XCL LTD.
the Issuer
and
FLEET NATIONAL BANK,
as Trustee
INDENTURE
Dated as of May 20, 1997
$75,000,000
13.50% Senior Secured Notes due May 1, 2004, Series A
13.50% Senior Secured Notes due May 1, 2004, Series B
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1) 7.10
(a)(2) 7.10, 7.10
(a)(3) N.A.
(a)(4) N.A.
(a)(5) 7.08, 7.10
(b) 7.08, 7.10
11.02
(c) N.A.
311(a) 7.11
(b) 7.11
(c) N.A.
312(a) 2.05
(b) 10.03
(c) 10.03
313(a) 7.06
(b)(1) N.A.
(b)(2) 7.06
(c) 7.06, 10.02
(d) 7.06
314(a) 4.07, 4.08
10.02
(b) 11.02
(c)(1) 10.04
(c)(2) 10.04
(c)(3) N.A.
(d) 11.04
(e) 10.05
(f) N.A.
315(a) 7.01(b)
(b) 7.05, 10.02
(c) 7.01(a)
(d) 7.01(c)
(e) 6.11
316(a) (last sentence) 2.09
(a)(1)(A) 6.05
(a)(1)(B) 6.04
(a)(2) N.A.
(b) 6.07
(c) 9.04
317(a)(1) 6.08
(a)(2) 6.09
(b) 2.04
318(a) 10.01
(c) 10.01
- ----------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
TABLE OF CONTENTS
Page
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ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Definitions 1
Section 1.02 Incorporation by Reference
of TIA 27
Section 1.03 Rules of Construction 27
ARTICLE TWO
THE NOTES
Section 2.01 Form and Dating 28
Section 2.02 Execution and Authentication;
Aggregate Principal Amount 30
Section 2.03 Registrar and Paying Agent 31
Section 2.04 Paying Agent To Hold Assets
in Trust 31
Section 2.05 Holder Lists 32
Section 2.06 Transfer and Exchange 32
Section 2.07 Replacement Notes 32
Section 2.08 Outstanding Notes 33
Section 2.09 Treasury Notes 33
Section 2.10 Temporary Notes 33
Section 2.11 Cancellation 34
Section 2.12 Defaulted Interest. 34
Section 2.13 CUSIP Numbers. 35
Section 2.14 Deposit of Monies 35
Section 2.15 Restrictive Legends 35
Section 2.16 Book-Entry Provisions for
Global Security 37
Section 2.17 Special Transfer Provisions 38
Section 2.18 Additional Interest Under
Registration Rights Agreement 41
ARTICLE THREE
REDEMPTION
Section 3.01 Notices to Trustee 41
Section 3.02 Selection of Notes To Be
Redeemed 41
Section 3.03 Optional Redemption 41
Section 3.04 Mandatory Redemption. 42
Section 3.05 Notice of Redemption. 42
Section 3.06 Effect of Notice of Redemption 43
Section 3.07 Deposit of Redemption Price 44
Section 3.08 Notes Redeemed in Part 44
ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Notes 44
Section 4.02 Maintenance of Office or
Agency 45
Section 4.03 Corporate Existence 45
Section 4.04 Payment of Taxes and Other
Claims 45
Section 4.05 Maintenance of Properties and
Insurance 45
Section 4.06 Compliance Certificate; Notice
of Default 46
Section 4.07 Compliance with Laws 47
Section 4.08 Reports to Holders 47
Section 4.09 Waiver of Stay, Extension or
Usury Laws 47
Section 4.10 Limitation on Restricted
Payments 47
Section 4.11 Limitation on Transactions with
Affiliates 50
Section 4.12 Limitation on Incurrence of
Additional Indebtedness 51
Section 4.13 Limitation on Dividend and
Other Payment Restrictions
Affecting Restricted
Subsidiaries 52
Section 4.14 Limitation on Restricted and
Unrestricted Subsidiaries 52
Section 4.15 Change of Control 54
Section 4.16 Limitation on Asset Sales 56
Section 4.17 Limitation on Capital Stock of
Restricted Subsidiaries 59
Section 4.18 Limitations on Liens 59
Section 4.19 Limitation on Conduct of
Business 59
Section 4.20 Additional Subsidiary
Guarantees. 60
Section 4.21 Payment of Existing Secured
Debt. 60
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Merger, Consolidation and Sale
of Assets 60
Section 5.02 Successor Corporation
Substituted 62
ARTICLE SIX
REMEDIES
Section 6.01 Events of Default 62
Section 6.02 Acceleration 64
Section 6.03 Other Remedies 65
Section 6.04 Waiver of Past Defaults 65
Section 6.05 Control by Majority 65
Section 6.06 Limitation on Suits 66
Section 6.07 Right of Holders to Receive
Payment 66
Section 6.08 Collection Suit by Trustee 66
Section 6.09 Trustee May File Proofs of
Claim 66
Section 6.10 Priorities 67
Section 6.11 Undertaking for Costs 67
Section 6.12 Restoration of Rights and
Remedies 68
ARTICLE SEVEN
TRUSTEE
Section 7.01 Duties of Trustee 68
Section 7.02 Rights of Trustee 69
Section 7.03 Individual Rights of Trustee 70
Section 7.04 Trustee's Disclaimer 70
Section 7.05 Notice of Default 70
Section 7.06 Reports by Trustee to Holders 71
Section 7.07 Compensation and Indemnity 71
Section 7.08 Replacement of Trustee 72
Section 7.09 Successor Trustee by Merger,
Etc. 73
Section 7.10 Eligibility; Disqualification 73
Section 7.11 Preferential Collection of
Claims Against Company 73
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01 Termination of Company's
Obligations 74
Section 8.02 Application of Trust Money 76
Section 8.03 Repayment to the Company 76
Section 8.04 Reinstatement 76
Section 8.05 Acknowledgment of Discharge by
Trustee 77
ARTICLE NINE
MODIFICATION OF THE INDENTURE
Section 9.01 Without Consent of Holders 77
Section 9.02 With Consent of Holders 78
Section 9.03 Compliance with TIA 78
Section 9.04 Revocation and Effect of
Consents 78
Section 9.05 Notation on or Exchange of
Notes 79
Section 9.06 Trustee 79
ARTICLE TEN
MISCELLANEOUS
Section 10.01 TIA Controls 80
Section 10.02 Notices 80
Section 10.03 Communications by Holders
with Other Holders 81
Section 10.04 Certificate and Opinion as to
Conditions Precedent 81
Section 10.05 Statements Required in
Certificate or Opinion 82
Section 10.06 Rules by Trustee, Paying
Agent, Registrar 82
Section 10.07 Legal Holidays 82
Section 10.08 Governing Law 83
Section 10.09 No Adverse Interpretation of
Other Agreements. 83
Section 10.10 No Personal Liability 83
Section 10.11 Successors 83
Section 10.12 Duplicate Originals 83
Section 10.13 Severability 83
Section 10.14 Independence of Covenants 84
ARTICLE ELEVEN
SECURITY
Section 11.01 Grant of Security Interest. 84
Section 11.02 Execution of Intercreditor
Agreement. 84
Section 11.03 Recording and Opinions 84
Section 11.04 Release of Collateral. 85
Section 11.05 Specified Releases of
Collateral 86
Section 11.06 Form and Sufficiency of
Release 87
Section 11.07 Purchase Protected 87
Section 11.08 Authorization of Actions To
Be Taken by the Trustee Under
the Security Documents 88
Section 11.09 Authorization of Receipt of
Funds by the Trustee Under
the 88
Section 11.10 Collateral Account 88
ARTICLE TWELVE
GUARANTEE
Section 12.01 Unconditional Guarantee 89
Section 12.02 Limitations on Subsidiary
Guarantees 90
Section 12.03 Execution and Delivery of
Subsidiary Guarantee 90
Section 12.04 Release of a Subsidiary
Guarantor. 91
Section 12.05 Waiver of Subrogation 92
Section 12.06 Immediate Payment 92
Section 12.07 No Set-Off 92
Section 12.08 Obligations Absolute. 93
Section 12.09 Obligations Continuing. 93
Section 12.10 Obligations Not Reduced. 93
Section 12.11 Obligations Reinstated. 93
Section 12.12 Obligations Not Affected. 94
Section 12.13 Waiver. 95
Section 12.14 No Obligation To Take Action
Against the Company. 95
Section 12.15 Dealing with the Company and
Others. 95
Section 12.16 Default and Enforcement. 96
Section 12.17 Amendment, Etc. 96
Section 12.18 Acknowledgment.
Section 12.19 Costs and Expenses. 96
Section 12.20 No Merger or Waiver; Cumulative
Remedies. 97
Section 12.21 Survival of Obligations. 97
Section 12.22 Subsidiary Guarantee in Addition
to Other Obligations. 97
Section 12.23 Severability. 97
Section 12.24 Successors and Assigns. 97
SIGNATURES 96
EXHIBITS
Exhibit A - Initial Note
Exhibit B - Exchange Note
Exhibit C - Pledge Agreement
Exhibit D - Certificate re transfer to Institutional
Accredited Investor
Exhibit E - Certificate re transfer to Non-U.S. Person
Exhibit F - Disbursement Agreement
Exhibit G - Intercreditor Agreement
Exhibit H - Registration Rights Agreement
Exhibit I - Security Agreement
Exhibit J - Notation of Subsidiary Guarantee
INDENTURE, dated as of May 20, 1997, between XCL Ltd., a
Delaware corporation (the "Company"), and Fleet National Bank, as
Trustee (the "Trustee").
The Company has duly authorized the creation of an issue of
13.50% Senior Secured Notes due May 1, 2004, Series A (the
"Initial Notes") and 13.50% Senior Secured Notes due May 1, 2004,
Series B to be issued in exchange for the Initial Notes pursuant
to the Registration Rights Agreement (as defined herein) (the
"Exchange Notes" and, together with the Private Exchange Notes
(as defined herein) and the Initial Notes, the "Notes") and, to
provide therefor, the Company has duly authorized the execution
and delivery of this Indenture. The Notes will be secured by a
first lien and security interest in the Collateral (as defined
below) maintained with the Disbursement Agent (as defined below)
pursuant to the terms of the Cash Collateral and Disbursement
Agreement (as defined below). Upon satisfaction of certain
conditions precedent, the Notes will also be secured by a pledge
of all of outstanding capital stock of XCL-China Ltd., a British
Virgin Islands company wholly owned by the Company ("XCL-China")
and all other then existing Restricted Subsidiaries (as defined
below) of the Company, subject to release of such collateral as
provided herein, and by the unconditional guarantee of payment
thereof by XCL-China and such Restricted Subsidiaries as herein
provided. All things necessary to make the Notes, when duly
issued and executed by the Company, and authenticated and
delivered hereunder, the valid obligations of the Company, and to
make this Indenture a valid and binding agreement of the Company,
have been done.
Each party hereto agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders
of the Notes, without preference of one series of the Notes over
the other.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or
any of its Subsidiaries (i) existing at the time such Person
becomes a Restricted Subsidiary or at the time it merges or
consolidates with the Company or any of its Restricted
Subsidiaries or (ii) which becomes Indebtedness of the Company or
a Restricted Subsidiary in connection with the acquisition of
assets from such Person, in each case not incurred in connection
with, or in anticipation or contemplation of, such Person
becoming a Restricted Subsidiary or such acquisition, merger or
consolidation.
"Additional Interest" shall have the meaning set forth in
the Registration Rights Agreement.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, (a) the sum of (i)
discounted future net revenues from proved oil and gas reserves
of the Company and its Restricted Subsidiaries, calculated in
accordance with Commission guidelines (before any state or
federal income tax), as estimated by a nationally recognized firm
of independent petroleum engineers in a reserve report prepared
as of the end of the Company's most recently completed fiscal
year, as increased by, as of the date of determination, the
estimated discounted future net revenues from (A) estimated
proved oil and gas reserves acquired since the date of such year-
end reserve report, and (B) estimated oil and gas reserves
attributable to upward revisions of estimates of proved oil and
gas reserves since the date of such year-end reserve report 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 (C) estimated proved oil and
gas reserves produced or disposed of since the date of such year-
end reserve report and (D) estimated oil and gas reserves
attributable to downward revisions of estimates of proved oil and
gas reserves since the date of such year-end reserve report 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, however, that, in the case of each of
the determinations made pursuant to clauses (A) through (D), such
increases and decreases shall be as estimated by the Company's
petroleum engineers, unless in the event that there is a Material
Change as a result of such acquisitions, dispositions or
revisions, then the discounted future net revenues utilized for
purposes of this clause (a)(i) shall be confirmed in writing, by
a nationally recognized firm of independent petroleum engineers
plus (ii) the capitalized costs that are attributable to oil and
gas properties of the Company and its Restricted Subsidiaries to
which no proved oil and gas reserves are attributable, based on
the Company's books and records as of a date no earlier than the
date of the Company's latest annual or quarterly financial
statements, plus (iii) the Net Working Capital on a date no
earlier than the date of the Company's latest consolidated annual
or quarterly financial statements plus (iv) with respect to each
other tangible asset of the Company or its Restricted
Subsidiaries, specifically including, but not to the exclusion of
any other qualifying tangible assets, the Company's or its
Restricted Subsidiaries' oil and gas producing facilities and
unproved oil and gas properties (less any remaining deferred
income taxes which have been allocated to such oil and gas
producing facilities in connection with the acquisition thereof),
land, equipment, leasehold improvements, investments carried on
the equity method, restricted cash and the carrying value of
marketable securities, the greater of (A) the net book value of
such other tangible asset on a date no earlier than the date of
the Company's latest consolidated annual or quarterly financial
statements or (B) the appraised value, as estimated by an
Independent Advisor, of such other tangible assets of the Company
and its Restricted Subsidiaries, as of a date no earlier than the
date of the Company's latest audited financial statements minus
(b) the sum of (i) minority interests, (ii) any gas balancing
liabilities of the Company and its Restricted Subsidiaries
reflected in the Company's latest audited financial statements,
(iii) to the extent included in (a)(i) above, the discounted
future net revenues, calculated in accordance with Commission
guidelines (utilizing the prices utilized in the Company's year-
end reserve report), attributable to reserves which are required
to be delivered to third parties to fully satisfy the obligations
of the Company and its Restricted Subsidiaries with respect to
Volumetric Production Payments on the schedules specified with
respect thereto and (iv) 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 (a)(i) above, would be necessary to fully satisfy
the payment obligations of the Company and its Restricted
Subsidiaries with respect to Dollar-Denominated Production
Payments on the schedules specified with respect thereto. If the
Company changes its method of accounting from the full cost
method to the successful efforts method or a similar method of
accounting, "Adjusted Consolidated Net Tangible Assets" will
continue to be calculated as if the Company was still using the
full cost method of accounting. In addition to, but without
duplication of, the foregoing, for purposes of this definition,
"Adjusted Consolidated Net Tangible Assets" shall be calculated
after giving effect, on a pro forma basis, to (1) any Investment
not prohibited by this Indenture, to and including the date of
the transaction giving rise to the need to calculate Adjusted
Consolidated Net Tangible Assets (the "Assets Transaction Date"),
in any other Person that, as a result of such Investment, becomes
a Restricted Subsidiary of the Company, (2) the acquisition, to
and including the Assets Transaction Date (by merger,
consolidation or purchase of stock or assets), of any business or
assets, including, without limitation, Permitted Industry
Investments, and (3) any sales or other dispositions of assets
permitted by this Indenture (other than sales of Hydrocarbons or
other mineral products in the ordinary course of business)
occurring on or prior to the Assets Transaction Date.
"Affiliate" means, with respect to any specified Person, (a)
any other Person who directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common
control with, such specified Person and (b) any Related Person of
such Person. The term "control" means the possession, directly
or indirectly, of the power to direct or cause the direction of
the management and policies of a Person, whether through the
ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative of
the foregoing.
"Affiliate Transaction" has the meaning provided in Section
4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Asset Acquisition" means (a) an Investment by the Company
or any Restricted Subsidiary in any other Person pursuant to
which such Person shall become a Restricted Subsidiary, or shall
be merged with or into the Company or any Restricted Subsidiary,
or (b) the acquisition by the Company or any Restricted
Subsidiary of the properties and assets of any Person (other than
a Restricted Subsidiary) which constitute all or substantially
all of the properties and assets of such Person or comprises any
division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary
course of business.
"Asset Sale" means any direct or indirect sale, issuance,
conveyance, transfer, exchange, lease (other than operating
leases entered into in the ordinary course of business),
assignment or other transfer for value by the Company or any of
its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Wholly
Owned Restricted Subsidiary of (a) any Capital Stock of any
Restricted Subsidiary; or (b) any other property or assets
(including any interests therein) of the Company or any
Restricted Subsidiary, including any disposition by means of a
merger, consolidation or similar transaction; provided, however,
that Asset Sales shall not include (i) the sale, lease,
conveyance, disposition or other transfer of all or substantially
all of the properties and assets of the Company in a transaction
which is made in compliance with the provisions of Section 5.01,
(ii) any Investment in an Unrestricted Subsidiary which is made
in compliance with the provisions of Section 4.10, (iii)
disposals or replacements of obsolete equipment in the ordinary
course of business, (iv) the sale, lease, conveyance, disposition
or other transfer (each, a "Transfer") by the Company or any
Restricted Subsidiary of assets or property to the Company or one
or more Wholly Owned Restricted Subsidiaries, (v) any disposition
of Hydrocarbons or other mineral products for value in the
ordinary course of business, (vi) the Transfer of the Company's
interests in the Lutcher Moore Tract or the Cox Field (both as
defined in the Offering Memorandum), and (vii) the Transfer by
the Company or any Restricted Subsidiary of other assets or
property in the ordinary course of business; provided, however,
that the aggregate amount (valued at the Fair Market Value of
such assets or property at the time of such Transfer) of all such
assets and property Transferred since the Issue Date pursuant to
this clause (vii) shall not exceed $1,000,000 in any one year.
"Authenticating Agent" has the meaning provided in Section
2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar
federal, state or foreign law for the relief of debtors.
"Board of Directors" means, as to any Person, the board of
directors of such Person or any duly authorized committee
thereof.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant
Secretary of such Person to have been duly adopted by the Board
of Directors of such Person and be in full force and effect on
the date of such certification, and delivered to the Trustee.
"Business Day" means any day other than a Saturday, Sunday
or any other day on which banking institutions in the Cities of
New York, New York, Hartford, Connecticut, or Boston,
Massachusetts are required or authorized by law or other
governmental action to be closed.
"Capitalized Interest Account" has the meaning given to such
term in the Disbursement Agreement.
"Capitalized Lease Obligation" means, as to any Person, the
discounted present value of the rental obligations of such Person
under a lease of (or other agreement conveying the right to use)
any property (whether real, personal or mixed) that is required
to be classified and accounted for as a capital lease obligation
at such date, determined in accordance with GAAP.
"Capital Stock" means (i) with respect to any Person that is
a corporation, any and all shares, interests, participations or
other equivalents (however designated and whether or not voting)
of capital stock, including each class of Common Stock and
Preferred Stock of such Person and including any rights, warrants
or options to acquire any of the foregoing and instruments
convertible into any of the foregoing and (ii) with respect to
any Person that is not a corporation, any and all partnership or
other equity interests of such Person.
"Cash Equivalents" means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States
Government or issued by any agency thereof and backed by the full
faith and credit of the United States, in each case maturing
within six months from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state
or any public instrumentality thereof maturing within six months
from the date of acquisition thereof and, at the time of
acquisition, having one of the two highest ratings obtainable
from either S&P or Moody's; (c) commercial paper maturing no more
than one year from the date of creation thereof and, at the time
of acquisition, having a rating of at least A-1 from S&P or at
least P-1 from Moody's; (d) certificates of deposit or bankers'
acceptances maturing within one year from the date of acquisition
thereof issued by any bank organized under the laws of the United
States of America or any state thereof or the District of
Columbia or any United States branch of a foreign bank having at
the date of acquisition thereof combined capital and surplus of
not less than $250,000,000; (e) repurchase obligations with a
term of not more than seven days for underlying securities of the
types described in clause (a) above entered into with any bank
meeting the qualifications specified in clause (d) above; (f)
money market mutual or similar funds having assets in excess of
$100,000,000; and (g) investments in money market funds
registered under the Investment Company Act of 1940, as amended,
substantially all of whose assets are limited to United States
government obligating and United States Agency obligations.
"Change of Control" means the occurrence of one or more of
the following events: (a) any sale, lease, exchange or other
transfer (in one transaction or a series of related transactions)
of all or substantially all of the properties and assets of the
Company (determined on a consolidated basis for the Company and
its Restricted Subsidiaries), whether as an entirety or
substantially as an entirety to any Person or group of related
Persons for purposes of Section 13(d) of the Exchange Act (a
"Group") (whether or not otherwise in compliance with the
provisions of this Indenture); (b) the approval by the holders of
Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not
otherwise in compliance with the provisions of this Indenture);
(c) any Person or Group shall become the owner, directly or
indirectly, beneficially or of record, of shares representing
more than 35% of the aggregate ordinary voting power represented
by the issued and outstanding Capital Stock of the Company; or
(d) the replacement of a majority of the Board of Directors of
the Company over a two-year period from the directors who
constituted the Board of Directors of the Company at the
beginning of such period with directors whose replacement shall
not have been approved (by recommendation, nomination or
election, as the case may be) by a vote of at least a majority of
the Board of Directors of the Company then still in office who
either were members of such Board of Directors at the beginning
of such period or whose election as a member of such Board of
Directors was previously so approved.
"Change of Control Offer" has the meaning provided in
Section 4.15.
"Change of Control Payment Date" has the meaning provided in
Section 4.15.
"Change of Control Purchase Price" has the meaning provided
in Section 4.15.
"Collateral" shall have the meaning set forth in Section
11.02.
"Collateral Accounts" shall have the meaning set forth in
the Disbursement Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" of any Person means any and all shares,
interests or other participations in, and other equivalents
(however designated and whether voting or non-voting) of such
Person's common stock, whether outstanding on the Issue Date or
issued after the Issue Date, and includes, without limitation,
all series and classes of such common stock.
"Company" means XCL Ltd., a Delaware corporation, until a
successor replaces it in accordance with the provisions of this
Indenture and thereafter means such successor.
"Company Properties" means all properties and assets, and
equity, partnership or other ownership interests therein, that
are related or incidental to, or used or useful in connection
with, the conduct or operation of any business activities of the
Company or the Subsidiaries, which business activities are not
prohibited by the terms of this Indenture.
"Consolidated EBITDA" means, for any period, the sum
(without duplication) of (a) Consolidated Net Income and (b) to
the extent Consolidated Net Income has been reduced thereby, (i)
all income taxes of the Company and its Restricted Subsidiaries
paid or accrued in accordance with GAAP for such period (other
than income taxes attributable to extraordinary, unusual or
nonrecurring gains or losses or taxes attributable to sales or
dispositions outside the ordinary course of business), (ii)
Consolidated Interest Expense, (iii) the amount of any Preferred
Stock dividends paid by the Company and its Restricted
Subsidiaries and (iv) Consolidated Non-cash Charges, less any
non-cash items increasing Consolidated Net Income for such
period, all as determined on a consolidated basis for the Company
and its Restricted Subsidiaries in accordance with GAAP.
"Consolidated EBITDA Coverage Ratio" means, with respect to
the Company, the ratio of (a) Consolidated EBITDA of the Company
during the four full fiscal quarters for which financial
information in respect thereof is available (the "Four Quarter
Period") ending on or prior to the date of the transaction giving
rise to the need to calculate the Consolidated EBITDA Coverage
Ratio (the "Transaction Date") to (b) Consolidated Fixed Charges
of the Company for the Four Quarter Period. In addition to and
without limitation of the foregoing, for purposes of this
definition, "Consolidated EBITDA" and "Consolidated Fixed
Charges" shall be calculated after giving effect (without
duplication) on a pro forma basis for the period of such
calculation to (a) the incurrence or repayment of any
Indebtedness of the Company or any of its Restricted Subsidiaries
(and the application of the proceeds thereof), giving rise to the
need to make such calculation and any incurrence or repayment of
other Indebtedness (and the application of the proceeds thereof),
other than the incurrence or repayment of Indebtedness in the
ordinary course of business for working capital purposes pursuant
to working capital facilities, occurring during the Four Quarter
Period or at any time subsequent to the last day of the Four
Quarter Period and on or prior to the Transaction Date, as if
such incurrence or repayment, as the case may be (and the
application of the proceeds thereof), occurred on the first day
of the Four Quarter Period and (b) any Asset Sales or Asset
Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a
result of the Company or one of its Restricted Subsidiaries
(including any Person who becomes a Restricted Subsidiary as a
result of the Asset Acquisition) incurring, assuming or otherwise
being liable for Acquired Indebtedness, and also including,
without limitation, any Consolidated EBITDA attributable to the
properties or assets which are the subject of the Asset
Acquisition or Asset Sale during the Four Quarter Period)
occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or
prior to the Transaction Date, as if such Asset Sale or Asset
Acquisition (including the incurrence, assumption or liability
for any such Acquired Indebtedness) occurred on the first day of
the Four Quarter Period. If the Company or any of its Restricted
Subsidiaries directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the
incurrence of such guaranteed Indebtedness as if the Company or
the Restricted Subsidiary, as the case may be, had directly
incurred or otherwise assumed such guaranteed Indebtedness.
Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator)
of this "Consolidated EBITDA Coverage Ratio," (i) interest on
outstanding Indebtedness determined on a fluctuating basis as of
the Transaction Date and which will continue to be so determined
thereafter shall be deemed to have accrued at a fixed rate per
annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (ii) if interest on any
Indebtedness actually incurred on the Transaction Date may
optionally be determined at an interest rate based upon a factor
of a prime or similar rate, a eurocurrency interbank offered
rate, or other rates, then the interest rate in effect on the
Transaction Date will be deemed to have been in effect during the
Four Quarter Period; and (iii) notwithstanding clauses (i) and
(ii) above, interest on Indebtedness determined on a fluctuating
basis, to the extent such interest is covered by agreements
relating to Interest Swap Obligations, shall be deemed to accrue
at the rate per annum resulting after giving effect to the
operation of such agreements.
