CONSENT AGREEMENT
Exhibit
10.2
This
Agreement (the “Agreement”) dated as of March 28, 2008
(the “Execution
Date”) is made by and among (i) the undersigned holders or investment
advisers or managers of discretionary accounts of the Notes (as defined below;
each such signatory, a “Consenting
Noteholder”) and (ii) Xxxxxx Petroleum Company, a Delaware corporation
(“Callon;” each
Consenting Noteholder and Callon, a “Party”, and collectively, the “Parties”).
RECITALS
WHEREAS, the Consenting
Noteholders who execute counterparts of this Agreement (the “Consenting
Noteholders”) and Callon have negotiated the terms and conditions of a
proposed consent solicitation (the “Consent
Solicitation”) with respect to Xxxxxx’x $200,000,000 9.75% Senior Notes
due 2010, Series B (the “Notes”);
NOW, THEREFORE, in
consideration of the foregoing, the Parties agree as follows:
AGREEMENT
Section
1. Means For
Effectuating the Transactions. To implement the Consent Solicitation,
Callon proposes, on the terms and conditions set forth herein, to consummate (to
the extent this Agreement has not been terminated) the Consent Solicitation.
A form of consent and disclosure document and Letter of Consent for the
Consent Solicitation (“Consent
Document”) is attached as Exhibit A.
The form of Supplemental Indenture (“Supplemental
Indenture”) to the Notes Indenture (as defined below) is attached as
Exhibit
B.
Section
2. Consent
Fee.
Callon agrees to pay to each holder of Notes that consents to the
amendment to the Note Indenture pursuant to the Supplemental Indenture a consent
fee of $5.00 per $1,000 principal amount of Notes owned by such holder and
voting to approve consenting to the amendment.
The consent fee shall be payable only if the amendment to the Note
Indenture is approved and the Supplemental Indenture is executed by Callon and
filed with the Trustee.
The Parties hereby acknowledge and agree that in connection with the
Consent Solicitation, no holder of the Notes will be entitled to receive, for
its consent to the amendment to the indenture for the Notes (the “Notes
Indenture”) and for the other treatment and transactions being solicited
in the Consent Solicitation, consideration (whether in cash, securities or
otherwise) other than the consideration provided in this Agreement.
Section
3. Consenting
Noteholders’ Commitments Regarding a Transaction.
(a) Agreement to Vote. Subject to
the conditions contained in paragraphs (b) and (c) of this Section 3, each
Consenting Noteholder agrees that it shall vote, or cause to be voted, in favor
of all the consents sought in the Consent Solicitation all of the Relevant
Securities (as defined below) and any additional Notes of which such Consenting
Holder (or a client account over which such Consenting Holder has discretion)
is, or at any time on or prior to the Outside Date (as defined below) becomes,
the holder of record or the beneficial owner and will not withdraw such consent.
The votes referenced in the preceding sentence shall be cast not later (x) two
business days after the Consent Commencement Date (as defined below) in the case
of Relevant Securities held as of the date of this Agreement and (y) the Outside
Date in the case of Relevant Securities acquired after the date of the Agreement
but before the Outside Date.
(b) Certain Conditions. The
obligations of each Consenting Noteholder set forth in Section 3 are subject to
the conditions that (i) the terms of any applicable agreements or
documents implementing the Consent Solicitation, including, without limitation,
the Consent Document and the Supplemental Indenture, embody and are
substantially consistent in all respects with this Agreement, including Exhibits B and C, (ii) all final
documents implementing the Consent Solicitation have been or will be entered
into by all applicable parties and have or will become valid, binding and
enforceable, (iii) no Consenting Noteholders’ Termination Event (as defined
below) shall have occurred, (iv) Callon has not terminated this Agreement after
the occurrence of a Company Termination Event (as defined below), and (v) no
other termination of this Agreement has occurred pursuant to the terms set forth
herein.
(c) Transfer of Interests and
Securities. Except as expressly provided herein, this Agreement shall not
in any way restrict the right or ability of any Consenting Noteholder to sell,
borrow, lend, use, assign, transfer or otherwise dispose of (“Transfer”) any of the Notes; provided, however, that for a
period commencing as of the date such Consenting Noteholder executes this
Agreement until the earlier to occur of (i) the occurrence of a Consenting
Noteholders’ Termination Event, (ii) Xxxxxx’x termination of this Agreement
after the occurrence of a Company Termination Event and (iii) any other
termination of this Agreement pursuant to the terms hereunder (such period, the
“Restricted
Period”), no
Consenting Noteholder shall Transfer any Notes, and any purported Transfer of
Notes shall be void and without effect unless the Transferee delivers to the
Consenting Noteholder transferor and Callon, at or prior to the time of the
proposed Transfer, a written agreement pursuant to which such transferee shall
assume all obligations of the Consenting Noteholder transferor hereunder in
respect of the Notes Transferred (such Transferee, if any, to also be a
Consenting Noteholder hereunder).
(d) Representation of Consenting
Noteholders’ Holdings. Each Consenting Noteholder represents on its own
behalf that, as of the date such Consenting Noteholder executes and delivers
this Agreement, it is the beneficial owner and/or the investment adviser or
manager of discretionary accounts for the holders or beneficial owners of the
aggregate principal amount of the Notes set forth on the signature page (the
“Relevant
Securities”) under its name, with the power to vote and dispose of all or
substantially all of the aggregate principal amount of the Relevant Securities
on behalf of such holders or beneficial owners.
Section
4. Undertakings
and Representations.
(a) Consent Solicitation Commencement
Date. Callon will commence the Consent Solicitation within one business
day after the Execution Date (such time and date, the “Consent
Commencement Date”). Such Consent Solicitation will require that all
consents be given by not later than 11:00 a.m. (prevailing New York City time)
on the last to occur of (i) 9 calendar days after the commencement of the
Consent Solicitation (or, if such ninth day is not a business day, then the
first business day thereafter) or (ii) such later date as may be requested by
Callon and consented to by Consenting Noteholders (the date of the last to occur
of clause (i) or (ii) being the “Outside
Date”). The Outside
Date may be accelerated by Callon to an earlier date in its
discretion.
(b) Representation of Callon.
Callon represents that, as of the date hereof, it has not executed any agreement
providing for, or otherwise adopted any board resolution, authorizing the entry
into any agreement with any person providing for a merger, consolidation, asset
sale, or the purchase or acquisition of all or a substantial part of the assets
of another entity, in each case, which would be material to Callon.
Section
5. Mutual
Representations, Warranties, and Covenants. Each of the Parties
represents, warrants, and covenants to the others, as of the date of this
Agreement, as follows (each of which is a continuing representation, warranty,
and covenant):
(a) Enforceability. This
Agreement is a legal, valid, and binding obligation of such Party, enforceable
against it in accordance with its terms, except as enforcement may be limited by
applicable laws relating to or limiting creditor’s rights generally or by
equitable principles relating to enforceability.
(b) No Consent or Approval.
Except as expressly provided in this Agreement, no consent or approval is
required by any other person or entity in order for it to carry out the Consent
Solicitation.
(c) Power and Authority. Except
as expressly provided in this Agreement, it has all requisite power and
authority to enter into this Agreement and to carry out the transactions
contemplated by, and perform its respective obligations under, this
Agreement.
(d) Authorization. The execution
and delivery of this Agreement and the performance of its obligations hereunder
have been duly authorized by all necessary action on its part.
Section
6. No
Waiver. Nothing herein is
intended to, or does, in any manner, waive, limit, impair, or restrict the
ability of any of the Consenting Noteholders to protect, prosecute, enforce or
preserve any of their respective rights, remedies, claims and/or interests
whether under the Notes Indenture or otherwise under applicable law or, subject
to paragraphs (a) and (c) of Section 3, to enter into any transactions
concerning the Notes.
Section
7. Termination
Events.
(a) Consenting Noteholder Termination
Events. This Agreement shall terminate automatically without any action
or notice upon the occurrence of any of the following events (each, a “Consenting
Noteholders’ Termination Event”): (a) the failure of Callon
to commence the Consent Solicitation on or prior to the Consent Commencement
Date, except as may be agreed by Callon and the Consenting Noteholders, (b) with
respect to the Consent Solicitation, the voting in favor of the consents
solicited pursuant to the Consent Solicitation by the holders thereof of less
than 75% in principal amount of the Notes (provided that, for purposes of calculating
the percentage of Notes voted in favor of the consents solicited pursuant to any
Consent Solicitation, any Notes of any Consenting Noteholder that are subject to
this Agreement shall be deemed to have been voted in favor of such consents if
the failure of such Consenting Noteholder to so vote such Notes would, but for
the provisions of this Section 7(a), constitute a breach of such Consenting
Noteholder’s commitments under this Agreement), (c) the breach in any material
respect by Callon of any of the representations, warranties or covenants set
forth in this Agreement, (d) the issuance by any governmental authority,
including any regulatory authority or court of competent jurisdiction, of any
ruling or order enjoining the consummation of the Consent Solicitation or any of
the transactions contemplated thereunder, (e) the occurrence of any “Event of
Default”, default or acceleration event under the Notes Indenture or (f) if the
Consent Solicitation has not been consummated in accordance with the terms set
forth herein on or before the Outside Date.
(b) Company Termination
Events. Callon
may terminate this Agreement as to all Parties by giving written notice to the
Consenting Noteholders upon the occurrence of any of the following events (each,
a “Company
Termination Event”): (a) the breach in any
material respect by any Consenting Noteholder of any of the representations,
warranties or covenants of such Consenting Noteholder set forth in this
Agreement, (b) if the Consent Solicitation has not been consummated in
accordance with the terms set forth herein on or before the Outside Date, or (c)
the issuance by any governmental authority, including any regulatory authority
or court of competent jurisdiction, of any ruling or order enjoining the
consummation of the Consent Solicitation or any of the transactions contemplated
thereunder.
(c) Mutual Termination. This
Agreement, and the obligations of all Parties hereunder, may be terminated by
mutual agreement among Callon and Consenting Noteholders.
(d) Termination. Except for
obligations that are expressly intended to survive the termination of this
Agreement, this Agreement, and the obligations of all Parties hereunder, shall
automatically terminate without any further notice or action at 5:00 p.m.
(prevailing New York City time) on the Outside Date.
(e) Effect of Termination. Upon
termination of this Agreement, each Party hereto shall be released from its
commitments, undertakings and agreements under or related to this Agreement and
shall have the rights and remedies that it would have had and shall be entitled
to take all actions, whether with respect to the transactions set forth on the
Term Sheet or otherwise, that it would have been entitled to take had it not
entered into this Agreement.
Section
8. Effectiveness;
Amendments. This
Agreement shall become effective and binding upon each of the Parties that have
executed and delivered counterpart signature pages hereto. Once effective, this
Agreement may not be modified, amended, supplemented or otherwise altered
(except as expressly provided herein), and no term or condition may be waived,
except in a writing signed by Callon and the Consenting
Noteholders.
Section
9. Miscellaneous.
(a) Further Assurances. The
Parties agree to execute and deliver such other instruments and perform such
acts, in addition to the matters herein specified, as may be appropriate or
necessary, from time to time, to effectuate the Consent Solicitation, whether
the same occurs before or after the date of this Agreement and further agree not
to take any actions inconsistent herewith.
(b) Complete Agreement. This
Agreement is the entire agreement between the Parties with respect to the
subject matter hereof and supersedes all prior agreements, oral or written,
between the Parties with respect thereto. No claim of waiver, modification,
consent or acquiescence with respect to any provision of this Agreement shall be
made against any Party, except on the basis of a written instrument executed by
or on behalf of such Party.
