EXHIBIT 4(a)
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DENBURY RESOURCES INC.,
Issuer
7 1/2% Senior Subordinated Notes Due 2013
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INDENTURE
Dated as of March 25, 2003
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JPMORGAN CHASE BANK,
Trustee
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2
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) .................................................... 7.10
(b) .................................................... 7.08; 7.10
(c) .................................................... N.A.
311(a) .................................................... 7.11
(b) .................................................... 7.11
(c) .................................................... N.A.
312(a) .................................................... 2.05
(b) .................................................... 13.03
(c) .................................................... 13.03
313(a) .................................................... 7.06
(b)(1) .................................................... 7.06
(b)(2) .................................................... 7.06
(c) .................................................... 13.02
(d) .................................................... 7.06
314(a) .................................................... 4.02; 4.11;
13.02
(b) .................................................... N.A.
(c)(1) .................................................... 2.02; 13.04
(c)(2) .................................................... 2.02; 13.04
(c)(3) .................................................... N.A.
(d) .................................................... N.A.
(e) .................................................... 13.05
(f) .................................................... N.A.
315(a) .................................................... 7.01
(b) .................................................... 7.05; 13.02
(c) .................................................... 7.01
(d) .................................................... 7.01
(e) .................................................... 6.11
316(a)(last sentence) .................................................... 13.06
(a)(1)(A) .................................................... 6.05
(a)(1)(B) .................................................... 6.04
(a)(2) .................................................... N.A.
(b) .................................................... 6.07
(c) .................................................... N.A.
317(a)(1) .................................................... 6.08
(a)(2) .................................................... 6.09
(b) .................................................... 2.04
318(a) .................................................... 13.01
(b) .................................................... N.A.
(c) .................................................... N.A.
N.A. means Not Applicable.
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Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be part of the Indenture.
TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions......................................................... 1
SECTION 1.02. Other Definitions................................................... 33
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act.................................................... 33
SECTION 1.04. Rules of Construction............................................... 34
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating..................................................... 35
SECTION 2.02. Execution and Authentication........................................ 35
SECTION 2.03. Registrar and Paying Agent.......................................... 36
SECTION 2.04. Paying Agent To Hold Money in Trust................................. 36
SECTION 2.05. Securityholder Lists................................................ 37
SECTION 2.06. Transfer and Exchange............................................... 37
SECTION 2.07. Replacement Securities.............................................. 37
SECTION 2.08. Outstanding Securities.............................................. 38
SECTION 2.09. Temporary Securities................................................ 38
SECTION 2.10. Cancelation......................................................... 38
SECTION 2.11. Defaulted Interest.................................................. 39
SECTION 2.12. CUSIP Numbers....................................................... 39
SECTION 2.13. Issuance of Additional Securities................................... 39
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee.................................................. 40
SECTION 3.02. Selection of Securities To Be
Redeemed......................................................... 40
SECTION 3.03. Notice of Redemption................................................ 41
SECTION 3.04. Effect of Notice of Redemption...................................... 41
SECTION 3.05. Deposit of Redemption Price......................................... 42
SECTION 3.06. Securities Redeemed in Part......................................... 42
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities............................................... 42
SECTION 4.02. SEC Reports......................................................... 42
SECTION 4.03. Limitation on Indebtedness.......................................... 43
SECTION 4.04. Incurrence of Layered Indebtedness.................................. 46
SECTION 4.05. Limitation on Restricted Payments................................... 46
SECTION 4.06. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries..................................................... 48
SECTION 4.07. Limitation on Sales of Assets and
Subsidiary Stock................................................. 49
SECTION 4.08. Limitation on Affiliate Transactions................................ 52
SECTION 4.09. Change of Control................................................... 54
SECTION 4.10. Limitation on Liens................................................. 55
SECTION 4.11. Compliance Certificate.............................................. 55
SECTION 4.12. Further Instruments and Acts........................................ 56
SECTION 4.13. Future Subsidiary Guarantors........................................ 56
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets........................................................... 56
SECTION 5.02. When Subsidiary Guarantors May Merge or
Transfer Assets.................................................. 57
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default................................................... 58
SECTION 6.02. Acceleration........................................................ 61
SECTION 6.03. Other Remedies...................................................... 61
SECTION 6.04. Waiver of Past Defaults............................................. 62
SECTION 6.05. Control by Majority................................................. 62
SECTION 6.06. Limitation on Suits................................................. 62
SECTION 6.07. Rights of Holders To Receive
Payment.......................................................... 63
SECTION 6.08. Collection Suit by Trustee.......................................... 63
SECTION 6.09. Trustee May File Proofs of Claim.................................... 63
SECTION 6.10. Priorities.......................................................... 63
SECTION 6.11. Undertaking for Costs............................................... 64
SECTION 6.12. Waiver of Stay or Extension Laws.................................... 64
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee................................................... 65
SECTION 7.02. Rights of Trustee................................................... 66
SECTION 7.03. Individual Rights of Trustee........................................ 67
SECTION 7.04. Trustee's Disclaimer................................................ 67
SECTION 7.05. Notice of Defaults.................................................. 67
SECTION 7.06. Reports by Trustee to Holders....................................... 67
SECTION 7.07. Compensation and Indemnity.......................................... 68
SECTION 7.08. Replacement of Trustee.............................................. 69
SECTION 7.09. Successor Trustee by Merger......................................... 70
SECTION 7.10. Eligibility; Disqualification....................................... 70
SECTION 7.11. Preferential Collection of Claims
Against Company.................................................. 70
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance....................................................... 71
SECTION 8.02. Conditions to Defeasance............................................ 72
SECTION 8.03. Application of Trust Money.......................................... 73
SECTION 8.04. Repayment to Company................................................ 73
SECTION 8.05. Indemnity for Government
Obligations...................................................... 74
SECTION 8.06. Reinstatement....................................................... 74
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders.......................................... 74
SECTION 9.02. With Consent of Holders............................................. 75
SECTION 9.03. Compliance with Trust Indenture Act................................. 77
SECTION 9.04. Revocation and Effect of Consents
and Waivers...................................................... 77
SECTION 9.05. Notation on or Exchange of
Securities....................................................... 77
SECTION 9.06. Trustee To Sign Amendments.......................................... 77
SECTION 9.07. Payment for Consent................................................. 78
ARTICLE 10
Subordination of the Securities
SECTION 10.01. Agreement To Subordinate............................................ 78
SECTION 10.02. Liquidation, Dissolution,
Bankruptcy....................................................... 78
SECTION 10.03. Default on Designated Senior
Indebtedness..................................................... 79
SECTION 10.04. Acceleration of Payment of
Securities....................................................... 80
SECTION 10.05. When Distribution Must Be Paid Over................................. 80
SECTION 10.06. Subrogation......................................................... 80
SECTION 10.07. Relative Rights..................................................... 81
SECTION 10.08. Subordination May Not Be Impaired by
Company.......................................................... 81
SECTION 10.09. Rights of Trustee and Paying Agent.................................. 81
SECTION 10.10. Distribution or Notice to
Representative................................................... 82
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To
Accelerate....................................................... 82
SECTION 10.12. Trust Moneys Not Subordinated....................................... 82
SECTION 10.13. Trustee Entitled To Rely............................................ 82
SECTION 10.14. Trustee To Effectuate Subordination................................. 83
SECTION 10.15. Trustee Not Fiduciary for Holders
of Senior Indebtedness of the
Company.......................................................... 83
SECTION 10.16. Reliance by Holders of Senior
Indebtedness of the Company on
Subordination Provisions......................................... 83
ARTICLE 11
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees............................................... 84
SECTION 11.02. Limitation on Liability............................................. 86
SECTION 11.03. Successors and Assigns.............................................. 86
SECTION 11.04. No Waiver........................................................... 87
SECTION 11.05. Modification........................................................ 87
SECTION 11.06. Release of Subsidiary Guarantor..................................... 87
ARTICLE 12
Subordination of Subsidiary Guarantees
SECTION 12.01. Agreement To Subordinate............................................ 87
SECTION 12.02. Liquidation, Dissolution,
Bankruptcy....................................................... 88
SECTION 12.03. Default on Designated Senior
Indebtedness of Subsidiary Guarantor............................. 88
SECTION 12.04. Demand for Payment.................................................. 90
SECTION 12.05. When Distribution Must Be Paid Over................................. 90
SECTION 12.06. Subrogation......................................................... 90
SECTION 12.07. Relative Rights..................................................... 90
SECTION 12.08. Subordination May Not Be Impaired
by Subsidiary Guarantor.......................................... 91
SECTION 12.09. Rights of Trustee and Paying Agent.................................. 91
SECTION 12.10. Distribution or Notice to
Representative................................................... 91
SECTION 12.11. Article 12 Not To Prevent Defaults
Under the Subsidiary Guarantee or Limit
Rights to Demand Payment......................................... 91
SECTION 12.12. Trustee Entitled To Rely............................................ 92
SECTION 12.13. Trustee To Effectuate Subordination................................. 92
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of Subsidiary
Guarantor........................................................ 93
SECTION 12.15. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions....................................................... 93
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls........................................ 93
SECTION 13.02. Notices............................................................. 93
SECTION 13.03. Communication by Holders with Other
Holders.......................................................... 94
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent............................................. 94
SECTION 13.05. Statements Required in Certificate
or Opinion....................................................... 95
SECTION 13.06. When Securities Disregarded......................................... 95
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar........................................................ 95
SECTION 13.08. Legal Holidays...................................................... 96
SECTION 13.09. Governing Law....................................................... 96
SECTION 13.10. No Recourse Against Others.......................................... 96
SECTION 13.11. Successors.......................................................... 96
SECTION 13.12. Multiple Originals.................................................. 96
SECTION 13.13. Table of Contents; Headings......................................... 96
SECTION 13.14. Severability........................................................ 97
Exhibit 1 Form of Supplemental Indenture
Rule 144A/Regulation S Appendix
Exhibit 1 - Form of Initial Security
Exhibit A - Form of Exchange Security or Private Exchange
Security
INDENTURE dated as of March 25, 2003, among
DENBURY RESOURCES INC., a Delaware corporation (the
"Company"), certain of the Company's subsidiaries
signatory hereto (each, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors") and
JPMORGAN CHASE BANK (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
Initial Securities, Exchange Securities and Private Exchange Securities
(collectively, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
Section 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in the Oil and Gas Business; (ii) the
Capital Stock of a Person that becomes a Restricted Subsidiary as a result of
the acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that any
such Restricted Subsidiary described in clauses (ii) or (iii) above is primarily
engaged in the Oil and Gas Business.
"Additional Securities" means, subject to the Company's
compliance with Section 4.03, 7 1/2% Senior Subordinated Notes Due 2013 issued
from time to time after the Issue Date under the terms of this Indenture (other
than pursuant to Section 2.06, 2.07, 2.09, 3.06 or 9.05 of this Indenture and
other than Exchange Securities or Private Exchange Securities issued pursuant to
an exchange offer for other Securities outstanding under this Indenture)
"Adjusted Consolidated Net Tangible Assets" or "ACNTA" means
(without duplication), as of the date of determination, (a) the sum of (i) the
discounted future net revenue from proved crude oil and natural gas reserves of
the Company and its Restricted Subsidiaries calculated in accordance with SEC
guidelines before any state or federal income taxes, as estimated
2
in a reserve report prepared as of the end of the Company's most recently
completed fiscal year, which reserve report is prepared or reviewed by
independent petroleum engineers, as increased by, as of the date of
determination, the discounted future net revenue of (A) estimated proved crude
oil and natural gas reserves of the Company and its Restricted Subsidiaries
attributable to acquisitions consummated since the date of such year-end reserve
report, and (B) estimated crude oil and natural gas reserves of the Company and
its Restricted Subsidiaries attributable to extensions, discoveries and other
additions and upward determinations of estimates of proved crude oil and natural
gas reserves (including previously estimated development costs incurred during
the period and the accretion of discount since the prior year end) due to
exploration, development or exploitation, production or other activities which
reserves were not reflected in such year-end reserve report which would, in the
case of determinations made pursuant to clauses (A) and (B), in accordance with
standard industry practice, result in such determinations, in each case
calculated in accordance with SEC guidelines (utilizing the prices utilized in
such year-end reserve report), and decreased by, as of the date of
determination, the discounted future net revenue attributable to (C) estimated
proved oil and gas reserves of the Company and its Restricted Subsidiaries
reflected in such year-end reserve report produced or disposed of since the date
of such year-end reserve report and (D) reductions in the estimated crude oil
and natural gas reserves of the Company and its Restricted Subsidiaries
reflected in such year-end reserve report since the date of such year-end
reserve report attributable to downward determinations of estimates of proved
crude oil and natural gas reserves due to exploration, development or
exploitation, production or other activities conducted or otherwise occurring
since the date of such year-end reserve report which would, in the case of
determinations made pursuant to clauses (C) and (D), in accordance with standard
industry practice, result in such determinations, in each case calculated in
accordance with SEC 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 engineers, except that if as a
result of such acquisitions, dispositions, discoveries, extensions or revisions,
there is a Material Change which is an increase, then such increases and
decreases in the discounted future net revenue shall be confirmed in writing by
an independent petroleum engineer, (ii) the capitalized costs that are
attributable to crude oil and natural gas properties of the Company and its
Restricted Subsidiaries to which no proved crude oil and natural gas reserves
are
3
attributed, 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,
(iii) the Net Working Capital on a date no earlier than the date of the
Company's latest annual or quarterly financial statements and (iv) the greater
of (I) the net book value on a date no earlier than the date of the Company's
latest annual or quarterly financial statements and (II) the appraised value, as
estimated by independent appraisers, of 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 (provided that the Company shall
not be required to obtain such an appraisal of such assets if no such appraisal
has been performed), minus (b) to the extent not otherwise taken into account in
the immediately preceding clause (a), the sum of (i) minority interests, (ii)
any natural gas balancing liabilities of the Company and its Restricted
Subsidiaries reflected in the Company's latest audited financial statements,
(iii) the discounted future net revenue, calculated in accordance with SEC
guidelines (utilizing the same prices utilized in the Company's year-end reserve
report), attributable to reserves subject to participation interests, overriding
royalty interests or other interests of third parties, pursuant to
participation, partnership, vendor financing or other agreements then in effect,
or which otherwise are required to be delivered to third parties, (iv) the
discounted future net revenue, calculated in accordance with SEC guidelines
(utilizing the same prices utilized in the Company's year-end reserve report),
attributable to reserves that are required to be delivered to third parties to
fully satisfy the obligations of the Company and its Restricted Subsidiaries
with respect to Volumetric Production Payments on the schedules specified with
respect thereto and (v) the discounted future net revenue, calculated in
accordance with SEC guidelines, attributable to reserves subject to
Dollar-Denominated Production Payments that, based on the estimates of
production included in determining the discounted future net revenue specified
in the immediately preceding clause (a)(i) (utilizing the same prices utilized
in the Company's year-end reserve report), would be necessary to satisfy fully
the obligations of the Company and its Restricted Subsidiaries with respect to
Dollar-Denominated Production Payments on the schedules specified with respect
thereto.
"Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly,
4
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. For purposes of Sections 4.05, 4.07 and 4.08 only, "Affiliate" shall
also mean any beneficial owner of Capital Stock representing 10% or more of the
total voting power of the Voting Stock (on a fully diluted basis) of the Company
or of rights or warrants to purchase such Capital Stock (whether or not
currently exercisable) and any Person who would be an Affiliate of any such
beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (ii) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary or
(iii) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted Subsidiary.
Notwithstanding the foregoing, none of the following shall be deemed to be an
Asset Disposition: (1) a disposition by a Restricted Subsidiary to the Company
or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (2)
for purposes of Section 4.07 only, a disposition that constitutes a Restricted
Payment permitted by Section 4.05, a disposition of all or substantially all the
assets of the Company in compliance with Section 5.01 or a disposition that
constitutes a Change of Control pursuant to clause (iii) of the definition
thereof, (3) the sale or transfer (whether or not in the ordinary course of
business) of crude oil and natural gas properties or direct or indirect
interests in real property; provided, however, that at the time of such sale or
transfer such properties do not have associated with them any proved reserves,
(4) the abandonment, farm-out, lease or sublease of developed or undeveloped
crude oil and natural gas properties in the ordinary course of business, (5) the
trade or exchange by the Company or any Restricted Subsidiary of any crude oil
and natural gas property owned or held by the Company or such Restricted
Subsidiary for any crude oil and natural gas property owned or held by another
Person or (6) the sale or transfer of hydrocarbons or other mineral products or
surplus or obsolete equipment, in each case in the ordinary course of business.
5
"Attributable Debt" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate implicit in the Sale/Leaseback Transaction, compounded annually)
of the total obligations of the lessee for rental payments during the remaining
term of the lease included in such Sale/Leaseback Transaction (including any
period for which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is
required to be classified and accounted for as a capital lease for financial
reporting purposes in accordance with GAAP, and the amount of Indebtedness
represented by such obligation shall be the capitalized amount of such
obligation determined in accordance with GAAP; and the Stated Maturity thereof
shall be the date of the last payment of rent or any other amount due under such
lease prior to the first date upon which such lease may be terminated by the
lessee without payment of a penalty.
"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible
into such equity.
6
"Change of Control" means the occurrence of any of the
following events:
(i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than a Permitted Holder, is or
becomes the beneficial owner (as defined in Rules 13d-3 and 13d-5 under
the Exchange Act, except that for purposes of this clause (i) such
person shall be deemed to have "beneficial ownership" of all shares
that such person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time), directly or
indirectly, of more than 40% of the total voting power of the Voting
Stock of the Company (for the purposes of this clause (i), such person
shall be deemed to beneficially own any Voting Stock of a specified
corporation held by a parent corporation, if such person is the
beneficial owner (as defined in this clause (i)), directly or
indirectly, of more than 40% of the voting power of the Voting Stock of
such parent corporation);
(ii) during any period of two consecutive years from and
after the Issue Date, individuals who at the beginning of such period
constituted the Board of Directors of the Company (together with any
new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved
by a vote of a majority of the directors of the Company then still in
office who were either directors at the beginning of such period or
whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the Board of Directors
then in office;
(iii) the shareholders of the Company shall have approved
any plan of liquidation or dissolution of the Company; or
(iv) the merger or consolidation of the Company with or into
another Person or the merger of another Person with or into the
Company, or the sale, lease, conveyance or transfer of all or
substantially all the assets of the Company and its Restricted
Subsidiaries, taken as a whole, to another Person (other than a Person
that is controlled (as defined in the definition of "Affiliate") by the
Permitted Holders), and, in the case of any such merger or
consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and which represent 100% of the
aggregate voting power of the Voting Stock of the Company are changed
into or exchanged for cash, securities or property, unless pursuant to
such transaction such
7
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the
aggregate voting power of the Voting Stock of the surviving
corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in the preamble to
this Indenture until a successor replaces it and, thereafter, means the
successor and, for purposes of any provision contained herein and required by
the TIA, each other obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the discharge
of any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if the Company or any Restricted Subsidiary
has repaid, repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged on the date of the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and
Consolidated Interest Expense for such period shall be calculated on a pro forma
basis as if such discharge had occurred on the first day of such period and as
if the Company or such Restricted Subsidiary had not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness, (3) if since the beginning of such period the Company or any
Restricted Subsidiary shall have made any Asset Disposition (other than an Asset
Disposition involving assets having a fair market value of less than the greater
of two and one-half percent (2.5%) of
8
Adjusted Consolidated Net Tangible Assets as of the end of the Company's then
most recently completed fiscal year and $3.0 million), then EBITDA for such
period shall be reduced by an amount equal to EBITDA (if positive) directly
attributable to the assets which are the subject of such Asset Disposition for
such period, or increased by an amount equal to EBITDA (if negative) directly
attributable thereto for such period and Consolidated Interest Expense for such
period shall be reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of the Company or any Restricted
Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to
the Company and its continuing Restricted Subsidiaries in connection with such
Asset Disposition for such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such period directly
attributable to the Indebtedness of such Restricted Subsidiary to the extent the
Company and its continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale), (4) if since the beginning of such period the
Company or any Restricted Subsidiary (by merger or otherwise) shall have made an
Investment in any Restricted Subsidiary (or any Person which becomes a
Restricted Subsidiary) or an acquisition (including by way of lease) of assets,
including any acquisition of assets occurring in connection with a transaction
requiring a calculation to be made hereunder, EBITDA and Consolidated Interest
Expense for such period shall be calculated after giving pro forma effect
thereto (including the Incurrence of any Indebtedness) as if such Investment or
acquisition occurred on the first day of such period and (5) if since the
beginning of such period any Person (that subsequently became a Restricted
Subsidiary or was merged with or into the Company or any Restricted Subsidiary
since the beginning of such period) shall have made any Asset Disposition, any
Investment or acquisition of assets that would have required an adjustment
pursuant to clause (3) or (4) above if made by the Company or a Restricted
Subsidiary during such period, EBITDA and Consolidated Interest Expense for such
period shall be calculated after giving pro forma effect thereto as if such
Asset Disposition, Investment or acquisition occurred on the first day of such
period. For purposes of this definition, whenever pro forma effect is to be
given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Interest Expense associated with any
Indebtedness Incurred in connection therewith, the pro forma calculations shall
be determined in good faith by a responsible financial or accounting Officer of
the Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebtedness shall be calculated as
if the rate in effect on the
9
date of determination had been the applicable rate for the entire period (taking
into account any Interest Rate Agreement applicable to such Indebtedness if such
Interest Rate Agreement has a remaining term in excess of 12 months).
"Consolidated Current Liabilities" as of the date of
determination means the aggregate amount of liabilities of the Company and its
consolidated Restricted Subsidiaries which would properly be classified as
current liabilities (including taxes accrued as estimated) on a consolidated
balance sheet of the Company and its Restricted Subsidiaries at such date, after
eliminating (i) all intercompany items between the Company and any Restricted
Subsidiary and (ii) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its Restricted Subsidiaries for such
period, determined on a consolidated basis in accordance with GAAP, plus, to the
extent not included in such total interest expense, and to the extent incurred
by the Company or its Restricted Subsidiaries, without duplication, (i) interest
expense attributable to Capital Lease Obligations and imputed interest with
respect to Attributable Debt, (ii) capitalized interest, (iii) non-cash interest
expense, (iv) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, (v) net costs
(including amortization of fees and up-front payments) associated with interest
rate caps and other interest rate and currency options that, at the time entered
into, resulted in the Company and its Restricted Subsidiaries being net payees
as to future payouts under such caps or options, and interest rate and currency
swaps and forwards for which the Company or any of its Restricted Subsidiaries
has paid a premium, (vi) dividends (excluding dividends paid in shares of
Capital Stock which is not Disqualified Stock) in respect of all Disqualified
Stock held by Persons other than the Company or a Wholly Owned Subsidiary, (vii)
interest accruing on any Indebtedness of any other Person to the extent such
Indebtedness is Guaranteed by the Company or any Restricted Subsidiary or
secured by a Lien on assets of the Company or any Restricted Subsidiary to the
extent such Indebtedness constitutes Indebtedness of the Company or any
Restricted Subsidiary (whether or not such Guarantee or Lien is called upon);
provided, however, "Consolidated Interest Expense" shall not include any (x)
amortization of costs relating to original debt issuances other than the
amortization of debt discount related to the issuance of zero coupon securities
or other securities with an original issue price of not more than
10
90% of the principal thereof, (y) Consolidated Interest Expense with respect to
any Indebtedness Incurred pursuant to Section 4.03(b)(8) and (z) noncash
interest expense Incurred in connection with interest rate caps and other
interest rate and currency options that, at the time entered into, resulted in
the Company and its Restricted Subsidiaries being either neutral or net payors
as to future payouts under such caps or options.