"Consolidated Fixed Charges" means, with respect to the
Company for any period, the sum, without duplication, of (a)
Consolidated Interest Expense (including any premium or penalty
paid in connection with redeeming or retiring Indebtedness of the
Company and its Restricted Subsidiaries prior to the stated
maturity thereof pursuant to the agreements governing such
Indebtedness), plus (b) the product of (i) the amount of all
dividend payments on any series of Preferred Stock of the Company
(other than dividends paid in Qualified Capital Stock) paid,
accrued or scheduled to be paid or accrued during such period
times (ii) a fraction, the numerator of which is one and the
denominator of which is one minus the then current effective
consolidated federal, state and local income tax rate of the
Company, expressed as a decimal.
"Consolidated Interest Expense" means, with respect to the
Company for any period, the sum of, without duplication: (a) the
aggregate of the interest expense of the Company and its
Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, including without
limitation, (i) any amortization of original issue discount, (ii)
the net costs under Interest Swap Obligations, (iii) all
capitalized interest and (iv) the interest portion of any
deferred payment obligation; and (b) the interest component of
Capitalized Lease Obligations paid, accrued and/or scheduled to
be paid or accrued by the Company and its Restricted Subsidiaries
during such period, as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company
for any period, the aggregate net income (or loss) of the Company
and its Restricted Subsidiaries for such period on a consolidated
basis, determined in accordance with GAAP; provided, however,
that there shall be excluded therefrom (a) after-tax gains from
Asset Sales or abandonments or reserves relating thereto, (b)
after-tax items classified as extraordinary or nonrecurring
gains, (c) the net income of any Person acquired in a "pooling of
interests" transaction accrued prior to the date it becomes a
Restricted Subsidiary or is merged or consolidated with the
Company or any Restricted Subsidiary, (d) the net income (but not
loss) of any Restricted Subsidiary to the extent that the
declaration of dividends or similar distributions by that
Restricted Subsidiary of that income is restricted by charter,
contract, operation of law or otherwise, (e) the net income of
any Person in which the Company has an interest, other than a
Restricted Subsidiary, except to the extent of cash dividends or
distributions actually paid to the Company or to a Restricted
Subsidiary by such Person, (f) income or loss attributable to
discontinued operations (including, without limitation,
operations disposed of during such period whether or not such
operations were classified as discontinued) and (g) in the case
of a successor to the Company by consolidation or merger or as a
transferee of the Company's properties and assets, any net income
(or loss) of the Surviving Entity prior to such consolidation,
merger or transfer of properties and assets.
"Consolidated Net Worth" of any Person as of any date means
the consolidated stockholders' equity of such Person, determined
on a consolidated basis in accordance with GAAP, less (without
duplication) amounts attributable to Disqualified Capital Stock
of such Person.
"Consolidated Non-cash Charges" means, with respect to the
Company, for any period, the aggregate depreciation, depletion,
amortization and other non-cash expenses of the Company and its
Restricted Subsidiaries reducing Consolidated Net Income of the
Company for such period, determined on a consolidated basis in
accordance with GAAP (excluding any such charges constituting an
extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).
"consolidation" means, with respect to any Person, the
consolidation of the accounts of the Restricted Subsidiaries of
such Person with those of such Person, all in accordance with
GAAP; provided, however, that "consolidation" will not include
consolidation of the account of any Unrestricted Subsidiary of
such Person with the accounts of such Person. The term
"consolidated" has a correlative meaning to the foregoing.
"Corporate Trust Office" means the office of the Trustee at
which at any particular time its corporate trust business shall
be principally administered, which office at the date of
execution of this Indenture is located at 777 Main Street,
Hartford, Connecticut 06115.
"Covenant Defeasance" has the meaning set forth in Section
8.01.
"Crude Oil and Natural Gas Business" means (i) the
acquisition, exploration, development, operation and disposition
of interests in oil, gas and other Hydrocarbon properties, and
(ii) the gathering, marketing, treating, processing, storage,
selling and transporting of all production from such interests or
properties of the Company or of others.
"Crude Oil and Natural Gas Hedge Agreement" means, with
respect to any Person, any oil and gas agreement and other
agreements or arrangements or any combination thereof entered
into by such Person and that is designed to provide protection
against oil and natural gas price fluctuations.
"Crude Oil and Natural Gas Properties" means all properties,
including equity or other ownership interests therein, owned by
any Person which have been assigned "proved oil and gas reserves"
as defined in Rule 4-10 of Regulation S-X of the Securities Act
as in effect on the Issue Date.
"Crude Oil and Natural Gas Related Assets" means any
Investment or capital expenditure (but not including additions to
working capital or repayments of any revolving credit or working
capital borrowings) by the Company or any Restricted Subsidiary
of the Company which is related to the business of the Company
and its Restricted Subsidiaries as it is conducted on the date of
the Asset Sale giving rise to the Net Cash Proceeds to be
reinvested.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect the Company or any Restricted Subsidiary of
the Company against fluctuations in currency values.
"Custodian" means any receiver, trustee, assignee,
liquidator, sequestrator or similar official under any Bankruptcy
Law.
"Default" means an event or condition the occurrence of
which is, or with the lapse of time or the giving of notice or
both would be, an Event of Default.
"Default Interest Payment Date" has the meaning provided in
Section 2.12.
"Depository" means The Depository Trust Company, its
nominees and successors.
"Disbursement Agreement" means the Cash Collateral and
Disbursement Agreement of even date herewith by and among the
Company, Fleet National Bank, as Disbursement Agent, Fleet
National Bank, as Trustee, and Herman J. Schellstede &
Associates, Inc., as Representative, as amended and supplemented
from time to time in accordance with its terms, substantially in
the form attached hereto as Exhibit F, with such changes thereto
that do not have a material adverse effect on the Holders.
"Disbursement Agent" means the party named as such in the
Disbursement Agreement until a successor replaces it in
accordance with the provisions of the Disbursement Agreement and
thereafter means such successor.
"Disqualified Capital Stock" means that portion of any
Capital Stock which, 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 is mandatorily redeemable at the sole option of the
holder thereof, in whole or in part, in either case, on or prior
to the final maturity of the Notes. The Company's shares of
Series A, Series B, Series E, Series F and Amended Series A
Preferred Stock shall not be deemed Disqualified Capital Stock.
"Dollar-Denominated Production Payments" means production
payment obligations recorded as liabilities in accordance with
GAAP, together with all undertakings and obligations in
connection therewith.
"Equity Offering" means an offering of Qualified Capital
Stock of the Company.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute or statutes thereto.
"Exchange Notes" has the meaning provided in the preamble to
this Indenture.
"Fair Market Value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length,
free market transaction, for cash, between an informed and
willing seller and an informed and willing buyer, neither of whom
is under undue pressure or compulsion to complete the
transaction. Fair Market Value shall be determined by the Board
of Directors of the Company acting reasonably and in good faith
and shall be evidenced by a Board Resolution of the Company
delivered to the Trustee; provided, however, that (a) if the
aggregate non-cash consideration to be received by the Company or
any Restricted Subsidiary from any Asset Sale shall reasonably by
expected to exceed $5,000,000 or (b) if the net worth of any
Restricted Subsidiary to be designated as an Unrestricted
Subsidiary shall reasonably be expected to exceed $10,000,000,
the Fair Market Value shall be determined by an Independent
Advisor.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial
Accounting Standards Board as of any date of determination.
"Global Note" has the meaning provided in Section 2.01.
"Global Note Legend" has the meaning provided in Section
2.15.
"guarantee" means any obligation, contingent or otherwise,
of any Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person and, without
limiting the generally of the foregoing, any obligation, direct
or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchaser or
payment of) such Indebtedness or other obligation of such other
Person (whether arising by virtue of partnership arrangements, or
by agreement to keep-well, to purchase assets, goods, securities
or services, to take-or-pay, or to maintain financial statements
conditions or otherwise) or (ii) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness or
other obligation of the payment thereof or to protect such
obligee against loss in respect thereof (in whole or in part)
(but if in part, only to the extent thereof); provided, however,
that the term "guarantee" shall not include (a) endorsements for
collection or deposit in the ordinary course of business and (b)
guarantees (other than guarantees of Indebtedness) by the Company
in respect of assisting one or more Subsidiaries in the ordinary
course of their respective businesses, including without
limitation guarantees of trade obligations and operating leases,
on ordinary business terms. The term "guarantee" used as a verb
has a corresponding meaning.
"Holder" means any Person holding a Note.
"Hydrocarbons" means oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate, liquid
hydrocarbons, gaseous hydrocarbons, including, without
limitation, coal bed methane, and all constituents, elements or
compounds thereof and products processed therefrom.
"incur" has the meaning set forth in Section 4.12.
"Indebtedness" means, with respect to any Person, without
duplication (a) all Obligations of such Person for borrowed
money, (b) all Obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments, (c) all
Capitalized Lease Obligations of such Person, (d) all Obligations
of such Person issued or assumed as the deferred purchase price
of property, all conditional sale obligations and all Obligations
under any title retention agreement (but excluding trade accounts
payable), (e) all Obligations of such Person for the
reimbursement of any obligor on a letter of credit, banker's
acceptance or similar credit transaction, (f) guarantees and
other contingent obligations of such Person in respect of
Indebtedness referred to in clauses (a) through (e) above and
clauses (h) and (i) below, (g) all Obligations of any Person of
the type referred to in clauses (a) through (f) above which are
secured by any Lien on any property or asset of such Person, the
amount of such Obligation being deemed to be the lesser of the
Fair Market Value of such property or asset or the amount of the
Obligation so secured, (h) all Obligations of such Person under
either Crude Oil and Natural Gas Hedging Agreements or Currency
Agreements and Interest Swap Obligations of such Person, (i) all
Obligations of such Person in respect of any Production Payment
or production imbalances and (j) all Disqualified Capital Stock
issued by such Person with the amount of Indebtedness represented
by such Disqualified Capital Stock being equal to the greater of
its voluntary or involuntary liquidation preference and its
maximum fixed Redemption Price or repurchase price. For purposes
hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall
be calculated in accordance with the terms of such Disqualified
Capital Stock as if such Disqualified Capital Stock were
purchased on any date on which Indebtedness shall be required to
be determined pursuant to this Indenture, and if such price is
based upon, or measured by, the Fair Market Value of such
Disqualified Capital Stock, such Fair Market Value shall be
determined reasonably and in good faith by the Board of Directors
of the Company. The "amount" or "principal amount" of
Indebtedness at any time of determination represented by (a) any
Indebtedness issued at a price that is less than the principal
amount at maturity thereof shall be the face amount of the
liability in respect thereof, (b) any Capitalized Lease
Obligation shall be the amount determined in accordance with the
definition thereof, (c) any Interest Swap Obligations or
Indebtedness under either Crude Oil and Natural Gas Hedging
Agreements or Currency Agreements included in the definition of
Permitted Indebtedness shall be zero, (d) all other unconditional
obligations shall be the amount of the liability thereof
determined in accordance with GAAP and (e) all other contingent
obligations shall be the maximum liability at such date of such
Person.
"Indenture" means this Indenture, as amended or supplemented
from time to time in accordance with the terms hereof.
"Independent Advisor" means a reputable accounting,
appraisal or nationally recognized investment banking,
engineering or consulting firm (a) which does not, and whose
directors, officers and employees or Affiliates do not have a
direct or indirect material financial interest in the Company and
(b) which, in the judgment of the Board of Directors of the
Company, is otherwise disinterested, independent and qualified to
perform the task for which it is to be engaged.
"ING" means ING (U.S.) Capital Corporation (formerly known
as Internationale Nederlanden (U.S.) Capital Corporation).
"ING Credit Facility" means that certain Credit Agreement
dated January 31, 1994 by and among the Company, XCL-Texas, Inc.
and ING, as amended and supplemented from time to time.
"Initial Notes" has the meaning provided in the preamble to
this Indenture.
"Initial Purchaser" means Jefferies & Company, Inc.
"Institutional Accredited Investor" means an institution
that is an "accredited investor" as that term is defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act.
"Intercreditor Agreement" means that certain Intercreditor
Agreement of even date herewith by and among the Company, the
Trustee, ING and the Subordinated Debt Holders substantially in
the form attached hereto as Exhibit G, with such changes thereto
that do not have a material adverse effect on the Holders.
"interest" when used with respect to any Note means the
amount of all interest accruing on such Note, including
applicable defaulted interest pursuant to Section 2.12 and any
Additional Interest pursuant to the Registration Rights
Agreement.
"Interest Payment Date" means the stated maturity of an
installment of interest on the Notes.
"Interest Swap Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person,
whereby, directly or indirectly, such Person is entitled to
receive from time to time periodic payments calculated by
applying either a floating or a fixed rate of interest on a
stated notional amount in exchange for periodic payments made by
such other Person calculated by applying a fixed or a floating
rate of interest on the stated notional amount and shall include,
without limitation, interest rate swaps, caps, floors, collars
and similar agreements.
"Internal Revenue Code" means the Internal Revenue Code of
1986, as amended to the date hereof and from time to time
hereafter.
"Investment" means, with respect to any Person, any direct
or indirect (i) loan, advance or other extension of credit
(including, without limitation, a guarantee) or capital
contribution to any Person (by means of any transfer of cash or
other property (valued at the Fair Market Value thereof as of the
date of transfer) to others or any payment of property or
services for the account or use of others), (ii) purchase or
acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities or evidences of Indebtedness
issued by, any Person (whether by merger, consolidation,
amalgamation or otherwise and whether or not purchased directly
from the issuer of such securities or evidences of Indebtedness),
(iii) guarantee or assumption of the Indebtedness of any other
Person (other than the guarantee or assumption of Indebtedness of
such Person or a Restricted Subsidiary of such Person which
guarantee or assumption is made in compliance with the provisions
of Section 4.12), and (iv) other items that would be classified
as investments on a balance sheet of such Person prepared in
accordance with GAAP. Notwithstanding the foregoing,
"Investment" shall exclude extensions of trade credit by the
Company and its Restricted Subsidiaries on commercially
reasonable terms in accordance with normal trade practices of the
Company or such Restricted Subsidiary, as the case may be. The
amount of any Investment shall not be adjusted for increases or
decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment. If the Company or any Restricted
Subsidiary sells or otherwise disposes of any Capital Stock of
any Restricted Subsidiary such that, after giving effect to any
such sale or disposition, it ceases to be a Subsidiary of the
Company, the Company shall be deemed to have made an Investment
on the date of any such sale or disposition equal to the Fair
Market Value of the Capital Stock of such Restricted Subsidiary
not sold or disposed of.
"Issue Date" means the date of original issuance of the
Initial Notes.
"Legal Defeasance" has the meaning set forth in Section
8.01.
"Legal Holiday" has the meaning provided in Section 10.07.
"Lien" means any lien, mortgage, deed of trust, pledge,
security interest, charge or encumbrance of any kind (including
any conditional sale or other title retention agreement, any
lease in the nature thereof and any agreement to give any
security interest).
"Lube Oil Business" means (i) the acquisition, design,
construction, and operation of lubrication oil plants and the
distribution and marketing of lubrication oils in China and
Southeast Asia and (ii) the joint venture with CNPC United Lube
Oil Corporation with respect to the acquisition, design,
construction, and operation of other facilities for the down-
stream processing and treatment, refining, storage, selling and
transporting of refined products.
"Mandatory Redemption" has the meaning set forth in Section
3.04.
"Material Change" means an increase or decrease of more than
10% during a fiscal quarter in the discounted future net cash
flows (excluding changes that result solely from changes in
prices) from proved oil and gas reserves of the Company and its
Restricted Subsidiaries (before any state or federal income tax),
calculated in accordance with accordance with clause (a)(i) of
the definition of Adjusted Consolidated Net Tangible Assets;
provided, however, that the following will be excluded from the
Material Change calculation: (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 reserves added
during the quarter attributable to the drilling or recompletion
of wells not included in previous reserves estimates, but which
will be included in future quarters.
"Maturity Date" means May 1, 2004.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Cash Proceeds" means, with respect to any Asset Sale,
the proceeds in the form of cash or Cash Equivalents including
payments in respect of deferred payment obligations when received
in the form of cash or Cash Equivalents received by the Company
or any of its Restricted Subsidiaries from such Asset Sale net of
(a) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or
payable after taking into account any reduction in consolidated
tax liability due to available tax credits or deductions and any
tax sharing arrangements, (c) repayment of Indebtedness that is
required to be repaid in connection with such Asset Sale and (d)
an appropriate amount to be provided by the Company or any
Restricted Subsidiary, as the case may be, as a reserve, in
accordance with GAAP, against any post-closing adjustments or
liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary , as the case may be, after
such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification
obligations associated with such Asset Sale (but excluding any
payments which, by the terms of the indemnities, will not, be
made during the term of the Notes).
"Net Proceeds Offer" has the meaning set forth in Section
4.16.
"Net Proceeds Offer Amount" has the meaning set forth in
Section 4.16.
"Net Proceeds Offer Payment Date" has the meaning set forth
in Section 4.16.
"Net Proceeds Offer Trigger Date" has the meaning set forth
in Section 4.16.
"Net Working Capital" means (i) all current assets of the
Company and its consolidated Subsidiaries, minus (ii) all current
liabilities of the Company and its consolidated Subsidiaries,
except current liabilities included in Indebtedness, in each case
as set forth in financial statements of the Company prepared in
accordance with GAAP.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse
for collection of principal and interest on such Indebtedness is
against the specific property identified in the instruments
evidencing or securing such Indebtedness and such property was
acquired with the proceeds of such Indebtedness or such
Indebtedness was incurred within 90 days after the acquisition of
such property and (ii) no other assets of such Person may be
realized upon in collection of principal or interest on such
Indebtedness; provided, however, that any such Indebtedness shall
not cease to be "Non-Recourse Indebtedness" solely as a result of
the instrument governing such Indebtedness containing terms
pursuant to which such Indebtedness becomes recourse upon (a)
fraud or misrepresentation by the Person in connection with such
Indebtedness, (b) such Person failing to pay taxes or other
charges that result in the creation of liens on any portion of
the specific property securing such Indebtedness or failing to
maintain any insurance on such property required under the
instruments securing such Indebtedness, (c) the conversion of any
of the collateral for such Indebtedness, (d) such Person failing
to maintain any of the collateral for such Indebtedness in the
condition required under the instruments securing the
Indebtedness, (e) any income generated by the specific property
securing such Indebtedness being applied in a manner not
otherwise allowed in the instruments securing such Indebtedness,
(f) the violation of any applicable law or ordinance governing
hazardous materials or substances or otherwise affecting the
environmental condition of the specific property securing the
Indebtedness or (g) the rights of the holder of such Indebtedness
to the specific property becoming impaired, suspended or reduced
by any act, omission or misrepresentation of such Person;
provided, further, however, that upon the occurrence of any of
the foregoing clauses (a) through (g) above, any such
Indebtedness which shall have ceased to be "Non-Recourse
Indebtedness" shall be deemed to have been Indebtedness incurred
by such Person at such time.
"Non-U.S. Person" means a Person who is not a U.S. person,
as defined in Regulation S.
"Notes" means the Initial Notes, the Exchange Notes and, if
required, the Private Exchange Notes, treated as a single class
of securities, as amended or supplemented from time to time in
accordance with the terms hereof, that are issued pursuant to
this Indenture.
"Obligations" means all obligations for principal, premium,
interest, penalties, fees, indemnifications, reimbursements,
damages and other liabilities payable under the documentation
governing any Indebtedness.
"Offering Memorandum" means the Confidential Offering
Memorandum dated May 13, 1997 of the Company relating to the
offering of the Notes.
"Officer" means, with respect to any Person, the Chairman of
the Board of Directors, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer, the
Treasurer, the Controller, or the Secretary of such Person, or
any other officer designated by the Board of Directors serving in
a similar capacity.
"Officers' Certificate" means a certificate signed by two
Officers of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee complying
with the requirements of Sections 10.04 and 10.05, as they relate
to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Default" has the meaning set forth in Section 5.01.
"Payment Restriction" has the meaning set forth in Section
4.13.
"Permitted Indebtedness" means, without duplication, each of
the following:
(a) Indebtedness under the Notes, this Indenture,
the Security Documents and the Subsidiary Guarantees;
(b) Indebtedness incurred pursuant to one or more
credit facilities with banks and other financial institutions to
be entered into by the Company in an aggregate principal amount
at any time outstanding not to exceed $5,000,000, reduced by any
required permanent repayments (which are accompanied by a
corresponding permanent commitment reduction) thereunder (the
"Maximum Bank Credit Amount"), and any renewals, amendments,
extensions, supplements, modifications, deferrals, refinancings
or replacements (each, for the purpose of this clause (b), a
"refinancing") thereof, including any successive refinancing
thereof, so long as the aggregate principal amount of any such
new Indebtedness outstanding pursuant to this clause (b), shall
not at any one time exceed the Maximum Bank Credit Amount;
(c) Interest Swap Obligations of the Company or a
Restricted Subsidiary covering Indebtedness of the Company or any
of its Restricted Subsidiaries; provided, however, that such
Interest Swap Obligations are entered into to protect the Company
and its Restricted Subsidiaries from fluctuations in interest
rates on Indebtedness incurred in accordance with this Indenture
to the extent the notional principal amount of such Interest Swap
Obligations does not exceed the principal amount of the
Indebtedness to which such Interest Swap Obligation relates;
(d) Indebtedness of a Restricted Subsidiary to the
Company or to a Wholly Owned Restricted Subsidiary for so long as
such Indebtedness is held by the Company or a Wholly Owned
Restricted Subsidiary, in each case subject to no Lien held by a
Person other than the Company or a Wholly Owned Restricted
Subsidiary; provided, however, that if as of any date any Person
other than the Company or a Wholly Owned Restricted Subsidiary
owns or holds any such Indebtedness or holds a Lien in respect of
such Indebtedness, such date shall be deemed the incurrence of
Indebtedness not constituting Permitted Indebtedness by the
issuer of such Indebtedness;
(e) Indebtedness of the Company to a Wholly Owned
Restricted Subsidiary for so long as such Indebtedness is held by
a Wholly Owned Restricted Subsidiary, in each case subject to no
Lien; provided, however, that (i) any such Indebtedness is
unsecured and subordinated, pursuant to a written agreement, to
the Company's obligations under this Indenture and the Notes and
(ii) if as of any date any Person other than a Wholly Owned
Restricted Subsidiary owns or holds any such Indebtedness or
holds a Lien in respect of such Indebtedness, such date shall be
deemed the incurrence of Indebtedness not constituting Permitted
Indebtedness by the Company;
(f) Indebtedness arising from the honoring by a
bank or other financial institution of a check, draft or similar
instrument inadvertently (except in the case of daylight
overdrafts) drawn against insufficient funds in the ordinary
course of business; provided, however, that such Indebtedness is
extinguished within two Business Days of incurrence;
(g) Indebtedness of the Company or any of its
Restricted Subsidiaries represented by letters of credit for the
account of the Company or such Restricted Subsidiary, as the case
may be, in order to provide security for workers' compensation
claims, payment obligations in connection with self-insurance or
similar requirements in the ordinary course of business;
(h) Refinancing Indebtedness;
(i) Capitalized Lease Obligations and Purchase
Money Indebtedness of the Company or any of its Restricted
Subsidiaries not to exceed $5,000,000 at any one time
outstanding;
(j) Permitted Operating Obligations;
(k) Obligations arising in connection with Crude
Oil and Natural Gas Hedge Agreements of the Company or a
Restricted Subsidiary entered into in the ordinary course of its
Crude Oil and Natural Gas Business and not for purposes of
speculation;
(l) Non-Recourse Indebtedness;
(m) Indebtedness under Currency Agreements;
provided, however, that in the case of Currency Agreements which
relate to Indebtedness, such Currency Agreements do not increase
the Indebtedness of the Company and its Restricted Subsidiaries
outstanding other than as a result of fluctuations in foreign
currency exchange rates or by reason of fees, indemnities and
compensation payable thereunder;
(n) additional Indebtedness of the Company or any
of its Restricted Subsidiaries in an aggregate principal amount
at any time outstanding not to exceed the greater of (i) $3.0
million or (ii) 2.5% of Adjusted Consolidated Net Tangible Assets
of the Company; and
(o) Indebtedness outstanding on the Issue Date,
including without limitation, Indebtedness outstanding under the
ING Credit Facility and the Subordinated Debt.
"Permitted Industry Investments" means, in relation to the
Crude Oil and Natural Gas Business, (i) capital expenditures,
including, without limitation, acquisitions of Company
Properties; (ii) (a) entry into operating agreements, joint
ventures, working interests, royalty interests, mineral leases,
unitization agreements, pooling arrangements or other similar
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, and (b)
exchanges of Company Properties for other Company Properties of
at least equivalent value as determined in good faith by the
Board of Directors of the Company; and (iii) Investments of
operating funds on behalf of co-owners of Crude Oil and Natural
Gas Properties of the Company or a Restricted Subsidiary pursuant
to joint operating agreements.
"Permitted Investments" means (a) Investments by the Company
or any Restricted Subsidiary in any Person that is or will become
immediately after such Investment a Wholly Owned Restricted
Subsidiary or that will merge or consolidate into the Company or
a Wholly Owned Restricted Subsidiary that is not subject to any
Payment Restriction; (b) Investments in the Company by any
Restricted Subsidiary; provided, however, that any Indebtedness
evidencing any such Investment is unsecured and subordinated,
pursuant to a written agreement, to the Company's obligations
under the Notes and this Indenture; (c) investments in cash and
Cash Equivalents; (d) Investments made by the Company or its
Restricted Subsidiaries as a result of consideration received in
connection with an Asset Sale made in compliance with Section
4.16; and (e) Permitted Industry Investments.