(c) Parties. This Agreement shall
be binding upon, and inure to the benefit of, the Parties. No rights or
obligations of any Party under this Agreement may be assigned or transferred to
any other person or entity except as provided in Section 3(c) hereof. Nothing in
this Agreement, express or implied, shall give to any person or entity, other
than the Parties, any benefit or any legal or equitable right, remedy or claim
under this Agreement.
(d) Injunctive Relief. The
Parties agree that damages at law would be an inadequate remedy for the breach
of any of the promises and agreements contained in this Agreement, and,
accordingly, any Party hereto shall be entitled to injunctive relief with
respect to any such breach, including, without limitation, specific performance
of such promises or agreements or an order enjoining a party from any
threatened, or from the continuation of any actual, breach of the promises or
agreements contained in this Agreement. The rights set forth in this Section
9(d) shall be in addition to any other rights which a Party may have at law or
in equity pursuant to this Agreement.
(e) Headings. The headings of all
sections of this Agreement are inserted solely for the convenience of reference
and are not a part of and are not intended to govern, limit or aid in the
construction or interpretation of any term or provision hereof.
(f) GOVERNING LAW; SUBMISSION TO
JURISDICTION; SELECTION OF FORUM; WAIVER OF TRIAL BY JURY. THIS AGREEMENT
IS TO BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED IN SUCH STATE, WITHOUT
GIVING EFFECT TO THE CHOICE OF LAWS PRINCIPLES THEREOF. Each Party hereto agrees
that it shall bring any action or proceeding in respect of any claim arising out
of or related to this Agreement or the transactions contained in or contemplated
by this Agreement exclusively in the United States District Court for the
Southern District of New York or any New York State court sitting in New York
City (the “Chosen
Courts”), and
solely in connection with claims arising under this Agreement or the
transactions that are the subject of this Agreement (i) irrevocably submits to
the exclusive jurisdiction of the Chosen Courts, (ii) waives any objection to
laying venue in any such action or proceeding in the Chosen Courts and (iii)
waives any objection that the Chosen Courts are an inconvenient forum or do not
have jurisdiction over any party hereto. Each party hereto irrevocably waives
any and all right to trial by jury in any legal proceeding arising out of or
relating to this Agreement or the transactions contemplated hereby. The terms
and conditions set forth in this Section shall survive any termination of this
Agreement.
(g) Execution of Agreement. This
Agreement may be executed and delivered (by facsimile or otherwise) in any
number of counterparts, each of which, when executed and delivered, shall be
deemed an original, and all of which together shall constitute the same
agreement. Except as expressly provided in this Agreement, each individual
executing this Agreement on behalf of a Party has been duly authorized and
empowered to execute and deliver this Agreement on behalf of said
Party.
(h) Interpretation. This
Agreement is the product of negotiations between Callon and the Consenting
Noteholders, and in the enforcement or interpretation hereof, is to be
interpreted in a neutral manner, and any presumption with regard to
interpretation for or against any Party by reason of that Party having drafted
or caused to be drafted this Agreement, or any portion hereof, shall not be
effective in regard to the interpretation hereof.
(i) Successors and Assigns. This
Agreement is intended to bind and inure to the benefit of the Parties and their
respective successors, assigns, heirs, executors, administrators and
representatives, other than a trustee or similar representative appointed in a
bankruptcy case. The agreements, representations and obligations of the
Consenting Noteholders under this Agreement are, in all respects, several and
not joint.
(j) Notices. All notices
hereunder shall be deemed given if in writing and delivered, if sent by
telecopy, e-mail, courier or by registered or certified mail (return receipt
requested) to the following addresses and telecopier numbers (or at such other
addresses or telecopier numbers as shall be specified by like
notice)
if to
Callon:
000 Xxxxx
Xxxxx Xxxxxx
Xxxxxxx,
Xxxxxxxxxxx 00000
Attention: Xxxxxx
Xxxxxxxxx
E-mail
address: xxxxxxxxxx@xxxxxx.xxx
with
copies to:
Xxxxxx
and Xxxxx, LLP
0000
XxXxxxxx, Xxxxx 0000
Xxxxxxx,
Xxxxx 00000
Attention: Xxxxxx
X. Xxxxx
E-mail
address: xxx.xxxxx@xxxxxxxxxxx.xxx
if to a
Consenting Noteholder to the address next to such Noteholder’s signatory on the
signature page.
Any
notice given by delivery, email, mail or courier shall be effective when
received. Any notice given by telecopier shall be effective upon oral or machine
confirmation of transmission.
Section
10. Disclosure.
(a) Publicity; Non-Disclosure of
Holdings. Except as required by law, Callon shall not (a) use the name of
any Consenting Noteholder in any public manner without such Consenting
Noteholder’s prior written consent or (b) disclose to any person (including, for
the avoidance of doubt, any other Consenting Noteholder) the principal amount or
percentage of any Notes or any other securities of Callon or any of their
respective subsidiaries held by any Consenting Noteholder; provided, however, that
Callon shall be permitted to disclose at any time (after consulting with
Consenting Noteholders) the aggregate principal amount of and aggregate
percentage of each series of Notes held by Consenting Noteholders or by persons
who have otherwise agreed to participate in the Consent Solicitation as a group.
The terms and conditions set forth in this Section shall survive any termination
of this Agreement.
(b) Nullity of Tendered Consents.
Upon the occurrence of any termination of this Agreement, any and all consents
tendered by the Consenting Noteholders prior to such termination shall be
deemed, for all purposes, to be null and void from the first instance and shall
not be considered or otherwise used in any manner by Callon in connection with
the Consent Solicitation.
[Remainder of Page Left
Intentionally Blank]
IN
WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
first above written.
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Xxxxxx
Petroleum Company
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By:
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Name:
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Title:
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Exhibit A to Consent
Agreement dated March 28, 2008
FORM
OF CONSENT SOLICITATION STATEMENT AND LETTER OF CONSENT
XXXXXX
PETROLEUM COMPANY
CONSENT
SOLICITATION STATEMENT
Solicitation
of Consents
with
respect to
$200
Million of 9.75% Senior Notes Due 2010, Series B
THE
CONSENT SOLICITATION WILL EXPIRE AT 11:00 A.M., NEW YORK CITY TIME, ON APRIL ●,
2008, UNLESS OTHERWISE EXTENDED (SUCH TIME AND DATE, AS THEY MAY BE EXTENDED,
THE “CONSENT DATE”).
Subject
to the terms and conditions set forth in this Consent Solicitation Statement (as
may be amended or supplemented, the “Consent
Solicitation Statement”) and the accompanying Letter of Consent (the
“Letter of
Consent”), Xxxxxx Petroleum Company, a Delaware corporation (“Callon”),
is hereby soliciting the consent (the “Consent
Solicitation”) of Holders (as defined below) as of the Record Date (as
defined below) of each of its 9.75% Senior Notes due 2010, Series B (the “Notes”)
outstanding under the Indenture (the “Indenture”),
dated as of March 15, 2004, among Callon, as issuer, and American Stock Transfer
& Trust Company, as trustee (in such capacity, the “Notes
Trustee”).
The
purpose of the Consent Solicitation is to amend and supplement the Indenture
(the “Supplemental
Indenture”) to permit Callon to transfer the Entrada prospect (as
described below) to Callon Entrada Company (“Callon
Entrada”) which will be a wholly-owned Unrestricted Subsidiary (as
defined in the Indenture) of Callon. Callon Entrada proposes to enter
into a Credit Agreement and related documents (the “Entrada Credit
Facility”) with CIECO Energy (Entrada) LLC, a subsidiary of ITOCHU
Corporation, pursuant to which Callon Entrada will borrow up to $150 million
plus capitalized interest to finance the development of the Entrada
prospect. The Entrada Credit Facility will be non-recourse to Callon,
and Callon will have no obligation to repay principal and interest outstanding
under the Entrada Credit Facility. However, Callon will enter into a
customary indemnification agreement pursuant to which it agrees to indemnify the
lenders under the Entrada Credit Facility against Callon Entrada’s
misappropriation of funds, non-performance of certain covenants and similar
matters. In addition, Callon will also guaranty payment by Callon
Entrada of any of its obligations to fund its proportionate share of any costs
and expenses for any operation related to the Entrada project that Callon
Entrada may, from time to time, expressly approve under the joint operating
agreement in effect for the Entrada project. Callon will also
guaranty Callon Entrada’s payment of all amounts to plug and abandon xxxxx and
related facilities, for a breach of law, rule or regulation (including
environmental laws) and for any losses attributable to gross
negligence of Callon Entrada.
Callon
has entered into an agreement with beneficial owners of $● principal amount of
Notes, in which the beneficial owners agree, within two business days following
the commencement of this solicitation, to vote their Notes in favor of the
Supplemental Indenture. Approval of the Supplemental Indenture
requires the approval of Holders of $150 million principal amount of Notes or
more.
The
Tabulation Agent for the Consent Solicitation is
Global
Bondholder Services Corporation
March ●,
2008
The
Supplemental Indenture shall become effective (the “Effective
Date”) promptly following (i) receipt of valid consents which are not
revoked from Holders (the “Consenting
Holders”) representing $150 million aggregate principal amount of Notes
(the “Requisite
Consents”) prior to the Consent Date, (ii) execution of the Supplemental
Indenture to the Indenture, and (iii) payment of the Consent Fee (as defined
below).
Callon
will pay a fee on or prior to the Effective Date (the “Consent
Fee”), to each Holder whose properly executed Letter of Consent is
received by the Tabulation Agent (as defined below and as described on the back
cover page hereof) on or prior to the Consent Date equal to $5.00 in cash for
each $1,000 in principal amount of Notes with respect to which such a consent is
received and not revoked from such Consenting Holder. The Consent Fee
will be paid only if the Supplemental Indenture becomes effective with respect
to the Notes.
In this
Consent Solicitation Statement, the term “Record
Date” means 5:00 p.m., New York City time, on March ●, 2008, and the term
“Holder”
means each person shown on the records of the Registrar (as defined in the
Indenture) for the Notes as a registered holder on the Record
Date. For purposes of determining the Requisite Consents with respect
to the Notes, as of the date of this Consent Solicitation Statement, there was
outstanding $200 million in aggregate principal amount of Notes.
Only
Holders of Notes whose properly executed Letters of Consent with respect to such
Holders’ Notes are received by the Tabulation Agent on or prior to the Consent
Date and not revoked will be entitled to receive the applicable Consent Fee in
the event the Supplemental Indenture becomes effective. All other
Holders of Notes will not be entitled to receive the Consent Fee but will be
bound by the Supplemental Indenture if it becomes effective. Subject
to the terms and conditions of this Consent Solicitation Statement and the
related Letter of Consent, Callon will pay the applicable Consent Fee to the
Consenting Holders on the Effective Date.
No
Consent Fee will be paid if the Requisite Consents are not received, if the
Consent Solicitation is withdrawn for any reason or if the Supplemental
Indenture does not otherwise become effective for any reason. If
Callon does not pay the Consent Fee to each Consenting Holder by ●, 2008, the
Consent Solicitation will terminate.
Holders
are requested to read and consider carefully the information contained in this
Consent Solicitation Statement and the related Letter of Consent and to give
their consent to the Supplemental Indenture by properly completing and executing
the accompanying Letter of Consent in accordance with the instructions set forth
herein and therein.
The
transfer of Notes after the Record Date will not have the effect of revoking any
consent theretofore validly given by a Holder, and each properly completed and
executed Letter of Consent will be counted notwithstanding any transfer of the
Notes to which such Letter of Consent relates.