"Consolidated Net Income" means, for any period, the net
income of the Company and its Subsidiaries determined on a consolidated basis in
accordance with GAAP; provided, however, that there shall not be included in
such Consolidated Net Income: (i) any net income of any Person (other than the
Company) if such Person is not a Restricted Subsidiary, except that (A) subject
to the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income; (ii) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income of any Restricted Subsidiary
(other than a Subsidiary Guarantor) if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the exclusion contained in clause (iv)
below, the Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or other distribution
paid to another Restricted Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included in determining such Consolidated
Net Income; (iv) any gain or loss realized upon the sale or other disposition of
any assets of the Company or its Subsidiaries (including pursuant to any
sale-and-leaseback arrangement) which is not sold or otherwise disposed of in
the ordinary course of business and any gain or loss realized upon the sale or
other disposition of any Capital Stock of any Person;
11
(v) extraordinary gains or losses; (vi) any non-cash compensation expense
realized for grants of performance shares, stock options or stock awards to
officers, directors and employees of the Company or any of its Restricted
Subsidiaries; (vii) any write-downs of non-current assets; provided, however,
that any ceiling limitation write-downs under SEC guidelines shall be treated as
capitalized costs, as if such write-downs had not occurred; and (viii) the
cumulative effect of a change in accounting principles. Notwithstanding the
foregoing, for the purposes of Section 4.05 only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under Section
4.05(a)(3)(E).
"Consolidated Net Tangible Assets", as of any date of
determination, means the total amount of assets (less accumulated depreciation
and amortization, allowances for doubtful receivables, other applicable reserves
and other properly deductible items) which would appear on a balance sheet of
the Company and its Restricted Subsidiaries, determined on a consolidated basis
in accordance with GAAP, and after giving effect to purchase accounting and
after deducting therefrom Consolidated Current Liabilities and, to the extent
otherwise included, the amounts of: (i) minority interests in Restricted
Subsidiaries held by Persons other than the Company or a Restricted Subsidiary;
(ii) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors; (iii) any revaluation or
other write-up in book value of assets subsequent to the Issue Date as a result
of a change in the method of valuation in accordance with GAAP consistently
applied; (iv) unamortized debt discount and expenses and other unamortized
deferred charges, goodwill, patents, trademarks, service marks, trade names,
copyrights, licenses, organization or developmental expenses and other
intangible items; (v) treasury stock; (vi) cash set apart and held in a sinking
or other analogous fund established for the purpose of redemption or other
retirement of Capital Stock to the extent such obligation is not reflected in
Consolidated Current Liabilities; and (vii) Investments in and assets of
Unrestricted Subsidiaries.
"Consolidated Net Worth" means the total of the amounts shown
on the balance sheet of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP, as of the end of the most recent
fiscal quarter of the Company ending
12
at least 45 days prior to the taking of any action for the purpose of which the
determination is being made, as (i) the par or stated value of all outstanding
Capital Stock of the Company plus (ii) paid-in capital or capital surplus
relating to such Capital Stock plus (iii) any retained earnings or earned
surplus less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"Credit Agreement" means that certain Third Amended and
Restated Credit Agreement, dated September 12, 2002, as amended, by and among
the Company and Bank One, N.A. (or any successor thereto or replacement
thereof), as administrative agent and as a lender, and certain other
institutions, as lenders, including any related notes, guarantees, collateral
documents, instruments and agreements executed in connection therewith, and in
each case as amended, restated, modified, renewed, refunded, replaced,
refinanced or increased in whole or in part, from time to time.
"Credit Facilities" means, with respect to the Company or any
Restricted Subsidiary, one or more debt facilities (including the Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, production payments,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Currency Agreement" means in respect of a Person any foreign
exchange contract, currency swap agreement or other similar agreement to which
such Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"Designated Senior Indebtedness" in respect of a Person means
(i) all the obligations of such Person under any Credit Facility (including the
Credit Agreement) and (ii) any other Senior Indebtedness of such Person which,
at the date of determination, has an aggregate principal amount outstanding of,
or under which, at the date of determination, the holders thereof are committed
to lend up to, at least $20 million and is specifically designated by such
Person in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture.
13
"Disqualified Stock" means, with respect any Person, any
Capital Stock that by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event, (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable, in whole or in part, at the option of
the holder thereof, in each case described in the immediately preceding clauses
(i), (ii) or (iii), on or prior to the Stated Maturity of the Securities;
provided, however, that any Capital Stock that would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to require
such Person to purchase or redeem such Capital Stock upon the occurrence of an
"asset sale" or "change of control" occurring prior to the Stated Maturity of
the Securities shall not constitute Disqualified Stock if (x) the "asset sale"
or "change of control" provisions applicable to such Capital Stock are not more
favorable to the holders of such Capital Stock than the provisions of Sections
4.07 and 4.09 and (y) any such requirement only becomes operative after
compliance with such corresponding terms applicable to the Securities, including
the purchase of any Securities tendered pursuant thereto. The amount of any
Disqualified Stock that does not have a fixed redemption, repayment or
repurchase price will be calculated in accordance with the terms of such
Disqualified Stock as if such Disqualified Stock were redeemed, repaid or
repurchased on any date on which the amount of such Disqualified Stock is to be
determined pursuant to the Indenture; provided, however, that if such
Disqualified Stock could not be required to be redeemed, repaid or repurchased
at the time of such determination, the redemption, repayment or repurchase price
will be the book value of such Disqualified Stock as reflected in the most
recent financial statements of such Person.
"Dollar-Denominated Production Payments" means production
payment obligations recorded as liabilities in accordance with GAAP, together
with all undertakings and obligations in connection therewith.
"EBITDA" for any period means the sum of Consolidated Net
Income, plus Consolidated Interest Expense plus the following to the extent
deducted in calculating such Consolidated Net Income: (a) provision for taxes
based on income or profits, (b) depletion and depreciation expense, (c)
amortization expense, (d) exploration expense (if applicable to the Company
after the Issue Date), (e) unrealized foreign exchange losses and (f) all other
non-cash charges, including non-cash charges taken pursuant to FAS 133
(excluding any such non-cash charge to the extent that
14
it represents an accrual of or reserve for cash charges in any future period or
amortization of a prepaid cash expense that was paid in a prior period except
such amounts as the Company determines in good faith are nonrecurring), and
less, to the extent included in calculating such Consolidated Net Income and in
excess of any costs or expenses attributable thereto and deducted in calculating
such Consolidated Net Income, the sum of (x) the amount of deferred revenues
that are amortized during such period and are attributable to reserves that are
subject to Volumetric Production Payments, (y) amounts recorded in accordance
with GAAP as repayments of principal and interest pursuant to Dollar-Denominated
Production Payments and (z) unrealized foreign exchange gains. Notwithstanding
the foregoing, the provision for taxes based on the income or profits of, and
the depletion, depreciation, amortization, exploration and other non-cash
charges of, a Restricted Subsidiary shall be added to Consolidated Net Income to
compute EBITDA only to the extent (and in the same proportion) that the net
income of such Restricted Subsidiary was included in calculating Consolidated
Net Income and only if a corresponding amount would be permitted at the date of
determination to be dividended to the Company by such Restricted Subsidiary
without prior approval (that has not been obtained), pursuant to the terms of
its charter and all agreements, instruments, judgments, decrees, orders,
statutes, rules and governmental regulations applicable to such Restricted
Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Existing 9% Senior Subordinated Notes" means the Company's 9%
Senior Subordinated Notes Due 2008 issued under an indenture dated as of
February 26, 1998, as amended and supplemented by a supplemental indenture dated
as of April 21, 1999, and the Company's 9% Series B Senior Subordinated Notes
Due 2008 issued under an indenture dated as of August 15, 2001.
"FAS 133" means Financial Accounting Standards Board
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities."
"GAAP" means generally accepted accounting principles in the
United States of America as in effect on the Issue Date, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board, (iii) such other
statements by such other entity as approved by a significant
15
segment of the accounting profession, and (iv) the rules and regulations of the
SEC governing the inclusion of financial statements (including pro forma
financial statements) in periodic reports required to be filed pursuant to
Section 13 of the Exchange Act, including opinions and pronouncements in staff
accounting bulletins and similar written statements from the accounting staff of
the SEC.
"Guarantee" means, without duplication, any obligation,
contingent or otherwise, of any Person directly or indirectly guaranteeing any
Indebtedness of any Person and 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 of such Person (whether arising by
virtue of partnership arrangements, or by agreements 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 the purpose of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantee Agreement" means a supplemental indenture,
substantially in the form attached hereto as Exhibit 1, pursuant to which a
Subsidiary Guarantor or any other Person becomes subject to the applicable terms
and conditions of this Indenture.
"Hedging Obligations" of any Person means the obligations of
such Person pursuant to any Oil and Gas Hedging Contract, Interest Rate
Agreement or Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a
Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be Incurred
by such Subsidiary at the time it becomes a Subsidiary. The term "Incurrence"
when used as a noun shall have a correlative meaning. The accretion of principal
of a non-interest bearing or other discount security shall not be deemed the
Incurrence of Indebtedness.
16
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication), (i) the principal of and premium (if
any) in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of
Sale/Leaseback Transactions entered into by such Person; (iii) all obligations
of such Person issued or assumed as the deferred purchase price of property
(which purchase price is due more than six months after the date of taking
delivery of title to such property), including all obligations of such Person
for the deferred purchase price of property under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the tenth Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit); (v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock (but
excluding any accrued dividends); (vi) all obligations of such Person relating
to any Production Payments; (vii) all obligations of the type referred to in
clauses (i) through (vi) of other Persons and all dividends of other Persons for
the payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including by means
of any Guarantee (including, with respect to any Production Payment, any
warranties or guarantees of production or payment by such Person with respect to
such Production Payment but excluding other contractual obligations of such
Person with respect to such Production Payment); (viii) all obligations of the
type referred to in clauses (i) through (vii) of other Persons secured by any
Lien on any property or asset of such first-mentioned Person (whether or not
such obligation is assumed by such first-mentioned Person), the amount of such
obligation being deemed to be the lesser of the value of such property or assets
or the amount of the obligation so secured and (ix) to the extent not otherwise
included in this definition, Hedging Obligations of such Person. The amount of
Indebtedness of any Person at any date shall be the outstanding balance at such
date of all unconditional obligations as described above and
17
the maximum liability, assuming the contingency giving rise to the obligation
was to have occurred on such date, of any Guarantees outstanding at such date.
None of the following shall constitute Indebtedness: (i)
indebtedness arising from agreements providing for indemnification or adjustment
of purchase price or from guarantees securing any obligations of the Company or
any of its Subsidiaries pursuant to such agreements, incurred or assumed in
connection with the disposition of any business, assets or Subsidiary of the
Company, other than guarantees or similar credit support by the Company or any
of its Subsidiaries of Indebtedness incurred by any Person acquiring all or any
portion of such business, assets or Subsidiary for the purpose of financing such
acquisition; (ii) any trade payables or other similar liabilities to trade
creditors and other accrued current liabilities incurred in the ordinary course
of business as the deferred purchase price of property; (iii) any liability for
Federal, state, local or other taxes owed or owing by such Person; (iv) amounts
due in the ordinary course of business to other royalty and working interest
owners; (v) obligations arising from guarantees to suppliers, lessors,
licensees, contractors, franchisees or customers incurred in the ordinary course
of business; (vi) obligations (other than express Guarantees of indebtedness for
borrowed money) in respect of Indebtedness of other Persons arising in
connection with (A) the sale or discount of accounts receivable, (B) trade
acceptances and (C) endorsements of instruments for deposit in the ordinary
course of business; (vii) obligations in respect of performance bonds provided
by the Company or its Subsidiaries in the ordinary course of business and
refinancing thereof; (viii) obligations arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business, provided,
however, that such obligation is extinguished within two Business Days of its
Incurrence; and (ix) obligations in respect of any obligations under workers'
compensation laws and similar legislation.
"Indenture" means this Indenture as amended or supplemented
from time to time, including the provisions of the TIA that are deemed to be a
part of and govern this Indenture and any supplemental indenture, respectively.
"Interest Rate Agreement" means any interest rate swap
agreement, interest rate cap agreement or other financial agreement or
arrangement designed to protect the Company or any Restricted Subsidiary against
fluctuations in interest rates.
18
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers or joint interest partners or
drilling partnerships sponsored by the Company or any Restricted Subsidiary in
the ordinary course of business that are recorded as accounts receivable on the
balance sheet of the lender) or other extensions of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
Except as otherwise provided for herein, the amount of an Investment shall be
its fair value at the time the Investment is made and without giving effect to
subsequent changes in value. For purposes of the definition of "Unrestricted
Subsidiary", the definition of "Restricted Payment" and Section 4.05, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary
at the time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"Issue Date" means March 25, 2003.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof).
"Limited Recourse Production Payments" means, with respect to
any Production Payments, Indebtedness, the terms of which limit the liability of
the Company and its Restricted Subsidiaries solely to the hydrocarbons covered
by such Production Payments; provided, however, that no default with respect to
such Indebtedness would permit any holder of any other Indebtedness of the
Company or any Restricted Subsidiary to declare a default on such other
Indebtedness or cause the payment
19
thereof to be accelerated or payable prior to its stated maturity.
"Material Change" means an increase or decrease (excluding
changes that result solely from changes in prices and changes resulting from the
Incurrence of previously estimated future development costs) of more than 25%
during a fiscal quarter in the discounted future net revenues from proved crude
oil and natural gas reserves of the Company and its Restricted Subsidiaries,
calculated in accordance with clause (a)(i) of the definition of Adjusted
Consolidated Net Tangible Assets; provided, however, that the following will be
excluded from the calculation of Material Change: (i) any acquisitions during
the fiscal quarter of oil and gas reserves that have been estimated by
independent petroleum engineers and with respect to which a report or reports of
such engineers exist and (ii) any disposition of properties existing at the
beginning of such fiscal quarter that have been disposed of in compliance with
Section 4.07.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Available Cash" from an Asset Disposition means cash
payments received therefrom (including any cash payments received by way of
deferred payment of principal pursuant to a note or installment receivable or
otherwise, but only as and when received, but excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
other obligations relating to such properties or assets or received in any other
noncash form) in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees (including financial and other advisory
fees) and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to minority interest holders in Subsidiaries or joint
ventures as a result of such Asset Disposition and (iv) the deduction of
appropriate amounts provided by the seller as a reserve, in accordance with
GAAP, against any liabilities associated with the property or other assets
disposed in such Asset Disposition and
20
retained by the Company or any Restricted Subsidiary after such
Asset Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Net Present Value" means, with respect to any proved
hydrocarbon reserves, the discounted future net cash flows associated with such
reserves, determined in accordance with the rules and regulations (including
interpretations thereof) of the SEC in effect on the Issue Date.
"Net Working Capital" means (a) all current assets of the
Company and its Restricted Subsidiaries minus (b) all current liabilities of the
Company and its Restricted Subsidiaries, except current liabilities included in
Indebtedness, determined in accordance with GAAP.
"Non-recourse Purchase Money Indebtedness" means Indebtedness
(other than Capital Lease Obligations) of the Company or any Subsidiary
Guarantor incurred in connection with the acquisition by the Company or such
Subsidiary Guarantor in the ordinary course of business of fixed assets used in
the Oil and Gas Business (including office buildings and other real property
used by the Company or such Subsidiary Guarantor in conducting its operations)
with respect to which (i) the holders of such Indebtedness agree that they will
look solely to the fixed assets so acquired which secure such Indebtedness, and
neither the Company nor any Restricted Subsidiary (a) is directly or indirectly
liable for such Indebtedness or (b) provides credit support, including any
undertaking, Guarantee, agreement or instrument that would constitute
Indebtedness (other than the grant of a Lien on such acquired fixed assets), and
(ii) no default or event of default with respect to such Indebtedness would
cause, or permit (after notice or passage of time or otherwise), any holder of
any other Indebtedness of the Company or a Subsidiary Guarantor to declare a
default or event of default on such other Indebtedness or cause the payment,
repurchase, redemption, defeasance or other acquisition or retirement for value
thereof to be accelerated or payable prior to any scheduled principal payment,
scheduled sinking fund payment or maturity.
21
"Obligations" means with respect to any Indebtedness all
obligations for principal, premium, interest, penalties, fees, indemnifications,
reimbursements, and other amounts payable pursuant to the documentation
governing such Indebtedness.
"Officer" means the Chairman of the Board, the President, any
Vice President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers.
"Oil and Gas Business" means the business of the exploration
for, and exploitation, development, acquisition, production, processing (but not
refining), marketing, storage and transportation of, hydrocarbons, and other
related energy and natural resource businesses (including oil and gas services
businesses related to the foregoing).
"Oil and Gas Hedging Contract" means any oil and gas purchase
or hedging agreement, and other agreement or arrangement, in each case, that is
designed to provide protection against oil and gas price fluctuations.
"Oil and Gas Liens" means (i) Liens on any specific property
or any interest therein, construction thereon or improvement thereto to secure
all or any part of the costs incurred for surveying, exploration, drilling,
extraction, development, operation, production, construction, alteration, repair
or improvement of, in, under or on such property and the plugging and
abandonment of wells located thereon (it being understood that, in the case of
oil and gas producing properties, or any interest therein, costs incurred for
"development" shall include costs incurred for all facilities relating to such
properties or to projects, ventures or other arrangements of which such
properties form a part or which relate to such properties or interests); (ii)
Liens on an oil or gas producing property to secure obligations Incurred or
guarantees of obligations Incurred in connection with or necessarily incidental
to commitments for the purchase or sale of, or the transportation or
distribution of, the products derived from such property; (iii) Liens arising
under partnership agreements, oil and gas leases, overriding royalty agreements,
net profits agreements, production payment agreements, royalty trust agreements,
incentive compensation programs on terms that are reasonably customary in the
Oil and Gas Business for geologists, geophysicists and other providers of
technical services to the
22
Company or a Restricted Subsidiary, master limited partnership agreements,
farm-out agreements, farm-in agreements, division orders, contracts for the
sale, purchase, exchange, transportation, gathering or processing of oil, gas or
other hydrocarbons, unitizations and pooling designations, declarations, orders
and agreements, development agreements, operating agreements, production sales
contracts, area of mutual interest agreements, gas balancing or deferred
production agreements, injection, repressuring and recycling agreements, salt
water or other disposal agreements, seismic or geophysical permits or
agreements, and other agreements which are customary in the Oil and Gas
Business; provided, however, that in all instances such Liens are limited to the
assets that are the subject of the relevant agreement, program, order or
contract; (iv) Liens arising in connection with Production Payments; and (v)
Liens on pipelines or pipeline facilities that arise by operation of law.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.
"Permitted Business Investment" means any investment made in
the ordinary course of, and of a nature that is or shall have become customary
in, the Oil and Gas Business, including investments or expenditures for actively
exploiting, exploring for, acquiring, developing, producing, processing,
gathering, marketing or transporting oil and gas through agreements,
transactions, interests or arrangements which permit one to share risks or
costs, comply with regulatory requirements regarding local ownership or satisfy
other objectives customarily achieved through the conduct of Oil and Gas
Business jointly with third parties, including (i) ownership interests in oil
and gas properties, processing facilities, gathering systems, pipelines or
ancillary real property interests and (ii) Investments in the form of or
pursuant to operating agreements, processing agreements, farm-in agreements,
farm-out agreements, development agreements, area of mutual interest agreements,
unitization agreements, pooling agreements, joint bidding agreements, service
contracts, joint venture agreements, partnership agreements (whether general or
limited), subscription agreements, stock purchase agreements and other similar
agreements (including for limited liability Companies) with third parties,
excluding, however, Investments in corporations other than Restricted
Subsidiaries.
23
"Permitted Holders" means TPG Advisors, Inc. or any Person who
on the Issue Date was an Affiliate thereof or any Person controlled by TPG
Advisors, Inc.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will,
upon the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is an Oil and
Gas Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is an Oil and Gas
Business; (iii) Temporary Cash Investments; (iv) receivables owing to the
Company or any Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made in the ordinary
course of business; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; (viii) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to Section
4.07; (ix) Permitted Business Investments; (x) Investments intended to promote
the Company's strategic objectives in the Oil and Gas Business in an aggregate
amount not to exceed 5.0% of ACNTA (determined as of the date of the making of
any such Investment) at any one time outstanding (which Investments shall be
deemed to be no longer outstanding only upon and to the extent of the return of
capital thereof); and (xi) Investments made pursuant to Hedging Obligations of
the Company and the Restricted Subsidiaries.
"Permitted Liens" means, with respect to any Person, (a) Liens
existing as of the Issue Date; (b) Liens securing the Securities, any Subsidiary
Guarantee and other obligations arising under the Indenture; (c) any Lien
existing on any property of a Person at the time such Person is merged or
consolidated with or into the Company or a Restricted Subsidiary or becomes a
Restricted Subsidiary (and not incurred in
24
anticipation of or in connection with such transaction), provided that such
Liens are not extended to other property of the Company or the Restricted
Subsidiaries; (d) any Lien existing on any property at the time of the
acquisition thereof (and not incurred in anticipation of or in connection with
such transaction), provided that such Liens are not extended to other property
of the Company or the Restricted Subsidiaries; (e) any Lien incurred in the
ordinary course of business incidental to the conduct of the business of the
Company or the Restricted Subsidiaries or the ownership of their property
including (i) easements, rights of way and similar encumbrances, (ii) rights or
title of lessors under leases (other than Capital Lease Obligations), (iii)
rights of collecting banks having rights of setoff, revocation, refund or
chargeback with respect to money or instruments of the Company or the Restricted
Subsidiaries on deposit with or in the possession of such banks, (iv) Liens
imposed by law, including Liens under workers' compensation or similar
legislation and mechanics', carriers', warehousemen's, materialmen's, suppliers'
and vendors' Liens, (v) Liens incurred to secure performance of obligations with
respect to statutory or regulatory requirements, performance or return-of-money
bonds, surety bonds or other obligations of a like nature and incurred in a
manner consistent with industry practice and (vi) Oil and Gas Liens, in each
case which are not incurred in connection with the borrowing of money, the
obtaining of advances or credit or the payment of the deferred purchase price of
property (other than trade accounts payable arising in the ordinary course of
business); (f) Liens for taxes, assessments and governmental charges not yet due
or the validity of which are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted, and for which
adequate reserves have been established to the extent required by GAAP as in
effect at such time; (g) Liens incurred to secure appeal bonds and judgment and
attachment Liens, in each case in connection with litigation or legal
proceedings that are being contested in good faith by appropriate proceedings,
so long as reserves have been established to the extent required by GAAP as in
effect at such time and so long as such Liens do not encumber assets by an
aggregate amount (together with the amount of any unstayed judgments against the
Company or any Restricted Subsidiary but excluding any such Liens to the extent
securing insured or indemnified judgments or orders) in excess of $10.0 million;
(h) Liens securing Hedging Obligations of the Company and its Restricted
Subsidiaries; (i) Liens securing purchase money Indebtedness or Capital Lease
Obligations, provided that such Liens attach only to the property acquired with
the proceeds of such purchase money Indebtedness or the property which is the
subject of such Capital Lease Obligations; (j) Liens securing
25
Non-recourse Purchase Money Indebtedness granted in connection with the
acquisition by the Company or any Restricted Subsidiary in the ordinary course
of business of fixed assets used in the Oil and Gas Business (including the
office buildings and other real property used by the Company or such Restricted
Subsidiary in conducting its operations), provided that (i) such Liens attach
only to the fixed assets acquired with the proceeds of such Non-recourse
Purchase Money Indebtedness and (ii) such Non- recourse Purchase Money
Indebtedness is not in excess of the purchase price of such fixed assets; (k)
Liens resulting from the deposit of funds or evidences of Indebtedness in trust
for the purpose of decreasing or legally defeasing Indebtedness of the Company
or any Restricted Subsidiary so long as such deposit of funds is permitted under
Section 4.05; (l) Liens resulting from a pledge of Capital Stock of a Person
that is not a Restricted Subsidiary to secure obligations of such Person and any
refinancings thereof; (m) Liens to secure any permitted extension, renewal,
refinancing, refunding or exchange (or successive extensions, renewals,
refinancings, refundings or exchanges), in whole or in part, of or for any
Indebtedness secured by Liens referred to in clauses (a), (b), (c), (d), (i) and
(j) above; provided, however, that (i) such new Lien shall be limited to all or
part of the same property (including future improvements thereon and accessions
thereto) subject to the original Lien and (ii) the Indebtedness secured by such
Lien at such time is not increased to any amount greater than the sum of (A) the
outstanding principal amount or, if greater, the committed amount of the
Indebtedness secured by such original Lien immediately prior to such extension,
renewal, refinancing, refunding or exchange and (B) an amount necessary to pay
any fees and expenses, including premiums, related to such refinancing,
refunding, extension, renewal or replacement; and (n) Liens in favor of the
Company or a Restricted Subsidiary. Notwithstanding anything in this definition
to the contrary, the term "Permitted Liens" shall not include Liens resulting
from the creation, Incurrence, issuance, assumption or Guarantee of any
Production Payments other than (i) any such Liens existing as of the Issue Date,
(ii) Production Payments in connection with the acquisition of any property
after the Issue Date, provided that any such Lien created in connection
therewith is created, incurred, issued, assumed or Guaranteed in connection with
the financing of, and within 60 days after the acquisition of, such property and
(iii) Production Payments other than those described in clauses (i) and (ii) of
this sentence, to the extent such Production Payments constitute Asset
Dispositions made pursuant to and in compliance with Section 4.07 and (iv)
incentive compensation programs for geologists, geophysicists and other
providers of technical services to the Company and any Restricted Subsidiary;
26
provided, however, that, in the case of the immediately foregoing clauses (i),
(ii), (iii) and (iv), any Lien created in connection with any such Production
Payments shall be limited to the property that is the subject of such Production
Payments.
