EXHIBIT 10.1
[Conformed Copy]
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SANTA FE ENERGY RESOURCES, INC.
ISSUER,
11% Senior Subordinated Debentures Due 2004
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FIRST SUPPLEMENTAL INDENTURE
Dated as of October 21, 1996
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STATE STREET BANK AND TRUST COMPANY,
TRUSTEE
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FIRST SUPPLEMENTAL INDENTURE TO INDENTURE, DATED AS OF MAY 25, 1994,
BETWEEN SANTA FE ENERGY RESOURCES, INC., AS ISSUER, AND THE FIRST NATIONAL BANK
OF BOSTON, AS TRUSTEE AND PREDECESSOR IN INTEREST TO STATE STREET BANK AND TRUST
CO.
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WITNESSETH FIRST SUPPLEMENTAL INDENTURE, dated as of October 21, 1996,
between SANTA FE ENERGY RESOURCES, INC., a Delaware corporation (the "Company"),
and STATE STREET BANK AND TRUST COMPANY, a Massachusetts banking corporation, as
trustee (the "Trustee").
WHEREAS, the Company and The First National Bank of Boston, as trustee,
have heretofore executed an Indenture, dated as of May 25, 1994 (the
"Indenture"), pursuant to which the Company issued $100 million principal amount
of its 11% Senior Subordinated Debentures Due 2004 (the "Securities"); and
WHEREAS, pursuant to Sections 7.09 of the Indenture, the Trustee succeeded
The First National Bank of Boston as trustee on October 2, 1995; and
WHEREAS, Section 9.02 of the Indenture provides, among other things, that
the Company and the Trustee may amend the Indenture in certain respects without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities; and
WHEREAS, the execution and delivery of this First Supplemental Indenture
has been authorized by a resolution of the Board of Directors; and
WHEREAS, the Company has delivered to the Trustee the written consents of
the Holders of at least a majority in principal amount of the outstanding
Securities to the amendments thereinafter set forth; and
WHEREAS, Section 9.06 of the Indenture provides, among other things, that
the Trustee shall sign any amendment authorized pursuant to Article 9 of the
Indenture if the amendment does not adversely affect the rights, duties,
liabilities or immunities of the Trustee; and
WHEREAS, the Company has represented and warranted to the Trustee that
this First Supplemental Indenture does not adversely affect the rights, duties,
liabilities or immunities of the Trustee, and
WHEREAS, pursuant to Section 9.06 of the Indenture, the Trustee has
requested, and the Company has furnished the Trustee with, an Opinion of
Counsel; and
WHEREAS, the Company has represented and warranted to the Trustee that all
conditions and requirements necessary to make this First Supplemental Indenture
a valid, binding and legal instrument in accordance with its terms have been
performed and fulfilled and the execution and delivery hereof have been in all
respects duly authorized;
NOW THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH that, for and
in consideration of the premises and the mutual covenants herein contained and
for other
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valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, each party thereto agrees for the equal and ratable benefit of the
Holders of the Securities;
ARTICLE A.
DEFINITIONS
SECTION A.1 The definitions set forth or incorporated by reference in
Article 1 of the Indenture shall be applicable to this First Supplemental
Indenture, including the recitals hereto, as fully and to the same extent as if
set forth herein, except as otherwise expressly provided herein.
SECTION A.2 Article 1 of the Indenture is hereby amended to add the
following terms and their respective definitions:
"CONTRIBUTION AGREEMENT" means the Conveyance and Contribution Agreement
to be entered into between the Company and Monterey.
"MONTEREY" means Monterey Resources, Inc., a Delaware corporation and a
Subsidiary of the Company.
"MONTEREY IPO" means the initial public offering of up to 19.9% of the
common stock of Monterey.
"MONTEREY SENIOR NOTES" means Monterey's 10.61% Series G Notes due 2005 in
original principal amount of up to $175 million.
