Exhibit 4.1
EXECUTION VERSION
The indebtedness evidenced by this document is subject to the provisions of the
Intercreditor, Security and Collateral Agency Agreement, dated as of October 28,
2004, among ABRAXAS PETROLEUM CORPORATION (the "Company"), the subsidiaries of
the Company listed on Schedule I thereto, WELLS FARGO FOOTHILL, INC., in its
capacity as agent for the lenders who are from time to time parties to a Loan
Agreement dated as of October 28, 2004, U.S. BANK NATIONAL ASSOCIATION, in its
capacities as trustee for the holders of the Company's Floating Rate Senior
Secured Notes due 2009 issued under an Indenture dated as of October 28, 2004,
and as collateral agent, and GUGGENHEIM CORPORATE FUNDING, LLC, in its capacity
as agent for the lenders who are from time to time parties to a Loan Agreement
dated as of October 28, 2004.
ABRAXAS PETROLEUM CORPORATION
each
SUBSIDIARY GUARANTOR
Named Herein
and
U.S. BANK NATIONAL ASSOCIATION, as
Trustee
INDENTURE
Dated as of October 28, 2004
$125,000,000
Floating Rate Senior Secured Notes due 2009
TABLE OF CONTENTS
Page
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1.1 DEFINITIONS.....................................................1
1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT...............35
1.3 RULES OF CONSTRUCTION...........................................35
1.4 ONE CLASS OF SECURITIES.........................................36
ARTICLE 2
THE NOTES
2.1 TITLE AND TERMS; FORM AND DATING................................36
2.2 DENOMINATIONS...................................................38
2.3 EXECUTION AND AUTHENTICATION....................................39
2.4 PERSONS DEEMED OWNERS AND HOLDERS LISTS.........................40
2.5 TRANSFER AND EXCHANGE...........................................40
2.6 REPLACEMENT SECURITIES..........................................54
2.7 OUTSTANDING SECURITIES..........................................55
2.8 TREASURY SECURITIES.............................................55
2.9 TEMPORARY SECURITIES............................................55
2.10 CANCELLATION....................................................56
2.11 DEFAULTED INTEREST..............................................56
2.12 CUSIP NUMBERS...................................................57
2.13 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.......................57
2.14 COMPUTATION OF INTEREST.........................................58
ARTICLE 3
SATISFACTION AND DISCHARGE
3.1 SATISFACTION AND DISCHARGE OF INDENTURE.........................58
3.2 APPLICATION OF TRUST MONEY......................................60
ARTICLE 4
REMEDIES
4.1 EVENTS OF DEFAULT AND REMEDIES..................................60
4.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT..............62
4.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.63
4.4 TRUSTEE MAY FILE PROOFS OF CLAIM................................64
4.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.....64
4.6 APPLICATION OF MONEY COLLECTED..................................65
4.7 LIMITATION ON SUITS.............................................65
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4.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT...............66
4.9 RESTORATION OF RIGHTS AND REMEDIES..............................66
4.10 RIGHTS AND REMEDIES CUMULATIVE..................................66
4.11 DELAY OR OMISSION NOT WAIVER....................................66
4.12 CONTROL BY HOLDERS..............................................66
4.13 WAIVER OF PAST DEFAULTS.........................................67
4.14 WAIVER OF STAY..................................................67
ARTICLE 5
THE TRUSTEE
5.1 DUTIES OF TRUSTEE...............................................67
5.2 CERTAIN RIGHTS OF TRUSTEE.......................................68
5.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES..70
5.4 MAY HOLD SECURITIES.............................................70
5.5 MONEY HELD IN TRUST.............................................70
5.6 COMPENSATION AND REIMBURSEMENT..................................70
5.7 CORPORATE TRUSTEE REQUIRED: ELIGIBILITY........................71
5.8 CONFLICTING INTERESTS...........................................72
5.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR...............72
5.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR..........................73
5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.....73
5.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY...............74
5.13 NOTICE OF DEFAULTS..............................................74
ARTICLE 6
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
6.1 HOLDERS' LISTS; HOLDER COMMUNICATIONS; DISCLOSURES RESPECTING
HOLDERS.........................................................74
6.2 REPORTS BY TRUSTEE..............................................75
6.3 REPORTS BY COMPANY..............................................75
ARTICLE 7
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OF OR LEASE
7.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS............76
7.2 SUCCESSOR SUBSTITUTED...........................................78
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND MODIFICATIONS
8.1 AMENDMENTS, SUPPLEMENTS AND MODIFICATIONS WITHOUT CONSENT OF
HOLDERS.........................................................79
8.2 AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS AND WAIVERS WITH
CONSENT OF HOLDERS..............................................80
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8.3 EXECUTION OF SUPPLEMENTAL INDENTURES............................82
8.4 EFFECT OF SUPPLEMENTAL INDENTURES...............................82
8.5 CONFORMITY WITH TRUST INDENTURE ACT.............................82
8.6 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES..............82
8.7 NOTICE OF SUPPLEMENTAL INDENTURES AND WAIVERS...................82
ARTICLE 9
COVENANTS
9.1 PAYMENT OF SECURITIES...........................................82
9.2 MAINTENANCE OF OFFICE OR AGENCY.................................83
9.3 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.................83
9.4 CORPORATE EXISTENCE.............................................84
9.5 PAYMENT OF TAXES AND OTHER CLAIMS...............................84
9.6 MAINTENANCE OF PROPERTIES.......................................85
9.7 INSURANCE.......................................................85
9.8 STATEMENT BY OFFICER AS TO DEFAULT..............................85
9.9 REPORTS.........................................................86
9.10 LIMITATION ON RESTRICTED PAYMENTS...............................87
9.11 LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED STOCK..............................................91
9.12 LIMITATION ON GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES
and other affiliates............................................92
9.13 LIMITATION ON ISSUANCE, SALE AND OWNERSHIP OF CAPITAL STOCK
OF RESTRICTED SUBSIDIARIES......................................93
9.14 LIMITATION ON LIENS.............................................93
9.15 PURCHASE OF SECURITIES UPON CHANGE OF CONTROL...................94
9.16 LIMITATION OF ASSET SALES.......................................96
9.17 LIMITATION ON TRANSACTIONS WITH AFFILIATES.....................100
9.18 LIMITATION ON SALE-LEASEBACK TRANSACTIONS......................101
9.19 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS
AFFECTING RESTRICTED SUBSIDIARIES..............................102
9.20 WAIVER OF CERTAIN COVENANTS....................................103
9.21 LIMITATION ON RESTRICTIVE COVENANTS............................103
ARTICLE 10
REDEMPTION OF SECURITIES
10.1 RIGHT OF REDEMPTION............................................103
10.2 APPLICABILITY OF ARTICLE.......................................104
10.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE..........................104
10.4 SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED...................104
10.5 NOTICE OF REDEMPTION...........................................104
10.6 DEPOSIT OF REDEMPTION PRICE....................................105
10.7 NOTES PAYABLE ON REDEMPTION DATE...............................105
10.8 NOTES REDEEMED IN PART.........................................106
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ARTICLE 11
COLLATERAL AND COLLATERAL DOCUMENTS
11.1 COLLATERAL DOCUMENTS...........................................106
11.2 RECORDING......................................................107
11.3 POSSESSION OF THE COLLATERAL...................................108
11.4 SUITS TO PROTECT THE COLLATERAL................................108
11.5 RELEASE OF COLLATERAL..........................................108
11.6 SPECIFIED RELEASES OF COLLATERAL...............................109
11.7 DISPOSITION OF COLLATERAL WITHOUT RELEASE......................112
11.8 SUFFICIENCY OF RELEASE.........................................113
11.9 ACTIONS BY THE TRUSTEE.........................................113
ARTICLE 12
DEFEASANCE AND DISCHARGE
12.1 COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE...113
12.2 DEFEASANCE AND DISCHARGE.......................................114
12.3 COVENANT DEFEASANCE............................................114
12.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE................115
12.5 DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD
IN TRUST; OTHER MISCELLANEOUS PROVISIONS.......................117
12.6 REINSTATEMENT..................................................117
ARTICLE 13
SUBSIDIARY GUARANTEES
13.1 UNCONDITIONAL GUARANTEE........................................117
13.2 SUBSIDIARY GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS...119
13.3 RELEASE OF SUBSIDIARY GUARANTORS...............................119
13.4 LIMITATION OF SUBSIDIARY GUARANTORS' LIABILITY.................120
13.5 CONTRIBUTION...................................................121
13.6 EXECUTION AND DELIVERY OF NOTATIONS OF SUBSIDIARY GUARANTEES...121
13.7 SEVERABILITY...................................................121
13.8 ARTICLE 13 NOT TO PREVENT EVENTS OF DEFAULT....................121
13.9 PAYMENT........................................................122
ARTICLE 14
MISCELLANEOUS
14.1 COMPLIANCE CERTIFICATES AND OPINIONS...........................122
14.2 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.........................122
14.3 ACTS OF HOLDERS................................................123
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14.4 NOTICES, ETC. TO TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS....124
14.5 NOTICE TO HOLDERS; WAIVER......................................124
14.6 EFFECT OF HEADINGS AND TABLE OF CONTENTS.......................125
14.7 SUCCESSORS AND ASSIGNS.........................................125
14.8 SEPARABILITY CLAUSE............................................125
14.9 BENEFITS OF INDENTURE..........................................125
14.10 GOVERNING LAW; TRUST INDENTURE ACT CONTROLS....................125
14.11 LEGAL HOLIDAYS.................................................126
14.12 NO RECOURSE AGAINST OTHERS.....................................126
14.13 DUPLICATE ORIGINALS............................................126
14.14 NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS..................126
EXHIBITS
A-1 Specimen of Rule 144A Global Note for Notes due 2009
A-2 Specimen of Regulation S Global Note for Note due 2009
A-3 Specimen of Institutional Accredited Investor Certificated
Note for Notes due 2009
B Form of Certificate of Transfer
C Form of Certificate of Exchange
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Reconciliation and Tie between Trust Indenture Act of
1939 and Indenture, dated as of October
28, 2004
Trust Indenture Act Indenture
Section
310(a)(1)....................................................................5.7
(a)(2)..................................................................5.7
(b)...........................................................5.7, 5.8, 5.9
311(a)......................................................................5.12
(b)....................................................................5.12
312 6.1
313 6.2
314(a).......................................................................6.3
(a)(4)...............................................................9.8(a)
(c)(1).................................................................14.1
(c)(2).................................................................14.1
(d)............................................................11.5(b),14.1
(e)................................................................... 14.1
315(a).......................................................................5.1
(b)....................................................................5.13
(c).....................................................................5.1
(e).....................................................................5.1
316(a)(1)(A)................................................................4.12
(a)(1)(B)..............................................................4.13
(b).....................................................................4.8
(c).................................................................14.3(d)
317(a)(1)....................................................................4.3
(a)(2)..................................................................4.4
(b).....................................................................9.3
318(a)..................................................................14.10(b)
vi
THIS INDENTURE, dated as of October 28, 2004, is among ABRAXAS PETROLEUM
CORPORATION, a Nevada corporation (hereinafter called "Abraxas" or the
"Company"), the SUBSIDIARY GUARANTORS (as defined hereinafter) and U.S. Bank
National Association, a national banking association (hereinafter called the
"Trustee").
RECITALS
The Company has duly authorized the creation of an issue of Floating Rate
Senior Secured Notes due 2009 herein, as amended or supplemented from time to
time in accordance with the terms hereof, of substantially the tenor and amount
hereinafter set forth, and to provide therefor the Company has duly authorized
the execution and delivery of this Indenture.
The Company owns, directly or indirectly, all of the equity ownership of
the outstanding Voting Stock of each initial Subsidiary Guarantor, and each
initial Subsidiary Guarantor is a member of the Company's consolidated group of
companies that are engaged in related businesses. Each initial Subsidiary
Guarantor will derive direct and indirect benefit from the issuance of the
Notes; accordingly, each initial Subsidiary Guarantor has authorized its
guarantee of the Company's obligations under this Indenture and the Notes, and
to provide therefor the initial Subsidiary Guarantors have duly authorized the
execution and delivery of this Indenture.
This Indenture is subject to the provisions of the Trust Indenture Act of
1939, as amended, that are required to be part of this Indenture and will, to
the extent applicable, be governed by such provisions.
All things necessary have been done to make the Notes, when issued and
executed by the Company and authenticated and delivered by the Trustee as herein
provided, the valid obligations of the Company, to make the Subsidiary
Guarantees, when the notations thereof on the Notes are executed by the initial
Subsidiary Guarantors, the valid obligation of the initial Subsidiary Guarantors
and to make this Indenture a valid agreement of the Company, the initial
Subsidiary Guarantors and the Trustee, in accordance with their respective
terms.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Notes
(together with the related Subsidiary Guarantees) by the Holders thereof, it is
mutually covenanted and agreed, for the equal and proportionate benefit of all
Holders of the Notes (together with the related Subsidiary Guarantees), as
follows:
ARTICLE 1
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
1.1 DEFINITIONS.
"144A Global Note" means a Global Note in the form of Exhibit A-1 hereto
bearing the Global Note Legend and the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Securities initially sold in reliance on Rule 144A.
"2003 Indenture" means the Indenture dated as of January 23, 2003 among the
Company, subsidiaries of the Company named in the Indenture and U.S. Bank
National Association, as Trustee, as amended and supplemented from time to time.
"2003 Notes" means the Company's 11.5% Secured Notes due 2007, Series A and
Series B, issued pursuant to the 2003 Indenture that are outstanding on the date
hereof.
"Acquired Indebtedness" means Indebtedness of a Person (i) assumed in
connection with an acquisition of Properties from such Person, which assumption
and acquisition shall not be in violation of the provisions of this Indenture or
(ii) outstanding at the time such Person becomes a Subsidiary of any other
Person (in either case other than any Indebtedness incurred in connection with,
or in contemplation of, such acquisition or such Person becoming such a
Subsidiary). Acquired Indebtedness will be deemed to be incurred on the date of
the related acquisition of Properties from any Person or the date the acquired
Person becomes a Subsidiary.
"Act," when used with respect to any Holder, has the meaning specified in
Section 14.3 hereof.
"Adjusted Net Assets" of a Subsidiary Guarantor means, on any date of
determination, the amount by which the fair value of the Properties of such
Subsidiary Guarantor exceeds the total amount of its liabilities, including,
without limitation, contingent liabilities (after giving effect to all other
fixed and contingent liabilities incurred or assumed on such date), but
excluding liabilities under the Subsidiary Guarantee of such Subsidiary
Guarantor.
"Affiliate" of any specified Person means (i) any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person or (ii) any other Person who is a director or
executive officer of (a) such specified Person or (b) any Person described in
the preceding clause (i). For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, will mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise.
"Agent" means any Note Registrar, Paying Agent, co-registrar,
authenticating agent or securities custodian.
"Agent Members" has the meaning specified in Section 2.13 hereof.
"Applicable Procedures" means, with respect to any transfer or exchange of
or for beneficial interests in any Global Note, the rules and procedures of the
Depositary, Euroclear and Clearstream that apply to such transfer or exchange.
"After-Acquired Property" means any and all assets or property acquired by
Abraxas or a Restricted Subsidiary after the Closing Date.
"Asset Sale" means any sale, issuance, conveyance, transfer, lease or other
disposition by the Company or any Restricted Subsidiary (including, without
limitation, by way of merger or consolidation or by way of a sale and leaseback)
(collectively, for purposes of this definition, a "transfer") to any Person
2
other than the Company or any Restricted Subsidiary, directly or indirectly, in
one or a series of related transactions, of (1) any Capital Stock (other than
Disqualified Stock) of any Restricted Subsidiary held by the Company or any
Restricted Subsidiary, (2) all or substantially all of the properties and assets
of the Company or any Restricted Subsidiary or (3) any other properties or
assets of the Company or any Restricted Subsidiary (including Production
Payments and Reserve Sales), other than: (a) a disposition for value of
hydrocarbons or other mineral products (other than Production Payments and
Reserve Sales), inventory, accounts receivable, cash, Cash Equivalents, Oil and
Gas Hedging Contracts, Currency Exchange Contracts or Interest Rate Protection
Obligations in the ordinary course of business, (b) any lease, abandonment,
disposition or relinquishment of any undeveloped oil and gas property in the
ordinary course of business or any other oil and gas property that is not
capable of production in economic quantities, (c) any Farmout of oil and gas
property consummated in the ordinary course of business pursuant to a Permitted
Farmout Agreement, including the transfer to the respective farmee(s) of an
interest in Farmout Property pursuant to the terms of such Permitted Farmout
Agreement, (d) the liquidation of property or assets received in settlement of
debts owing to the Company or any Restricted Subsidiary as a result of
foreclosure, perfection or enforcement of any Lien or debt, which debt were
owing to the Company or any Restricted Subsidiary in the ordinary course of
business of the Company or such Restricted Subsidiary, (e) any transfer of
properties or assets that is governed by, and made in accordance with, the
provisions of Article 7 hereof, (f) any transfer of properties or assets if
permitted under the covenant described under Section 9.10 hereof, (g) any
Production Payment and Reserve Sales created, incurred, issued, assumed or
Guaranteed in connection with the financing of, and within 60 days after, the
acquisition of the property that is subject thereto, where the holder of such
interest has recourse solely to such production or proceeds of production,
subject to the obligation of the grantor or transferor to operate and maintain,
or cause to be operated and maintained, such property in a reasonably prudent
manner or other customary standard or subject to the obligation of the grantor
or transferor to indemnify for environmental, title or other matters customary
in the Oil and Gas Business, (h) any transfer of properties or assets to the
Company or one or more Wholly Owned Restricted Subsidiaries, (i) any disposal in
the ordinary course of business of operating assets and equipment that has
become worn out, defective or obsolete or not used or useful in the business of
the Company or any Restricted Subsidiary and which is, to the extent required by
the Intercreditor Agreement or other Collateral Documents, replaced by property
of substantially equivalent or greater value which becomes subject to the Lien
of any of the Collateral Documents, (j) any payment of money in satisfaction of
Indebtedness (including the Notes) Incurred in compliance with the terms of this
Indenture, (k) an Event of Loss if the Collateral Agent is immediately granted a
perfected first priority security interest (subject to Permitted Prior Liens) in
the Net Loss Proceeds received by the Company or the Restricted Subsidiary, as
the case may be, as additional Collateral under the Collateral Documents to
secure the Secured Obligations, and such Net Loss Proceeds are deposited into an
Asset Sale Proceeds Account, all on terms and pursuant to arrangements
reasonably satisfactory to the Collateral Agent in its reasonable determination
(which may include, at the Collateral Agent reasonable request, customary
Officers' Certificates and legal opinions), and the Intercreditor Agreement and
other Collateral Documents will include release provisions requiring the
Collateral Agent to release such deposit as necessary to permit the Company or
its Restricted Subsidiaries to apply such Net Loss Proceeds in the manner
described under Section 9.16, unless the Collateral Agent has received written
3
notice that a Default or Event of Default has occurred and is continuing, and
(l) any transfer, in one or a series of related transactions, of properties or
assets in the ordinary course of business; provided that all properties and
assets transferred pursuant to this clause (l) shall have an aggregate fair
market value of less than $1,000,000, as determined in good faith by the Chief
Executive Officer of the Company, in any fiscal year.
"Asset Sale Proceeds Account" means a segregated account under the sole
control of the Collateral Agent that includes only proceeds from the Sale of
Collateral, Net Loss Proceeds and interest and investment income earned thereon.
"Attributable Indebtedness" in respect of a Sale-Leaseback Transaction
means, at the time of determination, the present value of such obligations
implicit in such transaction, determined in accordance with GAAP.
"Authentication Order" has the meaning specified in Section 2.3 hereof.
"Authority" means any national, federal, state, municipal or local
government or quasi governmental agency or authority.
"Authorized Officers" means each or any one or more of the Chairman of the
Board, the President or any Vice President and solely for purposes of attesting
to, or certifying the authenticity of signatures, documents, instruments or
agreements, Secretary or Assistant Secretary.
"Average Life" means, with respect to any Indebtedness or Preferred Stock,
as at any date of determination, the quotient obtained by dividing (i) the sum
of the products of (a) the number of years (and any portion thereof rounded up
to the nearest month) from the date of determination to the date or dates of
each successive scheduled principal payment (including, without limitation, any
sinking fund or mandatory redemption payment requirements) of such Indebtedness
or redemption or similar payment with respect to Preferred Stock multiplied by
(b) the amount of each such payment by (ii) the sum of all such payments.
"Board of Directors" means the board of directors of the Company and any
committee of such Board of Directors duly authorized to act hereunder; provided
that as the term "Board of Directors" is used in the definition of "Continuing
Directors" it shall refer only to the Board of Directors of the Company and not
to any committee thereof.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company to have been duly adopted by its board
of directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee, and, with respect to a Subsidiary
of the Company, a copy of a resolution certified by the Secretary or an
Assistant Secretary of such Subsidiary to have been duly adopted by its board of
directors and to be in full force and effect on the date of such certification,
and delivered to the Trustee.
"Bridge Loan" means that certain second lien increasing rate bridge loan
agreement, to be dated as of the Closing Date, with an aggregate principal
amount of $25,000,000 among the Company, certain Subsidiaries of the Company,
the Bridge Loan Administrative Agent and the lenders named therein, including
any related notes, Guarantees, Collateral Documents, instruments and agreements
4
executed in connection therewith, or any successor or replacement agreement
(together with any related successor or replacement notes, Guarantees,
Collateral Documents, instruments and agreements executed in connection
therewith), whether with the same or any other lender, group of lenders or
agent, in each case as the same may be amended (including any amendment and
restatement thereof), modified, supplemented, extended, restated, replaced,
renewed or refinanced (up to an aggregate commitment of $25,000,000) from time
to time in accordance with its terms and the applicable terms of the
Intercreditor Agreement.
"Bridge Loan Administrative Agent" means Guggenheim Corporate Funding, LLC,
as administrative agent under the Bridge Loan, together with its successors in
such capacity.
"Bridge Loan Asset Sale Proceeds Account" means an Asset Sale Proceeds
Account that includes only proceeds from the Sale of Collateral pursuant to an
Asset Sale consummated under the Bridge Loan in accordance with the provisions
described under [Section 9.16] hereof and interest and investment income earned
on such proceeds.
"Bridge Loan Obligations" means all Obligations under the Bridge Loan.
"Broker-Dealer" has the meaning set forth in the Registration Rights
Agreement.
"Business Day" means any day other than a Saturday or Sunday, or a day on
which banking institutions in The City of New York are authorized or required by
law, regulation or executive order to remain closed.
"Calculation Agent" means initially U.S. Bank National Association and any
duly appointed successor, appointed by the Company, as its agent, pursuant to a
calculation agent agreement to determine the Six-Month LIBOR rate on each
Interest Determination Date in accordance with the terms of this Indenture.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in or other equivalents in the equity
interests (however designated) in such Person, and any rights (other than debt
securities convertible into an equity interest), warrants or options exercisable
for, exchangeable for or convertible into such an equity interest in such
Person.
"Capitalized Lease Obligation" means, with respect to any Person, any
obligation that is required to be classified and accounted for as a capital
lease obligation under GAAP, and, for the purpose of this Indenture, the amount
of such obligation at any date shall be the capitalized amount thereof at such
date, determined in accordance with GAAP; the stated maturity thereof shall be
the date of the last payment of any amount due under such obligation prior to
the first date upon which such obligation may be terminated by the obligee
without payment of penalty.
"Cash Equivalents" means: (i) any evidence of Indebtedness with a maturity
of 180 days or less issued or directly and fully guaranteed or insured by the
United States of America or any agency or instrumentality thereof (provided that
the full faith and credit of the United States of America is pledged in support
thereof); (ii) demand and time deposits and certificates of deposit or
acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
5
surplus and undivided profits of not less than $500,000,000; (iii) commercial
paper with a maturity of 180 days or less issued by a corporation that is not an
Affiliate of the Company and is organized under the laws of any state of the
United States or the District of Columbia and rated at least A-1 by S&P or at
least P-1 by Moody's; (iv) repurchase obligations with a term of not more than
seven days for underlying securities of the types described in clause (i) above
entered into with any commercial bank meeting the specifications of clause (ii)
above; (v) overnight bank deposits and bankers' acceptances at any commercial
bank meeting the qualifications specified in clause (ii) above; (vi) deposits
available for withdrawal on demand with any commercial bank not meeting the
qualifications specified in clause (ii) above but which is organized under the
laws of any country in which the Company or any Restricted Subsidiary maintains
an office or is engaged in the Oil and Gas Business, provided that (a) all such
deposits are required to be made in such accounts in the ordinary course of
business, (b) such deposits do not at any one time exceed $2,500,000 in the
aggregate and (c) no funds so deposited remain on deposit in such bank for more
than 30 days; (vii) deposits available for withdrawal on demand with any
commercial bank not meeting the qualifications specified in clause (ii) above
but which is a lending bank under any credit facility of the Company or any
Restricted Subsidiary, provided that all such deposits do not exceed $2,500,000
in the aggregate at any one time; and (viii) investments in money market funds
substantially all of whose assets comprise securities of the types described in
clauses (i) through (v) above.
"Cash Pay Preferred Stock" means any Capital Stock that, by its terms, by
the terms of any security into which it is convertible or exchangeable, by
contract or otherwise, requires, or upon the happening of an event or passage of
time would require, the payment of dividends (other than dividends paid (1) in
Qualified Capital Stock and/or (2) from a segregated reserve account funded
solely out of amounts paid by the purchaser or purchasers of such Capital Stock
in connection with the issuance of such Capital Stock) prior to the date that is
91 days after the final Stated Maturity of the Notes.
"Change of Control" means the occurrence of any of the following events:
(i) any "person" or "group" (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) becomes the "beneficial owner" (as defined in Rules 13d-3
and 13d-5 under the Exchange Act), directly or indirectly, of shares
representing more than 35% of the total voting power of the then outstanding
Voting Stock of the Company other than by means of a Qualified Equity Offering;
(ii) the Company is merged with or into or consolidated with another Person and,
immediately after giving effect to the merger or consolidation, (a) less than
65% of the total voting power of the outstanding Voting Stock of the surviving
or resulting Person is then "beneficially owned" (within the meaning of Rule
13d-3 under the Exchange Act) in the aggregate by the stockholders of the
Company immediately prior to such merger or consolidation and (b) any "person"
or "group" (as defined in Section 13(d)(3) or 14(d)(2) of the Exchange Act) has
become the direct or indirect "beneficial owner" (as defined in Rule 13d-3 under
the Exchange Act) of more than 35% of the total voting power of the Voting Stock
of the surviving or resulting Person; (iii) the Company, either individually or
in conjunction with one or more Restricted Subsidiaries, sells, assigns,
conveys, transfers, leases or otherwise disposes of, or one or more Restricted
Subsidiaries sells, assigns, conveys, transfers, leases or otherwise disposes
of, all or substantially all of the Properties of the Company and the Restricted
Subsidiaries, taken as a whole (either in one transaction or a series of related
transactions), including Capital Stock of the Restricted Subsidiaries, to any
"person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the
6
Exchange Act) (other than the Company or one or more Wholly Owned Restricted
Subsidiaries; (iv) during any consecutive two-year period, individuals who at
the beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Company was approved by
a vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office; or (v) the
liquidation or dissolution of the Company.
"Change of Control Notice" has the meaning specified in Section 9.15(b)
hereof.
"Change of Control Offer" has the meaning specified in Section 9.15(a)
hereof.
"Change of Control Payment Date" has the meaning specified in Section
9.15(a) hereof.
"Change of Control Purchase Price" has the meaning specified in Section
9.15(a) hereof.
"Clearstream" means Clearstream Banking, S.A.
"Closing Date" means the date on which Notes are originally issued under
this Indenture.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means, collectively, all of the property and assets that are
from time to time subject to the Lien of the Collateral Documents, including the
Liens, if any, required to be granted pursuant to this Indenture.
"Collateral Account" means each collateral account established and
maintained by the Collateral Agent pursuant to the Intercreditor Agreement for
the receipt of Trust Monies, including an Asset Sale Proceeds Account.
"Collateral Agent" means U.S. Bank National Association, in its capacity as
collateral agent under the collateral agency agreement, together with its
successors in such capacity.
"Collateral Agent's Liens" means a Lien granted to the Collateral Agent as
security for Secured Obligations.
"Collateral Documents" means, collectively, the Intercreditor Agreement and
the security agreements, mortgages, deeds of trust, account control agreements
and other security documents applicable to the Collateral and given to secure
the Secured Obligations, each as may be amended, modified, supplemented,
restated or replaced from time to time in accordance with its terms.
"Commission" or "SEC" means the Securities and Exchange Commission as from
time to time constituted, or, if at any time after the execution of this
Indenture such Commission is not existing and performing the duties now assigned
to it under the Trust Indenture Act, then the body performing such duties at
such time.
7
"Common Stock" of any Person means Capital Stock of such Person that does
not rank prior, as to the payment of dividends or as to the distribution of
assets upon any voluntary or involuntary liquidation, dissolution or winding-up
of such Person, to shares of Capital Stock of any other class of such Person.
"Company" means the Person named as the "Company" in the first paragraph of
this Indenture, until a successor Person will have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Company" will mean such
successor Person.
"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman, its Chief Executive Officer,
its President, any Vice President, its Treasurer or an Assistant Treasurer, and
delivered to the Trustee.
"Condemnation" means any taking of the Collateral or any part thereof, in
or by condemnation, expropriation or similar proceeding, eminent domain
proceedings, seizure or forfeiture, pursuant to any law, general or special, or
by reason of the temporary requisition of the use of or occupancy of the
Collateral, or any part thereof by any Authority.
"Consolidated Fixed Charge Coverage Ratio" means, for any period, the ratio
of (i) the sum of Consolidated Net Income and Consolidated Fixed Charges,
Consolidated Income Tax Expense and Consolidated Non-Cash Charges (to the extent
deducted in computing Consolidated Net Income in each case) for such period, of
the Company and its Restricted Subsidiaries on a consolidated basis decreased
(to the extent included in determining Consolidated Net Income for such period)
by the sum of (y) the amount of deferred revenues that are amortized during such
period and are attributable to reserves that are subject to Volumetric
Production Payments and (x) amounts recorded for such period in accordance with
GAAP as repayments of principal and interest pursuant to Dollar-Denominated
Production Payments, to (ii) the Consolidated Fixed Charges for such period;
provided, however, that: (a) the Consolidated Fixed Charge Coverage Ratio will
be calculated on the assumption that (1) any Indebtedness to be Incurred (and
all other Indebtedness Incurred after the first day of such period of four full
fiscal quarters referred to in clause (1) of the first sentence of Section 9.11
hereof through and including the date of determination) and (if applicable) the
application of the net proceeds therefrom (and from any other such
Indebtedness), including to refinance other Indebtedness, but excluding the
Incurrence or repayment of Indebtedness in the ordinary business for working
capital purposes pursuant to working capital facilities, had been Incurred on
the first day of such period and, in the case of Acquired Indebtedness or
Indebtedness to be incurred in connection with an acquisition or other
transaction, on the assumption that the related transaction (whether by means of
purchase, merger or otherwise) also had occurred on such date with the
appropriate adjustments with respect to such acquisition being included in such
pro forma calculation and (2) any acquisition or disposition by the Company or
any Restricted Subsidiary of any Properties outside the ordinary course of
business, or any repayment of any principal amount of any Indebtedness of the
Company or any Restricted Subsidiary prior to the Stated Maturity thereof, in
either case since the first day of such period through and including the date of
determination, had been consummated on such first day of such period; (b) in
making such computation, the Consolidated Fixed Charges attributable to interest
on any Indebtedness required to be computed on a pro forma basis in accordance
with clause (1) of the first sentence of Section 9.11 hereof and (1) bearing a
floating interest rate shall be computed as if the rate in effect on the date of
8
computation had been the applicable rate for the entire period and (2) which was
not outstanding during the period for which the computation is being made but
which bears, at the option of the Company, a fixed or floating rate of interest,
shall be computed by applying, at the option of the Company, either the fixed or
floating rate; (c) in making such computation, the Consolidated Fixed Charges
attributable to interest on any Indebtedness under a revolving credit facility
required to be computed on a pro forma basis in accordance with clause (1) of
the first sentence of Section 9.11 hereof shall be computed based upon the
average daily balance of such Indebtedness during the applicable period,
provided that such average daily balance shall be reduced by the amount of any
repayment of Indebtedness under a revolving credit facility during the
applicable period, which repayment permanently reduced the commitments or
amounts available to be reborrowed under such facility; (d) notwithstanding
clauses (b) and (c) of this proviso, interest on Indebtedness determined on a
fluctuating basis, to the extent such interest is covered by agreements relating
to Interest Rate Protection Obligations, shall be deemed to have accrued at the
rate per annum resulting after giving effect to the operation of such
agreements; (e) in making such calculation, Consolidated Fixed Charges shall
exclude interest attributable to Dollar-Denominated Production Payments; and (f)
if after the first day of the period referred to in clause (i) of this
definition the Company has retired any Indebtedness out of the net cash proceeds
of the issue and sale of shares of Qualified Capital Stock of the Company within
30 days of such issuance and sale, Consolidated Fixed Charges shall be
calculated on a pro forma basis as if such Indebtedness had been retired on the
first day of such period.
"Consolidated Fixed Charges" means, for any period, without duplication,
(i) the sum of (a) the interest expense of the Company and its Restricted
Subsidiaries for such period as determined on a consolidated basis in accordance
with GAAP, including, without limitation, (1) any amortization of original issue
discount, (2) the net cost under Interest Rate Protection Obligations (including
any amortization of discounts), (3) the interest portion of any deferred payment
obligation constituting Indebtedness, (4) all commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, and (5) all accrued interest, in each case to the extent attributable
to such period, (b) to the extent any Indebtedness of any Person (other than the
Company or a Restricted Subsidiary) is guaranteed by the Company or any
Restricted Subsidiary, the aggregate amount of interest paid (to the extent not
accrued in a prior period) or accrued by such other Person during such period
attributable to any such Indebtedness, in each case to the extent attributable
to that period, (c) the aggregate amount of the interest component of
Capitalized Lease Obligations paid (to the extent not accrued in a prior
period), accrued and/or scheduled to be paid or accrued by the Company and its
Restricted Subsidiaries during such period as determined on a consolidated basis
in accordance with GAAP; and (d) the aggregate amount of dividends paid (to the
extent not accrued in a prior period) or accrued on Disqualified Stock of the
Company and its Restricted Subsidiaries, to the extent such Disqualified Stock
is owned by Persons other than the Company or its Restricted Subsidiaries and to
the extent such dividends are not paid in Qualified Capital Stock; less (ii) to
the extent included in clause (i) above, (A) amortization of capitalized debt
issuance costs of the Company and its Restricted Subsidiaries during such period
and (B) amounts paid, accrued and/or scheduled to be paid or accrued to the
Company or any its Restricted Subsidiaries.
"Consolidated Income Tax Expense" means, for any period, the provision for
federal, state, local and foreign income taxes (including any state franchise
taxes accounted for as income taxes in accordance with GAAP) of the Company and
9
its Restricted Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP.
"Consolidated Indebtedness" means, at any date, the consolidated
Indebtedness of the Company and its Restricted Subsidiaries on such date.
"Consolidated Net Income" means, for any period, the consolidated net
income (or loss) of the Company and its Restricted Subsidiaries for such period
as determined in accordance with GAAP, adjusted to the extent included in
calculating such net income (or loss) by excluding, without duplication: (i) net
after-tax extraordinary or non-recurring gains or losses to the extent
classified as such in accordance with GAAP, (ii) net after-tax gains or losses
(less all fees and expenses relating thereto) attributable to Asset Sales (or
abandoned reserves related thereto), (iii) the net income (or net loss) of any
Person (other than the Company or any of its Restricted Subsidiaries) in which
the Company or any of its Restricted Subsidiaries has an ownership interest,
except that the net income of such Person shall be included in Consolidated Net
Income to the extent of the amount of dividends or other distributions or
interest on Indebtedness actually paid to the Company or any of its Restricted
Subsidiaries in cash by such other Person during such period (regardless of
whether such cash dividends, distributions or interest on Indebtedness is
attributable to net income (or net loss) of such Person during such period or
during any prior period), (iv) the net income of any Subsidiary Guarantor to the
extent that the declaration or payment of dividends or similar distributions by
that Restricted Subsidiary is not at the date of determination permitted,
directly or indirectly, by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Restricted Subsidiary or its stockholders, (v) the
net income (or net loss) attributable to discontinued operations (including,
without limitation, operations disposed of during such period whether or not
such operations were classified as discontinued); and (vi) in the case of a
successor to the Company by consolidation or merger or as transferee of the
Company's assets, the net income of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Non-Cash Charges" means, for any period, the aggregate
depreciation, depletion, amortization and other non-cash expenses of the Company
and its Restricted Subsidiaries reducing Consolidated Net Income for such
period, determined on a consolidated basis in accordance with GAAP (excluding
any such non-cash charge that requires an accrual of or reserve for cash charges
for any future period).
"Control Party" has the meaning given to such term in the Intercreditor
Agreement.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee at which at any particular time its corporate trust business will be
administered, which office at the date of execution of this Indenture is located
at 60 Livingston Avenue, EP-MN-WS3C, Saint Paul, Minnesota 55107.
"Covenant Defeasance" has the meaning specified in Section 12.3 hereof.
"Credit Facility Agent" means each respective "Agent" under the Revolver,
the Bridge Loan or the Grey Wolf Term Loan.
10
"Currency Exchange Contract" means, with respect to the Company or its
Restricted Subsidiaries, any foreign exchange contract, currency swap agreement
or other similar agreement or arrangement that is entered into in the ordinary
course of business for the purpose of protecting itself against fluctuations in
currency values and not for the purpose of speculation.
"Default" means any event, act or condition which with the passage of time
or the giving of notice pursuant to this Indenture or both would be an Event of
Default.
"Defaulted Interest" has the meaning specified in Section 2.11 hereof.
"Definitive Note" means a certificated Note registered in the name of the
Holder thereof and issued in accordance with Section 2.5 hereof, in the form of
Exhibit A-1 hereto except that such Note shall not bear the Global Note Legend
and shall not have the "Schedule of Exchanges of Interests in the Global Note"
attached thereto.
"Depositary" means The Depository Trust Company, its nominees and their
respective successors.
"Designated LIBOR Page" means the display on the Moneyline service (or such
other service or services as may be nominated by the British Bankers'
Association) for the purpose of displaying London interbank rates of major banks
for U.S. dollar deposits. If no such rate appears on an Interest Determination
Date, the Six-Month LIBOR rate on such Interest Determination Date will be
determined as described in clause (2) of the definition of "Six-Month LIBOR."
"Disqualified Stock" means Capital Stock that is either Cash Pay Preferred
Stock or Redeemable Capital Stock.
"Disinterested Director" means, with respect to any transaction or series
of transactions in respect of which the Board of Directors of the Company is
required to deliver a Board Resolution hereunder, a member of the Board of
Directors of the Company who does not have any material direct or indirect
financial interest (other than in interest arising solely from the beneficial
ownership of Capital Stock of the Company) in or with respect to such
transaction or series of transactions.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Euroclear" means Euroclear SA/NV, as operator of the Euroclear system.
"Event of Default" has the meaning specified in Section 4.1 hereof.
"Event of Loss" means, with respect to any Collateral, any (1) loss,
destruction or damage of such Collateral, (2) condemnation, seizure or taking by
exercise of the power of eminent domain or otherwise of such Collateral, or
confiscation of such Collateral or the requisition of the use of such
Collateral, by any governmental or quasi-governmental entity or (3) settlement
in lieu of clause (2) above.
11
"Excess Proceeds" has the meaning specified in Section 9.16(b) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Notes" means the notes issued in the Exchange Offer pursuant to
Section 2.5 hereof.
"Exchange Offer" has the meaning set forth in the Registration Rights
Agreement.
"Exchange Offer Registration Statement" has the meaning set forth in the
Registration Rights Agreement.
"Existing Senior Debt Facility" means the Loan and Security Agreement,
dated as of January 22, 2003, among the Company, as borrower, each of its
Subsidiaries, as a guarantor, the lenders named therein, Wells Fargo Foothill,
Inc., as the arranger and administrative agent, and Guggenheim Corporate
Funding, LLC, as the specified appointee, as in existence on the Closing Date.
"Fair Market Value" means the fair market value of a Property (including
shares of Capital Stock) as determined by the Board of Directors of the Company
and evidenced by a Board Resolution in good faith, which determination will be
conclusive for purposes of this Indenture; provided, however, that unless
otherwise specified herein, the Board of Directors will be under no obligation
to obtain any valuation or assessment from any investment banker, appraiser or
other third party.
"Farmout" means an arrangement whereby the owner(s) of one or more oil, gas
and/or mineral lease or other oil and natural gas working interest with respect
to Farmout Property (referred to as the "farmor") agrees to transfer or assign
an interest in such Farmout Property to one or more other Persons (referred to
as the "farmee") in exchange for the farmee (1) drilling, or participating in
the cost of the drilling of, one or more oil and/or natural gas wells, or
undertaking other exploration or development activity or participating in the
cost of such other activity, to attempt to obtain production of hydrocarbons
from such Farmout Property, (2) agreeing to so drill or undertake such other
activity, or agreeing to participate in the cost of such drilling or such other
activity, with respect to such Farmout Property, or (3) obtaining production of
hydrocarbons from such Farmout Property, or participating in the costs of
obtaining such production.
"Farmout Agreement" means, with respect to a Farmout, the agreement or
agreements governing such Farmout.
"Farmout Property" means, with respect to a Farmout, the property from
which production of hydrocarbons is sought to be obtained through such Farmout.
The Farmout Property with respect to a Farmout may consist of only certain
specified depths, strata, zones or geological formations under one or more
tracts of land, but shall not include any depths, strata, zones or geological
formations under such tract(s) of land (i) that, at the time of such Farmout,
are being produced or developed by the farmor or any of its Affiliates in the
same field or area or (ii) that have been subject to production or development
12
activity by the farmor or any of its Affiliates in the same field or area and
such activity was discontinued with the desire or expectation of entering into a
Farmout.
"Farmout Property Value" means, with respect to a Farmout, the value of the
Farmout Property of the Company or its Restricted Subsidiaries at the time the
relevant Farmout Agreement is entered into determined as follows:
o with respect to Farmout Property with a value not exceeding $1,000,000,
as determined in good faith by the Chief Executive Officer of the
Company and evidenced by an Officers' Certificate delivered to the
Trustee;
o with respect to Farmout Property with a value exceeding $1,000,000 but
not exceeding $5,000,000, as determined in good faith by the Board of
Directors of the Company and evidenced by a Board Resolution delivered
to the Trustee; and
o with respect to Farmout Property with a value exceeding $5,000,000, as
reflected in an opinion or appraisal issued by an independent
accounting or investment banking firm which is nationally recognized in
the United States, or by a reputable independent appraisal or petroleum
engineering firm, as appropriate under the circumstances, delivered to
the Trustee "Foreign Unrestricted Subsidiary" means any Unrestricted
Subsidiary that is a controlled foreign corporation (within the meaning
of section 957(a) of the Internal Revenue Code of 1986, as amended).
"Federal Bankruptcy Code" means the United States Bankruptcy Code of Title
11 of The United States Code, as amended from time to time.
"Funding Guarantor" has the meaning specified in Section 13.5 hereof.
"GAAP" means generally accepted accounting principles, consistently
applied, that are 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 or in
such other statements by such other entity as may be approved by a significant
segment of the accounting profession of the United States of America, which were
effective as of the Closing Date.
"Global Note Legend" means the legend set forth in Section 2.5(g)(ii)
hereof, which is required to be placed on all Global Notes issued under this
Indenture.
"Global Notes" means, individually and collectively, each of the Restricted
Global Notes and the Unrestricted Global Notes, in the form of Exhibit A hereto
issued in accordance with Sections 2.1, 2.5(b)(iv), 2.5(d)(ii) or 2.5(f) hereof.
"Grey Wolf Loan Administrative Agent" means Guggenheim Corporate Funding,
LLC, as administrative agent under the Grey Wolf Term Loan Agreement, together
with its successors in such capacity.
"Grey Wolf Term Loan" means that certain senior secured term loan
agreement, to be dated as of the Closing Date, with an initial aggregate
commitment of $35,000,000 among Grey Wolf, the Grey Wolf Loan Administrative
13
Agent and the lenders named therein, including any related notes, Guarantees,
Collateral Documents, instruments and agreements executed in connection
therewith, or any successor or replacement agreement (together with any related
successor or replacement notes, Guarantees, Collateral Documents, instruments
and agreements executed in connection therewith), whether with the same or any
other lender, group of lenders, or agent, in each case as the same may be
amended (including any amendment and restatement thereof), modified,
supplemented, extended, restated, replaced, renewed or refinanced (up to an
aggregate commitment of $35,000,000) from time to time in accordance with its
terms and the applicable terms of the Intercreditor Agreement.
"Guarantee" means any obligation, contingent or otherwise, of any Person
guaranteeing Indebtedness of another Person (including, without limitation,
obligations, agreements to purchase assets, securities or services, to
take-or-pay such Indebtedness of another Person or to maintain financial
statement conditions, or similar arrangements or agreements, in each case
entered into for the purpose of assuring the obligee of such Indebtedness of the
payment thereof, including, without limiting the foregoing, the payment of
amounts drawn down by letters of credit, or to protect such obligee against loss
in respect thereof, in whole or in part), but excluding (i) endorsements of
negotiable instruments for collection or deposit in the ordinary course of
business and (ii) contingent obligations in connection with the sale or discount
of accounts receivable and similar paper; provided, however, that a Guarantee by
any Person shall not include a contractual commitment by one Person to invest in
another Person and provided further that such Investment is otherwise permitted
by this Indenture. When used as a verb, "Guarantee" shall have a corresponding
meaning.
"Holder" means a Person in whose name a Note is registered in a Note
Register.
"Incur" has the meaning specified in Section 9.11 hereof.
"Indebtedness" means, with respect to any Person, without duplication: (i)
all liabilities of such Person for borrowed money or for the deferred purchase
price of Property or services (excluding any trade accounts payable and other
accrued current liabilities incurred in the ordinary course of business), and
all liabilities of such Person incurred in connection with any letters of
credit, bankers' acceptances or other similar credit transactions, if, and to
the extent, any of the foregoing would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP; (ii) all obligations of
such Person evidenced by bonds, notes, debentures or other similar instruments,
if, and to the extent, any of the foregoing would appear as a liability upon a
balance sheet of such Person prepared in accordance with GAAP; (iii) all
indebtedness of such Person created or arising under any conditional sale, title
retention or similar agreement with respect to Property acquired by such Person
(even if the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such Property), but
excluding trade accounts payable arising in the ordinary course of business;
(iv) all Capitalized Lease Obligations of such Person; (v) all obligations of
such Person under or in respect of Currency Exchange Contracts, Oil and Gas
Hedging Contracts and Interest Rate Protection Obligations; (vi) all
indebtedness referred to in the preceding clauses of other Persons and all
dividends of other Persons, the payment of which is secured by (or for which the
holder of such Indebtedness has an existing right to be secured by) any Lien
upon Property (including, without limitation, accounts and contract rights)
owned by such Person, even though such Person has not assumed or become liable
14
for the payment of such Indebtedness (the amount of such obligation being deemed
to be the lesser of the value of such Property or the amount of the obligation
so secured); (vii) all Redeemable Capital Stock of such Person valued at the
greater of its voluntary or involuntary maximum fixed repurchase price plus
accrued dividends; (viii) all Guarantees by such Person of Indebtedness referred
to in this definition (including, with respect to any Production Payment and
Reserve Sales, any warranties or Guarantees of production or payment by such
Person with respect to such Production Payment and Reserve Sales, but excluding
other contractual obligations of such Person with respect to such Production
Payment and Reserve Sales); and (ix) all obligations of such Person under any
agreement to purchase, redeem, exchange, convert or otherwise acquire for value
any Capital Stock of such Person or any warrants, rights or options to acquire
such Capital Stock outstanding on the date of this Indenture or thereafter if,
and to the extent, such obligations would have caused such Capital Stock to have
been Redeemable Capital Stock if such obligations had been included in the terms
of such Capital Stock. For purposes hereof, the "maximum fixed repurchase price"
of any Redeemable Capital Stock which does not have a fixed repurchase price
shall be calculated in accordance with the terms of such Redeemable Capital
Stock as if such Redeemable Capital Stock were purchased on any date on which
Indebtedness shall be required to be determined pursuant to this Indenture, and
if such price is based upon, or measured by, the Fair Market Value of such
Redeemable Capital Stock, such Fair Market Value shall be determined in good
faith by the board of directors of the issuer of such Redeemable Capital Stock;
provided, however, that if such Redeemable Capital Stock is not at the date of
determination permitted or required to be repurchased, the "maximum fixed
repurchase price" shall be the book value of such Redeemable Capital Stock.
Subject to clause (viii) of the first sentence of this definition, neither
Dollar-Denominated Production Payments nor Volumetric Production Payments shall
be deemed to be Indebtedness.
"Indenture" means this instrument as originally executed and as it may from
time to time be supplemented or amended by one or more indentures supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Intercreditor Agreement" means that certain intercreditor agreement to be
entered into on the Closing Date among Company, the initial Restricted
Subsidiaries, the Trustee, the Revolving Credit Facility Administrative Agent,
the Bridge Loan Administrative Agent and the Collateral Agent, as the same may
be amended (including any amendment and restatement thereof), modified or
supplemented from time to time in accordance with its terms.
"Indirect Participant" means a Person who holds a beneficial interest in a
Global Note through a Participant.
"Initial Notes" means the LIBOR Floating Rate Senior Secured Notes due 2009
authenticated and delivered under this Indenture.
