EXHIBIT 4.3.2
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FIRST SUPPLEMENTAL INDENTURE
between
XTO ENERGY INC.
and
THE BANK OF NEW YORK,
as Trustee
______________
April __, 2002
__% Senior Notes due 2012
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TABLE OF CONTENTS
ARTICLE 1 THE 2012 NOTES ....................................................... 2
SECTION 1.1. Designation of 2012 Notes; Establishment of Form.................. 2
SECTION 1.2. Amount............................................................ 2
SECTION 1.3. Redemption and Repurchase. ....................................... 2
SECTION 1.4. Conversion........................................................ 3
SECTION 1.5. Maturity. ........................................................ 3
SECTION 1.6. Other Terms of 2012 Notes......................................... 3
ARTICLE 2 AMENDMENTS TO THE INDENTURE .......................................... 3
SECTION 2.1. Definitions....................................................... 3
SECTION 2.2. Consolidation, Merger and Sale.................................... 18
SECTION 2.3. Events of Default................................................. 18
SECTION 2.4. Supplemental Indentures without Consent of Holders................ 21
SECTION 2.5. Supplemental Indenture with Consent of Holders.................... 22
SECTION 2.6. Covenants......................................................... 22
SECTION 2.7. Redemption........................................................ 34
SECTION 2.8. Defeasance and Covenant Defeasance ............................... 35
SECTION 2.9. Guarantees........................................................ 38
ARTICLE 3 MISCELLANEOUS PROVISIONS ............................................. 42
SECTION 3.1. Integral Part. ................................................... 42
SECTION 3.2. General Definitions............................................... 42
SECTION 3.3. Adoption, Ratification and Confirmation........................... 42
SECTION 3.4. Counterparts...................................................... 42
SECTION 3.5. Benefits of Indenture............................................. 42
SECTION 3.6. Governing Law..................................................... 42
SECTION 3.7. Supplemental Indenture Controls................................... 42
EXHIBIT A FORM OF 2012 NOTE ....................................................A-1
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FIRST SUPPLEMENTAL INDENTURE
THIS FIRST SUPPLEMENTAL INDENTURE, dated as of April __, 2002 (this "First
Supplemental Indenture"), between XTO Energy Inc., a Delaware corporation (the
"Company"), and The Bank of New York, a New York banking corporation (the
"Trustee"),
W I T N E S S E T H:
WHEREAS, the Company has heretofore executed and delivered to the Trustee
an Indenture, dated as of April __, 2002 (the "Original Indenture" and, as
amended and supplemented by this First Supplemental Indenture, the "Indenture"),
providing for the issuance from time to time of one or more series of the
Company's Securities;
WHEREAS, Section 8.1(k) of the Indenture provides that the Company and the
Trustee may from time to time enter into one or more indentures supplemental
thereto to establish the form or terms of Securities of a new series;
WHEREAS, Sections 8.1(b) and 8.1(c) of the Indenture permit the execution
of supplemental indentures without the consent of any Holders to add to the
covenants of the Company for the benefit of, and to add any additional Events of
Default with respect to, all or any series of Securities;
WHEREAS, Section 8.1(h) of the Indenture permits the execution of
supplemental indentures without the consent of any Holders to add to, change or
eliminate any of the provisions of the Indenture with respect to all or any
series of Securities, provided that, among other things, such addition, change
or elimination does not apply to any outstanding Security of any series created
prior to the execution of such supplemental indenture;
WHEREAS, Sections 2.1 and 2.2 of the Indenture provide that the Company may
enter into supplemental indentures to establish the form, terms and provisions
of a series of Securities issued pursuant to the Indenture;
WHEREAS, the Company desires to issue __% Senior Notes due 2012 (the "2012
Notes"), a new series of Securities, the issuance of which was authorized by or
pursuant to resolution of the Board of Directors of the Company;
WHEREAS, the Company, pursuant to the foregoing authority, proposes in and
by this First Supplemental Indenture to supplement and amend the Indenture
insofar as it will apply only to the 2012 Notes in certain respects; and
WHEREAS, all things necessary have been done to make the 2012 Notes, when
executed by the Company and authenticated and delivered hereunder and duly
issued by the Company, the valid obligations of the Company, and to make this
First Supplemental Indenture a valid agreement of the Company, in accordance
with their and its terms;
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NOW, THEREFORE:
In consideration of the premises provided for herein, the Company and the
Trustee mutually covenant and agree for the equal and proportionate benefit of
all Holders of the 2012 Notes as follows:
ARTICLE 1
THE 2012 Notes
SECTION 1.1. Designation of 2012 Notes; Establishment of Form.
There shall be a series of Securities designated "__% Senior Notes due
2012" of the Company (the "2012 Notes"), and the form thereof shall be
substantially as set forth in Exhibit A hereto, which is incorporated into and
shall be deemed a part of this First Supplemental Indenture, in each case with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by the Indenture, and may have such letters, numbers
or other marks of identification and such legends or endorsements placed thereon
as may be required to comply with the rules of any securities exchange or as
may, consistently with the Indenture, be determined by the officers of the
Company executing such 2012 Notes, as evidenced by their execution of the 2012
Notes.
The 2012 Notes will initially be issued in permanent global form,
substantially in the form set forth in Exhibit A hereto, as a Global Security.
The Company initially appoints the Trustee to act as Paying Agent and
Security Registrar with respect to the 2012 Notes.
SECTION 1.2. Amount.
The Trustee shall authenticate and deliver 2012 Notes for original issue in
an aggregate principal amount of up to $300,000,000 upon Company Order for the
authentication and delivery of 2012 Notes, without any further action by the
Company. The authorized aggregate principal amount of 2012 Notes may be
increased at any time hereafter and the series may be reopened for issuances of
additional Securities as provided in the last paragraph of Section 2.2 of the
Original Indenture, subject to compliance with Section 9.14 of the Indenture.
The 2012 Notes issued on the date hereof and any such additional 2012 Notes that
may be issued hereafter shall be part of the same series of Securities.
SECTION 1.3. Redemption and Repurchase.
(a) There shall be no sinking fund for the retirement of the 2012 Notes or
other mandatory redemption obligation.
(b) The Company, at its option, may redeem the 2012 Notes in accordance
with the provisions of the 2012 Notes and the Indenture, including, without
limitation, Section 10.9.
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(c) The Company, at the option of the Holders thereof, shall repurchase the
2012 Notes in accordance with the provisions of and at the Change of Control
Purchase Price or the Offered Price, as the case may be, set forth in the 2012
Notes and in accordance with the provisions of the Indenture, including, without
limitation, Sections 9.15 and 9.16.
SECTION 1.4. Conversion.
The 2012 Notes shall not be convertible into any other securities.
SECTION 1.5. Maturity.
The Stated Maturity of the 2012 Notes shall be ______________ 1, 2012.
SECTION 1.6. Other Terms of 2012 Notes.
Without limiting the foregoing provisions of this Article 1, the terms of
the 2012 Notes shall be as provided in the form of 2012 Notes set forth in
Exhibit A hereto and as provided in the Indenture.
ARTICLE 2
AMENDMENTS TO THE INDENTURE
The amendments and supplements contained herein shall apply to 2012 Notes
only and not to any other series of Securities issued under the Indenture and
any covenants provided herein are expressly being included solely for the
benefit of the 2012 Notes. These amendments and supplements shall be effective
for so long as there remains any 2012 Notes outstanding.
SECTION 2.1. Definitions.
Section 1.1 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:
"Adjusted Net Assets" of a Subsidiary Guarantor at any date shall mean the
amount by which the fair value of the Properties of such Subsidiary Guarantor
exceeds the total amount of liabilities, including, without limitation,
contingent liabilities (after giving effect to all other fixed and contingent
liabilities incurred or assumed on such date), but excluding liabilities under
the Subsidiary Guarantee of such Subsidiary Guarantor at such date.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary or any Restricted Subsidiary shall be merged with
or into the Company or any Restricted Subsidiary or (b) the acquisition by the
Company or any Restricted Subsidiary of the assets of any Person which
constitute all or substantially all of the assets of such Person or any division
or line of business of such Person.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition to any Person other than the Company or any of its Restricted
Subsidiaries (including, without
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limitation, by way of a Production Payment or by way of merger or consolidation)
(collectively, for purposes of this definition, a "transfer"), directly or
indirectly, in one or a series of related transactions, of (a) any Capital Stock
of any Restricted Subsidiary held by the Company or any Restricted Subsidiary;
(b) all or substantially all of the properties and assets of any division or
line of business of the Company or any of its Restricted Subsidiaries; or (c)
any other properties or assets of the Company or any of its Restricted
Subsidiaries other than any abandonment, farm-in, farm-out, lease or sublease of
Oil and Gas Properties in the ordinary course of business or any disposition of
hydrocarbons or other mineral products in the ordinary course of business. For
the purposes of this definition, the term "Asset Sale" shall not include (i) any
transfer of properties or assets that is governed by, and made in accordance
with, the provisions of Article VII hereof; (ii) any transfer of properties or
assets to an Unrestricted Subsidiary, if such transfer is made in compliance
with Section 9.13 hereof; (iii) any trade or exchange of Oil and Gas Properties
or Capital Stock in any corporation or royalty trust in the Oil and Gas Business
owned by the Company or any Restricted Subsidiary for Oil and Gas Properties
owned or held by another Person provided that (x) the Fair Market Value of the
Properties or Capital Stock traded or exchanged by the Company or such
Restricted Subsidiary (including any cash or Cash Equivalents, not to exceed 15%
of such Fair Market Value, to be delivered by the Company or such Restricted
Subsidiary) is reasonably equivalent to the Fair Market Value of the Properties
(together with any cash or Cash Equivalents, not to exceed 15% of such Fair
Market Value) to be received by the Company or such Restricted Subsidiary as
determined in good faith by (A) any Officer of the Company if such Fair Market
Value is less than $5,000,000 and (B) the Board of Directors of the Company as
evidenced by a Board Resolution if such Fair Market Value is equal to or in
excess of $5,000,000, provided that if such resolution indicates that such Fair
Market Value is equal to or in excess of $10,000,000 such resolution shall be
accompanied by a written appraisal by a nationally recognized investment banking
firm or appraisal firm, in each case specializing or having a specialty in Oil
and Gas Properties, and (y) such exchange is approved by a majority of the
Disinterested Directors of the Company; (iv) Sale/Leaseback Transactions in
compliance with Section 9.19; or (v) any transfer of Properties having a Fair
Market Value of less than $2,000,000.
"Change of Control" means the occurrence of any of the following events:
(a) any "person" or "group" (as such terms are used in Sections 13(d)(3) or
14(d)(2) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of more than 50%
of the total voting power of the outstanding Voting Stock of the Company; (b)
the Company, either individually or in conjunction with one or more Restricted
Subsidiaries, sells, conveys, transfers or leases, or the Restricted
Subsidiaries sell, convey, transfer or lease, all or substantially all of the
assets of the Company and the Restricted Subsidiaries, taken as a whole (either
in one transaction or a series of related transactions), including Capital Stock
of the Restricted Subsidiaries, to any Person (other than the Company or a
Wholly Owned Restricted Subsidiary); (c) during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (together with any new directors whose election by such
Board of Directors or whose nomination for election by the stockholders of the
Company was approved by a vote of 662/3% 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 so approved) cease for any reason to
constitute a majority
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of the Board of Directors of the Company then in office; or (d) the liquidation
or dissolution of the Company.
"Change of Control Notice" has the meaning specified in Section 9.15(c).
"Change of Control Offer" has the meaning specified in Section 9.15(a).
"Change of Control Purchase Date" has the meaning specified in Section
9.15(c).
"Change of Control Purchase Price" has the meaning specified in Section
9.15(a).
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of (a) the sum of Consolidated Net Income, Consolidated Interest Expense,
Consolidated Income Tax Expense and Consolidated Non-cash Charges deducted in
computing Consolidated Net Income, in each case, for such period, of the Company
and its Restricted Subsidiaries on a consolidated basis, all determined in
accordance with GAAP, decreased (to the extent included in determining
Consolidated Net Income) by the sum of (x) the amount of deferred revenues that
are amortized during such period and are attributable to reserves that are
subject to Volumetric Production Payments and (y) amounts recorded in accordance
with GAAP as repayments of principal and interest pursuant to Dollar-Denominated
Production Payments, to (b) the sum of such Consolidated Interest Expense for
such period; provided that (i) in making such computation, the Consolidated
Interest Expense attributable to interest on any Indebtedness required to be
computed on a pro forma basis in accordance with clause (x) of Section 9.14
hereof and bearing a floating interest rate shall be computed as if the rate in
effect on the date of computation had been the applicable rate for the entire
period, (ii) in making such computation, the Consolidated Interest Expense
attributable to interest on any Indebtedness under a revolving credit facility
required to be computed on a pro forma basis in accordance with clause (x) of
Section 9.14 hereof shall be computed based upon the average daily balance of
such Indebtedness during the applicable period, provided that such average daily
balance shall be reduced by the amount of any repayment of Indebtedness under a
revolving credit facility during the applicable period, which repayment
permanently reduced the commitments or amounts available to be reborrowed under
such facility, (iii) notwithstanding clauses (i) and (ii) of this proviso,
interest on Indebtedness determined on a fluctuating basis, to the extent such
interest is covered by agreements relating to Interest Rate Protection
Obligations, shall be deemed to have accrued at the rate per annum resulting
after giving effect to the operation of such agreements and (iv) in making such
calculation, Consolidated Interest Expense shall exclude interest attributable
to Dollar-Denominated Production Payments.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes (including franchise taxes based
on income) of the Company and its Restricted Subsidiaries for such period as
determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, without duplication,
the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (i)
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any amortization of debt discount, (ii) the net cost under Interest Rate
Protection Obligations (including any amortization of discounts), (iii) the
interest portion of any deferred payment obligation, (iv) all commissions,
discounts and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and (v) all accrued interest, in each case to the
extent attributable to such period, (b) to the extent any Indebtedness of any
Person (other than the Company or a Restricted Subsidiary) that is guaranteed by
the Company or any Restricted Subsidiary is in default, the aggregate amount of
interest paid or accrued by such other Person during such period attributable to
any such Indebtedness, in each case to the extent attributable to that period,
(c) the aggregate amount of the interest component of Capitalized Lease
Obligations paid, accrued and/or scheduled to be paid or accrued by the Company
and its Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP and (d) the aggregate amount of
dividends paid or accrued on Redeemable Capital Stock of the Company and its
Restricted Subsidiaries, to the extent such Redeemable Capital Stock is owned by
Persons other than Restricted Subsidiaries.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted by excluding (a) net after-tax
extraordinary gains or losses (less all fees and expenses relating thereto), (b)
net after-tax effect of changes on or after January 1, 2001, in accounting
principles, (c) net after-tax gains or losses (less all fees and expenses
relating thereto) attributable to Asset Sales, (d) the net income (or net loss)
of any Person (other than the Company or any of its Restricted Subsidiaries or
any oil and gas royalty trust), in which the Company or any of its Restricted
Subsidiaries has an ownership interest, except to the extent of the amount of
dividends or other distributions actually paid to the Company or its Restricted
Subsidiaries in cash by such other Person during such period (regardless of
whether such cash dividends, distributions or interest on indebtedness is
attributable to net income (or net loss) of such Person during such period or
during any prior period), (e) the net income of any Restricted Subsidiary to the
extent that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary is not at the date of determination permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (f)
income resulting from transfers of assets received by the Company or any
Restricted Subsidiary from an Unrestricted Subsidiary, (g) any write-downs of
non-current assets; provided, however, that any ceiling limitation write-downs
under SEC guidelines shall be treated as capitalized costs, as if such
write-downs had not occurred and (h) any unrealized non-cash gains or losses in
respect of hedge or non-hedge derivatives (including those resulting from the
application of Financial Accounting Standards Board Statement No. 133).
