EXHIBIT 4.2
SWIFT ENERGY COMPANY,
as Issuer
and
XXXXX FARGO BANK,
NATIONAL ASSOCIATION
as Trustee
FIRST SUPPLEMENTAL INDENTURE
Dated as of June 23, 2004
To Indenture Dated as of June 23, 2004
Providing for Issuance of
7 5/8% Senior Notes due 2011
TABLE OF CONTENTS
Page
Section 1. Creation of 7 5/8% Notes...................................................................1
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........................................34
Section 5. Amendments to Article V the Original Indenture............................................48
Section 6. Amendments to Article VI the Original Indenture...........................................48
Section 7. Amendments to Article VII of the Original Indenture.......................................50
Section 8. Amendments to Article IX of the Original Indenture........................................50
Section 9. Amendments to Article X of the Original Indenture.........................................51
Section 10. Applicability of and Amendments to Article XI of the Original Indenture...................52
Section 11. Inapplicability of Article XII of the Original Indenture..................................53
Section 12. Subsidiary Guaranties.....................................................................54
Section 13. Governing Law.............................................................................57
Section 14. Counterparts..............................................................................57
Section 15. Supplemental Indenture Controls...........................................................57
Exhibit A Form of the Face of 7 5/8% Notes.........................................................A-1
Exhibit B Form of Supplemental Indenture...........................................................B-1
FIRST SUPPLEMENTAL INDENTURE, dated as of June 23, 2004 (this "First
Supplemental Indenture"), to the Indenture dated as of June 23, 2004 (the
"Original Indenture") between SWIFT ENERGY COMPANY, a Texas corporation, as
issuer (the "Company"), and XXXXX FARGO BANK, NATIONAL ASSOCIATION, 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 "7 5/8% Senior Notes due 2011" (the "7
5/8% 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 7 5/8% 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 7 5/8% 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 7 5/8% 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 7 5/8% 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 7 5/8% Notes and in
consideration of the acceptance of the 7 5/8% 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 7 5/8% 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 "7 5/8% Senior Notes due 2011", limited in aggregate principal
amount to $150,000,000 (which are hereinafter defined as the "7 5/8% Notes" for
purposes this First Supplemental Indenture). The Trustee shall authenticate 7
5/8% Notes for original issue in the aggregate principal amount of $150,000,000
(the "Original 7 5/8% Notes"). The Original 7 5/8% 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 7 5/8% Notes issued after the Issue Date (except for 7
5/8% Notes authenticated and delivered upon registration of transfer of, or in
exchange for, or in lieu of, other 7 5/8% Notes pursuant to Section 2.07, 2.08,
2.09, 2.15 or 3.03) (the "Additional 7 5/8% Notes"), there shall be established
in or pursuant to a resolution of the Board of Directors of the Company:
(a) that such Additional 7 5/8% Notes shall be issued as part of the same
or a different series as the Original 7 5/8% Notes;
(b) the aggregate principal amount of such Additional 7 5/8% Notes which
may be authenticated and delivered under the Indenture, which, subject to
compliance with Article IV of the Original Indenture, may be in an unlimited
aggregate principal amount or which may be in a limited principal amount (except
for Additional 7 5/8% Notes authenticated and delivered upon registration of
transfer of, or in exchange for, or in lieu of, other 7 5/8% Notes pursuant to
Section 2.07, 2.08, 2.09, 2.15 or 3.03 and except for Additional 7 5/8 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 7 5/8% Notes,
including the date from which interest on such Additional 7 5/8% Notes shall
accrue;
(d) if applicable, that such Additional 7 5/8% 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 7 5/8% 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 7 5/8% 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 7 5/8% 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.
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(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),
and decreased by, as of the date of determination, the estimated
discounted future net revenues from:
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(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 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
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(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.
"Adjusted Treasury Rate" means, with respect to any redemption date:
(a) (1) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after July 15, 2008, yields for the two published
maturities most closely corresponding to the Comparable Treasury Issue shall be
determined and the Adjusted Treasury Rate shall be interpolated or extrapolated
from such yields on a straight line basis, rounding to the nearest month) or
(2) if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such yields, the
rate per year equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date, in each case
calculated on the third Business Day immediately preceding the redemption date,
plus
(b) 0.50%.
"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.