"Permitted Liens" means each of the following types of
Liens:
(a) Liens securing (i) the Existing Secured Debt
and (ii) other Liens existing as of the Issue Date (to the extent
and in the manner such Liens are in effect on the Issue Date);
(b) Liens securing Indebtedness outstanding under a
new credit facility entered into by the Company and Liens arising
under this Indenture;
(c) Liens securing the Notes and the Subsidiary
Guarantees;
(d) Liens of the Company or a Restricted Subsidiary
on assets of any Restricted Subsidiary;
(e) Liens securing Refinancing Indebtedness which
is incurred to refinance, renew, replace, defease or refund any
Indebtedness which has been secured by a Lien permitted under
this Indenture and which has been incurred in accordance with the
provisions of this Indenture; provided, however, that such Liens
(x) are no less favorable to the Holders and are not more
favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being refinanced, renewed,
replaced, defeased or refunded and (y) do not extend to or cover
any property or assets of the Company or any of its Restricted
Subsidiaries not securing the Indebtedness so refinanced,
renewed, replaced, defeased or refunded;
(f) Liens for taxes, assessments or governmental
charges or claims either (i) not delinquent or (ii) contested in
good faith by appropriate proceedings and as to which the Company
or a Restricted Subsidiary, as the case may be, shall have set
aside on its books such reserves as may be required pursuant to
GAAP;
(g) statutory and contractual Liens of landlords to
secure rent arising in the ordinary course of business to the
extent such Liens relate only to the tangible property of the
lessee which is located on such property and Liens of carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and
other Liens imposed by law incurred in the ordinary course of
business for sums not yet delinquent or being contested in good
faith, if such reserve or other appropriate provision, if any, as
shall be required by GAAP shall have been made in respect
thereof;
(h) Liens incurred or deposits made in the ordinary
course of business (i) in connection with workers' compensation,
unemployment insurance and other types of social security,
including any Lien securing letters of credit issued in the
ordinary course of business consistent with past practice in
connection therewith, or (ii) to secure the performance of
tenders, statutory obligations, surety and appeal bonds, bids,
leases, government contracts, performance and return-of-money
bonds and other similar obligations (exclusive of obligations for
the payment of borrowed money);
(i) judgment and attachment Liens not giving rise
to an Event of Default;
(j) easements, rights-of-way, zoning restrictions,
restrictive covenants, minor imperfections in title and other
similar charges or encumbrances in respect of real property not
interfering in any material respect with the ordinary conduct of
the business of the Company or any of its Restricted
Subsidiaries;
(k) any interest or title of a lessor under any
Capitalized Lease Obligation; provided that such Liens do not
extend to any property or assets which is not leased property
subject to such Capitalized Lease Obligation;
(l) Liens securing Purchase Money Indebtedness of
the Company or any Restricted Subsidiary; provided, however, that
(i) the Purchase Money Indebtedness shall not be secured by any
property or assets of the Company or any Restricted Subsidiary
other than the property and assets so acquired or constructed and
(ii) the Lien securing such Indebtedness shall be created within
90 days of such acquisition or construction;
(m) Liens securing reimbursement obligations with
respect to commercial letters of credit which encumber documents
and other property relating to such letters of credit and
products and proceeds thereof;
(n) Liens encumbering deposits made to secure
obligations arising from statutory, regulatory, contractual, or
warranty requirements of the Company or any of its Restricted
Subsidiaries, including rights of offset and set-off;
(o) Liens securing Interest Swap Obligations which
Interest Swap Obligations relate to Indebtedness that is
otherwise permitted under this Indenture and Liens securing Crude
Oil and Natural Gas Hedge Agreements permitted under this
Indenture;
(p) Liens securing acquired Indebtedness incurred
in accordance with Section 4.12; provided, however, that (i) such
Liens secured such acquired Indebtedness at the time of and prior
to the incurrence of such Acquired Indebtedness by the Company or
a Restricted Subsidiary and were not granted in connection with,
or in anticipation of, the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary and (ii)
such Liens do not extend to or cover any property or assets of
the Company or of any of its Restricted Subsidiaries other than
the property or assets that secured the Acquired Indebtedness
prior to the time such Indebtedness became Acquired Indebtedness
of the Company or a Restricted Subsidiary and are no more
favorable to the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired
Indebtedness by the Company or a Restricted Subsidiary;
(q) Liens on, or related to, properties and assets
of the Company and its Subsidiaries to secure all or a part of
the costs incurred in the ordinary course of business of
exploration, drilling, development, production, processing,
transportation, marketing or storage, or operation thereof;
(r) Liens on pipeline or pipeline facilities,
Hydrocarbons or properties and assets of the Company or its
Subsidiaries which arise out of operation of law;
(s) royalties, overriding royalties, revenue
interests, net revenue interests, net profit interests,
revisionary interests, production payments, production sales
contracts, operating agreements and other similar interests,
properties, arrangements and agreements, all as ordinarily exist
with respect to properties and assets of the Company and its
Subsidiaries or otherwise as are customary in the oil and gas
business;
(t) with respect to any properties and assets of
the Company and its Subsidiaries, Liens arising under, or in
connection with, or related to, farm-out, farm-in, joint
operation, area of mutual interest agreements and/or other
similar or customary arrangements, agreements or interests that
the Company or any Subsidiary determines in good faith to be
necessary for the economic development of such property or
assets;
(u) any (a) interest or title of a lessor or
sublessor under any lease; (b) restriction or encumbrance that
the interest or title of such lessor or sublessor may be subject
to (including, without limitation, ground leases or other prior
leases of the demised premises, mortgages, mechanics' liens, tax
liens, and easements); or (c) subordination of the interest of
the lessee or sublessee under such lease to any restrictions or
encumbrance referred to in the preceding clause (b);
(v) Liens in favor of collecting or payor banks
having a right of setoff, revocation, refund or chargeback with
respect to money or instruments of the Company or any Restricted
Subsidiary on deposit with or in possession of such bank;
(w) Liens securing Non-Recourse Indebtedness; and
(x) Liens with respect to any properties and assets
of the Company and any Subsidiary and any production attributable
thereto in favor of any governmental agency of the People's
Republic of China;
provided, however, no Lien on any property subject to the Lien of
the Security Documents (except a Lien described in clause (c) of
this definition or a nonconsensual Lien described in clause (f)
of this definition) shall be deemed to be a Permitted Lien.
"Permitted Operating Obligations" means Indebtedness of the
Company or any Restricted Subsidiary in respect of one or more
standby letters of credit, bid, performance or surety bonds, or
other reimbursement obligations, issued for the account of, or
entered into by, the Company or any Restricted Subsidiary in the
ordinary course of business (excluding obligations related to the
purchase by the Company or any Restricted Subsidiary of
Hydrocarbons for which the Company or such Restricted Subsidiary
has contracts to sell), or in lieu of any thereof or in addition
to any thereto, guarantees and letters of credit supporting any
such obligations and Indebtedness (in each case, other than for
an obligation for borrowed money, other than borrowed money
represented by any such letter of credit, bid, performance or
surety bond, or reimbursement obligation itself, or any guarantee
and letter of credit related thereto).
"Person" means an individual, partnership, corporation,
unincorporated organization, limited liability company, trust,
estate or joint venture, or a governmental agency or political
subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Plan of Liquidation" means, with respect to any Person, a
plan (including by operation of law) that provides for,
contemplates or the effectuation of which is preceded or
accompanied by (whether or not substantially contemporaneously)
(i) the sale, lease, conveyance or other disposition of all or
substantially all of the assets of such Person otherwise than as
an entirety or substantially as an entirety and (ii) the
distribution of all or substantially all of the proceeds of such
sale, lease, conveyance or other disposition and all or
substantially all of the remaining assets of such Person to
holders of Capital Stock of such Person.
"Pledge Agreement" means the Pledge Agreement to be entered
into by and between the Company and the Trustee in substantially
the form of Exhibit C hereto with such changes thereto that do
not have a material adverse effect on the Holders, as amended or
supplemented from time to time in accordance with its terms.
"Preferred Stock" of any Person means any Capital Stock of
such Person that has preferential rights to any other Capital
Stock of such Person with respect to dividends or redemptions or
upon liquidation.
"principal" of any Indebtedness (including the Notes) means
the principal amount of such Indebtedness plus the premium, if
any, on such Indebtedness.
"Principal Account" has the meaning set forth in the
Disbursement Agreement.
"Private Exchange Notes" has the meaning set forth in the
Registration Rights Agreement.
"Private Placement Legend" means the legend initially set
forth on the Initial Notes in the form set forth in Section 2.15.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms of this Indenture, a
calculation in accordance with Article 11 of Regulation S-X under
the Securities Act, as determined by the Board of Directors of
the Company in consultation with its independent public
accountants.
"Production Payments" means Dollar-Denominated Production
Payments and Volumetric Production Payments, collectively.
"Purchase Money Indebtedness" means Indebtedness the net
proceeds of which are used to finance the cost (including the
cost of construction) of property or assets acquired in the
normal course of business by the Person incurring such
Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is
not Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" has the meaning
specified in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Notes.
"Redemption Date" when used with respect to any Note to be
redeemed, means the date fixed for such redemption pursuant to
this Indenture and the Notes.
"Redemption Price" when used with respect to any Note to be
redeemed, means the price fixed for such redemption, including
principal and premium, if any, pursuant to this Indenture and the
Notes.
"Redemption Warrants" have the meaning set forth in Section
3.04(b).
"Reference Date" has the meaning set forth in Section 4.10.
"Refinancing Indebtedness" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange
for, or the net proceeds of which are used to refinance, renew,
replace, defease or refund, other Indebtedness of the Company or
any of its Restricted Subsidiaries incurred pursuant to clause
(a), (h) or (o) of the definition of "Permitted Indebtedness";
provided that: (i) the principal amount (or accreted value, if
applicable) of such Refinancing Indebtedness does not exceed the
principal amount (or accreted value, if applicable) of the
Indebtedness so exchanged, refinanced, renewed, replaced,
defeased or refunded (plus the amount of related prepayment
penalties, fees and reasonable expenses incurred in connection
therewith); (ii) such Refinancing Indebtedness has a final
maturity date later than 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
exchanged, refinanced, renewed, replaced, defeased or refunded;
(iii) if the Indebtedness being exchanged, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of
payment to the Notes or the Subsidiary Guarantees, such
Refinancing Indebtedness is subordinated in right of payment to
the Notes or the Subsidiary Guarantees, as the case may be, on
terms at least as favorable to the Holders of Notes as those
contained in the documentation governing the Indebtedness being
exchanged, refinanced, renewed, replaced, defeased or refunded;
and (iv) such Indebtedness is incurred either by the Company or
by the Restricted Subsidiary that is the obligor on the
Indebtedness being exchanged, refinanced, renewed, replaced,
defeased or refunded.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration
Rights Agreement dated as of the Issue Date between the Company
and the Initial Purchaser, substantially in the form attached
hereto as Exhibit H, with such changes thereto that do not have a
material adverse effect on the Holders or the holders of the
Warrants.
"Regulation S" means Regulation S under the Securities Act.
"Related Person" of any Person means any other Person
directly or indirectly owning 10% or more of the outstanding
voting Common Stock of such Person (or, in the case of a Person
that is not a corporation, 10% or more of the equity interest in
such Person).
"Replacement Assets" shall have the meaning set forth in
Section 4.16.
"Restricted Payment" shall have the meaning set forth in
Section 4.10.
"Restricted Security" has the meaning assigned to such term
in Rule 144(a)(3) under the Securities Act; provided, however,
that the Trustee shall be entitled to request and conclusively
rely on an Opinion of Counsel with respect to whether any Note
constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company
(including, without limitation, XCL-China), unless such
Subsidiary is an Unrestricted Subsidiary or is designated by the
Board of Directors of the Company, by a Board Resolution
delivered to the Trustee, as an Unrestricted Subsidiary pursuant
to and in compliance with Section 4.14. Any such designation may
be revoked by a Board Resolution of the Company delivered to the
Trustee, subject to the provisions of such covenant.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Rating Services, a division of
The McGraw-Hill Companies, Inc. and its successors.
"Sale and Leaseback Transaction" means any direct or
indirect arrangement with any Person or to which any such Person
is a party providing for the leasing to the Company or a
Restricted Subsidiary of any property, whether owned by the
Company or any Restricted Subsidiary at the Issue Date or later
acquired, which has been or is to be sold or transferred by the
Company or such Restricted Subsidiary to such Person or to any
other Person from whom funds have been or are to be advanced by
such Person on the security of such property.
"Securities Act" means the Securities Act of 1933, as
amended, and the rules and regulations of the Commission
promulgated thereunder.
"Security Agreement" means the Security Agreement, Pledge
and Financing Statement of even date herewith by and between the
Company and Fleet National Bank, as Trustee, as amended and
supplemented from time to time in accordance with its terms,
substantially in the form attached hereto as Exhibit I, with such
changes thereto that do not have a material adverse effect on the
Holders.
"Security Documents" means, collectively, the Disbursement
Agreement, the Security Agreement and the Pledge Agreement, as
the same may be in force from time to time.
"Security Interest" means the Lien on the Collateral created
by the Security Documents in favor of the Trustee for the benefit
of the Holders.
"Subordinated Debt" means those certain Secured Subordinated
Notes due April 5, 2000 issued by the Company in the original
aggregate principal amount of $15,000,000.
"Subordinated Debt Holders" means the registered holders at
any time and from time to time of the Subordinated Debt.
"Subsidiary" with respect to any Person, means (a) any
corporation of which the outstanding Capital Stock having at
least a majority of the votes entitled to be cast in the election
of directors under ordinary circumstances shall at the time be
owned, directly or indirectly, by such Person or (b) any other
Person of which at least a majority of the voting interests under
ordinary circumstances is at the time, directly or indirectly,
owned by such Person.
"Subsidiary Guarantee" shall have the meaning set forth in
Section 12.01.
"Subsidiary Guarantor" means XCL-China upon disbursement to
the Company of the Collateral subject to the Principal Account
and each of the Company's other Restricted Subsidiaries that in
the future executes a supplemental indenture in which such
Restricted Subsidiary agrees to be bound by the terms of this
Indenture as a Subsidiary Guarantor; provided, however, that any
Person constituting a Subsidiary Guarantor as described above
shall cease to constitute a Subsidiary Guarantor when its
Subsidiary Guarantee is released in accordance with this
Indenture.
"Surviving Entity" shall have the meaning set forth in
Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb), as amended, as in effect on the date of
this Indenture, except as otherwise provided in Section 9.03.
"Trust Officer" means any officer or assistant officer of
the Trustee assigned by the Trustee to administer this Indenture,
or in the case of a successor trustee, an officer assigned to the
department, division or group performing the corporation trust
work of such successor and assigned to administer this Indenture.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions
of this Indenture and thereafter means such successor.
"U.S. Government Obligations" means direct obligations of,
and obligations guaranteed by, the United States of America for
the payment of which the full faith and credit of the United
States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the
Untied States of America as at the time of payment shall be legal
tender for the payment of public and private debts.
"Units" means units consisting of Initial Notes and Warrants
sold to the Initial Purchaser on the Issue Date pursuant to a
private offering conducted by the Company.
"Unrestricted Subsidiary" means any Subsidiary of the
Company designated as such pursuant to and in compliance with
Section 4.14; provided, however, that Unrestricted Subsidiaries
shall initially include all Subsidiaries of the Company as of the
Issue Date (other than XCL-China to the extent provided in
Section 4.17) and no Subsidiary whose Capital Stock is subject to
the Lien of the Pledge Agreement may be an Unrestricted
Subsidiary. Any such designation may be revoked by a Board
Resolution of the Company delivered to the Trustee, subject to
the provisions of such Section 4.14.
"Volumetric Production Payments" means production payment
obligations recorded as deferred revenue in accordance with GAAP,
together with all undertakings and obligations in connection
therewith.
"Warrants" means the seven year warrants to purchase Common
Stock of the Company issued together with the Initial Notes to
the Initial Purchaser as part of the Units.
"Weighted Average Life to Maturity" means, when applied to
any Indebtedness at any date, the number of years obtained by
dividing (a) the then outstanding aggregate principal amount of
such Indebtedness into (b) the sum of the total of the products
obtained by multiplying (i) 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 (ii) the number of years (calculated to the
nearest one-twelfth) which will elapse between such date and the
making of such payment.
"Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary of which all the outstanding voting securities
normally entitled to vote in the election of directors are owned
by the Company or another Wholly Owned Restricted Subsidiary.
"XCL-China" means XCL-China Ltd., a British Virgin Islands
company wholly-owned by the Company.
Section 1.02 Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA,
such provision is incorporated by reference in, and made a part
of, this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company or
any other obligor on the Notes.
All other TIA terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by Commission rule and not otherwise defined herein have
the meanings assigned to them therein.
Section 1.03 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 as of any date
of determination;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and
words in the plural include the singular;
(5) "herein," "hereof" and other words of similar
import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision; and
(6) any reference to a statute, law or regulation
means that statute, law or regulation as amended and in effect
from time to time and includes any successor statute, law or
regulation; provided, however, that any reference to the
Bankruptcy Law shall mean the Bankruptcy Law as applicable to the
relevant case.
ARTICLE TWO
THE NOTES
Section 2.01 Form and Dating.
The Initial Notes and the Trustee's certificate of
authentication relating thereto shall be substantially in the
form of Exhibit A hereto. The Exchange Notes and the Trustee's
certificate of authentication relating thereto shall be
substantially in the form of Exhibit B hereto. The Private
Exchange Notes, if required, and the Trustee's certificate of
authentication relating thereto shall be substantially in the
form of Exhibit B hereto but shall bear the Private Placement
Legend. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or depository rule or usage.
The Company and the Trustee shall approve the form of the Notes
and any notation, legend or endorsement on them. Each Note shall
be dated the date of its issuance and shall show the date of its
authentication.
The terms and provisions contained in the Notes,
annexed hereto as Exhibits A and B, shall constitute, and are
hereby expressly made, a part of this Indenture and, to the
extent applicable, the Company and the Trustee, by their
execution and delivery of this Indenture, expressly agree to such
terms and provisions and to be bound thereby.
Initial Notes offered and sold in reliance on Rule 144A
and Notes offered and sold in reliance on Regulation S shall be
issued initially in the form of one or more permanent global
Notes in registered form (each a "Global Note"), substantially in
the form set forth in Exhibit A, deposited with the Trustee, as
custodian for the Depository, duly executed by the Company and
authenticated by the Trustee as hereinafter provided and shall
bear the legends set forth in Section 2.15. Exchange Notes shall
be issued initially in the form of one or more permanent Global
Notes, substantially in the form set forth in Exhibit B,
deposited with the Trustee, as custodian for the Depository, duly
executed by the Company and authenticated by the Trustee as
hereinafter provided and shall bear the Global Note Legend. The
aggregate principal amount of a Global Note may from time to time
be increased or decreased by adjustments made on the records of
the Trustee, as custodian for the Depository, as hereinafter
provided.
Notes issued in exchange for an interest in a Global
Note pursuant to Section 2.16 may be issued in the form of
permanent certificated Notes in registered form in substantially
the form set forth in Exhibit A (the "Physical Notes"). Initial
Notes offered and sold to Institutional Accredited Investors and
Private Exchange Notes shall be issued in the form of Physical
Notes in substantially the form set forth in Exhibits A and B,
respectively, and shall bear the Private Placement Legend.
[THIS PAGE INTENTIONALLY LEFT BLANK]
Section 2.02 Execution and Authentication; Aggregate
Principal Amount.
Two Officers, or an Officer and an Assistant Secretary
of the Company, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each
case, have been duly authorized by all requisite corporate
actions) shall attest to, the Notes for the Company by manual or
facsimile signature. The corporate seal of the Company shall be
affixed to each Note or reproduced thereon.
If any Officer or Assistant Secretary whose signature
is on a Note was an Officer or Assistant Secretary at the time of
such execution but no longer holds that office or position at the
time the Trustee authenticates the Note, the Note shall
nevertheless be valid.
A Note shall not be valid until an authorized signatory
of the Trustee manually signs the certificate of authentication
on the Note. The signature shall be conclusive evidence that the
Notes has been authenticated under this Indenture.
The Trustee shall authenticate (i) Initial Notes for
original issue in the aggregate principal amount not to exceed
$75.0 million and (ii) Exchange Notes or Private Exchange Notes
from time to time for issue only in exchange for a like principal
amount of Initial Notes, in each case upon written order of the
Company in the form of an Officers' Certificate of the Company.
Each such written order shall specify the amount of Notes to be
authenticated and the date on which the Notes are to be
authenticated, whether the Notes are to be Initial Notes,
Exchange Notes or Private Exchange Notes and whether the Notes
are to be issued as Physical Notes or Global Notes or such other
information as the Trustee may reasonably request. In addition,
with respect to authentication pursuant to clause (ii) of the
first sentence of this paragraph, the first such written order
from the Company shall be accompanied by an Opinion of Counsel of
the Company in a form reasonably satisfactory to the Trustee
stating that the issuance of the Exchange Notes or Private
Exchange Notes, as the case may be, does not give rise to an
Event of Default, complies with this Indenture and has been duly
authorized by the Company. The aggregate principal amount of
Notes outstanding at any time may not exceed $75.0 million,
except as provided in Sections 2.07 and 2.08.
The Trustee may appoint an authentication agent (the
"Authenticating Agent") reasonably acceptable to the Company to
authenticate Notes. Unless otherwise provided in the appointment,
an Authenticating Agent may authenticate Notes whenever the
Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such
Authenticating Agent. An Authenticating Agent has the same
rights as an Agent to deal with the Company or with any Affiliate
of the Company.
The Notes shall be issuable in fully registered form
only, without coupons, in denominations of $1,000 and any
integral multiple thereof.
Section 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency where
(a) Notes may be presented or surrendered for registration of
transfer or for exchange ("Registrar"), (b) Notes may be
presented or surrendered for payment ("Paying Agent") and (c)
notices and demands to or upon the Company in respect of the
Notes and this Indenture may be served. The Registrar shall keep
a register of the Notes and of their transfer and exchange. The
Company, upon prior written notice to the Trustee, may have one
or more co-Registrars and one more additional Paying Agents
reasonably acceptable to the Trustee. The term "Paying Agent"
includes any additional Paying Agent. The Company may act as its
own Paying Agent, except that for the purposes of payments on the
Notes pursuant to Sections 4.15 and 4.16, neither the Company nor
any Affiliate of the Company may act as Paying Agent.
The Company shall enter into an appropriate agency
agreement with any Agent not a party to this Indenture, which
agreement shall incorporate the provisions of the TIA and
implement the provisions of this Indenture that relate to such
Agent. The Company shall notify the Trustee, in advance, of the
name and address of any such Agent. If the Company fails to
maintain a Registrar or Paying Agent, or fails to give the
foregoing notice, the Trustee shall act as such.
The Company initially appoints the Trustee as
Registrar, Paying Agent and agent for service of demands and
notices in connection with the Notes, until such time as the
Trustee has resigned or a successor has been appointed. Any of
the Registrar, the Paying Agent or any other Agent may resign
upon 30 days' notice to the Company.
Section 2.04 Paying Agent To Hold Assets in Trust.
The Company shall require each Paying Agent other than
the Trustee to agree in writing that such Paying Agent shall hold
in trust for the benefit of the Holders or the Trustee all assets
held by the Paying Agent for the payment of principal of,
premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Company or any other obligor
on the Notes), and the Company and the Paying Agent shall notify
the Trustee of any Default by the Company in making any such
payment. The Company at any time may require a Paying Agent to
distribute all assets held by it pursuant hereto to the Trustee
and account for any assets disbursed and the Trustee may at any
time during the continuance of any payment Default, upon written
request to a Paying Agent, require such Paying Agent to
distribute all assets held by it pursuant hereto to the Trustee
and to account for any assets distributed. Upon distribution to
the Trustee of all assets that shall have been delivered by the
Company to the Paying Agent, the Paying Agent shall have no
further liability for such assets.
Section 2.05 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 the Holders. If the Trustee is not the
Registrar, the Company shall furnish or cause the Registrar to
furnish to the Trustee before each Record Date and at such other
times as the Trustee may request in writing a list as of such
date and in such form as the Trustee may reasonably require of
the names and addresses of the Holders, which list may be
conclusively relied upon by the Trustee.
Section 2.06 Transfer and Exchange.
When Notes are presented to the Registrar or a co-
Registrar with a request to register the transfer of such Notes
or to exchange such Notes for an equal principal amount of Notes
or other authorized denominations, the Registrar or co-Registrar
shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however,
that the Notes presented or surrendered for registration of
transfer or exchange shall be duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the
Company, the Trustee and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in
writing. To permit registration of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Notes at
the Registrar's or co-Registrar's request. No service charge
shall be made for any registration of transfer or exchange, but
the Company may require repayment of a sum sufficient to cover
any transfer tax or similar governmental charge payable in
connection therewith (other than any such transfer taxes or
similar governmental charge payable upon exchanges or transfers
pursuant to Section 2.10, 3.04, 4.15, 4.16 or 9.05, in which
event the Company shall be responsible for the payment of such
tax or charge).
The Registrar or co-Registrar shall not be required to
register the transfer or exchange of any Note (i) during a period
beginning at the opening of business 15 days before the mailing
of a notice of redemption of Notes and ending at the close of
business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except
the unredeemed portion of any Note being redeemed in part.
Any Holder of a beneficial interest in a Global Note
shall, by acceptance of such Global Note, agree that transfers of
beneficial interests in such Global Notes may be effected only
through a book entry system maintained by the Holder of such
Global Note (or its agent), and that ownership of a beneficial
interest in the Note shall be required to be reflected in a book
entry system.
Section 2.07 Replacement Notes.
If a mutilated Note is surrendered to the Trustee or
the Holder of a Note claims that the Note has been lost,
destroyed or wrongfully taken, the Company shall issue and the
Trustee shall authenticate a replacement Note if the Trustee's
requirements are met. If required by the Trustee or the Company,
such Holder must provide an indemnity bond or other indemnity of
reasonable tenor, sufficient in the reasonable judgment of the
Company, to protect the Company, the Trustee or any Agent from
any loss which any of them may suffer if a Note is replaced.
Every replacement Note shall constitute an additional obligation
of the Company.
Section 2.08 Outstanding Notes.
Notes outstanding at any time are all the Notes that
have been authenticated by the Trustee except those canceled by
it, those delivered to it for cancellation and those described in
this Section as not outstanding. Subject to the provisions of
Section 2.09, a Note does not cease to be outstanding because the
Company or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other
than a mutilated Note surrendered for replacement), it ceases to
be outstanding unless the Trustee receives proof satisfactory to
it that the replaced Note is held by a bona fide purchaser. A
mutilated Note ceases to be outstanding upon surrender of such
Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying
Agent holds U.S. Legal Tender or, if the Company has exercised
either Legal Defeasance or Covenant Defeasance, U.S. Government
Obligations sufficient to pay all of the principal, premium, if
any, and interest due on the Notes payable on that date and is
not prohibited from paying such money to the Holders thereof
pursuant to the terms of this Indenture, then on and after that
date such Notes shall be deemed not to be outstanding and
interest on them shall cease to accrue.
Section 2.09 Treasury Notes.
In determining whether the Holders of the required
principal amount of Notes have concurred in any direction,
waiver, consent or notice, Notes owned by the Company or an
Affiliate of the Company shall be considered as though they are
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 which a Trust Officer of
the Trustee actually knows are so owned shall be so considered.
