1
EXHIBIT 4(A)
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SEVEN SEAS PETROLEUM INC.
as Issuer
$110,000,000
12 1/2% Senior Notes due 2005
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INDENTURE
Dated as of May 7, 1998
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THE BANK OF NOVA SCOTIA TRUST COMPANY OF NEW YORK
as Trustee
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2
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
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310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.5
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.2
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6, 7.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6, 10.2
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.6
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.25, 10.2
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.25
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.3
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.24, 4.25
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.4
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.5, 10.2
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.1
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.9
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.5
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.4
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.7
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.12
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.8
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.9
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.4
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N/A
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.1
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N/A means not applicable.
*This Cross-Reference Table is not part of the Indenture.
3
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.1 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.2 OTHER DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 1.4 RULES OF CONSTRUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE II
THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.1 FORM AND DATING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 2.2 EXECUTION AND AUTHENTICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.3 REGISTRAR AND PAYING AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.5 HOLDER LISTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.6 TRANSFER AND EXCHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 2.7 REPLACEMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.8 OUTSTANDING NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.9 TREASURY NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 2.10 TEMPORARY NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.11 CANCELLATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.12 DEFAULTED INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.13 RECORD DATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 2.14 COMPUTATION OF INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 2.15 CUSIP NUMBER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE III
REDEMPTION AND REPURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.1 NOTICES TO TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.2 SELECTION OF NOTES TO BE REDEEMED . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.3 NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 3.6 NOTES REDEEMED IN PART . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.7 OPTIONAL REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 3.8 OPTIONAL TAX REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 3.9 MANDATORY REDEMPTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
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ARTICLE IV
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.1 PAYMENT OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 4.3 CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.4 MAINTENANCE OF PROPERTIES AND INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 4.5 COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.6 REPORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.7 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.8 STAY, EXTENSION AND USURY LAWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 4.9 CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 4.10 ASSET SALES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 4.11 RESTRICTED PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 4.12 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK . . . . . . . . . . . . . . . . . 53
SECTION 4.13 SALE AND LEASEBACK TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 4.14 LIENS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 4.15 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED SUBSIDIARIES . . . . . . . . . . 57
SECTION 4.16 TRANSACTIONS WITH AFFILIATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.17 COVENANT TO ENTER INTO SUBSIDIARY GUARANTEES . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.18 CONVERSION OF CONVERTIBLE DEBT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 4.19 LINE OF BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.20 ADDITIONAL AMOUNTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 4.21 PAYMENT CERTIFICATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 4.22 COMPLIANCE CERTIFICATE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 4.23 ELIGIBLE SECURITIES ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
SECTION 4.24 PLEDGE ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 4.25 COMPLIANCE WITH TIA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
SECTION 4.26 MAINTENANCE OF CURRENT ASSETS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE V
SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
SECTION 5.1 MERGER, CONSOLIDATION OR SALE OF ASSETS OF SEVEN SEAS . . . . . . . . . . . . . . . . . . . . 66
SECTION 5.2 SUCCESSOR CORPORATION OF SEVEN SEAS SUBSTITUTED . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE VI
DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.1 EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 6.2 ACCELERATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.3 OTHER REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.4 WAIVER OF EXISTING DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
SECTION 6.5 CONTROL BY MAJORITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
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SECTION 6.6 LIMITATION ON SUITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.7 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.8 COLLECTION SUIT BY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 6.10 PRIORITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 6.11 UNDERTAKING FOR COSTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
ARTICLE VII
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.1 DUTIES OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 7.2 RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.4 TRUSTEE'S DISCLAIMER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 7.5 NOTICE OF DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.7 COMPENSATION AND INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 7.8 REPLACEMENT OF TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST SEVEN SEAS . . . . . . . . . . . . . . . . . . . . . 78
ARTICLE VIII
LEGAL DEFEASANCE AND COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . 78
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
SECTION 8.3 COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.4 CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE . . . . . . . . . . . . . . . . . . . . 79
SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST; OTHER
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 8.6 REPAYMENT TO SEVEN SEAS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
SECTION 8.7 REINSTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
ARTICLE IX
AMENDMENT, SUPPLEMENT AND WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
SECTION 9.2 WITH CONSENT OF HOLDERS OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
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ARTICLE X
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.1 TRUST INDENTURE ACT CONTROLS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
SECTION 10.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 10.3 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.4 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 10.5 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.6 LEGAL HOLIDAYS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND STOCKHOLDERS . . . . . . . . . . 88
SECTION 10.8 INDEMNIFICATION FOR JUDGMENT CURRENCY FLUCTUATIONS . . . . . . . . . . . . . . . . . . . . . 88
SECTION 10.9 CONSENT TO JURISDICTION AND SERVICE OF PROCESS . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 10.11 SUCCESSORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 10.12 SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 10.13 COUNTERPART ORIGINALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
SECTION 10.14 TABLE OF CONTENTS, HEADINGS, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
EXHIBITS
Exhibit A . . . . . Form of Note
Exhibit B-1 . . . . Form of Certificate for Exchange or Registration of Transfer from 144A Global Note to
Regulation S Global Note
Exhibit B-2 . . . . Form of Certificate for Exchange or Registration of Transfer from Regulation S Global Note to
144A Global Note
Exhibit B-3 . . . . Form of Certificate for Exchange or Registration of Transfer of Definitive Notes
Exhibit B-4 . . . . Form of Certificate for Exchange or Registration of Transfer from 144A Global Note or
Regulation S Global Note to Definitive Note
Exhibit C . . . . . Form of Supplemental Indenture
Exhibit D . . . . . Form of Collateral Pledge and Security Agreement
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INDENTURE, dated as of May 7, 1998, between Seven Seas Petroleum Inc.,
a corporation organized under the laws of Yukon Territory, Canada ("Seven Seas"
or the "Company"), and The Bank of Nova Scotia Trust Company of New York, as
trustee (the "Trustee").
Each party agrees as follows for the benefit of each other and for the
equal and ratable benefit of the Holders of the 12 1/2% Series A Senior Notes
due 2005 (the "Series A Notes") and the 12 1/2% Series B Senior Notes due 2005
(the "Series B Notes" and, together with the Series A Notes, the "Notes"):
ARTICLE I
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.1 DEFINITIONS
"144A Global Note" means a permanent global senior note that contains
the paragraph referred to in footnote 1 and the additional schedule referred to
in footnote 4 to the form of the Note attached hereto as Exhibit A, and that is
deposited with the Note Custodian and registered in the name of the Depository
or its nominee, representing a series of Notes sold in reliance on Rule 144A or
in reliance on another exemption from the registration requirements of the
Securities Act.
"Acquired Indebtedness" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary or is designated a Restricted
Subsidiary of such specified Person, including, without limitation,
Indebtedness incurred in connection with, or in contemplation of, such other
Person merging with or into or becoming a Subsidiary or Restricted Subsidiary
of such specified Person, and (ii) Indebtedness secured by a Lien encumbering
any asset acquired by such specified Person.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, (i) the sum of (a) discounted
future net revenues from proved oil and gas reserves of Seven Seas and its
Restricted Subsidiaries calculated in accordance with Commission guidelines
before any state, federal or foreign income taxes, as estimated by Seven Seas
and confirmed by a nationally recognized firm of independent petroleum
engineers in a reserve report prepared as of the end of Seven Seas' most
recently completed fiscal year for which audited financial statements are
available, as increased by, as of the date of determination, the estimated
discounted future net revenues from (1) estimated proved oil and gas reserves
acquired since such year-end, which reserves were not reflected in such year-
end reserve report, and (2) estimated proved oil and gas reserves attributable
to upward revisions of estimates of proved oil and gas reserves since such
year-end due to exploration, development or exploitation activities, in each
case calculated in accordance with Commission guidelines (utilizing the prices
utilized in such year-end reserve report), and decreased by, as of the date of
determination, the estimated discounted future net revenues from (3) estimated
proved oil and gas reserves produced or disposed of since such year-end and (4)
estimated oil and gas reserves attributable to downward revisions of estimates
of proved oil and
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gas reserves since such year-end due to changes in geological conditions or
other factors which would, in accordance with standard industry practice, cause
such revisions, in each case calculated in accordance with Commission
guidelines (utilizing the prices utilized in such year-end reserve report);
provided that, in the case of each of the determinations made pursuant to
clauses (1) through (4), such increases and decreases shall be as estimated by
Seven Seas' petroleum engineers, unless there is a Material Change as a result
of such acquisitions, dispositions or revisions, in which event the discounted
future net revenues utilized for purposes of this clause (i)(a) shall be
confirmed in writing by a nationally recognized firm of independent petroleum
engineers, (b) the capitalized costs that are attributable to oil and gas
properties of Seven Seas and its Restricted Subsidiaries to which no proved oil
and gas reserves are attributable, based on Seven Seas' books and records as of
a date no earlier than the date of Seven Seas' latest annual or quarterly
financial statements, (c) the Net Working Capital on a date no earlier than the
date of Seven Seas' latest consolidated annual or quarterly financial
statements, and (d) with respect to each other tangible asset of Seven Seas or
its Restricted Subsidiaries (excluding any amounts with respect to Colombian
Government Receivables), the greater of (A) the net book value of such other
tangible asset on a date no earlier than the date of Seven Seas' latest
consolidated annual or quarterly financial statements, and (B) the appraised
value, as estimated by a qualified independent appraiser, of such other
tangible asset, as of a date no earlier than the date that is three years prior
to the date of determination (or such later date on which Seven Seas shall have
a reasonable basis to believe that there has occurred a material decrease in
value since the determination of such appraised value), minus (ii) the sum of
(a) minority interests (other than a minority interest in a Subsidiary that is
a business trust or similar entity formed for the primary purpose of issuing
preferred securities the proceeds of which are loaned to Seven Seas or a
Restricted Subsidiary), (b) any net gas balancing liabilities of Seven Seas and
its Restricted Subsidiaries reflected in Seven Seas' latest audited financial
statements, (c) to the extent included in (i)(a) above, the discounted future
net revenues, calculated in accordance with Commission guidelines (utilizing
the prices utilized in Seven Seas' year-end reserve report), attributable to
reserves which are required to be delivered to third parties to fully satisfy
the obligations of Seven Seas and its Restricted Subsidiaries with respect to
Volumetric Production Payments on the schedules specified with respect thereto
and (d) to the extent included in (i)(a) above, the discounted future net
revenues, calculated in accordance with Commission guidelines, attributable to
reserves subject to Dollar-Denominated Production Payments which, based on the
estimates of production and price assumptions included in determining the
discounted future net revenues specified in (i)(a) above, would be necessary to
fully satisfy the payment obligations of Seven Seas and its Restricted
Subsidiaries with respect to Dollar-Denominated Production Payments on the
schedules specified with respect thereto. If Seven Seas changes its method of
accounting from the full cost method to the successful efforts method or a
similar method of accounting, "Adjusted Consolidated Net Tangible Assets" will
continue to be calculated as if Seven Seas were still using the full cost
method of accounting.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean
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the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Applicable Premium" means, with respect to a Note at any redemption
date, the greater of (i) 1.0% of the principal amount of such Note and (ii) the
excess of (a) the present value at such time of (1) the redemption price of
such Note at May 15, 2002 (as set forth in Section 3.7) plus (2) all required
interest payments due on such Note through May 15, 2005, computed in the case
of (1) and (2) using a discount rate equal to the Treasury Rate plus 50 basis
points, over (b) the principal amount of such Note.
"Applicable Procedures" means, with respect to any transfer or
exchange of beneficial interests in a Global Note, the rules and procedures of
the Depository that apply to such transfer and exchange.
"Asset Sale" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback transaction, including any disposition by means of a merger,
consolidation or similar transaction and including the issuance, sale or other
transfer of any of the Capital Stock of any Restricted Subsidiary of such
Person) other than to Seven Seas or to any of its Wholly Owned Subsidiaries
(including the receipt of proceeds of insurance paid on account of the loss of
or damage to any asset and awards of compensation for any asset taken by
condemnation, eminent domain, nationalization, expropriation or similar
proceeding or action, but excluding the receipt of proceeds of business
interruption insurance or environmental damage insurance or similar types of
policies); and (ii) the issuance of Equity Interests in any Restricted
Subsidiaries or the sale of any Equity Interests in any Restricted Subsidiaries
(other than directors' qualifying shares or shares required by applicable law
to be held by a Person other than Seven Seas or a Restricted Subsidiary), in
each case, in one or a series of related transactions. For purposes of this
definition, the term "Asset Sale" shall not include: (a) the sale, lease,
conveyance, disposition or other transfer of all or substantially all of the
assets of Seven Seas, as permitted under Section 5.1, (b) the sale or lease of
equipment, inventory, accounts receivable or other assets in the ordinary
course of business, (c) a transfer of assets by Seven Seas to a Restricted
Subsidiary or by a Restricted Subsidiary to Seven Seas or to another Restricted
Subsidiary, (d) an issuance of Equity Interests by a Restricted Subsidiary to
Seven Seas or to another Restricted Subsidiary, (e) the making of a Restricted
Payment or a Permitted Investment that is permitted by Section 4.11, (f) any
Production Payment and Reserve Sale created, incurred, issued, assumed or
guaranteed in connection with the financing of, and within 60 days after the
acquisition of, the Property that is subject thereto, (g) sales, leases,
conveyances or other dispositions of assets the aggregate gross proceeds of
which do not exceed $250,000 in any twelve-month period, (h) the relinquishment
of unexplored acreage in accordance with the Association Contracts, (i) the
abandonment, farm-out, lease or sublease of developed or undeveloped oil and
gas properties in the ordinary course of business, (j) the trade or
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exchange by Seven Seas or any Restricted Subsidiary of Seven Seas of any oil
and gas property owned or held by Seven Seas or such Subsidiary for any oil and
gas property owned or held by another Person in a single transaction or a
series of related transactions having a fair market value of less than $50.0
million, provided that (x) the fair market value of the properties traded or
exchanged by Seven Seas or such Subsidiary (including any cash or Cash
Equivalents, not to exceed 15% of such fair market value) is reasonably
equivalent to the fair market value of the oil and gas property to be received
by Seven Seas or such Subsidiary as determined in good faith by (1) any officer
of Seven Seas if such fair market value is less than $5.0 million and (2) the
Board of Directors of Seven Seas as certified by a certified resolution
delivered to the Trustee if such fair market value is equal to or in excess of
$5.0 million, and provided, further, that if such resolution indicates that
such fair market value is equal to or in excess of $20.0 million such
resolution shall be accompanied by a written appraisal by a nationally
recognized investment banking firm or appraisal firm, in each case specializing
or having a specialty in oil and gas properties, and (y) such trade or exchange
is approved by a majority of the Disinterested Directors of Seven Seas, or (k)
the sale or transfer of hydrocarbons or other mineral products for value in the
ordinary course of business.
"Association Contracts" means the Dindal Association Contract issued
by Ecopetrol in March 1993 and the Rio Seco Association Contract issued by
Ecopetrol in August 1995.
"Attributable Debt" in respect of a sale and leaseback transaction
means, as at the time of determination, the present value (discounted at the
interest rate implicit in such transaction, determined in accordance with GAAP)
of the total obligations of the lessee for net rental payments during the
remaining term of the lease included in such sale and leaseback transaction
(including any period for which such lease has been extended or may, at the
option of the lessor, be extended). As used in the preceding sentence, the
"net rental payment" under any lease for any such period shall mean the sum of
rental and other payments required to be paid with respect to such period by
the lessee thereunder, excluding any amounts required to be paid by such lessee
on account of maintenance and repairs, insurance, taxes, assessments, water
rates or similar charges. In the case of any lease which is terminable by the
lessee upon payment of a penalty, such net rental payment shall also include
the amount of such penalty, but no rent shall be considered as required to be
paid under such lease subsequent to the first date upon which it may be so
terminated.
"Board of Directors" means the Board of Directors of Seven Seas, or
any authorized committee of such Board of Directors.
"Borrowing Base" means, as of any date, the aggregate amount not to
exceed the sum of 100% of cash and Cash Equivalents that are not pledged to
secure Indebtedness plus 100% of Colombian Government Receivables plus 30% of
Adjusted Consolidated Net Tangible Assets.
"Business Day" means any day other than a Legal Holiday.
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"Capital Lease Obligation" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"Cash Equivalents" means (a) securities issued or directly and fully
guaranteed or insured by the United States of America or Canada or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States or Canada, as the case may be, is pledged in support thereof)
having maturities no more than twelve months from the date of acquisition, (b)
United States dollar denominated (or foreign currency fully hedged) time
deposits, certificates of deposit, Eurodollar time deposits or Eurodollar
certificates of deposit of (i) any United States or Canadian commercial bank of
recognized standing having capital and surplus in excess of $500 million or
(ii) any bank whose short-term commercial paper rating from Standard & Poor's
is at least A-1 or the equivalent thereof or from Xxxxx'x is at least P-1 or
the equivalent thereof (any such bank being an "Approved Lender"), in each case
with maturities of not more than twelve months from the date of acquisition,
(c) commercial paper and variable or fixed rate notes issued by any Approved
Lender (or by the parent company thereof) or commercial paper or any variable
rate notes issued by, or guaranteed by, any United States or Canadian
corporation rated A-1 (or the equivalent thereof) by Standard & Poor's or P-1
(or the equivalent thereof) by Moody's and maturing within twelve months of the
date of acquisition, (d) repurchase agreements with a bank or trust company or
recognized securities dealer having capital and surplus in excess of $500
million for direct obligations issued by or fully guaranteed by the United
States of America or Canada in which Seven Seas shall have a perfected first
priority security interest (subject to no other Liens) and having, on the date
of purchase thereof, a fair market value of at least 100% of the amount of
repurchase obligations, (e) deposits available for withdrawal on demand with
any commercial bank in Colombia not meeting the qualifications specified in
clause (b)(i) above, provided all such deposits do not exceed $2.0 million in
the aggregate at any one time, and (f) interests in money market mutual funds
which invest solely in assets or securities of the type described in
subparagraph (a), (b), (c) or (d) hereof.
"Cedel" means Cedel Bank, societe anonyme.
"Change of Control" means the occurrence of any of the following: (i)
any Person, other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rules 13d-3 and 13d-5 of the Exchange Act,
provided that such Person shall be deemed to have "beneficial ownership" of all
shares that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 50% of the total voting power of the Voting Stock of
Seven Seas; provided, however, that the Permitted Holders beneficially own (as
defined above), directly or indirectly, in the aggregate a lesser
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percentage of the total voting power of the Voting Stock of Seven Seas than
such other Person and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the
Board of Directors (for the purposes of this clause (i), such other Person
shall be deemed to beneficially own any Voting Stock of a specified corporation
held by a parent corporation, if such other Person is the beneficial owner (as
defined in this clause (i)), directly or indirectly, of more than 50% of the
voting power of the Voting Stock of such parent corporation and the Permitted
Holders beneficially own (as defined above), directly or indirectly, in the
aggregate a lesser percentage of the voting power of the Voting Stock of such
parent corporation and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of the
board of directors of such parent corporation); (ii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors (together with any new directors whose election by such
Board of Directors or whose nomination for election by the shareholders of
Seven Seas was approved by a vote of 66-2/3% of the directors of Seven Seas
then still in office who were either directors at the beginning of such period
or whose election or nomination for election was previously so approved) cease
for any reason to constitute a majority of the Board of Directors then in
office; or (iii) the merger or consolidation of Seven Seas with or into another
Person or the merger of another Person with or into Seven Seas, or the sale of
all or substantially all the assets of Seven Seas to another Person (other than
a Person that is controlled by the Permitted Holders), and, in the case of any
such merger or consolidation, the securities of Seven Seas that are outstanding
immediately prior to such transaction and which represent 100% of the aggregate
voting power of the Voting Stock of Seven Seas are changed into or exchanged
for cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving corporation.
"Colombian Government Receivables" means the aggregate accounts
receivable by Seven Seas or a Restricted Subsidiary from Ecopetrol or a
successor agency or ministry of the Colombian government with respect to the
Association Contracts, in the net amount recorded in accordance with GAAP on a
consolidated basis on the books of Seven Seas (net of any disputed, doubtful or
uncertain amounts or other offsets), as adjusted from time to time.
"Commission" means the United States Securities and Exchange
Commission.
"Company Order" means a written order or request signed in the name of
an Officer and delivered to the Trustee.
"Consolidated Cashflow" means, with respect to Seven Seas and its
Restricted Subsidiaries for any period, the sum of, without duplication, (i)
the Consolidated Net Income for such period, plus (ii) to the extent deducted
from Consolidated Net Income for such period, (x) the Fixed Charges for such
period, plus (y) noncash dividends on Seven Seas' Preferred Stock, plus (iii)
Consolidated Income Taxes for such period, plus (iv) consolidated depreciation,
amortization, depletion and other non-cash charges of Seven Seas and its
Restricted Subsidiaries required to be reflected as expenses
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on the books and records of Seven Seas, determined on a consolidated basis in
accordance with GAAP (excluding any such noncash expense or charge to the
extent that it represents an accrual of or reserve for cash expenditures in any
future period), in each case for such period decreased (to the extent included
in determining Consolidated Net Income) by the sum of (a) the amount of
deferred revenues that are amortized during such period and are attributable to
reserves that are subject to Volumetric Production Payments and (b) amounts
recorded in accordance with GAAP as repayments of principal and interest
pursuant to Dollar-Denominated Production Payments during such period, minus
(v) cash payments with respect to any nonrecurring, non-cash charges previously
added back pursuant to clause (iv) and excluding (vi) the impact of foreign
currency translations. Notwithstanding the foregoing, the provision for taxes
based on the income or profits of, and the depreciation and amortization and
other noncash charges of, a Restricted Subsidiary of a Person shall be added to
Consolidated Net Income to compute Consolidated Cashflow only to the extent
that the Net Income of such Restricted Subsidiary was included in calculating
the Consolidated Net Income of such Person and only if a corresponding amount
would be permitted at the date of determination to be dividended to Seven Seas
by such Restricted Subsidiary without prior approval (that has not been
obtained) pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
"Consolidated Income Taxes" means, with respect to any Person for any
period, taxes imposed upon such Person or other payments required to be made by
such Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Subsidiaries (to the extent such income or profits were included in
computing Consolidated Net Income for such period), regardless of whether such
taxes or payments are required to be remitted to any governmental authority.
"Consolidated Net Income" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that (i) the Net Income (but not loss) of any Person that
is not a Restricted Subsidiary of such Person or that is accounted for by the
equity method of accounting or by proportional consolidation by such Person
shall be included only to the extent of the amount of dividends or
distributions paid in cash to such Person or a Restricted Subsidiary of such
Person; (ii) the Net Income of, or any dividends or other distributions from,
any Unrestricted Subsidiary, to the extent otherwise included, shall be
excluded to the extent not distributed to such Person or one of its Restricted
Subsidiaries; (iii) the Net Income of any Restricted Subsidiary shall be
excluded to the extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that Net Income is not at the
date of determination permitted without any prior governmental approval (that
has not been obtained) or, directly or indirectly, by operation of the terms of
its charter or any agreement, instrument, judgment, decree, order, statute,
rule or governmental regulation applicable to that Restricted Subsidiary or its
stockholders; (iv) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition
shall be excluded; (v) the cumulative effect of a change in accounting
principles shall be excluded; (vi) income or loss attributable to discontinued
operations
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shall be excluded; (vii) any increase in cost of sales or other write-offs
resulting from the purchase accounting treatment of any acquisitions shall be
excluded; (viii) all other extraordinary, unusual or nonrecurring gains and
losses shall be excluded; (ix) any ceiling limitation writedowns under
Commission guidelines shall be treated as capitalized costs, as if such
writedown had not occurred and (x) with regard to a non-Wholly Owned
Subsidiary, any aggregate Net Income (or loss) in excess of such Person's or
such Subsidiary's pro rata share of such non-Wholly Owned Subsidiary's Net
Income (or loss) shall be excluded. Notwithstanding the foregoing, for the
purposes of Section 4.11 only, there shall be excluded from Consolidated Net
Income any dividends, repayments of loans or advances or other transfers of
assets from Unrestricted Subsidiaries to Seven Seas or a Restricted Subsidiary
to the extent such dividends, repayments or transfers are actually used to
increase the amount of Restricted Payments permitted pursuant to Section
4.11(c)(iv).