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"Applicable Premium" means, with respect to a Note at any redemption date,
the greater of:
(a) 1.0% of the principal amount of such Note and
(b) the excess of (1) the present value at such redemption date of (A) the
redemption price of such Note on July 15, 2008 (such redemption price being
described in the first paragraph and accompanying table of Section 3.06,
exclusive of any accrued interest) plus (B) all required remaining scheduled
interest payments due on such Note through July 15, 2008, computed using a
discount rate equal to the Adjusted Treasury Rate, over (2) the principal amount
of such Note on such redemption date.
"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:
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(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;
(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;
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(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 from
such lenders against such receivables or inventory) or trade or standby 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.
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"Change of Control" shall be deemed to occur if:
(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 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.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity comparable to the remaining
term from the redemption date to July 15, 2008, that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of a maturity most nearly equal
to July 15, 2008.
"Comparable Treasury Price" means, with respect to any redemption date, if
clause (a)(2) of the Adjusted Treasury Rate is applicable, the average of three,
or such lesser number as is obtained by the Trustee, Reference Treasury Dealer
Quotations for such redemption date.
"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:
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(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.
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:
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(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;
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:
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(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) any gain or loss, net of taxes, realized on the termination of any
employee pension benefit plan;
(f) 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;
(g) the cumulative effect of a change in accounting principles;
(h) 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
(i) 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.
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"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;
in each case on or prior to the first anniversary of the Stated Maturity of
the 7 5/8% 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.
"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
12
(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.
"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
(a) total combined voting power of all Voting Stock of the corporation, or
(b) 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.
13
"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 greater than
$2.0 million but less than $10.0 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 $10.0 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:
(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:
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(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
14
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;
(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
15
(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.
"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:
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(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 7 5/8% 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.
16
"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
(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.
17
"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;
(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.
18
"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
(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.
19
"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 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.
"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.
20
"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:
(a) Indebtedness arising under the Indenture with respect to the Original
7 5/8% 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) $300.0 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);
21
(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 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:
22
(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 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 in compliance with
the Xxxxxxxx-Xxxxx Act of 2002 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 on any Property of the Company and any Subsidiary Guarantor
securing Indebtedness and other obligations under Bank Credit Facilities that
are permitted to be Incurred by clause (b) of the definition of Permitted
Indebtedness;
(b) Liens existing as of the Issue Date;
23
(c) Liens securing the 7 5/8% Notes, any Subsidiary Guaranties and other
obligations arising under this Indenture;
(d) 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;
(e) 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;
(f) 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,
(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);
(g) 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;
(h) Xxxxx 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;
24
(i) Liens securing Permitted Hedging Agreements of the Company and its
Restricted Subsidiaries;
(j) 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;
(k) 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:
(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;
(l) 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;
(m) 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;
(n) 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
25
(B) an amount necessary to pay any fees and expenses, including
premiums, related to such refinancing, refunding, extension, renewal
or replacement;
(o) Liens in favor of the Company or a Restricted Subsidiary; and
(p) Liens not otherwise permitted by clauses (a) through (o) 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 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;
26
(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;
(d) such New Indebtedness is subordinated in right of payment to the 7 5/8%
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:
(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
27
(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 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 7 5/8% 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).
28
"Quotation Agent" means the Reference Treasury Dealer selected by the
Trustee after consultation with the Company.
"Reference Treasury Dealer" means Credit Suisse First Boston LLC and its
successors and assigns, Bank One Capital Markets, Inc. and its successors and
assigns and one other nationally recognized investment banking firm selected by
the Company that is a primary U.S. Government securities dealer.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount, quoted in
writing to the Trustee by such Reference Treasury Dealer at 5:00 p.m., New York
City Time, on the third Business Day immediately preceding such redemption date.
"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 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 7 5/8% 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
29
(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 be subordinate in right of payment to the 7 5/8% Notes;
provided, however, that Senior Indebtedness of the Company shall not include:
(a) Indebtedness of the Company to a Subsidiary of the Company;
(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) Subordinated Indebtedness of the Company;
(f) obligations with respect to any Capital Stock of the Company; and
(g) in-kind obligations relating to net oil and gas balancing positions.
"Senior Indebtedness" of any Subsidiary Guarantor has a correlative
meaning.