"Permitted Marketing Obligations" means Indebtedness of the
Company or any Restricted Subsidiary under letter of credit or borrowed money
obligations, or in lieu of or in addition to such letters of credit or borrowed
money, guarantees of such Indebtedness or other obligations of the Company or
any Restricted Subsidiary by any other Restricted Subsidiary, as applicable,
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; provided, however, that in the event that such Indebtedness or
obligations are guaranteed by the Company or any Restricted Subsidiary, then
either (i) the Person with which the Company or such Restricted Subsidiary has
contracts to sell has an investment grade credit rating from S&P or Moody's, or
in lieu thereof, a Person guaranteeing the payment of such obligated Person has
an investment grade credit rating from S&P or Moody's, or (ii) such Person
posts, or has posted for it, a letter of credit in favor of the Company or such
Restricted Subsidiary with respect to all such Person's obligations to the
Company or such Restricted Subsidiary under such contracts.
"Person" means any individual, corporation, partnership,
limited liability company, joint venture, association, joint-stock company,
trust, unincorporated organization, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
Person, means Capital Stock of any class or classes (however designated) which
is preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
The term "principal" of a Security means the principal of the
Security plus the premium, if any, payable on the Security which is due or
overdue or is to become due at the relevant time.
"Production Payments" means, collectively, Dollar-
Denominated Production Payments and Volumetric Production Payments.
27
"Refinance" means, in respect of any Indebtedness, to
refinance, extend, renew, refund, repay, prepay, redeem, defease or retire, or
to issue other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances
any Indebtedness of the Company or any Restricted Subsidiary existing on the
Issue Date or Incurred in compliance with the Indenture including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced, (iii) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced and (iv) if the Indebtedness being
Refinanced is Non-recourse Purchase Money Indebtedness, such Refinancing
Indebtedness satisfies clauses (i) and (ii) of the definition of "Non-recourse
Purchase Money Indebtedness"; provided further, however, that Refinancing
Indebtedness shall not include (x) Indebtedness of a Subsidiary that Refinances
Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted
Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.
"Representative" means any trustee, agent or representative
(if any) for an issue of Senior Indebtedness of the Company or of any Subsidiary
Guarantor.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment to the direct
or indirect holders of its Capital Stock (other than (x) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock), (y) dividends or distributions payable solely to the Company or a
Restricted Subsidiary, and (z) pro rata dividends or other distributions made by
a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the
28
case of a Subsidiary that is an entity other than a corporation)), (ii) the
purchase, redemption or other acquisition or retirement for value of any Capital
Stock of the Company held by any Person or of any Capital Stock of a Restricted
Subsidiary held by any Affiliate of the Company (other than a Restricted
Subsidiary), including the exercise of any option to exchange any Capital Stock
(other than into Capital Stock of the Company that is not Disqualified Stock),
(iii) the purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations of such Person
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations of such Person purchased in anticipation of satisfying a sinking
fund obligation, principal installment or final maturity, in each case due
within one year of the date of acquisition) or (iv) the making of any Investment
(other than a Permitted Investment) in any Person.
"Restricted Subsidiary" means any Subsidiary of the Company
that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services, a division of
The McGraw-Hill Company, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to
property owned on the Issue Date or thereafter acquired whereby the Company or a
Restricted Subsidiary transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person, provided that the fair market
value of such property (as reasonably determined by the Board of Directors
acting in good faith) is $10 million or more.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company
secured by a Lien.
"Senior Indebtedness" means with respect to any Person (i)
Indebtedness of such Person, and all obligations of such Person under any Credit
Facility, whether outstanding on the Issue Date or thereafter Incurred and (ii)
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating such Person to the
extent post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable unless, with respect
29
to obligations described in the immediately preceding clause (i) or (ii), in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that such obligations are not superior in right of
payment to the Securities or the applicable Subsidiary Guarantee; provided,
however, that Senior Indebtedness shall not include (1) any obligation of such
Person to any Subsidiary of such Person, (2) any liability for Federal, state,
local or other taxes owed or owing by such Person, (3) any accounts payable or
other liability to trade creditors arising in the ordinary course of business
(including guarantees thereof or instruments evidencing such liabilities), (4)
any Indebtedness of such Person (and any accrued and unpaid interest in respect
thereof) which is subordinate or junior in any respect to any other Indebtedness
or other obligation of such Person or (5) that portion of any Indebtedness which
at the time of Incurrence is Incurred in violation of this Indenture (other
than, in the case of the Company or any Subsidiary Guarantor that Guarantees any
Credit Facility, Indebtedness under any Credit Facility that is Incurred on the
basis of a representation by the Company or the applicable Subsidiary Guarantor
to the applicable lenders that such Person is permitted to Incur such
Indebtedness under this Indenture).
"Senior Subordinated Indebtedness" means (i) with respect to
the Company, the Securities, the Existing 9% Senior Subordinated Notes and any
other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of the Company which is not Senior Indebtedness of the Company
and (ii) with respect to each Subsidiary Guarantor, its Guarantee of the
Securities and the Existing 9% Senior Subordinated Notes and any other
Indebtedness of such Person that specifically provides that such Indebtedness
rank pari passu with its applicable Subsidiary Guarantee in right of payment and
is not subordinated by its terms in right of payment to any Indebtedness or
other obligation of such Person which is not Senior Indebtedness of such Person.
"Significant Subsidiary" means any Restricted Subsidiary that
would be a "Significant Subsidiary" of the Company within the meaning of Rule
1-02 under Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision
30
(but excluding any provision providing for the repurchase of such security at
the option of the holder thereof upon the happening of any contingency unless
such contingency has occurred).
"Stock Offering" means a primary offering, whether public or
private, of shares of common stock of the Company.
"Subordinated Obligation" means any Indebtedness of the
Company or any Subsidiary Guarantor (whether outstanding on the Issue Date or
thereafter Incurred) which is subordinate or junior in right of payment to, in
the case of the Company, the Securities or, in the case of a Subsidiary
Guarantor, its Subsidiary Guarantee pursuant to a written agreement to that
effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Subsidiary designated as
such on the signature pages hereto and any other Subsidiary that has issued a
Subsidiary Guarantee.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary
Guarantor of the Company's obligations with respect to the Securities.
"Temporary Cash Investments" means any of the following: (i)
any investment in direct obligations of the United States of America or any
agency thereof or obligations guaranteed by the United States of America or any
agency thereof, (ii) investments in time deposit accounts, certificates of
deposit and money market deposits maturing within one year of the date of
acquisition thereof issued by a bank or trust company which is organized under
the laws of the United States of America, any state thereof or any foreign
country recognized by the United States of America, and which bank or trust
company has capital, surplus and undivided profits aggregating in excess of
$200.0 million (or the foreign currency equivalent thereof) and has outstanding
debt which is rated "A" (or such similar equivalent rating) or higher by at
least one nationally
31
recognized credit rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor whose assets consist of obligations of the types
described in clauses (i), (ii), (iii), (iv) and (v) hereof, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a Person (other than an Affiliate of the Company) organized and in existence
under the laws of the United States of America or any foreign country recognized
by the United States of America with a rating at the time as of which any
investment therein is made of "P-2" (or higher) according to Moody's or "A-2"
(or higher) according to S&P or "R-1" (or higher) by Dominion Bond Rating
Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian
issuer), (v) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by
Moody's and (vi) Investments in asset-backed securities maturing within one year
of the date of acquisition thereof with a long- term rating at the time as of
which any investment therein is made of "A3" (or higher) by Dominion Bond Rating
Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian
issuer).
"TIA" means the Trust Indenture Act of 1939, as amended (15
U.S.C. Sections 77aaa-77bbbb), as in effect on the date of this Indenture except
as provided in Section 9.03; provided, however, that, in the event the Trust
Indenture Act of 1939 is amended after such date, "TIA" means, to the extent
required by any such amendments, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the party named as such in the preamble to
this Indenture until a successor replaces it and, thereafter, means the
successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the Trustee
to administer this Indenture.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
32
"Unrestricted Subsidiary" means (i) Tallahatchie Resources,
Inc. and Genesis Energy, Inc., (ii) any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (iii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.05. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) the Company could Incur $1.00 of
additional Indebtedness under Section 4.03(a) and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced by the Company to the Trustee by promptly filing with the Trustee a
copy of the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions. The Company represents and warrants that (i) Tallahatchie Resources,
Inc. has total assets of $1,000 or less and (ii) Genesis Energy, Inc. has no
assets other than a 2.0% general partnership interest in Genesis Energy, L.P.
and a 0.01% general partnership interest in Genesis Crude Oil, L.P.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Volumetric Production Payments" means production payment
obligations recorded as deferred revenue in accordance with GAAP, together with
all undertakings and obligations in connection therewith.
"Voting Stock" of a Person means all classes of Capital Stock
or other interests (including partnership interests) of such Person then
outstanding and normally entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof.
33
"Wholly Owned Subsidiary" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares and shares
held by other Persons to the extent such shares are required by applicable law
to be held by a Person other than the Company or a Restricted Subsidiary) is
owned by the Company or one or more Wholly Owned Subsidiaries.
Section 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction"........................................... 4.08(a)
"Appendix"........................................................ 2.01
"Bankruptcy Law".................................................. 6.01
"Blockage Notice"................................................. 10.03
"Company Order"................................................... 2.02
"covenant defeasance option"...................................... 8.01(b)
"Custodian" ...................................................... 6.01
"Event of Default"................................................ 6.01
"Excess Proceeds"................................................. 4.07(a)
"Excess Proceeds Offer"........................................... 4.07(b)(i)
"Excess Proceeds Payment"......................................... 4.07(b)(i)
"Excess Proceeds Payment Date".................................... 4.07(b)(ii)
"Guaranteed Obligations".......................................... 11.01
"legal defeasance option"......................................... 8.01(b)
"Legal Holiday"................................................... 13.08
"pay the Securities".............................................. 10.03
"Paying Agent".................................................... 2.03
"Payment Blockage Period"......................................... 10.03
"Registrar"....................................................... 2.03
"Subsidiary Guarantor Blockage
Notice"........................................................ 12.03
"Subsidiary Guarantor Payment
Blockage Period"............................................... 12.03
"Successor Company"............................................... 5.01
"Unrestricted Affiliate".......................................... 4.08(b)
Section 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
34
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means
the Trustee.
"obligor" on the indenture securities means the Company
and any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.
Section 1.04. Rules of Construction. Unless the
context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words
in the plural include the singular;
(6) unsecured Indebtedness shall not be deemed to be
subordinate or junior to Secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(7) the principal amount of any noninterest bearing or other
discount security at any date shall be the principal amount thereof
that would be shown on a balance sheet of the Company dated such date
prepared in accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i)
the maximum liquidation value of such Preferred Stock or (ii) the
maximum mandatory redemption or mandatory repurchase price with respect
to such Preferred Stock, whichever is greater.
35
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating. Provisions relating to the
Initial Securities, the Private Exchange Securities and the Exchange Securities
are set forth in the Rule 144A/Regulation S Appendix attached hereto (the
"Appendix") which is hereby incorporated in and expressly made part of this
Indenture. The Initial Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit 1 to the Appendix
which is hereby incorporated in and expressly made a part of this Indenture. The
Exchange Securities, the Private Exchange Securities and the Trustee's
certificate of authentication shall be substantially in the form of Exhibit A,
which is hereby incorporated in and expressly made a part of this Indenture. The
Securities may have notations, legends or endorsements required by law, stock
exchange rule, agreements to which the Company is subject, if any, or depository
procedure or usage (provided that any such notation, legend or endorsement is in
a form acceptable to the Company). Each Security shall be dated the date of its
authentication. The terms of the Securities set forth in the Appendix and
Exhibit A are part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
On the Issue Date, upon receipt of a written order of the
Company signed by two Officers of the Company (a "Company Order"), the Trustee
shall authenticate and deliver $225.0 million of 7 1/2% Senior Subordinated
Notes Due 2013 and, at any time and from time to time thereafter, the Trustee
shall, upon receipt of a Company Order, authenticate and deliver Securities for
original issue in an aggregate principal amount specified in such Company Order;
provided that, in each case, the Trustee shall be entitled to receive an
Officers' Certificate and an
36
Opinion of Counsel of the Company that it may reasonably request in connection
with such authentication of Securities. Such Company Order shall specify the
amount of Securities to be authenticated and the date on which the original
issue of Securities is to be authenticated and, in the case of an issuance of
Additional Securities pursuant to Section 2.13 after the Issue Date, shall
certify that such issuance is in compliance with Section 4.03.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by the
terms of such appointment, an authenticating agent may authenticate Securities
whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or agent
for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange, which office shall maintain the names and addresses
of Securityholders (the "Registrar"), and an office or agency where Securities
may be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any Wholly Owned Subsidiary incorporated or organized within the
United States of America may act as Paying Agent, Registrar, co- registrar or
transfer agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
11:00 a.m., New York City time, on each due date of the
37
principal and interest on any Security, the Company shall deposit with the
Paying Agent a sum sufficient to pay such principal and interest when so
becoming due. The Company shall require each Paying Agent (other than the
Trustee) to agree in writing that the Paying Agent shall hold in trust for the
benefit of Security holders or the Trustee all money held by the Paying Agent
for the payment of principal of or interest on the Securities and shall notify
the Trustee of any default by the Company in making any such payment. If the
Company or a Wholly Owned Subsidiary acts as Paying Agent, it shall segregate
the money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
SECTION 2.05. Securityholder 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 Securityholders. If the Trustee is not the
Registrar, the Company shall furnish to the Trustee, in writing at least five
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of Securityholders.
SECTION 2.06. Transfer and Exchange. The Securities shall be
issued in registered form and shall be transferable only upon the surrender of a
Security for registration of transfer. When a Security is presented to the
Registrar or a co-registrar with a request to register a transfer, the Registrar
shall register the transfer as requested if the requirements of this Indenture
and Section 8-401(a) of the Uniform Commercial Code are met.
When Securities are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met.
SECTION 2.07. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate and deliver a replacement Security if the
requirements of Section 8-405 of the Uniform Commercial Code are
38
met and the Holder satisfies any other reasonable requirements of the Trustee.
If required by the Trustee or the Company, such Holder shall furnish an
indemnity bond sufficient in the judgment of the Company and the Trustee to
protect the Company, the Trustee, the Paying Agent, the Registrar and any
co-registrar from any loss which any of them may suffer if a Security is
replaced. The Company and the Trustee may charge the Holder for their expenses
in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.08. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Securityholders on that date pursuant to the terms of this Indenture, then on
and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.09. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee shall
authenticate and deliver temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without unreasonable
delay, the Company shall prepare and the Trustee shall authenticate definitive
Securities and deliver them in exchange for temporary Securities.
SECTION 2.10. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the Paying
Agent shall forward to the Trustee any
39
Securities surrendered to them for registration of transfer, exchange, payment
or cancellation. The Trustee and no one else shall cancel and destroy (subject
to the record retention requirements of the Exchange Act) all Securities
surrendered for registration of transfer, exchange, payment or cancellation and
deliver a certificate of such destruction to the Company unless the Company
directs the Trustee to deliver canceled Securities to the Company. The Company
may not issue new Securities to replace Securities it has redeemed, paid or
delivered to the Trustee for cancellation.
SECTION 2.11. Defaulted Interest. If the Company defaults in a
payment of interest on the Securities, the Company shall pay defaulted interest
(plus interest on such defaulted interest to the extent lawful) in any lawful
manner. The Company may pay the defaulted interest to the Persons who are
Securityholders on a subsequent special record date as provided in the
Securities and in Section 4.01 hereof. The Company shall fix or cause to be
fixed any such special record date and payment date to the reasonable
satisfaction of the Trustee and shall promptly mail to each Securityholder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.12. CUSIP Numbers. The Company in issuing the
Securities may use "CUSIP" numbers (if then generally in use) and, if so, the
Trustee shall use "CUSIP", numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation made as to the correctness of such numbers either as printed on
the Securities or as contained in any notice of a redemption and that reliance
may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.13. Issuance of Additional Securities. The Company
shall be entitled, subject to its compliance with Section 4.03, to issue
Additional Securities under this Indenture which shall have identical terms as
the Securities issued on the Issue Date, other than with respect to the date of
issuance and issue price. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor shall be treated as a single class for all purposes
under this Indenture.
With respect to any Additional Securities, the Company
shall set forth in a resolution of the Board of Directors and an
40
Officers' Certificate, a copy of each which shall be delivered to the Trustee,
the following information:
(1) the aggregate principal amount of such Additional
Securities to be authenticated and delivered pursuant to
this Indenture;
(2) the issue price, the issue date and the CUSIP number of
such Additional Securities; provided, however, that no Additional
Securities may be issued at a price that would cause such Additional
Securities to have "original issue discount" within the meaning of
Section 1273 of the Code; and
(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Initial Securities as
set forth in the Appendix to this Indenture or shall be issued in the
form of Exchange Securities as set forth in Exhibit A.
ARTICLE 3
Redemption
Section 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
Section 3.02. Selection of Securities To Be Redeemed. If fewer
than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee in its sole discretion considers fair and appropriate. The Trustee shall
make the selection from outstanding Securities not previously called for
redemption. The Trustee may select for redemption portions of the principal of
Securities that have denominations
41
larger than $1,000. Securities and portions of them the Trustee selects shall be
in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture
that apply to Securities called for redemption also apply to portions of
Securities called for redemption. The Trustee shall notify the Company, the
Registrar and each Paying Agent promptly of the Securities or portions of
Securities to be redeemed.
Section 3.03. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered
to the Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be
redeemed, the identification and principal amounts of the particular
Securities to be redeemed;
(6) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on Securities
(or portions thereof) called for redemption ceases to accrue on and
after the redemption date; and
(7) that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed
on the Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
Section 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption
42
become due and payable on the redemption date and at the redemption price stated
in the notice, subject to any condition or contingency stated therein. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
Section 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to the
Trustee for cancelation.
Section 3.06. Securities Redeemed in Part. Upon surrender of
a Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder (at the Company's expense) a new
Security equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4
Covenants
Section 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and in
the manner provided in the Securities and in this Indenture. Principal and
interest shall be considered paid on the date due if on such date the Trustee or
the Paying Agent holds in accordance with this Indenture money sufficient to pay
all principal and interest then due and the Trustee or the Paying Agent, as the
case may be, is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Section 4.02. SEC Reports. Notwithstanding that the
Company may not at any time be subject to the reporting
43
requirements of Section 13 or 15(d) of the Exchange Act, the Company shall file
with the SEC and provide the Trustee and Securityholders with such annual
reports and such information, documents and other reports as are specified in
Sections 13 and 15(d) of the Exchange Act and applicable to a U.S. corporation
subject to such Sections, such information, documents and other reports to be so
filed and provided at the times specified for the filing of such information,
documents and reports under such Sections. In addition, the Company shall
furnish to the Securityholders and to prospective investors, upon the requests
of such Securityholders, any information required to be delivered pursuant to
Rule 144A(d)(4) under the Securities Act so long as any Securities are not
freely transferable under the Securities Act. The Company also shall comply with
the other provisions of TIA Section 314(a).
Section 4.03. Limitation on Indebtedness. (a) The Company
shall not, and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company or a
Restricted Subsidiary may Incur Indebtedness if, on the date of such Incurrence
and after giving effect thereto, the Consolidated Coverage Ratio equals or
exceeds 2.25 to 1.0.
