SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report
February 5, 1998
Abraxas Petroleum Corporation
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation)
0-19118 74-2584033
(Commission File Number) (I.R.S. Employer Identification Number)
500 N. Loop 1604 East, Suite 100
San Antonio, Texas 78232
(Address of principal executive offices)
Registrant's telephone number, including area code:
(210) 490-4788
Item 5. OTHER EVENTS
On January 27, 1998, Abraxas Petroleum Corporation ("Abraxas") and
Canadian Abraxas Petroleum Limited, a wholly-owned subsidiary of Abraxas
("Canadian Abraxas"), consummated the offering of $60 million aggregate
principal amount of their 11 1/2% Senior Notes due 2004, Series C (the "Notes").
Interest on the Notes accrues from their date of original issuance (the "Issue
Date") and is payable semi-annually in arrears on May 1 and November 1 of each
year, commencing on May 1, 1998, at the rate of 11.5% per annum. The Notes are
redeemable, in whole or in part, at the option of Abraxas and Canadian Abraxas,
on or after November 1, 2000, at the redemption prices set forth below, plus
accrued and unpaid interest to the date of redemption, if redeemed during the
12-month period commencing on November 1 of the years set forth below:
Year Percentage
2000 105.75%
2001 102.875
2002 and thereafter 100.00%
In addition, at any time on or prior to November 1, 1999, Abraxas and Canadian
Abraxas may, at their option, redeem up to 35% of the aggregate principal amount
of the Notes originally issued with the net cash proceeds of one or more equity
offerings, at a redemption price equal to 111.5% of the aggregate principal
amount of the Notes to be redeemed, plus accrued and unpaid interest to the date
of redemption; provided, however, that, after giving effect to any such
redemption, at least 65% of the aggregate principal amount of the Notes remains
outstanding.
The Notes are general unsecured obligations of Abraxas and Canadian
Abraxas and rank pari passu in right of payment to all existing and future
senior indebtedness of Abraxas and Canadian Abraxas and on a parity with
Abraxas' and Canadian Abraxas' 11 1/2% Senior Notes due 2004, Series B (the
"Series B Notes"). The Notes rank senior in right of payment to all future
subordinated indebtedness of Abraxas and Canadian Abraxas. The Notes are,
however, effectively subordinated to secured indebtedness of Abraxas and
Canadian Abraxas to the extent of the value of the assets securing such
indebtedness. Abraxas has an existing revolving credit facility (the "Credit
Facility") which is secured by certain assets of Abraxas and guaranteed by
Canadian Abraxas and is to be secured by certain assets of Canadian Abraxas. The
Credit Facility has an availability of $40.0 million. As of the date of this
Report, Abraxas, Canadian Abraxas and the Subsidiary Guarantors (as defined
below) had $100,000 of secured indebtedness outstanding.
2
The Notes will be unconditionally guaranteed, jointly and severally, by
certain of Abraxas' and Canadian Abraxas' future subsidiaries (the "Subsidiary
Guarantors"). Upon consummation of the merger of a subsidiary of Abraxas with
and into Vessels Energy, Inc. ("Vessels"), Vessels will become a Subsidiary
Guarantor. The guarantees will be general unsecured obligations of the
Subsidiary Guarantors and will rank pari passu in right of payment to all senior
indebtedness of the Subsidiary Guarantors and senior in right of payment to all
subordinated indebtedness of the Subsidiary Guarantors. The Guarantees will be
effectively subordinated to secured indebtedness of the Subsidiary Guarantors to
the extent of the value of the assets securing such indebtedness.
Upon a Change of Control (as defined in the Indenture governing the
Notes), each holder of the Notes will have the right to require Abraxas and
Canadian Abraxas to repurchase all or a portion of such holder's Notes at a
redemption price equal to 101% of the principal amount thereof, plus accrued and
unpaid interest to the date of repurchase. In addition, Abraxas and Canadian
Abraxas will be obligated to offer to repurchase the Notes at 100% of the
principal amount thereof plus accrued and unpaid interest to the date of
repurchase in the event of certain asset sales.
The net proceeds to Abraxas and Canadian Abraxas from the offering of
the Notes were approximately $62.7 million after deducting underwriting
discounts and estimated offering expenses payable by Abraxas and Canadian
Abraxas. Abraxas and Canadian Abraxas used the net proceeds to repay all amounts
outstanding under its Credit Facility (except for $100,000 which remains
outstanding) and to provide working capital for general corporate purposes
including future acquisitions and development of producing properties.
3
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(C) Exhibits.
The following exhibits are filed as part of this report:
NUMBER DOCUMENT
4.1 Indenture dated January 27, 1998 by
and among Abraxas Petroleum
Corporation ("Abraxas"), Canadian
Abraxas Petroleum Limited ("Canadian
Abraxas") and IBJ Schroeder Bank and
Trust Company.
10.1 Purchase Agreement dated January 20,
1998 by and among Abraxas, Canadian
Abraxas and Jefferies & Company, Inc.
(the "Initial Purchaser").
10.2 Registration Rights Agreement dated
January 27, 1998 by and among
Abraxas, Canadian Abraxas and the
Initial Purchaser.
10.3 Amendment No. 2 to Amended and
Restated Credit Agreement dated
January 27, 1998 by and among
Abraxas, Bankers Trust Company, ING
(U.S.) Capital Corporation and the
lenders named therein.
4
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ABRAXAS PETROLEUM CORPORATION
By: /s/ Chris Williford
Chris Williford
Executive Vice President, Chief
Financial Officer and Treasurer
Dated: February 5, 1998
5
EXHIBIT 4.1
ABRAXAS PETROLEUM CORPORATION
and
CANADIAN ABRAXAS PETROLEUM LIMITED,
as Issuers
and
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
INDENTURE
Dated as of January 27, 1998
$60,000,000
11 1/2% Senior Notes due 2004, Series C
and
$275,000,000
11 1/2% Senior Notes due 2004, Series D
CROSS-REFERENCE TABLE
TIA Indenture
Section
Section
310(a)(1)..................................................7.10
(a)(2)...............................................7.10
(a)(3)...............................................N.A.
(a)(4)...............................................N.A.
(a)(5)...............................................7.08; 7.10,
...........................................................7.11
(b)..................................................7.08; 7.10,
...........................................................10.02
(c)..................................................N.A.
311(a).....................................................7.11
(b)..................................................7.11
(c)..................................................N.A.
312(a).....................................................2.05
(b).................................................10.03
(c).................................................10.03
313(a).....................................................7.06
(b)(1)...............................................N.A.
(b)(2)...............................................7.06
(c)..................................................7.06; 10.02
(d)..................................................7.06
314(a).....................................................4.06; 4.08;
..........................................................10.02
(b)..................................................N.A.
(c)(1)...............................................7.02, 10.04
(c)(2)...............................................7.02, 10.04
(c)(3)...............................................N.A.
(d)..................................................N.A.
(e).................................................10.05
(f)..................................................N.A.
315(a).....................................................7.01(b)
(b)..................................................7.05; 10.02
(c)..................................................7.01(a)
(d)..................................................7.01(c)
(e)..................................................6.11
316(a)(last sentence)......................................2.09
(a)(1)(A)............................................6.05
(a)(1)(B)............................................6.04
(a)(2)...............................................N.A.
(b)..................................................6.07
(c)..................................................9.04
317(a)(1)..................................................6.08
(a)(2)...............................................6.09
(b)..................................................2.04
318(a)....................................................10.01
(c).................................................10.01
- ----------------------
N.A. means Not Applicable
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of the Indenture.
TABLE OF CONTENTS
Page
ARTICLE ONE DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions 1
SECTION 1.02. Incorporation by Reference of TIA 18
SECTION 1.03. Rules of Construction 18
ARTICLE TWO THE NOTES
SECTION 2.01. Execution and Authentication;
Aggregate Principal Amount 19
SECTION 2.03. Registrar and Paying Agent 20
SECTION 2.04. Paying Agent To Hold Assets in Trust 20
SECTION 2.05. Holder Lists 20
SECTION 2.06. Transfer and Exchange 21
SECTION 2.07. Replacement Notes 21
SECTION 2.08. Outstanding Notes 21
SECTION 2.09. Treasury Notes 22
SECTION 2.10. Temporary Notes 22
SECTION 2.11. Cancellation 22
SECTION 2.12. Defaulted Interest 22
SECTION 2.13. CUSIP Number 23
SECTION 2.14. Deposit of Monies 23
SECTION 2.15. Restrictive Legends 23
SECTION 2.16. Book-Entry Provisions for Global Security 24
SECTION 2.17. Special Transfer Provisions 25
SECTION 2.18. Liquidated Damages Under Registration
Rights Agreement 27
ARTICLE THREE REDEMPTION
SECTION 3.01. Notices to Trustee 27
SECTION 3.02. Selection of Notes To Be Redeemed 27
SECTION 3.03. Optional Redemption 27
SECTION 3.04. Notice of Redemption 28
SECTION 3.05. Effect of Notice of Redemption 28
SECTION 3.06. Deposit of Redemption Price 29
SECTION 3.07. Notes Redeemed in Part 29
ARTICLE FOUR COVENANTS
SECTION 4.01. Payment of Notes 29
SECTION 4.02. Maintenance of Office or Agency 29
SECTION 4.03. Corporate Existence 29
SECTION 4.04. Payment of Taxes and Other Claims 30
SECTION 4.05. Maintenance of Properties and Insurance 30
SECTION 4.06. Compliance Certificate; Notice of Default 30
SECTION 4.07. Compliance with Laws 31
SECTION 4.08. Reports to Holders 31
SECTION 4.09. Waiver of Stay, Extension or Usury Laws 31
SECTION 4.10. Limitation on Restricted Payments 31
SECTION 4.11. Limitation on Transactions with Affiliates 33
SECTION 4.12. Limitation on Incurrence of Additional
Indebtedness 33
SECTION 4.13. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries 34
SECTION 4.14. Limitation on Restricted and
Unrestricted Subsidiaries 34
SECTION 4.15. Change of Control 35
SECTION 4.16. Limitation on Asset Sales 37
SECTION 4.17. Limitation on Preferred Stock of
Restricted Subsidiaries 39
SECTION 4.18. Limitation on Liens 39
SECTION 4.19. Limitation on Conduct of Business 39
SECTION 4.20. Additional Subsidiary Guarantees 39
SECTION 4.21. Limitation on Restrictive Covenants 40
ARTICLE FIVE SUCCESSOR CORPORATION
SECTION 5.1. Merger, Consolidation and Sale of Assets 40
SECTION 5.02. Successor Corporation Substituted 41
ARTICLE SIX REMEDIES
SECTION 6.01. Events of Default 41
SECTION 6.02. Acceleration 42
SECTION 6.03. Other Remedies 43
SECTION 6.04. Waiver of Past Defaults 43
SECTION 6.05. Control by Majority 43
SECTION 6.06. Limitation on Suits 43
SECTION 6.07. Right of Holders To Receive Payment 44
SECTION 6.08. Collection Suit by Trustee 44
SECTION 6.09. Trustee May File Proofs of Claim 44
SECTION 6.10 Priorities 44
SECTION 6.11. Undertaking for Costs 45
SECTION 6.12. Restoration of Rights and Remedies 45
ARTICLE SEVEN TRUSTEE
SECTION 7.01. Duties of Trustee 45
SECTION 7.02. Rights of Trustee 46
SECTION 7.03. Individual Rights of Trustee 47
SECTION 7.04. Trustee's Disclaimer 47
SECTION 7.05. Notice of Default 47
SECTION 7.06. Reports by Trustee to Holders 47
SECTION 7.07. Compensation and Indemnity 47
SECTION 7.08. Replacement of Trustee 48
SECTION 7.09. Successor Trustee by Merger, Etc 49
SECTION 7.10 Eligibility; Disqualification 49
SECTION 7.11 Preferential Collection of Claims
Against Issuers 49
ARTICLE EIGHT DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Termination of Issuers' Obligations 49
SECTION 8.02. Application of Trust Money 51
SECTION 8.03. Repayment to the Issuers 51
SECTION 8.04. Reinstatement 51
SECTION 8.05. Acknowledgment of Discharge by Trustee 51
ARTICLE NINE MODIFICATION OF THE INDENTURE
SECTION 9.01. Without Consent of Holders 52
SECTION 9.02. With Consent of Holders 52
SECTION 9.03. Compliance with TIA 52
SECTION 9.04. Revocation and Effect of Consents 52
SECTION 9.05. Notation on or Exchange of Notes 53
SECTION 9.06. Trustee To Sign Amendments, Etc 53
ARTICLE TEN MISCELLANEOUS
SECTION 10.01. TIA Controls 53
SECTION 10.02. Notices 53
SECTION 10.03. Communications by Holders with Other Holders 54
SECTION 10.04. Certificate and Opinion as to Conditions
Precedent 54
SECTION 10.05. Statements Required in Certificate or
Opinion 55
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar 55
SECTION 10.07. Legal Holidays 55
SECTION 10.08. Governing Law 55
SECTION 10.09. No Adverse Interpretation of Other Agreements 55
SECTION 10.10. No Personal Liability 55
SECTION 10.11. Successors 56
SECTION 10.12. Duplicate Originals 56
SECTION 10.13. Severability 56
SECTION 10.14. Independence of Covenants 56
ARTICLE ELEVEN GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee 56
SECTION 11.02. Limitations on Guarantees 57
SECTION 11.03. Execution and Delivery of Guarantee 57
SECTION 11.04. Release of a Subsidiary Guarantor 58
SECTION 11.05. Waiver of Subrogation 58
SECTION 11.06. Immediate Payment 58
SECTION 11.07. No Set-Off 59
SECTION 11.08. Obligations Absolute 59
SECTION 11.09. Obligations Continuing 59
SECTION 11.10. Obligations Not Reduced 59
SECTION 11.11. Obligations Reinstated 59
SECTION 11.12. Obligations Not Affected 59
SECTION 11.13. Waiver 60
SECTION 11.14. No Obligation To Take Action Against
the Issuers 60
SECTION 11.15. Dealing with the Issuers and Others 61
SECTION 11.16. Default and Enforcement 61
SECTION 11.17. Amendment, Etc 61
SECTION 11.18. Acknowledgment 61
SECTION 11.19. Costs and Expenses 61
SECTION 11.20. No Merger or Waiver; Cumulative Remedies 61
SECTION 11.21. Survival of Obligations 62
SECTION 11.22. Guarantee in Addition to Other Obligation 62
SECTION 11.23. Severability 62
SECTION 11.24. Successors and Assigns 62
Exhibit A - Form of Initial Note.....................................A-1
Exhibit B - Form of Exchange Note....................................B-1
Exhibit C - Form of Certificate To Be Delivered in Connection
with Transfers to Non-QIB Accredited Investors...........C-1
Exhibit D - Form of Certificate To Be Delivered in Connection
with Transfers Pursuant to Regulation S .................D-1
Exhibit E - Guarantee................................................E-1
Note: This Table of Contents shall not, for any purpose, be deemed to be part of
the Indenture.
INDENTURE, dated as of January 27, 1998, among Abraxas Petroleum
Corporation, a Nevada corporation (the "Company"), Canadian Abraxas Petroleum
Limited, an Alberta corporation and wholly owned subsidiary of the Company
("Canadian Abraxas" and, together with the Company, the "Issuers") and IBJ
Schroder Bank & Trust Company, a New York corporation, as Trustee (the
"Trustee").
The Issuers have duly authorized the creation of an issue of 11 1/2%
Senior Notes due 2004, Series C (the "Initial Notes") and 11 1/2% Senior Notes
due 2004, Series D (the "Exchange Notes") to be issued in exchange for the
Initial Notes pursuant to the Registration Rights Agreement (as defined herein)
and, to provide therefor, the Issuers have duly authorized the execution and
delivery of this Indenture. The Notes (as defined herein) will be guaranteed on
a senior basis by each of the Company's future Restricted Subsidiaries (as
defined herein) (collectively, the "Subsidiary Guarantors"). All things
necessary to make the Notes, when duly issued and executed by the Issuers, and
authenticated and delivered hereunder, the valid obligations of the Issuers, and
to make this Indenture a valid and binding agreement of the Issuers, have been
done.
Each party hereto agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Notes.
ARTICLE ONE
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01......Definitions.
"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries (i) existing at the time such Person becomes a Restricted
Subsidiary or at the time it merges or consolidates with the Company or any of
its Restricted Subsidiaries or (ii) which becomes Indebtedness of the Company or
a Restricted Subsidiary in connection with the acquisition of assets from such
Person, in each case not incurred in connection with, or in anticipation or
contemplation of, such Person becoming a Restricted Subsidiary or such
acquisition, merger or consolidation.
"Additional Interest" shall have the meaning set forth in the
Registration Rights Agreement.
"Additional Series D Notes" means any Exchange Notes issued in exchange
for Series A/B Notes pursuant to the Registration Rights Agreement.
"Adjusted Consolidated Net Tangible Assets" means (without
duplication), as of the date of determination, (a) the sum of (i) discounted
future net revenues from proved oil and gas reserves of the Company and its
consolidated Subsidiaries, calculated in accordance with Commission guidelines
1
(before any state or federal income tax), as estimated by a nationally
recognized firm of independent petroleum engineers as of a date no earlier than
the date of the Company's latest annual consolidated financial statements, as
increased by, as of the date of determination, the estimated discounted future
net revenues from (A) estimated proved oil and gas reserves acquired since the
date of such year-end reserve report, and (B) estimated oil and gas reserves
attributable to upward revisions of estimates of proved oil and gas reserves
since the date of such year-end reserve report due to exploration, development
or exploitation activities, in each case calculated in accordance with
Commission guidelines (utilizing the prices utilized in such year-end reserve
report), and decreased by, as of the date of determination, the estimated
discounted future net revenues from (C) estimated proved oil and gas reserves
produced or disposed of since the date of such year-end reserve report and (D)
estimated oil and gas reserves attributable to downward revisions of estimates
of proved oil and gas reserves since the date of such year-end reserve report
due to changes in geological conditions or other factors which would, in
accordance with standard industry practice, cause such revisions, in each case
calculated in accordance with Commission guidelines (utilizing the prices
utilized in such year-end reserve report); provided, however, that, in the case
of each of the determinations made pursuant to clauses (A) through (D), such
increases and decreases shall be as estimated by the Company's petroleum
engineers, unless in the event that there is a Material Change as a result of
such acquisitions, dispositions or revisions, then the discounted future net
revenues utilized for purposes of this clause (a)(i) shall be confirmed in
writing, by a nationally recognized firm of independent petroleum engineers
(which may be the Company's independent petroleum engineers who prepare the
Company's annual reserve report) plus (ii) the capitalized costs that are
attributable to oil and gas properties of the Company and its Subsidiaries to
which no proved oil and gas reserves are attributable, based on the Company's
books and records as of a date no earlier than the date of the Company's latest
annual or quarterly financial statements, plus (iii) the Net Working Capital on
a date no earlier than the date of the Company's latest consolidated annual or
quarterly financial statements plus (iv) with respect to each other tangible
asset of the Company or its consolidated Restricted Subsidiaries, specifically
including, but not to the exclusion of any other qualifying tangible assets, the
Company's or its consolidated Restricted Subsidiaries, gas producing facilities
and unproved oil and gas properties (less any remaining deferred income taxes
which have been allocated to such gas processing facilities in connection with
the acquisition thereof), land, equipment, leasehold improvements, investments
carried on the equity method, restricted cash and the carrying value of
marketable securities, the greater of (A) the net book value of such other
tangible asset on a date no earlier than the date of the Company's latest
consolidated annual or quarterly financial statements or (B) the appraised
value, as estimated by a qualified Independent Advisor, of such other tangible
assets of the Company and its Restricted Subsidiaries, as of a date no earlier
than the date of the Company's latest audited financial statements minus (b)
minority interests and, to the extent not otherwise taken into account in
determining Adjusted Consolidated Net Tangible Assets, any gas balancing
2
liabilities of the Company and its consolidated Restricted Subsidiaries
reflected in the Company's latest audited financial statements. In addition to,
but without duplication of, the foregoing, for purposes of this definition,
"Adjusted Consolidated Net Tangible Assets" shall be calculated after giving
effect, on a pro forma basis, to (1) any Investment not prohibited by the
Indenture, to and including the date of the transaction giving rise to the need
to calculate Adjusted Consolidated Net Tangible Assets (the "Assets Transaction
Date"), in any other Person that, as a result of such Investment, becomes a
Restricted Subsidiary of the Company, (2) the acquisition, to and including the
Assets Transaction Date (by merger, consolidation or purchase of stock or
assets), of any business or assets, including, without limitation, Permitted
Industry Investments, and (3) any sales or other dispositions of assets
permitted by the Indenture (other than sales of Hydrocarbons or other mineral
products in the ordinary course of business) occurring on or prior to the Assets
Transaction Date.
"Affiliate" means, with respect to any specified Person, (a) any other
Person who directly or indirectly through one or more intermediaries controls,
or is controlled by, or under common control with, such specified Person and (b)
any Related Person of such Person. The term "control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative of the foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.11.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Agent Members" has the meaning provided in Section 2.16.
"Asset Acquisition" means (a) an Investment by the Company or any
Restricted Subsidiary in any other Person pursuant to which such Person shall
become a Restricted Subsidiary, or shall be merged with or into the Company or
any Restricted Subsidiary, or (b) the acquisition by the Company or any
Restricted Subsidiary of the assets of any Person (other than a Restricted
Subsidiary) which constitute all or substantially all of the assets of such
Person or comprises any division or line of business of such Person or any other
properties or assets of such Person other than in the ordinary course of
business.
"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, exchange, lease (other than operating leases entered into in the
ordinary course of business), assignment or other transfer for value by the
Company or any of its Restricted Subsidiaries (including any Sale and Leaseback
Transaction) to any Person other than the Company or a Restricted Subsidiary of
(a) any Capital Stock of any Restricted Subsidiary; or (b) any other property or
assets (including any interests therein) of the Company or any Restricted
Subsidiary, including any disposition by means of a merger, consolidation or
similar transaction; provided, however, that Asset Sales shall not include (i)
3
the sale, lease, conveyance, disposition or other transfer of all or
substantially all of the assets of the Company in a transaction which is made in
compliance with the provisions of Section 5.01, (ii) any Investment in an
Unrestricted Subsidiary which is made in compliance with the provisions of
Section 4.10, (iii) disposals or replacements of obsolete equipment in the
ordinary course of business, (iv) the sale, lease, conveyance, disposition or
other transfer (each, a "Transfer") by the Company or any Restricted Subsidiary
of assets or property to the Company or one or more Restricted Subsidiaries, (v)
any disposition of Hydrocarbons or other mineral products for value in the
ordinary course of business and (vi) the Transfer by the Company or any
Restricted Subsidiary of assets or property in the ordinary course of business;
provided, however, that the aggregate amount (valued at the fair market value of
such assets or property at the time of such Transfer) of all such assets and
property Transferred since the Series A/B Issue Date pursuant to this clause
(vi) shall not exceed $1,000,000 in any one year.
"Authenticating Agent" has the meaning provided in Section 2.02.
"Bankruptcy Law" means Title 11, U.S. Code or any similar Federal,
state or foreign law for the relief of debtors.
"Board of Directors" means, as for any Person, the board of directors
of such Person or any duly authorized committee thereof.
"Board Resolution" means, with respect to any Person, a copy of a
resolution certified by the Secretary or an Assistant Secretary of such Person
to be in full force and effect on the date of such certification, and delivered
to the Trustee.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions in the City of New York are required or
authorized by law or other governmental action to be closed.
"Canadian Abraxas" means the party named as such in the first paragraph
of this Indenture until a successor replaces it pursuant to this Indenture and
thereafter means such successor.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated and whether voting or non-voting) of capital stock,
including each class of Common Stock and Preferred Stock of such Person and any
and all rights, warrants or options exchangeable for or convertible into such
capital stock and (ii) with respect to any Person that is not a corporation, any
and all partnership or other equity interests of such Person.
"Capitalized Lease Obligation" means, as to any Person, the discounted
present value of the rental obligations of such Person under a lease of (or
4
other agreement conveying the right to use) any property (whether real, personal
or mixed) that is required to be classified and accounted for as a capital lease
obligation at such date, determined in accordance with GAAP.
"Cascade" means Cascade Oil & Gas Ltd., an Alberta, Canada corporation.
"Cash Equivalents" means (a) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (b)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation ("S&P") or Moody's
Investors Service, Inc. ("Moody's"); (c) commercial paper maturing no more than
one year from the date of creation thereof and, at the time of acquisition,
having a rating of at least A-1 from S&P or at least P-1 from Moody's; (d)
certificates of deposit or bankers' acceptances maturing within one year from
the date of acquisition thereof issued by any bank organized under the laws of
the United States of America or any state thereof or the District of Columbia or
any United States branch of a foreign bank having at the date of acquisition
thereof combined capital and surplus of not less than $250,000,000; (e)
repurchase obligations with a term of not more than seven days for underlying
securities of the types described in clause (a) above; and (f) money market
mutual or similar funds having assets in excess of $100,000,000.
"Change of Control" means the occurrence of one or more of the
following events: (a) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for purposes
of Section 13(d) of the Exchange Act (a "Group") (whether or not otherwise in
compliance with the provisions of this Indenture); (b) the approval by the
holders of Capital Stock of the Company of any plan or proposal for the
liquidation or dissolution of the Company (whether or not otherwise in
compliance with the provisions of this Indenture); (c) any Person or Group shall
become the owner, directly or indirectly, beneficially or of record, of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding Capital Stock of the Company; or (d) the replacement
of a majority of the Board of Directors of the Company over a two-year period
from the directors who constituted the Board of Directors of the Company at the
beginning of such period with directors whose replacement shall not have been
approved (by recommendation, nomination or election, as the case may be) by a
vote of at least a majority of the Board of Directors of the Company then still
in office who either were members of such Board of Directors at the beginning of
such period or whose election as a member of such Board of Directors was
previously so approved.
"Change of Control Offer" has the meaning provided in Section 4.15.
5
"Change of Control Payment Date" has the meaning provided in Section
4.15.
"Commission" means the SEC.
"Common Stock" of any Person means any and all shares, interests or
other participations in, and other equivalents (however designated and whether
voting or non-voting) of such Person's common stock, whether outstanding on the
Issue Date or issued after the Issue Date, and includes, without limitation, all
series and classes of such common stock.
"Company" means Abraxas Petroleum Corporation, a Nevada corporation.
"Company Properties" means all Properties, and equity, partnership or
other ownership interests therein, that are related or incidental to, or used or
useful in connection with, the conduct or operation of any business activities
of the Company or the Subsidiaries, which business activities are not prohibited
by the terms of the Indenture.
"Consolidated EBITDA" means, for any period, the sum (without
duplication) of (a) Consolidated Net Income and (b) to the extent Consolidated
Net Income has been reduced thereby, (i) all income taxes of the Company and its
Restricted Subsidiaries paid or accrued in accordance with GAAP for such period
(other than income taxes attributable to extraordinary, unusual or nonrecurring
gains or losses or taxes attributable to sales or dispositions outside the
ordinary course of business), (ii) Consolidated Interest Expense, (iii) the
amount of any Preferred Stock dividends paid by the Company and its Restricted
Subsidiaries and (iv) Consolidated Non-cash Charges, less any non-cash items
increasing Consolidated Net Income for such period, all as determined on a
consolidated basis for the Company and its Restricted Subsidiaries in accordance
with GAAP.
"Consolidated EBITDA Coverage Ratio" means, with respect to the
Company, the ratio of (a) Consolidated EBITDA of the Company during the four
full fiscal quarters for which financial information in respect thereof is
available (the "Four Quarter Period") ending on or prior to the date of the
transaction giving rise to the need to calculate the Consolidated EBITDA
Coverage Ratio (the "Transaction Date") to (b) Consolidated Fixed Charges of the
Company for the Four Quarter Period. In addition to and without limitation of
the foregoing, for purposes of this definition, "Consolidated EBITDA" and
"Consolidated Fixed Charges" shall be calculated after giving effect (without
duplication) on a pro forma basis for the period of such calculation to (a) the
incurrence or repayment of any Indebtedness of the Company or any of its
Restricted Subsidiaries (and the application of the proceeds thereof) giving
rise to the need to make such calculation and any incurrence or repayment of
other Indebtedness (and the application of the proceeds thereof), other than the
incurrence or repayment of indebtedness in the ordinary course of business for
working capital purposes pursuant to working capital facilities, occurring
6
during the Four Quarter Period or at any time subsequent to the last day of the
Four Quarter Period and on or prior to the Transaction Date, as if such
incurrence or repayment, as the case may be (and the application of the proceeds
thereof), occurred on the first day of the Four Quarter Period and (b) any Asset
Sales or Asset Acquisitions (including, without limitation, any Asset
Acquisition giving rise to the need to make such calculation as a result of the
Company or one of its Restricted Subsidiaries (including any Person who becomes
a Restricted Subsidiary as a result of the Asset Acquisition) incurring,
assuming or otherwise being liable for Acquired Indebtedness, and also
including, without limitation, any Consolidated EBITDA attributable to the
assets which are the subject of the Asset Acquisition or Asset Sale during the
Four Quarter Period) occurring during the Four Quarter Period or at any time
subsequent to the last day of the Four Quarter Period and on or prior to the
Transaction Date, as if such Asset Sale or Asset Acquisition (including the
incurrence, assumption or liability for any such Acquired Indebtedness) occurred
on the first day of the Four Quarter Period. If the Company or any of its
Restricted Subsidiaries directly or indirectly guarantees Indebtedness of a
third Person, the preceding sentence shall give effect to the incurrence of such
guaranteed Indebtedness as if the Company or the Restricted Subsidiary, as the
case may be, had directly incurred or otherwise assumed such guaranteed
Indebtedness. Furthermore, in calculating "Consolidated Fixed Charges" for
purposes of determining the denominator (but not the numerator) of this
"Consolidated EBITDA Coverage Ratio," (i) interest on outstanding Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to have accrued at a
fixed rate per annum equal to the rate of interest on such Indebtedness in
effect on the Transaction Date; (ii) if interest on any Indebtedness actually
incurred on the Transaction Date may optionally be determined at an interest
rate based upon a factor of a prime or similar rate, a eurocurrency interbank
offered rate, or other rates, then the interest rate in effect on the
Transaction Date will be deemed to have been in effect during the Four Quarter
Period; (iii) notwithstanding clauses (i) and (ii) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Swap Obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
such agreements.
"Consolidated Fixed Charges" means, with respect to the Company for any
period, the sum, without duplication, of (a) Consolidated Interest Expense
(including any premium or penalty paid in connection with redeeming or retiring
Indebtedness of the Company and its Restricted Subsidiaries prior to the stated
maturity thereof pursuant to the agreements governing such Indebtedness), plus
(b) the product of (i) the amount of all dividend payments on any series of
Preferred Stock of the Company (other than dividends paid in Qualified Capital
Stock) paid, accrued or scheduled to be paid or accrued during such period times
(ii) a fraction, the numerator of which is one and the denominator of which is
one minus the then current effective consolidated federal, state and local
income tax rate of such Person, expressed as a decimal.
7
"Consolidated Interest Expense" means, with respect to the Company for
any period, the sum of, without duplication: (a) the aggregate of the interest
expense of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP, including without
limitation, (i) any amortization of original issue discount, (ii) the net costs
under Interest Swap Obligations, (iii) all capitalized interest and (iv) the
interest portion of any deferred payment obligation; and (b) the interest
component of Capitalized Lease Obligations paid, accrued and/or scheduled to be
paid or accrued by the Company and its Restricted Subsidiaries during such
period, as determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, with respect to the Company for any
period, the aggregate net income (or loss) of the Company and its Restricted
Subsidiaries for such period on a consolidated basis, determined in accordance
with GAAP; provided, however, that there shall be excluded therefrom (a)
after-tax gains from Asset Sales or abandonments or reserves relating thereto,
(b) after-tax items classified as extraordinary or nonrecurring gains, (c) the
net income of any Person acquired in a "pooling of interests" transaction
accrued prior to the date it becomes a Restricted Subsidiary or is merged or
consolidated with the Company or any Restricted Subsidiary, (d) the net income
(but not loss) of any Restricted Subsidiary to the extent that the declaration
of dividends or similar distributions by that Restricted Subsidiary of that
income is restricted by charter, contract, operation of law or otherwise, (e)
the net income of any Person in which the Company has an interest, other than a
Restricted Subsidiary, except to the extent of cash dividends or distributions
actually paid to the Company or to a Restricted Subsidiary by such Person, (f)
income or loss attributable to discontinued operations (including, without
limitation, operations disposed of during such period whether or not such
operations were classified as discontinued) and (g) in the case of a successor
to the Company by consolidation or merger or as a transferee of the Company's
assets, any net income (or loss) of the successor corporation prior to such
consolidation, merger or transfer of assets.
"Consolidated Net Worth" of any Person as of any date means the
consolidated stockholders' equity of such Person, determined on a consolidated
basis in accordance with GAAP, less (without duplication) amounts attributable
to Disqualified Capital Stock of such Person.
"Consolidated Non-Cash Charges" means, with respect to the Company, for
any period, the aggregate depreciation, depletion, amortization and other
non-cash expenses of the Company and its Restricted Subsidiaries reducing
Consolidated Net Income of the Company for such period, determined on a
consolidated basis in accordance with GAAP (excluding any such charges
constituting an extraordinary item or loss or any such charge which requires an
accrual of or a reserve for cash charges for any future period).
"Consolidation" means, with respect to any Person, the consolidation of
the accounts of the Restricted Subsidiaries of such Person with those of such
8
Person, all in accordance with GAAP; provided, however, that "consolidation"
will not include consolidation of the accounts of any Unrestricted Subsidiary of
such Person with the accounts of such Person. The term "consolidated" has a
correlative meaning to the foregoing.
"Corporate Trust Office" means the office of the Trustee at which at
any particular time its corporate trust business shall be principally
administered, which office at the date of execution of this Indenture is located
at One State Street, Eleventh Floor, New York, New York 10004.
"Covenant Defeasance" has the meaning set forth in Section 8.01.
"Credit Facility" means the Amended and Restated Credit Agreement dated
as of November 14, 1996, by and among the Company, Bankers Trust Company and ING
Capital, as Co-Agents, and each of the lenders named therein, or any successor
or replacement agreement and whether by the same or any other agent, lender or
group of lenders, together with the related documents thereto (including,
without limitation, any guarantee agreements and security documents), in each
case as such agreements have been or may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time,
including any agreements extending the maturity of, refinancing, replacing,
increasing or otherwise restructuring all or any portion of the Indebtedness
under such agreements.
"Crude Oil and Natural Gas Business" means (i) the acquisition,
exploration, development, operation and disposition of interests in oil, gas and
other hydrocarbon properties located in North America, and (ii) the gathering,
marketing, treating, processing, storage, selling and transporting of any
production from such interests or properties of the Company or of others.
"Crude Oil and Natural Gas Hedge Agreements" means, with respect to any
Person, any oil and gas agreements and other agreements or arrangements or any
combination thereof entered into by such Person in the ordinary course of
business and that is designed to provide protection against oil and natural gas
price fluctuations.
"Crude Oil and Natural Gas Properties" means all Properties, including
equity or other ownership interests therein, owned by any Person which have been
assigned "proved oil and gas reserves" as defined in Rule 4-10 of Regulation S-X
of the Securities Act as in effect on the Issue Date.
"Crude Oil and Natural Gas Related Assets" means any Investment or
capital expenditure (but not including additions to working capital or
repayments of any revolving credit or working capital borrowings) by the Company
or any Subsidiary of the Company which is related to the business of the Company
and its Subsidiaries as it is conducted on the date of the Asset Sale giving
rise to the Net Cash Proceeds to be reinvested.
9
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any Restricted Subsidiary of the Company against fluctuations in
currency values.
"Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.
"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Disqualified Capital Stock" means that portion of any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is mandatorily redeemable at the sole option of the
holder thereof, in whole or in part, in either case, on or prior to the final
maturity of the Notes.
"Equity Offering" means an offering of Qualified Capital Stock of the
Company.
"Event of Default" has the meaning provided in Section 6.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor statute or statutes thereto.
"Exchange Notes" means the Issuers' 11 1/2% Senior Notes due 2004
Series D issued in exchange for the Initial Notes pursuant to the Registration
Rights Agreement and shall also include any Additional Series D Notes.
"fair market value" means, with respect to any asset or property, the
price which could be negotiated in an arm's-length, free market transaction, for
cash, between an informed and willing seller and an informed and willing buyer,
neither of whom is under undue pressure or compulsion to complete the
transaction. Fair market value shall be determined by the Board of Directors of
the Company acting reasonably and in good faith and shall be evidenced by a
Board Resolution of the Company delivered to the Trustee; provided, however,
that (A) if the aggregate non-cash consideration to be received by the Company
or any Restricted Subsidiary from any Asset Sale shall reasonably be expected to
exceed $5,000,000 or (B) if the net worth of any Restricted Subsidiary to be
designated as an Unrestricted Subsidiary shall reasonably be expected to exceed
$10,000,000, then fair market value shall be determined by an Independent
Advisor.
10
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board as of any date of determination.
"Global Note" has the meaning provided in Section 2.01.
"guarantee" means any obligation, contingent or otherwise, of any
Person directly or indirectly guaranteeing any Indebtedness or other obligation
of any other Person and, without limiting the generality of the foregoing, any
obligation, direct or indirect, contingent or otherwise, of such Person (i) to
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation of such other Person (whether arising by virtue
of partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for purposes of assuring
in any other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part) (but if in part, only to the extent thereof); provided,
however, that the term "guarantee" shall not include (A) endorsements for
collection or deposit in the ordinary course of business and (B) guarantees
(other than guarantees of Indebtedness) by the Company in respect of assisting
one or more Subsidiaries in the ordinary course of their respective businesses,
including without limitation guarantees of trade obligations and operating
leases, on ordinary business terms. The term "guarantee" used as a verb has a
corresponding meaning.
"Guarantees" means the guarantees of the obligations under this
Indenture and the Notes by the Subsidiary Guarantors as set forth in Article
Eleven hereof.
"Holder" means any Person holding a Note.
"Hydrocarbons" means oil, gas, casinghead gas, drip gasoline, natural
gasoline, condensate, distillate, liquid hydrocarbons, gaseous hydrocarbons and
all constituents, elements or compounds thereof and products processed
therefrom.
"incur" has the meaning set forth in Section 4.12.
"Indebtedness" means with respect to any Person, without duplication,
(a) all Obligations of such Person for borrowed money, (b) all Obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all Capitalized Lease Obligations of such Person, (d) all Obligations of
such Person issued or assumed as the deferred purchase price of property, all
conditional sale obligations and all Obligations under any title retention
agreement (but excluding trade accounts payable), (e) all Obligations for the
reimbursement of any obligor on a letter of credit, banker's acceptance or
similar credit transaction, (f) guarantees and other contingent obligations in
respect of Indebtedness referred to in clauses (a) through (e) above and clause
11
(h) below, (g) all Obligations of any other Person of the type referred to in
clauses (a) through (f) above which are secured by any Lien on any property or
asset of such Person, the amount of such Obligation being deemed to be the
lesser of the fair market value of such property or asset or the amount of the
Obligation so secured, (h) all Obligations under Currency Agreements and
Interest Swap Obligations and (i) all Disqualified Capital Stock issued by such
Person with the amount of Indebtedness represented by such Disqualified Capital
Stock being equal to the greater of its voluntary or involuntary liquidation
preference and its maximum fixed Redemption Price or repurchase price. For
purposes hereof, the "maximum fixed repurchase price" of any Disqualified
Capital Stock which does not have a fixed repurchase price shall be calculated
in accordance with the terms of such Disqualified Capital Stock as if such
Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value shall be determined reasonably and in good
faith by the Board of Directors of the Company. The "amount" or "principal
amount" of Indebtedness at any time of determination as used herein represented
by (a) any Indebtedness issued at a price that is less than the principal amount
at maturity thereof shall be the face amount of the liability in respect
thereof, (b) any Capitalized Lease Obligation shall be the amount determined in
accordance with the definition thereof, (c) any Interest Swap Obligations
included in the definition of Permitted Indebtedness shall be zero, (d) all
other unconditional obligations shall be the amount of the liability thereof
determined in accordance with GAAP and (e) all other contingent obligations
shall be the maximum liability at such date of such Person.
"Indenture" means this Indenture, as amended or supplemented from time
to time in accordance with the terms hereof.
"Independent Advisor" means a reputable accounting, appraisal or
nationally recognized investment banking, engineering or consulting firm (a)
which does not, and whose directors, officers and employees or Affiliates do
not, have a direct or indirect material financial interest in the Company and
(b) which, in the judgment of the Board of Directors of the Company, is
otherwise disinterested, independent and qualified to perform the task for which
it is to be engaged.
"Initial Notes" means the Company's 11 1/2% Senior Notes due 2004
Series C issued pursuant to this Indenture.
"Initial Purchaser" means Jefferies & Company, Inc.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest," when used with respect to any Note means the amount of all
12
interest accruing on such Note, including any applicable defaulted interest
pursuant to Section 2.12 and any Additional Interest pursuant to the
Registration Rights Agreement.
"Interest Payment Date" means the stated maturity of an installment of
interest on the Notes.
"Interest Swap Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person, whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such 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.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment" means, with respect to any Person, any direct or indirect
(i) loan, advance or other extension of credit (including, without limitation, a
guarantee) or capital contribution to (by means of any transfer of cash or other
property (valued at the fair market value thereof as of the date of transfer)
others or any payment for property or services for the account or use of
others), (ii) purchase or acquisition by such Person of any Capital Stock,
bonds, notes, debentures or other securities or evidences of Indebtedness issued
by, any Person (whether by merger, consolidation, amalgamation or otherwise and
whether or not purchased directly from the issuer of such securities or
evidences of Indebtedness), (iii) guarantee or assumption of the Indebtedness of
any other Person (other than the guarantee or assumption of Indebtedness of such
Person or a Restricted Subsidiary of such Person which guarantee or assumption
is made in compliance with the provisions of Section 4.12), and (iv) other items
that would be classified as investments on a balance sheet of such Person
prepared in accordance with GAAP. Notwithstanding the foregoing, "Investment"
shall exclude extensions of trade credit by the Company and its Restricted
Subsidiaries on commercially reasonable terms in accordance with normal trade
practices of the Company or such Restricted Subsidiary, as the case may be. The
amount of any Investment shall not be adjusted for increases or decreases in
value, or write-ups, write-downs or write-offs with respect to such Investment.
If the Company or any Restricted Subsidiary sells or otherwise disposes of any
Capital Stock of any Restricted Subsidiary such that, after giving effect to any
such sale or disposition, it ceases to be a Subsidiary of the Company, the
Company shall be deemed to have made an Investment on the date of any such sale
or disposition equal to the fair market value of the Capital Stock of such
Restricted Subsidiary not sold or disposed of.
"Issue Date" means the date of original issuance of the Initial Notes.
"Issuers" means the Company and Canadian Abraxas.
13
"Legal Defeasance" has the meaning set forth in Section 8.01.
"Legal Holiday" has the meaning provided in Section 10.07.
"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).
"Material Change" means an increase or decrease of more than 10% during
a fiscal quarter in the discounted future net cash flows (excluding changes that
result solely from changes in prices) from proved oil and gas reserves of the
Company and consolidated Subsidiaries (before any state or federal income tax);
provided, however, that the following will be excluded from the Material Change
calculation: (i) any acquisitions during the quarter of oil and gas reserves
that have been estimated by independent petroleum engineers and on which a
report or reports exist, (ii) any disposition of properties existing at the
beginning of such quarter that have been disposed of as provided in Section 4.16
and (iii) any reserves added during the quarter attributable to the drilling or
recompletion of wells not included in previous reserve estimates, but which will
be included in future quarters.
"Maturity Date" means November 1, 2004.
"Moody's" means Moody's Investors Service, Inc. and its successors.
"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds
in the form of cash or Cash Equivalents including payments in respect of
deferred payment obligations when received in the form of cash or Cash
Equivalents received by the Company or any of its Restricted Subsidiaries from
such Asset Sale net of (a) reasonable out-of-pocket expenses and fees relating
to such Asset Sale (including, without limitation, legal, accounting and
investment banking fees and sales commissions), (b) taxes paid or payable after
taking into account any reduction in consolidated tax liability due to available
tax credits or deductions and any tax sharing arrangements, (c) repayment of
Indebtedness that is required to be repaid in connection with such Asset Sale
and (d) appropriate amounts (determined by the Chief Financial Officer of the
Company) to be provided by the Company or any Restricted Subsidiary, as the case
may be, as a reserve, in accordance with GAAP, against any post-closing
adjustments or liabilities associated with such Asset Sale and retained by the
Company or any Restricted Subsidiary, as the case may be, after such Asset Sale,
including, without limitation, pension and other post-employment benefit
liabilities, liabilities related to environmental matters and liabilities under
any indemnification obligations associated with such Asset Sale (but excluding
any payments which, by the terms of the indemnities, will not, be made during
the term of the Notes).
14
"Net Proceeds Offer" has the meaning set forth in Section 4.16.
"Net Proceeds Offer Adjustment Ratio" has the meaning set forth in
Section 4.16.
"Net Proceeds Offer Amount" has the meaning set forth in Section 4.16.
"Net Proceeds Offer Payment Date" has the meaning set forth in Section
4.16.
"Net Proceeds Offer Trigger Date" has the meaning set forth in Section
4.16.
"Net Working Capital" means (i) all current assets of the Company and
its consolidated Subsidiaries, minus (ii) all current liabilities of the Company
and its consolidated Subsidiaries, except current liabilities included in
Indebtedness, in each case as set forth in financial statements of the Company
prepared in accordance with GAAP.
"Non-Recourse Indebtedness" with respect to any Person means
Indebtedness of such Person for which (i) the sole legal recourse for collection
of principal and interest on such Indebtedness is against the specific property
identified in the instruments evidencing or securing such Indebtedness and such
property was acquired with the proceeds of such Indebtedness or such
Indebtedness was Incurred within 90 days after the acquisition of such property
and (ii) no other assets of such Person may be realized upon in collection of
principal or interest on such Indebtedness; provided, however, that any such
Indebtedness shall not cease to be "Non-Recourse Indebtedness" solely as a
result of the instrument governing such Indebtedness containing terms pursuant
to which such Indebtedness becomes recourse upon (a) fraud or misrepresentation
by the Person in connection with such Indebtedness, (b) such Person failing to
pay taxes or other charges that result in the creation of liens on any portion
of the specific property securing such Indebtedness or failing to maintain any
insurance on such property required under the instruments securing such
Indebtedness, (c) the conversion of any of the collateral for such Indebtedness,
(d) such Person failing to maintain any of the collateral for such Indebtedness
in the condition required under the instruments securing the Indebtedness, (e)
any income generated by the specific property securing such Indebtedness being
applied in a manner not otherwise allowed in the instruments securing such
Indebtedness, (f) the violation of any applicable law or ordinance governing
hazardous materials or substances or otherwise affecting the environmental
condition of the specific property securing the Indebtedness or (g) the rights
of the holder of such Indebtedness to the specific property are impaired,
suspended or reduced by any act, omission or misrepresentation of such Person;
provided, further, however, that upon the occurrence of any of the foregoing
clauses (a) through (g) above, any such Indebtedness which shall have ceased to
be "Non-Recourse Indebtedness" shall be deemed to have been Indebtedness
incurred by such Person at such time.