RECIPIENTS
OF THIS CONSENT SOLICITATION STATEMENT AND THE ACCOMPANYING MATERIALS SHOULD NOT
CONSTRUE THE CONTENTS HEREOF OR THEREOF AS LEGAL, BUSINESS OR TAX
ADVICE. EACH RECIPIENT SHOULD CONSULT ITS OWN ATTORNEY, BUSINESS
ADVISOR AND TAX ADVISOR AS TO LEGAL, BUSINESS, TAX AND RELATED MATTERS
CONCERNING THE CONSENT SOLICITATION.
IMPORTANT
Only
Holders are eligible to consent to the Supplemental Indenture. Any
beneficial owner of Notes who is not a Holder of such Notes must arrange with
the person who is the Holder or such Holder’s assignee or nominee to execute and
deliver a Letter of Consent on behalf of such beneficial owner. As of
the date of this Consent Solicitation Statement, the only Holder of the Notes is
Cede & Co., as nominee for The Depository Trust Company (“DTC”). For
purposes of the Consent Solicitation, DTC has authorized DTC participants
(“Participants”)
set forth in the position listing of DTC as of the Record Date to execute
Letters of Consent as if they were the Holders of the Notes held of record in
the name of DTC or the name of its nominee. Accordingly, for purposes
of the Consent Solicitation, the term “Holder”
shall be deemed to include such Participants.
Holders
who wish to consent must deliver their properly completed and duly executed
Letters of Consent to the Tabulation Agent as set forth on the back cover page
of this Consent Solicitation Statement and in the Letter of Consent in
accordance with the instructions set forth herein and
therein. Consents should not be delivered to Callon or the Notes
Trustee. However, Callon reserves the right to accept any consent
received by Callon or the Notes Trustee. Under no
circumstances should any person tender or deliver Notes to Callon, the
Tabulation Agent, the Notes Trustee or any other party at any
time.
No person
has been authorized to give any information or make any representations other
than those contained or incorporated by reference herein or in the accompanying
Letter of Consent, and, if given or made, such information or representations
must not be relied upon as having been authorized by Callon, the Tabulation
Agent, the Notes Trustee or any other person. The statements made in
this Consent Solicitation Statement are made as of the date hereof, and the
delivery of this Consent Solicitation Statement and the accompanying materials
shall not, under any circumstances, create any implication that the information
contained herein is correct after the date hereof.
Unless
you are a Holder, please handle this matter through your nominee bank or broker
through whom you hold an interest in the Notes. Questions concerning
the terms of the Consent Solicitation should be directed to the Tabulation Agent
at the address or telephone numbers set forth on the back cover page
hereof. Requests for assistance in completing and delivering Letters
of Consent or requests for additional copies of this Consent Solicitation
Statement, the Letter of Consent or other related documents should be directed
to the Tabulation Agent at the address or telephone number set forth on the back
cover page hereof.
XXXXXX
PETROLEUM COMPANY
Xxxxxx
Petroleum Company (NYSE: CPE) is engaged in the exploration and development of
oil and gas properties, primarily in the Gulf of Mexico.
PURPOSE
AND BACKGROUND OF THE CONSENT SOLICITATION
Purpose
The
purpose of the Consent Solicitation is to amend the Indenture to permit Callon
to transfer the Entrada prospect to Callon Entrada, a wholly-owned Unrestricted
Subsidiary of Callon and to facilitate Callon Entrada entering into the Entrada
Credit Facility to develop the Entrada prospect. The Entrada prospect
is located in the deep water Gulf of Mexico, in approximately 4,500 feet of
water. Callon currently owns the entire working interest in the
Entrada prospect.
On
February 12, 2008, Callon agreed to sell a 50% working interest to CIECO Energy
(US) Limited (“CIECO”),
a subsidiary of ITOCHU Corporation. As part of the sale, CIECO agreed
to enter into the Entrada Credit Facility and loan to Callon Entrada, on a
non-recourse basis, up to $150 million (plus capitalized interest) to develop
the 50% working interest in the Entrada prospect retained by Callon. Callon
believes this financing arrangement is favorable to Callon for the following
reasons:
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If
development of the Entrada prospect is not successful, Callon will have no
obligation to repay principal and interest borrowed to develop the
project.
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The
financing arrangement has favorable prepayment terms, so Callon can
refinance it if the Entrada prospect is
successful.
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The
Entrada Credit Facility is part of the sale of a 50% interest in the
Entrada prospect to CIECO, the proceeds of which sale will be used to
repay senior secured indebtedness of
Xxxxxx.
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In order
to contribute the Entrada prospect to Xxxxxx Entrada and consummate the Entrada
Credit Facility, Xxxxxx must amend the Indenture as described
herein.
THE
SUPPLEMENTAL INDENTURE
The
Supplemental Indenture provides for the following:
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Clause
(y) of the proviso at the end of the definition of “Debt”
in Section
1.1 of the Indenture is amended in its entirety to read as follows:
“(y) any debt arising in connection with a Permitted Medusa Transaction or
a Permitted Entrada Transaction,
or”
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Clause
(b) of the definition of “Interest
Expense” in Section 1.1 of
the Indenture is amended in its entirety to read as follows: “(b) imputed
interest expense attributable to any production payment, project financing
by vendors and other non-recourse debt, but not including any amounts
arising out of a Permitted Medusa Transaction or a Permitted Entrada
Transaction”;
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Clause
(n) of the definition of “Permitted
Investment” in Section 1.1 of
the Indenture is amended in its entirety to read: “(n) any
Investment arising from or related to a Permitted Medusa Transaction, or a
Permitted Entrada Transaction;
and”
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Clause
(a) of the definition of “Unrestricted
Subsidiary” in Section 1.1 of
the Indenture is amended in its entirety to read: “(a) Xxxxxx Entrada
Company and any other Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board
of Directors of the Company in the manner provided below;
and”
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A
new definition of “Entrada
Assets” is added to Section 1.1 of
the Indenture, such new definition to be inserted in appropriate
alphabetical order and to read in its entirety as follows: “‘Entrada
Assets’ means all Oil and Gas Properties owned by the Company or
any of its Subsidiaries and located on, under or related to Garden Banks
Blocks 738, 782, 785, 826, and 827 in the federal offshore waters of the
Gulf of Mexico, subject to certain depth limits, and any and all related
equipment, accounts receivable, general intangibles and other assets
related thereto and any proceeds
therefrom.”
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A
new definition of “Permitted
Entrada Transaction” is added to Section 1.1 of
the Indenture, such new definition to be inserted in appropriate
alphabetical order and to read in its entirety as
follows: “Permitted
Entrada Transaction’ means (i) the sale, conveyance and
assignment by the Company or any of its Subsidiaries of a portion of the
Entrada Assets to a third party in a transaction which otherwise complies
with the requirements of Section
3.14(a), (ii) the contribution by the Company or any of its
Restricted Subsidiaries of all or any portion of its ownership interests
in the Entrada Assets, to a newly formed Unrestricted
Subsidiary, Xxxxxx Entrada Company, which contribution may occur either
prior to, contemporaneously with or after the sale, conveyance and
assignment contemplated in the immediately preceding clause (i), which
Unrestricted Subsidiary and/or its assets may be managed under one or more
management services agreements, contract operating agreements or similar
agreements with the Company or any of its Restricted Subsidiaries, (iii)
the incurrence by Xxxxxx Entrada Company of Debt, the proceeds of which
are to be used to fund the costs and expenses incurred to develop and/or
produce its interests in the Entrada Assets, such Debt to be non-recourse
to the Company and its Restricted Subsidiaries except to the extent of the
indemnities and/or performance guaranties described in clause (vi)
below, (iv) the granting of Liens on (w) the Entrada Assets,
(x) all other assets of Xxxxxx Entrada Company, (y) the equity interests
of Xxxxxx Entrada Company, and/or (z) any deposit accounts established and
maintained to hold any loan proceeds of such Debt pending disbursement
and/or any revenues and proceeds of production or other amounts
attributable to the Entrada Assets, in each case to secure such Debt, and
(v) the contribution or advance by the Company or any of its Restricted
Subsidiaries of additional cash or other assets to Xxxxxx Entrada Company
from time to time not to exceed, in the aggregate at any time outstanding,
the sum of (A) $ 10,000,000, plus (B) other contributions or advances
arising from or deemed to exist as a result of the payment and performance
by the Company or any of its Restricted Subsidiaries of any of their
respective obligations under clause (vi) of this definition, and (vi) the
indemnification of any Person against loss from the failure of Xxxxxx
Entrada Company to comply with, or the guarantee by the Company or a
Restricted Subsidiary of performance by Xxxxxx Entrada Company of, its
obligations arising under or related to the documents and agreements
evidencing or governing its Debt or relating to the development and
operations of its assets (other than the obligation of Xxxxxx Entrada
Company to repay the principal and interest of the Debt described in
clause (iii) of this definition) by the Company or any of its Restricted
Subsidiaries.”
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The
proviso at the end of Section 3.17 of
the Indenture is amended to read in its entirety as follows: “; provided,
however, that notwithstanding the provisions of this Section 3.17,
the Company may engage in any Permitted Medusa Transaction or Permitted
Entrada Transaction.”
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Section 3.23 of
the Indenture is amended in its entirety to read as follows: “Section
3.23 Permitted
Medusa Transactions; Permitted Entrada
Transaction. Notwithstanding anything in this Indenture
to the contrary, so long as no Default or Event of Default has occurred
and is continuing at the time the Company or any of its Subsidiaries
enters into any Permitted Medusa Transaction or Permitted Entrada
Transaction, the entering into and carrying out of such Permitted Medusa
Transaction or Permitted Entrada Transaction, as applicable, shall be
allowed hereunder and shall not in itself constitute a breach of,
non-compliance with, or Default or Event of Default under this
Indenture.”
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THE
CONSENT SOLICITATION
Overview
The
Supplemental Indenture will become effective on the Effective Date, which shall
occur promptly following (i) receipt of valid consents which have not been
revoked from Consenting Holders representing $150 million aggregate principal
amount of Notes, (ii) execution of the Supplemental Indenture, and (iii) payment
of the applicable Consent Fee.
If the
Supplemental Indenture becomes effective, it will be binding on all Holders of
Notes and their transferees, regardless of whether such Holders have consented
to the Supplemental Indenture. Failure to deliver a Letter of Consent
will have the same effect as if a Holder had chosen not to give its consent with
respect to the Supplemental Indenture.
The
delivery of a Letter of Consent will not affect a Holder’s right to sell or
transfer the Notes. If a Holder delivers a consent and subsequently
transfers its Notes, any payment pursuant to the Consent Solicitation with
respect to such Notes will be made to such transferring Holder.
Beneficial
owners of the Notes who wish to provide a consent and whose Notes are held, as
of the Record Date, in the name of a broker, dealer, commercial bank, trust
company or other nominee institution must contact such nominee promptly and
instruct such nominee, as the Holder of such Notes, to execute promptly and
deliver a Letter of Consent on behalf of the beneficial owner on or prior to the
Consent Date.
Consent
Fees
Xxxxxx
shall pay (directly or through an agent) a Consent Fee, on the Effective Date,
to each Holder of Notes whose properly executed Letter of Consent is received by
the Tabulation Agent on or prior to the Consent Date, of $5.00 in cash for each
$1,000 in principal amount of Notes with respect to which such a consent is
received and not revoked from such Consenting Holder.