"Insolvency" or "Liquidation Proceeding" mean, with respect to any Person,
(i) an insolvency or bankruptcy case or proceeding, or any receivership,
liquidation, reorganization or similar case or proceeding in connection
therewith, relative to such Person or its creditors, as such, or its assets or
(ii) any liquidation, dissolution or other winding-up proceeding of such Person,
whether voluntary or involuntary and whether or not involving insolvency or
15
bankruptcy or (iii) any assignment for the benefit of creditors or any other
marshaling of assets and liabilities of such Person.
"Interest Determination Date" means the second London Business Day
preceding each Interest Reset Date.
"Interest Payment Date" means the first day of June and December,
commencing on June 1, 2005; provided, that, if any such day is not a Business
Day, such Interest Payment Date shall be the next succeeding Business Day.
"Interest Rate Protection 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 Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without limitation, interest rate swaps,
caps, floors, collars and similar agreements or arrangements designed to protect
against or manage such Person's and any of its Subsidiaries' exposure to
fluctuations in interest rates.
"Interest Reset Date" means the first day of June and December, commencing
on June 1, 2005.
"Investment" means, with respect to any Person, any direct or indirect
advance, loan, Guarantee of Indebtedness or other extension of credit or capital
contribution to (by means of any transfer of cash or other Property to others or
any payment for Property or services for the account or use of others), or any
purchase or acquisition by such Person of any Capital Stock, bonds, notes,
debentures or other securities (including derivatives) or evidences of
Indebtedness issued by, any other Person. In addition: (i) the Fair Market Value
as determined by the Board of Directors of the Company in good faith of the net
assets of any Restricted Subsidiary (prorated for the Company's direct and
indirect interest in the Capital Stock of such Restricted Subsidiary if such
Restricted Subsidiary is not a Wholly Owned Restricted Subsidiary) at the time
that such Restricted Subsidiary is designated an Unrestricted Subsidiary shall
be deemed to be an "Investment" made by the Company in such Unrestricted
Subsidiary at such time; and (ii) the Fair Market Value of Capital Stock
retained by the Company or a Restricted Subsidiary in connection with the sale
or issuance of Capital Stock of a Restricted Subsidiary in accordance with
Section 9.13 hereof that, as a result of such transaction, is no longer a
Restricted Subsidiary (prorated for the Company's direct and indirect interest
in such Capital Stock if such Restricted Subsidiary is not a Wholly Owned
Restricted Subsidiary immediately prior to such sale or issuance) shall be
deemed to be an "Investment" made at the time of such transaction. "Investments"
shall exclude: (a) extensions of trade credit under a joint operating agreement
or otherwise in the ordinary course of business, workers' compensation, utility,
lease and similar deposits and prepaid expenses made in the ordinary course of
business; (b) Interest Rate Protection Obligations entered into in the ordinary
course of business or as required by any Permitted Indebtedness or any other
Indebtedness incurred in compliance with Section 9.11 hereof, but only to the
extent that the stated aggregate notional amounts of such Interest Rate
Protection Obligations do not exceed 105% of the aggregate principal amount of
such Indebtedness to which such Interest Rate Protection Obligations relate; (c)
bonds, notes, debentures or other securities received as a result of Asset Sales
16
permitted under Section 9.16 hereof; and (d) endorsements of negotiable
instruments and documents for collection in the ordinary course of business.
"Legal Defeasance" has the meaning specified in Section 12.2 hereof.
"Legal Requirements" means, at any time, any and all judicial and
administrative rulings and decisions, and any and all Federal, state and local
laws, ordinances, rules, regulations, permits and certificates, of any
Authority, in each case applicable, at such time to the Company or the
Collateral (or the ownership or use thereof).
"Letter of Transmittal" means the letter of transmittal to be prepared by
the Company and sent to all Holders of the Initial Notes for use by such Holders
in connection with the Exchange Offer.
"Lien" means any mortgage, charge, pledge, lien (statutory or other),
security interest, hypothecation, assignment for security, claim, or preference
or priority or other encumbrance or similar agreement or preferential
arrangement of any kind or nature whatsoever serving to provide security for an
obligation, whether or not filed, recorded or otherwise perfected under
applicable law (including, without limitation, any agreement to give or grant a
lien or any lease, conditional sale, title retention or similar agreement having
substantially the same economic effect as any of the foregoing) upon or with
respect to any Property of any kind. A Person shall be deemed to own subject to
a Lien any Property that such Person has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement.
"Liquidated Damages" means all additional interest then owing pursuant to
Section 3 of the Registration Rights Agreement.
"London Business Day" means any day on which dealings in U.S. dollars
generally are transacted in the London interbank market.
"Material Subsidiary" means, at any particular time, any Restricted
Subsidiary that, together with its Subsidiaries, (a) accounted for more than 5%
of the consolidated revenues of the Company and its Restricted Subsidiaries for
the most recently completed fiscal year of the Company or (b) was the owner of
more than 5% of the consolidated assets of the Company and its Restricted
Subsidiaries at the end of such fiscal year, all as shown in the case of (a) and
(b) on the consolidated financial statements of the Company and its Restricted
Subsidiaries for such fiscal year.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, sale, transfer
or other disposition by any Person, the aggregate proceeds thereof in the form
of cash or Cash Equivalents, including payments in respect of deferred payment
obligations when received in the form of cash or Cash Equivalents (except to the
extent that such obligations are financed or sold with recourse to the Company
or any Restricted Subsidiary), pursuant to, or monetization of, a note or
installment receivable or otherwise, net of: (i) brokerage commissions and other
17
fees and expenses (including, without limitation, fees and expenses of legal
counsel, accountants, petroleum engineering firms and investment banks) incurred
by such Person related to such Asset Sale, sale, transfer or other disposition;
(ii) the amount of any Indebtedness (including Redeemable Capital Stock or
Preferred Stock of a Subsidiary) that is required to be repaid by such Person or
its Affiliates in connection with such Asset Sale, sale, transfer or other
disposition; (iii) provisions for all taxes, including income taxes, payable as
a result of such Asset Sale, sale transfer or other disposition or attributable
to required prepayments or repayments of Indebtedness with the proceeds of such
Asset Sale, sale, transfer or other disposition; (iv) amounts required to be
paid to any Person or its Affiliates (other than the Company or any Restricted
Subsidiary) owning a beneficial interest in the assets subject to the Asset
Sale, sale, transfer, or other disposition or to holders of minority interests
in a Restricted Subsidiary or other entity as a result of such Asset Sale, sale,
transfer or other disposition; and (v) appropriate amounts to be provided by the
Company or any Restricted Subsidiary, as the case may be, as a reserve in
accordance with GAAP applied against post closing adjustments or any liabilities
associated with such Asset Sale, sale, transfer or other disposition and
retained by the Company or any Restricted Subsidiary, as the case may be, after
such Asset Sale, sale, transfer or other disposition, 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, sale, transfer or other
disposition, all as reflected in an Officers' Certificate delivered to the
Trustee; provided, however, that any amounts remaining after adjustments,
revaluations or liquidations of such reserves shall constitute Net Cash
Proceeds.
"Net Loss Proceeds" means, with respect to any Event of Loss, the proceeds
in the form of cash or Cash Equivalents received by the Company or any of its
Restricted Subsidiaries from such Event of Loss net of: (a) reasonable
out-of-pocket expenses and fees relating to such Event of Loss (including,
without limitation, fees and expenses of legal counsel, accountants, petroleum
engineering firms and investment banks), (b) provisions for all taxes, including
income taxes, payable as a result of such Event of Loss after taking into
account any reduction in consolidated tax liability due to available tax credits
or deductions and any tax sharing arrangements; and (c) repayment of
Indebtedness that is secured by, or directly related to, the property or assets
that are the subject of such Event of Loss.
"Net Proceeds Deficiency" has the meaning specified in Section 9.16(c)(ii)
hereof.
"Net Proceeds Offer" has the meaning specified in Section 9.16(c)(i)
hereof.
"Net Proceeds Payment Date" has the meaning specified in Section
9.16(c)(iv) hereof.
"Note Documents" means this Indenture, the Notes (including all additional
notes and all exchange notes therefor), the Subsidiary Guarantees and the
Collateral Documents to the extent the Collateral Documents secure obligations
under this Indenture, the Notes or the Subsidiary Guarantees.
"Note Obligations" means all Obligations under the Note Documents.
18
"Note Register" means the register maintained by or for the Company in
which the Company shall provide for the registration of the Notes and of
transfer of the Notes.
"Note Registrar" has the meaning specified in Section 2.3.1 hereof.
"Notes" means the Initial Notes and the Exchange Notes, as amended or
supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
"Obligations" means any principal, premium (if any), interest (including
additional or special interest), if any, and interest accruing on or after the
filing of any petition in bankruptcy or for reorganization relating to the
Company or its Restricted Subsidiaries whether or not a claim for post-filing
interest is allowed in such proceeding), penalties, fees, charges, expenses,
indemnifications, reimbursement obligations, damages (including additional or
special interest), Guarantees (including the Subsidiary Guarantees) and other
liabilities or amounts payable under the documentation governing any
Indebtedness or in respect thereof.
"Offered Price" has the meaning specified in Section 9.16(c)(ii) hereof.
"Officer" means, with respect to any Person, the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Chief Financial
Officer or the Treasurer of such Person.
"Officers' Certificate" means a certificate signed by two Authorized
Officers of the Company.
"Oil and Gas Business" means: (i) the acquisition, exploration,
development, operation and disposition of interests in oil, gas and other
hydrocarbon Properties; (ii) the gathering, marketing, treating, processing,
storage, selling and transporting of any production from such interests or
Properties; (iii) any business relating to or arising from exploration for or
development, production, treatment, processing, storage, transportation or
marketing of oil, gas, hydrocarbons and other minerals and products produced in
association therewith; (iv) any business relating to oil field sales and
service; and (v) any activity necessary, appropriate or incidental to the
activities described in the foregoing clauses (i) through (iv) of this
definition.
"Oil and Gas Hedging Contracts" means, with respect to the Company or its
Restricted Subsidiaries, any agreement or arrangement, or any combination
thereof, relating to hydrocarbon prices, transportation or basis costs or
differentials or other similar financial factors, that is customary in the Oil
and Gas Business and is entered into in the ordinary course of business for the
purpose of limiting or managing risks associated with fluctuations in such
prices, costs, differentials or similar factors and not for the purpose of
speculation.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
for the Company (or any Subsidiary Guarantor), including an employee of the
Company (or any Subsidiary Guarantor), and who shall be reasonably acceptable to
the Trustee.
"Outstanding," when used with respect to Notes, means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture, except:
19
(i) Notes theretofore canceled by the Trustee or delivered to the Trustee
for cancellation;
(ii) Notes, or portions thereof, for whose payment or redemption money in
the necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and segregated in
trust by the Company (if the Company is acting as its own Paying Agent) for the
Holders of such Notes, provided that, if such Notes are to be redeemed, notice
of such redemption has been duly given pursuant to this Indenture or provision
therefor satisfactory to the Trustee has been made;
(iii) Notes, except to the extent provided in Sections 12.2 and 12.3
hereof, with respect to which the Company has effected Legal Defeasance or
Covenant Defeasance as provided in Article 12 hereof; and
(iv) Notes which have been paid pursuant to Article 2 hereof or in exchange
for or in lieu of which other Notes have been authenticated and delivered
pursuant to this Indenture, other than any such Notes in respect of which there
will have been presented to the Trustee proof satisfactory to it that such
securities are held by a bona fide purchaser in whose hands the Notes are valid
obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by Section 313 of the TIA, Notes
owned by the Company, any Subsidiary Guarantor or any other obligor upon the
Notes or any Affiliate of the Company, any Subsidiary Guarantor or such other
obligor will be disregarded and deemed not to be Outstanding, except that, in
determining whether the Trustee will be protected in making such calculation or
in relying upon any such request, demand, authorization, direction, consent,
notice or waiver, only Notes which a Responsible Officer of the Trustee actually
knows to be so owned will be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right to so act with respect to
such Notes and that the pledgee is not the Company, any Subsidiary Guarantor or
any other obligor upon the Notes or any Affiliate of the Company, any Subsidiary
Guarantor or such other obligor.
"Participant" means, with respect to the Depositary, Euroclear or
Clearstream, a Person who has an account with the Depositary, Euroclear or
Clearstream, respectively (and, with respect to The Depository Trust Company,
shall include Euroclear and Clearstream).
"Paying Agent" means any Person (including the Company acting as Paying
Agent) authorized by the Company to pay the principal of, or the premium, if
any, interest or Liquidated Damages, if any, on, any Note on behalf of the
Company.
"Payment Amount" has the meaning specified in Section 9.16(c)(i) hereof.
"Permitted Farmout Agreement" means any Farmout Agreement entered into by
the Company and/or any Restricted Subsidiary, as the farmor, in the ordinary
course of business, (a) covering Farmout Property of the Company and/or one or
more Restricted Subsidiaries that does not include proved oil or natural gas
properties (other than those (i) proved by the efforts to obtain production
20
taken pursuant to such Farmout Agreement or (ii) that are not then otherwise
included in the Company's PV-10 or as a proved reserve in any reserve or other
report prepared by or on behalf of the Company in amount which exceeds either
$150,000 with respect to any individual property subject to such Farmout
Agreement or $500,000 when aggregated with any other proved oil or natural gas
property then subject to such Farmout Agreement or any other Farmout Agreement)
and (b) that, as determined in good faith by the Board of Directors of the
Company and evidenced by a Board Resolution delivered to the Trustee (or, solely
with respect to any Farmout with a Farmout Property Value not exceeding
$1,000,000, as determined in good faith by the Chief Executive Officer of the
Company and evidenced by an Officers' Certificate delivered to the Trustee), is
in the best interests of the holders of the Notes and does not adversely affect
the ability of the Company, the Restricted Subsidiaries and the Subsidiary
Guarantors to perform their respective obligations under the Notes, this
Indenture and the Subsidiary Guarantees, as applicable.
"Permitted Indebtedness" means any of the following:
(i) Indebtedness under the Revolving Credit Facility (but if Incurred under
any renewal, substitution, refinancing or replacement thereof, only to the
extent permitted by clause (ix) of this definition) in an aggregate principal
amount at any one time outstanding not to exceed $15,000,000 (less the aggregate
amount of permanent reductions of the lenders' commitment under the Revolving
Credit Facility made pursuant to the covenants described under Section 9.16
hereof, any Guarantee of any such Indebtedness (including by any Subsidiary of
Abraxas) and any interest, fees, premiums, expenses (including costs of
collection), indemnities and other amounts payable in connection with such
Indebtedness, including, without limitation, Related Revolving Indebtedness;
provided, that, the aggregate amount of all permanent reductions of the lenders'
commitment under the Revolving Credit Facility made pursuant to the covenants
described under Section 9.16 hereof, can be established by the Company at any
time by providing the Trustee with an Officers' Certificate stating such amount;
(ii) Indebtedness under the Notes (including any Notes issued pursuant to
an exchange offer made in accordance with the Registration Rights Agreement),
the Subsidiary Guarantees (including any Subsidiary Guarantees issued pursuant
to an exchange offer made in accordance with the Registration Rights Agreement)
and the Collateral Documents to the extent they secure the Notes or the
Subsidiary Guarantees;
(iii) Indebtedness under the Bridge Loan (but if Incurred under any
renewal, substitution, refinancing or replacement thereof, only to the extent
permitted by clause (x) of this definition) in an aggregate principal amount at
any one time outstanding not to exceed $25,000,000 any Guarantee of any such
Indebtedness (including by any Subsidiary of the Company) and any interest,
fees, premiums, expenses (including costs of collection), indemnities and other
amounts payable in connection with such Indebtedness;
(iv) (a) Indebtedness outstanding on the date of this Indenture and not
repaid or defeased with the proceeds of the Notes, the Bridge Loan or the Grey
Wolf Term Loan (but if Incurred under any renewal, substitution, refinancing or
replacement thereof, only to the extent permitted by clause (x) of this
definition), (b) the 2003 Notes and (c) the Existing Senior Debt Facility;
21
provided that the 2003 Notes and the Existing Senior Debt Facility are repaid
and defeased, respectively, with the proceeds of the Notes, the Bridge Loan
and/or the Grey Wolf Term Loan on the Closing Date and that the 2003 Notes are
redeemed on or prior to the date that is 90 days after the Closing Date;
(v) Indebtedness of the Company or a Restricted Subsidiary pursuant to (a)
Interest Rate Protection Obligations, but only to the extent that the stated
aggregate notional amounts of such obligations do not exceed 105% of the
aggregate principal amount of the Indebtedness covered by such Interest Rate
Protection Obligations, (b) Currency Exchange Contracts and (c) obligations
under Oil and Gas Hedging Contracts, in each case, entered into in the ordinary
course of business and not for speculative purposes;
(vi) Indebtedness of the Company owed to a Wholly Owned Restricted
Subsidiary and Indebtedness of a Restricted Subsidiary owed to the Company or a
Wholly Owned Restricted Subsidiary; provided, however, that such Indebtedness is
owned beneficially by the Company or such Restricted Subsidiary and constitutes
Subordinated Indebtedness; provided further, that the incurrence of such
Indebtedness does not violate Section 9.10; and provided further, that upon any
subsequent issuance or transfer of any Capital Stock or any other event which
results in any such Wholly Owned Restricted Subsidiary ceasing to be a Wholly
Owned Restricted Subsidiary or any other subsequent transfer of any such
Indebtedness (except to the Company or a Wholly Owned Restricted Subsidiary),
such Indebtedness shall be deemed, in each case, to be incurred and shall be
treated as an incurrence for purposes of Sections 9.10 and 9.11 hereof at the
time the Wholly Owned Restricted Subsidiary in question ceased to be a Wholly
Owned Restricted Subsidiary;
(vii) Indebtedness in respect of bid, performance or surety bonds issued
for the account of the Company or any Restricted Subsidiary in the ordinary
course of business, including Guarantees and letters of credit supporting such
bid, performance or surety obligations (in each case other than for an
obligation for money borrowed);
(viii) any Guarantee of Indebtedness incurred in compliance with Section
9.11 hereof, by a Restricted Subsidiary or the Company;
(ix) Indebtedness under any renewal, substitution, refinancing or
replacement (each, for purposes of this clause, a "refinancing") by the Company
or a Restricted Subsidiary of any Indebtedness incurred pursuant to clause (i)
of this definition (or any refinancing thereof under this paragraph (ix)),
including any successive refinancings by the Company or such Restricted
Subsidiary not incurred in violation of this Indenture, so long as (a) any such
refinancing shall be in a principal amount that does not exceed the aggregate
amount of Indebtedness then permitted to be Incurred under clause (i) of this
definition, (b) in the case such Indebtedness being refinanced is secured, the
Liens securing such new Indebtedness (1) are not materially less favorable to
the holders of the Notes and are not materially more favorable to the
lienholders with respect to such Liens than the Liens in respect of the
Indebtedness being refinanced and (2) are limited to all or part of the same
property that was or would have been encumbered by the original Lien under the
terms of the documents governing the original Indebtedness; provided, that, if
the terms of the Intercreditor Agreement apply to the Liens securing such new
Indebtedness, then such Liens will be considered to have satisfied the
conditions of this clause (b), (c) such new Indebtedness has a final Stated
Maturity not earlier than the final Stated Maturity of the Indebtedness being
22
refinanced and (d) such new Indebtedness is incurred by either the Company or a
Restricted Subsidiary who is the obligor of the Indebtedness being refinanced;
(x) Indebtedness under any renewal, substitution, refinancing or
replacement (each, for purposes of this clause, a "refinancing") by Abraxas or a
Restricted Subsidiary of any Indebtedness incurred pursuant to clause (iii) or
(iv) of this definition (or any refinancing thereof under this paragraph (x)) or
Indebtedness (excluding Permitted Indebtedness) incurred after the Closing Date
in compliance with the covenant described under Section 9.11 hereof, including
any successive refinancings by the Company or such Restricted Subsidiary not
incurred in violation of this Indenture, so long as (a) any such refinancing
shall be in a principal amount that does not exceed the principal amount (or, if
such Indebtedness being refinanced provides for an amount less than the
principal amount thereof to be due and payable upon a declaration of
acceleration thereof, such lesser amount as of the date of determination) so
refinanced plus the amount of accrued interest thereon plus the amount of any
premium required to be paid in connection with such refinancing pursuant to the
terms of the Indebtedness refinanced or the amount of any premium reasonably
determined by the Company or such Restricted Subsidiary as necessary to
accomplish such refinancing, plus the amount of expenses of the Company or such
Restricted Subsidiary incurred in connection with such refinancing (all of which
amounts are included as Permitted Indebtedness under this clause (x)), (b) in
the case of any refinancing of Indebtedness of the Company that is Subordinated
Indebtedness, such new Indebtedness shall be subordinated in right of payment to
the Notes on terms at least as favorable to the holders of the Notes as those
contained in the documentation governing the Indebtedness being refinanced, (c)
in the case of any refinancing of Indebtedness that is secured, the Liens
securing such new Indebtedness (1) are not materially less favorable to the
holders of the Notes and are not materially more favorable to the lienholders
with respect to such Liens than the Liens in respect of the Indebtedness being
refinanced and (2) are limited to all or part of the same property that was or
would have been encumbered by the original Lien under the terms of the documents
governing the original Indebtedness, (d) such new Indebtedness has an Average
Life equal to or greater than the Average Life of the Indebtedness being
refinanced and a final Stated Maturity not earlier than the final Stated
Maturity of the Indebtedness being refinanced and (e) such new Indebtedness is
incurred by either the Company or a Restricted Subsidiary who is the obligor of
the Indebtedness being refinanced;
(xi) any Indebtedness incurred to finance unpaid insurance premiums,
provided, however, that recourse with respect to such Indebtedness is limited to
the insurance policies with respect to which premiums have been financed;
(xii) 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;
(xiii) Indebtedness of the Company or any of its Restricted Subsidiaries
represented by letters of credit for the account of the Company or any of its
Restricted Subsidiaries, 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; and
23
(xiv) additional Indebtedness of Abraxas or any of its Restricted
Subsidiaries, other than Indebtedness Incurred under the Revolving Credit
Facility, in an aggregate principal amount at any time outstanding not to exceed
$500,000 under this clause (xiv).
"Permitted Investments" means any of the following: (i) Investments in Cash
Equivalents; (ii) Investments in the Company or any of its Restricted
Subsidiaries; (iii) Investments by the Company or any of its Restricted
Subsidiaries in another Person, if as a result of such Investment (a) such other
Person becomes a Restricted Subsidiary or (b) such other Person is merged or
consolidated with or into, or transfers or conveys all or substantially all of
its Properties to, the Company or a Restricted Subsidiary; (iv) Investments and
expenditures made in the ordinary course of, and of a nature that is or shall
have become customary in, the Oil and Gas Business as a means of actively
exploiting, exploring for, acquiring, developing, processing, gathering,
marketing or transporting oil and gas through agreements, transactions,
interests or arrangements which permit a Person to share risks or costs, comply
with regulatory requirements regarding local ownership or satisfy other
objectives customarily achieved through the conduct of the Oil and Gas Business
jointly with third parties, including, without limitation, (a) ownership
interests in oil and gas properties or gathering systems and (b) Investments and
expenditures in the form of or pursuant to operating agreements, processing
agreements, Farmout Agreements, development agreements, area of mutual interest
agreements, unitization agreements, pooling arrangements, joint bidding
agreements, service contracts, joint venture agreements, partnership agreements
(whether general or limited), limited liability company agreements, subscription
agreements, stock purchase agreements and other similar agreements with third
parties (including Unrestricted Subsidiaries); (v) Investments arising in
connection with Oil and Gas Hedging Contracts entered into in the ordinary
course of business solely for the purpose of protecting the production of the
Company or any Restricted Subsidiary against fluctuations in oil or natural gas
prices; (vi) Investments arising in connection with Interest Rate Protection
Obligations or Currency Exchange Contracts, in each case Incurred in the
ordinary course of business and not for speculative purposes; (vii) Investments
in stock, obligations or securities received in settlement of debts owing to the
Company or a Restricted Subsidiary as a result of bankruptcy or insolvency
proceedings or upon the foreclosure, perfection or enforcement of any Lien in
favor of the Company or a Restricted Subsidiary, in each case as to debt owing
to the Company or a Restricted Subsidiary that arose in the ordinary course of
business of the Company or any such Restricted Subsidiary; (viii) any Investment
received in settlement of debts, claims or disputes owed to the Company or any
Restricted Subsidiary that arose out of transactions in the ordinary course of
business; (ix) Investments in the form of intercompany Indebtedness or
Guarantees of Indebtedness of a Restricted Subsidiary permitted under the
covenant described under Section 9.11 hereof; (x) any security or other
Investment received or Investment made as a result of the receipt of non-cash
consideration from an Asset Sale that was made pursuant to and in compliance
with the covenant described above under Section 9.16 hereof; (xi) advances and
extensions of credit in the nature of accounts receivable arising from the sale
or lease of goods or services in the ordinary course of business; (xii)
Investments in the form of, or pursuant to, working interests, royalty
interests, mineral leases, Farmout Agreements or contracts for the sale of oil
and natural gas, in each case, made or entered into the ordinary course of the
business, excluding, however, investments in other Persons; (xiii) so long as
Grey Wolf is a Subsidiary of the Company, up to an aggregate principal amount of
$1,000,000 of intercompany loans made to Grey Wolf for use by Grey Wolf solely
for its working capital purposes in a manner consistent with its operations on
the Closing Date; and (xiv) other Investments by the Company or any Restricted
24
Subsidiary in any Person having an aggregate fair market value (determined in
good faith by the Chief Executive Officer of the Company and measured as of the
date each such Investment is made and without giving effect to subsequent
changes in value), when taken together with all other Investments made pursuant
to this clause (xiv) (net of returns of capital, dividends and interest paid on
Investments and sales, liquidations and redemptions of Investments), not in
excess of $500,000.
"Permitted Liens" means any and all of the following:
(i) Liens existing as of the Closing Date;
(ii) Liens securing the Notes, the Subsidiary Guarantees or other
obligations arising under this Indenture;
(iii) Liens securing the Revolving Credit Facility Obligations;
(iv) Liens securing the Bridge Loan Obligations;
(v) any Liens existing on any Property of a Person at the time such Person
is merged or consolidated with or into the Company or a Subsidiary Guarantor or
becomes a Restricted Subsidiary that is a Subsidiary Guarantor (and not incurred
in anticipation of such transaction), provided that such Liens are not extended
to other Property of the Company or the Subsidiary Guarantors;
(vi) any Lien existing on any Property at the time of the acquisition
thereof (and not incurred in anticipation of such transaction), provided that
such Liens are not extended to other Property of the Company or the Subsidiary
Guarantors;
(vii) Liens on cash and Cash Equivalents securing the performance of Oil
and Gas Hedging Contracts, Currency Exchange Contracts and Interest Rate
Protection Obligations permitted by the terms of this Indenture;
(viii) Liens with respect to amounts payable as reimbursement of premiums
in favor of Persons financing unpaid insurance premiums, provided, however, such
Liens are limited to insurance policies with respect to which premiums are
financed;
(ix) Liens securing any permitted extension, renewal, refinancing,
refunding or exchange (or successive extensions, renewals, refinancings,
refundings or exchanges), in whole or in part, of or for any Indebtedness
secured by Liens referred to in clauses (i), (ii), (iv), (v) and (vi) above and
this clause (ix); provided, however, that (a) such new Lien shall be limited to
all or part of the same Property that was or would have been encumbered by the
original Lien under the terms of the documents governing the original
Indebtedness, and (b) the Indebtedness secured by such Lien at the time of such
extension, renewal, refinancing, refunding or exchange (and such successive
extension, renewal, refinancing, refunding or exchange) is not increased to any
amount greater than the sum of (I) the outstanding principal amount of the
Indebtedness secured by such original Lien immediately prior to such extension,
renewal, refinancing, refunding or exchange and accrued interest thereon and
(II) an amount necessary to pay any fees and expenses, including premiums,
25
related to such refinancing, refunding, extension, renewal or replacement;
(x) Liens securing Indebtedness Incurred under clause (ix) of the
definition of Permitted Indebtedness;
(xi) Liens in favor of the Company or a Subsidiary Guarantor;
(xii) Liens for taxes, assessments or governmental charges or claims either
(a) not yet delinquent or (b) 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;
(xiii) statutory and contractual Liens of (a) landlords arising in the
ordinary course of business to secure rent not yet delinquent, but only to the
extent such Liens relate only to the tangible property of the lessee which is
located on such property and (b) carriers, warehousemen, mechanics, builders,
suppliers, materialmen, repairmen and other similar Liens incurred in the
ordinary course of business for sums not yet delinquent or being contested in
good faith by appropriate proceedings, in each case, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have been made
in respect thereof;
(xiv) Liens incurred on deposits made in the ordinary course of business
(a) 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 (b) to secure performance bonds, 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);
(xv) easements, rights-of-way, zoning restrictions, restrictive covenants,
minor imperfections in title and other similar charges or encumbrances in
respect of real property that, individually or in the aggregate, are not
interfering in any material respect with the ordinary conduct of the business of
the Company or any Restricted Subsidiary;
(xvi) any interest or title of a lessor under any Capitalized Lease
Obligation permitted by the terms of this Indenture; provided that such Liens do
not extend to any property which is not the leased property subject to such
Capitalized Lease Obligation;
(xvii) Liens securing reimbursement obligations, not to exceed $100,000 in
the aggregate at any time outstanding, with respect to commercial letters of
credit other than those issued under the Revolving Credit Facility which
encumber documents and other property relating to such letters of credit and
products and proceeds thereof;
(xviii) Liens encumbering deposits made to secure obligations arising from
statutory, regulatory, contractual or warranty requirements of the Company or
any Restricted Subsidiary, including rights of offset and setoff;
26
(xix) statutory Liens on pipeline or pipeline facilities, hydrocarbons or
properties and assets of the Company or any Restricted Subsidiary which arise
out of operation of law and are not voluntarily granted;
(xx) royalties, overriding royalties, net profit interests, reversionary
interests, operating agreements and other similar interests, properties,
arrangements and agreements, all as ordinarily exist with respect to properties
of the Company and its Restricted Subsidiaries or otherwise as are customary in
the Oil and Gas Business and all as relate to mineral leases and mineral
interests of the Company and its Restricted Subsidiaries;
(xxi) Liens pursuant to documents governing Permitted Farmout Agreements;
(xxii) any (a) interest or title of a lessor or sublessor under any mineral
lease or operating 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, builders' Liens, tax Liens, and easements) that,
individually or in the aggregate, are not interfering in any material respect
with the ordinary course of the business of the Company or any Restricted
Subsidiary 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);
(xxiii) Liens in favor of collecting or payor banks having a right of
setoff, revocation, refund or chargeback, subject to an account control
agreement constituting a Collateral Document, with respect to money or
instruments of the Company or any Restricted Subsidiary on deposit with or in
possession of such bank;
(xxiv) judgment and attachment Liens not giving rise to an Event of
Default;
(xxv) Liens incurred in the ordinary course of business of the Company or
any Restricted Subsidiary securing Indebtedness of the Company or such
Restricted Subsidiary permitted by the terms of this Indenture in an aggregate
principal amount at any time outstanding not exceeding the sum of $250,000 in
the aggregate; and
(xxvi) Liens pursuant to the documents governing Production Payments and
Reserved Sales on the property to which such Production Payments and Reserved
Sales relate and with respect to which the Liens of the Collateral Documents
have been released in compliance with the terms of this Indenture or the
Intercreditor Agreement.
"Permitted Prior Lien" means (a) Liens described in clauses (i), (iii),
(v), (vi), (vii) (to the extent securing obligations of not more than $250,000
in the aggregate), (viii) (to the extent securing obligations of not more than
$200,000 in the aggregate), (ix), (x), (xiv) (to the extent securing obligations
of not more than $250,000 in the aggregate), (xvi), (xviii) (to the extent
securing obligations of not more than $50,000 in the aggregate), (xxiii) and
(xxv) of the definition of Permitted Liens and (b) Liens which arise by
operation of law and are not consensually granted, to the extent entitled by law
to priority over the security interests created by the Collateral Documents.
27
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Predecessor Note" of any particular Note means every previous Note
evidencing all or a portion of the same debt as that evidenced by such
particular Note; and, for the purposes of this definition, any Note
authenticated and delivered under Section 2.3 hereof in exchange for a mutilated
Note or in lieu of a lost, destroyed or stolen Note will be deemed to evidence
the same debt as the mutilated, lost, destroyed or stolen Note.
"Preferred Stock" as applied to the Capital Stock of any Person, means
Capital Stock of any class or classes (however designated) which is preferred as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
Person, over shares of Capital Stock of any other class of such Person.
"Private Placement Legend" means the legend set forth in Section 2.5(g)(i)
hereof to be placed on all Notes issued under this Indenture except where
otherwise permitted by the provisions of this Indenture.
"Production Payments and Reserve Sales" means the grant and transfer to any
Person of a Dollar-Denominated Production Payment, Volumetric Production
Payment, royalty, overriding royalty, net profits interest, master limited
partnership interest or other similar interest in oil and natural gas
properties, reserves or the right to receive all or a portion of the production
or the proceeds from the sale of production attributable to such properties.
"Property" means, with respect to any Person, any interest of such Person
in any kind of property or asset, whether real, personal or mixed, or tangible
or intangible, including, without limitation, Capital Stock in any other Person.
"Purchase Notice" has the meaning specified in Section 9.16(c)(i) hereof.
"PV-10" means estimated future net revenue, discounted at a rate of 10% per
annum, before income taxes and with no price or cost escalation or de-escalation
in accordance with guidelines promulgated by the SEC.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Qualified Capital Stock" of any Person means any and all Capital Stock of
such Person other than Disqualified Stock.
"Qualified Equity Offering" means a public or private sale for cash by the
Company of Qualified Capital Stock of Abraxas other than public offerings with
respect to the Company's common stock, options, warrants or rights registered on
Form S-4 or S-8.
"Record Date" means a Regular Record Date or a Special Record Date.
"Redeemable Capital Stock" means any Capital Stock that, either by its
terms, by the terms of any security into which it is convertible or exchangeable
or by contract or otherwise, is, or upon the happening of an event or passage of
28
time would be, required to be redeemed (other than for shares of Qualified
Capital Stock) prior to the date that is 91 days after the final Stated Maturity
of the Notes or is redeemable (other than for shares of Qualified Capital Stock)
at the option of the holder thereof, in whole or in part, at any time prior to
such date, or at any time prior to such date is convertible into or exchangeable
for anything other than Qualified Capital Stock or securities or instruments
evidencing Indebtedness that is permitted to be Incurred by the terms of this
Indenture.
"Redemption Date," when used with respect to any Note to be redeemed, in
whole or in part, means the date fixed for such redemption by or pursuant to
this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Refinancing Indebtedness" means Indebtedness under any renewals,
substitutions, refinancings or replacements Incurred in compliance with clause
(ix) or (x) of the definition of Permitted Indebtedness.
"Registration Rights Agreement" means the Registration Rights Agreement,
dated as of the Closing Date, by and among the Company, the Subsidiary
Guarantors and the other parties named on the signature pages thereof.
"Regular Record Date" for the interest payable on any Interest Payment Date
means the May 15 or November 15 (whether or not a Business Day), as the case may
be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S promulgated under the Securities Act.
"Regulation S Global Note" means a Regulation S Temporary Global Note or
Regulation S Permanent Global Note, as appropriate.
"Regulation S Permanent Global Note" means a permanent global Note in the
form of Exhibit A-1 hereto bearing the Global Note Legend and the Private
Placement Legend and deposited with or on behalf of and registered in the name
of the Depositary or its nominee, issued in a denomination equal to the
outstanding principal amount of the Regulation S Temporary Global Note upon
expiration of the Restricted Period.
"Regulation S Temporary Global Note" means a temporary global Note in the
form of Exhibit A-2 hereto bearing the Private Placement Legend and deposited
with or on behalf of and registered in the name of the Depositary or its
nominee, issued in a denomination equal to the outstanding principal amount of
the Notes initially sold in reliance on Rule 903.
"Related Revolving Indebtedness" means (i) Indebtedness related to any fees
and expenses incurred by the Company or any of its Subsidiaries (including, but
not limited to, those owed to any Person not an Affiliate of the Company or any
of its Subsidiaries) in connection with any amendment (including any amendment
and restatement thereof), supplement, replacement, restatement, substitution,
renewal or other modification from time to time, including any agreements (and
related instruments and documents) extending the maturity of, refinancing,
29
replacing, substituting, renewing or other restructuring of all or any portion
of the Indebtedness under the Revolving Credit Facility or any successor or
replacement agreements (and related instruments and documents) and (ii) any
capitalized interest, fees, or other expenses incurred by the Company or any of
its Subsidiaries whether or not charged to a loan account or any similar account
created under the Revolving Credit Facility.
"Responsible Officer," when used with respect to the Trustee, means any
officer in the corporate trust department of the Trustee, and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of his knowledge of and familiarity with the
particular subject including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Trustee who customarily performs functions similar to those performed by the
Persons who at the time shall be such officers, respectively.
"Restricted Definitive Note" means a Definitive Note bearing the Private
Placement Legend.
"Restricted Global Note" means a Global Note bearing the Private Placement
Legend.
"Restricted Payment" has the meaning specified in Section 9.10(a)(v)
hereof.
"Restricted Period" means the 40-day restricted period as defined in
Regulation S.
"Restricted Subsidiary" means any Subsidiary of the Company, whether
existing on or after the date of this Indenture, unless such Subsidiary of the
Company is an Unrestricted Subsidiary or is designated as an Unrestricted
Subsidiary pursuant to the terms of this Indenture.
"Revolving Credit Facility" means that certain senior secured revolving
credit facility, to be dated as of the Closing Date, with an initial aggregate
commitment of $15,000,000 among the Company, certain Subsidiaries of the
Company, the Revolving Credit Facility Agent and the lenders named therein,
including any related notes, Guarantees, Collateral Documents, instruments and
agreements executed in connection therewith, or any successor or replacement
agreement (together with any related notes, Guarantees, Collateral Documents,
instruments and agreements executed in connection therewith), whether with the
same or any other lender, group of lenders or agent, in each case as the same
may be amended (including any amendment and restatement thereof), modified,
supplemented, extended, restated, substituted, replaced, renewed or refinanced
(up to an aggregate amount of Indebtedness then permitted to be Incurred under
clause (i) of the definition of Permitted Indebtedness) from time to time in
accordance with its terms and the applicable terms of the Intercreditor
Agreement.
"Revolving Credit Facility Administrative Agent" means Wells Fargo
Foothill, Inc., as administrative agent under the Revolving Credit Facility,
together with its successors in such capacity.
"Revolving Credit Facility Obligations" means all Obligations, including,
without limitation, Related Revolving Indebtedness, under the Revolving Credit
Facility.
"Rule 144" means Rule 144 promulgated under the Securities Act.
30
"Rule 144A" means Rule 144A promulgated under the Securities Act.
"Rule 903" means Rule 903 promulgated under the Securities Act.
"Rule 904" means Rule 904 promulgated under the Securities Act.
"S&P" means Standard and Poor's Ratings Service, a division of McGraw-Hill,
Inc., and its successors.
"Sale-Leaseback Transaction" means any transaction or series of related
transactions whereby the Company or a Restricted Subsidiary sells or transfers
any of its assets or properties (the "Sold Assets") and, as part of such
transaction or series of related transactions, either (i) leases (as lessee or
sublessee) back such assets or properties (or any part thereof) or (ii) leases
(as lessee or sublessee) any other assets or properties (or any part thereof)
(the "Leased Assets") from the same Person (or group of Persons) or from an
Affiliate of the same Person (or group of Persons) to whom the Sold Assets are
sold and which Leased Assets are intended to be used by the Company and the
Restricted Subsidiaries for substantially the same purpose or purposes as the
Sold Assets were used by the Company and the Restricted Subsidiaries (and in the
case of mineral leases, such mineral leases constituting Leased Assets are in
substantially the same geographic location as the mineral leases constituting
Sold Assets).
"Sale of Collateral" means any Asset Sale to the extent involving assets,
rights or other property that constitutes Collateral under the Collateral
Documents.
"Secured Obligations" means, collectively, the Revolving Credit Facility
Obligations, the Note Obligations and the Bridge Loan Obligations.
"Securities Act" means the Securities Act of 1933, as amended.
"Shelf Registration Statement" means the Shelf Registration Statement as
defined in the Registration Rights Agreement.
"Six-Month LIBOR" means the rate determined in accordance with the
following provisions:
(1) On each Interest Determination Date, the Calculation Agent will
determine the Six-Month LIBOR rate, which shall be the rate for deposits in the
London interbank market in U.S. dollars having a six-month maturity commencing
on the succeeding Interest Reset Date immediately following such Interest
Determination Date which appears on the Designated LIBOR Page as of 11:00 a.m.,
London time, on such Interest Determination Date.
(2) With respect to an Interest Determination Date for which no such rate
appears, the Calculation Agent will request the principal London offices of each
of four major reference banks in the London interbank market, as selected by the
Calculation Agent (after consultation with the Company), to provide the
Calculation Agent with its offered quotation for deposits in U.S. dollars having
a six-month maturity commencing on the Interest Reset Date immediately following
such Interest Determination Date to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on such Interest Determination Date
31
and in a principal amount not less than $1,000,000 that is representative for a
single transaction in U.S. dollars in such market at such time. If at least two
such quotations are provided, the Six-Month LIBOR rate on such Interest
Determination Date will be the arithmetic mean of such quotations. If fewer than
two quotations are provided, the Six-Month LIBOR rate determined on such
Interest Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., New York City time, on such Interest Determination
Date by three major banks in The City of New York selected by the Calculation
Agent (after consultation with the Company) for loans in U.S. dollars to leading
European banks, having a six-month maturity and in a principal amount not less
than $1,000,000 that is representative for a single transaction in U.S. dollars
in such market at such time. However, if the banks so selected by the
Calculation Agent are not quoting as mentioned above, the Six-Month LIBOR rate
with respect to such Interest Determination Date will be the Six-Month LIBOR
rate in effect immediately prior to such Interest Determination Date.
"Special Record Date" for the payment of any Defaulted Interest means a
date fixed by the Trustee pursuant to Article 2 hereof.
"Stated Maturity" means, when used with respect to any Note or any
installment of interest thereon, the date specified in such Note as the fixed
date on which the principal of such Note or such installment of interest is due
and payable, and, when used with respect to any other Indebtedness or any
installment of interest thereon, means the date specified in the instrument
evidencing or governing such Indebtedness as the fixed date on which the
principal of such Indebtedness or such installment of interest is due and
payable.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Restricted Subsidiary which is expressly subordinated in right of payment or
security to the Notes or a Subsidiary Guarantee, as applicable.
"Subsidiary" means, with respect to any Person, (i) a corporation a
majority of whose Voting Stock is at the time, directly or indirectly, owned by
such Person, by one or more Subsidiaries of such Person or by such Person and
one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) including, without limitation, a joint venture, in which such
Person, one or more Subsidiaries thereof or such Person and one or more
Subsidiaries thereof, directly or indirectly, at the date of determination
thereof, have at least majority ownership interest entitled to vote in the
election of directors, managers or trustees thereof (or other Persons performing
similar functions).
"Subsidiary Guarantee" means any Guarantee of the Notes by any Subsidiary
Guarantor, as specified in Section 13.1 hereof.
"Subsidiary Guarantor" means (1) initially the several Restricted
Subsidiaries named in this Indenture as a party hereto, (2) each of the other
Restricted Subsidiaries, if any, executing a supplemental indenture to this
Indenture in compliance with the provisions described under Article 8 hereof and
(3) any Person that becomes a successor guarantor of the Notes in compliance
with the provisions described under Article 13 hereof.
"Surviving Entity" has the meaning specified in Section 7.1(A)(1)(b)
hereof.
32
"Trigger Date" has the meaning specified in Section 9.16(c) hereof.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended and in force at the date as of which this Indenture was executed, except
as provided in Section 8.5 hereof.
"Trust Monies" means, subject to the Intercreditor Agreement, all cash and
Cash Equivalents received by the Collateral Agent:
(1) upon the release of Collateral from the Collateral Agent's Liens;
(2) pursuant to the Collateral Documents;
(3) as proceeds of any sale or other disposition of all or any part of
the Collateral by or on behalf of the Collateral Agent or any collection,
recovery, receipt, appropriation or other realization of or from all or any
part of the Collateral pursuant to this Indenture or any of the Collateral
Documents or otherwise; or
(4) for application as provided in the relevant provisions of the
Indenture or any Collateral Document for which disposition is not otherwise
specifically provided for in this Indenture or in the Intercreditor
Agreement or any other Collateral Document;
provided, however, that Trust Monies shall in no event include any property
deposited with the Trustee for any redemption, Legal Defeasance or Covenant
Defeasance of the Notes, for the satisfaction and discharge of this Indenture or
to pay the purchase price of Notes pursuant to a Change of Control Offer or Net
Proceeds Offer.
"Trustee" means the Person named as the "Trustee" in the first paragraph of
this Indenture until a successor Trustee will have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Trustee" will mean such
successor Trustee.
"Unrestricted Definitive Note" means one or more Definitive Notes that do
not bear and are not required to bear the Private Placement Legend.
"Unrestricted Global Note" means a permanent global security in the form of
Exhibit A-1 attached hereto that bears the Global Note Legend and that has the
"Schedule of Exchanges of Interests in the Global Note" attached thereto, and
that is deposited with or on behalf of and registered in the name of the
Depositary, representing a series of Notes that do not bear the Private
Placement Legend.
"Unrestricted Subsidiary" means: (a) Grey Wolf Exploration Inc., an Alberta
corporation, and each of its Subsidiaries (whether or not existing on the
Closing Date) unless otherwise designated as a Restricted Subsidiary in
compliance with the provisions of this definition; (b) any Subsidiary of the
Company that at the time of determination is designated an Unrestricted
Subsidiary by the Board of Directors of the Company as provided below; and (c)
any Subsidiary of an Unrestricted Subsidiary. The Board of Directors of the
Company may designate any Subsidiary of the Company as an Unrestricted
Subsidiary so long as: (i) neither the Company nor any Restricted Subsidiary is
directly or indirectly liable pursuant to the terms of any Indebtedness of such
33
Subsidiary; (ii) no default with respect to any Indebtedness of such Subsidiary
would permit (upon notice, lapse of time or otherwise) any holder of any other
Indebtedness of the Company or any Restricted Subsidiary to declare a default on
such other Indebtedness or cause the payment thereof to be accelerated or
payable prior to its Stated Maturity; (iii) neither the Company nor any
Restricted Subsidiary has made an Investment in such Subsidiary (other than
Investments made in such Subsidiary by the Company and any Restricted Subsidiary
(A) in an aggregate amount that would be permitted to be made on the date of
such designation pursuant to, and in accordance with, Section 9.10 hereof or (B)
in the ordinary course of the Oil and Gas Business as described in clause (iv)
of the definition of Permitted Investments); and (iv) such designation will not
result in the creation or imposition of any Lien on any of the Properties of the
Company or any Restricted Subsidiary (other than any Permitted Lien or any Lien
the creation or imposition of which is in compliance with Section 9.14 hereof);
provided, however, that with respect to clause (i), the Company or a Restricted
Subsidiary may be liable for Indebtedness of an Unrestricted Subsidiary if (x)
such liability constituted a Permitted Investment or a Restricted Payment
permitted by Section 9.10 hereof, in each case at the time of incurrence, or (y)
the liability would be a Permitted Investment at the time of designation of such
Subsidiary as an Unrestricted Subsidiary. Any such designation by the Board of
Directors of the Company shall be evidenced to the Trustee by the delivery of a
Board Resolution to the Trustee giving effect to such designation.
The Board of Directors of Company may designate any Unrestricted Subsidiary
as a Restricted Subsidiary if, immediately after giving effect to such
designation, (1) no Default or Event of Default shall have occurred and be
continuing, (2) the Company could Incur $1.00 of additional Indebtedness
(excluding Permitted Indebtedness) in compliance with the covenant described
under Section 9.11 hereof, (3) if any of the properties or assets of the Company
or any of its Restricted Subsidiaries would upon such designation become subject
to any Lien (other than a Permitted Lien), the creation or imposition of such
Lien shall have been in compliance with the covenant described under Section
9.14 hereof, (4) it takes such actions described under Article 13 hereof in
respect of an Unrestricted Subsidiary becoming a Restricted Subsidiary and (5)
such Restricted Subsidiary takes such actions described under Article 11 hereof
if applicable, as are necessary to cause a valid and enforceable perfected first
priority security interest (subject to Permitted Prior Liens) in the Collateral
owned by such Restricted Subsidiary to be created in favor of the Collateral
Agent as security for the Note Obligations. Without limiting the foregoing
sentence, Grey Wolf will not be permitted to become a Restricted Subsidiary
until 91 days after all of the Bridge Loan Obligations are repaid in full and
the Bridge Loan is terminated.
"Unsubordinated Indebtedness" means any Indebtedness of the Company or a
Restricted Subsidiary which is not Subordinated Indebtedness.
"U.S. Government Obligations" has the meaning specified in Section 12.4(a)
hereof.
"U.S. Person" means a U.S. person as defined in Rule 902(k) under the
Securities Act.
"Vice President" when used with respect to the Company or the Trustee,
means any vice president, whether or not designated by a number or a word or
words added before or after the title "vice president."
34
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"Voting Stock" means any class or classes of Capital Stock pursuant to
which the holders thereof have the general voting power under ordinary
circumstances to elect at least a majority of the board of directors, managers
or trustees of any Person (irrespective of whether or not, at the time, stock of
any other class or classes shall have, or might have, voting power by reason of
the happening of any contingency).
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary to the
extent (i) all of the Capital Stock or other ownership interests in such
Restricted Subsidiary, other than any directors' qualifying shares mandated by
applicable law, is owned directly or indirectly by the Company or (ii) such
Restricted Subsidiary is organized in a foreign jurisdiction and is required by
the applicable laws and regulations of such foreign jurisdiction to be partially
owned by the government of such foreign jurisdiction or individual or corporate
citizens of such foreign jurisdiction in order for such Restricted Subsidiary to
transact business in such foreign jurisdiction, provided that the Company,
directly or indirectly, owns the remaining Capital Stock or ownership interest
in such Restricted Subsidiary and, by contract or otherwise, controls the
management and business of such Restricted Subsidiary and derives the economic
benefits of ownership of such Restricted Subsidiary to substantially the same
extent as if such Restricted Subsidiary were a wholly owned Subsidiary.