15
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Notes" means the Initial Notes and the Exchange Notes (including any
Additional Series D Notes) treated as a single class of securities, as amended
or supplemented from time to time in accordance with the terms hereof, that are
issued pursuant to this Indenture.
"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing any Indebtedness.
"Offering Memorandum" means the confidential Offering Memorandum dated
January 20, 1998 of the Issuers relating to the offering of the Notes.
"Officer" means, with respect to any Person, the Chairman of the Board
of Directors, the Chief Executive Officer, the President, any Vice President,
the Chief Financial Officer, the Treasurer, the Controller, or the Secretary of
such Person, or any other officer designated by the Board of Directors serving
in a similar capacity.
"Officers' Certificate" means a certificate signed by two Officers of
each of the Issuers.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
10.04 and 10.05, as they relate to the giving of an Opinion of Counsel.
"Paying Agent" has the meaning provided in Section 2.03.
"Payment Restriction" shall have the meaning set forth in Section 4.13.
"Permitted Indebtedness" means, without duplication, each of the
following:
(a) Indebtedness under the Notes, the Exchange Notes, the
Private Exchange Notes, if any, this Indenture and the Guarantees, the
Series A/B Notes, the Series A/B Indenture and any guarantees relating
to the Series A/B Notes;
(b) Indebtedness incurred pursuant to the Credit Facility in
an aggregate principal amount at any time outstanding not to exceed
$50,000,000, reduced by any required permanent repayments (which are
accompanied by a corresponding permanent commitment reduction)
thereunder;
(c) Interest Swap Obligations of the Company or a Restricted
Subsidiary covering Indebtedness of the Company or any of its
16
Restricted Subsidiaries; provided, however, that such Interest Swap
Obligations are entered into to protect the Company and its Restricted
Subsidiaries from fluctuations in interest rates on Indebtedness
incurred in accordance with this Indenture to the extent the notional
principal amount of such Interest Swap Obligations does not exceed the
principal amount of the Indebtedness to which such Interest Swap
Obligation relates;
(d) Indebtedness of a Restricted Subsidiary to the Company or
to a Wholly Owned Restricted Subsidiary for so long as such
Indebtedness is held by the Company or a Wholly Owned Restricted
Subsidiary, in each case subject to no Lien held by a Person other than
the Company or a Wholly Owned Restricted Subsidiary; provided, however,
that if as of any date any Person other than the Company or a Wholly
Owned Restricted Subsidiary owns or holds any such Indebtedness or
holds a Lien in respect of such Indebtedness, such date shall be deemed
the incurrence of Indebtedness not constituting Permitted Indebtedness
by the issuer of such Indebtedness;
(e) Indebtedness of the Company to a Wholly Owned Restricted
Subsidiary for so long as such Indebtedness is held by a Wholly Owned
Restricted Subsidiary, in each case subject to no Lien; provided,
however, that (i) any Indebtedness of the Company to any Wholly Owned
Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured
and subordinated, pursuant to a written agreement, to the Company's
obligations under the Indenture and the Notes and (ii) if as of any
date any Person other than a Wholly Owned Restricted Subsidiary owns or
holds any such Indebtedness or holds a Lien in respect of such
Indebtedness, such date shall be deemed the incurrence of Indebtedness
not constituting Permitted Indebtedness by the Company;
(f) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn against
insufficient funds in the ordinary course of business; provided,
however, that such Indebtedness is extinguished within two Business
Days of incurrence;
(g) Indebtedness of the Company or any of its Restricted
Subsidiaries represented by letters of credit for the account of the
Company or such Restricted Subsidiary, as the case may be, in order to
provide security for workers' compensation claims, payment obligations
in connection with self-insurance or similar requirements in the
ordinary course of business;
(h) Refinancing Indebtedness;
(i) Capitalized Lease Obligations of the Company outstanding
17
on the Series A/B Issue Date;
(j) Capitalized Lease Obligations and Purchase Money
Indebtedness of the Company or any of its Restricted Subsidiaries not
to exceed $5,000,000 at any one time outstanding;
(k) Permitted Operating Obligations;
(l) Obligations arising in connection with Crude Oil and
Natural Gas Hedge Agreements of the Company or a Restricted Subsidiary;
(m) Non-Recourse Indebtedness;
(n) Indebtedness under Currency Agreements; provided, however,
that in the case of Currency Agreements which relate to Indebtedness,
such Currency Agreements do not increase the Indebtedness of the
Company and its Restricted Subsidiaries outstanding other than as a
result of fluctuations in foreign currency exchange rates or by reason
of fees, indemnities and compensation payable thereunder;
(o) additional Indebtedness of the Company or any of its
Restricted Subsidiaries in an aggregate principal amount at any time
outstanding not to exceed the greater of (i) $10.0 million or (ii) 5.0%
of Adjusted Consolidated Net Tangible Assets of the Company; and
(p) Indebtedness outstanding on the Series A/B Issue Date.
"Permitted Industry Investments" means (i) capital expenditures,
including, without limitation, acquisitions of Company Properties and interests
therein; (ii) (a) entry into operating agreements, joint ventures, working
interests, royalty interests, mineral leases, unitization agreements, pooling
arrangements or other similar or customary agreements, transactions, properties,
interests or arrangements, and Investments and expenditures in connection
therewith or pursuant thereto, in each case made or entered into in the ordinary
course of the oil and gas business, and (b) exchanges of Company Properties for
other Company Properties of at least equivalent value as determined in good
faith by the Board of Directors of the Company; and (iii) Investments of
operating funds on behalf of co-owners of Crude Oil and Natural Gas Properties
of the Company or the Subsidiaries pursuant to joint operating agreements.
"Permitted Investments" means (a) Investments by the Company or any
Restricted Subsidiary in any Person that is or will become immediately after
such Investment a Restricted Subsidiary or that will merge or consolidate into
the Company or a Restricted Subsidiary that is not subject to any Payment
Restriction, (b) Investments in the Company by any Restricted Subsidiary;
provided, however, that any Indebtedness evidencing any such Investment held by
a Restricted Subsidiary that is not a Subsidiary Guarantor is unsecured and
subordinated, pursuant to a written agreement, to the Company's obligations
18
under the Notes and this Indenture; (c) investments in cash and Cash
Equivalents; (d) Investments made by the Company or its Restricted Subsidiaries
as a result of consideration received in connection with an Asset Sale made in
compliance with Section 4.16; and (e) Permitted Industry Investments.
"Permitted Liens" means each of the following types of Liens:
(a) Liens existing as of the Series A/B Issue Date to the
extent and in the manner such Liens are in effect on the Series A/B
Issue Date (and any extensions, replacements or renewals thereof
covering property or assets secured by such Liens on the Series A/B
Issue Date);
(b) Liens securing Indebtedness outstanding under the Credit
Facility and Liens arising under the Indenture or the Series A/B
Indenture;
(c) Liens securing the Notes and the Guarantees;
(d) Liens of the Company or a Restricted Subsidiary on assets
of any Restricted Subsidiary;
(e) Liens securing Refinancing Indebtedness which is incurred
to Refinance any Indebtedness which has been secured by a Lien
permitted under this Indenture and which has been incurred in
accordance with the provisions of this Indenture; provided, however,
that such Liens (x) are no less favorable to the Holders and are not
more favorable to the lienholders with respect to such Liens than the
Liens in respect of the Indebtedness being Refinanced and (y) do not
extend to or cover any property or assets of the Company or any of its
Restricted Subsidiaries not securing the Indebtedness so Refinanced;
(f) Liens for taxes, assessments or governmental charges or
claims either (i) not delinquent or (ii) contested in good faith by
appropriate proceedings and as to which the Company or a Restricted
Subsidiary, as the case may be, shall have set aside on its books such
reserves as may be required pursuant to GAAP;
(g) statutory and contractual Liens of landlords to secure
rent arising in the ordinary course of business to the extent such
Liens relate only to the tangible property of the lessee which is
located on such property and Liens of carriers, warehousemen,
mechanics, suppliers, materialmen, repairmen and other Liens imposed by
law incurred in the ordinary course of business for sums not yet
delinquent or being contested in good faith, if such reserve or other
appropriate provision, if any, as shall be required by GAAP shall have
been made in respect thereof;
(h) Liens incurred or deposits made in the ordinary course of
19
business (i) in connection with workers' compensation, unemployment
insurance and other types of social security, including any Lien
securing letters of credit issued in the ordinary course of business
consistent with past practice in connection therewith, or (ii) to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of
obligations for the payment of borrowed money);
(i) judgment and attachment Liens not giving rise to an Event
of Default;
(j) easements, rights-of-way, zoning restrictions, restrictive
covenants, minor imperfections in title and other similar charges or
encumbrances in respect of real property not interfering in any
material respect with the ordinary conduct of the business of the
Company or any of its Restricted Subsidiaries;
(k) any interest or title of a lessor under any Capitalized
Lease Obligation; provided that such Liens do not extend to any
property or assets which is not leased property subject to such
Capitalized Lease Obligation;
(l) Liens securing Purchase Money Indebtedness of the Company
or any Restricted Subsidiary; provided, however, that (i) the Purchase
Money Indebtedness shall not be secured by any property or assets of
the Company or any Restricted Subsidiary other than the property and
assets so acquired or constructed and (ii) the Lien securing such
Indebtedness shall be created within 90 days of such acquisition or
construction;
(m) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(n) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual, or warranty
requirements of the Company or any of its Restricted Subsidiaries,
including rights of offset and set-off;
(o) Liens securing Interest Swap Obligations which Interest
Swap Obligations relate to Indebtedness that is otherwise permitted
under this Indenture and Liens securing Crude Oil and Natural Gas Hedge
Agreements;
(p) Liens securing Acquired Indebtedness incurred in
accordance with Section 4.12; provided, however, that (i) such Liens
secured such Acquired Indebtedness at the time of and prior to the
incurrence of such Acquired Indebtedness by the Company or a Restricted
Subsidiary and were not granted in connection with, or in anticipation
of, the incurrence of such Acquired Indebtedness by the Company or a
Restricted Subsidiary and (ii) such Liens do not extend to or cover any
20
property or assets of the Company or of any of its Restricted
Subsidiaries other than the property or assets that secured the
Acquired Indebtedness prior to the time such Indebtedness became
Acquired Indebtedness of the Company or a Restricted Subsidiary and are
no more favorable to the lienholders than those securing the Acquired
Indebtedness prior to the incurrence of such Acquired Indebtedness by
the Company or a Restricted Subsidiary;
(q) Liens on, or related to, properties and assets of the
Company and its Subsidiaries to secure all or a part of the costs
incurred in the ordinary course of business of exploration, drilling,
development, production, processing, transportation, marketing or
storage, or operation thereof;
(r) Liens on pipeline or pipeline facilities, Hydrocarbons or
properties and assets of the Company and its Subsidiaries which arise
out of operation of law;
(s) royalties, overriding royalties, revenue interests, net
revenue interests, net profit interests, revisionary interests,
production payments, production sales contracts, operating agreements
and other similar interests, properties, arrangements and agreements,
all as ordinarily exist with respect to Properties and assets of the
Company and its Subsidiaries or otherwise as are customary in the oil
and gas business;
(t) with respect to any Properties and assets of the Company
and its Subsidiaries, Liens arising under, or in connection with, or
related to, farm-out, farm-in, joint operation, area of mutual interest
agreements and/or other similar or customary arrangements, agreements
or interests that the Company or any Subsidiary determines in good
faith to be necessary for the economic development of such Property;
(u) any (a) interest or title of a lessor or sublessor under
any lease, (b) restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to (including, without
limitation, ground leases or other prior leases of the demised
premises, mortgages, mechanics' liens, tax liens, and easements), or
(c) subordination of the interest of the lessee or sublessee under such
lease to any restrictions or encumbrance referred to in the preceding
clause (b);
(v) Liens in favor of collecting or payor banks having a right
of setoff, revocation, refund or chargeback with respect to money or
instruments of the Company or any Restricted Subsidiary on deposit with
or in possession of such bank; and
(w) Liens securing Non-recourse Indebtedness.
21
"Permitted Operating Obligations" means Indebtedness of the Company or
any Restricted Subsidiary in respect of one or more standby letters of credit,
bid, performance or surety bonds, or other reimbursement obligations, issued for
the account of, or entered into by, the Company or any Restricted Subsidiary in
the ordinary course of business (excluding obligations related to the purchase
by the Company or any Restricted Subsidiary of Hydrocarbons for which the
Company or such Restricted Subsidiary has contracts to sell), or in lieu of any
thereof or in addition to any thereto, guarantees and letters of credit
supporting any such obligations and Indebtedness (in each case, other than for
an obligation for borrowed money, other than borrowed money represented by any
such letter of credit, bid, performance or surety bond, or reimbursement
obligation itself, or any guarantee and letter of credit related thereto).
"Person" means an individual, partnership, corporation, unincorporated
organization, limited liability company, trust, estate or joint venture, or a
governmental agency or political subdivision thereof.
"Physical Notes" has the meaning provided in Section 2.01.
"Plan of Liquidation" means, with respect to any Person, a plan
(including by operation of law) that provides for, contemplates or the
effectuation of which is preceded or accompanied by (whether or not
substantially contemporaneously) (i) the sale, lease, conveyance or other
disposition of all or substantially all of the assets of such Person otherwise
than as an entirety or substantially as an entirety and (ii) the distribution of
all or substantially all of the proceeds of such sale, lease, conveyance or
other disposition and all or substantially all of the remaining assets of such
Person to holders of Capital Stock of such Person.
"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.
"principal" of any Indebtedness (including the Notes) means the
principal amount of such Indebtedness plus the premium, if any, on such
Indebtedness.
"Private Exchange Notes" has the meaning set forth in the Registration
Rights Agreement.
"Private Placement Legend" means the legend initially set forth on the
Notes in the form set forth in Section 2.15.
"pro forma" means, with respect to any calculation made or required to
be made pursuant to the terms of this Indenture, a calculation in accordance
with Article 11 of Regulation S-X under the Securities Act, as determined by the
Board of Directors of the Company in consultation with its independent public
accountants.
22
"Property" means, with respect to any Person, any interests of such
Person in any kind of property or asset, whether real, personal or mixed, or
tangible or intangible, including, without limitation, Capital Stock,
partnership interests and other equity or ownership interests in any other
Person.
"Purchase Money Indebtedness" means Indebtedness the net proceeds of
which are used to finance the cost (including the cost of construction) of
property or assets acquired in the normal course of business by the Person
incurring such Indebtedness.
"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.
"Qualified Institutional Buyer" or "QIB" shall have the meaning
specified in Rule 144A under the Securities Act.
"Record Date" means the Record Dates specified in the Notes.
"Redemption Date," when used with respect to any Note to be redeemed,
means the date fixed for such redemption pursuant to this Indenture and the
Notes.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price fixed for such redemption, including principal and premium, if
any, pursuant to this Indenture and the Notes.
"Reference Date" has the meaning set forth in Section 4.10.
"Refinance" means, in respect of any security or Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue a security or Indebtedness in exchange or replacement for, such
security or Indebtedness in whole or in part; "Refinanced" and "Refinancing"
shall have correlative meanings.
"Refinancing Indebtedness" means any Refinancing by the Company or any
Restricted Subsidiary of the Company of Indebtedness incurred in accordance with
Section 4.12 (other than pursuant to clause (b), (c), (d), (e), (f), (g), (j),
(k), (l), (n) or (o) of the definition of Permitted Indebtedness), in each case
that does not (i) result in an increase in the aggregate principal amount of
Indebtedness of such Person as of the date of such proposed Refinancing (plus
the amount of any premium required to be paid under the terms of the instrument
governing such Indebtedness and plus the amount of reasonable expenses incurred
by the Company and its Restricted Subsidiaries in connection with such
Refinancing) or (ii) create Indebtedness with (x) a Weighted Average Life to
Maturity that is less than the Weighted Average Life to Maturity of the
Indebtedness being Refinanced or (y) a final maturity earlier than the final
maturity of the Indebtedness being Refinanced; provided, however, that (1) if
such Indebtedness being Refinanced is Indebtedness of the Company or a
23
Subsidiary Guarantor, then such Refinancing Indebtedness shall be Indebtedness
solely of the Company and/or such Subsidiary Guarantor and (2) if such
Indebtedness being Refinanced is subordinate or junior to the Notes or a
Guarantee, then such Refinancing Indebtedness shall be subordinate to the Notes
or such Guarantee, as the case may be, at least to the same extent and in the
same manner as the Indebtedness being Refinanced.
"Registrar" has the meaning provided in Section 2.03.
"Registration Rights Agreement" means the Registration Rights Agreement
dated the Issue Date among the Issuers and the Initial Purchaser.
"Regulation S" means Regulation S under the Securities Act.
"Related Person" of any Person means any other Person directly or
indirectly owning 10% or more of the outstanding voting Common Stock of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person).
"Replacement Assets" shall have the meaning set forth in Section 4.16.
"Restricted Payment" shall have the meaning set forth in Section 4.10.
"Restricted Security" has the meaning assigned to such term in Rule
144(a)(3) under the Securities Act; provided, however, that the Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with respect
to whether any Note constitutes a Restricted Security.
"Restricted Subsidiary" means any Subsidiary of the Company (including,
without limitation, Canadian Abraxas) that has not been designated by the Board
of Directors of the Company, by a Board Resolution delivered to the Trustee, as
an Unrestricted Subsidiary pursuant to and in compliance with Section 4.14. Any
such designation may be revoked by a Board Resolution of the Company delivered
to the Trustee, subject to the provisions of such covenant.
"Rule 144A" means Rule 144A under the Securities Act.
"S&P" means Standard & Poor's Rating Services, a division of The McGraw
Hill Companies, Inc., and its successors.
"Sale and Leaseback Transaction" means any direct or indirect
arrangement with any Person or to which any such Person is a party providing for
the leasing to the Company or a Restricted Subsidiary of any property, whether
owned by the Company or any Restricted Subsidiary at the Series A/B Issue Date
or later acquired, which has been or is to be sold or transferred by the Company
or such Restricted Subsidiary to such Person or to any other Person from whom
24
funds have been or are to be advanced by such Person on the security of such
property.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Series A/B Indenture"means the Indenture dated as of November 14,
1996, among the Issuers and IBJ Schroder Bank & Trust Company, as Trustee,
providing for the issuance of the Series A/B Notes in the aggregate principal
amount of $215,000,000, as such may be amended and supplemented from time to
time.
"Series A/B Issue Date" means the date on which the Series A/B Notes
were originally issued under the Series A/B Indenture.
"Series A/B Notes" means the Issuers 11 1/2% Senior Notes due 2004
issued pursuant to the Series A/B Indenture, as such may be amended or
supplemented from time to time.
"Subsidiary," with respect to any Person, means (a) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly, by such Person or (b) any
other Person of which at least a majority of the voting interest under ordinary
circumstances is at the time, directly or indirectly, owned by such Person.
"Subsidiary Guarantor" means each of the Company's Restricted
Subsidiaries that in the future executes a supplemental indenture in which such
Restricted Subsidiary agrees to be bound by the terms of this Indenture as a
Subsidiary Guarantor; provided, however, that any Person constituting a
Subsidiary Guarantor as described above shall cease to constitute a Subsidiary
Guarantor when its Guarantee is released in accordance with the terms of this
Indenture.
"Surviving Entity" shall have the meaning set forth in Section 5.01.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb), as amended, as in effect on the date of this Indenture, except as
otherwise provided in Section 9.03.
"Trust Officer" means any officer or assistant officer of the Trustee
assigned by the Trustee to administer this Indenture, or in the case of a
successor trustee, an officer assigned to the department, division or group
performing the corporation trust work of such successor and assigned to
administer this Indenture.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
25
thereafter means such successor.
"U.S. Government Obligations" mean direct obligations of, and
obligations guaranteed by, the United States of America for the payment of which
the full faith and credit of the United States of America is pledged.
"U.S. Legal Tender" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public and private debts.
"Unadjusted Net Proceeds Offer Amount" has the meaning set forth in
Section 4.16.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section 4.14; provided,
however, that Unrestricted Subsidiaries shall initially include Cascade and
Western. Any such designation may be revoked by a Board Resolution of the
Company delivered to the Trustee, subject to the provisions of such Section
4.14.
"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the sum of
the total of the products obtained by multiplying (i) the amount of each then
remaining installment, sinking fund, serial maturity or other required payment
of principal, including payment at final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
"Western" means Western Associated Energy Corporation, a Texas
Corporation.
"Wholly Owned Restricted Subsidiary" means any Restricted Subsidiary of
which all the outstanding voting securities normally entitled to vote in the
election of directors are owned by the Company or another Wholly Owned
Restricted Subsidiary.
SECTION 1.02. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in, and made a part of, this Indenture.
The following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Notes.
"indenture security holder" means a Holder.
26
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Issuers or any other
obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule and
not otherwise defined herein have the meanings assigned to them therein.
SECTION 1.03. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with GAAP of any date of determination;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the
plural include the singular;
(5) "herein," "hereof" and other words of similar import refer
to this Indenture as a whole and not to any particular Article, Section
or other subdivision; and
(6) any reference to a statute, law or regulation means that
statute, law or regulation as amended and in effect from time to time
and includes any successor statute, law or regulation; provided,
however, that any reference to the Bankruptcy Law shall mean the
Bankruptcy Law as applicable to the relevant case.
ARTICLE TWO
THE NOTES
SECTION 2.01.
(a) Principal Amount.
The aggregate principal amount of Notes which may be issued, executed,
27
authenticated and outstanding under this Indenture is $275,000,000, provided
that $215,000,000 shall be reserved for issuance and shall be available for
issuance only in connection with the exchange of the Series A/B Notes for
Exchange Notes.
(b) Form and Dating.
The Initial Notes and the Trustee's certificate of authentication
relating thereto shall be substantially in the form of Exhibit A hereto. The
Exchange Notes and the Trustee's certificate of authentication relating thereto
shall be substantially in the form of Exhibit B hereto. The Notes may have
notations, legends or endorsements required by law, stock exchange rule or
depository rule or usage. The Issuers and the Trustee shall approve the form of
the Notes and any notation, legend or endorsement on them. Each Note shall be
dated the date of its issuance and shall show the date of its authentication.
Each Note shall have an executed Guarantee endorsed thereon substantially in the
form of Exhibit E hereto.
The terms and provisions contained in the Notes, annexed hereto as
Exhibits A and B, shall constitute, and are hereby expressly made, a part of
this Indenture and, to the extent applicable, the Issuers and the Trustee, by
their execution and delivery of this Indenture, expressly agree to such terms
and provisions and to be bound thereby.
Notes offered and sold in reliance on Rule 144A, Notes offered and sold
to institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3)
or (7) under the Securities Act) and Notes offered and sold in reliance on
Regulation S shall be issued initially in the form of one or more permanent
global Notes in registered form, substantially in the form set forth in Exhibit
A (the "Global Note"), deposited with the Trustee, as custodian for the
Depository, duly executed by the Issuers (and having an executed Guarantee
endorsed thereon) and authenticated by the Trustee as hereinafter provided and
shall bear the legend set forth in Section 2.15. The aggregate principal amount
of the Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for the Depository,
as hereinafter provided.
Notes issued in exchange for interests in a Global Note pursuant to
Section 2.16 may be issued in the form of permanent certificated Notes in
registered form in substantially the form set forth in Exhibit A (the "Physical
Notes").
SECTION 2.02. Execution and Authentication; Aggregate Principal Amount.
Two Officers, or an Officer and an Assistant Secretary of each Issuer
and each Subsidiary Guarantor, shall sign, or one Officer shall sign and one
Officer or an Assistant Secretary (each of whom shall, in each case, have been
duly authorized by all requisite corporate actions) shall attest to, the Notes
for the Issuers and the Guarantees for the Subsidiary Guarantors by manual or
facsimile signature.
28
If an Officer or Assistant Secretary whose signature is on a Note or a
Guarantee was an Officer or Assistant Secretary at the time of such execution
but no longer holds that office or position at the time the Trustee
authenticates the Note, the Note shall nevertheless be valid.
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note. The signature
shall be conclusive evidence that the Note has been authenticated under this
Indenture.
The Trustee shall authenticate (i) Initial Notes for original issue in
the aggregate principal amount not to exceed $60,000,000 and (ii) Exchange Notes
from time to time for issue only in exchange for a like principal amount of
Initial Notes and up to $215,000,000 of Series A/B Notes or (iii) Private
Exchange Notes, in each case upon a written order of the Issuers in the form of
an Officers' Certificate of each Issuer. Each such written order shall specify
the amount of Notes to be authenticated and the date on which the Notes are to
be authenticated, whether the Notes are to be Initial Notes or Exchange Notes
and whether the Notes are to be issued as Physical Notes or Global Notes or such
other information as the Trustee may reasonably request. In addition, with
respect to authentication pursuant to clauses (ii) or (iii) of the first
sentence of this paragraph, the first such written order from the Issuers shall
be accompanied by an Opinion of Counsel of each Issuer in a form reasonably
satisfactory to the Trustee stating that the issuance of the Exchange Notes or
Private Exchange Notes, as the case may be, does not give rise to an event of
default, complies with this Indenture and has been duly authorized by such
Issuer. The aggregate principal amount of Notes outstanding at any time may not
exceed $275,000,000, except as provided in Sections 2.07 and 2.08; provided that
$215,000,000 of the Exchange Notes shall be reserved for issuance only in
exchange for Series A/B Notes.
The Trustee may appoint an authenticating agent (the "Authenticating
Agent") reasonably acceptable to the Issuers to authenticate Notes. Unless
otherwise provided in the appointment, an Authenticating Agent may authenticate
Notes whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such Authenticating
Agent. An Authenticating Agent has the same rights as an Agent to deal with the
Issuers or with any Affiliate of the Issuers.
The Notes shall be issuable in fully registered form only, without
coupons, in denominations of $1,000 and any integral multiple thereof.
SECTION 2.03. Registrar and Paying Agent.
The Issuers shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York) where
(a) Notes may be presented or surrendered for registration of transfer or for
exchange ("Registrar"), (b) Notes may be presented or surrendered for payment
("Paying Agent") and (c) notices and demands to or upon the Issuers in respect
29
of the Notes and this Indenture may be served. The Registrar shall keep a
register of the Notes and of their transfer and exchange. The Issuers, upon
prior written notice to the Trustee, may have one or more co-Registrars and one
or more additional paying agents reasonably acceptable to the Trustee. The term
"Paying Agent" includes any additional Paying Agent. The Issuers may act as
their own Paying Agent, except that for the purposes of payments on the Notes
pursuant to Sections 4.15 and 4.16, neither the Issuers nor any Affiliate of the
Issuers may act as Paying Agent.
The Issuers shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which agreement shall incorporate the
provisions of the TIA and implement the provisions of this Indenture that relate
to such Agent. The Issuers shall notify the Trustee, in advance, of the name and
address of any such Agent. If the Issuers fail to maintain a Registrar or Paying
Agent, or fail to give the foregoing notice, the Trustee shall act as such.
The Issuers initially appoint the Trustee as Registrar, Paying Agent
and agent for service of demands and notices in connection with the Notes, until
such time as the Trustee has resigned or a successor has been appointed. Any of
the Registrar, the Paying Agent or any other agent may resign upon 30 days'
notice to the Issuers.
SECTION 2.04. Paying Agent To Hold Assets in Trust.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that such Paying Agent shall hold in trust for the benefit of
the Holders or the Trustee all assets held by the Paying Agent for the payment
of principal of, premium, if any, or interest on, the Notes (whether such assets
have been distributed to it by the Issuers or any other obligor on the Notes),
and the Issuers and the Paying Agent shall notify the Trustee of any Default by
the Issuers (or any other obligor on the Notes) in making any such payment. The
Issuers at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default, upon written request to
a Paying Agent, require such Paying Agent to distribute all assets held by it to
the Trustee and to account for any assets distributed. Upon distribution to the
Trustee of all assets that shall have been delivered by the Issuers to the
Paying Agent, the Paying Agent shall have no further liability for such assets.
SECTION 2.05. Holder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Holders. If the Trustee is not the Registrar, the Issuers shall furnish or
cause the Registrar to furnish to the Trustee before each Record Date and at
such other times as the Trustee may request in writing a list as of such date
and in such form as the Trustee may reasonably require of the names and
addresses of the Holders, which list may be conclusively relied upon by the
Trustee.
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SECTION 2.06. Transfer and Exchange.
When Notes are presented to the Registrar or a co-Registrar with a
request to register the transfer of such Notes or to exchange such Notes for an
equal principal amount of Notes or other authorized denominations, the Registrar
or co-Registrar shall register the transfer or make the exchange as requested if
its requirements for such transaction are met; provided, however, that the Notes
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Issuers, the Trustee and the Registrar or co-Registrar, duly executed by
the Holder thereof or his attorney duly authorized in writing. To permit
registration of transfers and exchanges, the Issuers shall execute and the
Trustee shall authenticate Notes and the Subsidiary Guarantors shall execute
Guarantees thereon at the Registrar's or co-Registrar's request. No service
charge shall be made for any registration of transfer or exchange, but the
Issuers may require payment of a sum sufficient to cover any transfer tax, fee
or similar governmental charge payable in connection therewith (other than any
such transfer taxes or similar governmental charge payable upon exchanges or
transfers pursuant to Sections 2.10, 3.04, 4.15, 4.16 or 9.05, in which event
the Issuers shall be responsible for the payment of such taxes).
The Registrar or co-Registrar shall not be required to register the
transfer of or exchange of any Note (i) during a period beginning at the opening
of business 15 days before the mailing of a notice of redemption of Notes and
ending at the close of business on the day of such mailing and (ii) selected for
redemption in whole or in part pursuant to Article Three, except the unredeemed
portion of any Note being redeemed in part.
Any Holder of a beneficial interest in a Global Note shall, by
acceptance of such Global Note, agree that transfers of beneficial interests in
such Global Notes may be effected only through a book entry system maintained by
the Holder of such Global Note (or its agent), and that ownership of a
beneficial interest in the Note shall be required to be reflected in a book
entry system.
SECTION 2.07. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims that the Note has been lost, destroyed or wrongfully taken, the
Issuers shall issue and the Trustee shall authenticate a replacement Note and
the Subsidiary Guarantors shall execute a Guarantee thereon if the Trustee's
requirements are met. If required by the Trustee or the Issuers, such Holder
must provide an indemnity bond or other indemnity of reasonable tenor,
sufficient in the reasonable judgment of the Issuers, the Subsidiary Guarantors
and the Trustee, to protect the Issuers, the Subsidiary Guarantors, the Trustee
or any Agent from any loss which any of them may suffer if a Note is replaced.
Every replacement Note shall constitute an additional obligation of the Issuers
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and the Subsidiary Guarantors.
SECTION 2.08. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee except those canceled by it, those delivered to it
for cancellation and those described in this Section as not outstanding. Subject
to the provisions of Section 2.09, a Note does not cease to be outstanding
because an Issuer or any of its Affiliates holds the Note.
If a Note is replaced pursuant to Section 2.07 (other than a mutilated
Note surrendered for replacement), it ceases to be outstanding unless the
Trustee receives proof satisfactory to it that the replaced Note is held by a
bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender of
such Note and replacement thereof pursuant to Section 2.07.
If on a Redemption Date or the Maturity Date the Paying Agent holds
U.S. Legal Tender or U.S. Government Obligations sufficient to pay all of the
principal, premium, if any, and interest due on the Notes payable on that date
and is not prohibited from paying such money to the Holders thereof pursuant to
the terms of this Indenture, then on and after that date such Notes shall be
deemed not to be outstanding and interest on them shall cease to accrue.
SECTION 2.09. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, waiver, consent or notice, Notes owned by
the Issuers or an Affiliate of the Issuers shall be considered as though they
are not outstanding, except that for the purposes of determining whether the
Trustee shall be protected in relying on any such direction, waiver or consent,
only Notes which a Trust Officer of the Trustee actually knows are so owned
shall be so considered. The Issuers shall notify the Trustee, in writing, when
either of them or, to their knowledge, any of their Affiliates repurchases or
otherwise acquires Notes, of the aggregate principal amount of such Notes so
repurchased or otherwise acquired and such other information as the Trustee may
reasonably request and the Trustee shall be entitled to rely thereon.
SECTION 2.10. Temporary Notes.
Until definitive Notes are ready for delivery, the Issuers may prepare
and the Trustee shall authenticate temporary Notes upon receipt of a written
order of the Issuers in the form of an Officers' Certificate. The Officers'
Certificate shall specify the amount of temporary Notes to be authenticated and
the date on which the temporary Notes are to be authenticated. Temporary Notes
shall be substantially in the form of definitive Notes but may have variations
that the Issuers consider appropriate for temporary Notes and so indicate in the
Officers' Certificate. Without unreasonable delay, the Issuers shall prepare,
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the Trustee shall authenticate and the Subsidiary Guarantors shall execute
Guarantees on, upon receipt of a written order of the Issuers pursuant to
Section 2.02, definitive Notes in exchange for temporary Notes.
SECTION 2.11. Cancellation.
The Issuers at any time may deliver Notes to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Notes surrendered to them for transfer, exchange or payment. The Trustee, or
at the direction of the Trustee, the Registrar or the Paying Agent, and no one
else, shall cancel and, at the written direction of the Issuers, shall dispose,
in its customary manner, of all Notes surrendered for transfer, exchange,
payment or cancellation. Subject to Section 2.07, the Issuers may not issue new
Notes to replace Notes that they have paid or delivered to the Trustee for
cancellation. If the Issuers shall acquire any of the Notes, such acquisition
shall not operate as a redemption or satisfaction of the Indebtedness
represented by such Notes unless and until the same are surrendered to the
Trustee for cancellation pursuant to this Section 2.11.
SECTION 2.12. Defaulted Interest.
The Issuers will pay interest on overdue principal from time to time on
demand at the rate of interest then borne by the Notes. The Issuers shall, to
the extent lawful, pay interest on overdue installments of interest (without
regard to any applicable grace periods) from time to time on demand at the rate
of interest then borne by the Notes. Interest will be computed on the basis of a
360-day year comprised of twelve 30-day months, and, in the case of a partial
month, the actual number of days elapsed.
If the Issuers default in a payment of interest on the Notes, they
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest, to the Persons who are Holders on a
subsequent special record date, which special record date shall be the fifteenth
day next preceding the date fixed by the Issuers for the payment of defaulted
interest or the next succeeding Business Day if such date is not a Business Day.
The Issuers shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each Note and the date of the proposed payment
(a "Default Interest Payment Date"), and at the same time the Issuers shall
deposit with the Trustee an amount of money equal to the aggregate amount
proposed to be paid in respect of such defaulted interest or shall make
arrangements satisfactory to the Trustee for such deposit on or prior to the
date of the proposed payment, such money when deposited to be held in trust for
the benefit of the Persons entitled to such defaulted interest as provided in
this Section; provided, however, that in no event shall the Issuers deposit
monies proposed to be paid in respect of defaulted interest later than 11:00
a.m. New York City time of the proposed Default Interest Payment Date. At least
15 days before the subsequent special record date, the Issuers shall mail (or
cause to be mailed) to each Holder, as of a recent date selected by the Issuers,
with a copy to the Trustee, a notice that states the subsequent special record
33
date, the payment date and the amount of defaulted interest, and interest
payable on such defaulted interest, if any, to be paid. Notwithstanding the
foregoing, any interest which is paid prior to the expiration of the 30-day
period set forth in Section 6.01(a) shall be paid to Holders as of the regular
record date for the Interest Payment Date for which interest has not been paid.
Notwithstanding the foregoing, the Issuers may make payment of any defaulted
interest in any other lawful manner not inconsistent with the requirements of
any securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange.
SECTION 2.13. CUSIP Number.
The Issuers in issuing the Notes may use a "CUSIP" number, and, if so,
the Trustee shall use the CUSIP number in notices of redemption or exchange as a
convenience to Holders; provided, however, that no representation is hereby
deemed to be made by the Trustee as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Notes, and that reliance may be placed
only on the other identification numbers printed on the Notes. The Issuers shall
promptly notify the Trustee of any change in the CUSIP number.
SECTION 2.14. Deposit of Monies.
Prior to 11:00 a.m. New York City time on each Interest Payment Date,
Maturity Date, Redemption Date, Change of Control Payment Date and Net Proceeds
Offer Payment Date, the Issuers shall have deposited with the Paying Agent in
immediately available funds money sufficient to make cash payments, if any, due
on such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, as the case may be, in a
timely manner which permits the Paying Agent to remit payment to the Holders on
such Interest Payment Date, Maturity Date, Redemption Date, Change of Control
Payment Date and Net Proceeds Offer Payment Date, as the case may be.
SECTION 2.15. Restrictive Legends.
Each Global Note and Physical Note that constitutes a Restricted
Security shall bear the following legend (the "Private Placement Legend") on the
face thereof until after the third anniversary of the later of the Issue Date
and the last date on which an Issuer or any Affiliate of either Issuer was the
owner of such Note (or any predecessor security) (or such shorter period of time
as permitted by Rule 144(k) under the Securities Act or any successor provision
thereunder) (or such longer period of time as may be required under the
Securities Act or applicable state securities laws in the opinion of counsel for
the Issuers, unless otherwise agreed by the Issuers and the Holder thereof):
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
34
OFFERED OR SOLD WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR
BENEFIT OF, U.S. PERSONS EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION
HEREOF, THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT)
OR (B) IT IS AN "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3), OR (7) UNDER THE SECURITIES ACT), (AN "ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION IN COMPLIANCE WITH RULE 904 UNDER THE SECURITIES
ACT, (2) AGREES THAT IT WILL NOT WITHIN TWO YEARS AFTER THE ORIGINAL
ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE TRANSFER THIS SECURITY
EXCEPT (A) TO THE ISSUERS THEREOF OR ANY SUBSIDIARY THEREOF, (B) INSIDE
THE UNITED STATES TO A QUALIFIED INSTITUTIONAL BUYER IN COMPLIANCE WITH
RULE 144A UNDER THE SECURITIES ACT, (C) INSIDE THE UNITED STATES TO AN
ACCREDITED INVESTOR THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS
FURNISHED ON ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A
SIGNED LETTER CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO THE RESTRICTIONS ON TRANSFER OF THIS SECURITY (THE FORM OF
WHICH LETTER CAN BE OBTAINED FROM THE TRUSTEE FOR THIS SECURITY), (D)
OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH
RULE 904 UNDER THE SECURITIES ACT (PROVIDED THAT ANY SUCH SALE OR
TRANSFER IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT MUST
BE EFFECTED PURSUANT TO AN EXEMPTION FROM THE PROSPECTUS AND
REGISTRATION REQUIREMENTS UNDER APPLICABLE CANADIAN SECURITIES LAWS),
(E) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND (3)
AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS SECURITY IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. IN
CONNECTION WITH ANY TRANSFER OF THIS SECURITY WITHIN TWO YEARS AFTER
THE ORIGINAL ISSUANCE OF THIS SECURITY, IF THE PROPOSED TRANSFEREE IS
AN ACCREDITED INVESTOR, THE HOLDER MUST, PRIOR TO SUCH TRANSFER,
FURNISH TO THE TRUSTEE AND THE ISSUERS SUCH CERTIFICATIONS, LEGAL
OPINIONS OR OTHER INFORMATION AS EITHER OF THEM MAY REASONABLY REQUIRE
TO CONFIRM THAT SUCH TRANSFER IS BEING MADE PURSUANT TO AN EXEMPTION
FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS
35
OF THE SECURITIES ACT. AS USED HEREIN, THE TERMS "OFFSHORE
TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANING GIVEN
TO THEM BY REGULATION S UNDER THE SECURITIES ACT.
Each Global Note shall also bear the following legend on the
face thereof:
UNLESS AND UNTIL IT IS EXCHANGED IN WHOLE OR IN PART FOR SECURITIES IN
DEFINITIVE FORM, THIS SECURITY MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE
BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY, OR BY ANY SUCH
NOMINEE OF THE DEPOSITORY, OR BY THE DEPOSITORY OR NOMINEE OF SUCH
SUCCESSOR DEPOSITORY OR ANY SUCH NOMINEE TO A SUCCESSOR DEPOSITORY OR A
NOMINEE OF SUCH SUCCESSOR DEPOSITORY. UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO AN ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN
WHOLE, BUT NOT IN PART, TO NOMINEES OF CEDE & CO. OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS
GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH
THE RESTRICTIONS SET FORTH IN SECTION 2.17 OF THE INDENTURE.
SECTION 2.16. Book-Entry Provisions for Global Security.
(a) The Global Notes initially shall (i) be registered in the name of
the Depository or the nominee of such Depository, (ii) be delivered to the
Trustee as custodian for such Depository and (iii) bear legends as set forth in
Section 2.15.
Members of, or participants in, the Depository ("Agent Members") shall
have no rights under this Indenture with respect to any Global Note held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Notes, and the Depository may be treated by the Issuers, the Trustee and
36
any Agent of the Issuers or the Trustee as the absolute owner of such Global
Note for all purposes whatsoever. Notwithstanding the foregoing, nothing herein
shall prevent the Issuers, the Trustee or any Agent of the Issuers or the
Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and its Agent Members, the operation of customary practices governing the
exercise of the rights of a Holder of any Note.
(b) Transfers of a Global Note shall be limited to transfers in whole,
but not in part, to the Depository, its successors or their respective nominees.
Interests of beneficial owners in a Global Note may be transferred or exchanged
for Physical Notes in accordance with the rules and procedures of the Depository
and the provisions of Section 2.17. In addition, Physical Notes shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Global Note if (i) the Depository notifies the Issuers that it is unwilling
or unable to continue as Depository for the Global Notes and a successor
depositary is not appointed by the Issuers within 90 days of such notice or (ii)
an Event of Default has occurred and is continuing and the Registrar has
received a written request from the Depository to issue Physical Notes.
(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Note to beneficial owners pursuant to paragraph
(b), the Registrar shall (if one or more Physical Notes are to be issued)
reflect on its books and records the date and a decrease in the principal amount
of such Global Note in an amount equal to the principal amount of the beneficial
interest in the Global Note to be transferred, and the Issuers shall execute,
the Subsidiary Guarantors shall execute Guarantees on, and the Trustee shall
authenticate and deliver, one or more Physical Notes of like tenor and amount.
(d) In connection with the transfer of an entire Global Note to
beneficial owners pursuant to paragraph (b), such Global Note shall be deemed to
be surrendered to the Trustee for cancellation, and the Issuers shall execute,
the Subsidiary Guarantors shall execute Guarantees on and the Trustee shall
authenticate and deliver, to each beneficial owner identified by the Depository
in exchange for its beneficial interest in the Global Note, an equal aggregate
principal amount of Physical Notes of authorized denominations.
(e) Any Physical Note constituting a Restricted Security delivered in
exchange for an interest in a Global Note pursuant to paragraph (b) or (c)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (c) of Section
2.17, bear the legend regarding transfer restrictions applicable to the Physical
Notes set forth in Section 2.15.
(f) The Holder of a Global Note may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which a Holder is entitled
to take under this Indenture or the Notes.
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SECTION 2.17. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors and
Non-U.S. Persons. The following provisions shall apply with respect to the
registration of any proposed transfer of a Note constituting a Restricted
Security to any Institutional Accredited Investor which is not a QIB or to any
Non-U.S. Person:
(i) the Registrar shall register the transfer of any Note
constituting a Restricted Security, whether or not such Note bears the
Private Placement Legend, if (x) the requested transfer is after the
second anniversary of the Issue Date (provided, however, that neither
the Company nor any Affiliate of the Company has held any beneficial
interest in such Note, or portion thereof, at any time on or prior to
the second anniversary of the Issue Date) or (y) (1) in the case of a
transfer to an Institutional Accredited Investor which is not a QIB
(excluding Non-U.S. Persons), the proposed transferee has delivered to
the Registrar a certificate substantially in the form of Exhibit C
hereto or (2) in the case of a transfer to a Non-U.S. Person, the
proposed transferor has delivered to the Registrar a certificate
substantially in the form of Exhibit D hereto; and
(ii) if the proposed transferor is an Agent Member holding a
beneficial interest in the Global Note, upon receipt by the Registrar
of (x) the certificate, if any, required by paragraph (i) above and (y)
written instructions given in accordance with the Depository's and the
Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Notes) a
decrease in the principal amount of such Global Note in an amount equal to the
principal amount of the beneficial interest in the Global Note to be
transferred, and (b) the Issuers shall execute, the Subsidiary Guarantors shall
execute the Guarantees on and the Trustee shall authenticate and deliver one or
more Physical Notes of like tenor and amount.
(b) Transfers to QIBs. The following provisions shall apply with
respect to the registration of any proposed transfer of a Note constituting a
Restricted Security to a QIB (excluding transfers to Non-U.S.
Persons):
(i) the Registrar shall register the transfer if such
transfer is being made by a proposed transferor who has checked the box
provided for on the form of Note stating, or has otherwise advised the
Issuers and the Registrar in writing, that the sale has been made in
compliance with the provisions of Rule 144A to a transferee who has
signed the certification provided for on the form of Note stating, or
has otherwise advised the Issuers and the Registrar in writing, that it
is purchasing the Note for its own account or an account with respect
to which it exercises sole investment discretion and that it and any
such account is a QIB within the meaning of Rule 144A, and is aware
38
that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the
Issuers as it has requested pursuant to Rule 144A or has determined not
to request such information and that it is aware that the transferor is
relying upon its foregoing representations in order to claim the
exemption from registration provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the
Notes to be transferred consist of Physical Notes which after transfer
are to be evidenced by an interest in a Global Note, upon receipt by
the Registrar of written instructions given in accordance with the
Depository's and the Registrar's procedures, the Registrar shall
reflect on its books and records the date and an increase in the
principal amount of such Global Note in an amount equal to the
principal amount of the Physical Notes to be transferred, and the
Trustee shall cancel the Physical Notes so transferred.
(c) Private Placement Legend. Upon the transfer, exchange or
replacement of Notes not bearing the Private Placement Legend, the Registrar
shall deliver Notes that do not bear the Private Placement Legend. Upon the
transfer, exchange or replacement of Notes bearing the Private Placement Legend,
the Registrar shall deliver only Notes that bear the Private Placement Legend
unless (i) the requested transfer is after the third anniversary of the Issue
Date (provided, however, that neither Issuer nor any Affiliate of the Issuers
has held any beneficial interest in such Note, or portion thereof, at any time
prior to or on the third anniversary of the Issue Date), or (ii) there is
delivered to the Registrar an Opinion of Counsel reasonably satisfactory to the
Issuers and the Trustee to the effect that neither such legend nor the related
restrictions on transfer are required in order to maintain compliance with the
provisions of the Securities Act.