"Consolidated Net Worth" of a Person at any date means the amount by
which the assets of such Person and its consolidated Restricted Subsidiaries
(less any revaluation or other write-up subsequent to the date of this
Indenture in any such assets (other than write-ups resulting from foreign
currency translations and write-ups of tangible assets of a going concern
business made within twelve months after the acquisition of such business))
exceed the sum of (a) the total liabilities of such Person and its consolidated
Restricted Subsidiaries, plus (b) any Disqualified Stock of such Person or any
consolidated Restricted Subsidiaries of such Person issued to any Person other
than such Person or a Wholly Owned Subsidiary of such Person, in each case
determined in accordance with GAAP.
"Conversion Liquidated Damages" means liquidated damages owing
pursuant to Section 4.18.
"Convertible Debentures" means the convertible debentures for which
the Special Notes may be exchanged.
"Corporate Trust Office of the Trustee" shall be at the address of the
Trustee specified in Section 10.2 hereof or such other address as to which the
Trustee may give notice to Seven Seas.
"Credit Facility" means, collectively, (i) that certain proposed
credit facility, substantially as described in the Offering Memorandum by and
among Seven Seas, the lenders that may be from time to time parties as the
foregoing may from time to time be amended, renewed, supplemented or otherwise
modified at the option of the parties thereto, including any increases in the
principal amount thereof and (ii) after such proposed credit facility has been
terminated and all then outstanding Indebtedness thereunder or with respect
thereto has been repaid in full in cash and discharged, any successors to or
replacements (as designated by the Board of Directors of Seven Seas in its sole
judgment, and evidenced by a resolution) of such proposed credit facility, as
such successors or replacements may from time to time be amended, renewed,
supplemented, modified or replaced, including any increases in the principal
amount thereof. The Credit Facility, for purposes of this definition, may
include any issue of Indebtedness, incurred in accordance with Section 4.12,
pursuant to an underwritten public offering or a private placement of debt
securities.
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"Default" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"Definitive Notes" means Notes that are substantially in the form of
the Note attached hereto as Exhibit A, that do not include the information or
text called for by footnotes 1, 3 and 4 thereto.
"Depository" means the Depository Trust Company as the depository with
respect to the Notes, until a successor shall have been appointed and become
such Depository pursuant to the applicable provision of this Indenture, and,
thereafter, "Depository" shall mean or include such successor.
"Disinterested Director" means, with respect to any transaction or
series of transactions in respect of which the Board of Directors is required
to deliver its resolution under this Indenture, a member of the Board of
Directors who does not have any material direct or indirect financial interest
(other than an interest arising solely from the beneficial ownership of Capital
Stock of Seven Seas) in or with respect to such transaction or series of
transactions.
"Disqualified Stock" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the Holder thereof, in whole or in part, on or prior to the
date that is 91 days after the date that the Notes mature.
"Dollar-Denominated Production Payments" means production payment
obligations of Seven Seas or any Subsidiary which are payable from a specified
share of proceeds received from production from specific Properties, together
with all undertakings and obligations in connection therewith.
"Eligible Institution" means either (i) a commercial banking
institution organized under the laws of the United States or Canada that has
combined capital and surplus of not less than US$150 million or its equivalent
in foreign currency or (ii) an investment banking firm organized under the laws
of the United States or Canada, that regularly supplies account management
services, that has equity in excess of $500 million or its equivalent in
foreign currency, and, in either case of (i) or (ii), whose debt is rated "A-3"
or higher or "A" or higher according to Moody's, Standard & Poor's or Duff &
Xxxxxx Credit Rating Co. (or such similar equivalent rating by at least one
"nationally recognized statistical rating organization" (as defined in Rule 436
under the Exchange Act)) at the time as of which any investment or rollover
therein is made.
"Eligible Securities" means the securities purchased by Seven Seas
with a portion of the net proceeds from the offering of the Notes by Seven Seas
which shall consist of U.S. Government Securities to be deposited in the
Eligible Securities Account.
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"Eligible Securities Account" means an account in the name of Seven
Seas held at an Eligible Institution.
"Equity Interests" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"Equity or Strategic Investor Offering" means an offering after the
Issue Date of Equity Interests, other than Disqualified Stock and other than
Equity Interests issuable upon conversion of warrants, options or other rights
to acquire Capital Stock of Seven Seas or any successor by merger to Seven
Seas, including a public offering pursuant to a registration statement filed
with the Commission or other securities commission (other than on Form S-8 or
any other form relating to securities issuable under any benefit plan of Seven
Seas) or a private placement to a third party engaged in the Oil and Gas
Business.
"Euroclear" means Xxxxxx Guaranty Trust Company of New York, the
Brussels office, as operator of the Euroclear system.
"Exchange Act" means the United States Securities Exchange Act of
1934, as amended.
"Exchange Offer" means the offer that may be made by Seven Seas
pursuant to the Registration Rights Agreement to exchange Series B Notes for
Series A Notes.
"Exchange Offer Registration Statement" has the meaning set forth in
the Registration Rights Agreement.
"Existing Guarantee" means the guarantee by Seven Seas Petroleum
Holdings Inc., as in effect on the Issue Date, of the Special Notes and the
Convertible Debentures issued in August 1997 by Seven Seas.
"Existing Indebtedness" means the Indebtedness of Seven Seas and its
Restricted Subsidiaries (other than Indebtedness under the Credit Facility) in
existence on the Issue Date.
"Fixed Charges" means, with respect to any Person for any period, the
sum, without duplication, of (i) the consolidated interest expense of such
Person and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of any deferred payment
obligations, the interest component of all payments associated with Capital
Lease Obligations, commissions, discounts and other fees and charges incurred
in respect of letter of credit or bankers, acceptance financings, and net
payments (if any) pursuant to Hedging Obligations), and (ii) the consolidated
interest incurred by such Person and its Restricted Subsidiaries that was
capitalized during such period, and (iii) any interest expense on Indebtedness
of another Person that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or one of
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its Restricted Subsidiaries (whether or not such Guarantee or Lien is called
upon), and (iv) the product of (a) all dividend payments, whether or not in
cash, on any series of Preferred Stock of any such Person payable to a party
other than Seven Seas or a Wholly Owned Subsidiary, other than dividend
payments on Equity Interests payable solely in Equity Interests of Seven Seas,
times (b) a fraction, the numerator of which is one and the denominator of
which is one minus the then current combined federal, state, provincial and
local statutory tax rate of such Person, expressed as a decimal, in each case,
on a consolidated basis and in accordance with GAAP.
"Fixed Charge Coverage Ratio" means with respect to any Person for any
period, the ratio of the Consolidated Cashflow of such Person and its
Restricted Subsidiaries for such period of the most recent four consecutive
fiscal quarters for which financial statements are available prior to the date
of such determination to the Fixed Charges of such Person and its Restricted
Subsidiaries for such period. In the event that Seven Seas or any of its
Restricted Subsidiaries incurs, assumes, guarantees or repays any Indebtedness
(other than the incurrence or repayment of revolving credit borrowings used for
working capital, except to the extent that a repayment is accompanied by a
permanent reduction in revolving credit commitments) or issues Preferred Stock
subsequent to the commencement of the four-quarter reference period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, guarantee or
redemption of Indebtedness, or such issuance or redemption of Preferred Stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. For purposes of making the computation referred to above,
(i) acquisitions that have been made by Seven Seas or any of its Restricted
Subsidiaries, including through mergers or consolidations and including any
related financing transactions, during the four-quarter reference period or
subsequent to such reference period and on or prior to the Calculation Date
shall be, deemed to have occurred on the first day of the four-quarter
reference period and shall give pro forma effect to the Consolidated Cashflow
and Indebtedness of the Person which is the subject of any such acquisition,
and (ii) the Consolidated Cashflow attributable to discontinued operations, as
determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, and (iii) the Fixed Charges
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall
be excluded, but only to the extent that the obligations giving rise to such
Fixed Charges will not be obligations of the referenced Person or any of its
Restricted Subsidiaries following the Calculation Date.
"GAAP" means generally accepted accounting principles in the United
States which are in effect on the date of this Indenture.
"Global Note" means, individually and collectively, the Regulation S
Global Note and the 144A Global Note.
"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without
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limitation, letters of credit and reimbursement agreements in respect thereof),
of all or any part of any Indebtedness.
"Guarantor" means any Restricted Subsidiary that shall have
guaranteed, pursuant to a supplemental indenture and the requirements therefor
set forth in this Indenture, the payment of all principal of, and interest and
premium, if any, on, the Notes and all other amounts payable under the Notes or
this Indenture.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other hedging
agreements or arrangements, in each case designed to protect such Person
against fluctuations in interest rates, currencies and oil and natural gas
prices entered into in the ordinary course of business in the Oil and Gas
Business and not for speculation.
"Holder" means a Person in whose name a Note is registered on the
Registrar's books.
"Indebtedness" means, with respect to any Person, (i) any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any Property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable,
if and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP; (ii) all indebtedness
of others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person); (iii) the maximum fixed repurchase
price of Disqualified Stock issued by such Person, if held by a Person other
than Seven Seas or a Wholly Owned Subsidiary of Seven Seas; and (iv) to the
extent not otherwise included, the Guarantee by such Person of any indebtedness
of any other Person; provided that Indebtedness shall exclude Production
Payments and Reserve Sales. For purposes of this definition, the maximum fixed
repurchase price of any Disqualified Stock that does not have a fixed
repurchase price shall be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were repurchased on any date
on which Indebtedness shall be required to be determined pursuant to this
Indenture; provided, however, that if such Disqualified Stock is not then
permitted to be repurchased, the repurchase price shall be the book value of
such Disqualified Stock. The amount of Indebtedness of any Person at any date
shall be the outstanding balance at such date of all unconditional obligations
as described above and the maximum liability at such date in respect of any
contingent obligations described in this definition.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indirect Participant" means a person who holds an interest through a
Participant.
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"Initial Purchasers" means Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities
Corporation, Bear, Xxxxxxx & Co. Inc., CIBC Xxxxxxxxxxx Corp., Credit Suisse
First Boston Corporation and Paribas Corporation.
"Institutional Accredited Investor" means an institutional "accredited
investor" as defined in Rule 501(a)(1), (2), (3) or (7) of the Securities Act.
"Investments" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel, relocation and
similar advances to officers and employees made in the ordinary course of
business), purchases or other acquisitions for consideration of Indebtedness,
Equity Interests or other securities and all other items that are or would be
classified as investments on a balance sheet prepared in accordance with GAAP;
provided that an acquisition of assets, Equity Interests or other securities by
Seven Seas for consideration consisting of common equity securities of Seven
Seas shall not be deemed to be an Investment.
"Issue Date" means May 7, 1998.
"Legal Holiday" means a Saturday, a Sunday or a day on which federal
offices or banking institutions in the City of New York, in the city of the
Corporate Trust Office of the Trustee, or at a place of payment are authorized
by law, regulation or executive order to remain closed.
"Lien" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease
in the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement
under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidated Damages" means, collectively, all Registration Liquidated
Damages and all Conversion Liquidated Damages.
"Material Change" means an increase or decrease (excluding changes
that result solely from changes in prices) of more than 20% during a fiscal
quarter in the estimated discounted future net cash flows from proved oil and
gas reserves of Seven Seas and its Restricted Subsidiaries, calculated in
accordance with clause (i)(a) of the definition of Adjusted Consolidated Net
Tangible Assets; provided, however, that the following will be excluded from
the calculation of Material Change: (i) any acquisitions during the quarter of
oil and gas reserves that have been estimated by a nationally recognized firm
of independent petroleum engineers and on which a report or reports exist and
(ii) any disposition of properties held at the beginning of such quarter that
have been disposed of as provided in Section 4.10.
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"Maturity Date" means May 15, 2005.
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors.
"Net Income" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP, and before reduction for
noncash Preferred Stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes on such gain (but not
loss), realized in connection with (a) any Asset Sale (including, without
limitation, dispositions pursuant to sale and leaseback transactions) or (b)
the disposition of any securities by such Person or any of its Restricted
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Restricted Subsidiaries, and (ii) any items classified as extraordinary
gains or losses together with any related provision for taxes on such
extraordinary gains or losses.
"Net Proceeds" means the aggregate cash proceeds received by Seven
Seas or any of its Restricted Subsidiaries in respect of any Asset Sale
(including, without limitation, any cash received upon the sale or other
disposition of any non-cash consideration received in any Asset Sale), net of
the direct costs relating to such Asset Sale (including, without limitation,
legal, accounting and investment banking fees, and sales commissions) and any
relocation expenses incurred as a result thereof, taxes paid or payable as a
result thereof (after taking into account any available tax credits or
deductions and any tax sharing arrangements), and any reserve for adjustment in
respect of the sale price of such asset or assets established in accordance
with GAAP and net of any Purchase Money Obligations relating to the assets
comprising such Asset Sale.
"Net Working Capital" means (i) all current assets of Seven Seas and
its Restricted Subsidiaries excluding cash and Cash Equivalents and Colombian
Government Receivables (to the extent included in current assets), minus (ii)
all current liabilities of Seven Seas and its Restricted Subsidiaries, except
current liabilities included in Indebtedness.
"Non-Recourse Debt" means Indebtedness (i) as to which neither Seven
Seas nor any of its Restricted Subsidiaries (a) provides any Guarantee or
credit support of any kind (including any undertaking, Guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or (b) is directly
or indirectly liable (as a guarantor or otherwise), (ii) no default with
respect to which (including any rights that the holders thereof may have to
take enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness of Seven
Seas or any of its Restricted Subsidiaries to declare a default under such
other Indebtedness or cause the payment thereof to be accelerated or payable
prior to its stated maturity and (iii) the explicit terms of which provide that
there is no recourse against any of the assets of Seven Seas or its Restricted
Subsidiaries.
"Note Custodian" means the Trustee, as custodian with respect to the
Global Notes, or any successor entity thereto.
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"Obligations" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"Offering Memorandum" means the Offering Memorandum dated May 1, 1998,
relating to Seven Seas' offering and placement of the Series A Notes.
"Officer" means, with respect to any Person, the Chairman of the
Board, any Vice Chairman, the Chief Executive Officer, the President, the Chief
Operating Officer, the Chief Financial Officer or any Vice President of such
Person.
"Officers' Certificate" means a certificate signed on behalf of Seven
Seas by two Officers of Seven Seas, one of whom must be the principal executive
officer, the principal financial officer or the principal accounting officer of
Seven Seas, that meets the requirements of Section 10.3 hereof.
"Oil and Gas Business" means (i) the acquisition, exploration,
exploitation, development, operation or disposition of interests in oil, gas or
other hydrocarbon properties, (ii) the gathering, marketing, treating,
processing, storage, selling, transporting or refining of any production from
such interests or properties, (iii) any business relating to or arising from
exploration for or development, production, gathering, marketing, treatment,
processing, storage, sale, transportation or refining of oil, gas and other
minerals and products produced in association therewith or (iv) any activity
that is ancillary or necessary or desirable to facilitate the activities
described in clauses (i) through (iii) of this definition.
"Opinion of Counsel" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
10.3 hereof. The counsel may be an employee of or counsel to Seven Seas, any
Subsidiary of Seven Seas or the Trustee.
"Pari Passu Indebtedness" means Indebtedness that ranks pari passu in
right of payment to the Notes.
"Participant" means, with respect to DTC, Euroclear or Cedel, a Person
who has an account with DTC, Euroclear or Cedel, respectively (and, with
respect to DTC, shall include Euroclear and Cedel).
"Permitted Holders" means (i) Xxxxxx X. Xxxxxx III and Xxxxxx X. Xxxx,
(ii) any Person controlled directly or indirectly by either or both of the
Persons referred to in clause (i), and (iii) any trust, all of the
beneficiaries of which are any one or more of the Persons referred to in clause
(i) of this definition.
"Permitted Infrastructure Investment" means an investment made by
Seven Seas or any Restricted Subsidiary in production, processing, storage,
compression and pipeline facilities and infrastructure with respect to the
production and transportation of oil and natural gas from Emerald
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Mountain, provided that the aggregate amount of such investment made by Seven
Seas and its Restricted Subsidiaries in any such facilities and infrastructure,
as a proportion of the total investments made by all Persons in such facilities
and infrastructure, does not at any time exceed the combined proportionate
share of the working interests of Seven Seas and its Restricted Subsidiaries in
Emerald Mountain.
"Permitted Investments" means (i) any Investments in Seven Seas or in
a Restricted Subsidiary of Seven Seas that is engaged in the Oil and Gas
Business and reasonable extensions or expansions thereof; (ii) any investments
in Cash Equivalents; (iii) Investments by Seven Seas or any Restricted
Subsidiary of Seven Seas in a Person if as a result of such Investment (a) such
Person becomes a Wholly Owned Subsidiary of Seven Seas and such Person is
engaged in the Oil and Gas Business or (b) such Person is merged, consolidated
or amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, Seven Seas or a Wholly Owned Subsidiary of
Seven Seas that is engaged in the Oil and Gas Business; (iv) Investments made
as a result of the receipt of non-cash consideration from an Asset Sale that
was made pursuant to and in compliance with Section 4.10 hereof; (v)
investments by Seven Seas or any of its Restricted Subsidiaries in an aggregate
amount not to exceed $10.0 million outstanding at any one time in the Oil and
Gas Business; (vi) stock, obligations or securities received in settlement of
debts created in the ordinary course of business and owing to Seven Seas or any
of its Subsidiaries or in satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency of any
debtor; (vii) any operating agreements, joint ventures, partnership agreements,
working interests, royalty interests, mineral leases, processing agreements,
farm-out agreements, contracts for the sale, transportation or exchange of oil
and natural gas, unitization agreements, pooling arrangements, area of mutual
interest agreements, production sharing agreements or other similar or
customary agreements, transactions, properties, interests, or arrangements, and
Investments and expenditures in connection therewith or pursuant thereto, in
each case made or entered into in the ordinary course of the Oil and Gas
Business, excluding, however, investments in corporations; (viii) accounts
receivable created or acquired, and prepaid expenses arising, in the ordinary
course of business; (ix) the endorsements of negotiable instruments for
collection or deposit in the ordinary course of business; (x) Investments
existing on the date of this Indenture; (xi) the incurrence, assumption or
creation of Hedging Obligations that Seven Seas or a Restricted Subsidiary of
Seven Seas enter into in the ordinary course of the Oil and Gas Business for
the purpose of protecting its production against fluctuations in oil or natural
gas prices and otherwise in compliance with this Indenture; and (xii) Permitted
Infrastructure Investments.
"Permitted Liens" means (i) Liens securing Indebtedness permitted by
clauses (i), (ii), (iii), (iv) (to the extent that the Liens securing such
Indebtedness are Purchase Money Liens), (v) (to the extent that the Liens
securing Permitted Refinancing Indebtedness have the same terms and relate to
the same assets as the Liens securing the Indebtedness to be exchanged or
retired in relation thereto), (viii), (ix), (x) (to the extent that cash on
deposit may be encumbered by the issuance of trade letters of credit), and (xi)
(to the extent related to the Credit Facility) in each case, under the covenant
in Section 4.12 herein; (ii) Liens in favor of Seven Seas or any Wholly Owned
Subsidiary; (iii) Liens on Property of a Person existing at the time such
Person is merged into or consolidated
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with Seven Seas or any Restricted Subsidiary of Seven Seas; provided that such
Liens were in existence prior to the contemplation of such merger or
consolidation and do not extend to any assets other than those of the Person
merged into or consolidated with Seven Seas; (iv) Liens on Property of a Person
existing at the time such Person becomes a Restricted Subsidiary of Seven Seas;
(v) Liens on Property existing at the time of acquisition thereof by Seven Seas
or any Restricted Subsidiary of Seven Seas, provided that such Liens were in
existence prior to the contemplation of such acquisition; (vi) Liens to secure
the performance of statutory obligations, surety or appeal bonds, performance
bonds, tenders, bids, leases or other obligations of a like nature incurred in
the ordinary course of the Oil and Gas Business; (vii) Liens existing on the
date of this Indenture; (viii) Liens for taxes, assessments or governmental
charges or claims that are not yet delinquent or that are being contested in
good faith by appropriate proceedings promptly instituted and diligently
conducted, provided that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (ix) carriers',
warehousemen's, mechanics', materialmen's, repairmen's, or other similar Liens
arising in the ordinary course of business which are not overdue for a period of
more than 60 days or which are being contested in good faith by appropriate
proceedings diligently conducted; (x) easements, rights-of-way, restrictions,
minor defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the business of Seven
Seas or any of its Restricted Subsidiaries; (xi) statutory Liens of landlords or
of mortgagees of landlords arising by operation of law, provided that the rental
payments secured thereby are not yet due and payable; (xii) Liens incurred or
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of social security; (xiii)
Purchase Money Liens (including extensions and renewals thereof); (xiv)
interests of lessors in capital or operating leases; (xv) Liens on deposits made
in connection with Hedging Obligations; (xvi) other Liens arising in the
ordinary course of business of Seven Seas or any Restricted Subsidiary which do
not secure the payment of borrowed money and in the aggregate do not materially
adversely affect the value of the assets of Seven Seas and its Restricted
Subsidiaries, taken as a whole, or materially impair the use of such Properties
for the purposes for which such Properties are held by Seven Seas or such
Restricted Subsidiaries and (xvii) Liens arising in connection with Production
Payments and Reserve Sales.
"Permitted Refinancing Indebtedness" means any Indebtedness of Seven
Seas or any of its Restricted Subsidiaries issued in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease or
refund other Indebtedness of Seven Seas or any of its Restricted Subsidiaries;
provided that: (i) the principal amount (or fully accreted value at stated
maturity, if applicable) of such Permitted Refinancing Indebtedness does not
exceed the original principal amount (or then current accreted value, if
applicable) of the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded (plus the amount of reasonable expenses incurred in
connection therewith); (ii) such Permitted Refinancing Indebtedness has a final
maturity date at least as late as the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the Notes, such Permitted Refinancing Indebtedness has a final
maturity date later than the final maturity date of, and
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is subordinated in right of payment to, the Notes on terms at least as
favorable to the Holders of Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded and (iv) such Indebtedness is incurred either by Seven
Seas or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded provided,
however, that Permitted Refinancing Indebtedness shall not include (a)
Indebtedness of a Subsidiary of Seven Seas that refinances Indebtedness of
Seven Seas or (b) Indebtedness of Seven Seas or a Restricted Subsidiary that
refinances Indebtedness of an Unrestricted Subsidiary.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, or other business entity or government or agency or
political subdivision thereof (including any subdivision or ongoing business of
any such entity or substantially all or the assets of any such entity,
subdivision or business).
"Pledge Account" means an account established with the Trustee
pursuant to the terms of this Indenture for the deposit of the Pledged
Securities to be purchased by Seven Seas with a portion of the net proceeds
from the sale of the Notes.
"Pledge Agreement" means the Collateral Pledge and Security Agreement,
substantially in the form of Exhibit D attached hereto, dated as of the date of
this Indenture, by and between the Trustee and Seven Seas, governing the
disbursement of funds from the Pledge Account, as amended from time to time.
"Pledged Securities" means the U.S. Government Securities to be
purchased by Seven Seas and held in the Pledge Account in accordance with this
Indenture and the Pledge Agreement.
"Preferred Stock," as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
"Production Payments and Reserve Sales" means the grant or transfer by
Seven Seas or a Restricted Subsidiary to any Person of a royalty, overriding
royalty, net profits interest, production payment (whether a Volumetric
Production Payment or Dollar-Denominated Production Payment), partnership or
other interest in oil and gas properties, reserve or the right to receive all
or a portion of the production or the proceeds from the sale of production
attributable to such properties, in each case where the holder of such interest
has recourse solely to such production or proceeds of production, subject to
the obligation of the grantor or transferor to operate and maintain, or cause
the subject interests to be operated and maintained, in a reasonably prudent
manner or other customary standard or subject to the obligation of the grantor
or transferor to indemnify for environmental, title or other matters customary
in the Oil and Gas Business.
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"Property" means any property of any kind whatsoever, whether real,
personal or mixed and whether tangible or intangible, including any right of
interest therein or thereto.
"Purchase Money Lien" means a Lien granted on an asset or Property to
secure a Purchase Money Obligation or Capital Lease Obligation permitted to be
incurred under this Indenture and incurred solely to finance the purchase, or
the cost of construction or improvement, of such asset or property; provided
however, that such Lien encumbers only such asset or property and is granted
within 180 days of such acquisition.
"Purchase Money Obligations" of any Person means any obligations of
such Person to any seller or any other Person incurred or assumed solely to
finance the purchase, or the cost of construction or improvement, of real or
personal property to be used in the business of such Person or any of its
Restricted Subsidiaries in an amount that is not more than 100% of the cost, or
fair market value, as appropriate, of such property, and incurred within 90
days after the date of such acquisition (excluding accounts payable to trade
creditors incurred in the ordinary course of business).