The Company shall notify the Trustee, in writing, when it or, to
its knowledge, any of its Affiliates repurchases or otherwise
acquires Notes, of the aggregate principal amount of such Notes
so repurchased or otherwise acquired and such other information
as the Trustee may reasonably request and the Trustee shall be
entitled to rely thereon.
Section 2.10 Temporary Notes.
Until definitive Notes are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Notes upon receipt of a written order of the Company in the form
of an Officers' Certificate. The Officers' Certificate shall
specify the amount of temporary Notes to be authenticated and the
date on which the temporary Notes are to be authenticated.
Temporary Notes shall be substantially in the form of definitive
Notes but may have variations that the Company considers
appropriate for temporary Notes and so indicates in the Officers'
Certificate. Without unreasonable delay, the Company shall
prepare, and the Trustee shall authenticate upon receipt of a
written order of the Company pursuant to Section 2.02, definitive
Notes in exchange for temporary Notes.
Section 2.11 Cancellation.
The Company at any time may deliver Notes to the
Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Notes surrendered to them for
transfer, exchange or payment. The Trustee, or at the direction
of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and shall dispose, in its customary manner, of
all Notes surrendered for transfer, exchange, payment or
cancellation. Subject to Section 2.07, the Company may not issue
new Notes to replace Notes that they have paid or delivered to
the Trustee for cancellation. If the Company shall acquire any
of the Notes, such acquisition shall not operate as a redemption
or satisfaction of the Indebtedness represented by such Notes
unless and until the same are surrendered to the Trustee for
cancellation pursuant to this Section 2.11.
Section 2.12 Defaulted Interest.
The Company shall pay interest on overdue principal
from time to time on demand at the rate of interest then borne by
the Notes. The Company shall, to the extent lawful, pay interest
on overdue installments of interest (without regard to any
applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed
on the basis of a 360-day year comprised of twelve 30 day months,
and, in the case of a partial month, the actual number of days
elapsed.
If the Company defaults in a payment of interest on the
Notes, it shall pay the defaulted interest, plus (to the extent
lawful) any interest payable on the defaulted interest, to the
Persons who are Holders on a subsequent special record date,
which special record date shall be the fifteenth day next
preceding the date fixed by the Company for the payment of
defaulted interest or the next succeeding Business Day if such
date is not a Business Day. The Company 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 (a
"Default Interest Payment Date"), and at the same time the
Company shall deposit with the Trustee an amount of money equal
to the aggregate amount proposed to be paid in respect of such
defaulted interest or shall make arrangements satisfactory to the
Trustee for such deposit on or prior to the date of the proposed
payment, such money when deposited to be held in trust for the
benefit of the Persons entitled to such defaulted interest as
provided in this Section; provided, however, that in no event
shall the Company deposit monies proposed to be paid in respect
of defaulted interest later than 11:00 a.m. New York City time of
the proposed Default Interest Payment Date. At least 15 days
before the subsequent special record date, the Company shall mail
(or cause to be mailed) to each Holder, as of a recent date
selected by the Company, with a copy to the Trustee, a notice
that states the subsequent special record date, the payment date
and the amount of defaulted interest, and interest payable on
such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of
the 30-day period set forth in Section 6.01(a) shall be paid to
Holders as of the regular record date for the Interest Payment
Date for which interest has not been paid. Notwithstanding the
foregoing, the Company may make payment of any defaulted interest
in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Notes may be listed, and
upon such notice as may be required by such exchange.
Section 2.13 CUSIP Numbers.
The Company in issuing the Notes of each series may use
a "CUSIP" number, and, if so, the Trustee shall use the
appropriate CUSIP number in notices of redemption or exchange as
a convenience to Holders; provided, however, that no
representation is hereby deemed to be made by the Trustee 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. The
Company shall promptly notify the Trustee of any change in a
CUSIP number.
Section 2.14 Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest
Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, the Company
shall have deposited with the Paying Agent in immediately
available funds U.S. Legal Tender sufficient to make the cash
payments, if any, due on such Interest Payment Date, Maturity
Date, Redemption Date, Change of Control Payment Date and Net
Proceeds Offer Payment Date, as the case may be, in a timely
manner which permits the Paying Agent to remit payment to the
Holders on such Interest Payment Date, Maturity Date, Redemption
Date, Change of Control Payment Date and Net Proceeds Offer
Payment Date, as the case may be. At the option of the Company,
payment of interest on Physical Notes may be made by check mailed
to the Holders on or before the relevant Interest Payment Date.
Section 2.15 Restrictive Legends.
Each Global Note and Physical Note that constitutes a
Restricted Security, including, without limitation, the Private
Exchange Notes, shall bear the following legend (the "Private
Placement Legend") on the face thereof until after the second
anniversary of the later of the Issue Date and the last date on
which the Company or any Affiliate of the Company was the owner
of such Note (or any predecessor security) (or such shorter
period of time as permitted by Rule 144(k) under the Securities
Act or any successor provision thereunder) (or such longer period
of time as may be required under the Securities Act or applicable
state securities laws in the opinion of counsel for the Company,
unless otherwise agreed by the Company and the Holder thereof):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD WITHIN THE UNITED STATES
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S. PERSONS EXCEPT AS
SET FORTH BELOW. BY ITS ACQUISITION HEREOF, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS AN
INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(a)(1), (2), (3), OR (7) UNDER THE SECURITIES ACT) (AN
"ACCREDITED INVESTOR") OR (C) IT IS NOT A U.S. PERSON AND IS
ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN COMPLIANCE
WITH RULE 903 OR 904 UNDER THE SECURITIES ACT, (2) AGREES THAT IT
WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS
SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
THE COMPANY OR ANY SUBSIDIARY THEREOF, (B) INSIDE THE UNITED
STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH RULE
144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER,
FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A U.S. BROKER-
DEALER) TO THE COMPANY AND THE TRUSTEE A SIGNED LETTER CONTAINING
CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE
RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE COMPANY OR THE TRUSTEE FOR THIS
SECURITY), (D) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES ACT,
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE
144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND
(3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY
IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. IN CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN
TWO YEARS AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE
PROPOSED TRANSFEREE IS AN INSTITUTIONAL ACCREDITED INVESTOR, THE
HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE TRUSTEE AND
THE COMPANY SUCH CERTIFICATIONS, WRITTEN LEGAL OPINIONS OR OTHER
INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE TO CONFIRM
THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION FROM,
OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING
GIVEN TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
THIS SECURITY IS SUBJECT TO A REGISTRATION RIGHTS
AGREEMENT DATED AS OF MAY 20, 1997 BETWEEN THE COMPANY AND
JEFFERIES & COMPANY, INC., A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE COMPANY.
Each Global Note shall also bear the following legend
(the "Global Note Legend") on the face thereof:
THIS SECURITY IS A GLOBAL NOTE WITHIN THE MEANING OF
THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE
NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A SUCCESSOR
DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR
ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITORY TO A
NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE
REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE. UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK
CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OR DTC), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.
Section 2.16 Book-Entry Provisions for Global Security.
(a) The Global Notes initially shall (i) be
registered in the name of the Depository or the nominee of such
Depository, (ii) be delivered to the Trustee as custodian for
such Depository and (iii) bear the Global Note Legend as set
forth in Section 2.15.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect
to any Global Note held on their behalf by the Depository, or the
Trustee as its custodian, or under the Global Notes, and the
Depository may be treated by the Company, the Trustee and any
Agent of the Company or the Trustee as the absolute owner of such
Global Note for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Company, the Trustee
or any Agent of the Company 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
Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to
transfers in whole, but not in part, to the Depository, its
successors or their respective nominees. Interests of beneficial
owners in a Global Note may be transferred or exchanged for
Physical Notes in accordance with the rules and procedures of the
Depository and the provisions of Section 2.17. In addition,
Physical Notes shall be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Note if (i)
the Depository notifies the Company that it is unwilling or
unable to continue as Depository for the Global Notes and a
successor depositary is not appointed by the Company within 90
days of such notice; or (ii) the Company, in its sole discretion,
elects to issue Physical Notes.
(c) In connection with any transfer or exchange of
a portion of the beneficial interest in a Global Note to
beneficial owners pursuant to paragraph (b), the Registrar shall
(if one or more Physical Notes are to be issued) reflect on its
books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of
the beneficial interest in the Global Note to be transferred, and
the Company shall execute, and the Trustee shall authenticate and
deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire
Global Note to beneficial owners pursuant to paragraph (b), such
Global Note shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee
shall authenticate and deliver, to each beneficial owner
identified by the Depository in exchange for its beneficial
interest in the Global Note, an equal aggregate principal amount
of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted
Security delivered in exchange for an interest in a Global Note
pursuant to paragraph (b) or (c) shall, except as otherwise
provided by paragraphs (a)(i)(x) and (c) of Section 2.17, bear
the legend regarding transfer restrictions applicable to the
Physical Notes set forth in Section 2.15.
(f) The Holder of a Global Note may grant proxies
and otherwise authorize any Person, including Agent Members and
Persons that may hold interests through Agent Members, to take
any action which a Holder is entitled to take under this
Indenture or the Notes.
Section 2.17 Special Transfer Provisions.
(a) Transfer to Non-QIB Institutional Accredited
Investors and Non-U.S. Persons. The following provisions shall
apply with respect to the registration of any proposed transfer
of a Note constituting a Restricted Security to any Institutional
Accredited Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer
of any Note constituting a Restricted Security, whether or not
such Note bears the Private Placement Legend, if (x) the
requested transfer is after the second anniversary of the Issue
Date (provided, however, that neither the Company nor any
Affiliate of the Company has held any beneficial interest in such
Note, or portion thereof, at any time on or prior to the second
anniversary of the Issue Date) or (y) (1) in the case of a
transfer to an Institutional Accredited Investor which is not a
QIB (excluding Non-U.S. Persons), the proposed transferee has
delivered to the Registrar a certificate substantially in the
form of Exhibit D hereto or (2) in the case of a transfer to a
Non-U.S. Person, the proposed transferee has delivered to the
Registrar a certificate substantially in the form of Exhibit E
hereto; and
(ii) if the proposed transferor is an Agent
Member holding a beneficial interest in the Global Note, upon
receipt by the Registrar of (x) the certificate, if any, required
by paragraph (i) above and (y) written instructions given in
accordance with the Depository's and the Registrar's procedures,
whereupon
(iii) the Registrar shall reflect on its books
and records the date and (if the transfer does not involve a
transfer of outstanding Physical Notes) a decrease in the
principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to
be transferred, and
(iv) the Company shall execute, and the
Trustee shall authenticate and deliver, one or more Physical
Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions
shall apply with respect to the registration of any proposed
transfer of a Note constituting a Restricted Security to a QIB
(excluding transfers to Non-U.S. Persons):
(i) the Registrar shall register the transfer
if such transfer is being made by a proposed transferor who has
checked the box provided for on the form of Note stating, or has
otherwise advised the Company and the Registrar in writing, that
the transferee is purchasing the Note for its own account or an
account with respect to which it exercises sole investment
discretion and that it and any such account is a QIB within the
meaning of Rule 144A, and is aware that the sale to it is being
made in reliance on Rule 144A and represents that it has
furnished such information regarding the Company as such
transferee has requested pursuant to Rule 144A or has determined
not to request such information and that the transferee is aware
that the Company is relying upon the transferor's foregoing
representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent
Member, and the Notes to be transferred consist of Physical Notes
which after transfer are to be evidenced by an interest in a
Global Note, upon receipt by the Registrar of written
instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books
and records the date and an increase in the principal amount of
the Physical Notes to be transferred, and the Trustee shall
cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the transfer,
exchange or replacement of Notes not bearing the Private
Placement Legend, the Registrar shall deliver Notes that do not
bear the Private Placement Legend. Upon the transfer, exchange
or replacement of Notes bearing the Private Placement Legend, the
Registrar shall deliver only Notes that bear the Private
Placement Legend unless (i) the requested transfer is after the
second anniversary of the Issue Date (provided, however, that
neither the Company nor any Affiliate of the Company has held any
beneficial interest in such Note, or portion thereof, at any time
prior to or on the second anniversary of the Issue Date), or (ii)
there is delivered to the Registrar an Opinion of Counsel
reasonably satisfactory to the Company and the Trustee to the
effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing
the Private Placement Legend, each Holder of such a Note
acknowledges the restrictions on transfer of such Note set forth
in this Indenture and in the Private Placement Legend and agrees
that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters,
notices and other written communications received pursuant to
Section 2.16 or this Section 2.17. The Company shall have the
right to inspect and make copies of all such letters, notices or
other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable
written notice to the Registrar.
(e) Transfers of Notes Held by Affiliates. Any
certificate (i) evidencing a Note that has been transferred to an
Affiliate of the Company within two years after the Issue Date,
as evidenced by a notation on the assignment form for such
transfer or in the representation letter delivered in respect
thereof or (ii) evidencing a Note that has been acquired from an
Affiliate (other than by an Affiliate) in a transaction or a
chain of transactions not involving any public offering, shall,
until two years after the last date on which the Company or any
Affiliate of the Company was an owner of such Note, in each case,
bear a Private Placement Legend in substantially the form set
forth in Section 2.15 hereof, unless otherwise agreed by the
Company (with written notice thereof to the Trustee).
(f) No Separate Transfers Prior to Separability
Date. Notwithstanding any other provision of this Article Two,
no Note may be transferred separately from the Warrants until the
date which is the earlier of (i) 90 days from the Issue Date or
(ii) such date as the Initial Purchaser may, in its discretion,
deem appropriate. The Company shall promptly notify the
Registrar of the occurrence of the Separability Date.
Section 2.18 Additional Interest Under Registration
Rights Agreement.
Under certain circumstances, the Company shall be
obligated to pay Additional Interest to the Holders, all as set
forth in Section 4 of the Registration Rights Agreement. The
terms thereof are hereby incorporated herein by reference.
ARTICLE THREE
REDEMPTION
Section 3.01 Notices to Trustee.
If the Company elects to redeem Notes pursuant to
Paragraph 5 of the Notes, it shall notify the Trustee and the
Paying Agent in writing of the Redemption Date and the principal
amount of the Notes to be redeemed.
The Company shall give each notice provided for in this
Section 3.01 60 days before the Redemption Date (unless a shorter
notice period shall be satisfactory to the Trustee, as evidenced
in a writing signed on behalf of the Trustee), together with an
Officers' Certificate stating that such redemption shall comply
with the conditions contained herein and in the Notes.
Section 3.02 Selection of Notes To Be Redeemed.
In the event that less than all of the Notes are to be
redeemed at any time, selection of such Notes, or portions
thereof, 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 then listed on a national securities exchange, on a pro
rata basis, by lot or by such other method as the Trustee shall
deem fair and appropriate; provided, however, that no Notes of a
principal amount of $1,000 or less shall be redeemed in part, and
provided, further, that if a partial redemption is made with the
proceeds of an Equity Offering, selection of the Notes or
portions thereof for redemption shall be made by the Trustee only
on a pro rata basis or on as nearly a pro rata basis as is
practicable (subject to the procedures of the Depository), unless
such method is otherwise prohibited.
Section 3.03 Optional Redemption.
At any time, or from time to time, prior to May 1,
2002, the Company may, at its option, use all or a portion of the
net cash proceeds of one or more Equity Offerings to redeem up to
35% of the aggregate principal amount of the Initial Notes issued
on the Issue Date at the following Redemption Prices (expressed
as percentages of the aggregate principal amount of the Notes to
be redeemed) set forth below with respect to the indicated
Redemption Date, plus accrued and unpaid interest, if any,
thereon to the Redemption Date; provided, however, that at least
$48.75 million aggregate principal amount of Notes remains
outstanding immediately after giving effect to any such
redemption (it being expressly agreed that for purposes of
determining whether this condition is satisfied, Notes owned by
the Company or any of its Affiliates shall be deemed not to be
outstanding). In order to effect the foregoing redemption with
the proceeds of any Equity Offering, the Company shall make such
redemption not more than 90 days after the consummation of any
such Equity Offering.
The Notes will also be redeemable, at the Company's
option, in whole at any time or in part from time to time, on and
after May 1, 2002, at the following Redemption Prices (expressed
as percentages of the principal amount thereof) set forth below
with respect to the indicated Redemption Date, plus, in each
case, accrued and unpaid interest, if any, thereon to the
Redemption Date:
If redeemed during
the 12-month period
beginning May 1 Redemption Price
------------------- ----------------
1997.............................113.500%
1998.............................113.500%
1999.............................113.500%
2000.............................113.500%
2001.............................113.500%
2002.............................106.750%
2003 and thereafter...... 100.000%
Section 3.04 Mandatory Redemption.
The Company shall redeem (the "Mandatory Redemption")
the issued and outstanding Notes, in whole only, at a Redemption
Price equal to 100.00% of the principal amount thereof, plus
accrued and unpaid interest thereon to the Redemption Date, in
the event that the conditions specified in Section 5.2 of the
Disbursement Agreement have not been satisfied on or prior to
November 1, 1997, solely from amounts on deposit in the
Collateral Accounts. The Redemption Date on such Mandatory
Redemption shall be November 30, 1997.
Section 3.05 Notice of Redemption.
At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail or cause to be mailed a
notice of redemption by first class mail to each Holder of Notes
to be redeemed at its registered address, with a copy to the
Trustee and any Paying Agent. At the Company's request, the
Trustee shall give the notice of redemption in the Company's name
and at the Company's expense. The Company shall provide such
notices of redemption to the Trustee at least five days before
the intended mailing date.
Each notice of redemption shall identify (including the
CUSIP number) the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued
interest, if any, to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which
such redemption is being made;
(5) that any Physical Notes called for redemption
must be surrendered to the Paying Agent to collect the Redemption
Price plus accrued interest, if any;
(6) that, unless the Company defaults in making the
redemption payment, interest on Notes (or applicable portions
thereof) called for redemption ceases to accrue, on and after the
Redemption Date, and the only remaining right of the Holders of
such Notes is to receive payment of the Redemption Price plus
accrued interest as of the Redemption Date, if any, upon
surrender to the Paying Agent of the Notes redeemed;
(7) if any Physical Note is being redeemed in part,
the portion of the principal amount of such Note to be redeemed
and that, after the Redemption Date, and upon surrender of such
Physical Note, a new Physical Note or Notes in the aggregate
principal amount equal to the unredeemed portion thereof will be
issued; and
(8) if fewer than all the Notes are to be redeemed,
the identification of any particular Physical Notes (or portions
thereof) to be redeemed, as well as the aggregate principal
amount of Notes to be redeemed and the aggregate principal amount
of Notes to be outstanding after such partial redemption.
The Company 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 purchase of Notes.
Section 3.06 Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with
Section 3.05, such notice of redemption shall be irrevocable and
Notes called for redemption become due and payable on the
Redemption Date and at the Redemption Price plus accrued interest
as of such date, if any. Upon surrender to the Trustee or Paying
Agent, such Notes called for redemption shall be paid at the
Redemption Price plus accrued interest thereon to the Redemption
Date, but installments of interest, the maturity of which is on
or prior to the Redemption Date, shall be payable to Holders of
record at the close of business on the relevant record dates
referred to in the Notes. Interest shall accrue on or after the
Redemption Date and shall be payable only if the Company defaults
in payment of the Redemption Price.
Section 3.07 Deposit of Redemption Price.
On or before the Redemption Date and in accordance with
Section 2.14, the Company shall deposit, or shall cause the
deposit by the Disbursement Agent (in connection with a
redemption pursuant to Section 3.04 hereof) with the Paying
Agent, U.S. Legal Tender sufficient to pay the Redemption Price
plus accrued interest, if any, on all Notes to be redeemed on
that date in accordance with Section 3.03 or 3.04 hereof and
Section 5 of the Notes. The Paying Agent shall promptly return
to the Company any U.S. Legal Tender so deposited which is not
required for that purpose, except with respect to monies owed as
obligations to the Trustee pursuant to Article Seven.
Unless the Company fails to comply with the preceding
paragraph and defaults in the payment of such Redemption Price
plus accrued interest, if any, interest on the Notes to be
redeemed will cease to accrue, as the case may be, on and after
the applicable Redemption Date, whether or not such Notes are
presented for payment.
Section 3.08 Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in
part, the Trustee shall authenticate for the Holder a new Note or
Notes equal in principal amount to the unredeemed portion of the
Note surrendered.
ARTICLE FOUR
COVENANTS
Section 4.01 Payment of Notes.
(a) The Company shall pay the principal of,
premium, if any, and interest on the Notes on the dates and in
the manner provided in the Notes and this Indenture.
(b) An installment of principal of or interest on
the Notes shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or any of its
Affiliates) holds, prior to 11:00 a.m. Hartford, Connecticut time
on that date, U.S. Legal Tender designated for and sufficient to
pay the installment in full and is not prohibited from paying
such money to the Holders pursuant to the terms of this Indenture
or the Notes.
(c) Notwithstanding anything to the contrary
contained in this Indenture, the Company may, to the extent it is
required to do so by law, deduct or withhold income or other
similar taxes imposed by the United States of America from
principal or interest payments hereunder.
Section 4.02 Maintenance of Office or Agency.
The Company shall maintain the office or agency
required under Section 2.03. The Company shall give prior
written notice to the Trustee of the location, and any change in
the location, of such office or agency. If at any time the
Company 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 address of the Trustee set forth in Section
10.02.
Section 4.03 Corporate Existence.
Except as otherwise permitted by Article Five, the
Company shall do or cause to be done, at its own cost and
expense, all things necessary to preserve and keep in full force
and effect its corporate existence and the corporate existence of
each of its Restricted Subsidiaries in accordance with the
organizational documents of each such Restricted Subsidiary and
the material rights (charter and statutory) and franchises of the
Company and each such Restricted Subsidiary; provided, however,
that the Company shall not be required to preserve, with respect
to itself, any material right or franchise and, with respect to
any of its Restricted Subsidiaries, any such existence, material
right or franchise, if the Board of Directors of the Company
shall determine in good faith that the preservation thereof is no
longer desirable in the conduct of the business of the Company
and its Subsidiaries, taken as a whole.
Section 4.04 Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid
or discharged, before the same shall become delinquent, (i) all
material taxes, assessments and governmental charges (including
withholding taxes and any penalties, interest and additions to
taxes) levied or imposed upon the Company or any of its
Subsidiaries or properties of the Company or any of its
Subsidiaries and (ii) all material lawful claims for labor,
materials and supplies that, if unpaid, might by law become a
Lien upon the property of the Company or any of its Subsidiaries;
provided, however, that the Company shall not be required to pay
or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or
validity is being contested in good faith by appropriate
negotiations or proceedings properly instituted and diligently
conducted for which adequate reserves, to the extent required
under GAAP, have been taken.
Section 4.05 Maintenance of Properties and Insurance.
(a) The Company shall, and shall cause each of its
Restricted Subsidiaries to, maintain all properties used or
useful in the conduct of its business in good working order and
condition (subject to ordinary wear and tear) and make all
necessary repairs, renewals, replacements, additions, betterments
and improvements thereto and actively conduct and carry on its
business; provided, however, that nothing in this Section 4.05
shall prevent the Company or any of its Restricted Subsidiaries
from discontinuing the operation and maintenance of any of its
properties, if such discontinuance is (i) in the ordinary course
of business pursuant to customary business terms or (ii) in the
good faith judgment of the Boards of Directors or other governing
body of the Company or Restricted Subsidiary, as the case may be,
desirable in the conduct of their respective businesses and is
not disadvantageous in any material respect to the Holders.
(b) The Company shall provide or cause to be
provided, for itself and each of the Restricted Subsidiaries,
insurance (including appropriate self-insurance) against loss or
damage of the kinds that, in the good faith judgment of the
Company, are adequate and appropriate for the conduct of the
business of the Company and its Restricted Subsidiaries in a
prudent manner, with reputable insurers or with the government of
the United States of America or an agency or instrumentality
thereof, in such amounts, with such deductibles, and by such
methods as shall be customary, in the good faith judgment of the
Company, for companies similarly situated in the industry.
Section 4.06 Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee,
within 105 days after the end of its fiscal quarters and fiscal
years, an Officers' Certificate of the Company (provided,
however, that one of the signatories to each such Officers'
Certificate shall be the Company's principal executive officer,
principal financial officer or principal accounting officer), as
to such Officers' knowledge without independent investigation, of
the Company's compliance with all conditions and covenants under
this Indenture (without regard for any period of grace or
requirement of notice provided hereunder) and in the event any
Default exists, such Officers shall specify the nature of such
Default. Each such Officers' Certificate shall also notify the
Trustee should the Company elect to change the manner in which it
fixes its fiscal year end.
(b) So long as not contrary to the then current
recommendations of the American Institute of Certified Public
Accountants, the annual financial statements delivered pursuant
to Section 4.08 shall be accompanied by a written report of the
Company's independent certified public accountants (who shall be
a firm of established national reputation) stating (A) that their
audit examination has included a review of the terms of this
Indenture and the form of the Notes as they relate to accounting
matters, and (B) whether, in connection with their audit
examination, any Default or Event of Default has come to their
attention and if such a Default or Event of Default has come to
their attention, specifying the nature and period of existence
thereof; provided, however, that, without any restriction as to
the scope of the audit examination, such independent certified
public accountants shall not be liable by reason of any failure
to obtain knowledge of any such Default or Event or Default that
would not be disclosed in the course of an audit examination
conducted in accordance with generally accepted auditing
standards.
(c) (i) If any Default or Event of Default has
occurred and is continuing or (ii) if any Holder seeks to
exercise any remedy hereunder with respect to a claimed Default
under this Indenture or the Notes, the Company shall deliver to
the Trustee, at its address set forth in Section 10.02 hereof, by
registered or certified mail, or by facsimile transmission
followed by hard copy by registered or certified mail, an
Officers' Certificate specifying such event, notice or other
action within 10 days of its becoming aware of such occurrence.
Section 4.07 Compliance with Laws.
The Company shall comply, and shall cause each of its
Subsidiaries to comply, with all applicable statutes, rules,
regulations, orders and restrictions of the United States of
America, all states and municipalities thereof, and of any
governmental department, commissions, boards, regulatory
authority, bureau, agency and instrumentality of the foregoing,
in respect of the conduct of their respective businesses and the
ownership of their respective properties, except for such
noncompliances as could not singly or in the aggregate reasonably
be expected to have a material adverse effect on the financial
condition, business, prospects or results of operations of the
Company and its Subsidiaries taken as a whole.