1.2 INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the 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; and
"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 rules and
not otherwise defined herein have the meanings assigned to them therein.
1.3 RULES OF CONSTRUCTION.
For all purposes of this Indenture, except as otherwise expressly provided
or unless the context otherwise requires:
35
(a) The terms defined in this Article 1 have the meanings assigned to them
in this Article 1, and include the plural as well as the singular;
(b) all accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP;
(c) the words "herein," "hereof," and "hereunder" and other words of
similar import refer to this Indenture as a whole and not to any particular
Article, Section or other subdivision;
(d) the masculine gender includes the feminine and the neuter;
(e) provisions apply to successive events and transactions;
(f) a reference herein to any Person to this Indenture or to any other
agreement or instrument refer to such Person's successors and permitted assigns;
(g) a reference herein to any agreement or instrument refers to such
agreement or instrument (together with any schedule or exhibit attached thereto)
as it may have been, or may hereafter be, amended, modified, supplemented,
waived or restated from time to time in accordance with its terms, but only to
the extent not prohibited by this Indenture;
(h) a reference herein to any law, statute or other legislation or to any
provision thereof includes, unless otherwise expressly provided herein, any
amendment, modification or re-enactment thereof, any legislative provision
substituted therefor and all regulations, rules and interpretations issued
thereunder or pursuant thereto; and
(i) all references herein to "$," money, funds and dollars refer to
currency of the United States of America.
1.4 ONE CLASS OF SECURITIES
The Initial Notes and the Exchange Notes shall vote and consent together on
all matters as one class and neither the Initial Notes nor the Exchange Notes
shall have the right to vote or consent as a separate class on any matter.
ARTICLE 2.........
THE NOTES
2.1 TITLE AND TERMS; FORM AND DATING
(a) General.
The aggregate principal amount of Notes which may be authenticated and
delivered under this Indenture for original issue is limited to $125,000,000.
The Notes will be known and designated as the "Floating Rate Senior Secured
Notes Due 2009," of the Company. The Stated Maturity on which principal of the
Notes is due and payable is December 1, 2009. The Notes will bear interest at
36
the rate, and such interest will accrue and be payable, pursuant to the terms
and provisions contained in the Notes and this Indenture.
The Notes will be redeemable as provided in Article 10 hereof.
The Notes will be subject to defeasance at the option of the Company as
provided in Article 12 hereof.
The Notes will be guaranteed by the Subsidiary Guarantors as provided in
Article 13 hereof.
The Notes will be senior in right of payment to the Company's existing and
future Subordinated Indebtedness.
The Notes will be secured by a first priority perfected security interest
(subject to Permitted Prior Liens) in all material real and personal property
and assets of the Company and its Restricted Subsidiaries, pursuant to the terms
of the Intercreditor Agreement.
The Initial Notes and the Exchange Notes (including the notations thereon
relating to the Subsidiary Guarantees and the Trustee's certificate of
authentication) will be issued substantially in the form of Exhibit A hereto.
Any Note that is a Restricted Definitive Note or a Restricted Global Note shall
bear a Private Placement Legend as set forth in Section 2.5(g)(i) hereof. Any
portion of the text of any Note may be set forth on the reverse thereof. The
Notes may also have set forth on the reverse side thereof a form of assignment
and forms to elect purchase by the Company pursuant to Section 9.15 or 9.16
hereof.
The terms and provisions contained in the Notes shall constitute, and are
hereby expressly made, a part of this Indenture and the Company, the Subsidiary
Guarantors and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby. However,
to the extent any provision of any Note conflicts with the express provisions of
this Indenture, the provisions of this Indenture shall govern and be
controlling.
The Notes will be printed, lithographed or engraved on steel-engraved
borders or may be produced in any other manner, all as determined by the
Officers executing such Notes or notations of Subsidiary Guarantees, as the case
may be, as evidenced by their execution of such Notes or notations of Subsidiary
Guarantees, as the case may be. The Notes may have notations, legends or
endorsements required by law, stock exchange rule or usage. Each Note shall be
dated the date of its authentication. The Notes shall be in denominations of
$1,000 and integral multiples thereof.
(b) Global Notes.
Notes issued in global form shall be substantially in the form of Exhibit
A-1 or A-2 hereto (including the Global Note Legend thereon and the "Schedule of
Exchanges of Interests in the Global Note" attached thereto). Notes issued in
definitive form shall be substantially in the form of Exhibit A-1 hereto (but
without the Global Note Legend thereon and without the "Schedule of Exchanges of
Interests in the Global Note" attached thereto). Each Global Note shall
37
represent such of the outstanding Notes as shall be specified therein and each
shall provide that it shall represent the aggregate principal amount of
outstanding Notes from time to time endorsed thereon and that the aggregate
principal amount of outstanding Notes represented thereby may from time to time
be reduced or increased (subject to the limitation set forth in Section 2.1(a)
hereof), as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Note to reflect the amount of any increase or decrease in the
aggregate principal amount of outstanding Notes represented thereby shall be
made by the Trustee as custodian for the Depositary in accordance with written
instructions given by the Holder thereof as required by Section 2.5 hereof.
(c) Temporary Global Notes.
Notes offered and sold in reliance on Regulation S shall be issued
initially in the form of the Regulation S Temporary Global Note, which shall be
deposited on behalf of the purchasers of the Notes represented thereby with the
Trustee, at its New York City office, as custodian for the Depositary, and
registered in the name of the Depositary or the nominee of the Depositary for
the accounts of designated agents holding on behalf of Euroclear or Clearstream,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided. The Restricted Period shall be terminated upon the receipt by the
Trustee of (i) a written certificate from the Depositary, together with copies
of certificates from Euroclear and Clearstream certifying that they have
received certification of non-United States beneficial ownership of 100% of the
aggregate principal amount of the Regulation S Temporary Global Note (except to
the extent of any beneficial owner thereof who acquired an interest therein
during the Restricted Period pursuant to another exemption from registration
under the Securities Act and who will take delivery of a beneficial ownership
interest in a 144A Global Note bearing a Private Placement Legend, all as
contemplated by Section 2.5(a)(ii) hereof) and (ii) an Officers' Certificate
from the Company certifying that a 40-day distribution compliance period (within
the meaning of Regulation S) with respect to the Notes has expired. Following
the termination of the Restricted Period, beneficial interests in the Regulation
S Temporary Global Note shall be exchanged for beneficial interests in
Regulation S Permanent Global Notes pursuant to the Applicable Procedures.
Simultaneously with the authentication of Regulation S Permanent Global Notes,
the Trustee shall cancel the Regulation S Temporary Global Note. The aggregate
principal amount of the Regulation S Temporary Global Note and the Regulation S
Permanent Global Notes may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the Depositary or its
nominee, as the case may be, in connection with transfers of interest as
hereinafter provided.
(d) Euroclear, Clearstream Procedures Applicable.
The provisions of the "Operating Procedures of the Euroclear System" and
"Terms and Conditions Governing Use of Euroclear" and the "General Terms and
Conditions of Clearstream Banking" and "Customer Handbook" of Clearstream shall
be applicable to transfers of beneficial interests in the Regulation S Temporary
Global Note and the Regulation S Global Notes that are held by Participants
through Euroclear or Clearstream.
2.2 DENOMINATIONS
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The Notes will be issuable only in denominations of $1,000 and any integral
multiple thereof.
2.3 EXECUTION AND AUTHENTICATION
The Notes will be executed on behalf of the Company by its Chairman, its
President or a Vice President of the Company and attested by its Secretary or an
Assistant Secretary of the Company. The signature of any two of these Officers
on the Notes may be manual or facsimile signatures of the present or any future
such Authorized Officer and may be imprinted or otherwise reproduced on the
Notes. Notes bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company will bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
At any time after the execution and delivery of this Indenture, the Company
may deliver Notes executed by the Company and having the notations of Subsidiary
Guarantees executed by the Subsidiary Guarantors to the Trustee for
authentication, together with a Company Order signed by two officers of the
Company (the "Authentication Order") for the authentication and delivery of such
Notes, and the Trustee, in accordance with such Company Order, will authenticate
and deliver such Notes for original issue up to the aggregate principal amount
of $125,000,000 with the notations of Subsidiary Guarantees thereon as provided
in this Indenture.
No Note will be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose unless there appears on such Note a certificate of
authentication substantially in the form provided for herein duly executed by
the Trustee by manual signature of the Trustee and such certificate upon any
Note will be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder and is entitled to the benefits of
this Indenture.
In case the Company, pursuant to and in compliance with Article 7 hereof,
will be consolidated or merged with or into any other Person or will sell,
convey, transfer, lease or otherwise dispose of all or substantially all of its
Properties to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company will have
been merged, or the Person which will have received a sale, conveyance,
transfer, lease or other disposition as aforesaid, will have executed an
indenture supplemental hereto with the Trustee pursuant to Article 7 hereof, any
of the Notes authenticated or delivered prior to such sale, consolidation,
merger, conveyance, transfer, lease or other disposition may, from time to time,
at the request of the successor Person be exchanged for other Notes executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, will authenticate and deliver
Notes as specified in such request for the purpose of such exchange. If Notes
will at any time be authenticated and delivered in any new name of a successor
Person pursuant to this Section 2.3 in exchange or substitution for or upon
registration of transfer of any Notes, such successor Person, at the option of
the Holders but without expense to them, will provide for the exchange of all
Notes at the time Outstanding for Notes authenticated and delivered in such new
name.
39
The Trustee may (at the expense of the Company) appoint an authenticating
agent acceptable to the Company to authenticate Notes. 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
agent. An authenticating agent has the same rights as an Agent to deal with
Holders or an Affiliate of the Company and has the same protections under
Article 5 herein.
2.3.1 NOTE REGISTRAR AND PAYING AGENT
The Company shall maintain an office or agency where Notes may be presented
for registration of transfer or for exchange ("Note Registrar") and an office or
agency where Notes may be presented for payment. The Note Registrar shall keep a
register of the Notes and of their transfer and exchange. The Company may
appoint one or more co-registrars and one or more paying agents. The term "Note
Registrar" includes any co-registrar and the term "Paying Agent" includes any
additional paying agent. The Company may change any Paying Agent or Note
Registrar without notice to any Holder. The Company shall notify the Trustee in
writing of the name and address of any Agent not a party to this Indenture. If
the Company fails to appoint or maintain another entity as Note Registrar or
Paying Agent, the Trustee shall act as such. The Company or any of its
Subsidiaries (including any Subsidiary Guarantor) may act as Paying Agent or
Note Registrar.
The Company initially appoints The Depository Trust Company to act as
Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as the Note Registrar and
the Paying Agent and to act as custodian with respect to the Global Notes.
2.4 PERSONS DEEMED OWNERS AND HOLDERS LISTS
Prior to the due presentment of a Note for registration of transfer, the
Company, the Subsidiary Guarantors, the Note Registrar, the Trustee and any
agent of the Company, the Subsidiary Guarantors or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of (and premium, if any, on) and
(subject to Section 2.11 hereof) interest and Liquidated Damages, if any, on
such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Company, the Subsidiary Guarantors, the Note Registrar,
the Trustee or any agent of the Company, the Subsidiary Guarantors or the
Trustee will be affected by notice to the contrary.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with Section 312(a) of the TIA. If the
Trustee is not the Note Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each Interest Payment Date and at such other
times as the Trustee may request in writing, a list in such form and as of such
date as the Trustee may reasonably require of the names and addresses of the
Holders of Notes and the Company shall otherwise comply with Section 312(a) of
the TIA.
2.5 TRANSFER AND EXCHANGE
40
(a) Transfer and Exchange of Global Notes.
A Global Note may not be transferred as a whole except by the Depositary to
a nominee of the Depositary, by a nominee of the Depositary to the Depositary or
to another nominee of the Depositary, or by the Depositary or any such nominee
to a successor Depositary or a nominee of such successor Depositary. All Global
Notes will be exchanged by the Company for Definitive Notes if (i) the Company
delivers to the Trustee written notice from the Depositary that it is unwilling
or unable to continue to act as Depositary or that it is no longer a clearing
agency registered under the Exchange Act and, in either case, a successor
Depositary is not appointed by the Company within 120 days after the date of
such notice from the Depositary or (ii) the Company in its sole discretion
determines that the Global Notes (in whole but not in part) should be exchanged
for Definitive Notes and delivers a written notice to such effect to the
Trustee; provided that in no event shall the Regulation S Temporary Global Note
be exchanged by the Company for Definitive Notes prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Note Registrar of any
certificate required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act.
Upon the occurrence of either of the preceding events in (i) or (ii) above,
Definitive Notes shall be issued in such names as the Depositary shall instruct
the Trustee in writing. Global Notes also may be exchanged or replaced, in whole
or in part, as provided in Sections 2.6 and 2.9 hereof. Every Note authenticated
and delivered in exchange for, or in lieu of, a Global Note or any portion
thereof, pursuant to this Section 2.5 or Section 2.6 or 2.9 hereof, shall be
authenticated and delivered in the form of, and shall be, a Global Note. A
Global Note may not be exchanged for another Note other than as provided in this
Section 2.5(a), however, beneficial interests in a Global Note may be
transferred and exchanged as provided in Section 3.5(b), (c) or (f) hereof.
(b) Transfer and Exchange of Beneficial Interests in the Global Notes.
The transfer and exchange of beneficial interests in the Global Notes shall
be effected through the Depositary in accordance with the provisions of this
Indenture and the Applicable Procedures. Beneficial interests in the Restricted
Global Notes shall be subject to restrictions on transfer comparable to those
set forth herein to the extent required by the Securities Act. Transfers of
beneficial interests in the Global Notes also shall require compliance with
either subparagraph (i) or (ii) below, as applicable, as well as one or more of
the other following subparagraphs, as applicable:
(i) Transfer of Beneficial Interests in the Same Global Note. Beneficial
interests in any Restricted Global Note may be transferred to Persons who take
delivery thereof in the form of a beneficial interest in the same Restricted
Global Note in accordance with the transfer restrictions set forth in the
Private Placement Legend; provided, however, that prior to the expiration of the
Restricted Period, transfers of beneficial interests in the Temporary Regulation
S Global Note may not be made to a U.S. Person or for the account or benefit of
a U.S. Person (other than the Initial Purchaser). Beneficial interests in any
Unrestricted Global Note may be transferred to Persons who take delivery thereof
in the form of a beneficial interest in an Unrestricted Global Note. No written
orders or instructions shall be required to be delivered to the Note Registrar
to effect the transfers described in this Section 2.5(b)(i).
41
(ii) All Other Transfers and Exchanges of Beneficial Interests in Global
Notes. In connection with all transfers and exchanges of beneficial interests
that are not subject to Section 2.5(b)(i) hereof, the transferor of such
beneficial interest must deliver to the Note Registrar either (A) (1) a written
order from a Participant or an Indirect Participant given to the Depositary in
accordance with the Applicable Procedures directing the Depositary to credit or
cause to be credited a beneficial interest in another Global Note in an amount
equal to the beneficial interest to be transferred or exchanged and (2)
instructions given in accordance with the Applicable Procedures containing
information regarding the Participant account to be credited with such increase
or (B) (1) a written order from a Participant or an Indirect Participant given
to the Depositary in accordance with the Applicable Procedures directing the
Depositary to cause to be issued a Definitive Note in an amount equal to the
beneficial interest to be transferred or exchanged and (2) instructions given by
the Depositary to the Note Registrar containing information regarding the Person
in whose name such Definitive Note shall be registered to effect the transfer or
exchange referred to in (B)(1) above; provided that in no event shall Definitive
securities be issued upon the transfer or exchange of beneficial interests in
the Regulation S Temporary Global Note prior to (x) the expiration of the
Restricted Period and (y) the receipt by the Note Registrar of any certificate
required pursuant to Rule 903(b)(3)(ii)(B) under the Securities Act. Upon
consummation of an Exchange Offer by the Company in accordance with Section
2.5(f) hereof, the requirements of this Section 2.5(b)(ii) shall be deemed to
have been satisfied upon receipt by the Note Registrar of the instructions
contained in the Letter of Transmittal delivered by the holder of such
beneficial interests in the Restricted Global Notes. Upon satisfaction of all of
the requirements for transfer or exchange of beneficial interests in Global
Notes contained in this Indenture and the Notes or otherwise applicable under
the Securities Act, the Trustee shall adjust the principal amount of the
relevant Global Note(s) pursuant to Section 2.5(h) hereof.
(iii) Transfer of Beneficial Interests to Another Restricted Global Note. A
beneficial interest in any Restricted Global Note may be transferred to a Person
who takes delivery thereof in the form of a beneficial interest in another
Restricted Global Note if the transfer complies with the requirements of Section
2.5(b)(ii) hereof and the Note Registrar receives the following:
(A) if the transferee will take delivery in the form of a beneficial
interest in the 144A Global Note, then the transferor must deliver a
certificate in the form of Exhibit B hereto, including the
certifications in item (1) thereof; and
(B) if the transferee will take delivery in the form of a beneficial
interest in the Regulation S Temporary Global Note or the Regulation S
Global Note, then the transferor must deliver a certificate in the form
of Exhibit B hereto, including the certifications in item (2) thereof.
(iv) Transfer and Exchange of Beneficial Interests in a Restricted Global
Note for Beneficial Interests in the Unrestricted Global Note. A beneficial
interest in any Restricted Global Note may be exchanged by any holder thereof
for a beneficial interest in an Unrestricted Global Note or transferred to a
Person who takes delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note if the exchange or transfer complies with the
requirements of Section 2.5(b)(ii) hereof and:
42
(A) such exchange or transfer is effected pursuant to the Exchange Offer in
accordance with the Registration Rights Agreement and the holder of the
beneficial interest to be transferred, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the applicable Letter of
Transmittal that it is not (1) a Broker-Dealer, (2) a Person participating in
the distribution of the Exchange Notes or (3) a Person who is an affiliate (as
defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration Statement
in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the Exchange
Offer Registration Statement in accordance with the Registration Rights
Agreement; or
(D) the Note Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a beneficial
interest in an Unrestricted Global Note, a certificate from such holder
in the form of Exhibit C hereto, including the certifications in item
(1)(a) thereof; or
(2) if the holder of such beneficial interest in a Restricted Global
Note proposes to transfer such beneficial interest to a Person who
shall take delivery thereof in the form of a beneficial interest in an
Unrestricted Global Note, a certificate from such holder in the form of
Exhibit B hereto, including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Note
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Note Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
If any such transfer is effected pursuant to subparagraph (B) or (D) above
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.3 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the aggregate principal
amount of beneficial interests transferred pursuant to subparagraph (B) or (D)
above.
Beneficial interests in an Unrestricted Global Note cannot be exchanged
for, or transferred to Persons who take delivery thereof in the form of, a
beneficial interest in a Restricted Global Note.
(c) Transfer or Exchange of Beneficial Interests for Definitive Notes.
43
(i) Beneficial Interests in Restricted Global Notes to Restricted
Definitive Notes. If any holder of a beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted Definitive
Note or to transfer such beneficial interest to a Person who takes delivery
thereof in the form of a Restricted Definitive Note, then, upon receipt by the
Note Registrar of the following documentation:
(A) if the holder of such beneficial interest in a Restricted Global
Note proposes to exchange such beneficial interest for a Restricted
Definitive Note, a certificate from such holder in the form of Exhibit
C hereto, including the certifications in item (2)(a) thereof;
(B) if such beneficial interest is being transferred to a QIB in
accordance with Rule 144A, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such beneficial interest is being transferred to a non-U.S.
Person in an offshore transaction in accordance with Rule 903 or Rule
904, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such beneficial interest is being transferred pursuant to an
exemption from the registration requirements of the Securities Act in
accordance with Rule 144, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(a) thereof;
(E) if such beneficial interest is being transferred to the Company
or any of its Subsidiaries, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (3)(b) thereof;
or
(F) if such beneficial interest is being transferred pursuant to an
effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof,
the Trustee shall cause the aggregate principal amount of the applicable
Global Note to be reduced accordingly pursuant to Section 2.5(h) hereof,
and the Company shall execute and the Trustee shall, upon receipt of an
Authentication Order in accordance with Section 2.3 hereof, authenticate
and deliver to the Person designated in the instructions a Definitive Note
in the appropriate principal amount. Any Definitive Note issued in exchange
for a beneficial interest in a Restricted Global Note pursuant to this
Section 2.5(c) shall be registered in such name or names and in such
authorized denomination or denominations as the holder of such beneficial
interest shall instruct the Note Registrar through instructions from the
Depositary and the Participant or Indirect Participant. The Trustee shall
(at the expense of the Company) deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note
issued in exchange for a beneficial interest in a Restricted Global Note
pursuant to this Section 2.5(c)(i) shall bear the Private Placement Legend
and shall be subject to all restrictions on transfer contained therein.
44
Notwithstanding Sections 2.5(c)(i)(A) and (C) hereof, a beneficial
interest in the Regulation S Temporary Global Note may not be exchanged
for a Definitive Note or transferred to a Person who takes delivery
thereof in the form of a Definitive Note prior to (x) the expiration of
the Restricted Period and (y) the receipt by the Note Registrar of any
certificates required pursuant to Rule 903(b)(3)(ii)(B) under the
Securities Act, except in the case of a transfer pursuant to an
exemption from the registration requirements of the Securities Act
other than Rule 903 or Rule 904.
(ii) Beneficial Interests in Restricted Global Notes to Unrestricted
Definitive Notes. A holder of a beneficial interest in a Restricted Global Note
may exchange such beneficial interest for an Unrestricted Definitive Note or may
transfer such beneficial interest to a Person who takes delivery thereof in the
form of an Unrestricted Definitive Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
holder of such beneficial interest, in the case of an exchange, or the
transferee, in the case of a transfer, certifies in the Letter of
Transmittal that it is not (1) a Broker-Dealer, (2) a Person
participating in the distribution of the Exchange Notes or (3) a Person
who is an affiliate (as defined in Rule 144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Note Registrar receives the following:
(1) if the holder of such beneficial interest in a Restricted
Global Note proposes to exchange such beneficial interest for a
Definitive Note that does not bear the Private Placement Legend, a
certificate from such holder in the form of Exhibit C hereto,
including the certifications in item (1)(b) thereof; or
(2) if the holder of such beneficial interest in a Restricted
Global Note proposes to transfer such beneficial interest to a
Person who shall take delivery thereof in the form of a Definitive
Note that does not bear the Private Placement Legend, a certificate
from such holder in the form of Exhibit B hereto, including the
certifications in item (4) thereof,
and, in each such case set forth in this subparagraph (D), if the Note
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Note Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
45
(iii) Beneficial Interests in Unrestricted Global Notes to Unrestricted
Definitive Notes. If any holder of a beneficial interest in an Unrestricted
Global Note proposes to exchange such beneficial interest for a Definitive Note
or to transfer such beneficial interest to a Person who takes delivery thereof
in the form of a Definitive Note, then, upon satisfaction of the conditions set
forth in Section 2.5(b)(ii) hereof, the Trustee shall cause the aggregate
principal amount of the applicable Global Note to be reduced accordingly
pursuant to Section 2.5(h) hereof, and the Company shall execute and the
Trustee, shall upon receipt of an Authentication Order in accordance with
Section 2.3 hereof, authenticate and (at the expense of the Company) deliver to
the Person designated in the instructions a Definitive Note in the appropriate
principal amount. Any Definitive Note issued in exchange for a beneficial
interest pursuant to this Section 2.5(c)(iii) shall be registered in such name
or names and in such authorized denomination or denominations as the holder of
such beneficial interest shall instruct the Note Registrar through instructions
from the Depositary and the Participant or Indirect Participant. The Trustee
shall (at the expense of the Company) deliver such Definitive Notes to the
Persons in whose names such Notes are so registered. Any Definitive Note issued
in exchange for a beneficial interest pursuant to this Section 2.5(c)(iii) shall
not bear the Private Placement Legend.
(d) Transfer and Exchange of Definitive Notes for Beneficial Interests.
(i) Restricted Definitive Notes to Beneficial Interests in Restricted
Global Notes. If any Holder of a Restricted Definitive Note proposes to exchange
such Note for a beneficial interest in a Restricted Global Note or to transfer
such Restricted Definitive Note to a Person who takes delivery thereof in the
form of a beneficial interest in a Restricted Global Note, then, upon receipt by
the Note Registrar of the following documentation:
(A) if the Holder of such Restricted Definitive Note proposes to
exchange such Note for a beneficial interest in a Restricted Global
Note, a certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (2)(b) thereof;
(B) if such Restricted Definitive Note is being transferred to a QIB
in accordance with Rule 144A, a certificate to the effect set forth in
Exhibit B hereto, including the certifications in item (1) thereof;
(C) if such Restricted Definitive Note is being transferred to a
non-U.S. Person in an offshore transaction in accordance with Rule 903
or Rule 904, a certificate to the effect set forth in Exhibit B hereto,
including the certifications in item (2) thereof;
(D) if such Restricted Definitive Note is being transferred pursuant
to an exemption from the registration requirements of the Securities
Act in accordance with Rule 144, a certificate to the effect set forth
in Exhibit B hereto, including the certifications in item (3)(a)
thereof;
46
(E) if such Restricted Definitive Note is being transferred to the
Company or any of its Subsidiaries, a certificate to the effect set
forth in Exhibit B hereto, including the certifications in item (3)(b)
thereof; or
(F) if such Restricted Definitive Note is being transferred pursuant
to an effective registration statement under the Securities Act, a
certificate to the effect set forth in Exhibit B hereto, including the
certifications in item (3)(c) thereof, the Trustee shall cancel the
Restricted Definitive Note, increase or cause to be increased the
aggregate principal amount of, in the case of clause (A) above, the
appropriate Restricted Global Note, in the case of clause (B) above,
the 144A Global Note, and in the case of clause (C) above, the
Regulation S Global Note.
(ii) Restricted Definitive Note to Beneficial Interests in Unrestricted
Global Notes. A Holder of a Restricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Restricted Definitive Note to a Person who takes delivery thereof in the form of
a beneficial interest in an Unrestricted Global Note only if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Note Registrar receives the following:
(1) if the Holder of such Definitive Notes proposes to exchange
such Notes for a beneficial interest in the Unrestricted Global
Note, a certificate from such Holder in the form of Exhibit C
hereto, including the certifications in item (1)(c) thereof; or
(2) if the Holder of such Definitive Notes proposes to transfer
such Notes to a Person who shall take delivery thereof in the form
of a beneficial interest in the Unrestricted Global Note, a
certificate from such Holder in the form of Exhibit B hereto,
including the certifications in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Note
Registrar so requests or if the Applicable Procedures so require, an
Opinion of Counsel in form reasonably acceptable to the Note Registrar to
the effect that such exchange or transfer is in compliance with the
Securities Act and that the restrictions on transfer contained herein and
47
in the Private Placement Legend are no longer required in order to maintain
compliance with the Securities Act.
Upon satisfaction of the conditions of any of the subparagraphs in this
Section 2.5(d)(ii), the Trustee shall cancel the Definitive Notes and
increase or cause to be increased the aggregate principal amount of the
Unrestricted Global Note.
(iii) Unrestricted Definitive Notes to Beneficial Interests in Unrestricted
Global Notes. A Holder of an Unrestricted Definitive Note may exchange such Note
for a beneficial interest in an Unrestricted Global Note or transfer such
Definitive Notes to a Person who takes delivery thereof in the form of a
beneficial interest in an Unrestricted Global Note at any time. Upon receipt of
a written request for such an exchange or transfer, the Trustee shall cancel the
applicable Unrestricted Definitive Note and increase or cause to be increased
the aggregate principal amount of one of the Unrestricted Global Notes.
If any such exchange or transfer from a Definitive Note to a beneficial
interest is effected pursuant to Section 2.5(d)(ii)(B), (ii)(D) or (iii) hereof
at a time when an Unrestricted Global Note has not yet been issued, the Company
shall issue and, upon receipt of an Authentication Order in accordance with
Section 2.3 hereof, the Trustee shall authenticate one or more Unrestricted
Global Notes in an aggregate principal amount equal to the principal amount of
Definitive Notes so transferred.
(e) Transfer and Exchange of Definitive Notes for Definitive Notes.
Upon request by a Holder of Definitive Notes and such Holder's compliance
with the provisions of this Section 2.5(e), the Note Registrar shall register
the transfer or exchange of Definitive Notes. Prior to such registration of
transfer or exchange, the requesting Holder shall present or surrender to the
Note Registrar the Definitive Notes duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the Note Registrar duly executed
by such Holder or by his attorney, duly authorized in writing. In addition, the
requesting Holder shall provide any additional certifications, documents and
information, as applicable, required pursuant to the following provisions of
this Section 2.5(e).
(i) Restricted Definitive Notes to Restricted Definitive Notes. Any
Restricted Definitive Note may be transferred to and registered in the name of
Persons who take delivery thereof in the form of a Restricted Definitive Note if
the Note Registrar receives the following:
(A) if the transfer will be made pursuant to Rule 144A, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
including the certifications in item (1) thereof;
(B) if the transfer will be made pursuant to Rule 903 or Rule 904,
then the transferor must deliver a certificate in the form of Exhibit B
hereto, including the certifications in item (2) thereof; and
(C) if the transfer will be made pursuant to any other exemption
from the registration requirements of the Securities Act, then the
transferor must deliver a certificate in the form of Exhibit B hereto,
48
including the certifications, certificates and Opinion of Counsel
required by item (3) thereof, if applicable.
(ii) Restricted Definitive Notes to Unrestricted Definitive Notes. Any
Restricted Definitive Note may be exchanged by the Holder thereof for an
Unrestricted Definitive Note or transferred to a Person or Persons who take
delivery thereof in the form of an Unrestricted Definitive Note if:
(A) such exchange or transfer is effected pursuant to the Exchange
Offer in accordance with the Registration Rights Agreement and the
Holder, in the case of an exchange, or the transferee, in the case of a
transfer, certifies in the Letter of Transmittal that it is not (1) a
Broker-Dealer, (2) a Person participating in the distribution of the
Exchange Notes or (3) a Person who is an affiliate (as defined in Rule
144) of the Company;
(B) any such transfer is effected pursuant to the Shelf Registration
Statement in accordance with the Registration Rights Agreement;
(C) any such transfer is effected by a Broker-Dealer pursuant to the
Exchange Offer Registration Statement in accordance with the
Registration Rights Agreement; or
(D) the Note Registrar receives the following:
(1) if the Holder of such Restricted Definitive Notes proposes to
exchange such Notes for an Unrestricted Definitive Note, a
certificate from such Holder in the form of Exhibit C hereto,
including the certifications in item (1)(d) thereof; or
(2) if the Holder of such Restricted Definitive Notes proposes to
transfer such Notes to a Person who shall take delivery thereof in
the form of an Unrestricted Definitive Note, a certificate from such
Holder in the form of Exhibit B hereto, including the certifications
in item (4) thereof;
and, in each such case set forth in this subparagraph (D), if the Note
Registrar so requests, an Opinion of Counsel in form reasonably acceptable
to the Note Registrar to the effect that such exchange or transfer is in
compliance with the Securities Act and that the restrictions on transfer
contained herein and in the Private Placement Legend are no longer required
in order to maintain compliance with the Securities Act.
(iii) Unrestricted Definitive Notes to Unrestricted Definitive Notes. A
Holder of Unrestricted Definitive Notes may transfer such Notes to a Person who
takes delivery thereof in the form of an Unrestricted Definitive Note. Upon
receipt of a request to register such a transfer, the Note Registrar shall
register the Unrestricted Definitive Notes pursuant to the instructions from the
Holder thereof.
49
(f) Exchange Offer.
Upon the occurrence of the Exchange Offer in accordance with the
Registration Rights Agreement, the Company shall issue and, upon receipt of an
Authentication Order in accordance with Section 2.3 hereof, the Trustee shall
authenticate (i) one or more Unrestricted Global Notes in an aggregate principal
amount equal to the principal amount of the beneficial interests in the
Restricted Global Notes tendered for acceptance by Persons that certify in the
Letters of Transmittal that (x) they are not Broker-Dealers, (y) they are not
participating in a distribution of the Exchange Notes and (z) they are not
affiliates (as defined in Rule 144) of the Company, and accepted for exchange in
the Exchange Offer and (ii) Definitive Notes in an aggregate principal amount
equal to the principal amount of the Restricted Definitive Notes accepted for
exchange in the Exchange Offer. Concurrently with the issuance of such Notes,
the Trustee shall cause the aggregate principal amount of the applicable
Restricted Global Notes to be reduced accordingly, and the Company shall execute
and the Trustee shall authenticate and (at the expense of the Company) deliver
to the Persons designated by the Holders of Definitive securities so accepted
Definitive Notes in the appropriate principal amount.
(g) Legends.
The following legends shall appear on the face of all Global Notes and
Definitive Notes issued under this Indenture unless specifically stated
otherwise in the applicable provisions of this Indenture.
(i) Private Placement Legend.
(A) Except as permitted by subparagraph (B) below, each Global Note
and each Definitive Note (and all Notes issued in exchange therefor or
substitution thereof) shall bear the legend in substantially the
following form:
"THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR
OTHER JURISDICTION. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION
OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION.
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN
BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED
SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE, PRIOR TO
THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT IS TWO YEARS
AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON
WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS
NOTE (OR ANY PREDECESSOR NOTES), ONLY (A) TO THE ISSUER, (B) PURSUANT
TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE
50
SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN
"ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a) UNDER THE
SECURITIES ACT THAT IS AN ACCREDITED INVESTOR ACQUIRING THE NOTE FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF $100,000 OF NOTES, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN
CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR
(F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND THE
TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF
THEM. THIS LEGEND WILL BE REMOVED UPON REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
(B) Notwithstanding the foregoing, any Global Note or Definitive
Note issued pursuant to subparagraph (b)(iv), (c)(ii), (c)(iii),
(d)(ii), (d)(iii), (e)(ii), (e)(iii) or (f) to this Section 2.5 (and
all Notes issued in exchange therefor or substitution thereof) shall
not bear the Private Placement Legend.
(ii) Global Note Legend. Each Global Note shall bear a legend in
substantially the following form:
"THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE
INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE
BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY
PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (I) THE TRUSTEE MAY MAKE
SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.6 OF THE
INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN
PART PURSUANT TO SECTION 2.5(a) OF THE INDENTURE, (III) THIS GLOBAL
NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO
SECTION 2.10 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE
51
TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF
THE COMPANY."
(iii) Regulation S Temporary Global Note Legend. The Regulation S Temporary
Global Note shall bear a legend in substantially the following form:
"THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND
THE CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED
NOTES, ARE AS SPECIFIED IN THE INDENTURE (AS DEFINED HEREIN). NEITHER
THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS REGULATION S TEMPORARY
GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF INTEREST HEREON.
PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS
DEFINED IN REGULATION S ("REGULATION S") UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT")), THIS SECURITY MAY NOT BE
OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED WITHIN THE UNITED
STATES (AS DEFINED IN REGULATION S) OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION S), EXCEPT TO A
PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE
REFERRED TO HEREIN OR AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE
MEANING OF RULE 501(a) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE
NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL
ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF THE
NOTES OF $100,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT."
(h) Cancellation and/or Adjustment of Global Notes.
At such time as all beneficial interests in a particular Global Note have
been exchanged for Definitive Notes or a particular Global Note has been
redeemed, repurchased or canceled in whole and not in part, each such Global
Note shall be returned to or retained and canceled by the Trustee in accordance
with Section 2.10 hereof. At any time prior to such cancellation, if any
beneficial interest in a Global Note is exchanged for or transferred to a Person
who will take delivery thereof in the form of a beneficial interest in another
Global Note or for Definitive Notes, the principal amount of securities
represented by such Global Note shall be reduced accordingly and an endorsement
shall be made on such Global Note by the Trustee or by the Depositary at the
direction of the Trustee to reflect such reduction; and if the beneficial
interest is being exchanged for or transferred to a Person who will take
delivery thereof in the form of a beneficial interest in another Global Note,
such other Global Note shall be increased accordingly and an endorsement shall
52
be made on such Global Note by the Trustee or by the Depositary at the direction
of the Trustee to reflect such increase.
(i) General Provisions Relating to Transfers and Exchanges.
(A) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate Global Notes and
Definitive Notes upon receipt of an Authentication Order in accordance
with Section 2.3 hereof or upon receipt of a written request of the
Note Registrar.
(B) No service charge shall be made to a holder of a beneficial
interest in a Global Note or to a Holder of a Definitive Note for any
registration of transfer or exchange, but the Company may require
payment 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
exchange or transfer pursuant to Sections 2.9, 8.6, 9.15, 9.16 and
10.8).
(C) The Note Registrar shall not be required to register the
transfer of or exchange any Note selected for redemption in whole or in
part, except the unredeemed portion of any Note being redeemed in part.
(D) All Global Notes and Definitive Notes issued upon any
registration of transfer or exchange of Global Notes or Definitive
Notes shall be the valid obligations of the Company, evidencing the
same debt, and entitled to the same benefits under this Indenture, as
the Global Notes or Definitive Notes surrendered upon such registration
of transfer or exchange.
(E) The Company shall not be required (1) to issue, to register the
transfer of or to exchange any Notes during a period beginning at the
opening of business 15 days before the day of any selection of Notes
for redemption under Section 10.4 hereof and ending at the close of
business on the day of selection, (2) to register the transfer of or to
exchange any Note so selected for redemption in whole or in part,
except the unredeemed portion of any Note being redeemed in part, or
(3) to register the transfer of or to exchange a Note between a Record
Date and the next succeeding Interest Payment Date.
(F) Prior to due presentment for the registration of a transfer of
any Note, the Trustee, any Agent and the Company may deem and treat the
Person in whose name any Note is registered as the absolute owner of
such Note for the purpose of receiving payment of principal of and
interest on such Notes and for all other purposes, and none of the
Trustee, any Agent or the Company shall be affected by notice to the
contrary.
(G) The Trustee shall authenticate Global Notes and Definitive Notes
in accordance with the provisions of Section 3.3 hereof.
53
(H) All certifications, certificates and Opinions of Counsel
required to be submitted to the Note Registrar pursuant to this Section
3.5 to effect a registration of transfer or exchange may be submitted
by facsimile.
(I) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Note (including any transfers
between or among Depositary participants or beneficial owners of
interests in any Global Note) other than to require delivery of such
certificates and other documentation or evidence as are expressly
required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial
compliance as to form with the express requirement hereof.
2.6 REPLACEMENT SECURITIES
If (i) any mutilated Note is surrendered to the Trustee or (ii) the Company
and the Trustee receive evidence to their satisfaction of the destruction, loss
or theft of any Note, and there is delivered to the Company, the Subsidiary
Guarantors and the Trustee such security or indemnity as may be required by them
to save each of them harmless, then, in the absence of notice to the Company or
the Trustee that such Note has been acquired by a bona fide purchaser, the
Company will execute, and upon Company Order the Trustee will authenticate and
deliver, in exchange for any such mutilated Note or in lieu of any such
destroyed, lost or stolen Note, a new Note of the tenor and principal amount
bearing a number not contemporaneously outstanding, and the Subsidiary
Guarantors will execute the notation of Subsidiary Guarantees thereon.
In case any such mutilated, destroyed, lost or stolen Note has become or is
about to become due and payable, the Company in its discretion may, instead of
issuing a new Note, pay such Note.
Upon the issuance of any new Note under this Section 2.6, the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other expense (including
the fees and expenses of the Trustee) connected therewith.
Every new Note issued pursuant to this Section 2.6 in lieu of any
mutilated, destroyed, lost or stolen Note will constitute an original additional
continual obligation of the Company and the respective Subsidiary Guarantors,
whether or not the mutilated, destroyed, lost or stolen Note will be at any time
enforceable by anyone, and will be entitled to all benefits of this Indenture
equally and proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section 2.6 are exclusive and will preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes.
If required by the Trustee, the Company or a Subsidiary Guarantor, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee, the Company and each Subsidiary Guarantor to protect the
Company, each Subsidiary Guarantor, the Trustee, any Agent and any
54
authenticating agent from any loss that any of them may suffer if a Note is
replaced. The Company and the Trustee may charge for their expenses in replacing
a Note.
2.7 OUTSTANDING SECURITIES
The Notes outstanding at any time are all the Notes authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation,
those reductions in the interest in a Global Note effected by the Trustee in
accordance with the provisions hereof and those described in this Section 2.7 as
not outstanding. Except as set forth in Section 2.8 hereof, a Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note.
If a Note is replaced pursuant to Section 2.6 hereof, it ceases to be
outstanding unless the Trustee receives proof satisfactory to it that the
replaced Note is held by a bona fide purchaser.
If the principal amount of any Note is considered paid under Section 9.1
hereof, it ceases to be outstanding and interest on it ceases to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an Affiliate
of any thereof) holds, on a redemption date or maturity date, money sufficient
to pay Notes payable on that date, then on and after that date such Notes shall
be deemed to be no longer outstanding and shall cease to accrue interest.
2.8 TREASURY SECURITIES
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver or consent, Notes owned by the
Company or any Subsidiary Guarantor, or by any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company or any Subsidiary Guarantor shall be considered as though not
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Notes that a Responsible Officer of the Trustee actually knows are so owned
shall be so disregarded.
2.9 TEMPORARY SECURITIES
Pending the preparation of Definitive Notes, the Company may execute, and
upon Company Order the Trustee will authenticate and deliver, temporary Notes
which are printed, lithographed, typewritten, mimeographed or otherwise
produced, in any authorized denomination, substantially of the tenor of the
Definitive Notes in lieu of which they are issued and having the notations of
Subsidiary Guarantees thereon and with such appropriate insertions, omissions,
substitutions and other variations as the Authorized Officers executing such
Notes and notations of Subsidiary Guarantees may determine, as conclusively
evidenced by their execution of such Notes and notations of Subsidiary
Guarantees.
If temporary Notes are issued, the Company will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes will be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Company
designated for such purpose pursuant to Section 9.2, without charge to the
Holder. Upon surrender for cancellation of any one or more temporary Notes, the
55
Company will execute and the Trustee will authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized denominations
having the notations of Subsidiary Guarantees thereon. Until so exchanged, the
temporary Notes will in all respects be entitled to the same benefits under this
Indenture as Definitive Notes.
2.10 CANCELLATION
All Notes surrendered for payment, redemption, registration of transfer or
exchange will, if surrendered to any Person other than the Trustee, be delivered
to the Trustee and will be promptly canceled by it. The Company may at any time
deliver to the Trustee for cancellation any securities previously authenticated
and delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Notes so delivered will be promptly canceled by the Trustee.
No Notes will be authenticated in lieu of or in exchange for any Notes canceled
as provided in this Section 2.10, except as expressly permitted by this
Indenture. All canceled Notes held by the Trustee will be destroyed in
accordance with the Trustee's usual practice and a certificate of destruction
will be sent to the Company.
2.11 DEFAULTED INTEREST
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date will be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered at the close of
business on the Regular Record Date for such interest at the office or agency of
the Company maintained for such purpose pursuant to Section 9.2 hereof.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date will forthwith cease to be
payable to the Holder on the Regular Record Date by virtue of having been such
Holder, and such defaulted interest and (to the extent lawful) interest on such
defaulted interest at the rate borne by the Notes (such defaulted interest and
interest thereon herein collectively called "Defaulted Interest") may be paid by
the Company, at its election in each case, as provided in clause (i) or (ii)
below:
(i) The Company may elect to make payment of any Defaulted Interest to the
Persons in whose names the Notes (or their respective Predecessor Notes) are
registered at the close of business on a Special Record Date for the payment of
such Defaulted Interest, which will be fixed in the following manner. The
Company will 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, and at
the same time the Company will deposit with the Trustee an amount of money equal
in the aggregate amount proposed to be paid in respect of such Defaulted
Interest or will make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, and such money when deposited will be
held in trust for the benefit of the Persons entitled to such Defaulted Interest
as in this clause provided. Thereupon the Trustee will fix a Special Record Date
for the payment of such Defaulted Interest which will be not more than 15 days
and not less than 10 days prior to the date of the proposed payment and not less
than 10 days after the receipt by the Trustee of the notice of the proposed
payment. The Trustee will promptly notify the Company of such Special Record
Date, and in the name and at the expense of the Company, will cause notice of
the proposed payment of such Defaulted Interest and the Special Record Date
56
therefor to be given in the manner provided for in Section 14.5 hereof, not less
than 10 days prior to such Special Record Date. Notice of the proposed payment
of such Defaulted Interest and the Special Record Date therefor having been so
given, such Defaulted Interest will be paid to the Persons in whose names the
Notes (or their respective Predecessor Notes) are registered at the close of
business on such Special Record Date and will no longer be payable pursuant to
the following clause (ii).
(ii) 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, if any, after notice given by the Company to the Trustee of the
proposed payment pursuant to this clause, such manner of payment will be deemed
practicable by the Trustee.
Subject to the foregoing provisions of this Section 2.11, each Note
delivered under this Indenture upon registration of transfer of or in exchange
for or in lieu of any other Note will carry the rights to interest accrued and
unpaid, and to accrue, which were carried by such other Note.
2.12 CUSIP NUMBERS
The Company in issuing the Notes may use "CUSIP" numbers (if then generally
in use) and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders, provided, however, that any such notice
may state that no representation is made as to the correctness of such numbers
either as printed on the Notes or as contained in any notice of a redemption and
that reliance may be placed only on the other identification numbers printed on
the Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers.
2.13 BOOK-ENTRY PROVISIONS FOR GLOBAL SECURITY.
Each Global Note will be registered in the name of the Depositary for such
Global Note or the nominee of such Depositary and be delivered to the Trustee as
custodian for such Depositary. Members of, or participants in, the Depositary
("Agent Members") will have no rights under this Indenture with respect to any
Global Note held on their behalf by the Depositary, or the Trustee as its
custodian, or under such Global Note, and the Depositary may be treated by the
Company, the Subsidiary Guarantors, the Trustee and any agent of the Company,
the Subsidiary Guarantors or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
will prevent the Company, the Subsidiary Guarantors or the Trustee or any agent
of the Company, the Subsidiary Guarantors or the Trustee from giving effect to
any written certification, proxy or other authorization furnished by the
Depositary or will impair, as between the Depositary and its Agent Members, the
operation of customary practices governing the exercise of the rights of a
holder of any Note.
Transfers of a Global Note will be limited to transfers of such Global Note
in whole, but not in part, to the Depositary, its successors or their respective
nominees. Interests of beneficial owners in a Global Note may be transferred or
exchanged for Definitive Notes in accordance with the rules and procedures of
57
the Depositary. Definitive Notes will be transferred to all beneficial owners in
exchange for their beneficial interests in a Global Note if, and only if, either
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as depositary for the Global Note and a successor depositary is not
appointed by the Company within 90 days of such notice or (ii) an Event of
Default has occurred and is continuing and the Note Registrar has received a
request from the Depositary to issue Definitive Notes in lieu of all or a
portion of the Global Note (in which case the Company will deliver Definitive
Notes within 30 days of such request).
In connection with the transfer of an entire Global Note to beneficial
owners pursuant to this Section 2.13, the Global Note will be deemed to be
surrendered to the Trustee for cancellation, and the Company will execute, and
the Trustee will authenticate and deliver, to each beneficial owner identified
by the Depositary, in exchange for its beneficial interest in the Global Note,
an equal aggregate principal amount of Definitive Notes of authorized
denominations.
The Holder of the 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.
2.14 COMPUTATION OF INTEREST.
The amount of interest for each day that a Note is Outstanding shall be
calculated by dividing the interest rate in effect for such Note on such day by
360 and multiplying the result thereof by the principal amount of such Note on
such day. Except as otherwise provided by the terms and provisions contained in
a Note, the amount of interest to be paid on an Interest Payment Date in respect
of such Note shall be calculated by adding the daily interest amount for each
day on which such Note is Outstanding during the interest period to which such
Interest Payment Date relates.
ARTICLE 3
SATISFACTION AND DISCHARGE
3.1 SATISFACTION AND DISCHARGE OF INDENTURE.
This Indenture will upon Company Request cease to be of further effect
(except as to surviving rights of registration of transfer or exchange of Notes,
as expressly provided for in this Indenture) as to all Outstanding Notes, and
the Trustee, at the expense of the Company, will, upon payment of all amounts
due the Trustee under Section 5.6 hereof, execute proper instruments
acknowledging satisfaction and discharge of this Indenture when:
(a) either
(i) all Notes theretofore authenticated and delivered (other than (1) Notes
that have been mutilated, destroyed, lost or stolen and which have been replaced
or paid as provided in Section 2.6 hereof and (2) Notes for whose payment of
money or United States governmental obligations of the type described in clause
(i) of the definition of Cash Equivalents have theretofore been deposited in
trust with the Trustee or any Paying Agent or segregated and held in trust by
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the Company and thereafter repaid to the Company or discharged from such trust,
as provided in Section 9.3 hereof) have been delivered to the Trustee for
cancellation, or
(b) all such Notes not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their final Stated Maturity within a
period of time that does not have more than one Interest Reset Date, or
(iii) have been or are to be called for redemption, within a period of time
that does not have more than one Interest Reset Date under the terms of this
Indenture for the serving of notice of redemption by the Trustee in the name,
and at the expense, of the Company,
and the Company, in the case of clause (b)(i), (b)(ii) or (b)(iii) above, 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 (and
premium, if any, on) and interest on the Notes to the date of such deposit (in
the case of Notes which have become due and payable) or to such final Stated
Maturity or Redemption Date, provided, that, if the day on which such deposit is
made is not after the Interest Reset Date immediately preceding such final
Stated Maturity or redemption date, as the case may be, the interest rate from
and after such Interest Reset Date used to calculate such amount to be so
deposited shall be the interest rate on the Notes on the day immediately
preceding such Interest Reset Date plus the greater of (a) 2.00% and (b) such
other percent as may be requested by the Trustee in order to provide reasonable
assurance in the judgment of the Trustee that the amount being so deposited will
be sufficient to pay and discharge the principal of, and premium, if any, and
interest on, the Outstanding Notes on such final Stated Maturity or redemption
date, as the case may be, together with instructions from the Company
irrevocably directing the Trustee to apply such funds to the payment thereof at
maturity or redemption, as the case may be;
(c) the Company has paid or caused to be paid all other sums then due and
payable hereunder by the Company; and
(d) the Company has delivered to the Trustee an Officers' Certificate and
an Opinion of Counsel, in form and substance reasonably satisfactory to the
Trustee, each stating that all conditions precedent herein relating to the
satisfaction and discharge of this Indenture have been satisfied.