(d) General. By its acceptance of any Note bearing the Private
Placement Legend, each Holder of such a Note acknowledges the restrictions on
transfer of such Note set forth in this Indenture and in the Private Placement
Legend and agrees that it will transfer such Note only as provided in this
Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.16 or this Section 2.17.
The Issuers shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time during the
Registrar's normal business hours upon the giving of reasonable written notice
to the Registrar.
(e) Transfers of Notes Held by Affiliates. Any certificate (i)
evidencing a Note that has been transferred to an Affiliate of an Issuer within
three years after the Issue Date, as evidenced by a notation on the Assignment
Form for such transfer or in the representation letter delivered in respect
thereof or (ii) evidencing a Note that has been acquired from an Affiliate
(other than by an Affiliate) in a transaction or a chain of transactions not
involving any public offering, shall, until three years after the last date on
39
which either Issuer or any Affiliate of either Issuer was an owner of such Note,
in each case, bear a legend in substantially the form set forth in Section 2.15
hereof, unless otherwise agreed by the Issuers (with written notice thereof to
the Trustee).
SECTION 2.18. Liquidated Damages Under Registration Rights Agreement
Under certain circumstances, the Issuers shall be obligated to pay
certain liquidated damages to the Holders, all as set forth in Section 4 of the
Registration Rights Agreement. The terms thereof are hereby incorporated herein
by reference.
ARTICLE THREE
REDEMPTION
SECTION 3.01. Notices to Trustee
If the Company elects to redeem Notes pursuant to Paragraph 6 of the
Notes, it shall notify the Trustee and the Paying Agent in writing of the
Redemption Date and the principal amount of the Notes to be redeemed.
The Company shall give each notice provided for in this Section 3.01 60
days before the Redemption Date (unless a shorter notice period shall be
satisfactory to the Trustee, as evidenced in a writing signed on behalf of the
Trustee), together with an Officers' Certificate stating that such redemption
shall comply with the conditions contained herein and in the Notes.
SECTION 3.02. Selection of Notes To Be Redeemed
In the event that less than all of the Notes are to be redeemed at any
time, selection of such Notes, or portions thereof, for redemption will be made
by the Trustee in compliance with the requirements of the principal national
securities exchange, if any, on which the Notes are listed or, if the Notes are
not then listed on a national securities exchange, on a pro rata basis, by lot
or by such other method as the Trustee shall deem fair and appropriate;
provided, however, that no Notes of a principal amount of $1,000 or less shall
be redeemed in part; and provided, further, that if a partial redemption is made
with the proceeds of an Equity Offering, selection of the Notes or portions
thereof for redemption shall be made by the Trustee only on a pro rata basis or
on as nearly a pro rata basis as is practicable (subject to the procedures of
DTC), unless such method is otherwise prohibited. Notice of redemption shall 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
in accordance with the provisions of Section 3.04. If any Note is to be redeemed
in part only, the notice of redemption that relates to such Note shall state the
portion of the principal amount thereof to be redeemed. A new Note in a
40
principal amount equal to the unredeemed portion thereof will be issued in the
name of the Holder thereof upon cancellation of the original Note. On and after
the applicable Redemption Date, interest will cease to accrue on Notes or
portions thereof called for redemption as long as the Issuers have deposited
with the Paying Agent for the Notes funds in satisfaction of the applicable
Redemption Price.
SECTION 3.03. Optional Redemption
The Notes will be redeemable, at the Issuers' option, in whole at any
time or in part from time to time, on and after November 1, 2000, upon not less
than 30 nor more than 60 days' notice, at the following Redemption Prices
(expressed as percentages of the principal amount thereof) if redeemed during
the twelve-month period commencing on November 1 of the years set forth below,
plus, in each case, accrued and unpaid interest, if any, thereon to the date of
redemption:
Year Percentage
2000................. 105.750%
2001................. 102.875%
2002 and thereafter.. 100.000%
At any time, or from time to time, on or prior to November 1, 1999, the
Issuers may, at their option, use all or a portion of the net cash proceeds of
one or more Equity Offerings (as defined below) to redeem up to 35% of the
aggregate original principal amount of the Notes at a Redemption Price equal to
111.5% of the aggregate principal amount of the Notes to be redeemed, plus
accrued and unpaid interest, if any, thereon to the date of redemption;
provided, however, that at least 65% of the aggregate original principal amount
of the Notes remains outstanding immediately after giving effect to any such
redemption (it being expressly agreed that for purposes of determining whether
this condition is satisfied, Notes owned by either Issuer or any of their
Affiliates shall be deemed not to be outstanding). In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Issuers shall
make such redemption not more than 60 days after the consummation of any such
Equity Offering.
SECTION 3.04. Notice of Redemption
At least 30 days but not more than 60 days before a Redemption Date,
the Issuers shall mail or cause to be mailed a notice of redemption by first
class mail to each Holder of Notes to be redeemed at its registered address,
with a copy to the Trustee and any Paying Agent. At the Issuers' request, the
Trustee shall give the notice of redemption in the Issuers' name and at the
Company's expense. The Issuers' shall provide such notices of redemption to the
Trustee at least five days before the intended mailing date.
Each notice of redemption shall identify (including the CUSIP number)
41
the Notes to be redeemed and shall state:
(1) the Redemption Date;
(2) the Redemption Price and the amount of accrued interest,
if any, to be paid;
(3) the name and address of the Paying Agent;
(4) the subparagraph of the Notes pursuant to which such
redemption is being made;
(5) that Notes called for redemption must be surrendered to
the Paying Agent to collect the Redemption Price plus accrued interest,
if any;
(6) that, unless the Issuers default in making the redemption
payment, interest on Notes or applicable portions thereof called for
redemption ceases to accrue on and after the Redemption Date, and the
only remaining right of the Holders of such Notes is to receive payment
of the Redemption Price plus accrued interest as of the Redemption
Date, if any, upon surrender to the Paying Agent of the Notes redeemed;
(7) if any Note is being redeemed in part, the portion of the
principal amount of such Note to be redeemed and that, after the
Redemption Date, and upon surrender of such Note, a new Note or Notes
in the aggregate principal amount equal to the unredeemed portion
thereof will be issued; and
(8) if fewer than all the Notes are to be redeemed, the
identification of the particular Notes (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Notes to be
redeemed and the aggregate principal amount of Notes to be outstanding
after such partial redemption.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of Notes.
SECTION 3.05. Effect of Notice of Redemption
Once notice of redemption is mailed in accordance with Section 3.04,
such notice of redemption shall be irrevocable and Notes called for redemption
become due and payable on the Redemption Date and at the Redemption Price plus
accrued interest as of such date, if any. Upon surrender to the Trustee or
Paying Agent, such Notes called for redemption shall be paid at the Redemption
Price plus accrued interest thereon to the Redemption Date, but installments of
interest, the maturity of which is on or prior to the Redemption Date, shall be
payable to Holders of record at the close of business on the relevant record
42
dates referred to in the Notes. Interest shall accrue on or after the Redemption
Date and shall be payable only if the Issuers default in payment of the
Redemption Price.
SECTION 3.06. Deposit of Redemption Price
On or before the Redemption Date and in accordance with Section 2.14,
the Issuers shall deposit with the Paying Agent U.S. Legal Tender sufficient to
pay the Redemption Price plus accrued interest, if any, of all Notes to be
redeemed on that date. The Paying Agent shall promptly return to the Company any
U.S. Legal Tender so deposited which is not required for that purpose, except
with respect to monies owed as obligations to the Trustee pursuant to Article
Seven.
Unless the Issuers fail to comply with the preceding paragraph and
default in the payment of such Redemption Price plus accrued interest, if any,
interest on the Notes to be redeemed will cease to accrue on and after the
applicable Redemption Date, whether or not such Notes are presented for payment.
SECTION 3.07. Notes Redeemed in Part
Upon surrender of a Note that is to be redeemed in part, the Trustee
shall authenticate for the Holder a new Note or Notes equal in principal amount
to the unredeemed portion of the Note surrendered.
ARTICLE FOUR
COVENANTS
SECTION 4.01. Payment of Notes
(a) The Issuers shall pay the principal of, premium, if any, and
interest on the Notes on the dates and in the manner provided in the Notes and
in this Indenture.
(b) An installment of principal of or interest on the Notes shall be
considered paid on the date it is due if the Trustee or Paying Agent (other than
an Issuer or any of its Affiliates) holds, prior to 11:00 a.m. New York City
time on that date, U.S. Legal Tender designated for and sufficient to pay the
installment in full and is not prohibited from paying such money to the Holders
pursuant to the terms of this Indenture or the Notes.
(c) Notwithstanding anything to the contrary contained in this
Indenture, the Issuers may, to the extent they are required to do so by law,
deduct or withhold income or other similar taxes imposed by the United States of
America from principal or interest payments hereunder.
43
SECTION 4.02. Maintenance of Office or Agency
The Issuers shall maintain the office or agency required under Section
2.03. The Issuers shall give prior written notice to the Trustee of the
location, and any change in the location, of such office or agency. If at any
time the Issuers shall fail to maintain any such required office or agency or
shall fail to furnish the Trustee with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the address of the
Trustee set forth in Section 10.02.
SECTION 4.03. Corporate Existence
Except as otherwise permitted by Article Five, the Issuers shall do or
cause to be done, at their own cost and expense, all things necessary to
preserve and keep in full force and effect their respective corporate existence
and the corporate existence of each of their Restricted Subsidiaries in
accordance with the respective organizational documents of each such Restricted
Subsidiary and the material rights (charter and statutory) and franchises of the
Issuers and each such Restricted Subsidiary; provided, however, that the Issuers
shall not be required to preserve, with respect to themselves, any material
right or franchise and, with respect to any of their Restricted Subsidiaries,
any such existence, material right or franchise, if the Board of Directors of
the Company shall determine in good faith that the preservation thereof is no
longer desirable in the conduct of the business of the Issuers and their
Subsidiaries, taken as a whole.
SECTION 4.04. Payment of Taxes and Other Claims
The Issuers shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon either of them or any of their
Subsidiaries or properties of either of them or any of their Subsidiaries and
(ii) all material lawful claims for labor, materials and supplies that, if
unpaid, might by law become a Lien upon the property of the Issuers or any of
their Subsidiaries; provided, however, that the Issuers shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate negotiations or proceedings properly instituted and
diligently conducted for which adequate reserves, to the extent required under
GAAP, have been taken.
SECTION 4.05. Maintenance of Properties and Insurance
(a) Each Issuer shall, and shall cause each of the Restricted
Subsidiaries to, maintain all properties used or useful in the conduct of its
business in good working order and condition (subject to ordinary wear and tear)
and make all necessary repairs, renewals, replacements, additions, betterments
and improvements thereto and actively conduct and carry on its business;
44
provided, however, that nothing in this Section 4.05 shall prevent an Issuer or
any of the Restricted Subsidiaries from discontinuing the operation and
maintenance of any of its properties, if such discontinuance is (i) in the
ordinary course of business pursuant to customary business terms or (ii) in the
good faith judgment of the respective Boards of Directors or other governing
body of such Issuer or Restricted Subsidiary, as the case may be, desirable in
the conduct of their respective businesses and is not disadvantageous in any
material respect to the Holders.
(b) The Issuers shall provide or cause to be provided, for themselves
and each of the Restricted Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the good faith
judgment of the Company, are adequate and appropriate for the conduct of the
business of the Company and its Restricted Subsidiaries in a prudent manner,
with reputable insurers or with the government of the United States of America,
Canada or an agency or instrumentality thereof, in such amounts, with such
deductibles, and by such methods as shall be customary, in the good faith
judgment of the Company, for companies similarly situated in the industry.
SECTION 4.06. Compliance Certificate; Notice of Default
(a) The Issuers shall deliver to the Trustee, within 105 days after the
end of their respective fiscal quarters and fiscal years, an Officers'
Certificate of each of the Issuers (provided, however, that one of the
signatories to each such Officers' Certificate shall be the respective Issuer's
principal executive officer, principal financial officer or principal accounting
officer), as to such Officers' knowledge, without independent investigation, of
such Issuer's compliance with all conditions and covenants under this Indenture
(without regard to any period of grace or requirement of notice provided
hereunder) and in the event any Default of the Issuers exists, such Officers
shall specify the nature of such Default. Each such Officers' Certificate shall
also notify the Trustee should such Issuer elect to change the manner in which
it fixes its fiscal year end.
(b) So long as not contrary to the then current recommendations of the
American Institute of Certified Public Accountants, the annual financial
statements delivered pursuant to Section 4.08 shall be accompanied by a written
report of the Company's independent certified public accountants (who shall be a
firm of established national reputation) stating (A) that their audit
examination has included a review of the terms of this Indenture and the form of
the Notes as they relate to accounting matters, and (B) whether, in connection
with their audit examination, any Default or Event of Default has come to their
attention and if such a Default or Event of Default has come to their attention,
specifying the nature and period of existence thereof; provided, however, that,
without any restriction as to the scope of the audit examination, such
independent certified public accountants shall not be liable by reason of any
failure to obtain knowledge of any such Default or Event of Default that would
45
not be disclosed in the course of an audit examination conducted in accordance
with generally accepted auditing standards.
(c) (i) If any Default or Event of Default has occurred and is
continuing or (ii) if any Holder seeks to exercise any remedy hereunder with
respect to a claimed Default under this Indenture or the Notes, the Company
shall deliver to the Trustee, at its address set forth in Section 10.02 hereof,
by registered or certified mail or by facsimile transmission followed by hard
copy by registered or certified mail an Officers' Certificate specifying such
event, notice or other action within 10 days of its becoming aware of such
occurrence.
SECTION 4.07. Compliance with Laws
The Issuers shall comply, and shall cause each of their Subsidiaries to
comply, with all applicable statutes, rules, regulations, orders and
restrictions of the United States of America, all states and municipalities
thereof, and of any governmental department, commission, board, regulatory
authority, bureau, agency and instrumentality of the foregoing, in respect of
the conduct of their respective businesses and the ownership of their respective
properties, except for such noncompliances as could not singly or in the
aggregate reasonably be expected to have a material adverse effect on the
financial condition, business, prospects or results of operations of the Company
and its Subsidiaries taken as a whole.
SECTION 4.08. Reports to Holders
The Company will deliver to the Trustee within 15 days after filing the
same with the Commission, copies of the quarterly and annual reports and of the
information, documents and other reports, if any, which the Company is required
to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act, the Company will file
with the Commission, to the extent permitted, and provide the Trustee and
Holders with such annual reports and such information, documents and other
reports specified in Sections 13 and 15(d) of the Exchange Act. The Company will
also comply with the other provisions of Section 314(a) of the TIA.
SECTION 4.09. Waiver of Stay, Extension or Usury Laws
The Issuers covenant (to the extent that they may lawfully do so) that
they will not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law or any usury law
or other law that would prohibit or forgive the Issuers from paying all or any
portion of the principal of or interest on the Notes as contemplated herein,
wherever enacted, now or at any time hereafter in force, or which may affect the
covenants or the performance of this Indenture; and (to the extent that they may
lawfully do so) the Issuers hereby expressly waive all benefit or advantage of
any such law, and covenant that they will not hinder, delay or impede the
46
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.
SECTION 4.10. Limitation on Restricted Payments
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly,
(i) declare or pay any dividend or make any distribution
(other than dividends or distributions payable solely in Qualified
Capital Stock of the Company) on or in respect of shares of the
Company's Capital Stock to holders of such Capital Stock;
(ii) purchase, redeem or otherwise acquire or retire for
value any Capital Stock of the Company or any warrants, rights or
options to purchase or acquire shares of any class of such Capital
Stock other than through the exchange therefor solely of Qualified
Capital Stock of the Company or warrants, rights or options to purchase
or acquire shares of Qualified Capital Stock of the Company;
(iii) make any principal payment on, purchase, defease,
redeem, prepay, decrease or otherwise acquire or retire for value,
prior to any scheduled final maturity, scheduled repayment or scheduled
sinking fund payment, any Indebtedness of the Company or a Subsidiary
Guarantor that is subordinate or junior in right of payment to the
Notes or such Subsidiary Guarantor's Guarantee, as the case may be; or
(iv) make any Investment (other than a Permitted Investment)
(each of the foregoing actions set forth in clauses (i), (ii), (iii) and (iv)
being referred to as a "Restricted Payment"), if at the time of such Restricted
Payment or immediately after giving effect thereto, (a) a Default or an Event of
Default shall have occurred and be continuing, (b) the Company is not able to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.12; provided, however, that
notwithstanding the provisions of clause (i) (a) of Section 4.12, for purposes
of determining whether the Company could incur such additional Indebtedness
pursuant to this clause (b), the Consolidated EBITDA Coverage Ratio which shall
be required shall be at least 2.5 to 1.0, or (c) the aggregate amount of
Restricted Payments (including such proposed Restricted Payment) made subsequent
to the Series A/B Issue Date (the amount expended for such purposes, if other
than in cash, being the fair market value of such property as determined
reasonably and in good faith by the Board of Directors of the Company) shall
exceed the sum of:
(A) 50% of the cumulative Consolidated Net Income (or if
47
cumulative Consolidated Net Income shall be a loss, minus 100% of such
loss) of the Company earned subsequent to the Series A/B Issue Date and
on or prior to the last date of the Company's fiscal quarter
immediately preceding such Restricted Payment (the "Reference Date")
(treating such period as a single accounting period); plus
(B) 100% of the aggregate net cash proceeds received by the
Company from any Person (other than a Restricted Subsidiary of the
Company) from the issuance and sale subsequent to the Series A/B Issue
Date and on or prior to the Reference Date of Qualified Capital Stock
of the Company, plus
(C) without duplication of any amounts included in the
immediately preceding subclause (B), 100% of the aggregate net cash
proceeds of any equity contribution received by the Company from a
holder of the Company's Capital Stock (excluding in the case of the
immediately preceding clause (B) and this clause (C), any net cash
proceeds from an Equity Offering to the extent used to redeem the
Notes, including any additional Series D Notes); plus
(D) an amount equal to the net reduction in Investments in
Unrestricted Subsidiaries resulting from dividends, interest payments,
repayments of loans or advances, or other transfers of cash, in each
case to the Company or to any Restricted Subsidiary of the Company from
Unrestricted Subsidiaries (but without duplication of any such amount
included in calculating cumulative Consolidated Net Income of the
Company), or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries (in each case valued as provided in Section
4.14), not to exceed, in the case of any Unrestricted Subsidiary, the
amount of Investments previously made by the Company or any Restricted
Subsidiary in such Unrestricted Subsidiary and which was treated as a
Restricted Payment hereunder; plus
(E) without duplication of the immediately preceding subclause
(D), an amount equal to the lesser of the cost or net cash proceeds
received upon the sale or other disposition of any Investment made
after the Series A/B Issue Date which had been treated as a Restricted
Payment (but without duplication of any such amount included in
calculating cumulative Consolidated Net Income of the Company); plus
(F) $5,000,000.
Notwithstanding the foregoing, the provisions set forth above will not prohibit:
(1) The payment of any dividend or redemption payment within
60 days after the date of declaration of such dividend or applicable
redemption if the dividend or redemption payment, as the case may be,
would have been permitted on the date of declaration;
48
(2) If no Default or Event of Default shall have occurred and
be continuing, the acquisition of any shares of Capital Stock of the
Company, either (a) solely in exchange for shares of Qualified Capital
Stock of the Company or (b) through the application of net proceeds of
a substantially concurrent sale for cash (other than to a Restricted
Subsidiary of the Company) of shares of Qualified Capital Stock of the
Company;
(3) If no Default or Event of Default shall have occurred and
be continuing, the acquisition of any Indebtedness of the Company or
Subsidiary Guarantor that is subordinate or junior in right of payment
to the Notes or such Subsidiary Guarantor's Guarantee, as the case may
be, either (a) solely in exchange for shares of Qualified Capital Stock
of the Company or (b) through the application of the net proceeds of a
substantially concurrent sale for cash (other than to a Restricted
Subsidiary of the Company) of (i) shares of Qualified Capital Stock of
the Company or (ii) Refinancing Indebtedness; and
(4) The initial designation of Cascade and Western as
Unrestricted Subsidiaries.
In determining the aggregate amount of Restricted Payments made
subsequent to the Series A/B Issue Date in accordance with clause (c) of this
Section 4.10, amounts expended pursuant to clauses (1) and (2)(b) shall be
included in such calculation.
SECTION 4.11. Limitation on Transactions with Affiliates
(i) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, enter into, amend or permit
or suffer to exist any transaction or series of related transactions (including,
without limitation, the purchase, sale, lease or exchange of any property, the
guaranteeing of any Indebtedness or the rendering of any service) with or for
the benefit of any of their respective Affiliates (an "Affiliate Transaction"),
other than (a) Affiliate Transactions permitted under paragraph (ii) of this
Section 4.11 and (b) Affiliate Transactions that are on terms that are fair and
reasonable to the Company or the applicable Restricted Subsidiary and are no
less favorable to the Company or the applicable Restricted Subsidiary than those
that might reasonably have been obtained in a comparable transaction at such
time on an arm's-length basis from a Person that is not an Affiliate of the
Company or such Restricted Subsidiary. All Affiliate Transactions (and each
series of related Affiliate Transactions which are similar or part of a common
plan) involving aggregate payments or other property with a fair market value in
excess of $1,000,000 shall be approved by the Board of Directors of the Company,
such approval to be evidenced by a Board Resolution stating that such Board of
Directors has determined that such transaction complies with the foregoing
provisions. If the Company or any Restricted Subsidiary enters into an Affiliate
Transaction (or a series of related Affiliate Transactions related to a common
49
plan) that involves an aggregate fair market value of more than $10,000,000, the
Company shall, prior to the consummation thereof, obtain a favorable opinion as
to the fairness of such transaction or series of related transactions to the
Company or the relevant Restricted Subsidiary, as the case may be, from a
financial point of view, from an Independent Advisor and file the same with the
Trustee.
(ii) The restrictions set forth in clause (i) shall not apply to (a)
reasonable fees and compensation paid to and indemnity provided on behalf of,
officers, directors, employees or consultants of the Company or any Restricted
Subsidiary as determined in good faith by the Board of Directors or senior
management of the Company or such Restricted Subsidiary, as the case may be; (b)
transactions exclusively between or among the Company and any of its Restricted
Subsidiaries or exclusively between or among such Restricted Subsidiaries;
provided, however, that such transactions are not otherwise prohibited hereunder
and (c) Restricted Payments permitted hereunder.
SECTION 4.12. Limitation on Incurrence of Additional Indebtedness
Other than Permitted Indebtedness, the Company will not, and will not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
create, incur, assume, guarantee, acquire, become liable, contingently or
otherwise, with respect to, or otherwise become responsible for payment of
(collectively, "incur") any Indebtedness; provided, however, that if no Default
or Event of Default shall have occurred and be continuing at the time of or as a
consequence of the incurrence of any such Indebtedness, the Company and the
Restricted Subsidiaries or any of them may incur Indebtedness (including,
without limitation, Acquired Indebtedness), in each case, if on the date of the
incurrence of such Indebtedness, after giving pro forma effect to the incurrence
thereof and the receipt and application of the proceeds therefrom, (i) both (a)
the Company's Consolidated EBITDA Coverage Ratio would have been at least equal
to 2.5 to 1.0 and (b) the Company's Adjusted Consolidated Net Tangible Assets
are equal to or greater than 150% of the aggregate consolidated Indebtedness of
the Company and its Restricted Subsidiaries or (ii) the Company's Adjusted
Consolidated Net Tangible Assets are equal to or greater than 200% of the
aggregate consolidated Indebtedness of the Company and its Restricted
Subsidiaries.
For purposes of determining any particular amount of Indebtedness under
this Section 4.12, guarantees of Indebtedness otherwise included in the
determination of such amount shall not also be included.
Indebtedness of a Person existing at the time such Person becomes a
Restricted Subsidiary (whether by merger, consolidation, acquisition of Capital
Stock or otherwise) or is merged with or into the Company or any Restricted
Subsidiary or which is secured by a Lien on an asset acquired by the Company or
a Restricted Subsidiary (whether or not such Indebtedness is assumed by the
acquiring Person) shall be deemed incurred at the time the Person becomes a
Restricted Subsidiary or at the time of the asset acquisition, as the case may
be.
50
The Company will not, and will not permit any Subsidiary Guarantor to
incur any Indebtedness which by its terms (or by the terms of any agreement
governing such Indebtedness) is subordinated in right of payment to any other
Indebtedness of the Company or such Subsidiary Guarantor unless such
Indebtedness is also by its terms (or by the terms of any agreement governing
such Indebtedness) made expressly subordinate in right of payment to the Notes
or the Guarantee of such Subsidiary Guarantor, as the case may be, pursuant to
subordination provisions that are substantively identical to the subordination
provisions of such Indebtedness (or such agreement) that are most favorable to
the holders of any other Indebtedness of the Company or such Subsidiary
Guarantor, as the case may be.
SECTION 4.13. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries
The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or
permit to exist or become effective any encumbrance or restriction on the
ability of any Restricted Subsidiary to: (a) pay dividends or make any other
distributions on or in respect of its Capital Stock; (b) make loans or advances,
or pay any Indebtedness or other obligation owed, to the Company or any other
Restricted Subsidiary; (c) guarantee any Indebtedness or any other obligation of
the Company or any Restricted Subsidiary; or (d) transfer any of its property or
assets to the Company or any other Restricted Subsidiary (each such encumbrance
or restriction, a "Payment Restriction"), except for such encumbrances or
restrictions existing under or by reason of: (1) applicable law; (2) this
Indenture and the Series A/B Indenture; (3) the Credit Facility; (4) customary
non-assignment provisions of any contract or any lease governing a leasehold
interest of any Restricted Subsidiary; (5) any instrument governing Acquired
Indebtedness, which encumbrance or restriction is not applicable to such
Restricted Subsidiary, or the properties or assets of such Restricted
Subsidiary, other than the Person or the property or assets of the Person so
acquired; (6) agreements existing on the Issue Date to the extent and in the
manner such agreements are in effect on the Issue Date; (7) customary
restrictions with respect to a Restricted Subsidiary of the Company pursuant to
an agreement that has been entered into for the sale or disposition of Capital
Stock or assets of such Restricted Subsidiary to be consummated in accordance
with the terms of this Indenture solely in respect of the assets or Capital
Stock to be sold or disposed of; (8) any instrument governing a Permitted Lien,
to the extent and only to the extent such instrument restricts the transfer or
other disposition of assets subject to such Permitted Lien; or (9) an agreement
governing Refinancing Indebtedness incurred to Refinance the Indebtedness
issued, assumed or incurred pursuant to an agreement referred to in clause (2),
(3), (5) or (6) above; provided, however, that the provisions relating to such
encumbrance or restriction contained in any such Refinancing Indebtedness are no
less favorable to the Holders in any material respect as determined by the Board
of Directors of the Company in their reasonable and good faith judgment than the
provisions relating to such encumbrance or restriction contained in the
applicable agreement referred to in such clause (2), (3), (5), or (6).
51
SECTION 4.14. Limitation on Restricted and Unrestricted Subsidiaries
The Board of Directors may, if no Default or Event of Default shall
have occurred and be continuing or would arise therefrom, designate an
Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that
(i) any such redesignation shall be deemed to be an incurrence as of the date of
such redesignation by the Company and its Restricted Subsidiaries of the
Indebtedness (if any) of such redesignated Subsidiary for purposes of Section
4.12, (ii) unless such redesignated Subsidiary shall not have any Indebtedness
outstanding, other than Indebtedness which would be Permitted Indebtedness, no
such designation shall be permitted if immediately after giving effect to such
redesignation and the incurrence of any such additional Indebtedness the Company
could not incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) pursuant to Section 4.12 and (iii) such Subsidiary assumes by
execution of a supplemental indenture all of the obligations of a Subsidiary
Guarantor under a Guarantee.
The Board of Directors of the Company also may, if no Default or Event
of Default shall have occurred and be continuing or would arise therefrom,
designate any Restricted Subsidiary to be an Unrestricted Subsidiary if (i) such
designation is at that time permitted under Section 4.10 and (ii) immediately
after giving effect to such designation, the Company could incur $1.00 of
additional Indebtedness (other than Permitted Indebtedness) pursuant to Section
4.12. Any such designation by the Board of Directors shall be evidenced to the
Trustee by the filing with the Trustee of a certified copy of the resolution of
the Board of Directors giving effect to such designation or redesignation and an
Officers' Certificate certifying that such designation or redesignation complied
with the foregoing conditions and setting forth in reasonable detail the
underlying calculations. In the event that any Restricted Subsidiary is
designated an Unrestricted Subsidiary in accordance with this Section 4.14, such
Restricted Subsidiary's Guarantee will be released.
For purposes of Section 4.10, (i) an "Investment" shall be deemed to
have been made at the time any Restricted Subsidiary is designated as an
Unrestricted Subsidiary in an amount (proportionate to the Company's equity
interest in such Subsidiary) equal to the net worth of such Restricted
Subsidiary at the time that such Restricted Subsidiary is designated as an
Unrestricted Subsidiary; (ii) at any date the aggregate amount of all Restricted
Payments made as Investments since the Issue Date shall exclude and be reduced
by an amount (proportionate to the Company's equity interest in such Subsidiary)
equal to the net worth of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary, not to exceed, in
the case of any such redesignation of an Unrestricted Subsidiary as a Restricted
Subsidiary, the amount of Investments previously made by the Company and the
Restricted Subsidiaries in such Unrestricted Subsidiary (in each case (i) and
(ii) "net worth" to be calculated based upon the fair market value of the assets
52
of such Subsidiary as of any such date of designation); and (iii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its fair
market value at the time of such transfer.
Notwithstanding the foregoing, the Board of Directors may not designate
any Subsidiary of the Company to be an Unrestricted Subsidiary if, after such
designation, (a) the Company or any Restricted Subsidiary (i) provides credit
support for, or a guarantee of, any Indebtedness of such Subsidiary (including
any undertaking, agreement or instrument evidencing such Indebtedness) or (ii)
is directly or indirectly liable for any Indebtedness of such Subsidiary or (b)
such Subsidiary owns any Capital Stock of, or owns or holds any Lien on any
property of, any Restricted Subsidiary which is not a Subsidiary of the
Subsidiary to be so designated.
Notwithstanding the foregoing, the provisions set forth above will not
prohibit the initial designation of each of Cascade and Western as Unrestricted
Subsidiaries.
Subsidiaries of the Company that are not designated by the Board of
Directors as Restricted or Unrestricted Subsidiaries will be deemed to be
Restricted Subsidiaries. Notwithstanding any provisions of this Section 4.14,
all Subsidiaries of an Unrestricted Subsidiary will be Unrestricted
Subsidiaries.
SECTION 4.15. Change of Control
(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Issuers repurchase all or a portion of such
Holder's Notes (including any Additional Series D Notes) pursuant to the offer
described below (the "Change of Control Offer"), at a purchase price equal to
101% of the principal amount thereof plus accrued and unpaid interest, if any,
thereon to the date of purchase.
(b) Within 30 days following the date upon which the Change of Control
occurred, the Issuers must send, by first class mail, a notice to each Holder at
such Holder's last registered address, with a copy to the Trustee, which notice
shall govern the terms of the Change of Control Offer. The notice to the Holders
shall contain all instructions and materials necessary to enable such Holders to
tender Notes pursuant to the Change of Control Offer. Such notice shall state:
(i) that the Change of Control Offer is being made pursuant
to this Section 4.15, that all Notes tendered and not withdrawn will be
accepted for payment and that the Change of Control Offer shall remain
open for a period of 20 Business Days or such longer period as may be
required by law;
(ii) the purchase price (including the amount of accrued
interest) and the purchase date (which shall be no earlier than 30 days
nor later than 45 days from the date such notice is mailed, other than
as may be required by law) (the "Change of Control Payment Date");
53
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Issuers default in making payment
therefor, any Note accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(v) that Holders electing to have a Note purchased pursuant
to a Change of Control Offer will be required to surrender the Note,
with the form entitled "Option of Holder to Elect Purchase" on the
reverse of the Note completed, to the Paying Agent at the address
specified in the notice prior to the close of business on the third
Business Day prior to the Change of Control Payment Date;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day
prior to the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Notes the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such
Notes purchased;
(vii) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided, however, that each Note
purchased and each new Note issued shall be in an original principal
amount of $1,000 or integral multiples thereof; and
(viii) the circumstances and relevant facts regarding such
Change of Control.
On or before the Change of Control Payment Date, the Issuers shall (i)
accept for payment Notes or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent in accordance with Section
2.14 U.S. Legal Tender sufficient to pay the purchase price plus accrued
interest, if any, of all Notes so tendered and (iii) deliver to the Trustee
Notes so accepted together with an Officers' Certificate stating the Notes or
portions thereof being purchased by the Issuers. Upon receipt by the Paying
Agent of the monies specified in clause (ii) above and a copy of the Officers'
Certificate specified in clause (iii) above, the Paying Agent shall promptly
mail to the Holders of Notes so accepted payment in an amount equal to the
purchase price plus accrued interest, if any, and the Trustee shall promptly
authenticate and mail to such Holders new Notes equal in principal amount to any
unpurchased portion of the Notes surrendered. Any Notes not so accepted shall be
promptly mailed by the Company to the Holder thereof. For purposes of this
Section 4.15, the Trustee shall act as the Paying Agent.
54
The Issuers shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer at
the Change of Control Purchase Price, at the same times and otherwise in
compliance with the requirements applicable to a Change of Control Offer made by
the Issuers and purchases all Notes validly tendered and not withdrawn under
such Change of Control Offer.
Neither the Board of Directors of the Company nor the Trustee may waive
the provisions of this Section 4.15 relating to the Issuers' obligation to make
a Change of Control Offer.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Change of Control Offer. To the extent that
the provisions of any securities laws or regulations conflict with the
provisions of this Section 4.15, the Issuers shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached their
obligations under the provisions of this Section 4.15 by virtue thereof.
SECTION 4.16. Limitation on Asset Sales
(a) The Company will not, and will not cause or permit any of its
Restricted Subsidiaries to, consummate an Asset Sale unless:
(i) the Company or the applicable Restricted Subsidiary, as
the case may be, receives consideration at the time of such Asset Sale
at least equal to the fair market value of the assets sold or otherwise
disposed of (as determined in good faith by the Company's Board of
Directors or senior management of the Company);
(ii) (a) at least 70% of the consideration received by the
Company or the Restricted Subsidiary, as the case may be, from such
Asset Sale shall be in the form of cash or Cash Equivalents and is
received at the time of such disposition and (b) at least 15% of such
consideration received if in a form other than cash or Cash Equivalents
is converted into or exchanged for cash or Cash Equivalents within 120
days of such disposition; and
(iii) upon the consummation of an Asset Sale, the Company
shall apply, or cause such Restricted Subsidiary to apply, the Net Cash
Proceeds relating to such Asset Sale within 365 days of receipt thereof
either (a) to repay or prepay Indebtedness outstanding under the Credit
Facility, including, without limitation, a permanent reduction in the
related commitment, (b) to repay or prepay any Indebtedness of the
Company that is secured by a Lien permitted to be incurred pursuant to
Section 4.18, (c) to make an investment in properties or assets that
replace the properties or assets that were the subject of such Asset
55
Sale or in properties or assets that will be used in the business of
the Company and its Restricted Subsidiaries as existing on the Series
A/B Issue Date or in businesses reasonably related thereto
("Replacement Assets"), (d) to an investment in Crude Oil and Natural
Gas Related Assets or (e) a combination of prepayment and investment
permitted by the foregoing clauses (iii)(a) through (iii)(d). On the
366th day after an Asset Sale or such earlier date, if any, as the
Board of Directors of the Company determines not to apply the Net Cash
Proceeds relating to such Asset Sale as set forth in clauses (iii)(a)
through (iii)(d) of the next preceding sentence (each a "Net Proceeds
Offer Trigger Date"), such aggregate amount of Net Cash Proceeds which
have been received by the Company or such Restricted Subsidiary but
which have not been applied on or before such Net Proceeds Offer
Trigger Date as permitted in clauses (iii)(a) through (iii)(d) of the
next preceding sentence (each an "Unadjusted Net Proceeds Offer
Amount"), multiplied by the ratio (the "Net Proceeds Offer Adjustment
Ratio") of the then outstanding principal amount of the Notes to the
sum of the then outstanding principal amount of the Series A/B Notes
plus the then outstanding principal amount of the Notes (each a "Net
Proceeds Offer Amount") shall be applied by the Company or such
Restricted Subsidiary, as the case may be, to make an offer to purchase
(a "Net Proceeds Offer") on a date (the "Net Proceeds Offer Payment
Date") not less than 30 nor more than 45 days following the applicable
Net Proceeds Offer Trigger Date, from all Holders on a pro rata basis,
that principal amount of Notes purchasable with the Net Proceeds Offer
Amount at a price equal to 100% of the principal amount of the Notes to
be purchased, plus accrued and unpaid interest, if any, thereon to the
date of purchase; provided, however, that if at any time any non-cash
consideration received by the Company or any Restricted Subsidiary, as
the case may be, in connection with any Asset Sale is converted into or
sold or otherwise disposed of for cash (other than interest received
with respect to any such non-cash consideration), then such conversion
or disposition shall be deemed to constitute an Asset Sale hereunder
and the Net Cash Proceeds thereof shall be applied in accordance with
this Section 4.16. The Company may defer the Net Proceeds Offer until
the sum of the Unadjusted Net Proceeds Offer Amounts that correlate to
the unutilized Net Proceeds Offer Amounts resulting from one or more
Asset Sales are equal to or in excess of $5,000,000 (at which time, the
entire unutilized Net Proceeds Offer Amounts (recalculated using the
then current Net Proceeds Offer Adjustment Ratio), and not just the Net
Proceeds Offer Amounts correlating to the Unadjusted Net Proceeds Offer
Amounts in excess of $5,000,000, shall be applied as required pursuant
to this paragraph).
In the event of the transfer of substantially all (but not all) of the
property and assets of the Company and its Restricted Subsidiaries as an
entirety to a Person in a transaction permitted under Section 5.01, the
successor corporation shall be deemed to have sold the properties and assets of
the Company and its Restricted Subsidiaries not so transferred for purposes of
this Section 4.16, and shall comply with the provisions of this Section 4.16
56
with respect to such deemed sale as if it were an Asset Sale. In addition, the
fair market value of such properties and assets of the Company or its Restricted
Subsidiaries deemed to be sold shall be deemed to be Net Cash Proceeds for
purposes of this Section 4.16.
Notwithstanding the two immediately preceding paragraphs, the Company
and its Restricted Subsidiaries will be permitted to consummate an Asset Sale
without complying with such paragraphs to the extent (a) the consideration for
such Asset Sale constitutes Replacement Assets and/or Crude Oil and Natural Gas
Related Assets and (b) such Asset Sale is for fair market value; provided,
however, that any consideration not constituting Replacement Assets and Crude
Oil and Natural Gas Related Assets received by the Company or any of its
Restricted Subsidiaries in connection with any Asset Sale permitted to be
consummated under this paragraph shall constitute Net Cash Proceeds subject to
the provisions of the two immediately preceding paragraphs.
(b) Subject to the deferral of the Net Proceeds Offer contained in
clause (a)(iii) above, each notice of a Net Proceeds Offer pursuant to this
Section 4.16 shall be mailed or caused to be mailed, by first class mail, by the
Issuers not more than 30 days after the Net Proceeds Offer Trigger Date to all
Holders at their last registered addresses, with a copy to the Trustee. The
notice shall contain all instructions and materials necessary to enable such
Holders to tender Notes pursuant to the Net Proceeds Offer and shall state the
following terms:
(i) that the Net Proceeds Offer is being made pursuant to
Section 4.16, that all Notes (including any Additional Series D Notes)
tendered will be accepted for payment; provided, however, that if the
aggregate principal amount of Notes (including any Additional Series D
Notes) tendered in a Net Proceeds Offer plus accrued interest at the
expiration of such offer exceeds the aggregate amount of the Net
Proceeds Offer, the Issuers shall select the Notes (including any
Additional Series D Notes) to be purchased on a pro rata basis (with
such adjustments as may be deemed appropriate by the Issuers so that
only Notes in denominations of $1,000 or multiples thereof shall be
purchased) and that the Net Proceeds Offer shall remain open for a
period of 20 Business Days or such longer period as may be required by
law;
(ii) the purchase price (including the amount of accrued
interest) and the Net Proceeds Offer Payment Date (which shall be not
less than 30 nor more than 45 days following the applicable Net
Proceeds Offer Trigger Date and which shall be at least five business
days after the Trustee receives notice thereof from the Issuers);
(iii) that any Note not tendered will continue to accrue
interest;
(iv) that, unless the Issuers default in making payment
therefor, any Note accepted for payment pursuant to the Net Proceeds
57
Offer shall cease to accrue interest after the Net Proceeds Offer
Payment Date;
(v) that Holders electing to have a Note purchased pursuant
to a Net Proceeds Offer will be required to surrender the Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse
of the Note completed, to the Paying Agent at the address specified in
the notice prior to the close of business on the third Business Day
prior to the Net Proceeds Offer Payment Date;
(vi) that Holders will be entitled to withdraw their election
if the Paying Agent receives, not later than the second Business Day
prior to the Net Proceeds Offer Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Notes the Holder delivered for purchase and
a statement that such Holder is withdrawing his election to have such
Note purchased; and
(vii) that Holders whose Notes are purchased only in part will
be issued new Notes in a principal amount equal to the unpurchased
portion of the Notes surrendered; provided, however, that each Note
purchased and each new Note issued shall be in an original principal
amount of $1,000 or integral multiples thereof;
On or before the Net Proceeds Offer Payment Date, the Issuers shall (i)
accept for payment Notes (including any Additional Series D Notes) or portions
thereof tendered pursuant to the Net Proceeds Offer which are to be purchased in
accordance with item (b)(i) above, (ii) deposit with the Paying Agent in
accordance with Section 2.14 U.S. Legal Tender sufficient to pay the purchase
price plus accrued interest, if any, of all Notes to be purchased and (iii)
deliver to the Trustee Notes so accepted together with an Officers' Certificate
stating the Notes or portions thereof being purchased by the Issuers. The Paying
Agent shall promptly mail to the Holders of Notes so accepted payment in an
amount equal to the purchase price plus accrued interest, if any. For purposes
of this Section 4.16, the Trustee shall act as the Paying Agent.
The Issuers will comply with the requirements of Rule 14e-1 under the
Exchange Act and any other securities laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the
repurchase of Notes pursuant to a Net Proceeds Offer. To the extent that the
provisions of any securities laws or regulations conflict with the provisions of
this Section 4.16, the Issuers shall comply with the applicable securities laws
and regulations and shall not be deemed to have breached their obligations under
the provisions of this Section 4.16 by virtue thereof.
SECTION 4.17. Limitation on Preferred Stock of Restricted Subsidiaries
The Company will not cause or permit any of its Restricted Subsidiaries
58
to issue any Preferred Stock (other than to the Company or to a Wholly Owned
Restricted Subsidiary) or permit any Person (other than the Company or a Wholly
Owned Restricted Subsidiary) to own any Preferred Stock of any Restricted
Subsidiary.
SECTION 4.18. Limitation on Liens
Other than Permitted Liens, the Company will not, and will not cause or
permit any of its Restricted Subsidiaries to, directly or indirectly, create,
incur, assume or permit or suffer to exist any Liens of any kind against or upon
any property or assets of the Company or any of its Restricted Subsidiaries
(whether owned on the Issue Date or acquired after the Issue Date) or any
proceeds therefrom, or assign or otherwise convey any right to receive income or
profits therefrom unless (a) in the case of Liens securing Indebtedness that is
expressly subordinate or junior in right of payment to the Notes or any
Guarantee, the Notes or such Guarantee, as the case may be, are secured by a
Lien on such property, assets or proceeds that is senior in priority to such
Liens at least to the same extent as the Notes are senior in priority to such
Indebtedness and (b) in all other cases, the Notes and the Guarantees are
equally and ratably secured.
SECTION 4.19. Limitation on Conduct of Business
The Company will not, and will not permit any of its Restricted
Subsidiaries to, engage in the conduct of any business other than the Crude Oil
and Natural Gas Business.
SECTION 4.20. Additional Subsidiary Guarantees
If the Company or any of its Restricted Subsidiaries transfers or
causes to be transferred, in one transaction or a series of related
transactions, any property to any Restricted Subsidiary that is not a Subsidiary
Guarantor, or if the Company or any of its Restricted Subsidiaries shall
organize, acquire or otherwise invest in or hold an Investment in another
Restricted Subsidiary having total consolidated assets with a book value in
excess of $500,000 that is not a Subsidiary Guarantor, then such transferee or
acquired or other Restricted Subsidiary shall (a) execute and deliver to the
Trustee a supplemental indenture in form reasonably satisfactory to the Trustee
pursuant to which such Restricted Subsidiary shall unconditionally guarantee all
of the Company's obligations under the Notes and this Indenture on the terms set
forth in this Indenture and (b) deliver to the Trustee an Opinion of Counsel and
an Officers' Certificate, stating that no event of default shall occur as a
result of such supplemental indenture, that it complies with the terms of this
Indenture and that such supplemental indenture has been duly authorized,
executed and delivered by such Restricted Subsidiary and constitutes a legal,
valid, binding and enforceable obligation of such Restricted Subsidiary.
Thereafter, such Restricted Subsidiary shall be a Subsidiary Guarantor for all
purposes of the Indenture.
59
SECTION 4.21. Limitation on Restrictive Covenants
Notwithstanding any other provisions of this Indenture, the restrictive
covenants set forth herein for so long as the Series A/B Indenture remains in
effect, shall be and shall be deemed limited to the extent necessary so that the
creation, existence and effectiveness of such restrictive covenant shall not
result in a breach of the covenant of the Series A/B Indenture relating to
"Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries."