(b) Notwithstanding Section 4.03(a), the Company and any
Restricted Subsidiary may Incur the following Indebtedness:
(1) Indebtedness Incurred pursuant to any Credit Facility, so long as
the aggregate amount of all Indebtedness outstanding under all Credit
Facilities does not, at any one time, exceed the aggregate amount of
borrowing availability as of such date under all Credit Facilities that
determine availability on the basis of a borrowing base or other
asset-based calculation; provided, however, that in no event shall such
amount exceed the greater of (x) $300 million and (y) 75% of ACNTA as
of the date of such Incurrence;
(2) Indebtedness owed to and held by the Company or a Restricted
Subsidiary; provided, however, that any subsequent issuance or transfer
of any Capital Stock which results in any such Restricted Subsidiary
ceasing to be a Restricted Subsidiary or any subsequent transfer of
such Indebtedness (other than to the Company or another Restricted
Subsidiary) shall be deemed, in each case, to constitute the Incurrence
of such Indebtedness by the issuer thereof;
44
(3) Indebtedness of the Company represented by the Securities (other
than any Additional Securities);
(4) Indebtedness outstanding on the Issue Date (other than Indebtedness
described in paragraph (b) (1), (2) or (3) of this Section 4.03);
(5) Indebtedness of (A) a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Restricted Subsidiary
was acquired by the Company (other than Indebtedness Incurred in
connection with, or to provide all or any portion of the funds or
credit support utilized to consummate, the transaction or series of
related transactions pursuant to which such Restricted Subsidiary
became a Restricted Subsidiary or was acquired by the Company) and (B)
the Company or a Restricted Subsidiary Incurred for the purpose of
financing all or any part of the cost of acquiring oil and gas
properties, another Person (other than a Person that was, immediately
prior to such acquisition, a Subsidiary of the Company) engaged in the
Oil and Gas Business or all or substantially all the assets of such a
Person; provided, however, that in the case of each of clause (A) and
clause (B) above, on the date of such Incurrence and after giving
effect thereto, the Consolidated Coverage Ratio equals or exceeds 2.0
to 1.0;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred
pursuant to Section 4.03(a) or Section 4.03(b)(3), (4), (5), this
clause (6) or clause (7) below; provided, however, that to the extent
such Refinancing Indebtedness directly or indirectly Refinances
Indebtedness or Preferred Stock of a Restricted Subsidiary described in
Section 4.03(b)(5), such Refinancing Indebtedness shall be Incurred
only by such Restricted Subsidiary or the Company;
(7) Non-recourse Purchase Money Indebtedness;
(8) Indebtedness with respect to Production Payments; provided,
however, that any such Indebtedness shall be Limited Recourse
Production Payments; provided further, however, that the Net Present
Value of the reserves related to such Production Payments shall not
exceed 30% of ACNTA at the time of Incurrence;
(9) Indebtedness consisting of the Subsidiary Guarantees and any
Guarantee by a Subsidiary Guarantor of Indebtedness Incurred by the
Company pursuant to paragraphs (b)(1) and (3) of this Section 4.03;
45
(10) Indebtedness consisting of Interest Rate Agreements directly
related to Indebtedness permitted to be Incurred by the Company and its
Restricted Subsidiaries pursuant to the Indenture;
(11) Indebtedness under Oil and Gas Hedging Contracts and Currency
Agreements entered into in the ordinary course of business for the
purpose of limiting risks that arise in the ordinary course of business
of the Company and its Restricted Subsidiaries;
(12) Indebtedness in respect of bid, performance or surety obligations
issued by or for the account of the Company or any Restricted
Subsidiary in the ordinary course of business, including Guarantees and
letters of credit functioning as or supporting such bid, performance or
surety obligations (in each case other than for an obligation for money
borrowed);
(13) Indebtedness of the Company or a Restricted Subsidiary Incurred to
finance capital expenditures and Refinancing Indebtedness Incurred in
respect thereof in an aggregate amount which, when taken together with
the amount of all other Indebtedness Incurred pursuant to this clause
(13) since the Issue Date and then outstanding, does not exceed $20
million;
(14) Permitted Marketing Obligations;
(15) In-kind obligations relating to oil and gas balancing positions
arising in the ordinary course of business; and
(16) Indebtedness in an aggregate amount which, together with the
amount of all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness permitted by Section 4.03(a) or Section 4.03(b)(1)-(15))
does not exceed $30 million.
(c) Notwithstanding the foregoing, the Company shall not, and
shall not permit any Subsidiary Guarantor to, Incur any Indebtedness pursuant to
Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities or the relevant Subsidiary Guarantee, as the case
may be, to at least the same extent as such Subordinated Obligations.
46
(d) For purposes of determining compliance with this Section
4.03, (i) in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described in this Section 4.03, the
Company, in its sole discretion, will classify such item of Indebtedness at the
time of Incurrence and only be required to include the amount and type of such
Indebtedness in one of the above clauses of this Section 4.03; provided that
items of Indebtedness outstanding under the Credit Agreement on the Issue Date
will be treated as Incurred on the Issue Date under Section 4.03(b)(1); and (ii)
an item of Indebtedness may be divided and classified in more than one of the
types of Indebtedness described in this Section 4.03.
Section 4.04. Incurrence of Layered Indebtedness.
Notwithstanding paragraphs (a) and (b) of Section 4.03 above, the Company shall
not, and the Company shall not permit any Subsidiary Guarantor to, Incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in any
respect to any Senior Indebtedness of the Company or such Subsidiary Guarantor,
as applicable, unless such Indebtedness is Senior Subordinated Indebtedness or
is expressly subordinated in right of payment to Senior Subordinated
Indebtedness of such Person.
Section 4.05. Limitation on Restricted Payments. (a) The
Company shall not, and shall not permit any Restricted Subsidiary, directly or
indirectly, to make a Restricted Payment if at the time the Company or such
Restricted Subsidiary makes such Restricted Payment: (1) a Default shall have
occurred and be continuing (or would result therefrom); (2) the Company is not
able to Incur an additional $1.00 of Indebtedness pursuant to Section 4.03(a);
or (3) the aggregate amount of such Restricted Payment and all other Restricted
Payments since the Issue Date would exceed the sum of (without duplication): (A)
50% of the aggregate Consolidated Net Income of the Company accrued on a
cumulative basis commencing on the last day of the fiscal quarter immediately
preceding the Issue Date, and ending on the last day of the fiscal quarter
ending on or immediately preceding the date of such proposed Restricted Payment
(or, if such aggregate Consolidated Net Income shall be a deficit, minus 100% of
such deficit); (B) the aggregate Net Cash Proceeds received by the Company from
the issuance or sale of its Capital Stock (other than Disqualified Stock)
subsequent to the Issue Date (other than an issuance or sale to a Subsidiary of
the Company and other than an issuance or sale to an employee stock ownership
plan or to a trust established by the Company or any of its Subsidiaries for the
benefit of their employees); (C) the aggregate Net Cash Proceeds received by the
Company from the issue or sale subsequent to the Issue Date of its Capital Stock
(other than
47
Disqualified Stock) to an employee stock ownership plan; provided, however, that
if such employee stock ownership plan incurs any Indebtedness with respect
thereto, such aggregate amount shall be limited to an amount equal to any
increase in the Consolidated Net Worth of the Company resulting from principal
repayments made by such employee stock ownership plan with respect to such
Indebtedness; (D) the amount by which Indebtedness of the Company is reduced on
the Company's balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date, of any Indebtedness of
the Company convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company (less the amount of any cash, or the fair
value of any other property, distributed by the Company upon such conversion or
exchange); and (E) an amount equal to the sum of (i) the net reduction in
Investments made by the Company or any Restricted Subsidiary in any Person
resulting from dividends, repayments of loans or advances or other transfers of
assets, in each case to the Company or any Restricted Subsidiary from such
Person, and (ii) the portion (proportionate to the Company's equity interest in
such Subsidiary) of the fair market value of the net assets of an Unrestricted
Subsidiary at the time such Unrestricted Subsidiary is designated a Restricted
Subsidiary; provided, however, that the foregoing sum shall not exceed, in the
case of any such Person or Unrestricted Subsidiary, the amount of Investments
previously made (and treated as a Restricted Payment) by the Company or any
Restricted Subsidiary in such Person or Unrestricted Subsidiary.
(b) The provisions of Section 4.05(a) shall not prohibit: (i)
dividends paid within 60 days after the date of declaration thereof if at such
date of declaration such dividend would have complied with this Section 4.05;
provided, however, that at the time of payment of such dividend, no other
Default shall have occurred and be continuing (or result therefrom); provided
further, however, that such dividend shall be included in the calculation of the
amount of Restricted Payments; (ii) any purchase or redemption of Capital Stock
or Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of the Company
(other than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or to a trust
established by the Company or any of its Subsidiaries for the benefit of their
employees); provided, however, that (A) such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments and (B) the Net
Cash Proceeds from such sale shall be excluded from the calculation of amounts
under Section
48
4.05(a)(3)(B) (but only to the extent that such Net Cash Proceeds were used to
purchase or redeem such Capital Stock as provided in this clause (ii)); (iii)
any purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of Subordinated Obligations of the Company made by exchange
for, or out of the proceeds of the substantially concurrent sale of,
Subordinated Obligations of the Company; provided, however, that such purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
shall be excluded in the calculation of the amount of Restricted Payments; (iv)
the repurchase of shares of, or options to purchase shares of, common stock of
the Company or any of its Subsidiaries from employees, former employees,
directors or former directors of the Company or any of its Subsidiaries (or
permitted transferees of such employees, former employees, directors or former
directors), pursuant to the terms of the agreements (including employment
agreements) or plans (or amendments thereto) approved by the Board of Directors
under which such individuals purchase or sell or are granted the option to
purchase or sell, shares of such common stock; provided, however, that the
aggregate amount of such repurchases shall not exceed $2.0 million in any
calendar year; provided further, however, that such repurchases shall be
excluded in the calculation of the amount of Restricted Payments; (v) loans made
to officers, directors or employees of the Company or any Restricted Subsidiary
approved by the Board of Directors (or a duly authorized officer), the net cash
proceeds of which are used solely (A) to purchase common stock of the Company in
connection with a restricted stock or employee stock purchase plan, or to
exercise stock options received pursuant to an employee or director stock option
plan or other incentive plan, in a principal amount not to exceed the exercise
price of such stock options or (B) to refinance loans, together with accrued
interest thereon, made pursuant to item (A) of this clause (v); provided,
however, that such loans shall be excluded in the calculation of the amount of
Restricted Payments; or (vi) other Restricted Payments in an aggregate amount
not to exceed $20.0 million; provided, however, that such Restricted Payments
shall be excluded in the calculation of the amount of Restricted Payments.
Section 4.06. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary (a) to pay dividends or make any other distributions on
its Capital Stock or pay any Indebtedness owed to the Company or a Restricted
Subsidiary, (b) to make any loans
49
or advances to the Company or a Restricted Subsidiary or (c) to transfer any of
its property or assets to the Company or a Restricted Subsidiary, except: (i)
any encumbrance or restriction in the Credit Agreement on the Issue Date or
pursuant to any other agreement in effect on the Issue Date; (ii) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary
on or prior to the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred as consideration in, or to provide all
or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the Company) and
outstanding on such date; (iii) any encumbrance or restriction pursuant to an
agreement effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this covenant or this clause
(iii) or contained in any amendment to an agreement referred to in clause (i) or
(ii) of this covenant or this clause (iii); provided, however, that the
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any such refinancing agreement or amendment are no less favorable
to the Securityholders than encumbrances and restrictions with respect to such
Restricted Subsidiary contained in such agreements; (iv) any such encumbrance or
restriction consisting of customary nonassignment provisions in leases governing
leasehold interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder; (v) in the case of clause (c) above,
restrictions contained in security agreements or mortgages securing Indebtedness
of a Restricted Subsidiary to the extent such restrictions restrict the transfer
of the property subject to such security agreements or mortgages; and (vi) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary pending the closing of
such sale or disposition.
Section 4.07. Limitation on Sales of Assets and Subsidiary
Stock. (a) In the event and to the extent that the Net Available Cash received
by the Company or any Restricted Subsidiary from one or more Asset Dispositions
(other than an Asset Disposition referred to in Section 4.07(d)) occurring on or
after the Issue Date in any period of 12 consecutive months exceeds 15% of
Adjusted Consolidated Net Tangible Assets as of the beginning of such 12-month
period, then the Company shall (i) within 180 days (in the case of (A) below) or
18 months (in
50
the case of (B) below) after the date such Net Available Cash so received
exceeds such 15% of Adjusted Consolidated Net Tangible Assets (A) apply an
amount equal to such excess Net Available Cash to repay Senior Indebtedness of
the Company or a Subsidiary Guarantor or Indebtedness of a Restricted Subsidiary
that is not a Subsidiary Guarantor, in each case owing to a Person other than
the Company or any Affiliate of the Company or (B) invest an equal amount, or
the amount not so applied pursuant to clause (A), in Additional Assets or
Permitted Business Investments or (ii) apply such excess Net Available Cash (to
the extent not applied pursuant to clause (i)) as provided in Section 4.07(b).
The amount of such excess Net Available Cash required to be applied during the
applicable period and not applied as so required by the end of such period shall
constitute "Excess Proceeds."
(b)(i) If, as of the first day of any calendar month, the
aggregate amount of Excess Proceeds not theretofore subject to an Excess
Proceeds Offer (as defined below) totals at least $10 million, the Company must,
not later than the fifteenth Business Day of such month, make an offer (an
"Excess Proceeds Offer") to purchase from the Holders on a pro rata basis an
aggregate principal amount of Securities equal to the Excess Proceeds (rounded
down to the nearest multiple of $1,000) on such date, at a purchase price equal
to 100% of the principal amount of such Securities, plus, in each case, accrued
interest (if any) to the date of purchase (the "Excess Proceeds Payment"), but,
if the terms of any other Senior Subordinated Indebtedness require that an offer
be made for such Senior Subordinated Indebtedness contemporaneously with the
Excess Proceeds Offer, then the Excess Proceeds shall be prorated between the
Excess Proceeds Offer and the offer for such other Senior Subordinated
Indebtedness in accordance with the aggregate outstanding principal amounts (or,
in the case of other Senior Subordinated Indebtedness issued with significant
original issue discount, accreted value) of the Securities and such other Senior
Subordinated Indebtedness, and the aggregate principal amount of Securities for
which the Excess Proceeds Offer is made shall be reduced accordingly.
(ii) The Company shall commence any Excess Proceeds Offer with
respect to the Securities by mailing a notice to the Trustee and each Holder
stating: (A) that the Excess Proceeds Offer is being made pursuant to this
Section 4.07 and that all Securities validly tendered will be accepted for
payment on a pro rata basis; (B) the purchase price and the date of purchase
(which shall be a Business Day no earlier than 30 days nor later than 60 days
from the date such notice is mailed) (the "Excess Proceeds Payment Date"); (C)
that any Security not tendered will
51
continue to accrue interest pursuant to its terms; (D) that, unless the Company
defaults in the payment of the Excess Proceeds Payment, any Security accepted
for payment pursuant to the Excess Proceeds Offer shall cease to accrue interest
on and after the Excess Proceeds Payment Date; (E) that Holders electing to have
a Security purchased pursuant to the Excess Proceeds Offer will be required to
surrender the Security, together with the form entitled "Option of Holder to
Elect Purchase" on the reverse side of the Security completed, to the Paying
Agent at the address specified in the notice prior to the close of business on
the Business Day immediately preceding the Excess Proceeds Payment Date; (F)
that Holders will be entitled to withdraw their election if the Paying Agent
receives, not later than the close of business on the third Business Day
immediately preceding the Excess Proceeds Payment Date, a telegram, facsimile
transmission or letter setting forth the name of such Holder, the principal
amount of Securities delivered for purchase and a statement that such Holder is
withdrawing his election to have such Securities purchased; and (G) that Holders
whose Securities are being purchased only in part will be issued new Securities
equal in principal amount to the unpurchased portion of the Securities
surrendered; provided, however, that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or integral multiples
thereof.
(iii) On the Excess Proceeds Payment Date, the Company shall
(A) accept for payment on a pro rata basis Securities or portions thereof
tendered pursuant to the Excess Proceeds Offer, (B) deposit with the Paying
Agent money sufficient to pay the purchase price of all Securities or portions
thereof so accepted, and (C) deliver, or cause to be delivered, to the Trustee
all Securities or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof so accepted for
payment by the Company. The Paying Agent shall promptly mail to the Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered; provided, however, that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or integral multiples
thereof. The Company will publicly announce the results of the Excess Proceeds
Offer as soon as practicable after the Excess Proceeds Payment Date. For
purposes of this Section 4.07, the Trustee shall act as the Paying Agent.
(c) In the event of the transfer of substantially all (but not
all) the property and assets of the Company as an
52
entirety to a Person in a transaction permitted by Section 5.01, the Successor
Company shall be deemed to have sold the properties and assets of the Company
not so transferred for purposes of this Section 4.07, and shall comply with the
provisions of this Section 4.07 with respect to such deemed sale as if it were
an Asset Disposition and the Successor Company shall be deemed to have received
Net Available Cash in an amount equal to the fair market value (as determined in
good faith by the Board of Directors) of the properties and assets not so
transferred or sold.
(d) In the event of an Asset Disposition by the Company or any
Restricted Subsidiary that consists of a sale of hydrocarbons and results in
Production Payments, the Company or such Restricted Subsidiary shall apply an
amount equal to the Net Available Cash received by the Company or such
Restricted Subsidiary to (i) reduce Senior Indebtedness of the Company or a
Subsidiary Guarantor or Indebtedness of a Restricted Subsidiary that is not a
Subsidiary Guarantor, in each case owing to a Person other than the Company or
any Affiliate of the Company, within 180 days after the date such Net Available
Cash is so received, or (ii) invest in Additional Assets or Permitted Business
Investments within 18 months after the date such Net Available Cash is so
received.
(e) The Company will comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations thereunder in the event that such Excess Proceeds are
received by the Company under this Section 4.07 and the Company is required to
repurchase Securities as described above. To the extent that the provisions of
any securities laws or regulations conflict with the provisions of this Section
4.07, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.07 by virtue thereof.
Section 4.08. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property, employee compensation arrangements or the rendering of
any service) with any Affiliate of the Company (an "Affiliate Transaction")
unless the terms thereof (1) are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an Affiliate,
(2) if such Affiliate Transaction involves an amount in excess of
53
$15.0 million, are set forth in writing and have been approved by the Board of
Directors, including a majority of the members of the Board of Directors having
no personal stake in such Affiliate Transaction, and (3) if such Affiliate
Transaction involves an amount in excess of $25.0 million, have been determined
by a nationally recognized investment banking firm or other qualified
independent appraiser to be fair, from a financial standpoint, to the Company
and its Restricted Subsidiaries.
(b) The provisions of Section 4.08(a) shall not prohibit (i)
any sale of hydrocarbons or other mineral products to an Affiliate of the
Company or the entering into or performance of Oil and Gas Hedging Contracts,
gas gathering, transportation or processing contracts or oil or natural gas
marketing or exchange contracts with an Affiliate of the Company, in each case,
in the ordinary course of business, so long as the terms of any such transaction
are approved by a majority of the members of the Board of Directors who are
disinterested with respect to such transaction, (ii) the sale to an Affiliate of
the Company of Capital Stock of the Company that does not constitute
Disqualified Stock, and the sale to an Affiliate of the Company of Indebtedness
(including Disqualified Stock) of the Company in connection with an offering of
such Indebtedness in a market transaction and on terms substantially identical
to those of other purchasers in such market transaction, (iii) transactions
contemplated by any employment agreement or other compensation plan or
arrangement existing on the Issue Date or thereafter entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business, (iv)
the payment of reasonable fees to directors of the Company and its Restricted
Subsidiaries who are not employees of the Company or any Restricted Subsidiary,
(v) transactions between or among the Company and its Restricted Subsidiaries,
(vi) transactions between the Company or any of its Restricted Subsidiaries and
Persons that are controlled (as defined in the definition of "Affiliate") by the
Company (an "Unrestricted Affiliate"); provided that no other Person that
controls (as so defined) or is under common control (as so defined) with the
Company holds any Investments in such Unrestricted Affiliate; (vii) Restricted
Payments that are permitted by the provisions of Section 4.05; (viii) loans or
advances to employees in the ordinary course of business and approved by the
Company's Board of Directors in an aggregate principal amount not to exceed $2.5
million outstanding at any one time; and (ix) purchase and supply transactions
with Genesis Energy, L.P. or its Affiliates in the ordinary course of business
consistent with past practice.
54
Section 4.09. Change of Control. (a) Upon the occurrence of a
Change of Control, each Holder shall have the right to require that the Company
purchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.09(b). In the event that at
the time of such Change of Control the terms of the Indebtedness under the
Credit Agreement restrict or prohibit the purchase of Securities pursuant to
this Section, then prior to the mailing of the notice to Holders provided for in
Section 4.09(b) below, but in any event within 30 days following any Change of
Control, the Company shall (i) repay in full the Indebtedness under the Credit
Agreement or (ii) obtain the requisite consent under the agreements governing
the Indebtedness under the Credit Agreement to permit the purchase of the
Securities as provided for in Section 4.09(b).
(b) Within 30 days following a Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee stating: (1) that
a Change of Control has occurred and that such Holder has the right to require
the Company to purchase such Holder's Securities at a purchase price in cash
equal to 101% of the principal amount thereof plus accrued and unpaid interest,
if any, to the date of purchase (subject to the right of Holders of record on
the relevant record date to receive interest on the relevant interest payment
date); (2) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income, cash flow
and capitalization, in each case after giving effect to such Change of Control);
(3) the purchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed); and (4) the instructions determined
by the Company, consistent with this Section 4.09, that a Holder must follow in
order to have its Securities purchased.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least three Business Days
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase
55
by the Holder and a statement that such Holder is withdrawing his election to
have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered to the Trustee for cancelation,
and the Company shall pay the purchase price plus accrued and unpaid interest,
if any, to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the purchase of Securities pursuant to
this Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.09, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.09 by virtue
thereof.
(f) The Company will not be required to make an offer to
purchase Securities as a result of a Change of Control pursuant to this Section
4.09 if a third party (i) makes such offer in the manner, at the times and
otherwise in compliance with the requirements set forth in Section 4.09(b) and
(ii) purchases all Securities validly tendered and not withdrawn under such an
offer.
Section 4.10. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, enter
into, create, incur, assume or suffer to exist any Lien on or with respect to
any property of the Company or such Restricted Subsidiary, whether owned on the
Issue Date or acquired after the Issue Date, or any interest therein or any
income or profits therefrom, unless the Securities or any Subsidiary Guarantee
of such Restricted Subsidiary, as applicable, are secured equally and ratably
with (or prior to) any and all other Indebtedness secured by such Lien, except
that the Company and its Restricted Subsidiaries may enter into, create, incur,
assume or suffer to exist Permitted Liens and Liens securing Senior
Indebtedness.
Section 4.11. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any Default
that occurred during such fiscal year. If they do,
56
the certificate shall describe the Default, its status and what action the
Company is taking or proposes to take with respect thereto. The Company also
shall comply with TIA Section 314(a)(4).
Section 4.12. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 4.13. Future Subsidiary Guarantors. The Company shall
cause each Restricted Subsidiary that represents at least 10% of the book assets
of, or 10% of the ACNTA of the Company and its Restricted Subsidiaries, taken as
a whole, and that has an aggregate of $15.0 million or more of Indebtedness and
Preferred Stock outstanding at any time to promptly Guarantee the Securities
pursuant to a Supplemental Indenture substantially in the form attached hereto
as Exhibit 1.
ARTICLE 5
Successor Company
Section 5.01. When Company May Merge or Transfer Assets. The
Company shall not consolidate with or merge with or into, or convey, transfer or
lease, in one transaction or a series of related transactions, all or
substantially all the assets of the Company and its Restricted Subsidiaries,
taken as a whole, to, any Person, unless:
(i) (A) the resulting, surviving or transferee Person (the
"Successor Company") shall be a Person organized and existing under the
laws of the United States of America, any State thereof or the District
of Columbia and (B) the Successor Company (if not the Company) shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Trustee, in form satisfactory to the Trustee, all the
obligations of the Company under the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and
treating any Indebtedness which becomes an obligation of the Successor
Company or any Restricted Subsidiary as a result of such transaction as
having been Incurred by the Successor Company or any Subsidiary as a
result of such transaction as having been Incurred by such Successor
Company or such Subsidiary at the time of such transaction),
57
no Default shall have occurred and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Adjusted Consolidated Net Tangible Assets
that are not less than the Adjusted Consolidated Net Tangible Assets
prior to such transaction;
(v) in the case of a conveyance, transfer or lease of all or
substantially all the assets of the Company and its Restricted
Subsidiaries, taken as a whole, such assets shall have been so
conveyed, transferred or leased as an entirety or virtually as an
entirety to one Person; and
(vi) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if
any) comply with this Indenture;
provided, however, that clauses (iii) and (iv) shall not be applicable to any
such transaction solely between the Company and any Restricted Subsidiary.