Following the date upon which the entire principal of, and all premium, if
any, and interest on, all of the Outstanding Notes is then due and payable, the
Trustee shall unless there is then an Event of Default, upon request made to it
by the Company, be required to pay to the Company the difference, if any, of (x)
the aggregate amount deposited with the Trustee in accordance with clause (a) of
the immediately preceding paragraph and (y) the aggregate amount of any
principal of, and all premium, if any, and interest on, the Notes which is then
due and payable.
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Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.6 hereof and, if money
will have been deposited with the Trustee pursuant to this Section 3.1, the
obligations of the Trustee under Section 3.2 hereof and the last paragraph of
Section 9.3 hereof will survive.
3.2 APPLICATION OF TRUST MONEY.
Subject to the provisions of the last paragraph of Section 9.3 hereof, all
money deposited with the Trustee pursuant to Section 3.1 hereof will be held in
trust and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whom payment such money has been deposited with the
Trustee.
ARTICLE 4
REMEDIES
4.1 EVENTS OF DEFAULT AND REMEDIES.
"Event of Default," wherever used herein, means any one of the following
events:
(a) default in the payment when due of interest on, or Liquidated Damages
with respect to, the Notes, and such Default continues for 30 days; or
(b) default in the payment when due of the principal of or premium on any
Note, whether such payment is due at Stated Maturity, upon redemption, upon
repurchase pursuant to a Change of Control Offer or a Net Proceeds Offer, upon
declaration of acceleration or otherwise; or
(c) default in the performance or breach of the provisions of Section 9.15,
Section 9.16 or Section 7.1; or
(d) failure by the Company or any Restricted Subsidiary to comply with any
other term, covenant or agreement contained in the Notes, any Subsidiary
Guarantee, any Collateral Document or this Indenture (other than a default
specified in clause (a), (b) or (c) above or clause (j) or (k) below) for a
period of 60 days after written notice of such failure stating that it is a
"notice of default" under this Indenture and requiring the Company or such
Restricted Subsidiary, as the case may be, to remedy the same; or
(e) the occurrence and continuation beyond any applicable grace period of
any default in the payment when due of the principal of, or premium or interest
on, any Indebtedness for borrowed money of the Company (other than the Notes) or
any Restricted Subsidiary or any other default resulting in acceleration of any
Indebtedness for borrowed money of the Company or any Restricted Subsidiary, but
only in the event that the aggregate principal amount of such Indebtedness shall
exceed $2,000,000; or
(f) without limiting clause (e) above, the occurrence and continuation of
an "event of default" under either the Revolving Credit Facility or the Bridge
Loan; or
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(g) any Subsidiary Guarantee shall for any reason cease to be, or be
asserted by the Company, any Subsidiary Guarantor, any of their respective
Affiliates or any Person acting on behalf of any of the foregoing not to be, in
full force and effect and enforceable in any material respect in accordance with
its terms (except pursuant to the release or termination of any such Subsidiary
Guarantee in accordance with this Indenture); or
(h) any Collateral Document shall for any reason cease to be, or be
asserted by the Company, any Restricted Subsidiary, any of their respective
Affiliates or any Person acting on behalf of any of the foregoing not to be, in
full force and effect and enforceable in any material respect in accordance with
its terms or to not otherwise grant a duly perfected first priority security
interest in the Collateral in favor of the holders of the Note Obligations
(subject to Permitted Prior Liens and except pursuant to a release or
termination thereof consummated in accordance with this Indenture and the
Intercreditor Agreement and other Collateral Documents) for a period of 30 days
after written notice thereof stating that it is a "notice of default" under this
Indenture and requiring the Company or the respective Restricted Subsidiary, as
the case may be, to remedy the same; or
(i) final judgments or orders rendered against the Company or any
Restricted Subsidiary that are unsatisfied and that require the payment in
money, either individually or in an aggregate amount, that is more than
$2,000,000 over the coverage under applicable insurance policies and either (a)
commencement by any creditor of an enforcement proceeding upon such judgment
(other than a judgment that is stayed by reason of pending appeal or otherwise)
or (b) the occurrence of a 60-day period during which a stay of such judgment or
order, by reason of pending appeal or otherwise, was not in effect; or
(j) the entry of a decree or order by a court having jurisdiction in the
premises (a) for relief in respect of the Company or any Subsidiary in an
involuntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or (b) adjudging the Company or
any Subsidiary bankrupt or insolvent, or approving a petition seeking
reorganization, arrangement, adjustment or composition of the Company or any
Subsidiary under any applicable Federal or state law, or appointing under any
such law a custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Subsidiary or of a substantial part
of its consolidated assets, or ordering the winding up or liquidation of its
affairs, and the continuance of any such decree or order for relief or any such
other decree or order unstayed and in effect for a period of 60 consecutive
days; or
(k) the commencement by the Company or any Subsidiary of a voluntary case
or proceeding under any applicable Federal or state bankruptcy, insolvency,
reorganization or other similar law or any other case or proceeding to be
adjudicated bankrupt or insolvent, or the consent by the Company or any
Subsidiary to the entry of a decree or order for relief in respect thereof in an
involuntary case or proceeding under any applicable Federal or state bankruptcy,
insolvency, reorganization or other similar law or to the commencement of any
bankruptcy or insolvency case or proceeding against it, or the filing by the
Company or any Subsidiary of a petition or consent seeking reorganization or
relief under any applicable Federal or state law, or the consent by it under any
such law to the filing of any such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of any of the Company or any Subsidiary
or of any substantial part of its consolidated assets, or the making by it of an
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assignment for the benefit of creditors under any such law, or the admission by
it in writing of its inability to pay its debts generally as they become due or
the taking of corporate action by the Company or any Subsidiary in furtherance
of any such action.
4.2 ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
If any Event of Default (other than an Event of Default specified in
Section 4.1(j) or 4.1(k) hereof) occurs and is continuing, the Trustee, by
written notice to the Company, or the Holders of at least 25% in aggregate
principal amount of the Notes then Outstanding, by notice to the Trustee and the
Company, may, and the Trustee upon the request of the Holders of not less than
25% in aggregate principal amount of the Outstanding Notes shall declare the
principal of, premium, if any, and accrued interest on all of the Notes due and
payable immediately, upon which declaration all amounts payable in respect of
the Notes will be immediately due and payable; if an Event of Default specified
in Section 4.1(j) or 4.1(k) hereof occurs and is continuing, then the principal
of, and premium, if any, and accrued interest on, all of the Notes shall
automatically become and be immediately due and payable without any declaration,
notice or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration under this Indenture has
been made, but before a judgment or decree for payment of the money due has been
obtained by the Trustee or Holders of the Notes as hereinafter permitted in this
Article 4, the Holders of a majority in aggregate principal amount of the
Outstanding Notes, by written notice to the Company, the Subsidiary Guarantors
and the Trustee, may (i) rescind such declaration and its consequences and (ii)
on behalf of the Holders of all the Notes, waive any existing Event of Default
and its consequences, except a continuing Event of Default specified in Section
4.1(a) hereof, if
(a) the Company or any Subsidiary Guarantor has paid or deposited with the
Trustee a sum sufficient to pay,
(i) all sums paid or advanced by the Trustee under this Indenture and
the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel,
(ii) all overdue interest on all Outstanding Notes,
(iii) the unpaid principal of (and premium, if any, on) any Outstanding
Notes which have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Notes, and
(iv) to the extent that payment of such interest is lawful, interest on
overdue interest and overdue principal at the rate borne by the Notes
(without duplication of any amount paid or deposited pursuant to clause
(ii) or (iii) above);
(b) the rescission would not conflict with any judgment or decree of a
court of competent jurisdiction as certified to the Trustee by the Company; and
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(c) all Defaults and Events of Default, other than the non-payment of
amounts of principal of (or premium, if any, on) or interest on the Notes that
have become due solely by such declaration of acceleration, have been cured or
waived as provided in this Indenture.
Notwithstanding the foregoing, if an Event of Default specified in Section
4.1(e) hereof shall have occurred and be continuing, such Event of Default and
any consequential acceleration shall be automatically rescinded if the
Indebtedness that is the subject of such Event of Default has been repaid, or if
the default relating to such Indebtedness is waived or cured and if such
Indebtedness has been accelerated, then the holders thereof have rescinded their
declaration of acceleration in respect of such Indebtedness (provided, in each
case, that such repayment, waiver, cure or rescission is effected within a
period of 10 days from the continuation of such default beyond the applicable
grace period or the occurrence of such acceleration), and written notice of such
repayment, cure, waiver or rescission, as the case may be, will have been given
to the Trustee by the Company and countersigned by the holders of such
Indebtedness or a trustee, fiduciary or agent for such holders or other evidence
satisfactory to the Trustee of such events is provided to the Trustee, within 30
days after any such acceleration in respect of the Notes, and so long as such
rescission of any such acceleration of the Notes does not conflict with any
judgment or decree as certified to the Trustee by the Company.
No such rescission will affect any subsequent default or impair any right
consequent thereon.
4.3 COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY TRUSTEE.
The Company covenants that if:
(a) default is made in the payment of any installment of interest or
Liquidated Damages, if any, on any Note when such interest becomes due and
payable and such default continues for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if any,
on) any Note at the Stated Maturity thereof or with respect to any Note required
to have been purchased by the Company on the Change of Control Payment Date or
the Net Proceeds Payment Date pursuant to a Change of Control Offer or Net
Proceeds Offer, as applicable, the Company will, upon demand of the Trustee, pay
to the Trustee for the benefit of the Holders of such Notes, the whole amount
then due and payable on each such Note for principal (and premium, if any) and
interest, and interest on any overdue principal (and premium, if any) and, to
the extent that payment of such interest will be legally enforceable, upon any
overdue installment of interest, at the rate borne by the Notes, and, in
addition thereto, such further amount as will 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.
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name as trustee of an express trust, may institute a
judicial proceeding for the collection of the sums so due and unpaid, may
prosecute such proceeding to judgment or final decree and may enforce the same
against the Company or any other obligor upon the Notes and collect the money
63
adjudged or decreed to be payable in the manner provided by law out of the
Property of the Company or any other obligor upon the Notes, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
4.4 TRUSTEE MAY FILE PROOFS OF CLAIM.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company, any Restricted Subsidiary, any
Subsidiary Guarantor or any other obligor upon the Notes, their creditors or the
Property of the Company, any Restricted Subsidiary, any Subsidiary Guarantor or
of such other obligor, the Trustee (irrespective of whether the principal of the
Notes shall then be due and payable as therein expressed or by declaration or
otherwise and irrespective of whether the Trustee shall have made any demand on
the Company, the Subsidiary Guarantors or such other obligor for the payment of
overdue principal, premium, if any, or interest) will be entitled and empowered,
by intervention in such proceeding or otherwise,
(a) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Notes and to
file such other papers or documents and take any other action, including
participation as a full member of any creditor or other committee, as may be
necessary or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and of the Holders allowed in such judicial
proceeding, and
(b) to collect and receive any moneys or other Property payable or
deliverable on any such claim and to distribute the same, and any custodian
receiver, assignee, trustee, liquidator, sequestrator or similar official in any
such judicial proceeding is hereby authorized by each Holder to make such
payments to the Trustee and, in the event that the Trustee shall consent to the
making of such payments directly to the Holders, to pay 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 amount due the Trustee
under Section 5.6 hereof.
Nothing herein contained will 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 Subsidiary Guarantees 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; provided, however, that the Trustee may, on behalf of such Holders,
vote for the election of a trustee in bankruptcy or similar official.
4.5 TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF SECURITIES.
All rights of action and claims under this Indenture or the Notes or the
Subsidiary Guarantees may be prosecuted and enforced by the Trustee without the
possession of any of the Notes or the production thereof in any proceeding
64
relating thereto, and any such proceeding instituted by the Trustee will be
brought in its own name and as trustee of an express trust, and any recovery of
judgment will, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Holders of the Notes in respect of which such
judgment has been recovered.
4.6 APPLICATION OF MONEY COLLECTED.
Any money collected by the Trustee pursuant to this Article 4 will be
applied in the following order, at the date or dates fixed by the Trustee and,
in the case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:
FIRST: to the payment of all amounts due the Trustee under Section 5.6
hereof;
SECOND: to the payment of the amounts then due and unpaid for principal of
(and premium, if any, on) and interest on the Notes in respect of which or for
the benefit of which such money has been collected, ratably, without preference
or priority of any kind, according to the amounts due and payable on such Notes
for principal (and premium, if any) and interest, respectively; and
THIRD: the balance, if any, to the Company;
provided that, upon the occurrence and during the continuation of an Event of
Default hereunder or of an event of default under the terms of the Revolving
Credit Facility or the Bridge Loan, all money collected by the Trustee shall be
promptly paid to the Collateral Agent for the account of the Secured Parties and
shall be applied pursuant to the terms of the Intercreditor Agreement.
4.7 LIMITATION ON SUITS.
No Holder of any Notes will have any right to institute any proceeding,
with respect to this Indenture, or any other remedy hereunder, unless:
(a) such Holder has notified the Trustee in writing of a continuing Event
of Default;
(b) the Holders of at least 25% in aggregate principal amount of the
Outstanding Notes shall have made written request to the Trustee to institute
proceedings or pursue such remedy in respect of such Event of Default in its own
name as Trustee hereunder and offered to the Trustee reasonable indemnity
satisfactory to the Trustee against the costs, expenses and liabilities to be
incurred in compliance with the request;
(c) the Trustee for 60 days after its receipt of such request and offer of
indemnity has failed to institute any such proceeding; and
(d) no direction inconsistent, in the opinion of the Trustee, with such
written request has been given to the Trustee during such 60 day period by the
Holders of a majority in aggregate principal amount of the Outstanding Notes,
65
it being understood and intended that no Holder shall have any right in any
manner by virtue of, or by availing of, any provision of this Indenture to
affect, disturb or prejudice the rights of any other Holder, or to obtain or to
seek to obtain priority or preference over any other Holder or to enforce any
right under this Indenture, except in the manner herein provided and for the
equal and ratable benefit of all the Holders.
4.8 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PAYMENT.
Notwithstanding any other provision in this Indenture, the Holder of any
Note will have the right, which is absolute and unconditional, to receive
payment, as provided herein and in such Note of the principal of (and premium if
any, on) and (subject to Article 2 hereof) interest and Liquidated Damages, if
any, on such Note on the respective Stated Maturities expressed in such Note
(or, in the case of redemption, on the Redemption Date) and to institute suit
for the enforcement of any such payment, and such rights will not be impaired
without the consent of such Holder.
4.9 RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture 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, subject to any determination in
such proceeding, the Company, the Subsidiary Guarantors, the Trustee and the
Holders will be restored severally and respectively to their former positions
hereunder and all rights and remedies of the Trustee and the Holders will
continue as though no such proceeding had been instituted.
4.10 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes described in Article 2 hereof, no
right or remedy herein conferred upon or reserved to the Trustee or to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy will, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, will not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
4.11 DELAY OR OMISSION NOT WAIVER.
No delay or omission of the Trustee or of any Holder of any Note to
exercise any right or remedy occurring upon any Event of Default will impair any
such right or remedy or constitute a waiver of any such Event of Default or an
acquiescence thereof. Every right and remedy given by this Article 4 or by law
or in equity to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
4.12 CONTROL BY HOLDERS.
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Subject to the provisions of the Intercreditor Agreement, the Holders of
not less than a majority in aggregate principal amount of the Outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, provided that:
(a) such direction will not be in conflict with any rule of law or with
this Indenture;
(b) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction; and
(c) the Trustee need not take any action which might involve it in personal
liability or be unduly prejudicial to the Holders not joining therein.
4.13 WAIVER OF PAST DEFAULTS.
The Holders of not less than a majority in aggregate principal amount of
the Outstanding Notes may, on behalf of the Holders of all the Notes, waive any
existing Default or Event of Default hereunder and its consequences, except (i)
a Default or Event of Default in the payment of principal of, or premium, if
any, interest or Liquidated Damages, if any, on, the Notes, or (ii) in respect
of a covenant or provision hereof which under Article 8 hereof cannot be
modified or amended without the consent of the Holder of each Outstanding Note
affected thereby.
Upon any such waiver, such Default or Event of Default will cease to exist
for every purpose under this Indenture, but no such waiver will extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto. Any such waiver may (but need not) be given in connection with a tender
offer or exchange offer for the Notes.
4.14 WAIVER OF STAY.
Each of the Company and the Subsidiary Guarantors covenants (to the extent
that each 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,
extension or usury law or other law wherever enacted, now or at any time
hereafter in force, which would prohibit or forgive the Company or any
Subsidiary Guarantor from paying all or any portion of the principal of, or
premium, if any, or interest on, the Notes as contemplated herein, or which may
affect the covenants or the performance of this Indenture; and (to the extent
that it may lawfully do so) each of the Company and the Subsidiary Guarantors
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 the execution of every such
power as though no such law had been enacted.
ARTICLE 5
THE TRUSTEE
5.1 DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the Trustee will
exercise the rights and powers vested in it by this Indenture and use the same
degree of care and skill in its exercise as a prudent person would exercise or
67
use under the circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i) the Trustee undertakes to perform such duties and only such duties as
are specifically set forth in this Indenture and no implied covenants or
obligations will be read into this Indenture against the Trustee; and
(ii) in the absence of bad faith on its part, the Trustee may conclusively
rely, and will be fully protected in so relying, 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; provided, however, the Trustee will examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture (but need not confirm or investigate the accuracy
of mathematical calculations or other facts stated therein).
(iii) No provision of this Indenture will be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(A) this subsection will not be construed to limit the effect of
Section 5.1(a) hereof;
(B) the Trustee will not be liable for any error of judgment made in
good faith by a Responsible Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts;
(C) the Trustee will 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 4.12 hereof; and
(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.
(iv) Whether or not therein expressly so provided, every provision of this
Indenture relating to the conduct or affecting the liability of or affording
protection to the Trustee shall be subject to the provisions of this Section
5.1.
5.2 CERTAIN RIGHTS OF TRUSTEE.
Subject to the provisions of Section 5.1 hereof:
(a) the Trustee may conclusively rely and will be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
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note, other evidence of indebtedness or other paper or document believed by it
to be genuine and to have been signed or presented by the proper party or
parties;
(b) any request or direction of the Company mentioned herein will be
sufficiently evidenced by a Company Request or Company Order and any resolution
of the Board of Directors may be sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee will deem
it desirable that a matter be proved or established prior to taking, suffering
or omitting any action hereunder, the Trustee (unless other evidence is herein
specifically prescribed) may in the absence of bad faith on its part
conclusively rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel of its selection and the advice of
such counsel or any Opinion of Counsel will be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee will be under no obligation to exercise any of the rights
or powers vested in it by this Indenture at the request or direction of any of
the Holders pursuant to this Indenture, unless such Holders will have offered to
the Trustee reasonable security or indemnity satisfactory to it against the
costs, expenses and liabilities which might be incurred by it in compliance with
such request or direction;
(f) the Trustee will not be bound to make any investigation into the facts
or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, debenture,
note, other evidence of indebtedness or other paper or document, but the
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may reasonably see fit, and, if the Trustee will
determine to make such further inquiry or investigation, it will be entitled to
examine, during the business hours and upon reasonable notice, the books,
records and premises of the Company and its Subsidiaries, personally or by agent
or attorney at the sole cost of the Company and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation;
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys, and the Trustee will not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care by it
hereunder;
(h) the Trustee will not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture;
(i) the Trustee will not be deemed to have notice or knowledge of any
matter (including any Default or Event of Default) unless a Responsible Officer
has actual knowledge thereof or unless written notice thereof is received by the
Trustee at its Corporate Trust Office and such notice references the Notes
generally, the Company or this Indenture;
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(j) the rights, privileges, protections, immunities and benefits given to
the Trustee, including, without limitation, its right to be indemnified, are
extended to, and shall be enforceable by, the Trustee in each of its capacities
hereunder, and each agent, custodian and other Person employed by the Trustee to
act hereunder; and
(k) the Trustee may request that the Company deliver an Officers'
Certificate setting forth the names of individuals and/or titles of officers
authorized at such time to take specified actions pursuant to this Indenture,
which Officers' Certificate may be signed by any person authorized to sign an
Officers' Certificate, including any person specified as so authorized in any
such certificate previously delivered and not superseded.
The Trustee will not be required to advance, 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 will
have reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
5.3 TRUSTEE NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Notes and the notations of
Subsidiary Guarantees thereon, except for the Trustee's certificates of
authentication, will be taken as the statements of the Company or the Subsidiary
Guarantors, as the case may be, and the Trustee assumes no responsibility for
their correctness. The Trustee makes no representations as to the validity or
sufficiency of this Indenture, the Subsidiary Guarantees or the Notes, except
that the Trustee represents that it is duly authorized to execute and deliver
this Indenture, authenticate the Notes and perform its obligations hereunder,
and that the statements made by it in a Statement of Eligibility and
Qualification on Form T-1 supplied to the Company are true and accurate, subject
to the qualifications set forth therein. The Trustee will not be accountable for
the use or application by the Company of Notes or the proceeds thereof.
5.4 MAY HOLD SECURITIES.
The Trustee, any Paying Agent any Note Registrar or any other agent of the
Company, the Subsidiary Guarantors or of the Trustee, in its individual or any
other capacity, may become the owner or pledgee of Notes and, subject to
Sections 310(b) and 311 of the TIA in the case of the Trustee, may otherwise
deal with the Company and the Subsidiary Guarantors with the same rights it
would have if it were not the Trustee, Paying Agent, Note Registrar or such
other agent.
5.5 MONEY HELD IN TRUST.
Money held by the Trustee in trust hereunder need not be segregated from
other funds except to the extent required by law. The Trustee will be under no
liability for interest on any money received by it hereunder except as otherwise
agreed with the Company or any Subsidiary Guarantor.
5.6 COMPENSATION AND REIMBURSEMENT.
The Company agrees:
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(a) to pay to the Trustee from time to time such compensation as the
Company and the Trustee shall from time to time agree in writing for all
services rendered by it hereunder (which compensation will not be limited by any
provision of law in regard to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to reimburse the Trustee
upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to the Trustee's willful misconduct,
negligence or bad faith; and
(c) to indemnify each of the Trustee or any predecessor Trustee and their
agents for, and to hold them harmless against, any and all loss, liability,
damage, claim or expense, including taxes (other than those based upon, measured
by or determined by the income of the Trustee), incurred without willful
misconduct, negligence or bad faith on its part (i) arising out of or in
connection with the acceptance or administration of this trust, including the
costs and expenses of defending itself against any claim or liability (whether
assisted by the Company, any Holder or any other person) in connection with the
exercise or performance of any of its powers or duties hereunder or (ii) in
connection with enforcing this indemnification provision.
The obligations of the Company under this Section 5.6 to compensate the
Trustee, to pay or reimburse the Trustee for expenses, disbursements and
advances and to indemnify and hold harmless the Trustee will survive the
satisfaction and discharge of this Indenture or any other termination under any
Insolvency or Liquidation Proceeding and the resignation or removal of the
Trustee. As security for the performance of such obligations of the Company, the
Trustee will have a claim and lien prior to the Notes upon all property and
funds held or collected by the Trustee as such, except funds held in trust for
payment of principal of (and premium, if any, on) or interest on particular
Notes. Such lien will survive the satisfaction and discharge of this Indenture
or any other termination under any Insolvency or Liquidation Proceeding.
When the Trustee incurs expenses or renders services after the occurrence
of an Event of Default specified in paragraph (j) or (k) of Section 4.1 hereof,
such expenses and the compensation for such services are intended to constitute
expenses of administration under any Insolvency or Liquidation Proceeding.
5.7 CORPORATE TRUSTEE REQUIRED: ELIGIBILITY.
There will at all times be a Trustee hereunder which will be eligible to
act as Trustee under Section 310(a)(1) of the TIA and will have a combined
capital and surplus of at least $10,000,000 in the case of the initial Trustee
hereunder and $50,000,000 in the case of any successor Trustee. If such Person
publishes reports of condition at least annually, pursuant to law or to the
requirements of federal, state, territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 5.7, the combined
capital and surplus of such Person will be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. If at
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any time the Trustee will cease to be eligible in accordance with the provisions
of this Section 5.7, it will resign immediately in the manner with which the
effect hereinafter specified in this Article 5.
5.8 CONFLICTING INTERESTS.
The Trustee will comply with the provisions of Section 310(b) of the TIA;
provided, however, that there will be excluded from the operation of Section
310(b)(1) of the TIA 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 Section
310(b)(1) of the TIA are met. The duties and interests of the Trustee under this
Indenture shall be subject to its duties as Collateral Agent and the security
interest established pursuant to the Intercreditor Agreement.
5.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee pursuant to this Article 5 will become effective until the
acceptance of appointment by the successor Trustee in accordance with the
applicable requirements of Section 5.10 hereof.
(b) The Trustee may resign at any time by giving written notice thereof to
the Company. If the instrument of acceptance by a successor Trustee required by
Section 5.10 hereof will not have been delivered to the Trustee within 30 days
after the giving of such notice of resignation, the resigning Trustee may
petition, at the Company's expense, any court of competent jurisdiction for the
appointment of a successor Trustee.
(c) The Trustee may be removed at any time by an Act of the Holders of not
less than a majority in aggregate principal amount of the Outstanding Notes,
delivered to the Trustee and to the Company.
(d) If at any time:
(i) the Trustee shall have failed to comply with the provisions of Section
310(b) of the TIA after written request therefor by the Company or by any Holder
who has been a bona fide Holder of a Note for at least six months; or
(ii) the Trustee shall have ceased to be eligible under Section 5.7 hereof
and shall have failed to resign after written request therefor by the Company or
by any Holder who has been a bona fide Holder of a Note for at least six months;
or
(iii) the Trustee shall have become incapable of acting or shall have been
adjudged bankrupt or insolvent or a receiver of the Trustee or of its property
will be appointed or any public officer shall have taken charge or control of
the Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then, in any such case, (A) the Company, by a Board
Resolution, may remove the Trustee or (B) subject to Section 315(e) of the TIA,
any Holder who has been a bona fide Holder of a Note for at least six months
may, on behalf of itself and all others similarly situated, petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee.
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(e) If the Trustee shall have resigned, been removed or become incapable of
acting, or if a vacancy shall have occurred in the office of Trustee for any
cause, the Company, by a Board Resolution, will promptly appoint a successor
Trustee. If, within one year after such resignation, removal or incapability, or
the occurrence of such vacancy, a successor Trustee shall have been appointed by
Act of the Holders of a majority in aggregate principal amount of the
Outstanding Notes delivered to the Company and the retiring Trustee, the
successor Trustee so appointed shall, forthwith upon its acceptance of such
appointment, become the successor Trustee and supersede the successor Trustee
appointed by the Company. If no successor Trustee shall have been so appointed
by the Company or the Holders and accepted appointment in the manner hereinafter
provided, any Holder who has been a bona fide Holder of a Note for at least six
months may, on behalf of itself and all others similarly situated, petition any
court of competent jurisdiction for the appointment of a successor Trustee. The
evidence of such successorship may, but need not be, evidenced by a supplemental
indenture to this Indenture.
(f) The Company will give notice of each resignation and each removal of
the Trustee and each appointment of a successor Trustee to the Holders of Notes
in the manner provided for in Section 14.5 hereof. Each notice will include the
name of the successor Trustee and the address of its Corporate Trust Office.
5.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
Every successor Trustee appointed hereunder will execute, acknowledge and
deliver to the Company and to the retiring Trustee an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Trustee
will become effective and such successor Trustee, without any further act, deed
or conveyance, will become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Company or the successor
Trustee, such retiring Trustee will, upon payment of all amounts due it under
Section 5.6 hereof, execute and deliver an instrument transferring to such
successor Trustee all the rights, powers and trusts of the retiring Trustee and
will duly assign, transfer and deliver to such successor Trustee all money and
other Property held by such retiring Trustee hereunder. Upon request of any such
successor Trustee, the Company will execute any and all instruments for more
fully and certainly vesting in and confirming to such successor Trustee all such
rights, powers and trusts.
No successor Trustee will accept its appointment unless at the time of such
acceptance such successor Trustee will be qualified and eligible under this
Article 5.
5.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any corporation into which the Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee will be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, will be the successor of the Trustee hereunder,
provided such corporation will be otherwise qualified and eligible under this
Article 5, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Note shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
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by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such securities; and in
case at that time any of the Notes shall not have been authenticated, any
successor Trustee may authenticate such Notes either in the name of any
predecessor hereunder or in the name of the successor Trustee; and in all such
cases such certificates shall have the full force which it is anywhere in the
Notes or in this Indenture; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Notes in the name of any predecessor Trustee will apply only to its successor or
successors by merger, conversion or consolidation.
5.12 PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
If and when the Trustee is or becomes a creditor of the Company (or any
other obligor under the Notes), the Trustee will be subject to the provisions of
the Trust Indenture Act regarding the collection of claims against the Company
(or any such other obligor).
5.13 NOTICE OF DEFAULTS.
Within 60 days after the occurrence of any Default hereunder, the Trustee
will transmit in the manner and to the extent provided in Section 313(c) of the
TIA, notice of such Default hereunder known to the Trustee, unless such Default
will have been cured or waived; provided, however, that, except in the case of a
Default in the payment of the principal of, or premium, Liquidated Damages, or
interest on, any Note, the Trustee will be protected in withholding such notice
if and so long as the board of directors of the Trustee, committee of its board
of directors or a committee of Trust officers determines in good faith that the
withholding of such notice is in the interest of the Holders.
ARTICLE 6
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
6.1 HOLDERS' LISTS; HOLDER COMMUNICATIONS; DISCLOSURES RESPECTING HOLDERS.
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. Neither the Company, any Subsidiary Guarantor nor the Trustee shall
have any responsibility with regard to the accuracy of such list. If the Trustee
is not the Note Registrar, the Company will furnish to the Trustee semi-annually
before each Regular Record Date, and at such other times as the Trustee may
reasonably request in writing, a list, in such form as the Trustee may
reasonably request, as of such date of the names and addresses of the Holders
then known to the Company. The Company and the Trustee will also satisfy any
other requirement imposed upon each of them by Section 312(a) of the TIA.
Holders may communicate pursuant to Section 312(b) of the TIA with other
Holders with respect to their rights under this Indenture or the Notes.
Every Holder of Notes, by receiving and holding the same, agrees with the
Company, the Subsidiary Guarantors, the Note Registrar and the Trustee that (i)
none of the Company, the Subsidiary Guarantors, the Note Registrar or the
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Trustee, or any agent of any of them, shall be held accountable by reason of the
disclosure of any information as to the names and addresses of the Holders in
accordance with Section 312 of the TIA, regardless of the source from which such
information was derived, (ii) each of such Persons shall have the protection of
Section 312(c) of the TIA and (iii) the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under Section 312(b)
of the TIA.
6.2 REPORTS BY TRUSTEE.
Within 60 days after May 15th of each year commencing with May 15th, 2005,
the Trustee will transmit by mail to the Holders, as their names and addresses
appear in the Note Register, a brief report dated as of such in accordance with
and to the extent required under Section 313(a) of the TIA. The Trustee will
also comply with Sections 313(b) and 313(c) of the TIA.
The Company will promptly notify the Trustee in writing if the Notes become
listed on any stock exchange or automatic quotation system and of any delisting
thereof.
A copy of each Trustee's report, at the time of its mailing to Holders of
Notes, will be mailed to the Company and filed with the Commission and each
stock exchange or automatic quotation system, if any, on which the Notes are
listed or quoted, as the case may be.
6.3 REPORTS BY COMPANY.
The Company will:
(a) file with the Trustee, within 30 days after the Company is required to
file the same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission may from time to time by rules and regulations
prescribe) which the Company may be required to file with the Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company
is not required to file information, documents or reports pursuant to either of
said Sections, then the Company will file with the Trustee such information,
documents or reports as required pursuant to Section 9.9 hereof;
(b) file with the Trustee and the Commission, in accordance with rules and
regulations prescribed from time to time by the Commission, such additional
information, documents and reports with respect to compliance by the Company
with the conditions and covenants of this Indenture as may be required from time
to time by such rules and regulations; and
(c) transmit by mail to all Holders, in the manner and to the extent
provided in Section 313(c) of the TIA, such summaries of any information,
documents and reports (without exhibits except to the extent required by Section
313(c) of the TIA) required to be filed by the Company pursuant to paragraph (i)
or (ii) of this Section 6.3 as may be required by rules and regulations
prescribed from time to time by the Commission.
(d) Delivery of such reports, information and documents to the Trustee
pursuant to this Section 6.3 is for informational purposes only and the
Trustee's receipt of such shall not constitute constructive notice of any
75
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).
ARTICLE 7
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OF OR LEASE
7.1 COMPANY MAY CONSOLIDATE, ETC., ONLY ON CERTAIN TERMS.
The Company shall not, in any single transaction or a series of related
transactions, merge or consolidate with or into any other Person, or sell,
assign, convey, transfer, lease or otherwise dispose of all or substantially all
of the Properties of the Company and its Restricted Subsidiaries on a
consolidated basis to any other Person or group of Affiliated Persons (other
than the Company and its Wholly Owned Restricted Subsidiaries), and the Company
shall not permit any of its Restricted Subsidiaries to enter into any such
transaction or series of transactions if such transaction or series of
transactions, in the aggregate, would result in a sale, assignment, conveyance,
transfer, lease or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any other Person or group of Affiliated Persons other than the Company
and its Wholly Owned Restricted Subsidiaries, unless at the time and after
giving effect thereto, either:
(a) (i) either (A) if the transaction is a merger or consolidation, the
Company will be the surviving Person of such merger or consolidation or (B) the
Person (if other than the Company) formed by such consolidation or into which
the Company is merged or to which the Properties of the Company or its
Restricted Subsidiaries, as the case may be, are sold, assigned, conveyed,
transferred, leased or otherwise disposed of (any such surviving Person or
transferee Person being the "Surviving Entity") will be a corporation organized
and existing under the laws of the United States of America, any state thereof
or the District of Columbia and will, in either case, (I) expressly assume by a
supplemental indenture to this Indenture and, if the Registration Rights
Agreement is then in effect, a joinder agreement to the Registration Rights
Agreement, each executed and delivered to the Trustee, in form and substance
reasonably, satisfactory to the Trustee, all the obligations of the Company
under the Notes and this Indenture, and, if applicable, the Registration Rights
Agreement and (II) take such actions required under this Indenture so that the
transaction does not result in the surviving Entity owning or having acquired
Collateral that is not subject to a valid and enforceable perfected first
priority security interest (subject to Permitted Prior Liens) in favor of the
Collateral Agent as security for the Note Obligations, and, in the case of a
transaction described under (A) or (B), the Notes, this Indenture and, if
applicable, the Registration Rights Agreement shall remain in full force and
effect;
(ii) immediately before and immediately after giving effect to such
transaction or series of transactions on a pro forma basis (and treating any
Indebtedness not previously an obligation of the Company or any of its
Restricted Subsidiaries which becomes the obligation of the Company or any of
its Restricted Subsidiaries in connection with or as a result of such
transaction or transactions as having been incurred at the time of such
transaction or transactions), no Default or Event of Default will have occurred
and be continuing;
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(iii) except in the case of the consolidation or merger of any Restricted
Subsidiary with or into the Company, immediately after giving effect to such
transaction or transactions on a pro forma basis, the Consolidated Fixed Charge
Coverage Ratio of the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) is not less than the Consolidated Fixed
Charge Coverage Ratio of the Company immediately before such transaction or
transactions;
(iv) except in the case of the consolidation or merger of the Company with
or into a Wholly Owned Restricted Subsidiary or of any Restricted Subsidiary
with or into the Company or any Wholly Owned Restricted Subsidiary, immediately
before and immediately after giving effect to such transaction or transactions
on a pro forma basis (on the assumption that the transaction or transactions
occurred on the first day of the period of four full fiscal quarters for which
financial statements are available ending immediately prior to the consummation
of such transaction or transactions, with the appropriate adjustments with
respect to the transaction or transactions being included in such pro forma
calculation), the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) could Incur $1.00 of additional
Indebtedness (excluding Permitted Indebtedness) under the terms of Section 9.11
hereof;
(v) if any of the Properties of the Company or any of its Restricted
Subsidiaries would, upon such transaction or series of related transactions,
become subject to any Lien (other than a Permitted Lien), the creation or
imposition of such Lien will have been in compliance with Section 9.14 hereof;
(vi) if the Company is not the continuing obligor under this Indenture,
then any Subsidiary Guarantor, unless it is the Surviving Entity, shall have, by
supplemental indenture to this Indenture in form and substance reasonably
satisfactory to the Trustee, confirmed that its Subsidiary Guarantee of the
Notes will apply to the Surviving Entity's obligations under this Indenture and
the Notes; and
(vii) the Company (or the Surviving Entity if the Company is not the
continuing obligor under this Indenture) shall have delivered to the Trustee, in
form and substance reasonably satisfactory to the Trustee, (A) an Officers'
Certificate stating that such transaction or series of related transactions and,
if a supplemental indenture to this Indenture is required in connection with
such transaction, such supplemental indenture, comply with this Indenture and
(B) an Opinion of Counsel stating that (I) the requirements of clause (i) of
this paragraph have been satisfied and (II) any supplemental indenture to this
Indenture or joinder agreement to the Registration Rights Agreement delivered to
the Trustee in accordance with the requirements of this paragraph has been duly
authorized, executed and delivered by the Surviving Entity or any Subsidiary
Guarantor a party thereto and constitutes a legal, valid and binding obligation
of the Surviving Entity and any such Subsidiary Guarantor; or
(b) the transaction is effected in compliance with Section 9.16 hereof;
provided that all of the Notes then Outstanding are paid in full in accordance
with such Section 9.16 hereof;
provided that so long as the Fair Market Value of the Capital Stock of Grey Wolf
owned by the Company and its Subsidiaries does not exceed 50% of the Fair Market
Value of all of the Properties of the Company and its Subsidiaries on a
77
consolidated basis, then any disposition of all or a portion of such Capital
Stock of Grey Wolf by the Company and its Restricted Subsidiaries will not
constitute a sale of all or substantially all of the properties and assets of
the Company and its Restricted Subsidiaries on a consolidated basis for purposes
of the covenants described under this Article 7 or for purposes of clause (iii)
of the definition of "Change of Control" hereunder.
7.2 SUCCESSOR SUBSTITUTED.
(a) Upon any consolidation of the Company with or merger of the Company
into any other corporation or any sale, assignment, lease, conveyance, transfer
or other disposition of all or substantially all of the Properties of the
Company and its Restricted Subsidiaries on a consolidated basis in accordance
with Section 7.1 hereof, in which the Company is not the continuing corporation,
the Surviving Entity will succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
as if such Surviving Entity had been named as the Company herein, and in the
event of any such sale, assignment, conveyance, transfer or other disposition
(but not a lease), the Company (which term will for this purpose mean the Person
named as the "Company" in the first paragraph of this Indenture or any successor
Person which has theretofore become such in the manner described in Section 7.1
hereof) will be discharged of all obligations and covenants under this Indenture
and the Notes and the Company may be dissolved and liquidated and such
dissolution and liquidation will not cause a Change of Control under clause
(iii) of the definition thereof to occur unless such sale, assignment,
conveyance, transfer or other disposition of all or substantially all of the
Properties of the Company and its Restricted Subsidiaries on a consolidated
basis to any Person otherwise results in a Change of Control.
(b) The Company will not permit any Subsidiary Guarantor to consolidate
with or merge with or into, or convey, transfer or lease, in one transaction or
a series of related transactions, all or substantially all of its properties and
assets to any Person unless:
(i) the resulting, surviving or transferee Person (if not such Subsidiary
Guarantor) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary Guarantor was organized or under the
laws of the United States of America, any state thereof or the District of
Columbia, and such Person shall (I) expressly assume by a supplemental indenture
to this Indenture and, if the Registration Rights Agreement is then in effect, a
joinder agreement to the Registration Rights Agreement, each executed and
delivered to the Trustee, in form and substance reasonably satisfactory to the
Trustee, all the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee and, if applicable, the Registration Rights Agreement and (II) take
such actions required under this Indenture, such that the transaction does not
result in either (x) such Person owning or having acquired Collateral that is
not subject to a valid and enforceable perfected first priority security
interest (subject to Permitted Prior Liens) in favor of the Collateral Agent as
security for the Note Obligations or (y) all of the Capital Stock of such Person
owned directly or indirectly by the Company being duly pledged as a first
priority perfected security interest (subject to Permitted Prior Liens) to the
Collateral Agent for the benefit of the holders of the Note Obligations;
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(ii) immediately after giving effect to such transaction or transactions on
a pro forma basis (and treating any Indebtedness which becomes an obligation of
the resulting, surviving or transferee Person as a result of such transaction as
having been issued by such Person at the time of such transaction), no Default
or Event of Default shall have occurred and be continuing;
(iii) the Company would be permitted by virtue of its pro forma
Consolidated Fixed Charge Coverage Ratio, immediately after giving effect to
such transaction, to Incur at least $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the terms of clause (1) of the first sentence of
Section 9.11 hereof; and
(iv) the Company delivers to the Trustee an (a) Officers' Certificate and
an Opinion of Counsel (in form and substance satisfactory to the Trustee), each
stating that such consolidation, merger or transfer and, if a supplemental
indenture to this Indenture is required in connection with such transaction or
transactions, such supplemental indenture, complies with this Indenture and (b)
an Opinion of Counsel stating that (I) the requirements of clause (i) of this
paragraph have been satisfied and (II) any supplemental indenture of this
Indenture or joinder agreement to the Registration Rights Agreement delivered to
the Trustee in accordance with the requirements of this paragraph has been duly
authorized, executed and delivered by the resulting, surviving or transferee
Person and constitutes a legal, valid and binding obligation of such Person;
provided, however, that clauses (i), (iii) and (iv)(b) above shall not apply if
such transactions comply with Section 9.16 hereof and such resulting, surviving
or transferee Person is no longer a Subsidiary of the Company.
ARTICLE 8
AMENDMENTS, SUPPLEMENTS AND MODIFICATIONS
8.1 AMENDMENTS, SUPPLEMENTS AND MODIFICATIONS WITHOUT CONSENT OF HOLDERS.
Subject to the terms of the Intercreditor Agreement, without the consent of
any Holder, the Company, when authorized by a Board Resolution, each of the
Subsidiary Guarantors, when authorized by a Board Resolution, and the Trustee
upon Company Request, at any time and from time to time, may enter into one or
more amendments, supplements or modifications to this Indenture and the Notes
(by indentures supplemental hereto) or to any Collateral Documents, each in form
satisfactory to the Trustee, for any of the following purposes:
(a) to cure any ambiguity, to correct or supplement any provision herein
which may be defective or inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising under
this Indenture provided that such actions do not adversely affect the interests
of the Holders in any material respect;
(b) to provide for uncertificated Notes in addition to or in place of
certificated Notes, provided such uncertificated Notes are in registered form
for the purposes of the Code;
(c) provide for the assumption of the Company's obligations to Holders of
Notes in the case of a merger or consolidation or a sale in accordance with the
terms of this Indenture; or
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(d) to add or release a Subsidiary Guarantor from its Subsidiary Guarantee
pursuant to Section 13.3 hereof and the Intercreditor Agreement;
(e) make, complete or confirm any grant of a Lien on Collateral permitted
or required by the Collateral Documents or this Indenture or any release of a
Lien on Collateral that becomes effective in compliance with terms and provision
of this Indenture and the Intercreditor Agreement and other Collateral
Documents;
(f) to make any change that would provide additional rights or benefits to
the Holders and does not adversely affect the interests of any such Holders in
any material respect;
(g) to comply with the requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
(h) to add additional Events of Default;
(i) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee pursuant to the requirements of Sections 5.9 and 5.10 hereof
or for the acceptance of appointment under a Collateral Document by a successor
Collateral Agent;
(j) to secure the Notes pursuant to the requirements of this Indenture;
(k) to add any Restricted Subsidiary as an additional Subsidiary Guarantor
as provided in Section 9.12(a) hereof or to evidence the succession of another
Person to any Subsidiary Guarantor pursuant to Section 13.2(b) hereof and the
assumption by any such successor of the covenants and agreements of such
Subsidiary Guarantor contained herein, in the Notes and in the Subsidiary
Guarantee of such Subsidiary Guarantor;
(l) to evidence the succession of another Person to the Company and the
assumption by any such successor of the covenants of the Company contained
herein and in the Notes;
8.2 AMENDMENTS, SUPPLEMENTS OR MODIFICATIONS AND WAIVERS WITH CONSENT OF
HOLDERS.
Subject to the Intercreditor Agreement, with the consent of the Holders of
not less than a majority in aggregate principal amount of the Outstanding Notes
(which consent may, but need not, be given in connection with any tender offer
or exchange offer for the Notes), by Act of said Holders delivered to the
Company and the Trustee, the Company, when authorized by a Board Resolution,
each of the Subsidiary Guarantors, when authorized by a Board Resolution, and
the Trustee upon Company Request, may enter into amendments, supplements or
modifications to this Indenture and the Notes (by indenture or indentures
supplemental hereto) or any Collateral Document for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
thereof or of modifying in any manner the rights of the Holders thereunder;
provided, however, that no such amendment, supplement or modification shall,
without the consent of the Holder of each Outstanding Note affected thereby:
(a) reduce the principal amount of Notes whose Holders must consent to an
amendment, supplement or waiver;
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(b) reduce the principal of or change the final Stated Maturity of the
principal of, any Note, reduce the premium payable upon the redemption or
repurchase of any Note, change the time at which any Note may be redeemed or
alter any other provisions with respect to the redemption of the Notes, other
than provisions relating to Sections 9.15 and 9.16(c) hereof;
(c) reduce the rate of interest, including Defaulted Interest, on any Note
or change the time stated in any Note or this Indenture for the payment of
interest on any Note;
(d) waive a Default or Event of Default in the payment of principal of (or
the premium, if any on), or interest or Liquidated Damages, if any, on the Notes
(except a rescission of acceleration of the Notes by the Holders of at least a
majority in aggregate principal amount of the then Outstanding Notes and a
waiver of the payment default that resulted from such acceleration);
(e) make any Note payable in money other than that stated in the Notes;
(f) make any change in the provisions of this Indenture relating to waivers
of past Defaults or the rights of Holders of Notes to be paid the principal of,
or the premium, if any, or interest or Liquidated Damages, if any, on the Notes
or to bring suit to enforce such payment;
(g) waive any redemption payment with respect to any Note (other than a
payment required by Section 9.15 or 9.16(c) hereof);
(h) modify any Subsidiary Guarantee in any manner that, except in
accordance with the terms of the Indenture and the Intercreditor Agreement and
other Collateral Documents, releases or otherwise impairs or limits the
unconditional obligation of the respective Subsidiary Guarantor (or any other
Person that has Guaranteed the Notes) to fully and promptly perform the
Company's obligations under the Indenture and the Notes, including, without
limitation, the payment of principal of, and premium, interest and Liquidated
Damages, if any, on, the Notes, when due;
(i) make any change to any Note or Subsidiary Guarantee (or any other
Guarantee of the Notes) in a manner that causes such Note or Subsidiary
Guarantee (or other Guarantee) not to be senior indebtedness that is at least
pari passu (subject to the terms of the Intercreditor Agreement) with all
unsubordinated and unsecured Indebtedness of the Company or the respective
Subsidiary Guarantor (or other person providing such a Guarantee of the Notes),
as the case may be;
(j) release any Collateral from the Obligations created by the Collateral
Documents except as provided in this Indenture and the Intercreditor Agreement
and other Collateral Documents; or
(k) make any change in the foregoing amendment and waiver provisions.
It will not be necessary for any Act of the Holders under this Section to
approve the particular form of any proposed amendment, supplement or
modification, but it will be sufficient if such Act will approve the substance
thereof.
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8.3 EXECUTION OF SUPPLEMENTAL INDENTURES.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article 8 or the modifications thereby
of the trusts created by this Indenture, the Trustee will be entitled to
receive, and will be fully protected in relying upon, an Officers' Certificate
and an Opinion of Counsel stating that the execution of such supplemental
indenture is authorized or permitted by this Indenture. The Trustee may, but
will not be obligated to, enter into any such supplemental indenture which
affects the Trustee's own rights, duties or immunities under this Indenture or
otherwise.
8.4 EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any supplemental indenture under this Article 8, this
Indenture will be modified in accordance therewith, and such supplemental
indenture will form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder will be
bound thereby.
8.5 CONFORMITY WITH TRUST INDENTURE ACT.
Every supplemental indenture executed pursuant to this Article 8 will
conform to the requirements of the Trust Indenture Act as then in effect.
8.6 REFERENCE IN SECURITIES TO SUPPLEMENTAL INDENTURES.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article 8 may, and will if required by the Trustee,
bear a notation in form approved by the Trustee as to any matter provided for in
such supplemental indenture. If the Company will so determine, new Notes so
modified as to conform, in the opinion of the Trustee and the Company, to any
such supplemental indenture may be prepared and executed by the Company, with
the notations of Subsidiary Guarantees thereon executed by the Subsidiary
Guarantors, and authenticated and delivered by the Trustee in exchange for
Outstanding Notes.