ARTICLE FIVE
SUCCESSOR CORPORATION
SECTION 5.1. Merger, Consolidation and Sale of Assets
The Company will not, in a single transaction or series of related
transactions, consolidate or merge with or into any Person, or sell, assign,
transfer, lease, convey or otherwise dispose of (or cause or permit any
Restricted Subsidiary to sell, assign, transfer, lease, convey or otherwise
dispose of) all or substantially all of the Company's assets (determined on a
consolidated basis for the Company and its Restricted Subsidiaries), whether as
an entirety or substantially as an entirety to any Person unless: (a) either (i)
the Company or such Restricted Subsidiary, as the case may be, shall be the
surviving or continuing corporation or (ii) the Person (if other than the
Company) formed by such consolidation or into which the Company is merged or the
Person which acquires by sale, assignment, transfer, lease, conveyance or other
disposition the properties and assets of the Company and its Restricted
Subsidiaries substantially as an entirety (the "Surviving Entity") (x) shall be
a corporation organized and validly existing under the laws of the United States
or any state thereof or the District of Columbia and (y) shall expressly assume,
by supplemental indenture (in form and substance satisfactory to the Trustee),
executed and delivered to the Trustee, the due and punctual payment of the
principal of, premium, if any, and interest on all of the Notes and the
performance of every covenant of the Notes, the Indenture and the Registration
Rights Agreement on the part of the Company to be performed or observed; (b)
immediately after giving effect to such transaction and the assumption
contemplated by clause (a)(ii)(y) above (including giving effect to any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction), the Company or such Surviving Entity, as the case
may be, (i) shall have a Consolidated Net Worth equal to or greater than the
Consolidated Net Worth of the Company immediately prior to such transaction and
(ii) shall be able to incur at least $1.00 of additional Indebtedness (other
than Permitted Indebtedness) pursuant to Section 4.12 hereof; (c) immediately
before and immediately after giving effect to such transaction and the
assumption contemplated by clause (a)(ii)(y) above (including, without
limitation, giving effect to any Indebtedness incurred or anticipated to be
60
incurred and any Lien granted in connection with or in respect of the
transaction), no Default or Event of Default shall have occurred or be
continuing; and (d) the Company or the Surviving Entity, as the case may be,
shall have delivered to the Trustee an officers' certificate and an opinion of
counsel, each stating that such consolidation, merger, sale, assignment,
transfer, lease, conveyance or other disposition and, if a supplemental
indenture is required in connection with such transaction, such supplemental
indenture comply with the applicable provisions hereof and that all conditions
precedent in this Indenture relating to such transaction have been satisfied;
provided, however, that such counsel may rely, as to matters of fact, on a
certificate or certificates of officers of the Company.
For purposes of the foregoing, the transfer (by lease, assignment, sale
or otherwise, in a single transaction or series of transactions) of all or
substantially all of the properties or assets of one or more Restricted
Subsidiaries the Capital Stock of which constitutes all or substantially all of
the properties and assets of the Company, shall be deemed to be the transfer of
all or substantially all of the properties and assets of the Company.
Each Subsidiary Guarantor (other than any Subsidiary Guarantor whose
Guarantee is to be released in accordance with the terms of the Guarantee and
this Indenture in connection with any transaction complying with the provisions
of the Indenture described under Article Five) will not, and the Company will
not cause or permit any Subsidiary Guarantor to, consolidate with or merge with
or into any Person other than the Company or another Subsidiary Guarantor that
is a Wholly Owned Restricted Subsidiary unless: (a) the entity formed by or
surviving any such consolidation or merger (if other than the Subsidiary
Guarantor) or to which such sale, lease, conveyance or other disposition shall
have been made is a corporation organized and existing under the laws of the
United States or any state thereof or the District of Columbia; (b) such entity
assumes by execution of a supplemental indenture all of the obligations of the
Subsidiary Guarantor under its Guarantee; (c) immediately after giving effect to
such transaction, no Default or Event of Default shall have occurred and be
continuing; and (d) immediately after giving effect to such transaction and the
use of any net proceeds therefrom on a pro forma basis, the Company could
satisfy the provisions of clause (b) of the first paragraph of this covenant.
Any merger or consolidation of a Subsidiary Guarantor with and into the Company
(with the Company being the surviving entity) or another Subsidiary Guarantor
that is a Wholly Owned Restricted Subsidiary need only comply with clause (d) of
the first paragraph of this Section 5.01.
SECTION 5.02. Successor Corporation Substituted
Upon any consolidation, merger, conveyance, lease or transfer in
accordance with Section 5.01, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, lease or
transfer is made shall succeed to, and be substituted for, and may exercise
every right and power of, the Company under this Indenture with the same effect
61
as if such successor had been named as the Company herein and thereafter (except
in the case of a lease) the predecessor corporation will be relieved of all
further obligations and covenants under this Indenture and the Notes.
ARTICLE SIX
REMEDIES
SECTION 6.01. Events of Default
An "Event of Default" means any of the following events:
(a) the failure to pay interest (including any Additional
Interest) on any Notes when the same becomes due and payable and such
default continues for a period of 30 days;
(b) the failure to pay the principal of any Notes when such
principal becomes due and payable, at maturity, upon redemption or
otherwise (including the failure to make a payment to purchase Notes
tendered pursuant to a Change of Control Offer or a Net Proceeds
Offer);
(c) a default in the observance or performance of any other
covenant or agreement contained in this Indenture which default
continues for a period of 30 days after either Issuer or Subsidiary
Guarantor receives written notice specifying the default (and demanding
that such default be remedied) from the Trustee or the Holders of at
least 25% of the outstanding principal amount of the Notes (except in
the case of a default with respect to observance or performance of any
of the terms or provisions of Section 4.15, 4.16 or 5.01 which will
constitute an Event of Default with such notice requirement but without
such passage of time requirement);
(d) a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or
evidenced any Indebtedness of the Company or any Restricted Subsidiary
(or the payment of which is guaranteed by the Issuers or any Restricted
Subsidiary), whether such Indebtedness now exists, or is created after
the Issue Date, which default (i) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness after
any applicable grace period provided in such Indebtedness (a "Payment
Default") or (ii) results in the acceleration of such Indebtedness
prior to its express maturity and, in each case, the principal amount
of any such Indebtedness, together with the principal amount of any
other such Indebtedness under which there has been a Payment Default or
the maturity of which has been so accelerated, aggregates $5,000,000 or
more;
62
(e) one or more judgments in an aggregate amount in excess of
$5,000,000 (unless covered by insurance by a reputable insurer as to
which the insurer has acknowledged coverage) shall have been rendered
against the Company or any of its Restricted Subsidiaries and such
judgments remain undischarged, unvacated, unpaid or unstayed for a
period of 60 days after such judgment or judgments become final and
non-appealable;
(f) the Company or any of its Subsidiaries pursuant to or
under or within the meaning of any Bankruptcy Law:
(i) commences a voluntary case or proceeding;
(ii) consents to the entry of an order for relief
against it in an involuntary case or proceeding;
(iii) consents to the appointment of a Custodian of
it or for all or substantially all of its property;
(iv) makes a general assignment for the benefit of
its creditors; or
(v) shall generally not pay its debts when such
debts become due or shall admit in writing its inability to
pay its debts generally;
(g) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(i) is for relief against the Company or any
Subsidiary of the Company in an involuntary case or
proceeding,
(ii) appoints a Custodian of the Company or any
Subsidiary of the Company for all or substantially all of its
Properties, or
(iii) orders the liquidation of the Company or any
Subsidiary of the Company,
and in each case the order or decree remains unstayed and in effect for
60 days; or
(h) any of the Guarantees cease to be in full force and effect
or any of the Guarantees are declared to be null and void or invalid
and unenforceable or any of the Subsidiary Guarantors denies or
disaffirms its liability under its Guarantees (other than by reason of
release of a Subsidiary Guarantor in accordance with the terms of this
Indenture).
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SECTION 6.02. Acceleration
Upon the happening of any Event of Default specified in Section 6.01
the Trustee may, or the holders of at least 25% in aggregate principal amount of
outstanding Notes may, declare the principal of, premium, if any, and accrued
and unpaid interest on all the Notes to be due and payable by notice in writing
to the Issuers and the Trustee specifying the respective Event of Default and
that it is a "notice of acceleration" and the same shall become immediately due
and payable. If an Event of Default of the type described in clause (f) or (g)
above occurs and is continuing, then such amount will ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holder.
At any time after a declaration of acceleration with respect to the
Notes as described in the preceding paragraph, the Holders of a majority in
aggregate principal amount of the Notes then outstanding by written notice to
the Company and the Trustee may rescind and cancel such declaration and its
consequences (a) if the rescission would not conflict with any judgment or
decree, (b) if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of such
acceleration, (c) to the extent the payment of such interest is lawful, interest
on overdue installments of interest and overdue principal, which has become due
otherwise than by such declaration of acceleration, has been paid, (d) if the
Issuers have paid the Trustee its reasonable compensation and reimbursed the
Trustee for its expenses, disbursements and advances and (e) in the event of the
cure or waiver of an Event of Default of the type described in clause (f) or (g)
of the description of Events of Default above, the Trustee shall have received
an Officers' Certificate and an Opinion of Counsel that such Event of Default
has been cured or waived; provided, however, that such counsel may rely, as to
matters of fact, on a certificate or certificates of officers of the Company. No
such rescission shall affect any subsequent Default or impair any right
consequent thereto.
SECTION 6.03. Other Remedies
If an Event of Default occurs and is continuing, the Trustee may pursue
any available remedy by proceeding at law or in equity to collect the payment of
the principal of, premium, if any, or interest on the Notes or to enforce the
performance of any provision of the Notes or this Indenture.
All rights of action and claims under this Indenture or the Notes may
be enforced by the Trustee even if it does not possess any of the Notes or does
not produce any of them in the proceeding. A delay or omission by the Trustee or
any Holder in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or acquiescence
in the Event of Default. No remedy is exclusive of any other remedy. All
available remedies are cumulative to the extent permitted by law.
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SECTION 6.04. Waiver of Past Defaults
Prior to the declaration of acceleration of the Notes, the Holders of
not less than a majority in aggregate principal amount of the Notes then
outstanding by notice to the Trustee may, on behalf of the Holders of all the
Notes, waive any existing Default or Event of Default and its consequences under
this Indenture, except a Default or Event of Default specified in Section
6.01(a) or (b) or in respect of any provision hereof which cannot be modified or
amended without the consent of the Holder so affected pursuant to Section 9.02.
When a Default or Event of Default is so waived, it shall be deemed cured and
shall cease to exist. This Section 6.04 shall be in lieu of ss. 316(a)(1)(B) of
the TIA and such ss. 316(a)(1)(B) of the TIA is hereby expressly excluded from
this Indenture and the Notes, as permitted by the TIA.
SECTION 6.05. Control by Majority
Holders of the Notes may not enforce this Indenture or the Notes except
as provided in this Article Six and under the TIA. The Holders of not less than
a majority in aggregate principal amount of the outstanding Notes shall have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, provided, however, that the Trustee may refuse to follow any
direction (a) that conflicts with any rule of law or this Indenture, (b) that
the Trustee determines may be unduly prejudicial to the rights of another
Holder, or (c) that may expose the Trustee to personal liability for which
reasonable indemnity provided to the Trustee against such liability shall be
inadequate; provided, further, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such direction
or this Indenture. This Section 6.05 shall be in lieu of ss. 316(a)(1)(A) of the
TIA, and such ss. 316(a)(1)(A) of the TIA is hereby expressly excluded from this
Indenture and the Notes, as permitted by the TIA.
SECTION 6.06. Limitation on Suits
No Holder of any Notes shall have any right to institute any proceeding
with respect to this Indenture or the Notes or any remedy hereunder, unless the
Holders of at least 25% in aggregate principal amount of the outstanding Notes
have made written request, and offered reasonable indemnity, to the Trustee to
institute such proceeding as Trustee under the Notes and this Indenture, the
Trustee has failed to institute such proceeding within 30 days after receipt of
such notice, request and offer of indemnity and the Trustee, within such 30-day
period, has not received directions inconsistent with such written request by
Holders of not less than a majority in aggregate principal amount of the
outstanding Notes.
The foregoing limitations shall not apply to a suit instituted by a
Holder of a Note for the enforcement of the payment of the principal of,
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premium, if any, or interest on, such Note on or after the respective due dates
expressed or provided for in such Note.
A Holder may not use this Indenture to prejudice the rights of any
other Holders or to obtain priority or preference over such other Holders.
SECTION 6.07. Right of Holders To Receive Payment
Notwithstanding any other provision in this Indenture, the right of any
Holder of a Note to receive payment of the principal of, premium, if any, and
interest on such Note, on or after the respective due dates expressed or
provided for in such Note, or to bring suit for the enforcement of any such
payment on or after the respective due dates, is absolute and unconditional and
shall not be impaired or affected without the consent of the Holder.
SECTION 6.08. Collection Suit by Trustee
If an Event of Default specified in clause (a) or (b) of Section 6.01
occurs and is continuing, the Trustee may recover judgment in its own name and
as trustee of an express trust against the Company, or any other obligor on the
Notes for the whole amount of the principal of, premium, if any, and accrued
interest remaining unpaid, together with interest on overdue principal and, to
the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum provided for by the
Notes and such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. Trustee May File Proofs of Claim
The Trustee may file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents, counsel, accountants and experts) and
the Holders allowed in any judicial proceedings relative to the Issuers or
Restricted Subsidiaries (or any other obligor upon the Notes), their creditors
or their property and shall be entitled and empowered to collect and receive any
monies or other property payable or deliverable on any such claims and to
distribute the same, and any Custodian in any such judicial proceedings is
hereby authorized by each Holder to make such payments to the Trustee and, in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.07. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof, or to authorize the Trustee to vote in respect
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of the claim of any Holder in any such proceeding.
SECTION 6.10 Priorities
If the Trustee collects any money pursuant to this Article Six it shall
pay out such money in the following order:
First: to the Trustee for amounts due under Section 7.07;
Second: to Holders for interest accrued on the Notes, ratably,
without preference or priority of any kind, according to the amounts
due and payable on the Notes for interest;
Third: to Holders for the principal amounts (including any
premium) owing under the Notes, ratably, without preference or priority
of any kind, according to the amounts due and payable on the Notes for
the principal (including any premium); and
Fourth: the balance, if any, to the Issuers.
The Trustee, upon prior written notice to the Issuers, may fix a record
date and payment date for any payment to Holders pursuant to this Section 6.10.
SECTION 6.11. Undertaking for Costs
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may in its discretion require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to any suit by the Trustee, any suit by a
Holder pursuant to Section 6.06, or a suit by a Holder or Holders of more than
10% in aggregate principal amount of the outstanding Notes.
SECTION 6.12. Restoration of Rights and Remedies
If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture or any Note and such proceeding has
been discontinued or abandoned for any reason, or has been determined adversely
to the Trustee or to such Holder, then and in every such case the Issuers, the
Trustee and the Holders shall, subject to any determination in such proceeding,
be restored severally and respectively to their former positions hereunder, and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
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ARTICLE SEVEN
TRUSTEE
SECTION 7.01. Duties of Trustee
(a) If an Event of Default has occurred and is continuing, the Trustee
shall exercise such of the rights and powers vested in it by this Indenture and
use the same degree of care and skill in its exercise thereof as a prudent
person would exercise or use under the circumstances in the conduct of his own
affairs.
(b) Except during the continuance of an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no covenants or
obligations shall be implied in this Indenture that are adverse to the
Trustee.
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture. However, in the case of any such certificates or
opinions that by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) Notwithstanding anything to the contrary herein contained, the
Trustee may not be relieved from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b)
of this Section 7.01.
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts.
(3) The Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.02, 6.04 or 6.05.
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
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repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.01 and
Section 7.02.
(f) The Trustee shall not be liable for interest on any money or assets
received by it except as the Trustee may agree in writing with the Issuers.
Assets held in trust by the Trustee need not be segregated from other assets
except to the extent required by law.
SECTION 7.02. Rights of Trustee
Subject to Section 7.01:
(a) The Trustee may rely and shall be fully protected in
acting or refraining from acting upon any document believed by it to be
genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may
consult with counsel of its selection and may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to Sections
10.04 and 10.05. The Trustee shall not be liable for any action it
takes or omits to take in good faith in reliance on such Officers'
Certificate or Opinion of Counsel.
(c) The Trustee may act through its attorneys and agents and
shall not be responsible for the misconduct or negligence of any agent
appointed with due care.
(d) The Trustee shall not be liable for any action that it
takes or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.
(e) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, notice, request, direction, consent,
order, bond, debenture, or other paper or document, but the Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit, and, if the Trustee shall
determine to make such further inquiry or investigation, it shall be
entitled, upon reasonable notice to the Issuers, to examine the books,
records, and premises of the Issuers, personally or by agent or
attorney and to consult with the officers and representatives of the
Issuers, including the Issuers' accountants and attorneys.
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(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request,
order or direction of any of the Holders pursuant to the provisions of
this Indenture, unless such Holders shall have offered to the Trustee
security or indemnity reasonably satisfactory to the Trustee against
the costs, expenses and liabilities which may be incurred by it in
compliance with such request, order or direction.
(g) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder.
(h) Delivery of reports, information and documents to the
Trustee under Section 4.08 is for informational purposes only and the
Trustee's receipt of the foregoing shall not constitute constructive
notice of any information contained therein or determinable from
information contained therein, including the Issuers' compliance with
any of their covenants hereunder (as to which the Trustee is entitled
to rely exclusively on Officers' Certificates).
SECTION 7.03. Individual Rights of Trustee
The Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Issuers, any of their
Subsidiaries, or their respective Affiliates with the same rights it would have
if it were not Trustee. Any Agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer
The Trustee makes no representation as to the validity or adequacy of
this Indenture or the Notes, and it shall not be accountable for the Issuers'
use of the proceeds from the Notes, and it shall not be responsible for any
statement of the Issuers in this Indenture or the Notes other than the Trustee's
certificate of authentication.
SECTION 7.05. Notice of Default
If a Default or an Event of Default occurs and is continuing and if it
is known to a Trust Officer, the Trustee shall mail to each Holder notice of the
uncured Default or Event of Default within 90 days after obtaining knowledge
thereof. Except in the case of a Default or an Event of Default in payment of
principal of, or interest on, any Note, including an accelerated payment, a
Default in payment on the Change of Control Payment Date pursuant to a Change of
Control Offer or on the Net Proceeds Offer Payment Date pursuant to a Net
Proceeds Offer and a Default in compliance with Article Five hereof, the Trustee
may withhold the notice if and so long as its Board of Directors, the executive
committee of its Board of Directors or a committee of its directors and/or Trust
Officers in good faith determines that withholding the notice is in the interest
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of the Holders. The foregoing sentence of this Section 7.05 shall be in lieu of
the proviso to ss. 315(b) of the TIA and such proviso to ss. 315(b) of the TIA
is hereby expressly excluded from this Indenture and the Notes, as permitted by
the TIA.
SECTION 7.06. Reports by Trustee to Holders
Within 60 days after November 1 of each year beginning with 1998, the
Trustee shall, to the extent that any of the events described in TIA ss. 313(a)
occurred within the previous twelve months, but not otherwise, mail to each
Holder a brief report dated as of such date that complies with TIA ss. 313(a).
The Trustee also shall comply with TIA ss.ss. 313(b), (c) and (d).
A copy of each report at the time of its mailing to Holders shall be
mailed to the Issuers and filed with the Commission and each stock exchange, if
any, on which the Notes are listed.
The Issuers shall promptly notify the Trustee if the Notes become
listed on any stock exchange and the Trustee shall comply with TIA ss. 313(d).
SECTION 7.07. Compensation and Indemnity
The Issuers shall pay to the Trustee from time to time such
compensation for its services as has been agreed to in writing signed by the
Issuers and the Trustee. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuers shall
reimburse the Trustee upon request for all reasonable out-of-pocket expenses
incurred or made by it in connection with the performance of its duties under
this Indenture. Such expenses shall include the reasonable fees and expenses of
the Trustee's agents, counsel, accountants and experts.
The Issuers shall indemnify each of the Trustee (or any predecessor
Trustee) and its agents, employees, stockholders, Affiliates and directors and
officers for, and hold them each harmless against, any and all loss, liability,
damage, claim or expense (including reasonable fees and expenses of counsel),
including taxes (other than taxes based on the income of the Trustee) incurred
by them except for such actions to the extent caused by any negligence, bad
faith or willful misconduct on their part, arising out of or in connection with
the acceptance or administration of this trust including the reasonable costs
and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of their rights, powers or
duties hereunder. The Trustee shall notify the Issuers promptly of any claim
asserted against the Trustee for which it may seek indemnity. At the Trustee's
sole discretion, the Issuers shall defend the claim and the Trustee shall
cooperate and may participate in the defense; provided, however, that any
settlement of a claim shall be approved in writing by the Trustee if such
settlement would result in an admission of liability by the Trustee or if such
settlement would not be accompanied by a full release of the Trustee for all
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liability arising out of the events giving rise to such claim. Alternatively,
the Trustee may at its option have separate counsel of its own choosing and the
Issuers shall pay the reasonable fees and expenses of such counsel.
To secure the Issuers' payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Notes on all assets or money held or
collected by the Trustee, in its capacity as Trustee, except assets or money
held in trust to pay principal of or premium, if any, or interest on particular
Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(f) or (g) occurs, such expenses and the
compensation for such services are intended to constitute expenses of
administration under any Bankruptcy Law.
The provisions of this Section 7.07 shall survive the termination of
this Indenture.
SECTION 7.08. Replacement of Trustee
The Trustee may resign at any time by so notifying the Issuers. The
Holders of a majority in principal amount of the outstanding Notes may remove
the Trustee and appoint a successor Trustee with the Issuers' consent, by so
notifying the Issuers and the Trustee. The Issuers may remove the Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the
Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall notify each Holder of such
event and shall promptly appoint a successor Trustee. Within one year after the
successor Trustee takes office, the Holders of a majority in aggregate principal
amount of the outstanding Notes may appoint a successor Trustee to replace the
successor Trustee appointed by the Issuers.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee, subject to the lien provided in Section 7.07, the resignation
or removal of the retiring Trustee shall become effective, and the successor
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Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The Issuers shall mail notice of such successor Trustee's appointment
to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers or the
Holders of at least 10% in aggregate principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding any resignation or replacement of the Trustee pursuant
to this Section 7.08, the Issuers' obligations under Section 7.07 shall continue
for the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger, Etc
If the Trustee consolidates with, merges or converts into, or transfers
all or substantially all of its corporate trust business to, another
corporation, the resulting, surviving or transferee corporation without any
further act shall, if such resulting, surviving or transferee corporation is
otherwise eligible hereunder, be the successor Trustee; provided, however, that
such corporation shall be otherwise qualified and eligible under this Article
Seven.
SECTION 7.10 Eligibility; Disqualification
This Indenture shall always have a Trustee who satisfies the
requirement of TIA ss.ss. 310(a)(1), (2) and (5). The Trustee (or, in the case
of a Trustee that is a corporation included in a bank holding company system,
the related bank holding company) shall have a combined capital and surplus of
at least $150 million as set forth in its most recent published annual report of
condition, and have a Corporate Trust Office in the City of New York. In
addition, if the Trustee is a corporation included in a bank holding company
system, the Trustee, independently of such bank holding company, shall meet the
capital requirements of TIA ss. 310(a)(2). The Trustee shall comply with TIA ss.
310(b); provided, however, that there shall be excluded from the operation of
TIA ss. 310(b)(1) any indenture or indentures under which other securities, or
certificates of interest or participation in other securities, of the Issuers
are outstanding, if the requirements for such exclusion set forth in TIA ss.
310(b)(1) are met. The provisions of TIA ss. 310 shall apply to the Company, as
obligors of the Notes.
SECTION 7.11 Preferential Collection of Claims Against Issuers
The Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss. 311(a) to the extent indicated therein. The
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provisions of TIA ss. 311 shall apply to the Issuers, as obligors on the Notes.
ARTICLE EIGHT
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01 Termination of Issuers' Obligations
This Indenture will be discharged and will cease to be of further
effect (except as to surviving rights of registration of transfer or exchange of
the Notes, as expressly provided for in this Indenture) as to all outstanding
Notes when (a) either (i) all Notes, theretofore authenticated and delivered
(except lost, stolen or destroyed Notes which have been replaced or paid and
Notes for whose payment money has theretofore been deposited in trust or
segregated and held in trust by the Issuers and thereafter repaid to the Issuers
or discharged from such trust) have been delivered to the Trustee for
cancellation or (ii) all Notes not theretofore delivered to the Trustee for
cancellation have become due and payable and the Issuers have irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Notes not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Notes to the date of deposit together with
irrevocable instructions from the Issuers directing the Trustee to apply such
funds to the payment thereof at maturity or redemption, as the case may be; (b)
the Issuers have paid all other sums payable under this Indenture by the
Issuers; and (c) the Issuers have delivered to the Trustee an officers'
certificate and an opinion of counsel stating that all conditions precedent
under this Indenture relating to the satisfaction and discharge of this
Indenture have been complied with; provided, however, that such counsel may
rely, as to matters of fact, on a certificate or certificates of officers of the
Issuers.
The Issuers may, at their option and at any time, elect to have their
obligations and the corresponding obligations of the Subsidiary Guarantors
discharged with respect to the outstanding Notes ("Legal Defeasance"). Such
Legal Defeasance means that the Issuers shall be deemed to have paid and
discharged the entire indebtedness represented by the outstanding Notes, and
satisfied all of their obligations with respect to the Notes, except for (a) the
rights of Holders to receive payments in respect of the principal of, premium,
if any, and interest on the Notes when such payments are due, (b) the Issuers'
obligations with respect to the Notes concerning issuing temporary Notes,
registration of Notes, mutilated, destroyed, lost or stolen Notes and the
maintenance of an office or agency for payments, (c) the rights, powers, trust,
duties and immunities of the Trustee and the Issuers' obligations in connection
therewith and (d) the Legal Defeasance provisions of this Section 8.01. In
addition, the Issuers may, at their option and at any time, elect to have the
obligations of the Issuers and the Subsidiary Guarantors, if any, released with
respect to covenants contained in Sections 4.04, 4.08 and 4.10 through 4.20 and
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Article Five ("Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or Event of Default with respect
to the Notes. In the event of Covenant Defeasance, those events described under
Section 6.01 (except those events described in Section 6.01(a),(b),(f) and (g))
will no longer constitute an Event of Default with respect to the Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Issuers must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders cash in United States dollars,
non-callable U.S. Government Obligations, or a combination thereof, in
such amounts as will be sufficient, in the opinion of a nationally
recognized firm of independent public accountants, to pay the principal
of, premium, if any, and interest on the Notes on the stated date for
payment thereof or on the applicable Redemption Date, as the case may
be;
(b) in the case of Legal Defeasance, the Issuers shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that (i) the Issuers
have received from, or there has been published by, the Internal
Revenue Service a ruling or (ii) since the Series A/B Issue Date, there
has been a change in the applicable federal income tax law, in either
case to the effect that, and based thereon such opinion of counsel
shall confirm that, the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance
and will be subject to federal income tax on the same amounts, in the
same manner and at the same times as would have been the case if such
Legal Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Issuers shall have
delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to the Trustee confirming that the Holders will
not recognize income, gain or loss for federal income tax purposes as a
result of such Covenant Defeasance and will be subject to federal
income tax on the same amounts, in the same manner and at the same
times as would have been the case if such Covenant Defeasance had not
occurred;
(d) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit or insofar as Events of Default
under Section 6.01(f) or (g) from bankruptcy or insolvency events are
concerned, at any time in the period ending on the 91st day after the
date of deposit;
(e) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of, or constitute a default under this
Indenture or any other agreement or instrument to which the Company or
any of its Restricted Subsidiaries is a party or by which the Company
or any of its Restricted Subsidiaries is bound;
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(f) the Issuers shall have delivered to the Trustee an
officers' certificate stating that the deposit was not made by the
Issuers with the intent of preferring the Holders over any other
creditors of either Issuer or with the intent of defeating, hindering,
delaying or defrauding any other creditors of the Issuers or others;
(g) the Issuers shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance, as the case may be, have been complied
with; provided, however, that such counsel may rely, as to matters of
fact, on a certificate or certificates of officers of the Issuers;
(h) the Issuers shall have delivered to the Trustee an Opinion
of Counsel to the effect that after the 91st day following the deposit,
the trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally; and
(i) certain other customary conditions precedent are
satisfied.
SECTION 8.02. Application of Trust Money
The Trustee or Paying Agent shall hold in trust U.S. Legal Tender or
U.S. Government Obligations deposited with it pursuant to Section 8.01, and
shall apply the deposited U.S. Legal Tender and the money from U.S. Government
Obligations in accordance with this Indenture to the payment of the principal of
and interest on the Notes. The Trustee shall be under no obligation to invest
said U.S. Legal Tender or U.S. Government Obligations except as it may agree in
writing with the Issuers.
The Issuers shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the Legal Tender or U.S. Government
Obligations deposited pursuant to Section 8.01 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of outstanding Notes.
SECTION 8.03. Repayment to the Issuers
Subject to Section 8.01, the Trustee and the Paying Agent shall
promptly pay to the Issuers upon request any excess U.S. Legal Tender or U.S.
Government Obligations held by them at any time and thereupon shall be relieved
from all liability with respect to such money. The Trustee and the Paying Agent
shall pay to the Issuers upon request any money held by them for the payment of
principal or interest that remains unclaimed for one year; provided, however,
that the Trustee or such Paying Agent, before being required to make any
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payment, may at the expense of the Issuers cause to be published once in a
newspaper of general circulation in the City of New York or mail to each Holder
entitled to such money notice that such money remains unclaimed and that after a
date specified therein which shall be at least 30 days from the date of such
publication or mailing any unclaimed balance of such money then remaining will
be repaid to the Issuers. After payment to the Issuers, Holders entitled to such
money must look to the Issuers for payment as general creditors unless an
applicable law designates another Person.
SECTION 8.04. Reinstatement
If the Trustee or Paying Agent is unable to apply any U.S. Legal Tender
or U.S. Government Obligations in accordance with Section 8.01 by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Issuers' obligations under this Indenture and the Notes shall
be revived and reinstated as though no deposit had occurred pursuant to Section
8.01 until such time as the Trustee or Paying Agent is permitted to apply all
such U.S. Legal Tender or U.S. Government Obligations in accordance with Section
8.01; provided, however, that if the Issuers have made any payment of interest
on or principal of any Notes because of the reinstatement of their obligations,
the Issuers shall be subrogated to the rights of the Holders of such Notes to
receive such payment from the U.S.
Legal Tender or U.S. Government Obligations held by the Trustee or Paying Agent.
SECTION 8.05. Acknowledgment of Discharge by Trustee
After (i) the conditions of Section 8.01 have been satisfied, (ii) the
Issuers have paid or caused to be paid all other sums payable hereunder by the
Issuers and (iii) each of the Issuers has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent referred to in clause (i) above relating to the satisfaction and
discharge of this Indenture have been complied with, the Trustee upon request of
the Issuers shall acknowledge in writing the discharge of the Issuers'
obligations under this Indenture except for those surviving obligations
specified in Section 8.01, provided the legal counsel delivering such Opinion of
Counsel may rely as to matters of fact on one or more Officers' Certificates of
the Issuers.
ARTICLE NINE
MODIFICATION OF THE INDENTURE
SECTION 9.01. Without Consent of Holders
Subject to the provisions of Section 9.02, the Issuers, the Subsidiary
Guarantors and the Trustee may amend, waive or supplement this Indenture without
notice to or consent of any Holder: (a) to cure any ambiguity, defect or
inconsistency; (b) to comply with Section 5.01 of this Indenture; (c) to provide
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for uncertificated Notes in addition to certificated Notes; (d) to comply with
any requirements of the Commission in order to effect or maintain the
qualification of this Indenture under the TIA; or (e) to make any change that
would provide any additional benefit or rights to the Holders or that does not
adversely affect the rights of any Holder. Notwithstanding the foregoing, the
Trustee and the Issuers may not make any change that adversely affects the
rights of any Holder under this Indenture without the consent of such Holder. In
formulating its opinion on such matters, the Trustee will be entitled to rely on
such evidence as it deems appropriate, including, without limitation, solely on
an Opinion of Counsel; provided, however, that in delivering such Opinion of
Counsel, such counsel may rely as to matters of fact, on a certificate or
certificates of officers of the Company.
SECTION 9.02. With Consent of Holders
All other modifications and amendments of this Indenture may be made
with the consent of the Holders of a majority in the then outstanding principal
amount of the then outstanding Notes, except that, without the consent of each
Holder of the Notes affected thereby, no amendment may, directly or indirectly:
(i) reduce the amount of Notes whose Holders must consent to any amendment; (ii)
reduce the rate of or change the time for payment of interest, including
defaulted interest, on any Notes; (iii) reduce the principal of or change the
fixed maturity of any Notes, or change the date on which any Notes may be
subject to redemption or repurchase, or reduce the redemption or repurchase
price therefor; (iv) make any Notes payable in money other than that stated in
the Notes; (v) make any change in provisions of this Indenture protecting the
right of each Holder of a Note to receive payment of principal of and interest
on such Note on or after the due date thereof or to bring suit to enforce such
payment or permitting Holders of a majority in aggregate principal amount of the
then outstanding Notes to waive Defaults or Events of Default; (vi) amend,
change or modify in any material respect the obligation of the Issuers to make
and consummate a Change of Control Offer in the event of a Change of Control or
make and consummate a Net Proceeds Offer with respect to any Asset Sale that has
been consummated or modify any of the provisions or definitions with respect
thereto; (vii) modify or change any provision of this Indenture or Section 1.01
affecting the ranking of the Notes or any Guarantee in a manner which adversely
affects the Holders; or (viii) release any Subsidiary Guarantor from any of its
obligations under its Guarantee or this Indenture otherwise than in accordance
with the terms of this Indenture.
SECTION 9.03. Compliance with TIA
Every amendment, waiver or supplement of this Indenture or the Notes
shall comply with the TIA as then in effect; provided, however, that this
Section 9.03 shall not of itself require that this Indenture or the Trustee be
qualified under the TIA or constitute any admission or acknowledgment by any
party hereto that any such qualification is required prior to the time this
Indenture and the Trustee are required by the TIA to be so qualified.
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SECTION 9.04. Revocation and Effect of Consents
Until an amendment, waiver or supplement becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Note or portion of a Note that evidences the same debt as the
consenting Holder's Note, even if notation of the consent is not made on any
Note. Subject to the following paragraph, any such Holder or subsequent Holder
may revoke the consent as to such Holder's Note or portion of such Note by
notice to the Trustee or the Issuers received before the date on which the
Trustee receives an Officers' Certificate certifying that the Holders of the
requisite principal amount of Notes have consented (and not theretofore revoked
such consent) to the amendment, supplement or waiver. An amendment, supplement
or waiver becomes effective upon receipt by the Trustee of such Officers'
Certificate and evidence of consent by the Holders of the requisite percentage
in principal amount of outstanding Notes.
The Issuers may, but shall not be obligated to, fix a Record Date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which Record Date shall be at least 30 days prior to the
first solicitation of such consent. If a Record Date is fixed, then
notwithstanding the second sentence of the immediately preceding paragraph,
those Persons who were Holders at such Record Date (or their duly designated
proxies), and only those Persons, shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
Record Date. No such consent shall be valid or effective for more than 90 days
after such Record Date unless consents from Holders of the requisite percentage
in principal amount of outstanding Notes required hereunder for the
effectiveness of such consents shall have also been given and not revoked within
such 90 day period.
SECTION 9.05. Notation on or Exchange of Notes
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of such Note to deliver it to the Trustee. The
Trustee may place an appropriate notation on the Note about the changed terms
and return it to the Holder. Alternatively, if the Issuers or the Trustee so
determine, the Issuers in exchange for the Note shall issue and the Trustee
shall authenticate a new Note that reflects the changed terms.
SECTION 9.06. Trustee To Sign Amendments, Etc
The Trustee shall execute any amendment, supplement or waiver
authorized pursuant to this Article Nine; provided, however, that the Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver which affects the Trustee's own rights, duties or immunities under this
Indenture. In executing such supplement or waiver the Trustee shall be entitled
to receive indemnity reasonably satisfactory to it, and shall be fully protected
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in relying upon an Opinion of Counsel and an Officers' Certificate of each
Issuer, each stating that no event of default shall occur as a result of such
amendment, supplement or waiver and that the execution of any amendment,
supplement or waiver authorized pursuant to this Article Nine is authorized or
permitted by this Indenture, provided the legal counsel delivering such Opinion
of Counsel may rely as to matters of fact on one or more Officers' Certificates
of the Issuers. Such Opinion of Counsel shall not be an expense of the Trustee.
ARTICLE TEN
MISCELLANEOUS
SECTION 10.01. TIA Controls
If any provision of this Indenture limits, qualifies, or conflicts with
another provision which is required to be included in this Indenture by the TIA,
the required provision shall control; provided, however, that this Section 10.01
shall not of itself require that this Indenture or the Trustee be qualified
under the TIA or constitute any admission or acknowledgment by any party hereto
that any such qualification is required prior to the time this Indenture and the
Trustee are required by the TIA to be so qualified.
SECTION 10.02. Notices
Any notices or other communications required or permitted hereunder
shall be in writing, and shall be sufficiently given if made by hand delivery,
by telex, by telecopier or registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
if to the Issuers:
c/o Abraxas Petroleum Corporation
500 North Loop 1604 East
Suite 100
San Antonio, Texas 78232
Telecopier Number: (210) 490-8816
Attn: Chief Executive Officer
if to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
Eleventh Floor
80
New York, New York 10004
Telecopier Number: (212) 858-2952
Attention: Corporate Trust Trustee
Administration
Each of the Issuers and the Trustee by written notice to the other may
designate additional or different addresses for notices to such Person. Any
notice or communication to the Issuers or the Trustee shall be deemed to have
been given or made as of the date so delivered if hand delivered; when answered
back, if telexed; when receipt is acknowledged, if faxed; and five (5) calendar
days after mailing if sent by registered or certified mail, postage prepaid
(except that a notice of change of address shall not be deemed to have been
given until actually received by the addressee).
Any notice or communication mailed to a Holder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar ten (10) days prior to such mailing and
shall be sufficiently given to him if so mailed within the time prescribed.
Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. If a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.
SECTION 10.03. Communications by Holders with Other Holders
Holders may communicate pursuant to TIA ss. 312(b) with other Holders
with respect to their rights under this Indenture or the Notes. The Issuers, the
Trustee, the Registrar and any other Person shall have the protection of TIA ss.
312(c).
SECTION 10.04. Certificate and Opinion as to Conditions Precedent
Upon any request or application by the Issuers to the Trustee to take
any action under this Indenture, the Issuers shall furnish to the Trustee:
(1) an Officers' Certificate, in form and substance
satisfactory to the Trustee, stating that, in the opinion of the
signers, all conditions precedent to be performed by the Issuers, if
any, provided for in this Indenture relating to the proposed action
have been complied with; and
(2) an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent to be performed by the Issuers,
if any, provided for in this Indenture relating to the proposed action
have been complied with (which counsel, as to factual matters, may rely
on an Officers' Certificate).
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SECTION 10.05. Statements Required in Certificate or Opinion
Each certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture, other than the Officers' Certificate
required by Section 4.06, shall include:
(1) a statement that the Person making such certificate or
opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he has
made such examination or investigation as is reasonably necessary to
enable him to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of each
such Person, such condition or covenant has been complied with.
SECTION 10.06. Rules by Trustee, Paying Agent, Registrar
The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Holders. The Paying Agent
or Registrar may make reasonable rules for its functions.
SECTION 10.07. Legal Holidays
A "Legal Holiday" used with respect to a particular place of payment is
a Saturday, a Sunday or a day on which banking institutions in New York, New
York or at such place of payment are not required to be open. If a payment date
is a Legal Holiday at such place, payment may be made at such place on the next
succeeding day that is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 10.08. Governing Law
THIS INDENTURE AND THE NOTES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO CONTRACTS MADE
AND PERFORMED WITHIN THE STATE OF NEW YORK, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS. Each of the parties hereto agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Indenture.
SECTION 10.09. No Adverse Interpretation of Other Agreements
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This Indenture may not be used to interpret another indenture, loan or
debt agreement of either Issuer or any of their Subsidiaries. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.
SECTION 10.10. No Personal Liability
No director, officer, employee or stockholder, as such, of either
Issuer or any Subsidiary Guarantor, as such, shall have any liability for any
obligations of either Issuer or any Subsidiary Guarantor under the Notes, this
Indenture, the Guarantees or the Registration Rights Agreement or for any claim
based on, in respect of, or by reason of, such obligations or their creation.
Each Holder of Notes by accepting a Note waives and releases all such liability.
The waiver and release are part of the consideration for the issuance of the
Notes.
SECTION 10.11. Successors
All agreements of the Issuers in this Indenture and the Notes shall
bind their successors. All agreements of the Trustee in this Indenture shall
bind its successors.
SECTION 10.12. Duplicate Originals
All parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together shall represent the
same agreement.
SECTION 10.13. Severability
In case any one or more of the provisions in this Indenture or in the
Notes shall be held invalid, illegal or unenforceable, in any respect for any
reason, the validity, legality and enforceability of any such provision in every
other respect and of the remaining provisions shall not in any way be affected
or impaired thereby, it being intended that all of the provisions hereof shall
be enforceable to the full extent permitted by law.
SECTION 10.14. Independence of Covenants
All covenants and agreements in this Indenture and the Notes shall be
given independent effect so that if any particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or otherwise be within the limitations of, another covenant shall
not avoid the occurrence of a Default or an Event of Default if such action is
taken or condition exists.
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ARTICLE ELEVEN
GUARANTEE OF NOTES
SECTION 11.01. Unconditional Guarantee
Subject to the provisions of this Article Eleven, each Subsidiary
Guarantor, if any, hereby, jointly and severally, unconditionally and
irrevocably guarantees, on a senior basis (such guarantee to be referred to
herein as a "Guarantee") to each Holder of a Note authenticated and delivered by
the Trustee and to the Trustee and its successors and assigns, irrespective of
the validity and enforceability of this Indenture, the Notes or the obligations
of the Issuers or any other Subsidiary Guarantors to the Holders or the Trustee
hereunder or thereunder, that: (a) the principal of, premium, if any, and
interest on the Notes (and any Additional Interest payable thereon) shall be
duly and punctually paid in full when due, whether at maturity, upon redemption
at the option of Holders pursuant to the provisions of the Notes relating
thereto, by acceleration or otherwise, and interest on the overdue principal and
(to the extent permitted by law) interest, if any, on the Notes and all other
obligations of the Issuers or the Subsidiary Guarantors to the Holders or the
Trustee hereunder or thereunder (including amounts due the Trustee under Section
7.07 hereof) and all other obligations shall be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Notes or any of such other
obligations, the same shall be promptly paid in full when due or performed in
accordance with the terms of the extension or renewal, whether at maturity, by
acceleration or otherwise. Failing payment when due of any amount so guaranteed,
or failing performance of any other obligation of the Issuers to the Holders
under this Indenture or under the Notes, for whatever reason, each Subsidiary
Guarantor shall be obligated to pay, or to perform or cause the performance of,
the same immediately. An Event of Default under this Indenture or the Notes
shall constitute an event of default under this Guarantee, and shall entitle the
Holders of Notes to accelerate the obligations of the Guarantors hereunder in
the same manner and to the same extent as the obligations of the Issuers.
Each of the Subsidiary Guarantors hereby agrees that its obligations
hereunder shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any waiver or consent by any Holder of the Notes with respect
to any provisions hereof or thereof, any release of any other Subsidiary
Guarantor, the recovery of any judgment against the Issuers, any action to
enforce the same, whether or not a Guarantee is affixed to any particular Note,
or any other circumstance which might otherwise constitute a legal or equitable
discharge or defense of a guarantor. Each of the Subsidiary Guarantors hereby
waives the benefit of diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Issuers, any
right to require a proceeding first against the Issuers, protest, notice and all
demands whatsoever and covenants that its Guarantee shall not be discharged
except by complete performance of the obligations contained in the Notes, this
Indenture and this Guarantee. This Guarantee is a guarantee of payment and not
of collection. If any Holder or the Trustee is required by any court or
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otherwise to return to the Issuers or to any Subsidiary Guarantor, or any
custodian, trustee, liquidator or other similar official acting in relation to
the Issuers or such Subsidiary Guarantor, any amount paid by the Issuers or such
Subsidiary Guarantor to the Trustee or such Holder, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Subsidiary Guarantor further agrees that, as between it, on the one hand,
and the Holders of Notes and the Trustee, on the other hand, (a) subject to this
Article Eleven, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article Six hereof for the purposes of this
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 Six
hereof, such obligations (whether or not due and payable) shall forthwith become
due and payable by the Subsidiary Guarantors for the purpose of this Guarantee.
No stockholder, officer, director, employee or incorporator, past,
present or future, or any Subsidiary Guarantor, as such, shall have any personal
liability under this Guarantee by reason of his, her or its status as such
stockholder, officer, director, employee or incorporator.
Each Subsidiary Guarantor that makes a payment or distribution under
its Guarantee shall be entitled to a contribution from each other Subsidiary
Guarantor, determined in accordance with GAAP.
SECTION 11.02. Limitations on Guarantees
The obligations of each Subsidiary Guarantor under its Guarantee will
be limited to the maximum amount which, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Subsidiary Guarantor in respect of the obligations of such other Subsidiary
Guarantor under its Guarantee or pursuant to its contribution obligations under
the Indenture, will result in the obligations of such Subsidiary Guarantor under
the Guarantee not constituting a fraudulent conveyance or fraudulent transfer
under federal or state law.
SECTION 11.03. Execution and Delivery of Guarantee
To further evidence the Guarantee set forth in Section 11.01, each
Subsidiary Guarantor hereby agrees that a notation of such Guarantee,
substantially in the form of Exhibit E herein, shall be endorsed on each Note
authenticated and delivered by the Trustee. Such Guarantee shall be executed on
behalf of each Subsidiary Guarantor by either manual or facsimile signature of
two Officers of each Subsidiary Guarantor, each of whom, in each case, shall
have been duly authorized to so execute by all requisite corporate action. The
validity and enforceability of any Guarantee shall not be affected by the fact
that it is not affixed to any particular Note.
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Each of the Subsidiary Guarantors hereby agrees that its Guarantee set
forth in Section 11.01 shall remain in full force and effect notwithstanding any
failure to endorse on each Note a notation of such Guarantee.
If an Officer of a Subsidiary Guarantor whose signature is on this
Indenture or a Guarantee no longer holds that office at the time the Trustee
authenticates the Note on which such Guarantee is endorsed or at any time
thereafter, such Subsidiary Guarantor's Guarantee of such Note shall be valid
nevertheless.
The delivery of any Note by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of each Subsidiary Guarantor.
SECTION 11.04. Release of a Subsidiary Guarantor
(a) If no Default exists or would exist under this Indenture, upon the
sale or disposition of all of the Capital Stock of a Subsidiary Guarantor by the
Issuers or a Restricted Subsidiary of the Issuers in a transaction constituting
an Asset Sale the Net Cash Proceeds of which are applied in accordance with
Section 4.16, or upon the consolidation or merger of a Subsidiary Guarantor with
or into any Person in compliance with Article Five (in each case, other than to
an Issuer or an Affiliate of an Issuer or a Restricted Subsidiary), such
Subsidiary Guarantor and each Subsidiary of such Subsidiary Guarantor that is
also a Subsidiary Guarantor shall be deemed released from all obligations under
this Article Eleven without any further action required on the part of the
Trustee or any Holder; provided, however, that each such Subsidiary Guarantor is
sold or disposed of in accordance with this Indenture. Any Subsidiary Guarantor
not so released or the entity surviving such Subsidiary Guarantor, as
applicable, shall remain or be liable under its Guarantee as provided in this
Article Eleven.
(b) The Trustee shall deliver to the Issuers an appropriate instrument
evidencing the release of a Subsidiary Guarantor upon receipt of a request by
the Issuers or such Subsidiary Guarantor accompanied by an Officers' Certificate
and an Opinion of Counsel certifying as to the compliance with this Section
11.04, provided the legal counsel delivering such Opinion of Counsel may rely as
to matters of fact on one or more Officers Certificates of the Issuers.
