EXHIBIT 4.4
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WESTPORT RESOURCES CORPORATION
Issuer
8 1/4% Senior Subordinated Notes Due 2011
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INDENTURE
Dated as of November 5, 2001
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THE BANK OF NEW YORK
Trustee
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CROSS-REFERENCE TABLE
<Table>
<Caption>
TIA Indenture
Section Section
- ------- ---------
310(a)(1) ..................................................... 7.10
(a)(2) .................................................. 7.10
(a)(3) .................................................. N.A.
(a)(4) .................................................. N.A.
(b) ..................................................... 7.08; 7.10
(c) ..................................................... N.A.
311(a) ........................................................ 7.11
(b) ..................................................... 7.11
(c) ..................................................... N.A.
312(a) ........................................................ 2.05
(b) ..................................................... 11.03
(c) ..................................................... 11.03
313(a) ........................................................ 7.06
(b)(1) .................................................. N.A.
(b)(2) .................................................. 7.06
(c) ..................................................... 11.02
(d) ..................................................... 7.06
314(a) ........................................................ 4.02; 4.07;
11.02
(b) ..................................................... N.A.
(c)(1) .................................................. 11.04
(c)(2) .................................................. 11.04
(c)(3) .................................................. N.A.
(d) ..................................................... N.A.
(e) ..................................................... 11.05
(f) ..................................................... 4.07
315(a) ........................................................ 7.01
(b) ..................................................... 7.05; 11.02
(c) ..................................................... 7.01
(d) ..................................................... 7.01
(e) ..................................................... 6.11
316(a)(last sentence) ......................................... 11.06
(a)(1)(A) ............................................... 6.05
(a)(1)(B) ............................................... 6.04
(a)(2) .................................................. N.A.
(b) ..................................................... 6.07
317(a)(1) ..................................................... 6.08
(a)(2) .................................................. 6.09
(b) ..................................................... 2.04
318(a) ........................................................ 11.01
</Table>
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
<Table>
<Caption>
ARTICLE 1 Page
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Definitions and Incorporation by Reference
SECTION 1.01. Definitions ............................ 1
SECTION 1.02. Other Definitions ...................... 45
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act ........................ 46
SECTION 1.04. Rules of Construction .................. 47
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating ........................ 47
SECTION 2.02. Execution and Authentication ........... 48
SECTION 2.03. Registrar and Paying Agent ............. 48
SECTION 2.04. Paying Agent To Hold Money in Trust..... 49
SECTION 2.05. Securityholder Lists ................... 49
SECTION 2.06. Transfer and Exchange .................. 50
SECTION 2.07. Replacement Securities ................. 50
SECTION 2.08. Outstanding Securities ................. 50
SECTION 2.09. Temporary Securities ................... 51
SECTION 2.10. Cancellation ........................... 51
SECTION 2.11. Defaulted Interest ..................... 51
SECTION 2.12. CUSIP Numbers .......................... 52
SECTION 2.13. Issuance of Additional Securities ...... 52
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee ..................... 53
SECTION 3.02. Selection of Securities To Be
Redeemed ............................. 53
SECTION 3.03. Notice of Redemption ................... 54
SECTION 3.04. Effect of Notice of Redemption ......... 54
SECTION 3.05. Deposit of Redemption Price ............ 55
SECTION 3.06. Securities Redeemed in Part ............ 55
</Table>
2
<Table>
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities .................. 55
SECTION 4.02. SEC Reports ............................ 55
SECTION 4.03. Limitation on Indebtedness ............. 56
SECTION 4.04. Limitation on Restricted Payments ...... 60
SECTION 4.05. Limitation on Restrictions on
Distributions from Subsidiaries ...... 66
SECTION 4.06. Limitation on Liens .................... 68
SECTION 4.07. Limitation on Sales of Assets and
Subsidiary Stock ..................... 69
SECTION 4.08. Limitation on Affiliate Transactions ... 74
SECTION 4.09. Change of Control ...................... 76
SECTION 4.10. Future Guarantors ...................... 78
SECTION 4.11. Compliance Certificates ................ 78
SECTION 4.12. [Intentionally omitted] ................ 78
SECTION 4.13. Covenant Suspension .................... 78
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets ............................... 79
ARTICLE 6
Defaults and Remedies
SECTION 6.01. Events of Default ...................... 81
SECTION 6.02. Acceleration ........................... 84
SECTION 6.03. Other Remedies ......................... 84
SECTION 6.04. Waiver of Past Defaults ................ 85
SECTION 6.05. Control by Majority .................... 85
SECTION 6.06. Limitation on Suits .................... 85
SECTION 6.07. Rights of Holders To Receive Payment ... 86
SECTION 6.08. Collection Suit by Trustee ............. 86
SECTION 6.09. Trustee May File Proofs of Claim ....... 86
SECTION 6.10. Priorities ............................. 87
SECTION 6.11. Undertaking for Costs .................. 87
SECTION 6.12. Waiver of Stay or Extension Laws ....... 88
</Table>
3
<Table>
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee ...................... 88
SECTION 7.02. Rights of Trustee ...................... 90
SECTION 7.03. Individual Rights of Trustee ........... 91
SECTION 7.04. Trustee's Disclaimer ................... 91
SECTION 7.05. Notice of Defaults ..................... 91
SECTION 7.06. Reports by Trustee to Holders .......... 92
SECTION 7.07. Compensation and Indemnity ............. 92
SECTION 7.08. Replacement of Trustee ................. 93
SECTION 7.09. Successor Trustee by Merger ............ 94
SECTION 7.10. Eligibility; Disqualification .......... 94
SECTION 7.11. Preferential Collection of Claims
Against Company ...................... 95
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance ........................... 95
SECTION 8.02. Conditions to Defeasance ............... 96
SECTION 8.03. Application of Trust Money ............. 98
SECTION 8.04. Repayment to Company ................... 98
SECTION 8.05. Indemnity for Government
Obligations .......................... 98
SECTION 8.06. Reinstatement .......................... 98
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders ............. 99
SECTION 9.02. With Consent of Holders ................ 100
SECTION 9.03. Compliance with Trust Indenture ........ 102
SECTION 9.04. Revocation and Effect of Consents
and Waivers .......................... 102
SECTION 9.05. Notation on or Exchange of
Securities ........................... 102
SECTION 9.06. Trustee To Sign Amendments ............. 103
SECTION 9.07. Payment for Consent .................... 103
</Table>
4
<Table>
ARTICLE 10
Subordination
SECTION 10.01. Agreement To Subordinate .............. 103
SECTION 10.02. Liquidation, Dissolution,
Bankruptcy .......................... 104
SECTION 10.03. Default on Senior Indebtedness
of the Company ...................... 104
SECTION 10.04. Acceleration of Payment of
Securities .......................... 105
SECTION 10.05. When Distribution Must Be Paid Over ... 106
SECTION 10.05A. Reinstatement of Senior
Indebtedness ........................ 106
SECTION 10.06. Subrogation ........................... 106
SECTION 10.07. Relative Rights ....................... 106
SECTION 10.08. Subordination May Not Be Impaired
by Company .......................... 107
SECTION 10.09. Rights of Trustee and Paying
Agent ............................... 107
SECTION 10.09A. Rights of holders of Senior
Indebtedness ........................ 107
SECTION 10.10. Distribution or Notice to
Representative ...................... 108
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To
Accelerate .......................... 108
SECTION 10.12. Trust Moneys Not Subordinated ......... 108
SECTION 10.13. Trustee Entitled To Rely .............. 109
SECTION 10.14. Trustee To Effectuate
Subordination ....................... 109
SECTION 10.15. Trustee Not Fiduciary for Holders
of Senior Indebtedness of the
Company.............................. 109
SECTION 10.16. Reliance by Holders of Senior
Indebtedness of the Company
on Subordination Provisions ......... 110
</Table>
5
<Table>
ARTICLE 11
Subsidiary Guaranties
SECTION 11.01. Guaranties ............................. 110
SECTION 11.02. Limitation on Liability ................ 113
SECTION 11.03. Successors and Assigns ................. 113
SECTION 11.04. No Waiver .............................. 113
SECTION 11.05. Modification ........................... 113
SECTION 11.06. Release of Subsidiary Guarantor ........ 114
SECTION 11.07. Contribution ........................... 114
ARTICLE 12
Subordination of Subsidiary Guaranties
SECTION 12.01. Agreement to Subordinate .............. 114
SECTION 12.02. Liquidation, Dissolution, Bankruptcy ... 115
SECTION 12.03. Default on Senior Indebtedness of
Subsidiary Guarantor................. 115
SECTION 12.04. Demand for Payment .................... 117
SECTION 12.05. When Distribution Must Be Paid Over ... 117
SECTION 12.05A. Reinstatement of Senior
Indebtedness ........................ 117
SECTION 12.06. Subrogation ........................... 117
SECTION 12.07. Relative Rights ....................... 118
SECTION 12.08. Subordination May Not Be Impaired
by Company .......................... 118
SECTION 12.09. Rights of Trustee and Paying Agent .... 118
SECTION 12.09A. Rights of holders of Senior
Indebtedness ........................ 119
SECTION 12.10. Distribution or Notice to
Representative ...................... 120
SECTION 12.11. Article 12 Not to Prevent Defaults
Under a Subsidiary Guarantor
or Limit Right to Demand Payment .... 120
SECTION 12.12. Trust Moneys Not Subordinated ......... 120
SECTION 12.13. Trustee Entitled to Rely .............. 120
</Table>
6
<Table>
SECTION 12.14. Trustee to Effectuate Subordination ... 121
SECTION 12.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness of Subsidiary
Guarantor ........................... 121
SECTION 12.16. Reliance by Holders of Senior
Indebtedness of Subsidiary
Guarantor on Subordination
Provisions .......................... 121
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust Indenture Act Controls ........... 122
SECTION 13.02. Notices ................................ 122
SECTION 13.03. Communication by Holders with Other
Holders .............................. 123
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent ................. 123
SECTION 13.05. Statements Required in Certificate
or Opinion ........................... 123
SECTION 13.06. When Securities Disregarded ............ 124
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar ............................ 124
SECTION 13.08. Legal Holidays ......................... 124
SECTION 13.09. Governing Law .......................... 124
SECTION 13.10. No Recourse Against Others ............. 124
SECTION 13.11. Successors ............................. 125
SECTION 13.12. Multiple Originals ..................... 125
SECTION 13.13. Table of Contents; Headings ............ 125
Appendix A - Senior Note Covenants and Consequential
Amendments
Appendix B - Provisions Relating to Initial Securities,
Private Exchange Securities and Exchange
Securities
Exhibit 1 - Form of Initial Security
Exhibit A - Form of Exchange Security or Private Exchange
Security
</Table>
1
INDENTURE, dated as of November 5, 2001, by and among WESTPORT
RESOURCES CORPORATION, a Nevada corporation (the "COMPANY"), the Subsidiary
Guarantors from time to time parties hereto and THE BANK OF NEW YORK, a New York
banking corporation, as trustee (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:
(1) any property, plant, equipment or other assets
used in a Related Business;
(2) 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
(3) 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 clause (2)
or (3) above is primarily engaged in a Related Business.
"ADDITIONAL SECURITIES" means, subject to the Company's
compliance with Section 4.03, 8 1/4% Senior Subordinated Notes Due 2011 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 or 3.06 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).
2
"ADJUSTED CONSOLIDATED NET TANGIBLE ASSETS" or "ACNTA" means
(without duplication), as of the date of determination:
(a) the sum of:
(1) 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 in a reserve report prepared as of
the end of the fiscal year ending at least 45 days prior to the date of
determination (or for the period prior to the earlier of April 1, 2002
and the date the reserve report for 2001 is available, as of June 30,
2001), which reserve report is prepared or audited 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 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 period end) due to exploration, development or
exploitation, production or other activities which reserves
were not reflected in such reserve report which would, 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:
3
(C) estimated proved crude oil and natural gas
reserves of the Company and its Restricted Subsidiaries
reflected in such reserve report produced or disposed of since
the date of such reserve report, and
(D) reductions in the estimated oil and natural gas
reserves of the Company and its Restricted Subsidiaries
reflected in such reserve report since the date of such
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 reserve report which would, 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 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 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, then such increases and decreases in the
discounted future net revenue shall be confirmed in writing by
an independent petroleum engineer;
(2) 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
attributed, based on the Company's books and records as of a date no
earlier than the most recent fiscal quarter ending at least 45 days
prior to the date of determination;
(3) the Net Working Capital as of the end of the most recent
fiscal quarter ending at least 45 days prior to the date of
determination; and
(4) the greater of (i) the net book value as of a date no
earlier than the most recent fiscal quarter ending at least 45 days
prior to the date of determination and (ii) the appraised value, as
4
estimated by independent appraisers, of other tangible assets of the
Company and its Restricted Subsidiaries as of a date no earlier than
the most recent fiscal year ending at least 45 days prior to the date
of determination (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:
(1) minority interests;
(2) any natural gas balancing liabilities of the
Company and its Restricted Subsidiaries reflected in
the Company's latest audited financial statements;
(3) 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;
(4) 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
(5) 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)(1) (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
5
Restricted Subsidiaries with respect to Dollar-Denominated Production
Payments on the schedules specified with respect thereto.
If the Company changes its method of accounting from the
successful efforts method to the full cost method or a similar method of
accounting, "ACNTA" will continue to be calculated as if the Company were still
using the successful efforts method of accounting.
"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, 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 4.04, 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). No Person shall be deemed an Affiliate of an oil and natural gas
royalty trust solely by virtue of ownership of units of beneficial interest in
such trust.
"APPLICABLE PREMIUM" means, with respect to a Security at any
time, the greater of (1) 1.0% of the principal amount of such Security at such
time and (2) the excess of (A) the present value at such time of the principal
amount of such Security plus any required interest payments due on such Security
through November 1, 2006, computed using a discount rate equal to the Treasury
Rate plus 50 basis points, over (B) the principal amount of such Security.
"ASSET DISPOSITION" means any sale, lease, issuance, transfer
or other disposition (or series of related sales, leases, issuances, 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:
6
(1) 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);
(2) all or substantially all the assets of any
division or line of business of the Company or any
Restricted Subsidiary; or
(3) 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, the following shall be deemed not to be
Asset Dispositions:
(A) a disposition by the Company or a Restricted
Subsidiary to the Company or a Restricted Subsidiary;
(B) for purposes of Section 4.07 only, a disposition that
constitutes a Restricted Payment permitted by Section 4.04 or a
Permitted Investment;
(C) a disposition of all or substantially all the
assets of the Company in accordance with Section 5.01;
(D) the trade or exchange by the Company or any Restricted
Subsidiary of any oil or natural gas property or interest therein of
the Company or such Restricted Subsidiary for any oil or natural gas
property or interest therein of another Person, including any cash or
cash equivalents necessary in order to achieve an exchange of
equivalent value; provided, however, that the value of the oil or
natural gas property or interest therein received by the Company or any
Restricted Subsidiary in such trade or exchange (including any cash or
cash equivalents) is at least equal to the fair market value (as
determined in good faith by the Board of Directors, an Officer or an
officer of such Restricted Subsidiary with responsibility for such
transaction, which determination shall be conclusive evidence of
compliance with this provision) of the oil or natural gas property or
interest therein (including any cash or cash equivalents) so traded or
exchanged;
7
(E) the creation of a Lien;
(F) a disposition of oil and natural gas properties in
connection with tax credit transactions complying with Section 29 or
any successor or analogous provisions of the Code;
(G) a disposition of the Capital Stock of or any
Investment in any Unrestricted Subsidiary;
(H) surrender or waiver of contract rights or the settlement,
release or surrender of contract, tort or other claims of any kind;
(I) any disposition of defaulted receivables that
arose in the ordinary course of business for
collection; and
(J) a disposition of assets with a fair market value of less
than $1.0 million.
"ATTRIBUTABLE DEBT" in respect of a Sale/Leaseback Transaction
means, as at the time of determination, the present value (discounted at the
interest rate borne by the Securities, compounded semiannually) 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); provided, however, that if such
Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of
Indebtedness represented thereby will be determined in accordance with the
definition of "Capital Lease Obligation".
"AVERAGE LIFE" means, as of the date of determination, with
respect to any Indebtedness, the quotient obtained by dividing:
(1) 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 or redemption or similar payment with respect to
such Indebtedness multiplied by the amount of such payment by
(2) the sum of all such payments.
"BANK INDEBTEDNESS" means all obligations pursuant to any
Credit Facilities.
8
"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.
"CHANGE OF CONTROL" means the occurrence of any of the
following events:
(1) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders,
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
(1) such person shall be deemed to have "beneficial ownership" of all
shares that any 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; provided, however, that the Permitted
Holders beneficially own (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act), directly or indirectly, in the aggregate a lesser
percentage of the total voting power of the Voting Stock of the Company
than such other person and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of
9
Directors (for the purposes of this clause (1), such other person shall
be deemed to beneficially own any Voting Stock of the Company held by a
parent entity, if such other person is the beneficial owner (as defined
in this clause (1)), directly or indirectly, of more than 40% of the
voting power of the Voting Stock of such parent entity and the
Permitted Holders beneficially own (as defined in Rules 13d-3 and 13d-5
under the Exchange Act), directly or indirectly, in the aggregate a
lesser percentage of the voting power of the Voting Stock of such
parent entity and do not have the right or ability by voting power,
contract or otherwise to elect or designate for election a majority of
the board of directors of such parent entity);
(2) during any period of two consecutive years, individuals
who at the beginning of such period constituted the Board of Directors
(together with (A) 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 the 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 and (B) any representative of a Permitted
Holder) cease for any reason to constitute a majority of the Board of
Directors then in office;
(3) the adoption of a plan relating to the liquidation or
dissolution of the Company; or
(4) 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 of all or substantially all the assets of the
Company (determined on a consolidated basis) to another Person (other
than a Permitted Holder), other than a transaction following which (A)
in the case of a merger or consolidation transaction, holders of
securities that represented 100% of the Voting Stock of the Company
immediately prior to such transaction (or other securities into which
such securities are converted as part of such merger or consolidation
transaction) own directly or indirectly at least a majority of the
voting power of the Voting Stock of the surviving Person in such merger
or consolidation transaction immediately after such transaction and (B)
in the case of a sale of assets transaction,
10
the transferee Person becomes the obligor in respect of the Securities
and a Subsidiary of the transferor of such assets.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COMPANY" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
For the purposes of any part of any provision contained herein
which is required by the TIA, and only for the purposes of such part, to the
extent required by the context or by the TIA, "Company" shall also include each
other obligor on the indenture securities.
"CONSOLIDATED COVERAGE RATIO" as of any date of determination
means the ratio of (x) 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 (y) 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, then EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving effect on a pro forma basis to such
Indebtedness and the use of proceeds thereof as if such Indebtedness
had been Incurred on the first day of such period and such proceeds had
been applied as of such date;
(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, then 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
11
actually earned (if any) 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, then
EBITDA for such period shall be reduced by an amount equal to EBITDA
(if positive) directly attributable to the assets which were 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 of material assets, then
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
had 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, then EBITDA and
12
Consolidated Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Asset Disposition,
Investment or acquisition had 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.