8.7 NOTICE OF SUPPLEMENTAL INDENTURES AND WAIVERS.
Promptly after (i) the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of Section 8.2 hereof or (ii)
a waiver under Section 4.13 or 9.20 hereof becomes effective, the Company will
give notice thereof to the Holders of each Outstanding Note affected, in the
manner provided for in Section 14.5 hereof, setting forth in general terms the
substance of such supplemental indenture or waiver, as the case may be.
ARTICLE 9
COVENANTS
9.1 PAYMENT OF SECURITIES.
The Company covenants and agrees for the benefit of the Holders that it
will duly and punctually pay the principal of (and premium, if any, on) and
interest and Liquidated Damages, if any, on the Notes in The City of New York,
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New York in accordance with the terms of the Notes and this Indenture.
9.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in The City of New York an office or agency where
Notes may be presented or surrendered for payment, where Notes may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Company in respect of the Notes, the Subsidiary
Guarantees and this Indenture may be served. The Corporate Trust Office of the
Trustee will be such office or agency of the Company, unless the Company will
designate and maintain some other office or agency for one or more of such
purposes. The Company will give prompt written notice to the Trustee of any
change in the location of any such Office or agency. If at any time the Company
will fail to maintain any such required office or agency or will fail to furnish
the Trustee with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office, and the Company
hereby appoints the Trustee as its agent to receive all such presentation,
surrenders, notices and demands.
The Company may also from time to time designate one or more other offices
or agencies where the Notes may be presented or surrendered for any or all such
purposes and may from time to time rescind any such designation. The Company
will give prompt written notice to the Trustee of any such designation or
rescission and any change in the location of any such other office or agency.
9.3 MONEY FOR SECURITY PAYMENTS TO BE HELD IN TRUST.
If the Company will at any time act as its own Paying Agent, it will, on or
before 11:00 a.m. Eastern Time, on each due date of the principal of (and
premium, if any, on) or interest on any of the Notes, segregate and hold in
trust for the benefit of the Persons entitled thereto a sum sufficient to pay
the principal (and premium, if any) or interest so becoming due until such sum
will be paid to such Persons or otherwise disposed of as herein provided and
will promptly notify the Trustee of its action or failure so to act.
Whenever the Company will have one or more Paying Agents for the Notes, it
will on or before 11:00 a.m. Eastern Time, on each due date of the principal of
(and premium, if any, on), or interest on, any Notes, deposit with a Paying
Agent immediately available funds in a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due, such funds to be held in trust for
the benefit of the Persons entitled to such principal, premium or interest, and
(unless such Paying Agent is the Trustee) the Company will promptly notify the
Trustee of such action or any failure so to act.
The Company will cause each Paying Agent (other than the Trustee) to
execute and deliver to the Trustee an instrument in which such Paying Agent will
agree with the Trustee, subject to the provisions of this Section, that such
Paying Agent will:
(a) hold all sums held by it for the payment of the principal of (and
premium, if any), interest or Liquidated Damages, if any, on Notes in trust for
the benefit of the Persons entitled thereto until such sums will be paid to such
Persons or otherwise disposed of as herein provided;
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(b) give the Trustee notice of any default by the Company (or any other
obligor upon the Notes) in the making of any payment of principal (and premium,
if any) or interest; and
(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such Paying Agent.
The Company may at any time, for the purpose of obtaining the satisfaction
and discharge of this Indenture or for any other purpose, pay, or by Company
Order direct any Paying Agent to pay, to the Trustee all sums held in trust by
the Company or such Paying Agent, such sums to be held by the Trustee upon the
same trusts as those upon which such sums were held by the Company or such
Paying Agent; and, upon such payment by any Paying Agent to the Trustee, such
Paying Agent will be released from all further liability with respect to such
sums.
Subject to applicable escheat and abandoned property laws, any money
deposited with the Trustee or any Paying Agent, or then held by the Company, in
trust for the payment of the principal of (and premium, if any, on) or interest
on any Note and remaining unclaimed for two years after such principal (and
premium, if any) or interest has become due and payable will be paid to the
Company on Company Request, or (if then held by the Company) will be discharged
from such trust; and the Holder of such Note will thereafter, as an unsecured
general creditor, look only to the Company for payment thereof, and all
liability of the Trustee or such Paying Agent with respect to such trust money,
and all liability of the Company as trustee thereof, will thereupon cease;
provided, however, that the Trustee or such Paying Agent, before being required
to make any such repayment, may at the expense of the Company cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in the Borough of
Manhattan, The City of New York, notice that such money remains unclaimed and
that, after a date specified herein, which will not be less than 30 days from
the date of each publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
9.4 CORPORATE EXISTENCE.
Except as expressly permitted by Article 7 hereof, Section 9.17 hereof or
other provisions of this Indenture, the Company will do or cause to be done all
things necessary to preserve and keep in full force and effect the corporate
existence, rights (charter and statutory) and franchises of the Company and each
Restricted Subsidiary; provided, however, that the Company will not be required
to preserve any such existence of its Restricted Subsidiaries, rights or
franchises, if the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Restricted Subsidiaries, taken as a whole,
and that the loss thereof is not disadvantageous in any material respect to the
Holders.
9.5 PAYMENT OF TAXES AND OTHER CLAIMS.
The Company will pay or discharge or cause to be paid or discharged, before
the same will become delinquent, (i) all material taxes, assessments and
governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or Property of the Company or any
Restricted Subsidiary and (ii) all lawful claims for labor, materials and
supplies, which, if unpaid, might by law become a Lien upon the Property of the
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Company or any Restricted Subsidiary; provided, however, that the Company will
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 proceedings and for which
appropriate provision has been made in accordance with GAAP.
9.6 MAINTENANCE OF PROPERTIES.
The Company will cause all material Properties owned by the Company or any
Restricted Subsidiary and used or held for use in the conduct of its business or
the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order (ordinary wear and tear excepted), all as in
the judgment of the Company or such Restricted Subsidiary may be necessary so
that its or its Restricted Subsidiary's business may be properly and
advantageously conducted at all times; provided, however, that nothing in this
Section will prevent the Company or any Restricted Subsidiary from discontinuing
the maintenance of any of such Properties if such discontinuance is, in the
judgment of the Company or such Restricted Subsidiary, as the case may be,
desirable in the conduct of the business of the Company or such Restricted
Subsidiary and not disadvantageous in any material respect to the Holders.
Notwithstanding the foregoing, nothing contained in this Section 9.6 will limit
or impair in any way the right of the Company and its Restricted Subsidiaries to
sell, divest and otherwise to engage in transactions that are otherwise
permitted by this Indenture.
9.7 INSURANCE
The Company will at all times keep all of its, and cause its Restricted
Subsidiaries to keep their, Properties which are of an insurable nature insured
with insurers, believed by the Company to be responsible, against loss or damage
to the extent that property of similar character and in a similar location is
usually so insured by corporations similarly situated and owning like
Properties.
The Company or any Restricted Subsidiary may adopt such other plan or
method of protection, in lieu of or supplemental to insurance with insurers,
whether by the establishment of an insurance fund or reserve to be held and
applied to make good losses from casualties, or otherwise, conforming to the
systems of self-insurance maintained by corporations similarly situated and in a
similar location and owning like Properties, as may be determined by the Board
of Directors of the Company or such Restricted Subsidiary.
9.8 STATEMENT BY OFFICER AS TO DEFAULT.
(a) The Company will deliver to the Trustee, within 90 days after the end
of each fiscal year of the Company and within 45 days of the end of each of the
first, second and third quarters of each fiscal year of the Company, an
Officers' Certificate stating that a review of the activities of the Company and
its Restricted Subsidiaries during the preceding fiscal quarter or fiscal year,
as applicable, has been made under the supervision of the signing Officers with
a view to determining whether the Company has kept, observed, performed and
fulfilled its obligations under this Indenture, and further stating, as to each
such Officer signing such certificate, that to the best of such Officer's
knowledge the Company has kept, observed, performed and fulfilled each and every
covenant contained in this Indenture and no Default or Event of Default has
85
occurred and is continuing (or, if a Default or Event of Default will have
occurred, describing all such Defaults or Events of Default of which such
Officer may have knowledge and what action the Company is taking or proposes to
take with respect thereto). Such Officers' Certificate will comply with Section
314(a)(4) of the TIA. For purposes of this Section 9.8(a), such compliance will
be determined without regard to any period of grace or requirement of notice
under this Indenture.
(b) The Company will, so long as any of the Notes are outstanding, deliver
to the Trustee promptly upon any of its Officers becoming aware of any Default
or Event of Default an Officers' Certificate specifying such Default or Event of
Default and what action the Company proposes to take with respect thereto.
9.9 REPORTS.
So long as any Note is Outstanding and the Company is required by the rules
and regulations of the SEC, the Company will file with the SEC via the
Electronic Data Gathering and Retrieval system ("EDGAR") for public availability
(unless the SEC will not accept such a filing), within the time periods
specified in the SEC's rules and regulations:
o all quarterly and annual reports that would be required to be
filed with the SEC on Forms 10-Q and 10-K if it were required to
file such reports; and
o all current reports that the Company would be required to file
with the SEC on Form 8-K if it were required to file such reports.
The Company will also concurrently post on its website each such report so
filed with the SEC. The Company will not take any action for the purpose of
causing the SEC not to accept any such filings via EDGAR or otherwise.
All such reports will be prepared in all material respects in accordance
with all of the rules and regulations applicable to such reports. Each annual
report on Form 10-K will include a report on the Company's consolidated
financial statements by a firm of certified independent accountants. If, at any
time, the Company is no longer subject to the periodic reporting requirements of
the Exchange Act for any reason or is not otherwise required to file with the
SEC the reports specified in the first paragraph under this covenant, the
Company will instead furnish, or provide to the Trustee and cause the Trustee to
furnish at the Company's expense, to the Holders of the Notes the information
required in each such report within the time period specified in the SEC's rules
and regulations (as if the Company was required to file such report with the
SEC); provided, however, the Company will not be required to include any
officer's certification which would be required to be filed as an exhibit to
such report had such report been filed with the SEC.
The Company's quarterly and annual financial information required by the
first paragraph under this covenant will include, for any period during which at
least one of its Subsidiaries continues to be an Unrestricted Subsidiary, a
reasonably detailed presentation, either on the face of the financial statements
86
or in the footnotes thereto, of the Company's financial condition and results of
operations and those of its Restricted Subsidiaries separate from the financial
condition and results of operations of its Unrestricted Subsidiaries.
In addition, the Company agrees that, for so long as any Notes remain
outstanding, if at any time it is not required to file with the SEC the reports
specified in this first paragraph under this covenant, the Company will furnish
to the Holders of Notes and to securities analysts and prospective investors,
upon their request, the information required to be delivered pursuant to Rule
144A(d)(4) under the Securities Act.
9.10 LIMITATION ON RESTRICTED PAYMENTS.
(a) The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, take the following actions:
(i) declare or pay any dividend or make any other payment or distribution
(including, without limitation, any payment or distribution in connection with
any merger or consolidation involving the Company or any Restricted Subsidiary)
on account of the Capital Stock of the Company or any Restricted Subsidiary or
to the direct or indirect holders of Capital Stock of the Company or any
Restricted Subsidiary in their capacity as such, in each case other than
dividends or distributions (A) payable solely in shares of Qualified Capital
Stock of the Company or, if all of the Bridge Loan Obligations have been repaid
in full, in shares of Qualified Capital Stock of Grey Wolf or (B) declared or
paid to the Company or any Restricted Subsidiary;
(ii) purchase, redeem or otherwise acquire or retire for value (including
without limitation, in connection with any merger or consolidation involving the
Company or any Restricted Subsidiary) any Capital Stock of the Company or any
Affiliate thereof (other than any Wholly Owned Restricted Subsidiary) in a
transaction that does not constitute a Permitted Investment;
(iii) make any payment to purchase, redeem, defease or otherwise acquire or
retire for value, Subordinated Indebtedness, except (1) for payment of principal
and interest at its Stated Maturity, (2) out of a Net Proceeds Deficiency
following a Net Proceeds Offer in accordance with Section 9.16 hereof or (3)
upon a Change of Control to the extent (and only to the extent) required by the
indenture or other agreement or instrument pursuant to which such Subordinated
Indebtedness was issued, provided that the Company is then in compliance with
its obligations under Section 9.15 hereof or (4) for repayment of the Bridge
Loan Obligations in accordance with the provisions of this Indenture, the Bridge
Loan and Intercreditor Agreement (including, without limitation, with proceeds
from the sale by the Company, any Restricted Subsidiary or Grey Wolf of existing
or newly issued shares of Capital Stock of Grey Wolf or from any other Asset
Sale); or
(iv) make any Investment (other than any Permitted Investment);
(such payments or other actions described in (but not excluded from)
clauses (i) through (iv) are collectively referred to as "Restricted
Payments"), unless at the time of and after giving effect to the proposed
Restricted Payment: (1) no Default or Event of Default shall have occurred
and be continuing (or would result therefrom), (2) the Company could Incur
$1.00 of additional Indebtedness (excluding Permitted Indebtedness) in
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accordance with Section 9.11 hereof, and (3) such Restricted Payment,
together with the aggregate amount of all other Restricted Payments
declared or made after the date of this Indenture will not exceed the sum
(without duplication) of the following:
(A) 50% of the sum of (1) Consolidated Net Income plus (2) non-cash
asset impairment charges determined pursuant to GAAP (excluding any
such non-cash charge to the extent that it represents an accrual of or
reserve for cash expenses in any future period) in each case accrued
during the period beginning on July 1, 2004 and ending on the last day
of the Company's last fiscal quarter ending prior to the date of such
proposed Restricted Payment for which internal financial statements are
available (or, if such aggregate Consolidated Net Income shall be a
loss, minus 100% of such loss), plus
(B) 100% of the aggregate Net Cash Proceeds received by the Company
after the date of this Indenture by the Company as equity contributions
to the Company from a holder of Capital Stock of the Company, plus
(C) 100% of the aggregate Net Cash Proceeds received after the date
of this Indenture by the Company from the issuance or sale (other than
to any of its Restricted Subsidiaries) of shares of Qualified Capital
Stock of the Company or any options, warrants or rights to purchase
such shares of Qualified Capital Stock of the Company (but excluding
any debt security that is convertible into, or in exchange for
Qualified Capital Stock of the Company), plus
(D) 100% of the aggregate Net Cash Proceeds received after the date
of this Indenture by the Company (other than from any of its Restricted
Subsidiaries) upon the exercise of any options, warrants or rights to
purchase shares of Qualified Capital Stock of the Company, plus
(E) 100% of the aggregate Net Cash Proceeds received after the date
of this Indenture by the Company from the issuance or sale (other than
to any of its Restricted Subsidiaries) of debt securities or shares of
Disqualified Capital Stock that have been converted into or exchanged
for Qualified Capital Stock of the Company, together with the aggregate
net cash received by the Company at the time of such conversion or
exchange, plus
(F) an amount equal to the sum of (1) the aggregate amount returned
in cash or Cash Equivalents to the Company or its Restricted
Subsidiaries on or with respect to any Investment (other than a
Permitted Investment) made by the Company or any of its Restricted
Subsidiaries subsequent to the date of this Indenture in any Person
whether through payments of interest, dividends, repayments of loans or
advances, or other transfers or distributions of property, in an amount
not to exceed the book value of such Investment previously made in such
Person that was treated as Restricted Payments, (2) the net cash
proceeds received by the Company or its restricted Subsidiaries from
the disposition of all or any portion of such Investment (other than to
a Subsidiary of the Company) in an amount not to exceed the book value
of such Investment previously made in such Person that was treated as
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Restricted Payments and (3) upon the designation of any Unrestricted
Subsidiary as a Restricted Subsidiary, in an amount not to exceed the
lesser of (x) the book value of such Investment previously made in such
Unrestricted Subsidiary that was treated as Restricted Payments, and
(y) the fair market value of such Unrestricted Subsidiary, and, with
respect to clauses (x) and (y) of this clause (3), after deducting any
Indebtedness of the Unrestricted Subsidiary so designated (and, in each
case, as determined in good faith by the Board of Directors of the
Company as evidenced by a Board Resolution delivered to the Trustee,
unless determined in good faith by the Chief Executive Officer of the
Company to not exceed $1,000,000 and evidenced by an Officers'
Certificate delivered to the Trustee, and, if so determined to be in
excess of $5,000,000, based upon an opinion or appraisal issued by an
independent accounting or investment banking firm which is nationally
recognized in the United States, or a reputable independent appraisal
or petroleum engineering firm which is reasonably satisfactory to the
Trustee, as appropriate under the circumstances), only to the extent
that the sum of clauses (1), (2) and (3) above does not exceed the
aggregate amount of all such Investments made subsequent to the date of
this Indenture.
(b) Notwithstanding paragraph (a) above, the Company and its Restricted
Subsidiaries may take the following actions or make the following payments so
long as (in the case of clauses (ii) through (v) and (vii) below, no Default or
Event of Default shall have occurred and be continuing or occur as a consequence
of actions or payments set forth therein):
(i) pay any dividend on any Capital Stock of the Company or any Restricted
Subsidiary within 60 days after the date of declaration thereof, if at such
declaration date such declaration complied with the provisions of paragraph (a)
above (and such payment will be deemed to have been paid on such date of
declaration for purposes of any calculation required by the provisions of
paragraph (a) above);
(ii) repurchase, redeem, retire, defease or otherwise acquire any shares of
any class of Capital Stock of the Company or any Restricted Subsidiary, in
exchange for, or out of the aggregate net cash proceeds of, a substantially
concurrent issue and sale (other than to a Restricted Subsidiary) of shares of
Qualified Capital Stock of the Company;
(iii) repurchase, redeem, repay, defease or otherwise acquire or retire for
value any Subordinated Indebtedness in exchange for, or out of the aggregate net
cash proceeds of, a substantially concurrent issue and sale (other than to a
Restricted Subsidiary) of (A) shares of Qualified Capital Stock of the Company
or (B) Refinancing Indebtedness;
(iv) repurchases by the Company of options to acquire Capital Stock from
one or more former officers, directors and employees of the Company or any of
its Subsidiaries (or any of their authorized representatives) upon the death,
disability or termination of employment or directorship, as applicable, provided
that the amount paid by the Company with respect to all such purchases (other
than any purchase for which payment was made in Qualified Capital Stock of the
Company) from and after the date of this Indenture does not exceed $500,000 in
the aggregate for so long as any Note remains outstanding, and provided,
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further, that, in the case of such options to acquire Capital Stock (other than
any such option being purchased with Qualified Capital Stock of the Company),
the market price of the Capital Stock for which such options are exercisable is
at least 40% lower than the exercise price of such options;
(v) the repurchase or redemption of any Indebtedness in the event of a
change of control in accordance with provisions similar to the covenant
described under Section 9.15 hereof, provided, that, prior to or simultaneously
with such repurchase, the Company has made the Change of Control Offer as
provided in such covenant with respect to the Notes and has purchased all Notes
validly tendered for payment in connection with such Change of Control Offer;
(vi) (A) defease or otherwise acquire all of the Outstanding 2003 Notes on
the Closing Date and (B) redeem all of the Outstanding 2003 Notes on a date that
is no later than 60 days after the Closing Date, and pay related fees and
expenses, with all the proceeds from the issuance of the Notes; and
(vii) other Restricted Payments in an aggregate amount not to exceed
$500,000 from and after the date of this Indenture.
The actions described in clause (i) of this paragraph (b) will be Restricted
Payments that will be permitted to be taken in accordance with this paragraph
(b) but which will reduce the amount that would otherwise be available for
Restricted Payments under clause (iv)(C) of paragraph (a) above when declared,
(but not also when subsequently paid pursuant to such clause (i)). The actions
described in clauses (iii), (iv), (v) and (vii) of this paragraph (b) will be
Restricted Payments that will be permitted to be taken in accordance with this
paragraph (b) but which will, except with respect to exchanges referred to in
such clause (iii), reduce the amount that would otherwise be available for
Restricted Payments under clause (iv)(C) of paragraph (a) above. The actions
described in clause (ii) of this paragraph (b), and clause (vi) of this
paragraph (b) to the extent the actions described in such clause (vi) constitute
Restricted Payments, will be Restricted Payments that will be permitted to be
taken in accordance with this paragraph (b) and will not reduce the amount that
would otherwise be available for Restricted Payments under clause (iv)(C) of
paragraph (a) above. The amount of all Restricted Payments (other than cash)
shall be the fair market value on the date of the Restricted Payment of the
assets or securities proposed to be transferred or issued by the Company or such
Restricted Subsidiary, as the case may be, pursuant to such Restricted Payment.
The fair market value of any assets or securities that are required to be so
valued under the terms of this Indenture shall be determined in good faith by
the Board of Directors of the Company prior to the making of the respective
Restricted Payment and evidenced by a Board Resolution delivered to the Trustee
(or, solely with respect to assets and securities in an amount not exceeding
$1,000,000, as determined in good faith by the Chief Executive Officer of the
Company and evidenced by an Officers' Certificate delivered to the Trustee). If
the fair market value so determined exceeds $5,000,000, the Board of Directors'
determination must be based upon an opinion or appraisal issued prior to the
making of the respective Restricted Payment by an independent accounting or
investment banking firm which is nationally recognized in the United States, or
a reputable independent appraisal or petroleum engineering firm which is
reasonably satisfactory to the Trustee, as appropriate under the circumstances.
Not later than (i) the date upon which the Company or any Restricted Subsidiary
makes a Restricted Payment in excess of $1,000,000 or upon which the last
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Restricted Payment of a series of related Restricted Payments exceeding
$1,000,000 in the aggregate is made by the Company or any Restricted Subsidiary
or (ii) 45 days after the end of any fiscal quarter in which the Company or any
Restricted Subsidiary makes Restricted Payments in excess of $1,000,000 in the
aggregate (excluding any Restricted Payment for which an Officers' Certificate
has previously been delivered to the Trustee as contemplated by clause (i)), the
Company will be required to deliver to the Trustee an Officers' Certificate
stating that each such Restricted Payment is (or was) permitted and setting
forth the basis upon which the required calculations were computed, together
with a copy of any such required Board Resolution and/or fairness opinion or
appraisal.
(c) In computing Consolidated Net Income of the Company under paragraph (a)
above, (i) the Company will use audited financial statements for the portions of
the relevant period for which audited financial statements are available on the
date of determination and unaudited financial statements and other current
financial data based on the books and records of the Company for the remaining
portion of such period and (ii) the Company will be permitted to rely in good
faith on the financial statements and other financial data derived from the
books and records of the Company that are available on the date of
determination. If the Company makes a Restricted Payment which, at the time of
the making of such Restricted Payment would in the good faith determination of
the Company be permitted under the requirements of this Indenture, such
Restricted Payment will be deemed to have been made in compliance with this
Indenture notwithstanding any subsequent adjustments made in good faith to the
Company's financial statements affecting Consolidated Net Income of the Company
for any period.
9.11 LIMITATION ON INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF DISQUALIFIED
STOCK.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, create, incur, assume, Guarantee or otherwise become directly
or indirectly liable for the payment of (collectively, "Incur") any Indebtedness
(including any Acquired Indebtedness), other than Permitted Indebtedness, or
issue any Disqualified Stock, unless (1) at the time of such event and after
giving effect thereto and the receipt and application of the funds therefrom,
the Company's Consolidated Fixed Charge Coverage Ratio for the four full fiscal
quarters immediately preceding such event, taken as one period, would have been
at least equal to 3.00 to 1.00, determined on a pro forma basis (including a pro
forma application of the net proceeds therefrom) as if such additional
Indebtedness had been Incurred, or such Disqualified Stock had been issued, as
the case may be, at the beginning of such four-quarter period, (2) no Default or
Event of Default shall have occurred and be continuing at the time such
Indebtedness is Incurred or such Disqualified Stock is issued or would occur as
a consequence of the Incurrence of such Indebtedness or the issuance of such
Disqualified Stock and (3) with respect to any such Restricted Subsidiary, it is
then a Subsidiary Guarantor and its Subsidiary Guarantee then constitutes a
legal, valid and binding obligation of such Subsidiary Guarantor.
The amount of any Guarantees by the Company or any Restricted Subsidiary of
any Indebtedness of the Company or one or more Restricted Subsidiaries will not
be deemed to be Outstanding or Incurred for purposes of this Section 9.11 in
addition to the amount of Indebtedness which it Guarantees.
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Other than to the extent provided in the Intercreditor Agreement, neither
the Company nor any Restricted Subsidiary will be permitted to Incur any
Indebtedness or other obligation, including Permitted Indebtedness, that is
contractually subordinated in right of payment or security (other than Permitted
Liens) to any other Indebtedness of the Company or that Restricted Subsidiary,
as applicable, unless such Indebtedness is also expressly contractually
subordinated in right of payment and security (other than Permitted Liens) to
the Notes or the Subsidiary Guarantee of that Restricted Subsidiary, as
applicable, on substantially identical terms; provided, however, that no
Indebtedness of the Company or any Restricted Subsidiary will be deemed to be
contractually subordinated in right of payment or security to any other
Indebtedness of the Company or that Restricted Subsidiary solely by virtue of
being unsecured, and the provisions of this Section 9.11 shall not prohibit
tranches of Indebtedness under the Revolving Credit Facility being subordinated
to other tranches of Indebtedness thereunder.
9.12 LIMITATION ON GUARANTEES OF INDEBTEDNESS BY SUBSIDIARIES and other
affiliates
(a) The Company will not permit any Subsidiary of the Company that is not a
Subsidiary Guarantor to Guarantee the payment of any Indebtedness of the Company
or any of the Restricted Subsidiaries other than the Notes unless: (1) such
Subsidiary simultaneously (A) executes and delivers to the Trustee a
supplemental indenture to this Indenture and, if the Registration Rights
Agreement is then in effect, a joinder agreement to the Registration Rights
Agreement, each in form and substance reasonably satisfactory to the Trustee,
providing for such Subsidiary to become a Subsidiary Guarantor under this
Indenture and a party to the Registration Rights Agreement and (B) delivers to
the Trustee an opinion of counsel, in form and substance reasonably satisfactory
to the Trustee, to the effect that such supplemental indenture and joinder
agreement have been duly authorized, executed and delivered by such Subsidiary
and constitute legal, valid and binding obligations of such Subsidiary; (2) if
such Subsidiary is a Restricted Subsidiary, all properties and assets of the
kind constituting Collateral then owned by such Subsidiary shall be subject to a
valid, enforceable perfected first priority security interest (subject to
Permitted Prior Liens) in favor of the Collateral Agent as security for the Note
Obligations; and (3) such Subsidiary waives and agrees not to claim or take the
benefit or advantage of, in any manner whatsoever, any rights of reimbursement,
indemnity or subrogation or any other rights against the Company or any
Restricted Subsidiary as a result of any payment by such Subsidiary under its
Subsidiary Guarantee until such time as the obligations Guaranteed thereby are
paid in full; provided that this paragraph shall not be applicable to any
Guarantee by any Subsidiary of the Company that (x) existed at the time such
Person became a Subsidiary of the Company and (y) was not Incurred in connection
with, or in contemplation of, such Person becoming a Subsidiary of the Company.
Any Subsidiary Guarantee entered into by a Subsidiary of the Company will be
deemed released upon the release or discharge of each Guarantee that resulted in
the creation of such Subsidiary Guarantee of the Notes, except a discharge or
release by or as a result of payment under any such Guarantee.
(b) The Company will not permit any of its other Affiliates to Guarantee
the payment of any Indebtedness of the Company or the Restricted Subsidiaries
other than the Notes unless: (1) such Affiliate simultaneously (A) executes and
delivers to the Trustee a supplemental indenture to this Indenture and, if the
Registration Rights Agreement is then in effect, a joinder agreement to the
Registration Rights Agreement, each in form and substance reasonably
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satisfactory to the Trustee, providing for such Affiliate to become a guarantor
of the Notes under this Indenture and a party to the Registration Rights
Agreement and (B) delivers to the Trustee an opinion of counsel, in form and
substance reasonably satisfactory to the Trustee, to the effect that such
supplemental indenture and joinder agreement have been duly authorized, executed
and delivered by such Affiliate and constitute legal, valid and binding
obligation of such Affiliate; and (2) such Affiliate waives and agrees not to
claim or take the benefit or advantage of, in any manner whatsoever, any rights
of reimbursement, indemnity or subrogation or any other rights against the
Company or any Restricted Subsidiary as a result of any payment by such
Affiliate under its Guarantee until such time as the obligations Guaranteed
thereby are paid in full.
(c) Notwithstanding clauses (a) and (b) above and the other provisions of
this Indenture, any Subsidiary Guarantee Incurred by a Restricted Subsidiary
pursuant to this Section 9.12 will provide by its terms that it will be
automatically and unconditionally released and discharged upon the terms and
conditions set forth in Section 13.3 hereof.
9.13 LIMITATION ON ISSUANCE, SALE AND OWNERSHIP OF CAPITAL STOCK OF
RESTRICTED SUBSIDIARIES.
The Company (i) will not permit any Restricted Subsidiary to issue any
Capital Stock (other than to the Company or a Wholly Owned Restricted
Subsidiary) and (ii) will not permit any Person (other than the Company or a
Wholly Owned Restricted Subsidiary) to own any Capital Stock of any Restricted
Subsidiary, except, in each case, for (a) directors' qualifying shares, (b)
Capital Stock of a Restricted Subsidiary organized in a jurisdiction other than
in the United States required as a legal matter to be issued to, or owned by,
the government of such foreign jurisdiction or individual or corporate citizens
of such foreign jurisdiction in order for such Restricted Subsidiary to transact
business in such foreign jurisdiction, (c) a sale of Capital Stock of a
Restricted Subsidiary effected in accordance with Sections 9.10, 9.11 and 9.16
hereof and only if, immediately after giving effect to such sale, such
Restricted Subsidiary would no longer constitute a Restricted Subsidiary and any
Investment in such Person remaining after giving effect to such sale would have
been permitted under Sections 9.10, 9.11 and 9.16 hereof, (d) the issuance of
Capital Stock by a Restricted Subsidiary to a Person other than the Company or a
Wholly Owned Restricted Subsidiary, which issuance was made in accordance with
Sections 9.10, 9.11 and 9.16 hereof and only if, immediately after giving effect
to such issuance, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary and any Investment in such Person remaining after giving
effect to such issuance would have been permitted under Sections 9.10 and 9.16
hereof, (e) the ownership of shares of Capital Stock of a Restricted Subsidiary
owned by a Person at the time such Restricted Subsidiary became a Restricted
Subsidiary or acquired by such Person in connection with the formation of the
Restricted Subsidiary; provided, however, that any Capital Stock retained by the
Company or a Restricted Subsidiary in the case of clause (c), (d) or (e) will be
treated as an Investment for purposes of Section 9.10, if the amount of such
shares of Capital Stock represents less than a majority of the Voting Stock of
such Restricted Subsidiary.
9.14 LIMITATION ON LIENS.
The Company will not and will not permit any Restricted Subsidiary to,
directly or indirectly, Incur or suffer to exist, or become effective, any Lien
of any kind whatsoever, except for Permitted Liens, upon any of their respective
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Properties, whether owned prior to or acquired after the date of this Indenture,
or any income or profits therefrom to secure any Indebtedness.
9.15 PURCHASE OF SECURITIES UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each Holder of Notes will
have the right to require the Company to repurchase all or any part (equal to
$1,000 or an integral multiple thereof) of such holder's Notes, pursuant to the
offer described in Section 9.15(b) hereof (the "Change of Control Offer") at an
offer price in cash equal to 101% of the aggregate principal amount thereof plus
accrued and unpaid interest and Liquidated Damages, if any (the "Change of
Control Purchase Price"), to the date of purchase (the "Change of Control
Payment Date"). The Company will not be required to make a Change of Control
Offer upon a Change of Control if a third party makes the an offer to the
Holders of the Notes to purchase the Notes at the same or a higher purchase
price, at the same times and otherwise in substantial compliance with the
requirements applicable to a Change of Control Offer made by the Company and
purchases all Notes validly tendered and not withdrawn.
(b) Within 30 calendar days after the date of any Change of Control, the
Company or the Trustee, at the request and the expense of the Company, will send
to each Holder, in the manner provided in Section 14.5, a notice (the "Change of
Control Notice") prepared by the Company describing the transaction or
transactions that constitute the Change of Control and stating:
(i) that a Change of Control has occurred and a Change of Control Offer is
being made pursuant to this Section 9.15, and that all Notes that are timely
tendered and not withdrawn will be accepted for payment;
(ii) the Change of Control Purchase Price and the Change of Control Payment
Date, which date will be a Business Day no earlier than 30 calendar days nor
later than 60 calendar days subsequent to the date such notice is mailed;
(iii) that any Notes or portions thereof not tendered or accepted for
payment will continue to accrue interest;
(iv) that, unless the Company defaults in the payment of the Change of
Control Purchase Price with respect thereto, all Notes or portions thereof
accepted for payment pursuant to the Change of Control Offer will cease to
accrue interest from and after the Change of Control Payment Date;
(v) that any holder electing to have any Notes or portions thereof
purchased pursuant to a Change of Control Offer will be required to surrender
such Notes, with the form to elect purchase by the Company pursuant to this
Section 9.15 completed, to the Paying Agent at the address specified in the
notice, prior to the close of business on the third Business Day preceding the
Change of Control Payment Date;
(vi) that any holder will be entitled to withdraw such election if the
Paying Agent receives, not later than the close of business on the second
Business Day preceding the Change of Control Payment Date, a facsimile
transmission or letter, setting forth the name of the holder, the principal
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amount of Notes delivered for purchase and a statement that such holder is
withdrawing such holder's election to have such Notes or portions thereof
purchased pursuant to the Change of Control Offer;
(vii) that any holder electing to have Notes purchased pursuant to the
Change of Control Offer must specify the principal amount that is being tendered
for purchase, which principal amount must be $1,000 or an integral multiple
thereof;
(viii) if Definitive Notes have been issued pursuant to Section 2.5, that
any holder of Definitive Notes whose Definitive Notes are being purchased only
in part will be issued new Definitive Notes equal in principal amount to the
unpurchased portion of the Definitive Notes surrendered, which unpurchased
portion will be equal in principal amount to $1,000 or an integral multiple
thereof; and
(ix) any other information necessary to enable any holder to tender Notes
and to have such Notes purchased pursuant to this Section 9.15.
(c) On the Change of Control Payment Date, the Company will, to the extent
lawful: (i) accept for payment all Notes or portions thereof properly tendered
pursuant to the Change of Control Offer; (ii) irrevocably deposit with the
Paying Agent, by 11:00 a.m. Eastern Time, on such date, in immediately available
funds, an amount equal to the Change of Control Purchase Price in respect of all
Notes or portions thereof so accepted; and (iii) deliver or cause to be
delivered to the Trustee the Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of Notes or portions thereof
being purchased by the Company. The Paying Agent will promptly mail, in the
manner provided in Section 14.5, to each holder of Notes or portions thereof so
accepted the Change of Control Purchase Price for such Notes or portions
thereof. The Company will publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date. For
purposes of this Section 9.15, the Trustee will act as the Paying Agent.
(d) Upon surrender and cancellation of a Definitive Note that is purchased
in part pursuant to the Change of Control Offer, the Company will promptly issue
and the Trustee will authenticate and mail (or cause to be transferred by book
entry) to the surrendering Holder of such Definitive Note a new Definitive Note
equal in principal amount to any unpurchased portion of the surrendered
Definitive Note, if any; provided that each such new Definitive Note will be in
a principal amount of $1,000 or an integral multiple thereof.
(e) The Company shall comply with 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 a change of Control Offer. To the
extent that the provisions of any securities laws or regulations conflict with
the provisions of this Section 9.15, the Company shall comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Indenture by virtue thereof.
(f) The Company shall not and shall not permit any Restricted Subsidiary
to, create any restriction that materially impairs the ability of the Company or
such Restricted Subsidiary to make a Change of Control Offer or to pay the
Change of Control Price to holders of the Notes, other than the restrictions
95
contained in the Intercreditor Agreement, the Revolving Credit Facility and the
Bridge Loan. If a Change of Control occurs at a time when the Company is
contractually prohibited from purchasing Notes, and it were unable to eliminate
this prohibition, it would not be permitted to purchase Notes In such case, the
Company's failure to purchase tendered Notes would constitute an Event of
Default under this Indenture that would, in turn, constitute a default under the
Revolving Credit Facility and the Bridge Loan.
9.16 LIMITATION OF ASSET SALES.
(a) The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, consummate any Asset Sale unless: (i) the Company or
such Restricted Subsidiary, as the case may be, receives aggregate consideration
at the time of such Asset Sale at least equal to the Fair Market Value of the
assets or Capital Stock sold or otherwise disposed of pursuant to the Asset Sale
(as determined in good faith by the Board of Directors of the Company and
evidenced by a Board Resolution delivered to the Trustee or, solely with respect
to Asset Sales in an amount not exceeding $1,000,000, as determined in good
faith by the Chief Executive Officer of the Company and evidenced by an
Officers' Certificate delivered to the Trustee); (ii) at least 80% of the fair
market value of the consideration received by the Company or the Restricted
Subsidiary, as the case may be, in respect of such Asset Sale (as determined in
good faith by the Board of Directors of the Company and evidenced by a Board
Resolution delivered to the Trustee or, solely with respect to Asset Sales in an
amount not exceeding $1,000,000, as determined in good faith by the Chief
Executive Officer of the Company and evidenced by an Officers' Certificate
delivered to the Trustee) consists of cash, Cash Equivalents or properties used
in the Oil and Gas Business of the Company or its Restricted Subsidiaries; (iii)
in the case of a Sale of Collateral, the Collateral Agent is immediately granted
a perfected first priority security interest (subject to Permitted Prior Liens)
in the Net Cash Proceeds and other consideration therefor received by the
Company or the Restricted Subsidiary, as the case may be, as additional
Collateral under the Collateral Documents to secure the Secured Obligations,
and, in the case of Net Cash Proceeds, such Net Cash Proceeds must, except as
otherwise provided in the Intercreditor Agreement, be deposited into an Asset
Sale Proceeds Account, all on terms and pursuant to arrangements reasonably
satisfactory to the Collateral Agent in its reasonable determination (which may
include, at the Collateral Agent's reasonable request, customary Officers'
Certificates and legal opinions), and the Intercreditor Agreement and other
Collateral Documents include release provisions requiring the Collateral Agent
to release deposits in an Asset Sale Proceeds Account as necessary to permit the
Company or its Restricted Subsidiaries to apply such Net Cash Proceeds in the
set forth in paragraph (b) of this Section 9.16, unless the Collateral Agent
shall have received written notice that a Default or Event of Default has
occurred and is continuing; (iv) if the Board of Directors of the Company
determines in accordance with either clause (i) or (ii) of this paragraph (a)
that the Fair Market Value of the assets or Capital Stock, as the case may be,
to be sold or otherwise disposed of pursuant to the Asset Sale or the Fair
Market Value of the aggregate consideration to be received by the Company and
the Restricted Subsidiaries in respect of the Asset Sale exceeds $5,000,000, the
Company shall have delivered to the Trustee an opinion or appraisal with respect
to such determination issued by an independent accounting or investment banking
firm which is nationally recognized in the United States, or a reputable
independent appraisal or petroleum engineering firm which is reasonably
satisfactory to the Trustee, as appropriate under the circumstances; and (v) the
Company shall have delivered to the Trustee an Officers' Certificate certifying
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that such Asset Sale complies with clauses (i), (ii), (iii) and (iv) of this
Section 9.16(a); provided, that (a) any Asset Sale pursuant to a condemnation,
appropriation or other similar taking, including by deed in lieu of
condemnation, or pursuant to the foreclosure or other enforcement of a Lien
incurred not in violation of this Indenture or exercise by the related
lienholder of rights with respect thereto, including by deed or assignment in
lieu of foreclosure, will not be required to satisfy the conditions set forth in
clauses (i), (ii) and (iv) of this paragraph (and the Officers' Certificate
described in clause (v) of this paragraph will not be required to certify as to
compliance with such clauses (i), (ii) and (iv)); and (b) any Asset Sale
undertaken by the Company or a Restricted Subsidiary at the direction of the
Bridge Loan Administrative Agent in accordance with the terms of paragraph (c)
of this Section 9.16 shall not be required to satisfy any of the conditions of
this paragraph (a), but shall instead be required to fulfill the conditions of
such paragraph (c). The amount (without duplication) of any Unsubordinated
Indebtedness of the Company or any Restricted Subsidiary that is expressly
assumed by the transferee in an Asset Sale and with respect to which the Company
or such Restricted Subsidiary, as the case may be, is unconditionally discharged
by the holder of such Unsubordinated Indebtedness, will be deemed to be Cash
Equivalents for purposes of clause (ii) of this paragraph (a) and shall also be
deemed to constitute a repayment of, and a permanent reduction in, the amount of
such Unsubordinated Indebtedness for purposes of paragraph (b) of this Section
9.16.
(b) If the Company or any Restricted Subsidiary consummates an Asset Sale
(other than (i) any Asset Sale undertaken at the direction of the Bridge Loan
Administrative Agent or (ii) any Asset Sale with respect to Capital Stock of
Grey Wolf, which, so long as any of the Bridge Loan Obligations remain
outstanding, will be exclusively applied to repay such outstanding Bridge Loan
Obligations pursuant to the terms of the Bridge Loan) or (iii) there is any
Event of Loss, the Company or such Restricted Subsidiary may at its option
either:
(i) no more than 365 days after such Asset Sale, or date upon which any Net
Loss Proceeds are received by the Company or a Restricted Subsidiary in respect
of such Event of Loss, as the case may be, apply all or any portion of the Net
Cash Proceeds or Net Loss Proceeds, as applicable, therefrom to repay
Indebtedness outstanding under the Revolving Credit Facility (but not, unless
the Company elects to permanently reduce the commitment thereunder; provided,
that, the Company will be required to deliver an Officer's Certificate to the
Trustee, within 45 days after the end of any fiscal quarter in which any such
Net Cash Proceeds or Net Loss Proceeds, as applicable, are so applied, stating
for each such application the amount of Indebtedness repaid and the date of such
repayment);
(ii) no more than 365 days before or after such Asset Sale, or date upon
which any Net Loss Proceeds are received by the Company or a Restricted
Subsidiary in respect of such Event of Loss, as the case may be, use all or any
part of the Net Cash Proceeds or Net Loss Proceeds, respectively, therefrom to
make capital expenditures or acquire properties that will be used in the Oil and
Gas Business of the Company or its Restricted Subsidiaries, as the case may be,
provided, however, that, if any such Capital Expenditure is made or property is
acquired prior to the occurrence of such Asset Sale or date upon which any Net
Loss Proceeds are received, to the extent amounts were drawn under the Revolving
Credit Facility to pay for such acquisition, contemporaneously with the
consummation of the Asset Sale or receipt of such Net Loss Proceeds, as the case
may be, the Company shall be required to use the Net Cash Proceeds of such Asset
Sale or the Net Loss Proceeds of such Event of Loss, as the case may be, to
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repay (but not, unless the Company elects, permanently reduce) the Revolving
Credit Facility to the extent of the amount borrowed; or
(iii) no more than 365 days after such Asset Sale or date upon which any
Net Loss Proceeds are received by the Company or a Restricted Subsidiary in
respect of such Event of Loss, as the case may be, and at such time when no
Bridge Loan Obligations are outstanding and there is a ratio of the Company's
consolidated PV-10 to Consolidated Indebtedness of at least 1.25 to 1.00, use
all or any part of the Net Cash Proceeds or Net Loss Proceeds, respectively,
therefrom to, on one Interest Payment Date (but not more than one Interest
Payment Date), pay interest on the Notes up to the amount of the semi-annual
interest scheduled to be paid on such Interest Payment Date (without regard to
any overdue or default interest that may owing as of such Interest Payment
Date).
Notwithstanding the foregoing, the Net Cash Proceeds received by the
Company or any Restricted Subsidiary in respect of any disposition by it of any
Capital Stock of Grey Wolf, whether or not such disposition constitutes an Asset
Sale, will be required to be applied first to the repayment of any Obligations
then outstanding under the Bridge Loan and then, if any Net Cash Proceeds remain
after such application, such excess Net Cash Proceeds (to the extent resulting
from an Asset Sale) will be subject to the terms described in this paragraph.
The amount of such Net Cash Proceeds and Net Loss Proceeds not applied or
invested as provided in this paragraph (after the period specified in this
paragraph) shall constitute "Excess Proceeds".
The Revolving Credit Facility will provide that if the Net Proceeds from an
Asset Sale or the Net Loss Proceeds from an Event of Loss are applied to repay
Indebtedness outstanding under the Revolving Credit Facility in accordance with
clause (i) of the immediately preceding paragraph and the amount of such
Indebtedness is not, within 365 days of such application, redrawn under the
Revolving Credit Facility to make capital expenditures or acquire properties
that will be used in the Oil and Gas Business of the Company or its Restricted
Subsidiaries (as certified in an Officers' Certificate delivered to the Trustee
prior to the end of such 365 day period), then, at the end of such 365 day
period, the lenders' commitment under the Revolving Credit Facility will be
permanently reduced on a dollar-for-dollar basis by the amount of such Net Cash
Proceeds or Net Loss Proceeds, as the case may be, which were not so redrawn
under the Revolving Credit Facility and if the aggregate amount of the Net Cash
Proceeds from all other previous Asset Sales, together with the aggregate amount
of all Net Loss Proceeds from all other previous Events of Loss, which were
similarly applied in accordance with clause (i) of the immediately preceding
paragraph and not so redrawn under the Revolving Credit Facility within 365 days
of such application equals or exceeds $10,000,000. If as a result of any such
reduction in the lenders' commitment under the Revolving Credit Facility there
is then any Indebtedness outstanding thereunder in excess of such commitment,
the amount of such excess Indebtedness will become immediately due and payable
under the Revolving Credit Facility.
(c) When the aggregate amount of Excess Proceeds equals or exceeds
$5,000,000 (the "Trigger Date"), the Company will be required to make an offer
to purchase, from all Holders of the Notes, an aggregate principal amount of
Notes equal to such Excess Proceeds as follows:
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(i) Not later than the 30th day following the Trigger Date, the Company
shall give to the Trustee in the manner provided in Section 14.4 hereof, and the
Company or the Trustee, at the request and at the expense of the Company, shall
give each Holder of the Notes in the manner provided in Section 14.5 hereof, a
notice (a "Purchase Notice") offering to purchase (a "Net Proceeds Offer") from
all Holders of the Notes the maximum principal amount (expressed as a multiple
of $1,000) of Notes that may be purchased using an amount (the "Payment Amount")
equal to such Excess Proceeds (subject to proration in the event such Payment
Amount is less than the aggregate Offered Price (as hereinafter defined) of all
Notes tendered.
(ii) The offer price for the Notes will be payable in cash in an amount
equal to 100% of the aggregate principal amount of the Notes tendered pursuant
to a Net Proceeds Offer, plus accrued and unpaid interest and Liquidated Damages
thereon to the date such Net Proceeds Offer is consummated (the "Offered
Price"), in accordance with paragraph (iv) of this Section. To the extent that
the aggregate Offered Price of the Notes tendered pursuant to a Net Proceeds
Offer is less than the Payment Amount relating thereto (such shortfall
constituting a "Net Proceeds Deficiency"), the Company may use such Net Proceeds
Deficiency, or a portion thereof, for general corporate purposes, subject to the
limitations of Section 9.10 hereof.
(iii) If the aggregate Offered Price of Notes validly tendered and not
withdrawn by Holders thereof exceeds the Payment Amount, Notes to be purchased
will be selected on a pro rata basis (with adjustments as appropriate so that
only Notes in denominations of $1,000 or multiples thereof will be purchased) by
the Trustee based on the aggregate principal amount of Notes so tendered. Upon
completion of a Net Proceeds Offer, the amount of Excess Proceeds will be reset
to zero.
(iv) The Purchase Notice will set forth a purchase date (the "Net Proceeds
Payment Date"), which will be on a Business Day no earlier than 30 days nor
later than 60 days from the Trigger Date. The Purchase Notice will also state
(1) that a Trigger Date with respect to one or more Asset Sales has occurred,
that a Net Proceeds Offer is being made and that such Holder has the right to
require the Company to repurchase such Holder's Notes at the Offered Price
subject to the limitations described in the foregoing paragraph (iii), (2) any
information regarding such Net Proceeds Offer required to be furnished pursuant
to Rule 14e-1 under the Exchange Act and any other securities laws and
regulations thereunder, (3) that any Note, or portion thereof, not tendered or
accepted for payment will continue to accrue interest, (4) that, unless the
Company defaults in depositing money with the Paying Agent in accordance with
the last paragraph of clause (iv) of this Section 9.16, or payment is otherwise
prevented, any Note, or portion thereof, accepted for payment pursuant to the
Net Proceeds Offer will cease to accrue interest from and after the Net Proceeds
Payment Date, and (5) the instructions a Holder must follow in order to have his
Notes repurchased in accordance with paragraph (iv) of this Section.
(d) Holders electing to have Notes or portions thereof purchased pursuant
to the Net Proceeds Offer will be required to surrender such Notes to the Paying
Agent at the address specified in the Purchase Notice prior to the close of
business on the third Business Day the Net Proceeds Payment Date. Holders will
be entitled to withdraw their election if the Paying Agent receives, not later
than the close of business on the second Business Day the Net Proceeds Payment
Date, a facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Notes delivered for purchase by the Holder as to
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which his election is to be withdrawn and a statement that such Holder is
withdrawing his election to have such Notes or portions thereof purchased
pursuant to the Net Proceeds Offer. Holders of Definitive Notes whose Notes are
purchased only in part will be issued new Notes equal in principal amount to the
unpurchased portion of the Notes surrendered, which unpurchased portion will be
equal to $1,000 or an integral multiple thereof.