The Successor Company shall be the successor to the Company
and shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture, and the predecessor Company, except
in the case of a lease, shall be released from the obligation to pay the
principal of and interest on the Securities.
Section 5.02. When Subsidiary Guarantors May Merge or Transfer
Assets. The Company will not permit any Subsidiary Guarantor to consolidate with
or merge with or into, or convey, transfer or lease, in one transaction or a
series of transactions, all or substantially all of its assets to any Person
unless: (i) the resulting, surviving or transferee Person (if not such
Subsidiary) shall be a Person organized and existing under the laws of the
jurisdiction under which such Subsidiary was organized or under the laws of the
United States of America, or any State thereof or the District of Columbia, and,
if such Person is not the Company, such Person shall expressly assume, by
executing a Guarantee Agreement, all the obligations of such
58
Subsidiary, if any, under its Subsidiary Guarantee; (ii) immediately after
giving effect to such transaction or transactions on a pro forma basis (and
treating any Indebtedness which becomes an obligation of the resulting,
surviving or transferee Person as a result of such transaction as having been
issued by such Person at the time of such transaction), no Default shall have
occurred and be continuing; (iii) in the case of a conveyance, transfer or lease
of all or substantially all the assets of a Subsidiary Guarantor, such assets
shall have been so conveyed, transferred or leased as an entirety or virtually
as an entirety to one Person; and (iv) the Company delivers to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such Guarantee Agreement, if any, complies
with this Indenture. The provisions of clauses (i) and (ii) above shall not
apply to any one or more transactions which constitute an Asset Disposition if
the Company has complied with the applicable provisions of Section 4.07.
ARTICLE 6
Defaults and Remedies
Section 6.01. Events of Default. An "Event of Default" occurs
if:
(1) the Company defaults in any payment of interest on any
Security when the same becomes due and payable, whether or not such
payment shall be prohibited by Article 10, and such default continues
for a period of 30 consecutive days;
(2) the Company (i) defaults in the payment of the principal
of any Security when the same becomes due and payable at its Stated
Maturity, upon optional redemption, upon required purchase, upon
declaration of acceleration or otherwise, whether or not such payment
shall be prohibited by Article 10 or (ii) fails to redeem or purchase
Securities when required pursuant to this Indenture or the Securities,
whether or not such redemption or purchase shall be prohibited by
Article 10;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04,
4.05, 4.06, 4.07 (other than a failure to purchase Securities when
required under Section 4.07), 4.08, 4.09 (other than a failure to
purchase Securities when
59
required under Section 4.09), 4.10, 4.11 or 4.13 and such failure
continues for 30 consecutive days after the notice specified below;
(5) the Company fails to comply with any of its agreements
contained in the Securities or in this Indenture (other than those
referred to in (1), (2), (3) or (4) above) and such failure continues
for 60 consecutive days after the notice specified below;
(6) Indebtedness of the Company (other than Limited Recourse
Production Payments and Non-recourse Purchase Money Indebtedness) is
not paid within any applicable grace period after final maturity or the
maturity of such Indebtedness is accelerated by the holders thereof
because of a default (and such acceleration is not rescinded or
annulled) and the total amount of such Indebtedness unpaid or
accelerated exceeds $10.0 million;
(7) the Company or any Significant Subsidiary pursuant to or
within the meaning of any Bankruptcy Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief
against it in an involuntary case;
(C) consents to the appointment of a Custodian of it
or for any substantial part of its property; or
(D) makes a general assignment for the benefit of its
creditors;
or takes any comparable action under any foreign laws relating
to insolvency;
(8) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(A) is for relief against the Company or any
Significant Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any
Significant Subsidiary or for any substantial part of its
property; or
(C) orders the winding up or liquidation of the
Company or any Significant Subsidiary;
60
or any similar relief is granted under any foreign laws and
the order or decree remains unstayed and in effect for 60
days;
(9) any judgment or decree for the payment of money in an
uninsured or unindemnified amount in excess of $10.0 million or its
foreign currency equivalent at the time is rendered against the Company
or a Significant Subsidiary and is not discharged and either (A) an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (B) there is a period of 60 days following the
entry of such judgment or decree during which such judgment or decree
is not discharged, waived, bonded or the execution thereof stayed, in
either case 10 days after the notice specified below; or
(10) any Subsidiary Guarantee ceases or otherwise fails to be
in full force and effect (other than in accordance with the terms of
such Subsidiary Guarantee) or any Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guarantee if such
default continues for a period of 10 days after the notice specified
below.
The foregoing will constitute "Events of Default" whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
A Default under clause (4), (5), (9) or (10) is not an Event
of Default until the Trustee or the Holders of at least 25% in principal amount
of the Securities notify the Company of the Default and the Company does not
cure such Default within the time specified after receipt of such notice. Such
notice must specify the Default, demand that it be remedied and state that such
notice is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after
the occurrence thereof, written notice, in the form of an Officers' Certificate,
of any Event of Default under
61
clause (3) or (6) and any event which with the giving of notice or the lapse of
time would become an Event of Default under clause (4), (5), (9) or (10),
describing its status and what action the Company is taking or proposes to take
with respect thereto. The Trustee shall not be deemed to have knowledge of any
Default or Event of Default unless one of its Trust Officers receives written
notice thereof from the Company or any of the Holders.
Section 6.02. Acceleration. If an Event of Default (other than
an Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by written notice to the Company,
or the Holders of at least 25% in principal amount of the outstanding Securities
by written notice to the Company and the Trustee, may declare the principal of
and accrued but unpaid interest on all the Securities to be due and payable.
Upon such a declaration, such principal and interest shall be due and payable
immediately. If an Event of Default specified in Section 6.01(7) or (8) with
respect to the Company occurs and is continuing, the principal of and interest
on all the Securities shall ipso facto become and be immediately due and payable
without any declaration or other act on the part of the Trustee or any
Securityholders. The Holders of a majority in principal amount of the
outstanding Securities by written notice to the Trustee may rescind any such
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. 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 to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Securityholder 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.
62
Section 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by written notice to the Trustee
may waive an existing or past Default and its consequences except (i) a Default
in the payment of the principal of or interest on a Security or (ii) a Default
in respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
Section 6.05. Control by Majority. The Holders of a majority
in principal amount of the outstanding Securities may direct the time, method
and place of conducting any proceeding for any remedy available to the Trustee
or of exercising any trust or power conferred on the Trustee. The Trustee,
however, may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Section 7.01, that the Trustee determines is unduly
prejudicial to the rights of other Securityholders or would involve the Trustee
in personal liability; provided, however, that the Trustee may take any other
action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to be furnished with indemnification satisfactory to it in its sole discretion
against all losses and expenses caused by taking or not taking such action.
Section 6.06. Limitation on Suits. A Securityholder may not
pursue any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice stating
that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue
the remedy;
(3) such Holder or Holders furnish, if required by the
Trustee, to the Trustee reasonable security or indemnity against any
loss, liability or expense;
(4) the Trustee does not comply with the request within 60
days after receipt of the request and the furnishing of the required
security or indemnity; and
(5) the Holders of a majority in principal amount of the
outstanding Securities do not give the Trustee a
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direction inconsistent with the request during such 60-day period.
A Securityholder may not use this Indenture to prejudice the
rights of another Securityholder or to obtain a preference or priority over
another Securityholder.
Section 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of, premium (if any) or interest on the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
Section 6.08. Collection Suit by Trustee. If an Event of
Default specified in Section 6.01(1) or (2) occurs and is continuing, the
Trustee may recover judgment in its own name and as trustee of an express trust
against the Company for the whole amount then due and owing (together with
interest on any unpaid interest to the extent lawful) and the amounts provided
for in Section 7.07.
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 and the Securityholders
allowed in any judicial proceedings relative to the Company or any Subsidiary
Guarantor their respective creditors or their respective property and, unless
prohibited by law or applicable regulations, may vote on behalf of the Holders
in any election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make 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 it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
Section 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
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SECOND: to holders of Senior Indebtedness to the extent
required by Article 10 or 12;
THIRD: to Securityholders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Securityholders pursuant to this Section. At least 15 days before
such record date, the Company shall mail to each Securityholder and the Trustee
a notice that states the record date, the payment date and amount to be paid.
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 in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section does not apply to a
suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by
Holders of more than an aggregate of 10% in principal amount of the Securities.
Section 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE 7
Trustee
Section 7.01. Duties of Trustee. (a) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(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, the Trustee shall examine such certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b)
of this Section;
(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; and
(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 6.05.
(d) Every provision of this Indenture that in any way relates
to the Trustee is subject to paragraphs (a), (b) and (c) of this Section.
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(e) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee
to advance, expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers. The Trustee, however, may so advance or expend its own
funds if, in its own reasonable judgment, the Trustee believes that repayment of
such funds or adequate indemnity against such risk or liability has been
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct
or affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
(i) Notwithstanding anything to the contrary herein, the
Trustee shall have no duty to review the reports and information documents
required to be provided by Section 4.02 for the purposes of determining
compliance with any provisions of this Indenture.
Section 7.02. Rights of Trustee. (a) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter stated
in the document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not
be liable for any action it takes or omits to take in good faith in reliance on
the Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through 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 it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Trustee's conduct does not
constitute wilful misconduct or negligence.
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(e) The Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be charged with knowledge of any
Default or Event of Default unless either (1) a Trust Officer shall have actual
knowledge of such Default or Event of Default or (2) written notice of such
Default or Event of Default shall have been given to the Trustee by the Company
or any other obligor on such Securities or by any Holder of the Securities.
Section 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying 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 shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Company in the Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
Section 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Securityholder notice of the Default within 90 days after it occurs. Except in
the case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as the
Trust Officer responsible for administering this Indenture and the Securities in
good faith determines that withholding notice is not opposed to the interests of
Securityholders.
Section 7.06. Reports by Trustee to Holders. Within sixty (60)
days after May 15 of each year, beginning with May 15, 2003, the Trustee shall
mail to each Securityholder a brief
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report dated as of May 15 of such year, that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the SEC and each stock exchange (if any) on
which the Securities are listed. The Company agrees to notify promptly the
Trustee whenever the Securities become listed on any stock exchange and of any
delisting thereof.
Section 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time reasonable compensation for its services,
including extraordinary services such as default administration. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable out-of-pocket expenses incurred or made by it, including costs of
collection, in addition to the compensation for its services. Such expenses
shall include the reasonable compensation and expenses, disbursements and
advances of the Trustee's agents, counsel, accountants and experts. The Company
shall indemnify the Trustee against any and all loss, liability or expense
(including attorneys' fees) arising out of its acceptance of this trust or
incurred by it in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture against the Company (including under Section 7.07). The
Trustee shall notify the Company promptly of any claim (whether asserted by any
Securityholder or the Company) for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section,
the Trustee shall have a lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the resignation or removal of the Trustee and the discharge of
this Indenture. When the Trustee incurs expenses after the occurrence of a
Default specified in
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Section 6.01(7) or (8) with respect to the Company, the expenses are intended to
constitute expenses of administration under the Bankruptcy Law.
Section 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in principal
amount outstanding of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. A holder may petition a court of
competent jurisdiction to remove the Trustee in the manner and under the
circumstances contemplated by TIA Section 310(b)(iii). The Company shall 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 otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount outstanding of the Securities and such
Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy
exists in the office of Trustee for any reason (the Trustee in such event being
referred to herein as the retiring Trustee), the Company shall promptly appoint
a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 10% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
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If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction for the removal
of the Trustee and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; and in all such cases such certificates shall have the
full force which it is anywhere in the Securities or in this Indenture provided
that the certificate of the Trustee shall have.
Section 7.10. Eligibility; Disqualification. The Trustee shall
at all times satisfy the requirements of TIA Section 310(a). The Trustee shall
have a combined capital and surplus of at least $50.0 million as set forth in
its most recent annual report of condition. The Trustee shall comply with TIA
Section 310(b); provided, however, that there shall be excluded from the
operation of TIA Section 310(b)(1) any indenture or indentures under which other
securities or certificates of interest or participation in other securities of
the Company are outstanding if the requirements for such exclusion set forth in
TIA Section 310(b)(1) are met.
Section 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated.
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ARTICLE 8
Discharge of Indenture; Defeasance
Section 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (i) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancelation or (ii) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon to maturity or such redemption date
(other than Securities replaced pursuant to Section 2.07), and if in either case
the Company pays all other sums payable hereunder by the Company, then this
Indenture shall, subject to Section 8.01(c), cease to be of further effect. The
Trustee shall acknowledge satisfaction and discharge of this Indenture on demand
of the Company accompanied by an Officers' Certificate and an Opinion of Counsel
and at the cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any
time may terminate (i) all its obligations under the Securities and this
Indenture ("legal defeasance option") or (ii) its obligations under Sections
4.02, 4.03, 4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11 and 4.13 and the operation
of Sections 6.01(4), 6.01(6), 6.01(7) (but only with respect to Significant
Subsidiaries), 6.01(8) (but only with respect to Significant Subsidiaries),
6.01(9) and 6.01(10) and its obligations under Sections 5.01(iii), (iv) and (v)
and under Section 5.02 ("covenant defeasance option"). The Company may exercise
its legal defeasance option notwithstanding its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If the
Company exercises its covenant defeasance option, payment of the Securities may
not be accelerated because of an Event of Default specified in Section 6.01(4),
6.01(6), 6.01(7) (but only with respect to Significant Subsidiaries), 6.01(8)
(but only with respect to Significant Subsidiaries), 6.01(9) or 6.01(10) or
because of the failure of the Company to comply with Section 5.01(iii), (iv) or
(v) or with Section 5.02. If the Company exercises its legal defeasance option
or its covenant defeasance option, each
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Subsidiary Guarantor will be released from all its obligations with respect to
its Subsidiary Guarantee.
Upon satisfaction of the conditions set forth herein and upon
request of the Company, the Trustee shall acknowledge in writing the discharge
of those obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.07, 7.07, 7.08 and this Article 8
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
Section 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee
money or U.S. Government Obligations for the payment of principal and
interest on the Securities to maturity or redemption, as the case may
be;
(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing its
opinion that the payments of principal of and interest when due and
without reinvestment on the deposited U.S. Government Obligations plus
any deposited money without investment will provide cash at such times
and in such amounts as will be sufficient to pay principal and interest
when due on all the Securities to maturity or redemption, as the case
may be;
(3) 123 days pass after the deposit is made and during the
123-day period no Default specified in Section 6.01(7) or (8) with
respect to the Company occurs which is continuing at the end of the
period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel
to the effect that the trust resulting from the deposit does not
constitute, or is qualified as, a regulated investment company under
the Investment Company Act of 1940;
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(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such Opinion
of Counsel shall confirm that, the Securityholders will not recognize
income, gain or loss for Federal income tax purposes as a result of
such 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;
(7) in the case of the covenant defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Securityholders 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; and
(8) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent to the defeasance and discharge of the Securities as
contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
Section 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant to
this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with this
Indenture to the payment of principal of and interest on the Securities. Money
and securities so held in trust are not subject to Article 10.
Section 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any money or
securities held by them at any time which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof
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that would then be required for the Company to exercise its legal defeasance
option or its covenant defeasance option pursuant to this Article 8.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon written request any money
held by them for the payment of principal or interest that remains unclaimed for
two years, and, thereafter, Securityholders entitled to the money must look to
the Company for payment as general creditors.
Section 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
Section 8.06. Reinstatement. If the Trustee or Paying Agent is
unable to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.
ARTICLE 9
Amendments
Section 9.01. Without Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities
without notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
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(3) to provide for uncertificated Securities in addition to or
in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 or 12 that would limit or
terminate the benefits available to any holder of Senior Indebtedness
of the Company or any Subsidiary Guarantor (or Representatives
therefor) under Article 10 or 12;
(5) to add guarantees with respect to the Securities
(including any Subsidiary Guarantee) or to secure the Securities;
(6) to add to the covenants of the Company for the benefit of
the Holders or to surrender any right or power herein conferred upon
the Company or the Subsidiary Guarantors;
(7) to comply with any requirements of the SEC in connection
with qualifying this Indenture under the TIA; or
(8) to make any change that does not adversely affect the
rights of any Securityholder.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 or 12 of any holder of Senior
Indebtedness of the Company or of a Subsidiary Guarantor then outstanding unless
the holders of such Senior Indebtedness (or any group or representative thereof
authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such notice to all Securityholders, or any defect
therein, shall not impair or affect the validity of an amendment under this
Section.
Section 9.02. With Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture or the Securities
without notice to any Securityholder but with the written consent of the Holders
of at least a
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majority in principal amount of the Securities. Without the consent of each
Securityholder affected, however, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent
to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity of
any Security;
(4) reduce the premium payable upon a required purchase (to
the extent the Company has at the time become obligated by the terms of
the Indenture to effect a required purchase) or the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3 and paragraph 5 of the Securities;
(5) make any Security payable in money other than that stated
in the Security;
(6) make any change in Article 10 or 12 or that adversely
affects the rights of any Securityholder under Article 10 or 12;
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section; or
(8) make any change in any Subsidiary Guarantee that would
adversely affect the Securityholders.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 or 12 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness (or
any group or representative thereof authorized to give a consent) consent to
such change.
After an amendment under this Section becomes effective, the
Company shall mail to Securityholders a notice briefly describing such
amendment. The failure to give such
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notice to all Securityholders, or any defect therein, shall not impair or affect
the validity of an amendment under this Section.
Section 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
Section 9.04. Revocation and Effect of Consents and Waivers. A
consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any such
Holder or subsequent Holder may revoke the consent or waiver as to such Holder's
Security or portion of the Security if the Trustee receives the notice of
revocation before the date the amendment or waiver becomes effective. After an
amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Securityholders entitled to give their
consent or take any other action described above or required or permitted to be
taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
Section 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder of
the Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
Section 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the
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Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
Section 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid or agreed to be paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating to
such consent, waiver or agreement.
ARTICLE 10
Subordination of the Securities
Section 10.01. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the Indebtedness
evidenced by the Securities are senior unsecured, general obligations of the
Company, subordinated in right of payment, to the extent and in the manner
provided in this Article 10, to the prior payment of all Senior Indebtedness of
the Company, whether outstanding on the Issue Date or thereafter incurred,
including the Company's obligations under the Credit Agreement, and that the
subordination is for the benefit of and enforceable by the holders of such
Senior Indebtedness. The Securities shall in all respects rank pari passu with
all other Senior Subordinated Indebtedness of the Company, and only Indebtedness
of the Company which is Senior Indebtedness shall rank senior to the Securities
in accordance with the provisions set forth herein. All provisions of this
Article 10 shall be subject to Section 10.12.
Section 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company upon a total or partial
liquidation or a total or partial
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dissolution of the Company or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Company or its property:
(1) subject to the provisions of Section 10.12, holders of
Senior Indebtedness of the Company shall be entitled to receive payment
in full of such Senior Indebtedness before Securityholders shall be
entitled to receive any payment of principal of or interest on the
Securities; and
(2) until the Senior Indebtedness of the Company is paid in
full, any payment or distribution to which Securityholders would be
entitled but for this Article 10 shall be made to holders of such
Senior Indebtedness as their interests may appear, except that
Securityholders may receive shares of stock and any debt securities
that are subordinated to such Senior Indebtedness to at least the same
extent as the Securities.
Section 10.03. Default on Designated Senior Indebtedness. The
Company may not pay the principal of, premium (if any) or interest on the
Securities or make any deposit pursuant to Section 8.01 and may not repurchase,
redeem or otherwise retire any Securities (collectively, "pay the Securities")
if (i) any Designated Senior Indebtedness of the Company is not paid when due or
(ii) any other default on Designated Senior Indebtedness of the Company occurs
and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, (x) the default has been cured
or waived and any such acceleration has been rescinded or (y) such Designated
Senior Indebtedness has been paid in full; provided, however, that the Company
may pay the Securities without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
the Designated Senior Indebtedness with respect to which either of the events
set forth in clause (i) or (ii) of this sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness of the Company pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of the holders of such Designated Senior Indebtedness specifying
an
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election to effect a Payment Blockage Period and ending 179 days thereafter (or
earlier if such Payment Blockage Period is terminated (i) by written notice to
the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Designated Senior Indebtedness has been
repaid in full). Notwithstanding the provisions described in the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness
giving such Blockage Notice or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Company
shall resume payments on the Securities after the end of such Payment Blockage
Period. The Securities shall not be subject to more than one Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness of the Company during such
period. For purposes of this Section, no default or event of default which
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Blockage Period by the Representative of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
Section 10.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company or the Trustee (upon receipt of the requisite information from the
Company) shall promptly notify the holders of Designated Senior Indebtedness (or
their Representatives) of the Company of the acceleration.
Section 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 10 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of Senior Indebtedness of the Company and pay
it over to them as their interests may appear.
Section 10.06. Subrogation. After all Senior Indebtedness of
the Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 10 to holders of Senior Indebtedness of the
Company which otherwise would have been made
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to Securityholders is not, as between the Company and Securityholders, a payment
by the Company on such Senior Indebtedness.
Section 10.07. Relative Rights. This Article 10 defines the
relative rights of Securityholders and holders of Senior Indebtedness of the
Company. Nothing in this Indenture shall:
(1) impair, as between the Company and Securityholders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a Default, subject to the rights of holders
of Senior Indebtedness of the Company to receive distributions
otherwise payable to Securityholders.
Section 10.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness of the Company to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by its failure to comply with
this Indenture.
Section 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article 10. The Company, the Registrar or co-registrar, the
Paying Agent, a Representative or a holder of Senior Indebtedness may give the
notice; provided, however, that, if an issue of Senior Indebtedness of the
Company has a Representative, only the Representative may give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of the Company with the same rights it would have if it were
not Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 10 with respect to any such Senior Indebtedness which may at any
time be held by it, to the same extent as any other holder
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of such Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee
of any of its rights as such holder. Nothing in this Article 10 shall apply to
claims of, or payments to, the Trustee under or pursuant to Section 7.07.
Section 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of the Company, the distribution may be made and the notice given
to their Representative (if any).
Section 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 10 shall have
any effect on the right of the Securityholders or the Trustee to accelerate the
maturity of the Securities.
Section 10.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payment from the money or the
proceeds of U.S. Government Obligations deposited in trust with the Trustee in
accordance with the provisions of Article 8 for the payment of principal of and
interest on the Securities shall not be subordinated to the prior payment of any
Senior Indebtedness of the Company or subject to the restrictions set forth in
this Article 10, and none of the Securityholders shall be obligated to pay over
any such amount to the Company or any holder of such Senior Indebtedness of the
Company or any other creditor of the Company.
Section 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company
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to participate in any payment or distribution pursuant to this Article 10, the
Trustee may request such Person to furnish evidence to the reasonable
satisfaction of the Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and other facts pertinent to the rights of such Person
under this Article 10, and, if such evidence is not furnished, the Trustee may
defer any payment to such Person pending judicial determination as to the right
of such Person to receive such payment. The provisions of Sections 7.01 and 7.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article 10.
Section 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of the Company as provided in this Article 10 and appoints
the Trustee as attorney-in-fact for any and all such purposes.
Section 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company. The Trustee
undertakes to perform or to observe only such of the covenants and obligations
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to such holders of such Senior Indebtedness shall be
implied in this Indenture against the Trustee.