Section 4.08 Reports to Holders.
The Company will deliver to the Trustee within 15 days
after filing the same with the Commission, copies of the
quarterly and annual reports and of the information, documents
and other reports, if any, which the Company is required to file
with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. Notwithstanding that the Company may not be
subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, the Company shall file with the Commission, to
the extent permitted, and provide the Trustee and Holders with
such annual reports and such information, documents and other
reports specified in Section 13 of the Exchange Act. The Company
will also comply with the other provisions of Section 314(a) of
the TIA.
Section 4.09 Waiver of Stay, Extension or Usury Laws.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, plead,
or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law or any usury law or other
law that would prohibit or forgive the Company from paying all or
any portion of the principal of or interest on the Notes as
contemplated herein, wherever enacted, now or at any time
hereafter in force, or which may affect the covenants or the
performance of this Indenture; and (to the extent that it may
lawfully do so) the Company hereby expressly waives all benefit
or advantage of any such law, and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Trustee, but will suffer and permit execution of every
such power as though no such law had been enacted.
Section 4.10 Limitation on Restricted Payments.
The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend or make any
distribution (other than dividends or distributions payable
solely in Qualified Capital Stock of the Company) on or in
respect of shares of the Company's Capital Stock to holders of
such Capital Stock;
(ii) purchase, redeem or otherwise acquire or
retire for value any Capital Stock of the Company or any
warrants, rights or options to purchase or acquire shares of any
class of such Capital Stock;
(iii) make any principal payment on, purchase,
defease, redeem, prepay, decrease or otherwise acquire or retire
for value, prior to any scheduled final maturity, scheduled
repayment or scheduled sinking fund payment, any Indebtedness of
the Company or any Subsidiary Guarantor that is subordinate or
junior in right of payment to the Notes or such Subsidiary
Guarantor's Subsidiary Guarantee, as the case may be; or
(iv) make any Investment (other than a
Permitted Investment)
(each of the foregoing actions set forth in clauses (i), (ii),
(iii) and (iv) being referred to as a "Restricted Payment"), if
at the time of such Restricted Payment or immediately after
giving effect thereto, (a) a Default or an Event of Default shall
have occurred and be continuing, or (b) the Company is not able
to incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) in compliance with Section 4.12 or (c)
the aggregate amount of Restricted Payments (including such
proposed Restricted Payment) made subsequent to the Issue Date
(the amount expended for such purposes, if other than in cash,
being the Fair Market Value of such property as determined
reasonably and in good faith by the Board of Directors of the
Company, but shall not include the value of the Company's
interest in the lubrication oil joint venture contemplated to be
transferred to an Unrestricted Subsidiary upon receipt of the
approval of the Chinese Government) shall exceed the sum of:
(A) 50% of the cumulative Consolidated Net Income
(or if cumulative Consolidated Net Income shall be a loss, minus
100% of such loss) of the Company earned subsequent to the Issue
Date and on or prior to the last date of the Company's fiscal
quarter immediately preceding such Restricted Payment (the
"Reference Date") (treating such period as a single accounting
period); plus
(B) 100% of the aggregate net cash proceeds
received by the Company from any Person (other than a Restricted
Subsidiary of the Company) from the issuance and sale subsequent
to the Issue Date and on or prior to the Reference Date of
Qualified Capital Stock of the Company; plus
(C) without duplication of any amounts included in
the immediately preceding subclause (B), 100% of the aggregate
net cash proceeds of any equity contribution received by the
Company subsequent to the Issue Date from a holder of the
Company's Capital Stock (excluding in the case of the immediately
preceding clause (B) and this clause (C), any net cash proceeds
from an Equity Offering to the extent used to redeem the Notes);
plus
(D) an amount equal to the net reduction in
Investments in Unrestricted Subsidiaries resulting from
dividends, interest payments, repayments of loans or advances, or
other transfers of cash, in each case to the Company or to any
Wholly Owned Restricted Subsidiary of the Company subsequent to
the Issue Date from Unrestricted Subsidiaries (but without
duplication of any such amount included in calculating cumulative
Consolidated Net Income of the Company), or from designations of
Unrestricted Subsidiaries as Restricted Subsidiaries (in each
case valued as provided in Section 4.14), not to exceed, in the
case of any Unrestricted Subsidiary, the amount of Investments
previously made by the Company or any Restricted Subsidiary in
such Unrestricted Subsidiary and which was treated as a
Restricted Payment hereunder; plus
(E) without duplication of the immediately
preceding subclause (D), an amount equal to the lesser of the
cost or net cash proceeds received upon the sale or other
disposition of any Investment made after the Issue Date which had
been treated as a Restricted Payment (but without duplication of
any such amount included in calculating cumulative Consolidated
Net Income of the Company); plus
(F) $5 million.
Notwithstanding the foregoing, the provisions set forth
above will not prohibit:
(1) The payment of any dividend or redemption
payment within 60 days after the date of declaration of such
dividend or applicable redemption if the dividend or redemption
payment, as the case may be, would have been permitted on the
date of declaration;
(2) The redemption or other acquisition of any
shares of Capital Stock of the Company, either (a) solely in
exchange for shares of Qualified Capital Stock of the Company, or
(b) through the application of net proceeds of a substantially
concurrent sale for cash (other than to a Restricted Subsidiary
of the Company) of shares of Qualified Capital Stock of the
Company;
(3) If no Default or Event of Default shall have
occurred and be continuing, the acquisition of any Indebtedness
of the Company or Subsidiary Guarantor that is subordinate or
junior in right of payment to the Notes or such Subsidiary
Guarantor's Subsidiary Guarantee, as the case may be, either (a)
solely in exchange for shares of Qualified Capital Stock of the
Company or (b) through the application of the net proceeds of a
substantially concurrent sale for cash (other than to a
Restricted Subsidiary of the Company) of (i) shares of Qualified
Stock of the Company or (ii) Refinancing Indebtedness; and
(4) The initial designation of XCL-China, XCL-China
LubeOil, Ltd., XCL-China Coal Methane, Ltd., XCL-Texas, Ltd., XCL-
Acquisitions, Inc., The Exploration Company of Louisiana, Inc.
and XCL Land Ltd. as Unrestricted Subsidiaries hereunder and the
transfer of the Company's interest in the lubrication oil joint
venture to XCL-China LubeOil, Ltd.
In determining the aggregate amount of Restricted Payments made
subsequent to the Issue Date in accordance with clause (C) of
this Section 4.10, amounts expended pursuant to clauses (1),
(2)(b) and 3(b)(i) shall be included in such calculation.
Furthermore, the Company may pay cash dividends in respect of its
Preferred Stock in an amount of up to $9,400,000 in any twelve-
month period, commencing with the twelve months beginning on the
third anniversary of the Issue Date, if such Restricted Payments
comply with the provisions set forth in the initial paragraph of
this Section 4.10, but for such purposes losses incurred prior to
the third anniversary of the Issue Date shall be disregarded in
determining the amount referred to in clause (A) of such
paragraph.
Section 4.11 Limitation on Transactions with Affiliates.
(i) The Company will not, and will not cause
or permit any of its Restricted Subsidiaries to, directly or
indirectly, enter into, amend or permit or suffer to exist any
transaction or series of related transactions (including, without
limitation, the purchase, sale, lease or exchange of any
property, the guaranteeing of any Indebtedness or the rendering
of any service) with, or for the benefit of, any of their
respective Affiliates (each an "Affiliate Transaction"), other
than (a) Affiliate Transactions permitted under paragraph (ii) of
this Section 4.11 and (b) Affiliate Transactions that are on
terms that are fair and reasonable to the Company or the
applicable Restricted Subsidiary and are no less favorable to the
Company or the applicable Restricted Subsidiary than those that
might reasonably have been obtained in a comparable transaction
at such time on an arm's-length basis from a Person that is not
an Affiliate of the Company or such Restricted Subsidiary. All
Affiliate Transactions (and each series of related Affiliate
Transactions which are similar or part of a common plan)
involving aggregate payments or other property with a Fair Market
Value in excess of $1,000,000 shall be approved by the Board of
Directors of the Company, such approval to be evidenced by a
Board Resolution stating that such Board of Directors has
determined that such transaction complies with the foregoing
provisions. If the Company or any Restricted Subsidiary enters
into an Affiliate Transaction (or a series of related Affiliate
Transactions related to a common plan) that involves an aggregate
Fair Market Value of more than $10,000,000, the Company shall,
prior to the consummation thereof, obtain a favorable opinion as
to the fairness of such transaction or series of related
transactions to the Company or the relevant Restricted
Subsidiary, as the case may be, from a financial point of view,
from a nationally recognized investment banking firm and file the
same with the Trustee.
(ii) The restrictions set forth in clause (i)
shall not apply to (a) reimbursement of expenses incurred in the
conduct of the Company's or any Restricted Subsidiary's business
by, and reasonable fees and compensation paid to and indemnity
provided on behalf of, officers, directors, employees or
consultants of the Company or any Restricted Subsidiary as
determined in good faith by the Board of Directors or senior
management of the Company or such Restricted Subsidiary, as the
case may be; (b) transactions exclusively between or among the
Company and any of its Restricted Subsidiaries or exclusively
between or among such Restricted Subsidiaries; provided, however,
that such transactions are not otherwise prohibited hereunder;
and (c) Restricted Payments permitted hereunder.
Section 4.12 Limitation on Incurrence of Additional
Indebtedness.
Other than Permitted Indebtedness, the Company will
not, and will not cause or permit any of its Restricted
Subsidiaries to, directly or indirectly, create, incur, assume,
guarantee, acquire, become liable, contingently or otherwise,
with respect to, or otherwise become responsible for payment of
(collectively, "incur") any Indebtedness; provided, however, that
if no Default or Event of Default shall have occurred and be
continuing at the time of or as a consequence of the incurrence
of any such Indebtedness, the Company and the Restricted
Subsidiaries or any of them may incur Indebtedness (including,
without limitation, Acquired Indebtedness), in each case, if on
the date of the incurrence of such Indebtedness, after giving pro
forma effect to the incurrence thereof and the receipt and
application of the proceeds therefrom, both (a) the Company's
Consolidated EBITDA Coverage Ratio would have been greater than
2.5 to 1.0 and (b) the Company's Adjusted Consolidated Net
Tangible Assets are equal to or greater than 150% of the
aggregate consolidated Indebtedness of the Company and its
Restricted Subsidiaries.
For purposes of determining any particular amount of
Indebtedness under this Section 4.12, guarantees of Indebtedness
otherwise included in the determination of such amount shall not
also be included.
Indebtedness of a Person existing at the time such
Person becomes a Restricted Subsidiary (whether by merger,
consolidation, acquisition of Capital Stock or otherwise) or is
merged with or into the Company or any Restricted Subsidiary or
which is secured by a Lien on an asset acquired by the Company or
a Restricted Subsidiary (whether or not such Indebtedness is
assumed by the acquiring Person) shall be deemed incurred at the
time the Person becomes a Restricted Subsidiary or at the time of
the asset acquisition, as the case may be.
The Company will not, and will not permit any
Subsidiary Guarantor to incur any Indebtedness which by its terms
(or by the terms of any agreement governing such Indebtedness) is
subordinated in right of payment to any other Indebtedness of the
Company or such Subsidiary Guarantor unless such Indebtedness is
also by its terms (or by the terms of any agreement governing
such Indebtedness) made expressly subordinate in right of payment
to the Notes or the Subsidiary Guarantee of such Subsidiary
Guarantor, as the case may be, pursuant to subordination
provisions that are substantively identical to the subordination
provisions of such Indebtedness (or such agreement) that are most
favorable to the holders of such other Indebtedness of the
Company or such Subsidiary Guarantor, as the case may be.
Section 4.13 Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries.
The Company will not, and will not cause or permit any
of its Restricted Subsidiaries to, directly or indirectly, create
or otherwise cause or permit to exist or become effective any
encumbrances or restriction on the ability of any Restricted
Subsidiary to: (a) pay dividends or make any other distributions
on or in respect of its Capital Stock; (b) make loans or
advances, or pay any Indebtedness or other obligation owed, to
the Company or any other Restricted Subsidiary; (c) guarantee any
Indebtedness or any other obligation of the Company or any
Restricted Subsidiary; or (d) transfer any of its property or
assets to the Company or any other Restricted Subsidiary (each
such encumbrance or restriction, a "Payment Restriction"), except
for such encumbrances or restrictions existing under or by reason
of: (1) applicable law; (2) this Indenture; (3) a credit
facility described in clause (b) of the definition of Permitted
Indebtedness; (4) customary non-assignment provisions of any
contract or any lease governing a leasehold interest of any
Restricted Subsidiary; (5) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable
to such Restricted Subsidiary, or the properties or assets of
such Restricted Subsidiary, other than the Person or the property
or assets of the Person so acquired; (6) agreements existing on
the Issue Date to the extent and in the manner such agreements
are in effect on the Issue Date; (7) customary restrictions with
respect to a Restricted Subsidiary of the Company pursuant to an
agreement that has been entered into for the sale or disposition
of Capital Stock or assets of such Restricted Subsidiary to be
consummated in accordance with the terms of this Indenture solely
in respect of the assets or Capital Stock to be sold or disposed
of; (8) any instrument governing a Permitted Lien, to the extent
and only to the extent such instrument restricts the transfer or
other disposition of assets subject to such Permitted Lien; or
(9) an agreement governing Refinancing Indebtedness in relation
to the Indebtedness issued, assumed or incurred pursuant to an
agreement referred to in clause (2) or (6) above; provided,
however, that the provisions relating to such encumbrance or
restriction contained in any such Refinancing Indebtedness are
not less favorable to the Holders in any material respect (as
determined by the Board of Directors of the Company in their
reasonable and good faith judgment) than the provisions relating
to such encumbrance or restriction contained in the applicable
agreement referred to in such clause (2) or (6).
Section 4.14 Limitation on Restricted and Unrestricted
Subsidiaries.
The Board of Directors may, if no Default or Event of
Default shall have occurred and be continuing or would arise
therefrom, designate an Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, however, that (i) any such
designation shall be deemed to be an incurrence as of the date of
such designation by the Company and its Restricted Subsidiaries
of the Indebtedness (if any) of such designated Subsidiary for
purposes of Section 4.12 and (ii) unless such designated
Subsidiary shall not have any Indebtedness outstanding, other
than Indebtedness which would be Permitted Indebtedness, no such
designation shall be permitted if immediately after giving effect
to such designation and the incurrence of any such Indebtedness
the Company could not incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) pursuant to Section 4.12.
Notwithstanding the foregoing, however, the Company shall
designate XCL-China a Restricted Subsidiary effective on the date
its Subsidiary Guarantee becomes effective.
The Board of Directors of the Company also may, if no
Default or Event of Default shall have occurred and be continuing
or would arise therefrom, designate any Restricted Subsidiary to
be an Unrestricted Subsidiary if (i) such designation is at that
time permitted under Section 4.10 and (ii) immediately after
giving effect to such designation, the Company could incur $1.00
of additional Indebtedness (other than Permitted Indebtedness)
pursuant to Section 4.12. Any such designation by the Board of
Directors shall be evidenced to the Trustee by the filing with
the Trustee of the Board Resolution giving effect to such
designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and setting
forth in reasonable detail the underlying calculations. In the
event that any Restricted Subsidiary is designated an
Unrestricted Subsidiary in accordance with this Section 4.14,
such Restricted Subsidiary's Subsidiary Guarantee will be
released.
For purposes of Section 4.10, (i) an "Investment" shall
be deemed to have been made at the time any Restricted Subsidiary
is designated as an Unrestricted Subsidiary in an amount
(proportionate to the Company's equity interest in such
Subsidiary) equal to the net worth of such Restricted Subsidiary
at the time that such Restricted Subsidiary is designated as an
Unrestricted Subsidiary; (ii) at any date the aggregate amount of
all Restricted Payments made as Investments since the Issue Date
shall exclude and be reduced by an amount (proportionate to the
Company's equity interest in such Subsidiary) equal to the net
worth of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary,
not to exceed, in the case of any such designation of an
Unrestricted Subsidiary as a Restricted Subsidiary, the amount of
Investments previously made by the Company and the Restricted
Subsidiaries in such Unrestricted Subsidiary (in each case (i)
and (ii) "net worth" to be calculated based upon the Fair Market
Value of the assets of such Subsidiary as of any such date of
designation); and (iii) any property transferred to or from an
Unrestricted Subsidiary shall be valued at its Fair Market Value
at the time of such transfer.
Notwithstanding the foregoing, after the Issue Date the
Board of Directors may not designate any Subsidiary of the
Company to be an Unrestricted Subsidiary if, after such
designation, (a) the Company or any Restricted Subsidiary (i)
provides credit support for, or a guarantee of, any Indebtedness
of such Subsidiary (including any undertaking, agreement or
instrument evidencing such Indebtedness) or (ii) is directly or
indirectly liable for any Indebtedness of such Subsidiary or (b)
such Subsidiary owns any Capital Stock of, or owns or holds any
Lien on any property of, any Restricted Subsidiary which is not a
Subsidiary of the Subsidiary to be so designated.
Notwithstanding any provisions of this Section 4.14,
all Subsidiaries of an Unrestricted Subsidiary will be
Unrestricted Subsidiaries.
Section 4.15 Change of Control.
(a) Upon the occurrence of a Change of Control,
each Holder will have the right to require that the Company
purchase all or a portion of such Holder's Notes pursuant to the
offer described below (the "Change of Control Offer"), at a
purchase price equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, thereon to the date of
purchase.
(b) Within 30 days following the date upon which
the Change of Control occurred, the Company will send, by first
class mail, a notice to each Holder at such Holder's last
registered address, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control Offer. The
notice to the Holders shall contain all instructions and
materials necessary to enable such Holders to tender Notes
pursuant to the Change of Control Offer. Such notice shall
state:
(i) that the Change of Control Offer is being
made pursuant to this Section 4.15, that all Notes tendered and
not withdrawn will be accepted for payment and that the Change of
Control Offer shall remain open for a period of 20 Business Days
or for such longer period as may be required by law;
(ii) the purchase price (including the amount
of any accrued interest) and the purchase date (which shall be no
earlier than 30 days nor later than 45 days from the date such
notice is mailed, other than as may be required by law) (the
"Change of Control Payment Date");
(iii) that any Note not tendered will continue
to accrue interest;
(iv) that, unless the Company defaults in
making payment therefor, any Note accepted for payment pursuant
to the Change of Control Offer shall cease to accrue interest,
after the Change of Control Payment Date;
(v) that Holders electing to have a Physical
Note purchased pursuant to a Change of Control Offer will be
required to surrender the Note, with the form entitled "Option of
Holder to Elect Purchase" on the reverse of the Note completed,
to the Paying Agent at the address specified in the notice prior
to the close of business on the third Business Day prior to the
Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the
second Business Day prior to the Change of Control Payment Date,
a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Notes purchased;
(vii) that Holders whose Physical Notes are
purchased only in part will be issued new Physical Notes in a
principal amount equal to the unpurchased portion of the Physical
Notes surrendered; provided, however, that each Physical Note
purchased and each new Physical Note issued shall be in an
original principal amount of $1,000 or integral multiples
thereof; and
(viii) the circumstances and relevant facts
regarding such Change of Control.
On or before the Change of Control Payment Date, the
Company shall (i) accept for payment Notes or portions thereof
tendered pursuant to the Change of Control Offer, (ii) deposit
with the Paying Agent in accordance with Section 2.14 U.S. Legal
Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes so tendered and (iii) deliver to
the Trustee any Physical Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being
purchased by the Company. Upon receipt by the Paying Agent of
the monies specified in clause (ii) above and a copy of the
Officers' Certificate specified in clause (iii) above, the Paying
Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price plus accrued
interest, if any, and the Trustee shall promptly authenticate and
mail to the Holders of any Physical Notes so accepted new
Physical Notes equal in principal amount to any unpurchased
portion of the Physical Notes surrendered. Any Physical Notes
not so accepted shall be promptly mailed by the Paying Agent to
the Holder thereof. For purposes of this Section 4.15, the
Trustee shall act as the Paying Agent.
The Company shall not be required to make a Change of
Control Offer upon a Change of Control if a third party makes the
Change of Control Offer at the same purchase price and time and
otherwise in compliance with the requirements applicable to a
Change of Control Offer made by the Company and purchases all
Notes validly tendered and not withdrawn under such Change of
Control Offer.
Neither the Board of Directors of the Company nor the
Trustee may waive the provisions of this Section 4.15 relating to
the Company's obligation to make a Change of Control Offer.
The Company 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 a Change of Control Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the provisions of this Section 4.15, the Company shall comply
with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under the provisions
of this Section 4.15 by virtue thereof.
Section 4.16 Limitation on Asset Sales.
(a) The Company will not, and will not cause or
permit any of its Restricted Subsidiaries to, consummate an Asset
Sale unless:
(i) the Company or the applicable 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 sold or otherwise disposed of (as determined in
good faith by the Company's Board of Directors or, in the case of
any Asset Sale involving total cash consideration of less than
$2.0 million, senior management of the Company);
(ii) (a) at least 70% of the consideration
received by the Company or such Restricted Subsidiary, as the
case may be, from such Asset Sale shall be in the form of cash or
Cash Equivalents and is received at the time of such disposition
and (b) at least 15% of such consideration received if in a form
other than cash or Cash Equivalents is converted into or
exchanged for cash or Cash Equivalents within 120 days of such
disposition; and
(iii) upon the consummation of an Asset Sale,
the Company shall apply, or cause such Restricted Subsidiary to
apply, the Net Cash Proceeds relating to such Asset Sale within
365 days of receipt thereof either (a) to repay or prepay
Indebtedness (other than Indebtedness that is subordinate or
junior in right of payment to the Notes), provided, in each case,
that any related loan commitment is thereby permanently reduced
by the amount of the Indebtedness so paid, (b) to repay or prepay
any Indebtedness of the Company that is secured by a Lien
permitted to be incurred pursuant to Section 4.18, (c) to make an
investment in properties or assets that replace the properties or
assets that were the subject of such Asset Sale or in properties
or assets that will be used in the Crude Oil and Natural Gas
Business of the Company and its Restricted Subsidiaries as
existing on the Issue Date ("Replacement Assets"), (d) to an
investment in Crude Oil and Natural Gas Related Assets or (e) a
combination of prepayment and investment permitted by the
foregoing clauses (iii)(a) through (iii)(d). On the 366th day
after an Asset Sale or such earlier date, if any, following the
disbursement of all the Collateral subject to the Principal
Account in accordance with the Disbursement Agreement as the
Board of Directors of the Company determines not to apply the Net
Cash Proceeds relating to such Asset Sale as set forth in clauses
(iii)(a) through (iii)(e) of the next preceding sentence (each a
"Net Proceeds Offer Trigger Date"), such aggregate amount of Net
Cash Proceeds which have been received by the Company or such
Restricted Subsidiary but which have not been applied on or
before such Net Proceeds Offer Trigger Date as permitted in
clauses (iii)(a) through (iii)(e) of the next preceding sentence
(each a "Net Proceeds Offer Amount") shall be applied by the
Company or such Restricted Subsidiary, as the case may be, to
make an offer to purchase (a "Net Proceeds Offer") on a date (the
"Net Proceeds Offer Payment Date") not less than 30 nor more than
45 days following the applicable Net Proceeds Offer Trigger Date,
from all Holders on a pro rata basis, that principal amount of
Notes purchasable with the Net Proceeds Offer Amount at a price
equal to 100% of the principal amount of the Notes to be
purchased, plus accrued and unpaid interest, if any, thereon to
the date of purchase; provided, however, that if at any time any
non-cash consideration received by the Company or any Restricted
Subsidiary, as the case may be, in connection with any Asset Sale
is converted into or sold or otherwise disposed of for cash or
Cash Equivalents (other than interest received with respect to
any such non-cash consideration), then such conversion or
disposition shall be deemed to constitute an Asset Sale hereunder
and the Net Cash Proceeds thereof shall be applied in accordance
with this Section 4.16. The Company may defer the Net Proceeds
Offer until there is an aggregate unutilized Net Proceeds Offer
Amount equal to or in excess of $7.5 million resulting from one
or more Asset Sales (at which time, the entire unutilized Net
Proceeds Offer Amount, and not just the amount in excess of $7.5
million, shall be applied as required pursuant to this
paragraph).
In the event of the transfer of substantially all (but
not all) of the properties and assets of the Company and its
Restricted Subsidiaries as an entirety to a Person in a
transaction permitted under Section 5.01, such Person shall be
deemed to have sold the properties and assets of the Company and
its Restricted Subsidiaries not so transferred for purposes of
this Section 4.16, and shall comply with the provisions of this
Section 4.16 with respect to such deemed sale as if it were an
Asset Sale. In addition, the Fair Market Value of such
properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash
Proceeds for purposes of this Section 4.16.
Notwithstanding the two immediately preceding
paragraphs, the Company and its Restricted Subsidiaries will be
permitted to consummate an Asset Sale without complying with such
paragraphs to the extent (a) the consideration for such Asset
Sale constitutes Replacement Assets and/or Crude Oil and Natural
Gas Related Assets and (b) such Asset Sale is for Fair Market
Value; provided, however, that any consideration not constituting
Replacement Assets and Crude Oil and Natural Gas Related Assets
received by the Company or any of its Restricted Subsidiaries in
connection with any Asset Sale permitted to be consummated under
this paragraph shall constitute Net Cash Proceeds subject to the
provisions of the two immediately preceding paragraphs.