On the Net Proceeds Payment Date, the Company will, to the extent lawful,
(1) accept for payment all Notes or portions thereof validly tendered pursuant
to the Net Proceeds Offer in an aggregate principal amount equal to the Payment
Amount or such lesser amount of Notes as has been tendered, (2) irrevocably
deposit with the Paying Agent by 11:00 a.m. Eastern Time, immediately available
funds sufficient to pay the Purchase Price of all Notes or portions thereof so
tendered in an aggregate principal amount equal to the Payment Amount or such
lesser amount and (3) deliver or cause to be delivered to the Trustee the Notes
so accepted. The Paying Agent will promptly send, in the manner provided in
Section 14.5, to Holders of the Notes so accepted payment in an amount equal to
the Net Proceeds Offer Purchase Price, and the Company will execute and the
Trustee will authenticate and mail or make available for delivery to such
Holders a new Note equal in principal amount to any unpurchased portion of the
Note which any such Holder did not surrender for purchase. Any Notes not so
accepted will be promptly mailed or delivered to the Holder thereof. The Company
will announce the results of a Net Proceeds Offer on or as soon as practicable
after the Net Proceeds Payment Date. For purposes of this Section 9.16, the
Trustee will act as the Paying Agent.
(e) Except for the Intercreditor Agreement, the Revolving Credit Facility,
and the Bridge Loan, the Company will not, and will not permit any Restricted
Subsidiary to, enter into or suffer to exist any agreement that would place any
restriction of any kind (other than pursuant to law or regulation) on the right
of the Company to make a Net Proceeds Offer following any Asset Sale. The
Company will be required to comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder, if
applicable, in the event that an Asset Sale occurs and the Company is required
to purchase Notes as described in this Section 9.16. To the extent that the
provisions of any securities laws or regulations conflict with the provisions
relating to the Net Proceeds Offer, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have breached its
obligations under this Section 9.16 by virtue thereof.
9.17 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or suffer to exist any
transaction or series of related transactions (including, without limitation,
the sale, purchase, exchange or lease of Property or services) with any
Affiliate of the Company (other than the Company or a Restricted Subsidiary)
unless: (i) such transaction or series of related transactions is on terms that
are no less favorable to the Company or such Restricted Subsidiary, as the case
may be, than would be available in a comparable transaction in arm's length
dealings with a Person that is not an Affiliate of the Company or such
Restricted Subsidiary, (ii) with respect to a transaction or series of related
transactions involving payments in excess of $500,000 in the aggregate, the
Company shall deliver an Officers' Certificate to the Trustee certifying that
such transaction or series of transactions complies with clause (i) above, (iii)
without limiting clause (ii) above with respect to a transaction or series of
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related transactions involving payments in excess of $1,000,000 in the
aggregate, such transaction or series of related transactions shall have been
approved by the Board of Directors of the Company and at least two-thirds of the
independent directors of the Company then in office and evidenced by a Board
Resolution delivered to the Trustee; and (iv) without limiting clause (ii) or
(iii), with respect to a transaction or series of related transactions involving
payments of $5,000,000 or more in the aggregate, (a) the Company shall have
received the written opinion of an independent accounting or investment banking
firm which is nationally recognized in the United States, or a reputable
independent appraisal or petroleum engineering firm which is reasonably
satisfactory to the Trustee, as appropriate under the circumstances, that such
transaction or series of transactions is fair, from a financial point of view,
to the Company or such Restricted Subsidiary; provided, however, that the
foregoing restriction will not apply to: (1) transactions exclusively between or
among the Company and/or any of its Restricted Subsidiaries, (2) transactions
consummated pursuant to any agreement existing on the Closing Date (other than
the corporate services agreement between the Company and Grey Wolf), including
any amendment to, or replacement of, such existing agreement to the extent such
amendment or replacement is not more disadvantageous to the holders of the Notes
in any material respect than such existing agreement as in effect on the Closing
Date, (3) for so long as Grey Wolf is a Subsidiary of the Company, transactions
consummated pursuant to the corporate services agreement between the Company and
Grey Wolf, including any amendment to, or replacement of, such agreement to the
extent such amendment or replacement is not more disadvantageous to the holders
of the Notes in any material respect than such agreement as in effect on the
Closing Date, (4) the payment of reasonable and customary regular fees to
directors of the Company or any of its Restricted Subsidiaries who are not
employees of the Company or any Affiliate thereof as determined in good faith by
the Board of Directors of the Company, (5) payments made under the terms of the
employment agreements and employee compensation and other benefit arrangements
of the Company or any Restricted Subsidiary in the ordinary course of business,
(6) indemnities of officers and directors of the Company or any Subsidiary
thereof consistent with such Person's charter, bylaws or other constituent
documents and applicable statutory provisions, (7) Restricted Payments and
Permitted Investments, in each case, permitted by the provisions of this
Indenture, (8) any Guarantee or assumption by the Company or any of its
Restricted Subsidiaries of Indebtedness of the Company or any of its Restricted
Subsidiaries Incurred in accordance with the terms of this Indenture; or (9) the
issuance of Qualified Capital Stock of the Company.
9.18 LIMITATION ON SALE-LEASEBACK TRANSACTIONS
The Company will not, and will not permit any Restricted Subsidiary to,
enter into any Sale-Leaseback Transaction involving any of its Properties
whether now owned or hereafter acquired, unless:
(i) the Company or such Restricted Subsidiary, as applicable, would be
entitled to (a) Incur Indebtedness in an amount equal to the Attributable
Indebtedness relating to such Sale Leaseback Transaction under the Consolidated
Fixed Charge Coverage Ratio test in Section 9.11 and (b) create a Lien on the
properties and assets that are the subject of such Sale Leaseback Transaction to
secure such Attributable Indebtedness pursuant to Section 9.14;
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(ii) the gross proceeds of such Sale-Leaseback Transaction are at least
equal to the Fair Market Value of the Properties that are the subject of such
Sale-Leaseback Transaction (as determined in good faith by the Board of
Directors and evidenced by a Board Resolution delivered to the Trustee or,
solely with respect to a Sale-Leaseback Transaction in an amount not to exceed
$1,000,000, determined in good faith by the Chief Executive Officer of the
Company and evidenced by an Officers' Certificate delivered to the Trustee);
(iii) if the Fair Market Value of the Properties subject to such
Sale-Leaseback Transaction is determined in accordance with clause (ii) above to
be in excess of $5,000,000, the Company shall deliver to the Trustee an opinion
or appraisal with respect to such determination issued by an independent
accounting or investment banking firm which is nationally recognized in the
United States, or a reputable independent appraisal or petroleum engineering
firm which is reasonably satisfactory to the Trustee, as appropriate under the
circumstances; and
(iv) the transfer of such properties and assets in such Sale-Leaseback
Transaction is permitted by, and the Company or such Restricted Subsidiary, as
the case may be, applies the proceeds of such Sale-Leaseback Transaction in
compliance with the covenant described under Section 9.16.
9.19 LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective any consensual encumbrance or restriction of any kind on the ability
of any Restricted Subsidiary to: (i) pay dividends, in cash or otherwise, or
make any other distribution on or in respect of its Capital Stock to the Company
or any other Restricted Subsidiary; (ii) make loans or advances to the Company
or any other Restricted Subsidiary to pay any Indebtedness owed to the Company
or any other Restricted Subsidiary; (iii) make an investment in the Company or
any other Restricted Subsidiary; or (iv) transfer any of its Properties to the
Company or any other Restricted Subsidiary, except in each instance for such
encumbrances or restrictions pursuant to: (a) applicable law, (b) this
Indenture, the Notes, the Collateral Documents, the Revolving Credit Facility or
the Bridge Loan, (c) agreements in effect as of the Closing Date to the extent
and in the manner such encumbrances or restrictions are in effect on such date,
(d) any agreement or other instrument governing Acquired Indebtedness, which
encumbrance or restriction is not applicable to any other Person, or the
properties or assets of any other Person, other than the Person, or the property
or assets of the Person, so acquired, (e) customary non-assignment restrictions
in leases and licenses relating solely to the property covered thereby and
entered into in the ordinary course of business, (f) any agreement for the sale
or other disposition of a Restricted Subsidiary or its assets not otherwise
prohibited by this Indenture that restricts transactions by the Restricted
Subsidiary solely with respect to shares of Capital Stock of the Restricted
Subsidiary or such assets pending such sale or other disposition, provided that
any encumbrance or restriction pursuant to such agreement by its terms lapses no
later than 180 days after the date of such agreement, (g) customary
non-assignment restrictions in joint venture agreements, Permitted Farmout
Agreements or other similar agreements not otherwise prohibited by this
Indenture relating solely to the equity interests in the joint venture or
similar entity, or solely to the Farmout Property in the case of a Permitted
Farmout Agreement, and in each case entered into in the ordinary course of
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business, (h) provisions in an agreement or instrument to governing a Permitted
Lien that limit the ability of the Company or any Restricted Subsidiary to
dispose of assets subject to that Permitted Lien, or (i) any agreement governing
Refinancing Indebtedness that extends, renews, refinances or replaces
Indebtedness issued, assumed or incurred pursuant to any of the agreements
referred to in the foregoing clauses (b) through (h); provided that the
provisions relating to such encumbrance or restriction contained in such
agreement governing Refinancing Indebtedness are no less favorable to the
holders of the Notes as determined by the Board of Directors of the Company in
its reasonable and good faith judgment than those under or pursuant to the
applicable agreement referred to in the foregoing clauses (b) through (h).
9.20 WAIVER OF CERTAIN COVENANTS.
The Company may omit in any particular instance to comply with any term,
provision or condition set forth in Sections 9.5 - 9.12, 9.14, 9.15, 9.17, 9.18,
and 9.19 hereof if, before or after the time for such compliance, the Holders of
at least a majority in aggregate principal amount of the Outstanding Notes and
the Subsidiary Guarantors, by Act of such Holders and written agreement of the
Subsidiary Guarantors, waive such compliance in such instance with such term,
provision or condition, but no such waiver will extend to or affect such term,
provision or condition except to the extent so expressly waived, and, until such
waiver will become effective, the obligations of the Company and the duties of
the Trustee in respect of any such term, provision or condition will remain in
full force and effect.
9.21 LIMITATION ON RESTRICTIVE COVENANTS.
Notwithstanding any other provision of this Indenture, the restrictive
covenants set forth herein, including, without limitation, those described under
Section 9.10 hereof, shall be and shall be deemed limited to the extent
necessary so that the creation, existence and effectiveness of such restrictive
covenants shall not result in a breach of Section 9.19 of the this Indenture,
which limits dividend and other payment restrictions affecting certain
Subsidiaries of the Company.
ARTICLE 10
REDEMPTION OF SECURITIES
10.1 RIGHT OF REDEMPTION.
The Notes may be redeemed, at the election of the Company, as a whole or
from time to time in part, at any time after April 28, 2007, upon not less than
30 nor more than 60 days' notice to each Holder of Notes to be redeemed, subject
to the conditions and at the Redemption Prices (expressed as percentages of
principal amount) set forth below, together with accrued and unpaid interest and
Liquidated Damages, if any, to the applicable Redemption Date.
Year Percentage
---- ----------
From April 29, 2007 to April 28, 2008...... 104.00%
From April 29, 2008 to April 28, 2009...... 102.00%
After April 28, 2009....................... 100.00%
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Notwithstanding the foregoing, at any time prior to April 29, 2007, the
Company may, at its option and subject to any restriction or other provisions
relating thereto contained in the Revolving Credit Facility, on any one or more
occasions redeem up to 35% of the original aggregate principal amount of the
Notes with the Net Cash Proceeds of one or more Qualified Equity Offerings at a
redemption price equal to the product of (x) the principal amount of the Notes
being so redeemed and (y) a redemption price factor of 1.00 plus the per annum
interest rate on the Notes (expressed as a decimal) on the applicable redemption
date, plus accrued and unpaid interest to the applicable redemption date,
provided that (i) at least 65% of the original aggregate principal amount of the
Notes remains Outstanding after each such redemption; and (ii) any such
redemption occurs within 90 days after the closing of such Qualified Equity
Offering.
10.2 PPLICABILITY OF ARTICLE.
Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, will be made in
accordance with such provision and, the extent applicable, this Article 10.
10.3 ELECTION TO REDEEM; NOTICE TO TRUSTEE.
The election of the Company to redeem any Notes pursuant to Section 10.1
hereof will be evidenced by a Board Resolution. In case of any redemption at the
election of the Company, the Company will, at least 60 days prior to the
Redemption Date fixed by the Company (unless a shorter notice will be
satisfactory to the Trustee), notify the Trustee of such Redemption Date and of
the principal amount of Notes to be redeemed and will deliver to the Trustee
such documentation and records as will enable the Trustee to select the Notes to
be redeemed pursuant to Section 10.4 hereof. Any election to redeem Notes will
be revocable until the Company gives a notice of redemption pursuant to Section
10.5 hereof to the Holders of Notes to be redeemed.
10.4 SELECTION BY TRUSTEE OF NOTES TO BE REDEEMED.
If less than all the Notes are to be redeemed, the particular Notes to be
redeemed will be selected not less than 30 days nor more than 60 days prior to
the Redemption Date by the Trustee, from the Outstanding Notes not previously
called for redemption, pro rata or by any other method that the Trustee deems
fair and appropriate and which may provide for the selection for redemption of
portions of the principal of Notes; provided, however, that any such partial
redemption will be in integral multiples of $1,000.
The Trustee will promptly notify the Company in writing of the Notes
selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise requires,
all provisions relating to redemption of Notes will relate, in the case of any
Note redeemed or to be redeemed only in part, to the portion of the principal
amount of such Note which has been or is to be redeemed.
10.5 NOTICE OF REDEMPTION.
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Notice of redemption will be given in the manner provided for in Section
14.5 hereof not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Notes to be redeemed.
All notices of redemption will state:
(a) the Redemption Date;
(b) the Redemption Price;
(c) if less than all Outstanding Notes are to be redeemed, the
identification (and, in the case of a partial redemption, the principal amounts)
of the particular securities to be redeemed;
(d) that on the Redemption Date the Redemption Price (together with accrued
and unpaid interest and Liquidated Damages, if any, to the Redemption Date
payable as provided in Section 10.7 hereof) will become due and payable upon
each such Note, or the portion thereof, to be redeemed, and that, unless the
Company defaults in the payment of the Redemption Price and any applicable
accrued interest, interest thereon will cease to accrue on and after said date;
(e) the place or places where such Notes are to be surrendered for payment
of the Redemption Price; and
(f) the CUSIP number, if any.
Notice of redemption of Notes to be redeemed at the election of the Company
will be given by the Company or, at the Company's request, by the Trustee in the
name and at the expense of the Company. Failure to give such notice by mailing
to any Holder of Notes or any defect therein will not affect the validity of any
proceedings for the redemption of other Notes.
10.6 DEPOSIT OF REDEMPTION PRICE.
On or before 11:00 a.m. Eastern Time, on any Redemption Date, the Company
will deposit with the Trustee or with a Paying Agent (or, if the Company is
acting as its own Paying Agent, segregate and hold in trust as provided in
Section 10.3 hereof) an amount of money sufficient to pay the Redemption Price
of, and accrued and unpaid interest on, all the Notes which are to be redeemed
on such Redemption Date.
10.7 NOTES PAYABLE ON REDEMPTION DATE.
Notice of redemption having been given as aforesaid, the Notes so to be
redeemed will, on the Redemption Date, become due and payable at the Redemption
Price therein specified (together with accrued and unpaid interest, if any, to
the Redemption Date), and from and after such date (unless the Company will
default in the payment of the Redemption Price and accrued and unpaid interest)
such Notes will cease to bear interest. Upon surrender of any such Note for
redemption in accordance with said notice, such Note will be paid by the Company
at the Redemption Price, together with accrued and unpaid interest, if any, to
the Redemption Date; provided, however, that installments of interest whose
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Stated Maturity is on or prior to the Redemption Date will be payable to the
Holders of such Notes, or one or more Predecessor Notes, registered as such at
the close of business on the relevant Record Dates according to their terms and
the provisions hereof.
If any Note called for redemption will not be so paid upon surrender
thereof for redemption, the principal (and premium, if any) will, until paid,
bear interest from the Redemption Date at the rate borne by the Notes.
10.8 NOTES REDEEMED IN PART.
Any Note which is to be redeemed only in part will be surrendered at
the office or agency of the Company maintained for such purpose pursuant to
Section 10.2 hereof (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Company will execute, and the
Trustee will authenticate and deliver to the Holder of such Note without service
charge, a new Note or Notes of any authorized denomination as requested by such
Holder, in aggregate principal amount equal to and in exchange for the
unredeemed portion of the principal amount of the Note so surrendered.
ARTICLE 11
COLLATERAL AND COLLATERAL DOCUMENTS
11.1 Collateral Documents.
(a) As general and continuing collateral security for the due satisfaction
of all Obligations of the Company and its Restricted Subsidiaries under this
Indenture, the Notes and the Guarantees and the due performance by the Company
and its Restricted Subsidiaries of their other Obligations hereunder and
thereunder, the Company and the Restricted Subsidiaries are granting Liens
(subject to no Liens, other than Permitted Prior Liens) on the Collateral
pursuant to the Intercreditor Agreement and the other Collateral Documents.
(b) The Company covenants and agrees that it and its Restricted
Subsidiaries shall at all times have, full right, power and lawful authority to
grant, bargain, sell, release, convey, hypothecate, assign, mortgage, pledge,
transfer and confirm the Property constituting the Collateral pursuant to the
Intercreditor Agreement and the other Collateral Documents to which such Persons
are party, free and clear of all Liens (other than Permitted Prior Liens), and
that (i) it will forever warrant and defend the title to the same against the
claims of all Persons (except as to Permitted Liens), (ii) it and such of its
Restricted Subsidiaries, as applicable, will execute, acknowledge and deliver to
the Trustee such further assignments, transfers, assurances or other instruments
as the Trustee may reasonably require and (iii) it and such of its Restricted
Subsidiaries, as applicable, will do or cause to be done all such acts as may be
reasonably required by the Trustee, to confirm to the Trustee such Lien on the
Collateral, or any part thereof, as from time to time constituted, so as to
render the same available for the security and benefit of the Intercreditor
Agreement and the other Collateral Documents, this Indenture and the Notes. The
Company further covenants and agrees that the Intercreditor Agreement and each
of the Collateral Documents, as applicable, creates or will create (when
delivered) a shared first priority perfected security interest (to the extent
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attainable by filing, recordation or possession, and subject to Permitted Prior
Liens) in the Collateral subject thereto to secure the Note Obligations. The
provisions of this Article 11 shall all be subject to the terms of the
Intercreditor Agreement to the extent applicable.
(c) In the event that the Company or any Restricted Subsidiary at any time
acquires or otherwise owns any Property of the kind included in the Collateral
that is not subject to a valid and enforceable first priority perfected security
interest (subject to Permitted Prior Liens) in favor of the Collateral Agent as
security for the Note Obligations, then the Company shall, or shall cause that
Restricted Subsidiary to, as soon as practicable, but in any event within 15
days with respect to clauses (1) and (2) below, and within 30 days with respect
to clauses (3) and (4) below, of the earlier of such acquisition or of the day
an officer of the Company or a Restricted Subsidiary has knowledge or should
have reasonably known of any such deficiency with respect to any such property
or asset:
(1) execute and deliver to the Collateral Agent one or more joinder
agreements to the applicable Collateral Documents and any other security
agreement, pledge agreement, stock power or other instrument requested by
the Collateral Agent, each in form and substance reasonably satisfactory to
the Collateral Agent, required to grant a security interest in such
Collateral in favor of the Collateral Agent for the benefit of the holders
of the Note Obligations;
(2) deliver to the Collateral Agent and the Trustee one or more
Opinions of Counsel reasonably satisfactory to the Collateral Agent and the
Trustee with respect to the matters set forth in clause (1) above;
(3) cause the Liens granted in each Collateral Document to be duly
perfected first priority security interests (subject to Permitted Prior
Liens) in favor of the Collateral Agent, including by pledging any Capital
Stock constituting such Collateral as appropriate, and cause each other
Lien upon such Collateral to be (a) released, unless it is a Permitted
Prior Lien, or (b) subordinated, whether by agreement or operation of law,
to the Collateral Agent's Liens for the benefit of holders of the Note
Obligations if it is a Permitted Lien but not a Permitted Prior Lien; and
(4) deliver to the Collateral Agent and the Trustee one or more
Opinions of Counsel reasonably satisfactory to the Collateral Agent and the
Trustee with respect to lien perfection matters set forth in clause (3)
above.
11.2 Recording.
Subject to the terms of the Intercreditor Agreement, the Company shall
cause, at the Company's expense, each Collateral Document, and all amendments or
supplements thereto, to be registered, recorded and filed and/or re-recorded
and/or re-filed and/or renewed in such manner and in such place or places, if
any, as may be reasonably required by the Trustee in order to preserve, protect
and maintain the perfected Liens (subject to no Liens, other than Permitted
Liens) created by the Collateral Documents on the Collateral. The Company shall
pay all mortgage, mortgage recording, stamp, intangible or other similar taxes,
charges or fees required to be paid by any Authority under applicable Legal
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Requirements in connection with the execution, delivery, recordation, filing,
perfection or enforcement of any of the Collateral Documents.
11.3 Possession of the Collateral.
(a) Except after the occurrence and during the continuation of an Event of
Default, the Company or the relevant Restricted Subsidiary may possess, manage,
operate and enjoy, as applicable, the Collateral in accordance with the terms of
this Indenture, the Notes, the Guarantees and the Collateral Documents.
(b) Notwithstanding the foregoing, all amounts received by the Trustee, if
any, as proceeds of any part of the Collateral (including Net Cash Proceeds in
the case of an Asset Sale and Net Loss Proceeds in the case of an Event of Loss)
and all amounts of money, securities, letters of credit and other evidences of
Indebtedness deposited with or held by the Trustee in accordance with this
Indenture and any Collateral Document shall be held by the Trustee, if any, as
security for the Obligations of the Company and the Subsidiary Guarantors, if
any, under this Indenture, the Notes, any Guarantees and the Collateral
Documents until applied in accordance with the terms of this Indenture and the
Intercreditor Agreement.
11.4 Suits to Protect the Collateral.
Subject to the provisions of the Intercreditor Agreement, the Trustee shall
have power to institute in its name and to maintain such suits and proceedings
as it may deem expedient to prevent any impairment of the Collateral by any acts
which may be unlawful or in violation of this Indenture or any of the Collateral
Documents, 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 and in the principal, interest, issues, profits, rents, revenues and
other income arising therefrom, including 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 under any of the Collateral Documents,
or be prejudicial to the interests of the Holders or the Trustee.
11.5 Release of Collateral.
(a) The Trustee shall not at any time release, or authorize the Collateral
Agent or any other Person to release, Collateral from the Liens created by the
Collateral Documents unless such release is in accordance with the provisions of
this Indenture and the Collateral Documents.
(b) The release of any Collateral from the Lien of the Collateral 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 Collateral Documents. To the extent
applicable, the Company shall comply with Section 314(d) of the TIA relating to
the release of property from the Lien of the Collateral Documents and relating
to the substitution therefor of any property to be subjected to the Lien of the
Collateral Documents. Any certificate or opinion required by Section 314(d) of
the TIA may be made by an Officer of the Company, except in cases where Section
314(d) of the TIA requires that such certificate or opinion be made by an
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independent person, which person shall be an independent engineer, appraiser or
other expert selected by the Company.
11.6 Specified Releases of Collateral.
(a) Satisfaction and Discharge; Defeasance. The Company and the Restricted
Subsidiaries shall be entitled to obtain a full release of the Collateral from
the Liens of the Collateral Documents with respect to the Note Obligations upon
payment in full of all principal, premium, if any, interest on the Notes and of
all other Obligations for the payment of money due and owing to the Trustee or
the Holders under this Indenture, the Notes, the Guarantees and the Collateral
Documents, or upon compliance with the conditions precedent set forth in Article
12 hereof for Legal Defeasance or Covenant Defeasance. Upon such payment or 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 12), together with such documentation, if any, as
may be required by the TIA (including, without limitation, Section 314(d) of the
TIA) or reasonably required by the Trustee prior to the release of such
Collateral, the Trustee shall forthwith take all action that is necessary or
reasonably requested by the Company (in each case at the expense of the Company)
to release and reconvey to the Company without recourse all of the Collateral,
and shall deliver such Collateral in its possession to the Company and shall
execute and deliver to the Company releases and satisfactions, in recordable
form, to the extent reasonably requested by the Company.
(b) Releases of Collateral in Connection with Asset Sales. The Company and
the Restricted Subsidiaries shall be entitled to obtain a release of, and the
Trustee shall release, items of Collateral (including property and assets owned
by a Restricted Subsidiary of which the Capital Stock is being sold in
compliance with the terms of this Indenture and which following such sale will
not be a Restricted Subsidiary), other than certain Trust Monies, that are
subject to an Asset Sale or other disposition as provided under Section 11.7
hereof (the "Released Collateral") upon compliance with the conditions precedent
that the Company shall have delivered to the Collateral Agent, with a copy to
the Trustee, the following:
(i) a notice from the Company requesting release of Released Collateral (a
"Company Notice") which
(A) specifically describes the proposed Released Collateral;
(B) specifies the fair market value of such Released Collateral
(which, in the case of a sale of Capital Stock of a Restricted
Subsidiary resulting in it no longer being a Restricted Subsidiary,
means the fair market value of such Capital Stock) as of a date within
60 days of such notice (as determined in good faith by the Board of
Directors of the Company and evidenced by a Board Resolution delivered
to the Collateral Agent and the Trustee or, solely with respect to the
Released Collateral in an amount not exceeding $1.0 million, as
determined in good faith by the Chief Executive Officer of the Company
and evidenced by an Officers' Certificate delivered to the Collateral
Agent and the Trustee);
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(C) states (i) that the consideration to be received in respect of
such Released Collateral is at least equal to the fair market value of
such Released Collateral (which, in the case of a sale of Capital Stock
of a Restricted Subsidiary resulting in it no longer being a Restricted
Subsidiary, means the fair market value of such Capital Stock) or (ii)
with respect to an interest in Farmout Property to be conveyed to a
farmee under a Farmout Agreement, that such Farmout Agreement is a
Permitted Farmout Agreement;
(D) states that the release of such Released Collateral shall not
materially and adversely impair the value of the remaining Collateral,
taken as a whole, or interfere with the Collateral Agent's ability to
realize such value and will not impair the maintenance and operation of
the remaining Collateral, taken as a whole;
(E) confirms the sale or other disposition of, or an agreement to
sell or otherwise dispose of, such Released Collateral in a bona fide
sale to a person that is not an Affiliate of the Company or, in the
event that such sale or other disposition is to a person that is an
Affiliate of the Company, confirming that such sale or other
disposition is made in compliance with Section 9.17;
(F) certifies that such Asset Sale or other disposition of the
Released Collateral complies with the terms and conditions of this
Indenture and the Intercreditor Agreement, including, without
limitation, Section 9.16 hereof; and
(G) in the event that there is to be a substitution of property for
such Collateral subject to the Asset Sale or other disposition,
specifies the property intended to be substituted for the Collateral to
be sold or disposed of and that such property will be subject to the
Liens under the Collateral Documents.
(ii) a certificate certifying that
(A) such sale or other disposition covers only Collateral requested
to be released or other property which is not Collateral;
(B) all Net Cash Proceeds, if any, from the sale or other
disposition of any of such Released Collateral will be applied pursuant
to the provisions of this Indenture and the Intercreditor Agreement and
other Collateral Documents in respect of Asset Sales and other
dispositions of Collateral to the extent applicable thereto;
(C) there is no Default or Event of Default under this Indenture
(and no "default" or "event of default" under the Revolving Credit
Facility or the Bridge Loan) in effect on the date thereof;
(D) the release of the proposed Released Collateral will not result
in a Default or Event of Default under this Indenture (or a "default"
or "event of default" under the Revolving Credit Facility or the Bridge
Loan);
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(E) the release of the proposed Released Collateral complies with
the TIA; and
(F) all conditions precedent in this Indenture and the
Intercreditor Agreement and other Collateral Documents
relating to the release of the proposed Released Collateral
have been complied with.
(iii) if the fair market value of such Released Collateral (which, in the
case of a sale of Capital Stock of a Restricted Subsidiary resulting in it no
longer being a Restricted Subsidiary, means the fair market value of such
Capital Stock) exceeds $1,000,000 (as specified in the notice to be provided
pursuant to clause (i)(B) above), an opinion of counsel, in form and substance
reasonably satisfactory to the Collateral Agent and the Trustee, stating that
such release is permitted under and complies with the terms of this Indenture
and the Intercreditor Agreement and other Collateral Documents and all
conditions precedent thereunder to such release have been complied with;
(iv) if the fair market value of such Released Collateral (which, in the
case of a sale of Capital Stock of a Restricted Subsidiary resulting in it no
longer being a Restricted Subsidiary, means the fair market value of such
Capital Stock) exceeds $5,000,000 million (as specified in the notice to be
provided pursuant to clause (i)(B) above), an opinion or appraisal with respect
to the determination of such fair market value issued by an independent
accounting or investment banking firm which is nationally recognized in the
United States, or a reputable independent appraisal or petroleum engineering
firm which is reasonably satisfactory to the Collateral Agent and the Trustee,
as appropriate under the circumstances;
(v) if such Released Collateral is an interest in Farmout Property to be
conveyed to a farmee under a Permitted Farmout Agreement, such certificates and
board resolutions, if any, required by the definitions of Farmout Property Value
and Permitted Farmout Agreement; and
(vi) all documentation required by the TIA, if any, prior to the release by
the Collateral Agent of the Released Collateral, and, in the event there is to
be a substitution of property for such Collateral, all documentation required by
the TIA to effect the substitution of such new Collateral and to subject such
new Collateral to valid and enforceable first priority perfected security
interests (subject to Permitted Prior Liens) granted by the relevant Collateral
Documents, and all documents required by Section 11.1 hereof with respect to
such new Collateral.
Upon compliance by the Company with the conditions precedent set forth
above, the Trustee shall cause to be released and reconveyed to the Company
without recourse, the Released Collateral and shall deliver any such Released
Collateral in its possession to the Company and shall execute and deliver to the
Company at the Company's expense releases and satisfactions, in recordable form,
to the extent reasonably requested by the Company.
(c) Releases of Collateral in Connection with Events of Loss. The Company
and the Restricted Subsidiaries shall be entitled to obtain a release of, and
the Trustee shall release, items of Collateral subject to an Event of Loss
(other than Trust Monies constituting Net Loss Proceeds from an Event of Loss
with respect to Collateral, which Trust Monies are subject to release from the
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Lien of the Collateral Documents as provided under Article 12 hereof) upon
compliance with the conditions precedent that the Company shall have delivered
to the Collateral Agent, with a copy to the Trustee, the following:
(i) a certificate of the Company certifying that
(A) such Collateral is the subject of an Event of Loss and the
amount of the Net Loss Proceeds received in connection therewith;
(B) if applicable, that such property has been taken by
Condemnation;
(C) in the case of a taking by Condemnation, that the award for the
property so taken has become final and that an appeal from such award
is not advisable in the interests of the Company or the Holders; and
(D) that all conditions precedent herein and in the Collateral
Documents provided for relating to such release have been complied
with;
(ii) the Net Loss Proceeds to be held as Trust Monies subject to the
disposition thereof pursuant to Article 12 hereof; and
(iii) all documentation required by the TIA (including, without limitation,
Section 314(d) of the TIA), if any, prior to the release of Collateral by the
Trustee.
In any proceedings for the Condemnation of any Collateral, the Trustee may
be represented by counsel who may be counsel for the Company.
Upon compliance by the Company with the conditions precedent set forth
above, the Trustee shall cause to be released and reconveyed without recourse to
the Company the Collateral which is the subject of such Event of Loss, and shall
deliver such Collateral in its possession to the Company and shall execute and
deliver to the Company at the Company's expense releases and satisfactions, in
recordable form, to the extent reasonably requested by the Company.
11.7 Disposition of Collateral Without Release.
Notwithstanding the provisions of Sections 11.5 and Section 11.6 hereof,
the Intercreditor Agreement, and the Collateral Documents and subject to
Sections 11.8 and Section 14.10 hereof, so long as no Event of Default under
this Indenture (or "event of default" under each of the Revolving Credit
Facility and the Bridge Loan) exists or no Default or Event of Default under
this Indenture (or "default" or "event of default" under each of the Revolving
Credit Facility and the Bridge Loan), would result therefrom and so long as such
transaction would not violate the Intercreditor Agreement and other Collateral
Documents, the Company and its Restricted Subsidiaries may, to the extent
permitted by applicable law, without any prior release or consent by the
Trustee:
(1) dispose of equipment and other assets included in the Collateral that
has become worn out, defective or obsolete or not used or useful in the business
of the Company or any Restricted Subsidiary and which is, to the extent required
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by the Intercreditor Agreement or other Collateral Documents, replaced by
property of substantially equivalent or greater value which becomes subject to
the Lien of any of the Collateral Documents; (2) sell, lease or abandon any
undeveloped oil and gas property subject to the Lien of any of the Collateral
Documents or any other oil and gas property subject to the Lien of any of the
Collateral Documents that is not capable of production in economic quantities;
(3) terminate, cancel, amend or otherwise modify any contract subject to the
Lien of any of the Collateral Documents; (4) surrender or modify any license or
permit subject to the Lien of any of the Collateral Documents; (5) alter,
repair, replace, change the location and position of and add to the structures,
equipment, fixtures and appurtenances on any property subject to the Lien of any
of the Collateral Documents; or (6) sell hydrocarbons or other mineral products
for value.
The Company shall execute and deliver to the Collateral Agent, within 30
calendar days following the end of each six-month period beginning on December
1, 2004, a certificate to the effect that all releases and withdrawals during
the preceding six-month period with respect to which no release or consent of
the Collateral Agent was obtained were in the ordinary course of the business of
the Company and the Restricted Subsidiaries and were permitted by this
Indenture, the Intercreditor Agreement and other Collateral Documents or the
TIA.
Nothing in this Article 11 shall limit the right of each of the Company and
the Restricted Subsidiaries to sell, lease or otherwise deal in or dispose of
its property or assets that do not constitute Collateral, subject only to the
provisions of Article 6 hereof.
11.8 Sufficiency of Release.
All purchasers and grantees of any property or rights purporting to be
released 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 and of the Collateral Documents.
11.9 Actions by the Trustee.
Subject to the provisions of the Collateral Documents and Article 12, 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 Collateral Documents and (ii) to collect and receive all amounts
payable in respect of the obligations of the Company and any Guarantors under
the Collateral Documents and this Indenture. The Trustee shall have the power to
institute and maintain such suits and proceedings as it may deem expedient in
order to prevent any impairment of the Collateral by any act that may be
unlawful or in violation of this Indenture or the Collateral Documents, and such
suits and proceedings as the Trustee may deem expedient to preserve or protect
its interests and those of the Holders in the Collateral. No duty beyond that
set forth in Section 5.1 is imposed on the Trustee pursuant to this Section
11.9.
ARTICLE 12
DEFEASANCE AND DISCHARGE
12.1 COMPANY'S OPTION TO EFFECT DEFEASANCE OR COVENANT DEFEASANCE.
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The Company may, at its option by Board Resolution, at any time, after (1)
the penultimate Interest Reset Date preceding the final Stated Maturity of the
Notes or (2) if applicable, the penultimate Interest Reset Date preceding the
redemption date upon which all of the outstanding Notes have been called for
redemption in accordance with the terms of this Indenture, elect to have either
Section 12.2 or Section 12.3 hereof be applied to all Outstanding Notes, upon
compliance with the conditions set forth below in this Article 12.
12.2 DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.2, the Company and the Subsidiary Guarantors will
be deemed to have been discharged from their respective obligations with respect
to all Outstanding Notes on the date the conditions set forth in Section 12.4
hereof are satisfied (hereinafter, "Legal Defeasance"). For this purpose, such
Legal Defeasance means that the Company and the Subsidiary Guarantors will be
deemed (i) to have paid and discharged their respective obligations under the
Outstanding Notes and the Subsidiary Guarantees; provided, however, that the
Notes will continue to be deemed to be "Outstanding" for purposes of Section
12.5 hereof and the other Sections of this Indenture referred to in clauses (a)
and (b) below, and (ii) to have satisfied all their other obligations under such
Notes and such Subsidiary Guarantees and this Indenture insofar as such Notes
are concerned (and the Trustee, at the expense and direction of the Company,
will execute proper instruments acknowledging the same), except for the
following which will survive until otherwise terminated or discharged hereunder:
(a) the rights of Holders of Outstanding Notes to receive, solely from the trust
fund described in Section 12.4 hereof and as more fully set forth in such
Section, payments in respect of the principal of (and premium if any, on),
interest and Liquidated Damages, if any, on such Notes when such payments are
due (or at such time as the Notes would be subject to redemption at the option
of the Company in accordance with this Indenture), (b) the respective
obligations of the Company and the Subsidiary Guarantors under Sections 2.3,
2.5, 2.6, 2.9, 2.13, 4.8, 4.14, 5.6, 5.9, 5.10, 9.2, 9.3, 12.1 (to the extent it
relates to the foregoing Sections and this Article 12), 13.4 and 13.5 hereof,
(c) the rights, powers, trusts, duties and immunities of the Trustee hereunder,
and (d) the obligations of the Company and the Subsidiary Guarantors under this
Article 12. Subject to compliance with this Article 12, the Company may exercise
its option under this Section 12.2 notwithstanding the prior exercise of its
option under Section 12.3 hereof with respect to the Notes.
12.3 COVENANT DEFEASANCE.
Upon the Company's exercise under Section 12.1 hereof of the option
applicable to this Section 12.3, the Company and each Subsidiary Guarantor will
be released from their respective obligations under any covenant contained in
Article 9, in Sections 9.5 - 9.20 and in Section 13.2 hereof with respect to the
Outstanding Notes on and after the date the conditions set forth below are
satisfied (hereinafter, "Covenant Defeasance"), and the Notes will thereafter be
deemed not to be "Outstanding" for the purposes of any direction, waiver,
consent or declaration or Act of Holders (and the consequences of any thereof)
in connection with such covenants, but will continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such Covenant Defeasance
means that, with respect to the Outstanding Notes, the Company and each
Subsidiary Guarantor may omit to comply with and will have no liability in
respect of any term, condition or limitation set forth in any such covenant,
whether directly or indirectly, by reason of any reference elsewhere herein to
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any such covenant or by reason of any reference in any such covenant to any
other provision herein or in any other document and such omission to comply will
not constitute a Default or an Event of Default under Sections 4.1(c), 4.1(d),
4.1(e), 4.1(g) hereof, but, except as specified above, the remainder of this
Indenture and such Notes will be unaffected thereby.
12.4 CONDITIONS TO DEFEASANCE OR COVENANT DEFEASANCE.
The following will be the conditions to application of either Section 12.2
or 12.3 hereof to the Outstanding Notes:
(a) Subject to the terms of Article 3, the Company or any Subsidiary
Guarantor must irrevocably deposit or cause to be deposited with the Trustee (or
another trustee satisfying the requirements of Section 5.7 hereof who will agree
to comply with the provisions of this Article 12 applicable to it) as trust
funds in trust for the purpose of making the following payments, specifically
pledged as security for, and dedicated solely to, the benefit of the Holders of
such Notes, (A) cash in U.S. Dollars in an amount, or (B) U.S. Government
Obligations which through the scheduled payment of principal and interest in
respect thereof in accordance with their terms will provide, not later than one
day before the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay and discharge, and which will be applied by the
Trustee (or other qualifying trustee) to pay and discharge, the principal of,
premium, if any, and interest and Liquidated Damages, if any, on the Outstanding
Notes on their final Stated Maturity thereof (or Redemption Date, if
applicable), provided that the Trustee will have been irrevocably instructed in
writing by the Company to apply such money or the proceeds of such U.S.
Government Obligations to said payment with respect to the Notes. Before such a
deposit, the Company may give to the Trustee, in accordance with Section 2.3
hereof, a notice of its election to redeem all of the Outstanding Notes at a
future date in accordance with Article 13 hereof, which notice will be
irrevocable. The Company shall specify whether the Notes are being defeased to
maturity or to a particular Redemption Date. Such irrevocable redemption notice,
if given, will be given effect in applying the foregoing. For this purpose,
"U.S. Government Obligations" means securities that are (1) direct obligations
of the United States of America for the timely payment of which its full faith
and credit is pledged or (2) obligations of a Person controlled or supervised by
and acting as an agency or instrumentality of the United States of America the
timely payment of which is unconditionally guaranteed as a full faith and credit
obligation by the United States of America, which, in either case, are not
callable or redeemable at the option of the issuer thereof, and will also
include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act of 1933, as amended), as custodian with respect to any such
U.S. Government Obligation or a specific payment of principal of or interest on
any such U.S. Government Obligation held by such custodian for the amount of the
holder of such depositary receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depositary receipt from any amount received by the
custodian in respect of the U.S. Government Obligation or the specific payment
of principal of or interest on the U.S. Government Obligation evidenced by such
depositary receipt.
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(b) No Event of Default with respect to the Notes will have occurred and be
continuing on the date of such deposit or, insofar as Sections 4.1(j) and 4.1(k)
are concerned, at any time during the period ending on the 91st day after the
date of such deposit.
(c) The Company must deliver to the Trustee an Opinion of Counsel, in form
and substance reasonably satisfactory to the Trustee, 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.
(d) The Company must deliver to the Trustee an Officers' Certificate
stating that the deposit was not made by the Company with the intent of
hindering, delaying or defrauding, or making preferential payments to the
holders of Notes in lieu of payments to, creditors of the Company or its
Subsidiaries.
(e) Such Legal Defeasance or Covenant Defeasance will not cause the Trustee
to have a conflicting interest under this Indenture or the Trust Indenture Act
with respect to any securities of the Company or any Subsidiary Guarantor.
(f) Such Legal Defeasance or Covenant Defeasance will not result in a
breach or violation of, or constitute a default under any material agreement or
instrument to which the Company or any Subsidiary Guarantor is a party or by
which it is bound, as evidenced to the Trustee in an Officers' Certificate
delivered to the Trustee concurrently with such deposit.
(g) In the case of an election under Section 12.2 hereof the Company will
have delivered to the Trustee an Opinion of Counsel, in form and substance
reasonably satisfactory to the Trustee, stating that (a) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (b) since the date of this Indenture there has been a change in the
applicable federal income tax laws, in either case providing that the Holders of
the Outstanding Notes will not recognize income, gain or loss for federal income
tax purposes as a result of such Legal Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Legal Defeasance had not occurred (it being
understood that (1) such Opinion of Counsel will also state that such ruling or
applicable law is consistent with the conclusions reached in such Opinion of
Counsel and (2) the Trustee will be under no obligation to investigate the basis
of correctness of such ruling).
(h) In the case of an election under Section 12.3 hereof, the Company will
have delivered to the Trustee an Opinion of Counsel in form and substance
reasonably satisfactory to the Trustee, to the effect that the Holders or the
Outstanding Notes will not recognize income 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 (in the
case of Legal Defeasance, such opinion must refer to and be based upon a
published ruling of the Internal Revenue Service or a change in applicable
United States federal income tax laws).
(i) The Company will have delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel in form and substance reasonably satisfactory to the
Trustee, each stating that all conditions precedent provided for relating to
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either the Legal Defeasance under Section 12.2 hereof or the Covenant Defeasance
under Section 12.3 (as the case may be) have been satisfied.
12.5 DEPOSITED MONEY AND U.S. GOVERNMENT OBLIGATIONS TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to the provisions of the last paragraph of Section 9.3 hereof, all
money and U.S. Government Obligations (including the proceeds thereof) deposited
with the Trustee (or other qualifying trustee--collectively for purposes of this
Section 12.5, the "Trustee") pursuant to Section 12.4 hereof in respect of the
Outstanding Notes will be held in trust and applied by the Trustee, in
accordance with the provisions of such Notes and this Indenture, to the payment,
either directly or through any Paying Agent (including the Company acting as its
own Paying Agent) as the Trustee may determine, to the Holders of such Notes of
all sums due and to become due thereon in respect of principal (and premium, if
any) and interest, but such money need not be segregated from other funds except
to the extent required by law.
The Company will pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Governmental Obligations
deposited pursuant to Section 12.4 hereof or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the Outstanding Notes.
Anything in this Article 12 to the contrary notwithstanding, the Trustee
will deliver or pay to the Company from time to time upon Company Request any
money or U.S. Government Obligations held by it as provided in Section 12.4
hereof which, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to the
Trustee, are in excess of the amount thereof which would then be required to be
deposited to effect an equivalent Legal Defeasance or Covenant Defeasance, as
applicable, in accordance with this Article 12.
12.6 REINSTATEMENT.
If the Trustee or any Paying Agent is unable to apply any money in
accordance with Section 12.5 hereof by reason of any order or judgment of any
court or governmental authority enjoining, restraining or otherwise prohibiting
such application, then the Company's and the Subsidiary Guarantors' obligations
under this Indenture and the Notes will be revived and reinstated as though no
deposit had occurred pursuant to Section 12.2 or 12.3 hereof, as the case may
be, until such time as the Trustee or Paying Agent is permitted to apply all
such money in accordance with Section 12.5 hereof; provided, however, that if
the Company or any Subsidiary Guarantor makes any payment of principal of (or
premium if any, on), interest or Liquidated Damages, if any, on any Note
following the reinstatement of its obligations, the Company or such Subsidiary
Guarantor will be subrogated to the rights of the Holders of such Notes to
receive such payment from the money held by the Trustee or Paying Agent.
ARTICLE 13
SUBSIDIARY GUARANTEES
13.1 UNCONDITIONAL GUARANTEE.
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Each Subsidiary Guarantor hereby unconditionally, jointly and severally,
guarantees (each such guarantee being referred to herein as this "Subsidiary
Guarantee," with all such guarantees being referred to herein as the "Subsidiary
Guarantees") to each Holder of Notes authenticated and delivered by the Trustee
and to the Trustee and its successors and assigns, the full and prompt
performance of the Company's obligations under this Indenture and the Notes and
that:
(1) the principal of (and premium, if any, on), interest and Liquidated
Damages, if any, on the Notes will be promptly paid in full when due, whether at
maturity, by acceleration, redemption or otherwise, and interest on the overdue
principal of and interest on the Notes, if any, to the extent lawful, and all
other obligations of the Company to the Holders or the Trustee hereunder or
thereunder will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; and
(2) in case of any extension of time of payment or renewal of any Notes or
of any such other obligations, the same will be promptly paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at Stated Maturity by acceleration or otherwise; subject however to the
limitations set forth in Section 13.4 hereof.
Failing payment when due of any amount so guaranteed or any performance so
guaranteed for whatever reason, the Subsidiary Guarantors will be jointly and
severally obligated to pay the same immediately. Each Subsidiary Guarantor
hereby agrees that its obligations hereunder will, to the extent permitted by
law 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
hereof or thereof, the recovery of any judgment against the Company, any action
to enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a guarantor. Each Subsidiary
Guarantor hereby waives, to the extent permitted by law, diligence, presentment,
demand of payment, filing of claim 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 will not be discharged except by complete performance of
the obligations contained in the Notes, this Indenture and in this Subsidiary
Guarantee. If any Holder or the Trustee is required by any court or otherwise to
return to the Company, any Subsidiary Guarantor, or any custodian, trustee,
liquidator or other similar official acting in relation to the Company or any
Subsidiary Guarantor, any amount paid by the Company or any Subsidiary Guarantor
to the Trustee or such Holder, this Subsidiary Guarantee, to the extent
theretofore discharged, will be reinstated in full force and effect. Each
Subsidiary Guarantor agrees it will not be entitled to enforce any right of
subrogation in relation to the Holders in respect of any obligations guaranteed
hereby until payment in full of all obligations guaranteed hereby. Each
Subsidiary Guarantor further agrees that, as between each Subsidiary Guarantor,
on the one hand, and the Holders and the Trustee, on the other hand, (a) the
maturity of the obligations guaranteed hereby may be accelerated as provided in
Article 7 hereof for the purposes of this Subsidiary Guarantee, notwithstanding
any stay, injunction or other prohibition preventing such acceleration in
respect of the obligations guaranteed hereby, and (b) in the event of any
acceleration of such obligations as provided in Article 7 hereof, such
obligations (whether or not due and payable) will forthwith become due and
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payable by each Subsidiary Guarantor for the purpose of this Subsidiary
Guarantee.
13.2 SUBSIDIARY GUARANTOR MAY CONSOLIDATE, ETC., ON CERTAIN TERMS.
(a) Except as set forth in Article 8 hereof, nothing contained in this
Indenture or in any of the Notes will prevent any consolidation or merger of a
Subsidiary Guarantor with or into the Company or another Subsidiary Guarantor or
will prevent any sale, conveyance or other disposition of all or substantially
all the Properties of a Subsidiary Guarantor to the Company or another
Subsidiary Guarantor.
(b) Except as set forth in Article 8 hereof, nothing contained in this
Indenture or in any of the Notes will prevent any consolidation or merger of a
Subsidiary Guarantor with or into a Person other than the Company or another
Subsidiary Guarantor (whether or not Affiliated with the Subsidiary Guarantor),
or successive consolidations or mergers in which a Subsidiary Guarantor or its
successor or successors will be a party or parties, or will prevent any sale,
conveyance or other disposition of all or substantially all the Properties of a
Subsidiary Guarantor to a Person other than the Company or another Subsidiary
Guarantor (whether or not Affiliated with the Subsidiary Guarantor) authorized
to acquire and operate the same; provided, however, that (a) immediately after
such transaction, and giving effect thereto, no Default or Event of Default will
have occurred as a result of such transaction and be continuing, (b) such
transaction will not violate any of the covenants of Sections 9.1 - 9.20 hereof
and (c) each Subsidiary Guarantor hereby covenants and agrees that, upon any
such consolidation, merger, sale, conveyance or other disposition, such
Subsidiary Guarantor's Subsidiary Guarantee set forth in this Article 13 and in
a notation to the Notes, and the due and punctual performance and observance of
all of the covenants and conditions of this Indenture to be performed by such
Subsidiary Guarantor, will be expressly assumed (in the event that the
Subsidiary Guarantor is not the surviving corporation in a merger), by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by such Person formed by such consolidation, or into
which the Subsidiary Guarantor will have merged, or by the Person that will have
acquired such Property (except to the extent the following Section 13.3 would
result in the release of such Subsidiary Guarantee, in which case such surviving
Person or transferee of such Property will not have to execute any such
supplemental indenture and will not have to assume such Subsidiary Guarantor's
Subsidiary Guarantee). In the case of any such consolidation, merger, sale,
conveyance or other disposition and upon the assumption by the successor Person,
by supplemental indenture executed and delivered to the Trustee and satisfactory
in form, to the Trustee of the due and punctual performance of all of the
covenants and conditions of this Indenture to be performed by the Subsidiary
Guarantor, such successor Person will succeed to and be substituted for the
Subsidiary Guarantor with the same effect as if it had been named herein as the
initial Subsidiary Guarantor.