"Senior Indebtedness Offer" means an offer by us or a Subsidiary Guarantor
to purchase all or a portion of Senior Indebtedness to the extent required by
the indenture or other agreement or instrument pursuant to which such Senior
Indebtedness was issued.
30
"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
7 5/8% 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.
"Subsidiary Guarantors" means, unless released from their Subsidiary
Guaranties as permitted by the Indenture, any Restricted Subsidiary that becomes
a guarantor of the 7 5/8% 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 guaranty of the 7 5/8%
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
31
(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.
"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.1.
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.
32
(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 7 5/8% Notes
to read as follows:
If less than all the 7 5/8% Notes are to be redeemed at any time, selection
of 7 5/8% 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 7 5/8% Notes are listed, or, if the 7 5/8% Notes are not so listed, on a pro
rata basis.
(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 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 7
5/8% 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 7 5/8% Notes will not be redeemable at the option
of the Company prior to July 15, 2008. Starting on that date, the Company
may redeem all or any portion of the 7 5/8% 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 7 5/8% Notes redeemed during the 12-month period commencing on July
15 of the years set forth below, and are expressed as percentages of
principal amount:
Redemption
Year Price
----------------------------------------------------------------------
2008................................................... 103.813%
2009................................................... 101.906%
2010 and thereafter.................................... 100.000%
33
The Company may on any one or more occasions prior to July 15, 2007,
redeem up to 35% of the aggregate principal amount of the 7 5/8% Notes
originally issued with the net proceeds of one or more Equity Offerings at
a redemption price of 107.625% 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
65% of the aggregate principal amount of the 7 5/8% 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.
At any time prior to July 15, 2008, the Company will be entitled, at
its option, to redeem all, but not less than all, of the 7 5/8% Notes at a
redemption price equal to 100% of the principal amount of the 7 5/8% Notes
plus the Applicable Premium as of, and accrued and unpaid interest to, the
redemption date (subject to the right of Holders on the relevant record
date to receive interest due on the relevant interest payment date). Notice
of such redemption must be mailed by first-class mail to each Holder's
registered address, not less than 30 nor more than 60 days prior to the
redemption date.
SECTION 3.07. No Mandatory Sinking Fund. There will be no mandatory
sinking fund payments for the 7 5/8% 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 7 5/8% Notes.
(b) Section 4.10 of the Original Indenture is amended in its entirety with
respect to the 7 5/8% Notes to read as follows:
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 7 5/8% 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 Permitted Liens.
(c) Article IV of the Original Indenture is amended with respect to the 7
5/8% Notes by adding Sections 4.11 through 4.20, inclusive, as follows:
34
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),
(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,
35
(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 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:
(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 were treated as
Restricted Payments, and
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(ii) the Fair Market Value of the Company's and its
Restricted Subsidiaries' interest in such Unrestricted
Subsidiary, and
(6) $20.0 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
(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);
37
(e) the making of any principal payment on or the repurchase,
redemption, legal defeasance or other acquisition or retirement for value
of (i) the Company's 10 1/4% senior subordinated notes due 2009 outstanding
on the Issue Date, plus the applicable premium thereon, out of the net
proceeds of the sale of the 7 5/8% Notes or reborrowings under the
Company's bank credit facility that were temporarily repaid out of the net
proceeds of the sale of the 7 5/8% Notes; (ii) other Subordinated
Indebtedness in exchange for, or out of the net 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; or (iii) the Company's 9 3/8% senior subordinated
notes due 2012, outstanding on the Issue Date, plus the applicable premium
thereon, in exchange for, or out of the net proceeds of a substantially
concurrent Incurrence (other than a sale to a Subsidiary of the Company) of
Indebtedness pursuant to clause (a) of Section 4.11 of the Indenture.
(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) and in compliance with the
Xxxxxxxx-Xxxxx Act of 2002, 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 proceeds from any issuance or sale of Capital
Stock or 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.
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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 7 5/8% 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 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.
39
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); or
(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).