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Registration Liquidated Damages" means liquidated damages owing
pursuant to the Registration Rights Agreement.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among Seven Seas and
the Initial Purchasers, as such agreement may be amended, modified or
supplemented from time to time.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Note" means a permanent global senior note that
contains the paragraph referred to in footnote 1 and the additional schedule
referred to in footnote 3 to the form of the Note attached hereto as Exhibit A,
and that is deposited with the Note Custodian and registered in the name of the
Depository or its nominee, representing a series of Notes sold in reliance on
Regulation S.
"Responsible Officer," when used with respect to the Trustee, means
any officer of the Trustee with direct responsibility for the administration of
this Indenture and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Restricted Beneficial Interest" means any beneficial interest of a
Participant or Indirect Participant in the 144A Global Note or the Regulation S
Global Note.
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"Restricted Global Notes" means the 144A Global Note and the
Regulation S Global Note, each of which shall bear the Private Placement
Legend.
"Restricted Investment" means an Investment other than a Permitted
Investment.
"Restricted Subsidiary" of a Person means any Subsidiary of such
Person that is not an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act.
"Securities Act" means the United States Securities Act of 1933, as
amended.
"Shelf Registration Statement" means the Shelf Registration Statement
as defined in the Registration Rights Agreement.
"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.
"Special Notes" means the promissory notes, with an aggregate
principal amount of $25.0 million, issued by Seven Seas in August 1997.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., and its successors.
"Stated Maturity" means when used with respect to any Indebtedness or
any installment of interest thereon, the date specified in the instrument
evidencing or governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or such installment of interest is due and
payable.
"Subsidiary" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of Capital Stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
Person or one or more of the other Subsidiaries of that Person (or a
combination thereof) and (ii) any partnership (a) the sole general partner or
the managing general partner of which is such Person or a Subsidiary of such
Person or (b) the only general partners of which are such Person or one or more
Subsidiaries of such Person (or any combination thereof).
"Subsidiary Guarantee" means an unconditional guarantee of the Notes
and this Indenture given by any Restricted Subsidiary or other Person pursuant
to the terms of this Indenture or any supplement hereto.
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"Supplemental Indenture" means a supplement to this Indenture
substantially in the form of Exhibit C hereto.
"Transfer Restricted Securities" means Notes that bear or are required
to bear the Private Placement Legend.
"Treasury Rate" means the weekly average yield to maturity at the time
of computation of United States Treasury securities with a constant maturity
(as compiled and published in the most recent Federal Reserve Statistical
Release H.15 (519) that has become publicly available at least two business
days prior to the Redemption Date (or, if such Statistical Release is no longer
published, any published source or similar market data) most nearly equal to
the period from the Redemption Date to May 15, 2002, provided, however, that if
the period from the Redemption Date to May 15, 2002 is not equal to the
constant maturity of a United States Treasury security for which a weekly
average yield is given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year) from the weekly
average yields of the United States Treasury securities for which such yields
are given, except that if the period from the Redemption Date to May 15, 2002
is less than one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of one year shall be
used.
"Trust Indenture Act" or "TIA" means the United States Trust Indenture
Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) as in effect on the date on which
this Indenture is qualified under the Trust Indenture Act, except as provided
in Section 9.3 hereof.
"Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it in accordance with the applicable
provisions of this Indenture and thereafter means the successor serving
hereunder.
"Unrestricted Global Notes" means one or more Global Notes that do not
and are not required to bear the Private Placement Legend.
"Unrestricted Subsidiary" means any Subsidiary that is designated by
the Board of Directors as an Unrestricted Subsidiary pursuant to a resolution
of the Board of Directors of Seven Seas; but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with Seven Seas
or any Restricted Subsidiary of Seven Seas unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to
Seven Seas or such Restricted Subsidiary than those that might be obtained at
the time from Persons who are not Affiliates of Seven Seas; (c) is a Person
with respect to which neither Seven Seas nor any of its Restricted Subsidiaries
has any direct or indirect obligation (1) to subscribe for additional Equity
Interests or (2) to maintain or preserve such Person's financial condition or
to cause such Person to achieve or maintain any specified levels of
profitability (it being understood that agreements entered into in the ordinary
course of the Oil and Gas Business relating to transportation or throughput
commitments will not constitute such an obligation); and (d) has not guaranteed
or otherwise directly or indirectly provided credit support for any
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Indebtedness of Seven Seas or any of its Restricted Subsidiaries. Any such
designation by the Board of Directors of Seven Seas shall be evidenced to the
Trustee by filing with the Trustee a resolution of the Board of Directors of
Seven Seas giving effect to such designation and an Officers' Certificate
certifying that such designation complied with the foregoing conditions and was
permitted by Section 4.11 hereof. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it
shall thereafter cease to be an Unrestricted Subsidiary for purposes of this
Indenture and any Indebtedness of such Subsidiary shall be deemed to be
incurred by a Restricted Subsidiary of Seven Seas as of such date. The Board
of Directors of Seven Seas may at any time designate any Unrestricted
Subsidiary to be a Restricted Subsidiary, provided, that such designation shall
be deemed to be an incurrence of Indebtedness by a Restricted Subsidiary of
Seven Seas of any outstanding Indebtedness of such Unrestricted Subsidiary and
such designation shall only be permitted if (i) such Indebtedness is permitted
under Section 4.12 and (ii) no Default or Event of Default would be in
existence following such designation.
"U.S. Government Securities" means (i) securities that are (a) direct
obligations of the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or (b) obligations
of a Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the United
States of America, which, in either case, are not callable or redeemable at the
option of the issuer thereof and (ii) depository receipts issued by a bank (as
defined in Section 3(a)(2) of the Securities Act) as custodian with respect to
any U.S. Government Security which is specified in clause (i) above and held by
such bank for the account of the holder of such depository receipt, or with
respect to any specific payment of principal or interest on any U.S. Government
Security which is so specified and held, provided that (except as required by
law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by
the custodian in respect of the U.S. Government Security or the specific
payment of principal or interest of the U.S. Government Security evidenced by
such depository receipt.
"Volumetric Production Payments" means production payment obligations
of Seven Seas or any of its Subsidiaries which are payable from a specified
share of production from specific Properties, together with all undertakings
and obligations in connection therewith.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership and limited liability company interests) of
such Person then outstanding and normally entitled (without regard to the
occurrence of any contingency) to vote in the election of directors, managers
or trustees thereof.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years
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(calculated to the nearest one-twelfth) that will elapse between such date and
the making of such payment, by (ii) the then outstanding principal amount of
such Indebtedness.
"Wholly Owned Subsidiary" of any Person means a Restricted Subsidiary
of such Person all of the outstanding Capital Stock or other ownership
interests of which (other than directors' qualifying shares or shares required
by applicable law to be held by third parties) shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person.
Unrestricted Subsidiaries shall not be included in the definition of Wholly
Owned Subsidiary for any purposes of this Indenture.
SECTION 1.2 OTHER DEFINITIONS
Term Defined in Section
---- ------------------
"Additional Amounts" 4.20
"Affiliate Transaction" 4.16
"Aggregate Unused Proceeds" 4.10
"Agreement Currency" 10.7
"Asset Sale Offer" 4.10
"Asset Sale Offer Amount" 4.10
"Asset Sale Offer Period" 4.10
"Asset Sale Purchase Date" 4.10
"Authorized Agent" 10.8
"Bankruptcy Law" 6.1
"Change of Control Notice" 3.7
"Change of Control Offer" 4.9
"Change of Control Offer Period" 4.9
"Change of Control Payment" 4.9
"Change of Control Purchase Date" 4.9
"Covenant Defeasance" 8.3
"Custodian" 6.1
"DTC" 2.3
"Event of Default" 6.1
"Excess Proceeds" 4.10
"Excluded Taxes" 4.20
"Five Year Date" 4.10
"Group of Subsidiaries" 6.1
"Guaranteed Debt" 4.17
"incur" 4.12
"Interest" 2.13
"Judgment Currency" 10.7
"Legal Defeasance" 8.2
"Non-Excluded Taxes" 4.19
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"Notice of Default" 6.1
"Paying Agent" 2.3
"Payment Default" 6.1
"Private Placement Legend" 2.6
"Registrar" 2.3
"Restricted Payments" 4.11
"Seven Seas Funds" 4.23
"Special Note Default" 4.18
"Taxes" 4.20
SECTION 1.3 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT
Whenever this Indenture refers to a provision of the Trust Indenture
Act, the provision is incorporated by reference in and made a part of this
Indenture.
The following Trust Indenture Act terms used in this Indenture have
the following meanings:
"indenture securities" means the Notes;
"indenture security Holder" means a Holder of a Note;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee" means the Trustee; and
"obligor" on the Notes means Seven Seas and any successor thereto.
All other terms used in this Indenture that are defined by the Trust
Indenture Act, defined by the Trust Indenture Act reference to another statute
or defined by Commission rule under the Trust Indenture Act have the meanings
so assigned to them.
SECTION 1.4 RULES OF CONSTRUCTION
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means "including without limitation";
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(5) words in the singular include the plural, and in the
plural include the singular;
(6) provisions apply to successive events and
transactions; and
(7) references to sections of or rules under the
Securities Act shall be deemed to include substitute, replacement of
successor sections or rules adopted by the Commission from time to
time.
ARTICLE II
THE NOTES
SECTION 2.1 FORM AND DATING
(a) Form of Notes. The Notes and the Trustee's certificate of
authentication shall be substantially in the form set forth in Exhibit A
hereto. The Notes may have notations, legends or endorsements required by law,
stock exchange rule or usage. Each Note shall be dated the date of its
authentication. The Notes shall be in denominations of $1,000 and integral
multiples thereof. The form of the Series A Notes and the Series B Notes will
be the same except that the Private Placement Legend will be omitted from the
Series B Notes. The Series A Notes and the Series B Notes shall be considered
one series for purposes of voting, seniority and any similar rights.
The terms and provisions contained in the Notes shall constitute, and
are hereby expressly made, a part of this Indenture; and Seven Seas and the
Trustee, by their execution and delivery of this Indenture, expressly agree to
such terms and provisions and to be bound thereby.
(b) Global Notes. Notes offered and sold to (i) QIBs in reliance
on Rule 144A and (ii) Institutional Accredited Investors who are not QIBs,
shall be issued initially in the form of 144A Global Notes, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Note Custodian, and registered in the name of the Depository or a nominee of
the Depository, duly executed by Seven Seas and authenticated by the Trustee as
hereinafter provided. The aggregate principal amount of the 144A Global Notes
may from time to time be increased or decreased by adjustments made on the
records of the Trustee and the Depository or its nominee as hereinafter
provided.
Notes offered and sold in reliance on Regulation S shall be issued in
the form of the Regulation S Global Note, which shall be deposited on behalf of
the purchasers of the Notes represented thereby with the Note Custodian, and
registered in the name of the Depository or the nominee of the Depository for
the accounts of designated agents holding on behalf of Euroclear or Cedel, duly
executed by Seven Seas and authenticated by the Trustee as hereinafter
provided. The aggregate principal amount of the Regulation S Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depository or its nominee, as the case may be, in
connection with transfers of interest as hereinafter provided.
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Each Global Note shall represent such of the outstanding Notes as
shall be specified therein and each shall provide that it shall represent the
aggregate amount of outstanding Notes from time to time endorsed thereon and
that the aggregate amount of outstanding Notes represented thereby may from
time to time be reduced or increased, as appropriate, to reflect exchanges,
redemptions, and transfers of interests. Any endorsement of a Global Note to
reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Note Custodian,
at the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.6 hereof.
Except as set forth in Section 2.6 hereof, the Global Notes may be
transferred, in whole and not in part, only to a nominee of the Depository or
to a successor of the Depository or its nominee.
(c) Book-Entry Provisions. This Section 2.1(c) shall apply only
to Global Notes deposited with or on behalf of the Depository.
Seven Seas shall execute and the Trustee shall, in accordance with
this Section 2.1(c), authenticate and deliver the Global Notes that (i) shall
be registered in the name of the Depository or the nominee of the Depository
and (ii) shall be delivered by the Trustee to the Depository or pursuant to the
Depository's instructions or held by the Note Custodian.
Participants shall have no rights either under this Indenture with
respect to any Global Note held on their behalf by the Depository or by the
Note Custodian as custodian for the Depository or under such Global Note, and
the Depository may be treated by Seven Seas, the Trustee and any agent of Seven
Seas, or the Trustee as the absolute owner of such Global Note for all purposes
whatsoever. Nothing herein shall prevent Seven Seas, the Trustee or any agent
of Seven Seas or the Trustee from giving effect to any written certification,
proxy or other authorization furnished by the Depository or impair, as between
the Depository and its Participants, the operation of customary practices of
such Depository governing the exercise of the rights of an owner of a
beneficial interest in any Global Note.
(d) Definitive Notes. Notes issued in certificated form shall be
substantially in the form of Exhibit A attached hereto (but without including
the text referred to in footnotes 1, 3 and 4 thereto).
(e) Provisions Applicable to Forms of Notes. The Notes may also
have such additional provisions omissions, variations or substitutions as are
not inconsistent with the provisions of this Indenture and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may be required to comply with this Indenture,
any applicable law or with any rules made pursuant thereto or with the rules of
any securities exchange or governmental agency or as may be determined
consistently herewith by the Officers of Seven Seas executing such Notes, as
conclusively evidenced by their execution of such Notes. All Notes will be
otherwise substantially identical except as provided herein.
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Subject to the provisions of this Article 2, a Holder of a Global Note
may grant proxies and otherwise authorize any Person to take any action that a
Holder is entitled to take under this Indenture or the Notes.
SECTION 2.2 EXECUTION AND AUTHENTICATION
Two Officers shall sign the Notes for Seven Seas by manual or
facsimile signature.
If an Officer whose signature is on a Note no longer holds that office
at the time a Note is authenticated, the Note shall nevertheless be valid.
A Note shall not be valid until authenticated by the manual signature
of the Trustee. The signature shall be conclusive evidence that the Note has
been authenticated under this Indenture. The form of Trustee's certificate of
authentication to be borne by the Notes shall be substantially as set forth in
Exhibit A hereto.
The Trustee shall, upon a written order of Seven Seas signed by two
Officers, authenticate Notes for original issue up to the aggregate principal
amount stated in the Notes. The aggregate principal amount of Notes
outstanding at any time may not exceed such amount except as provided in
Section 2.7 hereof.
The Trustee may appoint an authenticating agent acceptable to Seven
Seas to authenticate the Notes. An authenticating agent may authenticate a
Note whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with Seven Seas or
an Affiliate of Seven Seas.
SECTION 2.3 REGISTRAR AND PAYING AGENT
Seven Seas shall maintain (i) an office or agency where the Notes may
be presented for registration of transfer or for exchange ("Registrar") and
(ii) an office or agency where the Notes may be presented for payment ("Paying
Agent"). The Registrar shall keep a register of the Notes and of their
transfer and exchange. Seven Seas may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
Seven Seas may change any Paying Agent or Registrar without notice to any
Holder. Seven Seas shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If Seven Seas fails to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. Seven Seas or any of its Subsidiaries may act as Paying Agent or
Registrar.
Seven Seas initially appoints the Depository Trust Company ("DTC") to
act as Depository with respect to the Global Notes.
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Seven Seas initially appoints the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.4 PAYING AGENT TO HOLD MONEY IN TRUST
Seven Seas shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal, premium or Liquidated Damages and Additional Amounts, if any, or
interest on the Notes, and shall notify the Trustee of any default by Seven
Seas in making any such payment. While any such default continues, the Trustee
may require a Paying Agent to pay all money held by it to the Trustee. Seven
Seas at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon payment over to the Trustee, the Paying Agent (if other than
Seven Seas or a Subsidiary) shall have no further liability for the money. If
Seven Seas or a Subsidiary acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Holders all money held by it as
Paying Agent. Upon any bankruptcy or reorganization proceedings relating to
Seven Seas, the Trustee shall serve as Paying Agent for the Notes.
SECTION 2.5 HOLDER LISTS
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, Seven Seas shall furnish to the Trustee at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders of
Notes, and Seven Seas, shall otherwise comply with TIA Section 312(a).
SECTION 2.6 TRANSFER AND EXCHANGE
(a) Transfer and Exchange of Global Notes. The transfer and
exchange of beneficial interests in Global Notes shall be effected through the
Depository, in accordance with this Indenture and the procedures of the
Depository therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
Beneficial interests in a Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Global Note
in accordance with the transfer restrictions set forth in the legend in
subsection (f) of this Section 2.6. Transfers of beneficial interests in the
Global Notes to Persons required to take delivery thereof in the form of an
interest in another Global Note shall be permitted as follows:
(i) 144A Global Note to Regulation S Global Note. If, at
any time, an owner of a beneficial interest in a 144A Global Note
deposited with the Depository (or the Note Custodian) wishes to
transfer its beneficial interest in such 144A Global Note to a Person
who is required or permitted to take delivery thereof in the form of
an interest in a Regulation S Global Note, such owner shall, subject
to the Applicable Procedures, exchange or cause
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the exchange of such interest for an equivalent beneficial interest in
a Regulation S Global Note as provided in this Section 2.6(a)(i). Upon
receipt by the Trustee of (1) instructions given in accordance with
the Applicable Procedures from a Participant directing the Trustee to
credit or cause to be credited a beneficial interest in the Regulation
S Global Note in an amount equal to the beneficial interest in the
144A Global Note to be exchanged, (2) a written order given in
accordance with the Applicable Procedures containing information
regarding the Participant account of the Depository and the Euroclear
or Cedel account to be credited with such increase, and (3) a
certificate in the form of Exhibit B-1 hereto given by the owner of
such beneficial interest stating that the transfer of such interest
has been made in compliance with the transfer restrictions applicable
to the Global Notes and pursuant to and in accordance with Rule 903 or
Rule 904 of Regulation S, then the Trustee, as Registrar, shall
instruct the Depository to reduce or cause to be reduced the aggregate
principal amount at maturity of the applicable 144A Global Note and to
increase or cause to be increased the aggregate principal amount at
maturity of the applicable Regulation S Global Note by the principal
amount at maturity of the beneficial interest in the 144A Global Note
to be exchanged or transferred, to credit or cause to be credited to
the account of the Person specified in such instructions, a beneficial
interest in the Regulation S Global Note equal to the reduction in the
aggregate principal amount at maturity of the 144A Global Note, and to
debit, or cause to be debited, from the account of the Person making
such exchange or transfer the beneficial interest in the 144A Global
Note that is being exchanged or transferred.
(ii) Regulation S Global Note to 144A Global Note. Prior
to the expiration of the 40-day distribution compliance period, an
owner of a beneficial interest in a Regulation S Global Note will not
be permitted to transfer its interest to a Person who is required or
permitted to take delivery thereof in the form of an interest in a
144A Global Note. If, at any time, after the expiration of the 40-day
distribution compliance period, an owner of a beneficial interest in a
Regulation S Global Note deposited with the Depository or with the
Note Custodian wishes to transfer its beneficial interest in such
Regulation S Global Note to a Person who is required or permitted to
take delivery thereof in the form of an interest in a 144A Global
Note, such owner shall, subject to the Applicable Procedures, exchange
or cause the exchange of such interest for an equivalent beneficial
interest in a 144A Global Note as provided in this Section 2.6(a)(ii).
Upon receipt by the Trustee of (1) instructions from Euroclear or
Cedel, if applicable, and the Depository, directing the Trustee, as
Registrar, to credit or cause to be credited a beneficial interest in
the 144A Global Note equal to the beneficial interest in the
Regulation S Global Note to be exchanged, such instructions to contain
information regarding the Participant account with the Depository to
be credited with such increase, (2) a written order given in
accordance with the Applicable Procedures containing information
regarding the participant account of the Depository and (3) a
certificate in the form of Exhibit B-2 attached hereto given by the
owner of such beneficial interest stating (A) if the transfer is
pursuant to Rule 144A, that the Person transferring such interest in a
Regulation S Global Note reasonably believes that the Person acquiring
such interest in a 144A Global Note is a QIB and is obtaining such
beneficial interest in a
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transaction meeting the requirements of Rule 144A and any applicable
blue sky or securities laws of any state of the United States, (B)
that the transfer complies with the requirements of Rule 144 under the
Securities Act or (C) if the transfer is pursuant to any other
exemption from the registration requirements of the Securities Act,
that the transfer of such interest has been made in compliance with
the transfer restrictions applicable to the Global Notes and pursuant
to and in accordance with the requirements of the exemption claimed,
such statement to be supported by an Opinion of Counsel from the
transferee or the transferor in form reasonably acceptable to Seven
Seas and to the Registrar and in each case, in accordance with any
applicable securities laws of any state of the United States or any
other applicable jurisdiction, then the Trustee, as Registrar, shall
instruct the Depository to reduce or cause to be reduced the aggregate
principal amount at maturity of such Regulation S Global Note and to
increase or cause to be increased the aggregate principal amount at
maturity of the applicable 144A Global Note by the principal amount at
maturity of the beneficial interest in the Regulation S Global Note to
be exchanged or transferred, and the Trustee, as Registrar, shall
instruct the Depository, concurrently with such redemption, to credit
or cause to be credited to the account of the Person specified in such
instructions a beneficial interest in the applicable 144A Global Note
equal to the reduction in the aggregate principal amount at maturity
of such Regulation S Global Note and to debit or cause to be debited
from the account of the Person making such transfer the beneficial
interest in the Regulation S Global Note that is being exchanged or
transferred.
(b) Transfer and Exchange of Definitive Notes. When Definitive
Notes are presented by a Holder to the Registrar with a request to register the
transfer of the Definitive Notes or to exchange such Definitive Notes for an
equal principal amount of Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested
only if the Definitive Notes are presented or surrendered for registration of
transfer or exchange, are endorsed and contain a signature guarantee or
accompanied by a written instrument of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his attorney duly authorized in
writing and contains a signature guarantee, and the Registrar received the
following documentation (all of which may be submitted by facsimile):
(i) in the case of Definitive Notes that are Transfer
Restricted Securities, such request shall be accompanied by the
following additional information and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for registration in the
name of such Holder, without transfer, or such Transfer
Restricted Security is being transferred to Seven Seas, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto); or
(B) if such Transfer Restricted Security is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act or in an
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offshore transaction pursuant to and in compliance with Rule
904 under the Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act, a
certification to that effect from such Holder (in
substantially the form of Exhibit B-3 hereto) and an Opinion
of Counsel reasonably acceptable to Seven Seas to the effect
that such transfer is in compliance with the Securities Act.
(c) Exchange of a Beneficial Interest in a 144A Global Note or
Regulation S Global Note for a Definitive Note.
(i) Any Person having a beneficial interest in a 144A
Global Note or Regulation S Global Note may upon request, subject to
the Applicable Procedures, exchange such beneficial interest for a
Definitive Note. The Trustee or the Note Custodian, at the direction
of the Trustee, shall, in accordance with the standing instructions
and procedures existing between the Depository and the Note Custodian,
cause the aggregate principal amount of 144A Global Notes or
Regulation S Global Notes, as applicable, to be reduced accordingly
and, following such reduction, Seven Seas shall execute and, the
Trustee shall authenticate and deliver to the transferee a Definitive
Note in the appropriate principal amount, upon receipt by the Trustee
of written instructions or such other form of instructions as is
customary for the Depository (or Euroclear or Cedel, if applicable),
from the Depository or its nominee on behalf of any Person having a
beneficial interest in a 144A Global Note or Regulation S Global Note,
and, in the case of a Transfer Restricted Security, the following
additional information and documents (all of which may be submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the Person designated by the Depository as
being the beneficial owner, a certification to that effect
from such Person (in substantially the form of Exhibit B-4
hereto); or
(B) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration
in accordance with Rule 144 under the Securities Act or in an
offshore transaction pursuant to and in compliance with Rule
904 under the Securities Act or pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B-4 hereto); or
(C) if such beneficial interest is being
transferred in reliance on any other exemption from the
registration requirements of the Securities Act a
certification to that effect from the transferee (in
substantially the form of Exhibit B-4 hereto) and
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an Opinion of Counsel from the transferee or the transferor
reasonably acceptable to Seven Seas to the effect that such
transfer is in compliance with the Securities Act.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a 144A Global Note or Regulation S Global Note, as
applicable, pursuant to this Section 2.6(c) shall be registered in
such names and in such authorized denominations as the Depository,
pursuant to instructions from its Participants or Indirect
Participants or otherwise, shall instruct the Trustee. The Trustee
shall deliver such Definitive Notes to the Persons in whose names such
Notes are so registered. Following any such issuance of Definitive
Notes, the Trustee, as Registrar, shall instruct the Depository to
reduce or cause to be reduced the aggregate principal amount at
maturity of the applicable Global Note to reflect the transfer.