"Consolidated Non-cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization (including, without limitation,
amortization of capitalized debt issuance costs), impairment and other non-cash
expenses (including any exploration expense) of the Company and its Restricted
Subsidiaries reducing Consolidated Net Income for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such non-cash charge
which requires an accrual of or reserve for cash charges for any future period).
"Covenant Termination Date" has the meaning specified in Section 9.21.
"Excess Proceeds" has the meaning specified in Section 9.16(b).
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"Existing Subordinated Notes" means all or any of (i) the Company's 9 1/4%
Senior Subordinated Notes due 20007 issued in the original aggregate principal
amount of $125,000,000 and outstanding at the Issue Date and (ii) the Company's
8 3/4% Senior Subordinated Notes due 2009 issued in the original aggregate
principal amount of $175,000,000 and outstanding at the Issue Date.
"Funding Guarantor" has the meaning specified in Section 14.5.
"Guarantee" means, as applied to any obligation, (i) a guarantee (other
than by endorsement of negotiable instruments for collection in the ordinary
course of business), direct or indirect, in any manner, of any part or all of
such obligation and (ii) an agreement, direct or indirect, contingent or
otherwise, the practical effect of which is to assure in any way the payment or
performance (or payment of damages in the event of nonperformance) of all or any
part of such obligation, including, without limiting the foregoing, the payment
of amounts drawn down by letters of credit. When used as a verb, "guarantee"
shall have a corresponding meaning.
"Indebtedness" means, with respect to any Person, without duplication, (a)
all liabilities of such Person for borrowed money or for the deferred purchase
price of property or services, excluding any trade accounts payable and other
accrued current liabilities incurred in the ordinary course of business, but
including, without limitation, all obligations, contingent or otherwise, of such
Person in connection with any letters of credit, bankers' acceptance or other
similar credit transaction and in connection with any agreement to purchase,
redeem, exchange, convert or otherwise acquire for value any Capital Stock of
such Person, or any warrants, rights or options to acquire such Capital Stock,
now or hereafter outstanding, if, and to the extent, any of the foregoing would
appear as a liability upon a balance sheet of such Person prepared in accordance
with GAAP, (b) all obligations of such Person evidenced by bonds, notes,
debentures or other similar instruments, if, and to the extent, any of the
foregoing would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP, (c) all Indebtedness of such Person created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even if the rights and remedies of
the seller or lender under such agreement in the event of default are limited to
repossession or sale of such property), but excluding trade accounts payable
arising in the ordinary course of business, (d) all Capitalized Lease
Obligations of such Person, (e) the Attributable Indebtedness (in excess of any
related Capitalized Lease Obligations) related to any Sale/Leaseback Transaction
of such Person (unless such Sale/Leaseback Transaction has been entered into in
reliance upon, and complies with, clause (ii) of Section 9.19), (f) all
Indebtedness referred to in the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which the
holder of such Indebtedness has an existing right, contingent or otherwise, to
be secured by) any Lien upon property (including, without limitation, accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness (the amount of
such obligation being deemed to be the lesser of the value of such property or
asset or the amount of the obligation so secured), (g) all guarantees by such
Person of Indebtedness referred to in this definition (including, with respect
to any Production Payment, any warranties or guaranties of production or payment
by such Person with respect to such Production Payment but excluding other
contractual obligations of such Person with respect to such Production Payment),
(h) all Redeemable Capital Stock of such Person valued at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued dividends,
(i) all
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net obligations of such Person under or in respect of currency exchange
contracts, Interest Rate Protection Obligations and Oil and Gas Hedging
Contracts and (j) any amendment, supplement, modification, deferral, renewal,
extension or refunding of any liability of such Person of the types referred to
in clauses (a) through (i) above. For purposes hereof, the "maximum fixed
repurchase price" of any Redeemable Capital Stock which does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Redeemable Capital Stock as if such Redeemable Capital Stock were purchased on
any date on which Indebtedness shall be required to be determined pursuant to
this Indenture, and if such price is based upon, or measured by, the Fair Market
Value of such Redeemable Capital Stock, such Fair Market Value shall be
determined in good faith by the board of directors of the issuer of such
Redeemable Capital Stock, provided, however, that if such Redeemable Capital
Stock is not at the date of determination permitted or required to be
repurchased, the "maximum fixed repurchase price" shall be the book value of
such Redeemable Capital Stock. Subject to clause (g) of the first sentence of
this definition, neither Dollar-Denominated Production Payments nor Volumetric
Production Payments shall be deemed to be Indebtedness.
"Interested Person" has the meaning set forth in Section 9.17.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other property or assets to
others or any payment for property, assets or services for the account or use of
others), or any purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities (including derivatives) or
evidences of Indebtedness issued by, any other Person. In addition, the Fair
Market Value of the net assets of any Restricted Subsidiary at the time that
such Restricted Subsidiary becomes an Unrestricted Subsidiary shall be deemed to
be an "Investment" made by the Company in such Unrestricted Subsidiary at such
time. "Investments" shall exclude (a) extensions of trade credit on commercially
reasonable terms in accordance with normal trade practices and (b) Interest Rate
Protection Obligations entered into in the ordinary course of business or as
required by any Permitted Indebtedness or any Indebtedness incurred in
compliance with Section 9.14 hereof, but only to the extent that the notional
principal amount of such Interest Rate Protection Obligations does not exceed
105% of the principal amount of such Indebtedness to which such Interest Rate
Protection Obligations relate and (c) bonds, notes, debentures or other
securities or evidences of Indebtedness received as a result of Asset Sales
permitted under Section 9.16 hereof.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or
the equivalent) by Xxxxx'x and equal to or higher than BBB- (or the equivalent)
by S&P.
"Issue Date" means the date of original issuance of the 2012 Notes.
"Liquid Securities" means securities of an issuer that is not an Affiliate
of the Company, that are publicly traded on a national securities exchange or
the Nasdaq Stock Market and upon which the Company does not have any selling
restrictions. The Company or any Restricted Subsidiary shall not be deemed to
have selling restrictions with respect to any securities under the Securities
Act if it has registration rights with respect to such securities.
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"Make-Whole Amount" with respect to a 2012 Note means an amount equal to
the excess, if any, of (i) the present value of the remaining interest, premium
and principal payments due on such 2012 Note (excluding any portion of such
payments of interest accrued as of the Redemption Date), computed using a
discount rate equal to the Treasury Rate plus 50 basis points, over (ii) the
outstanding principal amount of such 2012 Note. As used herein, "Treasury Rate"
is defined as the yield to maturity (calculated on a semi-annual bond equivalent
basis) at the time of the computation of United States Treasury securities with
a constant maturity (as compiled by and published in the most recent Federal
Reserve Statistical Release H.15 (510), which has become publicly available at
least two Business Days prior to the date of the redemption notice or, if such
Statistical Release is no longer published, any publicly available source of
similar market data) most nearly equal to the then remaining maturity of the
2012 Notes; provided, however, that if the Make-Whole Average Life of such 2012
Note is not equal to the constant maturity of the United States Treasury
security for which a weekly average yield is given, the Treasury Rate shall be
obtained by linear interpolation (calculated to the nearest one-twelfth of a
year) from the weekly average yields of United States Treasury securities for
which such yields are given, except that if the Make-Whole Average Life of such
2012 Note is less than one year, the weekly average yield on actually traded
United States Treasury securities adjusted to a constant maturity of one year
shall be used. As used herein, "Make-Whole Average Life" means the number of
years (calculated to the nearest one-twelfth) between the Redemption Date and
the Stated Maturity of the 2012 Notes.
"Make-Whole Price" means the sum of the outstanding principal amount of the
2012 Notes to be redeemed plus the Make-Whole Amount of such 2012 Notes.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
thereof in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents (except to the extent that such obligations are financed or sold
with recourse to the Company or any Restricted Subsidiary), net of (a) brokerage
commissions and other fees and expenses (including fees and expenses of legal
counsel and investment banks) related to such Asset Sale, (b) provisions for all
taxes payable as a result of such Asset Sale, (c) amounts required to be paid to
any Person (other than the Company or any Restricted Subsidiary) owning a
beneficial interest in the assets subject to the Asset Sale and (d) appropriate
amounts to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve required in accordance with GAAP consistently applied
against any liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale, all as
reflected in an Officers' Certificate delivered to the Trustee; provided,
however, that any amounts remaining after adjustments, revaluations or
liquidations of such reserves shall constitute Net Cash Proceeds.
"Net Proceeds Deficiency" has the meaning specified in Section 9.16(c).
"Net Proceeds Offer" has the meaning specified in Section 9.16(c).
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"Note Obligations" means any principal of, premium, if any, and interest
on, and any other amounts (including, without limitation, any payment
obligations with respect to the 2012 Notes as a result of any Asset Sale, Change
of Control or redemption) owing in respect of, the 2012 Notes payable pursuant
to the terms of the 2012 Notes or this Indenture or upon acceleration of the
2012 Notes.
"Offered Price" has the meaning specified in Section 9.16(c).
"Pari Passu Indebtedness Amount" has the meaning specified in Section
9.16(c).
"Pari Passu Offer" has the meaning specified in Section 9.16(c).
"Payment Amount" has the meaning specified in Section 9.16(c).
"Permitted Indebtedness" means any of the following:
(a) Indebtedness of the Company under one or more bank credit or revolving
credit facilities in an aggregate principal amount at any one time outstanding
under this clause (a) not to exceed the greater of (i) $850 million and (ii) an
amount equal to the sum of (A) $400 million and (B) 25% of Adjusted Consolidated
Net Tangible Assets determined as of the date of the incurrence of such
Indebtedness (plus interest and fees under such facilities), less any amounts
derived from Asset Sales and applied to the required permanent reduction of Pari
Passu Indebtedness (and a permanent reduction of the related commitment to lend
or amount available to be reborrowed in the case of a revolving credit facility)
under such credit facilities as contemplated by Section 9.16(b)(i) (the "Maximum
Credit Amount") (with the Maximum Credit Amount to be an aggregate maximum
amount for the Company and all Restricted Subsidiaries, pursuant to clause (a)
of the definition of "Permitted Subsidiary Indebtedness"), and any renewals,
amendments, extensions, supplements, modifications, deferrals, refinancings or
replacements (each, for purposes of this clause, a "refinancing") thereof by the
Company, including any successive refinancings thereof by the Company, so long
as the aggregate principal amount of any such new Indebtedness, together with
the aggregate principal amount of all other Indebtedness outstanding pursuant to
this clause (a) (and clause (a) of the definition of "Permitted Subsidiary
Indebtedness"), shall not at any one time exceed the Maximum Credit Amount;
(b) Indebtedness of the Company under the 2012 Notes issued on the Issue
Date;
(c) Indebtedness of the Company outstanding on the date of this Indenture
(and not repaid or defeased with the proceeds of the 2012 Notes);
(d) obligations of the Company pursuant to Interest Rate Protection
Obligations, but only to the extent such obligations do not exceed 105% of the
aggregate principal amount of the Indebtedness covered by such Interest Rate
Protection Obligations; and obligations under currency exchange contracts and
Oil and Gas Hedging Contracts entered into in the ordinary course of business;
(e) Indebtedness of the Company to any Restricted Subsidiaries;
10
(f) in-kind obligations relating to net gas balancing positions arising in
the ordinary course of business and consistent with past practice;
(g) Indebtedness in respect of bid, performance or surety bonds issued for
the account of the Company or any Restricted Subsidiary in the ordinary course
of business, including guarantees and letters of credit supporting such bid,
performance, surety or other reimbursement obligations (in each case other than
an obligation for money borrowed);
(h) any renewals, extensions, substitutions, refinancings or replacements
(each, for purposes of this clause, a "refinancing") by the Company of any
Indebtedness of the Company incurred in compliance with clauses (i) and (ii) of
the proviso to the first sentence of Section 9.14 or pursuant to clause (b),
(c), (h) or (j) of this definition, including any successive refinancings by the
Company, so long as (i) any such new Indebtedness shall be in a principal amount
that does not exceed the principal amount (or, if such Indebtedness being
refinanced 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) so refinanced plus the amount of any premium
required to be paid in connection with such refinancing pursuant to the terms of
the Indebtedness refinanced or the amount of any premium reasonably determined
by the Company as necessary to accomplish such refinancing, plus the amount of
expenses of the Company incurred in connection with such refinancing, and (ii)
in the case of any refinancing of Subordinated Indebtedness, such new
Indebtedness is made subordinate to the 2012 Notes at least to the same extent
as the Indebtedness being refinanced and (iii) such new Indebtedness has an
Average Life equal to or longer than the Average Life of the Indebtedness being
refinanced and a final Stated Maturity equal to or later than the final Stated
Maturity of the Indebtedness being refinanced;
(i) Non-Recourse Indebtedness;
(j) Purchase Money Indebtedness of the Company in an aggregate principal
amount (when added to (1) all refinancings thereof pursuant to clause (h) of
this definition plus (2) Purchase Money Indebtedness incurred by all Restricted
Subsidiaries pursuant to clause (k) of the definition of Permitted Subsidiary
Indebtedness and all refinancings thereof pursuant to clause (l) of such
definition) not in excess of $50,000,000 at any one time outstanding; and
(k) other Indebtedness of the Company in an aggregate principal amount not
in excess of $50,000,000 at any one time outstanding.
"Permitted Investments" means any of the following: (a) Investments in Cash
Equivalents; (b) Investments in the Company or any of its Restricted
Subsidiaries; (c) Investments in an amount not to exceed 10% of Adjusted
Consolidated Net Tangible Assets determined as of the date of the making or
incurrence of such Permitted Investment at any one time outstanding; (d)
Investments by the Company or any of its Restricted Subsidiaries in another
Person, if as a result of such Investment (i) such other Person becomes a
Restricted Subsidiary of the Company or (ii) such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its assets to, the Company or a Restricted Subsidiary; (e) entry into operating
agreements, joint ventures, partnership agreements, limited liability company
agreements, working interests, royalty interests, mineral leases, processing
11
agreements, farm-out agreements, contracts for the sale, transportation or
exchange of oil and natural gas, unitization agreements, pooling arrangements,
area of mutual interest agreements or other similar or customary agreements,
transactions or arrangements, and Investments, contributions of Property and
expenditures in connection therewith or pursuant thereto, in each case made or
entered into in the ordinary course of the Oil and Gas Business; (f) entry into
any Oil and Gas Hedging Contracts in the ordinary course of business; (g)
Investments in Capital Stock of any oil and gas royalty trust; (h) entry into a
joint venture or partnership agreement in connection with ownership and
operation of office and building real estate and related assets owned by the
Company or any Restricted Subsidiary and contribution of such assets to such
entity; or (i) loans and advances to employees of the Company or any Restricted
Subsidiary in an amount not to exceed $2,000,000 at any one time outstanding.