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 $20.0 million, the Company
will be required to make an offer (a "Prepayment Offer") to purchase 7
5/8% 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 7 5/8% 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 other Senior
Indebtedness require that a Senior Indebtedness Offer be made
contemporaneously with the Prepayment Offer, then the Excess Proceeds
shall be prorated between the Prepayment Offer and such Senior
Indebtedness Offer in accordance with the aggregate Outstanding
principal amounts of the 7 5/8% Notes and such other Senior
Indebtedness, and the aggregate principal amount of 7 5/8% Notes for
which the Prepayment Offer is made shall be reduced accordingly. If
the aggregate principal amount of 7 5/8% 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 7 5/8% Notes tendered and the Trustee will select the 7
5/8% Notes to be purchased in accordance with this Indenture. To the
extent that any portion of the amount of Excess Proceeds remains after
compliance with the second sentence of this paragraph and provided
that all Holders of 7 5/8% Notes have been given the opportunity to
tender their 7 5/8% 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 7 5/8% Notes pursuant to the preceding paragraph, send a
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written Prepayment Offer notice, by first-class mail, to the Holders
of the 7 5/8% 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 7 5/8% 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 7 5/8% Notes
pursuant to the provisions of this Indenture;
(b) that any 7 5/8% 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 7 5/8% 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 7 5/8% Notes to be
purchased;
(f) a description of the procedure that Holders of 7 5/8% Notes
must follow in order to tender their 7 5/8% Notes for payment; and
(g) all other instructions and materials necessary to enable
Holders to tender 7 5/8% 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 7 5/8%
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.
SECTION 4.15. Covenant Suspension. During any period (the
"Suspension Period") that the 7 5/8% Notes have a rating equal to or
higher than BBB- by S&P and Baa3 by Xxxxx'x ("Investment Grade
Ratings") and no Default has occurred and is continuing, we and our
Restricted Subsidiaries will not be subject to the following covenants
set forth in Sections 4.11, 4.12, 4.13, 4.14, 4.16, 4.17 and 4.18, and
clauses (d) and (e) of Section 10.01 (collectively, the "Suspended
Covenants"). In the event that we and our Restricted Subsidiaries are
not subject to the Suspended Covenants for any period of time as a
result of the preceding sentence, and subsequently one or both of S&P
and Xxxxx'x downgrades the rating assigned to the Notes below BBB-, in
41
the case of S&P, and below Baa3, in the case of Xxxxx'x, then we and
our Restricted Subsidiaries will thereafter again be subject to the
Suspended Covenants (subject to subsequent suspension if the Notes
again receive Investment Grade Ratings). Notwithstanding that the
Suspended Covenants may be reinstated, no Default or Event of Default
will be deemed to have occurred as a result of a failure to comply
with the Suspended Covenants during any Suspension Period. With
respect to Restricted Payments proposed to be made after the time of
such a downgrade, the permissibility of proposed Restricted Payments
will be calculated in accordance with the terms of Section 4.12 as
though such covenant had been in effect since the Issue Date.
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) $10.0 million but less than $25.0 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
(2) $25.0 million,
(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
42
(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 in compliance with the Xxxxxxxx-Xxxxx Act of 2002:
(1) to 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) to refinance loans, together with accrued interest
thereon, made pursuant to this clause (d);
(e) advances and loans made in compliance with the Xxxxxxxx-Xxxxx
Act of 2002 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 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.
43
(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 (including any Bank
Credit Facilities) 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 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 7 5/8% Notes than those under or pursuant to the
agreement so renewed, refinanced, extended or amended, as
determined in good faith by the Board of Directors of the Company
and,
44
(2) with respect to clause (c) only, to:
(A) restrictions pursuant to Liens permitted to be
Incurred and secured without also securing the 7 5/8% 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 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.
45
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 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:
46
(a) the Company could Incur at least $1.00 of additional
Indebtedness pursuant to clause (a) 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 7 5/8% 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 7
5/8% 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 7 5/8% 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 7 5/8% 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 this Indenture and that
all 7 5/8% 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
than 60 days from the date the Company mails such notice (the
"Change of Control Payment Date"),
(3) that any 7 5/8% 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 7 5/8% 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,
47
(6) the procedures that the Holders of the 7 5/8% Notes must
follow in order to tender their 7 5/8% Notes (or portions
thereof) for payment and the procedures that Holders of 7 5/8%
Notes must follow in order to withdraw an election to tender 7
5/8% Notes (or portions thereof) for payment, and
(7) all other instructions and materials necessary to enable
Holders to tender 7 5/8% 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 7 5/8%
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 7 5/8%
Notes validly tendered and not withdrawn under such Change of Control
Offer.