(d) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provision of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Note may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.
(e) Authentication of Definitive Notes in Absence of Depository.
If at any time:
(i) the Depository for the Global Notes notifies Seven
Seas that the Depository is unwilling or unable to continue as
Depository for the Global Notes and a successor Depository for the
Global Notes is not appointed by Seven Seas within 90 days after
delivery of such notice; or
(ii) Seven Seas, in its sole discretion, notifies the
Trustee in writing that it elects to cause the issuance of Definitive
Notes under this Indenture,
then Seven Seas, shall execute, and the Trustee shall, upon receipt of an
authentication order in accordance with Section 2.2 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of the Global Notes in exchange for such Global Notes.
(f) Legends.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each certificate evidencing Global Notes and
Definitive Notes (and all Notes issued in exchange therefor or
substitution thereof) shall bear a legend (the "Private Placement
Legend") in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER
THE U.S. SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED,
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SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS,
EXCEPT AS SET FORTH IN THE NEXT SENTENCE. BY ITS ACQUISITION
HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER: (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER"
(AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB"),
OR (B) IT HAS ACQUIRED THIS NOTE IN AN OFFSHORE TRANSACTION IN
COMPLIANCE WITH REGULATION S UNDER THE SECURITIES ACT, (2)
AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER THIS NOTE
EXCEPT (A) TO SEVEN SEAS OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN
OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
904 OF THE SECURITIES ACT, (D) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION
OF COUNSEL ACCEPTABLE TO SEVEN SEAS) OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION AND (3)
AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE
OR AN INTEREST HEREIN IS TRANSFERRED A NOTICE SUBSTANTIALLY TO
THE EFFECT OF THIS LEGEND. AS USED HEREIN, THE TERMS
"OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE THE MEANINGS
GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE SECURITIES
ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE TRUSTEE
TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION
OF THE FOREGOING."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Note) pursuant to Rule 144 under the Securities Act or pursuant
to an effective registration statement under the Securities Act:
(A) in the case of any Transfer Restricted
Security that is a Definitive Note, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the legend
set forth in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Security upon receipt of
a certification from the transferring holder substantially in
the form of Exhibit B-4 hereto; and
(B) in the case of any Transfer Restricted
Security represented by a Global Note, such Global Note shall
not be required to bear the legend set forth in (i) above, but
shall continue to be subject to the provisions of Section
2.6(a) hereof; provided,
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however, that with respect to any request for an exchange of a
Transfer Restricted Security that is represented by a Global
Note for a Definitive Note that does not bear the legend set
forth in (i) above, which request is made in reliance upon
Rule 144, the Holder thereof shall certify in writing to the
Registrar that such request is being made pursuant to Rule 144
(such certification to be substantially in the form of Exhibit
B-4 hereto).
(iii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Note) in reliance on any exemption from the registration
requirements of the Securities Act (other than exemptions pursuant to
Rule 144A or Rule 144 under the Securities Act) in which the Holder or
the transferee provides an Opinion of Counsel to Seven Seas in form
and substance reasonably acceptable to Seven Seas (which Opinion of
Counsel shall also state that the transfer restrictions contained in
the legend are no longer applicable):
(A) in the case of any Transfer Restricted
Security that is a Definitive Note, the Registrar shall permit
the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the legend
set forth in (i) above and rescind any restriction on the
transfer of such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted
Security represented by a Global Note, such Global Note shall
not be required to bear the legend set forth in (i) above, but
shall continue to be subject to the provisions of Section
2.6(a) hereof.
(iv) Notwithstanding the foregoing, upon the occurrence of
the Exchange Offer in accordance with the Registration Rights
Agreement, Seven Seas shall issue and, upon receipt of an
authentication order in accordance with Section 2.2 hereof, the
Trustee shall authenticate (i) one or more Unrestricted Global Notes
in aggregate principal amount equal to the principal amount of the
Restricted Beneficial Interests validly tendered and not properly
withdrawn by Persons that certify in the letter of transmittal
delivered in the Exchange Offer that they are not (x) broker-dealers,
(y) Persons participating in the distribution of the Series B Notes or
(z) Persons who are affiliates (as defined in Rule 144) of Seven Seas
and accepted for exchange in the Exchange Offer and (ii) Definitive
Notes that do not bear the Private Placement Legend in an aggregate
principal amount equal to the principal amount of the Restricted
Definitive Notes accepted for exchange in the Exchange Offer.
Concurrently with the issuance of such Notes, the Trustee shall cause
the aggregate principal amount of the applicable Restricted Global
Notes to be reduced accordingly and Seven Seas shall execute and the
Trustee shall authenticate and deliver to the Persons designated by
the Holders of Definitive Notes so accepted Definitive Notes in the
appropriate principal amount.
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(g) Cancellation and/or Adjustment of Global Notes. At such time
as all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, all Global Notes shall be returned
to or retained and cancelled by the Trustee in accordance with Section 2.11
hereof. At any time prior to such cancellation, if any beneficial interest in
a Global Note is exchanged for Definitive Notes, redeemed, repurchased or
cancelled, the principal amount of Notes represented by such Global Note shall
be reduced accordingly and an endorsement shall be made on such Global Note, by
the Trustee or the Notes Custodian, at the direction of the Trustee, to reflect
such reduction.
(h) General Provisions Relating to Transfers and Exchanges.
(i) To permit registrations of transfers and exchanges,
Seven Seas shall execute and the Trustee shall authenticate Global
Notes and Definitive Notes at the Registrar's request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but Seven Seas may require
payment of a sum sufficient to cover any stamp or transfer tax or
similar governmental charge payable in connection therewith (other
than any such stamp or transfer taxes or similar governmental charge
payable upon exchange or transfer pursuant to Sections 2.10, 3.6, 4.9,
4.10 and 9.5 hereto).
(iii) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of Seven Seas, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such
registration of transfer or exchange.
(iv) The Registrar shall not be required: (A) to issue, to
register the transfer of or to exchange Notes during a period
beginning at the opening of fifteen (15) Business Days before the day
of any selection of Notes for redemption under Section 3.2 hereof and
ending at the close of business on the day of selection, (B) to
register the transfer of or to exchange any Note so selected for
redemption in whole or in part, except the unredeemed portion of any
Note being redeemed in part, or (C) to register the transfer of or to
exchange a Note between a record date and the next succeeding interest
payment date.
(v) Prior to due presentment for the registration of a
transfer of any Note, the Trustee, any Agent and Seven Seas may deem
and treat the Person in whose name any Note is registered as the
absolute owner of such Note for the purpose of receiving payment of
principal of and interest on such Notes and for all other purposes,
and neither the Trustee, any Agent nor Seven Seas shall be affected by
notice to the contrary.
(vi) The Trustee shall authenticate Global Notes and
Definitive Notes in accordance with the provisions of Section 2.2
hereof.
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SECTION 2.7 REPLACEMENT OF NOTES
If any mutilated Note is surrendered to the Trustee, or Seven Seas and
the Trustee receives evidence to its satisfaction of the destruction, loss or
theft of any Note, Seven Seas shall issue and the Trustee, upon the written
order of Seven Seas signed by two Officers of Seven Seas, shall authenticate a
replacement Note if the Trustee's requirements are met. If required by the
Trustee or Seven Seas, an indemnity bond must be supplied by the Holder that is
sufficient in the judgment of the Trustee and Seven Seas to protect Seven Seas,
the Trustee, any Agent and any authenticating agent from any loss that any of
them may suffer if a Note is replaced. Seven Seas and the Trustee may charge
for their expenses in replacing a Note.
Every replacement Note is an additional obligation of Seven Seas and
shall be entitled to all of the benefits of this Indenture equally and
proportionately with all other Notes duly issued hereunder.
SECTION 2.8 OUTSTANDING NOTES
The Notes outstanding at any time are all the Notes authenticated by
the Trustee except for those cancelled by it, those delivered to it for
cancellation, those reductions in the interest in a Global Note effected by the
Trustee in accordance with the provisions hereof, and those described in this
Section as not outstanding. Except as set forth in Section 2.9 hereof, a Note
does not cease to be outstanding because Seven Seas or an Affiliate of Seven
Seas holds the Note.
If a Note is replaced pursuant to Section 2.7 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section
4.1 hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than Seven Seas, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay Notes payable on that date, then on and after that date such
Notes shall be deemed to be no longer outstanding and shall cease to accrue
interest.
SECTION 2.9 TREASURY NOTES
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by Seven
Seas, or by any Person directly or indirectly controlling or controlled by or
under direct or indirect common control with Seven Seas, shall be considered as
though not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes that a Trustee knows are so owned shall be so disregarded.
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SECTION 2.10 TEMPORARY NOTES
Until Definitive Notes are ready for delivery, Seven Seas may prepare
and the Trustee shall authenticate temporary Notes upon a written order of
Seven Seas signed by two Officers of Seven Seas. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that
Seven Seas considers appropriate for temporary Notes and as shall be reasonably
acceptable to the Trustee. Without unreasonable delay, Seven Seas shall
prepare and the Trustee shall authenticate Definitive Notes in exchange for
temporary Notes.
Holders of temporary Notes shall be entitled to all of the benefits of
this Indenture.
SECTION 2.11 CANCELLATION
Seven Seas at any time may deliver Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee any
Notes surrendered to them for registration of transfer, exchange or payment.
The Trustee and no one else shall cancel all Notes surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall destroy
cancelled Notes (subject to the record retention requirement of the Exchange
Act). Certification of the destruction of all cancelled Notes shall be
delivered to Seven Seas. Seven Seas may not issue new Notes to replace Notes
that it has paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12 DEFAULTED INTEREST
If Seven Seas defaults in a payment of interest on the Notes, it shall
pay the defaulted interest in any lawful manner plus, to the extent lawful,
interest payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, in each case at the rate provided in the Notes
and in Section 4.1 hereof. Seven Seas shall notify the Trustee in writing of
the amount of defaulted interest proposed to be paid on each Note and the date
of the proposed payment. Seven Seas shall fix or cause to be fixed each such
special record date and payment date, provided that no such special record date
shall be less than 10 days prior to the related payment date for such defaulted
interest. At least 15 days before the special record date, Seven Seas (or,
upon the written request of Seven Seas, the Trustee in the name and at the
expense of Seven Seas) shall mail or cause to be mailed to Holders a notice
that states the special record date, the related payment date and the amount of
such interest to be paid.
SECTION 2.13 RECORD DATE
The record date for purposes of determining the identity of Holders of
the Notes entitled to vote or consent to any action by vote or consent
authorized or permitted under this Indenture shall be determined as provided
for in TIA Section 316(c).
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SECTION 2.14 COMPUTATION OF INTEREST
Interest on the Notes shall be computed on the basis of a 360-day year
comprised of twelve 30-day months. For the purposes of the Interest Act
(Canada) the yearly rate of interest which is equivalent to the rate payable
hereunder is the rate payable multiplied by the actual number of days in the
year for which such calculation is made and divided by 360.
SECTION 2.15 CUSIP NUMBER
Seven Seas in issuing the Notes may use a "CUSIP" number, and if it
does so, the Trustee shall use the CUSIP number in notices of redemption or
exchange as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes and that reliance may be placed
only on the other identification numbers printed on the Notes. Seven Seas
shall promptly notify the Trustee of any change in the CUSIP number.
ARTICLE III
REDEMPTION AND REPURCHASE
SECTION 3.1 NOTICES TO TRUSTEE
If Seven Seas elects to redeem Notes pursuant to the optional
redemption provisions of Section 3.7 hereof, it shall furnish to the Trustee,
at least 45 days (unless a shorter period is acceptable to the Trustee) but not
more than 60 days before a redemption date, an Officers' Certificate setting
forth (i) the paragraph of the Notes and clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of Notes to be redeemed and (iv) the redemption price.
SECTION 3.2 SELECTION OF NOTES TO BE REDEEMED
If less than all of the Notes are to be redeemed at any time,
selection of the Notes for redemption will be made by the Trustee in compliance
with the requirements of the principal national securities exchange, if any, on
which the Notes are listed or, if the Notes are not so listed, on a pro rata
basis, by lot or by such other method as the Trustee considers fair and
appropriate; provided that no Notes of $1,000 in original principal amount or
less will be redeemed in part. In the event of partial redemption by lot, the
particular Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date by
the Trustee from the outstanding Notes not previously called for redemption.
The Trustee shall promptly notify Seven Seas in writing of the Notes
selected for redemption and, in the case of any Note selected for partial
redemption, the portion of the principal amount thereof to be redeemed. Notes
and portions of Notes selected shall be in amounts of $1,000 or integral
multiples of $1,000; except that if all of the Notes of a Holder are to be
redeemed, the entire
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outstanding principal amount of Notes held by such Holder, even if not an
integral multiple of $1,000, shall be redeemed. Except as provided in the
preceding sentence, provisions of this Indenture that apply to Notes called for
redemption also apply to portions of Notes called for redemption.
The provisions of the two preceding paragraphs of this Section 3.2
shall not apply with respect to any redemption affecting only a Global
certificate, whether such Global certificate is to be redeemed in whole or in
part. In case of any such redemption in part, the unredeemed portion of the
principal amount of the Global certificate shall remain outstanding.
SECTION 3.3 NOTICE OF REDEMPTION
At least 30 days but not more than 60 days before a redemption date,
Seven Seas shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose Notes are to be redeemed at its registered
address.
The notice shall identify the Notes to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the redemption
date upon surrender of such Note, a new Note or Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
Note;
(d) the name and address of the Paying Agent;
(e) that Notes called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(f) that, unless Seven Seas defaults in making such redemption
payment, interest on Notes called for redemption ceases to accrue on and after
the redemption date;
(g) the paragraph of the Notes and/or Section of this Indenture
pursuant to which the Notes called for redemption are being redeemed; and
(h) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on the
Notes.
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If any of the Notes to be redeemed is in the form of a Global Note,
then such notice shall be modified by Seven Seas to the extent appropriate to
accord with the Applicable Procedures for redemptions.
At Seven Seas' request, the Trustee shall give the notice of
redemption in Seven Seas' name and at its expense; provided, however, that
Seven Seas shall have delivered to the Trustee, at least 45 days prior to the
redemption date (unless a shorter time is acceptable to the Trustee), an
Officers' Certificate requesting that the Trustee give such notice and setting
forth the information to be stated in such notice as provided in the preceding
paragraph.
SECTION 3.4 EFFECT OF NOTICE OF REDEMPTION
Once notice of redemption is mailed in accordance with Section 3.3
hereof, Notes called for redemption become irrevocably due and payable on the
redemption date at the redemption price. A notice of redemption may not be
conditional. Failure to give such notice by mailing to any Holder of Notes or
any defect therein shall not affect the validity of any proceedings for
redemption of other Notes.
SECTION 3.5 DEPOSIT OF REDEMPTION PRICE
On or prior to the redemption date, Seven Seas shall deposit with the
Trustee or with the Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 2.4 hereof)
immediately available funds sufficient to pay the redemption price of and
accrued and unpaid interest, if any, and Liquidated Damages and Additional
Amounts, if any, on all Notes to be redeemed on that date. The Trustee or the
Paying Agent shall promptly return to Seven Seas any money deposited with the
Trustee or the Paying Agent by Seven Seas in excess of the amounts necessary to
pay the amount referred to in the immediately preceding sentence.
If Seven Seas complies with the provisions of the preceding paragraph,
on and after the redemption date, interest shall cease to accrue on the Notes
or the portions of Notes called for redemption. If a Note is redeemed on or
after an interest record date but on or prior to the related interest payment
date, then any accrued and unpaid interest (and Liquidated Damages and
Additional Amounts, if any) shall be paid to the Person in whose name such Note
was registered at the close of business on such record date. If any Note
called for redemption shall not be so paid upon surrender for redemption
because of the failure of Seven Seas to comply with the preceding paragraph,
interest (and Liquidated Damages and Additional Amounts, if any) shall be paid
on the unpaid principal, from the redemption date until such principal is paid,
and to the extent lawful on any interest not paid on such unpaid principal, in
each case at the rate provided in the Notes and in Section 4.1 hereof.
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SECTION 3.6 NOTES REDEEMED IN PART
Upon surrender of a Note that is redeemed in part (with, if the
Company or the Trustee so requires, due endorsement by, or a written instrument
of transfer in form reasonably satisfactory to the Company and the Trustee,
duly executed by the Holder thereof or such Holder's attorney duly authorized
in writing), Seven Seas shall issue and, upon Seven Seas' written request, the
Trustee shall authenticate for the Holder at the expense of Seven Seas a new
Note equal in principal amount to the unredeemed portion of the Note
surrendered. The records of the Registrar and the Depository shall reflect any
partial redemption of any Global Note.
SECTION 3.7 OPTIONAL REDEMPTION
(a) Except as set forth in clauses (b) and (c) of this Section 3.7
and in Section 3.8, the Notes shall not be redeemable at Seven Seas' option
prior to May 15, 2002. Thereafter, the Notes shall be subject to redemption
for cash at the option of Seven Seas, in whole or in part, upon not less than
30 nor more than 60 days' notice to each Holder of Notes to be redeemed, at the
following redemption prices (expressed as percentages of principal amount
thereof) if redeemed during the twelve-mouth period beginning on May 15 of each
of the years indicated below, in each case together with any accrued and unpaid
interest and Liquidated Damages and Additional Amounts, if any, thereon to the
applicable redemption date:
Year Percentage
---- ----------
2002 106.250%
2003 103.125%
2004 100.000%
(b) Notwithstanding the provisions of clause (a) of this Section
3.7, from time to time on or before May 15, 2002, Seven Seas may (but shall not
have the obligation to) redeem for cash up to 33-1/3% of the original aggregate
principal amount of the Notes at a redemption price of 112.500% of the
principal amount thereof, in each case plus any accrued and unpaid interest and
Liquidated Damages and Additional Amounts, if any, thereon to the redemption
date, with the Net Proceeds of any Equity or Strategic Investor Offering;
provided that at least 66-2/3% of the original aggregate principal amount of
the Notes remains outstanding immediately after the occurrence of each such
redemption and that no more than one-half of the net proceeds of such Equity or
Strategic Investor Offering are used to effect such redemption; and provided,
further, that each such redemption shall occur within 60 days of the date of
the closing of any such Equity or Strategic Investor Offering.
(c) Within 30 days following any Change of Control, Seven Seas
shall mail a notice ("Change of Control Notice") to each Holder describing the
transaction or transactions that constitute the Change of Control and either
(i) provided such Change of Control occurs prior to May 15, 2002, notifying the
Holders that it is redeeming all of the Notes pursuant to this Section 3.7, or
(ii) offering
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to repurchase all or any part (equal to $1,000 or an integral multiple thereof)
of such Holder's Notes pursuant to Section 4.9 hereof. If Seven Seas elects to
redeem the Notes pursuant to this Section 3.7, Seven Seas shall be obligated to
redeem the Notes no later than 90 days after the Change of Control. The
redemption price for each Note shall equal 100% of the principal amount thereof
plus the Applicable Premium (as determined by the Company) as of, and accrued
but unpaid interest, if any, to, the date of redemption, and Additional Amounts
and Liquidated Damages, if any then due, (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date). If the Change of Control occurs on or after May 15,
2002, Seven Seas shall not have any right to redeem the Notes pursuant to this
Section 3.7, but shall continue to be obligated to provide a Change of Control
Notice to each Holder and to repurchase the Notes pursuant to Section 4.9.
(d) Any redemption pursuant to this Section 3.7 shall be made
pursuant to the provisions of Sections 3.1 through 3.6 hereof.
SECTION 3.8 OPTIONAL TAX REDEMPTION
The Notes will be redeemable, at the option of Seven Seas, in whole,
but not in part, upon giving not less than 30 nor more than 60 days' notice to
the Holders (which notice shall be irrevocable), at 100% of the principal
amount thereof, premium, if any, plus accrued and unpaid interest, Liquidated
Damages and Additional Amounts, if any, to the date fixed for redemption, if
(i) as a result of any change in or amendment to the laws, treaties,
regulations or rulings of Canada, the Cayman Islands, Colombia or any other
jurisdiction with which Seven Seas or any Guarantor has any connection
(including any jurisdiction from or through which payments under the Notes or
the Subsidiary Guarantees are made) or any political subdivision or authority
therein or thereof having power to tax, (or of any political subdivision or
taxing authority thereof or therein) or any change in official position
regarding the application or interpretation of such laws, treaties, regulations
or rulings (including a holding, judgment or order by a court of competent
jurisdiction) that is proposed and becomes effective on or after the date of
this Indenture, in making any payment due or to become due under the Notes or
this Indenture, Seven Seas is or would be required on the next succeeding
interest payment date to pay Additional Amounts and (ii) such obligation cannot
be avoided by Seven Seas taking reasonable measures available to it (which
shall not include the substitution of another Person as obligor under the
Notes). No such notice of redemption shall be given earlier than 90 days prior
to the earliest date on which Seven Seas would be obligated to pay such
Additional Amounts if a payment in respect of such Notes were then due. Prior
to the publication or mailing of any notice of redemption of the Notes as
described above, Seven Seas must deliver to the Trustee an Officers'
Certificate to the effect that Seven Seas' obligation to pay Additional Amounts
cannot be avoided by Seven Seas taking reasonable measures available to it.
Seven Seas will also deliver an opinion of an independent legal counsel of
recognized standing stating that Seven Seas would be obligated to pay
Additional Amounts due to the changes in laws, treaties, regulations or
rulings. The Trustee will accept such certificate and opinion as sufficient
evidence of the satisfaction of the conditions precedent set forth in clauses
(i) and (ii) above, in which event it will be conclusive and binding on the
Holders.
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SECTION 3.9 MANDATORY REDEMPTION
Except as set forth in Section 4.9 and Section 4.10, Seven Seas is not
required to make any mandatory redemption, purchase or sinking fund payments
with respect to the Notes prior to the Maturity Date.
ARTICLE IV
COVENANTS
SECTION 4.1 PAYMENT OF NOTES
Seven Seas shall pay or cause to be paid the principal of, premium, if
any, and interest and Additional Amounts, if any, on the Notes on the dates and
in the manner provided in the Notes. Principal, premium, if any, and interest
and Additional Amounts, if any, shall be considered paid on the date due if the
Paying Agent, if other than Seven Seas or a Subsidiary thereof, holds as of
10:00 a.m. Eastern Time on the due date money deposited by Seven Seas in
immediately available funds and designated for and sufficient to pay all
principal premium, if any, and interest and Additional Amounts, if any then
due. Seven Seas shall pay all Liquidated Damages, if any, in the same manner
on the date and in the amounts set forth in the Registration Rights Agreement
and herein. Seven Seas will promptly notify the Trustee of a Registration
Default (as defined in the Registration Rights Agreement) under the
Registration Rights Agreement and any cure thereof.
Seven Seas shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue principal at the rate equal to
1% per annum in excess of the then applicable interest rate on the Notes to the
extent lawful; it shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest and
Liquidated Damages and Additional Amounts, if any (without regard to any
applicable grace period) at the same rate to the extent lawful.
SECTION 4.2 MAINTENANCE OF OFFICE OR AGENCY
Seven Seas shall maintain in the City of New York, an office or agency
(which may be an office of the Trustee or an affiliate of the Trustee,
Registrar or co-registrar) where Notes may be surrendered for registration of
transfer or for exchange and where notices and demands to or upon Seven Seas in
respect of the Notes and this Indenture may be served. Seven Seas shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time Seven Seas shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
Seven Seas may also from time to time designate one or more other
offices or agencies where the Notes may be presented or surrendered for any or
all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any
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manner relieve Seven Seas, of its obligation to maintain an office or agency in
the City of New York for such purposes. Seven Seas, shall give prompt written
notice to the Trustee of any such designation or rescission and of any change
in the location of any such other office or agency.
Seven Seas hereby designates the Corporate Trust Office of the Trustee
as one such office or agency of Seven Seas in accordance with Section 2.3
hereof.