Section 10.16. Reliance by Holders of Senior Indebtedness of
the Company on Subordination Provisions. Each Securityholder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder of
any Senior Indebtedness of the Company, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of such Senior Indebtedness shall be deemed conclusively to have relied
on such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
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ARTICLE 11
Subsidiary Guarantees
Section 11.01. Subsidiary Guarantees. Each Subsidiary
Guarantor, jointly and severally, as primary obligor and not merely as surety,
hereby irrevocably, fully and unconditionally Guarantees on a senior
subordinated basis to each Holder and to the Trustee and its successors and
assigns (a) the full and punctual payment of principal of and interest on the
Securities when due, whether at Stated Maturity, by acceleration, by redemption
or otherwise, and all other monetary obligations of the Company under this
Indenture and the Securities and (b) the full and punctual performance within
applicable grace periods of all other obligations of the Company under this
Indenture and the Securities (all the foregoing obligations hereinafter
collectively called the "Guaranteed Obligations"). Each Subsidiary Guarantor
further agrees that the Guaranteed Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Subsidiary
Guarantor, and that such Subsidiary Guarantor shall remain bound under this
Article 11 notwithstanding any extension or renewal of any such Guaranteed
Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Guaranteed Obligations and
also waives notice of protest for nonpayment. Each Subsidiary Guarantor waives
notice of any default under the Securities or the Guaranteed Obligations. The
obligations of each Subsidiary Guarantor hereunder shall not be affected by (a)
the failure of any Holder or the Trustee to assert any claim or demand or to
enforce any right or remedy against the Company or any other Person under this
Indenture, the Securities or any other agreement or otherwise; (b) any extension
or renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Securities or any other
agreement; (d) the release of any security held by any Holder or the Trustee for
the Guaranteed Obligations or any of them; (e) the failure of any Holder or
Trustee to exercise any right or remedy against any other guarantor of the
Guaranteed Obligations; or (f) except as provided in Section 11.06, any change
in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee herein constitutes a Guarantee of payment, performance and compliance
when due (and not a Guarantee of collection) and waives any right to require
that any resort be
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had by any Holder or the Trustee to any security held for payment of the
Guaranteed Obligations.
Each Subsidiary Guarantee is, to the extent and manner set
forth in Article 12, subordinated and subject in right of payment to the prior
payment in full in cash or cash equivalents of all Senior Indebtedness of the
Subsidiary Guarantor giving such Subsidiary Guarantee and each Subsidiary
Guarantee is hereby made subject to such provisions of this Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and
11.06, the obligations of each Subsidiary Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including any claim of waiver, release, surrender, alteration or compromise, and
shall not be subject to any defense of setoff, counterclaim, recoupment or
termination whatsoever or by reason of the invalidity, illegality or
unenforceability of the Guaranteed Obligations or otherwise. Without limiting
the generality of the foregoing, the obligations of each Subsidiary Guarantor
herein shall not be discharged or impaired or otherwise affected by the failure
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay, wilful
or otherwise, in the performance of the Guaranteed Obligations, or by any other
act or thing or omission or delay to do any other act or thing which may or
might in any manner or to any extent vary the risk of such Subsidiary Guarantor
or would otherwise operate as a discharge of such Subsidiary Guarantor as a
matter of law or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guarantee shall continue to be effective or be reinstated, as the case may be,
if at any time payment, or any part thereof, of principal of or interest on any
Guaranteed Obligation is rescinded or must otherwise be restored by any Holder
or the Trustee upon the bankruptcy or reorganization of the Company or
otherwise.
In furtherance of the foregoing and not in limitation of any
other right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Guaranteed Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Guaranteed Obligation, each
Subsidiary Guarantor shall, upon receipt of written demand by the Trustee,
forthwith pay, or cause to be paid, in cash, to
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the Holders or the Trustee an amount equal to the sum of (i) the unpaid
principal amount of such Guaranteed Obligations, (ii) accrued and unpaid
interest on such Guaranteed Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary Guaranteed Obligations of the Company to
the Holders and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled
to any right of subrogation in respect of any Guaranteed Obligations guaranteed
hereby until payment in full of all Guaranteed Obligations and all obligations
to which the Guaranteed Obligations are subordinated as provided in Article 12.
Each Subsidiary Guarantor further agrees that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, (x) the maturity of the
Guaranteed Obligations Guaranteed hereby may be accelerated as provided in
Article 6 for the purposes of such Subsidiary Guarantor's Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guaranteed Obligations Guaranteed hereby, and (y)
in the event of any declaration of acceleration of such Guaranteed Obligations
as provided in Article 6, such Guaranteed Obligations (whether or not due and
payable) shall forthwith become due and payable by such Subsidiary Guarantor for
the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs
and expenses (including reasonable attorneys' fees) incurred by the Trustee or
any Holder in enforcing any rights under this Section.
SECTION 11.02. Limitation on Liability. Any term or provision
of this Indenture to the contrary notwithstanding, the maximum, aggregate amount
of the obligations guaranteed hereunder by any Subsidiary Guarantor shall not
exceed the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Section 11.03. Successors and Assigns. This Article 11 shall
be binding upon each Subsidiary Guarantor and its successors and assigns and
shall enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically
87
extend to and be vested in such transferee or assignee, all subject to the terms
and conditions of this Indenture.
Section 11.04. No Waiver. Neither a failure nor a delay on the
part of either the Trustee or the Holders in exercising any right, power or
privilege under this Article 11 shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise of any
right, power or privilege. The rights, remedies and benefits of the Trustee and
the Holders herein expressly specified are cumulative and not exclusive of any
other rights, remedies or benefits which either may have under this Article 11
at law, in equity, by statute or otherwise.
Section 11.05. Modification. No modification, amendment or
waiver of any provision of this Article 11, nor the consent to any departure by
any Subsidiary Guarantor therefrom, shall in any event be effective unless the
same shall be in writing and signed by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand on any Subsidiary Guarantor in any case
shall entitle such Subsidiary Guarantor to any other or further notice or demand
in the same, similar or other circumstances.
SECTION 11.06. Release of Subsidiary Guarantor. This
Subsidiary Guarantee as to any Subsidiary Guarantor shall terminate and be of no
further force or effect (i) upon the sale (including any sale pursuant to any
exercise of remedies by a holder of Senior Indebtedness of such Subsidiary
Guarantor) or other disposition (including by way of consolidation or merger) of
such Subsidiary Guarantor or (ii) upon the sale or disposition of all or
substantially all of the assets of such Subsidiary Guarantor, in each case other
than to the Company or an Affiliate of the Company; provided, however, that such
sale or transfer shall be deemed to constitute an Asset Disposition and the
Company shall comply with all applicable provisions of Section 4.06 with respect
to such Asset Disposition.
ARTICLE 12
Subordination of Subsidiary Guarantees
Section 12.01. Agreement To Subordinate. Each Subsidiary
Guarantor agrees, and each Securityholder by accepting a Security agrees, that
the Obligations of such Subsidiary Guarantor under its Subsidiary Guarantee are
subordinated in
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right of payment, to the extent and in the manner provided in this Article 12,
to the prior payment in full in cash or cash equivalents of all Senior
Indebtedness of such Subsidiary Guarantor and that the subordination is for the
benefit of and enforceable by the holders of such Senior Indebtedness. The
Obligations of each Subsidiary Guarantor under its Subsidiary Guarantee shall in
all respects rank pari passu with all other Senior Subordinated Indebtedness of
such Subsidiary Guarantor and only Senior Indebtedness of such Subsidiary
Guarantor (including such Subsidiary Guarantor's Guarantees of Senior
Indebtedness of the Company) shall rank senior to the Subsidiary Guarantee of
such Subsidiary Guarantor in accordance with the provisions set forth herein.
Section 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of any Subsidiary Guarantor to creditors
upon a total or partial liquidation or a total or partial dissolution of such
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Subsidiary Guarantor or its
property:
(1) holders of Senior Indebtedness of such Subsidiary
Guarantor shall be entitled to receive payment in full of such Senior
Indebtedness in cash or cash equivalents before Securityholders shall
be entitled to receive any payment pursuant to the Subsidiary Guarantee
of such Subsidiary Guarantor; and
(2) until the Senior Indebtedness of such Subsidiary Guarantor
is paid in full in cash or cash equivalents, any distribution to which
Securityholders would be entitled but for this Article 12 shall be made
to holders of such Senior Indebtedness as their interests may appear,
except that Securityholders may receive shares of stock and any debt
securities of such Subsidiary Guarantor that are subordinated to
Senior Indebtedness, and to any debt securities received by holders of
Senior Indebtedness, of such Subsidiary Guarantor to at least the same
extent as the Subsidiary Guarantee of such Subsidiary Guarantor are
subordinated to Senior Indebtedness of such Subsidiary Guarantor.
Section 12.03. Default on Designated Senior Indebtedness of
Subsidiary Guarantor. No Subsidiary Guarantor may make any payment pursuant to
its Subsidiary Guarantee or repurchase, redeem or otherwise retire or defease
any Securities or other Obligations (collectively, "pay its Subsidiary
Guarantee") if (i) any Designated Senior Indebtedness of such
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Subsidiary Guarantor is not paid when due or (ii) any other default on
Designated Senior Indebtedness of such Subsidiary Guarantor occurs and the
maturity of such Designated Senior Indebtedness is accelerated in accordance
with its terms unless, in either case, (x) the default has been cured or waived
and any such acceleration has been rescinded or (y) such Designated Senior
Indebtedness has been paid in full; provided, however, that such Subsidiary
Guarantor may pay its Subsidiary Guarantee without regard to the foregoing if
such Subsidiary Guarantor and the Trustee receive written notice approving such
payment from the Representative of the Designated Senior Indebtedness with
respect to which either of the events set forth in clause (i) or (ii) of this
sentence has occurred and is continuing. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding sentence)
with respect to any Designated Senior Indebtedness of such Subsidiary Guarantor
pursuant to which the maturity thereof may be accelerated immediately without
further notice (except such notice as may be required to effect such
acceleration) or the expiration of any applicable grace periods, such Subsidiary
Guarantor may not pay its Guarantee for a period (a "Subsidiary Guarantor
Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to such Subsidiary Guarantor) of written notice (a "Subsidiary Guarantor
Blockage Notice") of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Subsidiary
Guarantor Payment Blockage Period and ending 179 days thereafter (or earlier if
such Subsidiary Guarantor Payment Blockage Period is terminated (i) by written
notice to the Trustee and such Subsidiary Guarantor from the Person or Persons
who gave such Subsidiary Guarantor Blockage Notice, (ii) because the default
giving rise to such Subsidiary Guarantor Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section),
unless the holders of Designated Senior Indebtedness giving such Subsidiary
Guarantor Blockage Notice or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, such Subsidiary
Guarantor shall resume payments pursuant to its Subsidiary Guarantee after the
end of such Subsidiary Guarantor Payment Blockage Period. A Subsidiary Guarantee
shall not be subject to more than one Subsidiary Guarantor Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness of such Subsidiary Guarantor
during such period. For purposes of this Section, no default or event of default
which existed or was
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continuing on the date of the commencement of any Subsidiary Guarantor Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Subsidiary Guarantor Payment Blockage Period shall be, or be made, the
basis of the commencement of a subsequent Subsidiary Guarantor Payment Blockage
Period by the Representative of such Designated Senior Indebtedness, whether or
not within a period of 360 consecutive days, unless such default or event of
default shall have been cured or waived for a period of not less than 90
consecutive days.
Section 12.04. Demand for Payment. If a demand for payment is
made on a Subsidiary Guarantor pursuant to Article 11, the Trustee shall
promptly notify the holders of the Designated Senior Indebtedness (or their
Representatives) of such Subsidiary Guarantor of such demand.
Section 12.05. When Distribution Must Be Paid Over. If a
distribution is made to Securityholders that because of this Article 12 should
not have been made to them, the Securityholders who receive the distribution
shall hold it in trust for holders of the relevant Senior Indebtedness and pay
it over to them or their Representative as their interests may appear.
Section 12.06. Subrogation. After all Senior Indebtedness of a
Subsidiary Guarantor is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
distribution made under this Article 12 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
relevant Subsidiary Guarantor and Securityholders, a payment by such Subsidiary
Guarantor on such Senior Indebtedness.
Section 12.07. Relative Rights. This Article 12 defines the
relative rights of Securityholders and holders of Senior Indebtedness of a
Subsidiary Guarantor. Nothing in this Indenture shall:
(1) impair, as between such Subsidiary Guarantor and
Securityholders, the obligation of such Subsidiary Guarantor, which is
absolute and unconditional, to pay the Obligations to the extent set
forth in Article 11; or
(2) prevent the Trustee or any Securityholder from exercising
its available remedies upon a default by such Subsidiary Guarantor
under its Subsidiary Guarantee, subject
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to the rights of holders of Senior Indebtedness of such Subsidiary
Guarantor to receive distributions otherwise payable to
Securityholders.
Section 12.08. Subordination May Not Be Impaired by Subsidiary
Guarantor. No right of any holder of Senior Indebtedness of any Subsidiary
Guarantor to enforce the subordination of the Obligations of such Subsidiary
Guarantor shall be impaired by any act or failure to act by such Subsidiary
Guarantor or by its failure to comply with this Indenture.
Section 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or Paying Agent may continue to make
payments pursuant to any Subsidiary Guarantee and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than two Business Days prior to the date of such
payment, a Trust Officer of the Trustee receives written notice satisfactory to
it that payments may not be made under this Article 12. The Company, such
Subsidiary Guarantor, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness of such Subsidiary Guarantor
may give the notice; provided, however, that, if an issue of Senior Indebtedness
of such Subsidiary Guarantor has a Representative, only the Representative may
give the notice.
The Trustee in its individual or any other capacity may hold
Senior Indebtedness of any Subsidiary Guarantor with the same rights it would
have if it were not Trustee. The Registrar and co-registrar and the Paying Agent
may do the same with like rights. The Trustee shall be entitled to all the
rights set forth in this Article 12 with respect to any Senior Indebtedness of
any Subsidiary Guarantor which may at any time be held by it, to the same extent
as any other holder of such Senior Indebtedness of such Subsidiary Guarantor;
and nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 12 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
Section 12.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of any Subsidiary Guarantor, the distribution may be made and the
notice given to their Representative (if any).
Section 12.11. Article 12 Not To Prevent Defaults Under a
Subsidiary Guarantee or Limit Right To Demand Payment. The failure to make a
payment pursuant to a Subsidiary Guarantee
92
by reason of any provision in this Article 12 shall not be construed as
preventing the occurrence of a default under such Subsidiary Guarantee. Nothing
in this Article 12 shall have any effect on the right of the Securityholders or
the Trustee to make a demand for payment on any Subsidiary Guarantor pursuant to
its Subsidiary Guarantee.
Section 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 12.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Securityholders or (iii) upon the Representative for the holders of Senior
Indebtedness of any Subsidiary Guarantor for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
such Senior Indebtedness and other Indebtedness of such Subsidiary Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or distributed
thereon and all other facts pertinent thereto or to this Article 12. In the
event that the Trustee determines, in good faith, that evidence is required with
respect to the right of any Person as a holder of Senior Indebtedness of such
Subsidiary Guarantor to participate in any payment or distribution pursuant to
this Article 12, the Trustee may request such Person to furnish evidence to the
reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness
of such Subsidiary Guarantor held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and other
facts pertinent to the rights of such Person under this Article 12, and, if such
evidence is not furnished, the Trustee may defer any payment to such Person
pending judicial determination as to the right of such Person to receive such
payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all
actions or omissions of actions by the Trustee pursuant to this Article 12.
Section 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of any Subsidiary Guarantor as provided in this Article 12
and appoints the Trustee as attorney-in-fact for any and all such purposes.
93
Section 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Subsidiary Guarantor. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of any Subsidiary Guarantor
and shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of such Senior Indebtedness shall be entitled by
virtue of this Article 12 or otherwise.
Section 12.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of any Subsidiary Guarantor, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
ARTICLE 13
Miscellaneous
Section 13.01. Trust Indenture Act 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.
Section 13.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or any Subsidiary Guarantor:
Denbury Resources Inc.
5100 Tennyson Parkway, Suite 3000
Plano, Texas 775024
Attention of Corporate Secretary
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if to the Trustee:
JPMorgan Chase Bank
600 Travis Street, Suite 1150
Houston, Texas 77002
Attention of Corporate Trust Department
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.
Failure to mail a notice or communication to a Securityholder
or any defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
Section 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 13.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the
signers, all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
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Section 13.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture shall include:
(1) a statement that the individual 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 individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
Any Officers' Certificate may be based, insofar as it relates to legal matters,
upon an Opinion of Counsel, unless any such Officer knows or in the exercise of
reasonable care should have known that such Opinion of Counsel is erroneous. Any
Opinion of Counsel may be based, insofar as it relates to factual matters,
information with respect to which is in possession of the Company, upon an
Officers' Certificate, unless such counsel knows or in the exercise of
reasonable care should have known that such Officers' Certificate is erroneous.
Section 13.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person directly or indirectly controlling or controlled by or under
direct or indirect common control with the Company shall be disregarded and
deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee actually knows are so owned shall
be so disregarded. Also, subject to the foregoing, only Securities outstanding
at the time shall be considered in any such determination.
Section 13.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by
96
or a meeting of Securityholders. The Registrar and the Paying Agent may make
reasonable rules for their functions.
Section 13.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to be
open in the State of New York or in the State of Texas. If a payment date is a
Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday, and no interest shall accrue with respect to such payment for the
intervening period. If a regular record date is a Legal Holiday, the record date
shall not be affected.
Section 13.09. Governing Law. 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.
Section 13.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company shall not have any
liability for any obligations of the Company under the Securities or this
Indenture or for any claim based on, in respect of or by reason of such
obligations or their creation. By accepting a Security, each Securityholder
shall waive and release all such liability. The waiver and release shall be part
of the consideration for the issue of the Securities.
Section 13.11. Successors. All agreements of the Company in
this Indenture and the Securities shall bind its successors. All agreements of
the Trustee in this Indenture shall bind its successors.
Section 13.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough to
prove this Indenture.
Section 13.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles
97
and Sections of this Indenture have been inserted for convenience of reference
only, are not intended to be considered a part hereof and shall not modify or
restrict any of the terms or provisions hereof.
Section 13.14. Severability. If any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
98
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
DENBURY RESOURCES INC.,
by____________________________
Name: Phil Rykhoek
Title: Chief Financial
Officer and Secretary
SUBSIDIARY GUARANTORS:
DENBURY ENERGY SERVICES, INC.,
by____________________________
Name:
Title:
DENBURY MARINE, L.L.C.,
by____________________________
Name:
Title:
DENBURY OFFSHORE, INC.,
by____________________________
Name:
Title:
DENBURY GATHERING & MARKETING,
INC.,
by____________________________
Name:
Title:
99
TRUSTEE:
JPMORGAN CHASE BANK,
as Trustee
by____________________________
Name:
Title:
EXHIBIT 1
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this
"Supplemental Indenture"), dated as of
, among [SUBSIDIARY GUARANTOR] (the "New
Subsidiary Guarantor"), a subsidiary of Denbury
Resources Inc. (or its successor) (the "Company"),
DENBURY RESOURCES INC., a Delaware corporation, on
behalf of itself and the Subsidiary Guarantors (the
"Existing Subsidiary Guarantors") under the Indenture
referred to below, and JPMORGAN CHASE BANK, as
trustee under the indenture referred to below (the
"Trustee").
W I T N E S S E T H :
WHEREAS the Company has heretofore executed and delivered to
the Trustee an Indenture (the "Indenture") dated as of March 25, 2003, providing
for the issuance of 7 1/2% Senior Subordinated Notes Due 2013 (the
"Securities");
WHEREAS Section 4.13 of the Indenture provides that under
certain circumstances the Company is required to cause the New Subsidiary
Guarantor to execute and deliver to the Trustee a supplemental indenture
pursuant to which the New Subsidiary Guarantor shall unconditionally guarantee
all of the Company's obligations under the Securities pursuant to a Subsidiary
Guarantee on the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the
Trustee, the Company and Existing Subsidiary Guarantors are authorized to
execute and deliver this Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other
good and valuable consideration, the receipt of which is hereby acknowledged,
the New Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors
and the Trustee mutually covenant and agree for the equal
2
and ratable benefit of the holders of the Securities as follows:
1. Definitions. (a) Capitalized terms used herein without
definition shall have the meanings assigned to them in the Indenture.
(b) For all purposes of this Supplement, except as otherwise
herein expressly provided or unless the context otherwise requires: (i) the
terms and expressions used herein shall have the same meanings as corresponding
terms and expressions used in the Indenture; and (ii) the words "herein,"
"hereof" and "hereby" and other words of similar import used in this Supplement
refer to this Supplement as a whole and not to any particular section hereof.
2. Agreement to Guarantee. The New Subsidiary Guarantor
hereby agrees, jointly and severally with all other Subsidiary Guarantors, to
guarantee the Company's obligations under the Securities on the terms and
subject to the conditions set forth in Article 11 of the Indenture and to be
bound by all other applicable provisions of the Indenture.
3. Ratification of Indenture; Supplemental Indentures Part of
Indenture. Except as expressly amended hereby, the Indenture is in all respects
ratified and confirmed and all the terms, conditions and provisions thereof
shall remain in full force and effect. This Supplemental Indenture shall form a
part of the Indenture for all purposes, and every holder of Securities
heretofore or hereafter authenticated and delivered shall be bound hereby.
4. Governing Law. THIS SUPPLEMENTAL INDENTURE 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.
5. Trustee Makes No Representation. The Trustee makes no
representation as to the validity or sufficiency of this Supplemental Indenture.
6. Counterparts. The parties may sign any number of copies of
this Supplemental Indenture. Each signed copy shall be an original, but all of
them together represent the
3
same agreement.
7. Effect of Headings. The Section headings herein are for
convenience only and shall not effect the construction thereof.
4
IN WITNESS WHEREOF, the parties hereto have caused this
Supplemental Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR],
by
______________________________
Name:
Title:
DENBURY RESOURCES INC., on behalf
of itself and the Existing
Subsidiary Guarantors,
by
______________________________
Name:
Title:
JPMORGAN CHASE BANK,
as Trustee,
by
______________________________
Name:
Title:
RULE 144A/REGULATIONS
APPENDIX
PROVISIONS RELATING TO INITIAL SECURITIES,
EXCHANGE SECURITIES
AND PRIVATE EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
Capitalized terms used but not otherwise defined in this Appendix shall
have the meanings assigned in the Indenture. For the purposes of this Appendix
the following terms shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Temporary Regulation S Global Security or beneficial
interest therein, the rules and procedures of the Depository, Euroclear and
Clearstream for such a Temporary Regulation S Global Security, in each case to
the extent applicable to such transaction and as in effect from time to time.
"Clearstream" means Clearstream Banking, societe anonyme, or
any successor securities clearing agency.
"Definitive Security" means a certificated Initial Security or
Exchange Security or Private Exchange Security bearing, if required, the
restricted securities legend set forth in Section 2.3(e).
"Depository" means The Depository Trust Company, its nominees
and their respective successors.
"Distribution Compliance Period", with respect to any
Securities, means the period of 40 consecutive days beginning on and including
the later of (i) the day on which such Securities are first offered to Persons
other than distributors (as defined in Regulation S under the Securities Act) in
reliance on Regulation S and (ii) the date on which such Securities are issued.
"Euroclear" means Euroclear Bank S.A./N.V., as operator of
the Euroclear System, or any successor securities clearing agency.
"Exchange Securities" means the 7 1/2% Senior Subordinated
Notes Due 2013 to be issued pursuant to the Indenture in exchange for, and in
aggregate principal amount
2
equal to, the Securities and any Additional Securities in compliance with one or
more Registration Rights Agreements.