13.3 RELEASE OF SUBSIDIARY GUARANTORS.
Upon the sale or disposition (by merger or otherwise) of a Subsidiary
Guarantor (or of all or substantially all of its Properties) to a Person other
than the Company or another Subsidiary Guarantor and pursuant to a transaction
that is otherwise in compliance with the terms of this Indenture, including but
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not limited to the provisions of Section 13.2 hereof or pursuant to Article 8
hereof, such Subsidiary Guarantor will be deemed released from its Subsidiary
Guarantee and all related obligations under this Indenture; provided, however,
that any such termination will occur only to the extent that all obligations of
such Subsidiary Guarantor under all of its Guarantees of, and under all of its
pledges of assets or other security interests which secure, other Indebtedness
of the Company or any other Restricted Subsidiary will also terminate upon such
sale or other disposition. The Trustee will deliver an appropriate instrument
evidencing such release upon receipt of a Company Request accompanied by an
Officers' Certificate and an Opinion of Counsel certifying that such sale or
other disposition was made by the Company in accordance with the provisions of
this Indenture.
Each Subsidiary Guarantor that is designated as an Unrestricted Subsidiary
in accordance with the provisions of this Indenture will be released from its
Subsidiary Guarantee and all related obligations under this Indenture for so
long as it remains an Unrestricted Subsidiary. The Trustee will deliver an
appropriate instrument evidencing such release upon its receipt of the Board
Resolution designating such Subsidiary Guarantor as an Unrestricted Subsidiary.
Notwithstanding any other provision of this Indenture, each Subsidiary
Guarantor will be deemed released from its respective Subsidiary Guarantee and
all related obligations under this Indenture in the event that all obligations
of such Subsidiary Guarantor under the guarantee which resulted in the creation
of such Subsidiary Guarantee will also terminate, except a termination,
discharge or release of such guarantee by or as a result of, payment under such
guarantee. The Trustee will deliver an appropriate instrument evidencing such
release upon receipt of a Company Request accompanied by an Officer's
Certificate and Opinion of Counsel certifying that all such obligations of such
Subsidiary Guarantee have terminated.
Any Subsidiary Guarantor not released in accordance with this Section 13.3
will remain liable for the full amount of principal of (and premium, if any, on)
and interest on the Notes as provided in this Article 13.
13.4 LIMITATION OF SUBSIDIARY GUARANTORS' LIABILITY.
Each Subsidiary Guarantor, and by its acceptance hereof each Holder, hereby
confirm that it is the intention of all such parties that the guarantee by such
Subsidiary Guarantor pursuant to its Subsidiary Guarantee not constitute a
fraudulent transfer or conveyance for purposes of the Federal Bankruptcy Code,
the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or
any similar federal or state law. To effectuate the foregoing intention, the
Holders and each Subsidiary Guarantor hereby irrevocably agree that the
obligations of such Subsidiary Guarantor under its Subsidiary Guarantee will be
limited to the maximum amount as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under its Subsidiary Guarantee or pursuant to Section 13.5 hereof,
result in the obligations of such Subsidiary Guarantor under its Subsidiary
Guarantee not constituting such a fraudulent conveyance or fraudulent transfer.
This Section 13.4 is for the benefit of the creditors of each Subsidiary
Guarantor.
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13.5 CONTRIBUTION.
In order to provide for just and equitable contribution among the
Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the
event any payment or distribution is made by any Subsidiary Guarantor (a
"Funding Guarantor") under its Subsidiary Guarantee, such Funding Guarantor will
be entitled to a contribution from each other Subsidiary Guarantor (if any) in a
pro rata amount based on the Adjusted Net Assets of each Subsidiary Guarantor
(including the Funding Guarantor) for all payments, damages and expenses
incurred by that Funding Guarantor in discharging the Company's obligations with
respect to the Notes or any other Subsidiary Guarantor's obligations with
respect to its Subsidiary Guarantee.
13.6 EXECUTION AND DELIVERY OF NOTATIONS OF SUBSIDIARY GUARANTEES.
To evidence its Subsidiary Guarantee set forth in Section 13.1 hereof, each
Subsidiary Guarantor hereby agrees to execute the notations of Subsidiary
Guarantees in substantially the form set forth in Exhibit A hereto to be
endorsed on all Notes ordered to be authenticated and delivered by the Trustee
and each Subsidiary Guarantor agrees that this Indenture will be executed on
behalf of such Subsidiary Guarantor by its President or one of its Vice
Presidents. Each Subsidiary Guarantor hereby agrees that its Subsidiary
Guarantee set forth in Section 13.1 hereof will remain in full force and effect
notwithstanding any failure to endorse on each Note a notation of such
Subsidiary Guarantee. Each such notation of Subsidiary Guarantee will be signed
on behalf of each Subsidiary Guarantor by its President or one of its Vice
Presidents (each of whom will, in each case, have been duly authorized by all
requisite corporate action) prior to the authentication of the Note on which it
is endorsed, and the delivery of such Note by the Trustee, after the
authentication thereof hereunder, will constitute due delivery of the Subsidiary
Guarantee set forth in this Indenture on behalf of such Subsidiary Guarantor.
Such signatures upon the notation of Subsidiary Guarantee may be by manual or
facsimile signature of such officers and may be imprinted or otherwise
reproduced on the Subsidiary Guarantee, and in case any such officer who will
have signed the notation of Subsidiary Guarantee will cease to be such officer
before the Note on which such notation of Subsidiary Guarantee is endorsed will
have been authenticated and delivered by the Trustee or disposed of by the
Company, such Note nevertheless may be authenticated and delivered or disposed
of as though the Person who signed the notation of Subsidiary Guarantee had not
ceased to be such officer of the Subsidiary Guarantor.
13.7 SEVERABILITY.
In case any provision of this Subsidiary Guarantee will be invalid, illegal
or unenforceable, that portion of such provision that is not invalid, illegal or
unenforceable will remain in effect, and the validity, legality, and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby.
13.8 ARTICLE 13 NOT TO PREVENT EVENTS OF DEFAULT.
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The failure to make a payment on account of the Subsidiary Guarantees by
reason of any provision in this Article 13 will not be construed as preventing
the occurrence of an Event of Default under this Indenture.
13.9 PAYMENT.
For purposes of this Article 13, a payment with respect to any Subsidiary
Guarantor or with respect to principal of or interest on the Note or any
Subsidiary Guarantee will include, without limitation, payment of principal of
and interest on any Note, any payment on account of any repurchase or redemption
of any Note and any payment or recovery on any claim (whether for rescission or
damages and whether based on contract, tort, duty imposed by law, or any other
theory of liability) relating to or arising out of the offer, sale or purchase
of any Note.
ARTICLE 14
MISCELLANEOUS
14.1 COMPLIANCE CERTIFICATES AND OPINIONS.
Upon any application or request by the Company or any Subsidiary Guarantor
to the Trustee to take any action under any provision of this Indenture, the
Company or such Subsidiary Guarantor, as the case may be, will furnish to the
Trustee such certificates and opinions as may be required under the Trust
Indenture Act or this Indenture. Each such certificate and each such opinion
will be in the form of an Officers' Certificate or an Opinion of Counsel, as
applicable, and will comply with the requirements of this Indenture.
Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture will include:
(a) a statement that each individual signing such certificate or opinion
has read such covenant or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions, contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he has made
such examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.
The certificates and opinions provided pursuant to this Section 14.1 and
the statements required by this Section 14.1 will comply in all respects with
TIA Sections 314(c) and (e).
14.2 FORM OF DOCUMENTS DELIVERED TO TRUSTEE.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
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Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate, or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
an Officer's Certificate, unless such counsel knows that the certificate with
respect to such matters is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
14.3 ACTS OF HOLDERS.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Indenture to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by agents duly appointed in writing;
and, except as herein otherwise expressly provided, such action will become
effective when such instrument or instruments are delivered to the Trustee and,
where it is hereby expressly required, to the Company. Such instrument or
instruments (and the action embodied therein and evidenced thereby) are herein
sometimes referred to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent will be sufficient for any purpose of this Indenture
and conclusive in favor of the Trustee and the Company, if made in the manner
provided in this section.
(b) The fact and date of the execution by any Person of any such instrument
or writing may be proved by the affidavit of a witness of such execution or by a
certificate of a notary public or other officer authorized by law to take
acknowledgments of deeds, certifying that the individual signing such instrument
or writing acknowledged to him the execution thereof. Where such execution is by
a signer acting in a capacity other than his individual capacity, such
certificate or affidavit will also constitute sufficient proof of authority. The
fact and date of the execution of any such instrument or writing, or the
authority of the Person executing the same, may also be proved in any other
manner which the Trustee deems sufficient.
(c) The ownership, principal amount and serial numbers of Notes held by any
Person, and the date of holding the same, will be proved by the Note Register.
(d) If the Company will solicit from the Holders of Notes any request,
demand, authorization, direction, notice, consent, waiver or other Act, the
Company may, at its option, by or pursuant to a Board Resolution, fix in advance
a record date for the determination of Holders entitled to give such request,
demand, authorization, direction, notice, consent, waiver or other Act, but the
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Company will have no obligation to do so. Notwithstanding Section 316(c) of the
TIA, such record date will be the record date specified in or pursuant to such
Board Resolution, which will be a date not earlier than the date 30 days prior
to the first solicitation of Holders generally in connection therewith and not
later than the date such solicitation is completed. If such a record date is
fixed, such request, demand, authorization, direction, notice, consent, waiver
or other Act may be given before or after such record date, but only the Holders
of record at the close of business on such record date will be deemed to be
Holders for the purposes of determining whether Holders of the requisite
proportion of Outstanding Notes have authorized or agreed or consented to such
request, demand, authorization, direction, notice, consent, waiver or other Act,
and for that purpose the Outstanding Notes will be computed as of such record
date, provided that no such authorization, agreement or consent by the Holders
on such record date will be deemed effective unless it will become effective
pursuant to the provisions of this Indenture not later than eleven months after
the record date.
(e) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Note will bind every future Holder of the same
Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.
14.4 NOTICES, ETC. TO TRUSTEE, COMPANY AND SUBSIDIARY GUARANTORS.
Any request, demand, authorization, direction, notice, consent, waiver or
Act of Holders or other document provided or permitted by this Indenture to be
made upon, given or furnished to or filed with
(a) the Trustee by any Holder or by the Company or any Subsidiary Guarantor
will be sufficient for every purpose hereunder if made, given, furnished or
filed in writing (in the English language) and delivered in person or mailed by
certified or registered mail (return receipt requested) to the Trustee at its
Corporate Trust Office; or
(b) the Company or any Subsidiary Guarantor by the Trustee or by any Holder
will be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing (in the English language) and delivered in
person or mailed by certified or registered mail (return receipt requested) to
the Company or such Subsidiary Guarantor, as applicable, addressed to it at the
Company's principal office located at 500 North Loop 1604 East, Suite 100, San
Antonio, Texas 78232, or at any other address otherwise furnished in writing to
the Trustee by the Company.
14.5 NOTICE TO HOLDERS; WAIVER.
Where this Indenture provides for notice of any event to Holders by the
Company, the Trustee or any Paying Agent, such notice will be sufficiently given
(unless otherwise herein expressly provided) if in writing (in the English
language) and mailed, first-class postage prepaid, to each Holder affected by
such event, at his address as it appears in the Note Register, not later than
the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
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neither the failure to mail such notice, nor any defect in any notice so mailed,
to any particular Holder will affect the sufficiency of such notice with respect
to other Holders. Any notice mailed to a Holder in the manner herein prescribed
will be conclusively deemed to have been received by such Holder, whether or not
such Holder actually receives such notice. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either herein or after the event, and such
waiver will be the equivalent of such notice. Waivers of notice by Holders will
be filed with the Trustee, but such filing will not be a condition precedent to
the validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of or irregularities in regular mail
service or by reason of any other cause, it will be impracticable to mail notice
of any event to Holders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as will be
satisfactory to the Trustee will be deemed to be a sufficient giving of such
notice for every purpose hereunder.
14.6 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are for
convenience only and will not affect the construction hereof.
14.7 SUCCESSORS AND ASSIGNS.
All caveats and agreements in this Indenture by the Company and the
Subsidiary Guarantors will bind their respective successors and assigns, whether
so expressed or not. All agreements of the Trustee in this Indenture will bind
its successor.
14.8 SEPARABILITY CLAUSE.
In case any provision in this Indenture or in the Notes or the Subsidiary
Guarantees will be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions will not in any way be affected or
impaired thereby, and a Holder will have no claim therefor against any party
hereto.
14.9 BENEFITS OF INDENTURE.
Nothing in this Indenture or in the Notes, express or implied, will give to
any Person (other than the parties hereto, any Paying Agent, any Notes Registrar
and their successors hereunder, the Holders and, to the extent set forth in
Section 13.4 hereof, creditors of Subsidiary Guarantors) any benefit or any
legal or equitable right, remedy or claim under this Indenture.
14.10 GOVERNING LAW; TRUST INDENTURE ACT CONTROLS.
(a) THIS INDENTURE, THE SUBSIDIARY GUARANTEES AND THE SECURITIES WILL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
THE COMPANY AND EACH SUBSIDIARY GUARANTOR IRREVOCABLY SUBMIT TO THE
NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR NEW YORK STATE COURT
SITTING IN THE BOROUGH OF MANHATTAN, THE CITY OF NEW YORK IN ANY ACTION OR
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PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE, THE SECURITIES OR THE
SUBSIDIARY GUARANTEES, AND THE COMPANY AND EACH SUBSIDIARY GUARANTOR IRREVOCABLY
AGREE THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED BY ANY SUCH COURT.
(b) This Indenture is subject to the provisions of the Trust Indenture Act
that are required to be part of this Indenture and will, to the extent
applicable, be governed by such provisions. If and to the extent that any
provision of this Indenture limits, qualifies or conflicts with the duties
imposed by operation of Section 318(c) of the TIA, or conflicts with any
provision (an "incorporated provision") required by or deemed to be included in
this Indenture by operation of such Trust Indenture Act section, such imposed
duties or incorporated provision will control.
14.11 LEGAL HOLIDAYS.
In any case where any Interest Payment Date, Redemption Date, or Stated
Maturity or Maturity of any Note will not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Notes or the
Subsidiary Guarantee) payment of interest or principal (and premium, if any)
need not be made on such date, but may be made on the next succeeding Business
Day with the same force and effect as if made on the Interest Payment Date,
Redemption Date or at the Stated Maturity or Maturity; provided, however, that
no interest will accrue for the period from and after such Interest Payment
Date, Redemption Date, Stated Maturity or Maturity, as the case may be.
14.12 NO RECOURSE AGAINST OTHERS.
A director, officer, employee, stockholder, incorporator or Affiliate, as
such, past, present or future, of the Company or any Subsidiary Guarantor will
not have any personal liability under the Notes or this Indenture by reason of
his or its status as a director, officer, employee, stockholder, incorporator or
Affiliate or any liability for any obligations of the Company or any Subsidiary
Guarantor under the Notes or this Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. Each Holder, by
accepting any of the Notes, waives and releases all such liability to the extent
permitted by applicable law.
14.13 DUPLICATE ORIGINALS.
The parties may sign any number of copies or counterparts of this
Indenture. Each signed copy will be an original, but all of them together
represent the same agreement.
14.14 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the day and year first above written.
ISSUER:
ABRAXAS PETROLEUM CORPORATION
By
--------------------------------------------
Name:
Title:
SUBSIDIARY GUARANTORS:
EASTSIDE COAL COMPANY, INC.
By
--------------------------------------------
Name:
Title:
SANDIA OIL & GAS CORPORATION
By
----------------------------------------------
Name:
Title:
SANDIA OPERATING CORP.
By
--------------------------------------------
Name:
Title:
WAMSUTTER HOLDINGS, INC.
By
--------------------------------------------
Name:
Title:
WESTERN ASSOCIATED ENERGY CORPORATION
By
--------------------------------------------
Name:
Title:
TRUSTEE:
U.S. BANK NATIONAL ASSOCIATION
By:
--------------------------------------------
Name:
Title:
EXHIBIT A-1
FORM OF RULE 144A GLOBAL NOTE
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.5(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.10 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF
AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO
OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR NOTES), ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a) UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF $100,000 OF NOTES, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
Exhibit A-1
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
THE INDEBTEDNESS EVIDENCED BY THIS DOCUMENT IS SUBJECT TO THE PROVISIONS OF
THE INTERCREDITOR, SECURITY AND COLLATERAL AGENCY AGREEMENT, DATED AS OF OCTOBER
28, 2004, AMONG ABRAXAS PETROLEUM CORPORATION (THE "COMPANY"), THE SUBSIDIARIES
OF THE COMPANY LISTED ON SCHEDULE I THERETO, WELLS FARGO FOOTHILL, INC., IN ITS
CAPACITY AS AGENT FOR THE LENDERS WHO ARE FROM TIME TO TIME PARTIES TO A LOAN
AGREEMENT DATED AS OF OCTOBER 28, 2004, U.S. BANK NATIONAL ASSOCIATION, IN ITS
CAPACITIES AS TRUSTEE FOR THE HOLDERS OF THE COMPANY'S FLOATING RATE SENIOR
SECURED NOTES DUE 2009 ISSUED UNDER AN INDENTURE DATED AS OF OCTOBER 28, 2004,
AND AS COLLATERAL AGENT, AND GUGGENHEIM CORPORATE FUNDING, LLC, IN ITS CAPACITY
AS AGENT FOR THE LENDERS WHO ARE FROM TIME TO TIME PARTIES TO A LOAN AGREEMENT
DATED AS OF OCTOBER 28, 2004.
Exhibit A-1
ABRAXAS PETROLEUM CORPORATION
Floating Rate Senior Secured Note due 2009
No. 144A-__ $__
CUSIP No. 003830 AH 9
Abraxas Petroleum Corporation, a Nevada corporation (herein called the
"Company" which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO. or registered assignee the principal sum of ? Dollars ($?) on December 1,
2009 at the office or agency of the Company referred to below, and to pay
interest thereon, commencing on June 1, 2005 and continuing semiannually
thereafter, on June 1 and December 1 in each year (each, an Interest Payment
Date), from October 28, 2004 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at a per annum floating rate
of Six-Month LIBOR (as defined below) plus 7.5%, until the principal hereof is
paid or duly provided for, and (to the extent lawful) to pay on demand interest
on any overdue interest at the rate borne by the Notes from the date on which
such overdue interest becomes payable to the date on which payment of such
interest has been made or duly provided for. The Company also hereby promises to
pay the Liquidated Damages, if any, payable pursuant to Section 3 of the
Registration Rights Agreement on the same dates on which interest is payable as
provided herein. The interest and Liquidated Damages, if any, so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in said Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered on the Note Register at the close
of business on the Regular Record Date for such interest, whether or not a
Business Day (as defined below), next preceding such Interest Payment Date. Any
such interest or Liquidated Damages not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date,
and such Defaulted Interest, Liquidated Damages and (to the extent lawful)
interest on such Defaulted Interest and Liquidated Damages at the rate borne by
the Notes, may be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered on the Note Register at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof will be given to Holders of Notes not less than
10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any, on) and interest and
Liquidated Damages, if any, on this Note will be made at the office or agency of
the Company maintained for that purpose in The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest and Liquidated Damages, if any, may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address will appear on the Note Register.
Exhibit A-1
Interest on the Note will accrue from and including the most recent date on
which interest has been paid or, if no interest has been paid, from and
including the date of issuance, until but excluding the date upon which the
principal thereof is paid or duly provided for in accordance with the Indenture.
The interest rate will be reset semi-annually on each June 1 and December 1,
commencing on June 1, 2005 (each such date, an "Interest Reset Date"). Interest
on the Note will be payable semiannually in arrears on June 1 and December 1 of
each year, commencing on June 1, 2005; provided, that, if any such day is not a
Business Day, such interest payment date will be the next succeeding Business
Day.
"Business Day" means any day other than a Saturday or Sunday, or a day on
which banking institutions in The City of New York are authorized or required by
law, regulation or executive order to remain closed and that is also a London
Business Day (as defined below).
"Six-Month LIBOR" means the rate determined in accordance with the
following provisions:
(1) On the second London Business Day preceding each Interest Reset Date
(each such date, an "Interest Determination Date"), a calculation agent,
initially U.S. Bank National Association or a duly appointed successor (the
"Calculation Agent"), as agent for the Company, will determine the Six-Month
LIBOR rate, which shall be the rate for deposits in the London interbank market
in U.S. dollars having a six-month maturity commencing on the succeeding
Interest Reset Date immediately following such Interest Determination Date which
appears on the Designated LIBOR Page as of 11:00 a.m., London time, on such
Interest Determination Date.
"Designated LIBOR Page" means the display on the Moneyline service (or such
other service or services as may be nominated by the British Bankers'
Association) for the purpose of displaying London interbank rates of major banks
for U.S. dollar deposits. If no such rate appears on an Interest Determination
Date, the Six-Month LIBOR rate on such Interest Determination Date will be
determined as described in clause (2) of the definition of "Six-Month LIBOR."
"London Business Day" means any day on which dealings in U.S. dollars
generally are transacted in the London interbank market.
(2) With respect to an Interest Determination Date for which no such rate
appears, the Calculation Agent will request the principal London offices of each
of four major reference banks in the London interbank market, as selected by the
Calculation Agent (after consultation with the Company), to provide the
Calculation Agent with its offered quotation for deposits in U.S. dollars having
a six-month maturity commencing on the Interest Reset Date immediately following
such Interest Determination Date to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on such Interest Determination Date
and in a principal amount not less than $1,000,000 that is representative for a
single transaction in U.S. dollars in such market at such time. If at least two
such quotations are provided, the Six-Month LIBOR rate on such Interest
Determination Date will be the arithmetic mean of such quotations. If fewer than
two quotations are provided, the Six-Month LIBOR rate determined on such
Interest Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., New York City time, on such Interest Determination
Date by three major banks in The City of New York selected by the Calculation
Exhibit A-1
2
Agent (after consultation with the Company) for loans in U.S. dollars to leading
European banks, having a six-month maturity and in a principal amount not less
than $1,000,000 that is representative for a single transaction in U.S. dollars
in such market at such time. However, if the banks so selected by the
Calculation Agent are not quoting as mentioned above, the Six-Month LIBOR rate
with respect to such Interest Determination Date will be the Six-Month LIBOR
rate in effect immediately prior to such Interest Determination Date.
All percentages resulting from any calculation on the Note will be rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point with
five one-millionths of a percentage point rounded upward and all U.S. dollar
amounts used in or resulting from such calculation on the Note will be rounded
to the nearest cent (with one-half cent being rounded upward).
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions will for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
will not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
[signature page follows]
Exhibit A-1
3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed in its corporate name by the signature of its officer thereunto duly
authorized.
ABRAXAS PETROLEUM CORPORATION
By:
--------------------------------------------
Name:
Title:
Attested By:
-----------------------------------
Name:
Title:
Exhibit A-1
4
Reverse of Note
This Note is one of a duly authorized issue of securities of the Company
designated as its Floating Rate Senior Secured Notes due 2009 (herein called the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $125,000,000, which may be issued under
an indenture (herein called the "Indenture") dated as of October 28, 2004 among
the Company, the initial Subsidiary Guarantors named therein and U.S. Bank
National Association (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitation of rights, duties, obligations and immunities thereunder of
the Company, the Subsidiary Guarantors, the Trustee and the Holders of the
Notes, and of the terms upon which the Notes are, and are to be, authenticated
and delivered.
Optional Redemption
The Notes may be redeemed, in whole or from time to time in part, at the
option of the Company at any time after April 28, 2007 upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below together with accrued and unpaid interest and
Liquidated Damages, if any, to the applicable redemption date during the periods
indicated below:
Year Percentage
---- ----------
From April 29, 2007 to April 28, 2008........ 104.00%
From April 29, 2008 to April 28, 2009........ 102.00%
After April 28, 2009......................... 100.00%
Notwithstanding the foregoing, at any time prior to April 29, 2007, the
Company may, at its option and subject to the restrictions and other provisions
relating thereto, if any, contained in the Revolving Credit Facility, on any one
or more occasions redeem up to 35% of the original aggregate principal amount of
the Notes (i.e., $43,750,000) with the Net Cash Proceeds of one or more
Qualified Equity Offerings at a redemption price equal to the product of (x) the
principal amount of the Notes being so redeemed and (y) a redemption price
factor of 1.00 plus the per annum interest rate on the Notes (expressed as a
decimal) on the applicable redemption date, plus accrued and unpaid interest to
the applicable redemption date, provided, that (1) at least 65% of the original
aggregate principal amount of the Notes (i.e., $81,250,000) remains outstanding
after each such redemption; and (2) any such redemption occurs within 90 days
after the closing of the Qualified Equity Offering to which such Net Cash
Proceeds relate.
If less than all the Notes are to be redeemed at any time, the particular
Notes to be redeemed will be selected not fewer than 30 days nor more than 60
days prior to the Redemption Date by the Trustee from the Outstanding Notes not
previously called for redemption pro rata or by any other method that the
Trustee deems fair and appropriate, provided that no Notes of $1,000 or less
will be redeemed in part. Notices of redemption will be mailed by first class
mail at least 30 but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at its registered address. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note will
Exhibit A-1
5
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon surrender of the original Note. On and after the
Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption as long as the Company has deposited with the Paying Agent
funds in satisfaction of the applicable Redemption Price, together with accrued
and unpaid interest and Liquidated Damages, if any, to the Redemption Date.
If a Redemption Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, the accrued and unpaid interest and
Liquidated Damages, if any, on each Note being redeemed will be paid to the
person in whose name such Note is registered at the close of business on such
Regular Record Date, and no other interest or Liquidated Damages will be payable
to any other Person who may become a Holder of such Note after such time.
The Notes do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase within 30 calendar days following the
occurrence of a Change of Control of the Company, all of the then Outstanding
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof, together with accrued and unpaid interest and Liquidated Damages, if
any, to the Change of Control Payment Date, all as provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Notes at a purchase price equal to 100% of the aggregate
principal amount of the Notes, together with accrued and unpaid interest and
Liquidated Damages, if any, to the date such Net Proceeds Offer is consummated
in accordance with the procedures set forth in the Indenture.
As more particularly set forth in the Indenture, an Event of Default is
generally (1) default in the payment when due of the principal of or premium on
any Note, whether such payment is due at Stated Maturity, upon redemption, upon
repurchase pursuant to a Change of Control Offer or a Net Proceeds Offer, upon
declaration of acceleration or otherwise; (2) default in the payment when due of
any installment of interest on, or Liquidated Damages with respect to, any Note,
and the continuance of such Default for a period of 30 days; (3) default in the
performance or breach of the provisions relating to mergers, consolidations and
sales of all or substantially all assets or the failure to make or consummate a
Change of Control Offer or a Net Proceeds Offer; (4) failure by the Company or
any Restricted Subsidiary to comply with any other term, covenant or agreement
contained in the Notes, any Subsidiary Guarantee, any Collateral Document or the
Indenture (other than a default specified in clause (1), (2) or (3) above) for a
period of 60 days after delivery to the Company or such Restricted Subsidiary,
as the case may be, of written notice of such failure stating that it is a
"notice of default" under this Indenture; (5) the occurrence and continuation
beyond any applicable grace period of any default in the payment when due of the
principal of, or premium or interest on, any Indebtedness for borrowed money of
the Company (other than the Notes) or any Restricted Subsidiary or any other
default resulting in acceleration of any Indebtedness for borrowed money of the
Company or any Restricted Subsidiary, but only in the event that the aggregate
Exhibit A-1
6
principal amount of such Indebtedness shall exceed $2,000,000; (6) without
limiting clause (5) above, the occurrence and continuation of an "event of
default" under either the Revolving Credit Facility or the Bridge Loan; (7) any
Subsidiary Guarantee shall for any reason cease to be, or be asserted by the
Company, any Subsidiary Guarantor, any of their respective Affiliates or any
Person acting on behalf of any of the foregoing not to be, in full force and
effect and enforceable in any material respect in accordance with its terms
(except pursuant to the release or termination of any such Subsidiary Guarantee
in accordance with this Indenture); (8) any Collateral Document shall for any
reason cease to be, or be asserted by the Company, any Restricted Subsidiary,
any of their respective Affiliates or any Person acting on behalf of any of the
foregoing not to be, in full force and effect and enforceable in any material
respect in accordance with its terms or to not otherwise grant a duly perfected
first priority security interest in the Collateral in favor of the holders of
the Note Obligations (subject to Permitted Prior Liens and except pursuant to a
release or termination thereof consummated in accordance with this Indenture and
the Intercreditor Agreement and other Collateral Documents) for a period of 30
days after delivery of written notice thereof stating that it is a "notice of
default" under this Indenture and requiring the Company or the respective
Restricted Subsidiary, as the case may be, to remedy the same; (9) final
judgments or orders rendered against the Company or any Restricted Subsidiary
that are unsatisfied and that require the payment in money, either individually
or in an aggregate amount, that is more than $2,000,000 over the coverage under
applicable insurance policies and either (a) commencement by any creditor of an
enforcement proceeding upon such judgment (other than a judgment that is stayed
by reason of pending appeal or otherwise) or (b) the occurrence of a 60-day
period during which a stay of such judgment or order, by reason of pending
appeal or otherwise, was not in effect; and (10) certain evens of bankruptcy,
insolvency or reorganization of the Company or any Subsidiary, as the case may
be. If any Event of Default has occurred and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Notes may declare the principal of, premium, if any, accrued and unpaid interest
and Liquidated Damages, if any, on the Notes to be due and payable immediately,
except that (i) in the case of an Event of Default arising from certain evens of
bankruptcy, insolvency or reorganization of the Company or any Subsidiary, the
principal of, premium, if any, accrued and unpaid interest and Liquidated
Damages, if any, on the Notes will become due and payable immediately without
further action or notice.
The Indenture contains provisions for (i) defeasance at any time of the
entire indebtedness of the Company on this Note and (ii) discharge from certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company and certain conditions set forth therein, which
provisions apply to this Note.
Subject to the terms of the Intercreditor Agreement, the Indenture permits,
with certain exceptions as therein provided, the amendment therefore and the
modification of the rights and obligations of the Company and the Subsidiary
Guarantors and the rights of the Holders under the Indenture at any time by the
Company, the Subsidiary Guarantors and the Trustee and the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Note will be conclusive and binding upon such
Exhibit A-1
7
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof for or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note.
Without the consent of any Holder, the Company, the Subsidiary Guarantors and
the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to add or release any Subsidiary Guarantor
pursuant to the Indenture, to provide for uncertificated Notes in addition to or
in place of certificated Notes and to make certain other specified changes and
other changes that do not adversely affect the interests of any Holder in any
material respect.
No reference herein to the Indenture and no provision of this Note or of
the Indenture will alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest and Liquidated Damages on this Note at the times, place, and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture, and subject to certain limitations therein
set forth, the transfer of this Note is registerable on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge will be made for any registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
No director, officer, employee, incorporator, stockholder or Affiliate of
the Company or any Subsidiary Guarantor, as such, past, present or future, will
have any personal liability under this Note or the Indenture by reason of his,
her or its status as such director, officer, employee, incorporator, stockholder
or Affiliate, or any liability for any obligations of the Company or any
Subsidiary Guarantor under the Notes or the Indenture or for any claim based on,
in respect of, or by reason of such obligations or their creation. Each Holder,
by accepting this Note with the notation of Subsidiary Guarantee endorsed
hereon, waives and releases all such liability. Such waiver and release are part
of the consideration for the issuance of this Note with the notation of
Subsidiary Guarantee endorsed hereon.
Prior to the time of due presentment of this Note of registration of
transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note is
overdue, and neither the Company, the Subsidiary Guarantors, the Trustee nor any
agent will be affected by notice to the contrary.
Exhibit A-1
8
All terms used in this Note which are defined in the Indenture and which
are not otherwise defined herein shall have the meanings assigned to them in the
Indenture. The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to the Company at
500 North Loop 1604 East, Suite 100, San Antonio, Texas 78232.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders thereof. No representation
is made as to the accuracy of such numbers as printed on the Notes and reliance
may be placed only on the other identifying information printed hereon.
Interest on this Note will be computed on the basis of a 360-day year.
This Note will be governed by and construed in accordance with the laws of
the State of New York.
Exhibit A-1
9
SUBSIDIARY GUARANTEES
Subject to the limitations set forth in the Indenture, the initial
Subsidiary Guarantors and, if any, all additional Subsidiary Guarantors (as
defined in the Indenture referred to in the Note upon which this notation is
endorsed and each being hereinafter referred to as a "Subsidiary Guarantor,"
which term includes any additional or successor Subsidiary Guarantor under the
Indenture) have, jointly and severally, unconditionally guaranteed (a) the due
and punctual payment of the principal of (and premium, if any) and interest, and
Liquidated Damages, if any, on the Notes, whether at maturity, acceleration,
redemption or otherwise, (b) the due and punctual payment of interest on the
overdue principal of and interest, and Liquidated Damages on the Notes, if any,
to the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance with
the terms set forth in the Indenture, and (d) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity, by acceleration or
otherwise.
The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture, 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. Each Subsidiary Guarantor that makes a
payment or distribution under a Subsidiary Guarantee will be entitled to a
contribution from each other Subsidiary Guarantor in a pro rata amount based on
the Adjusted Net Assets of each Subsidiary Guarantor.
No member, partner, stockholder, officer, director, manager, employee,
incorporator or Affiliate as such, past, present or future, of any Subsidiary
Guarantor will have any personal liability under its Subsidiary Guarantee by
reason of his, her or its status as such member, partner, stockholder, officer,
director, manager, employee, incorporator or Affiliate, or any liability for any
obligations of any Subsidiary Guarantor under the Notes or the Indenture or for
any claim based on, in respect of, or by reason of such obligations or their
creation.
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee upon
the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are defined
in the Indenture referred to in this Note upon which this notation of Subsidiary
Guarantees is endorsed will have the meanings assigned to them in such
Indenture.
The Subsidiary Guarantees will be binding upon the Subsidiary Guarantors
and will inure to the benefit of the Trustee and the Holders and, in the event
of any transfer or assignment of rights by any Holder or the Trustee respecting
the Note upon which the foregoing Subsidiary Guarantees are noted, the rights
and privileges herein conferred upon that party will automatically extend to and
Exhibit A-1
10
be vested in such transferee or assignee, all subject to the terms and
conditions hereof and in the Indenture.
The Subsidiary Guarantees will not be valid obligations for any purpose
until the certificate of authentication on the Note upon which the foregoing
Subsidiary Guarantees are noted will have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized signatories.
[signature page follows]
Exhibit A-1
11
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this instrument to
be duly executed in its corporate name by the signature of its officer thereunto
duly authorized.
EASTSIDE COAL COMPANY, INC.
By:
-------------------------------------------
Name:
Title:
SANDIA OIL & GAS CORPORATION
By:
-------------------------------------------
Name:
Title:
SANDIA OPERATING CORP.
By:
-------------------------------------------
Name:
Title:
WAMSUTTER HOLDINGS, INC.
By:
-------------------------------------------
Name:
Title:
WESTERN ASSOCIATED ENERGY CORPORATION
By:
-------------------------------------------
Name:
Title:
Exhibit A-1
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within mentioned Indenture.
Dated: October 28, 2004 U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:
-------------------------------------------
Authorized Signatory
Exhibit A-1
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_____________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:
------------------------------
Your signature:
-------------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.:
----------------
SIGNATURE GUARANTEE:
__________________________
Signatures must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Registrar, which
requirements include
membership or participation
in the Security Transfer
Agent Medallion Program
("STAMP") or such other
"signature guarantee
program" as may be
determined by the Registrar
in addition to, or in
substitution for, STAMP,
all in accordance with the
Securities Exchange Act of
1934, as amended.
Exhibit A-1
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 9.15 or 9.16 of the Indenture, check the box below:
[ ] Section 9.15 [ ] Section 9.16
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 9.15 or Section 9.16 of the Indenture, state the amount you
elect to have purchased: $_______
Date:
--------------------------
Your signature:
------------------------------
(Sign exactly as your name
appears on the face of this Note)
Tax Identification No.:
---------
SIGNATURE GUARANTEE:
_________________________
Signatures must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Registrar, which
requirements include
membership or participation
in the Security Transfer
Agent Medallion Program
("STAMP") or such other
"signature guarantee
program" as may be
determined by the Registrar
in addition to, or in
substitution for, STAMP,
all in accordance with the
Securities Exchange Act of
1934, as amended.
Exhibirt A-1
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in another
Global Note or for a Definitive Note, or exchanges of a part of another Global
Note or Definitive Note for an interest in this Global Note, have been made:
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase in following such authorized officer
in Principal Amount Principal Amount of decrease (or of Trustee or
Date of Exchange of this Global Note this Global Note increase) custodian
- -------------------------------------------------------------------------------------------------------------------
Exhibit A-1
EXHIBIT A-2
FORM OF REGULATION S GLOBAL NOTE
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.5(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.10 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THE RIGHTS ATTACHING TO THIS REGULATION S TEMPORARY GLOBAL NOTE, AND THE
CONDITIONS AND PROCEDURES GOVERNING ITS EXCHANGE FOR CERTIFICATED NOTES, ARE AS
SPECIFIED IN THE INDENTURE. NEITHER THE HOLDER NOR THE BENEFICIAL OWNERS OF THIS
REGULATION S TEMPORARY GLOBAL NOTE SHALL BE ENTITLED TO RECEIVE PAYMENT OF
INTEREST HEREON.
PRIOR TO EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD (AS
DEFINED IN REGULATION S ("REGULATION S") UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT")), THIS SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED
OR OTHERWISE TRANSFERRED WITHIN THE UNITED STATES (AS DEFINED IN REGULATION S)
OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, A U.S. PERSON (AS DEFINED IN REGULATION
S), EXCEPT TO A PERSON REASONABLY BELIEVED TO BE A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A ("RULE 144A") UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A AND THE INDENTURE REFERRED TO
HEREIN OR AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a) UNDER THE
SECURITIES ACT THAT IS ACQUIRING THE NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF SUCH AN ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF
THE NOTES OF $100,000, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR
OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES
ACT.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, OR THE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH
REGISTRATION.
Exhibit A-2
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF
AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO
OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR NOTES), ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a) UNDER THE SECURITIES ACT THAT IS AN ACCREDITED INVESTOR ACQUIRING THIS
NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, IN
EACH CASE IN A MINIMUM PRINCIPAL AMOUNT OF $100,000 OF NOTES, FOR INVESTMENT
PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
SUBJECT TO THE COMPANY'S AND THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER PURSUANT TO CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF
THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
THE INDEBTEDNESS EVIDENCED BY THIS DOCUMENT IS SUBJECT TO THE PROVISIONS OF
THE INTERCREDITOR, SECURITY AND COLLATERAL AGENCY AGREEMENT, DATED AS OF OCTOBER
28, 2004, AMONG ABRAXAS PETROLEUM CORPORATION (THE "COMPANY"), THE SUBSIDIARIES
OF THE COMPANY LISTED ON SCHEDULE I THERETO, WELLS FARGO FOOTHILL, INC., IN ITS
CAPACITY AS AGENT FOR THE LENDERS WHO ARE FROM TIME TO TIME PARTIES TO A LOAN
AGREEMENT DATED AS OF OCTOBER 28, 2004, U.S. BANK NATIONAL ASSOCIATION, IN ITS
CAPACITIES AS TRUSTEE FOR THE HOLDERS OF THE COMPANY'S FLOATING RATE SENIOR
SECURED NOTES DUE 2009 ISSUED UNDER AN INDENTURE DATED AS OF OCTOBER 28, 2004,
AND AS COLLATERAL AGENT, AND GUGGENHEIM CORPORATE FUNDING, LLC, IN ITS CAPACITY
AS AGENT FOR THE LENDERS WHO ARE FROM TIME TO TIME PARTIES TO A LOAN AGREEMENT
DATED AS OF OCTOBER 28, 2004.
Exhibit A-2
ABRAXAS PETROLEUM CORPORATION
Floating Rate Senior Secured Note due 2009
No.Regulation S-__ $__?
CUSIP No. C00380 AA 0
Abraxas Petroleum Corporation, a Nevada corporation (herein called the
"Company" which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO. or registered assignee the principal sum of ? Dollars ($?) on December 1,
2009 at the office or agency of the Company referred to below, and to pay
interest thereon, commencing on June 1, 2005 and continuing semiannually
thereafter, on June 1 and December 1 in each year (each, an Interest Payment
Date), from October 28, 2004 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at a per annum floating rate
of Six-Month LIBOR (as defined below) plus 7.5%, until the principal hereof is
paid or duly provided for, and (to the extent lawful) to pay on demand interest
on any overdue interest at the rate borne by the Notes from the date on which
such overdue interest becomes payable to the date on which payment of such
interest has been made or duly provided for. The Company also hereby promises to
pay the Liquidated Damages, if any, payable pursuant to Section 3 of the
Registration Rights Agreement on the same dates on which interest is payable as
provided herein. The interest and Liquidated Damages, if any, so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in said Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered on the Note Register at the close
of business on the Regular Record Date for such interest, whether or not a
Business Day (as defined below), next preceding such Interest Payment Date. Any
such interest or Liquidated Damages not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date,
and such Defaulted Interest, Liquidated Damages and (to the extent lawful)
interest on such Defaulted Interest and Liquidated Damages at the rate borne by
the Notes, may be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered on the Note Register at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof will be given to Holders of Notes not less than
10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any, on) and interest and
Liquidated Damages, if any, on this Note will be made at the office or agency of
the Company maintained for that purpose in The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest and Liquidated Damages, if any, may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address will appear on the Note Register.
Exhibit A-2
Interest on the Note will accrue from and including the most recent date on
which interest has been paid or, if no interest has been paid, from and
including the date of issuance, until but excluding the date upon which the
principal thereof is paid or duly provided for in accordance with the Indenture.
The interest rate will be reset semi-annually on each June 1 and December 1,
commencing on June 1, 2005 (each such date, an "Interest Reset Date"). Interest
on the Note will be payable semiannually in arrears on June 1 and December 1 of
each year, commencing on June 1, 2005; provided, that, if any such day is not a
Business Day, such interest payment date will be the next succeeding Business
Day.
"Business Day" means any day other than a Saturday or Sunday, or a day on
which banking institutions in The City of New York are authorized or required by
law, regulation or executive order to remain closed and that is also a London
Business Day (as defined below).
"Six-Month LIBOR" means the rate determined in accordance with the
following provisions:
(1) On the second London Business Day preceding each Interest Reset Date
(each such date, an "Interest Determination Date"), a calculation agent,
initially U.S. Bank National Association or a duly appointed successor (the
"Calculation Agent"), as agent for the Company, will determine the Six-Month
LIBOR rate, which shall be the rate for deposits in the London interbank market
in U.S. dollars having a six-month maturity commencing on the succeeding
Interest Reset Date immediately following such Interest Determination Date which
appears on the Designated LIBOR Page as of 11:00 a.m., London time, on such
Interest Determination Date.
"Designated LIBOR Page" means the display on the Moneyline service (or such
other service or services as may be nominated by the British Bankers'
Association) for the purpose of displaying London interbank rates of major banks
for U.S. dollar deposits. If no such rate appears on an Interest Determination
Date, the Six-Month LIBOR rate on such Interest Determination Date will be
determined as described in clause (2) of the definition of "Six-Month LIBOR."
"London Business Day" means any day on which dealings in U.S. dollars
generally are transacted in the London interbank market.
(2) With respect to an Interest Determination Date for which no such rate
appears, the Calculation Agent will request the principal London offices of each
of four major reference banks in the London interbank market, as selected by the
Calculation Agent (after consultation with the Company), to provide the
Calculation Agent with its offered quotation for deposits in U.S. dollars having
a six-month maturity commencing on the Interest Reset Date immediately following
such Interest Determination Date to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on such Interest Determination Date
and in a principal amount not less than $1,000,000 that is representative for a
single transaction in U.S. dollars in such market at such time. If at least two
such quotations are provided, the Six-Month LIBOR rate on such Interest
Determination Date will be the arithmetic mean of such quotations. If fewer than
two quotations are provided, the Six-Month LIBOR rate determined on such
Interest Determination Date will be the arithmetic mean of the rates quoted at
Exhibit A-2
2
approximately 11:00 a.m., New York City time, on such Interest Determination
Date by three major banks in The City of New York selected by the Calculation
Agent (after consultation with the Company) for loans in U.S. dollars to leading
European banks, having a six-month maturity and in a principal amount not less
than $1,000,000 that is representative for a single transaction in U.S. dollars
in such market at such time. However, if the banks so selected by the
Calculation Agent are not quoting as mentioned above, the Six-Month LIBOR rate
with respect to such Interest Determination Date will be the Six-Month LIBOR
rate in effect immediately prior to such Interest Determination Date.
All percentages resulting from any calculation on the Note will be rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point with
five one-millionths of a percentage point rounded upward and all U.S. dollar
amounts used in or resulting from such calculation on the Note will be rounded
to the nearest cent (with one-half cent being rounded upward).
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions will for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
will not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
[signature page follows]
Exhibit A-2
3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed in its corporate name by the signature of its officer thereunto duly
authorized.
ABRAXAS PETROLEUM CORPORATION
By:
---------------------------------------
Name:
Title:
Attested By:
---------------------------------------
Name:
Title:
Exhibit A-2
Reverse of Note
This Note is one of a duly authorized issue of securities of the Company
designated as its Floating Rate Senior Secured Notes due 2009 (herein called the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $125,000,000, which may be issued under
an indenture (herein called the "Indenture") dated as of October 28, 2004 among
the Company, the initial Subsidiary Guarantors named therein and U.S. Bank
National Association (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitation of rights, duties, obligations and immunities thereunder of
the Company, the Subsidiary Guarantors, the Trustee and the Holders of the
Notes, and of the terms upon which the Notes are, and are to be, authenticated
and delivered.
Optional Redemption
The Notes may be redeemed, in whole or from time to time in part, at the
option of the Company at any time after April 28, 2007 upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below together with accrued and unpaid interest and
Liquidated Damages, if any, to the applicable redemption date during the periods
indicated below:
Year Percentage
---- ----------
From April 29, 2007 to April 28, 2008.... 104.00%
From April 29, 2008 to April 28, 2009.... 102.00%
After April 28, 2009..................... 100.00%
Notwithstanding the foregoing, at any time prior to April 29, 2007, the
Company may, at its option and subject to the restrictions and other provisions
relating thereto, if any, contained in the Revolving Credit Facility, on any one
or more occasions redeem up to 35% of the original aggregate principal amount of
the Notes (i.e., $43,750,000) with the Net Cash Proceeds of one or more
Qualified Equity Offerings at a redemption price equal to the product of (x) the
principal amount of the Notes being so redeemed and (y) a redemption price
factor of 1.00 plus the per annum interest rate on the Notes (expressed as a
decimal) on the applicable redemption date, plus accrued and unpaid interest to
the applicable redemption date, provided, that (1) at least 65% of the original
aggregate principal amount of the Notes (i.e., $81,250,000) remains outstanding
after each such redemption; and (2) any such redemption occurs within 90 days
after the closing of the Qualified Equity Offering to which such Net Cash
Proceeds relate.
If less than all the Notes are to be redeemed at any time, the particular
Notes to be redeemed will be selected not fewer than 30 days nor more than 60
days prior to the Redemption Date by the Trustee from the Outstanding Notes not
previously called for redemption pro rata or by any other method that the
Trustee deems fair and appropriate, provided that no Notes of $1,000 or less
will be redeemed in part. Notices of redemption will be mailed by first class
mail at least 30 but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at its registered address. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note will
Exhibit A-2
5
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon surrender of the original Note. On and after the
Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption as long as the Company has deposited with the Paying Agent
funds in satisfaction of the applicable Redemption Price, together with accrued
and unpaid interest and Liquidated Damages, if any, to the Redemption Date.
If a Redemption Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, the accrued and unpaid interest and
Liquidated Damages, if any, on each Note being redeemed will be paid to the
person in whose name such Note is registered at the close of business on such
Regular Record Date, and no other interest or Liquidated Damages will be payable
to any other Person who may become a Holder of such Note after such time.
The Notes do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase within 30 calendar days following the
occurrence of a Change of Control of the Company, all of the then Outstanding
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof, together with accrued and unpaid interest and Liquidated Damages, if
any, to the Change of Control Payment Date, all as provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Notes at a purchase price equal to 100% of the aggregate
principal amount of the Notes, together with accrued and unpaid interest and
Liquidated Damages, if any, to the date such Net Proceeds Offer is consummated
in accordance with the procedures set forth in the Indenture.