(b) Subject to the deferral of the Net Proceeds
Offer contained in clause (a)(iii) above, each notice of a Net
Proceeds Offer pursuant to this Section 4.16 shall be mailed or
caused to be mailed, by first class mail, by the Company not more
than 30 days after the Net Proceeds Offer Trigger Date to all
Holders at their last registered addresses, 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
Net Proceeds Offer and shall state the following terms:
(i) that the Net Proceeds Offer is being made
pursuant to Section 4.16, that all Notes tendered will be
accepted for payment; provided, however, that if the aggregate
principal amount of Notes tendered in a Net Proceeds Offer plus
any accrued interest at the expiration of such offer exceeds the
aggregate amount of the Net Proceeds Offer, the Company shall
select the Notes to be purchased on a pro rata basis with such
adjustments as may be deemed appropriate by the Company (so that
only Notes in denominations of $1,000 or multiples thereof shall
be purchased) and that the Net Proceeds Offer shall remain open
for a period of 20 Business Days or such longer period as may be
required by law;
(ii) the purchase price (including the amount
of any accrued interest) and the Net Proceeds Offer Payment Date
(which shall be not less than 30 nor more than 45 days following
the applicable Net Proceeds Offer Trigger Date and which shall be
at least five Business Days after the Trustee receives notice
thereof from the Company);
(iii) that any Note not tendered will continue
to accrue interest;
(iv) that, unless the Company defaults in
making payment therefor, any Note accepted for payment pursuant
to the Net Proceeds Offer shall cease to accrue interest, after
the Net Proceeds Offer Payment Date;
(v) that Holders electing to have a Physical
Note purchased pursuant to a Net Proceeds Offer will be required
to surrender the Note, with the form entitled "Option of Holder
to Elect Purchase" on the reverse of the Note completed, to the
Paying Agent at the address specified in the notice prior to the
close of business on the third Business Day prior to the Net
Proceeds Offer Payment Date;
(vi) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the
second Business Day prior to the Net Proceeds Offer Payment Date,
a telegram, telex, facsimile transmission or letter setting forth
the name of the Holder, the principal amount of the Notes the
Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Note purchased; and
(vii) that Holders whose Physical Notes are
purchased only in part will be issued new Physical Notes in a
principal amount equal to the unpurchased portion of the Physical
Notes surrendered; provided, however, that each Physical Note
purchased and each new Physical Note issued shall be in an
original principal amount of $1,000 or integral multiples
thereof.
On or before the Net Proceeds Offer Payment Date, the
Company shall (i) accept for payment Notes or portions thereof
tendered pursuant to the Net Proceeds Offer which are to be
purchased in accordance with item (b)(i) above, (ii) deposit with
the Paying Agent in accordance with Section 2.14 U.S. Legal
Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes to be purchased and (iii) deliver
to the Trustee any Physical Notes so accepted together with an
Officers' Certificate stating the Notes or portions thereof being
purchased by the Company. Upon receipt by the Paying Agent of
the monies specified in clause (ii) above and a copy of the
Officers' Certificate specified in clause (iii) above, the Paying
Agent shall promptly mail to the Holders of Notes so accepted
payment in an amount equal to the purchase price plus accrued
interest, if any, and the Trustee shall promptly authenticate and
mail to the Holders of any Physical Notes so accepted new
Physical Notes equal in principal amount to any unpurchased
portion of the Physical Notes surrendered. Any Physical Notes
not so accepted shall be promptly mailed by the Paying Agent to
the Holder thereof. For purposes of this Section 4.16, the
Trustee shall act as the Paying Agent.
The Company 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 a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with
the provisions of this Section 4.16, the Company shall comply
with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under the provisions
of this Section 4.16 by virtue thereof.
Section 4.17 Limitation on Capital Stock of Restricted
Subsidiaries.
The Company will not cause or permit any of its
Restricted Subsidiaries to issue or sell Capital Stock (other
than to the Company or to another Wholly Owned Restricted
Subsidiary) or permit any Person (other than the Company or
another Wholly Owned Restricted Subsidiary) to own any Stock of
any Restricted Subsidiary. For purposes of this Section 4.17
only, XCL-China will be deemed to be a Restricted Subsidiary at
all times prior to the pledge of its capital stock pursuant to
the Pledge Agreement.
Section 4.18 Limitations on Liens.
Other than Permitted Liens, the Company will not, and
will not cause or permit any of its Restricted Subsidiaries to,
directly or indirectly, create, incur, assume or permit or suffer
to exist any Liens of any kind against or upon any property or
assets of the Company or any of its Restricted Subsidiaries
(whether owned on the Issue Date or acquired after the Issue
Date) or any proceeds therefrom, or assign or otherwise convey
any right to receive income or profits therefrom unless (a) in
the case of Liens securing Indebtedness that is expressly
subordinate or junior in right of payment to the Notes or any
Subsidiary Guarantee, the Notes or such Subsidiary Guarantee, as
the case may be, is secured by a Lien on such property, assets or
proceeds that is senior in priority to such Liens at least to the
same extent as the Notes or such Subsidiary Guarantee, as the
case may be, is senior in priority to such indebtedness and (b)
in all other cases, the Notes and the Subsidiary Guarantees are
equally and ratably secured.
Section 4.19 Limitation on Conduct of Business.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, engage in the conduct of any business
other than the Crude Oil and Natural Gas Business and the Lube
Oil Business.
Section 4.20 Additional Subsidiary Guarantees.
If the Company or any of its Restricted Subsidiaries
transfers or causes to be transferred, in one transaction or a
series of related transactions, any property to any Restricted
Subsidiary that is not a Subsidiary Guarantor, or if the Company
or any of its Restricted Subsidiaries shall organize, acquire or
otherwise invest in or hold an Investment in another Restricted
Subsidiary having total consolidated assets with a book value in
excess of $1,000,000 that is not a Subsidiary Guarantor, then
such transferee or acquired or other Restricted Subsidiary shall
(a) execute and deliver to the Trustee a supplemental indenture
in form reasonably satisfactory to the Trustee pursuant to which
such Restricted Subsidiary shall unconditionally guarantee all of
the Company's obligations under the Notes and this Indenture on
the terms set forth in this Indenture and (b) deliver to the
Trustee an Opinion of Counsel and an Officers' Certificate,
stating that such supplemental indenture has been duly
authorized, executed and delivered by such Restricted Subsidiary
and constitutes a legal, valid, binding and enforceable
obligation of such Restricted Subsidiary. Thereafter, such
Restricted Subsidiary shall be a Subsidiary Guarantor for all
purposes of this Indenture.
Section 4.21 Payment of Existing Secured Debt.
Concurrently with the release of the funds in the
Principal Account to the Company, the Company shall pay in full
the Indebtedness under the ING Credit Facility and the
Subordinated Debt (including, for this purpose, any Refinancing
Debt issued in respect of any such Indebtedness).
ARTICLE FIVE
SUCCESSOR CORPORATION
Section 5.01 Merger, Consolidation and Sale of Assets.
The Company will not, in a single transaction or series
of related transactions, consolidate or merge with or into any
Person, or sell, assign, transfer, lease, convey or otherwise
dispose of (or cause or permit any Restricted Subsidiary to sell,
assign, transfer, lease, convey or otherwise dispose of) all or
substantially all of the Company's properties and assets
(determined on a consolidated basis for the Company and its
Restricted Subsidiaries), whether as an entirety or substantially
as an entirety to any Person, unless: (a) either (i) the Company
shall be the surviving or continuing corporation or (ii) the
Person (if other than the Company) including, without limitation,
a Restricted Subsidiary, formed by such consolidation or into
which the Company is merged or the Person which acquires by sale,
assignment, transfer, lease, conveyance or other disposition the
properties and assets of the Company and its Restricted
Subsidiaries substantially as an entirety (the "Surviving
Entity") (x) shall be a corporation organized and validly
existing under the laws of the United States or any state thereof
or the District of Columbia and (y) shall expressly assume, by
supplemental indenture (in form and substance satisfactory to the
Trustee), executed and delivered to the Trustee, the due and
punctual payment of the principal of, premium, if any, and
interest on all of the Notes and the performance of every
covenant of the Notes, the Indenture, the Security Documents and
the Registration Rights Agreement on the part of the Company to
be performed or observed; (b) immediately after giving effect to
such transaction and the assumption contemplated by clause
(a)(ii)(y) above (including giving effect to any Indebtedness
incurred or anticipated to be incurred in connection with or in
respect of such transaction), the Company or such Surviving
Entity, as the case may be, (i) shall have a Consolidated Net
Worth equal to or greater than the Consolidated Net Worth of the
Company immediately prior to such transaction and (ii) shall be
able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.12 hereof; (c)
immediately before and immediately after giving effect to such
transaction and the assumption contemplated by clause (a)(ii)(y)
above (including, without limitation, giving effect to any
Indebtedness incurred or anticipated to be incurred and any Lien
granted in connection with or in respect of the transaction), no
Default or Event of Default shall have occurred or be continuing;
and (d) the Company or the Surviving Entity, as the case may be,
shall have delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that such consolidation,
merger, sale, assignment, transfer, lease, conveyance or other
disposition and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture
comply with the applicable provisions hereof and that all
conditions precedent in this Indenture relating to such
transaction have been satisfied; provided, however, that such
counsel may rely, as to matters of fact, on a certificate or
certificates of officers of the Company.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series
of transactions) of all or substantially all of the properties or
assets of one or more Restricted Subsidiaries, the Capital Stock
of which constitutes all or substantially all of the properties
and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the
Company.
Each Subsidiary Guarantor (other than any Subsidiary
Guarantor whose Subsidiary Guarantee is to be released in
accordance with the terms of the Subsidiary Guarantee and this
Indenture in connection with any transaction complying with the
provisions of the Indenture described under Article Five) will
not, and the Company will not cause or permit any Subsidiary
Guarantor to, consolidate with or merge with or into, or sell,
assign, transfer, lease, convey or otherwise dispose of all or
substantially all of its properties and assets to, any Person
other than the Company or another Subsidiary Guarantor unless:
(a) the entity formed by or surviving any such consolidation or
merger (if other than the Subsidiary Guarantor) or to which such
disposition shall have been made is a corporation organized and
existing under the laws of the United States or any state thereof
or the District of Columbia; (b) such entity assumes by execution
of a supplemental indenture all of the obligations of the
Subsidiary Guarantor under its Subsidiary Guarantee; (c)
immediately after giving effect to such transaction, no Default
or Event of Default shall have occurred and be continuing; and
(d) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the
Company could satisfy the provisions of clause (b) of the first
paragraph of this Section 5.01. Any merger or consolidation of a
Subsidiary Guarantor with and into, or disposition of all or
substantially all of its properties and assets to, the Company
(with the Company being the Surviving Entity) or another
Subsidiary Guarantor need only comply with clause (d) of the
first paragraph of this Section 5.01.
Section 5.02 Successor Corporation Substituted.
Upon any consolidation, combination or merger,
conveyance, lease or transfer in accordance with Section 5.01, in
which the Company is not the continuing corporation, the
Surviving Entity shall succeed to, and be substituted for, and
may exercise every right and power of, the Company under this
Indenture and the Notes with the same effect as if such Surviving
Entity had been named as the Company herein and therein, and
thereafter (except in the case of a lease) the predecessor
corporation will be relieved of all further obligations and
covenants under this Indenture and the Notes.
ARTICLE SIX
REMEDIES
Section 6.01 Events of Default.
An "Event of Default" means any of the following
events:
(a) the failure to pay interest (including any
Additional Interest) on any Notes when the same becomes due and
payable and such default continues for a period of 30 days:
(b) the failure to pay the principal of any Notes,
when such principal becomes due and payable, at maturity, upon
redemption or otherwise (including the failure to make a payment
to purchase Notes tendered pursuant to a Change of Control Offer
or a Net Proceeds Offer);
(c) a default in the performance or breach of the
provisions of Section 5.01, failure to make or consummate a
Change of Control Offer in accordance with Section 4.15, or
failure to make a consummate a Net Proceeds Offer in accordance
with Section 4.16;
(d) a default in the observance or performance of
any other covenant or agreement contained in this Indenture which
default continues for a period of 30 days after the Company
receives written notice specifying the default (and demanding
that such default be remedied) from the Trustee or the Holders of
at least 25% of the outstanding principal amount of the Notes;
(e) a default in the observance or performance of
any covenant or agreement contained in the Security Documents
which default continues for a period of 30 days after the Company
receives written notice specifying the default (and demanding
that such default be remedied) from the Trustee or the Holders of
least 25% of the outstanding principal amount of the Notes;
(f) a default under any mortgage, indenture or
instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness of the Company or of any
Restricted Subsidiary (or the payment of which is guaranteed by
the Company or any Restricted Subsidiary), whether such
Indebtedness now exists or is created after the Issue Date,
excluding, however, the Indebtedness under the ING Credit
Facility and the Subordinated Debt, which default (i) is caused
by a failure to pay principal of or premium, if any, or interest
on such Indebtedness after any applicable grace period provided
in such Indebtedness (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 any 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 at least $5,000,000;
(g) one or more judgments in an aggregate amount in
excess of $5,000,000 (unless covered by insurance by a reputable
insurer as to which the insurer has acknowledged coverage) shall
have been rendered against the Company or any of its Restricted
Subsidiaries and such judgments remain undischarged, unvacated,
unpaid or unstayed for a period of 60 days after such judgment or
judgments become final and non-appealable;
(h) the Security Documents shall, at any time,
cease to be in full force and effect (unless released by the
Trustee) or shall be declared null and void, or the validity or
enforceability thereof shall be contested by the Company or any
of its Affiliates, or any of the Liens intended to be created by
the Security Documents, shall cease to be or shall not be a valid
and perfected Lien having the priority contemplated thereby;
(i) the Company or any of its Subsidiaries pursuant
to or under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for
relief against it in an involuntary case or proceeding;
(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) shall generally not pay its debts when
such debts become due or shall admit in writing its inability to
pay its debts generally; or
(j) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that:
(i) is for relief against the Company or any
Subsidiary of the Company in an involuntary case or proceeding;
(ii) appoints a Custodian of the Company or
any Subsidiary of the Company for all or substantially all of its
Properties; or
(iii) orders the liquidation of the Company or
any Subsidiary of the Company, and in each case the order or
decree remains unstayed and in effect for 60 days; or
(k) any of the Subsidiary Guarantees cease to be in
full force and effect or any of the Subsidiary Guarantees are
declared to be null and void or invalid and unenforceable or any
of the Subsidiary Guarantors denies or disaffirms its liability
under its Subsidiary Guarantee (other than by reason of release
of a Subsidiary Guarantor in accordance with the terms of the
Indenture).
Section 6.02 Acceleration.
Upon the happening of any Event of Default specified in
Section 6.01 (other than an Event of Default specified in clause
(i) or (j)), the Trustee may, or the holders of at least 25% in
aggregate principal amount of outstanding Notes may, declare the
principal of, premium, if any, and accrued and unpaid interest on
all the Notes to be due and payable by notice in writing to the
Company and the Trustee specifying the respective Event of
Default and that it is a "notice of acceleration," and the same
shall become immediately due and payable. If an Event of Default
of the type described in clause (i) or (j) above occurs and is
continuing, then such amount will ipso facto become and be
immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder.
At any time after a declaration of acceleration with
respect to the Notes as described in the preceding paragraph, the
Holders of a majority in aggregate principal amount of the Notes
then outstanding by written notice to the Company and the Trustee
may rescind and cancel such declaration and its consequences (a)
if the rescission would not conflict with any judgment or decree,
(b) if all existing Events of Default have been cured or waived
except nonpayment of principal or interest that has become due
solely because of such acceleration, (c) to the extent the
payment of such interest is lawful, interest on overdue
installments of interest and overdue principal, which has become
due otherwise than by such declaration of acceleration, has been
paid, (d) if the Company has paid the Trustee its reasonable
compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (e) in the event of the cure or
waiver of an Event of Default of the type described in clause (i)
or (j) of the description of Events of Default above, the Trustee
shall have received an Officers' Certificate and an Opinion of
Counsel that such Event of Default has been cured or waived;
provided, however, that such counsel may rely, as to matters of
fact, on a certificate or certificates of officers of the
Company. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
Section 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of the principal of, premium, if
any, or interest on the Notes or to enforce the performance of
any provision of the Notes or this Indenture.
All rights of action and claims under this Indenture or
the Notes may be enforced by the Trustee 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 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. No remedy is exclusive of
any other remedy. All available remedies are cumulative to the
extent permitted by law.
Section 6.04 Waiver of Past Defaults.
Prior to the declaration of acceleration of the Notes,
the Holders of not less than a majority in aggregate principal
amount of the Notes then outstanding by notice to the Trustee
may, on behalf of the Holders of all the Notes, waive any
existing Default or Event of Default and its consequences under
this Indenture, except a Default or Event of Default specified in
Section 6.01(a) or (b) or in respect of any provision hereof
which cannot be modified or amended without the consent of the
Holder so affected pursuant to Section 9.02. When a Default or
Event of Default is so waived, it shall be deemed cured and shall
cease to exist. This Section 6.04 shall be in lieu of Section
316(a)(1)(B) of the TIA and such Section 316(a)(1)(B) of the TIA
is hereby expressly excluded from this Indenture and the Notes,
as permitted by the TIA.
Section 6.05 Control by Majority.
Holders of the Notes may not enforce this Indenture or
the Notes except as provided in this Article Six and under the
TIA. The Holders of not less than a majority in aggregate
principal amount of the outstanding Notes shall have the right to
direct the time, method and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust
of power conferred on the Trustee, provided, however, that the
Trustee may refuse to follow any direction (a) that conflicts
with any rule of law or this Indenture, (b) that the Trustee
determines may be unduly prejudicial to the rights of another
Holder, or (c) that may expose the Trustee to personal liability
for which reasonable indemnity provided to the Trustee against
such liability shall be inadequate; provided, further, however,
that the Trustee may take any other action deemed proper by the
Trustee that is not inconsistent with such direction or this
Indenture. This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA
is hereby expressly excluded from this Indenture and the Notes,
as permitted by the TIA.
Section 6.06 Limitation on Suits.
No Holder of any Notes shall have any right to
institute any proceeding with respect to this Indenture or the
Notes or any remedy hereunder, unless the Holders of at least 25%
in aggregate principal amount of the outstanding Notes have made
written request, and offered reasonable indemnity, to the Trustee
to institute such proceeding as Trustee under the Notes and this
Indenture, the Trustee has failed to institute such proceeding
within 30 days after receipt of such notice, request and offer of
indemnity and the Trustee, within such 30-day period, has not
received directions inconsistent with such written request by
Holders of not less than a majority in aggregate principal amount
of the outstanding Notes.
The foregoing limitations shall not apply to a suit
instituted by a Holder of a Note for the enforcement of the
payment of the principal of, premium, if any, or interest on,
such Notes on or after the respective due dates expressed or
provided for in such Note.
A Holder may not use this Indenture to prejudice the
rights of any other Holders or to obtain priority or preference
over such other Holders.
Section 6.07 Right of Holders to Receive Payment.
Notwithstanding any other provision in this Indenture,
the right of any Holder of a Note to receive payment of the
principal of, premium, if any, and interest on such Note, on or
after the respective due dates expressed or provided for in such
Note, or to bring suit for the enforcement of any such payment on
or after the respective due dates, is absolute and unconditional
and shall not be impaired or affected without the consent of the
Holder.
Section 6.08 Collection Suit by Trustee.
If an Event of Default specified in clause (a) or (b)
of Section 6.01 occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust
against the Company, or any other obligor on the Notes, for the
whole amount of the principal of, premium, if any, and accrued
interest, remaining unpaid, together with interest on overdue
principal and, to the extent that payment of such interest is
lawful, interest on overdue installments of interest, in each
case at the rate per annum provided for by the Notes 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.
Section 6.09 Trustee May File Proofs of Claim.
The Trustee may 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, counsel, accountants and experts) and
the Holders allowed in any judicial proceedings relative to the
Company or Restricted Subsidiaries (or any other obligor upon the
Notes), their creditors or their property and shall be entitled
and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the
same, and any Custodian in any such judicial proceedings 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
7.07. Nothing herein contained shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf
of any Holder any plan of reorganization, arrangement, adjustment
or composition affecting the Notes or the rights of any Holder
thereof, 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 Six it shall pay out such money in the following order:
First: to the Trustee for amounts due under Section
7.07;
Second: to Holders for interest accrued on the Notes,
ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for interest, if any;
Third: to Holders for the principal amounts (including
any premium) owing under the Notes, ratably, without preference
or priority of any kind, according to the amounts due and payable
on the Notes for the principal thereof (including any premium);
and
Fourth: the balance, if any, to the Company.
The Trustee, upon prior written notice to the Company,
may fix a record date and payment date for any payment to Holders
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 Trustee, a court may in its
discretion 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
any suit by the Trustee, any suit by a Holder pursuant to Section
6.06, or a suit by a Holder or Holders of more than 10% in
aggregate principal amount of the outstanding Notes.
Section 6.12 Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any
proceeding to enforce any right or remedy under this Indenture or
any Note and such proceeding has been discontinued or abandoned
for any reason, or has been determined adversely to the Trustee
or to such Holder, then and in every such case the Company, the
Trustee and the Holders shall, subject to any determination in
such proceeding, be restored severally and respectively to their
former positions hereunder, and thereafter all rights and
remedies of the Trustee and the Holders shall continue as though
no such proceeding had been instituted.
ARTICLE SEVEN
TRUSTEE
Section 7.01 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 thereof as a prudent person would
exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of
Default:
(1) The Trustee need perform only those duties as
are specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse
to the Trustee.
(2) 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 Indenture. However, in the case of
any such certificates or opinions that by any provision hereof
are specifically required to be furnished to the Trustee, the
Trustee shall examine the certificates and opinions to determine
whether or not they conform to the requirements of this
Indenture.
(c) Notwithstanding anything to the contrary
herein contained, the Trustee may not be relieved from liability
for its own negligent action, its own negligent failure to act,
or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of
paragraph (b) of this Section 7.01.
(2) The Trustee shall not be liable for any error
of judgment made in good faith by a Trust Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts.
(3) 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
6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder or in the exercise of any of its rights or powers if it
shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability
is not reasonably assured to it.
(e) Every provision of this Indenture that in any
way relates to the Trustee is subject to paragraphs (a), (b), (c)
and (d) of this Section 7.01 and Section 7.02.
(f) The Trustee shall not be liable for interest
on any money or assets received by it except as the Trustee may
agree in writing with the Company. Assets held in trust by the
Trustee need not be segregated from other assets except to the
extent required by law.
Section 7.02 Rights of Trustee.
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully
protected in acting or refraining from acting 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 consult with counsel of its selection and may
require an Officers' Certificate or an Opinion of Counsel, which
shall conform to Sections 10.04 and 10.05. 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.
(c) The Trustee may act through its attorneys and
agents and shall not be responsible for the misconduct or
negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action
that it takes or omits to take in good faith which it reasonably
believes to be authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, notice, request,
direction, consent, order, bond, debenture, or other paper or
document, but the Trustee, in its discretion, may makes 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, upon
reasonable notice to the Company, to examine the books, records,
and premises of the Company, personally or by agent or attorney
and to consult with the officers and representatives of the
Company, including the Company's accountants and attorneys.
(f) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request, order or direction of any of the
Holders pursuant to the provisions of this Indenture, unless such
Holders shall have offered to the Trustee security or indemnity
reasonably satisfactory to the Trustee against the costs,
expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee shall not be required to give any
bond or surety in respect of the performance of its powers and
duties hereunder.
(h) Delivery of reports, information and documents
to the Trustee under Section 4.08 is for informational purposes
only and the Trustee's receipt of the foregoing shall not
constitute constructive notice of any information contained
therein or determinable from information contained therein,
including the Company's compliance with any of its covenants
hereunder (as to which the Trustee is entitled to rely
exclusively on Officers' Certificates).
Section 7.03 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
the Company, any of its Subsidiaries, or Affiliates, with the
same rights it would have if it were not Trustee. Any Agent may
do the same with like rights. However, the Trustee must comply
with Sections 7.10 and 7.11.
Section 7.04 Trustee's Disclaimer.
The Trustee makes no representation as to the validity
or adequacy of this Indenture or the Notes, and it shall not be
accountable for the Company's use of the proceeds from the Notes,
and it shall not be responsible for any statement of the Company
in this Indenture or the Notes other than the Trustee's
certificate of authentication.
Section 7.05 Notice of Default.
If a Default or an Event of Default occurs and is
continuing and if it is known to a Trust Officer, the Trustee
shall mail to each Holder notice of the uncured Default or Event
of Default within 90 days after obtaining knowledge thereof.
Except in the case of a Default or an Event of Default in payment
of principal of, or interest on, any Note, including an
accelerated payment, a Default in payment on the Change of
Control Payment Date pursuant to a Change of Control Offer or on
the Net Proceeds Offer Payment Date pursuant to a Net Proceeds
Offer and a Default in compliance with Article Five hereof, the
Trustee may withhold the notice if and so long as its Board of
Directors, the executive committee of its Board of Directors or a
committee of its directors and/or Trust Officers in good faith
determines that withholding the notice is in the interest of the
Holders. The foregoing sentence of this Section 7.05 shall be in
lieu of the proviso to Section 315(b) of the TIA and such proviso
to Section 315(b) of the TIA is hereby expressly excluded from
this Indenture and the Notes, as permitted by the TIA.
Section 7.06 Reports by Trustee to Holders.
Within 60 days after May 15 of each year beginning with
1998, the Trustee shall, to the extent that any of the events
described in TIA Section 313(a) occurred with the previous twelve
months, but not otherwise, mail to each Holder a brief report
dated as of such date that complies with TIA Section 313(a). The
Trustee also shall comply with TIA Sections 313(b), (c) and (d).
A copy of each report at the time of its mailing to
Holders shall be mailed to the Company and filed with the
Commission and each stock exchange, if any, on which the Notes
are listed.
The Company shall promptly notify the Trustee if the
Notes become listed on any stock exchange and the Trustee shall
comply with TIA Section 313(d).
Section 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time
such compensation for its services as has been agreed to in
writing signed by the Company and the Trustee. The Trustee's
compensation shall not be limited by any law on compensation of a
trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its
duties under the Indenture. Such expenses shall include the
reasonable fees and expenses of the Trustee's agents, counsel,
accountants and experts.
The Company shall indemnify each of the Trustee (or any
predecessor Trustee) and its agents, employees, stockholders,
Affiliates and directors and officers for, and hold them each
harmless against, any and all loss, liability, damage, claim or
expense (including reasonable fees and expenses of counsel),
including taxes (other than taxes based on the income of the
Trustee) incurred by them except for such actions to the extent
caused by any negligence, bad faith or willful misconduct on
their part, arising out of or in connection with the acceptance
of administration of this trust including the reasonable costs
and expenses of defending themselves against any claim or
liability in connection with the exercise or performance of any
of their rights, powers or duties hereunder. The Trustee shall
notify the Company promptly of any claim asserted against the
Trustee for which it may seek indemnity. At the Trustee's sole
discretion, the Company shall defend the claim and the Trustee
shall cooperate and may participate in the defense, provided,
however, that any settlement of a claim shall be approved in
writing by the Trustee if such settlement would result in an
admission of liability by the Trustee or if such settlement would
not be accompanied by a full release of the Trustee for all
liability arising out of the events giving rise to such claims.