"Initial Purchasers" means (1) with respect to the Initial
Securities issued on the Issue Date, Credit Suisse First Boston LLC and (2) with
respect to each issuance of Additional Securities, the Persons purchasing such
Additional Securities under the related Purchase Agreement.
"Initial Securities" means (1) $225,000,000 aggregate
principal amount of 7 1/2% Senior Subordinated Notes Due 2013 issued on the
Issue Date and (2) Additional Securities, if any, issued in a transaction exempt
from the registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to
a Registration Rights Agreement, to each Initial Purchaser to issue and deliver
to the Initial Purchaser, in exchange for the Initial Securities held by the
Initial Purchaser as part of its initial distribution, a like aggregate
principal amount of Private Exchange Securities.
"Private Exchange Securities" means any 7 1/2% Senior
Subordinated Notes Due 2013 issued in connection with a Private Exchange.
"Purchase Agreement" means (1) with respect to the Initial
Securities issued on the Issue Date, the Purchase Agreement dated March 17,
2003, among the Company, the Subsidiary Guarantors and the Initial Purchaser and
(2) with respect to each issuance of Additional Securities, the purchase
agreement or underwriting agreement among the Company, the Subsidiary Guarantors
and the Persons purchasing such Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in
Rule 144A.
"Registered Exchange Offer" means the offer by the Company,
pursuant to a Registration Rights Agreement, to certain Holders of Initial
Securities, to issue and deliver to such Holders, in exchange for the Initial
Securities, a like aggregate principal amount of Exchange Securities registered
under the Securities Act.
"Registration Rights Agreement" means (1) with respect to the
Initial Securities issued on the Issue Date, the Registration Rights Agreement
dated March 25, 2003,
3
among the Company, the Subsidiary Guarantors and the Initial Purchaser and (2)
with respect to each issuance of Additional Securities issued in a transaction
exempt from the registration requirements of the Securities Act, the
registration rights agreement, if any, among the Company and the Persons
purchasing such Additional Securities under the related Purchase Agreement.
"Rule 144A Securities" means all Initial Securities offered
and sold to QIBs in reliance on Rule 144A.
"Securities" means the Initial Securities, the Exchange
Securities and the Private Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depository), or any successor Person
thereto and shall initially be the Trustee.
"Shelf Registration Statement" means the registration
statement, if any, filed by the Company in connection with the offer and sale of
Initial Securities or Private Exchange Securities pursuant to a Registration
Rights Agreement.
"Transfer Restricted Securities" means Securities that bear or
are required to bear the legend relating to restrictions on transfer relating to
the Securities Act set forth in Section 2.3(e) hereto.
1.2 Other Definitions
Defined in
----------
Term Section:
- ---- -------
"Agent Members"............................................................................. 2.1(b)
"Global Security"........................................................................... 2.1(a)
"Permanent Regulation S Global Security..................................................... 2.1(a)
"Regulation S".............................................................................. 2.1(a)
"Rule 144A"................................................................................. 2.1(a)
"Rule 144A Global Security.................................................................. 2.1(a)
"Temporary Regulation S Global Security".................................................... 2.1(a)
4
2. The Securities.
2.1 (a) Form and Dating. The Initial Securities will be offered and
sold by the Company pursuant to a Purchase Agreement. The Initial Securities
will be resold initially only to (i) QIBs in reliance on Rule 144A under the
Securities Act ("Rule 144A") and (ii) Persons other than U.S. Persons (as
defined in Regulation S) in reliance on Regulation S under the Securities Act
("Regulation S"). Initial Securities may thereafter be transferred to, among
others, QIBs and purchasers in reliance on Regulation S, subject to the
restrictions on transfer set forth herein. Initial Securities initially resold
pursuant to Rule 144A shall be issued initially in the form of one or more
permanent global Securities in definitive, fully registered form (collectively,
the "Rule 144A Global Security") and Initial Securities initially resold
pursuant to Regulation S shall be issued initially in the form of one or more
temporary global securities in definitive, fully registered form (collectively,
the "Temporary Regulation S Global Security"), in each case without interest
coupons and with the global securities legend and restricted securities legend
set forth in Exhibit 1 hereto, which shall be deposited on behalf of the
purchasers of the Initial Securities represented thereby with the Securities
Custodian, and registered in the name of the Depository or a nominee of the
Depository, duly executed by the Company and authenticated by the Trustee as
provided in this Indenture. Beneficial ownership interests in the Temporary
Regulation S Global Security will not be exchangeable for interests in the Rule
144A Global Security, a permanent global security (the "Permanent Regulation S
Global Security"), or any other Security without a legend containing
restrictions on transfer of such Security prior to the expiration of the
Distribution Compliance Period and then only upon certification in form
reasonably satisfactory to the Trustee that beneficial ownership interests in
such Temporary Regulation S Global Security are owned either by non-U.S. persons
or U.S. persons who purchased such interests in a transaction that did not
require registration under the Securities Act. The Rule 144A Global Security,
the Temporary Regulation S Global Security and the Permanent Regulation S Global
Security are collectively referred to herein as "Global Securities". The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee and the
Depository or its nominee as hereinafter provided.
5
(b) Book-Entry Provisions. This Section 2.1(b) shall apply
only to a Global Security deposited with or on behalf of the Depository.
The Company shall execute and the Trustee shall, in accordance
with this Section 2.1(b), authenticate and deliver initially one or more Global
Securities that (a) shall be registered in the name of the Depository for such
Global Security or Global Securities or the nominee of such Depository and (b)
shall be delivered by the Trustee to such Depository or pursuant to such
Depository's instructions or held by the Trustee as custodian for the
Depository.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository or by the Trustee as the
custodian of the Depository or under such Global Security, and the Company, the
Trustee and any agent of the Company or the Trustee shall be entitled to treat
the Depository as the absolute owner of such Global Security for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
Company, the Trustee or any agent of the Company or the Trustee from giving
effect to any written certification, proxy or other authorization furnished by
the Depository or impair, as between the Depository and its Agent Members, the
operation of customary practices of such Depository governing the exercise of
the rights of a holder of a beneficial interest in any Global Security.
(c) Certificated Securities. Except as provided in this
Section 2.1 or Section 2.3 or 2.4, owners of beneficial interests in Global
Securities shall not be entitled to receive physical delivery of Definitive
Securities.
2.2 Authentication. The Trustee shall authenticate and deliver: (1) on
the Issue Date, an aggregate principal amount of $225,000,000 7 1/2% Senior
Subordinated Notes Due 2013, (2) any Additional Securities for an original issue
in an aggregate principal amount specified in the Company Order pursuant to
Section 2.02 of the Indenture and (3) Exchange Securities or Private Exchange
Securities for issue only in a Registered Exchange Offer or a Private Exchange,
respectively, pursuant to a Registration Rights Agreement, for a like principal
amount of Initial Securities, in each case upon a Company Order. Such order
shall specify the amount of the Securities to be authenticated and the date on
which the original issue of Securities is to be authenticated and, in
6
the case of any issuance of Additional Securities pursuant to Section 2.13 of
the Indenture, shall certify that such issuance is in compliance with Section
4.03 of the Indenture.
2.3 Transfer and Exchange.
(a) Transfer and Exchange of Definitive Securities. When
Definitive Securities are presented to the Registrar or a co-registrar with a
request:
(x) to register the transfer of such Definitive Securities; or
(y) to exchange such Definitive Securities for an equal
principal amount of Definitive Securities of other authorized
denominations,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Securities surrendered for transfer or
exchange:
(i) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Registrar or co- registrar, duly executed by the Holder thereof
or its attorney duly authorized in writing; and
(ii) if such Definitive Securities are required to bear a
restricted securities legend, they are being transferred or exchanged
pursuant to an effective registration statement under the Securities
Act, pursuant to Section 2.3(b) or pursuant to clause (A), (B) or (C)
below, and are accompanied by the following additional information and
documents, as applicable:
(A) if such Definitive Securities are being delivered
to the Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect; or
(B) if such Definitive Securities are being
transferred to the Company, a certification to that
effect; or
(C) if such Definitive Securities are being
transferred (x) pursuant to an exemption from
7
registration in accordance with Rule 144A, Regulation S or
Rule 144 under the Securities Act,; or (y) in reliance upon
another exemption from the requirements of the Securities Act:
(i) a certification to that effect (in the form set forth on
the reverse of the Security) and (ii) if the Company so
requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions
set forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a
Beneficial Interest in a Global Security. A Definitive Security may not be
exchanged for a beneficial interest in a Rule 144A Global Security or a
Permanent Regulation S Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is either (A) being transferred
to a QIB in accordance with Rule 144A or (B) is being transferred after
expiration of the Distribution Compliance Period by a Person who
initially purchased such Security in reliance on Regulation S to a
buyer who elects to hold its interest in such Security in the form of a
beneficial interest in the Permanent Regulation S Global Security; and
(ii) written instructions directing the Trustee to make, or to
direct the Securities Custodian to make, an adjustment on its books and
records with respect to such Rule 144A Global Security (in the case of
a transfer pursuant to clause (b)(i)(A)) or Permanent Regulation S
Global Security (in the case of a transfer pursuant to clause
(b)(i)(B)) to reflect an increase in the aggregate principal amount of
the Securities represented by the Rule 144A Global Security or
Permanent Regulation S Global Security, as applicable, such
instructions to contain information regarding the Depository account to
be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian,
8
the aggregate principal amount of Securities represented by the Rule 144A Global
Security or Permanent Regulation S Global Security, as applicable, to be
increased by the aggregate principal amount of the Definitive Security to be
exchanged and shall credit or cause to be credited to the account of the Person
specified in such instructions a beneficial interest in the Rule 144A Global
Security or Permanent Regulation S Global Security, as applicable, equal to the
principal amount of the Definitive Security so cancelled. If no Rule 144A Global
Securities or Permanent Regulation S Global Securities, as applicable, are then
outstanding, the Company shall issue and the Trustee shall authenticate, upon
written order of the Company in the form of an Officers' Certificate of the
Company, a new Rule 144A Global Security or Permanent Regulation S Global
Security, as applicable, in the appropriate principal amount.
(c) Transfer and Exchange of Global Securities. (i) The
transfer and exchange of Global Securities or beneficial interests therein shall
be effected through the Depository, in accordance with this Indenture (including
applicable restrictions on transfer set forth herein, if any) and the procedures
of the Depository therefor. A transferor of a beneficial interest in a Global
Security shall deliver to the Registrar a written order given in accordance with
the Depository's procedures containing information regarding the participant
account of the Depository to be credited with a beneficial interest in the
Global Security. The Registrar shall, in accordance with such instructions,
instruct the Depository to credit to the account of the Person specified in such
instructions a beneficial interest in the Global Security and to debit the
account of the Person making the transfer the beneficial interest in the Global
Security being transferred.
(ii) If the proposed transfer is a transfer of a beneficial
interest in one Global Security to a beneficial interest in another
Global Security, the Registrar shall reflect on its books and records
the date and an increase in the principal amount of the Global Security
to which such interest is being transferred in an amount equal to the
principal amount of the interest to be so transferred, and the
Registrar shall reflect on its books and records the date and a
corresponding decrease in the principal amount of the Global Security
from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this Appendix
(other than the provisions set forth in
9
Section 2.4), a Global Security may not be transferred as a whole
except by the Depository to a nominee of the Depository or by a nominee
of the Depository to the Depository or another nominee of the
Depository or by the Depository or any such nominee to a successor
Depository or a nominee of such successor Depository.
(iv) In the event that a Global Security is exchanged for
Definitive Securities pursuant to Section 2.4 of this Appendix, prior
to the consummation of a Registered Exchange Offer or the effectiveness
of a Shelf Registration Statement with respect to such Securities, such
Securities may be exchanged only in accordance with such procedures as
are substantially consistent with the provisions of this Section 2.3
(including the certification requirements set forth on the reverse of
the Initial Securities intended to ensure that such transfers comply
with Rule 144A or Regulation S, as the case may be) and such other
procedures as may from time to time be adopted by the Company.
(d) Restrictions on Transfer of Temporary Regulation S Global
Securities. During the Distribution Compliance Period, beneficial ownership
interests in Temporary Regulation S Global Securities may only be sold, pledged
or transferred through Euroclear or Clearstream in accordance with the
Applicable Procedures and only (i) to the Company, (ii) so long as such Security
is eligible for resale pursuant to Rule 144A, to a Person whom the selling
holder reasonably believes is a QIB that purchases for its own account or for
the account of a QIB to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, (iii) in an offshore transaction in
accordance with Regulation S, (iv) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 (if applicable) under the
Securities Act or (v) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States.
(e) Legend.
(i) Except as permitted by the following paragraphs (ii),
(iii) and (iv), each Security certificate evidencing the Global
Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the
following form:
10
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
THIS SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF THIS SECURITY
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION
5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED
OR OTHERWISE TRANSFERRED, ONLY (I) TO THE COMPANY, (II) WITHIN
THE UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES
IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER
THE SECURITIES ACT, (IV) PURSUANT TO EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF
CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND OTHER
JURISDICTIONS, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS SECURITY
FROM IT OF THE RESALE RESTRICTIONS REFERRED TO IN (A) ABOVE.
Each Definitive Security will also bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to Rule 144 under the Securities Act, the
Registrar shall permit the transferee thereof to exchange such Transfer
11
Restricted Security for a certificated Security that does not bear the
legend set forth above and rescind any restriction on the transfer of
such Transfer Restricted Security, if the transferor thereof certifies
in writing to the Registrar that such sale or transfer was made in
reliance on Rule 144 (such certification to be in the form set forth on
the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private
Exchange Securities pursuant to and during the period of the
effectiveness of a Shelf Registration Statement with respect to such
Initial Securities or Private Exchange Securities, as the case may be,
all requirements pertaining to legends relating to the restrictions on
transfer relating to the Securities Act on such Initial Securities or
such Private Exchange Securities will cease to apply, the requirements
requiring any such Initial Securities or such Private Exchange
Securities issued to certain Holders be issued in global form will
cease to apply, and certificated Initial Securities or Private Exchange
Securities or Initial Securities or Private Exchange Securities in
global form, in each case without restrictive transfer legends, will be
available to the transferee of the Holder of such Initial Securities or
Private Exchange Securities upon exchange of such transferring Holder's
certificated Initial Securities or Private Exchange Securities or
appropriate directions to transfer such Holder's interest in the Global
Security, as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders be
issued in global form will still apply with respect to Holders of such
Initial Securities that do not exchange their Initial Securities.
Exchange Securities in certificated or global form, in each case
without the restrictive securities legend relating to the restrictions
on transfer under the Securities Act set forth in Exhibit 1 hereto,
will be available to Holders that exchange such Initial Securities in
such Registered Exchange Offer.
(v) Upon the consummation of a Private Exchange with respect
to the Initial Securities, all requirements pertaining to such Initial
Securities that Initial Securities issued to certain Holders be issued
in global form will still apply with respect to Holders of such
12
Initial Securities that do not exchange their Initial Securities, and
Private Exchange Securities in global form with the global securities
legend and the Restricted Securities Legend set forth in Exhibit 1
hereto will be available to Holders that exchange such Initial
Securities in such Private Exchange.
(f) Cancellation or Adjustment of Global Security. At such
time as all beneficial interests in a Global Security have either been exchanged
for Definitive Securities, redeemed, purchased or canceled, such Global Security
shall be returned to the Depository for cancellation or retained and canceled by
the Trustee. At any time prior to such cancellation, if any beneficial interest
in a Global Security is exchanged for certificated Securities, redeemed,
purchased or canceled, the principal amount of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of
Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Trustee shall authenticate Definitive
Securities and Global Securities at the Registrar's or co-registrar's
request.
(ii) No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar
governmental charge payable in connection therewith (other than any
such transfer taxes, assessments or similar governmental charge payable
upon exchange or transfer pursuant to Sections 3.06, 4.07, 4.09 and
9.05 of the Indenture).
(iii) The Registrar or co-registrar shall not be required to
register the transfer of or exchange of (a) any Definitive Security
selected for redemption in whole or in part pursuant to Article 3 of
this Indenture, except the unredeemed portion of any Definitive
Security being redeemed in part, or (b) any Security for a period
beginning 15 Business Days before the mailing of a notice of an offer
to repurchase or redeem Securities or 15 Business Days before an
interest payment date.
13
(iv) Prior to the due presentation for registration of
transfer of any Security, the Company, the Trustee, the Paying Agent,
the Registrar or any co-registrar may deem and treat the person in
whose name a Security is registered as the absolute owner of such
Security for the purpose of receiving payment of principal of and
interest on such Security and for all other purposes whatsoever,
whether or not such Security is overdue, and none of the Company, the
Trustee, the Paying Agent, the Registrar or any co-registrar shall be
affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Indenture shall evidence the same debt
and shall be entitled to the same benefits under this Indenture as the
Securities surrendered upon such transfer or exchange.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Security, a member of, or a
participant in the Depository or other Person with respect to the
accuracy of the records of the Depository or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depository) of
any notice (including any notice of redemption) or the payment of any
amount, under or with respect to such Securities. All notices and
communications to be given to the Holders and all payments to be made
to Holders under the Securities shall be given or made only to or upon
the order of the registered Holders (which shall be the Depository or
its nominee in the case of a Global Security). The rights of beneficial
owners in any Global Security shall be exercised only through the
Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in
relying upon information furnished by the Depository with respect to
its members, participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to
any transfer of any interest in any Security (including any transfers
between
14
or among Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates
and other documentation or evidence as are expressly required by, and
to do so if and when expressly required by, the terms of this
Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.
2.4 Certificated Securities.
(a) A Global Security deposited with the Depository or with
the Trustee as Securities Custodian for the Depository pursuant to Section 2.1
shall be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 hereof and (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a "clearing agency"
registered under the Exchange Act and, in either case, a successor depositary is
not appointed by the Company within 90 days of such notice, or (ii) an Event of
Default has occurred and is continuing or (iii) the Company, in its sole
discretion, notifies the Trustee in writing that it elects to cause the issuance
of Definitive Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this Section shall be surrendered by the Depository
to the Trustee located at its corporate trust office in the borough of
Manhattan, The City of New York, or in Dallas, Texas, to be so transferred, in
whole or from time to time in part, without charge, and the Trustee shall
authenticate and deliver, upon such transfer of each portion of such Global
Security, an equal aggregate principal amount of Definitive Securities of
authorized denominations. Any portion of a Global Security transferred pursuant
to this Section shall be executed, authenticated and delivered only in
denominations of $1,000 principal amount and any integral multiple thereof and
registered in such names as the Depository shall direct. Any Definitive Security
delivered in exchange for an interest in the Transfer Restricted Security shall,
except as otherwise provided by Section 2.3(e) hereof, bear the restricted
securities legend set forth in Exhibit 1 hereto.
15
(c) Subject to the provisions of Section 2.4(b) hereof, the
registered Holder of a Global Security shall be entitled to 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 Securities.
(d) In the event of the occurrence of one of the events
specified in Section 2.4(a) hereof, the Company shall promptly make available to
the Trustee a reasonable supply of Definitive Securities in definitive, fully
registered form without interest coupons.
EXHIBIT 1
to
RULE 144A/REGULATION S APPENDIX
[FORM OF FACE OF INITIAL SECURITY]
[Global Securities Legend]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT 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 DTC 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 THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[[FOR REGULATION S GLOBAL SECURITY ONLY] UNTIL 40 DAYS AFTER
THE CLOSING OF THE OFFERING, AN OFFER OR SALE OF SECURITIES WITHIN THE UNITED
STATES BY A DEALER (AS DEFINED IN THE U.S. SECURITIES ACT) MAY VIOLATE THE
REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES ACT IF SUCH OFFER OR SALE IS
MADE OTHERWISE THAN IN ACCORDANCE WITH RULE 144A THEREUNDER.]
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY
2
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE
COMPANY THAT (A) THIS SECURITY MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT
TO EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH
ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND OTHER
JURISDICTIONS, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
REFERRED TO IN (A) ABOVE.
[Temporary Regulation S Global Security Legend]
EXCEPT AS SET FORTH BELOW, BENEFICIAL OWNERSHIP INTERESTS IN
THIS TEMPORARY REGULATION S GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR
INTERESTS IN THE PERMANENT REGULATION S GLOBAL SECURITY OR ANY OTHER SECURITY
REPRESENTING AN INTEREST IN THE SECURITIES REPRESENTED HEREBY WHICH DO NOT
CONTAIN A LEGEND CONTAINING RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF
THE "40-DAY DISTRIBUTION COMPLIANCE PERIOD" (WITHIN THE MEANING OF RULE
903(b)(2) OF REGULATION S UNDER THE SECURITIES ACT) AND THEN ONLY UPON
CERTIFICATION IN FORM REASONABLY SATISFACTORY TO THE TRUSTEE THAT SUCH
BENEFICIAL INTERESTS ARE OWNED EITHER BY NON-U.S. PERSONS OR U.S. PERSONS WHO
PURCHASED SUCH INTERESTS IN A TRANSACTION THAT DID NOT REQUIRE REGISTRATION
UNDER THE SECURITIES ACT. DURING SUCH 40-DAY DISTRIBUTION COMPLIANCE PERIOD,
BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL SECURITY
MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED THROUGH EUROCLEAR BANK S.A./N.V., AS
OPERATOR OF THE EUROCLEAR SYSTEM OR CLEARSTREAM BANKING, SOCIETE ANONYME AND
ONLY (I) TO THE COMPANY, (II) WITHIN THE UNITED STATES TO A PERSON WHOM THE
SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN A TRANSACTION IN
3
ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT, OR (IV) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I)
THROUGH (IV) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES AND OTHER JURISDICTIONS. HOLDERS OF INTERESTS IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY WILL NOTIFY ANY PURCHASER OF THIS
SECURITY OF THE RESALE RESTRICTIONS REFERRED TO ABOVE, IF THEN APPLICABLE.
BENEFICIAL INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL
SECURITY MAY BE EXCHANGED FOR INTERESTS IN A RULE 144A GLOBAL SECURITY ONLY IF
(1) SUCH EXCHANGE OCCURS IN CONNECTION WITH A TRANSFER OF THE SECURITIES IN
COMPLIANCE WITH RULE 144A AND (2) THE TRANSFEROR OF THE REGULATION S GLOBAL
SECURITY FIRST DELIVERS TO THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM
ATTACHED TO THIS CERTIFICATE) TO THE EFFECT THAT THE REGULATION S GLOBAL
SECURITY IS BEING TRANSFERRED (A) TO A PERSON WHO THE TRANSFEROR REASONABLY
BELIEVES TO BE A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A,
(B) TO A PERSON WHO IS PURCHASING FOR ITS OWN ACCOUNT OR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A AND (C) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES AND OTHER JURISDICTIONS.
BENEFICIAL INTERESTS IN A RULE 144A GLOBAL SECURITY MAY BE
TRANSFERRED TO A PERSON WHO TAKES DELIVERY IN THE FORM OF AN INTEREST IN THE
REGULATION S GLOBAL SECURITY, WHETHER BEFORE OR AFTER THE EXPIRATION OF THE
40-DAY DISTRIBUTION COMPLIANCE PERIOD, ONLY IF THE TRANSFEROR FIRST DELIVERS TO
THE TRUSTEE A WRITTEN CERTIFICATE (IN THE FORM ATTACHED TO THIS CERTIFICATE) TO
THE EFFECT THAT IF SUCH TRANSFER IS BEING MADE IN ACCORDANCE WITH RULE 903 OR
904 OF REGULATION S OR RULE 144 (IF AVAILABLE) AND THAT, IF SUCH TRANSFER OCCURS
PRIOR TO THE EXPIRATION OF THE 40-DAY DISTRIBUTION COMPLIANCE PERIOD, THE
INTEREST TRANSFERRED WILL BE HELD IMMEDIATELY THEREAFTER THROUGH EUROCLEAR BANK
S.A./N.V. OR CLEARSTREAM BANKING, SOCIETE ANONYME.