SECTION 4.3 CORPORATE EXISTENCE
Subject to Article V and Section 4.10 hereof, Seven Seas shall do or
cause to be done all things necessary to preserve and keep in full force and
effect (i) its corporate existence, and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of each
of Seven Seas or any such Subsidiary and (ii) the rights (charter and
statutory), licenses and franchises of each of Seven Seas and its Subsidiaries;
provided, however, that Seven Seas shall not be required to preserve any such
right, license or franchise, or the corporate, partnership or other existence
of any of its Subsidiaries, if the Board of Directors shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
Seven Seas and its Subsidiaries, taken as a whole, and that the loss thereof is
not adverse in any material respect to the Holders of the Notes.
SECTION 4.4 MAINTENANCE OF PROPERTIES AND INSURANCE
(a) Seven Seas shall cause all material Properties owned by or
leased by it or any of its Subsidiaries useful and necessary to the conduct of
its business or the business of any of its Subsidiaries to be improved or
maintained and kept in normal condition, repair and working order and shall
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereof, all as in its judgment may be necessary, so that the
business carried on in connection therewith may be properly conducted at all
times; provided, however, that nothing in this Section 4.4 shall prevent Seven
Seas or any of its Subsidiaries from discontinuing the use, operation or
maintenance of any of such Properties, or disposing of any of them, if such
discontinuance or disposal is, in the judgment of the Board of Directors or of
the board of directors of any Subsidiary of Seven Seas concerned, or of an
officer (or other agent employed by Seven Seas or of any of its Subsidiaries)
of Seven Seas or any of its Subsidiaries having managerial responsibility for
any such property, desirable in the conduct of the business of Seven Seas or
any Subsidiary of Seven Seas, and if such discontinuance or disposal is not
adverse in any material respect to the Holders as determined by the Board of
Directors or such board, officer or agent and evidenced in an Officer's
Certificate delivered to the Trustee.
(b) To the extent available at commercially reasonable rates,
Seven Seas shall maintain, and shall cause its Subsidiaries, to the extent such
Subsidiaries maintain operations, to maintain, insurance with responsible
carriers against such risks and in such amounts, and with such deductibles,
retentions, self-insured amounts and co-insurance provisions, as are
customarily carried by similar businesses of similar size.
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SECTION 4.5 COMPLIANCE WITH LAWS
Seven Seas shall comply, and shall cause its Subsidiaries to comply,
with all applicable statutes, rules, regulations, orders and restrictions in
respect of the conduct of their respective businesses and the ownership of
their respective properties, except for such noncompliances as would not in the
aggregate have a material adverse effect on the financial condition or results
of operations of Seven Seas and its Subsidiaries taken as a whole.
SECTION 4.6 REPORTS
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Notes are outstanding, Seven Seas shall furnish to
all Holders of Notes, within 15 days after it is or would have been required to
file such with the Commission, (i) all quarterly and annual financial
information that would be required to be contained in a filing with the
Commission on Form 10-K and 10-Q if Seven Seas was required to file such Forms,
including a "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and, with respect to the annual information only, a
report thereon by the certified independent accountants of Seven Seas and (ii)
all current reports that would be required to be filed with the Commission on
Form 8-K if Seven Seas were required to file such reports. In addition,
whether or not required by the rules and regulations of the Commission, Seven
Seas will file copies of all such information and reports with the Commission
for public availability (unless the Commission will not accept such a filing)
and make such information available to securities analysts and prospective
investors upon request.
(b) For so long as any Notes remain outstanding, Seven Seas shall
furnish to all Holders and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
SECTION 4.7 TAXES
Seven Seas shall pay, and shall cause each of its Restricted
Subsidiaries to pay prior to delinquency, all material Taxes, assessments, and
governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Notes.
SECTION 4.8 STAY, EXTENSION AND USURY LAWS
Seven Seas covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants
or the performance of this Indenture; and Seven Seas (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to
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the Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.9 CHANGE OF CONTROL
Upon the occurrence of a Change of Control at any time and subject to
Seven Seas' right to redeem all of the Notes pursuant to Section 3.7, each
Holder of Notes shall have the right to require Seven Seas to repurchase all or
any part (equal to $1,000 or an integral multiple thereof) of such Holder's
Notes pursuant to the offer described below (the "Change of Control Offer") at
an offer price in cash equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest and Liquidated Damages and Additional Amounts,
if any, thereon to the date of purchase (the "Change of Control Payment"). The
offer to repurchase shall be made in the Change of Control Notice, delivered
pursuant to Section 3.7(c), and shall offer to repurchase Notes pursuant to the
procedures required by this Indenture and described in the Change of Control
Notice. If any of the Notes subject to a change of Control Offer is in the
form of a Global certificate, such notice shall be modified by the Company to
the extent appropriate to accord with the Applicable Procedures for
repurchases. Seven Seas shall comply with the requirements of Rule 14e-1 under
the Exchange Act and any other securities laws and regulations thereunder to
the extent such laws and regulations are applicable in connection with the
repurchase of the Notes as a result of a Change of Control.
The Change of Control Offer shall remain open for a period of at least
20 Business Days following its commencement but no longer than 40 days, except
to the extent that a longer period is required by applicable law (the "Change
of Control Offer Period"). No later than five Business Days after the
termination of the Change of Control Offer Period (the "Change of Control
Purchase Date"), Seven Seas shall purchase all Notes validly tendered and not
properly withdrawn pursuant to the Change of Control Offer. Payment for any
Notes so purchased shall be made in the same manner as interest payments are
made on the Notes.
If the Change of Control Purchase Date is on or after an interest
record date and on or before the related interest payment date, any accrued and
unpaid interest and Liquidated Damages and Additional Amounts, if any, shall be
paid to the Person in whose name a Note is registered at the close of business
on such interest record date, and no additional interest will be payable to
Holders who tender Notes pursuant to the Change of Control Offer.
Upon the commencement of a Change of Control Offer, Seven Seas shall
send, by first class mail, a notice to each of the Holders, with a copy of each
such notice to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Notes pursuant to the
Change of Control Offer. The Change of Control Offer shall be made to all
Holders. The notice, which shall govern the terms of the Change of Control
Offer, shall state:
(a) that the Change of Control Offer is being made pursuant to
this covenant and the length of time the Change of Control Offer shall remain
open;
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(b) the purchase price and the Change of Control Purchase Date;
(c) that any Note which is not validly tendered or are otherwise
not accepted for payment shall continue to accrue interest;
(d) that, unless Seven Seas defaults in making such payment, any
Note accepted for payment pursuant to the Change of Control Offer shall cease
to accrue interest after the Change of Control Purchase Date;
(e) that Holders electing to have a Note purchased pursuant to any
Change of Control Offer shall be required to surrender the Note, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Note
completed, or transfer by book-entry transfer, to Seven Seas, a depository, if
appointed by Seven Seas, or a Paying Agent at the address specified in the
notice no later than the close of business on the last day of the Change of
Control Offer Period; and
(f) that Holders shall be entitled to withdraw their election if
the Paying Agent receives, not later than the close of business on the last day
of the Change of Control Offer Period, a telegram, facsimile transmission or
letter setting forth the name of the Holder, the principal amount of the Note
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note (or specified portion thereof)
purchased.
On the Change of Control Purchase Date, Seven Seas will, to the extent
lawful, (1) accept for payment all Notes or portions thereof validly tendered
and not properly withdrawn pursuant to the Change of Control Offer, (2) deposit
with the Paying Agent an amount equal to the Change of Control Payment in
respect of all Notes or portions thereof so validly tendered and not properly
withdrawn and (3) deliver or cause to be delivered to the Trustee the Notes so
accepted together with an Officers' Certificate stating the aggregate principal
amount of Notes or portions thereof being purchased by Seven Seas. The Paying
Agent shall promptly mail to each Holder of Notes so validly tendered and not
properly withdrawn the Change of Control Payment for such Notes, and the
Trustee shall promptly authenticate and mail (or cause to be transferred by
book entry) to each Holder a new Note equal in principal amount to any
unpurchased portion of the Notes surrendered, if any, provided that each such
new Note shall be in a principal amount of $1,000 or in integral multiple
thereof. Seven Seas will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of Control Purchase
Date.
SECTION 4.10 ASSET SALES
Seven Seas will not, and will not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale unless (i) Seven Seas (or the
Restricted Subsidiary, as the case may be) receives consideration at the time
of such Asset Sale at least equal to the fair market value of the assets or
Equity Interests sold or otherwise disposed of (evidenced in each case by a
resolution of the Board of Directors of such entity set forth in an Officers'
Certificate delivered to the Trustee) and (ii) at least 80% (100% in the case
of lease payments) of the consideration therefor received by Seven Seas
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or such Restricted Subsidiary is in the form of the following (or any
combination thereof): (a) cash or Cash Equivalents, (b) the assumption by the
purchaser of liabilities other than subordinated Indebtedness and (c) any notes
or other obligations received by Seven Seas or any such Restricted Subsidiary
from such purchaser that are converted by Seven Seas or such Restricted
Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash
Equivalents received) within 180 days following the closing of such Asset Sale,
will be deemed to be cash for purposes of this provision (and shall be deemed
to be Net Proceeds upon receipt).
Within 365 days after the receipt of any Net Proceeds from an Asset
Sale, Seven Seas (or the Restricted Subsidiary, as applicable) may apply, or
enter into binding contracts (subject only to obtaining required governmental
approvals) irrevocably committing Seven Seas or such Restricted Subsidiary to
apply, such Net Proceeds to an investment in another business, the making of a
capital expenditure or the acquisition of other tangible assets, in each case,
in the Oil and Gas Business, or Seven Seas (or the Restricted Subsidiary, as
applicable) may apply such Net Proceeds to the permanent reduction of
Indebtedness under the Credit Facility or the permanent reduction of any other
senior Indebtedness of Seven Seas or the permanent reduction of any long-term
Indebtedness of such Restricted Subsidiary. Pending the final application of
any such Net Proceeds, Seven Seas or any such Restricted Subsidiary may
temporarily reduce outstanding revolving credit borrowings, including
borrowings under the Credit Facility, or otherwise invest such Net Proceeds in
any manner that is not prohibited by this Indenture. Any Net Proceeds from
Asset Sales that are not applied or invested, or committed to be applied or
invested as provided in the preceding sentence of this paragraph shall be
deemed to constitute "Excess Proceeds." On the 366th day after the receipt of
any Net Proceeds from an Asset Sale or, if a governmental authority declines on
or after such 366th day to grant or issue a required approval in relation to a
binding contract, then on the tenth Business Day thereafter, Seven Seas will be
required to make an offer to all Holders of Notes (an "Asset Sale Offer") to
purchase the maximum principal amount of Notes that may be purchased out of the
Excess Proceeds, at an offer price in cash in an amount equal to 100% of the
principal amount thereof plus accrued and unpaid interest and Liquidated
Damages and Additional Amounts, if any, thereon to the date of purchase, in
accordance with the procedures set forth in this Indenture; provided, however,
that if Seven Seas is required to apply such Excess Proceeds to repurchase, or
to offer to repurchase, any Pari Passu Indebtedness, Seven Seas shall only be
required to offer to purchase the maximum principal amount of Notes that may be
purchased out of the amount of such Excess Proceeds multiplied by a fraction,
the numerator of which is the aggregate principal amount of Notes outstanding
and the denominator of which is the aggregate principal amount of Notes
outstanding plus the aggregate principal amount of Pari Passu Indebtedness
outstanding (for which such repurchase requirement exists). To the extent that
the aggregate amount of Notes so validly tendered and not properly withdrawn
pursuant to an Asset Sale Offer is less than the applicable amount of Excess
Proceeds, Seven Seas may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of Notes surrendered by
Holders thereof exceeds the applicable amount of Excess Proceeds, Seven Seas
shall notify the Trustee of the aggregate principal amount of Notes that are to
be purchased and the Trustee shall select the Notes to be purchased in
authorized denominations on a pro rata basis, by lot or by such other method as
the Trustee deems
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fair and appropriate. Upon completion of such Asset Sale Offer, the amount of
Excess Proceeds shall be reset at zero.
Notwithstanding the foregoing, Seven Seas will not be obligated to
repurchase more than 25% of the original aggregate principal amount of the
Notes pursuant to this covenant prior to the day following the fifth
anniversary of the issue date of the Notes (the "Five Year Date"), and the
maximum amount to be applied to the repurchase of Notes in connection with any
Asset Sale Offer made pursuant to this covenant having a purchase date prior to
the day following the Five Year Date shall be the lesser of (x) the Excess
Proceeds and (y) 25% of the original aggregate principal amount of the Notes
less the aggregate principal amount of Notes purchased pursuant to Asset Sale
Offers relating to all prior Asset Sales. To the extent that the amount of
Excess Proceeds exceeds the amount of Notes purchased because of the limitation
imposed by the immediately preceding sentence (the amount of such excess being
the "Aggregate Unused Proceeds"), such Aggregate Unused Proceeds shall
constitute Excess Proceeds for purposes of the first Asset Sale Offer that is
made after the Five Year Date and, in the event the amount of the Aggregate
Unused Proceeds exceeds $10.0 million, promptly after the Five Year Date, Seven
Seas shall commence an Asset Sale Offer on a pro rata basis for an aggregate
principal amount of Notes equal to the Aggregate Unused Proceeds (and any other
Excess Proceeds that arise between the Five Year Date and such Asset Sale
Offer) at a purchase price equal to 101% of the principal amount of the Notes,
plus accrued and unpaid interest and Liquidated Damages and Additional Amounts,
if any, thereon to the date of purchase.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement but no longer than 40 days, except to the
extent that a longer period is required by applicable law (the "Asset Sale
Offer Period"). No later than five Business Days after the termination of the
Asset Sale Offer Period (the "Asset Sale Purchase Date"), Seven Seas shall
purchase the principal amount of Notes required to be purchased pursuant to
this covenant (the "Asset Sale Offer Amount") or, if less than the Asset Sale
Offer Amount has been so validly tendered and not properly withdrawn, all Notes
validly tendered and not properly withdrawn in response to the Asset Sale
Offer. Payment for any Notes so purchased shall be made in the same manner as
interest payments are made on the Notes.
If the Asset Sale Purchase Date is on or after an interest record date
and on or before the related interest payment date, any accrued and unpaid
interest and Liquidated Damages and Additional Amounts, if any, will be paid to
the Person in whose name a Note is registered at the close of business on such
record date, and no additional interest will be payable to Holders who tender
Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, Seven Seas shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender Notes pursuant to the Asset Sale
Offer. The Asset Sale Offer shall be made to all Holders. The notice, which
shall govern the terms of the Asset Sale Offer, shall state:
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(a) that the Asset Sale Offer is being made pursuant to
this covenant and the length of time the Asset Sale Offer shall remain
open;
(b) the Asset Sale Offer Amount, the purchase price and
the Asset Sale Purchase Date;
(c) that any Notes which are not validly tendered or are
not otherwise accepted for payment shall continue to accrete or accrue
interest;
(d) that, unless Seven Seas defaults in making such
payment, any Note accepted for payment pursuant to the Asset Sale
Offer shall cease to accrete or accrue interest after the Asset Sale
Purchase Date;
(e) that Holders electing to have a Note purchased
pursuant to any Asset Sale Offer shall be required to surrender the
Note, with the form entitled "Option of Holder to Elect Purchase" on
the reverse of the Note completed, or transfer by book-entry transfer,
to Seven Seas, a depository, if appointed by Seven Seas, or a Paying
Agent at the address specified in the notice no later than the close
of business on the last day of the Asset Sale Offer Period;
(f) that Holders shall be entitled to withdraw their
election if the Paying Agent receives, not later than close of
business on the last day of the Asset Sale Offer Period, a telegram,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Note the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such
Note purchased;
(g) that, if the aggregate principal amount of Notes
surrendered by Holders and any Pari Passu Indebtedness surrendered by
holders or lenders thereof, collectively exceeds the Asset Sale Offer
Amount, the Trustee shall select the Notes and such Pari Passu
Indebtedness to be purchased on a pro rata basis, by lot or by such
other method as the Trustee deems fair and appropriate (with such
adjustments as may be deemed appropriate by Seven Seas so that only
Notes in denominations of $1,000, or integral multiples thereof, shall
be purchased); and
(h) that Holders whose Notes were purchased only in part
shall be issued new Notes equal in principal amount to the unpurchased
portion of the Notes surrendered (or transferred by book-entry
transfer).
If any of the Notes subject to the Asset Sale Offer is in the form of
a Global Note, then such notice shall be modified by Seven Seas to the extent
appropriate to accord with the Applicable Procedures for repurchases.
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On or before the Asset Sale Purchase Date, Seven Seas shall, to the
extent lawful, accept for payment, on a pro rata basis to the extent necessary,
the Asset Sale Offer Amount of Notes or portions thereof validly tendered and
not properly withdrawn pursuant to the Asset Sale Offer, or if less than the
Asset Sale Offer Amount has been validly tendered and not properly withdrawn,
all Notes validly tendered and not properly withdrawn, and shall deliver to the
Trustee an Officers' Certificate stating that such Notes or portions thereof
were accepted for payment by Seven Seas in accordance with the terms of this
covenant. Seven Seas shall promptly (but in any case not later than five days
after the Asset Sale Purchase Date) cause to be mailed or delivered to each
tendering Holder an amount equal to the purchase price of the Notes validly
tendered and not properly withdrawn by such Holder and accepted by Seven Seas
for purchase, and upon surrender of a Note that is to be purchased in part
(with, if Seven Seas or the Trustee so requires, due endorsement by, or a
written instrument of transfer in form reasonably satisfactory to Seven Seas
and the Trustee, duly executed by the Holder thereof or such Holder's attorney
duly authorized in writing) Seven Seas shall promptly issue a new Note, and the
Trustee, upon delivery of an Officers' Certificate from Seven Seas, shall
authenticate and mail or deliver such new Note to such Holder, in a principal
amount equal to any unpurchased portion of the Note surrendered. Any Note not
so accepted shall be promptly mailed or delivered by Seven Seas to the Holder
thereof. Seven Seas shall publicly announce the results of the Asset Sale
Offer on the Asset Sale Purchase Date.
Seven Seas will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to any Asset Sale Offer.
SECTION 4.11 RESTRICTED PAYMENTS
Seven Seas shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or
make any distribution on account of Seven Seas' or any of its Restricted
Subsidiaries' Equity Interests (including, without limitation, any payment in
connection with any merger or consolidation involving Seven Seas) other than
dividends or distributions payable in Equity Interests (other than Disqualified
Stock) of Seven Seas or dividends or distributions payable to Seven Seas or any
Wholly Owned Subsidiary of Seven Seas; (ii) purchase, redeem or otherwise
acquire or retire for value any Equity Interests of Seven Seas or any
Restricted Subsidiary of Seven Seas (other than any such Equity Interests owned
by Seven Seas or any Wholly Owned Subsidiary of Seven Seas); (iii) prepay,
purchase, redeem, defease or otherwise acquire or retire for value any
Indebtedness that is subordinated in right of payment to the Notes or any
Subsidiary Guarantee, as applicable, except in accordance with the scheduled
mandatory redemption or repayment provisions set forth in the original
documentation governing such Indebtedness (but not pursuant to any mandatory
offer to repurchase upon the occurrence of any event); or (iv) make any
Restricted Investment (all such payments and other actions set forth in clauses
(i) through (iv) above being collectively referred to as "Restricted
Payments"), unless, at the time of and after giving effect to such Restricted
Payment:
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(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) Seven Seas would, at the time of such Restricted Payment and
after giving proforma effect thereto as if such Restricted Payment had been
made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Fixed Charge Coverage Ratio test set forth in the first paragraph of Section
4.12; and
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by Seven Seas and its Restricted Subsidiaries
after the date of this Indenture, does not exceed the sum of, without
duplication, (i) 50% of the Consolidated Net Income of Seven Seas for the
period (taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of this Indenture to the end of Seven Seas'
most recently ended fiscal quarter for which internal financial statements are
available at the time of such Restricted Payment (or, if such Consolidated Net
Income for such period is a deficit or loss, less 100% of such deficit or
loss), plus (ii) 100% of the aggregate net cash proceeds received after the
date of this Indenture by Seven Seas from the issue or sale of, or from
additional capital contributions in respect of, Equity Interests of Seven Seas
or of debt securities of Seven Seas that have been converted into or exchanged
for Equity Interests of Seven Seas (other than (x) Equity Interests (or debt
securities) sold to a Subsidiary of Seven Seas and (y) Disqualified Stock or
debt securities that have been converted into or exchanged for Disqualified
Stock), plus (iii) to the extent that any Restricted Investment that was made
after the Issue Date is sold to a Person other than Seven Seas or a Restricted
Subsidiary for cash or otherwise liquidated or repaid for cash, the lesser of
the cash proceeds of such sale or other liquidation or repayment (after
deduction of items deducted in determining the Net Proceeds of an Asset Sale)
and the amount of the Restricted Investment (to the extent such amount was
included in the calculation of the amount of Restricted Payments), plus (iv)
the amount equal to the net reduction in Investments in Unrestricted
Subsidiaries resulting from (A) payments of dividends or interest or other
transfers of assets to Seven Seas or any Restricted Subsidiary from
Unrestricted Subsidiaries, (B) the redesignation of Unrestricted Subsidiaries
as Restricted Subsidiaries or (C) the receipt of proceeds by Seven Seas or any
Restricted Subsidiary from the sale or other disposition of any portion of any
Investment in an Unrestricted Subsidiary, in the case of (A), (B) and (C), not
to exceed the amount of Investments previously made by Seven Seas or any
Restricted Subsidiary in such Unrestricted Subsidiary (to the extent such
amount was included in the calculation of the amount of Restricted Payments).
The foregoing provisions will not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with the provisions of this
Indenture; (ii) the making of any Restricted Investment in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary of Seven Seas) of, or from substantially concurrent
additional capital contributions in respect of, Equity Interests of Seven Seas,
(other than Disqualified Stock); (iii) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of Seven Seas in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary of Seven Seas) of, or from
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substantially concurrent additional capital contributions (other than from a
Subsidiary of Seven Seas) in respect of, other Equity Interests of Seven Seas
(other than any Disqualified Stock); (iv) the defeasance, redemption or
repurchase of subordinated Indebtedness with the net cash proceeds from (X) an
incurrence of Permitted Refinancing Indebtedness or (Y) the substantially
concurrent sale (other than to a Restricted Subsidiary of Seven Seas) of, or
from substantially concurrent additional capital contributions (other than from
a Subsidiary of Seven Seas) in respect of, Equity Interests of Seven Seas
(other than Disqualified Stock); (v) any dividend or other distribution made by
any Wholly Owned Subsidiary of Seven Seas to another Wholly Owned Subsidiary of
Seven Seas or to Seven Seas; (vi) so long as no Default or Event of Default
shall have occurred and be continuing, the repurchase, redemption or other
acquisition or retirement for value of any Equity Interests of Seven Seas held
by any employee of Seven Seas or any of its Restricted Subsidiaries, provided
that the aggregate price paid for all such repurchased, redeemed, acquired or
retired Equity Interests shall not exceed $1.0 million in any calendar year;
and (vii) the acquisition of Equity Interests by Seven Seas in connection with
the exercise of stock options or stock appreciation rights by way of cashless
exercise or in connection with the satisfaction of withholding tax obligations
related thereto. In determining the aggregate amount of Restricted Payments
made after the date hereof, 100% of the amounts described in the foregoing
clauses (i) and (vi) shall be included in such calculation and none of the
amounts (whether positive or negative) described in the foregoing clauses (ii),
(iii), (iv), (v) and (vii) shall be included in such calculation.
As of the Issue Date, all of Seven Seas' Subsidiaries are Restricted
Subsidiaries. The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default. For
purposes of making such determination, all outstanding Investments by Seven
Seas and its Restricted Subsidiaries (except to the extent repaid in cash) in
the Subsidiary so designated shall be deemed to be Restricted Payments at the
time of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. Such designation will
only be permitted if such Restricted Payment would be permitted at such time
and if such Subsidiary otherwise meets the definition of an Unrestricted
Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
greater of (i) book value or (ii) fair market value (evidenced by a resolution
of the Board of Directors set forth in an Officers' Certificate delivered to
the Trustee) on the date of the Restricted Payment of the asset(s) proposed to
be transferred by Seven Seas or the applicable Restricted Subsidiary, as the
case may be, pursuant to the Restricted Payment. Not later than the date of
making any Restricted Payment, Seven Seas shall deliver to the Trustee an
Officers' Certificate stating that such Restricted Payment is permitted and
setting forth the basis upon which the calculations required by this covenant
were computed, which calculations shall be based upon Seven Seas' latest
available financial statements.