"MONTEREY TRANSACTIONS" means (a) the Monterey Transfer, (b) the Monterey
IPO, (c) any Preferred Stock Purchases, (d) the Senior Notes Refinancing, (e)
the Proposed Spinoff and (f) the Company's entering into, borrowings and
repayments under a revolving credit facility to be offered by a group of banks
to the Company and Monterey, (g) conversion of the DECS and the 7% Preferred
Stock into Capital Stock, (h) such other transactions to be effected pursuant to
agreements to be entered into between the Company and Monterey in connection
with clauses (a) through (g) relating to, among other things, corporate
services, taxes, indemnification, contribution of assets, registration rights
and union obligations, and (i) the payment of any fees relating to the matters
in clauses (a) through (h).
"MONTEREY TRANSFER" means the transfer of substantially all of the assets
and operations of the Company's Western Division to Monterey (excluding a
production payment with respect to certain properties in the Midway-Sunset field
to be retained by the Company in an aggregate amount of $30 million), subject to
the liabilities and obligations associated with the Western Division, pursuant
to the Contribution Agreement.
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"PREFERRED STOCK PURCHASES" means any purchases by the Company of its 7%
Preferred Stock pursuant to the Preferred Tender, through open market purchases,
in negotiated transactions or otherwise.
"PREFERRED TENDER" means any purchase by the Company of shares of 7%
Preferred Stock pursuant to an offer to purchase outstanding shares of 7%
Preferred Stock (as the same may be amended, modified or extended from time to
time).
"PROPOSED SPINOFF" means a distribution by the Company to its stockholders
of shares of Capital Stock of Monterey owned by the Company at the time of such
distribution.
"RECALCULATION DATE" means the date immediately following the later to
occur of (i) the date on which the Senior Notes Refinancing is consummated and
(ii) the date on which the Preferred Tender is consummated.
"SENIOR NOTES REFINANCING" means (a) the assumption by Monterey of
obligations of the Company in respect of the Series E Notes, the Series F Notes
and the Series G Notes, (b) the repayment in full by Monterey of the outstanding
principal amount the Series E Notes and the Series F Notes, plus accrued
interest thereon and a prepayment premium of approximately $2.0 million, and (c)
the issuance by Monterey of the Monterey Senior Notes to holders of the Series G
Notes in exchange for cancellation of such notes and the payment by Monterey of
a consent fee of approximately $1.3 million in connection therewith.
"SERIES E NOTES" means the Company's 10.23% Series E Notes due 1997 in an
original principal amount of $35 million.
"SERIES F NOTES" means the Company's 10.27% Series F Notes due 1998 in an
original principal amount of $35 million.
"SERIES G NOTES" means the Company's 10.61% Series G Notes due 2005 in an
original principal amount of $175 million.
SECTION A.3 Article 1 of the Indenture is hereby amended to replace the
existing definition of "Asset Sale" with the following:
"ASSET SALE" means, with respect to any Person, any transfer, conveyance,
sale, lease or other disposition (including, without limitation, dispositions
pursuant to any consolidation or merger, but excluding any Sale and Leaseback
Transaction) by such Person or any of its Restricted Subsidiaries in any single
transaction or series of transactions of (a) shares of Capital Stock or other
ownership interests of another Person (including transfers of outstanding
Capital Stock of, and issuances of Capital Stock by, Restricted Subsidiaries and
Unrestricted Subsidiaries that are owned directly by the Company or a Restricted
Subsidiary) or (b) any other Property of such Person or any of its Restricted
Subsidiaries; PROVIDED, HOWEVER, that the term "Asset Sale" shall not include
(i) the sale
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or transfer of permitted Short-Term Investments, inventory or other Property (or
interests therein) in the ordinary course of business, or the sale or transfer
of oil and gas properties or direct or indirect interests in real property,
PROVIDED that at the time of such sale or transfer such properties and interests
do not have associated with them any proved reserves (whether or not in the
ordinary course of business); (ii) a sale or transfer of hydrocarbons or other
mineral products in the ordinary course of business of the oil and gas
production or marketing operations conducted by the Company and its Restricted
Subsidiaries; (iii) the liquidation of Property received in settlement of debts
owing to the Company or any Restricted Subsidiary as a result of foreclosure,
perfection or enforcement of any Lien or debt, which debts were owing to the
Company or any Restricted Subsidiary in the ordinary course of business of the
Company or such Restricted Subsidiary; (iv) when used with respect to the
Company, (x) any asset disposition permitted pursuant to Section 5.01 which
constitutes a disposition of all or substantially all of the Company's assets,
or (y) any contribution, sale, transfer or other disposition effected in
connection with or contemplated by the Monterey Transactions, or any
contribution, sale, issuance, transfer or other disposition by Monterey or the
Company of any shares of Capital Stock or other ownership interests of Monterey
or any Subsidiary of Monterey, or any Property of Monterey (including the
Proposed Spinoff, and any sale or transfer of outstanding Capital Stock of, and
issuances of Capital Stock by, Monterey or any Subsidiary of Monterey); or (v)
the sale or transfer of any Property or Capital Stock by the Company to a
Restricted Subsidiary or by a Restricted Subsidiary to the Company or by a
Restricted Subsidiary to a Restricted Subsidiary.