No
Consent Fee will be paid if the Requisite Consents are not received, if the
Consent Solicitation is withdrawn for any reason or if the Supplemental
Indenture does not otherwise become effective for any reason. If
Xxxxxx does not pay the Consent Fee to each Consenting Holder by ●, 2008, the
Consent Solicitation will terminate.
Record
Date
The
Record Date for the determination of Holders entitled to give consents pursuant
to the Consent Solicitation is 5:00 p.m., New York City time, on ●,
2008. This Consent Solicitation Statement and the accompanying Letter
of Consent are being sent to all Holders. As of the date of this
Consent Solicitation Statement, the only Holder of the Notes is Cede & Co.
as nominee for DTC. For purposes of the Consent Solicitation, DTC has
authorized DTC Participants set forth in the position listing of DTC as of the
Record Date to execute Letters of Consent as if they were the Holders of the
Notes held of record in the name of DTC or the name of its
nominee. Accordingly, for purposes of the Consent Solicitation, the
term “Holder”
shall be deemed to include such Participants. Xxxxxx reserves the
right to establish from time to time any new date as the Record Date and,
thereupon, any such new date will be deemed to be the “Record
Date” for purposes of the Consent Solicitation.
Consent
Date; Extensions; Amendment
The term
“Consent
Date” means 11:00 A.M.., New York City time, on April ●, 2008, unless
Xxxxxx, in its sole discretion, extends the period during which the Consent
Solicitation is open, in which case the term Consent Date means the latest time
and date to which the Consent Solicitation is extended. In order to
extend the Consent Date, Xxxxxx will notify the Tabulation Agent and the Notes
Trustee in writing of any extension and will make a public announcement thereof,
each prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Consent Date. Xxxxxx may waive any conditions
with respect to, or extend, amend, modify or withdraw the Consent Solicitation;
however, if the Consent Solicitation is amended or modified in a manner
determined by Xxxxxx to constitute a material adverse change to the Holders,
Xxxxxx will promptly disclose such amendment or modification in a manner it
deems appropriate, with written notice to the Tabulation Agent and the Notes
Trustee, and may, if appropriate, extend the Consent Solicitation for a period
deemed by it to be adequate to permit the Holders of such Notes to deliver
and/or revoke their consents. Failure by any Holder or beneficial
owner of Notes to be so notified will not affect the extension of the Consent
Solicitation.
Procedures
for Consenting
All
Letters of Consent that are properly completed and duly executed and received by
the Tabulation Agent on or prior to the Consent Date will be given effect in
accordance with the specifications therein.
Holders
who desire to act with respect to the Supplemental Indenture should so indicate
by signing and dating the accompanying Letter of Consent included herewith and
delivering it to the Tabulation Agent at the address set forth in the Letter of
Consent, in accordance with the instructions contained herein and
therein. Signatures must be guaranteed in accordance with paragraph 6
of the instructions in the Letter of Consent.
The
Letter of Consent must be executed by a Holder in exactly the same manner as the
name of the Holder appears in the records of the registrar for the
Notes. An authorized Participant must execute the Letter of Consent
exactly as its name appears on DTC’s position listing as of the Record
Date. If the Notes are held of record by two or more joint Holders,
all such Holders must sign the Letter of Consent. If a signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other Holder acting in a fiduciary or representative capacity,
such person should so indicate when signing and must submit proper evidence
satisfactory to Xxxxxx of such person’s authority so to act. If the
Notes are registered in different names, separate Letters of Consent must be
executed covering each form of registration. If a Letter of Consent
is executed by a person other than the Holder, then such person must have been
properly authorized by proxy or in some other manner acceptable to Xxxxxx to
execute the Letter of Consent. Any beneficial owner of the Notes who
is not a Holder of record of such Notes or an authorized Participant must
arrange with the person who is the Holder of record or such Holder’s assignee or
nominee to execute and deliver a Letter of Consent on behalf of such beneficial
owner.
If a
Letter of Consent relates to fewer than all the Notes held as of the Record Date
by the Holder providing such Letter of Consent, such Holder must indicate on the
Letter of Consent the series and aggregate dollar amount (in integral multiples
of $1,000) of such Notes to which the Letter of Consent relates. Otherwise, the
Letter of Consent will be deemed to relate to all such Notes.
A Holder
must complete, sign and date the Letter of Consent (or photocopy thereof) for
such Holder’s Notes and deliver such Letter of Consent to the Tabulation Agent
by mail, first-class postage prepaid, hand delivery, overnight courier or by
facsimile transmission at the address or facsimile number of the Tabulation
Agent set forth on the back cover page hereof. Delivery of Letters of
Consent should be made sufficiently in advance of the Consent Date to assure
that the Letter of Consent is received prior to the Consent
Date. Under no
circumstances should any person tender or deliver Notes to Xxxxxx, the
Tabulation Agent, the Notes Trustee or any other party at any
time.
Xxxxxx
reserves the right to receive Letters of Consent by any other reasonable means
or in any form that reasonably evidences the giving of consent.
All
questions as to the validity, form, eligibility (including time of receipt) and
acceptance of consents will be resolved by Xxxxxx, whose good faith
determinations will be final and binding. Xxxxxx reserves the
absolute right to reject any or all consents that are not in proper form or the
acceptance of which could, in the opinion of Xxxxxx’x counsel, be
unlawful. Xxxxxx also reserves the right to waive any irregularities
in connection with deliveries, which Xxxxxx may require to be cured within such
time as Xxxxxx determines. None of Xxxxxx, the Notes Trustee, the
Tabulation Agent or any other person shall have any duty to give notification of
any such irregularities or waiver, nor shall any of them incur any liability for
failure to give such notification. Deliveries of Letters of Consent
will not be deemed to have been made until such irregularities have been cured
or waived. Xxxxxx’x good faith interpretation of the terms and
conditions of the Consent Solicitation (including this Consent Solicitation
Statement and the accompanying Letter of Consent and the instructions hereto and
thereto) will be final and binding on all parties.
Revocation
of Consents
All
properly completed and executed Letters of Consent received prior to the Consent
Date will be counted, notwithstanding any transfer of any Notes to which such
Letter of Consent relates, unless Xxxxxx receives from a Holder (or a subsequent
holder that has received a proxy from the relevant Holder) a written notice of
revocation bearing a date later than the date of the prior Letter of Consent at
any time prior to the Consent Date. Any notice of revocation received
after the Consent Date will not be given effect. A transfer of Notes
after the Record Date must be accompanied by a duly executed proxy from the
relevant Holder if the subsequent transferee is to have revocation rights with
respect to the consent to the Supplemental Indenture. To be
effective, a notice of revocation must be in writing, must contain the name of
the Holder and the aggregate principal amount of the Notes to which it relates
and must be (i) signed in the same manner as the original Letter of Consent or
(ii) accompanied by a duly executed proxy or other authorization (in form
satisfactory to Xxxxxx). All revocations of consents must be sent to
the Tabulation Agent at its address set forth in the Letter of
Consent.
Tabulation
Agent
Xxxxxx
has retained Global Bondholder Services Corporation to act as Tabulation Agent
with respect to the Consent Solicitation (the “Tabulation
Agent”). For the services of the Tabulation Agent, Xxxxxx has
agreed to pay reasonable and customary fees and to reimburse the Tabulation
Agent for its reasonable out-of-pocket expenses in connection with such
services.
Requests
for assistance in completing and delivering the Letter of Consent or requests
for additional copies of this Consent Solicitation Statement, the accompanying
Letter of Consent and other related documents should be directed to the
Tabulation Agent at its address or telephone number set forth on the back cover
page hereof. Holders may also contact their broker, dealer,
commercial bank, trust company or other nominee for assistance concerning the
Consent Solicitation. The executed Letter of Consent and
any other documents required by the Letter of Consent should be sent to the
Tabulation Agent at the address set forth in the Letter of Consent, and not to
Xxxxxx or the Notes Trustee.
Fees
and Expenses
Xxxxxx
will bear the costs of the Consent Solicitation. Xxxxxx will
reimburse the Notes Trustee for the reasonable and customary expenses that the
Notes Trustee incurs in connection with the Consent
Solicitation. Xxxxxx will also reimburse banks, trust companies,
securities dealers, nominees, custodians and fiduciaries for their reasonable
and customary expenses in forwarding this Consent Solicitation Statement, the
accompanying Letter of Consent and other materials to beneficial owners of the
Notes.
CERTAIN
UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The
following summary describes certain material United States (“U.S.”)
federal income tax consequences of the Consent Solicitation, the Indenture and
the receipt of the Consent Fee. This discussion is based on the
Internal Revenue Code of 1986, as amended (the “Code”),
existing and proposed Treasury regulations and judicial and administrative
rulings as in effect and existing on the date hereof, all of which are subject
to change or differing interpretations, possibly with retroactive
effect. Xxxxxx has not sought any rulings from the Internal Revenue
Service (the “IRS”) with
respect to the statements made and positions taken in this
summary. Therefore, there is no assurance that the IRS would not
assert a position contrary to the positions stated below, or that a court would
not agree with any such assertion. Furthermore, no opinion of counsel
has been or will be rendered with respect to the tax consequences of the Consent
Solicitation, the Supplemental Indenture and/or the receipt of the Consent
Fee.
This
summary does not discuss any aspects of state, local, estate, gift or foreign
tax laws, and it applies only to Notes that are held as capital assets (within
the meaning of Section 1221 of the Code). This discussion does not
describe all of the tax consequences that may be relevant to Holders in light of
their particular circumstances or to Holders subject to special rules, such as,
but not limited to:
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certain
financial institutions;
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insurance
companies;
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brokers
or dealers in securities or foreign
currencies;
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persons
holding Notes as part of a straddle, conversion transaction, hedge or
other integrated transaction;
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U.S.
Holders (as defined below) whose functional currency is not the U.S.
dollar;
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partnerships
or other pass-through entities for U.S. federal income tax
purposes;
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persons
subject to the alternative minimum
tax;
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tax-exempt
entities;
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real
estate investment trusts;
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controlled
foreign corporations; and
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certain
U.S. expatriates.
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HOLDERS
ARE URGED TO CONSULT THEIR TAX ADVISORS WITH REGARD TO THE APPLICATION OF THE
U.S. FEDERAL INCOME TAX LAWS TO THEIR PARTICULAR SITUATIONS AS WELL AS ANY TAX
CONSEQUENCES ARISING UNDER THE LAWS OF ANY STATE, LOCAL OR FOREIGN TAXING
JURISDICTION.
Tax
Consequences to Consenting U.S. Holders
As used
herein, the term “U.S.
Holder” means a beneficial owner of a Note for U.S. federal income tax
purposes that is:
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an
individual who is a citizen or resident of the United
States;
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a
corporation, or other entity taxable as a corporation for U.S. federal
income tax purposes, created or organized in or under the laws of the
United States or of any political subdivision
thereof;
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an
estate, the income of which is subject to U.S. federal income taxation
regardless of its source; or
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a
trust that (a) is subject to primary supervision by a court within the
United States and with respect to which one or more U.S. persons have the
authority to control all substantial decisions, or (b) has made a valid
election under applicable Treasury regulations to be treated as a U.S.
person.
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Special
rules, not discussed in this summary, may apply to persons holding Notes through
entities treated as partnerships for U.S. federal income tax
purposes. Such persons should consult their own tax advisors with
respect to these rules.