"Permitted Liens" means the following types of Liens:
(a) Liens existing as of the Issue Date;
(b) Liens securing the 2012 Notes;
(c) Liens in favor of the Company or a Subsidiary Guarantor;
(d) Liens securing refinancings, as defined in clause (h) of the definition
of Permitted Indebtedness of secured Indebtedness; provided that such Liens
extend only to cover the Property currently securing the Indebtedness being
refinanced;
(e) Liens for taxes, assessments and governmental charges or claims either
(i) not delinquent or (ii) contested in good faith by appropriate proceedings
and as to which the Company or its Restricted Subsidiaries shall have set aside
on their books such reserves as may be required pursuant to GAAP;
(f) statutory Liens of landlords and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by law
incurred in the ordinary course of business for sums not delinquent or being
contested in good faith, if such reserve or other appropriate provision, if any,
as shall be required by GAAP shall have been made in respect thereof;
(g) Liens incurred or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security, or to secure the payment or performance of tenders, statutory
or regulatory obligations, surety and appeal bonds, bids, leases, government
contracts and leases, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money but
including lessee or operator obligations under statutes, governmental
regulations or instruments related to the ownership, exploration and production
of oil, gas and minerals on state, federal or foreign lands or waters);
(h) judgment Liens not giving rise to an Event of Default so long as any
appropriate legal proceedings which may have been duly initiated for the review
of such judgment shall not
12
have been finally terminated or the period within which such proceeding may be
initiated shall not have expired;
(i) easements, rights-of-way, restrictions and other similar charges or
encumbrances not interfering in any material respect with the ordinary conduct
of the business of the Company or any of its Restricted Subsidiaries;
(j) any interest or title of a lessor under any Capitalized Lease
Obligation or operating lease;
(k) Liens resulting from the deposit of funds or evidences of Indebtedness
in trust for the purpose of defeasing Indebtedness of the Company or any of its
Restricted Subsidiaries;
(l) Liens securing obligations under Oil and Gas Hedging Contracts;
(m) Liens upon specific items of inventory or other goods and proceeds of
any Person securing such Person's obligations in respect of bankers' acceptances
issued or created for the account of such Person to facilitate the purchase,
shipment or storage of such inventory or other goods;
(n) Liens securing reimbursement obligations with respect to commercial
letters of credit which encumber documents and other property relating to such
letters of credit and products and proceeds thereof;
(o) Liens encumbering property or assets under construction arising from
progress or partial payments by a customer of the Company or its Restricted
Subsidiaries relating to such property or assets;
(p) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company or
any of its Restricted Subsidiaries, including rights of offset and set-off;
(q) Liens securing Interest Rate Protection Obligations which Interest Rate
Protection Obligations relate to Indebtedness that is secured by Liens otherwise
permitted under this Indenture;
(r) Liens on, or related to, properties or assets to secure all or part of
the costs incurred in the ordinary course of business for the exploration,
drilling, development or operation thereof;
(s) Liens on pipeline or pipeline facilities which arise out of operation
of law;
(t) Liens arising under operating agreements, joint venture agreements,
partnership agreements, oil and gas leases, farm-out agreements, division
orders, contracts for the sale, transportation or exchange of oil and natural
gas, unitization and pooling declarations and
13
agreements, area of mutual interest agreements and other agreements which are
customary in the Oil and Gas Business;
(u) Liens reserved in oil, gas and mineral leases for bonus or rental
payments, and for compliance with the terms of such leases;
(v) Liens constituting survey exceptions, encumbrances, easements, or
reservations of, or rights to others for, rights-of-way, zoning or other
restrictions as to the use of real properties, and minor defects of title which,
in the case of any of the foregoing, were not incurred or created to secure the
payment of borrowed money or the deferred purchase price of Property or
services, and in the aggregate do not materially adversely affect the value of
Property of the Company and the Restricted Subsidiaries, taken as a whole, or
materially impair the use of such Properties for the purposes for which such
Properties are held by the Company or any Restricted Subsidiaries;
(w) Liens securing Non-Recourse Indebtedness; provided, however, that the
related Non-Recourse Indebtedness shall not be secured by any property or assets
of the Company or any Restricted Subsidiary other than the property and assets
acquired by it with the proceeds of such Non-Recourse Indebtedness;
(x) Liens securing Indebtedness incurred under one or more bank credit or
revolving credit facilities in compliance with Section 9.14, including
Indebtedness incurred in accordance with clause (a) of the definition of
Permitted Indebtedness and/or clause (a) of the definition of Permitted
Subsidiary Indebtedness;
(y) (i) Liens upon any Property of any Person existing at the time of
acquisition thereof by the Company or a Restricted Subsidiary, (ii) Liens upon
any Property of a Person existing at the time such Person is merged or
consolidated with the Company or any Restricted Subsidiary or existing at the
time of the sale or transfer of any such Property of such Person to the Company
or any Restricted Subsidiary, or (iii) Liens upon any Property of a Person
existing at the time such Person becomes a Restricted Subsidiary; provided that
in each case such Lien has not been created in contemplation of such sale,
merger or consolidation, transfer or acquisition, and provided that, in each
such case no such Lien shall extend to or cover any Property of the Company or
any Restricted Subsidiary other than the Property being acquired and
improvements thereon;
(z) purchase money Liens granted or assumed in connection with the
acquisition of assets in the ordinary course of business and consistent with
past practices; provided, that (A) such Liens attach only to the property so
acquired with the Purchase Money Indebtedness secured thereby and (B) such Liens
secure only Indebtedness that is not in excess of 100% of the purchase price of
such assets;
(aa) other Liens of the Company that, at the date incurred, when taken
together with all other Liens theretofore incurred in reliance upon this clause
(aa), secure Indebtedness in an aggregate principal amount not in excess of 10%
of Adjusted Consolidated Net Tangible Assets; and
14
(bb) any Lien that is deemed to arise as a result of the sale or transfer
of a Production Payment that does not involve the creation of a guaranty of the
type described in clause (g) of the definition of "Indebtedness."
"Permitted Subsidiary Indebtedness" means any of the following:
(a) Indebtedness of any Restricted Subsidiary under one or more bank
credit or revolving credit facilities (and "refinancings" thereof) in an amount
at any one time outstanding not to exceed the Maximum Credit Amount (in the
aggregate for all Restricted Subsidiaries and the Company, pursuant to clause
(a) of the definition of "Permitted Indebtedness");
(b) Indebtedness of any Restricted Subsidiary outstanding on the Issue
Date;
(c) obligations of any Restricted Subsidiary pursuant to Interest Rate
Protection Obligations, but only to the extent such obligations do not exceed
105% of the aggregate principal amount of the Indebtedness covered by such
Interest Rate Protection Obligations, and obligations under any Oil and Gas
Hedging Contracts that any Restricted Subsidiary enters into in the ordinary
course of business;
(d) the Subsidiary Guarantees (and any assumption of the obligations
guaranteed thereby);
(e) Indebtedness of any Restricted Subsidiary relating to guarantees by
such Restricted Subsidiary of Permitted Indebtedness pursuant to clause (a) of
the definition of "Permitted Indebtedness;"
(f) in-kind obligations relating to net gas balancing positions arising in
the ordinary course of business and consistent with past practice;
(g) Indebtedness in respect of bid, performance or surety bonds or other
reimbursement obligations issued for the account of any Restricted Subsidiary in
the ordinary course of business, including guarantees and letters of credit
supporting such bid, performance, surety bonds or other reimbursement
obligations (in each case other than for an obligation for money borrowed);
(h) Indebtedness of any Restricted Subsidiary to any other Restricted
Subsidiary or to the Company;
(i) Indebtedness relating to guarantees by any Restricted Subsidiary
permitted to be incurred pursuant to Section 9.12(a) hereof;
(j) Non-Recourse Indebtedness;
(k) Purchase Money Indebtedness of any Restricted Subsidiary in an
aggregate principal amount (when added to (1) Purchase Money Indebtedness of all
other Restricted Subsidiaries under this clause (k) and all refinancings thereof
pursuant to clause (l) of this definition plus (2) Purchase Money Indebtedness
of the Company under clause (j) of the
15
definition of Permitted Indebtedness and all refinancings thereof pursuant to
clause (h) of such definition) not in excess of $50,000,000 at any one time
outstanding;
(l) any renewals, extensions, substitutions, refinancings or replacements
(each, for purposes of this clause, a "refinancing") by any Restricted
Subsidiary of any Indebtedness of such Restricted Subsidiary incurred in
compliance with clauses (i) and (ii) of the proviso to the first sentence of
Section 9.14 or pursuant to clause (b) or (k) of this definition, including any
successive refinancings by such Restricted Subsidiary, so long as (i) any such
new Indebtedness shall be in a principal amount that does not exceed the
principal amount (or, if such Indebtedness being refinanced 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) so refinanced plus the amount of any premium required to be paid
in connection with such refinancing pursuant to the terms of the Indebtedness
refinanced or the amount of any premium reasonably determined by such Restricted
Subsidiary as necessary to accomplish such refinancing, plus the amount of
expenses of such Restricted Subsidiary incurred in connection with such
refinancing and (ii) such new Indebtedness has an Average Life equal to or
longer than the Average Life of the Indebtedness being refinanced and a final
Stated Maturity equal to or later than the final Stated Maturity of the
Indebtedness being refinanced; and
(m) other Indebtedness of the Restricted Subsidiaries in an aggregate
principal amount not in excess of $50,000,000 at any one time outstanding.
"Preferred Stock" means, with respect to any Person, any and all shares,
interests, participations or other equivalents (however designated) of such
Person's preferred or preference stock, whether now outstanding or issued after
the date of this Indenture, including, without limitation, all classes and
series of preferred or preference stock of such Person.
"Public Market" exists at any time with respect to the Qualified Capital
Stock of the Company if such Qualified Capital Stock of the Company is then (a)
registered with the Commission pursuant to Section 12(b) or 12(g) of the
Exchange Act and (b) traded either on a national securities exchange or on the
Nasdaq Stock Market.
"Purchase Notice" has the meaning set forth in Section 9.16(c).
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Redeemable Capital Stock.
"Qualified Redemption Transaction" means a call for redemption of any
Capital Stock or Subordinated Indebtedness (including any Subordinated
Indebtedness accounted for as a minority interest of the Company that is held by
a Subsidiary that is a business trust or similar entity formed for the primary
purpose of issuing preferred securities the proceeds of which are loaned to the
Company or a Restricted Subsidiary) that by its terms is convertible into Common
Stock of the Company if on the date of notice of such call for redemption (a) a
Public Market exists in the shares of Common Stock of the Company and (b) the
average closing price on the Public Market for shares of Common Stock of the
Company for the twenty trading days immediately preceding the date of such
notice exceeds 120% of the conversion price per share of
16
Common Stock of the Company issuable upon conversion of the Capital Stock or
Subordinated Indebtedness called for redemption.
"Rating Agency" means each of S&P and Xxxxx'x, or if S&P or Xxxxx'x or both
shall not make a rating on the 2012 Notes publicly available, a nationally
recognized statistical rating agency or agencies, as the case may be, selected
by the Company (as evidenced by a Board Resolution of the Board of Directors of
the Company) which shall be substituted for S&P or Xxxxx'x, or both, as the case
may be.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the 15 or 15 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Restricted Payment" has the meaning specified in Section 9.13.
"Subordinated Indebtedness" means Indebtedness of the Company that is
expressly subordinated to the 2012 Notes, including the Existing Subordinated
Notes.
"Subsidiary Guarantee" means any guarantee of the 2012 Notes by (i) any
Subsidiary Guarantor in accordance with the provisions of Section 14.1 hereof
and (ii) any Restricted Subsidiary in accordance with the provisions of Section
9.12.
"Subsidiary Guarantor" means (a) each of the Company's Restricted
Subsidiaries that becomes a guarantor of the Securities in compliance with the
provisions of Section 9.12 or Section 14.1 hereof and (b) each of the Company's
Subsidiaries executing a supplemental indenture in which such Subsidiary agrees
to be bound by the terms of this Indenture and to guarantee the payment of the
2012 Notes pursuant to the provisions of Article XIV hereof.
"Terminated Covenants" has the meaning specified in Section 9.21.
"Trigger Date" has the meaning specified in Section 9.16(c).
"Unrestricted Subsidiary" means (a) any Subsidiary of the Company that at
the time of determination will be designated an Unrestricted Subsidiary by the
Board of Directors of the Company as provided below, Hugoton Royalty Trust and
any other oil and gas royalty trust Subsidiary of the Company that meets the
criteria set forth in clauses (i) through (iv) of the second sentence of this
definition, and (b) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors of the Company may designate any Subsidiary of the Company as an
Unrestricted Subsidiary so long as (i) neither the Company nor any Restricted
Subsidiary is directly or indirectly liable pursuant to the terms of any
Indebtedness of such Subsidiary, (ii) no default with respect to any
Indebtedness of such Subsidiary would permit (upon notice, lapse of time or
otherwise) any holder of any other Indebtedness of the Company or any Restricted
Subsidiary to declare a default on such other Indebtedness or cause the payment
thereof to be accelerated or payable prior to its stated maturity, (iii) neither
the Company nor any Restricted Subsidiary has made an Investment in such
Subsidiary unless such Investment was made pursuant to, and in accordance with,
Section 9.13 hereof (other than Investments of the type described in clause (d)
of the definition of Permitted Investments), and (iv) such designation shall not
result in the creation or imposition of any Lien on any of the Properties of the
Company
17
or any Restricted Subsidiary (other than any Permitted Lien or any Lien the
creation or imposition of which shall have been in compliance with Section 9.10
hereof); provided, however, that with respect to clause (i), the Company or a
Restricted Subsidiary may be liable for Indebtedness of an Unrestricted
Subsidiary if (A) such liability constituted a Permitted Investment or a
Restricted Payment permitted by Section 9.13 hereof, in each case at the time of
incurrence, or (B) the liability would be a Permitted Investment at the time of
designation of such Subsidiary as an Unrestricted Subsidiary. Any such
designation by the Board of Directors of the Company shall be evidenced to the
Trustee by filing a Board Resolution with the Trustee giving effect to such
designation. The Board of Directors of the Company may designate any
Unrestricted Subsidiary as a Restricted Subsidiary if, immediately after giving
effect to such designation, (x) no Default or Event of Default shall have
occurred and be continuing, (y) the Company could incur $1.00 of additional
Indebtedness (not including the incurrence of Permitted Indebtedness) under the
first paragraph of Section 9.14 hereof and (z) if any of the Properties of the
Company or any of its Restricted Subsidiaries would upon such designation become
subject to any Lien (other than a Permitted Lien), the creation or imposition of
such Lien shall have been in compliance with Section 9.10 hereof.