If any Indebtedness bears a floating rate of interest and is
being given pro forma effect, the interest on such Indebtedness shall be
calculated as if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any Interest Rate
Agreement applicable to such Indebtedness, but if the remaining term of such
Interest Rate Agreement is less than 12 months, then such Interest Rate
Agreement shall only be taken into account for that portion of the period equal
to the remaining term thereof).
The Consolidated Interest Expense attributable to interest on
any Indebtedness under a revolving credit facility, the outstanding principal
balance of which is required to be computed on a pro forma basis in accordance
with the foregoing, shall be computed based upon the average daily balance of
such Indebtedness during the applicable period; provided, however, that such
average daily balance shall take into account the amount of any repayment of
Indebtedness under such revolving credit facility during the applicable period,
to the extent such repayment permanently reduced the commitments or amounts
available to be borrowed under such facility.
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the
total interest expense of the Company and its consolidated Restricted
Subsidiaries, 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:
(1) interest expense attributable to capital leases and the
interest expense attributable to leases constituting part of a
Sale/Leaseback Transaction;
13
(2) amortization of debt discount and debt
issuance cost;
(3) capitalized interest;
(4) non-cash interest expense;
(5) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers' acceptance financing;
(6) net payments pursuant to Interest Rate
Agreements;
(7) Preferred Stock dividends in respect of all Preferred
Stock held by Persons other than the Company or a Wholly Owned
Subsidiary (other than dividends payable solely in Capital Stock (other
than Disqualified Stock) of the Company);
(8) interest incurred in connection with
Investments in discontinued operations;
(9) interest accruing on any Indebtedness of any other Person
to the extent such Indebtedness is Guaranteed by (or secured by the
assets of) the Company or any Restricted Subsidiary; and
(10) the cash contributions to any employee stock ownership
plan or similar trust to the extent such contributions are used by such
plan or trust to pay interest or fees to any Person (other than the
Company) in connection with Indebtedness Incurred by such plan or
trust;
minus, to the extent included above, write-off of deferred financing costs and
interest attributable to Dollar- Denominated Production Payments.
"CONSOLIDATED NET INCOME" means, for any period, the net
income of the Company and its consolidated Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income:
(1) any net income of any Person (other than the Company) if
such Person is not a Restricted Subsidiary, except that:
14
(A) subject to the exclusion contained in clause (4)
below, the Company's equity in the net income of any such
Person for such period shall be included in such Consolidated
Net Income in an amount equal to the aggregate amount of cash
actually distributed by such Person during such period to the
Company or a Restricted Subsidiary as a dividend, interest
payment or other distribution (subject, in the case of a
dividend, interest payment or other distribution paid to a
Restricted Subsidiary, to the limitations contained in clause
(3) below); and
(B) the Company's equity in a net loss of any such
Person for such period shall not be included in determining
such Consolidated Net Income, except to the extent of the
aggregate cash actually contributed to such Person by the
Company or a Restricted Subsidiary during such period;
(2) solely for purposes of determining the aggregate amount
available for Restricted Payments under Section 4.04(a)(3), 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;
(3) any net income of any Restricted Subsidiary 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 (4)
below, the net income of any such Restricted Subsidiary for
such period shall be included in such Consolidated Net Income
in an amount equal to the aggregate amount of cash that could
have been distributed by such Restricted Subsidiary during
such period to the Company or another Restricted Subsidiary as
a dividend, interest payment or other distribution (subject,
in the case of a dividend, interest payment or other
distribution paid to another Restricted Subsidiary, to the
limitation contained in this clause); and
15
(B) the net loss of any such Restricted Subsidiary
for such period shall be included in determining such
Consolidated Net Income;
(4) any gain or loss, together with any related provision for
taxes on such gain or loss and all related fees and expenses, realized
in connection with (A) the sale or other disposition of any assets of
the Company, its consolidated Subsidiaries or any other Person
(including pursuant to any Sale/ Leaseback Transaction) which is not
sold or otherwise disposed of in the ordinary course of business and
(B) the disposition of any securities of any Person or the
extinguishment of any Indebtedness of the Company or any of its
Subsidiaries;
(5) extraordinary or nonrecurring gains or losses, together
with any related provision for taxes on such gains or losses and all
related fees and expenses;
(6) the cumulative effect of a change in
accounting principles;
(7) any impairment losses on oil and natural gas
properties;
(8) any unrealized noncash gains or losses or charges in
respect of Hedging Obligations (including those resulting from the
application of FAS 133); and
(9) any non-cash compensation charge arising from any grant of
stock, stock options or other equity-based awards.
Notwithstanding the foregoing, for the purposes of Section 4.04 only, there
shall be excluded from Consolidated Net Income any repurchases, repayments or
redemptions of Investments, proceeds realized on the sale of Investments or
return of capital to the Company or a Restricted Subsidiary to the extent such
repurchases, repayments, redemptions, proceeds or returns increase the amount of
Restricted Payments permitted under such section pursuant to Section
4.04(a)(3)(E).
"CONSOLIDATED NET WORTH" means the total of the amounts shown
on the balance sheet of the Company and its consolidated Subsidiaries,
determined on a consolidated
16
basis in accordance with GAAP, as of the end of the most recent fiscal quarter
of the Company ending at least 45 days prior to the taking of any action for the
purpose of which the determination is being made, as the sum of:
(1) the par or stated value of all outstanding Capital Stock
of the Company; plus
(2) paid-in capital or capital surplus relating to such
Capital Stock; plus
(3) any retained earnings or earned surplus,
less (A) any accumulated deficit and (B) any amounts attributable to
Disqualified Stock.
"CREDIT FACILITIES" means, with respect to the Company or any
Restricted Subsidiary, one or more debt facilities (including the Revolving
Credit Facility) or commercial paper facilities with banks or other lenders
providing revolving credit loans, term loans, production payments, receivables
financing (including through the sale of 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 designed
to protect such Person against fluctuations in currency values.
"DEFAULT" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
"DESIGNATED PREFERRED STOCK" means Preferred Stock (not
constituting Disqualified Stock) of the Company (excluding any Preferred Stock
issued prior to or on the Issue Date and any Preferred Stock issued in exchange
or substitution therefor or in a transaction to which Section 4.04(b)(1)
applies) that is designated as Designated Preferred Stock on or after the date
of issuance thereof pursuant to an Officers' Certificate delivered to the
Trustee on the designation thereof, the cash proceeds of which are excluded from
the calculation set forth in Section 4.04(a)(3)(B).
17
"DESIGNATED SENIOR INDEBTEDNESS" with respect to a Person
means:
(1) the Bank Indebtedness; and
(2) 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 $25.0 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.
"DISQUALIFIED STOCK" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable at the option of the holder) or
upon the happening of any event:
(1) matures or is mandatorily redeemable (other than
redeemable only for Capital Stock of such Person which is not itself
Disqualified Stock) pursuant to a sinking fund obligation or otherwise;
(2) is convertible or exchangeable at the option
of the holder for Indebtedness or Disqualified Stock;
or
(3) is mandatorily redeemable or must be purchased
upon the occurrence of certain events or otherwise, in
whole or in part;
in each case on or prior to the first anniversary of the Stated Maturity of the
Securities; provided, however, that:
(A) 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" shall not
constitute Disqualified Stock if:
(1) the "asset sale" or "change of control"
provisions applicable to such Capital Stock are not more
favorable, as measured by the purchase or redemption price or
the breadth of the definition of the event or events
triggering
18
such purchase or redemption obligation, to the holders of such
Capital Stock than the terms applicable to the Securities
pursuant to Sections 4.07 and 4.09; and
(2) any such requirement only becomes operative after
compliance with such terms applicable to the Securities,
including the purchase of any Securities tendered pursuant
thereto,
and (B) any Capital Stock that would constitute Disqualified
Stock solely because such Capital Stock is issued pursuant to any plan
for the benefit of employees of the Company or Subsidiaries of the
Company or by any such plan to such employees and may be required to be
repurchased by the Company in order to satisfy applicable statutory or
regulatory obligations shall not constitute Disqualified Stock.
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 this 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 the following to the extent deducted in calculating such
Consolidated Net Income:
(1) all income tax expense of the Company and its
consolidated Restricted Subsidiaries;
(2) Consolidated Interest Expense;
(3) depreciation, depletion, exploration and amortization
expense of the Company and its
19
consolidated Restricted Subsidiaries (excluding amortization expense
attributable to a prepaid operating activity item that was paid in cash
in a prior period); and
(4) all other non-cash charges of the Company and its
consolidated Restricted Subsidiaries (excluding any such non-cash
charge to the extent that it represents an accrual of or reserve for
cash expenditures in any future period);
in each case for such period, 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:
(A) the amount of deferred revenues that are amortized during
such period and are attributable to reserves that are subject to
Volumetric Production Payments; and
(B) amounts recorded in accordance with GAAP as repayments of
principal and interest pursuant to Dollar-Denominated Production
Payments.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depreciation, depletion, exploration and amortization and
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,
including by reason of minority interests) 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 U.S. Securities Exchange Act of 1934,
as amended.
"EXISTING INVESTMENTS" means assets (including securities)
held by the Company or any of the Restricted Subsidiaries as consideration for
an Investment made on or before the Issue Date or acquired thereafter pursuant
to any agreement or obligation as in effect on the Issue Date.
20
"EXISTING PREFERRED STOCK" means the Company's 6 1/2%
Convertible Preferred Stock, par value $.01 per share and liquidation preference
$25.00 per share.
"EXISTING SECURITIES" means the Company's 87/8%
Senior Subordinated Notes Due 2007.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in:
(1) the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public
Accountants;
(2) statements and pronouncements of the Financial Accounting
Standards Board;
(3) such other statements by such other entity as approved by
a significant segment of the accounting profession; and
(4) 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 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:
(1) 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
21
(2) 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. The term "GUARANTOR" shall mean any
Person Guaranteeing any Indebtedness.
"GUARANTY AGREEMENT" means a supplemental indenture, in a form
satisfactory to the Trustee, pursuant to which a Subsidiary Guarantor guarantees
the Company's obligations with respect to the Securities on the terms provided
for in this Indenture.
"HEDGING OBLIGATIONS" of any Person means the obligations of
such Person pursuant to any Oil and Natural 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 Restricted Subsidiary
(whether by merger, consolidation, acquisition or otherwise) shall be deemed to
be Incurred by such Person at the time it becomes a Restricted Subsidiary. The
term "INCURRENCE" when used as a noun shall have a correlative meaning. Solely
for purposes of determining compliance with Section 4.03, (1) amortization of
debt discount or the accretion of principal with respect to a non-interest
bearing or other discount security, (2) the payment of regularly scheduled
interest in the form of additional Indebtedness of the same instrument or the
payment of regularly scheduled dividends on Capital Stock in the form of
additional Capital Stock of the same class and with the same terms, and (3)
unrealized losses or charges in respect of Hedging Obligations (including those
resulting from the application of FAS 133) shall be deemed not to be Incurrences
of Indebtedness.
22
"INDEBTEDNESS" means, with respect to any Person on any date
of determination (without duplication):
(1) the principal 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, including, in each case, any
premium on such indebtedness to the extent such premium has become due
and payable;
(2) all Capital Lease Obligations of such Person and all
Attributable Debt in respect of Sale/Leaseback Transactions entered
into by such Person;
(3) all obligations of such Person issued or assumed as the
deferred purchase price of property, all conditional sale obligations
of such Person and all obligations of such Person under any title
retention agreement (but excluding trade accounts payable and accrued
expenses);
(4) 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
clauses (1) through (3) 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 payment on
the letter of credit);
(5) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified
Stock of such Person or, with respect to any Preferred Stock of any
Restricted Subsidiary of such Person, the principal amount of such
Preferred Stock to be determined in accordance with this Indenture (but
excluding, in each case, any accrued dividends) (and the term "INCUR
INDEBTEDNESS" and similar terms include issuances of such Disqualified
Stock and Preferred Stock);
23
(6) all obligations of the types referred to in clauses (1)
through (5) of other Persons for which, and all dividends of other
Persons for the payment of which, in either case, such Person is
responsible or liable, directly or indirectly, including by means of
any Guarantee;
(7) all obligations of the types referred to in clauses (1)
through (6) of other Persons secured by any Lien on any property of
such Person (whether or not such obligation is assumed by such Person),
the amount of such obligation being deemed to be the lesser of the
liquidation value of such property and the amount of the obligation so
secured;
(8) to the extent not otherwise included in this definition,
Hedging Obligations of such Person; and
(9) any Guarantee by such Person of production or payment with
respect to a Production Payment,
if and to the extent, in the case of obligations of the types referred to in
clauses (1), (2) and (3) above, such obligations would appear as a liability
upon a balance sheet of such Person prepared in accordance with GAAP.
Except as expressly provided in clause (9) above, Production
Payments and Reserve Sales shall not constitute "INDEBTEDNESS".
Notwithstanding the foregoing, in connection with the purchase
by the Company or any Restricted Subsidiary of any business, the term
"INDEBTEDNESS" will exclude post- closing payment adjustments to which the
seller may become entitled to the extent such payment is determined by a final
closing balance sheet or such payment depends on the performance of such
business after the closing; provided, however, that, at the time of closing, the
amount of any such payment is not determinable and, to the extent such payment
thereafter becomes fixed and determined, the amount is paid within 30 days
thereafter.
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 the maximum liability, upon the occurrence of the
contingency giving rise to the obligation, of any contingent obligations at such
date; provided, however, that in the case of Indebtedness sold at a discount,
the amount of such Indebtedness at any time will be the accreted value thereof
at such time.
24
"INDENTURE" means this Indenture as amended or supplemented
from time to time.
"INDEPENDENT QUALIFIED PARTY" means an investment banking
firm, accounting firm or appraisal firm of national standing; provided, however,
that such firm is not an Affiliate of the Company.
"INTEREST RATE AGREEMENT" means in respect of a Person any
interest rate swap agreement, interest rate cap agreement or other financial
agreement or arrangement designed to protect such Person against fluctuations in
interest rates.
"INVESTMENT" in any Person means any direct or indirect
advance, loan or other extension of credit, including by way of Guarantee (but
excluding any such extension of credit made in the ordinary course of business
to any customer or supplier) 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 for
value 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 therein or in the
consideration received in exchange for such Investment.
For purposes of the definition of "Unrestricted Subsidiary,"
the definition of "Restricted Payment" and Section 4.04:
(1) "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; and
(2) 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.
25
"ISSUE DATE" means November 5, 2001.
"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).
"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 development costs) of more than 50% during a
fiscal quarter in the discounted future net revenues from proved oil and natural
gas reserves of the Company and its Restricted Subsidiaries, calculated in
accordance with clause (a)(1) of the definition of ACNTA; provided, however,
that the following will be excluded from the calculation of Material Change:
(1) any acquisitions during the fiscal quarter of oil and
natural gas reserves that have been estimated by independent petroleum
engineers and with respect to which a report or reports of such
engineers exist; and
(2) 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.
"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 and proceeds from the sale or other disposition of any securities
received as consideration, 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 assets or received in any
other noncash form), in each case net of:
(1) all accounting, engineering, investment banking,
brokerage, legal, title and recording tax expenses, commissions and
other fees and expenses incurred, and all Federal, state, provincial,
foreign and local and other taxes required to be accrued as a liability
under GAAP, as a consequence of such Asset Disposition, and any
relocation expenses incurred or assumed in connection with such Asset
Disposition;
26
(2) 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;
(3) all distributions and other payments required to be made
to minority interest holders in Restricted Subsidiaries as a result of
such Asset Disposition; and
(4) the deduction of appropriate amounts provided by the
seller as a reserve for adjustment in respect of the sale price of the
assets that were the subject of such Asset Disposition or as a reserve,
in accordance with GAAP, against any liabilities associated with such
assets and retained by the Company or any Restricted Subsidiary after
such Asset Disposition.
Notwithstanding the foregoing, to the extent that any or all
of the Net Available Cash from an Asset Disposition made outside the United
States of America is prohibited or delayed from being repatriated to the United
States pursuant to applicable local law (or to the extent that the Board of
Directors determines, in good faith, that repatriation of such Net Available
Cash would have a material adverse tax consequence to the Company) despite
reasonable effort by the Company or such Restricted Subsidiary to exclude or
release those funds from such restrictions or to avoid such tax, the portion of
such Net Available Cash so affected shall be deemed excluded from Net Available
Cash for so long as such restrictions or material adverse tax consequences
exist.
"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.
27
"NET PRESENT VALUE" means, with respect to any proved oil and
natural gas 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 date of the Offering
Circular.
"NET WORKING CAPITAL" means:
(1) all current assets of the Company and its Restricted
Subsidiaries, except current assets from commodity price risk
management activities arising in the ordinary course of business; minus
(2) all current liabilities of the Company and its Restricted
Subsidiaries, except current liabilities included in Indebtedness and
current liabilities from commodity price risk management activities
arising in the ordinary course of business,
determined in accordance with GAAP.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING CIRCULAR" means the Confidential Offering Circular
dated October 31, 2001 issued by the Company in relation to $275,000,000
aggregate principal amount of 8 1/4% Senior Subordinated Notes Due 2011 to be
issued on the Issue Date.
"OFFICER" means the Chairman of the Board, the President, any
Vice President, the Treasurer or the Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two
Officers.
"OIL AND GAS BUSINESS" means:
(1) the acquisition, exploration, exploitation,
development, operation and disposition of interests in
oil, gas and other hydrocarbon properties;
(2) the gathering, marketing, distribution, treating,
processing, storage, refining, selling and
28
transporting of any production from such interests or properties and
the marketing of oil and gas obtained from unrelated Persons;
(3) any business relating to or arising from exploration for
or exploitation, development, production, treatment, processing,
storage, refining, transportation, gathering or marketing of oil, gas
and other minerals and products produced in association therewith;
(4) any other related energy business, including power
generation and electrical transmission business in a jurisdiction
outside North America where fuel required by such business is supplied,
directly or indirectly, from hydrocarbons produced substantially from
properties in which the Company or its Restricted Subsidiaries,
directly or indirectly, participates;
(5) any business relating to oil field sales and service; and
(6) any activity necessary, appropriate or incidental to the
activities described in the preceding clauses (1) through (5) of this
definition.
"OIL AND NATURAL GAS HEDGING CONTRACT" means any oil and
natural gas hedging agreement, and other agreement or arrangement designed to
protect the Company or any Restricted Subsidiary against fluctuations in oil and
natural gas prices.
