareholder,
other equity holder, officer, director, employee or controlling Person as such,
of the Company or the Subsidiary Guarantors or of any successor Person shall
have any liability for any obligations of the Company or the Subsidiary
Guarantors under the 9 3/8% Notes or the Indenture or for any claim based on, in
respect of or by reason of, such obligations or their creation. Each Holder by
accepting a 9 3/8% Note expressly waives and releases all such liability. The
waiver and release are a condition of, and part of the consideration for the
issuance of the 9 3/8% Notes.
19. Authentication.
This 9 3/8% Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this 9 3/8%
Note.
20. Abbreviations.
Customary abbreviations may be used in the name of a Holder or an
assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by the
entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian) and U/G/M/A (= Uniform Gifts to Minors
Act).
21. Governing Law.
THIS 9 3/8% NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF
NEW YORK.
22. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the 9 3/8% Notes and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Holders. No representation is made as
to the accuracy of such numbers either as printed on the 9 3/8% Notes or as
contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
The Company will furnish to any Holder upon written request and without
charge a copy of the Indenture. Requests may be made to
Swift Energy Company,
00000 Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, Attention: Chief
Financial Officer.
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ASSIGNMENT FORM
To assign this 9 3/8% Note, fill in the form below:
I or we assign and transfer this 9 3/8% Note to
---------------------------------
--------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
--------------------------------------------------------------------------------
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint __________________________ agent to transfer this 9 3/8%
Note on the books of the Company. The agent may substitute another to act for
him.
--------------------------------------------------------------------------------
Date:
-------------------
Your Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the other side of this 9 3/8% Note)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed by a financial
institution that is a member of the Securities
Transfer Agent Medallion Program ("STAMP"), the Stock
Exchange Medallion Program ("SEMP"), the
New York
Stock Exchange, Inc. Medallion Signature Program
("MSP") or such other signature guarantee program as
may be determined by the Registrar in addition to, or
in substitution for, STAMP, SEMP, or MSP, all in
accordance with the Securities Exchange Act of 1934,
as amended.)
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OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this 9 3/8% Note purchased by the Company pursuant
to Section 4.14 (Asset Sale) or Section 4.20 (Change of Control) of the
Indenture, check the Box:
[ ] Section 4.14 [ ] Section 4.20
If you wish to have a portion of this 9 3/8% Note purchased by the
Company pursuant to Section 4.14 or Section 4.20 of the Indenture, state the
amount:
$
-------------
Date:
-------------------
Your Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the other side of this 9 3/8% Note)
Signature Guarantee:
------------------------------------------------------------
(Signature must be guaranteed by a financial
institution that is a member of the Securities
Transfer Agent Medallion Program ("STAMP"), the Stock
Exchange Medallion Program ("SEMP"), the
New York
Stock Exchange, Inc. Medallion Signature Program
("MSP") or such other signature guarantee program as
may be determined by the Registrar in addition to, or
in substitution for, STAMP, SEMP, or MSP, all in
accordance with the Securities Exchange Act of 1934,
as amended.)
A-12
Exhibit B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture") dated as of
_______________, ____, among [GUARANTOR] (the "New Subsidiary Guarantor"), a
subsidiary of
Swift Energy Company (or its successor), a Texas corporation (the
"Company"),
SWIFT ENERGY COMPANY[, on behalf of itself and the Subsidiary
Guarantors (the "Existing Subsidiary Guarantors") under the indenture referred
to below,] and BANK ONE, NA, a national banking association, as trustee under
the indenture referred to below (the "Trustee")
WITNESSETH
WHEREAS the Company [and the Existing Subsidiary Guarantors] has
heretofore executed and delivered to the Trustee an Indenture dated as of April
16, 2002 (such Indenture, as amended or supplemented to date, including by the
First Supplemental Indenture dated as of April 16, 2002, between the Company and
the Trustee, is hereinafter called the "Indenture"), providing for the initial
issuance of an aggregate principal amount of up to $200,000,000 of 9 3/8% Senior
Subordinated Notes due 2012 (the "Securities");
WHEREAS Section 4.18 of the Indenture provides that under certain
circumstances the Company is required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally Guarantee all the Company's
obligations under the Securities pursuant to a Subsidiary Guaranty on the terms
and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the
Company and the Existing Subsidiary Guarantors are authorized to execute and
deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees,
jointly and severally with all other Subsidiary Guarantors, to unconditionally
Guarantee the Company's obligations under the Securities on the terms and
subject to the conditions set
B-1
forth in Article XIV of the Indenture and to be bound by all other applicable
provisions of the Indenture.
2. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
3. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK.
4. Trustee Makes No Representation. The Trustee makes no representation
as to the validity or sufficiency of this Supplemental Indenture.
5. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
6. Effect of Headings. The Section headings herein are for convenience
only and shall not effect the construction thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
By:
--------------------------
Name:
Title:
SWIFT ENERGY COMPANY, [on behalf of itself
and the Existing Subsidiary Guarantors,]
By:
--------------------------
Name:
Title:
[EXISTING SUBSIDIARY GUARANTORS],
By:
--------------------------
Name:
Title:
B-2
BANK ONE, NA, as Trustee,
By:
--------------------------
Name:
Title:
B-3