The Trustee shall execute any documents reasonably requested by the
Issuers or a Subsidiary Guarantor in order to evidence the release of such
Subsidiary Guarantor from its obligations under its Guarantee endorsed on the
Notes and under this Article Eleven.
Except as set forth in Articles Four and Five and this Section 11.04,
nothing contained in this Indenture or in any of the Notes shall prevent any
consolidation or merger of a Subsidiary Guarantor with or into the Issuers or
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another Subsidiary Guarantor or shall prevent any sale or conveyance of the
property of a Subsidiary Guarantor as an entirety or substantially as an
entirety to the Issuers or another Subsidiary Guarantor.
SECTION 11.05. Waiver of Subrogation
Until this Indenture is discharged and all of the Notes are discharged
and paid in full, each Subsidiary Guarantor hereby irrevocably waives and agrees
not to exercise any claim or other rights which it may now or hereafter acquire
against the Issuers that arise from the existence, payment, performance or
enforcement of the Issuers' obligations under the Notes or this Indenture and
such Subsidiary Guarantor's obligations under this Guarantee and this Indenture,
in any such instance including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, and any right to
participate in any claim or remedy of the Holders against the Issuers, whether
or not such claim, remedy or right arises in equity, or under contract, statute
or common law, including, without limitation, the right to take or receive from
the Issuers, directly or indirectly, in cash or other property or by set-off or
in any other manner, payment or security on account of such claim or other
rights. If any amount shall be paid to any Subsidiary Guarantor in violation of
the preceding sentence and any amounts owing to the Trustee or the Holders of
Notes under the Notes, this Indenture, or any other document or instrument
delivered under or in connection with such agreements or instruments, shall not
have been paid in full, such amount shall have been deemed to have been paid to
such Subsidiary Guarantor for the benefit of, and held in trust for the benefit
of, the Trustee or the Holders and shall forthwith be paid to the Trustee for
the benefit of itself or such Holders to be credited and applied to the
obligations in favor of the Trustee or the Holders, as the case may be, whether
matured or unmatured, in accordance with the terms of this Indenture. Each
Subsidiary Guarantor acknowledges that it will receive direct and indirect
benefits from the financing arrangements contemplated by this Indenture and that
the waiver set forth in this Section 11.05 is knowingly made in contemplation of
such benefits.
SECTION 11.06. Immediate Payment
Each Subsidiary Guarantor agrees to make immediate payment to the
Trustee on behalf of the Holders of all Obligations owing or payable to the
respective Holders upon receipt of a demand for payment therefor by the Trustee
to such Subsidiary Guarantor in writing.
SECTION 11.07. No Set-Off
Each payment to be made by a Subsidiary Guarantor hereunder in respect
of the Obligations shall be payable in the currency or currencies in which such
Obligations are denominated, and shall be made without set-off, counterclaim,
reduction or diminution of any kind or nature.
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SECTION 11.08. Obligations Absolute
The obligations of each Subsidiary Guarantor hereunder are and shall be
absolute and unconditional and any monies or amounts expressed to be owing or
payable by each Subsidiary Guarantor hereunder which may not be recoverable from
such Subsidiary Guarantor on the basis of a Guarantee shall be recoverable from
such Subsidiary Guarantor as a primary obligor and principal debtor in respect
thereof.
SECTION 11.09. Obligations Continuing
The obligations of each Subsidiary Guarantor hereunder shall be
continuing and shall remain in full force and effect until all the obligations
have been paid and satisfied in full. Each Subsidiary Guarantor agrees with the
Trustee that it will from time to time deliver to the Trustee suitable
acknowledgments of this continued liability hereunder and under any other
instrument or instruments in such form as counsel to the Trustee may advise and
as will prevent any action brought against it in respect of any default
hereunder being barred by any statute of limitations now or hereafter in force
and, in the event of the failure of a Subsidiary Guarantor so to do, it hereby
irrevocably appoints the Trustee the attorney and agent of such Subsidiary
Guarantor to make, execute and deliver such written acknowledgment or
acknowledgments or other instruments as may from time to time become necessary
or advisable, in the judgment of the Trustee on the advice of counsel, to fully
maintain and keep in force the liability of such Subsidiary Guarantor hereunder.
SECTION 11.10. Obligations Not Reduced
The obligations of each Subsidiary Guarantor hereunder shall not be
satisfied, reduced or discharged solely by the payment of such principal,
premium, if any, interest, fees and other monies or amounts as may at any time
prior to discharge of this Indenture pursuant to Article 8 be or become owing or
payable under or by virtue of or otherwise in connection with the Notes or this
Indenture.
SECTION 11.11. Obligations Reinstated
The obligations of each Subsidiary Guarantor hereunder shall continue
to be effective or shall be reinstated, as the case may be, if at any time any
payment which would otherwise have reduced the obligations of any Subsidiary
Guarantor hereunder (whether such payment shall have been made by or on behalf
of the Issuers or by or on behalf of a Subsidiary Guarantor) is rescinded or
reclaimed from any of the Holders upon the insolvency, bankruptcy, liquidation
or reorganization of either Issuer or any Subsidiary Guarantor or otherwise, all
as though such payment had not been made. If demand for, or acceleration of the
time for, payment by the Issuers is stayed upon the insolvency, bankruptcy,
liquidation or reorganization of either Issuer, all such Indebtedness otherwise
subject to demand for payment or acceleration shall nonetheless be payable by
each Subsidiary Guarantor as provided herein.
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SECTION 11.12. Obligations Not Affected
The obligations of each Subsidiary Guarantor hereunder shall not be
affected, impaired or diminished in any way by any act, omission, matter or
thing whatsoever, occurring before, upon or after any demand for payment
hereunder (and whether or not known or consented to by any Subsidiary Guarantor
or any of the Holders) which, but for this provision, might constitute a whole
or partial defense to a claim against any Subsidiary Guarantor hereunder or
might operate to release or otherwise exonerate any Subsidiary Guarantor from
any of its obligations hereunder or otherwise affect such obligations, whether
occasioned by default of any of the Holders or otherwise, including, without
limitation:
(a) any limitation of status or power, disability, incapacity
or other circumstance relating to either Issuer or any other person,
including any insolvency, bankruptcy, liquidation, reorganization,
readjustment, composition, dissolution, winding-up or other proceeding
involving or affecting either Issuer or any other person;
(b) any irregularity, defect, unenforceability or invalidity
in respect of any indebtedness or other obligation of either Issuer or
any other person under this Indenture, the Notes or any other document
or instrument;
(c) any failure of the Issuers, whether or not without fault
on their part, to perform or comply with any of the provisions of this
Indenture or the Notes, or to give notice thereof to a Subsidiary
Guarantor;
(d) the taking or enforcing or exercising or the refusal or
neglect to take or enforce or exercise any right or remedy from or
against the Issuers or any other person or their respective assets or
the release or discharge of any such right or remedy;
(e) the granting of time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Issuers or any other Person;
(f) any change in the time, manner or place of payment of, or
in any other term of, any of the Notes, or any other amendment,
variation, supplement, replacement or waiver of, or any consent to
departure from, any of the Notes or this Indenture, including, without
limitation, any increase or decrease in the principal amount of or
premium, if any, or interest on any of the Notes;
(g) any change in the ownership, control, name, objects,
businesses, assets, capital structure or constitution of either Issuer
or a Subsidiary Guarantor;
89
(h) any merger or amalgamation of either Issuer or a
Subsidiary Guarantor with any Person or Persons;
(i) the occurrence of any change in the laws, rules,
regulations or ordinances of any jurisdiction by any present or future
action of any governmental authority or court amending, varying,
reducing or otherwise affecting, or purporting to amend, vary, reduce
or otherwise affect, any of the Obligations or the obligations of a
Subsidiary Guarantor under its Guarantee; and
(j) any other circumstance, including release of the
Subsidiary Guarantor pursuant to Section 11.04 (other than by complete,
irrevocable payment) that might otherwise constitute a legal or
equitable discharge or defense of the Issuers under this Indenture or
the Notes or of a Subsidiary Guarantor in respect of its Guarantee
hereunder.
SECTION 11.13. Waiver
Without in any way limiting the provisions of Section 11.01 hereof,
each Subsidiary Guarantor hereby waives notice of acceptance hereof, notice of
any liability of any Subsidiary Guarantor hereunder, notice or proof of reliance
by the Holders upon the obligations of any Subsidiary Guarantor hereunder, and
diligence, presentment, demand for payment on the Issuers, protest, notice of
dishonor or non-payment of any of the Obligations, or other notice or
formalities to the Issuers or any Subsidiary Guarantor of any kind whatsoever.
SECTION 11.14. No Obligation To Take Action Against the Issuers
Neither the Trustee nor any other Person shall have any obligation to
enforce or exhaust any rights or remedies or to take any other steps under any
security for the Obligations or against the Issuers or any other Person or any
Property of the Issuers or any other Person before the Trustee is entitled to
demand payment and performance by any or all Subsidiary Guarantors of their
liabilities and obligations under their Guarantees or under this Indenture.
SECTION 11.15. Dealing with the Issuers and Others
The Holders, without releasing, discharging, limiting or otherwise
affecting in whole or in part the obligations and liabilities of any Subsidiary
Guarantor hereunder and without the consent of or notice to any Subsidiary
Guarantor, may
(a) grant time, renewals, extensions, compromises,
concessions, waivers, releases, discharges and other indulgences to the
Issuers or any other Person;
90
(b) take or abstain from taking security or collateral from
the Issuers or from perfecting security or collateral of the Issuers;
(c) release, discharge, compromise, realize, enforce or
otherwise deal with or do any act or thing in respect of (with or
without consideration) any and all collateral, mortgages or other
security given by the Issuers or any third party with respect to the
obligations or matters contemplated by this Indenture or the Notes;
(d) accept compromises or arrangements from the Issuers;
(e) apply all monies at any time received from the Issuers or
from any security upon such part of the Obligations as the Holders may
see fit or change any such application in whole or in part from time to
time as the Holders may see fit; and
(f) otherwise deal with, or waive or modify their right to
deal with, the Issuers and all other Persons and any security as the
Holders or the Trustee may see fit.
SECTION 11.16. Default and Enforcement
If any Subsidiary Guarantor fails to pay in accordance with Section
11.06 hereof, the Trustee may proceed in its name as trustee hereunder in the
enforcement of the Guarantee of any such Subsidiary Guarantor and such
Subsidiary Guarantor's obligations thereunder and hereunder by any remedy
provided by law, whether by legal proceedings or otherwise, and to recover from
such Subsidiary Guarantor the obligations.
SECTION 11.17. Amendment, Etc
No amendment, modification or waiver of any provision of this Indenture
relating to any Subsidiary Guarantor or consent to any departure by any
Subsidiary Guarantor or any other Person from any such provision will in any
event be effective unless it is signed by such Subsidiary Guarantor and the
Trustee.
SECTION 11.18. Acknowledgment
Each Subsidiary Guarantor hereby acknowledges communication of the
terms of this Indenture and the Notes and consents to and approves of the same.
SECTION 11.19. Costs and Expenses
Each Subsidiary Guarantor shall pay on demand by the Trustee any and
all costs, fees and expenses (including, without limitation, legal fees on a
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solicitor and client basis) incurred by the Trustee, its agents, advisors and
counsel or any of the Holders in enforcing any of their rights under any
Guarantee.
SECTION 11.20. No Merger or Waiver; Cumulative Remedies
No Guarantee shall operate by way of merger of any of the obligations
of a Subsidiary Guarantor under any other agreement, including, without
limitation, this Indenture. No failure to exercise and no delay in exercising,
on the part of the Trustee or the Holders, any right, remedy, power or privilege
hereunder or under the Indenture or the Notes, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right, remedy, power or
privilege hereunder or under this Indenture or the Notes preclude any other or
further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges in the Guarantee and
under this Indenture, the Notes and any other document or instrument between a
Subsidiary Guarantor and/or either Issuer and the Trustee are cumulative and not
exclusive of any rights, remedies, powers and privilege provided by law.
SECTION 11.21. Survival of Obligations
Without prejudice to the survival of any of the other obligations of
each Subsidiary Guarantor hereunder, the obligations of each Subsidiary
Guarantor under Section 11.01 shall survive the payment in full of the
Obligations and shall be enforceable against such Subsidiary Guarantor without
regard to and without giving effect to any defense, right of offset or
counterclaim available to or which may be asserted by the Company or any
Subsidiary Guarantor.
SECTION 11.22. Guarantee in Addition to Other Obligations
The obligations of each Subsidiary Guarantor under its Guarantee and
this Indenture are in addition to and not in substitution for any other
obligations to the Trustee or to any of the Holders in relation to this
Indenture or the Notes and any guarantees or security at any time held by or for
the benefit of any of them.
SECTION 11.23. Severability
Any provision of this Article Eleven which is prohibited or
unenforceable in any jurisdiction shall not invalidate the remaining provisions
and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction
unless its removal would substantially defeat the basic intent, spirit and
purpose of this Indenture and this Article Eleven.
SECTION 11.24. Successors and Assigns
Each Guarantee shall be binding upon and inure to the benefit of each
Subsidiary Guarantor and the Trustee and the other Holders and their respective
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successors and permitted assigns, except that no Subsidiary Guarantor may assign
any of its obligations hereunder or thereunder.
[Remainder of Page Intentionally Left Blank]
93
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed, all as of the date first written above.
ABRAXAS PETROLEUM CORPORATION
By: /s/ CHRIS E. WILLIFORD
Name: Chris E. Williford
Title: Executive Vice President, Chief
Financial Officer and Treasurer
CANADIAN ABRAXAS PETROLEUM LIMITED
By: /s/ CHRIS E. WILLIFORD
Name: Chris E. Williford
Title: Vice President
IBJ SCHRODER BANK & TRUST COMPANY,
as Trustee
By: /s/ STEPHEN J. GIURLANDO
Name: Stephen J. Giurlando
Title: Assistant Vice President
94
EXHIBIT A
CUSIP No.: [ ]
ABRAXAS PETROLEUM CORPORATION
11 1/2% SENIOR NOTE DUE 2004, SERIES C
No. [ ] $[ ]
ABRAXAS PETROLEUM CORPORATION, a Nevada corporation, and CANADIAN
ABRAXAS PETROLEUM LIMITED, an Alberta corporation (the "Issuers", which term
includes any successor entities), for value received promise to pay to [ ] or
registered assigns the principal sum of [ ] Dollars on November 1, 2004.
Interest Payment Dates: May 1 and November 1, commencing May 1, 1998
Record Dates: April 15 and October 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Issuers have caused this Note to be signed
manually or by facsimile by their duly authorized officers and a facsimile of
their corporate seal to be affixed hereto or imprinted hereon.
ABRAXAS PETROLEUM CORPORATION
By:____________________________
Name:
Title:
CANADIAN ABRAXAS PETROLEUM LIMITED
By:___________________________
Name:
Title:
Dated:
Certificate of Authentication
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This is one of the 11 1/2% Senior Notes due 2004, Series C referred to
in the within-mentioned Indenture.
IBJ SCHRODER BANK & TRUST COMPANY
as Trustee
By:_____________________________
Authorized Signatory
Date of Authentication:
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(REVERSE OF SECURITY)
11 1/2% Senior Note due 2004, Series C
(1) Interest. ABRAXAS PETROLEUM CORPORATION, a Nevada corporation, and
CANADIAN ABRAXAS PETROLEUM LIMITED, an Alberta corporation (the "Issuers"),
promise to pay interest on the principal amount of this Note at the rate per
annum shown above. Interest on the Notes will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from January
27, 1998. The Issuers will pay interest semi-annually in arrears on each
Interest Payment Date, commencing May 1, 1998. Interest will be computed on the
basis of a 360-day year of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Issuers shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange (including pursuant to an Exchange Offer (as defined in the
Registration Rights Agreement)) after such Record Date. Holders must surrender
Notes to a Paying Agent to collect principal payments. The Issuers shall pay
principal and interest in money of the United States that at the time of payment
is legal tender for payment of public and private debts ("U.S. Legal Tender").
However, the Issuers may pay principal and interest by their check payable in
such U.S. Legal Tender. The Issuers may deliver any such interest payment to the
Paying Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, IBJ Schroder Bank & Trust
Company (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders.
4. Indenture. The Issuers issued the Notes under an Indenture, dated as
of January 27, 1998 (the "Indenture"), among the Issuers and the Trustee. This
Note is one of a duly authorized issue of Initial Notes of the Issuers
designated as their 11 1/2% Senior Notes due 2004, Series C (the "Initial
Notes"). The Notes are limited in aggregate principal amount to $275,000,000;
provided that $215,000,000 shall be reserved for issuance and shall be available
for issuance only in connection with the exchange of the Series A/B Notes (as
defined in the Indenture) for Exchange Notes. The Notes include the Initial
Notes and the Exchange Notes, as defined below, issued in exchange for the
Initial Notes and the Series A/B Notes (as defined in the Indenture) pursuant to
the Registration Rights Agreement. The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture. Capitalized terms
herein are used as defined in the Indenture unless otherwise defined herein. The
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terms of the Notes include those stated in the Indenture and those made part of
the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S. Code
ss.ss. 77aaa-77bbbb) (the "TIA"), as in effect on the date of the Indenture.
Notwithstanding anything to the contrary herein, the Notes are subject to all
such terms, and Holders of Notes are referred to the Indenture and said Act for
a statement of them. The Notes are general unsecured obligations of the Issuers.
5. Indenture. Each Holder, by accepting a Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time in accordance with its terms.
6. Redemption. The Notes will be redeemable, at the Issuers' option, in
whole at any time or in part from time to time, on and after November 1, 2000,
upon not less than 30 nor more than 60 days' notice, at the following Redemption
Prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on November 1 of the years set forth
below, plus, in each case, accrued and unpaid interest, if any, thereon to the
date of redemption:
Year Percentage
2000............................ 105.750%
2001............................ 102.875%
2002 and thereafter............. 100.000%
At any time, or from time to time, on or prior to November 1, 1999, the
Issuers may, at their option, use all or a portion of the net cash proceeds of
one or more Equity Offerings (as defined in the Indenture) to redeem up to 35%
of the aggregate original principal amount of the Notes at a Redemption Price
equal to 111.5% of the aggregate principal amount of the Notes to be redeemed,
plus accrued and unpaid interest, if any, thereon to the date of redemption;
provided, however, that at least 65% of the aggregate original principal amount
of the Notes remains outstanding immediately after giving effect to any such
redemption (it being expressly agreed that for purposes of determining whether
this condition is satisfied, Notes owned by either Issuer or any of their
Affiliates shall be deemed not to be outstanding). In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Issuers shall
make such redemption not more than 60 days after the consummation of any Equity
Offering.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at such Holder's registered address.
Notes in denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Issuers default in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
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8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, after certain Asset Sales (as defined in the Indenture) and upon the
occurrence of a Change of Control (as defined in the Indenture), and subject to
further limitations contained therein, the Issuers will make an offer to
purchase certain amounts of the Notes (including any Additional Series D Notes
as defined in the Indenture) in accordance with the procedures set forth in the
Indenture.
9. Registration Rights. Pursuant to the Registration Rights Agreement
among the Issuers and the Initial Purchaser, the Issuers and the Subsidiary
Guarantors will be obligated to consummate an exchange offer pursuant to which
the Holder of this Note shall have the right to exchange this Note for the
Issuers' 11 1/2% Senior Notes due 2004, Series D (the "Exchange Notes"), which
have been registered under the Securities Act, in like principal amount and
having terms identical in all material respects as the Initial Notes. The
Holders of the Initial Notes shall be entitled to receive certain additional
interest payments in the event such exchange offer is not consummated and upon
certain other conditions, all pursuant to and in accordance with the terms of
the Registration Rights Agreement.
10. Denominations; Transfer; Exchange. The Notes are in registered
form, without coupons, and (except Notes issued as payment of Interest) in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange of any
Notes or portions thereof selected for redemption.
11. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
12. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee and the Paying Agent will pay the
money back to the Issuers. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
13. Discharge Prior to Redemption or Maturity. If the Issuers at any
time deposit with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption or
maturity and comply with the other provisions of the Indenture relating thereto,
the Issuers will be discharged from certain provisions of the Indenture and the
Notes (including certain covenants, but including, under certain circumstances,
their obligation to pay the principal of and interest on the Notes but without
affecting the rights of the Holders to receive such amounts from such deposits).
14. Amendment; Supplement; Waiver. Subject to certain exceptions set
A-5
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding, and any past
Default or Event of Default or noncompliance with any provision may be waived
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, comply with any requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the TIA or comply with Article
Five of the Indenture or make any other change that does not adversely affect
the rights of any Holder of a Note.
15. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Issuers and the Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of their Capital
Stock or certain Indebtedness, make certain Investments, create or incur liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Restricted Subsidiaries, issue Preferred Stock of their
Restricted Subsidiaries, and on the ability of the Issuers and their Restricted
Subsidiaries to merge or consolidate with any other Person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
Issuers' and their Restricted Subsidiaries' assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Issuer must annually report to the Trustee on compliance with such limitations.
16. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
17. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest when due, for any reason or a
Default in compliance with Article Five of the Indenture) if it determines that
withholding notice is in their interest.
18. Trustee Dealings with Issuers. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuers, their Subsidiaries or their respective
A-6
Affiliates as if it were not the Trustee.
19. No Recourse Against Others. No partner, director, officer, employee
or stockholder, as such, of either Issuer or any Subsidiary Guarantor, as such,
shall have any liability for any obligations of either Issuer or any Subsidiary
Guarantor under the Notes, the Indenture, the Guarantees or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
20. Guarantees. This Note will be entitled to the benefits of certain
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Subsidiary Guarantors, the
Trustee and the Holders.
21. Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
22. Governing Law. This Note and the Indenture shall be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Note.
23. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
24. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. 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 identification numbers
printed hereon.
The Issuers will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note.
Requests may be made to: Abraxas Petroleum Corporation, 500 North Loop 1604
East, Suite 100, San Antonio, Texas 78232.
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ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint _________, agent to transfer this Note on the books of
the Issuers. The agent may substitute another to act for him.
Dated:________________ Signed:_________________________________________
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee:_______________________________________________________
In connection with any transfer of this Note occurring prior to the
date which is the earlier of (i) the date of the declaration by the Commission
of the effectiveness of a registration statement under the Securities Act of
1933, as amended (the "Securities Act") covering resales of this Note (which
effectiveness shall not have been suspended or terminated at the date of the
transfer) and (ii) January 27, 1999, the undersigned confirms that it has not
utilized any general solicitation or general advertising in connection with the
transfer:
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[Check One]
(1) __ to the Issuers or a subsidiary thereof; or
(2) __ pursuant to and in compliance with Rule 144A under the Securities
Act of 1933, as amended; or
(3) __ to an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as
amended) that has furnished to the Trustee a signed letter
containing certain representations and agreements (the form of which
letter can be obtained from the Trustee); or
(4) __ outside the United states to a "foreign person" in compliance
with Rule 904 of Regulation S under the Securities Act of 1933, as
amended; or
(5) __ pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933, as amended; or
(6) __ pursuant to an effective registration statement under the
Securities Act of 1933, as amended; or
(7) __ pursuant to another available exemption from the registration
requirements of the Securities Act of 1933, as amended.
and unless the box below is checked, the undersigned confirms that such Note is
not being transferred to an "affiliate" of the Issuers as defined in Rule 144
under the Securities Act of 1933, as amended (an "Affiliate"):
o The transferee is an Affiliate of the Issuers.
Unless one of the items is checked, the Trustee will refuse to register any of
the Notes evidenced by this certificate in the name of any person other than the
registered Holder thereof; provided, however, that if item (3), (4), (5) or (7)
is checked, the Issuers or the Trustee may require, prior to registering any
such transfer of the Notes, in their sole discretion, such written legal
opinions, certifications (including an investment letter in the case of box (3)
or (4)) and other information as the Trustee or the Issuers have reasonably
requested to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, as amended.
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If none of the foregoing items are checked, the Trustee or Registrar shall not
be obligated to register this Note in the name of any person other than the
Holder hereof unless and until the conditions to any such transfer of
registration set forth herein and in Section 2.17 of the Indenture shall have
been satisfied.
Dated:___________________ Signed:___________________________________
(Sign exactly as name
appears on the other side
of this Note)
Signature Guarantee:_________________________________
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing this Note
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuers as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.
Dated:_______________ _________________________________________
NOTICE: To be executed by
an executive officer
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[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.15 or Section 4.16
of the Indenture, check the appropriate box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Issuers pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$______________
Dated: __________________ ________________________________________
NOTICE: The signature on this
assignment must correspond with
the name as it appears upon the
face of the within Note in every
particular without alteration or
enlargement or any change
whatsoever and be guaranteed.
Signature Guarantee:__________________________________
A-11
EXHIBIT B
CUSIP No.: [ ]
ABRAXAS PETROLEUM CORPORATION
11 1/2% SENIOR NOTE DUE 2004, SERIES D
No. [ ] $[ ]
ABRAXAS PETROLEUM CORPORATION, a Nevada corporation, and CANADIAN
ABRAXAS PETROLEUM LIMITED, an Alberta corporation (the "Issuers", which term
includes any successor entities), for value received promise to pay to [ ] or
registered assigns the principal sum of [ ] Dollars on November 1, 2004.
Interest Payment Dates: May 1 and November 1, commencing May 1, 1998
Record Dates: April 15 and October 15
Reference is made to the further provisions of this Note contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Issuers have caused this Note to be signed
manually or by facsimile by their duly authorized officers and a facsimile of
their corporate seal to be affixed hereto or imprinted hereon.
ABRAXAS PETROLEUM CORPORATION
By:______________________________
Name:
Title:
CANADIAN ABRAXAS PETROLEUM LIMITED
By:______________________________
Name:
Title:
Dated:
Certificate of Authentication
B-1
This is one of the 11 1/2% Senior Notes due 2004, Series D referred to
in the within-mentioned Indenture.
IBJ SCHRODER BANK AND TRUST COMPANY,
as Trustee
By:______________________________
Authorized Signatory
Date of Authentication:
B-2
(REVERSE OF SECURITY)
11 1/2% Senior Note due 2004, Series D
1. Interest. ABRAXAS PETROLEUM CORPORATION, a Nevada corporation, and
CANADIAN ABRAXAS PETROLEUM LIMITED, an Alberta corporation (the "Issuers"),
promise to pay interest on the principal amount of this Note at the rate per
annum shown above. Interest on the Notes will accrue from the most recent date
on which interest has been paid or, if no interest has been paid, from January
27, 1998. The Issuers will pay interest semi-annually in arrears on each
Interest Payment Date, commencing May 1, 1998. Interest will be computed on the
basis of a 360-day year of twelve 30-day months and, in the case of a partial
month, the actual number of days elapsed.
The Issuers shall pay interest on overdue principal and on overdue
installments of interest from time to time on demand at the rate borne by the
Notes and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful.
2. Method of Payment. The Issuers shall pay interest on the Notes
(except defaulted interest) to the Persons who are the registered Holders at the
close of business on the Record Date immediately preceding the Interest Payment
Date even if the Notes are cancelled on registration of transfer or registration
of exchange after such Record Date. Holders must surrender Notes to a Paying
Agent to collect principal payments. The Issuers shall pay principal and
interest in money of the United States that at the time of payment is legal
tender for payment of public and private debts ("U.S. Legal Tender"). However,
the Issuers may pay principal and interest by their check payable in such U.S.
Legal Tender. The Issuers may deliver any such interest payment to the Paying
Agent or to a Holder at the Holder's registered address.
3. Paying Agent and Registrar. Initially, IBJ Schroder Bank & Trust
Company (the "Trustee") will act as Paying Agent and Registrar. The Company may
change any Paying Agent, Registrar or co-Registrar without notice to the
Holders.
4. Indenture. The Issuers issued the Notes under an Indenture, dated as
of January 27, 1998 (the "Indenture"), among the Issuers, the Subsidiary
Guarantors and the Trustee. This Note is one of a duly authorized issue of
Exchange Notes of the Issuers designated as their 11 1/2% Senior Notes due 2004,
Series D (the "Exchange Notes"). The Notes are limited in aggregate principal
amount to $275,000,000; provided that $215,000,000 shall be reserved for
issuance and shall be available for issuance only in connection with the
exchange of the Series A/B Notes (as defined in the Indenture) for Exchange
Notes. The Notes include the 11 1/2% Notes due 2004 (the "Initial Notes") and
the Exchange Notes, issued in exchange for the Initial Notes and the Series A/B
Notes (as defined in the Indenture) pursuant to the Registration Rights
Agreement. The Initial Notes and the Exchange Notes are treated as a single
class of securities under the Indenture. Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The terms of the Notes
include those stated in the Indenture and those made part of the Indenture by
B-3
reference to the Trust Indenture Act of 1939 (15 U.S. Code ss.ss. 77aaa-77bbbb)
(the "TIA"), as in effect on the date of the Indenture. Notwithstanding anything
to the contrary herein, the Notes are subject to all such terms, and Holders of
Notes are referred to the Indenture and said Act for a statement of them. The
Notes are general unsecured obligations of the Issuers.
5. Indenture. Each Holder, by accepting a Note, agrees to be bound by
all of the terms and provisions of the Indenture, as the same may be amended
from time to time in accordance with its terms.
6. Redemption. The Notes will be redeemable, at the Issuers' option, in
whole at any time or in part from time to time, on and after November 1, 2000,
upon not less than 30 nor more than 60 days' notice, at the following Redemption
Prices (expressed as percentages of the principal amount thereof) if redeemed
during the twelve-month period commencing on November 1 of the years set below,
plus, in each case, accrued and unpaid interest, if any, thereon to the date of
redemption:
Year Percentage
2000........................... 105.750%
2001........................... 102.875%
2002 and thereafter............ 100.000%
At any time, or from time to time, on or prior to November 1, 1999, the
Issuers may, at their option, use all or a portion of the net cash proceeds of
one or more Equity Offerings (as defined in the Indenture) to redeem up to 35%
of the aggregate original principal amount of the Notes at a Redemption Price
equal to 111.5% of the aggregate principal amount of the Notes to be redeemed,
plus accrued and unpaid interest, if any, thereon to the date of redemption;
provided, however, that at least 65% of the aggregate original principal amount
of the Notes remains outstanding immediately after giving effect to any such
redemption (it being expressly agreed that for purposes of determining whether
this condition is satisfied, Notes owned by either Issuer or any of their
Affiliates shall be deemed not to be outstanding). In order to effect the
foregoing redemption with the proceeds of any Equity Offering, the Issuers shall
make such redemption not more than 60 days after the consummation of any Equity
Offering.
7. Notice of Redemption. Notice of redemption will be mailed at least
30 days but not more than 60 days before the Redemption Date to each Holder of
Notes to be redeemed at such Holder's registered address.
Notes in denominations larger than $1,000 may be redeemed in part.
Except as set forth in the Indenture, if monies for the redemption of
the Notes called for redemption shall have been deposited with the Paying Agent
for redemption on such Redemption Date, then, unless the Issuers default in the
payment of such Redemption Price plus accrued interest, if any, the Notes called
for redemption will cease to bear interest from and after such Redemption Date
and the only right of the Holders of such Notes will be to receive payment of
the Redemption Price plus accrued interest, if any.
B-4
8. Offers to Purchase. Sections 4.15 and 4.16 of the Indenture provide
that, after certain Asset Sales (as defined in the Indenture) and upon the
occurrence of a Change of Control (as defined in the Indenture), and subject to
further limitations contained therein, the Issuers will make an offer to
purchase certain amounts of the Notes (including any Additional Series D Notes
(as defined in the Indenture)) in accordance with the procedures set forth in
the Indenture.
9. Denominations; Transfer; Exchange. The Notes are in registered form,
without coupons, and (except Notes issued as payment of Interest) in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Notes in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements and transfer documents and to pay certain transfer taxes or similar
governmental charges payable in connection therewith as permitted by the
Indenture. The Registrar need not register the transfer of or exchange of any
Notes or portions thereof selected for redemption.
10. Persons Deemed Owners. The registered Holder of a Note shall be
treated as the owner of it for all purposes.
11. Unclaimed Money. If money for the payment of principal or interest
remains unclaimed for one year, the Trustee and the Paying Agent will pay the
money back to the Issuers. After that, all liability of the Trustee and such
Paying Agent with respect to such money shall cease.
12. Discharge Prior to Redemption or Maturity. If the Issuers at any
time deposit with the Trustee U.S. Legal Tender or U.S. Government Obligations
sufficient to pay the principal of and interest on the Notes to redemption and
comply with the other provisions of the Indenture relating thereto, the Issuers
will be discharged from certain provisions of the Indenture and the Notes
(including certain covenants, including, under certain circumstances, their
obligation to pay the principal of and interest on the Notes but without
affecting the rights of the Holders to receive such amounts from such deposit).
13. Amendment; Supplement; Waiver. Subject to certain exceptions set
forth in the Indenture, the Indenture or the Notes may be amended or
supplemented with the written consent of the Holders of not less than a majority
in aggregate principal amount of the Notes then outstanding, and any past
Default or Event of Default or noncompliance with any provision may be waived
with the written consent of the Holders of not less than a majority in aggregate
principal amount of the Notes then outstanding. Without notice to or consent of
any Holder, the parties thereto may amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency,
provide for uncertificated Notes in addition to or in place of certificated
Notes, comply with any requirements of the Commission in order to effect or
maintain the qualification of the Indenture under the TIA or comply with Article
Five of the Indenture or make any other change that does not adversely affect
the rights of any Holder of a Note.
B-5
14. Restrictive Covenants. The Indenture imposes certain limitations on
the ability of the Issuers and the Restricted Subsidiaries to, among other
things, incur additional Indebtedness, make payments in respect of their Capital
Stock or certain Indebtedness, make certain Investments, create or incur liens,
enter into transactions with Affiliates, create dividend or other payment
restrictions affecting Restricted Subsidiaries, issue Preferred Stock of their
Restricted Subsidiaries, and on the ability of the Issuers and their Restricted
Subsidiaries to merge or consolidate with any other Person or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of the
Issuers' and their Restricted Subsidiaries' assets or adopt a plan of
liquidation. Such limitations are subject to a number of important
qualifications and exceptions. Pursuant to Section 4.06 of the Indenture, the
Issuers must annually report to the Trustee on compliance with such limitations.
15. Successors. When a successor assumes, in accordance with the
Indenture, all the obligations of its predecessor under the Notes and the
Indenture, the predecessor, subject to certain exceptions, will be released from
those obligations.
16. Defaults and Remedies. If an Event of Default occurs and is
continuing, the Trustee or the Holders of not less than 25% in aggregate
principal amount of Notes then outstanding may declare all the Notes to be due
and payable in the manner, at the time and with the effect provided in the
Indenture. Holders of Notes may not enforce the Indenture or the Notes except as
provided in the Indenture. The Trustee is not obligated to enforce the Indenture
or the Notes unless it has received indemnity reasonably satisfactory to it. The
Indenture permits, subject to certain limitations therein provided, Holders of a
majority in aggregate principal amount of the Notes then outstanding to direct
the Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders of Notes notice of any continuing Default or Event of Default (except a
Default in payment of principal or interest when due, for any reason or a
Default in compliance with Article Five of the Indenture) if it determines that
withholding notice is in their interest.
17. Trustee Dealings with Issuers. The Trustee under the Indenture, in
its individual or any other capacity, may become the owner or pledgee of Notes
and may otherwise deal with the Issuers, their Subsidiaries or their respective
Affiliates as if it were not the Trustee.
18. No Recourse Against Others. No partner, director, officer, employee
or stockholder, as such, of either Issuer or any Subsidiary Guarantor, as such,
shall have any liability for any obligations of either Issuer or any Subsidiary
Guarantor under the Notes, the Indenture, the Guarantees or the Registration
Rights Agreement or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of Notes by accepting a Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes.
19. Guarantees. This Note will be entitled to the benefits of certain
Guarantees, if any, made for the benefit of the Holders. Reference is hereby
B-6
made to the Indenture for a statement of the respective rights, limitations of
rights, duties and obligations thereunder of the Subsidiary Guarantors, the
Trustee and the Holders.
20. Authentication. This Note shall not be valid until the Trustee or
Authenticating Agent manually signs the certificate of authentication on this
Note.
21. Governing Law. This Note and the Indenture shall be governed by and
construed in accordance with the laws of the State of New York, as applied to
contracts made and performed within the State of New York, without regard to
principles of conflict of laws. Each of the parties hereto agrees to submit to
the jurisdiction of the courts of the State of New York in any action or
proceeding arising out of or relating to this Note.
22. Abbreviations and Defined Terms. Customary abbreviations may be
used in the name of a Holder of a Note or an assignee, such as: TEN COM (=
tenants in common), TEN ENT (= tenants by the entireties), JT TEN (= joint
tenants with right of survivorship and not as tenants in common), CUST (=
Custodian), and U/G/M/A (= Uniform Gifts to Minors Act).
23. CUSIP Numbers. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the Notes as a convenience to the Holders of the
Notes. 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 identification numbers
printed hereon.
The Issuers will furnish to any Holder of a Note upon written request
and without charge a copy of the Indenture, which has the text of this Note.
Requests may be made to: Abraxas Petroleum Corporation, 500 North Loop 1604
East, Suite 100, San Antonio, Texas 78232.
B-7
ASSIGNMENT FORM
If you the Holder want to assign this Note, fill in the form below and
have your signature guaranteed:
I or we assign and transfer this Note to:
____________________________________________________________________________
____________________________________________________________________________
____________________________________________________________________________
(Print or type name, address and zip code and
social security or tax ID number of assignee)
and irrevocably appoint_____________________________________________________,
agent to transfer this Note on the books of the Issuers. The agent may
substitute another to act for him.
Dated:_____________ Signed:___________________________
(Sign exactly as name appears
on the other side of this Note)
Signature Guarantee:______________________________________________________
B-8
[OPTION OF HOLDER TO ELECT PURCHASE]
If you want to elect to have this Note purchased by the Issuers
pursuant to Section 4.15 or Section 4.16 of the Indenture, check the appropriate
box:
Section 4.15 [ ]
Section 4.16 [ ]
If you want to elect to have only part of this Note purchased by the
Issuers pursuant to Section 4.15 or Section 4.16 of the Indenture, state the
amount you elect to have purchased:
$_______________________
Dated: _________________ ______________________________________
NOTICE: The signature on this
assignment must correspond with the
name as it appears upon the face of
the within Note in every particular
without alteration or enlargement
or any change whatsoever and be
guaranteed.
Signature Guarantee:_____________________________
B-9
EXHIBIT C
Form of Certificate To Be
Delivered in Connection with
Transfers to Non-QIB Accredited Investors
[ ], [ ]
[ ]
[ ]
[ ]
Ladies and Gentlemen:
In connection with our proposed purchase of 11 1/2% Senior Notes due
2004 (the "Notes") of Abraxas Petroleum Corporation ("Abraxas") and Canadian
Abraxas Petroleum Limited ("Canadian Abraxas"), we confirm that:
I. We have received a copy of the Offering Memorandum (the
"Offering Memorandum"), dated January 20, 1998, relating to the Notes
and such other information as we deem necessary in order to make our
investment decision. We acknowledge that we have read and agreed to the
matters stated in the section entitled "Notice to Investors" of such
Offering Memorandum.
2. We understand that any subsequent transfer of the Notes is
subject to certain restrictions and conditions set forth in the
indenture relating to the Notes (the "Indenture") as described in the
Offering Memorandum and the undersigned agrees to be bound by, and not
to resell, pledge or otherwise transfer the Notes except in compliance
with, such restrictions and conditions and the Securities Act of 1933,
as amended (the "Securities Act"), and all applicable State securities
laws.
3. We understand that the offer and sale of the Notes have not
been registered under the Securities Act, and that the Notes may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except as permitted in the following sentence.
We agree, on our own behalf and on behalf of any accounts for which we
are acting as hereinafter stated, that if we should sell any Notes, we
will do so only (i) to Abraxas, Canadian Abraxas or any subsidiary
thereof, (ii) inside the United States in accordance with Rule 144A
under the Securities Act to a "qualified institutional buyer" (as
defined in Rule 144A promulgated under the Securities Act) that, prior
to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Trustee (as defined in the Indenture) a signed
letter containing certain representations and agreements relating to
C-1
the restrictions on transfer of the Notes (the form of which letter can
be obtained from the Trustee), (iii) outside the United States in
accordance with Rule 904 of Regulation S promulgated under the
Securities Act (provided that any such sale or transfer in Canada or to
or for the benefit of a Canadian resident must be effected pursuant to
an exemption from the prospectus and registration requirements under
applicable Canadian securities laws), (iv) pursuant to the exemption
from registration provided by Rule 144 under the Securities Act (if
available), or (v) pursuant to an effective registration statement
under the Securities Act, and we further agree to provide to any person
purchasing any of the Notes from us a notice advising such purchaser
that resales of the Notes are restricted as stated herein.
4. We understand that, on any proposed resale of any Notes, we
will be required to furnish to the Trustee, Abraxas and Canadian
Abraxas such certification, legal opinions and other information as the
Trustee and Abraxas may reasonably require to confirm that the proposed
sale complies with the foregoing restrictions. We further understand
that the Notes purchased by us will bear a legend to the foregoing
effect.
5. We are an institutional "accredited investor" (as defined
in Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities
Act) and have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are
acting are each able to bear the economic risk of our or their
investment, as the case may be.
6. We are acquiring the Notes purchased by us for our account
or for one or more accounts (each of which is an institutional
"accredited investor") as to each of which we exercise sole investment
discretion.
You, Abraxas, Canadian Abraxas, the Trustee and others are
entitled to rely upon this letter and are irrevocably authorized to produce this
letter or a copy hereof to any interested party in any administrative or legal
proceeding or official inquiry with respect to the matters covered hereby.
Very truly yours,
[Name of Transferee]
By:_____________________
Name:
Title:
C-2
EXHIBIT D
Form of Certificate To Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[ ], [ ]
[ ]
[ ]
[ ]
[ ]
Re: Abraxas Petroleum Corporation
Canadian Abraxas Petroleum Limited (the "Issuers")
11 1/2% Senior Notes due 2004 (the "Notes")
Ladies and Gentlemen:
In connection with our proposed sale of $[ ] aggregate principal amount
of the Notes, we confirm that such sale has been effected pursuant to and in
accordance with Regulation S under the U.S. Securities Act of 1933, as amended
(the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Notes was not made to a person in the
United States;
(2) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on
our behalf reasonably believed that the transferee was outside the
United States, or (b) the transaction was executed in, on or through
the facilities of a designated off-shore securities market and neither
we nor any person acting on our behalf knows that the transaction has
been pre-arranged with a buyer in the United States;
(3) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903(b) or Rule
904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade
the registration requirements of the Securities Act; and
(5) we have advised the transferee of the transfer
restrictions applicable to the Notes.
You, the Issuers and counsel for the Issuers are entitled to
D-1
rely upon this letter and are irrevocably authorized to produce this letter or a
copy hereof to any interested party in any administrative or legal proceedings
or official inquiry with respect to the matters covered hereby. Terms used in
this certificate have the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:______________________________
Authorized Signature
D-2
EXHIBIT E
GUARANTEE
For value received, the undersigned hereby unconditionally guarantees,
as principal obligor and not only as a surety, to the Holder of this Note the
cash payments in United States dollars of principal of, premium, if any, and
interest on this Note (and including Additional Interest payable thereon) in the
amounts and at the times when due and interest on the overdue principal,
premium, if any, and interest, if any, of this Note, if lawful, and the payment
or performance of all other obligations of the Issuers under the Indenture or
the Notes, to the Holder of this Note and the Trustee, all in accordance with
and subject to the terms and limitations of this Note, Article Eleven of the
Indenture and this Guarantee. This Guarantee will become effective in accordance
with Article Eleven of the Indenture and its terms shall be evidenced therein.
The validity and enforceability of any Guarantee shall not be affected by the
fact that it is not affixed to any particular Note. Capitalized terms used but
not defined herein shall have the meanings ascribed to them in the Indenture
dated as of January 27, 1998, among Abraxas Petroleum Corporation, a Nevada
corporation, and Canadian Abraxas Petroleum Limited, an Alberta corporation, as
issuers (the "Issuers") and IBJ Schroder Bank & Trust Company, as trustee (the
"Trustee"), as amended or supplemented (the "Indenture").
The obligations of the undersigned to the Holders of Notes and to the
Trustee pursuant to this Guarantee and the Indenture are expressly set forth in
Article Eleven of the Indenture and reference is hereby made to the Indenture
for the precise terms of the Guarantee and all of the other provisions of the
Indenture to which this Guarantee relates.
THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO PRINCIPLES OF
CONFLICTS OF LAW. Each Subsidiary Guarantor hereby agrees to submit to the
jurisdiction of the courts of the State of New York in any action or proceeding
arising out of or relating to this Guarantee.
This Guarantee is subject to release upon the terms set forth in the
Indenture.
E-1
IN WITNESS WHEREOF, each Subsidiary Guarantor has caused its Guarantee
to be duly executed.
Date: ____________________
[NAME OF SUBSIDIARY GUARANTOR], as
Guarantor
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
E-2
EXHIBIT 10.1
ABRAXAS PETROLEUM CORPORATION
CANADIAN ABRAXAS PETROLEUM LIMITED
$60,000,000
11 1/2% Senior Notes due 2004
PURCHASE AGREEMENT
January 20, 1998
JEFFERIES & COMPANY INC.
909 Fannin, Suite 3100
Houston, TX 77010
Ladies and Gentlemen:
Abraxas Petroleum Corporation, a Nevada corporation (the "Company"),
and Canadian Abraxas Petroleum Limited, an Alberta corporation and a
wholly-owned subsidiary of the Company ("Canadian Abraxas" and together with the
Company, the "Issuers"), hereby confirm their agreement with you (the "Initial
Purchaser") as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Issuers propose to issue and sell to the Initial Purchaser
$60,000,000 aggregate principal amount of their 11 1/2% Senior Notes due 2004
(the "Notes"). The Notes will be guaranteed (collectively, the "Guarantees") on
a senior basis by each of the Company's future Restricted Subsidiaries (as
defined in the Indenture) (collectively, the "Subsidiary Guarantors"). The Notes
and the Guarantees are collectively referred to herein as the "Securities". The
Notes are to be issued under an indenture (the "Indenture") to be dated as of
January 27, 1998 by and among the Issuers and IBJ Schroder Bank & Trust Company,
as Trustee (the "Trustee").
The Securities will be offered and sold to the Initial Purchaser
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Issuers have
prepared a final offering memorandum dated January 20, 1998 (the "Final
Memorandum" or "Memorandum") setting forth or including a description of the
1
terms of the Securities, the terms of the offering of the Securities, a
description of the Issuers and the Subsidiary Guarantors and any material
developments relating to the Issuers and the Subsidiary Guarantors occurring
after the date of the most recent historical financial statements included
therein.