SECTION 4.12 INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK
Seven Seas will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable,
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contingently or otherwise, with respect to (collectively, "incur") any
Indebtedness (including Acquired Indebtedness); neither Seven Seas nor any
Guarantor will issue any Disqualified Stock; and Seven Seas will not permit any
of its Restricted Subsidiaries that are not Guarantors to issue any shares of
Preferred Stock; provided, however, that Seven Seas and any Guarantor may incur
Indebtedness (including Acquired Indebtedness) or issue shares of Disqualified
Stock if (i) the Fixed Charge Coverage Ratio for Seven Seas' most recently
ended four full consecutive fiscal quarters for which internal financial
statements are available immediately preceding the date on which such
additional Indebtedness is incurred or such Disqualified Stock is issued would
have been at least 2.5 to 1, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period and (ii) no
Default or Event of Default will have occurred and be continuing or would occur
as a consequence thereof.
The foregoing provisions shall not apply to:
(i) the incurrence by Seven Seas and the Guarantors, if
any, of Indebtedness under the Credit Facility not exceeding the
greater of (a) $25.0 million and (b) the Borrowing Base, less any
amounts derived from Asset Sales and applied to the required permanent
reduction of such Indebtedness (and a permanent reduction of the
related commitment to lend or in the amount available to be refinanced
in the case of a revolving credit facility) under the Credit Facility
as contemplated by Section 4.10;
(ii) Existing Indebtedness;
(iii) the incurrence by Seven Seas and any Guarantor of
Indebtedness represented by the Notes;
(iv) the incurrence by Seven Seas or its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations,
mortgage financings, Purchase Money Obligations or similar financing
transactions relating to its properties, assets and rights acquired
after the date of issue of the Notes, provided that the aggregate
principal amount of such Indebtedness under this clause does not
exceed 100% of the cost of such properties, assets and rights and
provided, further, that the aggregate amount of Indebtedness incurred
pursuant to this clause (iv) does not at any time exceed $10.0
million;
(v) the incurrence by Seven Seas or any Restricted
Subsidiary of Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to extend, refinance, renew,
replace, defease or refund, Indebtedness of such entity that was
permitted by this Indenture to be incurred;
(vi) the incurrence of Indebtedness of Seven Seas to a
Restricted Subsidiary; provided that any such Indebtedness is made
pursuant to an intercompany note and is subordinated in right of
payment to the Notes; and provided, further, that any subsequent
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issuance or transfer of any Capital Stock or other event that results
in any such Restricted Subsidiary ceasing to be a Restricted
Subsidiary or any subsequent transfer of any such Indebtedness (except
to Seven Seas or another Restricted Subsidiary) shall be deemed, in
each case, to be an incurrence of such Indebtedness;
(vii) the incurrence of Indebtedness of a Restricted
Subsidiary to Seven Seas or another Restricted Subsidiary; provided
that (a) any such Indebtedness is made pursuant to an intercompany
note and (b) if a Guarantor incurs such Indebtedness to a Restricted
Subsidiary that is not a Guarantor, such Indebtedness is subordinated
in right of payment to the Subsidiary Guarantee of such Guarantor; and
provided, further, that any subsequent issuance or transfer of any
Capital Stock of any Restricted Subsidiary to whom such Indebtedness
is owed or any other event which results in any such Restricted
Subsidiary ceasing to be a Restricted Subsidiary or any subsequent
transfer of any such Indebtedness (except to Seven Seas or another
Restricted Subsidiary) shall be deemed, in each case, to be an
incurrence of such Indebtedness;
(viii) the incurrence, assumption or creation of Hedging
Obligations of Seven Seas or a Restricted Subsidiary pursuant to
interest rate protection obligations, but only to the extent that the
stated aggregate notional amounts of such obligations do not exceed
105% of the aggregate principal amount of the Indebtedness covered by
such interest rate protection obligations; the incurrence, assumption
or creation of Hedging Obligations under currency exchange contracts
entered into for the purpose of limiting risks that arise in the
ordinary course of business of Seven Seas and its Subsidiaries; and
the incurrence, assumption or creation of Hedging Obligations that
Seven Seas or a Restricted Subsidiary enters into for the purpose of
protecting its production against fluctuations in oil or natural gas
prices;
(ix) the incurrence by Seven Seas and its Restricted
Subsidiaries of Indebtedness in connection with one or more standby
letters of credit, or bid, performance or surety bonds or other
reimbursement obligations, in each case, issued in the conduct of the
Oil and Gas Business and not in connection with the borrowing of money
or the obtaining of advances or credit, not to exceed in the aggregate
at any time outstanding 5.0% of consolidated total assets of Seven
Seas;
(x) issuance of any Guarantee by a Restricted Subsidiary
of Seven Seas of senior Indebtedness of Seven Seas that was permitted
to be incurred under this Indenture; provided that prior to or
concurrently with the issuance of such Guarantee such Restricted
Subsidiary complies with Section 4.17 hereof;
(xi) Indebtedness of Seven Seas or any Guarantor incurred
to finance Permitted Infrastructure Investments, in an aggregate
principal amount that does not at any time exceed $10.0 million;
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(xii) the incurrence by Seven Seas and its Restricted
Subsidiaries of Indebtedness in connection with one or more trade
letters of credit, in each case, issued in the ordinary course of
business in the conduct of the Oil and Gas Business and not in
connection with the borrowing of money or the obtaining of advances or
credit; or
(xiii) the incurrence by Seven Seas and the Guarantors of
Indebtedness in an aggregate principal amount of up to $10.0 million
(all or any portion of which may be borrowed under the Credit
Facility, and which shall be in addition to amounts which may be
incurred pursuant to clauses (i) through (xii) above).
Notwithstanding any other provision of this covenant a Guarantee of
Indebtedness permitted by the terms of this Indenture at the time such
Indebtedness was incurred shall not constitute a separate incurrence of
Indebtedness.
In the event that Indebtedness falls within more than one category of
permitted Indebtedness as set out above, Seven Seas shall determine the
applicable category and such Indebtedness shall only be counted once. If
Indebtedness is issued at less than the principal amount thereof, the amount of
such Indebtedness for purposes of the above limitations shall equal the amount
of the liability as determined in accordance with GAAP. Accrual of interest
and the accretion of accreted value will not be deemed to be an incurrence of
Indebtedness for purposes of this Section 4.12.
Seven Seas shall not permit any Unrestricted Subsidiary to incur any
Indebtedness other than Non-Recourse Debt; provided, however, if any such
Indebtedness ceases to be Non-Recourse Debt, such event shall be deemed to
constitute an incurrence of Indebtedness by Seven Seas or a Restricted
Subsidiary.
SECTION 4.13 SALE AND LEASEBACK TRANSACTIONS
Seven Seas will not, and will not permit any of its Restricted
Subsidiaries to, enter into any sale and leaseback transaction; provided that
Seven Seas or any Guarantor may enter into a sale and leaseback transaction if
(i) Seven Seas or such Guarantor could have (a) incurred Indebtedness in an
amount equal to the Attributable Debt relating to such sale and leaseback
transition pursuant to the Fixed Charge Coverage Ratio test set forth in the
first paragraph of Section 4.12 hereof and (b) incurred a Lien to secure such
Indebtedness pursuant to Section 4.14 hereof, (ii) the net cash proceeds of
such sale and leaseback transaction are at least equal to the fair market
value (as determined in good faith by the Board of Directors and set forth in
an Officers' Certificate delivered to the Trustee) of the property that is the
subject of such sale and leaseback transaction and (iii) the transfer of assets
in such sale and leaseback transaction is permitted by, and the proceeds of
such transaction are applied in compliance with, Section 4.10 hereof.
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SECTION 4.14 LIENS
Seven Seas will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume or otherwise
cause or suffer to exist or become effective any Lien securing Indebtedness of
any kind (other than Permitted Liens) on any of its property or assets, now
owned or hereafter acquired, or any interests therein or any income or profits
therefrom, unless all payments under the Notes are secured on an equal and
ratable basis with such Indebtedness so secured until such time as such
Indebtedness is no longer outstanding or is no longer secured by a Lien.
SECTION 4.15 DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING RESTRICTED
SUBSIDIARIES
Seven Seas will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) (a) pay dividends or make any other distributions
to Seven Seas or any of its Restricted Subsidiaries (1) on its Capital Stock or
(2) with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to Seven Seas or any of its
Restricted Subsidiaries, (ii) make loans or advances to Seven Seas or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets
to Seven Seas or any of its Restricted Subsidiaries, except for such
encumbrances or restrictions existing under or by reason of (a) Existing
Indebtedness as in effect on the date of this Indenture, (b) the Credit
Facility as in effect as of the date of this Indenture, and any amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings thereof, provided, that such amendments,
modifications, restatements, renewals, increases, supplements, refundings,
replacements or refinancings are no more restrictive with respect to such
dividend and other payment restrictions than those contained in the Credit
Facility as in effect on the date of this Indenture, (c) applicable law, (d)
this Indenture and the Notes, (e) any instrument governing Acquired
Indebtedness or Capital Stock of a Person acquired by Seven Seas or any of its
Restricted Subsidiaries as in effect at the time of such acquisition (except to
the extent such Acquired Indebtedness was incurred in connection with or in
contemplation of such acquisition), which encumbrance or restriction is not
applicable to any Person, or the properties or assets of any Person, other than
the Person, or the property or assets of the Person, so acquired, provided that
the Consolidated Cashflow of such Person is not taken into account in
determining whether such acquisition was permitted by the terms of this
Indenture, (f) any encumbrance or restricted on assets subject to Capital Lease
Obligations or Purchase Money Obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, (g) by reason of customary
non-assignment provisions in leases and licenses entered into in the ordinary
course of business and consistent with past practices, (h) agreements relating
to the financing of the acquisition of real or tangible personal property
acquired after the date of this Indenture; provided, that such encumbrance or
restriction relates only to the property which is acquired and in the case of
any encumbrance or restriction that constitutes a Lien, such Lien constitutes a
Purchase Money Lien, (i) Permitted Refinancing Indebtedness,
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provided that the restrictions contained in agreements governing such Permitted
Refinancing Indebtedness are no more restrictive than those contained in
agreements governing the Indebtedness being refinanced, or (j) any merger
agreements, stock purchase agreements, asset sale agreements and similar
agreements limiting the transfer of properties and assets to be transferred or
otherwise disposed of pending consummation of the subject transactions in
accordance with the terms thereof.
SECTION 4.16 TRANSACTIONS WITH AFFILIATES
Seven Seas will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly enter into or permit to exist any
transaction or series of related transactions (including the purchase, sale,
lease, exchange, transfer or disposition of property or assets, the rendering
of any service, or any contract, agreement, understanding, loan, advance or
Guarantee) with, or for the benefit of, any Affiliate (each of the foregoing,
an "Affiliate Transaction"), unless (i) the terms of such Affiliate Transaction
are fair and reasonable to Seven Seas or such Restricted Subsidiary, as the
case may be, from a financial point of view and are at least as favorable to
Seven Seas or such Restricted Subsidiary as the terms which could be obtained
on such date by Seven Seas or such Restricted Subsidiary, as the case may be,
in a comparable transaction entered into on an arm's-length basis with an
unrelated third party and (ii) Seven Seas delivers to the Trustee (a) with
respect to any Affiliate Transaction entered into after the date of this
Indenture involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that the terms of such Affiliate Transaction have been set forth in
writing and comply with clause (i) above and that such Affiliate Transaction
has been approved by a majority of the disinterested members of the Board of
Directors and (b) with respect to any Affiliate Transaction involving aggregate
consideration in excess of $5.0 million, an opinion issued by an investment
banking or appraisal firm of national standing (in the United States or Canada)
as to the fairness to Seven Seas or such Restricted Subsidiary of such
Affiliate Transaction from a financial point of view; provided that the
following will not be deemed to be Affiliate Transactions: (1) reasonable fees
and compensation paid to, and reasonable and customary indemnity provided on
behalf of, officers and directors of Seven Seas or any Restricted Subsidiary as
determined in good faith by the Board of Directors, (2) loans or advances to
employees in the ordinary course of business in accordance with customary
practices in the Oil and Gas Business, but in any event not to exceed $0.5
million in the aggregate outstanding at any one time, (3) transactions pursuant
to agreements as in existence on the Issue Date, (4) any employment,
noncompetition or confidentiality agreements entered into by Seven Seas or any
of its Restricted Subsidiaries with its employees in the ordinary course of
business, (5) transactions between or among Seven Seas and a Wholly Owned
Subsidiary or between Wholly Owned Subsidiaries and (6) transactions with joint
ventures engaged in the Oil and Gas Business, provided that no Equity Interest
not owned by Seven Seas or its Restricted Subsidiaries in such joint venture is
owned by a Person that is otherwise an Affiliate of Seven Seas and (7)
Restricted Payments that are permitted by the provisions of this Indenture as
described in Section 4.11.
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SECTION 4.17 COVENANT TO ENTER INTO SUBSIDIARY GUARANTEES
Seven Seas will not permit any Restricted Subsidiary to guarantee the
payment of any Indebtedness of Seven Seas (other than any guarantee of the
Notes and the Existing Guarantee) or any Indebtedness of any Guarantor (in each
case, the "Guaranteed Debt") unless (i) if such Restricted Subsidiary is not
then a Guarantor, then such Restricted Subsidiary simultaneously executes and
delivers a Supplemental Indenture providing for a Subsidiary Guarantee of
payment of the Notes by such Restricted Subsidiary, (ii) if the Guaranteed Debt
is by its express terms subordinated in right of payment to the Notes or the
Subsidiary Guarantee of such Guarantor, any such Guarantee of such Restricted
Subsidiary with respect to the Guaranteed Debt shall be subordinated in right
of payment to such Restricted Subsidiary's Subsidiary Guarantee with respect to
the Notes substantially to the same extent as the Guaranteed Debt is
subordinated to the Notes or the Subsidiary Guarantee of such Guarantor, (iii)
such Restricted Subsidiary waives and will not in any manner whatsoever claim
or take the benefit or advantage of any rights of reimbursement, indemnity or
subrogation or any other rights against Seven Seas or any other Restricted
Subsidiary as a result of any payment by such Restricted Subsidiary under its
Subsidiary Guarantee, and (iv) such Restricted Subsidiary shall deliver to the
Trustee an Opinion of Counsel to the effect that (a) such Subsidiary Guarantee
of the Notes has been duly executed and authorized and (b) such Subsidiary
Guarantee of the Notes constitutes a valid, binding and enforceable obligation
of such Restricted Subsidiary, except insofar as enforcement thereof may be
limited by bankruptcy, insolvency or similar laws (including, without
limitation, all laws relating to fraudulent transfers) and except insofar as
enforcement thereof is subject to general principles of equity.
Notwithstanding the foregoing, any Subsidiary Guarantee shall be
automatically and unconditionally released and discharged upon (i) any sale,
exchange or transfer, to any Person that is not an Affiliate of Seven Seas, of
all of Seven Seas' Capital Stock in, or all or substantially all the assets of,
such Restricted Subsidiary (which sale, exchange or transfer is not prohibited
by this Indenture) or (ii) the release or discharge of the Guarantee that
resulted in the creation of such Subsidiary Guarantee, except a discharge or
release by or as a result of payment under such Guarantee.
SECTION 4.18 CONVERSION OF CONVERTIBLE DEBT
Seven Seas will use its reasonable best efforts to cause the
conversion of the Special Notes into the Convertible Debentures and the
conversion of the Convertible Debentures into common shares and warrants to
purchase common shares. If any Special Notes or Convertible Debentures remain
outstanding on or after July 31, 1998 (a "Special Note Default"), Seven Seas
and the Guarantors (if any) agree to pay liquidated damages ("Conversion
Liquidated Damages"), which will accrue at the rate of 0.25%, of the principal
amount of the Notes held by Holder, per annum as long as a Special Note Default
continues. Following the cure of the Special Note Default by the permanent
retirement of all of the Special Notes and Convertible Debentures, the accrual
of Conversion Liquidated Damages will cease. Seven Seas shall pay all accrued
Conversion Liquidated
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Damages on each interest payment date in the same manner as such payments are
to be made hereunder.
SECTION 4.19 LINE OF BUSINESS
Seven Seas shall not, and shall not permit any Subsidiary to, engage
in any line of business other than the Oil and Gas Business.
SECTION 4.20 ADDITIONAL AMOUNTS
Seven Seas will make all payments of principal of, premium, if any,
and interest on, each Note and Liquidated Damages, if any, free and clear of,
and without withholding or deduction for or on account of, any current or
future taxes, levies, imports, deductions, withholdings, collections, duties,
assessments or charges of whatever nature and any fines, penalties, interest or
liabilities with respect thereto imposed, levied, collected, withheld or
assessed by or on behalf of Canada, the Cayman Islands, Colombia or any other
jurisdiction with which Seven Seas or any Guarantor has any connection
(including any jurisdiction from or through which payments under the Notes or
the Subsidiary Guarantees are made) or any political subdivision or authority
therein or thereof having power to tax (referred to herein as a "Tax" or
"Taxes"), unless such withholding or deduction is required by law or by
regulation or governmental policy having the force of law. In the event that
any such withholding or deduction for or on account of any Tax is required,
(excluding any Taxes imposed on a Holder by the jurisdiction (or by a political
subdivision thereof) under the laws of which (or under the laws of a political
subdivision of which) the Holder is organized or if such Holder is an
individual, the jurisdiction (or by a political subdivision thereof) of which
such Holder is a citizen or resident (such excluded Taxes are referred to
herein as "Excluded Taxes")), Seven Seas will pay such additional amounts
("Additional Amounts") as will result in receipt by each Holder of any Note of
such amounts as would have been received by such Holder or the beneficial owner
with respect to such Note had no such withholding or deduction of Taxes been
required, provided that:
(a) No Additional Amounts shall be payable for or on account of
any Tax which would not have been imposed but for:
(1) the existence of any present or former connection
between such Holder or the beneficial owner of such Note and Canada,
the Cayman Islands, Colombia or any other jurisdiction with which
Seven Seas or any Guarantor has any connection (including any
jurisdiction from or through which payments under the Notes or the
Subsidiary Guarantees are made) or any political subdivision or
authority therein (other than merely holding such Note), including,
without limitation, such Holder or the beneficial owner of such Note
being or having been a national, domiciliary or resident of or treated
as a resident thereof or being or having been present or engaged in a
trade or business therein or having had a permanent establishment
therein; or
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(2) the presentation of such Note (where presentation is
required) more than 30 days after the date on which the payment in
respect of such Note became due and payable or provided for, whichever
is later, except to the extent that such Holder would have been
entitled to such Additional Amounts if it had presented such Note for
payment on any day within such period of 30 days; or
(3) the failure of such Holder or the beneficial owner of
such Note to comply with a request by Seven Seas addressed to such
Holder (A) to provide information concerning the nationality,
residence or identity of such Holder or such beneficial owner or (B)
to make any declaration or other similar claim or satisfy any
information or reporting requirement, which, in the case of (A) or
(B), is required or imposed by a statute, treaty, regulation or
administrative practice of the taxing jurisdiction as a precondition
to exemption from all or part of such tax, assessment or other
governmental charge; or
(4) the Holder not dealing at arm's length with Seven
Seas (within the meaning of the Income Tax Act (Canada)) at the time
the payment to which the Additional Amounts relate was made;
(5) any combination of items (1 ), (2), (3) and (4); and
(b) No Additional Amounts shall be payable to any Holder who is
not the beneficial owner of such Note (including a fiduciary or partnership) to
the extent that the beneficial owner of such Note would not have been entitled
to such Additional Amounts had it been the Holder of the Note.
In the event that Seven Seas fails to pay any Taxes (other than
Excluded Taxes) when due to the appropriate taxing authority and a Holder is
subsequently assessed by such taxing authority in respect of such Taxes, Seven
Seas shall pay such Taxes assessed to the taxing authority. In the event that
a Holder previously shall have paid such Taxes to the taxing authority, Seven
Seas shall promptly indemnify and reimburse such Holder in respect of all such
Taxes so paid plus interest at the rate borne by the Notes.
Whenever there is mentioned, in any context, the payment of principal,
premium or interest in respect of any Note or the net proceeds received on the
sale or exchange of any Note, such mention shall be deemed to include the
payment of Additional Amounts provided for in this Indenture to the extent
that, in such context, Additional Amounts are, were or would be payable in
respect thereof pursuant to this Indenture.
SECTION 4.21 PAYMENT CERTIFICATIONS
At least 10 days prior to the first date on which payment of principal
and any premium, interest, Liquidated Damages or Additional Amounts, if any, on
the Notes is to be made, and at least 10 days prior to any subsequent such date
if there has been any change with respect to the matters
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set forth in the Officers' Certificate described in this Section 4.21, Seven
Seas will furnish the Trustee and the Paying Agent, if other than the Trustee,
with an Officers' Certificate instructing the Trustee and the Paying Agent
whether such payment of principal, premium, interest, Liquidated Damages or
Additional Amounts, if any, on the Notes (whether or not in the form of
Definitive Notes) shall be made to the Holders without withholding for or on
account of Taxes, unless the withholding or deduction of such Taxes is then
required by law. If any such withholding shall be required, then such
Officers' Certificate shall specify the amount, if any, required to be withheld
on such payments to such Holders and Seven Seas will pay to the Trustee or the
Paying Agent the Additional Amounts pursuant to the terms of this Indenture and
the Notes. Seven Seas shall indemnify the Trustee and the Paying Agent for,
and hold them harmless against, any loss, liability or expense reasonably
incurred without negligence or bad faith on their part arising out of or in
connection with actions taken or omitted by any of them in reliance on any
Officers' Certificate furnished to them pursuant to this Section 4.21.
SECTION 4.22 COMPLIANCE CERTIFICATE
(a) Seven Seas shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of Seven Seas and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether Seven Seas has kept, observed, performed and fulfilled its
obligations under this Indenture, and further stating, as to each such Officer
signing such certificates that to the best of his or her knowledge Seven Seas
has kept, observed, performed and fulfilled each and every covenant contained
in this Indenture and is not in default in the performance or observance of any
of the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred describing all such Defaults or Events of
Default of which he or she may have knowledge and what action Seven Seas is
taking, or proposes to take with respect thereto) and that to the best of his
or her knowledge no event has occurred and remains in existence by reason of
which payments on account of the principal of or interest, if any, on the Notes
is prohibited or if such event has occurred, a description of the event and
what action Seven Seas is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.6(a) hereof shall be accompanied by
a written statement of the independent public accountants of Seven Seas (who
shall be a firm of established national reputation) that in making the
examination necessary for certification of such financial statements, nothing
has come to their attention that would lead them to believe that Seven Seas has
violated any provisions of Article IV or Article V hereof (except that, such
written statement need not address Seven Seas' compliance with the provisions
of Section 4.2 or 4.14 hereof) or, if any such violation has occurred,
specifying the nature and period of existence thereof, it being understood that
such accountants shall not be liable directly or indirectly to any Person for
any failure to obtain knowledge of any such violation.
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(c) Seven Seas shall, so long as any of the Notes are outstanding,
deliver to the Trustee, forthwith upon any Officer becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default
or Event of Default and what action Seven Seas is taking or proposes to take
with respect thereto.
SECTION 4.23 ELIGIBLE SECURITIES ACCOUNT
(a) On the Issue Date, Seven Seas shall purchase, and deposit in
the Eligible Securities Account, Eligible Securities in an aggregate principal
amount which, in the opinion of an internationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, is (i) equal to the first two regularly scheduled
interest payments due on the Notes on November 15, 1998 and May 15, 1999 and
(ii) such that receipt of scheduled principal and interest payments on such
Eligible Securities will result in receipt of United States dollars in an
amount and at a time sufficient to provide for payment in full when due of each
of those regularly scheduled interest payments.
(b) Seven Seas agrees to retain Eligible Securities in the
Eligible Securities Account in an aggregate principal amount which shall
satisfy Section 4.23(a) (or, in the event the first regularly scheduled
interest payment has been made, in an amount sufficient to provide for payment
in full of the interest payment due on the Notes on May 15, 1999) until the
Eligible Securities and amounts, if any, in the Eligible Securities Account
shall be released to it by the Eligible Institution in accordance with Section
4.23(e) hereof.