ARTICLE B.
EFFECTIVENESS
SECTION B.1 This First Supplemental Indenture shall be and become
effective when the Company and the Trustee execute this First Supplemental
Indenture.
ARTICLE C.
ENDORSEMENT OF SECURITIES
SECTION C.1 Any Securities authenticated and delivered after the close of
business on the date that this First Supplemental Indenture becomes effective in
substitution for Securities then outstanding and all Securities presented or
delivered to the Trustee on after that date for such purpose shall be stamped,
imprinted or otherwise legended by the Trustee, with a notation as follows:
"Effective as of October 21, 1996, certain definitions and
restrictive covenants of the Company have been amended, as provided in the
First Supplemental Indenture, dated as of October 21, 1996. Reference is
hereby made to said First Supplemental Indenture, copies of which are on
file with the Trustee, for a description of the amendments made therein."
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ARTICLE D.
AMENDMENTS
SECTION D.1 Article 4 of the Indenture is hereby amended as follows:
(a) Section 4.04 of the Indenture, captioned "Limitation on Restricted
Payments," is hereby amended to read in its entirety as follows:
4.04 LIMITATION ON RESTRICTED PAYMENTS. The Company will not, and will not
permit any Restricted Subsidiary to, directly or indirectly, (i) declare or pay
any dividend on, or make any distribution on or in respect of, its Capital Stock
or Redeemable Stock (including any such payment (other than payments solely in
its Capital Stock or in options, warrants or other rights to purchase its
Capital Stock) in connection with any merger or consolidation involving the
Company), except dividends or distributions payable solely in its Capital Stock
or in options, warrants or other rights to purchase such Capital Stock and
except dividends or distributions payable solely to the Company or any
Restricted Subsidiary, (ii) purchase, redeem or otherwise acquire for value any
Capital Stock or Redeemable Stock of the Company or any Restricted Subsidiary
held by Persons other than the Company or any Restricted Subsidiary, (iii) make
any principal payment, or redeem, purchase, repurchase, defease or otherwise
acquire or retire for value prior to any scheduled repayment, scheduled sinking
fund payment or other scheduled maturity, any Indebtedness that is subordinated
in right of payment to the Securities or (iv) make any Investment in any Person
(any such dividend, distribution, purchase, redemption, repurchase, defeasance,
other acquisition, retirement or investment being herein referred to as a
"Restricted Payment"), unless at the time of and after giving effect to the
proposed Restricted Payment (a) no Default or Event of Default shall have
occurred and be continuing under this Indenture, (b) the Company could Incur at
least $1.00 of additional Indebtedness under clause (a) of the definition of
"Permitted Indebtedness" in Section 4.03 and (c) the aggregate amount of such
Restricted Payment and all other Restricted Payments (the amount so expended, if
other than in cash, to be determined in good faith by the Board of Directors of
the Company, whose determination shall be evidenced by a resolution of such
Board) declared or made since the Recalculation Date, would not exceed, without
duplication, the sum of (1) 50% of the Consolidated Adjusted Net Income accrued
during the period (treated as one accounting period) from the quarter end on or
before the Recalculation Date to the end of the Company's most recent fiscal
quarter immediately preceding such proposed Restricted Payment (or, if such
Consolidated Adjusted Net income shall be a deficit, minus 50% of such deficit),
(2) the aggregate net proceeds, including cash and the Fair Market Value of
Property other than cash, received by the Company from the issue or sale of its
Capital Stock (including pursuant to the exercise of options or warrants or the
making of any equity contribution by stockholders of the Company subsequent to
the Recalculation Date (other than an issuance or sale to a Subsidiary of the
Company or any employee stock ownership plan or other trust established by the
Company or any of its Subsidiaries), (3) the amount by which the Indebtedness of
the Company or any Restricted Subsidiary is reduced on the Company's balance