The Initial Purchaser and its direct and indirect transferees of the
Securities will be entitled to the benefits of the Registration Rights Agreement
to be dated as of the Closing Date (as defined) (the "Registration Rights
Agreement"), pursuant to which the Issuers will agree, among other things, to
file with the Securities and Exchange Commission (the "Commission"), under the
circumstances set forth therein, (i) a registration statement under the Act (the
"Exchange Offer Registration Statement"), relating to Senior Notes due 2004 of
the Issuers (the "Exchange Notes") to be offered in exchange (the "Exchange
Offer") for the Notes, and (ii) as and to the extent required by the
Registration Rights Agreement, a shelf registration statement pursuant to Rule
415 under the Act (the "Shelf Registration Statement" and, together with the
Exchange Offer Registration Statement, the "Registration Statements"), relating
to the resale by certain holders of the Notes, and to use their best efforts to
cause such Registration Statements to be declared effective. This Purchase
Agreement (this "Agreement"), the Notes, the Guarantees, the Indenture and the
Registration Rights Agreement are hereinafter referred to collectively as the
"Operative Documents."
2. Representations and Warranties. The Issuers, jointly and severally,
represent and warrant to and agree with the Initial Purchaser that:
(a) Neither the Final Memorandum nor any amendment or
supplement thereto as of the date thereof and at all times subsequent
thereto up to the Closing Date (as defined in Section 3 below)
contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with information
relating to the Initial Purchaser furnished to the Issuers in writing
by the Initial Purchaser expressly for use in the Final Memorandum or
any amendment or supplement thereto.
(b) As of September 30, 1997, the Company had the authorized,
issued and outstanding capitalization set forth in the Final
Memorandum; all of the subsidiaries of the Company are listed on
Schedule I attached hereto (each, a "Subsidiary" and collectively, the
"Subsidiaries"); all of the outstanding shares of capital stock of the
Issuers and of each of the Subsidiaries of the Company have been, and
as of the Closing Date will be, duly authorized and validly issued, are
fully paid and nonassessable and were not issued in violation of any
preemptive or similar rights; all of the outstanding shares of capital
2
stock of Canadian Abraxas and of each of the Subsidiaries (other than
with respect to the shares of capital stock of Cascade Oil & Gas Ltd.,
an Alberta corporation ("Cascade"), and Western Associated Energy
Corporation, a Texas corporation ("Western"), such shares of capital
stock owned by others as of the Closing Date and as set forth in the
Final Memorandum or in this Agreement) will be owned by the Company
free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability (other than those imposed by the Act
and the securities or "Blue Sky" laws of certain jurisdictions) or
voting, except for the liens created by the Credit Facility (as defined
herein); except as set forth in the Final Memorandum, as of September
30, 1997, there were no (i) options, warrants or other rights to
purchase, (ii) agreements or other obligations of the Issuers to issue
or (iii) other rights to convert any obligation into, or exchange any
securities for, shares of capital stock of or ownership interests in
either Issuer or any of the Subsidiaries outstanding. Except for the
Subsidiaries and as disclosed in the Final Memorandum, none of the
Issuers or any of the Subsidiaries owns, directly or indirectly, any
shares of capital stock or any other equity or long-term debt
securities or have any equity interest in any firm, partnership, joint
venture or other entity.
(c) Each of the Issuers and the Subsidiaries is duly
incorporated, validly existing and in good standing under the laws of
its respective jurisdiction of incorporation and has all requisite
corporate power and authority to own its properties and conduct its
business as now conducted and as described in the Final Memorandum;
each of the Issuers and the Subsidiaries is duly qualified to do
business as a foreign corporation in good standing in all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except where the
failure to be so qualified would not, individually or in the aggregate,
have a material adverse effect on the general affairs, management,
business, condition (financial or otherwise), prospects or results of
operations of the Issuers and the Subsidiaries taken as a whole (any
such event, a "Material Adverse Effect").
(d) Each of the Issuers and the Subsidiaries has all requisite
corporate power and authority to execute, deliver and perform its
respective obligations under this Agreement and the other Operative
Documents to which it is a party and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the
power and authority to issue, sell and deliver the Securities as
contemplated by this Agreement.
(e) This Agreement has been duly and validly authorized,
executed and delivered by each of the Issuers.
(f) The Indenture has been duly and validly authorized by the
3
Issuers and, when duly executed and delivered in accordance with its
terms (assuming the due execution and delivery thereof by the Trustee),
will be the valid and legally binding agreement of the Issuers,
enforceable against each of them in accordance with its terms, except
as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereinafter in
effect relating to or affecting creditors' rights generally, by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the Indenture
meets the requirements for qualification under the Trust Indenture Act
of 1939, as amended (the "TIA").
(g) The Notes have been duly and validly authorized for
issuance and sale to the Initial Purchaser by the Issuers pursuant to
this Agreement and, when issued and authenticated in accordance with
the terms of the Indenture and delivered against payment therefor in
accordance with the terms hereof, will be the legally valid and binding
obligations of the Issuers, enforceable against each of them in
accordance with their terms and entitled to the benefits of the
Indenture, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or
hereinafter in effect relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or
the discretion of the court before which any proceeding therefor may be
brought.
(h) The Exchange Notes have been duly and validly authorized
for issuance by the Issuers and, when issued and authenticated in
accordance with the terms of the Indenture, the Registration Rights
Agreement and the Exchange Offer, will be the legally valid and binding
obligations of the Issuers, enforceable against each of them in
accordance with their terms and entitled to the benefits of the
Indenture, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws now or
hereinafter in effect relating to or affecting creditors' rights
generally, by general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law) or
the discretion of the court before which any proceeding therefor may be
brought.
(i) The Registration Rights Agreement has been duly authorized
by the Issuers and, when duly executed and delivered by the Issuers
(assuming the due execution and delivery thereof by the Initial
Purchaser), will be the legally valid and binding obligation of the
Issuers, enforceable against each of them in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or hereinafter in
effect relating to or affecting creditors' rights generally, by general
4
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or the discretion of
the court before which any proceeding therefor may be brought and, as
to rights of indemnification and contribution, by principles of public
policy or U.S. or Canadian federal, state or provincial securities laws
relating thereto.
(j) No consent, waiver, approval, authorization or order of or
filing, registration, qualification, license or permit of or with any
court or governmental agency or body, or third party is required for
(i) the issuance and sale by the Issuers of the Notes to the Initial
Purchaser or the consummation by the Issuers of each of the other
transactions contemplated hereby or by any of the other Operative
Documents and (ii) the issuance and sale by the Subsidiary Guarantors
of the Guarantees or the consummation by the Subsidiary Guarantors of
the other transactions contemplated hereby or by any of the Operative
Documents, except, in each case, such as have been or, prior to the
Closing Date, will be obtained, such as may be required under state
securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Initial Purchaser and the receipt by
the Issuers and the Subsidiary Guarantors of an order declaring the
Exchange Offer Registration Statement and/or the Shelf Registration
Statement effective from the Commission. None of the Issuers or any of
the Subsidiaries is (A) in violation of its charter or bylaws (or
similar organizational document), (B) in breach or violation of any
statute, judgment, decree, order, rule or regulation applicable to any
of them or any of their respective properties or assets, except for any
such breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect, or (C) in breach of or
default under (nor has any event occurred which, with notice or passage
of time or both, would constitute a default under) or in violation of
any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, permit, certificate,
contract or other agreement or instrument to which any of them is a
party or to which any of them or their respective properties or assets
is subject (collectively, "Contracts"), except for any such breach,
default, violation or event which would not, individually or in the
aggregate, have a Material Adverse Effect.
(k) The execution, delivery and performance by the Issuers of
this Agreement and each of the other Operative Documents (to the extent
a party thereto) and the consummation of the transactions contemplated
hereby and thereby (including, without limitation, the issuance and
sale of the Securities to the Initial Purchaser and the issuance of the
Exchange Notes in the Exchange Offer), do not and will not violate,
conflict with or constitute or result in a breach of or a default under
(or constitute an event which with notice or passage of time or both
would constitute a default under) or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the
obligation to create or impose) a Lien (as defined) on any properties
5
or assets of either Issuer or any Subsidiary with respect to (A) the
terms or provisions of any Contract, except for any such conflict,
breach, violation, default or event which would not, individually or in
the aggregate, have a Material Adverse Effect, (B) the charter or
bylaws (or similar organizational document) of the Issuers or any of
the Subsidiaries, or (C) (assuming compliance with all applicable state
securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchaser in Section 8
hereof) any statute, judgment, decree, order, rule or regulation
applicable to the Issuers or any of the Subsidiaries or any of their
respective properties or assets, except for any such conflict, breach
or violation which would not, individually or in the aggregate, have a
Material Adverse Effect.
(l) Ernst & Young LLP, Deloitte & Touche LLP, KPMG Chartered
Accountants, Arthur Andersen LLP and Price Waterhouse LLP, who are
reporting on the audited financial statements of the Issuers, Enserch
Exploration, Inc.'s Wamsutter Area package, CGGS and Vessels Energy,
Inc. ("Vessels"), respectively, included in the Final Memorandum, are
independent public accountants within the meaning of the Act. The
audited financial statements of the Issuers, CGGS, Enserch Exploration,
Inc.'s Wamsutter Area package and Vessels and related notes thereto
included in the Final Memorandum present fairly in all material
respects the financial position of the Issuers, CGGS, Enserch
Exploration, Inc.'s Wamsutter Area package and Vessels, as of the dates
indicated and the results of their respective operations and the
changes in the cash flow for the periods specified, in accordance with
generally accepted accounting principles ("GAAP") consistently applied
throughout such periods, except as otherwise stated therein. The
summary and selected financial and statistical data included in the
Final Memorandum present fairly in all material respects the
information shown therein and have been prepared and compiled on a
basis consistent with the audited financial statements included
therein, except as stated therein.
(m) The pro forma financial statements (including the notes
thereto) and the other pro forma financial information included in the
Final Memorandum (i) comply as to form in all material respects with
the applicable requirements of Regulation S-X promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii)
have been prepared in all material respects in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements, and (iii) have been properly computed on the bases
described therein; the assumptions used in the preparation of the pro
forma financial data and other pro forma financial information included
in the Final Memorandum are reasonable and the adjustments used therein
are appropriate to give effect to the transactions or circumstances
referred to therein.
6
(n) There is not pending or, to the knowledge of the Issuers,
threatened any action, suit, proceeding, inquiry or investigation to
which either of the Issuers or any of the Subsidiaries is a party, or
to which the property or assets of either of the Issuers or any of the
Subsidiaries is subject, before or brought by any court, arbitrator or
governmental agency or body which, if determined adversely to either of
the Issuers or any of the Subsidiaries, would, individually or in the
aggregate, have a Material Adverse Effect or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance
or sale of the Securities to be sold hereunder or the consummation of
the other transactions described in the Final Memorandum.
(o) Each of the Issuers and the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made all declarations and filings with,
all federal, state, local and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals,
presently required or necessary to own or lease, as the case may be,
and to operate its respective properties and to carry on its respective
businesses as now or proposed to be conducted as set forth in the Final
Memorandum ("Permits"), except where the failure to obtain such Permits
would not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect; each of the Issuers and the
Subsidiaries has fulfilled and performed all of its obligations with
respect to such Permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such Permit, except where the failure to perform such
obligations or the occurrence of such event would not have a Material
Adverse Effect; and none of the Issuers or any of the Subsidiaries has
received any notice of any proceeding relating to revocation or
modification of any such Permit, except as described in the Final
Memorandum and except where such revocation or modification would not,
individually or in the aggregate, have a Material Adverse Effect.
(p) Since the respective dates as to which information is
given in the Final Memorandum, except as described therein, (i) none of
the Issuers or any of the Subsidiaries has incurred any liabilities or
obligations, direct or contingent, or entered into or agreed to enter
into any transactions or contracts (written or oral) not in the
ordinary course of business, or which liabilities, obligations,
transactions or contracts would, individually or in the aggregate, be
material to the business, condition (financial or otherwise), prospects
or results of operations of the Issuers and the Subsidiaries, taken as
a whole, (ii) none of the Issuers or any of the Subsidiaries has
purchased any of its outstanding capital stock, nor declared, paid or
otherwise made any dividend or distribution of any kind on its capital
7
stock other than with respect to any of such Subsidiary, the purchase
of, or dividend or distribution on, capital stock owned by the Company)
and (iii) there shall not have been any change in the capital stock or
long-term indebtedness of any of the Issuers or Subsidiaries.
(q) Each of the Issuers and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns,
except where the failure to so file such returns would not,
individually or in the aggregate, have a Material Adverse Effect, and
has paid all taxes shown as due thereon except as to taxes any of the
Issuers or Subsidiaries is contesting in good faith; and other than tax
deficiencies which any of the Issuers or Subsidiaries is contesting in
good faith and for which such Issuer or such Subsidiaries has provided
adequate reserves in accordance with generally accepted accounting
principles, there is no tax deficiency that has been asserted against
any of the Issuers or the Subsidiaries that would have, individually or
in the aggregate, a Material Adverse Effect.
(r) The statistical and market-related data included in the
Final Memorandum are based on or derived from sources which the Issuers
believe to be reliable and accurate.
(s) None of the Issuers or any of the Subsidiaries or any
agent acting on their behalf has taken or will take any action that
might cause this Agreement or the sale of the Securities to violate
Regulation G, T, U or X of the Board of Governors of the Federal
Reserve System, in each case as in effect, or as the same may hereafter
be in effect, on the Closing Date.
(t) Each of the Issuers and the Subsidiaries has good and
defensible title to all real property and good title to all personal
property described in the Final Memorandum as being owned by it and
good and defensible title to a leasehold estate in the real and
personal property described in the Final Memorandum as being leased by
it free and clear of all liens, charges, encumbrances or restrictions,
except as described in the Final Memorandum, liens arising under the
Company's senior revolving credit facility (the "Credit Facility"),
liens for taxes not yet delinquent, or to the extent the failure to
have such title or the existence of such liens, charges, encumbrances
or restrictions would not, individually or in the aggregate, have a
Material Adverse Effect. All leases, contracts and agreements to which
any of the Issuers or Subsidiaries is a party or by which any of them
is bound are valid and enforceable against such Issuer or such
Subsidiary, as the case may be, and to the knowledge of the Issuers and
the Subsidiaries are valid and enforceable against the other party or
parties thereto and are in full force and effect with only such
exceptions as would not, individually or in the aggregate, have a
8
Material Adverse Effect, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws now or hereinafter in effect relating to or affecting creditors'
rights generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity or
at law) or the discretion of the court before which any proceeding
therefor may be brought. The Issuers and the Subsidiaries own or
possess adequate licenses or other rights to use all patents,
trademarks, service marks, trade names, copyrights and know-how
necessary to conduct the businesses now or proposed to be operated by
them as described in the Final Memorandum, and none of the Issuers or
any of the Subsidiaries has received any notice of infringement of or
conflict with (or knows of any such infringement of or conflict with)
asserted rights of others with respect to any patents, trademarks,
service marks, trade names, copyrights or know-how which, if such
assertion of infringement or conflict were sustained, would have a
Material Adverse Effect.
(u) There are no legal or governmental proceedings involving
or affecting any of the Issuers or Subsidiaries or any of their
respective properties or assets which would be required to be described
in a prospectus pursuant to the Act that are not so described in the
Final Memorandum, nor are there any material contracts or other
documents which would be required to be described in a prospectus
pursuant to the Act that are not so described in the Final Memorandum.
(v) Except as described in the Final Memorandum or as would
not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect (A) each of the Issuers and the Subsidiaries is
in compliance with and not subject to any known liability under
applicable Environmental Laws (as defined below), (B) each of the
Issuers and the Subsidiaries has made all filings and provided all
notices required under any applicable Environmental Law, and has, and
is in compliance with, all Permits required under any applicable
Environmental Laws and each of them is in full force and effect, (C)
there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation or, to the knowledge of the Issuers
and the Subsidiaries, investigation, proceeding, notice or demand
letter or request for information pending or threatened against any of
the Issuers or the Subsidiaries under any Environmental Law, (D) no
lien, charge, encumbrance or restriction has been recorded under any
Environmental Law with respect to any assets, facility or property
owned, operated, leased or controlled by any of the Issuers or the
Subsidiaries, (E) none of the Issuers or any of the Subsidiaries has
received notice that it has been identified as a potentially
responsible party under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), or any
comparable state law, (F) no property or facility of any of the Issuers
or the Subsidiaries is (i) listed or, to the knowledge of the Issuers
9
and the Subsidiaries proposed for listing on the National Priorities
List under CERCLA or is (ii) listed in the Comprehensive Environmental
Response, Compensation, Liability Information System List promulgated
pursuant to CERCLA, or on any comparable list maintained by any state
or local governmental authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (i) emissions,
discharges, releases or threatened releases of hazardous materials into
the environment (including, without limitation, ambient air, surface
water, ground water, land surface or subsurface strata), (ii) the
manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of hazardous materials, and
(iii) underground and above ground storage tanks and related piping,
and emissions, discharges, releases or threatened releases therefrom.
(w) There is no strike, labor dispute, slowdown or work
stoppage with the employees of any of the Issuers or the Subsidiaries
which is pending or, to the knowledge of the Issuers, threatened.
(x) Each of the Issuers and the Subsidiaries carries insurance
including self-insurance in such amounts and covering such risks as in
its reasonable determination is adequate for the conduct of its
business and the value of its properties.
(y) None of the Issuers or any of the Subsidiaries has
incurred any liability for any prohibited transaction or funding
deficiency or any complete or partial withdrawal liability with respect
to any pension, profit sharing or other plan which is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
to which any of the Issuers or the Subsidiaries makes or ever has made
a contribution and in which any employee of any of the Issuers or the
Subsidiaries is or has ever been a participant, which in the aggregate
could have a Material Adverse Effect. With respect to such plans, each
of the Issuers and the Subsidiaries is in compliance in all respects
with all applicable provisions of ERISA, except where the failure to so
comply would not, individually or in the aggregate, have a Material
Adverse Effect.
(z) Each of the Issuers and the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
10
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(aa) None of the Issuers or any of the Subsidiaries will be an
"investment company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended, and the rules and regulations
thereunder.
(bb) The Notes, the Guarantees, the Indenture, the
Registration Rights Agreement and the Credit Facility conform in all
material respects to the descriptions thereof contained in the Final
Memorandum.
(cc) No holder of securities of any of the Issuers or any
Subsidiary will be entitled to have such securities registered under
the registration statements required to be filed by the Issuers
pursuant to the Registration Rights Agreement, other than as expressly
permitted thereby.
(dd) Immediately after the consummation of the transactions
contemplated by this Agreement and the Indenture, the fair value and
present fair saleable value of the assets of each of the Issuers and
the Subsidiaries will exceed the sum of its stated liabilities and
identified contingent liabilities; none of the Issuers or any of the
Subsidiaries (each on a consolidated basis) is, nor will any of the
Issuers or the Subsidiaries (each on a consolidated basis) be, after
giving effect to the execution, delivery and performance of this
Agreement and the Indenture, and the consummation of the transactions
contemplated hereby and thereby, (a) left with unreasonably small
capital with which to carry on its business as it is proposed to be
conducted, (b) unable to pay its debts (contingent or otherwise) as
they mature or (c) otherwise insolvent.
(ee) None of the Issuers or any of the Subsidiaries or any of
their respective Affiliates (as defined in Rule 501(b) of Regulation D
under the Act) has directly, or through any agent, (i) sold, offered
for sale, solicited offers to buy or otherwise negotiated in respect
of, any "security" (as defined in the Act) which is or could be
integrated with the sale of the Securities in a manner that would
require the registration under the Act of the Securities or (ii)
engaged in any form of general solicitation or general advertising (as
those terms are used in Regulation D under the Act) in connection with
the offering of the Securities or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
11
(ff) When the Securities are delivered pursuant to this
Agreement, none of the Securities will be of the same class (within the
meaning of Rule 144A under the Act) as securities of either Issuer or
any Subsidiary that are listed on a national securities exchange
registered under Section 6 of the Exchange Act or that are quoted in a
United States automated inter-dealer quotation system.
(gg) None of the Issuers, the Subsidiaries, any of their
respective Affiliates (as defined in Rule 501(b) of Regulation D under
the Act) or any person acting on any of their behalf (other than the
Initial Purchaser) has engaged in any directed selling efforts (as that
term is defined in Regulation S under the Act ("Regulation S")) with
respect to the Securities; the Issuers and their respective Affiliates
and any person acting on any of their behalf (other than the Initial
Purchaser) have complied with the offering restrictions requirement of
Regulation S.
(hh) Subsequent to the respective dates as of which
information is given in the Final Memorandum and up to the Closing
Date, except as set forth in the Final Memorandum, neither of the
Issuers has incurred any liabilities or obligations, direct or
contingent, which are material to the Issuers taken as a whole, nor
entered into any transaction not in the ordinary course of business and
there has not been, individually or in the aggregate, any material
adverse change, or any development which may reasonably be expected to
involve a material adverse change, in the properties, business, results
of operations, condition (financial or otherwise), affairs or prospects
of the Issuers taken as a whole (including, without limitation, any
material downward revision in the Issuers' estimated proved reserves)
other than any such effect caused solely by decreases in crude oil,
natural gas liquids and natural gas prices (any such event, a "Material
Adverse Change").
(ii) Assuming that the representations and warranties of the
Initial Purchaser contained in Section 8 are true and correct, it is
not necessary in connection with the offer, sale and delivery of the
Securities to the Initial Purchaser or the reoffer and resale by the
Initial Purchaser in the manner contemplated by this Agreement to
register the Securities under the Act or to qualify the Indenture in
respect of the Notes under the TIA.
(jj) Western is a subsidiary of the Company with no operations, assets
or liabilities other than $2,000,000 par value preferred stock issued
to a bank. Any certificate signed by any officer of either Issuer and
delivered to any Initial Purchaser or to counsel for the Initial
Purchaser or either of the Issuers shall be deemed a joint and several
representation and warranty by the Issuers to the Initial Purchaser as
to the matters covered thereby.
12
3. Purchase, Sale and Delivery of the Securities. On the basis of the
representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Issuers agree to issue
and sell to the Initial Purchaser, and the Initial Purchaser agrees to purchase
the Notes (and the related Guarantees) at 104.75% of their principal amount. One
or more certificates in definitive form for the Notes and Guarantees that the
Initial Purchaser have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchaser
request upon notice to the Issuers at least 36 hours prior to the Closing Date,
shall be delivered by or on behalf of the Issuers to the Initial Purchaser,
against payment by or on behalf of the Initial Purchaser of the purchase price
therefor by wire transfer (same day funds) to such account or accounts as the
Issuers shall specify prior to the Closing Date, or by such means as the parties
hereto shall agree prior to the Closing Date. Such delivery of and payment for
the Securities shall be made at the offices of Vinson & Elkins L.L.P., 1001
Fannin, Suite 3600, Houston, Texas at 9:00 a.m., central standard time, on
January 27, 1998, or at such other place, time or date as the Initial Purchaser,
on the one hand, and the Issuers, on the other hand, may agree upon, such time
and date of delivery against payment being herein referred to as the "Closing
Date." The Issuers will make such certificate or certificates for the Securities
available for checking and packaging by the Initial Purchaser at the offices of
Jefferies & Company, Inc., Houston, Texas, or at such other place as Jefferies &
Company, Inc. may designate, at least 24 hours prior to the Closing Date.
4. Offering by the Initial Purchaser. The Initial Purchaser proposes to
make an offering of the Securities at the price and upon the terms set forth in
the Final Memorandum, as soon as practicable after this Agreement is entered
into and as in the judgment of the Initial Purchaser is advisable.
5. Covenants of the Issuers. The Issuers, jointly and severally,
covenant and agree with the Initial Purchaser that:
(a) The Issuers will not amend or supplement the Final
Memorandum or any amendment or supplement thereto of which the Initial
Purchaser shall not previously have been advised and furnished a copy
for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchaser shall not have given
its consent, which consent shall not unreasonably be withheld. The
Issuers will promptly, upon the reasonable request of the Initial
Purchaser or counsel for the Initial Purchaser, make any amendments or
supplements to the Final Memorandum that may be necessary or advisable
in connection with the resale of the Securities by the Initial
Purchaser.
13
(b) The Issuers will cooperate with the Initial Purchaser in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Initial Purchaser may designate and will continue such qualifications
in effect for as long as may be necessary to complete the resale of the
Securities; provided, however, that in connection therewith, neither of
the Issuers shall be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or
subject itself to taxation in excess of a nominal dollar amount in any
such jurisdiction where it is not then so subject.
(c) If, at any time prior to the initial resale by the Initial
Purchaser of the Securities or the Exchange Notes, any event occurs or
information becomes known as a result of which the Final Memorandum as
then amended or supplemented would include any untrue statement of a
material fact, or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Final Memorandum to comply with
applicable law, the Issuers will promptly notify the Initial Purchaser
thereof and will prepare, at the expense of the Issuers, an amendment
or supplement to the Final Memorandum that corrects such statement or
omission or effects such compliance.
(d) The Issuers will, without charge, provide to the Initial
Purchaser and to counsel for the Initial Purchaser as many copies of
the Final Memorandum or any amendment or supplement thereto as the
Initial Purchaser may reasonably request.
(e) The Issuers will apply the net proceeds from the sale of
the Securities as set forth under "Use of Proceeds" in the Final
Memorandum.
(f) For so long as any of the Securities remain outstanding,
the Issuers will furnish to the Initial Purchaser copies of all reports
and other communications (financial or otherwise) furnished by the
Issuers to the Trustee or to the holders of the Notes and, as soon as
available, copies of any reports or financial statements furnished to
or filed by the Issuers with the Commission or any national securities
exchange on which any class of securities of the Company may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchaser, as soon as they have been prepared, if at all, a
copy of any available unaudited consolidated interim financial
statements of the Company and any available unaudited interim
consolidated financial statements of CGGS and Vessels for any period
subsequent to the period covered by the most recent financial
14
statements of the Company, CGGS and Vessels respectively, appearing in
the Final Memorandum.
(h) None of the Issuers or any of their Affiliates will sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Act) which could be
integrated with the sale of the Securities in a manner which would
require the registration under the Act of the Securities.
(i) The Issuers will not, and will not permit any of the
Subsidiaries to, engage in any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Act) in
connection with the offering of the Securities or in any manner
involving a public offering within the meaning of Section 4(2) of the
Act.
(j) For so long as any of the Securities remain outstanding,
the Company will make available at its expense, upon request, to any
holder of such Securities and any prospective purchaser thereof, the
information specified in Rule 144A(d)(4) under the Act, unless the
Company is then subject to Section 13 or 15(d) of the Exchange Act.
(k) The Issuers will use their best efforts to (i) permit the
Securities to be designated for trading in the Private Offerings,
Resales and Trading through Automated Linkages market (the "PORTAL
Market") of the NASD and (ii) permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
(l) In connection with Securities offered and sold in an
off-shore transaction (as defined in Regulation S) the Issuers will not
register any transfer of such Notes not made in accordance with the
provisions of Regulation S and will not, except in accordance with the
provisions of Regulation S, if applicable, issue any such Notes in the
form of definitive securities.
6. Expenses. The Issuers agree, jointly and severally, to pay all costs
and expenses incident to the performance of their respective obligations under
this Agreement, whether or not the transactions contemplated herein are
consummated or this Agreement is terminated pursuant to Section 10 hereof,
including all costs and expenses incident to (i) the printing, word processing
or other production of documents with respect to the transactions contemplated
hereby, including any costs of printing the Preliminary Memorandum and the Final
Memorandum and any amendment or supplement thereto, and any "Blue Sky"
memoranda, (ii) all arrangements relating to the delivery to the Initial
Purchaser of copies of the foregoing documents, (iii) the fees and disbursements
of the counsel, the accountants and any other experts or advisors retained by
the Issuers, (iv) preparation (including printing), issuance and delivery to the
15
Initial Purchaser of the Securities, (v) the qualification of the Securities
under state securities and "Blue Sky" laws, including filing fees and reasonable
fees and disbursements of counsel for the Initial Purchaser relating thereto,
(vi) expenses in connection with any meetings with prospective investors in the
Securities, (vii) fees and expenses of the Trustee including reasonable fees and
expenses of its counsel, (viii) all expenses and listing fees incurred in
connection with the application for quotation of the Securities on the PORTAL
Market, (ix) any fees charged by investment rating agencies for the rating of
the Securities and (x) all reasonable out-of-pocket expenses of the Initial
Purchaser. If the sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Initial Purchaser set forth in
Section 7 hereof is not satisfied, because this Agreement is terminated or
because of any failure, refusal or inability on the part of the Issuers to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder (other than solely by reason of a default by the Initial
Purchaser of their obligations hereunder after all conditions hereunder have
been satisfied in accordance herewith), the Issuers agree, jointly and
severally, to promptly reimburse the Initial Purchaser upon demand for all
out-of-pocket expenses that shall have been incurred by the Initial Purchaser in
connection with the proposed purchase and sale of the Securities.
7. Conditions of the Initial Purchaser's Obligations. The obligation of
the Initial Purchaser to purchase and pay for the Securities shall, in its sole
discretion, be subject to the satisfaction or waiver of the following conditions
on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchaser, of Cox & Smith Incorporated, United States counsel
for the Issuers, in form and substance satisfactory to counsel for the
Initial Purchaser, to the effect that:
(i) The Company is duly incorporated, validly
existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate
power and authority to own its properties and to conduct its
business as described in the Final Memorandum. The Company is
duly qualified to do business as a foreign corporation in good
standing in each jurisdiction where the ownership or leasing
of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified
would not, individually or in the aggregate, have a Material
Adverse Effect.
(ii) All of the outstanding shares of capital stock
of the Issuers and each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and
nonassessable and, with respect to the Company and Western,
were not issued in violation of any preemptive or similar
16
rights; all of the outstanding shares of capital stock of
Canadian Abraxas will be owned, directly or indirectly, by the
Company, free and clear of all perfected security interests
other than those arising under the Credit Facility and, to the
knowledge of such counsel, free and clear of all other liens,
encumbrances, equities and claims or restrictions on
transferability (other than those imposed by the Act and the
securities or "Blue Sky" laws of certain jurisdictions and
those arising under the Credit Facility) or voting.
(iii) To the knowledge of such counsel, except as set
forth in the Final Memorandum, no holder of securities of
either Issuer or any of the Subsidiaries is entitled to have
such securities registered under a registration statement
filed pursuant to the Registration Rights Agreement.
(iv) The Company has the requisite corporate power
and authority to execute, deliver and perform its obligations
under this Agreement and each of the other Operative Documents
and to consummate the transactions contemplated hereby and
thereby, including, without limitation, the corporate power
and authority to issue, sell and deliver the Securities as
contemplated by this Agreement. The Company has the requisite
corporate power and authority to execute, deliver and perform
its obligations under each Operative Document and to
consummate the transactions contemplated hereby and thereby.
(v) This Agreement has been duly and validly
authorized, executed and delivered by the Company and the
Company has the requisite corporate power and authority to
execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated
hereby.
(vi) The Indenture has been duly and validly
authorized by the Company and, when duly executed and
delivered in accordance with its terms (assuming the due
execution and delivery thereof by each of the parties thereto
other than the Company), will be the valid and legally binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereinafter in effect
relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) or the discretion of the court before which any
proceeding therefor may be brought; and the Indenture meets
the requirements for qualification under the TIA.
17
(vii) The Notes have been duly and validly authorized
for issuance and sale to the Initial Purchaser by the Company
pursuant to this Agreement and, when issued and authenticated
in accordance with the terms of the Indenture and delivered
against payment therefor in accordance with the terms hereof,
will be the legally valid and binding obligations of the
Company, enforceable against the Company in accordance with
their terms and entitled to the benefits of the Indenture,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law) or the discretion of the court
before which any proceeding therefor may be brought.
(viii) The Exchange Notes have been duly and validly
authorized for issuance by the Company and, when issued and
authenticated in accordance with the terms of the Indenture,
the Registration Rights Agreement and the Exchange Offer, will
be the legally valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms
and entitled to the benefits of the Indenture, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or
hereinafter in effect relating to or affecting creditors'
rights generally, by general equitable principles (regardless
of whether such enforceability is considered in a proceeding
in equity or at law) or the discretion of the court before
which any proceeding therefor may be brought.
(ix) The Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and
delivered by the Company (assuming the due execution and
delivery thereof by each of the parties thereto other than the
Company), will be the legally valid and binding obligation of
the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and
other similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law) or the
discretion of the court before which any proceeding therefor
may be brought and, as to rights of indemnification and
contribution, by principles of public policy or federal or
state securities or "Blue Sky" laws relating thereto.
18
(x) The statements set forth in the Final Memorandum
under the captions "Business-Regulatory Matters" and "Certain
United States and Canadian Income Tax Considerations" insofar
as they address matters of United States or Texas law or legal
conclusions based on United States or Texas law and subject to
the limitations set forth therein, insofar as such statements
constitute a summary of the matters referred to therein,
fairly and accurately present the information disclosed
therein in all material respects.
(xi) The Indenture, the Notes, the Guarantees, the
Registration Rights Agreement and the Credit Facility conform
in all material respects to the descriptions thereof contained
in the Final Memorandum.
(xii) To such counsel's knowledge, no legal or
governmental proceedings are pending or threatened to which
either of the Issuers or any Subsidiary is a party or to which
the property or assets of either of the Issuers or any
Subsidiary is subject, before or brought by any court,
arbitrator or government agency or body which, if determined
adversely to either of the Issuers or any Subsidiary, would
result, individually or in the aggregate, in a Material
Adverse Effect, or which seeks to restrain, enjoin, prevent
the consummation of or otherwise challenge the issuance or
sale of the Securities to be sold hereunder or the
consummation of the other transactions described in the Final
Memorandum.
(xiii) To such counsel's knowledge, none of the
Issuers or any of the Subsidiaries is (A) in violation of its
charter or bylaws (or similar organizational document), (B) in
breach or violation of any statute, judgment, decree, order,
rule or regulation applicable to any of them or any of their
respective properties or assets, except for any such breach or
violation which would not, individually or in the aggregate,
have a Material Adverse Effect, or (C) in breach of or default
under (nor has any event occurred which, with notice or
passage of time or both, would constitute a default under) or
in violation of any of the terms or provisions of any
Contract, except for any such breach, default, violation or
event which would not, individually or in the aggregate, have
a Material Adverse Effect.
(xiv) The execution, delivery and performance by the
Issuers of the Purchase Agreement and each of the other
Operative Documents (to the extent a party thereto) and the
consummation of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale
19
of the Securities to the Initial Purchaser and the issuance of
the Exchange Notes in the Exchange Offer), do not conflict
with or constitute or result in a breach or a default under
(or an event which with notice or passage of time or both
would constitute a default under) or violation of or cause an
acceleration of any obligation under, or result in the
imposition or creation of (or the obligation to create or
impose) a Lien on any properties or assets of the Company or
any Subsidiary with respect to (i) the terms or provisions of
any Contract known to such counsel to which the Company is a
party, except for any such conflict, breach, violation,
default or event which would not, individually or in the
aggregate, have a Material Adverse Effect, (ii) the
certificate of incorporation or bylaws (or similar
organizational document) of the Company, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky"
laws and assuming the accuracy of the representations and
warranties of the Initial Purchaser in Section 8 hereof) any
statute, judgment, decree, order, rule or regulation known to
such counsel to be applicable to the Company or any of its
properties or assets, except for any such conflict, breach or
violation which would not, individually or in the aggregate,
have a Material Adverse Effect.
(xv) To the knowledge of such counsel, no consent,
waiver, approval, authorization or order of or filing,
registration, qualification, license or permit of or with any
court or governmental agency or body, or third party is
required for the issuance and sale by the Issuers of the Notes
to the Initial Purchaser or the consummation by the Issuers of
the other transactions contemplated hereby, except such as may
be required under Blue Sky laws, as to which such counsel need
express no opinion, those which have previously been obtained
and the receipt by the Issuers and the Subsidiary Guarantors
of an order declaring the Exchange Offer Registration
Statement and/or the Shelf Registration Statement effective
from the Commission.
(xvi) To the knowledge of such counsel, there are no
legal or governmental proceedings involving or affecting
either Issuer or the Subsidiaries or any of their respective
properties or assets which would be required to be described
in a prospectus pursuant to the Act that are not so described
in the Final Memorandum, nor are there any material contracts
or other documents which would be required to be described in
a prospectus pursuant to the Act that are not so described in
the Final Memorandum.
(xvii) None of the Issuers or any of the Subsidiaries
is, or immediately after the sale of the Securities to be sold
hereunder and the application of the proceeds from such sale
(as described in the Final Memorandum under the caption "Use
20
of Proceeds") will be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(xviii) No registration under the Act of the
Securities is required in connection with the sale of the
Securities to the Initial Purchaser as contemplated by this
Agreement and the Final Memorandum or in connection with the
initial resale of the Securities by the Initial Purchaser in
accordance with Section 8 of this Agreement, and prior to the
commencement of the Exchange Offer or the effectiveness of the
Shelf Registration Statement, the Indenture is not required to
be qualified under the TIA, in each case assuming (i) that the
purchasers who buy such Securities in the initial resale
thereof are qualified institutional buyers as defined in Rule
144A promulgated under the Act ("QIBs") or accredited
investors as defined in Rule 501(a) (1), (2), (3) or (7)
promulgated under the Act ("Accredited Investors"), (ii) the
accuracy of the Initial Purchaser's representations in Section
8 and those of the Issuers contained in this Agreement
regarding the absence of a general solicitation in connection
with the sale of such Securities to the Initial Purchaser and
the initial resale thereof and (iii) the due performance by
the Initial Purchaser of the agreements set forth in Section 8
hereof.
(xix) Neither the consummation of the transactions
contemplated by this Agreement nor the sale, issuance,
execution or delivery of the Securities will violate
Regulation G, T, U or X of the Board of Governors of the
Federal Reserve System.
At the time the foregoing opinion is delivered, Cox & Smith,
Incorporated shall additionally state that it has participated in
conferences with officers and other representatives of the Issuers,
representatives of the independent public accountants for the Issuers,
representatives of Canadian counsel for the Issuers, representatives of
the Initial Purchaser and counsel for the Initial Purchaser, at which
conferences the contents of the Final Memorandum and related matters
were discussed, and, although it has not independently verified and is
not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final
Memorandum (except to the extent specified in subsections (x) and (xi)
of this Section 7(a)), no facts have come to its attention which lead
it to believe that the Final Memorandum, on the date thereof or at the
Closing Date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements contained therein, in light of the
circumstances under which they were made, not misleading (it being
understood that such firm need express no opinion with respect to the
21
financial statements and related notes thereto and the other financial,
engineering, statistical and accounting data included in the Final
Memorandum).
In rendering the foregoing opinions, Cox & Smith Incorporated
may (i) rely, to the extent such counsel deems proper, upon the
representations and certifications of officers of the Issuers or of
public officials and (ii) rely as to matters involving the application
of laws of any jurisdiction other than the federal laws of the United
States of America and the laws of the State of Texas and the
corporation law of the State of Nevada, to the extent such counsel
deems proper and specifies in such opinion, upon the opinion of other
counsel who are reasonably satisfactory to counsel for the Initial
Purchaser; provided, however, that Cox & Smith Incorporated shall state
that it believes that it, the Initial Purchaser and counsel for the
Initial Purchaser are justified in relying on such opinion.
References to the Final Memorandum in this subsection (a)
shall include any amendment or supplement thereto prepared in
accordance with the provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchaser shall have
received the opinion, dated as of the Closing Date and addressed to the
Initial Purchaser, of Osler, Hoskin & Harcourt, Canadian Counsel for
the Issuers, in form and substance satisfactory to counsel for the
Initial Purchaser, to the effect that:
(i) Each of Canadian Abraxas and Cascade is duly
incorporated, validly existing and in good standing under the
laws of its respective jurisdiction of incorporation and has
all requisite corporate power and authority to own its
properties and to conduct its business as described in the
Final Memorandum. Each of Canadian Abraxas and Cascade is duly
qualified to carry on business in the Province of Alberta,
Canada, being the only jurisdiction in which such entities do
business.
(ii) All of the outstanding shares of capital stock
of Canadian Abraxas and Cascade have been duly and validly
issued, are fully paid and non-assessable and in respect of
Canadian Abraxas, to the knowledge of counsel, were not issued
in violation of any preemptive or similar rights. The Company
is the registered owner of all of the outstanding shares of
capital stock of Canadian Abraxas and the Company is the
registered owner of the capital stock of Cascade as is
reflected in the Final Memorandum in the indirect ownership of
the Company in Cascade; in each such case, free and clear of
all perfected security interests registered in the Province of
Alberta against the Company and Cascade. To the knowledge of
such counsel, except as set forth in the Final Memorandum (A)
no options, warrants or other rights to purchase from Canadian
22
Abraxas or Cascade shares of capital stock or ownership
interests in Canadian Abraxas or Cascade are outstanding,
other than as are disclosed in the Final Memorandum and other
than stock options issued to employees, officers and
directors, (B) no agreements or other obligations to issue, or
other rights to convert, any obligation into, or exchange any
securities for, shares of capital stock or ownership interests
in Canadian Abraxas or Cascade are outstanding other than
stock options issued to employees, officers and directors and
(C) no holder of securities of Canadian Abraxas or Cascade is
entitled to have such securities registered under a
registration statement filed pursuant to the Registration
Rights Agreement.
(iii) Each of Canadian Abraxas and Cascade has all
requisite corporate power and authority to execute, deliver
and perform its respective obligations under this Agreement
and the other Operative Documents to which it is a party and
to consummate the transactions contemplated hereby and
thereby, including, without limitation, in respect of Canadian
Abraxas the corporate power and authority to issue, sell and
deliver the Securities as contemplated by this Agreement.
(iv) This Agreement has been duly and validly
authorized, executed and delivered by Canadian Abraxas.
(v) The Indenture has been duly and validly
authorized by Canadian Abraxas and, when duly executed and
delivered in accordance with its terms (assuming the due
execution and delivery thereof by the other parties thereto),
will be the valid and legally binding agreement of Canadian
Abraxas, enforceable against it in accordance with its terms,
except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
now or hereinafter in effect relating to or affecting
creditors' rights generally, by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(vi) The Notes have been duly and validly authorized
for issuance and sale to the Initial Purchaser by Canadian
Abraxas pursuant to this Agreement and, when issued and
authenticated in accordance with the terms of the Indenture
and delivered against payment therefor in accordance with the
terms hereof, will be the legally valid and binding
obligations of Canadian Abraxas, enforceable against Canadian
Abraxas in accordance with their terms and entitled to the
benefits of the Indenture, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws now or hereinafter in effect
23
relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(vii) The Exchange Notes have been duly and validly
authorized for issuance by Canadian Abraxas and, when issued
and authenticated in accordance with the terms of the
Indenture, the Registration Rights Agreement and the Exchange
Offer, will be the legally valid and binding obligations of
Canadian Abraxas, enforceable against Canadian Abraxas in
accordance with their terms and entitled to the benefits of
the Indenture, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws now or hereinafter in effect relating to or
affecting creditors' rights generally, by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(viii) The Registration Rights Agreement has been
duly authorized by Canadian Abraxas and, when duly executed
and delivered by Canadian Abraxas (assuming the due execution
and delivery thereof by the other parties thereto), will be
the legally valid and binding obligation of Canadian Abraxas,
enforceable against it in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws now or
hereinafter in effect relating to or affecting creditors'
rights generally, by general equitable principles (regardless
of whether such enforceability is considered in a proceeding
in equity or at law) and, as to rights of indemnification,
contribution and waiver, by principles of public policy or
federal or provincial securities laws relating thereto.
(ix) To such counsel's knowledge, no legal or
governmental proceedings are pending or threatened to which
Canadian Abraxas or Cascade is a party or to which the
property or assets of Canadian Abraxas or Cascade is subject,
before or brought by any court, arbitrator or government
agency or body which, if determined adversely to Canadian
Abraxas or Cascade, would result, individually or in the
aggregate, in a Material Adverse Effect, or which seeks to
restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Securities to be sold
hereunder or the consummation of the other transactions
described in the Final Memorandum.
(x) To such counsel's knowledge, none of Canadian
Abraxas or Cascade is (A) in violation of its charter or
bylaws (or similar organizational document), (B) in breach or
24
violation of any statute, judgment, decree, order, rule or
regulation applicable to any of them or any of their
respective properties or assets, except for any such breach or
violation which would not, individually or in the aggregate,
have a Material Adverse Effect, or (C) in breach of or default
under (nor has any event occurred which, with notice or
passage of time or both, would constitute a default under) or
in violation of any of the terms or provisions of any Contract
known to such counsel, except for any such breach, default,
violation or event which would not, individually or in the
aggregate, have a Material Adverse Effect.
(xi) The execution, delivery and performance by
Canadian Abraxas of the Purchase Agreement and each of the
other Operative Documents (to the extent a party thereto) and
the consummation of the transactions contemplated hereby and
thereby (including, without limitation, the issuance and sale
of the Securities to the Initial Purchaser and the issuance of
the Exchange Notes in the Exchange Offer), do not and will not
conflict with or constitute or result in a breach or a default
under (or an event which with notice or passage of time or
both would constitute a default under) or violation of or
cause an acceleration of any obligation under, or result in
the imposition or creation of (or the obligation to create or
impose) a Lien on any properties or assets of Canadian Abraxas
or Cascade with respect to (i) the terms or provisions of any
Contract known to such counsel, except for any such conflict,
breach, violation, default or event which would not,
individually or in the aggregate, have a Material Adverse
Effect, (ii) the certificate of incorporation or bylaws (or
similar organizational document) of Canadian Abraxas or
Cascade, or (iii) (assuming the accuracy of the
representations and warranties of the Initial Purchaser in
Section 8 hereof) any statute, judgment, decree, order, rule
or regulation known to such counsel to be applicable to
Canadian Abraxas or Cascade or any of their respective
properties or assets, except for any such conflict, breach or
violation which would not, individually or in the aggregate,
have a Material Adverse Effect.
(xii) To the knowledge of such counsel no consent,
waiver, approval, authorization or order of or filing,
registration, qualification, license or permit of or with any
court or governmental agency or body, or third party is
required for the issuance and sale by Canadian Abraxas of the
Notes to the Initial Purchaser or the consummation by Canadian
Abraxas of the other transactions contemplated hereby under
the laws of Alberta except those which have previously been
obtained or made.
(xiii) The statements set forth in the final
Memorandum under the captions "Business-Regulatory Matters"
and "Certain United States and Canadian Income Tax
25
Considerations," insofar as they address matters of Alberta
law or the laws of Canada applicable therein and subject to
the limitations set forth therein, insofar as such statements
constitute a summary of the matters referred to therein,
fairly and accurately present the information disclosed
therein in all material respects.