"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 INVESTMENTS" means Investments and
expenditures made in the ordinary course of, and of a nature that is or shall
have become customary in, the Oil and Gas Business as means of actively
exploiting, exploring for, acquiring, developing, processing, gathering,
marketing or transporting oil and natural gas through agreements, transactions,
interests or arrangements that permit one to share risks or costs, comply with
regulatory requirements regarding local ownership or satisfy other
29
objectives customarily achieved through the conduct of the Oil and Gas Business
jointly with third parties, including:
(1) ownership interests in oil and natural gas properties or
gathering, transportation, processing, storage or related systems; and
(2) entry into, and Investments and expenditures in the form
of or pursuant to, operating agreements, working interests, royalty
interests, mineral leases, processing agreements, farm-in agreements,
farm-out agreements, contracts for the sale, transportation or
exchange of oil and natural gas, production sharing agreements,
development agreements, area of mutual interest agreements, unitization
agreements, pooling arrangements, joint bidding agreements, service
contracts, joint venture agreements, partnership agreements (whether
general or limited), limited liability company agreements, subscription
agreements, stock purchase agreements, stockholder agreements and other
similar agreements with third parties (including Unrestricted
Subsidiaries).
"PERMITTED HOLDERS" means:
(1) Robert A. Belfer, Renee E. Belfer, Laurence D. Belfer and
Jack Saltz;
(2) Saltz Investment Group, LLC, Jack & Anita Saltz
Foundation, The Robert A. and Renee E. Belfer Family Foundation, Belfer
Corp., Belwest Petroleum, Inc., A&B Investors, Inc., Renee Holdings
Partnership, L.P., Trust for the benefit of Elizabeth Kones Belfer
(T-6), Trust for the benefit of Elizabeth Kones Belfer (T-7), The
Laurence D. Belfer Family Foundation, LDB Corp., Robert A. Belfer 1990
Family Trust and Vantz Limited Partnership (together with the Persons
listed in clause (1), the "BELFER GROUP");
(3) Westport Energy LLC, Richard J. Haas, Robert A. Haas,
Eugen von Liechtenstein and Graham Garner (the "WESTPORT ENERGY
GROUP");
(4) ERI Investments, Inc.;
(5) the direct and indirect beneficial owners of the Persons
described in clauses (2), (3) and (4);
30
(6) the spouses or descendants of such individuals described
or listed above;
(7) the estates or legal representatives of the individuals
described or listed above;
(8) trusts created for the benefit of such Persons; and
(9) entities 80% or more directly or indirectly owned by any
of the preceding Persons,
provided, however, that to the extent Voting Stock beneficially owned (as
defined in clause (1) of the definition of "Change of Control") by any of the
Belfer Group, the Westport Energy Group or ERI Investments, Inc. (together with
their respective related persons identified in clauses (5) to (9)), exceeds in
the aggregate 30% of the Voting Stock of the Company, such Voting Stock shall be
deemed not to be beneficially owned by a Permitted Holder.
"PERMITTED INVESTMENT" means an Investment by the Company or
any Restricted Subsidiary in:
(1) the Company, a Restricted Subsidiary or a Person that will
as a result of such Investment and all other related transactions,
become a Restricted Subsidiary or be merged, consolidated or
amalgamated with or into, or transfer or convey all or substantially
all of its assets to, or be liquidated into, the Company or a
Restricted Subsidiary; provided, however, that the primary business of
such Restricted Subsidiary or Person is a Related Business;
(2) cash and Temporary Cash Investments;
(3) 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;
(4) payroll, travel and similar extensions of credit to cover
matters that are expected at the time of such extensions of credit
ultimately to be treated as expenses for accounting purposes and that
are made in the ordinary course of business;
31
(5) extensions of credit to officers, directors and employees
made in the ordinary course of business of the Company or such
Restricted Subsidiary;
(6) Capital 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;
(7) 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 or consideration received for a
disposition not constituting an Asset Disposition;
(8) any Person where such Investment was acquired by the
Company or any of its Restricted Subsidiaries (a) in exchange for any
other Investment or accounts receivable held by the Company or any such
Restricted Subsidiary in connection with or as a result of a
bankruptcy, workout, reorganization or recapitalization of the issuer
of such other Investment or accounts receivable or (b) as a result of a
foreclosure by the Company or any of its Restricted Subsidiaries with
respect to any secured Investment or other transfer of title with
respect to any secured Investment in default;
(9) any acquisitions of Capital Stock solely in exchange for
Capital Stock (other than Disqualified Stock) of the Company; provided,
however, that the fair market value of such Capital Stock, when taken
together with all other Capital Stock acquired pursuant to this clause
(9) and at the time owned by the Company or its Restricted
Subsidiaries, does not exceed $10.0 million;
(10) Hedging Obligations;
(11) obligations of one or more officers, directors or
employees of the Company or any of its Restricted Subsidiaries in
connection with such individual's acquisition of shares of Capital
Stock
32
of the Company (and refinancings of the principal thereof and accrued
interest thereon) so long as no net cash or other assets of the Company
and its Restricted Subsidiaries is paid by the Company or any of its
Restricted Subsidiaries to such individuals in connection with the
acquisition of any such obligations;
(12) Existing Investments and any Investments made with the
proceeds of any dispositions thereof;
(13) Permitted Business Investments;
(14) Guarantees of performance or other obligations (other
than Indebtedness) arising in the ordinary course in the Oil and Gas
Business, including obligations under oil and natural gas exploration,
development, joint operating, and related agreements and licenses or
concessions related to the Oil and Gas Business;
(15) Investments in prepaid expenses, negotiable instruments
held for collection or deposit and lease, utility and workers
compensation, performance and similar deposits entered into as a result
of the operations of the business in the ordinary course of business;
and
(16) any Person, not otherwise permitted to be made pursuant
to clause (1) through (15), in an aggregate amount, which when taken
together with all other Investments made on or after the Issue Date
pursuant to this clause, does not exceed $20 million at any one time
outstanding.
"PERMITTED LIENS" means the following types of Liens:
(1) Liens securing Senior Indebtedness;
(2) Liens in favor of the Company or a Restricted Subsidiary;
(3) Liens securing the Securities:
(4) Liens existing as of the Issue Date;
(5) Liens for taxes, assessments and governmental charges or
claims either (A) not delinquent or (B) contested in good faith by
33
appropriate proceedings and as to which the Company or its Restricted
Subsidiaries shall have set aside on its books such reserves as may be
required pursuant to GAAP;
(6) statutory and contractual Liens of landlords and Liens of
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen
and other Liens imposed by law or contract incurred in the ordinary
course of business for sums not delinquent or being contested in good
faith, if such reserve or other appropriate provision, if any, as shall
be required by GAAP shall have been made in respect thereof;
(7) Liens incurred or deposits or pledges made in the ordinary
course of business in connection with workers' compensation,
unemployment insurance and other types of social security, or to secure
the payment or performance of tenders, statutory or regulatory
obligations, surety and appeal bonds, bids, leases, government
contracts and leases, performance and return of money bonds and other
similar obligations, including letters of credit and bank guarantees
required or requested by the United States, any State thereof or any
foreign government or any subdivision, department, agency, organization
or instrumentality of any of the foregoing in connection with any
contract or statute (exclusive of obligations for the payment of
borrowed money but including lessee or operator obligations under
statutes, governmental regulations, contracts or instruments related to
the ownership, exploration and production of oil, gas and minerals on
state, Federal or foreign lands or waters);
(8) Liens arising out of judgments, decrees, orders or awards
not constituting an Event of Default;
(9) leases, subleases, licenses or sublicenses to third
parties entered into in the ordinary course of business;
(10) Liens on, or related to, assets to secure all or part of
the costs incurred in the ordinary course of the Oil and Gas Business
for the exploration, drilling, development, production, processing,
transportation, marketing, storage or operation thereof;
34
(11) Liens on pipeline or pipeline facilities that arise under
operation of law;
(12) Liens arising under operating agreements, joint venture
agreements, partnership agreements, oil and gas leases, farm-out or
farm-in agreements, division orders, contracts for the sale,
transportation or exchange of oil or natural gas, unitization and
pooling declarations and agreements, area of mutual interest agreements
and other agreements that are customary in the Oil and Gas Business;
(13) Liens reserved in oil and gas mineral leases
for bonus or rental payments and for compliance with
the terms of such leases;
(14) Liens constituting survey exceptions, encumbrances,
easements, and reservations of, and rights to others for,
rights-of-way, zoning and other restrictions as to the use of real
properties, and minor defects of title which, in the case of any of the
foregoing, do not secure the payment of borrowed money, and in the
aggregate do not materially adversely affect the value of the assets of
the Company and its Restricted Subsidiaries, taken as a whole, or
materially impair the use of such properties for the purposes for which
such properties are held by the Company or such Subsidiaries;
(15) Liens encumbering assets under construction arising from
progress or partial payments by a customer of the Company or its
Restricted Subsidiaries relating to such assets;
(16) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty
requirements of the Company or any of its Restricted Subsidiaries,
including rights of offset and set-off;
(17) Liens upon specific items of inventory or other goods and
proceeds of any Person securing such Person's obligations in respect of
bankers' acceptances issued or created for the account of such Person
to facilitate the purchase, shipment or storage of such inventory or
other goods;
35
(18) Liens arising under this Indenture in favor of the
Trustee for its own benefit and similar Liens in favor of other
trustees, agents and representatives arising under instruments
governing Indebtedness permitted to be incurred under this Indenture;
provided, however, that such Liens are solely for the benefit of the
trustees, agents or representatives in their capacities as such and not
for the benefit of the holders of such Indebtedness;
(19) set-off, chargeback and other rights of depositary and
collection banks and other regulated financial institutions with
respect to money or instruments of the Company or any of its Restricted
Subsidiaries on deposit with or in the possession of such institutions;
and
(20) Liens arising from the deposit of funds or securities in
trust for the purpose of decreasing or defeasing Indebtedness so long
as such deposit of funds or securities and such decreasing or defeasing
of Indebtedness are permitted under Section 4.04.
In each case set forth above, notwithstanding any stated
limitation on the assets that may be subject to such Lien, a Permitted Lien on a
specified asset or group or type of assets may include Liens on all
improvements, additions and accessions thereto and all products and proceeds
thereof (including, without limitation, dividends, distributions and increases
in respect thereof).
"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.
"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.
36
"PRODUCTION PAYMENTS" means, collectively, Dollar- Denominated
Production Payments and Volumetric Production Payments.
"PRODUCTION PAYMENTS AND RESERVE SALES" means the grant or
transfer to any Person of a Dollar-Denominated Production Payment, Volumetric
Production Payment, royalty, overriding royalty, net profits interest, master
limited partnership interest or other interest in oil and natural gas
properties, reserves or the right to receive all or a portion of the production
or the proceeds from the sale of production attributable to such properties.
"PUBLIC EQUITY OFFERING" means an underwritten primary public
offering of common stock of the Company pursuant to an effective registration
statement under the Securities Act.
"REFINANCE" means, in respect of any Indebtedness, to
refinance or refund, 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 this Indenture, including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that:
(1) such Refinancing Indebtedness has a Stated Maturity no
earlier than the Stated Maturity of the Indebtedness being Refinanced;
(2) 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; and
(3) 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 accrued interest
37
thereon and fees and expenses, including any premium and defeasance
costs) under the Indebtedness being Refinanced;
provided further, however, that Refinancing Indebtedness shall not include (A)
Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor which
Refinances Indebtedness of the Company and (B) Indebtedness of the Company or a
Restricted Subsidiary that Refinances Indebtedness of an Unrestricted
Subsidiary.
"RELATED BUSINESS" means the Oil and Gas Business and any
other business in which the Company or a Subsidiary was engaged on the Issue
Date and any business related, ancillary or complementary thereto.
"REPRESENTATIVE" means with respect to a Person any trustee,
agent or representative (if any) for an issue of Senior Indebtedness of such
Person.
"RESTRICTED PAYMENT" with respect to any Person means:
(1) the declaration or payment (without duplication) 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 (A) dividends or
distributions payable solely in its Capital Stock (other than
Disqualified Stock), (B) dividends or distributions payable solely to
the Company or a Restricted Subsidiary, and (C) dividends or other
distributions made by a Subsidiary to the holders of any class of its
Capital Stock on a pro rata basis);
(2) the purchase, redemption or other acquisition or
retirement for value of any Capital Stock of the Company held by any
Person (other than a Restricted Subsidiary) or of any Capital Stock of
a Restricted Subsidiary held by any Affiliate of the Company (other
than the Company or 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);
38
(3) 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, redemption, defeasance or other acquisition or retirement
for value of Subordinated Obligations in anticipation of satisfying a
sinking fund obligation, principal installment or final maturity, in
each case due within one year of the date of such purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value);
or
(4) 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.
"REVOLVING CREDIT FACILITY" means the Credit Agreement dated
as of August 21, 2001 among the Company, the lenders referred to therein, The
Chase Manhattan Bank, as Issuing Bank and Administrative Agent, Credit Suisse
First Boston and Fleet National Bank, as Syndication Agents, and Fortis Capital
Corp. and U.S. Bank National Association, as Documentation Agents, together with
the related documents thereto (including the term loans and revolving loans
thereunder, any guarantees and security documents, whether made by the Company
or any Restricted Subsidiary), as amended, extended, renewed, restated,
supplemented or otherwise modified (in whole or in part, and without limitation
as to amount, terms, conditions, covenants and other provisions) from time to
time, and any agreement (and related document) governing Indebtedness incurred
to Refinance, in whole or in part, the borrowings and commitments then
outstanding or permitted to be outstanding under such credit agreement or a
successor credit agreement, whether by the same or any other lender or agent or
group of lenders or agents.
"S&P" means Standard & Poor's Ratings Group.
"SALE/LEASEBACK TRANSACTION" means an arrangement relating to
property owned by the Company or a Restricted Subsidiary on the Issue Date or
thereafter acquired by the Company or a Restricted Subsidiary whereby the
Company or a Restricted Subsidiary transfers
39
such property to a Person and thereafter the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITIES" has the meaning set forth in the second paragraph
of this Indenture.
"SECURITIES ACT" means the U.S. Securities Act of 1933, as
amended.
"SENIOR INDEBTEDNESS" means with respect to any Person:
(1) Indebtedness of such Person, whether outstanding on the
Issue Date or thereafter Incurred; and
(2) (i) accrued and unpaid interest (including interest
accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to such Person whether or not post-filing
interest is allowed in such proceeding) and (ii) reimbursement
obligations, fees, commissions, expenses, indemnitees and other similar
amounts in respect of (A) indebtedness of such Person for money
borrowed (and all Hedging Obligations directly related thereto) and (B)
indebtedness evidenced by notes, debentures, bonds or other similar
instruments for the payment of which such Person is responsible or
liable
unless, in the case of clauses (1) and (2), in the instrument creating or
evidencing the same or pursuant to which the same is outstanding, it is provided
that such obligations are subordinate or pari passu in right of payment to the
Securities or the Subsidiary Guaranty of such Person, as the case may be;
provided, however, that Senior Indebtedness shall not include:
(A) any obligation of such Person to any Subsidiary;
(B) any liability for Federal, state, local or other taxes
owed or owing by such Person;
(C) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees
thereof or instruments evidencing such liabilities);
40
(D) any Indebtedness of such Person (and any accrued and
unpaid interest in respect thereof) which is subordinate or junior in
right of payment to any other Indebtedness or other obligation of such
Person;
(E) any Disqualified Stock; and
(F) that portion of any Indebtedness which at the time of
Incurrence is Incurred in violation of this Indenture (but, as to any
such obligation, no such violation shall be deemed to exist for the
purposes of this clause (F) if the Trustee shall have received an
Officers' Certificate of the Company at the time of such Incurrence to
the effect that the Incurrence of such Indebtedness does not violate
this Indenture) other than Indebtedness under (i) the Revolving Credit
Facility or (ii) any other Credit Facility that is incurred on the
basis of a representation by the Company to the applicable lenders that
it is permitted to incur such Indebtedness under this Indenture.
"SENIOR SUBORDINATED INDEBTEDNESS" means, with respect to a
Person, the Securities and the Existing Securities (in the case of the Company),
a Subsidiary Guaranty and a Guarantee of the Existing Securities (in the case of
a Subsidiary Guarantor) and any other Indebtedness of such Person that
specifically provides that such Indebtedness is to rank pari passu with the
Securities or such Subsidiary Guaranty, as the case may be, 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 (but excluding any provision providing for the
repurchase of such security
41
at the option of the holder thereof upon the happening of any contingency unless
such contingency has occurred).
"SUBORDINATED OBLIGATION" means, with respect to a Person, any
Indebtedness of such Person (whether outstanding on the Issue Date or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities
or a Subsidiary Guaranty of such Person, as the case may be, pursuant to a
written agreement to that effect.
"SUBSIDIARY" means, with respect to any Person, any
corporation, association, partnership or other business entity of which more
than 50% of the total voting power of shares of Voting Stock is at the time
owned or controlled, directly or indirectly, by:
(1) such Person;
(2) such Person and one or more Subsidiaries of such Person;
or
(3) one or more Subsidiaries of such Person.
Unless otherwise specified, "SUBSIDIARY" means a Subsidiary of
the Company.
"SUBSIDIARY GUARANTOR" means each Subsidiary of the Company
that executes this Indenture on the Issue Date as a guarantor and each other
Subsidiary of the Company that thereafter guarantees the Securities pursuant to
the terms of this Indenture, in each case unless and until such Subsidiary is
released from its obligations under its Subsidiary Guaranty pursuant to the
terms of this Indenture.
"SUBSIDIARY GUARANTY" 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:
(1) 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;
42
(2) investments in demand accounts, time deposit accounts,
bankers' acceptances, overnight bank deposits, certificates of deposit
and money market deposits maturing within twelve months 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 is a lender under the
Revolving Credit Facility or has capital, surplus and undivided profits
aggregating in excess of $50.0 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
recognized statistical 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;
(3) investments in deposits available for withdrawal on demand
with any commercial bank that is organized under the laws of any
country in which the Company or any Restricted Subsidiary maintains an
office or is engaged in the Oil and Gas Business, provided that (i) all
such deposits have been made in such accounts in the ordinary course of
business and (ii) such deposits do not at any one time exceed $10.0
million in the aggregate;
(4) repurchase (or reverse repurchase) obligations with a term
of not more than 30 days for underlying securities of the types
described in clause (1) above entered into with a bank meeting the
qualifications described in clause (2) above;
(5) investments in commercial paper issued by a corporation
(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-1" (or
higher) according to Moody's or "A-1" (or higher)
according to S&P; and
(6) 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.
43
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of this Indenture, except as
provided in Section 9.03.
"TREASURY RATE" means the yield to maturity at the time of
computation of United States Treasury securities with a constant maturity (as
compiled and published in the most recent Federal Reserve Statistical Release
H.15(519) which has become publicly available at least two Business Days prior
to the date fixed for redemption or, in the case of defeasance, prior to the
date of deposit (or, if such Statistical Release is no longer published, any
publicly available source of similar market data)) most nearly equal to the then
remaining average life to November 1, 2006 or, in the case of defeasance, to
maturity; provided, however, that if the average life to November 1, 2006 or
maturity, as the case may be, of the Securities is not equal to the constant
maturity of a United States Treasury security for which a weekly average yield
is given, the Treasury Rate shall be obtained by linear interpolation
(calculated to the nearest one-twelfth of a year) from the weekly average yields
of United States Treasury securities for which such yields are given, except
that if the average life to November 1, 2006 or maturity, as the case may be, of
the Securities is less than one year, the weekly average yield on actually
traded United States Treasury securities adjusted to a constant maturity of one
year shall be used.