sheet upon the conversion or exchange (other than by a Subsidiary of the
Company), subsequent to the Recalculation Date of any Indebtedness or Redeemable
Stock of the Company or any Restricted
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Subsidiary into or for Capital Stock of the Company (less the amount of any cash
(other than cash distributed in payment of interest on such Indebtedness accrued
and unpaid to the date of such conversion or exchange) or other property
distributed by the Company or any Restricted Subsidiary upon such conversion or
exchange) and (4) $50 million.
Any payments made pursuant to clauses (a) through (f) of the definition of
"Permitted Investment" shall be excluded for purposes of any calculation of the
aggregate amount of Restricted Payments. Any payments made pursuant to clauses
(g), (h) and (i) of the definition of "Permitted Investment" shall be included
for purposes of any calculation of the aggregate amount of Restricted Payments.
The foregoing limitations will not prevent the Company or any Restricted
Subsidiary from (a) paying a dividend on its Capital Stock within 60 days after
declaration thereof if, on the declaration date, such dividend could have been
paid in compliance with this Indenture or (b) making Permitted Investments, so
long as no Default or Event of Default shall have occurred and be continuing.
Furthermore, notwithstanding anything to the contrary in this Indenture, no
payment under any of the Monterey Transactions shall constitute a Restricted
Payment except any payment of greater than $100 million with respect to the
Preferred Stock Purchases.
(b) Section 4.07 of the Indenture, captioned "Transactions with
Affiliates," is hereby amended to read in its entirety as follows:
SECTION 4.07 TRANSACTIONS WITH AFFILIATES. (a) The Company will not, and
will not permit any of its Restricted Subsidiaries to, directly or indirectly,
conduct any business or enter into any transaction or series of transactions
(including, but not limited to, the sale, transfer, disposition, purchase,
exchange or lease of Property, the making of any Investment, the giving of any
Guarantee or the rendering of any service) with or for the benefit of any
Affiliate of the Company, unless (i) an Officer will have determined, in his
good faith judgment, that such transaction or series of transactions is in the
best interest of the Company or such Restricted Subsidiary, and on terms no less
favorable to the Company or such Restricted Subsidiary than those that could be
obtained in a comparable arm's-length transaction with a Person that is not an
Affiliate of the Company, and the Company delivers an Officers' Certificate to
the Trustee to that effect, (ii) with respect to a transaction or series of
transactions involving aggregate payments by the Company or such Restricted
Subsidiary having a Fair Market Value equal to or in excess of $10 million, the
Board of Directors of the Company (including a majority of the disinterested
Directors) approves such transaction or series of transactions and determines,
in its good faith judgment, that such transaction or series of transactions
complies with the standards set forth in clause (i) of this paragraph, and the
Company delivers a certified resolution to the Trustee to that effect and (iii)
with respect to a transaction or series of transactions involving aggregate
payments by the Company or such Restricted Subsidiary having a Fair Market Value
equal to or in excess of $25 million, the Company receives the written opinion
of a nationally recognized investment banking firm or other nationally
recognized expert having sufficient expertise to the effect that such
transaction (or series of transactions) is fair to the Company from a financial
point of view, which opinion shall be delivered
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promptly to the Trustee. With respect to any capital contribution to, or
transaction with, a Subsidiary, the requirement that a transaction be on "terms
no less favorable to the Company or such Restricted Subsidiary than those that
could be obtained in a comparable arm's length transaction with a Person that is
not an Affiliate of the Company" shall be satisfied if such transaction is fair,
from a financial point of view, to the Company.