Debt
Modification Rules
Generally,
the modification of a debt instrument (including a change in the yield) will be
treated as a “deemed exchange” of an “old” debt instrument for a “new” debt
instrument for U.S. federal income tax purposes if such modification is
“significant” within the meaning of the Treasury regulations promulgated under
Section 1001 of the Code (the “Reissuance
Regulations”). Such a deemed exchange would be a taxable event
unless a non-recognition provision of the Code were to apply. Under
the Reissuance Regulations, the modification of a debt instrument is
“significant” if, based on all the facts and circumstances and taking into
account all modifications of the debt instrument collectively, the legal rights
or obligations that are altered and the degree to which they are altered are
“economically significant.” The Reissuance Regulations provide that a
modification of a debt instrument that adds, deletes or alters customary
accounting or financial covenants is not a significant
modification. However, the Reissuance Regulations also provide that a
change in the yield of certain debt instruments generally constitutes a
significant modification if the yield of the modified debt instrument varies
from the yield of the unmodified debt instrument by more than the greater of 25
basis points or 5 percent of the annual yield on the unmodified debt
instrument.
Although
the payment of the Consent Fee will change the yield of the Notes, this change
will be smaller than that which would be treated as a significant modification
under the Reissuance Regulations. Accordingly, the adoption of the
Supplemental Indenture and the payment of the Consent Fee should not cause a
deemed exchange of a U.S. Holder’s Notes (“Old
Notes”) for new Notes (“New
Notes”) for U.S. federal income tax purposes, and since a deemed exchange
does not appear to occur a U.S. Holder should not recognize gain or loss as a
result of the payment of the Consent Fee (although the Consent Fee would be
included in income, as discussed below).
Even if
the adoption of the Supplemental Indenture and the payment of the Consent Fee
were found to result in a deemed exchange with respect to the Notes, Xxxxxx
would take the position that, although not free from doubt, the deemed exchange
constitutes a tax-free recapitalization under Section 354(a) of the Code for
U.S. federal income tax purposes. If there were a deemed exchange and
such exchange was treated as a tax-free recapitalization, generally no gain or
loss would be recognized by a U.S. Holder (except to the extent of the Consent
Fee being included as income). In such event, a U.S. Holder would
have an initial tax basis in the New Notes received in the deemed exchange equal
to the Holder’s tax basis in the Old Notes deemed exchanged, increased by any
taxable gain or income recognized in the exchange (as discussed under the
heading “Consent Fee” below). In general, the Holder’s holding period for the
New Notes would include the period during which the Holder held the Old Notes
deemed surrendered in the deemed exchange.
If any
such deemed exchange were not to qualify as a tax-free recapitalization with
respect to the Notes, the tax consequences of the adoption of the Supplemental
Indenture and the payment of the Consent Fee could materially differ from those
described herein.
Consent
Fee
The law
is unclear with respect to the U.S. federal income tax treatment of the Consent
Fee. Callon intends to treat the Consent Fee as a fee paid to a U.S.
Holder in consideration of such Holder’s consent to the Supplemental
Indenture. Alternatively, the Consent Fee might be treated as a
payment of additional interest on the Notes. In either case, a U.S.
Holder would recognize ordinary income in the amount of the Consent Fee received
without any reduction by any portion of a U.S. Holder’s tax basis in the
Notes.
Information
Reporting and Backup Withholding
Information
returns will be filed with the IRS in connection with the payment of the Consent
Fee and any deemed interest payments with respect to a deemed exchange of Old
Notes for New Notes. A U.S. Holder will be subject to U.S. backup
withholding on such payments if the U.S. Holder fails to provide its taxpayer
identification number to the paying agent and comply with certain certification
procedures or otherwise establish an exemption from backup
withholding. The amount of any backup withholding deducted from a
payment to a U.S. Holder will be allowed as a credit against the U.S. Holder’s
U.S. federal income tax liability and may entitle the U.S. Holder to a refund,
provided that the required information is furnished to the IRS.
U.S.
HOLDERS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE U.S. FEDERAL INCOME TAX
CONSEQUENCES OF THE CONSENT SOLICITATION.
Tax
Consequences to Consenting Non-U.S. Holders
As used
herein, the term “Non-U.S.
Holder” means a beneficial owner of a Note for U.S. federal income tax
purposes that is not a U.S. Holder or an entity treated as a partnership for
U.S. federal income tax purposes. This discussion is not addressed to
Non-U.S. Holders who own, actually or constructively, 10% or more of the total
combined voting power of all classes of stock of Xxxxxx entitled to vote, who
are controlled foreign corporations related to Xxxxxx through stock ownership,
or who, on the date of acquisition of the Notes, owned Notes with a fair market
value of more than 5% of the fair market value of the common stock of
Callon. Additionally, this discussion does not describe the U.S.
federal income tax consequences to Non-U.S. Holders who are engaged in a trade
or business in the United States with which the Notes are effectively connected,
or who are individuals present in the United States for 183 days or more in the
taxable year of disposition. Such Non-U.S. Holders will generally be
subject to special rules and should consult their own tax advisors regarding the
U.S. federal income tax consequences applicable to their particular
situation.
Although
it is not entirely clear that withholding of U.S. federal income tax is
applicable to the payment of the Consent Fee to a Non-U.S. Holder, Callon
intends to withhold such tax from any Consent Fee paid to a Non-U.S. Holder at a
30% rate unless an exemption or partial reduction as a result of a treaty is
properly established. A Non-U.S. Holder may be able to claim an
exemption or establish that a reduced rate of withholding applies by delivering
to the applicable withholding agent a properly executed (a) IRS Form W-8BEN (or
a permissible substitute) claiming and exemption from or reduction in
withholding under the benefit of an applicable income tax treaty or (b) IRS Form
W-8ECI stating that the Consent Fee is not subject to withholding tax because it
is effectively connected with the Non-U.S. Holder’s conduct of a trade or
business in the United States.
Information
Reporting and Backup Withholding
Information
returns will be filed with the IRS in connection with the payment of the Consent
Fee and any deemed interest payments with respect to any deemed exchange of Old
Notes for New Notes. Unless the Non-U.S. Holder complies with
certification procedures to establish that it is not a U.S. person, the Non-U.S.
Holder may be subject to U.S. backup withholding on any Consent Fee payments or
deemed interest payments with respect to the Notes. The certification
procedures required to claim the exemption from withholding tax described above
will satisfy the certification requirements necessary to avoid backup
withholding as well. The amount of any backup withholding from a
payment to a Non-U.S. Holder will be allowed as a credit against the Non-U.S.
Holder’s U.S. federal income tax liability and may entitle the Non-U.S. Holder
to a refund, provided that the required information is furnished to the
IRS.
NON-U.S.
HOLDERS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE U.S. FEDERAL
INCOME TAX TREATMENT OF THE CONSENT FEE AND THE POSSIBILITY OF OBTAINING A
REFUND WITH RESPECT TO ANY U.S. FEDERAL TAXES WITHHELD THEREFROM.
Tax
Considerations for Non-Consenting Holders
The
Supplemental Indenture will not be a significant modification to non-consenting
Holders, and therefore, the Consent Solicitation will generally have no U.S.
federal income tax consequences to such Holders.
WHERE
YOU CAN FIND MORE INFORMATION
Callon is
subject to the informational requirements of the Securities Exchange Act of
1934, as amended, (the “Exchange
Act”) and, in accordance therewith, files reports and other information
with the Securities and Exchange Commission (“SEC”). Such
reports and other information can be inspected, without charge, and copied at
the Public Reference Section of the SEC located at 000 X Xxxxxx, X.X., Xxxx
0000, Xxxxxxxxxx, X.X. 00000. The SEC also maintains a web site at xxxx://xxx.xxx.xxx, which
contains reports and other information regarding registrants that file
electronically with the SEC. Copies of these materials can be
obtained at prescribed rates from the Public Reference Section of the SEC at the
principal offices of the SEC, 000 X Xxxxxx, X.X., Xxxx 0000, Xxxxxxxxxx, X.X.
00000.
All
documents and reports filed by Xxxxxx with the SEC pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act on or after the date of this Consent
Solicitation Statement and on or prior to the Effective Date or the withdraw of
the Consent Solicitation will be deemed incorporated herein by reference and
will be deemed to be a part hereof from the date of filing of such documents and
reports. Any statement contained in a document incorporated or deemed
to be incorporated by reference herein will be deemed to be modified or
superseded for purposes of this Consent Solicitation Statement to the extent
that a statement contained herein or in any subsequently filed document or
report that also is or is deemed to be incorporated by reference herein modifies
or supersedes such statement. Any such statement so modified or
superseded will not be deemed, except as so modified or superseded, to
constitute a part of this Consent Solicitation Statement. Xxxxxx is
not incorporating any document or information deemed to have been furnished and
not filed in accordance with SEC rules.
Xxxxxx
will provide, without charge, to each Holder to whom this Consent Solicitation
Statement is delivered, upon the written or oral request of any such person, a
copy of any or all of the documents relating to Callon that are incorporated
herein by reference, except the exhibits to such documents (unless such exhibits
are specifically incorporated by reference in such
documents). Requests for such copies should be directed to Callon at
Investor Relations, Xxxxxx Petroleum Company, 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx,
Xxxxxxxxxxx 00000; Tel: (000) 000-0000.
SPECIAL
NOTE ON FORWARD-LOOKING STATEMENTS
This
Consent Solicitation Statement and the documents incorporated by reference
herein include “forward-looking statements” within the meaning of Section 27A of
the Securities Act of 1933, as amended (“Securities
Act”), and Section 21E of the Exchange Act. These statements involve
known and unknown risks, uncertainties and other factors that may cause our
actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by the
forward-looking statements. In some cases, you can identify forward-looking
statements by terms such as “may,” “will,” “should,” “could,” “would,”
“expects,” “plans,” “anticipates,” “intends,” “believes,” “estimates,”
“projects,” “predicts,” “potential,” and similar expressions intended to
identify forward-looking statements.
All
statements, other than statements of historical facts, included in herein and
the documents incorporated by reference that address activities, events or
developments that we expect or anticipate will or may occur in the future,
including such things as estimated future net revenues from oil and gas reserves
and the present value thereof, future capital expenditures (including the amount
and nature thereof), business strategy and measures to implement strategy,
competitive strength, goals, expansion and growth of our business and
operations, plans, references to future success, reference to intentions as to
future matters and other such matters are forward-looking statements. These
statements are based on certain assumptions and analyses made by us in light of
our experience and our perception of historical trends, current conditions and
expected future developments as well as other factors we believe are appropriate
in the circumstances. However, whether actual results and developments will
conform with our expectations and predictions is subject to a number of
factors. Some of the factors which could affect our future results
and could cause results to differ materially from those expressed in our
forward-looking statements include:
|
|
·
|
general
economic and industry conditions;
|
|
|
·
|
volatility
of oil and natural gas prices;
|
|
|
·
|
uncertainty
of estimates of oil and natural gas
reserves;
|
|
|
·
|
impact
of competition;
|
|
|
·
|
availability
and cost of seismic, drilling and other
equipment;
|
|
|
·
|
operating
hazards inherent in the exploration for and production of oil and natural
gas;
|
|
|
·
|
difficulties
encountered during the exploration for and production of oil and natural
gas;
|
|
|
·
|
difficulties
encountered in delivering oil and natural gas to commercial
markets;
|
|
|
·
|
changes
in customer demand and producers’
supply;
|
|
|
·
|
uncertainty
of our ability to attract capital;
|
|
|
·
|
compliance
with, or the effect of changes in, the extensive governmental regulations
regarding the oil and natural gas
business;
|
|
|
·
|
actions
of operators of our oil and gas
properties;
|
|
|
·
|
weather
conditions; and
|
|
|
·
|
the
risk factors discussed in the documents we have incorporated by
reference.
|
Consequently,
all of the forward-looking statements herein and in the documents incorporated
by reference are qualified by these cautionary statements and we cannot assure
you that the actual results or developments anticipated by us will be realized
or, even if realized, that they will have the expected consequences to or
effects on us, our business or operations. We have no intention, and disclaim
any obligation, to update or revise any forward looking statements, whether as a
result of new information, future results or otherwise.