"TRUSTEE" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor.
"TRUST OFFICER" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"UNIFORM COMMERCIAL CODE" means the New York Uniform
Commercial Code as in effect from time to time.
"UNRESTRICTED SUBSIDIARY" means:
(1) 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;
44
(2) any Subsidiary of an Unrestricted Subsidiary; and
(3) Belco Energy (Cayman Islands) Corp., AWM-Chile LLC and
AWM-Chile Two LLC,
in each case unless and until such time as such Subsidiary is designated a
Restricted Subsidiary for the purposes of this Indenture.
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 4.04 (the amount of such Restricted Payment being calculated in
the manner set forth in the definition of the term "Investment").
The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (A) the Company could Incur $1.00 of
additional Indebtedness under Section 4.03(a) and (B) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced to the Trustee by promptly filing with the Trustee a copy of the
resolution of the Board of Directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing provisions.
"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.
45
"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.
"WHOLLY OWNED SUBSIDIARY" means a Restricted Subsidiary all
the Capital Stock of which (other than directors' qualifying shares and shares
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.
<Table>
<Caption>
Defined in
Term Section
---- ----------
"Affiliate Transaction" ................ 4.08
"Bankruptcy Law" ....................... 6.01
"Blockage Notice" ...................... 10.03/12.03
"Change of Control Offer" .............. 4.09(b)
"covenant defeasance option" ........... 8.01(b)
"Custodian" ............................ 6.01
"Event of Default" ..................... 6.01
"Guarantied Obligations" ............... 11.01
"Investment Grade Rating"............... 4.13
"legal defeasance option" .............. 8.01(b)
"Legal Holiday" ........................ 13.08
"Offer" ................................ 4.07(b)
"Offer Amount" ......................... 4.07(c)(2)
</Table>
46
<Table>
"Offer Period" ......................... 4.07(c)(2)
"pay its Subsidiary Guaranty" .......... 12.03
"pay the Securities" ................... 10.03
"Paying Agent" ......................... 2.03
"Payment Default" ...................... 10.03/12.03
"Payment Blockage Period" .............. 10.03/12.03
"Purchase Date" ........................ 4.07(c)(1)
"Registrar"............................. 2.03
"Successor Company" .................... 5.01
"Suspended Covenants" .................. 4.13
</Table>
In addition, terms defined in Appendix B shall have the
meanings set forth therein.
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;
"indenture security holder" means a Securityholder;
"indenture to be qualified" means this Indenture;
"indenture trustee" or "institutional trustee"
means the Trustee; and
"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.
47
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 issuer dated such date
prepared in accordance with GAAP;
(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; and
(9) all references to the date the Securities were originally
issued shall refer to the Issue Date.
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 Appendix B attached hereto 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 Appendix B 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
48
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 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 Exhibit 1 to Appendix B 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. The
Company's seal may be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
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.
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
49
exchange (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
each due date of the 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 Securityholders 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 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
50
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 a replacement Security if the requirements of
Section 8-405 of the Uniform Commercial Code are 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.
51
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 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 Securities surrendered to them for
registration of transfer, exchange or payment. The Trustee and no one else shall
cancel and dispose of in accordance with its customary procedures (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
52
defaulted interest to the persons who are Securityholders on a subsequent
special record date. 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 and corresponding "ISINs" (if then generally
in use) and, if so, the Trustee shall use "CUSIP" numbers and corresponding
"ISINs" in notices of redemption as a convenience to Holders; provided, however,
that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the 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. The Company shall
promptly notify the Trustee of any change in the "CUSIP" numbers or "ISINs".
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 Initial 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 Officers'
Certificate, a copy of each of 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 and
corresponding ISIN of such Additional Securities; provided, however,
that the Additional Securities will be fungible for tax purposes with
all other Securities; and
53
(3) whether such Additional Securities shall be Transfer
Restricted Securities and issued in the form of Initial Securities as
set forth in Appendix B 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 60 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 the
Company is redeeming less than all the Securities at any time, the Trustee shall
select the Securities to be redeemed on a pro rata basis, or by lot or by such
other method that complies with applicable legal and securities exchange
requirements, if any, and that the Trustee in its sole discretion shall deem to
be 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
larger than $1,000. Securities and portions of them the Trustee selects shall be
in principal 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
promptly of the Securities or portions of Securities to be redeemed.
54
SECTION 3.03. Notice of Redemption. The Company shall cause
notices of redemption to be mailed by first- class mail at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at such Holder's registered address.
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 any Security is to be redeemed in part only, the
principal amount thereof 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 portion 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 or corresponding ISIN, 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 become due and payable on
the redemption date and at the redemption price stated in the notice. 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
(subject to the right of Holders of record on the relevant record date to
receive interest due on the related interest
55
payment 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 or, to the
extent permitted by the Trustee, on 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 cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon cancellation
of a Security that is redeemed in part, the Company shall execute and the
Trustee shall authenticate for the Holder (at the Company's expense) a new
Security equal in principal amount to the unredeemed portion of the Security
cancelled.
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 be subject to the reporting 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
56
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 (but without exhibits in the case of Securityholders), 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 Holders of the
Securities and to prospective investors, upon the requests of such Holders, 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).
Delivery of the reports, information and documents specified
in the preceding paragraph to the Trustee is for informational purposes only and
the Trustee's receipt of such shall not constitute constructive notice of any
information contained therein or determinable from information contained
therein, including the Company's compliance with any of its covenants hereunder
(as to which the Trustee is entitled to rely on Officers' Certificates).
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 and the
Subsidiary Guarantors shall be entitled to Incur Indebtedness if, on the date of
such Incurrence and after giving effect thereto on a pro forma basis, no Default
has occurred and is continuing and the Consolidated Coverage Ratio exceeds 2.5
to 1.
(b) Notwithstanding the foregoing paragraph (a), the Company
and the Restricted Subsidiaries shall be entitled to Incur any or all of the
following Indebtedness:
(1) Indebtedness Incurred pursuant to Credit Facilities;
provided, however, that, after giving effect to any such Incurrence,
the aggregate principal amount of all Indebtedness Incurred under this
clause (1) and then outstanding does not exceed the greater of (A) $500
million less the sum of all principal payments with respect to such
Indebtedness pursuant to Section 4.07(a)(3)(A) and (B) $250 million
plus 20% of ACNTA as of the date of such Incurrence;
57
(2) Indebtedness owed to and held by the Company or a Wholly
Owned Subsidiary; provided, however, that (A) any subsequent issuance
or transfer of any Capital Stock which results in any such Wholly Owned
Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent
transfer of such Indebtedness (other than to the Company or a Wholly
Owned Subsidiary) shall be deemed, in each case, to constitute the
Incurrence of such Indebtedness by the obligor thereon and (B) if the
Company is the obligor on such Indebtedness, unless such Indebtedness
is owing to a Subsidiary Guarantor, such Indebtedness is expressly
subordinated to the prior payment in full in cash of all obligations
with respect to the Securities;
(3) the Securities (excluding any Additional Securities) and
all Subsidiary Guaranties;
(4) Indebtedness outstanding on the Issue Date (other than
Indebtedness described in clause (1), (2) or (3) of this Section
4.03(b)) including the Existing Securities;
(5) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on or prior to the date on which such Subsidiary became a
Restricted Subsidiary or 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
Subsidiary became a Restricted Subsidiary or was acquired by the
Company); provided, however, that on the date such Subsidiary became a
Restricted Subsidiary or was acquired by the Company and after giving
pro forma effect thereto, the Company would have been able to Incur at
least $1.00 of additional Indebtedness pursuant to Section 4.03(a);
(6) Refinancing Indebtedness in respect of Indebtedness
Incurred pursuant to Section 4.03(a) or pursuant to clause (3), (4) or
(5) of this Section 4.03(b) or this clause (6); provided, however, that
to the extent such Refinancing Indebtedness directly or indirectly
Refinances Indebtedness of a Restricted Subsidiary Incurred
58
pursuant to clause (5), such Refinancing Indebtedness shall be Incurred
only by such Restricted Subsidiary or, so long as such Restricted
Subsidiary has no liability with respect to such Refinancing
Indebtedness, by the Company or a Subsidiary Guarantor;
(7) Indebtedness consisting of Guarantees of production or
payment with respect to Production Payments; provided, however, that
the Net Present Value of the reserves related to such Production
Payments shall not exceed 2.5% of ACNTA at the time of Incurrence;
(8) Hedging Obligations consisting of Interest Rate Agreements
related to Indebtedness outstanding on the Issue Date or permitted to
be Incurred by the Company and the Restricted Subsidiaries pursuant to
this Indenture;
(9) Hedging Obligations consisting of Oil and Natural 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 Subsidiaries;
(10) obligations in respect of performance, bid and surety
bonds, including Guarantees and letters of credit functioning as or
supporting such performance, bid and surety bonds, completion
guarantees and other reimbursement obligations provided by the Company
or any Restricted Subsidiary in the ordinary course of business (in
each case other than for an obligation for money borrowed);
(11) Indebtedness 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 Indebtedness is extinguished within two
Business Days of its Incurrence;
(12) Indebtedness consisting of any Guarantee by the Company
or a Subsidiary Guarantor of Indebtedness of the Company or a
Subsidiary Guarantor outstanding on the Issue Date or permitted by this
Indenture to be Incurred by the Company or a Subsidiary Guarantor;
59
(13) Indebtedness represented by Capital Lease Obligations,
mortgage financings or purchase money obligations, in each case,
Incurred for the purpose of financing all or any part of the purchase
price, cost of construction or improvement or carrying cost of assets
used in the business of the Company and its Restricted Subsidiaries and
related financing costs, and Refinancing Indebtedness Incurred to
Refinance any Indebtedness Incurred pursuant to this clause, in an
aggregate principal amount at any one time outstanding not to exceed
$20 million;
(14) Indebtedness arising from any agreement providing for
indemnities, Guarantees, purchase price adjustments, holdbacks,
contingency payment obligations based on the performance of the
acquired or disposed assets or similar obligations (other than
Guarantees of Indebtedness) Incurred by any Person in connection with
the acquisition or disposition of assets;
(15) in-kind obligations relating to net oil or natural gas
balancing positions arising in the ordinary course of business; and
(16) Indebtedness of the Company or its Restricted
Subsidiaries in an aggregate principal amount which, when taken
together with all other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the date of such Incurrence (other than
Indebtedness permitted by clauses (1) through (15) of this Section
4.03(b) or Section 4.03(a)) does not exceed $25 million, of which not
more than $10 million may be Indebtedness of Restricted Subsidiaries
that are not Subsidiary Guarantors.
(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 of the Company or any Subsidiary
Guarantor unless such Indebtedness shall be subordinated to the Securities or
the applicable Subsidiary Guaranty to at least the same extent as such
Subordinated Obligations.
(d) For purposes of determining compliance with this Section
4.03, in the event that an item of Indebtedness meets the criteria of more than
one of the
60
categories of Indebtedness described above (including Section 4.03(a)), (1) the
Company, in its sole discretion, may classify such item of Indebtedness at the
time of Incurrence, in any manner in compliance with this Section 4.03, (2) the
Company will only be required to include the amount and type of such
Indebtedness in one of the above categories and (3) the Company shall be
entitled to divide and classify such item of Indebtedness in more than one of
the categories of Indebtedness described herein.
(e) Notwithstanding Section 4.03(a) or 4.03(b), the Company
shall not, and shall not permit any Subsidiary Guarantor to, Incur any
Indebtedness if such Indebtedness is subordinate or junior in ranking in right
of payment to any Senior Indebtedness of such Person, unless such Indebtedness
is Senior Subordinated Indebtedness of such Person or is expressly subordinated
in right of payment to Senior Subordinated Indebtedness of such Person.
SECTION 4.04. 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 entitled 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 Consolidated Net Income accrued during
the period (treated as one accounting period) from the
beginning of the fiscal quarter immediately following the
fiscal quarter during which the Issue Date occurs to the end
of the most recent fiscal quarter ending at least 45 days
prior to the date of such Restricted Payment (or, in case such
Consolidated Net Income shall be a deficit, minus 100% of such
deficit); plus
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(B) 100% of the aggregate Net Cash Proceeds or the
fair market value of property other than cash (including
Capital Stock of Persons engaged in the Oil and Gas Business
or assets used in the Oil and Gas Business) 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) and 100% of
any capital contribution received by the Company from its
shareholders subsequent to the Issue Date; plus
(C) the aggregate Net Cash Proceeds received by the
Company subsequent to the Issue Date from the issuance or sale
of its Capital Stock (other than Disqualified Stock) 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; provided, however, that if such employee stock
ownership plan or trust Incurs any Indebtedness to finance the
purchase of such Capital Stock, such aggregate amount shall be
limited to the excess of such Net Cash Proceeds over the
amount of such Indebtedness plus an amount equal to any
increase in the Consolidated Net Worth of the Company
resulting from principal repayments made from time to time by
such employee stock ownership plan or trust with respect to
such Indebtedness; plus
(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); plus
(E) an amount equal to the sum of (x) the net
reduction in the Investments (other than
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Permitted Investments) made by the Company or any Restricted
Subsidiary in any Person resulting from repurchases,
repayments or redemptions of such Investments by such Person,
proceeds realized on the sale of such Investment and proceeds
representing the return of capital (excluding dividends and
distributions), in each case received by the Company or any
Restricted Subsidiary and (y) to the extent such Person is an
Unrestricted Subsidiary, the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Unrestricted Subsidiary
at the time such Unrestricted Subsidiary is designated a
Restricted Subsidiary; provided, however, that to the extent
the foregoing sum exceeds, in the case of any such Person or
Unrestricted Subsidiary, the amount of Investments (excluding
Permitted Investments) previously made (and treated as a
Restricted Payment) by the Company or any Restricted
Subsidiary in such Person or Unrestricted Subsidiary, such
excess shall not be included in this clause (E) unless the
amount represented by such excess has not been and will not be
taken into account in one of clauses (A)-(D) of this Section
4.04(a); plus
(F) $15.0 million.
(b) The provisions of Section 4.04(a) shall not prohibit:
(1) any Restricted Payment made out of the Net Cash Proceeds
of the substantially concurrent issuance or sale of, or made by
conversion into or exchange for, 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) or a substantially concurrent cash capital
contribution received by the Company from one or more of its
shareholders; provided, however, that (A) such Restricted Payment shall
be excluded in the calculation of the amount of Restricted Payments and
(B) the Net Cash Proceeds from such sale or such cash capital
contribution (to the extent so used for
63
such Restricted Payment) shall be excluded from the calculation of
amounts under Section 4.04(a)(3)(B);
(2) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the
Company or a Subsidiary Guarantor made by exchange for, or out of the
proceeds of the substantially concurrent Incurrence or sale of,
Indebtedness which is permitted to be Incurred pursuant to Section
4.03; 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;
(3) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Disqualified Stock of the
Company or a Subsidiary Guarantor made by conversion into or exchange
for, or out of the proceeds of the substantially concurrent issuance or
sale (other than 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) of, Disqualified Stock
of the Company which is permitted to be issued pursuant to Section
4.03; 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;
(4) 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 4.04; 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 at the time of payment;
(5) the purchase, redemption or other acquisition or
retirement for value of shares of Capital 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
64
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 Capital Stock;
provided, however, that the aggregate amount of such purchases,
redemptions and other acquisitions and retirements (excluding amounts
representing cancellation of Indebtedness) shall not exceed $2.0
million in any calendar year; provided further, however, that such
purchases, redemptions and other acquisitions and retirements shall be
excluded in the calculation of the amount of Restricted Payments;
(6) the payment of cash in lieu of fractional shares of
Capital Stock in connection with any transaction otherwise permitted
under this Section 4.04; provided, however, that such payment will be
excluded in the calculation of the amount of Restricted Payments;
(7) so long as no Default has occurred and is continuing, the
declaration and payment of regularly accruing dividends to holders of
any class or series of Designated Preferred Stock of the Company issued
on or after the Issue Date; provided, however, that at the time of the
designation of such Preferred Stock as Designated Preferred Stock, and
after giving effect to such designation on a pro forma basis (for
purposes of making determinations on a pro forma basis pursuant to this
clause (7), treating all dividends which will accrue on such Designated
Preferred Stock during the four full fiscal quarters immediately
following such issuance, as well as all other Designated Preferred
Stock then outstanding, as if the same will in fact be, or have in fact
been, paid in cash), the Company would have been able to Incur at least
$1.00 of additional Indebtedness under Section 4.03(a); provided
further, however, that such declaration and payment shall be excluded
from the calculation of Restricted Payments;
(8) so long as no Default has occurred and is continuing, any
declaration or payment of dividends and other distributions in respect
of, and any purchase, redemption or other acquisition or retirement for
value of, the Existing Preferred
65
Stock; provided, however, that such dividends, distributions,
purchases, redemptions or other acquisitions or retirements for value
will be excluded from the calculation of Restricted Payments;
(9) Restricted Payments in or to the Company or any of its
Restricted Subsidiaries; provided, however, that such Restricted
Payments will be excluded from the calculation of Restricted Payments;
or
(10) upon the occurrence of a Change of Control or an Asset
Disposition and within 60 days after the completion of the offer to
repurchase the Securities pursuant to Section 4.07 or 4.09 (including
the purchase of all Securities tendered), any purchase, repurchase,
redemption, defeasance, acquisition or other retirement for value of
Subordinated Obligations required pursuant to the terms thereof as a
result of such Change of Control or Asset Disposition at a purchase or
redemption price not to exceed 101% of the outstanding principal amount
thereof, plus accrued and unpaid interest thereon, if any; provided,
however, that (A) at the time of such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value, no Default
shall have occurred and be continuing (or would result therefrom), and
(B) such purchase, repurchase, redemption, defeasance or other
acquisition and retirement for value will be excluded in the
calculation of the amount of Restricted Payments.
The amount of all Restricted Payments (other than cash) shall
be the fair market value on the date of the Restricted Payment of the assets
proposed to be transferred by the Company or such Restricted Subsidiary, as the
case may be, in accordance with the Restricted Payment.
For purposes of determining compliance with this Section 4.04,
in the event that a Restricted Payment meets the criteria of more than one of
the types of Restricted Payments described above, the Company, in its sole
discretion, may order and classify such Restricted Payment in any manner in
compliance with this Section 4.04.