"2012 Notes" means the __% Senior Notes due 2012 of the Company to be
issued pursuant to this Indenture. For purposes of this Indenture, the term
"2012 Notes" shall, except where the context otherwise requires, include the
Subsidiary Guarantees, if any.
SECTION 2.2. Consolidation, Merger and Sale.
The Original Indenture shall be amended and supplemented by (i)
redesignating clause (d) of Section 7.1 as clause (f) and (ii) inserting the
following new clauses (d) and (e) in Section 7.1:
"(d) except in the case of the consolidation or merger of any Restricted
Subsidiary with or into the Company, immediately after giving effect to such
transaction or transactions on a pro forma basis (on the assumption that the
transaction or transactions occurred on the first day of the period of four full
fiscal quarters ending immediately prior to the consummation of such transaction
or transactions with the appropriate adjustments with respect to the transaction
or transactions being included in such pro forma calculation) the Company (or
the Surviving Entity if the Company is not the continuing obligor under this
Indenture) could incur $1.00 of additional Indebtedness (excluding Permitted
Indebtedness) under Section 9.14 hereof;
(e) if the Company is not the continuing obligor under this Indenture,
then each Subsidiary Guarantor, unless it is the party to the transactions
described above, shall have by supplemental indenture confirmed that its
Subsidiary Guarantee shall apply to such Person's obligations under this
Indenture and the 2012 Notes; and".
SECTION 2.3. Events of Default.
(a) The following Events of Default shall be substituted for those in
clauses (a)-(j) of Section 4.1 of the Original Indenture insofar as they relate
to the 2012 Notes:
18
"(a) default in the payment of the principal of or premium, if any, on any
of the 2012 Notes, whether such payment is due at Stated Maturity, xxxx
xxxxxxxxxx, xxxx xxxxxxxxxx pursuant to a Change of Control Offer or a Net
Proceeds Offer, upon acceleration or otherwise; or
(b) default in the payment of any installment of interest on any of the
2012 Notes, when it becomes due and payable, and the continuance of such default
for a period of 30 days; or
(c) default in the performance or breach of the provisions of Article VII
hereof, the failure to make or consummate a Change of Control Offer in
accordance with Section 9.15 hereof or the failure to make or consummate a Net
Proceeds Offer in accordance with the provisions of Section 9.16 hereof; or
(d) the Company or any Subsidiary Guarantor shall fail to perform or
observe any other term, covenant or agreement (not theretofore terminated
pursuant to Section 9.21 hereof) contained in the 2012 Notes, any Subsidiary
Guarantee or this Indenture (other than a default specified in (a), (b) or (c)
above) for a period of 30 days after written notice of such failure requiring
the Company to remedy the same shall have been given (i) to the Company by the
Trustee or (ii) to the Company and the Trustee by the holders of at least 25% in
aggregate principal amount of the 2012 Notes then Outstanding; or
(e) the occurrence and continuation beyond any applicable grace period of
any default in the payment of the principal of (or premium, if any, on) or
interest on any Indebtedness of the Company (other than the 2012 Notes) or any
Restricted Subsidiary for money borrowed when due, or any other default causing
acceleration of any Indebtedness of the Company or any Restricted Subsidiary for
money borrowed; provided that the aggregate principal amount of such
Indebtedness shall exceed $10,000,000; provided further that if any such default
is cured or waived or any such acceleration rescinded, or such debt is repaid,
within a period of 10 days from the continuation of such default beyond the
applicable grace period or the occurrence of such acceleration, as the case may
be, such Event of Default under this Indenture and any consequential
acceleration of the 2012 Notes shall be automatically rescinded, so long as such
rescission does not conflict with any judgment or decree; or
(f) the commencement of proceedings, or the taking of any enforcement
action (including by way of set-off), by any holder of at least $10,000,000 in
aggregate principal amount of Indebtedness of the Company or any Restricted
Subsidiary, after a default under such Indebtedness, to retain in satisfaction
of such Indebtedness or to collect or seize, dispose of or apply in satisfaction
of such Indebtedness, property or assets of the Company or any Restricted
Subsidiary having a Fair Market Value in excess of $10,000,000 individually or
in the aggregate; provided that if any such proceedings or actions are
terminated or rescinded, or such Indebtedness is repaid, such Event of Default
under this Indenture and any consequential acceleration of the Securities shall
be automatically rescinded, so long as (i) such rescission does not conflict
with any judgment or decree and (ii) the holder of such Indebtedness shall not
have applied any such property or assets in satisfaction of such Indebtedness;
or
19
(g) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company or any Subsidiary Guarantor, as applicable, not to be,
in full force and effect, enforceable in accordance with its terms (except
pursuant to the release of any such Subsidiary Guarantee in accordance with this
Indenture); or
(h) if (i) any material "accumulated funding deficiency" (as defined in
Section 302 of ERISA or Section 412 of the Code), shall exist with respect to
any PBGC Plan or Multiple Employer Plan (unless a waiver or extension is
obtained under Section 412(d) or (e) of the Code and Sections 303 and 304 of
ERISA), if such accumulated funding deficiency would give rise to a material
liability of the Company, (ii) a Reportable Event shall occur with respect to
any PBGC Plan or Multiple Employer Plan, which Reportable Event is likely to
result in the termination of such PBGC Plan or Multiple Employer Plan for
purposes of Title IV of ERISA and to give rise to a material liability of the
Company, (iii) proceedings to have a trustee appointed shall commence, or a
trustee shall be appointed to terminate or administer a PBGC Plan or Multiple
Employer Plan, which proceeding is likely to result in the termination of such
PBGC Plan or Multiple Employer Plan and to give rise to a material liability of
the Company with respect to such termination, (iv) a notice of intent to
terminate a PBGC Plan or Multiple Employer Plan in a distress termination under
Section 4041(c) of ERISA is furnished to participants, (v) any Multiemployer
Plan is in reorganization or is insolvent and the circumstances are such that
such reorganization or insolvency will likely result in a material liability to
the Company, (vi) there is a complete or partial withdrawal from a Multiemployer
Plan under circumstances that would likely subject the Company to material
liability, or (vii) any event or condition described in (i) through (vi) above
(determined without regard to whether the event or condition taken alone would
or could result in a material liability) shall occur or exist with respect to a
PBGC Plan, Multiple Employer Plan or Multiemployer Plan which in combination
with one or more of any events described in (i) through (vi) above (determined
without regard to whether the event or condition taken alone would or could
result in a material liability) that has occurred or exists, would likely
subject the Company, any Subsidiary Guarantor or any other Restricted Subsidiary
to any material tax, penalty or other liability (for purposes of this paragraph
(h) the term "material" and "material liability" shall mean any tax, penalty or
liability in excess of $10,000,000); or
(i) final judgments or orders rendered against the Company or any
Restricted Subsidiary that are unsatisfied and that require the payment in
money, either individually or in an aggregate amount, that is more than
$10,000,000 over the coverage under applicable insurance policies and either (i)
commencement by any creditor of an enforcement proceeding upon such judgment
(other than a judgment that is stayed by reason of pending appeal or otherwise)
or (ii) the occurrence of a 60-day period during which a stay of such judgment
or order, by reason of pending appeal or otherwise, was not in effect; or
(j) the entry of a decree or order by a court having jurisdiction in the
premises (i) for relief in respect of the Company or any Restricted Subsidiary
in an involuntary case or proceeding under the Federal Bankruptcy Code or any
other applicable federal or state bankruptcy, insolvency, reorganization or
other similar law or (ii) adjudging the Company or any Restricted Subsidiary
bankrupt or insolvent, or approving a petition seeking reorganization,
arrangement, adjustment or composition of the Company or a Restricted Subsidiary
under the
20
Federal Bankruptcy Code or any other applicable federal or state law, or
appointing under any such law a custodian, receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the Company or any Subsidiary
Guarantor or any other Restricted Subsidiary or of a substantial part of their
consolidated assets, or ordering the winding up or liquidation of their affairs,
and the continuance of any such decree or order for relief or any such other
decree or order unstayed and in effect for a period of 60 consecutive days; or
(k) the commencement by the Company or any Restricted Subsidiary of a
voluntary case or proceeding under the Federal Bankruptcy Code or any other
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or any other case or proceeding to be adjudicated bankrupt or
insolvent, or the consent by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary to the entry of a decree or order for relief in
respect thereof in an involuntary case or proceeding under the Federal
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency,
reorganization or other similar law or to the commencement of any bankruptcy or
insolvency case or proceeding against it, or the filing by the Company or any
Subsidiary Guarantor or any other Restricted Subsidiary of a petition or consent
seeking reorganization or relief under any applicable federal or state law, or
the consent by it under any such law to the filing of any such petition or to
the appointment of or taking possession by a custodian, receiver, liquidator,
assignee, trustee or sequestrator (or other similar official) of any of the
Company or any Subsidiary Guarantor or any other Restricted Subsidiary or of any
substantial part of their consolidated assets, or the making by it of an
assignment for the benefit of creditors under any such law, or the admission by
it in writing of its inability to pay its debts generally as they become due or
taking of corporate action by the Company or any Subsidiary Guarantor or any
other Restricted Subsidiary in furtherance of any such action."
(b) The references in Sections 4.2 and 5.6 of the Original Indenture to
clause (i) or (j) of Section 4.1 shall be deemed to be references to clause (j)
or (k) of Section 4.1 in relation to the 2012 Notes.
SECTION 2.4. Supplemental Indentures without Consent of Holders.
Section 8.1 of the Original Indenture shall be amended and supplemented by
(i) inserting the words "any Subsidiary Guarantors, when authorized by a Board
Resolution," after the words "Board Resolution," in the first paragraph thereof,
(ii) deleting the period at the end of paragraph (k) and substituting therefor
"; or" and (iii) inserting the following paragraphs:
"(l) to add any Person as a Subsidiary Guarantor as provided in Section
14.1 hereof or as contemplated by the definition of "Permitted Subsidiary
Indebtedness" to evidence the succession of another Person to any
Subsidiary Guarantor and the assumption by any such successor of the
covenants and agreements of such Subsidiary Guarantor contained herein, in
the 2012 Notes and in the Subsidiary Guarantee; or
(m) to release a Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 9.12 hereof."
21
SECTION 2.5. Supplemental Indenture with Consent of Holders.
Section 8.2 of the Original Indenture shall be amended and supplemented by
(i) inserting the words "any Subsidiary Guarantors, when authorized by a Board
Resolution," after the words "Board Resolution," in the first paragraph thereof,
(ii) deleting the period at the end of paragraph (c) and substituting therefor
"; or" and (iii) inserting the following paragraphs:
"(d) modify Section 9.12 hereof or any provisions of this Indenture
relating to any Subsidiary Guarantees in a manner adverse to the Holders
thereof; or
(e) amend, change or modify the obligation of the Company to make and
consummate a Change of Control Offer in the event of a Change of Control, or to
make and consummate a Net Proceeds Offer with respect to any Asset Sale or
modify any of the provisions or definitions with respect thereto."
SECTION 2.6. Covenants.
(a) Article IX of the Original Indenture shall be amended and
supplemented by inserting the following in substitution for Section 9.9:
"Section 9.9 Reports.
The Company shall file on a timely basis with the Commission, to the extent
such filings are accepted by the Commission and whether or not the Company has a
class of securities registered under the Exchange Act, the annual reports,
quarterly reports and other documents that the Company would be required to file
if it were subject to Section 13 or 15(d) of the Exchange Act). The Company will
also be required to file with the Trustee copies of such reports and documents
within 15 days after the date on which the Company files such reports and
documents with the Commission or the date on which the Company would be required
to file such reports and documents if the Company were so required. The Company
also will furnish at its cost copies of such reports and documents to any holder
of 2012 Notes promptly upon written request, irrespective of whether or not the
Company files any such report or document with the Commission. The Company and
each Subsidiary Guarantor also shall comply with other provisions of TIA Section
314(a).
Delivery of such reports, information and documents to the Trustee is for
informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates)."
(b) Article IX of the Original Indenture shall be further amended and
supplemented by inserting the following in substitution for Section 9.11:
"Section 9.11 Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 9.5 through 9.10, Sections 9.13 and
9.14 and Sections 9.17
22
through 9.20 hereof if, before or after the time for such compliance, the
Holders of at least a majority in principal amount of the Outstanding 2012 Notes
and the Subsidiary Guarantors, by act of such Holders and written agreement of
the Subsidiary Guarantors, waive such compliance in such instance with such
term, provision or condition, but no such waiver shall extend to or affect such
term, provision or condition except to the extent so expressly waived, and,
until such waiver shall become effective, the obligations of the Company and the
duties of the Trustee in respect of any such term, provision or condition shall
remain in full force and effect."
(c) Article IX of the Original Indenture shall be further amended and
supplemented by inserting the following new sections in their entirety:
"Section 9.12 Limitation on Non-Guarantor Restricted Subsidiaries.
(a) The Company shall not permit any Restricted Subsidiary that is not a
Subsidiary Guarantor to guarantee the payment of any Indebtedness of the Company
unless (i) such Restricted Subsidiary simultaneously executes and delivers a
supplemental indenture to this Indenture providing for a Subsidiary Guarantee of
the 2012 Notes by such Restricted Subsidiary; (ii) such Restricted Subsidiary
waives, and agrees not in any manner whatsoever to claim or take the benefit or
advantage of, any rights of reimbursement, indemnity or subrogation or any other
rights against the Company or any other Restricted Subsidiary as a result of any
payment by such Restricted Subsidiary under its Subsidiary Guarantee until such
time as the obligations guaranteed thereby are paid in full; and (iii) such
Restricted Subsidiary shall deliver to the Trustee an Opinion of Counsel to the
effect that such supplemental indenture has been duly executed and authorized
and such Subsidiary Guarantee constitutes a valid, binding and enforceable
obligation of such Restricted Subsidiary, except insofar as enforcement thereof
may be limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity; provided that
this paragraph (a) shall not be applicable to (x) any guarantee of any
Restricted Subsidiary that (1) existed at the time such Person became a
Restricted Subsidiary of the Company and (2) was not incurred in connection
with, or in contemplation of, such Person becoming a Restricted Subsidiary of
the Company or (y) any guarantee of any Restricted Subsidiary of Indebtedness of
the Company described in clause (a) of the definition of Permitted Indebtedness.