Alternatively, the Trustee may at its option have separate
counsel of its own choosing and the Company shall pay the
reasonable fees and expenses of such counsel.
To secure the Company's payment obligations in this
Section 7.07, the Trustee shall have a lien prior to the Notes on
all assets or money held or collected by the Trustee, in its
capacity as Trustee, except assets or money held in trust to pay
principal of or premium, if any, or interest on particular Notes.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.01(i) or (j)
occurs, such expenses and the compensation for such services are
intended to constitute expenses of administration under any
Bankruptcy Law.
The provisions of this Section 7.07 shall survive the
termination of this Indenture.
Section 7.08 Replacement of Trustee.
The Trustee may resign at any time by so notifying the
Company. The Holders of a majority in principal amount of the
outstanding Notes may remove the Trustee and appoint a successor
Trustee with the Company's consent, by so notifying the Company
and the Trustee. The Company may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge
of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall
notify each Holder of such event and shall promptly appoint a
successor Trustee. Within one year after the successor Trustee
takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee
to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall transfer all
property held by it as Trustee to the successor Trustee, subject
to the lien provided in Section 7.07, 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 Company shall mail notice of
such successor Trustee's appointment to each Holder.
If a successor Trustee does not take office within 60
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of at least 10% in
aggregate principal amount of the outstanding Notes may petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Holder may petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor
Trustee.
Notwithstanding any resignation or replacement of the
Trustee pursuant to this Section 7.08, the Company's obligations
under Section 7.07 shall continue for the benefit of the retiring
Trustee.
Section 7.09 Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate
trust business to, another corporation, the resulting, surviving
or transferee corporation without any further act shall, if such
resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee; provided, however,
that such corporation shall be otherwise qualified and eligible
under this Article Seven.
Section 7.10 Eligibility; Disqualification.
This Indenture shall always have a Trustee who
satisfies the requirement of TIA Sections 310(a)(1), (2) and (5).
The Trustee (or, in the case of a Trustee that is a corporation
included in a bank holdings company system, the related bank
holding company) shall have a combined capital and surplus of at
least $150 million as set forth in its most recent published
annual report of condition, and have a Corporate Trust Office in
the City of New York. In addition, if the Trustee is a
corporation included in a bank holding company system, the
Trustee, independently of such bank holding company, shall meet
the capital requirements of TIA Section 310(a)(2). The Trustee
shall comply with TIA Section 310(b); provided, however, that
there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other
securities, or certificates of interest or participation in other
securities, of the Company are outstanding, if the requirements
for such exclusion set forth in TIA Section 310(b)(1) are met.
The provisions of TIA Section 310 shall apply to the Company, as
obligor of the Notes.
Section 7.11 Preferential Collection of Claims Against
Company.
The Trustee shall comply with TIA Section 311(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. The
provisions of TIA Section 311(a) shall apply to the Company, as
obligor on the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
Section 8.01 Termination of Company's Obligations.
This Indenture will be discharged and will cease to be
of further effect (except as to surviving rights of registration
of transfer or exchange of the Notes, as expressly provided for
in this Indenture) as to all outstanding Notes when (a) either
(i) all Notes, theretofore authenticated and delivered (except
lost, stolen or destroyed Notes which have been replaced or paid
and Notes for whose payment money has theretofore been deposited
in trust or segregated and held in trust by the Company and
thereafter repaid to the Company or discharged from such trust)
have been delivered to the Trustee for cancellation or (ii) all
Notes not therefore delivered to the Trustee for cancellation
have become due and payable and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an
amount sufficient to pay and discharge the entire Indebtedness on
the Notes not theretofore delivered to the Trustee for
cancellation, for principal of, premium, if any, and interest on
the Notes to the date of deposit together with irrevocable
instructions from the Company directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the
case may be; (b) the Company has paid all other sums payable
under this Indenture by the Company; and (c) the Company has
delivered to the Trustee an Officers' Certificate and an Opinion
of Counsel stating that all conditions precedent under this
Indenture relating to the satisfaction and discharge of this
Indenture have been complied with; provided, however, that such
counsel may rely, as to matters of fact, on a certificate or
certificates of officers of the Company.
The Company may, at its option and at any time, elect
to have its obligations and the corresponding obligations of each
Subsidiary Guarantor discharged with respect to the outstanding
Notes ("Legal Defeasance"). Such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire
indebtedness represented by the outstanding Notes, and satisfied
all of its obligations with respect to the Notes, except for (a)
the rights of Holders to receive payments in respect of the
principal of, premium, if any, and interest in the Notes when
such payments are due, (b) the Company's Obligations with respect
to the Notes concerning issuing temporary Notes, registration of
Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (c) the rights,
powers, trust, duties and immunities of the Trustee and the
Company's obligations in connection therewith and (d) the Legal
Defeasance provisions of this Section 8.01. In addition, the
Company may, at its option and at any time, elect to have the
obligations of the Company released with respect to covenants
contained in Sections 4.04, 4.05, 4.07, 4.08 and 4.10 through
4.21 and Article Five ("Covenant Defeasance") and thereafter any
omission to comply with such obligations shall not constitute a
Default or Event of Default with respect to the Notes. In the
event of Covenant Defeasance, those events described under
Section 6.01 (except those events described in Section 6.01(a),
(b), (i) and (j)) will no longer constitute an Event of Default
with respect to the Notes.
In order to exercise either Legal Defeasance or
Covenant Defeasance:
(a) the Company must irrevocably deposit with the
Trustee, in trust, for the benefit of the Holders cash in United
States dollars, non-callable U.S. Government Obligations, 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 on the Notes on the stated date for payment thereof or
on the applicable Redemption Date, as the case may be;
(b) in the case of Legal Defeasance, the Company
shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming
that (i) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling or (ii) since
the date of this Indenture, there has been a change in the
applicable federal income tax law, in either case to the effect
that, and based thereon such Opinion of Counsel shall confirm
that, the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts, in
the same manner and at the same times as would have been the case
if such Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company
shall have delivered to the Trustee an Opinion of Counsel in the
United States reasonably acceptable to the Trustee confirming
that the Holders will not recognize income, gain or loss for
federal income tax purposes as a result of such Covenant
Defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have
been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or insofar
as Events of Default under Section 6.01(i) or (j) from bankruptcy
or insolvency events are concerned, at any time in the period
ending on the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance
shall not result in a breach or violation of, or constitute a
default under this Indenture or any other agreement or instrument
to which the Company or any of its Restricted Subsidiaries is a
party or by which the Company or any its Restricted Subsidiaries
is bound;
(f) the Company shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not made by
the Company with the intent of preferring the Holders over any
other creditors of the Company or with the intent of defeating,
hindering, delaying or defrauding any other creditors of the
Company or others;
(g) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating
that all conditions precedent provided for or relating to the
Legal Defeasance or the Covenant Defeasance, as the case may be,
have been complied with; provided, however, that such counsel may
rely, as to matters of fact, on a certificate or certificates of
officers of the Company; and
(h) the Company shall have delivered to the Trustee
an Opinion of Counsel to the effect that after 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.
Section 8.02 Application of Trust Money.
The Trustee or Paying Agent shall hold in trust U.S.
Legal Tender or U.S. Government Obligations deposited with it
pursuant to Section 8.01, and shall apply the deposited U.S.
Legal Tender and the money from U.S. Government Obligations in
accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no
obligation to invest said U.S. Legal Tender or U.S. Government
Obligations except as it may agree in writing with the Company.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed or assessed against the U.S.
Legal Tender or U.S. Government Obligations deposited pursuant to
Section 8.01 or the principal and interest received in respect
thereof other than any such tax, fee or other charge which by law
is for the account of the Holders of outstanding Notes.
Section 8.03 Repayment to the Company.
Subject to Section 8.01, the Trustee and the Paying
Agent shall promptly pay to the Company upon request any excess
U.S. Legal Tender or U.S. Government Obligations held by them at
any time and thereupon shall be relieved from all liability with
respect to such money. The Trustee and the Paying Agent shall
pay to the Company upon request any money held by them for the
payment of principal or interest that remains unclaimed for one
year; provided, however, that the Trustee or such Paying Agent,
before being required to make any payment, may at the expense of
the Company cause to be published once in a newspaper of general
circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed
and that after a date specified therein which shall be at least
30 days from the date of such publication or mailing any
unclaimed balance of such money then remaining will be repaid to
the Company. After payment to the Company, Holders entitled to
such money must look to the Company for payment as general
creditors unless an applicable law designates another Person.
Section 8.04 Reinstatement.
If the Trustee or Paying Agent is unable to apply any
U.S. Legal Tender or U.S. Government Obligations in accordance
with Section 8.01 by reason of any legal proceeding or by reason
of any order or judgment of any court or governmental authority
enjoining, restraining or otherwise prohibiting such application,
the Company's obligations under this Indenture and the Notes
shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.01 until such time as the Trustee or Paying
Agent is permitted to apply all such U.S. Legal Tender or U.S.
Government Obligations in accordance with Section 8.01; provided,
however, that if the Company has made any payment of interest on
or principal of any Notes because of the reinstatement of its
obligations, the Company shall be subrogated to the rights of the
Holders of such Notes to receive such payment from the U.S. Legal
Tender or U.S. Government Obligations held by the Trustee or
Paying Agent.
Section 8.05 Acknowledgment of Discharge by Trustee.
After (i) the conditions of Section 8.01 have been
satisfied, (ii) the Company has paid or cause to be paid all
other sums payable hereunder by the Company and (iii) the Company
has delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that all conditions precedent
referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee
upon request shall acknowledge in writing the discharge of the
Company's obligations under this Indenture except for those
surviving obligations specified in Section 8.01; provided that
the legal counsel delivering such Opinion of Counsel may rely as
to matters of fact on one or more Officers' Certificates of the
Company.
ARTICLE NINE
MODIFICATION OF THE INDENTURE
Section 9.01 Without Consent of Holders.
Subject to the provisions of Section 9.02, the Company,
the Subsidiary Guarantors and the Trustee may modify or amend,
waive or supplement this Indenture without notice to or consent
of any Holder: (a) to cure any ambiguity, defect or
inconsistency; (b) to comply with Section 5.01 of this Indenture;
(c) to provide for uncertificated Notes in addition to
certificated Notes; (d) to comply with any requirements of the
Commission in order to effect or maintain the qualification of
this Indenture under the TIA; or (e) to make any change that
would provide any additional benefit or rights of any Holder.
Notwithstanding the foregoing, the Trustee, the Subsidiary
Guarantors and the Company may not make any change that adversely
affects the rights of any Holder under this Indenture without the
consent of such Holder. In formulating its opinion on such
matters, the Trustee will be entitled to rely on such evidence as
it deems appropriate, including, without limitation, solely on an
Opinion of Counsel; provided, however, that in delivering such
Opinion of Counsel, such counsel may rely as to matters of fact,
on a certificate or certificates of officers of the Company.
Section 9.02 With Consent of Holders.
The provisions of this Indenture respecting a Mandatory
Redemption may be modified or amended with the consent of the
Holders of a majority in principal amount of the then outstanding
Notes. All other modifications and amendments of this Indenture
may be made with the consent of the Holders of two-thirds in
principal amount of the then outstanding Notes, except that,
without the consent of each Holder of the Notes affected thereby,
no amendment may, directly or indirectly, (i) reduce the amount
of Notes whose Holders must consent to any amendment; (ii) reduce
the rate of or change the time for payment of interest, including
Defaulted Interest, on any Notes; (iii) reduce the principal of
or change the fixed maturity of any Notes, or change the date on
which any Notes may be subject to redemption or repurchase, or
reduce the redemption or repurchase price therefor; (iv) make any
Notes payable in money other than that stated in the Notes; (v)
make any change in provisions of this Indenture protecting the
right of each Holder of a Note to receive payment of principal of
and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment or permitting Holders or a
majority in aggregate principal amount of the then outstanding
Notes to waive Defaults or Events of Default; (vi) amend, change
or modify in any material respect the obligation of the Company
to make and consummate a Change of Control Offer in the event of
a Change of Control or make and consummate a Net Proceeds Offer
with respect to any Asset Sale that has been consummated or
modify any of the provisions or definitions with respect thereto;
(vii) modify or change any provisions of this Indenture or any
Security Document or the related definitions affecting the
ranking of the Notes or any Subsidiary Guarantee or the security
for the Notes in a manner which adversely affects the Holders; or
(viii) release any Subsidiary Guarantor from any of its
obligations under its Subsidiary Guarantee or this Indenture
otherwise than in accordance with the terms of this Indenture.
Section 9.03 Compliance with TIA.
Every amendment, waiver or supplement of this Indenture
or the Notes shall comply with the TIA as then in effect;
provided, however, that this Section 9.03 shall not of itself
require that this Indenture or the Trustee be qualified under the
TIA or constitute any admission or acknowledgment by any party
hereto that any such qualification is required prior to the time
this Indenture and the Trustee are required by the TIA to be so
qualified.
Section 9.04 Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes
effective, a consent to it by a Holder is a continuing consent by
the Holder 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.
Subject to the following paragraph, any such Holder or subsequent
Holder may revoke the consent as to such Holder's Note or portion
of such Note by notice to the Trustee or the Company received
before the date on which the Trustee receives an Officers'
Certificate certifying that the Holders of the requisite
principal amount of Notes have consented (and not theretofore
revoked such consent) to the amendment, supplement or waiver. An
amendment, supplement or waiver becomes effective upon receipt by
the Trustee of such Officers' Certificate and evidence of consent
by the Holders of the requisite percentage in principal amount of
outstanding Notes.
The Company may, but shall not be obligated to, fix a
Record Date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver, which Record
Date shall be at least 30 days prior to the first solicitation of
such consent. If a Record Date is fixed, then notwithstanding
the second sentence of the immediately preceding paragraph, those
Persons who were Holders at such Record Date (or their duly
designated proxies), and only those Persons, shall be entitled to
revoke any consent previously given, whether or not such Persons
continue to be Holders after such Record Date. No such consent
shall be valid or effective for more than 90 days after such
Record Date unless consents from Holders of the requisite
percentage in principal amount of outstanding Notes required
hereunder for the effectiveness of such consents shall have also
been given and not revoked within such 90 day period.
Section 9.05 Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms
of a Note, the Trustee may require the Holder of such Note to
deliver it to the Trustee. The Trustee may place an appropriate
notation on the Note about the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so
determine, the Company in exchange for the Note shall issue and
the Trustee shall authenticate a new Note that reflects the
changed terms.
Section 9.06 Trustee.
The Trustee shall execute any amendment, supplement or
waiver authorized pursuant to this Article Nine; provided,
however, that the Trustee may, but shall not be obligated to,
execute any such amendment, supplement or waiver which affects
the Trustee's own rights, duties or immunities under this
Indenture. In executing such supplement or waiver the Trustee
shall be entitled to receive indemnity reasonably satisfactory to
it, and shall be fully protected in relying upon an Opinion of
Counsel and an Officers' Certificate of the Company, each stating
that no Event of Default shall occur as a result of such
amendment, supplement or waiver and that the execution of any
amendment, supplement or waiver authorized pursuant to this
Article Nine is authorized or permitted by this Indenture,
provided the legal counsel delivering such Opinion of Counsel may
rely as to matters of fact on one or more Officers' Certificates
of the Company. Such Opinion of Counsel shall not be an expense
of the Trustee.
ARTICLE TEN
MISCELLANEOUS
Section 10.01 TIA Controls.
If any provision of this Indenture limits, qualifies,
or conflicts with another provision which is required to be
included in this Indenture by the TIA, the required provision
shall control; provided, however, that this Section 10.01 shall
not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or
acknowledgment by any party hereto that any such qualification is
required prior to the time this Indenture and the Trustee are
required by the TIA to be so qualified.
Section 10.02 Notices.
Any notices or other communications required or
permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, by telex, by
telecopier or registered or certified mail, postage prepaid,
return receipt requested, addressed as follows:
if to the Company:
XCL Ltd.
110 Rue Jean Lafitte
Lafayette, LA 70508
Telecopier Number: (318) 237-3316
Attn: Chief Executive Officer
with a copy to:
Peter A. Basilevsky, Esq.
Satterlee Stephens Burke & Burke LLP
230 Park Avenue
New York, NY 10169
Telecopier Number: (212) 818-9606
if to the Trustee:
Fleet National Bank
777 Main Street
Hartford, CT 06115
Attn: Corporate Trust Administration
Ref: XCL Ltd. Indenture 1997
Telecopier Number: (860) 986-7920
Each of the Company and the Trustee by written notice
to the other may designate additional or different addresses for
notices to such Person. Any notice or communication to the
Company or the Trustee shall be deemed to have been given or made
as of the date so delivered if hand delivered; when answered
back, if telexed; when receipt is acknowledged, if faxed; and
five (5) calendar days after mailing, if sent by registered or
certified mail, postage prepaid (except that a notice of change
of address shall not be deemed to have been given until actually
received by the addressee).
Any notice or communication mailed to a Holder shall be
mailed to him by first class mail or other equivalent means at
his address as it appears on the registration books of the
Registrar ten (10) days prior to such mailing and shall be
sufficiently given to him if so mailed within the time
prescribed.
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, it is duly given, whether or not the
addressee receives it.
Section 10.03 Communications by Holders with Other
Holders.
Holders may communicate pursuant to TIA Section 312(b)
with other Holders with respect to their rights under this
Indenture or the Notes. The Company, the Trustee, the Registrar
and any other Person shall have the protection of TIA Section
312(c).
Section 10.04 Certificate and Opinion as to
Conditions Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate, in form and
substance satisfactory to the Trustee, stating that, in the
opinion of the signers, all conditions precedent to be performed
by the Company, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent to be
performed by the Company, if any, provided for in this Indenture
relating to the proposed action have been complied with (which
counsel, as to factual matters, may rely on an Officers'
Certificate).
Section 10.05 Statements Required in Certificate or
Opinion.
Each certificate or opinion with respect to compliance
with a condition or covenant provided for in this Indenture,
other than the Officers' Certificate required by Section 4.06,
shall include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or condition;
(2) 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;
(3) a statement that, in the opinion of such
Person, he has made such examination or investigation as is
reasonably necessary to enable him to express an informed opinion
as to whether or not such covenant or condition has been complied
with; and
(4) a statement as to whether or not, in the
opinion of each such Person, such condition or covenant has been
complied with.
Section 10.06 Rules by Trustee, Paying Agent,
Registrar.
The Trustee may make reasonable rules in accordance
with the Trustee's customary practices for action by or at a
meeting of Holders. The Paying Agent or Registrar may make
reasonable rules for its functions.
Section 10.07 Legal Holidays.
A "Legal Holiday" used with resect to a particular
place of payment is a Saturday, a Sunday or a day on which
banking institutions in New York, New York or at such place of
payment are not required to be open. If a payment date is a
Legal Holiday at such place, payment may be made at such place on
the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
Section 10.08 Governing Law.
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
AS APPLIED TO CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF
NEW YORK, WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS. Each
of the parties hereto agrees to submit to the non-exclusive
jurisdiction of the competent courts of the State of New York
sitting in the City of New York or the Untied States District
Court for the Southern District of New York, in any action or
proceeding arising out of or relating to this Indenture or the
Notes.
Section 10.09 No Adverse Interpretation of Other
Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or any of its
Subsidiaries. Any such indenture, loan or debt agreement may not
be used to interpret this Indenture.
Section 10.10 No Personal Liability.
No director, officer, employee or stockholder, as such,
of the Company or any Subsidiary, as such, shall have any
liability for any obligations of the Company or any Subsidiary
Guarantor under the Notes, any Subsidiary Guarantee, this
Indenture, the Security Documents, or the Registration Rights
Agreement or for any claim based on, in respect of, or by reason
of, such obligations or their creation. Each Holder of Notes by
accepting a Note waives and releases all such liability. The
waiver and release are part of the consideration for the issuance
of the Notes.
Section 10.11 Successors.
All agreements of the Company and any Subsidiary
Guarantor in this Indenture and in the Notes and under any
Subsidiary Guarantee, as the case may be, shall bind its
successors. All agreements of the Trustee in this Indenture
shall bind its successors.
Section 10.12 Duplicate Originals.
All parties may sign any number of copies of this
Indenture. Each signed copy shall be an original, but all of
them together shall represent the same agreement.
Section 10.13 Severability.
In case any one or more of the provisions in this
Indenture or in the Notes shall be held invalid, illegal or
unenforceable, in any respect for any reason, the validity,
legality and enforceability of any such provision in every other
respect and of the remaining provisions shall not in any way be
affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent
permitted by law.
Section 10.14 Independence of Covenants.
All covenants and agreements in this Indenture and the
Notes shall be given independent effect so that if any particular
action or condition is not permitted by any of such covenants,
the fact that it would be permitted by an exception to, or
otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if
such action is taken or condition exists.
ARTICLE ELEVEN
SECURITY
Section 11.01 Grant of Security Interest.
In order to secure the due and punctual payment of the
principal of, premium, if any, and interest on the Notes when and
as the same shall be due and payable, whether on an Interest
Payment Date, at maturity, by acceleration, purchase, repurchase,
redemption or otherwise, and interest on the overdue principal
of, premium, if any, and interest (to the extent permitted by
law), if any, on the Notes and the performance of all other
Obligations of the Company to the Holders or the Trustee under
this Indenture and the Notes, the Company hereby covenants to
execute and deliver the Security Documents concurrently with this
Indenture (or, in the case of the Pledge Agreement, concurrently
with the release of funds in the Principal Account). The
Security Documents shall grant to the Trustee a security interest
in the collateral therein described (collectively referred to
herein as the "Collateral") and when filed shall be deemed hereby
incorporated by reference herein to the same extent and as fully
as if set forth in their entirety at this place, and reference is
made hereby to each Security Document for a more complete
description of the terms and provisions thereof. Each Holder, by
accepting a Note, agrees to all of the terms and provisions of
the Security Documents and the Trustee agrees to all of the terms
and provisions of the Security Documents signed by it.
Section 11.02 Execution of Intercreditor Agreement.
Concurrently with the execution and delivery of this
Indenture, the Trustee and the Company, ING and the Subordinated
Debt Holders will execute and deliver the Intercreditor
Agreement.
Section 11.03 Recording and Opinions.
(a) The Company shall take or cause to be
taken all action required to perfect, maintain, preserve and
protect the Lien and Security Interest in the Collateral granted
by the Security Documents, including, without limitation, the
filing of financing statements, continuation statements and any
instruments of further assurance, in such manner and in such
places as may be required by law fully to preserve and protect
the rights of the Holders and the Trustee under this Indenture
and the Security Documents to all property comprising the
Collateral. The Company shall from time to time promptly pay all
financing and continuation statement recording and/or filing
fees, charges and taxes relating to this Indenture and the
Security Documents any amendments thereto and any other
instruments of further assurance required pursuant to the
Security Documents.
(b) The Company shall furnish to the Trustee,
at such time as required by Section 314(b) of the TIA, Opinion(s)
of Counsel either (a) substantially to the effect that, in the
opinion of such counsel, this Indenture and the grant of a
Security Interest in the Collateral intended to be made by the
Security Documents and all other instruments of further
assurance, including, without limitation, financing statements,
have been properly recorded and filed to the extent necessary to
perfect the Security Interest in the Collateral created by the
Security Documents and reciting the details of such action, and
stating that as to the Security Interests created pursuant to the
Security Documents, such recordings and filings are the only
recordings and filings necessary to give notice thereof and that
no re-recordings or refilings are necessary to maintain such
notice (other than as stated in such opinion), or (b) to the
effect that, in the opinion of such counsel, no such action is
necessary to perfect such Security Interest.
(c) To the extent required by the TIA, the
Company shall furnish to the Trustee on May 1 in each year,
beginning with 1998, an Opinion of Counsel, dated as of such
date, either (i)(A) stating that, in the opinion of such counsel,
action has been taken with respect to the recording, filing, re-
recording and refiling of all supplemental indentures, financing
statements, continuation statements and other documents as is
necessary to maintain the Lien of the Security Documents and
reciting with respect to the Security Interest in the Collateral
the details of such action or referring to prior Opinions of
Counsel in which such details are given, and (B) stating that,
based on relevant laws as in effect on the date of such Opinion
of Counsel, all financing statements, continuation statements and
other documents have been executed and filed that are necessary
as of such date and during the succeeding 24 months fully to
maintain the Security Interests of the Holders and the Trustee
hereunder and under the Security Documents with respect to the
Collateral, or (ii) stating that, in the opinion of such counsel,
no such action is necessary to maintain such Lien.
Section 11.04 Release of Collateral.
(a) The Trustee, in its capacity as Trustee
under the Security Documents, shall not at any time release
Collateral from the Security Interest created by this Indenture
and the Security Documents unless such release is in accordance
with the provisions of this Indenture and the Security Documents.
(b) At any time when an Event of Default shall
have occurred and be continuing, no release of Collateral
pursuant to the provisions of this Indenture and the Security
Documents shall be effective as against the Holders of the Notes.
(c) The release of any Collateral from the
terms of the Security Documents shall not be deemed to impair the
security under this Indenture in contravention of the provisions
hereof if and to the extent the Collateral is released pursuant
to this Indenture and the Security Documents. To the extent
applicable, the Company shall cause TIA Section 314(d) relating
to the release of property from the Lien of the Security
Documents and relating to the substitution therefor of any
property to be subjected to the Lien of the Security Documents to
be complied with. Any certificate or opinion required by TIA
314(d) may be made by an Officer of the Company, except in cases
where TIA Section 314(d) requires that such certificate or
opinion be made by an independent Person, which Person shall be
an independent engineer, appraiser or other expert selected or
approved by the Trustee in the exercise of reasonable care. A
Person is "independent" if such Person (a) is in fact
independent, (b) does not have any direct financial interest or
any material indirect financial interest in the Company or in any
Affiliate of the Company and (c) is not an officer, employee,
promoter, underwriter, trustee, partner or director or person
performing similar functions to any of the foregoing for the
Company. The Trustee shall be entitled to receive and rely upon
a certificate provided by any such Person confirming that such
Person is independent within the foregoing definition.
Section 11.05 Specified Releases of Collateral.