SECTION 5. Amendments to Article V of the Original Indenture. Section 5.03
of the Original Indenture is amended in its entirety with respect to the 7 5/8%
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 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 of the Original Indenture
(a) Sections 6.01(a) and 6.01(b) of the Original Indenture are amended with
respect to the 7 5/8% Notes by deleting in each the phrase ",whether or not such
payment may have been prohibited by Article XII, if applicable;"
(b) Section 6.01(e) of the Original Indenture is amended with respect to
the 7 5/8% Notes by deleting the number "60" and substituting the number "30" in
its place.
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(c) Section 6.01(f) of the Original Indenture is amended in its entirety
with respect to the 7 5/8% 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 $10.0 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;
(d) Sections 6.01(g) and 6.01(h) of the Original Indenture are amended with
respect to the 7 5/8% Notes by deleting each reference to "Restricted
Subsidiary" and "Restricted Subsidiaries" therein and substituting "Significant
Subsidiary" or "Significant Subsidiaries", respectively, in its place.
(e) Section 6.01 of the Original Indenture is amended with respect to the 7
5/8% 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:
(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
$10.0 million and such judgments or orders are not discharged, waived, stayed,
satisfied or bonded for a period of 60 consecutive days; or
(g) 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.
(h) 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.
(i) 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.
49
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 7
5/8% 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 7 5/8% Notes in addition to or in
place of certificated 7 5/8% Notes;
(m) to make any change that does not adversely affect the rights of
any Holder of 7 5/8% 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
words "in the Trustee's opinion 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.
(c) Section 9.02 of the Original Indenture is amended with respect to the 7
5/8% 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 7 5/8% 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.
50
(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 7 5/8% 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 7 5/8% 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 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 7
5/8% 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;
51
(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) 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;
provided, however, that clauses (d) and (e) will not be applicable to (1) a
Restricted Subsidiary consolidating with, merging with or into or selling,
transferring, leasing or otherwise disposing of all or substantially all its
Property to the Company or a Subsidiary Guarantor that is a Wholly Owned
Subsidiary or (2) the Company merging with or into an Affiliate of the Company
solely for the purpose and with the sole effect of reincorporating the Company
in another jurisdiction.
(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 7 5/8%
Notes.
(b) Section 11.02(b) of the Original Indenture is superseded with respect
to the 7 5/8% Notes by the following provisions:
(b) Subject to Sections 11.02(c) and 11.03, the Company at any time
may terminate (i) all its obligations under the 7 5/8% Notes and this
Indenture with respect to the 7 5/8% 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)
52
(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 7
5/8% Notes may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the 7 5/8%
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 IV
and X 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 7 5/8% 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 7 5/8% 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.
SECTION 11. Inapplicability of Article XII of the Original Indenture
Article XII of the Original Indenture shall not be applicable to
the 7 5/8% Notes. The Notes shall be Senior Indebtedness of the
Company.
53
SECTION 12. Subsidiary Guaranties
(a) The Original Indenture is amended with respect to the 7 5/8% Notes by
adding Article XIV 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 7 5/8% 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 7 5/8%
Notes and (b) the full and punctual performance within applicable grace
periods of all other obligations of the Company under the Indenture and the
7 5/8% 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 7 5/8% 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 7 5/8% 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 7 5/8% Notes or any other agreement; (d) the release of any
security held by any Holder or the Trustee for the Obligations or 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.
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
54
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 7 5/8% 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 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 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 that, in the event a payment
shall be made by any other Subsidiary Guarantor under any Subsidiary
55
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 7 5/8% 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 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.
56
SECTION 13. Governing Law. This First Supplemental Indenture and the 7 5/8%
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 7 5/8% 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.
57
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: /s/ Xxxxx X. Xxxxxxxx, Xx.
------------------------------
Xxxxx X. Xxxxxxxx, Xx.
Senior Vice President--Finance
and Chief Financial Officer
XXXXX FARGO BANK, NATIONAL
ASSOCIATION, as Trustee
By: /s/ Xxxxxxx X. Xxxxx
------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
58
EXHIBIT A
[Form of the Face of 7 5/8% 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
7 5/8% Senior Note due 2011
REGISTERED CUSIP No. 870738 AE 1
No. __ $150,000,000.00
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 one hundred fifty million United States Dollars
($150,000,000.00) on July 15, 2011.