66
SECTION 4.05. 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 to (a) pay dividends or make any other distributions on
its Capital Stock to the Company or a Restricted Subsidiary or pay any
Indebtedness owed to the Company, (b) make any loans or advances to the Company
or (c) transfer any of its property or assets to the Company, except:
(1) with respect to clauses (a), (b) and (c),
(A) any encumbrance or restriction pursuant to an
agreement governing Indebtedness, Capital Stock and other
agreements or instruments in effect at or entered into on the
Issue Date, including the Revolving Credit Facility, this
Indenture, the Securities and the Subsidiary Guaranties;
(B) any encumbrance or restriction with respect to a
Restricted Subsidiary pursuant to an agreement relating to any
Indebtedness Incurred by such Restricted Subsidiary or Capital
Stock or other agreement or instrument of such Restricted
Subsidiary in existence on or prior to the date on which such
Restricted Subsidiary was acquired (including by merger or
otherwise) by the Company or otherwise becomes a Restricted
Subsidiary (other than Indebtedness Incurred, Capital Stock
issued or agreements or instruments entered into 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;
(C) any encumbrance or restriction pursuant to an
agreement effecting a Refinancing in whole or in part of
Indebtedness Incurred, Capital Stock issued or agreements or
instruments entered into pursuant to an agreement referred to
in Section 4.05(1)(A) or 4.05(1)(B) or this clause (C) or
Section 4.05(2)(B) or contained in any amendment to, or
modification, restatement,
67
renewal, increase, supplement, replacement, or extension of,
an agreement referred to in Section 4.05(1)(A) or 4.05(1)(B)
or this clause (C) or Section 4.05(2)(B); provided, however,
that the encumbrances and restrictions with respect to such
Restricted Subsidiary contained in any such refinancing
agreement or amendment, modification, restatement, renewal,
increase, supplement, replacement or extension agreement are
not materially more restrictive, taken as a whole, than
encumbrances and restrictions with respect to such Restricted
Subsidiary contained in such predecessor agreements;
(D) any customary restriction with respect to a
Restricted Subsidiary imposed pursuant to a merger agreement
or an agreement entered into for the sale or disposition of
the Capital Stock or assets of such Restricted Subsidiary
pending the closing of such sale or disposition;
(E) customary encumbrances and restrictions contained
in agreements of the types described in the definition of the
term "Permitted Business Investments";
(F) customary supermajority voting provisions and
other customary provisions with respect to the disposition or
distribution of assets, each contained in corporate charters,
bylaws, stockholders' agreements, limited liability company
agreements, partnership agreements, joint venture agreements
and other similar agreements entered into in the ordinary
course of business of the Company and its Restricted
Subsidiaries; and
(2) with respect to clause (c) only,
(A) any such encumbrance or restriction consisting of
customary nonassignment provisions (including provisions
forbidding subletting or sublicensing) in leases governing
leasehold interests and licenses to the extent such provisions
restrict the transfer of the lease or license or the property
leased or licensed thereunder;
68
(B) encumbrances and restrictions contained in any
agreement, instrument or Capital Stock assumed by the Company
or any of its Restricted Subsidiaries or for which any of them
becomes liable as in effect at the time of such transaction
(except to the extent such agreement, instrument or Capital
Stock was entered into in connection with or in contemplation
of such transaction), which encumbrances and restrictions are
not applicable to any assets other than assets acquired in
connection with such transaction and all improvements,
additions and accessions thereto and products and proceeds
thereof;
(C) restrictions contained in credit agreements,
security agreements or mortgages securing Indebtedness of the
Company or a Restricted Subsidiary to the extent such
restrictions restrict the transfer of the property subject to
such security agreements or mortgages;
(D) restrictions on cash or other deposits imposed by
customers under contracts entered into in the ordinary course
of business;
(E) encumbrances and restrictions contained in
contracts entered into in the ordinary course of business, not
relating to any Indebtedness, and that do not, individually or
in the aggregate, detract from the value of, or from the
ability of the Company and the Restricted Subsidiaries to
realize the value of, property or assets of the Company or any
Restricted Subsidiary in any manner material to the Company or
any Restricted Subsidiary; and
(F) restrictions on the transfer of property or
assets required by any regulatory authority having
jurisdiction over the Company or such Restricted Subsidiary.
SECTION 4.06. Limitation on Liens. The Company shall not, and
shall not permit any Subsidiary Guarantor to, directly or indirectly, create,
incur, assume or suffer to exist or become effective any Lien securing
Indebtedness of any kind except for Permitted Liens, on or with respect to any
of its assets, whether owned at the Issue Date or thereafter acquired, unless
(A) in the
69
case of any Lien securing Subordinated Obligations, the Securities are secured
by a Lien on such assets that is senior in priority to such Lien and (B) in the
case of any other Lien, the Securities are either secured equally and ratably
with such Indebtedness or are secured by a Lien on such assets that is senior in
priority to such Lien.
SECTION 4.07. Limitation on Sales of Assets and Subsidiary
Stock. (a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, consummate any Asset Disposition unless:
(1) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to
the fair market value (as determined in good faith by the Board of
Directors, an Officer or an officer of such Restricted Subsidiary with
responsibility for such transaction, which determination shall be
conclusive evidence of compliance with this provision) of the shares or
assets subject to such Asset Disposition;
(2) in case of an Asset Distribution in excess of $5.0
million, at least 75% of the consideration thereof received by the
Company or such Restricted Subsidiary is in the form of cash, cash
equivalents, oil and natural gas properties or capital assets to be
used by the Company or any Restricted Subsidiary in the Oil and Gas
Business; and
(3) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by the Company (or such Restricted
Subsidiary, as the case may be)
(A) first, to the extent the Company so elects, to
prepay, repay, purchase, repurchase, redeem, defease or
otherwise acquire or retire for value Senior Indebtedness of
the Company or any Subsidiary Guarantor or Indebtedness of a
Wholly Owned Subsidiary that is not a Subsidiary Guarantor (in
each case other than Indebtedness owed to the Company or an
Affiliate of the Company) within one year from the later of
the date of such Asset Disposition or the receipt of such Net
Available Cash;
(B) second, to the extent of the balance of such Net
Available Cash after application in
70
accordance with clause (A), to the extent the Company so
elects, to acquire Additional Assets or make capital
expenditures in the Oil and Gas Business within one year from
the later of the date of such Asset Disposition or the receipt
of such Net Available Cash; and
(C) third, to the extent of the balance of such Net
Available Cash after application in accordance with clauses
(A) and (B), to make an Offer to the holders of the Securities
(and to holders of other Senior Subordinated Indebtedness of
the Company designated by the Company) to purchase Securities
(and such other Senior Subordinated Indebtedness of the
Company) pursuant to and subject to the conditions of this
Section 4.07;
provided, however, that in connection with any prepayment, repayment,
purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness pursuant to clause (A) or (C) of
this Section 4.07(a)(3), the Company or such Restricted Subsidiary
shall permanently retire such Indebtedness and shall cause the related
loan commitment (if any) to be permanently reduced in an amount equal
to the principal amount so prepaid, repaid or purchased.
Notwithstanding the foregoing provisions of this Section 4.07,
the Company and the Restricted Subsidiaries shall not be required to apply any
Net Available Cash in accordance with this Section 4.07 except to the extent
that the aggregate Net Available Cash from all Asset Dispositions which is not
applied in accordance with this Section 4.07(a) exceeds $20 million. Pending
application of Net Available Cash pursuant to this Section 4.07(a), such Net
Available Cash shall be invested in Temporary Cash Investments or applied to
temporarily reduce revolving credit indebtedness.
For the purposes of clause (a)(2) of this Section 4.07, the
following are deemed to be cash or cash equivalents: (1) the release of,
pursuant to a novation or other agreement, or the discharge of, the Company or
such Restricted Subsidiary from all liability on Indebtedness in connection with
such Asset Disposition; and (2) securities received by the Company or any
Restricted Subsidiary from the transferee that are promptly converted by the
Company or such Restricted Subsidiary into cash.
71
Notwithstanding the foregoing, the 75% limitation referred to
in paragraph (a)(2) of this Section 4.07 shall be deemed satisfied with respect
to any Asset Disposition in which the cash or cash equivalents portion of the
consideration received therefrom, determined in accordance with the foregoing
provision on an after-tax basis, is equal to or greater than what the after-tax
proceeds would have been had such Asset Disposition complied with the
aforementioned 75% limitation.
The requirement of Section 4.07(a)(3)(B) shall be deemed
satisfied if an agreement (including a lease, whether a capital lease or an
operating lease) committing to make the acquisitions or expenditures referred to
therein is entered into by the Company or its Restricted Subsidiary within the
time period specified in such clause and such Net Available Cash is subsequently
applied in accordance with such agreement within six months following such
agreement.
(b) In the event of an Asset Disposition that requires the
purchase of Securities (and other Senior Subordinated Indebtedness of the
Company) pursuant to Section 4.07(a)(3)(C), the Company shall make such offer to
purchase Securities (the "OFFER") on or before the 366th day after the later of
the date of such Asset Disposition or the receipt of such Net Available Cash,
and will purchase Securities tendered pursuant to an offer by the Company for
the Securities (and such other Senior Subordinated Indebtedness of the Company)
at a purchase price of 100% of their principal amount (or, in the event such
other Senior Subordinated Indebtedness of the Company was issued with
significant original issue discount, 100% of the accreted value thereof) without
premium, plus accrued but unpaid interest (or, in respect of such other Senior
Subordinated Indebtedness of the Company, such lesser price, if any, as may be
provided for by the terms of such Senior Subordinated Indebtedness of the
Company) in accordance with the procedures (including prorating in the event of
oversubscription) set forth in this Indenture. If the aggregate purchase price
of Securities and any other Senior Subordinated Indebtedness tendered exceeds
the Net Available Cash allotted to their purchase, the Company shall select the
Securities and other Senior Subordinated Indebtedness to be purchased on a pro
rata basis but in round
72
denominations, which in the case of the Securities shall be denominations of
$1,000 principal amount or multiples thereof. The Company shall not be required
to make such an offer to purchase Securities (and other Senior Subordinated
Indebtedness of the Company) pursuant to this Section 4.07 if the Net Available
Cash available therefor is less than $20 million (which lesser amount shall be
carried forward for purposes of determining whether such an offer is required
with respect to the Net Available Cash from any subsequent Asset Disposition).
(c) (1) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall deliver
to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have its Securities
purchased by the Company either in whole or in part (subject to
prorating as described in Section 4.07(b) in the event the Offer is
oversubscribed) in integral multiples of $1,000 of principal amount, at
the applicable purchase price. The notice shall specify a purchase date
not less than 30 days nor more than 60 days after the date of such
notice (the "PURCHASE DATE") and shall contain such information
concerning the business of the Company which the Company in good faith
believes will enable such Holders to make an informed decision and all
instructions and materials necessary to tender Securities pursuant to
the Offer, together with the information contained in clause (3).
(2) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall
deliver to the Trustee an Officers' Certificate as to (A) the amount of
the Offer (the "OFFER AMOUNT"), including information as to any other
Senior Subordinated Indebtedness included in the Offer, (B) the
allocation of the Net Available Cash from the Asset Dispositions
pursuant to which such Offer is being made and (C) the compliance of
such allocation with the provisions of Section 4.07(a) and (b). On or
before the Purchase Date, the Company shall irrevocably deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its
own Paying Agent, segregate and hold in trust) in Temporary Cash
Investments, maturing prior to or on the Purchase Date if funds are
immediately available by open of business, an amount equal to the Offer
73
Amount to be held for payment in accordance with the provisions of this
Section. If the Offer includes other Senior Subordinated Indebtedness,
the deposit described in the preceding sentence may be made with any
other paying agent pursuant to arrangements satisfactory to the
Trustee. Upon the expiration of the period for which the Offer remains
open (the "OFFER PERIOD"), the Company shall deliver to the Trustee for
cancellation the Securities or portions thereof which have been
properly tendered to and are to be accepted by the Company. The Trustee
shall, on the Purchase Date, mail or deliver payment (or cause the
delivery of payment) to each tendering Holder in the amount of the
purchase price. In the event that the aggregate purchase price of the
Securities delivered by the Company to the Trustee is less than the
Offer Amount applicable to the Securities, the Trustee shall deliver
the excess to the Company immediately after the expiration of the Offer
Period for application in accordance with this Section 4.07.
(3) Holders electing to have a Security purchased shall 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 shall 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
facsimile transmission or letter setting forth the name of the Holder,
the principal amount of the Security which was delivered for purchase
by the Holder and a statement that such Holder is withdrawing its
election to have such Security purchased. Holders whose Securities are
purchased only in part shall be issued new Securities equal in
principal amount to the unpurchased portion of the Securities
surrendered.
(4) At the time the Company delivers Securities to the Trustee
which are to be accepted for purchase, the Company shall also deliver
an Officers' Certificate stating that such Securities are to be
accepted by the Company pursuant to and in accordance with the terms of
this Section. A Security shall be deemed to have been accepted for
purchase at the time the Trustee, directly or through an agent, mails
or delivers payment therefor to the surrendering Holder.
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(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 repurchase of Securities pursuant to
this Section. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Section by virtue of its compliance
with such securities laws or regulations.
SECTION 4.08. Limitation on Affiliate Transactions. (a) The
Company shall not, and shall not permit any Restricted Subsidiary to, enter into
any transaction (including the purchase, sale, lease or exchange of any
property, employee compensation arrangements or the rendering of any service)
with, or for the benefit of, any Affiliate of the Company (an "AFFILIATE
TRANSACTION") unless:
(1) the terms of the Affiliate Transaction are no less
favorable to the Company or such Restricted Subsidiary than those that
could reasonably be expected to be obtained at the time of the
Affiliate Transaction in arm's-length dealings with a Person who is not
an Affiliate;
(2) if such Affiliate Transaction involves an amount in excess
of $15 million, the terms of the Affiliate Transaction are set forth in
writing and a majority of the non-employee directors of the Company
disinterested with respect to such Affiliate Transaction shall have
determined in good faith that the criteria set forth in clause (1) are
satisfied and shall have approved the relevant Affiliate Transaction as
evidenced by a resolution of the Board of Directors; and
(3) if such Affiliate Transaction involves an amount in excess
of $30 million, the Board of Directors shall have received a written
opinion from an Independent Qualified Party to the effect that such
Affiliate Transaction is fair, from a financial standpoint, to the
Company and its Restricted Subsidiaries or is not less favorable to the
Company and its Restricted Subsidiaries than could reasonably be
expected to be obtained at the time in an arm's-length transaction with
a Person who was not an Affiliate.
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(b) The provisions of Section 4.08(a) shall not prohibit:
(1) any Investment (other than a Permitted Investment) or
other Restricted Payment, in each case not prohibited to be made
pursuant to Section 4.04;
(2) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans and
other benefit plans approved by the Board of Directors;
(3) loans or advances to officers, directors and employees in
the ordinary course of business of the Company or its Restricted
Subsidiaries, but in any event not to exceed $3.0 million in the
aggregate outstanding at any one time;
(4) any transaction between or among the Company, a Restricted
Subsidiary or joint venture or other Person that would constitute an
Affiliate Transaction solely because the Company or a Restricted
Subsidiary owns an equity interest in or otherwise controls such
Restricted Subsidiary, joint venture or other Person;
(5) the issuance or sale of any Capital Stock (other than
Disqualified Stock) of the Company;
(6) reasonable fees and reasonable compensation paid to, and
indemnity and similar arrangements provided on behalf of, officers,
directors and employees of the Company or any Restricted Subsidiary as
determined in good faith by the Board of Directors or the Company's
senior management; and
(7) with respect to any agreements or arrangements in effect
on, or entered into on or prior to, the Issue Date, and which are
disclosed in the Offering Circular, any amendment, modification, or
supplement thereto or any replacement thereof, so long as any such
amendment, modification, supplement or replacement agreement or
arrangement is not materially more disadvantageous to the holders of
the Securities than the original agreements and arrangements as in
effect on the Issue Date, and any transactions contemplated by any of
the foregoing agreements or arrangements.
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SECTION 4.09. Change of Control. (a) Upon the occurrence of a
Change of Control, then unless the Company shall have exercised its right to
redeem all the Securities, each Holder shall have the right to require that the
Company repurchase such Holder's Securities at a purchase price in cash equal to
101% of the principal amount thereof on the date of the purchase 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 due 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 a Change of Control, the terms
of the Revolving Credit Facility prohibit the Company from making a Change of
Control Offer or from purchasing the Securities pursuant to this Section 4.09,
the Company shall, 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: (1) repay in full all Indebtedness outstanding under the Revolving
Credit Facility or offer to repay in full all such Indebtedness and repay the
Indebtedness of each lender who has accepted such offer; or (2) obtain the
requisite consent under the Revolving Credit Facility to permit the purchase of
the Securities as provided for in Section 4.09(b). The Company must first comply
with the covenant set forth in the preceding sentence before it shall be
required to purchase Securities in the event of a Change of Control, provided,
however, that the Company's failure to comply with the covenant set forth in the
preceding sentence or to make a Change of Control Offer because of any such
failure shall constitute a default under Section 6.01(4) (and not under Section
6.01(2)).
(b) Unless the Company has exercised its right to redeem all
the Securities and shall have delivered an irrevocable notice of redemption to
the Trustee, then within 30 days following any Change of Control, the Company
shall mail a notice to each Holder with a copy to the Trustee (the "CHANGE OF
CONTROL OFFER") 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 on the date of purchase,
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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, as determined by the Company, consistent
with this Section, 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 facsimile transmission or letter setting forth the name of
the Holder, the principal amount of the Security which was delivered for
purchase by the Holder and a statement that such Holder is withdrawing their
election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the
Company under this Section shall be delivered by the Company to the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(e) Notwithstanding the foregoing provisions of this Section,
the Company shall not be required to make a Change of Control Offer following a
Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Section and purchases all Securities validly tendered and not withdrawn
under such Change of Control Offer.
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(f) 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 repurchase of Securities as a result
of a Change of Control. To the extent that the provisions of any securities laws
or regulations conflict with provisions of this Section, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section by virtue of its
compliance with such securities laws or regulations.
SECTION 4.10. Future Guarantors. The Company shall cause each
Restricted Subsidiary that Incurs any Indebtedness (other than Indebtedness
Incurred pursuant to and in compliance with the last clause of Section
4.03(b)(16)) to, at the same time, execute and deliver to the Trustee a Guaranty
Agreement pursuant to which such Restricted Subsidiary will Guarantee payment of
the Securities on the same terms and conditions as those set forth in this
Indenture.
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, one of the signers of which shall be the
principal executive, principal financial or principal accounting officer of the
Company, 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 period. If they do, 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. [Intentionally omitted.]
SECTION 4.13. Covenant Suspension. (a) During any period that
the Securities have a rating equal to or higher than BBB- by S&P and Baa3 by
Moody's (each, an "INVESTMENT GRADE RATING") and no Default has occurred and is
continuing, the Company and the Restricted Subsidiaries will not be subject to
Sections 4.03(a) through (d), 4,04, 4.05, 4.07, 4.08, 4.10 and 5.01(a)(3)
(collectively, the "SUSPENDED COVENANTS").