(c) Seven Seas may reinvest proceeds of the Eligible Securities
retained in the Eligible Securities Account in other Eligible Securities;
provided that Seven Seas may only so reinvest the Eligible Securities if, based
on the report of an internationally recognized firm of independent public
accountants (selected by Seven Seas) expressed in a written certification
thereof delivered to the Trustee, after giving effect to such reinvestment, the
aggregate principal amount of Eligible Securities retained in the Eligible
Securities Account is (i) at least equal to the first two regularly scheduled
interest payments due on the Notes on November 15, 1998 and May 15, 1999 (or,
in the event the first regularly scheduled interest payment has been made, in
an amount sufficient to provide for payment in full of the interest payment due
on the Notes on May 15, 1999) and (ii) such that receipt of scheduled principal
and interest payments on such Eligible Securities will result in receipt of
United States dollars in an amount and at a time sufficient to provide for
payment in full when due of each of those regularly scheduled interest payments
(or, in the event the first regularly scheduled interest payment has been made,
in an amount sufficient to provide for payment in full of the interest payment
due on the Notes on May 15, 1999).
(d) Seven Seas agrees that all principal payments made on,
interest earned on or other distributions or amounts paid with respect to the
Eligible Securities shall be retained in the Eligible Securities Account;
provided that Seven Seas may withdraw interest earned on the Eligible
Securities from the Eligible Securities Amount if after giving effect to such
withdrawal, the aggregate principal amount of Eligible Securities retained in
the Eligible Securities Account is (i)
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at least equal to the first two regularly scheduled interest payments due on
the Notes on November 15, 1998 and May 15, 1999 (or, in the event the first
regularly scheduled interest payment has been made, in an amount sufficient to
provide for payment in full of the interest payment due on the Notes on May 15,
1999) and (ii) such that receipt of scheduled principal and interest payments
on such Eligible Securities will result in receipt of United States dollars in
an amount and at a time sufficient to provide for payment in full when due of
each of those regularly scheduled interest payments (or, in the event the first
regularly scheduled interest payment has been made, in an amount sufficient to
provide for payment in full of the interest payment due on the Notes on May 15,
1999).
(e) Seven Seas agrees that the Eligible Securities and any amounts
retained in the Eligible Securities Account will only be disbursed from the
Eligible Securities Account as follows:
(i) Not less than three Business Days prior to the date
of either of the first two regularly scheduled interest payments due
on the Notes, Seven Seas may direct the Eligible Institution in
writing to transfer from the Eligible Securities Account to the
Trustee in its capacity as Paying Agent (or, if applicable, any
successor Paying Agent), United States dollars in immediately
available funds necessary to provide for payment in full or of any
portion of the next regularly scheduled interest payment on the Notes
when due. Upon receipt of such written request, the Eligible
Institution shall take such action as is necessary to provide for the
payment of such amount of United States dollars in immediately
available funds directly to the Trustee as Paying Agent (or, if
applicable, any successor Paying Agent) from proceeds of the Eligible
Securities held in the Eligible Securities Account.
(ii) If Seven Seas elects to pay either of the first two
regularly scheduled interest payments (or portions thereof) on the
Notes from a source of funds other than the Eligible Securities
Account (the "Seven Seas Funds"), then Seven Seas may on at least two
Business Days' prior written notice, after payment when due of such
regularly scheduled interest payment or portion thereof or upon a
Defeasance under Article VIII hereunder (evidenced by an Officer's
Certificate delivered to the Trustee and the Eligible Institution
stating that such regularly scheduled interest payment or portion
thereof has been made when due in accordance with the terms of this
Indenture), direct the Eligible Institution in writing to release to
Seven Seas or as it may direct an amount of funds or Eligible
Securities from the Eligible Securities Account less than or equal to
the amount of Seven Seas Funds so expended. Upon receipt of such
written direction from Seven Seas, together with the Officers'
Certificate described in the preceding sentence, the Eligible
Institution shall take such action as is necessary to provide for the
payment to Seven Seas of the amount requested from the Eligible
Securities Account.
(iii) Upon payment in full when due of the first two
regularly scheduled interest payments on the Notes, evidenced by an
Officers' Certificate delivered to the Eligible Institution stating
that such regularly scheduled interest payments have been made in full
when due in accordance with this Indenture, the Eligible Institution
shall, at Seven Seas'
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written direction, release to Seven Seas the Eligible Securities and
amounts, if any, remaining in the Eligible Securities Account.
(f) Notwithstanding any other provision in this Indenture, Seven
Seas may not, and may not permit any Restricted Subsidiary to, directly or
indirectly, incur or suffer to exist any Lien on, or with respect to, the
Eligible Securities and the Eligible Securities Account.
SECTION 4.24 PLEDGE ACCOUNT
(a) On the Issue Date Seven Seas shall deposit in the Pledge
Account, for the benefit of Holders and owners of beneficial ownership
interests in the Notes, sufficient proceeds to purchase Pledged Securities in
an amount which, in the opinion of an internationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, will result in the receipt of United States dollars
in immediately available funds in an amount and at a time sufficient to provide
for payment in full when due of the four regularly scheduled interest payments
due on the Notes from November 15, 1999 through May 15, 2001 upon receipt of
scheduled principal and interest payments on the Pledged Securities. Seven
Seas shall contract for the purchase of the Pledged Securities with
instructions for delivery to Trustee and provide such information to the
Trustee; if for any reason the amount of proceeds deposited in the Pledge
Account is insufficient to pay for the Pledged Securities and any associated
costs, Seven Seas shall immediately provide to Trustee the necessary additional
funds.
(b) Seven Seas hereby agrees that all of its rights and
obligations with respect to the Pledged Securities shall be as set forth in the
Pledge Agreement.
SECTION 4.25 COMPLIANCE WITH TIA
Seven Seas agrees to comply with all provisions of the TIA applicable
to it, including without limitation, Section 314(b) thereof.
SECTION 4.26 MAINTENANCE OF CURRENT ASSETS
Seven Seas will not permit current assets less current liabilities
(without giving effect to Eligible Securities shown on the balance sheet of
Seven Seas) as determined in accordance with GAAP ("Net Current Assets Amount")
to be (i) less than $10 million for the period from the issue date of the Notes
to November 15, 1998 and (ii) less than $5 million for the period from November
16, 1998 to May 15, 1999. Seven Seas shall furnish to the Trustee an Officers'
Certificate indicating compliance with the terms of this provision promptly
following the determination of the Net Current Assets Amount at the end of each
financial quarter of Seven Seas ending on or before May 15, 1999.
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ARTICLE V
SUCCESSORS
SECTION 5.1 MERGER, CONSOLIDATION OR SALE OF ASSETS OF SEVEN SEAS
Seven Seas shall not, in a single transaction or series of related
transactions, consolidate or merge with or into (whether or not Seven Seas is
the surviving corporation), or directly and/or indirectly through its
Restricted Subsidiaries sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its properties or assets determined on a
consolidated basis for Seven Seas and its Restricted Subsidiaries taken as a
whole in one or more related transactions, to another Person unless (i) Seven
Seas is the surviving corporation or the Person formed by or surviving any such
consolidation or merger (if other than Seven Seas) or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made is a corporation organized or existing under the laws of Canada, one of
the provinces or territories thereof, one of the states of the United States or
the District of Columbia; (ii) the Person formed by or surviving any such
consolidation or merger (if other than Seven Seas) or the Person to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made assumes all the obligations of Seven Seas under the Notes and this
Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after such transaction no
Default or Event of Default exists; (iv) Seven Seas or the Person formed by or
surviving any such consolidation or merger (if other than Seven Seas), or to
which such sale, assignment, transfer, lease, conveyance or other disposition
will have been made (A) will have Consolidated Net Worth immediately after the
transaction equal to or greater than the Consolidated Net Worth of Seven Seas
immediately preceding the transaction and (B) except in the case of a
consolidation or merger of Seven Seas with or into a Wholly Owned Subsidiary of
Seven Seas, will, at the time of such transaction and after giving pro forma
effect thereto as if such transaction had occurred at the beginning of the
applicable four-quarter period, be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Fixed Charge Coverage Ratio test set
forth in the first paragraph of Section 4.12; (v) each Guarantor, if any,
unless it is the other party to the transactions described above, shall have by
supplemental indenture confirmed that its Subsidiary Guarantee shall apply to
such Person's obligations under this Indenture and the Notes; and (vi) Seven
Seas shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel addressed to the Trustee with respect to the foregoing
matters.
SECTION 5.2 SUCCESSOR CORPORATION OF SEVEN SEAS SUBSTITUTED
Upon any consolidation or merger, or any sale, assignment, transfer,
lease conveyance or other disposition of all or substantially all of the
Properties or assets of Seven Seas in accordance with Section 5.1 hereof, the
successor corporation formed by such consolidation or into or with which Seven
Seas is merged or to which such sale, assignment, transfer, lease, conveyance
or other disposition is made shall succeed to, and be substituted for Seven
Seas under this Indenture and the Notes (so that from and after the date of
such consolidation, merger, sale, lease, conveyance or other disposition, the
provisions of this Indenture referring to "Seven Seas" shall refer instead to
the successor corporation and not to Seven Seas), and may exercise every right
and power of Seven Seas
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under this Indenture with the same effect as if such successor Person had been
named as Seven Seas herein; provided, however, that the predecessor corporation
shall not be relieved from the obligation to pay the principal, premium if any,
and interest and Liquidated Damages and Additional Amounts, if any, on the
Notes except in the case of a sale of all or substantially all of Seven Seas'
Properties or assets that meets the requirements of Section 5.1 hereof.
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.1 EVENTS OF DEFAULT
An "Event of Default" occurs if:
(a) Seven Seas defaults in the payment of interest on, or
Liquidated Damages or Additional Amounts with respect to, any Note when the
same becomes due and payable and the Default continues for a period of 30 days;
(b) Seven Seas defaults in the payment of the principal of or
premium, if any, on any Note when the same becomes due and payable at maturity,
upon optional redemption, upon required repurchase, upon declaration or
otherwise;
(c) Seven Seas fails to comply with any covenant, condition or
agreement on the part of Seven Seas to be observed or performed pursuant to
Section 4.9, 4.10, 4.11, or 5.1 hereof;
(d) Seven Seas fails to comply with any of its other agreements or
covenants in, or provisions of, the Notes or this Indenture and the Default
continues for a period of 60 days after there has been given to Seven Seas by
the Trustee or to Seven Seas and the Trustee by the Holders of at least 25% in
principal amount of the outstanding Notes a written notice specifying such
Default and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder;
(e) a Default occurs under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by Seven Seas or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Seven Seas or any of its
Restricted Subsidiaries), whether such Indebtedness or Guarantee exists on the
date of this Indenture or shall be created thereafter, which default (i) is
caused by a failure to pay principal of or premium, if any, or interest on such
Indebtedness prior to the expiration of the applicable grace period provided in
such Indebtedness on the date of such default (a "Payment Default") or (ii)
results in the acceleration of such Indebtedness prior to its express maturity
and, in each case, the principal amount of such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$5.0 million or more;
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(f) a final judgment or final judgments for the payment of money
are entered by a court or courts of competent jurisdiction against Seven Seas
or any of its Restricted Subsidiaries, and such judgment or judgments are not
paid, discharged or stayed for a period of 60 days, provided that the aggregate
of all such undischarged and unpaid judgments exceeds $5.0 million;
(g) Seven Seas or any of its Significant Subsidiaries or group of
Restricted Subsidiaries that, together taken (as of the latest audited
consolidated financial statement for Seven Seas and its Subsidiaries), would
constitute a Significant Subsidiary (a "Group of Subsidiaries"), pursuant to or
within the meaning of any Bankruptcy Law:
(i) commences a voluntary case;
(ii) consents to the entry of an order for relief against
it in an involuntary case;
(iii) consents to the appointment of a Custodian of it or
for all or substantially all of its property;
(iv) makes a general assignment for the benefit of its
creditors; or
(v) generally is not paying its debts as they become due;
(h) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against Seven Seas or any Significant
Subsidiary or Group of Subsidiaries in an involuntary case;
(ii) appoints a Custodian of Seven Seas or any Significant
Subsidiary or Group of Subsidiaries or for all or substantially all of
the property of Seven Seas or any Significant Subsidiary or Group of
Subsidiaries;
(iii) orders the liquidation of Seven Seas or any
Significant Subsidiary or Group of Subsidiaries; or
(iv) and in each case the order or decree remain unstayed
and in effect for 30 consecutive days;
(i) the security interest in the Pledged Securities shall cease to
be in full force and effect or enforceable in accordance with its terms other
than in accordance with its terms.
The term "Bankruptcy Law" means Title 11 U.S. Code or any similar
federal or state law or the Bankruptcy and Insolvency Act (Canada) or any
similar law in Canada, any province or any other jurisdiction with which Seven
Seas or any Subsidiary has any connection, for the relief of debtors.
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The term "Custodian" means any receiver, trustee, assignee, liquidator or
similar official under any Bankruptcy Law.
SECTION 6.2 ACCELERATION
If an Event of Default (other than an Event of Default specified in
clause (g) or (h) of Section 6.1) occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes by written notice to Seven Seas, may declare the unpaid principal of and
any premium and accrued interest, and Liquidated Damages and Additional
Amounts, if any, on all the Notes to be due and payable. Upon such
declaration, 100% of the principal amount of the Notes plus any premium and
accrued and unpaid interest, and Liquidated Damages and Additional Amounts, if
any, on the Notes shall be due and payable immediately. If an Event of Default
specified in clause (g) or (h) of Section 6.1 relating to Seven Seas, any
Significant Subsidiary or any Group of Subsidiaries occurs, all such amounts
shall ipso facto become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder. The Holders
of a majority in principal amount of the then outstanding Notes by written
notice to the Trustee may rescind an acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default (except nonpayment of principal or interest or Liquidated
Damages or Additional Amounts that has become due solely because of the
acceleration) have been cured or waived. The Trustee may withhold from Holders
of the Notes notice of any continuing Default or Event of Default (except a
Default or Event of Default relating to the payment of principal or interest)
if it determines that withholding notice is in their interest.
SECTION 6.3 OTHER REMEDIES
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, premium, if
any, and interest and Liquidated Damages and Additional Amounts, if any, on the
Notes or to enforce the performance of any provision of the Notes, this
Indenture or the Pledge Agreement.
The Trustee may maintain a proceeding even if it does not possess any
of the Notes or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Holder of a Note in exercising any right or
remedy accruing upon an Event of Default shall not impair the right or remedy
or constitute a waiver of or acquiescence in the Event of Default. All remedies
are cumulative to the extent permitted by law.
SECTION 6.4 WAIVER OF EXISTING DEFAULTS
Subject to Section 6.7 and Section 9.2, Holders of not less than a
majority in aggregate principal amount of the then outstanding Notes by notice
to the Trustee may on behalf of the Holders of all of the Notes waive any
existing Default or Event of Default and its consequences hereunder, except a
continuing Default or Event of Default in the payment of the principal of,
premium and
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Liquidated Damages and Additional Amounts, if any, or interest on, the Notes
(including in connection with an offer to purchase). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.5 CONTROL BY MAJORITY
Holders of a majority in principal amount of the then outstanding
Notes may direct the time, method and place of conducting any proceeding for
exercising any remedy available to the Trustee or exercising any trust or power
conferred on it, including, without limitation, under the Pledge Agreement.
However, the Trustee may refuse to follow any direction that conflicts with law
or this Indenture or the Pledge Agreement or that the Trustee determines may be
unduly prejudicial to the rights of other Holders of Notes or that may involve
the Trustee in personal liability.
SECTION 6.6 LIMITATION ON SUITS
A Holder of a Note may pursue a remedy with respect to this Indenture
or the Notes only if:
(a) the Holder of a Note gives to the Trustee written notice of a
continuing Event of Default;
(b) the Holders of at least 25% in aggregate of the principal
amount of the then outstanding Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a Note or Holders of Notes offer and, if
requested, provide to the Trustee indemnity satisfactory to the Trustee against
any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in
aggregate of the principal amount of the then outstanding Notes do not give
the Trustee a direction inconsistent with the request.
SECTION 6.7 RIGHTS OF HOLDERS OF NOTES TO RECEIVE PAYMENT
Notwithstanding any other provision of this Indenture, the right of
any Holder of a Note to receive payment of principal, premium and Liquidated
Damages and Additional Amounts, if any, and interest on the Note, on or after
the respective due dates expressed in the Note (including in connection with an
offer to purchase), or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
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SECTION 6.8 COLLECTION SUIT BY TRUSTEE
If an Event of Default specified in Section 6.1 (a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name
and as trustee of an express trust against Seven Seas for the whole amount of
principal of, premium and Liquidated Damages and Additional Amounts, if any,
and interest remaining unpaid on the Notes and interest on overdue principal
and, to the extent lawful, interest and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due to the Trustee under Section
7.7.
SECTION 6.9 TRUSTEE MAY FILE PROOFS OF CLAIM
The Trustee is authorized to file such proofs of claim and other
papers or documents as may be necessary or advisable in order to have the
claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel)
and the Holders of the Notes allowed in any judicial proceedings relative to
Seven Seas (or any other obligor upon the Notes), its creditors or its property
and will be entitled and empowered to collect, receive and distribute any money
or other property payable or deliverable on any such claims and any custodian
in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee, and in the event that the Trustee shall consent
to the making of such payments directly to the Holders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.7 hereof. To the extent that the payment of any
such compensation, expenses, disbursements and advances of the Trustee, its
agents and counsel, and any other amounts due the Trustee under Section 7.7
hereof out of the estate in any such proceeding, shall be denied for any
reason, payment of the same shall be secured by a Lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of my Holder any plan
of reorganization, or an adjustment or composition affecting the Notes or the
rights of any Holder, or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.
SECTION 6.10 PRIORITIES
If the Trustee collects any money pursuant to this Article, it shall
pay out the money in the following order:
First: to the Trustee, its agents and attorneys for amounts due under
Section 7.7 hereof, including payment of all compensation, expenses and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of such collection;
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Second: to Holders of Notes for amounts due and unpaid on the Notes
for principal, premium, Additional Amounts and Liquidated Damages, if any, and
interest, ratably, without preference or priority of any kind, according to the
amounts due and payable on the Notes for principal, premium and Liquidated
Damages and Additional Amounts, if any, and interest, respectively; and
Third: to Seven Seas or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of Notes pursuant to this Section 6.10.
SECTION 6.11 UNDERTAKING FOR COSTS
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
of a Note pursuant to Section 6.7 hereof, or a suit by Holders of more than 10%
in aggregate of the principal amount of the then outstanding Notes.
ARTICLE VII
TRUSTEE
SECTION 7.1 DUTIES OF TRUSTEE
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely
by the express provisions of this Indenture and the Pledge Agreement
and the Trustee need perform only those duties that are specifically
set forth in this Indenture and the Pledge Agreement and no others,
and no implied covenants or obligations shall be read into this
Indenture against the Trustee; and
(ii) in the absence of bad faith on its part the Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this
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Indenture or the Pledge Agreement. However, the Trustee shall examine
the certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.5 hereof.
(d) Whether or not therein expressly so provided, every provision
of this Indenture and the Pledge Agreement that in any way relates to the
Trustee is subject to the provisions of this Section.
(e) No provision of this Indenture or the Pledge Agreement shall
require the Trustee to expend or risk its own funds or incur any liability.
The Trustee shall be under no obligation to exercise any of its rights and
powers under this Indenture or the Pledge Agreement at the request of any
Holders, unless such Holder shall have offered to the Trustee security and
indemnity satisfactory to it against any loss, liability or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with Seven Seas.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.2 RIGHTS OF TRUSTEE
(a) The Trustee may conclusively rely upon any document believed
by it to be genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on such Officers' Certificate or Opinion of Counsel. The Trustee may
consult with counsel and the written advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and protection from liability
in respect of any action taken, suffered or omitted by it hereunder in good
faith and in reliance thereon.
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(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any attorney or agent
appointed with due care.
(d) The Trustee shall not be liable for any action it takes or
omits to take in good faith that it believes to be authorized or within the
rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction or other paper or
document, but the Trustee, in its discretion, may make such further inquiry or
investigation into such facts or matters as it may see fit, and if the Trustee
shall determine to make such further inquiry or investigation, it shall be
entitled to examine the books, records and premises of Seven Seas, personally
or by agent or attorney.
(f) Unless otherwise specifically provided in this Indenture and
subject to Section 7.2(b), any demand, request, direction or notice from Seven
Seas shall be sufficient if signed by an Officer of Seven Seas.
(g) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture or the Pledge Agreement at
the request or direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction.
(h) the Trustee shall not be liable with respect to the validity
or perfection of any security interest to be created under the Pledge Agreement
or this Indenture.
SECTION 7.3 INDIVIDUAL RIGHTS OF TRUSTEE
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with Seven Seas or any
Affiliate of Seven Seas with the same rights it would have if it were not
Trustee. However, in the event that the Trustee acquires any conflicting
interest (as defined in the Trust Indenture Act) it must eliminate such
conflict within 90 days, apply to the Commission for permission to continue as
Trustee or resign. Any Agent may do the same with like rights and duties. The
Trustee is also subject to Sections 7.10 and 7.11 hereof.
SECTION 7.4 TRUSTEE'S DISCLAIMER
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Notes, it shall not be
accountable for Seven Seas' use of the proceeds from the Notes or any money
paid to Seven Seas or upon Seven Seas' direction under any provision of this
Indenture, it shall not be responsible for the use or application of any money
received by any Paying Agent other than the Trustee, and it shall not be
responsible for any
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statement or recital herein or any statement in the Notes or any other document
in connection with the sale of the Notes or pursuant to this Indenture other
than its certificate of authentication.
SECTION 7.5 NOTICE OF DEFAULTS
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of Notes a notice of
the Default or Event of Default within 90 days after it occurs. Except in the
case of a Default or Event of Default in payment of principal of, premium, if
any, or interest on any Note, the Trustee may withhold the notice if and so
long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of the Holders of the Notes.
SECTION 7.6 REPORTS BY TRUSTEE TO HOLDERS OF THE NOTES
Within 60 days after each May 15th beginning with May 15, 1999, and
for so long as Notes remain outstanding, the Trustee shall mail to the Holders
of the Notes a brief report dated as of such reporting date that complies with
TIA Section 313(a) (but if no event described in TIA Section 313(a) has
occurred within the twelve months preceding the reporting date, no report need
be transmitted). The Trustee also shall comply with TIA Section 313(b)(2).
The Trustee shall also transmit by mail all reports as required by TIA Section
313(c).
A copy of each report at the time of its mailing to the Holders of
Notes shall be mailed to Seven Seas and filed with the Commission and each
stock exchange on which the Notes are listed in accordance with TIA Section
313(d). Seven Seas shall promptly notify the Trustee when the Notes are listed
on any stock exchange.
SECTION 7.7 COMPENSATION AND INDEMNITY
Seven Seas shall pay to the Trustee from time to time such
compensation as agreed to between Seven Seas and the Trustee for its acceptance
of this Indenture and the Pledge Agreement and services hereunder and
thereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. Seven Seas shall reimburse the
Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its
services. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
Seven Seas shall indemnify the Trustee against any and all losses,
liabilities or expenses (including reasonable attorneys' fees) incurred by it
arising out of or in connection with the acceptance or administration of its
duties under this Indenture and the Pledge Agreement, including the costs and
expenses of enforcing this Indenture and the Pledge Agreement against Seven
Seas (including this Section 7.7) and defending itself against any claim
(whether asserted by Seven Seas or any Holder or any other Person) or liability
in connection with the exercise or performance of any of its powers or duties
hereunder or thereunder, except to the extent any such loss, liability or
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expense may be attributable to its negligence or bad faith. The Trustee shall
notify Seven Seas promptly of any claim for which it may seek indemnity.
Failure by the Trustee to so notify Seven Seas shall not relieve Seven Seas of
its obligations hereunder. Seven Seas shall defend the claim and the Trustee
shall cooperate in the defense. The Trustee may have separate counsel and
Seven Seas shall pay the reasonable fees and expenses of such counsel. Seven
Seas need not pay for any settlement made without its consent, which consent
shall not be unreasonably withheld.
The obligations of Seven Seas under this Section 7.7 shall survive the
resignation or removal of the Trustee and the satisfaction and discharge of
this Indenture.
To secure Seven Seas' payment obligations in this Section, the Trustee
shall have a Lien prior to the interest of the Holders of the Notes on all
money or Property held or collected by the Trustee, except that held in trust
to pay principal, premium, Additional Amounts and Liquidated Damages, if any,
and interest on particular Notes. Such Lien shall survive the satisfaction and
discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(g) or 6.1(h) hereof occurs, the expenses and
the compensation for the services (including the fees and expenses of its
agents and counsel) are intended to constitute expenses of administration under
any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.8 REPLACEMENT OF TRUSTEE
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying Seven Seas. The Holders of Notes of a
majority in aggregate of the principal amount of the then outstanding Notes may
remove the Trustee by so notifying the Trustee and Seven Seas in writing.