Interest Payment Dates: January 15, and July15, commencing January 15,
2005.
Regular Record Dates: January 1 and July 1.
Reference is hereby made to the further provisions of this 7 5/8% 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.
A-1
IN WITNESS WHEREOF, the Company has caused this 7 5/8% 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.
XXXXX FARGO BANK, NATIONAL
ASSOCIATION,
as Trustee
By:
------------------------------------
Authorized Signatory
A-2
[FORM OF THE REVERSE OF 7 5/8% NOTES]
SWIFT ENERGY COMPANY
7 5/8% Senior Note due 2011
1. Indenture; Limitations.
The Company issued the 7 5/8% Notes under an Indenture dated as of June 23,
2004 (the "Original Indenture") and a First Supplemental Indenture dated as of
June 23, 2004 (the "Supplemental Indenture") (the Original Indenture, as
supplemented by the Supplemental Indenture being hereinafter referred to as the
"Indenture"), between the Company and Xxxxx Fargo Bank, National Association, as
trustee (the "Trustee"). Capitalized terms herein are used as defined in the
Indenture unless otherwise indicated. The terms of the 7 5/8% Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act. The 7 5/8% 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 7 5/8% Note and the terms
of the Indenture, the terms of the Indenture shall control.
The 7 5/8% Notes are senior unsecured obligations of the Company and the
aggregate principal amount of the 7 5/8% 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 7 5/8% Notes under the Indenture in either a limited
or an unlimited aggregate principal amount. This 7 5/8% Note is one of the
Original 7 5/8% Notes referred to in the Indenture issued in an aggregate
principal amount of $150,000,000. The Additional 7 5/8% Notes may be issued as
part of the same or a different series of Debt Securities as the Original 7 5/8%
Notes. The 7 5/8% Notes include the Original Notes and any Additional 7 5/8%
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 7 5/8% Note on July 15, 2011.
The Company promises to pay interest on the principal amount of this 7 5/8%
Note on each January 15 and July 15 (each an "Interest Payment Date"), as set
forth below, at the rate per annum shown above.
Interest will be payable semiannually (to the holders of record of the 7
5/8% Notes at the close of business on the January 1 or July 1 immediately
preceding the Interest Payment Date) on each Interest Payment Date, commencing
January 15, 2005.
Interest on the 7 5/8% Notes will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from June 23, 2004,
provided that, if there is no existing Default in the payment of interest and
this 7 5/8% 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.
A-3
The Company shall pay interest on overdue principal at the rate borne by
the 7 5/8% 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 7 5/8%
Notes.
3. Method of Payment.
The Company will pay interest (except defaulted interest) on the principal
amount of the 7 5/8% 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 January 1 and July 1 immediately preceding the relevant
Interest Payment Date), in each case, even if the 7 5/8% 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 7 5/8% Note to a paying agent on or after July
15, 2011.
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 7 5/8% 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 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 7 5/8% Notes will not
be redeemable at the option of the Company prior to July 15, 2008. Starting on
that date, the Company may redeem all or any portion of the 7 5/8% 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 7 5/8% Notes redeemed during the 12-month period commencing on
July 15 of the years set forth below, and are expressed as percentages of
principal amount:
A-4
Redemption
Year Price
----------------------------------------------------------------------
2008................................................... 103.813%
2009................................................... 101.906%
2010 and thereafter.................................... 100.000%
The Company may on any one or more occasions prior to July 15, 2007, redeem
up to 35% of the aggregate principal amount of the 7 5/8% Notes originally
issued with the net proceeds of one or more Equity Offerings at a redemption
price of 107.625% 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 65% of the aggregate principal
amount of the 7 5/8% 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.
At any time prior to July 15, 2008, the Company will be entitled, at its
option, to redeem all, but not less than all, of the 7 5/8% Notes at a
redemption price equal to 100% of the principal amount of the 7 5/8% Notes plus
the Applicable Premium as of, and accrued and unpaid interest to, the redemption
date (subject to the right of Holders on the relevant record date to receive
interest due on the relevant interest payment date). Notice of such redemption
must be mailed by first-class mail to each Holder's registered address, not less
than 30 nor more than 60 days prior to the redemption date.