As more particularly set forth in the Indenture, an Event of Default is
generally (1) default in the payment when due of the principal of or premium on
any Note, whether such payment is due at Stated Maturity, upon redemption, upon
repurchase pursuant to a Change of Control Offer or a Net Proceeds Offer, upon
declaration of acceleration or otherwise; (2) default in the payment when due of
any installment of interest on, or Liquidated Damages with respect to, any Note,
and the continuance of such Default for a period of 30 days; (3) default in the
performance or breach of the provisions relating to mergers, consolidations and
sales of all or substantially all assets or the failure to make or consummate a
Change of Control Offer or a Net Proceeds Offer; (4) failure by the Company or
any Restricted Subsidiary to comply with any other term, covenant or agreement
contained in the Notes, any Subsidiary Guarantee, any Collateral Document or the
Indenture (other than a default specified in clause (1), (2) or (3) above) for a
period of 60 days after delivery to the Company or such Restricted Subsidiary,
as the case may be, of written notice of such failure stating that it is a
"notice of default" under this Indenture; (5) the occurrence and continuation
beyond any applicable grace period of any default in the payment when due of the
principal of, or premium or interest on, any Indebtedness for borrowed money of
the Company (other than the Notes) or any Restricted Subsidiary or any other
default resulting in acceleration of any Indebtedness for borrowed money of the
Company or any Restricted Subsidiary, but only in the event that the aggregate
Exhibit A-2
6
principal amount of such Indebtedness shall exceed $2,000,000; (6) without
limiting clause (5) above, the occurrence and continuation of an "event of
default" under either the Revolving Credit Facility or the Bridge Loan; (7) any
Subsidiary Guarantee shall for any reason cease to be, or be asserted by the
Company, any Subsidiary Guarantor, any of their respective Affiliates or any
Person acting on behalf of any of the foregoing not to be, in full force and
effect and enforceable in any material respect in accordance with its terms
(except pursuant to the release or termination of any such Subsidiary Guarantee
in accordance with this Indenture); (8) any Collateral Document shall for any
reason cease to be, or be asserted by the Company, any Restricted Subsidiary,
any of their respective Affiliates or any Person acting on behalf of any of the
foregoing not to be, in full force and effect and enforceable in any material
respect in accordance with its terms or to not otherwise grant a duly perfected
first priority security interest in the Collateral in favor of the holders of
the Note Obligations (subject to Permitted Prior Liens and except pursuant to a
release or termination thereof consummated in accordance with this Indenture and
the Intercreditor Agreement and other Collateral Documents) for a period of 30
days after delivery of written notice thereof stating that it is a "notice of
default" under this Indenture and requiring the Company or the respective
Restricted Subsidiary, as the case may be, to remedy the same; (9) final
judgments or orders rendered against the Company or any Restricted Subsidiary
that are unsatisfied and that require the payment in money, either individually
or in an aggregate amount, that is more than $2,000,000 over the coverage under
applicable insurance policies and either (a) commencement by any creditor of an
enforcement proceeding upon such judgment (other than a judgment that is stayed
by reason of pending appeal or otherwise) or (b) the occurrence of a 60-day
period during which a stay of such judgment or order, by reason of pending
appeal or otherwise, was not in effect; and (10) certain evens of bankruptcy,
insolvency or reorganization of the Company or any Subsidiary, as the case may
be. If any Event of Default has occurred and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Notes may declare the principal of, premium, if any, accrued and unpaid interest
and Liquidated Damages, if any, on the Notes to be due and payable immediately,
except that (i) in the case of an Event of Default arising from certain evens of
bankruptcy, insolvency or reorganization of the Company or any Subsidiary, the
principal of, premium, if any, accrued and unpaid interest and Liquidated
Damages, if any, on the Notes will become due and payable immediately without
further action or notice.
The Indenture contains provisions for (i) defeasance at any time of the
entire indebtedness of the Company on this Note and (ii) discharge from certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company and certain conditions set forth therein, which
provisions apply to this Note.
Subject to the terms of the Intercreditor Agreement, the Indenture permits,
with certain exceptions as therein provided, the amendment therefore and the
modification of the rights and obligations of the Company and the Subsidiary
Guarantors and the rights of the Holders under the Indenture at any time by the
Company, the Subsidiary Guarantors and the Trustee and the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Note will be conclusive and binding upon such
Exhibit A-2
7
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof for or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note.
Without the consent of any Holder, the Company, the Subsidiary Guarantors and
the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to add or release any Subsidiary Guarantor
pursuant to the Indenture, to provide for uncertificated Notes in addition to or
in place of certificated Notes and to make certain other specified changes and
other changes that do not adversely affect the interests of any Holder in any
material respect.
No reference herein to the Indenture and no provision of this Note or of
the Indenture will alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest and Liquidated Damages on this Note at the times, place, and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture, and subject to certain limitations therein
set forth, the transfer of this Note is registerable on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge will be made for any registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
No director, officer, employee, incorporator, stockholder or Affiliate of
the Company or any Subsidiary Guarantor, as such, past, present or future, will
have any personal liability under this Note or the Indenture by reason of his,
her or its status as such director, officer, employee, incorporator, stockholder
or Affiliate, or any liability for any obligations of the Company or any
Subsidiary Guarantor under the Notes or the Indenture or for any claim based on,
in respect of, or by reason of such obligations or their creation. Each Holder,
by accepting this Note with the notation of Subsidiary Guarantee endorsed
hereon, waives and releases all such liability. Such waiver and release are part
of the consideration for the issuance of this Note with the notation of
Subsidiary Guarantee endorsed hereon.
Prior to the time of due presentment of this Note of registration of
transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note is
overdue, and neither the Company, the Subsidiary Guarantors, the Trustee nor any
agent will be affected by notice to the contrary.
Exhibit A-2
8
All terms used in this Note which are defined in the Indenture and which
are not otherwise defined herein shall have the meanings assigned to them in the
Indenture. The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to the Company at
500 North Loop 1604 East, Suite 100, San Antonio, Texas 78232.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders thereof. No representation
is made as to the accuracy of such numbers as printed on the Notes and reliance
may be placed only on the other identifying information printed hereon.
Interest on this Note will be computed on the basis of a 360-day year.
This Note will be governed by and construed in accordance with the laws of
the State of New York.
Exhibit A-2
9
SUBSIDIARY GUARANTEES
Subject to the limitations set forth in the Indenture, the initial
Subsidiary Guarantors and, if any, all additional Subsidiary Guarantors (as
defined in the Indenture referred to in the Note upon which this notation is
endorsed and each being hereinafter referred to as a "Subsidiary Guarantor,"
which term includes any additional or successor Subsidiary Guarantor under the
Indenture) have, jointly and severally, unconditionally guaranteed (a) the due
and punctual payment of the principal of (and premium, if any) and interest, and
Liquidated Damages, if any, on the Notes, whether at maturity, acceleration,
redemption or otherwise, (b) the due and punctual payment of interest on the
overdue principal of and interest, and Liquidated Damages on the Notes, if any,
to the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance with
the terms set forth in the Indenture, and (d) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity, by acceleration or
otherwise.
The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture, 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. Each Subsidiary Guarantor that makes a
payment or distribution under a Subsidiary Guarantee will be entitled to a
contribution from each other Subsidiary Guarantor in a pro rata amount based on
the Adjusted Net Assets of each Subsidiary Guarantor.
No member, partner, stockholder, officer, director, manager, employee,
incorporator or Affiliate as such, past, present or future, of any Subsidiary
Guarantor will have any personal liability under its Subsidiary Guarantee by
reason of his, her or its status as such member, partner, stockholder, officer,
director, manager, employee, incorporator or Affiliate, or any liability for any
obligations of any Subsidiary Guarantor under the Notes or the Indenture or for
any claim based on, in respect of, or by reason of such obligations or their
creation.
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee upon
the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are defined
in the Indenture referred to in this Note upon which this notation of Subsidiary
Guarantees is endorsed will have the meanings assigned to them in such
Indenture.
The Subsidiary Guarantees will be binding upon the Subsidiary Guarantors
and will inure to the benefit of the Trustee and the Holders and, in the event
of any transfer or assignment of rights by any Holder or the Trustee respecting
the Note upon which the foregoing Subsidiary Guarantees are noted, the rights
Exhibit A-2
10
and privileges herein conferred upon that party will automatically extend to and
be vested in such transferee or assignee, all subject to the terms and
conditions hereof and in the Indenture.
The Subsidiary Guarantees will not be valid obligations for any purpose
until the certificate of authentication on the Note upon which the foregoing
Subsidiary Guarantees are noted will have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized signatories.
[signature page follows]
Exhibit A-2
11
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this
instrument to be duly executed in its corporate name by the signature of its
officer thereunto duly authorized.
EASTSIDE COAL COMPANY, INC.
By:
-------------------------------------------
Name:
Title:
SANDIA OIL & GAS CORPORATION
By:
-------------------------------------------
Name:
Title:
SANDIA OPERATING CORP.
By:
-------------------------------------------
Name:
Title:
WAMSUTTER HOLDINGS, INC.
By:
-------------------------------------------
Name:
Title:
WESTERN ASSOCIATED ENERGY CORPORATION
By:
-------------------------------------------
Name:
Title:
Exhibit A-2
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within mentioned Indenture.
Dated: October 28, 2004 U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:
-----------------------------------------------
Authorized Signatory
Exhibit A-2
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_____________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:
------------------------------
Your signature:
-------------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.:
----------------
SIGNATURE GUARANTEE:
__________________________
Signatures must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Registrar, which
requirements include
membership or participation
in the Security Transfer
Agent Medallion Program
("STAMP") or such other
"signature guarantee
program" as may be
determined by the Registrar
in addition to, or in
substitution for, STAMP,
all in accordance with the
Securities Exchange Act of
1934, as amended.
Exhibit A-2
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 9.15 or 9.16 of the Indenture, check the box below:
[ ] Section 9.15 [ ] Section 9.16
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 9.15 or Section 9.16 of the Indenture, state the amount you
elect to have purchased: $_______
Date:
--------------------------
Your signature:
------------------------------
(Sign exactly as your name
appears on the face of this Note)
Tax Identification No.:
---------
SIGNATURE GUARANTEE:
_________________________
Signatures must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Registrar, which
requirements include
membership or participation
in the Security Transfer
Agent Medallion Program
("STAMP") or such other
"signature guarantee
program" as may be
determined by the Registrar
in addition to, or in
substitution for, STAMP,
all in accordance with the
Securities Exchange Act of
1934, as amended.
Exhibit A-2
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase in following such authorized officer
in Principal Amount Principal Amount of decrease (or of Trustee or
Date of Exchange of this Global Note this Global Note increase) custodian
- -------------------------------------------------------------------------------------------------------------------
EXHIBIT A-3
FORM OF ACCREDITED INVESTOR GLOBAL NOTE
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE
GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL
OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES
EXCEPT THAT (I) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED
PURSUANT TO SECTION 2.6 OF THE INDENTURE, (II) THIS GLOBAL NOTE MAY BE EXCHANGED
IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.5(a) OF THE INDENTURE, (III) THIS
GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION
2.10 OF THE INDENTURE AND (IV) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A
SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE COMPANY.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY
BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE
DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS
EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.
THE HOLDER OF THIS NOTE, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF
AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO
OFFER, SELL OR OTHERWISE TRANSFER THIS NOTE, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
ISSUER WAS THE OWNER OF THIS NOTE (OR ANY PREDECESSOR NOTES), ONLY (A) TO THE
ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE NOTES ARE ELIGIBLE
FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT
REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A
UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR
OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE
SECURITIES ACT, (E) TO AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE
501(a) UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF SUCH AN ACCREDITED INVESTOR, IN EACH CASE IN A MINIMUM
PRINCIPAL AMOUNT OF $100,000 OF NOTES, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO OR FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S AND
THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATION AND OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND
WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
TERMINATION DATE.
THE INDEBTEDNESS EVIDENCED BY THIS DOCUMENT IS SUBJECT TO THE PROVISIONS OF
THE INTERCREDITOR, SECURITY AND COLLATERAL AGENCY AGREEMENT, DATED AS OF OCTOBER
28, 2004, AMONG ABRAXAS PETROLEUM CORPORATION (THE "COMPANY"), THE SUBSIDIARIES
OF THE COMPANY LISTED ON SCHEDULE I THERETO, WELLS FARGO FOOTHILL, INC., IN ITS
Exhibit A-3
CAPACITY AS AGENT FOR THE LENDERS WHO ARE FROM TIME TO TIME PARTIES TO A LOAN
AGREEMENT DATED AS OF OCTOBER 28, 2004, U.S. BANK NATIONAL ASSOCIATION, IN ITS
CAPACITIES AS TRUSTEE FOR THE HOLDERS OF THE COMPANY'S FLOATING RATE SENIOR
SECURED NOTES DUE 2009 ISSUED UNDER AN INDENTURE DATED AS OF OCTOBER 28, 2004,
AND AS COLLATERAL AGENT, AND GUGGENHEIM CORPORATE FUNDING, LLC, IN ITS CAPACITY
AS AGENT FOR THE LENDERS WHO ARE FROM TIME TO TIME PARTIES TO A LOAN AGREEMENT
DATED AS OF OCTOBER 28, 2004.
Exhibit A-3
ABRAXAS PETROLEUM CORPORATION
Floating Rate Senior Secured Note due 2009
No.AI-__ $__
CUSIP No. 003830 AJ 5
Abraxas Petroleum Corporation, a Nevada corporation (herein called the
"Company" which term includes any successor Person under the Indenture
hereinafter referred to), for value received, hereby promises to pay to CEDE &
CO. or registered assignee the principal sum of ? Dollars ($?) on December 1,
2009 at the office or agency of the Company referred to below, and to pay
interest thereon, commencing on June 1, 2005 and continuing semiannually
thereafter, on June 1 and December 1 in each year (each, an Interest Payment
Date), from October 28, 2004 or from the most recent Interest Payment Date to
which interest has been paid or duly provided for, at a per annum floating rate
of Six-Month LIBOR (as defined below) plus 7.5%, until the principal hereof is
paid or duly provided for, and (to the extent lawful) to pay on demand interest
on any overdue interest at the rate borne by the Notes from the date on which
such overdue interest becomes payable to the date on which payment of such
interest has been made or duly provided for. The Company also hereby promises to
pay the Liquidated Damages, if any, payable pursuant to Section 3 of the
Registration Rights Agreement on the same dates on which interest is payable as
provided herein. The interest and Liquidated Damages, if any, so payable, and
punctually paid or duly provided for, on any Interest Payment Date will, as
provided in said Indenture, be paid to the Person in whose name this Note (or
one or more Predecessor Notes) is registered on the Note Register at the close
of business on the Regular Record Date for such interest, whether or not a
Business Day (as defined below), next preceding such Interest Payment Date. Any
such interest or Liquidated Damages not so punctually paid or duly provided for
will forthwith cease to be payable to the Holder on such Regular Record Date,
and such Defaulted Interest, Liquidated Damages and (to the extent lawful)
interest on such Defaulted Interest and Liquidated Damages at the rate borne by
the Notes, may be paid to the Person in whose name this Note (or one or more
Predecessor Notes) is registered on the Note Register at the close of business
on a Special Record Date for the payment of such Defaulted Interest to be fixed
by the Trustee, notice whereof will be given to Holders of Notes not less than
10 days prior to such Special Record Date, or may be paid at any time in any
other lawful manner not inconsistent with the requirements of any securities
exchange on which the Notes may be listed, and upon such notice as may be
required by such exchange, all as more fully provided in said Indenture.
Payment of the principal of (and premium, if any, on) and interest and
Liquidated Damages, if any, on this Note will be made at the office or agency of
the Company maintained for that purpose in The City of New York, in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that payment
of interest and Liquidated Damages, if any, may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address will appear on the Note Register.
Exhibit A-3
Interest on the Note will accrue from and including the most recent date on
which interest has been paid or, if no interest has been paid, from and
including the date of issuance, until but excluding the date upon which the
principal thereof is paid or duly provided for in accordance with the Indenture.
The interest rate will be reset semi-annually on each June 1 and December 1,
commencing on June 1, 2005 (each such date, an "Interest Reset Date"). Interest
on the Note will be payable semiannually in arrears on June 1 and December 1 of
each year, commencing on June 1, 2005; provided, that, if any such day is not a
Business Day, such interest payment date will be the next succeeding Business
Day.
"Business Day" means any day other than a Saturday or Sunday, or a day on
which banking institutions in The City of New York are authorized or required by
law, regulation or executive order to remain closed and that is also a London
Business Day (as defined below).
"Six-Month LIBOR" means the rate determined in accordance with the
following provisions:
(1) On the second London Business Day preceding each Interest Reset Date
(each such date, an "Interest Determination Date"), a calculation agent,
initially U.S. Bank National Association or a duly appointed successor (the
"Calculation Agent"), as agent for the Company, will determine the Six-Month
LIBOR rate, which shall be the rate for deposits in the London interbank market
in U.S. dollars having a six-month maturity commencing on the succeeding
Interest Reset Date immediately following such Interest Determination Date which
appears on the Designated LIBOR Page as of 11:00 a.m., London time, on such
Interest Determination Date.
"Designated LIBOR Page" means the display on the Moneyline service (or such
other service or services as may be nominated by the British Bankers'
Association) for the purpose of displaying London interbank rates of major banks
for U.S. dollar deposits. If no such rate appears on an Interest Determination
Date, the Six-Month LIBOR rate on such Interest Determination Date will be
determined as described in clause (2) of the definition of "Six-Month LIBOR."
"London Business Day" means any day on which dealings in U.S. dollars
generally are transacted in the London interbank market.
(2) With respect to an Interest Determination Date for which no such rate
appears, the Calculation Agent will request the principal London offices of each
of four major reference banks in the London interbank market, as selected by the
Calculation Agent (after consultation with the Company), to provide the
Calculation Agent with its offered quotation for deposits in U.S. dollars having
a six-month maturity commencing on the Interest Reset Date immediately following
such Interest Determination Date to prime banks in the London interbank market
at approximately 11:00 a.m., London time, on such Interest Determination Date
and in a principal amount not less than $1,000,000 that is representative for a
single transaction in U.S. dollars in such market at such time. If at least two
such quotations are provided, the Six-Month LIBOR rate on such Interest
Determination Date will be the arithmetic mean of such quotations. If fewer than
two quotations are provided, the Six-Month LIBOR rate determined on such
Interest Determination Date will be the arithmetic mean of the rates quoted at
approximately 11:00 a.m., New York City time, on such Interest Determination
Date by three major banks in The City of New York selected by the Calculation
Exhibit A-3
Agent (after consultation with the Company) for loans in U.S. dollars to leading
European banks, having a six-month maturity and in a principal amount not less
than $1,000,000 that is representative for a single transaction in U.S. dollars
in such market at such time. However, if the banks so selected by the
Calculation Agent are not quoting as mentioned above, the Six-Month LIBOR rate
with respect to such Interest Determination Date will be the Six-Month LIBOR
rate in effect immediately prior to such Interest Determination Date.
All percentages resulting from any calculation on the Note will be rounded,
if necessary, to the nearest one hundred-thousandth of a percentage point with
five one-millionths of a percentage point rounded upward and all U.S. dollar
amounts used in or resulting from such calculation on the Note will be rounded
to the nearest cent (with one-half cent being rounded upward).
Reference is hereby made to the further provisions of this Note set forth
on the reverse hereof, which further provisions will for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been duly executed by
the Trustee referred to on the reverse hereof by manual signature, this Note
will not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
[signature page follows]
Exhibit A-3
3
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed in its corporate name by the signature of its officer thereunto duly
authorized.
ABRAXAS PETROLEUM CORPORATION
By:
-----------------------------------------
Name:
Title:
Attested By:
-----------------------------------------
Name:
Title:
Exhibit A-3
Reverse of Note
This Note is one of a duly authorized issue of securities of the Company
designated as its Floating Rate Senior Secured Notes due 2009 (herein called the
"Notes"), limited (except as otherwise provided in the Indenture referred to
below) in aggregate principal amount to $125,000,000, which may be issued under
an indenture (herein called the "Indenture") dated as of October 28, 2004 among
the Company, the initial Subsidiary Guarantors named therein and U.S. Bank
National Association (herein called the "Trustee," which term includes any
successor trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights, limitation of rights, duties, obligations and immunities thereunder of
the Company, the Subsidiary Guarantors, the Trustee and the Holders of the
Notes, and of the terms upon which the Notes are, and are to be, authenticated
and delivered.
Optional Redemption
The Notes may be redeemed, in whole or from time to time in part, at the
option of the Company at any time after April 28, 2007 upon not less than 30 nor
more than 60 days' notice, at the redemption prices (expressed as percentages of
principal amount) set forth below together with accrued and unpaid interest and
Liquidated Damages, if any, to the applicable redemption date during the periods
indicated below:
Year Percentage
---- ----------
From April 29, 2007 to April 28, 2008........ 104.00%
From April 29, 2008 to April 28, 2009........ 102.00%
After April 28, 2009......................... 100.00%
Notwithstanding the foregoing, at any time prior to April 29, 2007, the
Company may, at its option and subject to the restrictions and other provisions
relating thereto, if any, contained in the Revolving Credit Facility, on any one
or more occasions redeem up to 35% of the original aggregate principal amount of
the Notes (i.e., $43,750,000) with the Net Cash Proceeds of one or more
Qualified Equity Offerings at a redemption price equal to the product of (x) the
principal amount of the Notes being so redeemed and (y) a redemption price
factor of 1.00 plus the per annum interest rate on the Notes (expressed as a
decimal) on the applicable redemption date, plus accrued and unpaid interest to
the applicable redemption date, provided, that (1) at least 65% of the original
aggregate principal amount of the Notes (i.e., $81,250,000) remains outstanding
after each such redemption; and (2) any such redemption occurs within 90 days
after the closing of the Qualified Equity Offering to which such Net Cash
Proceeds relate.
If less than all the Notes are to be redeemed at any time, the particular
Notes to be redeemed will be selected not fewer than 30 days nor more than 60
days prior to the Redemption Date by the Trustee from the Outstanding Notes not
previously called for redemption pro rata or by any other method that the
Trustee deems fair and appropriate, provided that no Notes of $1,000 or less
will be redeemed in part. Notices of redemption will be mailed by first class
mail at least 30 but not more than 60 days before the Redemption Date to each
Holder of Notes to be redeemed at its registered address. If any Note is to be
redeemed in part only, the notice of redemption that relates to such Note will
Exhibit A-3
5
state the portion of the principal amount thereof to be redeemed. A new Note in
principal amount equal to the unredeemed portion thereof will be issued in the
name of the holder thereof upon surrender of the original Note. On and after the
Redemption Date, interest will cease to accrue on Notes or portions thereof
called for redemption as long as the Company has deposited with the Paying Agent
funds in satisfaction of the applicable Redemption Price, together with accrued
and unpaid interest and Liquidated Damages, if any, to the Redemption Date.
If a Redemption Date is on or after a Regular Record Date and on or before
the related Interest Payment Date, the accrued and unpaid interest and
Liquidated Damages, if any, on each Note being redeemed will be paid to the
person in whose name such Note is registered at the close of business on such
Regular Record Date, and no other interest or Liquidated Damages will be payable
to any other Person who may become a Holder of such Note after such time.
The Notes do not have the benefit of any sinking fund obligations.
In the event of a Change of Control of the Company, and subject to certain
conditions and limitations provided in the Indenture, the Company will be
obligated to make an offer to purchase within 30 calendar days following the
occurrence of a Change of Control of the Company, all of the then Outstanding
Notes at a purchase price equal to 101% of the aggregate principal amount
thereof, together with accrued and unpaid interest and Liquidated Damages, if
any, to the Change of Control Payment Date, all as provided in the Indenture.
In the event of Asset Sales, under certain circumstances, the Company will
be obligated to make a Net Proceeds Offer to purchase all or a specified portion
of each Holder's Notes at a purchase price equal to 100% of the aggregate
principal amount of the Notes, together with accrued and unpaid interest and
Liquidated Damages, if any, to the date such Net Proceeds Offer is consummated
in accordance with the procedures set forth in the Indenture.
As more particularly set forth in the Indenture, an Event of Default is
generally (1) default in the payment when due of the principal of or premium on
any Note, whether such payment is due at Stated Maturity, upon redemption, upon
repurchase pursuant to a Change of Control Offer or a Net Proceeds Offer, upon
declaration of acceleration or otherwise; (2) default in the payment when due of
any installment of interest on, or Liquidated Damages with respect to, any Note,
and the continuance of such Default for a period of 30 days; (3) default in the
performance or breach of the provisions relating to mergers, consolidations and
sales of all or substantially all assets or the failure to make or consummate a
Change of Control Offer or a Net Proceeds Offer; (4) failure by the Company or
any Restricted Subsidiary to comply with any other term, covenant or agreement
contained in the Notes, any Subsidiary Guarantee, any Collateral Document or the
Indenture (other than a default specified in clause (1), (2) or (3) above) for a
period of 60 days after delivery to the Company or such Restricted Subsidiary,
as the case may be, of written notice of such failure stating that it is a
"notice of default" under this Indenture; (5) the occurrence and continuation
beyond any applicable grace period of any default in the payment when due of the
principal of, or premium or interest on, any Indebtedness for borrowed money of
the Company (other than the Notes) or any Restricted Subsidiary or any other
default resulting in acceleration of any Indebtedness for borrowed money of the
Exhibit A-3
6
Company or any Restricted Subsidiary, but only in the event that the aggregate
principal amount of such Indebtedness shall exceed $2,000,000; (6) without
limiting clause (5) above, the occurrence and continuation of an "event of
default" under either the Revolving Credit Facility or the Bridge Loan; (7) any
Subsidiary Guarantee shall for any reason cease to be, or be asserted by the
Company, any Subsidiary Guarantor, any of their respective Affiliates or any
Person acting on behalf of any of the foregoing not to be, in full force and
effect and enforceable in any material respect in accordance with its terms
(except pursuant to the release or termination of any such Subsidiary Guarantee
in accordance with this Indenture); (8) any Collateral Document shall for any
reason cease to be, or be asserted by the Company, any Restricted Subsidiary,
any of their respective Affiliates or any Person acting on behalf of any of the
foregoing not to be, in full force and effect and enforceable in any material
respect in accordance with its terms or to not otherwise grant a duly perfected
first priority security interest in the Collateral in favor of the holders of
the Note Obligations (subject to Permitted Prior Liens and except pursuant to a
release or termination thereof consummated in accordance with this Indenture and
the Intercreditor Agreement and other Collateral Documents) for a period of 30
days after delivery of written notice thereof stating that it is a "notice of
default" under this Indenture and requiring the Company or the respective
Restricted Subsidiary, as the case may be, to remedy the same; (9) final
judgments or orders rendered against the Company or any Restricted Subsidiary
that are unsatisfied and that require the payment in money, either individually
or in an aggregate amount, that is more than $2,000,000 over the coverage under
applicable insurance policies and either (a) commencement by any creditor of an
enforcement proceeding upon such judgment (other than a judgment that is stayed
by reason of pending appeal or otherwise) or (b) the occurrence of a 60-day
period during which a stay of such judgment or order, by reason of pending
appeal or otherwise, was not in effect; and (10) certain evens of bankruptcy,
insolvency or reorganization of the Company or any Subsidiary, as the case may
be. If any Event of Default has occurred and is continuing, the Trustee or the
Holders of not less than 25% in aggregate principal amount of the Outstanding
Notes may declare the principal of, premium, if any, accrued and unpaid interest
and Liquidated Damages, if any, on the Notes to be due and payable immediately,
except that (i) in the case of an Event of Default arising from certain evens of
bankruptcy, insolvency or reorganization of the Company or any Subsidiary, the
principal of, premium, if any, accrued and unpaid interest and Liquidated
Damages, if any, on the Notes will become due and payable immediately without
further action or notice.
The Indenture contains provisions for (i) defeasance at any time of the
entire indebtedness of the Company on this Note and (ii) discharge from certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company and certain conditions set forth therein, which
provisions apply to this Note.
Subject to the terms of the Intercreditor Agreement, the Indenture permits,
with certain exceptions as therein provided, the amendment therefore and the
modification of the rights and obligations of the Company and the Subsidiary
Guarantors and the rights of the Holders under the Indenture at any time by the
Company, the Subsidiary Guarantors and the Trustee and the consent of the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding. The Indenture also contains provisions permitting the Holders of
specified percentages in aggregate principal amount of the Notes at the time
Outstanding, on behalf of the Holders of all the Notes, to waive compliance by
the Company with certain provisions of the Indenture and certain past defaults
under the Indenture and their consequences. Any such consent or waiver by or on
behalf of the Holder of this Note will be conclusive and binding upon such
Exhibit A-3
7
Holder and upon all future Holders of this Note and of any Note issued upon the
registration of transfer hereof or in exchange hereof for or in lieu hereof
whether or not notation of such consent or waiver is made upon this Note.
Without the consent of any Holder, the Company, the Subsidiary Guarantors and
the Trustee may amend or supplement the Indenture or the Notes to cure any
ambiguity, defect or inconsistency, to add or release any Subsidiary Guarantor
pursuant to the Indenture, to provide for uncertificated Notes in addition to or
in place of certificated Notes and to make certain other specified changes and
other changes that do not adversely affect the interests of any Holder in any
material respect.
No reference herein to the Indenture and no provision of this Note or of
the Indenture will alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any, on)
and interest and Liquidated Damages on this Note at the times, place, and rate,
and in the coin or currency, herein prescribed.
As provided in the Indenture, and subject to certain limitations therein
set forth, the transfer of this Note is registerable on the Note Register of the
Company, upon surrender of this Note for registration of transfer at the office
or agency of the Company maintained for such purpose duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by, the Holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Notes, of
authorized denominations and for the same aggregate principal amount, will be
issued to the designated transferee or transferees.
The Notes are issuable only in registered form without coupons in
denominations of $1,000 and any integral multiple thereof. As provided in the
Indenture and subject to certain limitations therein set forth, the Notes are
exchangeable for a like aggregate principal amount of Notes of a different
authorized denomination, as requested by the Holder surrendering the same.
No service charge will be made for any registration of transfer or exchange
of Notes, but the Company may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
No director, officer, employee, incorporator, stockholder or Affiliate of
the Company or any Subsidiary Guarantor, as such, past, present or future, will
have any personal liability under this Note or the Indenture by reason of his,
her or its status as such director, officer, employee, incorporator, stockholder
or Affiliate, or any liability for any obligations of the Company or any
Subsidiary Guarantor under the Notes or the Indenture or for any claim based on,
in respect of, or by reason of such obligations or their creation. Each Holder,
by accepting this Note with the notation of Subsidiary Guarantee endorsed
hereon, waives and releases all such liability. Such waiver and release are part
of the consideration for the issuance of this Note with the notation of
Subsidiary Guarantee endorsed hereon.
Prior to the time of due presentment of this Note of registration of
transfer, the Company, the Subsidiary Guarantors, the Trustee and any agent of
the Company or the Trustee may treat the Person in whose name this Note is
registered as the owner hereof for all purposes, whether or not this Note is
overdue, and neither the Company, the Subsidiary Guarantors, the Trustee nor any
agent will be affected by notice to the contrary.
Exhibit A-3
8
All terms used in this Note which are defined in the Indenture and which
are not otherwise defined herein shall have the meanings assigned to them in the
Indenture. The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to the Company at
500 North Loop 1604 East, Suite 100, San Antonio, Texas 78232.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Notes as a convenience to the Holders thereof. No representation
is made as to the accuracy of such numbers as printed on the Notes and reliance
may be placed only on the other identifying information printed hereon.
Interest on this Note will be computed on the basis of a 360-day year.
This Note will be governed by and construed in accordance with the laws of
the State of New York.
Exhibit A-3
9
SUBSIDIARY GUARANTEES
Subject to the limitations set forth in the Indenture, the initial
Subsidiary Guarantors and, if any, all additional Subsidiary Guarantors (as
defined in the Indenture referred to in the Note upon which this notation is
endorsed and each being hereinafter referred to as a "Subsidiary Guarantor,"
which term includes any additional or successor Subsidiary Guarantor under the
Indenture) have, jointly and severally, unconditionally guaranteed (a) the due
and punctual payment of the principal of (and premium, if any) and interest, and
Liquidated Damages, if any, on the Notes, whether at maturity, acceleration,
redemption or otherwise, (b) the due and punctual payment of interest on the
overdue principal of and interest, and Liquidated Damages on the Notes, if any,
to the extent lawful, (c) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance with
the terms set forth in the Indenture, and (d) in case of any extension of time
of payment or renewal of any Notes or any of such other obligations, the same
will be promptly paid in full when due or performed in accordance with the terms
of the extension or renewal, whether at Stated Maturity, by acceleration or
otherwise.
The obligations of each Subsidiary Guarantor are limited to the maximum
amount as will, after giving effect to all other contingent and fixed
liabilities of such Subsidiary Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Subsidiary
Guarantor in respect of the obligations of such other Subsidiary Guarantor under
its Subsidiary Guarantee or pursuant to its contribution obligations under the
Indenture, 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. Each Subsidiary Guarantor that makes a
payment or distribution under a Subsidiary Guarantee will be entitled to a
contribution from each other Subsidiary Guarantor in a pro rata amount based on
the Adjusted Net Assets of each Subsidiary Guarantor.
No member, partner, stockholder, officer, director, manager, employee,
incorporator or Affiliate as such, past, present or future, of any Subsidiary
Guarantor will have any personal liability under its Subsidiary Guarantee by
reason of his, her or its status as such member, partner, stockholder, officer,
director, manager, employee, incorporator or Affiliate, or any liability for any
obligations of any Subsidiary Guarantor under the Notes or the Indenture or for
any claim based on, in respect of, or by reason of such obligations or their
creation.
Any Subsidiary Guarantor may be released from its Subsidiary Guarantee upon
the terms and subject to the conditions provided in the Indenture.
All terms used in this notation of Subsidiary Guarantee which are defined
in the Indenture referred to in this Note upon which this notation of Subsidiary
Guarantees is endorsed will have the meanings assigned to them in such
Indenture.
The Subsidiary Guarantees will be binding upon the Subsidiary Guarantors
and will inure to the benefit of the Trustee and the Holders and, in the event
of any transfer or assignment of rights by any Holder or the Trustee respecting
the Note upon which the foregoing Subsidiary Guarantees are noted, the rights
and privileges herein conferred upon that party will automatically extend to and
Exhibit A-3
10
be vested in such transferee or assignee, all subject to the terms and
conditions hereof and in the Indenture.
The Subsidiary Guarantees will not be valid obligations for any purpose
until the certificate of authentication on the Note upon which the foregoing
Subsidiary Guarantees are noted will have been executed by the Trustee under the
Indenture by the manual signature of one of its authorized signatories.
[signature page follows]
Exhibit A-3
11
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused this
instrument to be duly executed in its corporate name by the signature of its
officer thereunto duly authorized.
EASTSIDE COAL COMPANY, INC.
By:
-------------------------------------------
Name:
Title:
SANDIA OIL & GAS CORPORATION
By:
-------------------------------------------
Name:
Title:
SANDIA OPERATING CORP.
By:
-------------------------------------------
Name:
Title:
WAMSUTTER HOLDINGS, INC.
By:
-------------------------------------------
Name:
Title:
WESTERN ASSOCIATED ENERGY CORPORATION
By:
-------------------------------------------
Name:
Title:
Exhibit A-3
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes referred to in the within mentioned Indenture.
Dated: October 28, 2004 U.S. BANK NATIONAL ASSOCIATION
as Trustee
By:
------------------------------------
Authorized Signatory
Exhibit A-3
ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and transfer
this Note to
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. no.)
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
and irrevocably appoint_____________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
________________________________________________________________________________
Date:
------------------------------
Your signature:
-------------------------
(Sign exactly as your name appears on
the face of this Note)
Tax Identification No.:
----------------
SIGNATURE GUARANTEE:
__________________________
Signatures must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Registrar, which
requirements include
membership or participation
in the Security Transfer
Agent Medallion Program
("STAMP") or such other
"signature guarantee
program" as may be
determined by the Registrar
in addition to, or in
substitution for, STAMP,
all in accordance with the
Securities Exchange Act of
1934, as amended.
Exhibit A-3
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 9.15 or 9.16 of the Indenture, check the box below:
[ ] Section 9.15 [ ] Section 9.16
If you want to elect to have only part of the Note purchased by the Company
pursuant to Section 9.15 or Section 9.16 of the Indenture, state the amount you
elect to have purchased: $_______
Date:
--------------------------
Your signature:
------------------------------
(Sign exactly as your name
appears on the face of this Note)
Tax Identification No.:
---------
SIGNATURE GUARANTEE:
_________________________
Signatures must be
guaranteed by an "eligible
guarantor institution"
meeting the requirements of
the Registrar, which
requirements include
membership or participation
in the Security Transfer
Agent Medallion Program
("STAMP") or such other
"signature guarantee
program" as may be
determined by the Registrar
in addition to, or in
substitution for, STAMP,
all in accordance with the
Securities Exchange Act of
1934, as amended.
Exhibit A-3
Principal Amount of
this Global Note Signature of
Amount of decrease Amount of increase in following such authorized officer
in Principal Amount Principal Amount of decrease (or of Trustee or
Date of Exchange of this Global Note this Global Note increase) custodian
- -------------------------------------------------------------------------------------------------------------------
Exhibit A-3
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
Abraxas Petroleum Corporation
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
U.S. Bank National Association
60 Livingston Avenue
St. Paul, Minnesota 55107
Attention: Corporate Trust Administration
Re: Floating Rate Senior Secured Notes due 2009
Reference is hereby made to the Indenture, dated as of October __, 2004
(the "Indenture"), among Abraxas Petroleum Corporation (the "Company"), the
subsidiary guarantors party thereto and U.S. Bank National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
_______________ (the "Transferor") owns and proposes to transfer the
Securities or interest in such Securities specified in Annex A hereto, in the
principal amount of $________ in such Securities or interests (the "Transfer"),
to _______________ (the "Transferee"), as further specified in Annex A hereto.
In connection with the Transfer, the Transferor hereby certifies that:
[CHECK ALL THAT APPLY]
1. |_| Check if Transferee will take delivery of a beneficial interest in the
144A Global Note or a Definitive Security Pursuant to Rule 144A. The Transfer is
being effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended (the "Securities Act"), and,
accordingly, the Transferor hereby further certifies that the beneficial
interest or Definitive Security is being transferred to a Person that the
Transferor reasonably believed and believes is purchasing the beneficial
interest or Definitive Security for its own account, or for one or more accounts
with respect to which such Person exercises sole investment discretion, and such
Person and each such account is a "qualified institutional buyer" within the
meaning of Rule 144A in a transaction meeting the requirements of Rule 144A and
such Transfer is in compliance with any applicable blue sky securities laws of
any state of the United States. Upon consummation of the proposed Transfer in
accordance with the terms of the Indenture, the transferred beneficial interest
or Definitive Security will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the 144A Global Note
and/or the Definitive Security and in the Indenture and the Securities Act.
2. |_| Check if Transferee will take delivery of a beneficial interest in the
Temporary Regulation S Global Note, the Regulation S Global Note or a Definitive
Exhibit B
Security pursuant to Regulation S. The Transfer is being effected pursuant to
and in accordance with Rule 903 or Rule 904 under the Securities Act and,
accordingly, the Transferor hereby further certifies that (i) the Transfer is
not being made to a person in the United States and (x) at the time the buy
order was originated, the Transferee was outside the United States or such
Transferor and any Person acting on its behalf reasonably believed and believes
that the Transferee was outside the United States or (y) the transaction was
executed in, on or through the facilities of a designated offshore securities
market and neither such Transferor nor any Person acting on its behalf knows
that the transaction was prearranged with a buyer in the United States, (ii) no
directed selling efforts have been made in contravention of the requirements of
Rule 903(b) or Rule 904(b) of Regulation S under the Securities Act, (iii) the
transaction is not part of a plan or scheme to evade the registration
requirements of the Securities Act and (iv) if the proposed transfer is being
made prior to the expiration of the Restricted Period, the transfer is not being
made to a U.S. Person or for the account or benefit of a U.S. Person (other than
an Initial Purchaser). Upon consummation of the proposed transfer in accordance
with the terms of the Indenture, the transferred beneficial interest or
Definitive Security will be subject to the restrictions on Transfer enumerated
in the Private Placement Legend printed on the Regulation S Global Note, the
Temporary Regulation S Global Note and/or the Definitive Security and in the
Indenture and the Securities Act.
3. |_| Check and complete if Transferee will take delivery of a beneficial
interest in the IAI Certificated Note or a Definitive Security pursuant to any
provision of the Securities Act other than Rule 144A or Regulation S. The
Transfer is being effected in compliance with the transfer restrictions
applicable to beneficial interests in Restricted Global Notes and Restricted
Definitive Securities and pursuant to and in accordance with the Securities Act
and any applicable blue sky securities laws of any state of the United States,
and accordingly the Transferor hereby further certifies that (check one):
(a) |_| such Transfer is being effected pursuant to and in accordance
with Rule 144 under the Securities Act;
or
(b) |_| such Transfer is being effected to the Company or a subsidiary
thereof,
or
(c) |_| such Transfer is being effected pursuant to an effective
registration statement under the Securities Act and in compliance with the
prospectus delivery requirements of the Securities Act;
or
(d) |_| such Transfer is being effected to an Institutional Accredited
Investor and pursuant to an exemption from the registration requirements of the
Securities Act other than Rule 144A, Rule 144 or Rule 904, and the Transferor
hereby further certifies that it has not engaged in any general solicitation
within the meaning of Regulation D under the Securities Act and the Transfer
complies with the transfer restrictions applicable to beneficial interests in a
Restricted Global Note or Restricted Definitive Securities and the requirements
Exhibit B
2
of the exemption claimed, which certification is supported by (1) a certificate
executed by the Transferee and (2) if such Transfer is in respect of a principal
amount of Notes at the time of transfer of less than $250,000, an Opinion of
Counsel provided by the Transferor or the Transferee (a copy of which the
Transferor has attached to this certification), to the effect that such Transfer
is in compliance with the Securities Act. Upon consummation of the proposed
transfer in accordance with the terms of the Indenture, the transferred
beneficial interest or Definitive Security will be subject to the restrictions
on transfer enumerated in the Private Placement Legend printed on the IAI
Certificated Note and/or the Definitive Securities and in the Indenture and the
Securities Act.
4. |_| Check if Transferee will take delivery of a beneficial interest in an
Unrestricted Global Note or of an Unrestricted Definitive Security.
(a) |_| Check if Transfer is Pursuant to Rule 144. (i) The Transfer is
being effected pursuant to and in accordance with Rule 144 under the Securities
Act and in compliance with the transfer restrictions contained in the Indenture
and any applicable blue sky securities laws of any state of the United States
and (ii) the restrictions on transfer contained in the Indenture and the Private
Placement Legend are not required in order to maintain compliance with the
Securities Act. Upon consummation of the proposed Transfer in accordance with
the terms of the Indenture, the transferred beneficial interest or Definitive
Security will no longer be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Global Notes, on
Restricted Definitive Securities and in the Indenture.
(b) |_| Check if Transfer is Pursuant to Regulation S. (i) The Transfer
is being effected pursuant to and in accordance with Rule 903 or Rule 904 under
the Securities Act and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any state of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Security will no longer be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes, on Restricted Definitive Securities and in the Indenture.
(c) |_| Check if Transfer is Pursuant to Other Exemption. (i) The
Transfer is being effected pursuant to and in compliance with an exemption from
the registration requirements of the Securities Act other than Rule 144, Rule
903 or Rule 904 and in compliance with the transfer restrictions contained in
the Indenture and any applicable blue sky securities laws of any State of the
United States and (ii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act. Upon consummation of the proposed Transfer
in accordance with the terms of the Indenture, the transferred beneficial
interest or Definitive Security will not be subject to the restrictions on
transfer enumerated in the Private Placement Legend printed on the Restricted
Global Notes or Restricted Definitive Securities and in the Indenture.
Exhibit A-3
3
This certificate and the statements contained herein are made for your
benefit and the benefit of the Company.
[Insert Name of Transferor]
By:
----------------------------
Name:
Title:
Dated: _________, ___
Exhibit B
4
Exhibit B
5
NY1 5586099v7
ANNEX A TO CERTIFICATE OF TRANSFER
1. The Transferor owns and proposes to transfer the following:
[CHECK ONE OF (a) OR (b)]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ______), or
(ii) |_| Regulation S Global Note (CUSIP ______), or
(iii) |_| IAI Certificated Note (CUSIP ______); or
(b) |_| a Restricted Definitive Security.
2. After the Transfer the Transferee will hold:
[CHECK ONE]
(a) |_| a beneficial interest in the:
(i) |_| 144A Global Note (CUSIP ______), or
(ii) |_| Regulation S Global Note (CUSIP ______), or
(iii) |_| IAI Certificated Note (CUSIP ______), or
(iv) |_| Unrestricted Global Note (CUSIP ______); or
(b) |_| a Restricted Definitive Security; or
(c) |_| an Unrestricted Definitive Security,
in accordance with the terms of the Indenture.
Exhibit B
5
EXHIBIT C
FORM OF CERTIFICATE OF EXCHANGE
Abraxas Petroleum Corporation
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
U.S. Bank National Association
60 Livingston Avenue
St. Paul, Minnesota 55107
Attention: Corporate Trust Administration
Re: Floating Rate Senior Secured Notes due 2009
(CUSIP _______________)
Reference is hereby made to the Indenture, dated as of October 28, 2004
(the "Indenture"), among Abraxas Petroleum Corporation (the "Company"), the
subsidiary guarantors party thereto and U.S. Bank National Association, as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture.
_______________ (the "Owner") owns and proposes to exchange the
Securities or interest in such Securities specified herein, in the principal
amount of $______________ in such Securities or interests (the "Exchange"). In
connection with the Exchange, the Owner hereby certifies that:
1. Exchange of Restricted Definitive Securities or Beneficial Interests in a
Restricted Global Note for Unrestricted Definitive Securities or Beneficial
Interests in an Unrestricted Global Note
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to beneficial interest in an Unrestricted Global Note. In connection
with the Exchange of the Owner's beneficial interest in a Restricted Global Note
for a beneficial interest in an Unrestricted Global Note in an equal principal
amount, the Owner hereby certifies (i) the beneficial interest is being acquired
for the Owner's own account without transfer, (ii) such Exchange has been
effected in compliance with the transfer restrictions applicable to the Global
Notes and pursuant to and in accordance with the United States Securities Act of
1933, as amended (the "Securities Act"), (iii) the restrictions on transfer
contained in the Indenture and the Private Placement Legend are not required in
order to maintain compliance with the Securities Act and (iv) the beneficial
interest in an Unrestricted Global Note is being acquired in compliance with any
applicable blue sky securities laws of any state of the United States.
(b) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Unrestricted Definitive Security. In connection with the Exchange
of the Owner's beneficial interest in a Restricted Global Note for an
Unrestricted Definitive Security, the Owner hereby certifies (i) the Definitive
Exhibit C
Security is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to the Restricted Global Notes and pursuant to and in accordance with
the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Definitive Security is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(c) |_| Check if Exchange is from Restricted Definitive Security to
beneficial interest in an Unrestricted Global Security. In connection with the
Owner's Exchange of a Restricted Definitive Security for a beneficial interest
in an Unrestricted Global Note, the Owner hereby certifies (i) the beneficial
interest is being acquired for the Owner's own account without transfer, (ii)
such Exchange has been effected in compliance with the transfer restrictions
applicable to Restricted Definitive Securities and pursuant to and in accordance
with the Securities Act, (iii) the restrictions on transfer contained in the
Indenture and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the beneficial interest is being
acquired in compliance with any applicable blue sky securities laws of any state
of the United States.
(d) |_| Check if Exchange is from Restricted Definitive Security to
Unrestricted Definitive Security. In connection with the Owner's Exchange of a
Restricted Definitive Security for an Unrestricted Definitive Security, the
Owner hereby certifies (i) the Unrestricted Definitive Security is being
acquired for the Owner's own account without transfer, (ii) such Exchange has
been effected in compliance with the transfer restrictions applicable to
Restricted Definitive Securities and pursuant to and in accordance with the
Securities Act, (iii) the restrictions on transfer contained in the Indenture
and the Private Placement Legend are not required in order to maintain
compliance with the Securities Act and (iv) the Unrestricted Definitive Security
is being acquired in compliance with any applicable blue sky securities laws of
any state of the United States.
2. Exchange of Restricted Definitive Securities or Beneficial Interests in
Restricted Global Notes for Restricted Definitive Securities or Beneficial
Interests in Restricted Global Notes
(a) |_| Check if Exchange is from beneficial interest in a Restricted
Global Note to Restricted Definitive Security. In connection with the Exchange
of the Owner's beneficial interest in a Restricted Global Note for a Restricted
Definitive Security with an equal principal amount, the Owner hereby certifies
that the Restricted Definitive Security is being acquired for the Owner's own
account without transfer. Upon consummation of the proposed Exchange in
accordance with the terms of the Indenture, the Restricted Definitive Security
issued will continue to be subject to the restrictions on transfer enumerated in
the Private Placement Legend printed on the Restricted Definitive Security and
in the Indenture and the Securities Act.
(b) |_| Check if Exchange is from Restricted Definitive Security to
beneficial interest in a Restricted Global Note. In connection with the Exchange
of the Owner's Restricted Definitive Security for a beneficial interest in the
[CHECK ONE] |_| 144A Global Note, |_| Regulation S Global Note, |_| IAI Global
Note with an equal principal amount, the Owner hereby certifies (i) the
beneficial interest is being acquired for the Owner's own account without
Exhibit C
2
transfer and (ii) such Exchange has been effected in compliance with the
transfer restrictions applicable to the Restricted Global Notes and pursuant to
and in accordance with the Securities Act, and in compliance with any applicable
blue sky securities laws of any state of the United States. Upon consummation of
the proposed Exchange in accordance with the terms of the Indenture the
beneficial interest issued will be subject to the restrictions on transfer
enumerated in the Private Placement Legend printed on the relevant Restricted
Global Note and in the Indenture and the Securities Act.
This certificate and the statements contained herein are made
for your benefit and the benefit of the Company.
[Insert Name of Owner]
By:
Name:
Title:
Dated: _______, ___
Exhibit C
3