(b) In the event that the Company and the Restricted
Subsidiaries are not subject to the Suspended
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Covenants for any period of time as a result of the operation of clause (a) of
this Section 4.13, and subsequently one or both of S&P and Moody's downgrades
the rating assigned to the Securities below their respective Investment Grade
Rating, then the Company and the Restricted Subsidiaries will thereafter again
be subject to the Suspended Covenants, and, with respect to Restricted Payments
proposed to be made after the time of such downgrade, the permissibility of such
proposed Restricted Payments will be calculated in accordance with Section 4.04
as though Section 4.04 had been in effect since the Issue Date.
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer Assets. (a)
The Company shall not consolidate with or merge with or into, or convey,
transfer or lease, in one transaction or a series of transactions, directly or
indirectly, all or substantially all the assets of the Company and its
Restricted Subsidiaries, taken as a whole, to, any Person, unless:
(1) 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 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;
(2) immediately after giving pro forma effect to such
transaction (and treating any Indebtedness which becomes an obligation
of the Successor Company or any Subsidiary as a result of such
transaction as having been Incurred by the Successor Company or such
Subsidiary at the time of such transaction), no Default shall have
occurred and be continuing;
(3) immediately after giving pro forma effect to such
transaction, the Successor Company would be able to Incur an additional
$1.00 of Indebtedness pursuant to Section 4.03(a);
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(4) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental indenture (if any) comply with this Indenture; and
(5) the Company shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Holders will not recognize income,
gain or loss for Federal income tax purposes as a result of such
transaction 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 transaction had not occurred;
provided, however, that clause (3) will not be applicable (A) to the Company or
a Restricted Subsidiary consolidating with, merging into, conveying,
transferring or leasing all or part of its assets to the Company or a Subsidiary
Guarantor, (B) to the Company merging with an Affiliate of the Company solely
for the purpose and with the sole effect of reincorporating the Company in
another jurisdiction within the United States of America or (C) at any time when
the Company and its Restricted Subsidiaries are not subject to the Suspended
Covenants.
The Successor Company (if not the 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.
(b) The Company shall 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:
(1) (other than in the case of a Subsidiary Guarantor that has
been disposed of in its entirety to another Person (other than to the
Company or an Affiliate of the Company), whether through a merger,
consolidation or sale of Capital Stock or assets, if in connection
therewith the Company complies with its obligations under Section 4.07
in respect of such disposition), the resulting, surviving or transferee
Person (if not such Subsidiary) shall be
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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 a Subsidiary Guarantor, such
Person shall expressly assume, by a Guaranty Agreement, in a form
satisfactory to the Trustee, all the obligations of such Subsidiary, if
any, under its Subsidiary Guaranty;
(2) 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; and
(3) in the event a Guaranty Agreement is executed and
delivered pursuant to clause (b)(1) of this Section, the Company
delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger, conveyance,
transfer or lease and such Guaranty Agreement comply with this
Indenture.
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 30 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 declaration of acceleration or
otherwise, whether or not such payment shall be prohibited by Article
10 or (ii) fails to purchase Securities when required pursuant to this
Indenture or the Securities, whether or not such redemption or pur
chase shall be prohibited by Article 10;
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(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, 4.08, 4.09 or 4.10 (other than a failure to purchase
Securities when required under Section 4.07 or 4.09) and such failure
continues for 30 days after the notice specified below;
(5) the Company fails to comply with any of its agreements in
the Securities or this Indenture (other than those referred to in
clauses (1), (2), (3) and (4) above) and such failure continues for 60
days after the notice specified below;
(6) Indebtedness of the Company or any Significant Subsidiary
is not paid within any applicable grace period after final maturity or
is accelerated by the holders thereof because of a default and the
total amount of such Indebtedness unpaid or accelerated exceeds $10
million, or its foreign currency equivalent at the time;
(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;
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(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;
or any similar relief is granted under any foreign
laws and the order or decree remains unstayed and in
effect for 60 days; or
(9) any judgment or decree for the payment of money in excess
of $10 million (or its foreign currency equivalent at the time) above
the coverage under applicable insurance policies and indemnities as to
which the relevant insurer or indemnitor has not disclaimed
responsibility is entered against the Company or any Significant
Subsidiary, remains outstanding for a period of 60 consecutive days
following the entry of such judgment or decree and is not discharged,
waived or stayed; or
(10) a Subsidiary Guaranty ceases to be in full force and
effect (other than in accordance with the terms of such Subsidiary
Guaranty) for five days after notice or any Subsidiary Guarantor denies
or disaffirms its obligations under its Subsidiary Guaranty other than
in accordance with the terms of such Subsidiary Guaranty.
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.
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A Default under clauses (4), (5) or (10) is not an Event of
Default until the Trustee or the holders of at least 25% in principal amount of
the outstanding 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 clause (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), its status and what action the Company is taking or proposes
to take with respect thereto.
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 notice to the Company, or the
Holders of at least 25% in principal amount of the Securities by 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,
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 Securities by notice to the Trustee may rescind an 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.
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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.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the outstanding Securities by notice to the
Trustee may waive an existing Default and its consequences except (i) a Default
in the payment of the principal of or interest on a Security (ii) a Default
arising from the failure to redeem or purchase any Security when required
pursuant to this Indenture or (iii) a Default in respect of a provision that
under Section 9.02 cannot be amended without the consent of each Securityholder
affected thereby. 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. However, the
Trustee 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 that 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 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. Except to enforce the right
to receive payment of principal, premium (if any) or interest when due, no
Securityholder may pursue any remedy with respect to this Indenture or the
Securities unless:
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(1) the Holder has previously given 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 have requested in writing to the Trustee to
pursue the remedy;
(3) such Holder or Holders have offered the Trustee security
or indemnity satisfactory to it against any loss, liability or expense;
(4) the Trustee has not complied with such request within 60
days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
outstanding Securities have not given the Trustee a direction
inconsistent with such 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 and 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
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relative to the Company, its creditors or its 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;
SECOND: to holders of Senior Indebtedness of the Company and,
if such money or property has been collected from a Subsidiary
Guarantor, to holders of Senior Indebtedness of such Subsidiary
Guarantor, in each case to the extent required by Articles 10 and 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
88
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 and
expenses, 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 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.
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, in the case of any such certificates or
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opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall be under a duty to examine
the same to determine whether or not they conform to the requirements
of this Indenture (but need not confirm or investigate the accuracy of
mathematical calculations or other facts stated therein).
(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.
(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 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, if it shall have reasonable grounds to believe that repayment
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
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(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.
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.
(e) The Trustee may consult with counsel of its selection, 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 bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Trustee, in its reasonable discretion, may make such reasonable inquiry or
investigation into such facts or matters as it may reasonably see fit, and, if
the Trustee shall determine to make such further inquiry or investigation, it
shall incur no liability or additional liability of any kind by reason of such
inquiry or investigation.
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(g) The Trustee shall not be deemed to have notice of any
Default or Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless written notice of any event which is in fact such a
Default or Event of Default is received by the Trustee in compliance with
Section 13.02 and such notice references the Securities and this Indenture.
(h) The rights, privileges, protections, immunities and
benefits given to the Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Trustee in each
of its capacities hereunder, and each agent, custodian and other Person employed
to act hereunder.
(i) The Trustee may request that the Company deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Indenture, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded.
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 this 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
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payments pursuant to the mandatory redemption provisions of such Security, if
any), the Trustee may withhold the notice if and so long as a committee of its
Trust Officers in good faith determines that withholding the notice is not
opposed to the interests of Securityholders.
SECTION 7.06. Reports by Trustee to Holders. As promptly as
practicable after each September 15 beginning with the September 15 following
the date of this Indenture, and in any event prior to November 15 in each year,
the Trustee shall mail to each Securityholder a brief report dated as of May 15
that complies with TIA Section 313(a), if such report is required by such
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 such compensation as shall be agreed in
writing between the Company and the Trustee for its services. 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 each of the Trustee and any predecessor Trustee against any and
all loss, liability, damage, claim or expense (including reasonable attorneys'
fees and expenses) incurred by it in connection with the administration of this
trust and the performance of its duties hereunder. The Trustee shall notify the
Company promptly of any claim 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
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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 discharge of this Indenture. When the Trustee incurs expenses
after the occurrence of a Default specified in 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 of the Securities may remove the Trustee by so notifying the Trustee and
may appoint a successor Trustee. 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 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
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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, at the
expense of the Company, any court of competent jurisdiction for the appointment
of a successor Trustee.
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
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of TIA Section 310(a). The Trustee shall have a combined capital and surplus of
at least $50,000,000 as set forth in its most recent published 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.
ARTICLE 8
Discharge of Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (a) When (1) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.07) for
cancellation or (2) all outstanding Securities have become due and payable,
whether at maturity or on a redemption date as a result of the mailing of a
notice of redemption pursuant to Article 3 hereof or will become due and payable
within one year and the Company irrevocably deposits or causes to be deposited
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), be satisfied and
discharged and 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 (1) all its and the Subsidiary Guarantors' obligations under
the Securities and this Indenture ("LEGAL DEFEASANCE OPTION") or (2) its
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and the Subsidiary Guarantors' obligations under Sections 4.02, 4.03, 4.04,
4.05, 4.06, 4.07, 4.08, 4.09 and 4.10, the operation of Sections 6.01(4),
6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.01(10) (but, in the case of Sections
6.01(7) and (8), with respect only to Significant Subsidiaries), the limitation
contained in Section 5.01(a)(3), and all rights and obligations of all Persons
under or pursuant to Articles 10, 11 and 12 ("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 with
respect thereto. If the Company exercises its covenant defeasance option,
payment of the Securities may not be accelerated because of an Event of Default
specified in Sections 6.01(4), 6.01(6), 6.01(7), 6.01(8), 6.01(9) and 6.10(10)
(but, in the case of Sections 6.01(7) and (8), with respect only to Significant
Subsidiaries) or because of the failure of the Company or a Subsidiary Guarantor
to comply with Section 5.01(a)(3) or any provision of Article 10, 11 or 12. If
the Company exercises its legal defeasance option or its covenant defeasance
option, each Subsidiary Guarantor, if any, shall be released from all its
obligations with respect to its Subsidiary Guaranty and the Guaranty Agreements.
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, 2.06, 2.07, 2.08, 7.07 and 7.08 and in
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 of
and interest on the Securities to maturity or redemption, as the case
may be;
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(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing their
opinion that the payments of principal 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 Sections 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
material agreement binding on the Company (other than this Indenture)
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;
(6) in the case of the legal defeasance option, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(A) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (B) since the date of this
Indenture there has been a change in the applicable Federal income tax
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 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
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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 Articles 10 and 12.
SECTION 8.04. Repayment to Company. The Trustee and the Paying
Agent shall promptly turn over to the Company upon request any excess money or
securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for 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
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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. Notwithstanding
Section 9.02, the Company, the Subsidiary Guarantors and the Trustee may amend
this Indenture or the Securities without notice to or consent of any Security
holder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(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 eliminate Section 4.03(e) and Articles 10 and 12 and
add a covenant relating to Sale/Leaseback Transactions and amend
Section 4.06 and effect other consequential changes to this Indenture
and the Securities, as outlined in Appendix A;
(5) to add guarantees with respect to the Securities,
including any Subsidiary Guaranties, or to secure the Securities;
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(6) to add to the covenants of the Company or a Subsidiary
Guarantor for the benefit of the Holders or to surrender any right or
power herein conferred upon the Company or a Subsidiary Guarantor;
(7) to make any change that does not adversely affect the
rights of any Securityholder; or
(8) to comply with any requirement of the SEC in connection
with the qualification of this Indenture under the TIA.
Except as specified in clause (4) of this Section, 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 such holder of such
Senior Indebtedness (or its Representative) consents to such change or as
otherwise permitted by the notes, debentures, bonds or other similar instruments
evidencing such Senior Indebtedness.
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 majority in principal amount of the Securities then outstanding
(including consents obtained in connection with a tender offer or exchange for
the Securities). However, without the consent of each Securityholder affected
thereby, 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 amount of or extend the Stated
Maturity of any Security;
(4) reduce the amount payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
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(5) make any Security payable in money other than that stated
in the Security;
(6) impair the right of any Securityholder to receive payment
of principal of and interest on such Securityholder's Securities on or
after the due dates therefor or to institute suit for the enforcement
of any payment on or with respect to such Securityholder's Securities;
(7) make any change in Section 6.04 or 6.07 or
the second sentence of this Section;
(8) make any changes in the ranking or priority of any
Security that would adversely affect the Securityholders; or
(9) make any change in any Subsidiary Guaranty that would
adversely affect the Securityholders in any material respect.
Notwithstanding the foregoing, the provisions under this
Indenture relating to the Company's obligations to make a Change of Control
Offer may be waived or modified with the written consent of the Holders of a
majority in principal amount of the Securities.
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 of the Company or of a Subsidiary Guarantor then outstanding unless
such holder of such Senior Indebtedness (or its Representative) consents to such
change or as otherwise permitted by the notes, debentures, bonds or other
similar instruments evidencing such Senior Indebtedness.
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.
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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. An
amendment or waiver becomes effective upon the execution of such amendment or
waiver by the Trustee.
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.
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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 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 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
SECTION 10.01. Agreement To Subordinate. The Company agrees,
and each Securityholder by accepting a Security agrees, that the payment of the
principal of, premium, if any, and interest on the Securities and any other
payment obligation of the Company in respect of the Securities (including any
obligation to purchase Securities) is subordinated in right of payment, to the
extent and in the manner provided in this Article 10, to the prior payment in
full of all Senior Indebtedness of the Company, including the obligations of the
Company under the Revolving Credit Facility, and that the subordination is for
the benefit of and shall be enforceable directly 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 of the Company 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.
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SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company upon a total or partial
liquidation or dissolution or reorganization of or similar proceeding relating
to the Company or its property:
(1) holders of Senior Indebtedness of the Company shall be
entitled to receive payment in full in cash of such Senior Indebtedness
before Securityholders shall be entitled to receive any payment; and
(2) until such Senior Indebtedness is paid in full in cash,
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 Senior Indebtedness of the Company.
The Company shall not pay the principal of, premium, if any, or interest on the
Securities or any other payment obligation in respect of the Securities
(including any obligation to purchase the Securities) or make any deposit
pursuant to Section 8.01 and may not purchase, redeem or otherwise retire any
Securities (collectively, "PAY THE SECURITIES") if either of the following (a
"PAYMENT DEFAULT") occurs: (1) a default in the payment of any principal of,
premium, if any, or interest on Designated Senior Indebtedness of the Company
occurs; or (2) 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, the Payment
Default has been cured or waived and any such acceleration has been rescinded or
such Designated Senior Indebtedness has been paid in full in cash; provided,
however, that the Company shall be entitled to pay the Securities without regard
to the foregoing if the Company and the Trustee receive written notice approving
such payment from the Representatives of all Designated Senior Indebtedness with
respect to which the Payment Default has occurred and is continuing.
During the continuance of any default (other than a Payment
Default) with respect to any Designated Senior Indebtedness of the Company
pursuant to which the
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maturity thereof may be accelerated without further notice (except such notice
as may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Company shall 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 a written notice (a "BLOCKAGE NOTICE") of such default
from the Representative of such Designated Senior Indebtedness specifying an
election to effect a Payment Blockage Period and ending 179 days thereafter. The
Payment Blockage Period shall end earlier if such Payment Blockage Period is
terminated: (1) by written notice to the Trustee and the Company from the Person
or Persons who gave such Blockage Notice; (2) because the default giving rise to
such Blockage Notice is cured, waived or otherwise no longer continuing; or (3)
because such Designated Senior Indebtedness has been discharged or repaid in
full in cash.
Notwithstanding the provisions described in the above paragraph, unless
the holders of such Designated Senior Indebtedness or the Representative of such
Designated Senior Indebtedness shall have accelerated the maturity of such
Designated Senior Indebtedness, the Company shall be permitted to 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; provided,
however, that if any Blockage Notice within such 360-day period is delivered to
the Trustee by or on behalf of any holders of Designated Senior Indebtedness of
the Company (other than holders of the Bank Indebtedness), a Representative of
holders of Bank Indebtedness may give another Blockage Notice within such
period; provided further, however, that in no event may the total number of days
during which any Payment Blockage Period or Periods is in effect exceed 179 days
in the aggregate during any consecutive 360-day period, and there must be 181
days during any consecutive 360-day period during which no Payment Blockage
Period is in effect.
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 shall promptly notify the holders of Designated Senior
Indebtedness of the Company (or their Representatives) of the acceleration.
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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 10.05A. Reinstatement of Senior Indebtedness. To the
extent any payment of or distribution in respect of Senior Indebtedness (whether
by or on behalf of the Company as proceeds of security or enforcement of any
right of setoff or otherwise) is declared to be fraudulent or preferential, set
aside or required to be paid to any receiver, trustee in bankruptcy, liquidating
trustee, agent or other similar Person under any bankruptcy, insolvency,
receivership, fraudulent conveyance or similar law, then if such payment or
distribution is recovered by, or paid over to, such receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person, the Senior
Indebtedness or part thereof originally intended to be satisfied shall be deemed
to be reinstated and outstanding as if such payment had not occurred.
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 such Senior Indebtedness
which otherwise would have been made 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.
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SECTION 10.08. Subordination May Not Be Impaired by Company.
No right of any present or future holders of any Senior Indebtedness of the
Company to enforce subordination as provided in this Indenture will at any time
in any way be prejudiced or impaired by noncompliance by the Company with the
terms of this Indenture, regardless of any knowledge thereof that any such
holder of Senior Indebtedness may have or otherwise be charged with.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent shall continue to
make payments on the Securities and shall not be charged with knowledge of the
existence of facts that under this Article 10 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
such payments are prohibited by this Article 10. The Company, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness of the Company shall be entitled to give the notice; provided,
however, that, if an issue of Senior Indebtedness of the Company has a
Representative, only the Representative shall be entitled to give the notice.
The Trustee in its individual or any other capacity shall be
entitled to 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 shall be entitled to 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
Senior Indebtedness of the Company which may at any time be held by it, to the
same extent as any other holder 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 10.09A Rights of holders of Senior Indebtedness. The
holders of Senior Indebtedness may, at any time and from time to time subject to
the terms of such Senior Indebtedness, without the consent of or notice to the
Trustee or the Securityholders, without
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incurring responsibility to the Securityholders and without impairing or
releasing the subordination provided in this Indenture or the obligations
hereunder of the Securityholders to the holders of Senior Indebtedness, do any
one or more of the following:
(1) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding or secured;
(2) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness;
(3) release any Person liable in any manner for the collection
of Senior Indebtedness; and
(4) exercise or refrain from exercising any rights against the
Company and any other Person.
SECTION 10.10. Distribution or Notice to Representative.
Whenever any Person is to make a distribution or give a notice to holders of
Senior Indebtedness of the Company, such Person shall be entitled to make such
distribution or give such notice 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, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee 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 Senior Indebtedness of the Company or any other creditor of the
Company.