[Definitive Securities Legend]
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.
4
CUSIP No.______________
ISIN No.______________
No.______________ $________________
7 1/2% Senior Subordinated Notes Due 2013
Denbury Resources Inc., a Delaware corporation, promises to
pay to Cede &Co., or registered assigns, the principal sum of _________________
Dollars on April 1, 2013.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
DENBURY RESOURCES INC.
by
_____________________________
Name:
Title:
_____________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
JPMORGAN CHASE BANK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by_____________________________
Authorized Signatory
5
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
7 1/2% Senior Subordinated Notes Due 2013
1. Interest
Denbury Resources Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above; provided,
however, that if a Registration Default (as defined in the Registration Rights
Agreement) occurs, additional interest will accrue on this Security at a rate of
0.50% per annum (increasing by an additional 0.50% per annum after each
consecutive 90-day period that occurs after the date on which such Registration
Default occurs up to a maximum additional interest rate of 2.00% per annum) from
and including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration Defaults have been cured. The
Company will pay interest semiannually on April 1 and October 1 of each year,
commencing October 1, 2003. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 25, 2003. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company shall pay interest on overdue principal at the
rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the March 15 or September 15 next preceding the
interest payment date even if Securities are canceled after the record date and
on or before the interest payment date. Holders must surrender Securities to a
Paying Agent to collect principal payments. The Company will 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. Payments in respect of
Securities represented by a Global Security (including
6
principal, premium, if any, and interest) will be made by wire transfer of
immediately available funds to the accounts specified by The Depository Trust
Company. The Company will make all payments in respect of a certificated
Security (including principal, premium, if any, and interest) by mailing a check
to the registered address of each Holder thereof; provided, however, that
payments on a certificated Security will be made by wire transfer to a U.S.
dollar account maintained by the payee with a bank in the United States if such
Holder elects payment by wire transfer by giving written notice to the Trustee
or the Paying Agent to such effect designating such account no later than 30
days immediately preceding the relevant due date for payment (or such other date
as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, JPMorgan Chase Bank (the "Trustee"), will act as
Paying Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any Wholly Owned
Subsidiary may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of March 25, 2003 ("Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Securities 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.C. Sections 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
The Securities are general unsecured obligations of the
Company. The Company shall be entitled, subject to its compliance with Section
4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13
of the Indenture. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor will be treated as a single class for all purposes
under the Indenture. The Indenture contains covenants that limit the ability of
the Company and its subsidiaries to incur additional indebtedness; pay dividends
or distributions on, or
7
redeem or repurchase capital stock; make investments; engage in transactions
with affiliates; transfer or sell assets; guarantee indebtedness; restrict
dividends or other payments of subsidiaries; and consolidate, merge or transfer
all or substantially all of its assets and the assets of its subsidiaries. These
covenants are subject to important exceptions and qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled
to redeem the Securities prior to April 1, 2008.
On and after April 1, 2008, the Company shall be entitled at
its option to redeem all or a portion of the Securities upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed in
percentages of principal amount on the redemption date), plus accrued and unpaid
interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), if redeemed during the 12-month period commencing on April 1 of
the years set forth below:
Redemption
Period Price
- ---------- ----------
2008 103.75%
2009 102.50%
2010 101.25%
2011 and thereafter 100.00%
Prior to April 1, 2006, the Company may at its option on one
or more occasions redeem Securities (which includes Additional Securities, if
any) in an aggregate principal amount not to exceed 35% of the aggregate
principal amount of the Securities (which includes Additional Securities, if
any) originally issued at a redemption price (expressed as a percentage of
principal amount) of 107.50%, plus accrued and unpaid interest to the redemption
date, with the net cash proceeds from one or more Stock Offerings; provided,
however, that
(1) at least 65% of such aggregate principal amount of
Securities (which includes Additional Securities, if any) remains
outstanding immediately after the occurrence of each such redemption
(other than Securities held, directly or indirectly, by the Company or
its Affiliates); and
8
(2) each such redemption occurs within 60 days after the date
of the related Stock Offering.
6. 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 Securities to be
redeemed at its registered address. Securities in denominations larger than
$1,000 principal amount may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a purchase price equal to 101% of the principal amount of the
Securities to be repurchased on the date of purchase plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid in full in cash before the
Securities may be paid. The Company agrees, and each Securityholder by accepting
a Security agrees, to the subordination provisions contained in the Indenture
and authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purpose.
9. Guaranties
The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and unconditionally guaranteed on a
joint and several senior subordinated basis by each of the Subsidiary Guarantors
on the
9
terms set forth in the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal, premium (if any) or
interest remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company at its request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the money
must look only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture, including the Subsidiary Guarantees, if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal
and interest on the Securities to redemption or maturity, as the case may be.
10
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding and (ii) any default or noncompliance with any provisions may be
waived with the written consent of the Holders of at least a majority in
principal amount of the Securities then outstanding. Subject to certain
exceptions set forth in the Indenture, without notice to or the consent of any
Securityholder, the Company, the Subsidiary Guarantors and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities
(provided that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code), or
to make any change to the subordination provisions of the Indenture that would
limit or terminate the benefits available to any holder of Senior Indebtedness
(or its Representative) of the Company or any Subsidiary Guarantor, or to add
guarantees (including Subsidiary Guarantees) with respect to the Securities, or
to secure the Securities, or to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power conferred on the
Company or any Subsidiary Guarantor, or to make any change that does not
adversely affect the rights of any Securityholder, or to comply with any
requirement of the SEC in connection with qualifying the Indenture under the
Act. No amendment may be made to the subordination provisions of the Indenture
that adversely affects the rights of any holder of Senior Indebtedness of the
Company or of any Subsidiary Guarantor then outstanding unless the holders of
such Senior Indebtedness (or their Representative) consent to such change.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities when due; (ii) default in
payment of principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon declaration or acceleration or otherwise,
or failure by the Company to redeem or purchase
11
Securities when required; (iii) failure by the Company to comply with its
obligations under certain covenants; (iv) failure by the Company to comply with
other agreements in the Indenture or the Securities, in certain cases subject to
notice and lapse of time; (v) certain accelerations (including failure to pay
within any grace period after final maturity) of other Indebtedness of the
Company or any Significant Subsidiary (other than Limited Recourse Indebtedness)
if the amount accelerated (or so unpaid) exceeds $10.0 million; (vi) certain
events of bankruptcy, insolvency or reorganization with respect to the Company
or a Significant Subsidiary; (vii) any judgment or decree for the payment of
money in excess of $10.0 million is rendered against the Company or a
Significant Subsidiary, remains outstanding for a period of 60 days following
such judgment or decree and is not discharged, waived or stayed within 10 days
after notice; or (viii) any Subsidiary Guarantee ceases or otherwise fails to be
in full force and effect (other than in accordance with the terms of such
Subsidiary Guarantee) or any Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guarantee if such default continues for a
period of 10 days after notice thereof to the Company. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the principal of and
accrued but unpaid interest on all the Securities to be due and payable
immediately. Certain events of bankruptcy, insolvency or reorganization are
Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default. A default under
clauses (iv), (v), (vii) or (viii) will not constitute an Event of Default until
the Trustee or the Holders of 25% in principal amount of the outstanding
Securities notifies the Company of the default and the Company does not cure
such default within the time specified after receipt of such notice.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
12
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee, stockholder, incorporator or
member, as such, of the Company or any Subsidiary Guarantor shall not have any
liability for any obligations of the Company or any Subsidiary Guarantor under
the Securities, any Subsidiary Guarantee or the Indenture or for any claim based
on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers.
The Company has caused CUSIP numbers to be printed on the
Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Securityholders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice of redemption and reliance may be
13
placed only on the other identification numbers placed
thereon.
21. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including the
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.
22. Governing Law.
THIS SECURITY 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.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE.
REQUESTS MAY BE MADE TO:
DENBURY RESOURCES INC.
5100 TENNYSON PARKWAY, SUITE 3000
PLANO, TEXAS 75024
ATTENTION OF CHIEF FINANCIAL OFFICER
14
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date: __________________________ Your Signature: _______________________________
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) - to the Company; or
(2) - pursuant to an effective registration statement
under the United States Securities Act of 1933;
or
(3) - inside the United States to a "qualified
institutional buyer" (as defined in Rule 144A
under the United States Securities Act of 1933)
that purchases for its own account or for the
15
account of a qualified institutional buyer to whom
notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and
in compliance with Rule 144A under the United States
Securities Act of 1933; or
(4) - outside the United States in an offshore
transaction within the meaning of Regulation S under
the United States Securities Act in compliance with
Rule 904 under the United States Securities Act of
1933; or
(5) - pursuant to the exemption from registration
provided by Rule 144 under the United States
Securities Act of 1933.
If such transfer is being made pursuant to an offshore
transaction in accordance with Rule 904 under the Securities Act, the
undersigned further certifies that:
(i) the offer of the Securities was not made to a
person in the United States;
(ii) 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 prearranged with a buyer in the United States;
(iii) no directed selling efforts have been made in the United
States in contravention of the requirements of Rule 903 or Rule 904 of
Regulation S, as applicable;
(iv) the transaction is not part of a plan or scheme
to evade the registration requirements of the Securities
Act;
(v) we have advised the transferee of the transfer
restrictions applicable to the Securities; and
(vi) if the circumstances set forth in Rule 904(b) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if
16
applicable) sending a confirmation or other notice stating that the
Securities may be offered and sold during the distribution compliance
period specified in Rule 903 of Regulation S only in accordance with
the provisions of Regulation S; pursuant to registration of the
Securities under the Securities Act; or pursuant to an available
exemption from the registration requirements under the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register
any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however,
that if box (4) or (5) is checked, the Trustee shall be entitled to
require, prior to registering any such transfer of the Securities, such
legal opinions, certifications and other information as the Company has
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 United States Securities Act of 1933,
such as the exemption provided by Rule 144 under such Act.
_______________________________
Signature
Signature Guarantee:
____________________________ _______________________________
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the United
States Securities Exchange Act of 1934, as amended.
17
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security 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 United
States Securities Act of 1933, 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 Company 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
18
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
Principal amount Signature of
Amount of decrease Amount of increase of this Global authorized officer
in Principal in Principal Security following of Trustee or
Date of amount of this amount of this such decrease or Securities
Exchange Global Security Global Security increase) Custodian
19
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.07 or 4.09 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.07 or 4.09 of the Indenture,
state the amount in principal amount:
$__________________.
Date: _______________ Your Signature:_________________________
(Sign exactly as your
name appears on the other
side of this Security.)
Signature Guarantee: _______________________________________________
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the United
States Securities Exchange Act of 1934, as amended.
EXHIBIT A
FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY */**/
- -------------------
*/ If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to the Appendix and the attachment from such Exhibit 1
captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY".
**/ If the Security is a Private Exchange Security issued in a Private Exchange
to an Initial Purchaser holding an unsold portion of its initial allotment, add
the Restricted Securities Legend from Exhibit 1 to the Appendix and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.
2
CUSIP No._________________
ISIN No._________________
No._________________ $_________________
7 1/2% Senior Subordinated Notes Due 2013
Denbury Resources Inc., a Delaware corporation, promises to
pay to Cede & Co., or registered assigns, the principal sum
of $ ______________ Dollars on April 1, 2013.
Interest Payment Dates: April 1 and October 1.
Record Dates: March 15 and September 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
DENBURY RESOURCES INC.
by
______________________________
Name:
Title:
______________________________
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
JPMORGAN CHASE BANK
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
______________________________
Authorized Signatory
3
FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY
7 1/2% Senior Subordinated Notes Due 2013
1. Interest
Denbury Resources Inc., a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown above[; PROVIDED,
HOWEVER, THAT IF A REGISTRATION DEFAULT (AS DEFINED IN THE REGISTRATION RIGHTS
AGREEMENT) OCCURS, ADDITIONAL INTEREST WILL ACCRUE ON THIS SECURITY AT A RATE OF
0.50% PER ANNUM (INCREASING BY AN ADDITIONAL 0.50% PER ANNUM AFTER EACH
CONSECUTIVE 90-DAY PERIOD THAT OCCURS AFTER THE DATE ON WHICH SUCH REGISTRATION
DEFAULT OCCURS UP TO A MAXIMUM ADDITIONAL INTEREST RATE OF 2.00% PER ANNUM) FROM
AND INCLUDING THE DATE ON WHICH ANY SUCH REGISTRATION DEFAULT SHALL OCCUR TO BUT
EXCLUDING THE DATE ON WHICH ALL REGISTRATION DEFAULTS HAVE BEEN CURED].(1) The
Company will pay interest semiannually on April 1 and October 1 of each year,
commencing October 1, 2003. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from March 25, 2003. Interest will be computed on the basis of a 360-day year of
twelve 30-day months. The Company shall pay interest on overdue principal at the
rate borne by the Securities plus 1% per annum, and it shall pay interest on
overdue installments of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the Persons who are registered holders of Securities at
the close of business on the March 15 or September 15 next preceding the
interest payment date even
- ----------------------
(1)Insert if at the date of issuance of the Exchange Security or Private
Exchange Security (as the case may be) any Registration Default has occurred
with respect to the related Initial Securities during the interest period in
which such date of issuance occurs.
4
if Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will 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. Payments in respect of the Securities represented by a Global
Security (including principal, premium, if any, and interest) will be made by
wire transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Company will make all payments in respect of a
certificated Security (including principal, premium, if any, and interest) by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on a certificated Security will be made by wire transfer
to a U.S. dollar account maintained by the payee with a bank in the United
States if such Holder elects payment by wire transfer by giving written notice
to the Trustee or the Paying Agent to such effect designating such account no
later than 30 days immediately preceding the relevant due date for payment (or
such other date as the Trustee may accept in its discretion).
3. Paying Agent and Registrar
Initially, JPMorgan Chase Bank (the "Trustee"), will act as
Paying Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any Wholly Owned
Subsidiary may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of March 25, 2003 ("Indenture"), among the Company, the Subsidiary Guarantors
and the Trustee. The terms of the Securities 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.C. Sections 77aaa-77bbbb) as in effect on the date
of the Indenture (the "Act"). Terms defined in the Indenture and not defined
herein have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the Act for a statement of those terms.
The Securities are general unsecured obligations of the
Company. The Company shall be entitled, subject to its compliance with Section
4.03 of the Indenture, to issue Additional Securities pursuant to Section 2.13
of the
5
Indenture. The Initial Securities issued on the Issue Date, any Additional
Securities and all Exchange Securities or Private Exchange Securities issued in
exchange therefor will be treated as a single class for all purposes under the
Indenture. The Indenture contains covenants that limit the ability of the
Company and its subsidiaries to incur additional indebtedness; pay dividends or
distributions on, or redeem or repurchase capital stock; make investments;
engage in transactions with affiliates; transfer or sell assets; guarantee
indebtedness; restrict dividends or other payments of subsidiaries; and
consolidate, merge or transfer all or substantially all of its assets and the
assets of its subsidiaries. These covenants are subject to important exceptions
and qualifications.
5. Optional Redemption
Except as set forth below, the Company shall not be entitled
to redeem the Securities prior to April 1, 2008.
On and after April 1, 2008, the Company shall be entitled at
its option to redeem all or a portion of the Securities upon not less than 30
nor more than 60 days' notice, at the redemption prices (expressed in
percentages of principal amount on the redemption date), plus accrued and unpaid
interest to the redemption date (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant interest
payment date), if redeemed during the 12-month period commencing on April 1 of
the years set forth below:
Redemption
Period Price
- ------ ----------
2008 103.75%
2009 102.50%
2010 101.25%
2011 and thereafter 100.00%
Prior to April 1, 2006, the Company may at its option on one
or more occasions redeem Securities (which includes Additional Securities, if
any) in an aggregate principal amount not to exceed 35% of the aggregate
principal amount of the Securities (which includes Additional Securities, if
any) originally issued at a redemption price (expressed as a percentage of
principal amount) of 107.50%, plus accrued and unpaid interest to the redemption
date, with the net cash proceeds from one or more Stock Offerings; provided,
however, that
6
(1) at least 65% of such aggregate principal amount of
Securities (which includes Additional Securities, if any) remains
outstanding immediately after the occurrence of each such redemption
(other than Securities held, directly or indirectly, by the Company or
its Affiliates); and
(2) each such redemption occurs within 60 days after the date
of the related Stock Offering.
6. 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 Securities to be
redeemed at its registered address. Securities in denominations larger than
$1,000 principal amount may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued interest
on all Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to accrue
on such Securities (or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right to cause the Company to repurchase all or any part of the Securities
of such Holder at a purchase price equal to 101% of the principal amount of the
Securities to be repurchased on the date of purchase plus accrued and unpaid
interest, if any, to the date of repurchase (subject to the right of holders of
record on the relevant record date to receive interest due on the relevant
interest payment date) as provided in, and subject to the terms of, the
Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness of the
Company, as defined in the Indenture. To the extent provided in the Indenture,
Senior Indebtedness of the Company must be paid in full in cash before the
Securities may be paid. The Company agrees, and each Securityholder by accepting
a Security agrees, to the subordination provisions contained in the Indenture
and authorizes the Trustee to give it effect and appoints the Trustee as
attorney-in-fact for such purpose.
7
9. Guaranties
The payment by the Company of the principal of, and premium
and interest on, the Securities is fully and unconditionally guaranteed on a
joint and several senior subordinated basis by each of the Subsidiary Guarantors
on the terms set forth in the Indenture.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 principal amount and whole multiples of $1,000. A Holder
may transfer or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish appropriate
endorsements or transfer documents and to pay any taxes and fees required by law
or permitted by the Indenture. The Registrar need not register the transfer of
or exchange any Securities selected for redemption (except, in the case of a
Security to be redeemed in part, the portion of the Security not to be redeemed)
or any Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal, premium (if any) or
interest remains unclaimed for two years, the Trustee or Paying Agent shall pay
the money back to the Company at its request unless an abandoned property law
designates another Person. After any such payment, Holders entitled to the money
must look only to the Company and not to the Trustee for payment.
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time shall
be entitled to terminate some or all of its obligations under the Securities and
the Indenture, including the Subsidiary Gurantees, if the Company deposits with
the Trustee money or U.S. Government Obligations for the payment of principal
and interest on the Securities to redemption or maturity, as the case may be.
8
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding and (ii) any default or noncompliance with any provisions may be
waived with the written consent of the Holders of at least a majority in
principal amount of the Securities then outstanding. Subject to certain
exceptions set forth in the Indenture, without notice to or the consent of any
Securityholder, the Company, the Subsidiary Guarantors and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities
(provided that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code), or
to make any change to the subordination provisions of the Indenture that would
limit or terminate the benefits available to any holder of Senior Indebtedness
(or its Representative) of the Company or any Subsidiary Guarantor, or to add
guarantees (including Subsidiary Guarantees) with respect to the Securities, or
to secure the Securities, or to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power conferred on the
Company or any Subsidiary Guarantor, or to make any change that does not
adversely affect the rights of any Securityholder, or to comply with any
requirement of the SEC in connection with qualifying the Indenture under the
Act. No amendment may be made to the subordination provisions of the Indenture
that adversely affects the rights of any holder of Senior Indebtedness of the
Company or of any Subsidiary Guarantor then outstanding unless the holders of
such Senior Indebtedness (or their Representative) consent to such change.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities when due; (ii) default in
payment of principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon declaration or acceleration or
9
otherwise, or failure by the Company to redeem or purchase Securities when
required; (iii) failure by the Company to comply with its obligations under
certain covenants; (iv) failure by the Company to comply with other agreements
in the Indenture or the Securities, in certain cases subject to notice and lapse
of time; (v) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company or any
Significant Subsidiary (other than Limited Recourse Indebtedness) if the amount
accelerated (or so unpaid) exceeds $10.0 million; (vi) certain events of
bankruptcy, insolvency or reorganization with respect to the Company or a
Significant Subsidiary; (vii) any judgment or decree for the payment of money in
excess of $10.0 million is rendered against the Company or a Significant
Subsidiary, remains outstanding for a period of 60 days following such judgment
or decree and is not discharged, waived or stayed within 10 days after notice;
or (viii) any Subsidiary Guarantee ceases or otherwise fails to be in full force
and effect (other than in accordance with the terms of such Subsidiary
Guarantee) or any Subsidiary Guarantor denies or disaffirms its obligations
under its Subsidiary Guarantee if such default continues for a period of 10 days
after notice thereof to the Company. If an Event of Default occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the outstanding Securities may declare the principal of and accrued but unpaid
interest on all the Securities to be due and payable immediately. Certain events
of bankruptcy, insolvency or reorganization are Events of Default which will
result in the Securities being due and payable immediately upon the occurrence
of such Events of Default. A default under clauses (iv), (v), (vii) or (viii)
will not constitute an Event of Default until the Trustee or the Holders of 25%
in principal amount of the outstanding Securities notifies the Company of the
default and the Company does not cure such default within the time specified
after receipt of such notice.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
10
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Company or its Affiliates and may otherwise deal
with the Company or its Affiliates with the same rights it would have if it were
not Trustee.
17. No Recourse Against Others
A director, officer, employee, stockholder, incorporator, or
member, as such, of the Company or any Subsidiary Guarantor shall not have any
liability for any obligations of the Company or any Subsidiary Guarantor under
the Securities, any Subsidiary Guarantee, or the Indenture or for any claim
based on, in respect of or by reason of such obligations or their creation. By
accepting a Security, each Securityholder waives and releases all such
liability. The waiver and release are part of the consideration for the issue of
the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a
Securityholder or an assignee, such as TEN COM (=tenants in common), TEN ENT
(=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship
and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to
Minors Act).
20. CUSIP Numbers.
The Company has caused CUSIP numbers to be printed on the
Securities and has directed the Trustee to use CUSIP numbers in notices of
redemption as a convenience to Securityholders. No representation is made as to
the accuracy of such numbers either as printed on the Securities or as contained
in any notice of redemption and reliance may be placed only on the other
identification numbers placed
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thereon.
[21. Holders' Compliance with Registration Rights Agreement.
Each Holder of a Security, by acceptance hereof, acknowledges
and agrees to the provisions of the Registration Rights Agreement, including the
obligations of the Holders with respect to a registration and the
indemnification of the Company to the extent provided therein.](2)
22. Governing Law.
THIS SECURITY 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.
THE COMPANY WILL FURNISH TO ANY SECURITYHOLDER UPON WRITTEN
REQUEST AND WITHOUT CHARGE TO THE SECURITYHOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
DENBURY RESOURCES INC.
5100 TENNYSON PARKWAY, SUITE 3000
PLANO, TEXAS 75024
ATTENTION OF CHIEF FINANCIAL OFFICER
- -------------
(2)Delete if this Security is not being issued in exchange for an Initial
Security.
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to
transfer this Security on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date: ______________________ Your Signature: __________________________________
- --------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.07 or 4.09 of the Indenture, check the box:
[ ]
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.07 or 4.09 of the Indenture,
state the amount in principal amount:
$____________.
Date: ____________________ Your Signature:____________________________
(Sign exactly as your
name appears on the other
side of this Security.)
Signature Guarantee: ___________________________________________________________
(Signature must be guaranteed)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the United
States Securities Exchange Act of 1934, as amended.