(xiv) The laws of the Province of Alberta, Canada,
permit an action to be brought in a court of competent
jurisdiction on any final and conclusive judgment in persona
for a sum certain in money of a court of the State of New York
in favor of persons of a foreign jurisdiction, which is not
impeachable as void or voidable under the internal laws of
such foreign jurisdiction, for a sum certain, without
reexamination or relitigation of the matters adjudicated upon
if:
a) the Court rendering such judgment had
jurisdiction, in accordance with Alberta conflict of
law rules, over the judgment debtor (and submission
by Canadian Abraxas to the jurisdiction of the New
York Court pursuant to the Operative Documents will
suffice for this purpose).
b) such judgment was not obtained by fraud
or in a manner contrary to natural justice and the
enforcement thereof would not be contrary to public
policy, as such term is understood under the laws of
Alberta and the federal laws of Canada applicable
therein;
c) the enforcement of such judgment does not
constitute, directly or indirectly, the enforcement
of foreign revenues, expropriation, penal or public
laws;
d) no new admissible evidence relevant to
the action is discovered prior to the rendering of
judgment by the Alberta Court; and
e) the action to enforce such judgment is
commenced within 10 years after the date of such
judgment.
(xv) In the event that any of the Operative Documents
are sought to be enforced in any action or proceeding in the
Province of Alberta, Canada, in accordance with the laws of
the State of New York, the courts of the Province of Alberta,
Canada, would recognize the choice of laws and would apply the
laws of the State of New York in any such action or
proceeding, upon appropriate evidence as to such laws being
adduced, provided that none of the provisions of such
26
agreements or instruments, as the case may be, or of the laws
of the State of New York are contrary to public policy, as
such term is understood under the law of the Province of
Alberta, Canada and, an Alberta court will not apply those
laws of New York which it characterizes as being of a revenue,
expropriatory, penal or public law nature and in matters of
procedure, the laws of Alberta will be applied.
At the time the foregoing opinion is delivered,
Osler, Hoskin & Harcourt shall additionally state that
although it has not independently verified and is not passing
upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the
Final Memorandum (except to the extent specified in subsection
(xiv), no facts have come to its attention which lead it to
believe that the Final Memorandum, on the date thereof or at
the Closing Date, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements contained therein,
in light of the circumstances under which they were made, not
misleading (it being understood that such firm need express no
opinion with respect to the financial statements and related
notes thereto and the other financial, statistical and
accounting data included in the Final Memorandum).
In rendering the foregoing opinions, Osler, Hoskin &
Harcourt may rely, to the extent such counsel deems proper,
upon the representations and certifications of officers of the
Issuers or of public officials and shall not be required to
opine on the effect of any statutes or laws of the United
States and may restrict its opinion to the laws of the
Province of Alberta and the laws of Canada applicable therein.
References to the Final Memorandum in this subsection
(a) shall include any amendment or supplement thereto prepared
in accordance with the provisions of this Agreement at the
Closing Date.
(c) On the Closing Date, the Initial Purchaser shall have
received the opinion, in form and substance satisfactory to the Initial
Purchaser, dated as of the Closing Date and addressed to the Initial
Purchaser, of Vinson & Elkins L.L.P., counsel for the Initial
Purchaser, with respect to certain legal matters relating to this
Agreement and such other related matters as the Initial Purchaser may
reasonably require. In rendering such opinion, Vinson & Elkins L.L.P.
shall have received and may rely upon such certificates and other
documents and information as it may reasonably request to pass upon
such matters.
27
(d) The Initial Purchaser shall have received from each of
Ernst & Young LLP, Deloitte & Touche LLP, KPMG Chartered Accountants,
Arthur Andersen LLP and Price Waterhouse LLP a comfort letter or
letters dated the date hereof and the Closing Date, in form and
substance satisfactory to counsel for the Initial Purchaser.
(e) The representations and warranties of the Issuers
contained in this Agreement shall be true and correct in all material
respects on and as of the date hereof and on and as of the Closing Date
as if made on and as of the Closing Date; the statements of the
Issuers' officers made pursuant to any certificate delivered in
accordance with the provisions hereof shall be true and correct in all
material respects on and as of the date made and on and as of the
Closing Date; the Issuers shall have performed all covenants and
agreements and satisfied all conditions on their part to be performed
or satisfied hereunder at or prior to the Closing Date; and, except as
described in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), subsequent to the date of
the most recent financial statements in such Final Memorandum, there
shall have been no event or development, and no information shall have
become known, that, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(f) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
(g) Subsequent to the date of the most recent financial
statements in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), none of the Issuers or any
of the Subsidiaries shall have sustained any loss or interference with
respect to its business or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any strike, labor dispute, slow down or work stoppage or from any
legal or governmental proceeding, order or decree, which loss or
interference, individually or in the aggregate, has or would be
reasonably likely to have a Material Adverse Effect.
(h) The Initial Purchaser shall have received a certificate of
the Company, dated the Closing Date, signed on behalf of the Company by
its Chairman of the Board, President or any Senior Vice President and
the Chief Financial Officer, to the effect that:
(i) The representations and warranties of the Issuers
contained in this Agreement are true and correct on and as of
the date hereof and on and as of the Closing Date, and the
Issuers have performed all covenants and agreements and
satisfied all conditions on their part to be performed or
28
satisfied hereunder at or prior to the Closing Date;
(ii) At the Closing Date, since the date hereof or
since the date of the most recent financial statements in the
Final Memorandum (exclusive of any amendment or supplement
thereto after the date hereof), no event or development has
occurred, and no information has become known, that,
individually or in the aggregate, has or would be reasonably
likely to have a Material Adverse Effect (including, without
limitation, any material downward revision in the Issuer's
estimated proved reserves) other than any such effect caused
solely by decreases in the prices of crude oil, natural gas
liquids and natural gas; and
(iii) The sale of the Securities hereunder has not
been enjoined (temporarily or permanently).
(i) On the Closing Date, the Initial Purchaser shall have
received the Registration Rights Agreement executed by each of the
Issuers and such agreement shall be in full force and effect at all
times from and after the Closing Date.
(j) On or before the Closing Date, the Initial Purchaser and
counsel for the Initial Purchaser shall have received such further
documents, opinions, certificates, letters and schedules or instruments
relating to the business, corporate, legal and financial affairs of the
Issuers as they shall have heretofore reasonably requested.
(k) On the Closing Date, the Initial Purchaser shall have
received letters, dated as of the Closing Date and addressed to the
Initial Purchaser of, DeGolyer & MacNaughton, independent petroleum
engineers for the Company, in form and substance satisfactory to
counsel for the Initial Purchaser.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchaser and counsel for the Initial Purchaser. The Issuers shall
furnish to the Initial Purchaser such conformed copies of such documents,
opinions, certificates, letters, schedules and instruments in such quantities as
the Initial Purchaser shall reasonably request.
8. Offering of Securities; Restrictions on Transfer. (a) The Initial
Purchaser represents and warrants (as to itself only) that it is a QIB. The
Initial Purchaser agrees with the Issuers (as to itself only) that (i) it has
not and will not solicit offers for, or offer or sell, the Securities by any
form of general solicitation or general advertising (as those terms are used in
Regulation D under the Act) or in any manner involving a public offering within
29
the meaning of Section 4(2) of the Act; and (ii) it has and will solicit offers
for the Securities only from, and will offer the Securities only to (A) in the
case of offers inside the United States, (x) persons whom the Initial Purchaser
reasonably believes to be QIBs or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to the Initial Purchaser that each such
account is a QIB, to whom notice has been given that such sale or delivery is
being made in reliance on Rule 144A, and, in each case, in transactions under
Rule 144A or (y) a limited number of other institutional investors reasonably
believed by the Initial Purchaser to be Accredited Investors that, prior to
their purchase of the Securities, deliver to the Initial Purchaser a letter
containing the representations and agreements set forth in Annex A to the Final
Memorandum and (B) in the case of offers outside the United States, to persons
other than U.S. persons ("foreign purchaser," which term shall include dealers
or other professional fiduciaries in the United States acting on a discretionary
basis for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (B), in purchasing such Securities
such persons are deemed to have represented and agreed as provided under the
caption "Notice to Investors" contained in the Final Memorandum (or, if the
Final Memorandum is not in existence, in the most recent Memorandum).
(b) The Initial Purchaser represents and warrants (as to
itself only) with respect to offers and sales outside the United States
that (i) it has and will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Securities or has in its possession or distributes any
Memorandum or any such other material, in all cases at its own expense
including, without limitation, that the Securities have not been and
will not be offered or sold to residents of the Province of Alberta,
Canada; (ii) the Securities have not been and will not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons except in accordance with Regulation S under the Act or
pursuant to an exemption from the registration requirements of the Act;
(iii) it has offered the Securities and will offer and sell the
Securities (A) as part of its distribution at any time and (B)
otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S and, accordingly, neither it nor any persons acting on its
behalf have engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Securities,
and any such persons have complied and will comply with the offering
restrictions requirement of Regulation S; and (iv) it agrees that, at
or prior to confirmation of sales of the Securities, it will have sent
to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the
following effect:
30
The Securities covered hereby have not been registered under
the United States Securities Act of 1933 (the "Securities Act") and may
not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of the distribution of
the Securities at any time or (ii) otherwise until 40 days after the
later of the commencement of the offering and the closing date of the
offering, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have
the meaning given to them in Regulation S."
Terms used in this Section 8(b) and not defined in this Agreement have the
meanings given to them in Regulation S.
(c) The Initial Purchaser represents and warrants (as to
itself only) that the source of funds being used by it to acquire the
Securities does not include the assets of any "employee benefit plan"
(within the meaning of Section 3 of ERISA) or any "plan" (within the
meaning of Section 4975 of the Code).
9. Indemnification and Contribution. (a)The Issuers and any Subsidiary
Guarantors agree, jointly and severally, to indemnify and hold harmless the
Initial Purchaser, its affiliates and each person, if any, who controls the
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities to which
any Initial Purchaser or such controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement
of any material fact contained in any Memorandum or any
amendment or supplement thereto or any application or other
document, or any amendment or supplement thereto, executed by
an Issuer or based upon written information furnished by or on
behalf of an Issuer filed in any jurisdiction in order to
qualify the Securities under the securities or "Blue Sky" laws
thereof or filed with any securities association or securities
exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in
the Memorandum or any amendment or supplement thereto or any
Application, a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading,
and will reimburse, as incurred, the Initial Purchaser, each such affiliate and
31
each such controlling person for any reasonable legal or other reasonable
expenses incurred by the Initial Purchaser, such affiliate or such controlling
person in connection with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action; provided, however, that the Issuers and the Subsidiary Guarantors
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon any untrue statement or
alleged untrue statement or omission or alleged omission made in the Memorandum
or any amendment or supplement thereto or any Application in reliance upon and
in conformity with written information concerning the Initial Purchaser
furnished to an Issuer by the Initial Purchaser specifically for use therein.
This indemnity agreement will be in addition to any liability that the Issuers
and the Subsidiary Guarantors may otherwise have to the indemnified parties. The
Issuers and the Subsidiary Guarantors shall not be liable under this Section 9
for any settlement of any claim or action effected without their prior written
consent, which shall not be unreasonably withheld.
The Initial Purchaser shall not, without the prior written consent of
the Issuers, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Issuer is or could have been a party, or
indemnity could have been sought hereunder by any Issuer, unless such settlement
(A) included an unconditional written release of the Issuers, in form and
substance reasonably satisfactory to the Issuers, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of any Issuer.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Issuers and the Subsidiary Guarantors, their respective
directors and their respective officers and each person, if any, who
controls an Issuer within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act against any losses, claims, damages or
liabilities to which an Issuer or any of the Subsidiary Guarantors or
any such director, officer or controlling person may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any Memorandum or any
amendment or supplement thereto or any Application, or (ii) the
omission or the alleged omission to state therein a material fact
required to be stated in any Memorandum or any amendment or supplement
thereto or any Application, or necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with
written information concerning the Initial Purchaser, furnished to an
Issuer by the Initial Purchaser specifically for use therein; and
32
subject to the limitation set forth immediately preceding this clause,
will reimburse, as incurred, any reasonable legal or other expenses
incurred by an Issuer or any of the Subsidiary Guarantors or any such
director, officer or controlling person in connection with
investigating or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or
action in respect thereof. This indemnity agreement will be in addition
to any liability that the Initial Purchaser may otherwise have to the
indemnified parties. The Initial Purchaser shall not be liable under
this Section 9 for any settlement of any claim or action effected
without their consent, which shall not be unreasonably withheld.
The Issuers shall not, without the prior written consent of the Initial
Purchaser, effect any settlement or compromise of any pending or threatened
proceeding in respect of which any Initial Purchaser is or could have been a
party, or indemnity could have been sought hereunder by any Initial Purchaser,
unless such settlement (A) includes an unconditional written release of the
Initial Purchaser, in form and substance reasonably satisfactory to the Initial
Purchaser, from all liability on claims that are the subject matter of such
proceeding and (B) does not include any statement as to an admission of fault,
culpability or failure to act by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such
indemnified party is entitled to indemnification under this Section 9,
such indemnified party will, if a claim in respect thereof is to be
made against the indemnifying party under this Section 9, notify the
indemnifying party of the commencement thereof in writing; but the
omission to so notify the indemnifying party (i) will not relieve the
indemnifying party from any liability under paragraph (a) or (b) above
unless and to the extent such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will
not, in any event, relieve the indemnifying party from any obligations
to any indemnified party other than the indemnification obligation
provided in paragraphs (a) and (b) above. In case any such action is
brought against any indemnified party, and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such
indemnified party; provided, however, that if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest, (ii) the
defendants in any such action include both the indemnified party and
the indemnifying party and the indemnified party shall have been
advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, or
(iii) the indemnifying party shall not have employed counsel reasonably
33
satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after receipt by the indemnifying party
of notice of the institution of such action, then, in each such case,
the indemnifying party shall not have the right to direct the defense
of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate
counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and approval by
such indemnified party of counsel appointed to defend such action, the
indemnifying party will not be liable to such indemnified party under
this Section 9 for any legal or other expenses, other than reasonable
costs of investigation, subsequently incurred by such indemnified party
in connection with the defense thereof, unless (i) the indemnified
party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood,
however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel
(in addition to local counsel) in any one action or separate but
substantially similar actions in the same jurisdiction arising out of
the same general allegations or circumstances, designated by the
Initial Purchaser in the case of paragraph (a) of this Section 9 or the
Issuers in the case of paragraph (b) of this Section 9, representing
the indemnified parties under such paragraph (a) or paragraph (b), as
the case may be, who are parties to such action or actions) or (ii) the
indemnifying party has authorized in writing the employment of counsel
for the indemnified party at the expense of the indemnifying party.
After such notice from the indemnifying party to such indemnified
party, the indemnifying party will not be liable for the costs and
expenses of any settlement of such action effected by such indemnified
party without the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld), unless such
indemnified party waived in writing its rights under this Section 9, in
which case the indemnified party may effect such a settlement without
such consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any
losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the
indemnifying party or parties on the one hand and the indemnified party
on the other from the offering of the Securities or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative
34
fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or
omissions or alleged statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof).
The relative benefits received by the Issuers on the one hand and the
Initial Purchaser on the other shall be deemed to be in the same
proportion as the total proceeds from the offering (before deducting
expenses) received by the Issuers bear to the total discounts and
commissions received by the Initial Purchaser. The relative fault of
the parties shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Issuers on the one hand, or the Initial
Purchaser on the other, the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission or alleged statement or omission, and any other equitable
considerations appropriate in the circumstances. The Issuers and the
Initial Purchaser agree that it would not be equitable if the amount of
such contribution were determined by pro rata or per capita allocation
or by any other method of allocation that does not take into account
the equitable considerations referred to in the first sentence of this
paragraph (d). Notwithstanding any other provision of this paragraph
(d), the Initial Purchaser shall not be obligated to make contributions
hereunder that in the aggregate exceed the total discounts, commissions
and other compensation received by the Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial
Purchaser has otherwise been required to pay by reason of the untrue or
alleged untrue statements or the omissions or alleged omissions to
state a material fact, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this paragraph (d),
each affiliate of the Initial Purchaser, each person, if any, who
controls the Initial Purchaser within the meaning of Section 15 of the
Act or Section 20 of the Exchange Act shall have the same rights to
contribution as the Initial Purchaser, and each director of an Issuer,
each officer of an Issuer and each person, if any, who controls an
Issuer within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the
Issuers.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Issuers, their
respective officers and the Initial Purchaser set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement shall remain in full
force and effect, regardless of (i) any investigation made by or on behalf of
the Issuers, any of their respective officers or directors, the Initial
Purchaser or any controlling person referred to in Section 9 hereof and (ii)
delivery of and payment for the Securities. The respective agreements,
35
covenants, indemnities and other statements set forth in Sections 6, 9 and 15
hereof shall remain in full force and effect, regardless of any termination or
cancellation of this Agreement.
11. Termination. (a)This Agreement may be terminated in the sole
discretion of the Initial Purchaser by notice to the Issuers given prior to the
Closing Date in the event that either of the Issuers shall have failed, refused
or been unable to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder at or prior thereto or, if at or prior to
the Closing Date:
(i) either of the Issuers shall have sustained any
loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any
strike, labor dispute, slow down or work stoppage or any legal
or governmental proceeding, which loss or interference, in the
sole judgment of the Initial Purchaser, has had or has a
Material Adverse Effect, or there shall have been, in the sole
judgment of the Initial Purchaser, any event or development
that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including
without limitation a change in control of any of the Issuers
or the Subsidiaries), except in each case as described in the
Final Memorandum (exclusive of any amendment or supplement
thereto);
(ii) trading in securities generally on the New York
Stock Exchange, American Stock Exchange or the NASDAQ National
Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared
by New York or United States authorities;
(iv) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any
foreign power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or
any other national or international calamity or emergency, or
(C) any material change in the financial markets of the United
States which, in the case of (A), (B) or (C) above and in the
sole judgment of the Initial Purchaser, makes it impracticable
or inadvisable to proceed with the offering or the delivery of
the Securities as contemplated by the Final Memorandum; or
(v) any securities of the Issuers shall have been
downgraded or placed on any "watch list" for possible
36
downgrading by any nationally recognized statistical rating
organization.
(b) Termination of this Agreement pursuant to this Section 11
shall be without liability of any party to any other party except as
provided in Section 10 hereof.
12. Information Supplied by the Initial Purchaser. The statements set
forth in the last paragraph on the front cover page, the paragraph regarding
stabilization on page ii, the second sentence on page 4 opposite the caption
"Exchange Offer; Registration Rights" and in the third and fourth paragraphs and
the fourth, fifth, sixth and seventh sentences of the fifth paragraph under the
heading "Plan of Distribution" in the Final Memorandum (to the extent such
statements relate to the Initial Purchaser) constitute the only information
furnished by the Initial Purchaser to the Issuers for the purposes of Sections
2(a) and 9 hereof and the Initial Purchaser confirm that such statements are
correct as of the date hereof and as of the Closing Date.
13. Notices. All communications hereunder shall be in writing and, if
sent to the Initial Purchaser, shall be mailed or delivered to Jefferies &
Company, Inc., 909 Fannin, Suite 3100, Houston, Texas 77010, Attention: Robert
W. Carington, Jr., with a copy to Vinson & Elkins L.L.P., 1001 Fannin, Suite
2300, Houston, Texas 77002-6760, Attention: Alan P. Baden; if sent to the
Issuers or the Subsidiary Guarantors, if any, shall be mailed or delivered to
the Issuers at 500 North Loop 1604 East, Suite 100, San Antonio, Texas 78232,
Attention: Robert L.G. Watson, with a copy to Cox & Smith Incorporated, 112 East
Pecan, Suite 1800, San Antonio, Texas 78205, Attention: Steven Jacobs.
All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; five business days after
being deposited in the mail, postage prepaid, if mailed; and one business day
after being timely delivered to a next-day air courier.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchaser, the Issuers and the Subsidiary Guarantors,
if any, and their respective successors and legal representatives, and nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement, or any provisions herein contained; this Agreement
and all conditions and provisions hereof being intended to be and being for the
sole and exclusive benefit of such persons and for the benefit of no other
person except that (i) the indemnities of the Issuers and the Subsidiary
Guarantors, if any, contained in Section 9 of this Agreement shall also be for
37
the benefit of any person or persons who control the Initial Purchaser within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act and (ii)
the indemnities of the Initial Purchaser contained in Section 9 of this
Agreement shall also be for the benefit of the directors of the Issuers and the
Subsidiary Guarantors, if any, their respective officers and any person or
persons who control an Issuer within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act. No purchaser of Securities from the Initial
Purchaser will be deemed a successor because of such purchase.
15. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS
MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY PROVISIONS
THEREOF RELATING TO CONFLICTS OF LAW.
16. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
17. Miscellaneous. If, on the Closing Date, any of the Initial
Purchaser shall fail or refuse to purchase Securities that it has agreed to
purchase hereunder on such date, and the aggregate amount of Securities which
such defaulting Initial Purchaser agreed but failed and refused to purchase is
not more than ten percent of the aggregate amount of Securities to be purchased
on such date, the other Initial Purchaser shall be obligated to purchase the
Securities which such defaulting Initial Purchaser agreed but failed or refused
to purchase on such date. If, on the Closing Date, any Initial Purchaser shall
fail or refuse to purchase Securities which it agreed to purchase hereunder on
such date and the aggregate amount of Securities with respect to which such
default occurs is more than ten percent of the aggregate amount of Securities to
be purchased on such date and arrangements satisfactory to the nondefaulting
Initial Purchaser and the Company for the purchase of such Securities are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any nondefaulting Initial Purchaser or of the Company,
except as provided in Section 10. In any such case either the nondefaulting
Initial Purchaser or the Company shall have the right to postpone the Closing
Date, but in no event for longer than seven days, in order that the required
changes, if any, in the Final Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Initial Purchaser from liability in respect to any
default of such Initial Purchaser under this Agreement.
18. Agent for Service; Submission to Jurisdiction; Waiver of
Immunities. By the execution and delivery of this Agreement, Canadian Abraxas
(i) acknowledges that it has, by separate written instrument, designated and
appointed CT Corporation System, 1633 Broadway, New York, New York 10019 (and
any successor entity), as its authorized agent upon which process may be served
in any suit or proceeding arising out of or relating to this Agreement, the
38
Registration Rights Agreement, the Securities, the Exchange Notes, the Private
Exchange Notes, if any, or the Indenture that may be instituted in any Federal
or state court in the State of New York, The City of New York, the Borough of
Manhattan, or brought under Federal or state securities laws, and acknowledges
that CT Corporation System has accepted such designation, (ii) submits to the
non-exclusive jurisdiction of any such court in any such suit or proceeding and
(iii) agrees that service of process upon CT Corporation System and written
notice of said service to Canadian Abraxas in accordance with Section 13 shall
be deemed in every respect effective service of process upon Canadian Abraxas in
any such suit or proceeding. Canadian Abraxas further agrees to take any and all
action, including the execution and filing of any and all such documents and
instruments, as may be necessary to continue such designation and appointment of
CT Corporation System in full force and effect so long as any of the Securities,
the Exchange Notes, the Private Exchange Notes, if any, shall be outstanding;
provided that Canadian Abraxas may, by written notice to the Initial Purchaser,
designate such additional or alternative agent for service of process under this
Section 18 that (i) maintains an office located in the Borough of Manhattan, The
City of New York in the State of New York; (ii) is either (x) counsel for
Canadian Abraxas or (y) a corporate service company which acts as agent for
service of process for other persons in the ordinary course of its business and
(iii) agrees to act as agent for service of process in accordance with this
Section 18. Such written notice shall identify the name of such agent for
service of process and the address of the office of such agent for service of
process in the Borough of Manhattan, The City of New York, State of New York.
19. Subsidiary Guarantor a Party. Immediately upon the designation of
any Subsidiary of either Issuer as a Restricted Subsidiary (as defined in the
Indenture), the Issuers shall cause such Subsidiary to become a party hereto as
a Subsidiary Guarantor by executing and delivering to the Initial Purchaser a
counterpart hereof.
39
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Issuers
and the Initial Purchaser.
Very truly yours,
ABRAXAS PETROLEUM CORPORATION
By:/s/ CHRIS E. WILLIFORD
Name: Chris E. Williford
Title: Executive Vice President, Chief Financial
Officer and Treasurer
CANADIAN ABRAXAS PETROLEUM LIMITED
By:/s/ CHRIS E. WILLIFORD
Name: Chris E. Williford
Title: Vice President
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
JEFFERIES & COMPANY INC.
By: /s/ ROBERT CARINGTON
Name: Robert Carington
Title: Senior Vice President
40
SCHEDULE I
Subsidiaries of Abraxas Petroleum Corporation
Cascade Oil & Gas Ltd.
Western Associated Energy Corporation
VEI Acquisition Corp.
Canadian Abraxas Petroleum Limited
EXHIBIT 10.2
REGISTRATION RIGHTS AGREEMENT
Dated as of January 27, 1998
By and Among
ABRAXAS PETROLEUM CORPORATION
and
CANADIAN ABRAXAS PETROLEUM LIMITED,
as Issuers
and
JEFFERIES & COMPANY, INC.,
as Initial Purchaser
11 1/2% Senior Notes due 2004
TABLE OF CONTENTS
Page
1. Definitions ................................................... 1
2. Exchange Offer.................................................. 5
3. Shelf Registration.............................................. 9
4. Liquidated Damages.............................................. 11
5. Registration Procedures......................................... 13
6. Registration Expenses........................................... 25
7. Indemnification................................................. 26
8. Rules 144 and 144A.............................................. 31
9. Underwritten Registrations...................................... 31
10. Miscellaneous................................................... 32
(a) No Inconsistent Agreements............................. 32
(b) Adjustments Affecting Transfer Restricted Securities... 32
(c) Amendments and Waivers................................. 32
(d) Notices................................................ 33
(e) Successors and Assigns................................. 33
(f) Release of Subsidiary Guarantors....................... 34
(g) Counterparts........................................... 34
(h) Headings............................................... 34
(i) Governing Law.......................................... 34
(j) Severability........................................... 34
(k) Securities Held by the Issuers or Their
Affiliates......................................... 34
(l) Third Party Beneficiaries.............................. 34
(m) Entire Agreement....................................... 35
(n) Information Supplied by the Participants............... 35
(o) Subsidiary Guarantor a Party........................... 35
i
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated
as of January 27, 1998, by and among ABRAXAS PETROLEUM CORPORATION, a Nevada
corporation (the "Company"), and CANADIAN ABRAXAS PETROLEUM LIMITED, an Alberta
corporation and a wholly owned subsidiary of the Company ("Canadian Abraxas"
and, together with the Company, the "Issuers"), as issuers, and JEFFERIES &
COMPANY, INC. as initial purchaser (the "Initial Purchaser").
This Agreement is entered into in connection with the Purchase
Agreement, dated as of January 20, 1998, by and among the Issuers and the
Initial Purchaser (the "Purchase Agreement"), which provides for the sale by the
Issuers to the Initial Purchaser of $60,000,000 aggregate principal amount of
the Issuer's 11 1/2% Senior Notes due 2004, Series C (the "Notes"),
unconditionally guaranteed on a senior basis by each of the Company's future
Restricted Subsidiaries (as defined in the Indenture) (collectively, the
"Subsidiary Guarantors"). In order to induce the Initial Purchaser to enter into
the Purchase Agreement, the Issuers have agreed to provide the registration
rights set forth in this Agreement for the benefit of the Initial Purchaser and
any subsequent holder or holders of the Notes. The execution and delivery of
this Agreement is a condition to the Initial Purchaser's obligation to purchase
the Notes under the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following terms shall have the
following meanings:
Advice: See Section 5 hereof.
Agreement: See the introductory paragraphs hereto.
Applicable Period: See Section 2 hereof.
Canadian Abraxas: See the introductory paragraphs hereto.
Company: See the introductory paragraphs hereto.
Damages Payment Date: With respect to the Notes, each Interest
Payment Date.
1
Effectiveness Date: With respect to any Registration
Statement, the 60th day after the Filing Date with respect thereto.
Effectiveness Period: See Section 3 hereof.
Event Date: See Section 4 hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC promulgated thereunder.
Exchange Notes: See Section 2 hereof.
Exchange Offer: See Section 2 hereof.
Exchange Offer Registration Statement: See Section 2 hereof.
Filing Date: If no Registration Statement has been filed by
the Company pursuant to this Agreement, the 75th day after the Issue Date;
provided, however, that if a Shelf Notice is given, then the Filing Date with
respect to the Initial Shelf Registration shall be the 60th calendar day after
the date of the giving of such Shelf Notice.
Holder: Any holder of a Transfer Restricted Security or
Transfer Restricted Securities or any holders of Series A/B Notes.
Indemnified Person: See Section 7(c) hereof.
Indemnifying Person: See Section 7(c) hereof.
Indenture: The Indenture, dated as of January 27, 1998, by and
among the Issuers and IBJ SCHRODER BANK & TRUST COMPANY, as trustee, pursuant to
which the Notes are being issued, as the same may be amended or supplemented
from time to time in accordance with the terms thereof.
Initial Purchaser: See the introductory paragraphs hereto.
Initial Shelf Registration: See Section 3(a) hereof.
Inspectors: See Section 5(o) hereof.
Interest Payment Date: As defined in the Indenture and the
Notes.
Issue Date: January 27, 1998, the date of original issuance of
the Notes.
Issuers: See the introductory paragraphs hereto.
2
Liquidated Damages: See Section 4 hereof.
NASD: See Section 5(t) hereof.
Participant: See Section 7(a) hereof.
Participating Broker-Dealer: See Section 2 hereof.
Person: An individual, trustee, corporation, partnership,
joint stock company, trust, unincorporated association, union, business
association, firm or other legal entity.
Private Exchange: See Section 2 hereof.
Private Exchange Notes: See Section 2 hereof.
Prospectus: The prospectus included in any Registration
Statement (including, without limitation, any prospectus subject to completion
and a prospectus that includes any information previously omitted from a
prospectus filed as part of an effective registration statement in reliance upon
Rule 430A promulgated under the Securities Act and any term sheet filed pursuant
to Rule 434 under the Securities Act), as amended or supplemented by any
prospectus supplement, and all other amendments and supplements to the
Prospectus, including post-effective amendments, and all material incorporated
by reference or deemed to be incorporated by reference in such Prospectus.
Purchase Agreement: See the introductory paragraphs hereof.
Records: See Section 5(o) hereof.
Registration Default: As defined in Section 4.
Registration Statement: Any registration statement of the
Issuers and the Subsidiary Guarantors (if any) that covers any of the Notes, the
Exchange Notes or the Private Exchange Notes filed with the SEC under the
Securities Act, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits, and
all material incorporated by reference or deemed to be incorporated by reference
in such registration statement.
Rule 144: Rule 144 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the SEC providing for offers and sales
of securities made in compliance therewith resulting in offers and sales by
subsequent holders that are not affiliates of an issuer of such securities being
3
free of the registration and prospectus delivery requirements of the Securities
Act.
Rule 144A: Rule 144A promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the SEC.
Rule 415: Rule 415 promulgated under the Securities Act, as
such Rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the SEC.
SEC: The Securities and Exchange Commission.
Securities Act: The Securities Act of 1933, as amended, and
the rules and regulations of the SEC promulgated thereunder.
Series A/B Notes shall mean the Issuer's 11 1/2% Senior Notes
due 2004 in the aggregate principal amount of $215,000,000 issued pursuant to
the Indenture dated as of November 14, 1996, between the Issuers and IBJ
Schroder Bank & Trust Company.
Shelf Notice: See Section 2 hereof.
Shelf Registration: See Section 3(b) hereof.
Subsequent Shelf Registration: See Section 3(b) hereof.
TIA: The Trust Indenture Act of 1939, as amended.
Transfer Restricted Securities. Each Note until (i) the date
on which such Note has been exchanged by a person other than a Broker-Dealer for
an Exchange Note in the Exchange Offer, (ii) following the exchange by a
Broker-Dealer in the Exchange Offer of a Note for an Exchange Note, the date on
which such Exchange Note is sold to a purchaser who receives from such
Broker-Dealer on or prior to the date of such sale a copy of the Prospectus
contained in the Exchange Offer Registration Statement, (iii) the date on which
such Note has been effectively registered under the Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Note is distributed to the public pursuant to Rule 144 under the Act or may be
distributed to the public pursuant to Rule 144(k) under the Act.
Trustee: The trustee under the Indenture and the trustee (if
any) under any indenture governing the Exchange Notes and Private Exchange
Notes.
4
Underwritten registration or underwritten offering: A
registration in which securities of the Issuers are sold to an underwriter for
reoffering to the public.
2. Exchange Offer
(a) To the extent permitted by applicable law or applicable
interpretation of the staff of the Division of Corporation Finance of the SEC,
the Issuers shall file with the SEC, no later than the Filing Date, a
Registration Statement (the "Exchange Offer Registration Statement") on an
appropriate registration form with respect to a registered offer (the "Exchange
Offer") to exchange any and all of the Transfer Restricted Securities and Series
A/B Notes for a like aggregate principal amount of notes (the "Exchange Notes")
of the Issuers (and the guarantees, if any, of the Subsidiary Guarantors) that
are identical in all material respects to the Notes and the Series A/B Notes
except that the Exchange Notes (and the guarantees, if any, of the Subsidiary
Guarantors) shall contain no restrictive legend thereon. The Exchange Offer
shall comply with all applicable tender offer rules and regulations under the
Exchange Act and other applicable law. The Issuers shall use their respective
best efforts to (x) cause the Exchange Offer Registration Statement to be
declared effective under the Securities Act on or before the Effectiveness Date;
(y) keep the Exchange Offer open for at least 30 days (or longer if required by
applicable law) after the date that notice of the Exchange Offer is mailed to
Holders; and (z) consummate the Exchange Offer on or prior to the 165th day
following the Issue Date. If, after the Exchange Offer Registration Statement is
initially declared effective by the SEC, the Exchange Offer or the issuance of
the Exchange Notes thereunder is interfered with by any stop order, injunction
or other order or requirement of the SEC or any other governmental agency or
court, the Exchange Offer Registration Statement shall be deemed not to have
become effective for purposes of this Agreement.
Each Holder that participates in the Exchange Offer will be
required to represent that any Exchange Notes to be received by it will be
acquired in the ordinary course of its business, that at the time of the
consummation of the Exchange Offer such Holder will have no arrangement or
understanding with any Person to participate in the distribution of the Exchange
Notes in violation of the provisions of the Securities Act, and that such Holder
is not an affiliate of any of the Issuers within the meaning of the Securities
Act.
No securities other than the Exchange Notes shall be included
in the Exchange Offer Registration Statement.
(b) The Issuers shall include within the Prospectus contained
in the Exchange Offer Registration Statement a section entitled "Plan of
Distribution," reasonably acceptable to the Holders, which shall contain a
5
summary statement of the positions taken or policies made by the staff of the
SEC with respect to the potential "underwriter" status of any broker-dealer that
is the beneficial owner (as defined in Rule 13d-3 under the Exchange Act) of
Exchange Notes received by such broker-dealer in the Exchange Offer (a
"Participating Broker-Dealer"), whether such positions or policies have been
publicly disseminated by the staff of the SEC or such positions or policies
represent the prevailing views of the staff of the SEC. Such "Plan of
Distribution" section shall also expressly permit, to the extent permitted by
applicable policies and regulations of the SEC, the use of the Prospectus by all
Persons subject to the prospectus delivery requirements of the Securities Act,
including, to the extent permitted by applicable policies and regulations of the
SEC, all Participating Broker-Dealers, and include a statement describing the
means by which Participating Broker-Dealers may resell the Exchange Notes in
compliance with the Securities Act.
The Issuers shall use their respective best efforts to keep
the Exchange Offer Registration Statement effective and to amend and supplement
the Prospectus contained therein in order to permit such Prospectus to be
lawfully delivered by all Persons subject to the prospectus delivery
requirements of the Securities Act for such period of time as is necessary to
comply with applicable law in connection with any resale of the Exchange Notes
covered thereby; provided, however, that such period shall not exceed 180 days
after such Exchange Offer Registration Statement is declared effective (or such
longer period if extended pursuant to the last paragraph of Section 5 hereof)
(the "Applicable Period").
If, prior to consummation of the Exchange Offer, any Holder
holds any Notes acquired by it that have, or that are reasonably likely to be
determined to have, the status of an unsold allotment in an initial
distribution, or any Holder is not entitled to participate in the Exchange
Offer, the Issuers upon the request of any such Holder shall simultaneously with
the delivery of the Exchange Notes in the Exchange Offer, issue and deliver to
any such Holder, in exchange (the "Private Exchange") for such Notes held by any
such Holder, a like principal amount of notes (the "Private Exchange Notes") of
the Issuers that are identical in all material respects to the Exchange Notes
and the Subsidiary Guarantors if any shall guarantee such Private Exchange
Notes. The Private Exchange Notes shall be issued pursuant to the same indenture
as the Exchange Notes and bear the same CUSIP number as the Exchange Notes.
Interest on the Exchange Notes and the Private Exchange Notes
will accrue from (A) the later of (i) the last interest payment date on which
interest was paid on the Notes surrendered in exchange therefor or (ii) if the
Notes are surrendered for exchange on a date in a period which includes the
record date for an interest payment date to occur on or after the date of such
exchange and as to which interest will be paid, the date of such interest
6
payment date or (B) if no interest has been paid on the Notes, from the date of
the original issuance of the Notes.
In connection with the Exchange Offer, the Issuers shall:
(1) mail, or cause to be mailed, to each Holder entitled to
participate in the Exchange Offer a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal and related documents;
(2) keep the Exchange Offer open for not less than 30 days
after the date that notice of the Exchange Offer is mailed to Holders
(or longer if required by applicable law);
(3) utilize the services of a depositary for the Exchange
Offer with an address in the Borough of Manhattan, The City of New
York;
(4) permit Holders to withdraw tendered Notes or Series A/B
Notes at any time prior to the close of business, New York time, on the
last business day on which the Exchange Offer shall remain open; and
(5) otherwise comply in all material respects with all
applicable laws, rules and regulations.
As soon as practicable after the close of the Exchange Offer
and the Private Exchange, if any, the Issuers shall:
(1) accept for exchange all Transfer Restricted Securities and
Series A/B Notes validly tendered and not validly withdrawn pursuant to
the Exchange Offer and the Private Exchange, if any;
(2) deliver to the Trustee for cancellation all Transfer
Restricted Securities and Series A/B Notes so accepted for exchange;
and
(3) cause the Trustee to authenticate and deliver promptly to
each Holder of Notes, Exchange Notes or Private Exchange Notes, as the
case may be, equal in principal amount to the Notes of such Holder so
accepted for exchange.
The Exchange Offer and the Private Exchange shall not be
subject to any conditions, other than that (i) the Exchange Offer or Private
Exchange, as the case may be, does not violate applicable law or any applicable
interpretation of the staff of the SEC, (ii) no action or proceeding shall have
been instituted or threatened in any court or by any governmental agency which
might materially impair the ability of the Issuers to proceed with the Exchange
Offer or the Private Exchange, and no material adverse development shall have
7
occurred in any existing action or proceeding with respect to the Issuers and
(iii) all governmental approvals shall have been obtained, which approvals the
Issuers deem necessary for the consummation of the Exchange Offer or Private
Exchange.
The Exchange Notes and the Private Exchange Notes shall be
issued under (i) the Indenture or (ii) an indenture identical in all material
respects to the Indenture and which, in either case, has been qualified under
the TIA or is exempt from such qualification and shall provide that the Exchange
Notes shall not be subject to the transfer restrictions set forth in the
Indenture. The Indenture or such indenture shall provide that the Exchange
Notes, the Private Exchange Notes and the Notes shall vote and consent together
on all matters as one class and that none of the Exchange Notes, the Private
Exchange Notes or the Notes will have the right to vote or consent as a separate
class on any matter.
(c) If, (i) the Issuers are not required to file an Exchange
Offer Registration Statement or permitted to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 5 below have been complied
with) or (ii) any Holder of Transfer Restricted Securities notifies the Issuers
prior to the 20th day following the consummation of the Exchange Offer (A) that
such Holder is prohibited by applicable law or Commission policy from
participating in the Exchange Offer or (B) that such Holder may not resell the
Exchange Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and that the Prospectus contained in the Exchange Offer
Registration Statement is not available for such resales by such Holder, then
the Issuers shall promptly deliver to the Holders and the Trustee written notice
thereof (the "Shelf Notice") and shall file a Shelf Registration pursuant to
Section 3 hereof.
3. Shelf Registration
If at any time a Shelf Notice is delivered as contemplated by
Section 2(c) hereof, then:
(a) Shelf Registration. The Issuers shall file with the SEC a
Registration Statement for an offering to be made on a continuous basis pursuant
to Rule 415 covering all of the Transfer Restricted Securities covered by
Section 2(c)(ii) above (the "Initial Shelf Registration"). The Issuers shall use
their respective diligent best efforts to file with the SEC the Initial Shelf
Registration on or before the applicable Filing Date. The Initial Shelf
Registration shall be on Form S-1 or another appropriate form permitting
registration of such Transfer Restricted Securities for resale by Holders in the
manner or manners designated by them (including, without limitation, one or more
underwritten offerings). The Issuers shall not permit any securities other than
8
the Transfer Restricted Securities to be included in the Initial Shelf
Registration or any Subsequent Shelf Registration (as defined below).
The Issuers shall use their respective best efforts to cause
the Initial Shelf Registration to be declared effective under the Securities Act
on or prior to the Effectiveness Date and to keep the Initial Shelf Registration
continuously effective under the Securities Act until the date which is two
years from the Effectiveness Date, subject to extension pursuant to the last
paragraph of Section 5 hereof (the "Effectiveness Period"), or such shorter
period ending when (i) all Transfer Restricted Securities covered by the Initial
Shelf Registration have been sold in the manner set forth and as contemplated in
the Initial Shelf Registration or (ii) a Subsequent Shelf Registration covering
all of the Transfer Restricted Securities covered by and not sold under the
Initial Shelf Registration or an earlier Subsequent Shelf Registration has been
declared effective under the Securities Act; provided, however, that the
Effectiveness Period in respect of the Initial Shelf Registration shall be
extended to the extent required to permit dealers to comply with the applicable
prospectus delivery requirements of Rule 174 under the Securities Act and as
otherwise provided herein and shall be subject to reduction to the extent that
the applicable provisions of Rule 144 are amended or revised.
No holder of Transfer Restricted Securities may include any of
its Transfer Restricted Securities in any Shelf Registration Statement pursuant
to this Agreement unless and until such holder furnishes to the Issuers in
writing, within 30 days after receipt of a request therefor, such information as
the Issuers may reasonably request for use in connection with any Shelf
Registration Statement or Prospectus or preliminary prospectus included therein.
No holder of Transfer Restricted Securities shall be entitled to Liquidated
Damages pursuant to Section 4 hereof unless and until such holder shall have
provided all such reasonably requested information. Each holder of Transfer
Restricted Securities as to which any Shelf Registration Statement is being
effected agrees to furnish promptly to the Issuers all information required to
be disclosed in order to make information previously furnished to the Issuers by
such Holder not materially misleading.
(b) Subsequent Shelf Registrations. If the Initial Shelf
Registration or any Subsequent Shelf Registration ceases to be effective for any
reason at any time during the Effectiveness Period (other than because of the
sale of all of the securities registered thereunder), the Issuers shall use
their respective best efforts to obtain the prompt withdrawal of any order
suspending the effectiveness thereof, and in any event shall within 30 days of
such cessation of effectiveness amend the Initial Shelf Registration in a manner
to obtain the withdrawal of the order suspending the effectiveness thereof, or
file an additional "shelf" Registration Statement pursuant to Rule 415 covering
all of the Transfer Restricted Securities covered by and not sold under the
Initial Shelf Registration or an earlier Subsequent Shelf Registration (each, a
9
"Subsequent Shelf Registration"). If a Subsequent Shelf Registration is filed,
the Issuers shall use their respective best efforts to cause the Subsequent
Shelf Registration to be declared effective under the Securities Act as soon as
practicable after such filing and to keep such subsequent Shelf Registration
continuously effective for a period equal to the number of days in the
Effectiveness Period less the aggregate number of days during which the Initial
Shelf Registration or any Subsequent Shelf Registration was previously
continuously effective. As used herein the term "Shelf Registration" means the
Initial Shelf Registration and any Subsequent Shelf Registration.
(c) Supplements and Amendments. The Issuers shall promptly
supplement and amend any Shelf Registration if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration, if required by the Securities Act, or if reasonably
requested by the Holders of a majority in aggregate principal amount of the
Transfer Restricted Securities covered by such Registration Statement or by any
underwriter of such Transfer Restricted Securities.
4. Liquidated Damages
(a) The Issuers and the Initial Purchaser agree that the
Holders will suffer damages if the Issuers fail to fulfill their obligations
under Section 2 or Section 3 hereof and that it would not be feasible to
ascertain the extent of such damages with precision. Accordingly, the Issuers
agree, jointly and severally, to pay, as liquidated damages, additional interest
on the Notes ("Liquidated Damages") under the circumstances and to the extent
set forth below (each of which shall be given independent effect):
(i) if (A) neither the Exchange Offer Registration Statement
nor the Initial Shelf Registration has been filed on or prior to the
applicable Filing Date or (B) notwithstanding that the Issuers have
consummated or will consummate the Exchange Offer, the Issuers are
required to file a Shelf Registration and such Shelf Registration is
not filed on or prior to the Filing Date applicable thereto, then,
commencing on the day after any such Filing Date, Liquidated Damages
shall accrue on the principal amount of the Notes at a rate of $.05 per
week per $1,000 principal amount of Notes held by such Holder for the
first 90 days immediately following each such Filing Date, and such
Liquidated Damages shall increase by an additional $.05 per week per
$1,000 principal amount at the beginning of each subsequent 90-day
period; or
(ii) if (A) neither the Exchange Offer Registration Statement
nor the Initial Shelf Registration is declared effective by the SEC on
or prior to the relevant Effectiveness Date or (B) notwithstanding that
the Issuers have consummated or will consummate the Exchange Offer, the
Issuers are required to file a Shelf Registration and such Shelf
10
Registration is not declared effective by the SEC on or prior to the
Effectiveness Date in respect of such Shelf Registration, then,
commencing on the day after such Effectiveness Date, Liquidated Damages
shall accrue on the principal amount of the Notes at a rate of $.05 per
week per $1,000 principal amount of Notes held by such Holder for the
first 90 days immediately following the day after such Effectiveness
Date, and such Liquidated Damages shall increase by an additional $.05
per week per $1,000 principal amount at the beginning of each
subsequent 90-day period; or
(iii) if (A) the Issuers have not exchanged Exchange Notes for
all Notes and Series A/B Notes validly tendered in accordance with the
terms of the Exchange Offer on or prior to the 165th day after the
Issue Date or (B) if applicable, a Shelf Registration has been declared
effective and such Shelf Registration ceases to be effective at any
time during the Effectiveness Period, then Liquidated Damages shall
accrue on the principal amount of the Notes at a rate of $.05 per week
per $1,000 principal amount of Notes held by such Holder for the first
90 days commencing on the (x) 166th day after such Issue Date, in the
case of (A) above, or (y) the day such Shelf Registration ceases to be
effective in the case of (B) above, and such Liquidated Damages shall
increase by an additional $.05 per week per $1,000 principal amount at
the beginning of each such subsequent 90-day period (each such event
referred to in clauses (i) through (iii) above a "Registration
Default");
provided, however, that the Liquidated Damages on the Notes may not exceed at
any one time in the aggregate $.20 per week per $1,000 principal amount of Notes
held by such Holder; provided, further, however, that (1) upon the filing of the
applicable Exchange Offer Registration Statement or the applicable Shelf
Registration as required hereunder (in the case of clause (i) above of this
Section 4), (2) upon the effectiveness of the Exchange Offer Registration
Statement or the applicable Shelf Registration Statement as required hereunder
(in the case of clause (ii) of this Section 4), or (3) upon the exchange of the
applicable Exchange Notes for all Notes tendered (in the case of clause (iii)(A)
of this Section 4), or upon the effectiveness of the applicable Shelf
Registration Statement which had ceased to remain effective (in the case of
(iii)(B) of this Section 4), Liquidated Damages on the Notes in respect of which
such events relate as a result of such clause (or the relevant subclause
thereof), as the case may be, shall cease to accrue.