(b) The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, transfer any assets, businesses, divisions, real property or
equipment to any Restricted Subsidiary (other than sales of oil and natural gas
production in the ordinary course of business at prices under contracts in
existence as of the date of this Indenture or on terms not less favorable to the
Subsidiary than would be obtainable at the time in comparable transactions
through arms-length dealings with Persons other than Affiliates of the Company
or any transfer that results in Permitted Subsidiary Indebtedness) or acquire
Capital Stock of a new Restricted Subsidiary that in either case is not a
Subsidiary Guarantor unless (i) such transferee or new Restricted Subsidiary
enters into a Subsidiary Guarantee by complying with Section 9.12(a) hereof or
(ii) the aggregate Fair Market Value at the time of such proposed transfer or
acquisition, of such assets, businesses, divisions, real property or equipment
proposed to be transferred or Capital Stock of a new Restricted Subsidiary
proposed to be acquired, together with the aggregate Fair Market Value of all
assets, businesses, divisions, real property or equipment previously
23
transferred pursuant to this clause (ii) and Capital Stock previously acquired
pursuant to this clause (ii) (in each case valued at the time of transfer or
acquisition) does not exceed (x) the greater of $50,000,000 and 5% of Adjusted
Consolidated Net Tangible Assets less (y) the book value of total combined
assets of all Subsidiaries of the Company at December 31, 2001, as reflected in
a consolidating balance sheet of the Company prepared in accordance with GAAP
(exclusive, in the case of each of clauses (x) and (y), of intercompany
receivables and liabilities due from the Company and assets subject to any
Sale/Leaseback Transaction treated as an operating lease in the consolidated
financial statements of the Company); provided that, in the case of clause (ii),
if the Restricted Subsidiary to which such transfer was made or whose Capital
Stock was acquired subsequently enters into a Subsidiary Guarantee, such
transfer or acquisition shall be treated as having been made pursuant to clause
(i).
(c) Notwithstanding the foregoing and the other provisions of this
Indenture, any Subsidiary Guarantee incurred by a Restricted Subsidiary pursuant
to this Section 9.12 shall provide by its terms that it shall be automatically
and unconditionally released and discharged upon (i) any sale, exchange or
transfer, to any Person that is not an Affiliate of the Company, of all of the
Company's Capital Stock in such Restricted Subsidiary (which sale, exchange or
transfer is not prohibited by this Indenture), (ii) the merger of such
Restricted Subsidiary into the Company or any other Restricted Subsidiary or the
liquidation and dissolution of such Restricted Subsidiary (in each case to the
extent not prohibited by this Indenture), or (iii) (x) the release or discharge
of all guarantees by such Restricted Subsidiary of any Indebtedness other than
Note Obligations, except a discharge or release by or as a result of payment
under such guarantees and (y) after giving effect to the proposed release and
discharge, the aggregate total combined assets of all Restricted Subsidiaries
that are not Subsidiary Guarantors (exclusive of intercompany receivables and
liabilities due from the Company and assets subject to any Sale/Leaseback
Transaction treated as an operating lease in the consolidated financial
statements of the Company) do not exceed the greater of $50,000,000 and 5% of
Adjusted Consolidated Net Tangible Assets."
"SECTION 9.13 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, take the following actions:
(i) declare or pay any dividend on, or make any distribution to
holders of, any shares of the Company's Capital Stock (other than dividends
or distributions payable solely in shares of Qualified Capital Stock of the
Company, options, warrants or other rights to purchase Qualified Capital
Stock of the Company);
(ii) purchase, redeem or otherwise acquire or retire for value any
Capital Stock of the Company or any Affiliate thereof (other than any
Restricted Subsidiary of the Company) or any options, warrants or other
rights to acquire such Capital Stock; provided, however, that the Company
may purchase, redeem or otherwise retire common stock of the Company in an
amount not to exceed $10,000,000 in the aggregate for all such transactions
after the Issue Date, and; provided, further, that the Company may make any
payment of the applicable redemption price in connection with a Qualified
Redemption Transaction;
24
(iii) make any principal payment on or repurchase, redeem, defease
or otherwise acquire or retire for value, prior to any scheduled principal
payment, scheduled sinking fund payment or maturity, any Subordinated
Indebtedness, provided, however, that the Company may make any payment of
the applicable redemption price in connection with a Qualified Redemption
Transaction;
(iv) declare or pay any dividend on, or make any distribution to
the holders of, any shares of Capital Stock of any Restricted Subsidiary of
the Company (other than to the Company or any of its Restricted
Subsidiaries) or purchase, redeem or otherwise acquire or retire for value
any Capital Stock of any Restricted Subsidiary or any options, warrants or
other rights to acquire any such Capital Stock (other than with respect to
any such Capital Stock held by the Company or any Wholly Owned Restricted
Subsidiary of the Company);
(v) make any Investment (other than a Permitted Investment); or
(vi) incur any guarantee of Indebtedness of any Affiliate (other
than (A) guarantees of Indebtedness of any Restricted Subsidiary by the
Company or (B) guarantees of Indebtedness of the Company by any Restricted
Subsidiary, in each case in accordance with the terms of this Indenture);
(such payments or other actions described in (but not excluded from)
clauses (i) through (vi) are collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to the proposed
Restricted Payment (with the amount of any such Restricted Payment, if
other than cash, being the amount determined by the Board of Directors of
the Company, whose determination shall be conclusive and evidenced by a
Board Resolution), (1) no Default or Event of Default shall have occurred
and be continuing, (2) the Company could incur $1.00 of additional
Indebtedness (excluding Permitted Indebtedness) in accordance with Section
9.14 hereof and (3) the aggregate amount of all Restricted Payments
declared or made after April 1, 1997, shall not exceed the sum (without
duplication) of the following:
(I) 50% of the aggregate cumulative Consolidated Net Income
of the Company accrued on a cumulative basis during the period
beginning on May 1, 1997, and ending on the last day of the Company's
last fiscal quarter ending prior to the date of such proposed
Restricted Payment (or, if such aggregate cumulative Consolidated Net
Income shall be a loss, minus 100% of such loss), plus
(II) the aggregate net cash proceeds received after April 1,
1997, by the Company as capital contributions to the Company (other
than from any Restricted Subsidiary), plus
(III) the aggregate net cash proceeds, and the Fair Market
Value at the date of acquisition of Property other than cash or Cash
Equivalents, received after April 1, 1997 by the Company from or as
the result of the issuance or sale (other
25
than to any of its Restricted Subsidiaries) of shares of Qualified
Capital Stock of the Company or any options, warrants or rights to
purchase such shares of Qualified Capital Stock of the Company, plus
(IV) the aggregate net cash proceeds received after April 1,
1997 by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options, warrants or rights to
purchase shares of Qualified Capital Stock of the Company, plus
(V) the aggregate net cash proceeds, and the Fair Market
Value at the date of acquisition of Property other than cash or Cash
Equivalents, received after April 1, 1997 by the Company from or as
the result of the issuance or sale (other than to any of its
Restricted Subsidiaries) of debt securities or shares of Redeemable
Capital Stock that have been converted into or exchanged for Qualified
Capital Stock of the Company, together with the aggregate cash and the
Fair Market Value at the date of acquisition of Property other than
cash or Cash Equivalents received by the Company at the time of such
conversion or exchange, plus
(VI) To the extent not otherwise included in the Company's
Consolidated Net Income, the net reduction in Investments in
Unrestricted Subsidiaries resulting from the payments of interest on
Indebtedness, dividends, repayments of loans or advances, or other
transfers of assets, in each case to the Company or a Restricted
Subsidiary after April 1, 1997 from any Unrestricted Subsidiary or
from the redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary (valued in each case as provided in the definition of
"Investment"), not to exceed in the case of any Unrestricted
Subsidiary the total amount of Investments (other than Permitted
Investments) in such Unrestricted Subsidiary made by the Company and
its Restricted Subsidiaries in such Unrestricted Subsidiary after
April 1, 1997, plus
(VII) $50,000,000.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take the following actions so long as (in the case of clauses
(ii), (iii), (iv) and (vi) below) no Default or Event of Default shall have
occurred and be continuing:
(i) the payment of any dividend within 60 days after the date
of declaration thereof, if at such declaration date such declaration
complied with the provisions of paragraph (a) above (and such payment shall
be deemed to have been paid on such date of declaration for purposes of any
calculation required by the provisions of paragraph (a) above);
(ii) the repurchase, redemption or other acquisition or retirement
of any shares of any class of Capital Stock of the Company or any
Restricted Subsidiary, in exchange for, or out of the aggregate net cash
proceeds of, a substantially concurrent issue and sale
26
(other than to a Restricted Subsidiary) of shares of Qualified Capital
Stock of the Company;
(iii) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of any Subordinated Indebtedness (other
than Redeemable Capital Stock) in exchange for or out of the aggregate net
cash proceeds of a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of shares of Qualified Capital Stock of the Company;
(iv) the purchase, redemption, repayment, defeasance or other
acquisition or retirement for value of (A) any Existing Subordinated Notes
or (B) any other Subordinated Indebtedness (other than Redeemable Capital
Stock) so long as, in the case of this subclause (B) only, such other
Subordinated Indebtedness (1) was issued after the Issue Date and (2) has
an Average Life to Stated Maturity that is longer than the Average Life to
Stated Maturity of the 2012 Notes and has a Stated Maturity for its final
scheduled principal payment that is at least 91 days later than the Stated
Maturity for the final scheduled principal payment of the 2012 Notes;
(v) repurchases, acquisitions or retirements of shares of
Qualified Capital Stock of the Company deemed to occur upon the exercise of
stock options or similar rights issued under employee benefit plans of the
Company if such shares represent all or a portion of exercise price or are
surrendered in connection with satisfying any federal income tax
obligation; or
(vi) repurchases, redemptions, other acquisitions or retirements
for value of Capital Stock of the Company held by employees of the Company
or any Restricted Subsidiary in an amount not to exceed $2,000,000 in the
aggregate during any calendar year.
The actions described in clauses (i), (ii), (iii) and (vi) of this
paragraph (b) shall be Restricted Payments that shall be permitted to be
taken in accordance with this paragraph (b) but shall reduce the amount
that would otherwise be available for Restricted Payments under clause (3)
of paragraph (a) (provided that any dividend paid pursuant to clause (i) of
this paragraph (b) shall reduce the amount that would otherwise be
available under clause (3) of paragraph (a) when declared, but not also
when subsequently paid pursuant to such clause (i)), and the actions
described in clauses (iv) and (v) of this paragraph (b) shall be Restricted
Payments that shall be permitted to be taken in accordance with this
paragraph and shall not reduce the amount that would otherwise be available
for Restricted Payments under clause (3) of paragraph (a).
(c) In computing Consolidated Net Income of the Company under paragraph
(a) above, (i) the Company shall use audited financial statements for the
portions of the relevant period for which audited financial statements are
available on the date of determination and unaudited financial statements and
other current financial data based on the books and records of the Company for
the remaining portion of such period and (ii) the Company shall be permitted to
rely in good faith on the financial statements and other financial data derived
from the books and
27
records of the Company that are available on the date of determination. If the
Company makes a Restricted Payment which, at the time of the making of such
Restricted Payment, would in the good faith determination of the Company be
permitted under the requirements of this Indenture, such Restricted Payment
shall be deemed to have been made in compliance with this Indenture
notwithstanding any subsequent adjustments made in good faith to the Company's
financial statements affecting Consolidated Net Income of the Company for any
period.
Section 9.14 Limitation on Indebtedness.
The Company shall not, and shall not permit any Restricted Subsidiary to,
create, incur, issue, assume, guarantee or in any manner become directly or
indirectly liable for the payment of (collectively "incur") any Indebtedness
(including any Acquired Indebtedness), other than Permitted Indebtedness and
Permitted Subsidiary Indebtedness, as the case may be; provided, however, that
the Company and its Restricted Subsidiaries that are Subsidiary Guarantors may
incur additional Indebtedness if (i) the Company's Consolidated Fixed Charge
Coverage Ratio for the four full fiscal quarters immediately preceding the
incurrence of such Indebtedness (and for which financial statements are
available), taken as one period (at the time of such incurrence, after giving
pro forma effect to: (x) the incurrence of such Indebtedness and (if applicable)
the application of the net proceeds therefrom, including to refinance other
Indebtedness or to acquire producing oil and natural gas Properties, as if such
Indebtedness had been incurred and the application of such proceeds had occurred
at the beginning of such four-quarter period; (y) the incurrence, repayment or
retirement of any other Indebtedness (including Permitted Indebtedness) by the
Company or its Restricted Subsidiaries since the first day of such four-quarter
period (including any other Indebtedness to be incurred concurrently with the
incurrence of such Indebtedness) as if such Indebtedness had been incurred,
repaid or retired at the beginning of such four-quarter period; and (z) the
acquisition (whether by purchase, merger or otherwise) or disposition (whether
by sale, merger or otherwise) of any Person acquired or disposed of by the
Company or its Restricted Subsidiaries, as the case may be, since the first day
of such four-quarter period, as if such acquisition or disposition had occurred
at the beginning of such four-quarter period), would have been equal to at least
2.50 to 1.0 and (ii) no Default or Event of Default shall have occurred and be
continuing at the time such additional Indebtedness is incurred or would occur
as a consequence of the incurrence of the additional Indebtedness.
For purposes of determining compliance with this Section 9.14, in the event
that an item of Indebtedness (including Acquired Indebtedness) meets the
criteria of more than one of the categories of Permitted Indebtedness or
Permitted Subsidiary Indebtedness, as applicable, or is entitled to be incurred
pursuant to clauses (i) and (ii) of the proviso to the first sentence of the
preceding paragraph of this Section 9.14, the Company may, in its sole
discretion, classify (or later reclassify) in whole or in part such item of
Indebtedness in any manner that complies with this Section 9.14 and such item of
Indebtedness or a portion thereof may be classified (or later reclassified) in
whole or in part as having been incurred under more than one of the applicable
clauses of Permitted Indebtedness or Permitted Subsidiary Indebtedness or
pursuant to clauses (i) and (ii) of the proviso to the first sentence of the
preceding paragraph hereof. Accrual of interest, the accretion of accreted value
and the payment of interest in the form of additional Indebtedness will not be
deemed to be an incurrence of Indebtedness for purposes of this covenant.
28
Section 9.15 Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall be
obligated to make an offer to purchase (a "Change of Control Offer") all of the
then Outstanding 2012 Notes, in whole or in part, from the Holders of such 2012
Notes in integral multiples of $1,000, at a purchase price (the "Change of
Control Purchase Price") equal to 101% of the aggregate principal amount of such
2012 Notes, plus accrued and unpaid interest to the Change of Control Purchase
Date (as defined below), in accordance with the procedures set forth in
paragraphs (b), (c) and (d) of this Section. The Company shall, subject to the
provisions described below, be required to purchase all 2012 Notes properly
tendered into the Change of Control Offer and not withdrawn. 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 at the same purchase price, at the
same times and otherwise in substantial compliance with the requirements
applicable to a Change of Control Offer made by the Company and purchases all
2012 Notes validly tendered and not withdrawn under such Change of Control
Offer.
(b) The Change of Control Offer is required to remain open for at least
20 Business Days and until the close of business on the fifth Business Day prior
to the Change of Control Purchase Date.
(c) Not later than the 30th day following any Change of Control, the
Company shall give to the Trustee in the manner provided in Section 13.4 and
each Holder of the 2012 Notes in the manner provided in Section 13.5, a notice
(the "Change of Control Notice") stating:
(1) that a Change in Control has occurred and that such Holder has
the right to require the Company to repurchase such Holder's 2012 Notes, or
portion thereof, at the Change of Control Purchase Price;
(2) any information regarding such Change of Control required to be
furnished pursuant to Rule 14e-1 under the Exchange Act and any other
securities laws and regulations thereunder;
(3) a purchase date (the "Change of Control Purchase Date") which
shall be on a Business Day and no earlier than 30 days nor later than 70
days from the date the Change of Control occurred;
(4) that any 2012 Note, or portion thereof, not tendered or
accepted for payment will continue to accrue interest;
(5) that unless the Company defaults in depositing money with the
Paying Agent in accordance with the last paragraph of paragraph (d) of this
Section 9.15, or payment is otherwise prevented, any 2012 Note, or portion
thereof, accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Purchase Date; and
(6) the instructions a Holder must follow in order to have its 2012
Notes repurchased in accordance with paragraph (d) of this Section.