(a) The Company shall be entitled to obtain a
full release of all of the Collateral from the Lien of this
Indenture and of the Security Documents upon compliance with the
conditions precedent set forth in Section 8.01 for satisfaction
and discharge of this Indenture or for Legal Defeasance pursuant
to Section 8.01. Upon delivery by the Company to the Trustee of
an Officers' Certificate and an Opinion of Counsel, each to the
effect that such conditions precedent have been complied with
(and which may be the same Officers' Certificate and Opinion of
Counsel required by Article Eight), the Trustee shall forthwith
take all necessary action (at the request of and the expense of
the Company) to release and reconvey to the Company all of the
Collateral, and shall deliver such Collateral in its possession
to the Company and its applicable Subsidiary Guarantors
including, without limitation, the execution and delivery of
releases and satisfactions wherever required.
(b) Upon the sale of all of the capital stock
or other equity securities of a Restricted Subsidiary that are
Collateral under the Pledge Agreement ("Transferred Collateral"),
which sale is in accordance with all applicable provisions of the
Indenture, the Company shall be entitled to obtain a full release
of all of the Transferred Collateral from the Lien of this
Indenture and of the Security Documents. Upon delivery by the
Company to the Trustee of an Officers' Certificate and an Opinion
of Counsel, each to the effect that such provisions of the
Indenture have been complied with, the Trustee shall forthwith
take all necessary action (at the request and expense of the
Company) to release and reconvey to the Company all of the
Transferred Collateral, and shall deliver such Transferred
Collateral in its possession to the Company and its applicable
Subsidiary Guarantors, including, without limitation, the
execution and delivery of releases and satisfactions wherever
required.
(c) The Company shall be entitled to obtain a
release of, and the Trustee shall release, all other items of
Collateral (the "Released Interests") upon compliance with the
condition precedent that the Company and shall have satisfied all
applicable conditions precedent to any such release set forth in
the applicable Security Documents and shall have delivered to the
Trustee the following:
(i) An Officers' Certificate certifying that
such release complies with the terms and conditions of the
applicable Security Documents; and
(ii) All certificates, opinions and other
documentation required by the TIA or this Indenture, if any.
Upon compliance by the Company with the conditions
precedent set forth above, the Trustee shall cause to be released
and reconveyed to the Company, the Released Interests.
Section 11.06 Form and Sufficiency of Release.
In the event that the Company has sold, exchanged, or
otherwise disposed of or proposes to sell, exchange or otherwise
dispose of any portion of the Collateral that may be sold,
exchanged or otherwise disposed of by the Company, and the
Company requests the Trustee to furnish a written disclaimer,
release or quit-claim of any interest in such property under this
Indenture and the Security Documents, the Trustee, in its
capacity as Trustee under the Security Documents, shall execute,
acknowledge and deliver to the Company (in proper form) such an
instrument promptly after satisfaction of the conditions set
forth herein for delivery of any such release. Notwithstanding
the preceding sentence, all purchasers and grantees of any
property or rights purporting to be released herefrom shall be
entitled to rely upon any release executed by the Trustee
hereunder as sufficient for the purpose of this Indenture and as
constituting a good and valid release of the property therein
described from the Lien of this Indenture or of the Security
Documents.
Section 11.07 Purchaser Protected.
No purchaser or grantee of any property or rights
purporting to be released herefrom shall be bound to ascertain
the authority of the Trustee to execute the release or to inquire
as to the existence of any conditions herein prescribed for the
exercise of such authority; nor shall any purchaser or grantee or
any property or rights permitted by this Indenture to be sold or
otherwise disposed of by the Company be under any obligation to
ascertain or inquire into the authority of the Company to make
such sale or other disposition.
Section 11.08 Authorization of Actions To Be Taken
by the Trustee Under the Security Documents.
Subject to the provisions of the applicable Security
Document, (a) the Trustee may, in its sole discretion and without
the consent of the Holders, take all actions it deems necessary
or appropriate in order to (i) enforce any of the terms of the
Security Documents and (ii) collect and receive any and all
amounts payable in respect of the Obligations of the Company
hereunder and (b) the Trustee shall have power to institute and
to maintain such suits and proceedings as it may deem expedient
to prevent any impairment of the Collateral by any act that may
be unlawful or in violation of the Security Documents or this
Indenture, and such suits and proceedings as the Trustee may deem
expedient to preserve or protect its interests and the interests
of the Holders in the Collateral (including the power to
institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be
unconstitutional or otherwise invalid if the enforcement of, or
compliance with, such enactment, rule or order would impair the
security interest thereunder or be prejudicial to the interests
of the Holders or of the Trustee).
Section 11.09 Authorization of Receipt of Funds by
the
Trustee Under the Security Documents.
The Trustee is authorized to receive any funds for the
benefit of the Holders distributed under the Security Documents,
and to make further distributions of such funds to the Holders in
accordance with the provisions of Section 6.10 and the other
provisions of this Indenture.
Section 11.10 Collateral Accounts.
(a) The Trustee shall maintain and establish two
Collateral Accounts, which, subject to the terms of the
Disbursement Agreement and the Intercreditor Agreement, shall
hold Collateral for the equal and ratable benefit of the Holders
without preference, priority or distinction of any thereof over
any other by reason of difference in time of issuance, sale or
otherwise, as security for the Company's Obligations under the
Indenture and the Notes. The Trustee (or the Disbursement Agent
under the Disbursement Agreement) shall have sole dominion and
control over the Collateral Accounts and the funds from time to
time on deposit therein, and such funds may be withdrawn or
transferred from the Collateral Accounts only in accordance with
the provisions of the Disbursement Agreement and the
Intercreditor Agreement.
(b) All proceeds from the issuance of the Units
shall be deposited in the Collateral Accounts on the Issue Date
as contemplated by Section 4.2 of the Disbursement Agreement.
ARTICLE TWELVE
GUARANTEE
Section 12.01 Unconditional Guarantee
Subject to the provisions of this Article Twelve, on or
prior to the date on which the Disbursement Agent disburses to
the Company the amounts on deposit in the Principal Account
pursuant to Section 5.4(b) of the Disbursement Agreement, the
Company, XCL-China and the Trustee shall execute a supplemental
indenture in form and substance reasonably satisfactory to the
Trustee pursuant to which XCL-China (herein a "Subsidiary
Guarantor") and each future Subsidiary Guarantor, if any, shall,
jointly and severally, unconditionally and irrevocably guarantee,
on a senior basis (such guarantee to be referred to herein as a
"Subsidiary Guarantee") to each Holder of a Note authenticated
and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and
enforceability of this Indenture, the Notes or the Obligations of
the Company or any other Subsidiary Guarantors to the Holders or
the Trustee hereunder or thereunder, that: (a) the principal of,
premium, if any, and interest on the Notes (and any Additional
Interest payable thereon) shall be duly and punctually paid in
full when due, whether at maturity, upon redemption at the option
of Holders pursuant to the provisions of the Notes relating
thereto, by acceleration or otherwise, and interest on the
overdue principal and (to the extent permitted by law) interest,
if any, on the Notes and all other Obligations of the Company or
the Subsidiary Guarantors to the Holders or the Trustee hereunder
or thereunder (including amounts due the Trustee under Section
7.07 hereof) and all other Obligations shall be promptly paid in
full or performed, all in accordance with the terms hereof and
thereof; and (b) in case of any extension of time of payment or
renewal of any Notes or any of such other Obligations, the same
shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at
maturity, by acceleration or otherwise. Failing payment when due
of any amount so guaranteed, or failing performance of any other
Obligation of the Company to the Holders under this Indenture or
under the Notes, for whatever reason, each Subsidiary Guarantor
shall be obligated to pay, or to perform or cause the performance
of, the same immediately. An Event of Default under this
Indenture or the Notes shall constitute an event of default under
each such Subsidiary Guarantee, and shall entitle the Holders of
Notes to accelerate the Obligations of the Subsidiary Guarantors
in the same manner and to the same extent as the Obligations of
the Company.
Each of the Subsidiary Guarantors shall agree that its
Obligations under its Subsidiary Guarantee shall be
unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any
action to enforce the same, any waiver or consent by any Holder
of the Notes with respect to any provisions thereof, any release
of any other Subsidiary Guarantor, the recovery of any judgment
against the Company, any action to enforce the same, whether or
not a Subsidiary Guarantee is affixed to any particular Note, or
any other circumstance which might otherwise constitute a legal
or equitable discharge or defense of a guarantor. Each of the
Subsidiary Guarantors shall waive the benefit of diligence,
presentment, demand of payment, filing of claims with a court in
the event of insolvency or bankruptcy of the Company, any right
to require a proceeding first against the Company, protest,
notice and all demands whatsoever and covenants that its
Subsidiary Guarantee shall not be discharged except by complete
performance of the Obligations contained in the Notes, this
Indenture and its Subsidiary Guarantee. Each Subsidiary
Guarantee shall be a guarantee of payment and not of collection.
If any Holder or the Trustee is required by any court or
otherwise to return to the Company or to any Subsidiary
Guarantor, or any custodian, trustee, liquidator or other similar
official acting in relation to the Company or such Subsidiary
Guarantor, any amount paid by the Company or such Subsidiary
Guarantor to the Trustee or such Holder, the Subsidiary
Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. Each Subsidiary Guarantor
shall further agree that, as between it, on the one hand, and the
Holders of Notes and the Trustee, on the other hand, (a) subject
to this Article Twelve, the maturity of the Obligations
guaranteed may be accelerated as provided in Article Six hereof
for the purposes of its Subsidiary Guarantee, notwithstanding any
stay, injunction or other prohibition preventing such
acceleration in respect of the Obligations guaranteed thereby,
and (b) in the event of any acceleration of such Obligations as
provided in Article Six hereof, such Obligations (whether or not
due and payable) shall forthwith become due and payable by each
Subsidiary Guarantor for the purpose of its Subsidiary Guarantee.
No stockholder, officer, director, employee or
incorporator, past, present or future, of any Subsidiary
Guarantor, as such, shall have any personal liability under any
Subsidiary Guarantee by reason of his, her or its status as such
stockholder, officer, director, employee or incorporator.
Each Subsidiary Guarantor that makes a payment or
distribution under its Subsidiary Guarantee shall be entitled to
a contribution from each other Subsidiary Guarantor, determined
in accordance with GAAP.
Section 12.02 Limitations on Subsidiary Guarantees
The obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee will be limited to the maximum amount which,
after giving effect to all other contingent and fixed liabilities
of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee or pursuant
to its contribution obligations under the Indenture, will result
in the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under federal or state law.
Section 12.03 Execution and Delivery of Subsidiary
Guarantee
To further evidence each Subsidiary Guarantee referred
to in Section 12.01, each Subsidiary Guarantor shall agree that a
notation of such Subsidiary Guarantee, substantially in the form
of Exhibit J herein, shall be endorsed on each Note authenticated
and delivered by the Trustee. Such Subsidiary Guarantee shall be
executed on behalf of each Subsidiary Guarantor by either manual
or facsimile signature of two Officers of each Subsidiary
Guarantor, each of whom, in each case, shall have been duly
authorized to so execute by all requisite corporate action. The
validity and enforceability of any Subsidiary Guarantee shall not
be affected by the fact that it is not affixed to any particular
Note.
Each of the Subsidiary Guarantors shall agree that its
Subsidiary Guarantee set forth in Section 12.01 shall remain in
full force and effect notwithstanding any failure to endorse on
each Note a notation of such Subsidiary Guarantee.
If an Officer of a Subsidiary Guarantor whose signature
is on a Subsidiary Guarantee no longer holds that office at the
time the Trustee authenticates the Note on which such Subsidiary
Guarantee is endorsed or at any time thereafter, such Subsidiary
Guarantor's Subsidiary Guarantee of such Note shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the
authentication thereof hereunder, shall constitute due delivery
of any Subsidiary Guarantee set forth in this Indenture on behalf
of each Subsidiary Guarantor.
Section 12.04 Release of a Subsidiary Guarantor.
(a) If no Default exists or would exist under this
Indenture, upon the sale or disposition of all of the Capital
Stock of a Subsidiary Guarantor by the Company or a Restricted
Subsidiary of the Company in a transaction constituting an Asset
Sale the Net Cash Proceeds of which are applied in accordance
with Section 4.16, or upon the consolidation or merger of a
Subsidiary Guarantor with or into any Person in compliance with
Article Five (in each case, other than to the Company or an
Affiliate of the Company or a Restricted Subsidiary), such
Subsidiary Guarantor and each Subsidiary of such Subsidiary
Guarantor that is also a Subsidiary Guarantor shall be deemed
released from all Obligations under this Article Twelve and its
Subsidiary Guarantee without any further action required on the
part of the Trustee or any Holder; provided, however, that each
such Subsidiary Guarantor is sold or disposed of in accordance
with this Indenture. Any Subsidiary Guarantor not so released or
the entity surviving such Subsidiary Guarantor, as applicable,
shall remain or be liable under its Subsidiary Guarantee as
provided in this Article Twelve.
(b) The Trustee shall deliver an appropriate
instrument evidencing the release of a Subsidiary Guarantor upon
receipt of a request by the Company or such Subsidiary Guarantor
accompanied by an Officers' Certificate and an Opinion of Counsel
certifying as to the compliance with this Section 12.04, provided
the legal counsel delivering such Opinion of Counsel may rely as
to matters of fact on one or more Officers' Certificates of the
Company.
The Trustee shall execute any documents reasonably
requested by the Company or a Subsidiary Guarantor in order to
evidence the release of such Subsidiary Guarantor from its
obligations under its Subsidiary Guarantee, whether or not
endorsed on the Notes, and under this Article Twelve.
Except as set forth in Articles Four and Five and this
Section 12.04, nothing contained in this Indenture or in any of
the Notes shall prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another
Subsidiary Guarantor or shall prevent any sale or conveyance of
the property of a Subsidiary Guarantor as an entirety or
substantially as an entirety to the Company or another Subsidiary
Guarantor.
Section 12.05 Waiver of Subrogation
Until this Indenture is discharged and all of the Notes
are discharged and paid in full, each Subsidiary Guarantor shall
irrevocably waive and agree not to exercise any claim or other
rights which it may hereafter acquire against the Company that
arise from the existence, payment, performance or enforcement of
the Company's Obligations under the Notes or this Indenture and
such Subsidiary Guarantor's Obligations under its Subsidiary
Guarantee and this Indenture, in any such instance including,
without limitation, any right of subrogation, reimbursement,
exoneration, contribution, indemnification, and any right to
participate in any claim, remedy or right arises in equity, or
under contract, statute or common law, including, without
limitation, the right to take or receive from the Company,
directly or indirectly, in cash or other property or by set-off
or in any other manner, payment or security on account of such
claim or other rights. If any amount shall be paid to any
Subsidiary Guarantor in violation of the preceding sentence and
any amounts owing to the Trustee or the Holders of Notes under
the Notes, this Indenture, or any other document or instrument
delivered under or in connection with such agreements or
instruments, shall not have been paid in full, such amount shall
have been deemed to have been paid to such Subsidiary Guarantor
for the benefit of, and held in trust for the benefit of, the
Trustee or the Holders and shall forthwith be paid to the Trustee
for the benefit of itself or such Holders to be credited and
applied to the obligations in favor of the Trustee or the
Holders, as the case may be whether matured or unmatured, in
accordance with the terms of this Indenture. Each Subsidiary
Guarantor shall acknowledge that it will receive direct and
indirect benefits from the financing arrangements contemplated by
this Indenture and that the waiver set forth in this Section
12.05 is knowingly made in contemplation of such benefits.
Section 12.06 Immediate Payment
Each Subsidiary Guarantor shall agree to make immediate
payment to the Trustee on behalf of the Holders of all
Obligations owing or payable to the respective Holders upon
receipt of a demand for payment therefor by the Trustee to such
Subsidiary Guarantor in writing.
Section 12.07 No Set-Off
Each payment to be made by a Subsidiary Guarantor
hereunder in respect of the Obligations shall be payable in the
currency or currencies in which such Obligations are denominated,
and shall be made without set-off, counterclaim, reduction or
diminution of any kind or nature.
Section 12.08 Obligations Absolute.
The Obligations of each Subsidiary Guarantor shall be
absolute and unconditional and any monies or amounts expressed to
be owing or payable by each Subsidiary Guarantor which may not be
recoverable from such Subsidiary Guarantor on the basis of a
Subsidiary Guarantee shall be recoverable from such Subsidiary
Guarantor as a primary obligor and principal debtor in respect
thereof.
Section 12.09 Obligations Continuing.
The Obligations of each Subsidiary Guarantor shall be
continuing and shall remain in full force and effect until all
the Obligations have been paid and satisfied in full. Each
Subsidiary Guarantor shall agree with the Trustee that it will
from time to time deliver to the Trustee suitable acknowledgments
of this continued liability hereunder and under any other
instrument or instruments in such form as counsel to the Trustee
may advise and as will prevent any action brought against it in
respect of any default hereunder being barred by an statute of
limitations now or hereafter in force and, in the event of the
failure of a Subsidiary Guarantor so to do, it shall irrevocably
appoint the Trustee the attorney and agent of such Subsidiary
Guarantor to make, execute and deliver such written
acknowledgment or acknowledgments or other instruments as may
from time to time become necessary or advisable, in the judgment
of the Trustee on the advice of counsel, to fully maintain and
keep in force the liability of such Subsidiary Guarantor under
its Subsidiary Guarantee.
Section 12.10 Obligations Not Reduced.
The Obligations of each Subsidiary Guarantor shall not
be satisfied, reduced or discharged solely by the payment of such
principal, premium, if any, interest, fees and other monies or
amounts as may at any time prior to discharge of this Indenture
pursuant to Article Eight be or become owing or payable under or
by virtue of or otherwise in connection with the Notes or this
Indenture.
Section 12.11 Obligations Reinstated.
The Obligations of each Subsidiary Guarantor shall
continue to be effective or shall be reinstated, as the case may
be, if at any time any payment which would otherwise have reduced
the Obligations of any Subsidiary Guarantor (whether such payment
shall have been made by or on behalf of the Company or by or on
behalf of a Subsidiary Guarantor) is rescinded or reclaimed from
any of the Holders upon the insolvency, bankruptcy, liquidation
or reorganization of the Company or any Subsidiary Guarantor or
otherwise, all as though such payment had not been made. If
demand for, or acceleration of the time for, payment by the
Company is stayed upon the insolvency, bankruptcy, liquidation or
reorganization of the Company, all such indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless
by payable by each Subsidiary Guarantor as provided herein.
Section 12.12 Obligations Not Affected.
The Obligations of each Subsidiary Guarantor shall not
be affected, impaired or diminished in any way by any act,
omission, matter or thing whatsoever, occurring before, upon or
after any demand for payment (and whether or not known or
consented to by any Subsidiary Guarantor or any of the Holders)
which, but for this provision, might constitute a whole or
partial defense to a claim against any Subsidiary Guarantor under
its Subsidiary Guarantee or might operate to release or otherwise
exonerate any Subsidiary Guarantor from any of its Obligations or
otherwise affect such Obligations, whether occasioned by default
of any of the Holders or otherwise, including, without
limitation:
(a) any limitation of status or power, disability,
incapacity or other circumstance relating to the Company or any
other Person, including any insolvency, bankruptcy, liquidation,
reorganization, readjustment, composition, dissolution, winding-
up or other proceeding involving or affecting either Issuer or
any other person;
(b) any irregularity, defect, unenforceability or
invalidity in respect of any indebtedness or other Obligation of
the Company or any other Person under this Indenture, the Notes
or any other document or instrument;
(c) any failure of the Company, whether or not
without fault on its part, to perform or comply with any of the
provisions of this Indenture or the Notes, or to give notice
thereof to a Subsidiary Guarantor;
(d) the taking or enforcing or exercising or the
refusal or neglect to take or enforce or exercise any right or
remedy from or against the Company or any other Person or their
respective assets or the release or discharge of any such right
or remedy;
(e) the granting of time, renewals, extensions,
compromises, concessions, waivers, releases, discharges and other
indulgences to the Company or any other Person;
(f) any change in the time, manner or place of
payment of, or in any other term of, any of the Notes, or any
other amendment, variation, supplement, replacement or waiver of,
or any consent to departure from, any of the Notes or this
Indenture, including, without limitation, any increase or
decrease in the principal amount of or premium, if any, or
interest on any of the Notes;
(g) any change in the ownership, control, name,
objects, businesses, assets, capital structure or constitution of
the Company or a Subsidiary Guarantor;
(h) any merger or amalgamation of the Company or a
Subsidiary Guarantor with any Person or Persons;
(i) the occurrence of any change in the laws,
rules, regulations or ordinances of any jurisdiction by an
present or future action of any governmental authority or court
amending, varying, reducing or otherwise affecting, or purporting
to amend, vary, reduce or otherwise affect, any of the
Obligations of the Company under this Indenture or the Notes or
the Obligations of a Subsidiary Guarantor under its Subsidiary
Guarantee, and
(j) any other circumstance, including release of
the Subsidiary Guarantor pursuant to Section 12.04 (other than by
complete, irrevocable payment) that might otherwise constitute a
legal or equitable discharge or defense of the Company under this
Indenture or the Notes or of a Subsidiary Guarantor in respect of
its Subsidiary Guarantee.
Section 12.13 Waiver.
Without in any way limiting the provisions of Section
12.01 hereof, each Subsidiary Guarantor shall waive notice of
acceptance hereof, notice of any liability of any Subsidiary
Guarantor under its Subsidiary Guarantee, notice or proof of
reliance by the Holders upon the Obligations of any Subsidiary
Guarantor, and diligence, presentment, demand for payment on the
Company, protest, notice of dishonor or non-payment of any of the
Company's Obligations under this Indenture or the Notes, or other
notice or formalities to the Company or any Subsidiary Guarantor
of any kind whatsoever.
Section 12.14 No Obligation To Take Action Against the
Company.
Neither the Trustee nor any other Person shall have any
obligation to enforce or exhaust any rights or remedies or to
take any other steps under any security for the Company's
Obligations under this Indenture or the Notes, or against the
Company or any other Person or any Property of the Company or any
other Person before the Trustee is entitled to demand payment and
performance by any or all Subsidiary Guarantors of their
liabilities and obligations under their Subsidiary Guarantees or
under this Indenture.
Section 12.15 Dealing with the Company and Others.
The Holders, without releasing, discharging, limiting
or otherwise affecting in whole or in part the obligations and
liabilities of any Subsidiary Guarantor hereunder and without the
consent of or notice to any Subsidiary Guarantor, may
(a) grant time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences
to the Company or any other Person;
(b) take or abstain from taking security or
collateral from the Company or from perfecting security or
collateral of the Company;
(c) release, discharge, compromise, realize,
enforce or otherwise deal with or do any act or thing in respect
of (with or without consideration) any and all collateral,
mortgages or other security given by the Company or any third
party with respect to the Company's Obligations under, or matters
contemplated by, this Indenture or the Notes;
(d) accept compromises or arrangements from the
Company;
(e) apply all monies at any time received from the
Company or from any security upon such part of the Company's
Obligations under this Indenture or the Notes as the Holders may
see fit or change any such application in whole or in part from
time to time as the Holders may see fit; and
(f) otherwise deal with, or waive or modify their
right to deal with, the Company and all other Persons and any
security as the Holders or the Trustee may see fit.
Section 12.16 Default and Enforcement.
If any Subsidiary Guarantor fails to pay in accordance
with Section 12.06 hereof, the Trustee may proceed in its name as
trustee hereunder in the enforcement of the Subsidiary Guarantee
of any such Subsidiary Guarantor and such Subsidiary Guarantor's
Obligations thereunder and hereunder by any remedy provided by
law, whether by legal proceedings or otherwise, and to recover
from such Subsidiary Guarantor the Company's Obligations under
this Indenture and the Notes.
Section 12.17 Amendment, Etc.
No amendment, modification or waiver of any provision
of this Indenture relating to any Subsidiary Guarantor or consent
to any departure by any Subsidiary Guarantor or any other Persons
from any such provision will in any event be effective unless it
is signed by such Subsidiary Guarantor and the Trustee.
Section 12.18 Acknowledgment.
Each Subsidiary Guarantor shall acknowledge
communication of the terms of this Indenture and the Notes and
consents to and approves of the same.
Section 12.19 Costs and Expenses.
Each Subsidiary Guarantor shall pay on demand by the
Trustee any and all costs, fees and expenses (including, without
limitation, legal fees on a solicitor and client basis) incurred
by the Trustee, its agents, advisors and counsel or any of the
Holders in enforcing any of their rights under any Subsidiary
Guarantee.
Section 12.20 No Merger or Waiver; Cumulative Remedies.
No Subsidiary Guarantee shall operate by way of merger
of any of the obligations of a Subsidiary Guarantor under any
other agreement, including, without limitation, this Indenture.
No failure to exercise and no delay in exercising, on the part of
the Trustee or the Holders, any right, remedy, power or privilege
hereunder or under the Indenture or the Notes, shall operate as a
waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder or under this
Indenture or the Notes preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in each
Subsidiary Guarantee and under this Indenture, the Notes and any
other document or instrument between a Subsidiary Guarantor
and/or the Company and the Trustee are cumulative and not
exclusive of any rights, remedies, powers and privilege provided
by law.
Section 12.21 Survival of Obligations.
Without prejudice to the survival of any of the other
obligations of each Subsidiary Guarantor, the obligations of each
Subsidiary Guarantor under Section 12.01 shall survive the
payment in full of the Company's Obligations under this Indenture
and the Notes and shall be enforceable against such Subsidiary
Guarantor without regard to and without giving effect to any
defense, right of offset or counterclaim available to or which
may be asserted by the Company or any Subsidiary Guarantor.
Section 12.22 Subsidiary Guarantee in Addition to Other
Obligations.
The obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee and this Indenture are in addition to and
not in substitution for any other obligations to the Trustee or
to any of the Holders in relation to this Indenture or the Notes
and any guarantees or security at any time held by or for the
benefit of any of them.
Section 12.23 Severability.
Any provision of this Article Twelve which is
prohibited or unenforceable in any jurisdiction shall not
invalidate the remaining provisions and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any jurisdiction unless
its removal would substantially defeat the basic intent, spirit
and purpose of this Indenture and this Article Twelve.
Section 12.24 Successors and Assigns.
Each Subsidiary Guarantee shall be binding upon and
inure to the benefit of each Subsidiary Guarantor and the Trustee
and the other Holders and their respective successors and
permitted assigns, except that no Subsidiary Guarantor may assign
any of its obligations hereunder or thereunder.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written
above.
XCL LTD.
By:___________________________
David A. Melman
Executive Vice President,
General Counsel and Secretary
FLEET NATIONAL BANK
By:____________________________
Susan C. Merker
Assistant Vice President