MISCELLANEOUS
This
Consent Solicitation is not being made to, and Letters of Consent will not be
accepted from or on behalf of, Holders in any jurisdiction in which the making
of the Consent Solicitation or the acceptance thereof would not be in compliance
with the laws of such jurisdiction. However, Callon may in its
discretion take any action that it deems necessary to make the Consent
Solicitation in any such jurisdiction and to extend the Consent Solicitation to
Holders in such jurisdiction. In any jurisdiction in which the
securities laws or blue sky laws require the Consent Solicitation to be made by
a licensed broker or dealer, the Consent Solicitation will be deemed to be made
on behalf of Callon by one or more registered brokers or dealers that are
licensed under the laws of such jurisdiction.
Requests
for assistance in completing and delivering the Letter of Consent or requests
for additional copies of this Consent Solicitation Statement, the Letter of
Consent and other related documents should be directed to the Tabulation Agent
at its address and telephone number below. Letters of Consent must be delivered
to the Tabulation Agent on or before the Consent Date.
The
Tabulation Agent for the Consent Solicitation is:
Global
Bondholder Services Corporation
65
Broadway – Xxxxx 000
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Corporate
Actions
Banks and
Brokers call: (000) 000-0000
Toll free
(000) 000-0000
By
Facsimile:
(For
Eligible Institutions Only):
(000)
000-0000
Confirmation:
(000)
000-0000
By Mail,
Overnight Courier or Hand Delivery:
65
Broadway – Xxxxx 000
Xxx Xxxx,
Xxx Xxxx 00000
XXXXXX
PETROLEUM COMPANY
LETTER
OF CONSENT
Relating
to the Solicitation of Consents
with
respect to the $200 Million of 9.75% Senior Notes Due 2010, Series
B
To: Global
Bondholder Services Corporation (as Tabulation Agent)
Global
Bondholder Services Corporation
65
Broadway – Xxxxx 000
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Corporate
Actions
Banks and
Brokers call: (000) 000-0000
Toll free
(000) 000-0000
By
Facsimile:
(For
Eligible Institutions Only):
(000)
000-0000
Confirmation:
(000)
000-0000
The
Consent Solicitation is made by Xxxxxx Petroleum Company, a Delaware corporation
(“Callon”),
only to Holders (as defined below) as of the Record Date (as defined below) of
the 9.75% Senior Notes due 2010, Series B (“Notes”),
issued and outstanding under the Indenture dated as of March 15, 2004, among
Callon, as issuer, and American Stock Transfer & Trust Company, as trustee
(in such capacity, the “Notes
Trustee”) as more fully described in the accompanying Consent
Solicitation Statement dated March ●, 2008 (as may be amended or supplemented,
the “Consent Solicitation Statement”) of Callon.
The term
“Record
Date” as used herein means 5:00 p.m., New York City time, on March ●,
2008, and the term “Holder”
means each person shown on the records of the Registrar for the Notes as a
registered holder on the Record Date. Capitalized terms used herein
but not defined herein have the meanings given to them in the Consent
Solicitation Statement or in the Indenture.
Holders
of the Notes who wish to consent to the amendments to the Indenture (the “Supplemental Indenture”)
must deliver their properly completed and duly executed Letter of Consent by
mail, first-class postage prepaid, hand delivery, overnight courier or by
facsimile transmission to the Tabulation Agent (not to Callon or the Notes
Trustee) at its address or facsimile number set forth above in accordance with
the instructions set forth herein and in the Consent Solicitation
Statement. However, Callon reserves the right to accept any consent
received by it or the Notes Trustee.
Under
no circumstances should any person tender or deliver Notes to Callon, the
Tabulation Agent, the Notes Trustee or any other party at any time in connection
with the Consent Solicitation or this Letter of Consent.
Only
Holders or their duly designated proxies (“Duly Designated
Proxies”) are eligible to consent to the Supplemental Indenture. Any
beneficial owner of Notes who is not a Holder of such Notes must arrange with
the person who is the Holder or such Holder’s assignee or nominee to (i) execute
and deliver a Letter of Consent on behalf of such beneficial owner or (ii)
deliver a proxy so that such beneficial owner can execute and deliver a Letter
of Consent on its own behalf. As of the date of the Consent Solicitation
Statement, the only Holder of the Notes is Cede & Co., nominee for The
Depository Trust Company (“DTC”). For
purposes of the Consent Solicitation, DTC has authorized DTC participants (“Participants”)
set forth in the position listing of DTC as of the Record Date to execute
Letters of Consent as if they were Holders of the Notes held of record in the
name of DTC or the name of its nominee. Accordingly, for purposes of the Consent
Solicitation, the term “Holder” shall be deemed to include such
Participants.
Only
Holders of Notes whose properly executed Letters of Consent with respect to such
Notes are received by the Tabulation Agent on or prior to the Consent Date and
not revoked will be entitled to receive the applicable Consent Fee in the event
the Supplemental Indenture becomes effective with respect to the
Notes. Subject to the terms and conditions of this Consent
Solicitation Statement and the related Letter of Consent, Callon will pay the
Consent Fee to the Consenting Holders on or prior to the Effective
Date.
CONSENT
TO SUPPLEMENTAL INDENTURE
By
execution hereof, the undersigned acknowledges receipt of the Consent
Solicitation Statement and hereby represents and warrants that the undersigned
is a Holder (or Duly Designated Proxy) of the Notes indicated below and has full
power and authority to take the action indicated below in respect of such Notes.
The undersigned will, upon request, execute and deliver any additional documents
deemed by Callon to be necessary or desirable to perfect the undersigned’s
consent to the Supplemental Indenture.
The
undersigned acknowledges that the undersigned must comply with the provisions of
this Letter of Consent and complete the information required herein to consent
validly to the Supplemental Indenture.
By
execution hereof, the undersigned acknowledges that Callon has not filed or may
fail to file with the Securities and Exchange Commission (the “SEC”), and has not furnished
to the applicable Notes Trustee certain of the reports described by the
Indenture(s) governing the Notes held by such Holder and called for by the
applicable provisions of the Securities Exchange Act of 1934, as amended (the
“Exchange
Act”).
The
undersigned acknowledges that the Supplemental Indenture will become effective
on the Effective Date, which shall occur promptly following (i) receipt of valid
consents which are not revoked from Consenting Holders representing $150 million
aggregate principal amount of such Notes (the “Requisite
Consent”), (ii) execution of the Supplemental Indenture, and (iii)
payment of the Consent Fee. The terms of the Indenture shall remain in full
force and effect, except as modified by the Supplemental Indenture, and are
hereby confirmed.
The
undersigned acknowledges that Letters of Consent delivered pursuant to any one
of the procedures described under the heading “The Consent
Solicitation—Procedures for Consenting” in the Consent Solicitation Statement
and in the instructions included in this Letter of Consent will constitute a
binding agreement between the undersigned and Callon upon the terms and subject
to the conditions of the Consent Solicitation.
Unless
otherwise specified in the table below, this Letter of Consent relates to the
total aggregate principal amount of Notes held of record by the undersigned at
the close of business on the Record Date. If this Letter of Consent relates to
less than the total aggregate principal amount of Notes so held, the undersigned
must list on the table below the serial numbers (with respect to the Notes not
held by depositaries) and principal amount (in integral multiples of $1,000) of
Notes for which consent is given. If the space provided below is inadequate,
list the certificate numbers and aggregate principal amounts on a separate
signed schedule and affix the schedule to this Letter of Consent.
The
undersigned authorizes the Tabulation Agent to deliver this Letter of Consent
and any proxy delivered in connection herewith to Callon and the Notes Trustee
as evidence of the undersigned’s actions with respect to the Supplemental
Indenture.
DESCRIPTION
OF THE NOTES AS TO WHICH CONSENTS ARE GIVEN
|
Name and Address of Holder
|
Serial Number(s)*
|
Aggregate Principal Amount of
Notes**
|
Principal Amount With Respect to Which Consents
are Given**
|
|||
|
Total
Principal Amount Consenting of Notes: $
|
________________________
|
*
|
Need
not be completed by Holders whose Notes are held of record by depositaries
including DTC.
|
|
**
|
Unless
otherwise indicated in the column labeled “Principal Amount With Respect
to Which Consents Are Given,” the undersigned will be deemed to have
consented in respect of the entire aggregate principal amount indicated in
the column labeled “Aggregate Principal Amount of Notes.” All
principal amounts must be in multiples of
$1,000.
|
CONSENT
IMPORTANT—READ
CAREFULLY
A Holder
must execute this Letter of Consent exactly as its name appears on the
Notes. An authorized Participant must execute this Letter of Consent
exactly as its name appears on DTC’s position listing as of the Record
Date. If the Notes are held of record by two or more joint Holders,
all such Holders must sign this Letter of Consent. If a signatory is
a trustee, executor, administrator, guardian, attorney-in-fact, officer of a
corporation or other person acting in a fiduciary or representative capacity,
such person must so indicate when signing this Letter of Consent and must submit
proper evidence satisfactory to Callon of such person’s authority to so
act. If the Notes are registered in different names, separate Letters
of Consent must be executed covering each form of registration. If
this Letter of Consent is executed by a person other than the Holder, then such
person must have been authorized by proxy or in some other manner acceptable to
Callon to execute and deliver this Letter of Consent on behalf of the
Holder.
Signature(s)
of Holder(s)
|
Signature(s):
|
|
Name(s):
|
(Please
Print)
|
Date:
|
|
Capacity
(full title):
|
|
Address
(Include Zip Code):
|
|
Area
Code and Telephone No.:
|
|
Wire
Transfer Instructions:*
|
|
Tax
Identification or Social Security No.:
|
GUARANTEE
OF SIGNATURE(S)
(If
required, see instructions 5 and 6 below)
|
Authorized
Signature:
|
|
Name
and Title:
|
(Please
Print)
|
Dated:
|
|
Name
of Firm:
|
________
* To be
provided if payment is to be made by wire transfer
PROXY
WITH RESPECT TO THE CONSENT
The
undersigned hereby irrevocably
appoints ,
as attorney and proxy of the undersigned, with full power of substitution, to
execute and deliver this Letter of Consent on which this Proxy is set forth with
respect to the Notes in accordance with the terms of the Consent Solicitation
described in the Consent Solicitation Statement, with all the power the
undersigned would possess if consenting personally. THIS PROXY IS IRREVOCABLE
AND IS COUPLED WITH AN INTEREST AND SHALL EXPIRE ON THE CONSENT
DATE.
The
aggregate principal amount and serial numbers of Notes as to which this Proxy is
given are set forth below.
|
Aggregate Principal Amount of
Note(s)
|
Serial Number(s)
|
|||
IMPORTANT—READ
CAREFULLY
This
proxy must be signed by the Holder exactly as its name appears on the
Notes. If the Notes are held of record by two more joint Holders, all
such Holders must sign this proxy. If a signatory is a trustee,
executor, administrator, guardian, attorney-in-fact, officer or other person
acting in a fiduciary or representative capacity, please set forth the
signatory’s full name below.