29
(d) Holders electing to have 2012 Notes purchased will be required to
surrender such 2012 Notes to the Company at the address specified in the Change
of Control Notice at least five Business Days prior to the Change of Control
Purchase Date. Holders will be entitled to withdraw their election if the
Company receives, not later than three Business Days prior to the Change of
Control Purchase Date, a facsimile transmission or letter setting forth the name
of the Holder, the certificate number(s) and principal amount of the 2012 Notes
delivered for purchase by the Holder as to which his election is to be withdrawn
and a statement that such Holder is withdrawing his election to have such 2012
Notes purchased. Holders whose 2012 Notes are purchased only in part will be
issued new 2012 Notes equal in principal amount to the unpurchased portion of
the 2012 Notes surrendered.
On the Change of Control Purchase Date, the Company shall (i) accept for
payment all 2012 Notes or portions thereof tendered pursuant to a Change of
Control Offer; (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all 2012 Notes or portions thereof so tendered; and (iii)
deliver or cause to be delivered to the Trustee the 2012 Notes so accepted. The
Paying Agent shall promptly mail or deliver to Holders of the 2012 Notes so
accepted payment in an amount equal to the purchase price, and the Company shall
execute and the Trustee will promptly authenticate and mail or make available
for delivery to such Holders a new 2012 Note equal in principal amount to any
unpurchased portion of the 2012 Note which any Holder did not surrender for
purchase. Any 2012 Notes not so accepted will be promptly mailed or delivered to
the Holder thereof. The Company shall announce the results of a Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date. For purposes of this Section 9.15, the Trustee will act as the Paying
Agent.
Section 9.16 Limitation on Disposition of Proceeds of Asset Sales.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, engage in any Asset Sale unless (i) 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 Properties sold
or otherwise disposed of pursuant to the Asset Sale and (ii) the Fair Market
Value of all forms of consideration other than cash, Cash Equivalents and Liquid
Securities received with respect to any Asset Sale, when taken together with the
Fair Market Value of all consideration other than cash, Cash Equivalents and
Liquid Securities received by the Company and its Restricted Subsidiaries with
respect to all other Asset Sales since the Issue Date, shall not exceed an
aggregate amount equal to 10% of Adjusted Consolidated Net Tangible Assets at
the date of each determination.
(b) If the Company or any Restricted Subsidiary engages in an Asset
Sale, the Company may either (i) apply the Net Cash Proceeds thereof to
permanently reduce Pari Passu Indebtedness, or (ii) invest all or any part of
the Net Cash Proceeds thereof, within 365 days after such Asset Sale, in Oil and
Gas Properties, (iii) apply the Net Cash Proceeds thereof to acquire a
controlling interest in a Person that is primarily engaged in the Oil and Gas
Business or (iv) apply the Net Cash Proceeds thereof to develop or exploit the
Company's Oil and Gas Properties. The amount of such Net Cash Proceeds not
applied or invested as provided in this paragraph constitutes "Excess Proceeds,"
subject to disposition as provided below.
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(c) When the aggregate amount of Excess Proceeds equals or exceeds
$15,000,000 (the "Trigger Date"), the Company shall make an offer to purchase,
from all Holders of the 2012 Notes then Outstanding and any then outstanding
Pari Passu Indebtedness required to be repurchased or repaid on a permanent
basis in connection with an Asset Sale, an aggregate principal amount of 2012
Notes and any then outstanding Pari Passu Indebtedness equal to such Excess
Proceeds as follows:
(i) (A) No later than the 30th day following the Trigger Date,
the Company shall give to the Trustee in the manner provided in Section
13.4 hereof and each Holder of the 2012 Notes in the manner provided in
Section 13.5 hereof, notice (a "Purchase Notice") offering to purchase (a
"Net Proceeds Offer") from all Holders of the 2012 Notes the maximum
principal amount (expressed as a multiple of $1,000) of 2012 Notes that may
be purchased out of an amount (the "Payment Amount") equal to the product
of such Excess Proceeds multiplied by a fraction, the numerator of which is
the outstanding principal amount of the 2012 Notes and the denominator of
which is the sum of the outstanding principal amount of the 2012 Notes and
such Pari Passu Indebtedness, if any (subject to proration in the event
such amount is less than the aggregate Offered Price of all 2012 Notes
tendered), and (B) to the extent required by such Pari Passu Indebtedness
and provided there is a permanent reduction in the principal amount of such
Pari Passu Indebtedness, the Company shall make an offer to purchase Pari
Passu Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu
Indebtedness Amount") equal to the excess of the Excess Proceeds over the
Payment Amount.
(ii) The offer price for the 2012 Notes shall be payable in cash
in an amount equal to 100% of the principal amount of the 2012 Notes
tendered pursuant to a Net Proceeds Offer, plus accrued and unpaid interest
to the date such Net Proceeds Offer is consummated (the "Offered Price"),
in accordance with paragraph (d) of this Section. To the extent that the
aggregate Offered Price of the 2012 Notes tendered pursuant to a Net
Proceeds Offer is less than the Payment Amount relating thereto or the
aggregate amount of the Pari Passu Indebtedness that is purchased or repaid
pursuant to the Pari Passu Offer is less than the Pari Passu Indebtedness
Amount (such shortfall constituting a "Net Proceeds Deficiency"), the
Company may use such Net Proceeds Deficiency, or a portion thereof, for
general corporate purposes, subject to the limitations of Section 9.13
hereof.
(iii) If the aggregate Offered Price of 2012 Notes validly tendered
and not withdrawn by Holders thereof exceeds the Payment Amount, 2012 Notes
to be purchased will be selected on a pro rata basis. Upon completion of
such Net Proceeds Offer and Pari Passu Offer, the amount of Excess Proceeds
shall be reset to zero.
(iv) The Purchase Notice shall set forth a purchase date (the "Net
Proceeds Payment Date"), which shall be on a Business Day no earlier than
30 days nor later than 70 days from the Trigger Date. The Purchase Notice
shall also state (A) that a Trigger Date with respect to one or more Asset
Sales has occurred and that such Holder has the right to require the
Company to repurchase such Holder's Securities at the Offered Price,
subject to the limitations described in the forgoing paragraph (iii), (B)
any information regarding such Net Proceeds Offer required to be furnished
pursuant to Rule 14e-1 under the Exchange Act and any other securities laws
and regulations thereunder, (C) that any
31
2012 Note, or portion thereof, not tendered or accepted for payment will
continue to accrue interest, (D) that, unless the Company defaults in
depositing money with the Paying Agent in accordance with the last
paragraph of paragraph (d) of this Section 9.16, or payment is otherwise
prevented, any 2012 Note, or portion thereof, accepted for payment pursuant
to the Net Proceeds Offer shall cease to accrue interest after the Net
Proceeds Payment Date, and (E) the instructions a Holder must follow in
order to have its Securities repurchased in accordance with paragraph (d)
of this Section.
(d) Holders electing to have 2012 Notes purchased will be required to
surrender such 2012 Notes to the Company at the address specified in the
Purchase Notice at least five Business Days prior to the Net Proceeds Payment
Date. Holders will be entitled to withdraw their election if the Company
receives, not later than three Business Days prior to the Net Proceeds Payment
Date, a facsimile transmission or letter setting forth the name of the Holder,
the certificate number(s) and principal amount of the 2012 Notes delivered for
purchase by the Holder as to which his election is to be withdrawn and a
statement that such Holder is withdrawing his election to have such 2012 Notes
purchased. Holders whose 2012 Notes are purchased only in part will be issued
new 2012 Notes equal in principal amount to the unpurchased portion of the 2012
Notes surrendered.
On the Net Proceeds Payment Date, the Company shall (i) accept for payment
2012 Notes or portions thereof tendered pursuant to a Net Proceeds Offer in an
aggregate principal amount equal to the Payment Amount or such lesser amount of
2012 Notes as has been tendered, (ii) deposit with the Paying Agent money
sufficient to pay the purchase price of all 2012 Notes or portions thereof so
tendered in an aggregate principal amount equal to the Payment Amount or such
lesser amount and (iii) deliver or cause to be delivered to the Trustee the 2012
Notes so accepted. The Paying Agent shall promptly mail or deliver to Holders of
the 2012 Notes so accepted payment in an amount equal to the purchase price, and
the Company shall execute and the Trustee will promptly authenticate and mail or
make available for delivery to such Holders a new 2012 Note equal in principal
amount to any unpurchased portion of the 2012 Note which any such Holder did not
surrender for purchase. Any 2012 Notes not so accepted will be promptly mailed
or delivered to the Holder thereof. The Company shall announce the results of a
Net Proceeds Offer on or as soon as practicable after the Net Proceeds Payment
Date. For purposes of this Section 9.16, the Trustee will act as the Paying
Agent.
(e) The Company shall not permit any Subsidiary to enter into or suffer
to exist any agreement that would place any restriction of any kind (other than
pursuant to law or regulation) on the ability of the Company to make a Net
Proceeds Offer following any Asset Sale.
Section 9.17 Limitation on Transactions with Affiliates.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into or suffer to exist any transaction or series
of related transactions (including, without limitation, the sale, purchase,
exchange or lease of assets, property or the rendering of any services) with, or
for the benefit of, any Affiliate of the Company other than a Restricted
Subsidiary (each, other than a Restricted Subsidiary, being an "Interested
Person"), unless (a) such transaction or series of transactions is on terms that
are no less favorable to the Company or such Restricted Subsidiary, as the case
may be, than those that would be available in a
32
comparable arm's length transaction with unrelated third parties who are not
Interested Persons, (b) with respect to any one transaction or series of
transactions involving aggregate payments in excess of $5,000,000, the Company
delivers an Officers' Certificate to the Trustee certifying that such
transaction or series of transactions complies with clause (a) above and such
transaction or series of transactions has been approved by the Board of
Directors of the Company and (c) with respect to any one transaction or series
of transactions involving aggregate payments in excess of $25,000,000, the
Officers' Certificate referred to in clause (b) above also certifies that such
transaction or series of transactions has been approved by a majority of the
Disinterested Directors or, in the event there are no such Disinterested
Directors, that the Company has obtained a written opinion 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, which opinion shall be to the
effect set forth in clause (a) above or shall state that such transaction or
series of transactions is fair from a financial point of view to the Company or
such Restricted Subsidiary; provided, however, that this covenant will not
restrict the Company from (i) paying reasonable and customary regular
compensation and fees to directors of the Company who are not employees of the
Company or any Restricted Subsidiary or (ii) paying dividends on, or making
distributions with respect to, shares of Capital Stock of the Company on a pro
rata basis to the extent permitted by Section 9.13 hereof.
Section 9.18 Limitation on Dividends and Other Payment Restrictions
Affecting Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
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 to the Company or
any Restricted Subsidiary, (b) pay any Indebtedness owed to the Company or any
Restricted Subsidiary, (c) make an Investment in the Company or any Restricted
Subsidiary or (d) transfer any of its properties or assets to the Company or any
Restricted Subsidiary, except for such encumbrances or restrictions (i) pursuant
to an agreement in effect or entered into on the date of this Indenture, (ii)
any agreement or other instrument of a Person acquired by the Company or any
Restricted Subsidiary in existence at the time of such acquisition (but not
created in contemplation thereof), which encumbrance or restriction is not
applicable to any other Person, or the properties or assets of any other Person,
other than the Person, or the property or assets of the Person, so acquired or
(iii) existing under any agreement that extends, renews, refinances or replaces
the agreements containing the restrictions in the foregoing clauses (i) and
(ii), provided that the terms and conditions of any such restrictions are not
materially less favorable to the Holders of the Securities than those under or
pursuant to the agreement evidencing the Indebtedness so extended, renewed,
refinanced or replaced.
Section 9.19 Limitation on Sale/Leaseback Transactions.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, enter into any Sale/Leaseback Transaction with any Person
(other than the Company or any Wholly Owned Restricted Subsidiary) unless either
(i) the Company or such Restricted Subsidiary, as the case may be, at the date
of determination would be able to incur Indebtedness secured by a Lien on
33
the Property subject to such Sale/Leaseback Transaction without equally and
ratably securing the 2012 Notes or (ii) the Company, within six months after
such transaction, applies an amount equal to the Attributable Indebtedness of
such transaction in the same manner and to the same extent as Net Cash Proceeds
from an Asset Sale are applied pursuant to Section 9.16.
Section 9.20 Limitation on Conduct of Business.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the Oil and
Gas Business, except that the Company and the Restricted Subsidiaries may engage
in any business other than the Oil and Gas Business, provided that the
consolidated assets of the Company and the Restricted Subsidiaries used in such
business shall not exceed, at any time, 10% of Adjusted Consolidated Net
Tangible Assets.
Section 9.21 Termination of Covenants.
From and after the time that the 2012 Notes have received an Investment
Grade Rating from both Rating Agencies (the "Covenant Termination Date"), so
long as no Default has occurred and is continuing, upon delivery to the Trustee
of notice to such effect the Company and the Restricted Subsidiaries shall no
longer be subject to Sections 9.12, 9.13, 9.14, 9.16 (except for purposes of
clause (ii) of Section 9.19), 9.17, 9.18, and 9.20 and clause (d) of Section 7.1
(collectively, the "Terminated Covenants"); provided, however, that all other
provisions of this Indenture shall continue to be in full force and effect.
Subject to the next sentence, after the Covenant Termination Date, solely for
purposes of Section 9.10, the Permitted Liens described in clauses (x) and (bb)
of that definition shall be Permitted Liens only to the extent that they secure
Indebtedness not exceeding, at the time of determination, 10% of Adjusted
Consolidated Net Tangible Assets. If, after the Covenant Termination Date,
either of the Rating Agencies withdraws its ratings or downgrades the ratings
assigned to the 2012 Notes below the Investment Grade Ratings, so that the 2012
Notes do not have an Investment Grade Rating from both Rating Agencies, then
upon delivery to the Trustee of notice to such effect the limitation on the
application of clauses (x) and (bb) of the definition of Permitted Liens set
forth in the preceding sentence shall not apply until such time as the 2012
Notes again have an Investment Grade Rating from both Rating Agencies.
SECTION 2.7. Redemption.
Article X of the Original Indenture shall be amended and supplemented by
inserting the following new section in its entirety:
Section 10.9 Optional Redemption at Make-Whole Price.
At any time and from time to time, the Company may, at its option,
redeem all or any portion of the 2012 Notes at the Make-Whole Price plus accrued
and unpaid interest on the 2012 Notes so redeemed to the Redemption Date. Any
redemption pursuant to this Section 10.9 shall be made, to the extent
applicable, pursuant to the provisions of Sections 10.2 through 10.7 hereof.
34
SECTION 2.8. Defeasance and Covenant Defeasance.