If less than all the 7 5/8% Notes are to be redeemed at any time, selection
of 7 5/8% 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 7 5/8% Notes are listed, or, if the 7 5/8% Notes are not so listed, on a pro
rata basis.
6. Sinking Fund
The 7 5/8% Notes are not subject to any sinking fund.
7. Ranking
The 7 5/8% Notes are Senior Indebtedness of the Company.
8. Repurchase upon a Change of Control.
Upon the occurrence of a Change of Control, each Holder of 7 5/8% 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
7 5/8% 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 7 5/8% 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)
A-5
9. Denominations; Transfer; Exchange.
The 7 5/8% 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 7 5/8% 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 7 5/8% Notes selected or called for redemption
(except in the case of a 7 5/8% Note redeemed in part, the portion of the 7 5/8%
Note not to be redeemed). Also, it need not register the transfer or exchange
of any 7 5/8% Notes for a period of 15 days before the day of the mailing of a
notice of redemption of 7 5/8% Notes selected for redemption.
10. Persons Deemed Owners.
A Holder shall be treated as the owner of a 7 5/8% 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 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 7 5/8% 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 7 5/8% Notes, except in certain circumstances for certain
sections thereof.
13. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the 7 5/8% Notes may be
amended or supplemented with the consent of the Holders of at least a majority
in principal amount of the 7 5/8% 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 7 5/8% Notes then
Outstanding. Without notice to or the consent of any Holder, the parties thereto
may amend or supplement the Indenture or the 7 5/8% 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
A-6
certain payments to the Company, issue Capital Stock of Restricted Subsidiaries,
engage in transactions with Affiliates, suffer to exist or incur Liens or merge,
consolidate or transfer substantially all of their assets. Certain restrictive
covenants will be suspended during any period when the 7 5/8% Notes have
Investment Grade Ratings and no Default has occurred and is continuing. 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 7 5/8% Notes and the Indenture, the
predecessor Person will be released from those obligations.
16. Defaults and Remedies.
The following are summaries of Events of Default under the Indenture with
respect to the 7 5/8% Notes:
(a) failure to pay any interest on the 7 5/8% Notes when due,
continued for 30 days;
(b) failure to pay principal of (or premium, if any, on) the 7 5/8%
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 7 5/8% Notes;
(e) a default by the Company or any Restricted Subsidiary under any
Indebtedness for borrowed money in an aggregate amount greater than $10.0
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 $10.0 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
A-7
(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 7 5/8% 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 7 5/8%
Notes by notice as provided in the Indenture may declare the principal amount of
the 7 5/8% Notes to be due and payable immediately. If an Event of Default
described in clause (g) above with respect to the 7 5/8% Notes at the time
Outstanding shall occur, the principal amount of all the 7 5/8% 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 7 5/8% 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 7
5/8% 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 7 5/8% 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 7
5/8% Notes.
No Holder of 7 5/8% 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 7 5/8% Notes;
(b) the Holders of at least 25% in aggregate principal amount of the
Outstanding 7 5/8% 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 7 5/8% 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 7
5/8% Notes for the enforcement of payment of the principal of or any premium or
interest on such 7 5/8% Notes on or after the applicable due date specified in
such 7 5/8% Notes.
A-8
17. Trustee Dealings with the Company or the Subsidiary 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 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 7 5/8% 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 7 5/8%
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 7 5/8%
Notes.
19. Authentication.
This 7 5/8% Note shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on the other side of this 7 5/8%
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 7 5/8% 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 7 5/8% 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 7 5/8% 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.
A-9
ASSIGNMENT FORM
To assign this 7 5/8% Note, fill in the form below:
I or we assign and transfer this 7 5/8% 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 7 5/8%
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 7 5/8% 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-10
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this 7 5/8% 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 7 5/8% 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 7 5/8% 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-11
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 XXXXX FARGO BANK, NATIONAL ASSOCIATION, 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 June 23, 2004
(such Indenture, as amended or supplemented to date, including by the First
Supplemental Indenture dated as of June 23, 2004, between the Company and the
Trustee, is hereinafter called the "Indenture"), providing for the initial
issuance of an aggregate principal amount of up to $150,000,000 of 7 5/8% Senior
Notes due 2011 (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 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.
B-1
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:
XXXXX FARGO BANK, NATIONAL ASSOCIATION,
as Trustee
By:
-------------------------------------------
Authorized Signatory
B-2