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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 (1) 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, (2) 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 (3) upon the Representatives 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 to participate in any payment or distribution
pursuant to this Article 10, the Trustee shall be entitled to request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as to
the amount of such 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 shall be entitled to 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 its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination 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 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
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any holders of Senior Indebtedness of the Company shall be entitled by virtue of
this Article 10 or otherwise.
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.
ARTICLE 11
Subsidiary Guaranties
SECTION 11.01. Guaranties. Each Subsidiary Guarantor hereby
unconditionally and irrevocably guarantees, jointly and severally, 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 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 being hereinafter collectively called the "GUARANTIED
OBLIGATIONS"). Each Subsidiary Guarantor further agrees that the Guarantied
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
will remain bound under this Article 11 notwithstanding any extension or renewal
of any Guarantied Obligation.
Each Subsidiary Guarantor waives presentation to, demand of,
payment from and protest to the Company of any of the Guarantied Obligations and
also waives notice of protest for nonpayment. Each Subsidiary Guarantor waives
notice of any default under the Securities or the Guarantied Obligations. The
obligations of each Subsidiary Guarantor hereunder shall not be affected by
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(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 Guarantied Obligations or any of them; (e) the failure of any Holder or the
Trustee to exercise any right or remedy against any other guarantor of the
Guarantied Obligations; or (f) except as set forth in Section 11.06, any change
in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary
Guaranty 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 had by any Holder or the Trustee to any security held for
payment of the Guarantied Obligations.
Each Subsidiary Guaranty is, to the extent and in the manner
set forth in Article 12, subordinated and subject in right of payment to the
prior payment in full of the principal of and premium, if any, and interest on
all Senior Indebtedness of the Subsidiary Guarantor giving such Subsidiary
Guaranty and each Subsidiary Guaranty is made subject to such provisions of this
Indenture.
Except as expressly set forth in Sections 8.01, 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 Guarantied 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, willful
or otherwise, in the performance of the obligations, or by
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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
Guaranty herein 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 Guarantied 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 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 Obligation, each Subsidiary Guarantor hereby
promises to and shall, upon receipt of written demand by the Trustee, forthwith
pay, or cause to be paid, in cash, to the Holders or the Trustee an amount equal
to the sum of (1) the unpaid amount of such Guarantied Obligations, (2) accrued
and unpaid interest on such Guarantied Obligations (but only to the extent not
prohibited by law) and (3) all other monetary Guarantied 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 Guarantied Obligations until
payment in full of all Guarantied Obligations and all obligations to which the
Guarantied 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
Guarantied Obligations may be accelerated as provided in Article 6 for the
purposes of such Subsidiary Guarantor's Subsidiary Guaranty herein,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guarantied Obligations, and (y) in the event of
any declaration of acceleration of such Guarantied Obligations as provided in
Article 6, such Guarantied Obligations (whether or not due and
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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 and expenses) 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 Guarantied Obligations with respect to 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 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
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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. Upon the sale
or other disposition (including by way of consolidation or merger) of a
Subsidiary Guarantor or the sale or disposition of all or substantially all the
assets of such Subsidiary Guarantor (in each case other than a sale or
disposition to the Company or an Affiliate of the Company) and as permitted by
this Indenture, such Subsidiary Guarantor shall be deemed released from all
obligations under this Indenture and the Securities without any further action
required on the part of the Trustee, the Company, such Subsidiary Guarantor or
any Holder. At the request of the Company, the Trustee shall execute and deliver
an appropriate instrument evidencing such release.
SECTION 11.07 Contribution. Each Subsidiary Guarantor that
makes a payment under its Subsidiary Guaranty shall be entitled upon payment in
full of all Guarantied Obligations to a contribution from each other Subsidiary
Guarantor in an amount equal to such other Subsidiary Guarantor's pro rata
portion of such payment based on the respective net assets of all the Subsidiary
Guarantors at the time of such payment determined in accordance with GAAP.
ARTICLE 12
Subordination of Subsidiary Guaranties
SECTION 12.01. Agreement To Subordinate. Each Subsidiary
Guarantor agrees, and each Securityholder by accepting a Security agrees, that
the payment of such Subsidiary Guarantor's Subsidiary Guaranty (including any
amounts in respect of the principal of, premium, if any, or interest on the
Securities and any other payment obligation in respect of the Securities,
including any obligation of the Company to purchase Securities) is subordinated
in right of payment, to the extent and in the manner provided in this Article
12, to the prior payment in full of all Senior Indebtedness of such Subsidiary
Guarantor, including such Subsidiary Guarantor's Guarantee of Senior
Indebtedness of the Company, and that the subordination is for the benefit of
and shall be enforceable directly by the holders of such
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Senior Indebtedness. The Obligations of a Subsidiary Guarantor 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
shall rank senior to the Guarantied Obligations of such Subsidiary Guarantor in
accordance with the provisions set forth herein. All provisions of this Article
12 shall be subject to Section 12.12.
SECTION 12.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of any Subsidiary Guarantor upon a total
or partial liquidation or dissolution or reorganization of 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 in cash of such
Senior Indebtedness before Securityholders shall be entitled to receive
any payment pursuant to the Subsidiary Guaranty of such Subsidiary
Guarantor; and
(2) until the Senior Indebtedness of any Subsidiary Guarantor
is paid in full in cash, any payment or 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 such
Senior Indebtedness to at least the same extent as Subsidiary Guaranty.
SECTION 12.03. Default on Senior Indebtedness of Subsidiary
Guarantor. No Subsidiary Guarantor shall make any payment under its Subsidiary
Guaranty, whether in respect of the principal of, premium, if any, or interest
on the Securities or any other payment obligation in respect of the Securities
(including any obligation of the Company to purchase Securities) or make any
deposit pursuant to Section 8.01 and may not purchase, redeem or otherwise
retire or defease any Securities or other Guarantied Obligations (collectively,
"PAY ITS SUBSIDIARY GUARANTY") if either of the following (a "PAYMENT DEFAULT")
occurs (1) a default in the payment of any principal of, premium, if any, or
interest on Designated Senior Indebtedness of such Subsidiary Guarantor occurs;
or (2) any other default on Designated Senior Indebtedness of such Subsidiary
Guarantor occurs
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and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms; unless, in either case, the Payment Default has been
cured or waived and any such acceleration has been rescinded or such Designated
Senior Indebtedness has been paid in full in cash; provided, however, that any
Subsidiary Guarantor shall be entitled to pay its Subsidiary Guaranty without
regard to the foregoing if such Subsidiary Guarantor and the Trustee receive
written notice approving such payment from the Representatives of all Designated
Senior Indebtedness with respect to which the Payment Default has occurred and
is continuing.
During the continuance of any default (other than a Payment
Default) with respect to any Designated Senior Indebtedness of such Subsidiary
Guarantor pursuant to which the maturity thereof may be accelerated 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 shall not pay its Subsidiary Guaranty for a period (a "PAYMENT
BLOCKAGE PERIOD") commencing upon the receipt by the Trustee (with a copy to
such Subsidiary Guarantor) of written notice (a "BLOCKAGE NOTICE") of such
default from the Representative of such Designated Senior Indebtedness
specifying an election to effect a Payment Blockage Period and ending 179 days
thereafter. The Payment Blockage Period shall end earlier if such Payment
Blockage Period is terminated: (1) by written notice to the Trustee and such
Subsidiary Guarantor from the Person or Persons who gave such Blockage Notice;
(2) because the default giving rise to such Blockage Notice is cured, waived or
otherwise no longer continuing; or (3) because such Designated Senior
Indebtedness has been discharged or repaid in full in cash.
Notwithstanding the provisions described in the above
paragraph, unless the holders of such Designated Senior Indebtedness giving such
Payment Notice or the Representative of such Designated Senior Indebtedness
shall have accelerated the maturity of such Designated Senior Indebtedness, any
Subsidiary Guarantor shall be permitted to resume payments pursuant to its
Subsidiary Guaranty after the end of such Payment Blockage Period. No Subsidiary
Guarantor shall be subject to more than one 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; provided,
however, that if any Blockage Notice within such 360-day period is
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delivered to the Trustee by or on behalf of any holders of Designated Senior
Indebtedness of such Subsidiary Guarantor (other than holders of the Bank
Indebtedness), a Representative of holders of the Bank Indebtedness may give
another Blockage Notice within such period; provided further, however, that in
no event may the total number of days during which any Payment Blockage Period
or Periods is in effect exceed 179 days in the aggregate during any consecutive
360-day period, and there must be 181 days during any consecutive 360-day period
during which no Payment Blockage Period is in effect.
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 Designated Senior Indebtedness of such Subsidiary
Guarantor (or their Representatives) 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 Senior Indebtedness of the applicable
Subsidiary Guarantor and pay it over to them or their Representatives as their
interests may appear.
SECTION 12.05A. Reinstatement of Senior Indebtedness. To the
extent any payment of or distribution in respect of Senior Indebtedness (whether
by or on behalf of any Subsidiary Guarantor as proceeds of security or
enforcement of any right of setoff or otherwise) is declared to be fraudulent or
preferential, set aside or required to be paid to any receiver, trustee in
bankruptcy, liquidating trustee, agent or other similar Person under any
bankruptcy, insolvency, receivership, fraudulent conveyance or similar law, then
if such payment or distribution is recovered by, or paid over to, such receiver,
trustee in bankruptcy, liquidating trustee, agent or other similar Person, the
Senior Indebtedness or part thereof originally intended to be satisfied shall be
deemed to be reinstated and outstanding as if such payment had not occurred.
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
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distributions applicable to Senior Indebtedness of such Subsidiary Guarantor. 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 a Subsidiary Guarantor and
Securityholders, the obligation of such Subsidiary Guarantor, which is
absolute and unconditional, to pay its Subsidiary Guaranty 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 Guaranty, subject 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 Company.
No right of any present or future holders of any Senior Indebtedness of any
Subsidiary Guarantor to enforce subordination as provided in this Indenture will
at any time in any way be prejudiced or impaired by noncompliance by such
Subsidiary Guarantor with the terms of this Indenture, regardless of any
knowledge thereof that any such Holder of Senior Indebtedness may have or
otherwise be charged with.
SECTION 12.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 12.03, the Trustee or Paying Agent shall continue to
make payments on any Subsidiary Guaranty 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
such payments are prohibited by this Article 12. The Company, the relevant
Subsidiary Guarantor, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior
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Indebtedness of such Subsidiary Guarantor shall be entitled to give the notice;
provided, however, that, if an issue of Senior Indebtedness of any Subsidiary
Guarantor has a Representative, only the Representative shall be entitled to
give the notice.
The Trustee in its individual or any other capacity shall be
entitled to hold Senior Indebtedness of any Subsidiary Guarantor with the same
rights it would have if it were not the 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; 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 12.09A Rights of holders of Senior Indebtedness. The
holders of Senior Indebtedness may, at any time and from time to time subject to
the terms of such Senior Indebtedness, without the consent of or notice to the
Trustee or the Securityholders, without incurring responsibility to the
Securityholders and without impairing or releasing the subordination provided in
this Indenture or the obligations hereunder of the Securityholders to the
holders of Senior Indebtedness, do any one or more of the following:
(1) change the manner, place or terms of payment or extend the
time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior
Indebtedness is outstanding or secured;
(2) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness;
(3) release any Person liable in any manner for the collection
of Senior Indebtedness; and
(4) exercise or refrain from exercising any rights against any
Subsidiary Guarantor and any other Person.
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SECTION 12.10. Distribution or Notice to Representative.
Whenever any Person is to make a distribution or give a notice to holders of
Senior Indebtedness of any Subsidiary Guarantor, such Person shall be entitled
to make such distribution or give such notice to their Representative (if any).
SECTION 12.11. Article 12 Not To Prevent Events of Default or
Limit Right To Demand Payment. The failure to make a payment pursuant to a
Subsidiary Guaranty by reason of any provision in this Article 12 shall not be
construed as preventing the occurrence of a Default. 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
Guaranty.
SECTION 12.12. Trust Moneys Not Subordinated. Notwithstanding
anything contained herein to the contrary, payments from money or the proceeds
of U.S. Government Obligations held in trust under Article 8 by the Trustee for
the payment of principal of and interest on the Securities shall not be
subordinated to the prior payment of any Senior Indebtedness of any Subsidiary
Guarantor or subject to the restrictions set forth in this Article 12, and none
of the Securityholders shall be obligated to pay over any such amount to any
Subsidiary Guarantor or any holder of Senior Indebtedness of any Subsidiary
Guarantor or any other creditor of any Subsidiary Guarantor.
SECTION 12.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely (1) 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, (2) 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 (3) upon the Representatives 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 any
Subsidiary Guarantor to participate
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in any payment or distribution pursuant to this Article 12, the Trustee shall be
entitled to 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 shall be entitled to 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 12.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on its
behalf to take such action as may be necessary or appropriate to effectuate the
subordination provided in this Article 12 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
SECTION 12.15. 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 12.16. Reliance by Holders of Senior Indebtedness of
Subsidiary Guarantors 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.
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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:
Westport Resources Corporation
410 Seventeenth Street, Suite 2300
Denver, Colorado 80202-4436
Attention: Chief Financial Officer
if to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286-0099
Attention: Corporate Trust Administration
The Company, any Subsidiary Guarantor 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.
123
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, any Subsidiary Guarantor, 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.
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.
124
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 a Trust Officer of 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 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. 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 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, incorporator or stockholder 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 Guaranty 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
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
125
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 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.
126
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
WESTPORT RESOURCES CORPORATION
by /s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Chief Financial Officer
BELCO ENERGY CORP.
by /s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Treasurer
BELCO ENERGY I L.P.
by BELCO ENERGY CORP., general partner
/s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Treasurer
BELCO FINANCE CO.
by /s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Treasurer
BOG WYOMING LLC
by BELCO ENERGY CORP., manager
/s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Treasurer
127
ELECTRA RESOURCES, INC.
by /s/ DONALD D. WOLF
------------------------------------
Name: Donald D. Wolf
Title: President
FORTUNE CORP.
by /s/ BARTH E. WHITHAM
------------------------------------
Name: Barth E. Whitham
Title: President
GIN LANE COMPANY
by /s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Treasurer
JERRY CHAMBERS EXPLORATION COMPANY
by WESTPORT OIL AND GAS COMPANY, INC.
managing general partner
/s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Vice President and Chief
Financial Officer
WESTPORT ARGENTINA LLC
by /s/ DONALD D. WOLF
------------------------------------
Name: Donald D. Wolf
Title: Manager
128
WESTPORT CANADA LLC
by WESTPORT OIL AND GAS COMPANY, INC.
member
/s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Vice President and Chief
Financial Officer
WESTPORT OIL AND GAS COMPANY, INC.
by /s/ LON MCCAIN
------------------------------------
Name: Lon MCain
Title: Vice President and Chief
Financial Officer
WESTPORT OVERRIDING ROYALTY LLC
by WESTPORT OIL AND GAS COMPANY, INC.
manager
/s/ LON MCCAIN
------------------------------------
Name: Lon McCain
Title: Vice President and Chief
Financial Officer
129
THE BANK OF NEW YORK, as Trustee
by /s/ VAN K. BROWN
------------------------------------
Name: Van K. Brown
Title: Vice President
APPENDIX A
Senior Note Covenants and Consequential Amendments
Section 1. Removal of subordination provisions.
(a) Amend Article 1 of the Indenture by deleting the
definitions of "Designated Senior Indebtedness" and "Representative" in Section
1.01.
(b) Amend the definition of "Senior Indebtedness" in Section
1.01 by replacing the existing definition with the following:
""SENIOR INDEBTEDNESS" means, with respect to any Person, any
Indebtedness of such Person (and any accrued and unpaid interest in respect
thereof) that is not subordinate or junior in right of payment to any other
Indebtedness or other obligation of such Person."
(c) Amend Article 4 of the Indenture by:
(1) deleting Section 4.03(e) and the second and
third sentences of Section 4.09(a); and
(2) replacing "Senior Subordinated Indebtedness" wherever that
term appears in Section 4.07 with the term "Senior Indebtedness".
(d) Amend Article 8 of the Indenture by deleting the last
sentence of Section 8.03.
(e) Amend Article 9 of the Indenture by deleting:
(1) Section 9.01(4);
(2) the second paragraph of Section 9.01; and
(3) the fourth paragraph of Section 9.02.
(f) Delete Articles 10 and 12 of the Indenture.
(g) Amend Article 11 of the Indenture by deleting the fourth
paragraph of Section 11.01.
(h) Amend the reverse side of the Securities by deleting
Section 8 and "subordinated" from Section 9.
2
Section 2. Addition of senior note covenants.
(a) Amend Section 1.01 of the Indenture by amending clause (1)
of the definition of "Permitted Liens", to read as follows:
"(1) Liens to secure Indebtedness Incurred under
Credit Facilities;"
(b) Further amend the definition of "Permitted Liens" in
Section 1.01 of the Indenture by (1) deleting the word "and" at the end of
clause (19) of such definition, (2) replacing the period at the end of clause
(20) of such definition with a semi-colon and (3) adding the following
immediately after clause (20):
"(21) Liens on assets or Capital Stock of a Person existing at
the time such Person is merged with or into or consolidated with, or is
acquired by, the Company or any of its Subsidiaries or such Person is
designated to be a Restricted Subsidiary; provided that such Liens were
in existence prior to the contemplation of such merger, consolidation,
acquisition or designation and do not extend to any assets other than
those of the Person merged into, consolidated with or acquired by the
Company or such Subsidiary or so designated;
(22) Liens on assets existing at the time of acquisition of
such assets by the Company or any of its Restricted Subsidiaries,
provided that such Liens were in existence prior to the contemplation
of such acquisition and do not extend to any assets other than the
acquired assets;
(23) Liens securing Hedging Obligations;
(24) any interest or title of a lessor under any
Capital Lease Obligation or operating lease;
(25) Liens securing reimbursement obligations with respect to
commercial letters of credit which encumber documents and other
property relating to such letters of credit and products and proceeds
thereof;
(26) purchase money Liens; provided, however, that the related
purchase money Indebtedness shall not be secured by any property of the
Company or any Restricted Subsidiary other than the property so
3
acquired, all improvements, additions and accessions thereto and all
proceeds thereof;
(27) Liens securing Attributable Debt under any Sale/Leaseback
Transaction permitted by the terms of this Indenture, but only on the
property subject to such Sale/Leaseback Transaction;
(28) Liens arising in connection with Production
Payments and Reserve Sales;
(29) Liens to secure any Indebtedness used to Refinance other
Indebtedness, provided that such new Liens shall be limited to all or
part of the same property that secured the original Lien, plus
improvements on the property;
(30) Liens existing on the date this Indenture is amended to
implement the changes set forth in Appendix A attached hereto or
provided for pursuant to agreements (and terms thereof) existing on
such date securing Indebtedness (A) existing on such date or (B) to be
incurred under agreements existing on such date;
(31) Liens on property (and all improvements, additions and
accessions thereto and all proceeds thereof) securing (A) all or any
portion of the cost of exploration, drilling, development, operation or
maintenance of such property or the cost of acquiring, constructing,
altering, improving or repairing such property or improvements used or
to be used in connection with such property (including the cost of
financing such actions) or (B) Indebtedness incurred by the Company or
any Restricted Subsidiary to provide funds for the activities set forth
in clause (A) above;
(32) Liens on any property securing (A) Indebtedness incurred
in connection with the construction, installation or financing of
pollution control or abatement facilities or other forms of industrial
revenue bond financing or (B) Indebtedness issued or guaranteed by the
United States or any State thereof or any department, agency or
instrumentality of either; and
(33) Other Liens (exclusive of any Lien of any type otherwise
permitted under Section 4.06 or the other clauses of this definition)
securing
4
Indebtedness for borrowed money of the Company or any of its Restricted
Subsidiaries in an aggregate principal amount that, together with the
aggregate amount of Attributable Debt deemed to be outstanding in
respect of all Sale/Leaseback Transactions entered into pursuant to
Section 4.06A(a) in reliance upon this clause (33), does not at the
time such Indebtedness is incurred exceed 15% of ACNTA."