Article XI of the Original Indenture shall be amended and supplemented by
inserting the following in substitution therefor:
"ARTICLE XI
DEFEASANCE AND COVENANT DEFEASANCE
Section 11.1 Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution, at any time, with
respect to the 2012 Notes, elect to have either Section 11.2 or Section 11.3
hereof be applied to all Outstanding 2012 Notes upon compliance with the
conditions set forth below in this Article XI.
Section 11.2 Defeasance and Discharge.
Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.2, the Company shall be deemed to have been
discharged from its obligations with respect to all Outstanding 2012 Notes on
the date the conditions set forth in Section 11.4 hereof are satisfied
(hereinafter, "legal defeasance"). For this purpose, such legal defeasance means
that the Company and the Subsidiary Guarantors shall be deemed (a) to have paid
and discharged their respective obligations under the Outstanding 2012 Notes;
provided, however that the 2012 Notes shall continue to be deemed to be
"Outstanding" for purposes of Section 11.5 hereof and the other Sections of this
Indenture referred to in clauses (i) and (ii) below, and (b) to have satisfied
all their other obligations under such 2012 Notes and this Indenture insofar as
such 2012 Notes are concerned (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except for the
following which shall survive until otherwise terminated or discharged
hereunder: (i) the rights of Holders of Outstanding 2012 Notes to receive,
solely from the trust fund described in Section 11.4 hereof and as more fully
set forth in such Section, payments in respect of the principal of (and premium,
if any, on) and interest on such 2012 Notes when such payments are due (or at
such time as the 2012 Notes would be subject to redemption at the option of the
Company in accordance with this Indenture), (ii) the respective obligations of
the Company and any Subsidiary Guarantors under Sections 2.4, 2.5, 2.6, 2.7,
2.8, 2.9, 4.8, 4.14, 5.6, 5.9, 5.10, 9.1, 9.2, 9.3, 9.4, 14.1 (to the extent it
relates to the foregoing Sections and Article XI hereof), 14.4 and 14.5 hereof,
(iii) the rights, powers, trusts, duties and immunities of the Trustee
hereunder, and (iv) the obligations of the Company and any Subsidiary Guarantors
under this Article XI. Subject to compliance with this Article XI, the Company
may exercise its option under this Section 11.2 notwithstanding the prior
exercise of its option under Section 11.3 hereof with respect to the Securities.
Section 11.3 Covenant Defeasance.
Upon the Company's exercise under Section 11.1 hereof of the option
applicable to this Section 11.3, the Company shall be released from its
obligations under any covenant contained in Article VII and in Sections 9.5
through 9.20 hereof with respect to the Outstanding 2012 Notes on and after the
date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the 2012 Notes shall thereafter be deemed not to be
"Outstanding" for the
35
purposes of any direction, waiver, consent, declaration or other Act of Holders
(and the consequences of any thereof) in connection with such covenants, but
shall continue to be deemed "Outstanding" for all other purposes hereunder. For
this purpose, such covenant defeasance means that, with respect to the
Outstanding 2012 Notes, the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document and such omission to
comply shall not constitute a Default or an Event of Default under Sections
4.1(c) or 4.1(d) hereof, but, except as specified above, the remainder of this
Indenture and such 2012 Notes shall be unaffected thereby.
Section 11.4 Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either Section 11.2
or Section 11.3 hereof to the Outstanding 2012 Notes:
(a) The Company or any Subsidiary Guarantor shall irrevocably have
deposited or caused to be deposited with the Trustee (or another trustee
satisfying the requirements of Section 5.7 hereof who shall agree to comply with
the provisions of this Article XI applicable to it) as trust funds in trust for
the purpose of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the Holders of such 2012 Notes, (i)
cash in U.S. Dollars in an amount, or (ii) U.S. Government Obligations which
through the scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before the due
date of any payment, money in an amount, or (iii) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent public
accountants expressed in a written certification thereof delivered to the
Trustee, to pay and discharge, and which shall be applied by the Trustee (or
other qualifying trustee) to pay and discharge, the principal of (and premium,
if any, on) and interest on the Outstanding 2012 Notes on the Stated Maturity
(or Redemption Date, if applicable) of such principal (and premium, if any) or
installment of interest; provided that the Trustee shall have been irrevocably
instructed in writing by the Company to apply such money or the proceeds of such
U.S. Government Obligations to said payments with respect to the 2012 Notes.
Before such a deposit, the Company may give to the Trustee, in accordance with
Section 10.2 hereof, a notice of its election to redeem all of the Outstanding
2012 Notes at a future date in accordance with Article X hereof, which notice
shall be irrevocable. Such irrevocable redemption notice, if given, shall be
given effect in applying the foregoing. For this purpose, "U.S. Government
Obligations" means securities that are (x) direct obligations of the United
States of America for the timely payment of which its full faith and credit is
pledged or (y) 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, which, 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 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
36
the custodian in respect of the U.S. Government Obligation or the specific
payment of principal of or interest on the U.S. Government Obligation evidenced
by such depository receipt.
(b) No Default or Event of Default with respect to the 2012 Notes shall
have occurred and be continuing on the date of such deposit.
(c) Such legal defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest under this Indenture or the Trust
Indenture Act with respect to any securities of the Company.
(d) Such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under any other material
agreement or instrument to which the Company or any Subsidiary Guarantor is a
party or by which it is bound, as evidenced to the Trustee in an Officers'
Certificate delivered to the Trustee concurrently with such deposit.
(e) In the case of an election under Section 11.2 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (i) the
Company has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable federal income tax laws; in either case providing that
the Holders of the Outstanding 2012 Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such legal defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such legal defeasance had
not occurred (it being understood that (x) such Opinion of Counsel shall also
state that such ruling or applicable law is consistent with the conclusions
reached in such Opinion of Counsel and (y) the Trustee shall be under no
obligation to investigate the basis of correctness of such ruling).
(f) In the case of an election under Section 11.3 hereof, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that the
Holders of the Outstanding 2012 Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant defeasance and will
be subject to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such covenant defeasance had not
occurred.
(g) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the legal defeasance under Section
11.2 hereof or the covenant defeasance under Section 11.3 (as the case may be)
have been complied with.
Section 11.5 Deposited Money and U.S. Government Obligations to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 9.3 hereof, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee--collectively for purposes of this
Section 11.5, the "Trustee") pursuant to Section 11.4 hereof in respect of the
Outstanding 2012 Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own
37
Paying Agent) as the Trustee may determine, to the Holders of such 2012 Notes of
all sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds except
to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 11.4 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Securities.
Anything in this Article XI to the contrary notwithstanding, the Trustee
shall deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 11.4
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent legal defeasance or covenant defeasance, as
applicable, in accordance with this Article.
Section 11.6 Reinstatement.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 11.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and the Subsidiary Guarantors' obligations
under this Indenture and the 2012 Notes shall be revived and reinstated as
though no deposit had occurred pursuant to Section 11.2 or 11.3 hereof, as the
case may be, until such time as the Trustee or Paying Agent is permitted to
apply all such money in accordance with Section 11.5 hereof; provided, however,
that if the Company or any Subsidiary Guarantor makes any payment of principal
of (or premium, if any, on) or interest on any 2012 Note following the
reinstatement of its obligations, the Company or such Subsidiary Guarantor shall
be subrogated to the rights of the Holders of such 2012 Notes to receive such
payment from the money held by the Trustee or Paying Agent."
SECTION 2.9. Guarantees.
The Original Indenture shall be amended and supplemented by inserting the
following new article in its entirety:
"ARTICLE XIV
GUARANTEES
Section 14.1 Unconditional Guarantee.
Each Restricted Subsidiary that hereafter becomes a Subsidiary Guarantor
shall unconditionally, jointly and severally, guarantee (each such guarantee to
be referred to herein as a "Subsidiary Guarantee," with all such guarantees
being referred to herein as the "Subsidiary Guarantees") to each Holder of 2012
Notes authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, the full and prompt performance of the Company's
obligations under this Indenture and the 2012 Notes and that:
38
(a) the principal of (or premium, if any, on) and interest on the 2012
Notes will be promptly paid in full when due, whether at maturity, by
acceleration, redemption or otherwise, and interest on the overdue principal of
and interest on the 2012 Notes, if any, to the extent lawful, and all other
obligations of the Company to the Holders or the Trustee hereunder or thereunder
will be promptly paid in full or performed, all in accordance with the terms
hereof and thereof; and
(b) in case of any extension of time of payment or renewal of any 2012
Notes or of any such other obligations, the same will be promptly paid in full
when due or performed in accordance with the terms of the extension or renewal,
whether at Stated Maturity, by acceleration or otherwise;
subject, however, in the case of clauses (a) and (b) above, to the limitations
set forth in Section 14.4 hereof.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and
severally obligated to pay the same immediately. The obligations of each
Subsidiary Guarantor hereunder shall be unconditional, irrespective of the
validity, regularity or enforceability of the 2012 Notes or this Indenture, the
absence of any action to enforce the same, any waiver or consent by any Holder
of the 2012 Notes with respect to any provisions hereof or thereof, the recovery
of any judgment against the Company, any action to enforce the same or any other
circumstance which might otherwise constitute a legal or equitable discharge or
defense of a guarantor. Each Subsidiary Guarantor shall waive diligence,
presentment, demand of payment, filing of claims with a court in the event of
insolvency or bankruptcy of the Company, any right to require a proceeding first
against the Company, protest, notice and all demands whatsoever and shall
covenant that its Subsidiary Guarantee will not be discharged except by complete
performance of the obligations contained in the 2012 Notes, this Indenture and
in the Subsidiary Guarantee. If any Holder or the Trustee is required by any
court or otherwise to return to the Company, any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Company or any Subsidiary Guarantor, any amount paid by the Company or any
Subsidiary Guarantor to the Trustee or such Holder, the Subsidiary Guarantee, to
the extent theretofore discharged, shall be reinstated in full force and effect.
No Subsidiary Guarantor shall be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed by the
Subsidiary Guarantee until payment in full of all obligations guaranteed
thereby. Each Subsidiary Guarantor shall further agree that, as between each
Subsidiary Guarantor, on the one hand, and the Holders and the Trustee, on the
other hand, (i) the maturity of the obligations guaranteed by the Subsidiary
Guarantee may be accelerated as provided in Article IV hereof for the purposes
of the Subsidiary Guarantee, notwithstanding any stay, injunction or other
prohibition preventing such acceleration in respect of the obligations
guaranteed by the Subsidiary Guarantee, and (ii) in the event of any
acceleration of such obligations as provided in Article IV hereof, such
obligations (whether or not due and payable) shall forthwith become due and
payable by each Subsidiary Guarantor for the purpose of the Subsidiary
Guarantee.
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Section 14.2 Subsidiary Guarantors May Consolidate, etc. on Certain Terms.
(a) Except as set forth in Articles VII and IX hereof, nothing contained
in this Indenture or in any of the 2012 Notes shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into the Company or another Subsidiary
Guarantor or shall prevent any sale or conveyance of the assets of a Subsidiary
Guarantor as an entirety or substantially as an entirety, to the Company or
another Subsidiary Guarantor.
(b) Except as set forth in Articles VII and IX hereof, nothing contained
in this Indenture or in any of the 2012 Notes shall prevent any consolidation or
merger of a Subsidiary Guarantor with or into a Person or Persons other than the
Company or a Subsidiary Guarantor (whether or not affiliated with the Subsidiary
Guarantor), or successive consolidations or mergers in which a Subsidiary
Guarantor or its successor or successors shall be a party or parties, or shall
prevent any sale or conveyance of the Properties of a Subsidiary Guarantor as an
entirety or substantially as an entirety, to a Person other than the Company or
another Subsidiary Guarantor (whether or not Affiliated with the Subsidiary
Guarantor) authorized to acquire and operate the same; provided, however, that,
subject to Sections 14.2(a) and 14.3 hereof, (A) immediately after such
transaction, and giving effect thereto, no Default or Event of Default shall
have occurred as a result of such transaction and be continuing, (B) such
transaction shall not violate any of the covenants in Sections 9.1 through 9.20
hereof, and (C) each Subsidiary Guarantor shall covenant and agree that, upon
any such consolidation or merger, such Subsidiary Guarantor's Subsidiary
Guarantee set forth in this Article XIV, and the due and punctual performance
and observance of all of the covenants and conditions of this Indenture to be
performed by such Subsidiary Guarantor, shall be expressly assumed (in the event
that the Subsidiary Guarantor is not the surviving Person in the merger), by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by such Person formed by such consolidation, or into
which the Subsidiary Guarantor shall have merged (except to the extent the
following Section 14.3 would result in the release of such Subsidiary Guarantee
in which case such surviving Person does not have to execute any such
supplemental indenture). In the case of any such consolidation or merger, and
upon the assumption by the successor Person, by supplemental indenture executed
and delivered to the Trustee and satisfactory in form to the Trustee of the due
and punctual performance of all of the covenants and conditions of this
Indenture to be performed by the Subsidiary Guarantor, such successor Person
shall succeed to and be substituted for the Subsidiary Guarantor with the same
effect as if it had been named herein as a Subsidiary Guarantor.
Section 14.3 Release of a Subsidiary Guarantor.
The Subsidiary Guarantee of any Restricted Subsidiary may be released upon
the terms and subject to the conditions set forth in Section 9.12(c) hereof.
Each Subsidiary Guarantor that is designated as an Unrestricted Subsidiary in
accordance with the provisions of this Indenture shall be released from all of
its Subsidiary Guarantee and related obligations set forth in this Indenture for
so long as it remains an Unrestricted Subsidiary. The Trustee shall deliver an
appropriate instrument evidencing such release upon receipt of a Company Request
accompanied by an Officers' Certificate and an Opinion of Counsel certifying
that such sale or other disposition was made by the Company in accordance with
the provisions of this Indenture. Any
40
Subsidiary Guarantor not so released remains liable for the full amount of
principal of (and premium, if any, on) and interest on the 2012 Notes as
provided in this Article XIV.
Section 14.4 Limitation of Subsidiary Guarantor's Liability.
Each Subsidiary Guarantor shall confirm, and by its acceptance hereof each
Holder hereby confirms, that it is the intention of all such parties that the
Guarantee by such Subsidiary Guarantor pursuant to its Subsidiary Guarantee not
constitute a fraudulent transfer or conveyance for purposes of any federal or
state law. To effectuate the foregoing intention, the Holders hereby irrevocably
agree, and each Subsidiary Guarantor shall irrevocably agree, that the
obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under its Subsidiary Guarantee or pursuant to Section 14.5 hereof,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee not constituting a fraudulent conveyance or fraudulent transfer under
federal or state law. This Section 14.4 is for the benefit of the creditors of
each Subsidiary Guarantor.
Section 14.5 Contribution.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors shall agree, inter se, that in
the event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor
shall be entitled to a contribution from each other Subsidiary Guarantor (if
any) in a pro rata amount based on the Adjusted Net Assets of each Subsidiary
Guarantor (including the Funding Guarantor) for all payments, damages and
expenses incurred by that Funding Guarantor in discharging the Company's
obligations with respect to the 2012 Notes or any other Subsidiary Guarantor's
obligations with respect to its Subsidiary Guarantee.