(b) The limitations of paragraph (a) of this Section 4.7 shall not apply
to (i) transactions with Affiliates in accordance with the terms of agreements
as in effect on the date of this Indenture (and not otherwise in violation of
this Indenture); PROVIDED that any renewal or modification of the terms of any
such agreement after the date of this Indenture shall comply with paragraph (a)
of this Section 4.7, (ii) transactions with Restricted Subsidiaries, or (iii)
transactions effected in connection with or contemplated by the Monterey
Transactions. The requirements of clause (iii) of paragraph (a) of this Section
4.7 shall not apply (i) to a transaction that constitutes a Permitted Business
Investment if none of the parties to such transaction (other than the Company,
the Restricted Subsidiary (if any) making such Permitted Business Investment,
other Restricted Subsidiaries of the Company and the entity (if any) receiving
such Permitted Business Investment) (x) are Affiliates of the Company or (y)
were during the preceding 12 months, or are expected during the following 12
months to be, associated with more than 10% of the net oil and gas production of
the Company and its Subsidiaries (whether by reason of purchases of oil and gas
or any kind of shared or cooperative production agreements) or (ii) to
additional sales of or commitments to sell to Hadson Corporation natural gas on
terms no less favorable to the Company than those obtained as of the date of
this Indenture pursuant to the Gas Marketing Agreement, dated as of December 14,
1993, among the Company, Santa Fe Energy Operating Partners, L.P. and Adobe Gas
Pipeline Company.
SECTION D.2 Article 11 of the Indenture is hereby amended as follows:
(a) Section 11.15, captioned "Approval of Monterey Transactions," is
hereby added to read as follows:
SECTION 11.15. APPROVAL OF MONTEREY TRANSACTIONS. Notwithstanding anything
to the contrary in this Indenture, none of the transactions effected in
connection with or contemplated by the Monterey Transactions shall constitute or
be deemed to constitute a breach or violation of the terms of this Indenture, or
require that any action be taken under Section 4.08, or cause a Default or Event
of Default hereunder.
ARTICLE E.
MISCELLANEOUS
SECTION E.1 This First Supplemental Indenture is a supplemental indenture
pursuant to Section 9.02 of the Indenture. Upon execution and delivery of this
First Supplemental Indenture, the terms and conditions of this First
Supplemental Indenture shall be part of the terms and conditions of the
Indenture for any and all purposes, shall bind all Securityholders and all the
terms
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and conditions of both shall be read together as though they constitute one
instrument, except that in case of conflict the provisions of this First
Supplemental Indenture will control.
SECTION E.2 Except as they may have been amended and supplemented by this
First Supplemental Indenture, each and every term and provision of the Indenture
remains in full force and effect.
SECTION E.3 This First Supplemental Indenture may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION E.4 The Trustee accepts the trusts created by the Indenture, as
supplemented by this First Supplemental Indenture, and agrees to perform the
same upon the terms and conditions in the Indenture, as supplemented by this
First Supplemental Indenture.
SECTION E.5 THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
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IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, all as of the date and year first above written.
SANTA FE ENERGY RESOURCES, INC.
By: /s/ R. GRAHAM WHALING
Name: R. Graham Whaling
Title: Senior Vice President and Chief
Financial Officer
STATE STREET BANK AND TRUST COMPANY,
as trustee
By: /s/ JILL OLSON
Name: Jill Olson
Title: Assistant Vice President
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