(b) The Issuers shall notify the Trustee within one business
day after each and every date on which an event occurs in respect of which
Liquidated Damages are required to be paid (an "Event Date"). Any amounts of
Liquidated Damages due pursuant to (a)(i), (a)(ii) or (a)(iii) of this Section 4
will be payable in cash semi-annually on each Damages Payment Date (to the
11
holders of record (the "Record Holders") on the April 15 and October 15
immediately preceding such dates), commencing with the first such date occurring
after any such Liquidated Damages commence to accrue. The amount of Liquidated
Damages will be determined by multiplying the applicable Liquidated Damages by
the principal amount of the Transfer Restricted Securities, multiplied by a
fraction, the numerator of which is the number of days such Liquidated Damages
were applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months and, in the case of a partial month, the
actual number of days elapsed), and the denominator of which is 360. All accrued
Liquidated Damages shall be paid to the Record Holders by the Issuers by wire
transfer of immediately available funds or by federal funds check on each
Damages Payment Date. Following the cure of all Registration Defaults relating
to any particular Transfer Restricted Securities, the accrual of Liquidated
Damages with respect to such Transfer Restricted Securities will cease.
5. Registration Procedures
In connection with the filing of any Registration Statement
pursuant to Sections 2 or 3 hereof, the Issuers shall effect such registrations
to permit the sale of the securities covered thereby in accordance with the
intended method or methods of disposition thereof, and pursuant thereto and in
connection with any Registration Statement filed by the Issuers hereunder the
Issuers shall:
(a) Prepare and file with the SEC prior to the applicable
Filing Date, a Registration Statement or Registration Statements as
prescribed by Sections 2 or 3 hereof, and use their respective best
efforts to cause each such Registration Statement to become effective
and remain effective as provided herein; provided, however, that, if
(1) such filing is pursuant to Section 3 hereof, or (2) a Prospectus
contained in the Exchange Offer Registration Statement filed pursuant
to Section 2 hereof is required to be delivered under the Securities
Act by any Participating Broker-Dealer who seeks to sell Exchange Notes
during the Applicable Period relating thereto, before filing any
Registration Statement or Prospectus or any amendments or supplements
thereto, the Issuers shall furnish to and afford the Holders of the
Transfer Restricted Securities covered by such Registration Statement
or each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, a reasonable opportunity
to review copies of all such documents (including copies of any
documents to be incorporated by reference therein and all exhibits
thereto) proposed to be filed (in each case at least five days prior to
such filing, or such later date as is reasonable under the
circumstances). The Issuers shall not file any Registration Statement
or Prospectus or any amendments or supplements thereto if the Holders
of a majority in aggregate principal amount of the Transfer Restricted
12
Securities covered by such Registration Statement, or any such
Participating Broker-Dealer, as the case may be, their counsel, or the
managing underwriters, if any, shall reasonably object.
(b) Prepare and file with the SEC such amendments and
post-effective amendments to each Shelf Registration Statement or
Exchange Offer Registration Statement, as the case may be, as may be
necessary to keep such Registration Statement continuously effective
for the Effectiveness Period or the Applicable Period, as the case may
be; cause the related Prospectus to be supplemented by any Prospectus
supplement required by applicable law, and as so supplemented to be
filed pursuant to Rule 424 (or any similar provisions then in force)
promulgated under the Securities Act; and comply with the provisions of
the Securities Act and the Exchange Act applicable to each of them with
respect to the disposition of all securities covered by such
Registration Statement as so amended or in such Prospectus as so
supplemented and with respect to the subsequent resale of any
securities being sold by a Participating Broker-Dealer covered by any
such Prospectus. The Issuers shall be deemed not to have used their
respective diligent best efforts to keep a Registration Statement
effective during the Effective Period or the Applicable Period, as the
case may be, relating thereto if any of the Issuers voluntarily takes
any action that would result in selling Holders of the Transfer
Restricted Securities covered thereby or Participating Broker-Dealers
seeking to sell Exchange Notes not being able to sell such Transfer
Restricted Securities or such Exchange Notes during that period unless
(i) such action is required by applicable law or (ii) such Issuers
comply with the provisions of the last sentence of Section 5(k) or the
last paragraph of this Section 5.
(c) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period relating thereto from whom the Company has received written
notice that it will be a Participating Broker-Dealer in the Exchange
Offer, notify the selling Holders of Transfer Restricted Securities, or
each such Participating Broker-Dealer, as the case may be, their
counsel and the managing underwriters, if any, promptly (but in any
event within one day), and confirm such notice in writing, (i) when a
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to a Registration Statement or any
post-effective amendment, when the same has become effective under the
Securities Act (including in such notice a written statement that any
Holder may, upon request, obtain, at the sole expense of the Issuers,
one conformed copy of such Registration Statement or post-effective
amendment including financial statements and schedules, documents
incorporated or deemed to be incorporated by reference and exhibits),
13
(ii) of the issuance by the SEC of any stop order suspending the
effectiveness of a Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the initiation of
any proceedings for that purpose, (iii) if at any time when a
prospectus is required by the Securities Act to be delivered in
connection with sales of the Transfer Restricted Securities or resales
of Exchange Notes by Participating Broker-Dealers the representations
and warranties of any of the Issuers contained in any agreement
(including any underwriting agreement) contemplated by Section 5(m)
hereof cease to be true and correct in all material respects, (iv) of
the receipt by any of the Issuers of any notification with respect to
the suspension of the qualification or exemption from qualification of
a Registration Statement or any of the Transfer Restricted Securities
or the Exchange Notes to be sold by any Participating Broker-Dealer for
offer or sale in any jurisdiction, or the initiation or threatening of
any proceeding for such purpose, (v) of the happening of any event, the
existence of any condition or any information becoming known that makes
any statement made in such Registration Statement or related Prospectus
or any document incorporated or deemed to be incorporated therein by
reference untrue in any material respect or that requires the making of
any changes in or amendments or supplements to such Registration
Statement, Prospectus or documents so that, in the case of the
Registration Statement, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and
that in the case of the Prospectus, it will not contain any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and (vi) of any of the Issuers' determination that a
post-effective amendment to a Registration Statement would be
appropriate.
(d) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, use their respective best efforts to prevent the issuance of
any order suspending the effectiveness of a Registration Statement or
of any order preventing or suspending the use of a Prospectus or
suspending the qualification (or exemption from qualification) of any
of the Transfer Restricted Securities or the Exchange Notes to be sold
by any Participating Broker-Dealer, for sale in any jurisdiction, and,
if any such order is issued, to use their respective best efforts to
obtain the withdrawal of any such order at the earliest possible date.
14
(e) Subject to the provisions of the last sentence of Section
5(k), if a Shelf Registration is filed pursuant to Section 3 and if
requested by the managing underwriter or underwriters (if any), the
Holders of a majority in aggregate principal amount of the Transfer
Restricted Securities being sold in connection with an underwritten
offering or any Participating Broker-Dealer, (i) promptly as
practicable incorporate in a prospectus supplement or post-effective
amendment such information as the managing underwriter or underwriters
(if any), such Holders, any Participating Broker-Dealer or counsel for
any of them reasonably request to be included therein, (ii) make all
required filings of such prospectus supplement or such post-effective
amendment as soon as practicable after either Issuer has received
notification of the matters to be incorporated in such prospectus
supplement or post-effective amendment, and (iii) supplement or make
amendments to such Registration Statement; provided, however, that the
Issuers shall not be required to take any action pursuant to this
Section 5(e) that would violate applicable law.
(f) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, furnish to each selling Holder of Transfer Restricted
Securities and to each such Participating Broker-Dealer who so requests
and to counsel and each managing underwriter, if any, at the sole
expense of the Issuers, one conformed copy of the Registration
Statement or Registration Statements and each post-effective amendment
thereto, including financial statements and schedules, and, if
requested, all documents incorporated or deemed to be incorporated
therein by reference and all exhibits.
(g) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, deliver to each selling Holder of Transfer Restricted
Securities, or each such Participating Broker-Dealer, as the case may
be, their respective counsel, and the underwriters, if any, at the sole
expense of the Issuers, as many copies of the Prospectus or
Prospectuses (including each form of preliminary prospectus) and each
amendment or supplement thereto and any documents incorporated by
reference therein as such Persons may reasonably request; and, subject
to the last paragraph of this Section 5, each of the Issuers hereby
consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders of Transfer Restricted
Securities or each such Participating Broker-Dealer, as the case may
15
be, and the underwriters or agents, if any, and dealers (if any), in
connection with the offering and sale of the Transfer Restricted
Securities covered by, or the sale by Participating Broker-Dealers of
the Exchange Notes pursuant to, such Prospectus and any amendment or
supplement thereto.
(h) Prior to any public offering of Transfer Restricted
Securities or any delivery of a Prospectus contained in the Exchange
Offer Registration Statement by any Participating Broker-Dealer who
seeks to sell Exchange Notes during the Applicable Period, to use their
respective best efforts to register or qualify, and to cooperate with
the selling Holders of Transfer Restricted Securities or each such
Participating Broker-Dealer, as the case may be, the managing
underwriter or underwriters, if any, and their respective counsel in
connection with the registration or qualification (or exemption from
such registration or qualification) of such Transfer Restricted
Securities for offer and sale under the securities or Blue Sky laws of
such jurisdictions within the United States as any selling Holder,
Participating Broker-Dealer, or the managing underwriter or
underwriters reasonably request in writing; provided, however, that
where Exchange Notes held by Participating Broker-Dealers or Transfer
Restricted Securities are offered other than through an underwritten
offering, the Issuers agree to cause their counsel to perform Blue Sky
investigations and file registrations and qualifications required to be
filed pursuant to this Section 5(h); keep each such registration or
qualification (or exemption therefrom) effective during the period such
Registration Statement is required to be kept effective and do any and
all other acts or things reasonably necessary or advisable to enable
the disposition in such jurisdictions of the Exchange Notes held by
Participating Broker-Dealers or the Transfer Restricted Securities
covered by the applicable Registration Statement; provided, however,
that none of the Issuers shall be required to (A) qualify generally to
do business in any jurisdiction where it is not then so qualified, (B)
take any action that would subject it to general service of process in
any such jurisdiction where it is not then so subject or (C) subject
itself to taxation in excess of a nominal dollar amount in any such
jurisdiction where it is not then so subject.
(i) If a Shelf Registration is filed pursuant to Section 3
hereof, cooperate with the selling Holders of Transfer Restricted
Securities and the managing underwriter or underwriters, if any, to
facilitate the timely preparation and delivery of certificates
representing Transfer Restricted Securities to be sold, which
certificates shall not bear any restrictive legends and shall be in a
form eligible for deposit with The Depository Trust Company; and enable
such Transfer Restricted Securities to be in such denominations and
registered in such names as the managing underwriter or underwriters,
if any, or Holders may request.
16
(j) Use their respective best efforts to cause the Transfer
Restricted Securities covered by the Registration Statement to be
registered with or approved by such other governmental agencies or
authorities as may be reasonably necessary to enable the seller or
sellers thereof or the underwriter or underwriters, if any, to
consummate the disposition of such Transfer Restricted Securities,
except as may be required solely as a consequence of the nature of such
selling Holder's business, in which case the Issuers will cooperate in
all reasonable respects with the filing of such Registration Statement
and the granting of such approvals.
(k) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, upon the occurrence of any event contemplated by paragraph
5(c)(v) or 5(c)(vi) hereof, as promptly as practicable prepare and
(subject to Section 5(a) hereof) file with the SEC, at the sole expense
of the Issuers, a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any
document incorporated or deemed to be incorporated therein by
reference, or file any other required document so that, as thereafter
delivered to the purchasers of the Transfer Restricted Securities being
sold thereunder or to the purchasers of the Exchange Notes to whom such
Prospectus will be delivered by a Participating Broker-Dealer, any such
Prospectus will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading. Notwithstanding the
foregoing, the Issuers shall not be required to amend or supplement a
Registration Statement, any related prospectus or any document
incorporated therein by reference in the event that, and for a period
(a "Black Out Period") not to exceed, for so long as this Agreement is
in effect, an aggregate of 45 days if (x) an event occurs and is
continuing as a result of which a Registration Statement, any related
prospectus or any document incorporated therein by reference as then
amended or supplemented would, in the Issuers' good faith judgment,
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading,
and (y) (1) the Issuers determine in good faith that the disclosure of
such event at such time would have a material adverse effect on the
business, operations or prospects of the Issuers or (2) the disclosure
otherwise relates to a material business transaction which has not yet
been publicly disclosed in any relevant jurisdiction.
17
(l) Prior to the effective date of the first Registration
Statement relating to the Transfer Restricted Securities, (i) provide
the Trustee with certificates for the Transfer Restricted Securities in
a form eligible for deposit with The Depository Trust Company and (ii)
provide a CUSIP number for the Transfer Restricted Securities.
(m) In connection with any underwritten offering of Transfer
Restricted Securities pursuant to a Shelf Registration, enter into an
underwriting agreement as is customary in underwritten offerings of
debt securities similar to the Notes in form and substance reasonably
satisfactory to the Issuers and take all such other actions as are
reasonably requested by the managing underwriter or underwriters in
order to expedite or facilitate the registration or the disposition of
such Transfer Restricted Securities and, in such connection, (i) make
such representations and warranties to, and covenants with, the
underwriters with respect to the business of the Issuers and their
respective subsidiaries (including any acquired business, properties or
entity, if applicable) and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by
reference therein, in each case, as are customarily made by issuers to
underwriters in underwritten offerings of debt securities similar to
the Notes, and confirm the same in writing if and when requested in
form and substance reasonably satisfactory to the Issuers; (ii) obtain
the written opinions of counsel to the Issuers and written updates
thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters, addressed to the underwriters
covering the matters customarily covered in opinions reasonably
requested in underwritten offerings and such other matters as may be
reasonably requested by the managing underwriter or underwriters; (iii)
use their best efforts to obtain "cold comfort" letters and updates
thereof in form, scope and substance reasonably satisfactory to the
managing underwriter or underwriters from the independent certified
public accountants of the Issuers (and, if necessary, any other
independent certified public accountants of any subsidiary of any of
the Issuers or of any business acquired by any of the Issuers for which
financial statements and financial data are, or are required to be,
included or incorporated by reference in the Registration Statement),
addressed to each of the underwriters, such letters to be in customary
form and covering matters of the type customarily covered in "cold
comfort" letters in connection with underwritten offerings of debt
securities similar to the Notes and such other matters as reasonably
requested by the managing underwriter or underwriters as permitted by
the Statement on Auditing Standards No. 72; and (iv) if an underwriting
agreement is entered into, the same shall contain indemnification
provisions and procedures no less favorable to the sellers and
underwriters, if any, than those set forth in Section 7 hereof (or such
other provisions and procedures acceptable to Holders of a majority in
18
aggregate principal amount of Transfer Restricted Securities covered by
such Registration Statement and the managing underwriter or
underwriters or agents, if any). The above shall be done at each
closing under such underwriting agreement, or as and to the extent
required thereunder.
(n) If (1) a Shelf Registration is filed pursuant to Section 3
hereof, or (2) a Prospectus contained in the Exchange Offer
Registration Statement filed pursuant to Section 2 hereof is required
to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Notes during the Applicable
Period, make available for inspection by any selling Holder of such
Transfer Restricted Securities being sold, or each such Participating
Broker-Dealer, as the case may be, any underwriter participating in any
such disposition of Transfer Restricted Securities, if any, and any
attorney, accountant or other agent retained by any such selling Holder
or each such Participating Broker-Dealer, as the case may be, or
underwriter (collectively, the "Inspectors"), at the offices where
normally kept, during reasonable business hours, all financial and
other records, pertinent corporate documents and instruments of the
Issuers and their respective subsidiaries (collectively, the "Records")
as shall be reasonably necessary to enable them to exercise any
applicable due diligence responsibilities, and cause the officers,
directors and employees of the Issuers and their respective
subsidiaries to supply all information reasonably requested by any such
Inspector in connection with such Registration Statement and
Prospectus. Each Inspector shall agree in writing that it will keep the
Records confidential and that it will not disclose any of the Records
unless (i) the disclosure of such Records is necessary to avoid or
correct a misstatement or omission in such Registration Statement or
Prospectus, (ii) the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, (iii)
disclosure of such information is necessary or advisable, in the
opinion of counsel for any Inspector, in connection with any action,
claim, suit or proceeding, directly or indirectly, involving or
potentially involving such Inspector and arising out of, based upon,
relating to, or involving this Agreement or the Purchase Agreement, or
any transactions contemplated hereby or thereby or arising hereunder or
thereunder, or (iv) the information in such Records has been made
generally available to the public; provided, however, that prior notice
shall be provided as soon as practicable to the Issuers of the
potential disclosure of any information by such Inspector pursuant to
clauses (ii) or (iii) of this sentence to permit the Issuers to obtain
a protective order (or waive the provisions of this paragraph (n)) and
that such Inspector shall take such actions as are reasonably necessary
to protect the confidentiality of such information (if practicable) to
the extent such action is otherwise not inconsistent with, an
19
impairment of or in derogation of the rights and interests of the
Holder or any Inspector. Each selling Holder of such Transfer
Restricted Securities and each such Participating Broker-Dealer will be
required to agree that information obtained by it as a result of such
inspections shall be deemed confidential and shall not be used by it as
the basis for any market transactions in the securities of the Issuers
unless and until such is made generally available to the public. Each
selling Holder of such Transfer Restricted Securities and each such
Participating Broker-Dealer will be required to further agree that it
will, upon learning that disclosure of such Records is sought in a
court of competent jurisdiction, give notice to the Issuers and allow
the Issuers to undertake appropriate action to prevent disclosure of
the Records deemed confidential at the Issuers' expense.
(o) Provide an indenture trustee for the Transfer Restricted
Securities or the Exchange Notes, as the case may be, and cause the
Indenture or the trust indenture provided for in Section 2(a) hereof,
as the case may be, to be qualified under the TIA not later than the
effective date of the first Registration Statement relating to the
Transfer Restricted Securities; and in connection therewith, cooperate
with the trustee under any such indenture and the Holders of the
Transfer Restricted Securities, to effect such changes to such
indenture as may be required for such indenture to be so qualified in
accordance with the terms of the TIA; and execute, and use their
respective best efforts to cause such trustee to execute, all documents
as may be required to effect such changes, and all other forms and
documents required to be filed with the SEC to enable such indenture to
be so qualified in a timely manner.
(p) Comply with all applicable rules and regulations of the
SEC and make generally available to their respective securityholders
earnings statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder (or any similar rule promulgated
under the Securities Act) no later than 45 days after the end of any
12-month period (or 90 days after the end of any 12-month period if
such period is a fiscal year) (i) commencing at the end of any fiscal
quarter in which Transfer Restricted Securities are sold to
underwriters in a firm commitment or best efforts underwritten offering
and (ii) if not sold to underwriters in such an offering, commencing on
the first day of the first fiscal quarter of the Issuers after the
effective date of a Registration Statement, which statements shall
cover said 12-month periods.
(q) Upon consummation of the Exchange Offer or a Private
Exchange, obtain an opinion of counsel to the Issuers, in a form
customary for underwritten transactions, addressed to the Trustee for
the benefit of all Holders of Transfer Restricted Securities
participating in the Exchange Offer or the Private Exchange, as the
20
case may be, that the Exchange Notes or Private Exchange Notes, as the
case may be, and the related indenture constitute legal, valid and
binding obligations of the Issuers, enforceable against the Issuers in
accordance with its respective terms, subject to customary exceptions
and qualifications.
(r) If the Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Transfer Restricted Securities by
Holders to the Issuers (or to such other Person as directed by the
Issuers) in exchange for the Exchange Notes or the Private Exchange
Notes, as the case may be, the Issuers shall mark, or cause to be
marked, on such Transfer Restricted Securities that such Transfer
Restricted Securities are being cancelled in exchange for the Exchange
Notes or the Private Exchange Notes, as the case may be; in no event
shall such Transfer Restricted Securities be marked as paid or
otherwise satisfied.
(s) Cooperate with each seller of Transfer Restricted
Securities covered by any Registration Statement and each underwriter,
if any, participating in the disposition of such Transfer Restricted
Securities and their respective counsel in connection with any filings
required to be made with the National Association of Securities
Dealers, Inc. (the "NASD").
(t) Use their respective best efforts to take all other steps
reasonably necessary to effect the registration of the Exchange Notes
and/or Transfer Restricted Securities covered by a Registration
Statement contemplated hereby.
The Issuers may require each seller of Transfer Restricted
Securities as to which any registration is being effected to furnish to the
Issuers such information regarding such seller and the distribution of such
Transfer Restricted Securities as the Issuers may, from time to time, reasonably
request. The Issuers may exclude from such registration the Transfer Restricted
Securities of any seller so long as such seller fails to furnish such
information within a reasonable time after receiving such request. Each seller
as to which any Shelf Registration is being effected agrees to furnish promptly
to the Issuers all information required to be disclosed in order to make the
information previously furnished to the Issuers by such seller not materially
misleading.
If any such Registration Statement refers to any Holder by
name or otherwise as the holder of any securities of the Issuers, then such
Holder shall have the right to require (i) the insertion therein of language, in
form and substance reasonably satisfactory to such Holder, to the effect that
the holding by such Holder of such securities is not to be construed as a
recommendation by such Holder of the investment quality of the securities
covered thereby and that such holding does not imply that such Holder will
assist in meeting any future financial requirements of any of the Issuers, or
(ii) in the event that such reference to such Holder by name or otherwise is not
required by the Securities Act or any similar federal statute then in force, the
21
deletion of the reference to such Holder in any amendment or supplement to the
Registration Statement filed or prepared subsequent to the time that such
reference ceases to be required.
Each Holder of Transfer Restricted Securities and each
Participating Broker-Dealer agrees by its acquisition of such Transfer
Restricted Securities or Exchange Notes to be sold by such Participating
Broker-Dealer, as the case may be, that, upon actual receipt of any notice from
the Issuers of the happening of any event of the kind described in Section
5(c)(ii), 5(c)(iv), 5(c)(v), or 5(c)(vi) hereof, such Holder will forthwith
discontinue disposition of such Transfer Restricted Securities covered by such
Registration Statement or Prospectus or Exchange Notes to be sold by such Holder
or Participating Broker-Dealer, as the case may be, until such Holder's or
Participating Broker-Dealer's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 5(k) hereof, or until it is advised
in writing (the "Advice") by any of the Issuers that the use of the applicable
Prospectus may be resumed, and has received copies of any amendments or
supplements thereto. In the event that the Issuers shall give any such notice,
each of the Effectiveness Period and the Applicable Period shall be extended by
the number of days during such periods from and including the date of the giving
of such notice to and including the date when each seller of Transfer Restricted
Securities covered by such Registration Statement or Exchange Notes to be sold
by such Participating Broker-Dealer, as the case may be, shall have received (x)
the copies of the supplemented or amended Prospectus contemplated by Section
5(k) hereof or (y) the Advice.
6. Registration Expenses
All fees and expenses incident to the performance of or
compliance with this Agreement by the Issuers shall be borne by the Issuers,
jointly and severally, whether or not the Exchange Offer Registration Statement
or any Shelf Registration is filed or becomes effective or the Exchange Offer is
consummated, including, without limitation, (i) all registration and filing fees
(including, without limitation, (A) fees with respect to filings required to be
made with the NASD in connection with an underwritten offering and (B) fees and
expenses of compliance with state securities or Blue Sky laws (including,
without limitation, reasonable fees and disbursements of counsel in connection
with Blue Sky qualifications of the Transfer Restricted Securities or Exchange
Notes and determination of the eligibility of the Transfer Restricted Securities
or Exchange Notes for investment under the laws of such jurisdictions (x) where
the holders of Transfer Restricted Securities are located, in the case of the
Exchange Notes, or (y) as provided in Section 5(h) hereof, in the case of
Transfer Restricted Securities or Exchange Notes to be sold by a Participating
Broker-Dealer during the Applicable Period)), (ii) printing expenses, including,
without limitation, expenses of printing certificates for Transfer Restricted
Securities or Exchange Notes in a form eligible for deposit with The Depository
Trust Company and of printing prospectuses if the printing of prospectuses is
22
requested by the managing underwriter or underwriters, if any, by the Holders of
a majority in aggregate principal amount of the Transfer Restricted Securities
included in any Registration Statement or in respect of Transfer Restricted
Securities or Exchange Notes to be sold by any Participating Broker-Dealer
during the Applicable Period, as the case may be, (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Issuers and
reasonable fees and disbursements of one special counsel for all of the sellers
of Transfer Restricted Securities (exclusive of any counsel retained pursuant to
Section 7 hereof), (v) fees and disbursements of all independent certified
public accountants referred to in Section 5(m)(iii) hereof (including, without
limitation, the expenses of any special audit and "cold comfort" letters
required by or incident to such performance), (vi) Securities Act liability
insurance, if the Issuers desire such insurance, (vii) fees and expenses of all
other Persons retained by any of the Issuers, (viii) internal expenses of the
Issuers (including, without limitation, all salaries and expenses of officers
and employees of all of the Issuers performing legal or accounting duties), (ix)
the expense of any annual audit, (x) the fees and expenses incurred in
connection with the listing of the securities to be registered on any securities
exchange, and the obtaining of a rating of the securities, in each case, if
applicable, and (xi) the expenses relating to printing, word processing and
distributing all Registration Statements, underwriting agreements, indentures
and any other documents necessary in order to comply with this Agreement.
7. Indemnification
(a) The Issuers and any Subsidiary Guarantors agree, jointly
and severally, to indemnify and hold harmless each Holder of Transfer Restricted
Securities and each Participating Broker-Dealer selling Exchange Notes during
the Applicable Period, the officers, directors, employees and agents of each
such Person, and each Person, if any, who controls any such Person within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act (each, a "Participant"), from and against any and all losses, claims,
damages, judgments, liabilities and expenses (including, without limitation, the
reasonable legal fees and other expenses actually incurred in connection with
any suit, action or proceeding or any claim asserted) caused by, arising out of
or based upon any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement (or any amendment thereto) or
Prospectus (as amended or supplemented if any of the Issuers shall have
furnished any amendments or supplements thereto) or any preliminary prospectus,
or caused by, arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in the case of the Prospectus in light of the
circumstances under which they were made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any untrue statement or
omission or alleged untrue statement or omission made in reliance upon and in
conformity with information relating to any Participant furnished to the Issuers
in writing by such Participant expressly for use therein; provided, however,
23
that the Issuers will not be liable if such untrue statement or omission or
alleged untrue statement or omission was contained or made in any preliminary
prospectus and corrected in the final Prospectus or any amendment or supplement
thereto and any such loss, liability, claim, or damage or expense suffered or
incurred by the Participants resulted from any action, claim or suit by any
Person who purchased Transfer Restricted Securities or Exchange Notes which are
the subject thereof from such Participant and it is established in the related
proceeding that such Participant failed to deliver or provide a copy of the
final Prospectus (as amended or supplemented) to such Person with or prior to
the confirmation of the sale of such Transfer Restricted Securities or Exchange
Notes sold to such Person if required by applicable law.
(b) Each Participant agrees, severally and not jointly, to
indemnify and hold harmless each of the Issuers, their respective directors,
their respective officers who sign the Registration Statement and each Person
who controls each Issuer within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act to the same extent (but on a several, and not
joint, basis) as the foregoing indemnity from the Issuers to each Participant,
but only with reference to information relating to such Participant furnished to
the Issuers in writing by such Participant expressly for use in any Registration
Statement or Prospectus, any amendment or supplement thereto, or any preliminary
prospectus. The liability of any Participant under this paragraph shall in no
event exceed the proceeds received by such Participant from sales of Transfer
Restricted Securities or Exchange Notes giving rise to such obligations.
(c) If any suit, action, proceeding (including any
governmental or regulatory investigation), claim or demand shall be brought or
asserted against any Person in respect of which indemnity may be sought pursuant
to either of the two preceding paragraphs, such Person (the "Indemnified
Person") shall promptly notify the Persons against whom such indemnity may be
sought (the "Indemnifying Persons") in writing, and the Indemnifying Persons,
upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and
any others the Indemnifying Persons may reasonably designate in such proceeding
and shall pay the fees and expenses actually incurred by such counsel related to
such proceeding; provided, however, that the failure to so notify the
Indemnifying Persons shall not relieve any of them of any obligation or
liability which any of them may have hereunder or otherwise. In any such
proceeding, any Indemnified Person shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Person unless (i) the Indemnifying Persons and the Indemnified
Person shall have mutually agreed to the contrary, (ii) the Indemnifying Persons
shall have failed within a reasonable period of time to retain counsel
reasonably satisfactory to the Indemnified Person or (iii) the named parties in
any such proceeding (including any impleaded parties) include both any
24
Indemnifying Person and the Indemnified Person or any affiliate thereof and
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that,
unless there exists a conflict among Indemnified Persons, the Indemnifying
Persons shall not, in connection with such proceeding or separate but
substantially similar related proceeding in the same jurisdiction arising out of
the same general allegations, be liable for the fees and expenses of more than
one separate firm (in addition to any local counsel) for all Indemnified
Persons, and that all such fees and expenses shall be reimbursed promptly as
they are incurred. Any such separate firm for the Participants and such control
Persons of Participants shall be designated in writing by Participants who sold
a majority in interest of Transfer Restricted Securities and Exchange Notes sold
by all such Participants and shall be reasonably acceptable to the Issuers and
any such separate firm for the Issuers, their respective directors, their
respective officers and such control Persons of the Issuers shall be designated
in writing by the Issuers and shall be reasonably acceptable to the Holders.
The Indemnifying Persons shall not be liable for any
settlement of any proceeding effected without its prior written consent (which
consent shall not be unreasonably withheld or delayed), but if settled with such
consent or if there be a final non-appealable judgment for the plaintiff for
which the Indemnified Person is entitled to indemnification pursuant to this
Agreement, each of the Indemnifying Persons agrees to indemnify and hold
harmless each Indemnified Person from and against any loss or liability by
reason of such settlement or judgment. No Indemnifying Person shall, without the
prior written consent of the Indemnified Persons (which consent shall not be
unreasonably withheld or delayed), effect any settlement or compromise of any
pending or threatened proceeding in respect of which any Indemnified Person is
or could have been a party, or indemnity could have been sought hereunder by
such Indemnified Person, unless such settlement (A) includes an unconditional
written release of such Indemnified Person, in form and substance reasonably
satisfactory to such Indemnified Person, from all liability on claims that are
the subject matter of such proceeding and (B) does not include any statement as
to an admission of fault, culpability or failure to act by or on behalf of such
Indemnified Person.
(d) If the indemnification provided for in the first and
second paragraphs of this Section 7 is for any reason unavailable to, or
insufficient to hold harmless, an Indemnified Person in respect of any losses,
claims, damages or liabilities referred to therein, then each Indemnifying
Person under such paragraphs, in lieu of indemnifying such Indemnified Person
thereunder and in order to provide for just and equitable contribution, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities in such proportion as is
appropriate to reflect (i) the relative benefits received by the Indemnifying
Person or Persons on the one hand and the Indemnified Person or Persons on the
other from the offering of the Notes or (ii) if the allocation provided by the
foregoing clause (i) is not permitted by applicable law, not only such relative
25
benefits but also the relative fault of the Indemnifying Person or Persons on
the one hand and the Indemnified Person or Persons on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof) as well as any other relevant equitable considerations. The relative
benefits received by the Issuers on the one hand and the Participants on the
other shall be deemed to be in the same proportion as the total proceeds from
the offering (net of discounts and commissions but before deducting expenses) of
the Notes received by the Issuers bears to the total proceeds received by such
Participant from the sale of Transfer Restricted Securities or Exchange Notes,
as the case may be, in each case as set forth in the table on the cover page of
the Offering Memorandum in respect of the sale of the Notes. The relative fault
of the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Issuers on the one hand or such Participant or such other Indemified Person, as
the case may be, on the other, the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances.
(e) The parties agree that it would not be just and equitable
if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Participants were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages, judgments, liabilities and expenses referred to in the
immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any reasonable legal or other expenses actually
incurred by such Indemnified Person in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of this
Section 7, in no event shall a Participant be required to contribute any amount
in excess of the amount by which proceeds received by such Participant from
sales of Transfer Restricted Securities or Exchange Notes, as the case may be,
exceeds the amount of any damages that such Participant has otherwise been
required to pay or has paid by reason of such untrue or alleged untrue statement
or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.
(f) Any losses, claims, damages, liabilities or expenses for
which an indemnified party is entitled to indemnification or contribution under
this Section 7 shall be paid by the Indemnifying Party to the Indemnified Party
as such losses, claims, damages, liabilities or expenses are incurred. The
26
indemnity and contribution agreements contained in this Section 7 and the
representations and warranties of the Issuers set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of any Holder or any person who controls a
Holder, any Issuer, their respective directors, officers, employees or agents or
any person controlling any Issuer, and (ii) any termination of this Agreement.
(g) The indemnity and contribution agreements contained in
this Section 7 will be in addition to any liability which the Indemnifying
Persons may otherwise have to the Indemnified Persons referred to above.
8. Rules 144 and 144A
The Issuers covenant and agree that each of them will file the
reports required to be filed by each of them under the Securities Act and the
Exchange Act and the rules and regulations adopted by the SEC thereunder in a
timely manner in accordance with the requirements of the Securities Act and the
Exchange Act and, if at any time any of the Issuers is not required to file such
reports, such Issuer will, upon the request of any Holder or beneficial owner of
Transfer Restricted Securities, make available such information necessary to
permit sales pursuant to Rule 144A under the Securities Act. The Issuers further
covenant and agree, for so long as any Transfer Restricted Securities remain
outstanding that each of them will take such further action as any Holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such holder to sell Transfer Restricted
Securities without registration under the Securities Act within the limitation
of the exemptions provided by (a) Rule 144(k) and Rule 144A under the Securities
Act, as such Rules may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the SEC.
9. Underwritten Registrations
If any of the Transfer Restricted Securities covered by any
Shelf Registration are to be sold in an underwritten offering, the investment
banker or investment bankers and manager or managers that will manage the
offering will be selected by the Holders of a majority in aggregate principal
amount of such Transfer Restricted Securities included in such offering and
shall be reasonably acceptable to the Issuers.
No Holder of Transfer Restricted Securities may participate in
any underwritten registration hereunder unless such Holder (a) agrees to sell
such Holder's Transfer Restricted Securities on the basis provided in any
underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents required
under the terms of such underwriting arrangements.
27
10. Miscellaneous
(a) No Inconsistent Agreements. None of the Issuers has, as of
the date hereof, and none of the Issuers shall, after the date of this
Agreement, enter into any agreement with respect to any of its securities that
is inconsistent with the rights granted to the Holders of Transfer Restricted
Securities in this Agreement or otherwise conflicts with the provisions hereof.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of any of the
Issuers' other issued and outstanding securities under any such agreements.
Except as otherwise disclosed to the Initial Purchaser, none of the Issuers has
entered and none will enter into any agreement with respect to any of its
securities which will grant to any Person piggy-back registration rights with
respect to any Registration Statement.
(b) Adjustments Affecting Transfer Restricted Securities. None
of the Issuers shall, directly or indirectly, take any action with respect to
the Transfer Restricted Securities as a class that would adversely affect the
ability of the Holders of Transfer Restricted Securities to include such
Transfer Restricted Securities in a registration undertaken pursuant to this
Agreement.
(c) Amendments and Waivers. The provisions of this Agreement
may not be amended, modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given, otherwise than with the
prior written consent of (I) the Issuers and the Subsidiary Guarantors, if any,
and (II)(A) the Holders of not less than a majority in aggregate principal
amount of the then outstanding Transfer Restricted Securities and (B) in
circumstances that would adversely affect the Participating Broker-Dealers, the
Participating Broker-Dealers holding not less than a majority in aggregate
principal amount of the Exchange Notes held by all Participating Broker-Dealers;
provided, however, that Section 7 and this Section 10(c) may not be amended,
modified or supplemented without the prior written consent of each Holder and
each Participating Broker-Dealer (including any person who was a Holder or
Participating Broker-Dealer of Transfer Restricted Securities or Exchange Notes,
as the case may be, disposed of pursuant to any Registration Statement) affected
by any such amendment, modification or supplement. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders of Transfer
Restricted Securities whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect, impair, limit or
compromise the rights of other Holders of Transfer Restricted Securities may be
given by Holders of at least a majority in aggregate principal amount of the
Transfer Restricted Securities being sold pursuant to such Registration
Statement.
28
(d) Notices. All notices and other communications (including,
without limitation, any notices or other communications to the Trustee) provided
for or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, next-day air courier or facsimile:
(i) if to a Holder of the Transfer Restricted Securities or
any Participating Broker-Dealer, at the most current address of such
Holder or Participating Broker-Dealer, as the case may be, set forth on
the records of the registrar under the Indenture.
29
(ii) if to either of the Issuers or any of the Subsidiary
Guarantors, at the address as follows:
c/o Abraxas Petroleum Corporation
500 N. Loop 1604 East
Suite 100
San Antonio, Texas
Facsimile No.: (210) 490-8816
Attention: Chief Executive Officer
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; one business
day after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if sent by facsimile.
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to the Trustee at
the address and in the manner specified in such Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the parties
hereto, the Holders and the Participating Broker-Dealers.
(f) Release of Subsidiary Guarantors. If any Subsidiary
Guarantor becomes a party to this Agreement and is subsequently released from
its obligations under the Indenture in accordance with the terms thereof then
such Subsidiary Guarantor shall be released from its obligations hereunder.
(g) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED ENTIRELY WITHIN THE STATE OF NEW YORK, WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(j) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
30
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their best efforts to find and employ an alternative means to
achieve the same or substantially the same result as that contemplated by such
term, provision, covenant or restriction. It is hereby stipulated and declared
to be the intention of the parties that they would have executed the remaining
terms, provisions, covenants and restrictions without including any of such that
may be hereafter declared invalid, illegal, void or unenforceable.
(k) Securities Held by the Issuers or Their Affiliates.
Whenever the consent or approval of Holders of a specified percentage of
Transfer Restricted Securities is required hereunder, Transfer Restricted
Securities held by any of the Issuers or any of their their respective
affiliates (as such term is defined in Rule 405 under the Securities Act) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(l) Third Party Beneficiaries. Holders of Transfer Restricted
Securities and Participating Broker-Dealers are intended third party
beneficiaries of this Agreement, and this Agreement may be enforced by such
Persons.
(m) Entire Agreement. This Agreement, together with the
Purchase Agreement and the Indenture, is intended by the parties as a final and
exclusive statement of the agreement and understanding of the parties hereto in
respect of the subject matter contained herein and therein and any and all prior
oral or written agreements, representations, or warranties, contracts,
understandings, correspondence, conversations and memoranda between the Holders
on the one hand and the Issuers on the other, or between or among any agents,
representatives, parents, subsidiaries, affiliates, predecessors in interest or
successors in interest with respect to the subject matter hereof and thereof are
merged herein and replaced hereby.
n. Information Supplied by the Participant. The statements set
forth in the last paragraph on the front cover page, the paragraph regarding
stabilization on page ii, the second sentence on page 4 opposite the caption
"Exchange Offer; Registration Rights" and in the third and fourth paragraphs and
the fourth, fifth, sixth and seventh sentences of the fifth paragraph under the
heading "Plan of Distribution" in the Final Memorandum (to the extent such
statements relate to the Participant) constitute the only information furnished
by the Participant to the Issuers for the purposes of Section 7 hereof.
(o) Subsidiary Guarantor a Party. Immediately upon the
designation of any Subsidiary of either Issuer as a Restricted Subsidiary (as
defined in the Indenture), the Issuers shall cause such Subsidiary to become a
31
party hereto as a Subsidiary Guarantor by executing and delivering to the
Initial Purchaser a counterpart hereof.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
ABRAXAS PETROLEUM CORPORATION
By:/s/ CHRIS E. WILLIFORD
Name: Chris E. Williford
Title: Executive Vice President, Chief
Financial Officer and Treasurer
CANADIAN ABRAXAS PETROLEUM LIMITED
By:/s/ CHRIS E. WILLIFORD
Name: Chris E. Williford
Title: Vice President
JEFFERIES & COMPANY, INC.,
as Initial Purchaser
By: /s/ ROBERT CARINGTON
Name: Robert Carington
Title: Senior Vice President
32
Each of the undersigned by its execution hereof agrees to
become a party to this Agreement as a Subsidiary Guarantor as of the date first
above written:
By:___________________________
Name:
Title:
33
EXHIBIT 10.3
AMENDED AND RESTATED CREDIT AGREEMENT
This Second Amendment to Amended and Restated Credit Agreement
(this "Amendment") dated as of January 23, 1998 is among ABRAXAS PETROLEUM
CORPORATION, a Nevada corporation (the "Borrower"), the banks named on the
signature pages hereto (together with their respective successors and assigns in
such capacity, the "Banks"), BANKERS TRUST COMPANY, as agent for the Banks
(together with its successors and assigns in such capacity, the "Agent") and ING
(U.S.) CAPITAL CORPORATION, as co-agent for the Banks (together with its
successors and assigns in such capacity, the "Co-Agent").
PRELIMINARY STATEMENT
A. The Borrower and the Bank Group have entered into that
certain Amended and Restated Credit Agreement dated as of November 14, 1996, as
amended by that certain First Amendment to Amended and Restated Credit Agreement
dated as of October 14, 1997 (as so amended, the "Credit Agreement").
B. The Borrower and the Bank Group desire to further amend the
Credit Agreement as set forth herein.
NOW THEREFORE, in consideration of the foregoing and the
mutual agreements set forth herein, the parties agree as follows:
Section 1. Definitions. Unless otherwise defined in this
Amendment, each capitalized term used in this Amendment has the meaning assigned
to such term in the Credit Agreement.
Section 2. Amendments. The Credit Agreement is hereby amended
as follows:
a. Section 6.09 of the Credit Agreement is hereby amended by inserting
the following subclause (j) at the end of Section 6.09:
"(j) the repurchase at market value of up to $1,200,000 of the capital
stock of the Borrower."
b. The definitions of "Bond Indebtedness" and "Bond Indenture" set forth
in Annex A of the Credit Agreement are hereby amended in their entirety to read
as follows:
"Bond Indebtedness" means, collectively, Indebtedness
of the Borrower and the Guarantor in the aggregate principal amount of
$215,000,000 evidenced by their 11 1/2% Senior Notes due 2004 and
Indebtedness of the Borrower and the Guarantor in the aggregate
principal amount of $60,000,000 evidenced by their 11 1/2% Senior Notes
due 2004.
"Bond Indenture" means, collectively, that certain
Indenture dated November 14, 1996 between the Borrower and the Guarantor
as issuers and IBJ Schroder Bank & Trust Company as trustee and that
certain Indenture dated January 27, 1998 between the Borrower and the
Guarantor as issuers and IBJ Schroder Bank and Trust Company as trustee.
Section 3. Bond Proceeds. The Borrower shall use a portion of
the proceeds from the 11 1/2% Senior Notes due 2004 issued after the date hereof
to repay all outstanding Loans under the Credit Agreement in excess of $100,000.
Section 4. Ratification. The Borrower hereby ratifies and
confirms all of the Obligations under the Credit Agreement (as amended hereby)
and the other Loan Documents and the Liens created under the Security Documents.
All references in the Loan Documents to the "Credit Agreement" shall mean the
Credit Agreement as amended hereby and as the same may be amended, supplemented,
restated or otherwise modified and in effect from time to time in the future.
Section 5. Effectiveness. The effectiveness of this Amendment
is subject to the condition precedent that the Agent shall have received this
Amendment executed by the Borrower and each member of the Bank Group in such
number of counterparts as may be reasonably requested by the Agent.
Section 6. Representations and Warranties. The Borrower hereby
represents and warrants to the Bank Group that (a) the execution, delivery and
performance of this Amendment has been duly authorized by all requisite
corporate action on the part of the Borrower, (b) each of the Credit Agreement
(as amended hereby) and the other Loan Documents to which it is a party
constitutes a valid and legally binding agreement enforceable against the
Borrower in accordance with its terms except, as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or other similar laws relating to or affecting the enforcement of
creditors' rights generally and by general principles of equity, (c) the
representations and warranties by the Borrower contained in the Credit Agreement
as amended hereby and in the other Loan Documents are true and correct on and as
of the date hereof in all material respects as though made as of the date
hereof, (d) no Default or Event of Default exists under the Credit Agreement (as
amended hereby) or any of the other Loan Documents.
Section 7. Choice of Law. This Amendment shall be governed by,
and construed in accordance with, the laws of the State of New York.
-2-
Section 8. Final Agreement. THE CREDIT AGREEMENT (AS AMENDED
HEREBY) AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN
THE PARTIES.
Section 9. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original, and all of
which taken together shall constitute one and the same agreement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
-3-
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be executed by its officers thereunto duly authorized as of the
date first above written.
ABRAXAS PETROLEUM CORPORATION
By:/s/ Chris E. Williford
Chris E. Williford
Executive Vice President
BANKERS TRUST COMPANY,
as Agent and Bank
By:/s/ Mary Jo Jolly
Name: Mary Jo Jolly
Title: Assistant Vice President
ING (U.S.) CAPITAL CORPORATION,
as Co-Agent and Bank
By: /s/ Christopher R. Wagner
Name: Christopher R. Wagner
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.,
By: /s/ Carl Stutzman
Name: Carl Stutzman
Title: Vice President
By: /s/ Tony R. Weber
Name: Tony R. Weber
Title:
-4-
The foregoing Second Amendment to Amended and Restated Credit
Agreement is hereby acknowledged and agreed to effective as of this 23rd day of
January, 1998.
CANADIAN ABRAXAS PETROLEUM
LIMITED
By: /s/ Chris E. Williford
Name: Chris E. Williford
Title: Vice President
-5-