PLEASE
SIGN BELOW
(See
Instructions 1 and 5 below)
|
Signature:
|
|
Signature
|
|
Dated:
|
,
2008
|
|
Name(s):
|
(Please
Print)
|
Capacity
(full title):
|
|
Address
(Including Zip Code):
|
|
Area
Code and Telephone Number:
|
SIGNATURE
GUARANTEE
(If
Required, see Instructions 5 and 6 below)
|
Signature(s)
Guaranteed by an Eligible Institution:
|
|
|
(Authorized
Signature)
|
|
(Name
and Title)
|
|
Dated:
|
|||
|
(Name
of Firm)
|
|||
INSTRUCTIONS
FOR CONSENTING HOLDERS
(FORMING
PART OF THE TERMS AND CONDITIONS OF THE CONSENT SOLICITATION)
1. Delivery
of this Letter of Consent. Subject to the terms and conditions set forth
herein and in the Consent Solicitation Statement, a properly completed and duly
executed copy of this Letter of Consent and other documents required by this
Letter of Consent must be received by the Tabulation Agent at its address or
facsimile number set forth on the cover hereof on or prior to the Consent Date.
The method
of delivery of this Letter of Consent and all other required documents to the
Tabulation Agent is at the risk of the Holder or Duly Designated Proxy, and the
delivery will be deemed made only when actually received by the Tabulation
Agent. In all cases, sufficient time should be allowed to assure timely
delivery. No Letter of Consent should be sent to any person other than the
Tabulation Agent.
Any
beneficial owner of Notes who is not a Holder of such Notes must arrange with
the person who is the Holder (e.g., the beneficial owner’s
broker, dealer, commercial bank, trust company or other nominee institution) or
such Holder’s assignee or nominee to (i) execute and deliver this Letter of
Consent on behalf of such beneficial owner or (ii) deliver a proxy so that such
beneficial owner can execute and deliver a Letter of Consent on its own
behalf.
2. Consent
Date. The Consent Solicitation expires at 5:00 p.m., New York City time,
on April ●, 2008, unless Callon, in its sole discretion, extends the period
during which the Consent Solicitation is open, in which case the term “Consent
Date” shall mean the latest date and time as so extended. In order to extend the
Consent Date, Callon will notify the Tabulation Agent in writing or orally of
any extension and will make a public announcement thereof by press release,
prior to 9:00 a.m., New York City time, on the next business day after the
previously scheduled Consent Date. Callon may extend the Consent Solicitation on
a daily basis or for such specified period of time as it determines in its sole
discretion. Failure by any Holder or beneficial owner of the Notes to be so
notified will not affect the extension of the Consent
Solicitation.
3. Questions
Regarding Validity, Form, Legality, etc. All questions as to the
validity, form, eligibility (including time of receipt) and acceptance of
consents will be resolved by Callon, whose good faith determinations will be
final and binding. Callon reserves the absolute right to reject any or all
consents that are not in proper form or the acceptance of which could, in the
opinion of Xxxxxx’x counsel, be unlawful. Callon also reserves the right to
waive any irregularities in connection with deliveries, or Callon may require
that such irregularities be cured within such time as Callon determines. None of
Callon, the Tabulation Agent, the Notes Trustee or any other person shall have
any duty to give notification of any such irregularities or waiver, nor shall
any of them incur any liability for failure to give such notification.
Deliveries of Letters of Consent will not be deemed to have been made until such
irregularities have been cured or waived. Xxxxxx’x good faith interpretation of
the terms and conditions of the Consent Solicitation (including this Letter of
Consent and the accompanying Consent Solicitation Statement and the instructions
hereto and thereto) will be binding on all parties.
4. Holders
Entitled to Consent. Only a Holder (or its Duly Designated Proxy,
representative or attorney-in-fact) or another person who has complied with the
procedures set forth below may execute and deliver a Letter of Consent. Any
beneficial owner or registered holder of the Notes who is not the Holder thereof
(e.g., the beneficial
owner’s broker, dealer, commercial bank, trust company or other nominee
institution) must arrange with such Holder(s) or such Holder’s assignee or
nominee to (i) execute and deliver this Letter of Consent to the Tabulation
Agent on behalf of such beneficial owner or (ii) deliver a proxy so that such
beneficial owner can execute and deliver a Letter of Consent on its own behalf.
For purposes of the Consent
Solicitation, the term “Holder” shall be deemed to include Participants through
which a beneficial owner’s Notes may be held of record as of the Record Date in
DTC. A consent by a Holder or Duly Designated Proxy is a continuing
consent notwithstanding that ownership of a Note has been transferred subsequent
to the Record Date.
5. Signatures
on this Letter of Consent. If this Letter of Consent is signed by the
Holder(s) of the Notes with respect to which this Letter of Consent is given,
the signature(s) of such Holder(s) must correspond with the name(s) as contained
on the books of the register maintained by the Notes Trustee or as set forth in
DTC’s position listing without alteration, enlargement or any change
whatsoever. If any of the Notes with respect to which this Letter of
Consent is given were held of record on the Record Date by two or more joint
Holders, all such Holders must sign this Letter of Consent. If any Notes with
respect to which this Letter of Consent is given have different Holders, it will
be necessary to complete, sign and submit as many separate copies of this Letter
of Consent and any necessary accompanying documents as there are different
Holders.
If this
Letter of Consent is signed by trustees, executors, administrators, guardians,
Duly Designated Proxies, attorneys-in-fact, officers of corporations or others
acting in a fiduciary or representative capacity, such persons must indicate
such fact when signing and must, unless waived by Callon, submit evidence
satisfactory to Callon of their authority to so act along with this Letter of
Consent.
6. Signature
Guarantees. All signatures on this Letter of Consent must be guaranteed
by a firm or other entity identified in Rule l7Ad-15 under the Exchange Act
including (as such terms are defined therein): (a) a bank; (b) a broker, dealer,
municipal securities dealer, municipal securities broker, government securities
dealer or government securities broker; (c) a credit union; (d) a national
securities exchange, registered securities association or clearing agency; or
(e) a savings institution that is a participant in a Securities Transfer
Association recognized program (each an “Eligible
Institution”). However, signatures need not be guaranteed if this Letter
of Consent is given by or for the account of an Eligible Institution. If the
Holder of the Notes is a person other than the signer of this Letter of Consent,
see Instruction 5.
7. Backup
Withholding. In general, information reporting requirements
will apply to the payment of the Consent Fee. Federal income tax law also
imposes “backup withholding” unless a consenting U.S. holder has provided such
Holder’s correct taxpayer identification number (“TIN”)
which, in the case of a Holder who is an individual, is his or her social
security number, and certain other information, or otherwise establishes a basis
for exemption from backup withholding. Completion of the Substitute
Form W-9 provided in this Letter of Consent should be used for this
purpose. Exempt Holders (including, among others, all corporations
and certain foreign individuals) are not subject to these backup withholding and
information reporting requirements, provided that they properly demonstrate
their eligibility for exemption.
If the
consenting U.S. holder has not provided the correct TIN and certain other
information or an adequate basis for exemption, the Holder may be subject to a
penalty imposed by the IRS and the Consent Fee paid to the Holder will be
subject to a backup withholding tax of 28%. Backup withholding is not
an additional tax. If any such withholding results in an overpayment of taxes, a
refund or credit may be obtained, provided that the required information is
provided to the IRS.
The
“Applied For” box in Part I of the Substitute Form W-9 may be checked if the
consenting U.S. holder (or other payee) has not been issued a TIN and has
applied for a TIN or intends to apply for a TIN in the near
future. If the “Applied For” box in Part I is so checked and the
Tabulation Agent is not provided with a TIN by the time of payment, the
Tabulation Agent will withhold 28% on all such payments received pursuant to the
Consent Solicitation until a TIN is provided to the Tabulation
Agent. A consenting U.S. holder who checks the “Applied For” box in
Part I in lieu of furnishing his or her TIN should furnish the Tabulation Agent
with such Holder’s TIN as soon as it is received.
In order
for a non-U.S. holder to qualify as an exempt recipient, that non-U.S. holder
should check the “Exempt from backup withholding” box on the Substitute Form W-9
provided in this Letter of Consent and submit the appropriate Internal Revenue
Service Form W-8 (which are available from the Tabulation Agent) signed under
penalties of perjury, attesting to that non-U.S. holder’s foreign
status. Callon intends to withhold at a rate of 30% on any Consent
Fee paid to a non-U.S. Holder unless such Holder provides either (i) an IRS Form
W-8BEN certifying that such non-U.S. holder is eligible for a reduction in the
rate of withholding with respect to “Other Income” under the provisions of an
applicable federal income tax treaty or (ii) IRS Form W-8ECI certifying that
income from such payment is effectively connected with such Holder’s United
States trade or business. If such withholding results in an overpayment of
federal income taxes, a refund or credit may be obtained from the
IRS.
|
PAYER’S
NAME: Global Bondholder Services Corporation (as Tabulation
Agent)
|
||
|
SUBSTITUTE
|
||
|
Form
W-9
|
PAYEE INFORMATION
(please print or type)
|
|
|
Department
of the Treasury
|
||
|
Internal
Revenue Service
|
Individual
or
|
|
|
business
name:
|
||
|
Request
for Taxpayer Identification Number and Certification
|
Check
appropriate box:
|
|
|
o Individual/Sole
Proprietor
|
o
Corporation
|
|
|
o
Partnership
|
o
Other
|
|
|
o Exempt from
backup withholding
|
||
|
Address
(number, street, and apt. or suite no.):
|
||
|
City,
State and ZIP code:
|
||
|
Part
I: Taxpayer Identification Number (“TIN”)
|
|||
|
Enter
your TIN to the right. For individuals, your TIN is your
social
|
Social
security number:
|
||
|
security
number. Sole proprietors may enter either their social security
number or their employer identification number.
|
|||
|
For
other entities, your TIN is your employer identification
number
|
|||
|
or
|
|||
|
Employer
identification number:
|
|||
|
o Applied
For
|
|||
Part
II: Certification
Certification
Instructions: You must cross out item 2 below if you have been
notified by the Internal Revenue Service (the “IRS”)
that you are currently subject to backup withholding because of underreporting
interest or dividends on your tax return. However, if after being
notified by the IRS that you were subject to backup withholding you received
another notification from the IRS that you are no longer subject to backup
withholding, do not cross out item 2.
Under
penalties of perjury, I certify that:
|
1.
|
The
number shown on this form is my correct TIN (or a TIN has not been issued
to me and either (a) I have mailed or delivered an application to receive
a TIN to the appropriate IRS Center or Social Security Administration
Office, or (b) I intend to mail or deliver an application in the near
future). I understand that until I provide my TIN to the payer,
a portion of all reportable payments made to me by the payer may be
withheld and remitted to the IRS as backup
withholding;
|
|
2.
|
I
am not subject to backup withholding because: (a) I am exempt
from backup withholding, (b) I have not been notified by the IRS that I am
subject to backup withholding as a result of a failure to report all
interest or dividends or (c) the IRS has notified me that I am no longer
subject to backup withholding; and
|
|
3.
|
I
am a U.S. person (including a U.S. resident
alien).
|
The
Internal Revenue Service does not require your consent to any provision of this
document other than the certifications required to avoid backup
withholding.
|
,2008
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|||
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Signature
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Date
|
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NOTE:
|
Failure
to complete and return this form may result in backup withholding of 28%
of any payments made to you pursuant to the Consent Solicitation and a $50
penalty imposed by the IRS. Please review the enclosed
Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9 for additional
details.
|
8. Amendment. Callon
reserves the absolute right, subject to applicable law, to amend or modify the
terms of the Consent Solicitation.