Section 14.6 Execution and Delivery of Evidence of Subsidiary Guarantee.
To evidence the Subsidiary Guarantee set forth in Section 14.1 hereof, the
Company shall cause this Indenture or a supplemental indenture to be executed on
behalf of each Subsidiary Guarantor by its President or one of its Vice
Presidents and attested to by one of its Secretaries or Assistant Secretaries.
Section 14.7 Severability.
In case any provision of the Subsidiary Guarantee shall be invalid, illegal
or unenforceable, that portion of such provision that is not invalid, illegal or
unenforceable shall remain in effect, and the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
Section 14.8 Payment.
For purposes of this Article XIV, a payment with respect to any Subsidiary
Guarantee or with respect to principal of or interest on any 2012 Note or any
Subsidiary Guarantee shall
41
include, without limitation, payment of principal of and interest on any 2012
Note, any depositing of funds under Article III, IV or XI hereof, any payment on
account of any repurchase or redemption of any 2012 Note and any payment or
recovery on any claim (whether for rescission or damages and whether based on
contract, tort, duty imposed by law, or any other theory of liability) relating
to or arising out of the offer, sale or purchase of any 2012 Note."
ARTICLE 3
MISCELLANEOUS PROVISIONS
SECTION 3.1. Integral Part.
This First Supplemental Indenture constitutes an integral part of the
Indenture.
SECTION 3.2. Rules of Construction.
For all purposes of this First Supplemental Indenture:
(a) capitalized terms used herein without definition shall have the
meanings specified in the Original Indenture; and
(b) the terms "herein," "hereof," "hereunder" and other words of similar
import refer to this First Supplemental Indenture.
SECTION 3.3. Adoption, Ratification and Confirmation.
The Original Indenture, as supplemented and amended by this First
Supplemental Indenture, is in all respects hereby adopted, ratified and
confirmed.
SECTION 3.4. Counterparts.
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed an original; and
all such counterparts shall together constitute but one and the same instrument.
SECTION 3.5. Benefits of Indenture.
Nothing in this First Supplemental Indenture or in the 2012 Notes, express
or implied, shall give to any Person (other than the parties hereto, any Paying
Agent, any Securities Registrar and their successors hereunder, the Holders and,
to the extent set forth in Section 14.4 hereof, creditors of Subsidiary
Guarantors) any benefit or any legal or equitable right, remedy or claim under
the Indenture.
SECTION 3.6. Governing Law.
THIS FIRST SUPPLEMENTAL INDENTURE, THE 2012 NOTES AND THE SUBSIDIARY
GUARANTEES, IF ANY, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW
42
YORK, EXCEPT TO THE EXTENT THE TRUST INDENTURE ACT IS APPLICABLE. THE COMPANY
WILL CAUSE EACH SUBSIDIARY GUARANTOR, IF ANY, TO IRREVOCABLY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK IN ANY ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THE INDENTURE, THE 2012 NOTES OR A
SUBSIDIARY GUARANTEE, AND THE COMPANY WILL CAUSE EACH SUBSIDIARY GUARANTOR TO
IRREVOCABLY AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE
HEARD AND DETERMINED BY ANY SUCH COURT.
SECTION 3.7. 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.
43
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed as of the day and year first written above.
XTO ENERGY INC.
By: __________________________________________
Name: ___________________________________
Title: ___________________________________
THE BANK OF NEW YORK, as Trustee
By: __________________________________________
Name: ___________________________________
Title: ___________________________________
44
EXHIBIT A
[FORM OF FACE OF 2012 NOTE]
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE
NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT HEREON IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), 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 WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A
NOMINEE THEREOF. THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE
NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE AND, UNLESS AND UNTIL IT IS EXCHANGED
IN WHOLE OR IN PART FOR SECURITIES IN DEFINITIVE FORM, THIS SECURITY MAY NOT BE
TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE DEPOSITARY
OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER NOMINEE OF THE
DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITARY OR
A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.]/1/
_____________________
/1/ These paragraphs should be included only if the Security is a Global
Security.
A-1
XTO ENERGY INC.
__% SENIOR NOTE DUE 2012
No. _____ $___________
CUSIP No. ________________
XTO Energy Inc., a Delaware corporation (herein called the "Company," which
term includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to ________________________ or
registered assigns the principal sum of _______________ Dollars on May 1, 2012
[or such greater or lesser amount as is indicated on the Schedule of Exchanges
of Securities attached hereto]/2/, at the office or agency of the Company
referred to below, and to pay interest thereon, commencing on November 1, 2002
and continuing semiannually thereafter, on May 1 and November 1 of each year,
from __________, or from the most recent Interest Payment Date to which interest
has been paid or duly provided for, at the rate of _____% per annum, until the
principal hereof is paid or duly provided for, and (to the extent lawful) to pay
on demand, interest on any overdue interest at the rate borne by the Securities
from the date on which such overdue interest becomes payable to the date payment
of such interest has been made or duly provided for. The interest so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the close of business
on the Regular Record Date for such interest, which shall be the April 15 or
October 15 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for shall forthwith cease to be payable to the Holder on such Regular
Record Date and may be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than 10 days prior to such Special Record Date, or may be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture. Interest on the Securities of this series shall be computed
on the basis of a 360-day year comprised of twelve 30-day months.
Payment of the principal of, premium, if any, and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in The City of New York, or at such other office or agency of the Company as may
be maintained for such purpose, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided however, that payment of interest may be made at the
option of the Company (i) by check mailed to Holders at their respective
addresses as shown in the Security Register or (ii) with respect to any Holder
owning Securities in the principal amount of $500,000 or more, by wire transfer
to an account maintained by the Holder located in the United States, as
specified in a written notice to the Trustee (received prior to the relevant
record date) by any such Holder requesting payment by wire transfer and
specifying the account to
___________________
/2/ This clause should be included only if the Security is a Global Security.
A-2
which transfer is requested. Notwithstanding the foregoing, so long as this
Security is registered in the name of a Depositary or its nominee, all payments
hereon shall be made by wire transfer of immediately available funds to the
account of such Depositary or its nominee. The Holder must surrender this
Security to a Paying Agent to collect payment of principal.
Reference is hereby made to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
[SEAL]
XTO ENERGY INC.
By:
--------------------------------
Name:
-------------------------
Title:
-------------------------
Attest:
______________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities of the series designated herein and referred to in
the within-mentioned Indenture.
Dated: _________ THE BANK OF NEW YORK, as Trustee
By _______________________________
Authorized Signatory
A-3
[FORM OF REVERSE OF 2012 NOTE]
This Security is one of a duly authorized issue of the series of securities
of the Company designated as its __% Senior Notes due 2012 (herein called the
"Securities"), which is issued under, with securities of one or more additional
series that may be issued under, an indenture dated as of April __, 2002,
between the Company and The Bank of New York, as trustee (herein called the
"Trustee," which term includes any successor trustee under the Indenture), as
amended and supplemented by the First Supplemental Indenture of even date (such
Indenture, as so amended and supplemented, being called the "Indenture"), to
which Indenture and all future indentures supplemental thereto reference is
hereby made for a statement of the respective rights, limitations of rights,
duties, obligations and immunities thereunder of the Company, the Trustee and
the Holders of the Securities, and of the terms upon which the Securities are,
and are to be, authenticated and delivered.
The Securities are subject to redemption at the option of the Company, in
whole or in part, at any time and from time to time, upon not less than 30 or
more than 60 days' notice, at a Redemption Price of 100% of their principal
amount plus a Make-Whole Amount, together in the case of any such redemption
with accrued and unpaid interest to the Redemption Date (subject to the right of
Holders of record on the relevant Regular Record Date to receive interest due on
an Interest Payment Date that is on or prior to the Redemption Date), all as
provided in the Indenture.
In the case of any redemption of Securities, interest installments whose
Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Securities, or one or more Predecessor Securities, of record at
the close of business on the relevant Record Date referred to on the face
hereof. Securities (or portions thereof) for whose redemption and payment
provision is made in accordance with the Indenture shall cease to bear interest
from and after the Redemption Date. At the option of the Holder and subject to
the terms and conditions of the Indenture, the Company shall become obligated to
purchase all or any part specified by the Holder (so long as the principal
amount of such part is $1,000 or an integral multiple of $1,000 in excess
thereof) of the Securities held by such Holder on a Business Day selected by the
Company no earlier than 30 days nor later than 70 days after the occurrence of a
Change of Control, at a purchase price equal to 101% of the principal amount
thereof together with accrued and unpaid interest to the Change of Control
Purchase Date. The Holder shall have the right to withdraw any Change of Control
Notice (in whole or in a portion thereof that is $1,000 or an integral multiple
of $1,000 in excess thereof) at any time prior to the close of business on the
third Business Day next preceding the Change of Control Purchase Date by
delivering a written notice of withdrawal to the Company in accordance with the
terms of the Indenture.
In the event of redemption or purchase of this Security in part only, a new
Security or Securities for the unredeemed or unpurchased portion hereof shall be
issued in the name of the Holder hereof upon the cancellation hereof.
The Securities do not have the benefit of any sinking fund obligations.
A-4
As set forth in the Indenture, an Event of Default is generally: (a)
failure to pay principal upon Stated Maturity, redemption or otherwise; (b)
default for 30 days in payment of interest on any of the Securities; (c) default
in the performance of agreements relating to mergers, consolidations and sales
of all or substantially all assets; (d) failure for 30 days after notice to
comply with any other covenants in the Indenture or the Securities; (e) certain
payment defaults under, the acceleration prior to the maturity of, and the
exercise of certain enforcement rights with respect to, certain Indebtedness of
the Company or any Restricted Subsidiary in an aggregate principal amount in
excess of $10,000,000; (f) certain events giving rise to ERISA liability; (g)
certain final judgments against the Company or any Restricted Subsidiary in an
aggregate amount of $10,000,000 or more which remain unsatisfied and either
become subject to commencement or enforcement proceedings or remain unstayed for
a period of 60 days; and (h) certain events of bankruptcy, insolvency or
reorganization of the Company or any Restricted Subsidiary.
If any Event of Default occurs and is continuing, the Trustee or the
holders of at least 25% in aggregate principal amount of the Outstanding
Securities may declare the principal amount of all the Securities to be due and
payable immediately, except that (i) in the case of an Event of Default arising
from certain events of bankruptcy, insolvency or reorganization of the Company
or any Restricted Subsidiary, the principal amount of the Securities will become
due and payable immediately without further action or notice and (ii) in the
case of an Event of Default which relates to certain payment defaults,
acceleration or the exercise of certain enforcement rights with respect to
certain Indebtedness, any acceleration of the Securities will be automatically
rescinded if any such Indebtedness is repaid or if the default relating to such
Indebtedness is cured or waived and if the holders thereof have accelerated such
Indebtedness then such holders have rescinded their declaration of acceleration
or if in certain circumstances the proceedings or enforcement action with
respect to the Indebtedness that is the subject of such Event of Default is
terminated or rescinded.
No Holder may pursue any remedy under the Indenture unless the Trustee
shall have failed to act after notice of an Event of Default and written request
by Holders of at least 25% in principal amount of the Outstanding Securities,
and the offer to the Trustee of indemnity reasonably satisfactory to it;
however, such provision does not affect the right to xxx for enforcement of any
overdue payment on a Security by the Holder thereof. Subject to certain
limitations, Holders of a majority in principal amount of the Outstanding
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders notice of any continuing default (except
default in payment of principal, premium or interest) if it determines in good
faith that withholding the notice is in the interest of the Holders. The Company
is required to file quarterly reports with the Trustee as to the absence or
existence of defaults.
Under the circumstances set forth in the Indenture, the Company's payment
obligations under the Securities may be jointly and severally guaranteed by
existing or future Restricted Subsidiaries of the Company as Subsidiary
Guarantors.
The Indenture contains provisions for defeasance at any time of (i) the
entire indebtedness of the Company and any Subsidiary Guarantor on this Security
and (ii) certain
A-5
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive compliance
by the Company with certain provisions of the Indenture and certain past
defaults under the Indenture and their consequences. Any such consent or waiver
by or on behalf of the Holder of this Security shall be conclusive and binding
upon such Holder and upon all future Holders of this Security and of any
Security issued upon the registration of transfer hereof or in exchange herefor
or in lieu hereof, whether or not notation of such consent or waiver is made
upon this Security. Without the consent of any Holder, the Company and the
Trustee may amend or supplement the Indenture or the Securities to cure any
ambiguity, defect or inconsistency, to provide for uncertificated Securities in
addition to or in place of Definitive Securities and to make certain other
specified changes and other changes that do not adversely affect the rights of
any Holder in any material respect.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest on this Security at the times, place, and rate, and in the coin or
currency, herein prescribed.
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registerable in the Security Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained for such purpose, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Security Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Securities,
of authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Securities are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Securities
are exchangeable for a like aggregate principal amount of Securities of a
different authorized denomination, as requested by the Holder surrendering the
same.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Company may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
A director, officer, employee or stockholder of the Company shall not have
any personal liability under this Security or the Indenture by reason of his or
its status as such director, officer,
A-6
employee or stockholder. Each Holder, by accepting this Security, waives and
releases all such liability. Such waiver and release are part of the
consideration for the issuance of this Security.
Prior to the time of due presentment of this Security for registration of
transfer, the Company, Trustee and any agent of the Company or the Trustee may
treat the Person in whose name this Security is registered as the owner hereof
for all purposes, whether or not this Security is overdue, and neither the
Company, the Trustee nor any agent shall be affected by notice to the contrary.
All terms used in this Security which are defined in the Indenture shall
have the meanings assigned to them in the Indenture. The Company will furnish to
any Holder upon written request and without charge a copy of the Indenture.
Requests may be made to the Company, 000 Xxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx
00000.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders thereof. No
representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identifying information
printed hereon.
This Security shall be governed by and construed in accordance with the
laws of the State of New York, except to the extent that the Trust Indenture Act
is applicable.
A-7
ASSIGNMENT FORM
(I) or (we) assign and transfer this Security to
________________________________________________________________________________
(Insert assignee's social security or tax I.D. number)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
as agent to transfer this Security on the Security Register of the Company.
The agent may substitute another to act for him.
Dated: _____________ Signature:___________________________________________
(Sign exactly as name appears on the face
of this Security)
Name:________________________________________________
Address:_____________________________________________
_____________________________________________
Phone No.:___________________________________________
Signature Guarantee
By:____________________________________
Signature guarantor must be an eligible
guarantor institution - a bank or trust
company or broker or dealer which is a
member of a registered exchange or the
NASD.
A-8
SCHEDULE OF EXCHANGES OF SECURITIES/3/
The following exchanges, redemptions or repurchases of a part of this Global
Security have been made:
Principal Amount
of this Global Security Authorized Amount of
Following Such Signatory of Amount of Decrease in Increase in
Decrease Date Trustee or Security Principal Amount Principal Amount
of Exchange (or Increase) Custodian of this Global Security of this Global Security
------------------------- ------------------- ----------------------- -----------------------
______________________
/3/ This schedule should be included only if the Security is a Global Security.
A-9