Seven Seas may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a Custodian or public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
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If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, Seven Seas shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in aggregate of the principal amount of the then outstanding
Notes may appoint a successor Trustee to replace the successor Trustee
appointed by Seven Seas.
If a successor Trustee does not take office within 60 days after the
retiring Trustee notifies Seven Seas of its resignation is removed, the
retiring Trustee, Seven Seas, or the Holders of Notes of at least 10% in
aggregate of the principal amount of the then outstanding Notes may petition
any court of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a Note who has
been a Holder of a Note for at least six months, fails to comply with Section
7.10, such Holder of a Note may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to Seven Seas. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Holders of the Notes. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, provided
all sums owing to the Trustee hereunder have been paid and subject to the Lien
provided for in Section 7.7 hereof. Notwithstanding replacement of the Trustee
pursuant to this Section 7.8, Seven Seas' obligations under Section 7.7 hereof
shall continue for the benefit of the retiring Trustee.
SECTION 7.9 SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee. Within 30 days of such event, the successor Trustee shall mail a
notice of its succession to Seven Seas and the Holders of the Notes.
SECTION 7.10 ELIGIBILITY; DISQUALIFICATION
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or
state authorities and that has a combined capital and surplus of at least $50.0
million (in the case of each successor Trustee) as set forth in its most recent
published annual report of condition.
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This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject to
TIA Section 310(b).
SECTION 7.11 PREFERENTIAL COLLECTION OF CLAIMS AGAINST SEVEN SEAS
The Trustee is subject to TIA Section 31l(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated therein.
ARTICLE VIII
LEGAL DEFEASANCE AND
COVENANT DEFEASANCE
SECTION 8.1 OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE
Seven Seas may, at the option of its Board of Directors evidenced by a
resolution set forth in an Officers' Certificate, at any time, elect to have
either Section 8.2 or 8.3 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.2 LEGAL DEFEASANCE AND DISCHARGE
Upon Seven Seas' exercise under Section 8.1 hereof of the option
applicable to this Section 8.2, Seven Seas shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be deemed to have been
discharged from its obligations with respect to all outstanding Notes on the
date the conditions set forth below are satisfied (hereinafter, "Legal
Defeasance"). For this purpose, Legal Defeasance means that Seven Seas shall
be deemed to have paid and discharged the entire Indebtedness represented by
the outstanding Notes, which shall thereafter be deemed to be "outstanding"
only for the purposes of Section 8.5 hereof and the other sections of this
Indenture referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Notes and this Indenture (and the Trustee, on demand of
and at the expense of Seven Seas, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Notes to receive solely from the trust fund described in
Section 8.4 hereof, and as more fully set forth in such Section, payments in
respect of the principal of, premium, if any, and interest and Liquidated
Damages and Additional Amounts, if any, on such Notes when such payments are
due, (b) Seven Seas' obligations with respect to such Notes under Article 2 and
Section 4.2 hereof, (c) the rights, powers, trusts, duties and immunities of
the Trustee hereunder and Seven Seas' obligations in connection therewith and
(d) this Article Eight. Subject to compliance with this Article Eight, Seven
Seas may exercise its option under this Section 8.2 notwithstanding the prior
exercise of its option under Section 8.3 hereof.
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SECTION 8.3 COVENANT DEFEASANCE
Upon Seven Seas' exercise under Section 8.1 hereof of the option
applicable to this Section 8.3, Seven Seas shall, subject to the satisfaction
of the conditions set forth in Section 8.4 hereof, be released from its
obligations under the covenants contained in Sections 4.7, 4.9, 4.10, 4.11,
4.12, 4.13, 4.14, 4.15, 4.16, 4.17, 4.18 and 4.19 and Section 5.1(iv) hereof
with respect to the outstanding Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "Covenant Defeasance"), and the Notes
shall thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder (it being understood that such
Notes shall not be deemed outstanding for accounting purposes). For this
purpose such Covenant Defeasance means that, with respect to the outstanding
Notes and Subsidiary Guarantees, if any, Seven Seas and any Subsidiary
Guarantor may omit to comply with and shall have no liability in respect of any
term, condition or limitation set forth in any such covenant, whether directly
or indirectly, by reason of any reference elsewhere herein to any such covenant
or by reason of any reference in any such covenant to any other provision
herein or in any other document and such omission to comply shall not
constitute a Default or an Event of Default under Sections 6.1(c) and 6.1(d),
but, except as specified above, the remainder of this Indenture and such Notes
and Subsidiary Guarantees, if any, shall be unaffected thereby. In addition,
upon Seven Seas' exercise under Section 8.1 of the option applicable to Section
8.3, Sections 6.1(c) through 6.1(f) and Section 6.1(i) shall not constitute
Events of Default.
SECTION 8.4 CONDITIONS TO LEGAL DEFEASANCE OR COVENANT DEFEASANCE
The following shall be the conditions to application of either Section
8.2 or Section 8.3 to the outstanding Notes and Subsidiary Guarantees (if any):
(a) Seven Seas must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Notes, cash in United States
dollars, non-callable U.S. Government Securities, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally recognized
firm of independent public accountants, to pay the principal of, premium, if
any, and interest and Liquidated Damages and Additional Amounts, if any, on the
outstanding Notes of the Stated Maturity or on the applicable redemption date,
as the case may be, and Seven Seas must specify whether the Notes are being
defeased to maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, Seven Seas shall have
delivered to the Trustee an Opinion of Counsel in the United States confirming
that, (i) Seven Seas has received from, or there has been published by, the
Internal Revenue Service a ruling or (ii) since the date of this Indenture,
there has been a change in the applicable United States federal income tax law,
in either case to the effect that, and based thereon such Opinion of Counsel
shall confirm that, the Holders of the outstanding Notes will not recognize
income, gain or loss for United States federal income tax purposes as a result
of such Legal Defeasance and will be subject to United States federal income
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tax on the same amounts, in the same manner and at the same times as would have
been the case if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, Seven Seas shall have
delivered to the Trustee an Opinion of Counsel in the United States confirming
that the Holders of the outstanding Notes will not recognize income, gain or
loss for United States federal income tax purposes as a result of such Covenant
Defeasance and will be subject to United States federal income tax on the same
amounts, in the same manner and at the same times as would have been the case
if such Covenant Defeasance had not occurred;
(d) Seven Seas will have delivered to the Trustee an Opinion of
Counsel in Canada confirming that the Holders of the outstanding Notes will not
recognize income, gain or loss for Canadian federal income tax purposes as a
result of such Legal Defeasance and will be subject to Canadian federal income
tax on the same amounts, in the same manner and at the same times as could have
been the case if such Legal Defeasance had not occurred;
(e) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event of
Default resulting from the borrowing of funds to be applied to such deposit) or
insofar as Section 6.1(g) or 6.1(h) hereof is concerned, at any time in the
period ending on the 91st day after the date of deposit;
(f) such Legal Defeasance or Covenant Defeasance shall not result
in a breach or violation of, or constitute a default under, any material
agreement or instrument (other than this Indenture) to which Seven Seas or any
of its Subsidiaries is a party or by which Seven Seas or any of its
Subsidiaries is bound, including, without limitation, the Credit Facility;
(g) Seven Seas shall have delivered to the Trustee an Opinion of
Counsel to the effect that on the 91st day following the deposit, the trust
funds will not be subject to the effect of any applicable bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights
generally;
(h) Seven Seas shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by Seven Seas with the intent
of preferring the Holders of Notes over any other creditors of Seven Seas or
with the intent of defeating, hindering, delaying or defrauding creditors of
Seven Seas or others; and
(i) Seven Seas shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for or relating to the Legal Defeasance or the Covenant
Defeasance, as the case may be, have been complied with.
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SECTION 8.5 DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS
Subject to Section 8.6 hereof, all money and non-callable U.S.
Government Securities (including the proceeds thereof) deposited with the
Trustee (or other qualifying trustee, collectively for purposes of this Section
8.5, the "Trustee") pursuant to Section 8.4 hereof in respect of the
outstanding Notes shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including Seven Seas
acting as Paying Agent) as the Trustee may determine, to the Holders of such
Notes of all sums due and to become due thereon in respect of principal,
premium, if any, and interest, but such money need not be segregated from other
funds except to the extent required by law.
Seven Seas shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the cash or non-callable U.S.
Government Securities deposited pursuant to Section 8.4 hereof or the principal
and interest received in respect thereof.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to Seven Seas from time to time upon the request
of Seven Seas, any money or non-callable U.S. Government Securities held by it
as provided in Section 8.4 hereof which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4(a) hereof), are in excess of the amount thereof
that would then be required to be deposited to effect an equivalent Legal
Defeasance or Covenant Defeasance.
SECTION 8.6 REPAYMENT TO SEVEN SEAS
Subject to applicable escheat and abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by Seven Seas, in
trust for the payment of the principal of, premium if any, Liquidated Damages
and Additional Amounts or interest on any Note and remaining unclaimed for two
years after such principal, and premium, if any, Liquidated Damages and
Additional Amounts, if any, or interest has become due and payable shall be
paid to Seven Seas on its request or (if then held by Seven Seas) shall be
discharged from such trust; and the Holder of such Note shall thereafter, as a
creditor, look only to Seven Seas for payment thereof, and all liability of the
Trustee or such Paying Agent with respect to such trust money, and all
liability of Seven Seas as trustee thereof, shall thereupon cease; provided,
however, that the Trustee or such Paying Agent, before being required to make
any such repayment, may at the expense of Seven Seas cause to be published
once, in The New York Times and The Wall Street Journal (national edition),
notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to Seven Seas.
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SECTION 8.7 REINSTATEMENT
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable U.S. Government Securities in accordance with Section
8.5 hereof, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then Seven Seas' obligations under this Indenture and the Notes shall be
revived and reinstated as though no deposit had occurred pursuant to Section
8.2 or 8.3 hereof, as the case may be, until such time as the Trustee or Paying
Agent is permitted to apply all such money in accordance with Section 8.5
hereof, as the case may be; provided, however, that, if Seven Seas makes any
payment of principal of, premium, if any, or interest on any Note following the
reinstatement of its obligations, Seven Seas shall be subrogated to the rights
of the Holders of such Notes to receive such payment from the money held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENT, SUPPLEMENT AND
WAIVER
SECTION 9.1 WITHOUT CONSENT OF HOLDERS OF NOTES
Notwithstanding Section 9.2 of this Indenture, Seven Seas, the
Guarantors, if any, and the Trustee may amend or supplement this Indenture, the
Notes or the Pledge Agreement without the consent of any Holder of a Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for certificated Notes in addition to or in place
of uncertificated Notes;
(c) to provide for the assumption of Seven Seas' obligations to
the Holders of the Notes pursuant to Article 5 hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the Notes, to further secure the Notes, to add to
the covenants of Seven Seas for the benefit of the Holders of the Notes or to
surrender any right or power conferred upon Seven Seas, or to make any change
that does not adversely affect the legal rights hereunder of any Holder of the
Notes;
(e) to comply with requirements of the Commission in order to
effect or maintain the qualification of this Indenture under the Trust
Indenture Act; or
(f) to add any additional Guarantor or to release any Guarantor
from its Subsidiary Guarantee in accordance with this Indenture.
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Upon the request of Seven Seas accompanied by a resolution of its
Board of Directors authorizing the execution of any such amendment or
supplement, and upon receipt by the Trustee of the documents described in
Section 9.6 hereof, the Trustee shall join with Seven Seas in the execution of
any amendment or supplement authorized or permitted by the terms of this
Indenture and to make any further appropriate agreements and stipulations that
may be therein contained, but the Trustee shall not be obligated to enter into
such amendment or supplement that affects its own rights, duties or immunities
under this Indenture, the Pledge Agreement or otherwise.
SECTION 9.2 WITH CONSENT OF HOLDERS OF NOTES
Except as provided below in this Section 9.2, Seven Seas and the
Trustee may amend or supplement this Indenture (including Sections 4.9 and 4.10
hereof), the Notes and the Pledge Agreement amended or supplemented with the
consent of the Holders of at least a majority in aggregate of the principal
amount of Notes then outstanding (including consents obtained in connection
with a purchase of or tender offer or exchange offer for the Notes).
Upon the request of Seven Seas accompanied by a resolution of its
Board of Directors authorizing the execution of any such amendment or
supplement, and upon the filing with the Trustee of evidence satisfactory to
the Trustee of the consent of the Holders of Notes as aforesaid, and upon
receipt by the Trustee of the documents described in Section 9.6 hereof, the
Trustee shall join with Seven Seas in the execution of such amendment or
supplement unless such amendment or supplement affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise, in which case
the Trustee may in its discretion, but shall not be obligated to, enter into
such amendment or supplement.
It shall not be necessary for the consent of the Holders of Notes
under this Section 9.2 to approve the particular form of any proposed
amendment, supplement or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, Seven Seas shall mail to the Holders of Notes affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
Seven Seas to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
Subject to Sections 6.4 and 6.7 hereof and the provisions of this
Section, the Holders of a majority in aggregate principal amount of the Notes
then outstanding may waive any existing Default or Event of Default compliance
in a particular instance by Seven Seas with any provision of this Indenture,
the Notes or the Pledge Agreement. However, without the consent of each Holder
affected, an amendment or waiver may not (with respect to any Notes held by a
non-consenting Holder):
(a) reduce the principal amount of Notes whose Holders must
consent to an amendment, supplement or waiver;
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(b) reduce the principal of or the Liquidated Damages or
Additional Amounts payable with respect to any Note, change the fixed maturity
of any Note or alter or waive any of the provisions with respect to the
redemption or repurchase of the Notes, except as provided above with respect to
Sections 4.9 and 4.10 hereof;
(c) reduce the rate of or change the time for payment of interest,
including default interest, on any Note;
(d) waive a Default or Event of Default in the payment of
principal of or premium, if any, or interest on the Notes (except a rescission
of acceleration of the Notes by the Holders of at least a majority in aggregate
principal amount of the then outstanding Notes and a waiver of the Payment
Default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the
Notes;
(f) make any change in the provisions of this Indenture relating
to waivers of past Defaults or the rights of Holders of Notes to receive
payments of principal of or interest, premium, if any, or Liquidated Damages or
Additional Amounts, if any, on the Notes;
(g) waive a redemption payment with respect to any Note (other
than a payment required by one of the covenants under Sections 4.9 or 4.10
hereof);
(h) make any change in Section 6.4 or 6.7 hereof or in the
foregoing amendment and waiver provisions;
(i) except as provided in Article VIII hereof, or in accordance
with the terms of any Subsidiary Guarantee, release a Guarantor from its
obligations under its Subsidiary Guarantee or make any changes in the Notes or
the Subsidiary Guarantees that would change the ranking thereof to anything
other than pari passu in right of payment to all Senior Indebtedness of Seven
Seas or the applicable Guarantor;
(j) release any of the Pledged Securities from the Lien of this
Indenture or the Pledge Agreement except in accordance with the terms of this
Indenture; or
(k) make any modification to the provisions in Section 4.20 hereof
that would adversely affect the rights of Holders to receive Additional Amounts
as described thereunder.
SECTION 9.3 COMPLIANCE WITH TRUST INDENTURE ACT
Every amendment or supplement to this Indenture or the Notes shall be
set forth in an amended or supplemental Indenture that complies with the Trust
Indenture Act as then in effect.
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SECTION 9.4 REVOCATION AND EFFECT OF CONSENTS
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Note is a continuing consent by the Holder of a Note and
every subsequent Holder of a Note or portion of a Note that evidences the same
debt as the consenting Holder's Note, even if notation of the consent is not
made on any Note. However, any such Holder of a Note or subsequent Holder of a
Note may revoke the consent as to its Note if the Trustee receives written
notice of revocation before the date the waiver, supplement or amendment
becomes effective. An amendment, supplement or waiver becomes effective in
accordance with its terms and thereafter binds every Holder.
SECTION 9.5 NOTATION ON OR EXCHANGE OF NOTES
The Trustee may place in appropriate notation about an amendment,
supplement or waiver on any Note thereafter authenticated. Seven Seas in
exchange for all Notes may issue and the Trustee shall authenticate new Notes
that reflect the amendment, supplement or waiver.
Failure to make the appropriate notation or issue a new Note shall not
affect the validity and effect of such amendment, supplement or waiver.
SECTION 9.6 TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amendment or supplement authorized pursuant
to this Article IX if the amendment or supplement does not adversely affect the
rights, duties, liabilities or immunities of the Trustee. Seven Seas may not
sign an amendment or supplement until the Board of Directors approves it. In
executing any amendment or supplement, the Trustee shall be entitled to receive
indemnity reasonably satisfactory to it and to receive and (subject to Section
7.1) shall be fully protected in relying upon, in addition to the documents
required by Section 9.2, an Officers' Certificate and an Opinion of Counsel
stating that the execution of such amended or supplemental indenture is
authorized or permitted by this Indenture and the Pledge Agreement, if
applicable.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 TRUST INDENTURE ACT CONTROLS
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
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SECTION 10.2 NOTICES
Any notice or communication by Seven Seas or the Trustee to the others
is duty given if in writing and delivered in Person or mailed by first class
mail (registered or certified, return receipt requested), telecopier or
overnight air courier guaranteeing next day delivery, to the others' address:
If to Seven Seas:
Seven Seas Petroleum Inc.
0000 Xxxx Xxx Xxxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
With a copy to:
Xxxxxx & Xxxxxx
1001 Xxxxxx, Suite 0000
Xxxxx Xxxx Xxxxx
Xxxxxxx, Xxxxx 00000
Attention: T. Xxxx Xxxxx
Telephone No. 000-000-0000
Telecopier No. 000-000-0000
If to the Trustee:
The Bank of Nova Scotia Trust Company of New York
Xxx Xxxxxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Department
Telephone No.. 212-225- 5422
Telecopier No.: 000-000-0000
Seven Seas or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given; at the time delivered by hand, if
personally delivered; when receipt acknowledged, if telecopied; and the next
Business Day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register
kept by the Registrar. Any notice or communication shall also be so
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mailed to any Person described in TIA Section 313(c), to the extent required by
the Trust Indenture Act. Failure to mail a notice or communication to a Holder
or any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If Seven Seas mails a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
COMMUNICATION BY HOLDERS OF NOTES WITH OTHER HOLDERS OF NOTES
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Notes. Seven
Seas, the Trustee, the Registrar and anyone else shall have the protection of
TIA Section 312(c).
SECTION 10.3 CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT
Upon any request or application by Seven Seas to the Trustee to take
any action under this Indenture, Seven Seas, upon request, shall furnish to the
Trustee:
(a) an Officers' Certificate in form reasonably satisfactory to
the Trustee (which shall include the statements set forth in Section 10.4
hereof) stating that, in the opinion of the signers, all conditions precedent
and covenants, if any, provided for in this Indenture relating to the proposed
action have been satisfied; and
(b) an Opinion of Counsel in form reasonably satisfactory to the
Trustee (which shall include the statements set forth in Section 10.4 hereof)
stating that, in the opinion of such counsel, all such conditions precedent and
covenants have been satisfied.
SECTION 10.4 STATEMENTS REQUIRED IN CERTIFICATE OR OPINION
Each certificate (other than the certificates provided pursuant to
Section 4.22) or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(a) a statement that the person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
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(c) a statement that, in the opinion of such person, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether such covenant or condition has been complied
with; and
(d) a statement as to whether, in the opinion of such person, such
condition or covenant has been complied with; provided, however, that with
respect to matters of fact an Opinion of Counsel may rely on an Officers'
Certificate or certificates of public officials.
SECTION 10.5 GOVERNING LAW
THIS INDENTURE, THE NOTES AND THE SUBSIDIARY GUARANTEES, IF ANY, SHALL
BE, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
SECTION 10.6 LEGAL HOLIDAYS
In any case where a payment date shall not be a Business Day, then
(notwithstanding any other provisions of this Indenture, the Notes or any
Subsidiary Guarantee) payment of interest or principal (and premium, if any)
need not be made on such date but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date or
date established for payment of Defaulted Interest pursuant to Section 4.1 or
Maturity, and no interest shall accrue with respect to such payment for the
period from and after such Interest Payment Date or date established for
payment of Defaulted Interest pursuant to Section 4.1 or Maturity, as the case
may be, to the next succeeding Business Day.
SECTION 10.7 NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS
No past, present or future director, officer, employee, incorporator
or stockholder of Seven Seas, as such, shall have any liability for any
obligations of Seven Seas under the Notes, this Indenture or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder by accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of the Notes.
SECTION 10.8 INDEMNIFICATION FOR JUDGMENT CURRENCY FLUCTUATIONS
The obligations of Seven Seas to any Holder of Notes shall,
notwithstanding any judgment in a currency (the "Judgment Currency") other than
United States dollars (the "Agreement Currency"), be discharged only to the
extent that on the day following receipt by such Holder of Notes or the
Trustee, as the case may be, of any amount in the Judgment Currency, such
Holder of Notes may in accordance with normal banking procedures purchase the
Agreement Currency with the Judgment Currency. If the amount of the Agreement
Currency so purchased is less than the amount originally to be paid to such
Holder of Notes or the Trustee, as the case may be, in the Agreement Currency,
Seven Seas agrees, as a separate obligation and notwithstanding such
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judgment, to pay to such Holder of Notes or the Trustee, as the case may be,
the difference, and if the amount of the Agreement Currency so purchased
exceeds the amount originally to be paid to such Holder of Notes or the
Trustee, as the case may be, such Holder of Notes or the Trustee, as the case
may be, agrees to pay to or for the account of Seven Seas such excess, provided
that such Holder of Notes or the Trustee, as the case may be, shall not have
any obligation to pay any such excess as long as a Default by Seven Seas in its
obligations under the Notes or this Indenture has occurred and is continuing,
in which case such excess may be applied by such Holder of Notes or the
Trustee, as the case may be, to such obligations.
SECTION 10.9 CONSENT TO JURISDICTION AND SERVICE OF PROCESS
Seven Seas and each Guarantor, if any, hereby appoints the principal
office of CT Corporation System in The City of New York which, on the date
hereof, is located at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as the
authorized agent thereof (the "Authorized Agent") upon whom process may be
served in any action, suit or proceeding arising out of or based on this
Indenture or the Notes which may be instituted in the Supreme Court of the
State of New York or the United States District Court for the Southern District
of New York, in either case in The Borough of Manhattan, The City of New York,
by the Trustee or any Holder of any Note, and Seven Seas and each Guarantor, if
any, hereby waives any objection which it may now or hereafter have to the
laying of venue of any such proceeding and expressly and irrevocably accepts
and submits, for the benefit of the Trustee and the Holders from time to time
of the Notes, to the nonexclusive jurisdiction of any such court in respect of
any such action, suit or proceeding, for itself and with respect to its
properties, revenues and assets. Such appointment shall be irrevocable unless
and until the appointment of a successor authorized agent for such purpose, and
such successor's acceptance of such appointment, shall have occurred. Seven
Seas and each Guarantor, if any, agrees to take any and all actions, including
the filing of any and all documents and instruments, that may be necessary to
continue such appointment in full force and effect as aforesaid. Service of
process upon the Authorized Agent with respect to any such action shall be
deemed, in every respect, effective service of process upon Seven Seas and any
such Guarantor. Notwithstanding the foregoing, any action against Seven Seas
or any Guarantor arising out of or based on any Note may also be instituted by
the Trustee or Holder of such Note in any court in the jurisdiction of
organization of Seven Seas or such Guarantor, and Seven Seas and each
Guarantor, if any, expressly accepts the jurisdiction of any such court in any
such action. Seven Seas shall require the Authorized Agent to agree in writing
to accept the foregoing appointment as agent for service of process.
SECTION 10.10 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of Seven Seas or its Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
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SECTION 10.11 SUCCESSORS
All agreements of Seven Seas in this Indenture and the Notes shall
bind its successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 10.12 SEVERABILITY
In case any provision in this Indenture or in the Notes shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 10.13 COUNTERPART ORIGINALS
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.14 TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed,
as of the date first written above.
SEVEN SEAS PETROLEUM INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx, III
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx, III
Title: Executive Vice President and Chief
Financial Officer
THE BANK OF NOVA SCOTIA TRUST
COMPANY OF NEW YORK, as Trustee
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Name: Xxxx X. Xxxxxx
Title: Assistant Trust Officer
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