9. Revocation
of Consent. All properly completed and executed Letters of
Consent received prior to the Consent Date will be counted, notwithstanding any
transfer of any Notes to which such Letter of Consent relates, unless Callon
receives from a Holder (or a subsequent holder that has received a proxy from
the relevant Holder) a written notice of revocation bearing a date later than
the date of the prior Letter of Consent at any time prior to the Consent
Date. Any notice of revocation received after the Consent Date will
not be given effect. A transfer of Notes after the Record Date must
be accompanied by a duly executed proxy from the relevant Holder if the
subsequent transferee is to have revocation rights with respect to the consent
to the Supplemental Indenture. To be effective, a notice of
revocation must be in writing, must contain the name of the Holder and the
aggregate principal amount of the Notes to which it relates and must be (i)
signed in the same manner as the original Letter of Consent or (ii) accompanied
by a duly executed proxy or other authorization (in form satisfactory to
Callon). All revocations of consents must be sent to the Tabulation
Agent at its address set forth in the Letter of Consent.
A
revocation of a consent may be rescinded only by the delivery of a written
notice of revocation or the execution and delivery of a new Letter of
Consent.
10. Questions
and Requests for Assistance and Additional Copies. Questions
regarding the Consent Solicitation, requests for assistance in completing and
delivery of this Letter of Consent or for additional copies of the Consent
Solicitation Statement, this Letter of Consent or other related documents should
be directed to the Tabulation Agent as follows:
Global
Bondholder Services Corporation
65
Broadway – Xxxxx 000
Xxx Xxxx,
Xxx Xxxx 00000
Attn: Corporate
Actions
Banks and
Brokers call: (000) 000-0000
Toll free
(000) 000-0000
By
Facsimile:
(For
Eligible Institutions Only):
(000)
000-0000
Confirmation:
(000)
000-0000
By Mail, Overnight Courier or Hand
Delivery:
65
Broadway – Xxxxx 000
Xxx Xxxx,
Xxx Xxxx 00000
Exhibit B to Consent
Agreement dated March 28, 2008
FORM
OF FIRST SUPPLEMENTAL INDENTURE
FIRST
SUPPLEMENTAL INDENTURE dated as of April _, 2008 (the “Supplemental Indenture”),
between XXXXXX PETROLEUM COMPANY, a Delaware corporation (the “Company”), having its
principal office at 000 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxxxx 00000, the
undersigned Subsidiary Guarantors (herein so called), and AMERICAN STOCK
TRANSFER & TRUST COMPANY, as trustee (the “Trustee”).
WHEREAS,
there has heretofore been executed and delivered to the Trustee an Indenture
dated as of March 15, 2004 between the Company, the Subsidiary Guarantors and
the Trustee (as the same may have been amended or supplemented from time to time
by one or more indentures supplemental thereto entered into pursuant to the
applicable provisions thereof, the “Indenture”), providing for
the issuance of the Company’s 9.75% Senior Notes due 2010, Series B (the “Securities”);
WHEREAS,
there are now outstanding under the Indenture Securities in the aggregate
principal amount of $200,000,000;
WHEREAS,
Section 9.2 of the Indenture provides that the Company and the Trustee may amend
the Indenture with the written consent of the Holders (as defined in the
Indenture) of at least 75% in principal amount of the Securities then
outstanding, or with respect to certain amendments, with the consent of the
Holder of each outstanding Security;
WHEREAS,
the Company desires to amend certain provisions of the Indenture, as set forth
in Article II hereof;
WHEREAS,
the Company has received consents from Holders of at least 75% of the
outstanding Securities (“Consenting Holders”) to the
amendments to the Indenture set forth herein;
WHEREAS,
all matters necessary to make this Supplemental Indenture a valid agreement, in
accordance with its terms, have been done.
NOW
THEREFORE, this Supplemental Indenture witnesseth that, for and in consideration
of the premises, the Company and the Trustee agree as follows for the equal and
ratable benefit of the Holders of the Securities:
ARTICLE
I
EFFECTIVENESS
|
SECTION
1.1.
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Effectiveness. This
Supplemental Indenture shall become effective as of the date
hereof.
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ARTICLE
II
AMENDMENTS
TO INDENTURE
|
SECTION
2.1.
|
Amendments to
Indenture.
|
(a) Clause
(y) of the proviso at the end of the definition of “Debt” in Section 1.1 of the
Indenture is hereby amended in its entirety to read as follows:
“(y) any
debt arising in connection with a Permitted Medusa Transaction or a Permitted
Entrada Transaction, or”
(b) Clause
(b) of the definition of “Interest Expense” in Section 1.1 of the Indenture is
hereby amended in its entirety to read as follows:
“(b) imputed
interest expense attributable to any production payment, project financing by
vendors and other non-recourse debt, but not including any amounts arising out
of a Permitted Medusa Transaction or a Permitted Entrada
Transaction”;
(c) Clause
(n) of the definition of “Permitted Investment” in Section 1.1 of the Indenture
is hereby amended in its entirety to read as follows:
“(n) any
Investment arising from or related to a Permitted Medusa Transaction, or a
Permitted Entrada Transaction; and”
(d) Clause
(a) of the definition of “Unrestricted Subsidiary” in Section 1.1 of the
Indenture is hereby amended in its entirety to read as follows:
“(a) Callon
Entrada Company and any other Subsidiary of the Company that at the time of
determination shall be designated an Unrestricted Subsidiary by the Board of
Directors of the Company in the manner provided below; and”
(e) A
new definition of “Entrada
Assets” is hereby added to Section 1.1 of the Indenture, such new
definition to be inserted in appropriate alphabetical order and to read in its
entirety as follows:
“‘Entrada
Assets’ means all Oil and Gas Properties owned by the Company or any of
its Subsidiaries and located on, under or related to Garden Banks Blocks 738,
782, 785, 826, and 827 in the federal offshore waters of the Gulf of Mexico,
subject to certain depth limits, and any and all related equipment, accounts
receivable, general intangibles and other assets related thereto and any
proceeds therefrom.”
(f) A
new definition of “Permitted Entrada
Transaction” is hereby added to Section 1.1 of the Indenture, such new
definition to be inserted in appropriate alphabetical order and to read in its
entirety as follows:
“ ‘Permitted Entrada
Transaction’ means (i) the sale, conveyance and assignment by
the Company or any of its Subsidiaries of a portion of the Entrada Assets to a
third party in a transaction which otherwise complies with the requirements of
Section 3.14(a), (ii) the contribution by the Company or any of its Restricted
Subsidiaries of all or any portion of its ownership interests in the Entrada
Assets, to a newly formed Unrestricted Subsidiary, Callon Entrada
Company, which contribution may occur either prior to, contemporaneously with or
after the sale, conveyance and assignment contemplated in the immediately
preceding clause (i), which Unrestricted Subsidiary and/or its assets may be
managed under one or more management services agreements, contract operating
agreements or similar agreements with the Company or any of its Restricted
Subsidiaries, (iii) the incurrence by Callon Entrada Company of Debt, the
proceeds of which are to be used to fund the costs and expenses incurred to
develop and/or produce its interests in the Entrada Assets, such Debt to be
non-recourse to the Company and its Restricted Subsidiaries except to the extent
of the indemnities and/or performance guaranties described in clause (vi)
below, (iv) the granting of Liens on (w) the Entrada Assets, (x) all
other assets of Callon Entrada Company, (y) the equity interests of Callon
Entrada Company, and/or (z) any deposit accounts established and maintained to
hold any loan proceeds of such Debt pending disbursement and/or any revenues and
proceeds of production or other amounts attributable to the Entrada Assets, in
each case to secure such Debt, and (v) the contribution or advance by the
Company or any of its Restricted Subsidiaries of additional cash or other assets
to Callon Entrada Company from time to time not to exceed, in the aggregate at
any time outstanding, the sum of (A) $ 10,000,000, plus (B) other contributions
or advances arising from or deemed to exist as a result of the payment and
performance by the Company or any of its Restricted Subsidiaries of any of their
respective obligations under clause (vi) of this definition, and (vi) the
indemnification of any Person against loss from the failure of Callon Entrada
Company to comply with, or the guarantee by the Company or any Restricted
Subsidiary of performance by Callon Entrada Company of, its obligations arising
under or related to the documents and agreements evidencing or governing its
Debt or relating to the development and operations of its assets (other than the
obligation of Callon Entrada Company to repay the principal and interest of the
Debt described in clause (iii) of this definition) by the Company or any of its
Restricted Subsidiaries.”
(g) The
proviso at the end of Section 3.17 of the Indenture is hereby amended to read in
its entirety as follows:
“;
provided, however, that notwithstanding the provisions of this Section 3.17, the
Company may engage in any Permitted Medusa Transaction or Permitted Entrada
Transaction.”
(h) Section
3.23 of the Indenture is hereby amended in its entirety to read as
follows:
“Section
3.23 Permitted Medusa
Transactions; Permitted Entrada Transaction. Notwithstanding
anything in this Indenture to the contrary, so long as no Default or Event of
Default has occurred and is continuing at the time the Company or any of its
Subsidiaries enters into any Permitted Medusa Transaction or Permitted Entrada
Transaction, the entering into and carrying out of such Permitted Medusa
Transaction or Permitted Entrada Transaction, as applicable, shall be allowed
hereunder and shall not in itself constitute a breach of, non-compliance with,
or Default or Event of Default under this Indenture.”
ARTICLE
III
MISCELLANEOUS
SECTION
3.1 Instruments To Be Read
Together. This Supplemental Indenture is an indenture
supplemental to and in implementation of the Indenture, and said Indenture and
this Supplemental Indenture shall henceforth be read together.
SECTION
3.2 Confirmation. The
Indenture as amended and supplemented by this Supplemental Indenture is in all
respects confirmed and preserved.
SECTION
3.3 Terms
Defined. Capitalized terms used in this Supplemental Indenture
and not otherwise defined herein shall have the respective meanings set forth in
the Indenture.
SECTION
3.4 Headings. The
headings of the Articles and Sections of this Supplemental
Indenture have been inserted for convenience of reference only, and are not to
be considered a part hereof and shall in no way modify or restrict any of the
terms and provisions hereof.
SECTION
3.5 Governing
Laws. This Supplemental Indenture shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION
3.6 Multiple
Originals. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is
enough to prove this Supplemental Indenture.
SECTION
3.7 Compliance with the Trust Indenture
Act. This Supplemental Indenture shall be interpreted to
comply in every respect with the Trust Indenture Act of 1939, as amended (the
“TIA”). If
any provision of this Supplemental Indenture limits, qualifies or conflicts with
the duties imposed by the TIA, the imposed duties shall control.
SECTION
3.8 Responsibility of
Trustee. The recitals contained herein shall be taken as the
statements of the Company, and the Trustee assumes no responsibility for their
correctness. The Trustee makes no representations as to the validity or
sufficiency of this Supplemental Indenture, except that the Trustee is duly
authorized to execute and deliver this Supplemental Indenture.
[signature
page follows]
IN
WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, all as of the date first written
above.
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XXXXXX
PETROLEUM COMPANY
|
||||
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By:
|
||||
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Name:
|
||||
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Title:
|
||||
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Subsidiary
Guarantors:
|
||||
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XXXXXX
PETROLEUM OPERATING COMPANY
|
||||
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By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
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XXXXXX
OFFSHORE PRODUCTION, INC.
|
||||
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By:
|
||||
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Name:
|
||||
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Title:
|
||||
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MISSISSIPPI
MARKETING, INC.
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
|
AMERICAN
STOCK TRANSFER & TRUST COMPANY, as Trustee
|
||||
|
By:
|
||||
|
Name:
|
||||
|
Title:
|
||||