(c) Amend Section 1.01 of the Indenture by inserting the
following definition in proper alphabetical order:
""PRINCIPAL PROPERTY" means:
(1) any property owned or leased by the Company or any
Restricted Subsidiary and located within the United States of America,
any State thereof (including property located off the coast of the
United States of America held pursuant to lease from any United States
Federal, State or other governmental body) or Canada that is considered
by the Company to be capable of producing oil, natural gas or other
minerals in commercial quantities;
(2) any refinery, smelter or processing or manufacturing plant
owned or leased by the Company or any Restricted Subsidiary and located
within the United States of America, any State thereof, or Canada,
except (A) facilities related thereto employed in transportation,
distribution or marketing, and (B) any refinery, smelter or processing
or manufacturing plant, or portion thereof, that the Board of Directors
determines is not material to the business of the Company and its
Restricted Subsidiaries taken as a whole; and
(3) any Capital Stock or Indebtedness issued by a Restricted
Subsidiary that owns or leases property of the types described in
clauses (1) and (2) of this definition."
(d) Amend Article 4 of the Indenture by amending Section 4.06,
to read as follows:
"SECTION 4.06. Limitation on Liens. The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, Incur any
Lien (the "INITIAL LIEN") of any nature whatsoever on any of its Principal
Properties, whether owned at the Issue Date
5
or thereafter acquired, securing any Indebtedness for borrowed money, other than
Permitted Liens, without effectively providing that the Securities shall be
secured equally and ratably with (or prior to) the obligations so secured for so
long as such obligations are so secured. Any Lien created for the benefit of the
Holders of the Securities pursuant to the foregoing sentence shall provide by
its terms that such Lien shall be automatically and unconditionally released and
discharged upon the release and discharge of the Initial Lien."
(e) Amend Article 4 of the Indenture by adding a Section
4.06A, to read as follows:
"SECTION 4.06A. Limitation on Sale/Leaseback Transactions. The
Company will not, and will not permit any Restricted Subsidiary to, enter into
any Sale/Leaseback Transaction for a period of more than three years with
respect to any Principal Property with any Person (other than the Company or a
Restricted Subsidiary) unless either:
(a) the Company or such Restricted Subsidiary would be
entitled to incur Indebtedness, in a principal amount equal to the Attributable
Debt with respect to such Sale/Leaseback Transaction, secured by a Lien on the
property subject to such Sale/Leaseback Transaction pursuant to Section 4.06
hereof without equally and ratably securing the Securities pursuant to such
Section 4.06; or
(b) such Sale/Leaseback Transaction occurs within 180 days
from the date of acquisition of such Principal Property or the date of the
completion of construction or commencement of full operations of such Principal
Property, whichever is later; or
(c) after the Issue Date and within a period commencing six
months prior to the consummation of such Sale/Leaseback Transaction and ending
six months after the consummation thereof, (1) the Company or a Restricted
Subsidiary shall have expended for property used or to be used in the business
of the Company and its Restricted Subsidiaries an amount equal to all or a
portion of the net proceeds from such Sale/Leaseback Transaction and (2) the
Company shall have elected to designate such amount as a credit against such
Sale/Leaseback Transaction (with any such amount not being so expended and so
designated to be applied as set forth in Section 4.06A(d) below); or
6
(d) the Company or a Restricted Subsidiary, during the
12-month period after the effective date of such Sale/Leaseback Transaction,
shall have applied to the voluntary repayment, repurchase, redemption,
defeasance or other acquisition or retirement ("RETIREMENT") of Securities,
other Senior Indebtedness of the Company or any Subsidiary Guarantor or any
Indebtedness of a Restricted Subsidiary that is not a Subsidiary Guarantor
("RETIRED INDEBTEDNESS") an amount equal to (1) the greater of (A) the net
proceeds of the sale or transfer of the property leased in such Sale/Leaseback
Transaction and (B) the fair value, as determined by the Board of Directors, of
such property at the time of entering into such Sale/Leaseback Transaction (in
either case reduced to reflect the remaining term of the lease and any amount
expended and designated by the Company or a Restricted Subsidiary as set forth
in Section 4.06A(c) above) minus (2) an amount equal to the principal amount of
such Retired Indebtedness voluntarily retired within such 12-month period and
not designated as a credit against any other Sale/Leaseback Transaction entered
into by the Company or any Restricted Subsidiary during such period."
(f) Amend Article 6 of the Indenture by adding "4.06A,"
immediately after "4.06," in Section 6.01(4).
(g) Amend Article 8 of the Indenture by adding "4.06A,"
immediately after "4.06," in Section 8.01(b).
APPENDIX B
PROVISIONS RELATING TO INITIAL SECURITIES,
PRIVATE EXCHANGE SECURITIES
AND EXCHANGE SECURITIES
1. Definitions
1.1 Definitions
For the purposes of this Appendix B 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 Regulations 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 Issue Date with respect to such
Securities.
"EUROCLEAR" means Euroclear Bank S.A./N.V., as operator of the
Euroclear System or any successor securities clearing agency.
"EXCHANGE SECURITIES" means (1) the 8 1/4% Senior Subordinated
Notes Due 2011 issued pursuant to the Indenture in connection with a Registered
Exchange Offer pursuant to a Registration Rights Agreement and (2) Additional
Securities, if any, issued pursuant to a registration statement filed with the
SEC under the Securities Act.
2
"INITIAL PURCHASERS" means (1) with respect to the Initial
Securities issued on the Issue Date, Credit Suisse First Boston Corporation,
Fleet Securities, Inc., Fortis Investment Services LLC, J.P. Morgan Securities
Inc., Lehman Brothers, Inc., TD Securities (USA) Inc. and U.S. Bancorp Piper
Jaffray Inc. 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) $275,000,000 aggregate
principal amount of 8 1/4% Senior Subordinated Notes Due 2011 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 the Initial Purchasers to issue and deliver
to each 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 8 1/4% Senior
Securities Subordinated Due 2011 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 October 31,
2001, among the Company, the Subsidiary Guarantors and the Initial Purchasers,
and (2) with respect to each issuance of Additional Securities, the purchase
agreement or underwriting agreement among the Company 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
3
Date, the Registration Rights Agreement dated October 31, 2001, among the
Company, the Subsidiary Guarantors and the Initial Purchasers, 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 issued 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 set forth in Section 2.3(e)hereto.
1.2 Other Definitions
<Table>
<Caption>
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)
</Table>
4
2. The Securities.
2.1 (a) Form and Dating. The Initial Securities will be
offered and sold by the Company, from time to time, pursuant to one or more
Purchase Agreements. The Initial Securities will be resold initially only to
QIBs in reliance on Rule 144A under the Securities Act ("RULE 144A") and 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 $275,000,000 8
1/4% Senior Subordinated Notes Due 2011, (2) any Additional Securities for an
original issue in an aggregate principal amount specified in the written order
of the Company 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
6
Private Exchange, respectively, pursuant to a Registration Rights Agreement, for
a like principal amount of Initial Securities, in each case upon a written order
of the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. 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 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
7
(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 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
Security (in the case of a transfer pursuant to clause (b)(i)(B)) to
reflect an increase in the aggregate principal amount of the
8
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, 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 canceled. 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, 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.
9
(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 B
(other than the provisions set forth in 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 B, 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,
10
(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 the Definitive Securities (and all Securities issued in
exchange therefor or in substitution thereof) shall bear a legend in
substantially the following form:
THIS SECURITY (OR ITS PREDECESSOR) WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER THE 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) IN 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 AN 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 (B) THE
11
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
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 on such Initial Security or such
Private Exchange Security will cease to apply, the requirements
requiring any such Initial Security or such Private Exchange Security
issued to certain Holders be issued in global form will cease to apply,
and a certificated Initial Security or Private Exchange Security or an
Initial Security or Private Exchange Security 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 Security or Private Exchange Security or directions to transfer
such Holder's interest in the Global Security, as applicable.
12
(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, and
Exchange Securities in certificated or global form, in each case
without the restrictive securities legend 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 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
13
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, 4.09 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 days before the mailing of a notice of an offer to
repurchase or redeem Securities or 15 days before an interest payment
date.
(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
14
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 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 Definitive 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 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
15
such Depository ceases to be a "clearing agency" registered under the Exchange
Act and a successor Depository 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 principal corporate trust office in the Borough of
Manhattan, The City of New York, 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 a Transfer Restricted Security shall, except as otherwise provided
by Section 2.3(e), bear the restricted securities legend set forth in Exhibit 1
hereto.
(c) Subject to the provisions of Section 2.4(b), 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), 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
APPENDIX B
[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.
[Restricted Securities Legend]
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE 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) IN 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 AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE) OR (V) PURSUANT TO AN
2
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 (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]
BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY REGULATION S
GLOBAL SECURITY WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE RULE 144A GLOBAL
SECURITY OR 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(c)(3) 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.A., AS
OPERATOR OF THE EUROCLEAR SYSTEM OR CLEARSTREAM BANKING, SOCIETE ANONYME AND
ONLY (I) TO THE COMPANY, (II) IN 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 AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF
RULE 144A, (III) OUTSIDE THE UNITED STATES IN A TRANSACTION IN ACCORDANCE WITH
RULE 904 UNDER THE SECURITIES ACT, (IV) PURSUANT TO AN 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. 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.
3
[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
No. $
------------- ---------
CUSIP No.
---------
ISIN
---------
8 1/4% Senior Subordinated Notes Due 2011
WESTPORT RESOURCES CORPORATION, a Nevada corporation, promises
to pay to CEDE & CO., or registered assigns, the principal sum of __________
Dollars on November 1, 2011.
Interest Payment Dates: May 1 and November 1, commencing May
1, 2002.
Record Dates: April 15 and October 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: , 20 .
------------ --
WESTPORT RESOURCES CORPORATION,
by
----------------------
Name:
Title:
----------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
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]
8 1/4% Senior Subordinated Note Due 2011
1. Interest
Westport Resources Corporation, a Nevada 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 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 May 1 and
November 1 of each year, commencing May 1, 2002. 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 [insert date of issuance]. 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 April 15 or October 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 the Securities
represented by a Global Security (including principal, premium 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 and interest)
by
6
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, The Bank of New York, a New York banking
corporation (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 of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 5, 2001 (as such may be amended or supplemented from time to time,
the "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 "TIA").
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 TIA 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
7
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; create liens on assets; 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. During any period that the Securities
have an Investment Grade Rating from both S&P and Moody's and no Default has
occurred and is continuing, certain covenants will be suspended. 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 at its option prior to November 1, 2006.
The Company shall be entitled, at its option, at any time as a
whole prior to November 1, 2006, to redeem the Securities (which includes the
Additional Securities, if any) at a redemption price equal to the sum of:
(1) the principal amount thereof, plus
(2) accrued and unpaid interest, if any, to the redemption
date, plus
(3) the Applicable Premium at the redemption date.
On and after November 1, 2006, 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 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 November 1 of the
years set forth below:
<Table>
<Caption>
Redemption
Period Price
------ ----------
2006 104.125%
2007 102.750%
2008 101.375%
2009 and thereafter 100.000%
</Table>
8
In addition, prior to November 1, 2004, the Company shall be
entitled at its option on one or more occasions to 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) issued prior to the redemption date at a
redemption price (expressed as a percentage of principal amount) of 108.25%,
plus accrued and unpaid interest to the redemption date, with the net cash
proceeds from one or more Public Equity 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 (2) each such redemption
occurs within 90 days after the date of the related Public Equity 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, then unless the Company shall have
exercised its right to redeem all the Securities, each Holder will have the
right to require that the Company purchase such Holder's Securities at a
purchase price equal to 101% of the principal amount of
9
the Securities to be purchased 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 due on the related interest payment date) as
provided in, and subject to the terms of, the Indenture.
Under certain circumstances as set forth in the Indenture, the
Company will be required to offer to purchase Securities with the Net Available
Cash from Asset Dispositions.
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 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. Guaranty
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.
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 the mailing of a notice of
redemption of Securities to be redeemed or 15 days before an interest payment
date.
10
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 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 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.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company, the Subsidiary
Guarantors and the Trustee shall be entitled to 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, or to
eliminate Section 4.03(e) and Article 10 and 12 of the Indenture and add
covenants relating to Sale/Leaseback
11
Transactions and amend covenants relating to Liens and effect other
consequential changes to the Indenture and the Securities, as outlined in
Appendix B to the Indenture, or to add guarantees with respect to the
Securities, including Subsidiary Guaranties, or to secure the Securities, or to
add additional covenants or surrender rights and powers conferred on the Company
or the Subsidiary Guarantors, or to comply with any request of the SEC in
connection with qualifying the Indenture under the TIA, or to make certain
changes in the subordination provisions, or to make any change that does not
adversely affect the rights of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon optional redemption pursuant to
paragraph 5 of the Securities, upon declaration of acceleration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (iii)
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; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Indebtedness of the Company if the amount accelerated (or so
unpaid) exceeds $10 million; (v) certain events of bankruptcy or insolvency with
respect to the Company and the Significant Subsidiaries; and (vi) certain
judgments or decrees for the payment of money in excess of $10 million; and
(vii) certain defaults with respect to Subsidiary Guaranties. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
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 indemnity or
security satisfactory to it. 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
12
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.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, 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 or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities 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).
13
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
and corresponding ISINs to be printed on the Securities and has directed the
Trustee to use CUSIP numbers and corresponding ISINs 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 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 SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
WESTPORT RESOURCES CORPORATION
410 SEVENTEENTH STREET, SUITE 2300
DENVER, COLORADO 80202-4436
ATTENTION: INVESTOR RELATIONS
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 of 1933, as amended (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
15
(2) [ ] in the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities
Act) that purchases for its own account or for the
account of a qualified institutional buyer to whom
notice is given that such transfer is being made in
reliance on Rule 144A, in each case pursuant to and
in compliance with Rule 144A under the Securities
Act; or
(3) [ ] outside the United States in an offshore transaction
within the meaning of Regulation S under the
Securities Act in compliance with Rule 904 under the
Securities Act; or
(4) [ ] pursuant to the exemption from registration provided
by Rule 144 under the Securities Act; or
(5) [ ] pursuant to an effective registration statement under
the Securities Act.
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 pre-arranged 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;
16
(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 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; 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 (3) or (4) 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 Securities Act 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 Securities Exchange Act of 1934, as amended.
17
- --------------------------------------------------------------------------------
TO BE COMPLETED BY PURCHASER IF (2) 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
Securities Act 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:
<Table>
<Caption>
Principal amount of
this Global
Amount of decrease in Amount of increase in Security following Signature of authorized
Date of Principal amount of Principal amount of such decrease or signatory of Trustee or
Exchange this Global Security this Global Security increase Securities Custodian
</Table>
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 Securities Exchange Act of 1934, as amended.
EXHIBIT A
[FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]*/**/
No. $
------------- ---------
CUSIP No.
---------
ISIN
---------
8 1/4% Senior Subordinated Notes Due 2011
WESTPORT RESOURCES CORPORATION, a Nevada corporation, promises
to pay to ________, or registered assigns, the principal sum of __________
Dollars on November 1, 2011.
Interest Payment Dates: May 1 and November 1, commencing May
1, 2002.
Record Dates: April 15 and October 15.
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: , 20 .
------------ --
WESTPORT RESOURCES CORPORATION,
by
---------------------
Name:
Title:
---------------------
Name:
Title:
2
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE BANK OF NEW YORK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
---------------------------
Authorized Signatory
3
- ----------
*/If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix B 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 Appendix B and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.
4
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
8 1/4% Senior Subordinated Note Due 2011
1. Interest
Westport Resources Corporation, a Nevada 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 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 May 1 and
November 1 of each year, commencing May 1, 2002. 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 [insert last interest payment date on which
interest was paid on the Initial Securities or, if no interest has been paid on
the Initial Securities, insert the date of original issue of the Initial
Securities]. 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 April 15 or October 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 the Securities
represented by a Global Security (including principal, premium and interest)
will be made by wire
5
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 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, The Bank of New York, a New York banking
corporation (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 of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of November 5, 2001 (as such may be amended or supplemented from time to time,
the "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 "TIA").
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 TIA 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
6
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; create liens on assets; 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. During any period that the Securities have an
Investment Grade Rating from both S&P and Moody's and no Default has occurred
and is continuing, certain covenants will be suspended. 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 at its option prior to November 1, 2006.
The Company shall be entitled, at its option, at any time as a
whole prior to November 1, 2006, to redeem the Securities (which includes the
Additional Securities, if any) at a redemption price equal to the sum of:
(1) the principal amount thereof, plus
(2) accrued and unpaid interest, if any, to the redemption
date, plus
(3) the Applicable Premium at the redemption date.
On and after November 1, 2006, 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 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 November 1 of the
years set forth below:
7
<Table>
<Caption>
Redemption
Period Price
------ -----------
2006 104.125%
2007 102.750%
2008 101.375%
2009 and thereafter 100.000%
</Table>
In addition, prior to November 1, 2004, the Company shall be
entitled at its option on one or more occasions to 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) issued prior to the redemption date at a
redemption price (expressed as a percentage of principal amount) of 108.25%,
plus accrued and unpaid interest to the redemption date, with the net cash
proceeds from one or more Public Equity 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 (2) each such redemption
occurs within 90 days after the date of the related Public Equity 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.
8
7. Put Provisions
Upon a Change of Control, then unless the Company shall have
exercised its right to redeem all the Securities, each Holder will have the
right to require that the Company purchase such Holder's Securities at a
purchase price equal to 101% of the principal amount of the Securities to be
purchased 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 due on the related interest payment date) as provided in, and
subject to the terms of, the Indenture.
Under certain circumstances as set forth in the Indenture, the
Company will be required to offer to purchase Securities with the Net Available
Cash from Asset Dispositions.
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 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. Guaranty
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.
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
9
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 the mailing of a notice of
redemption 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 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 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.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture and the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the Securities
and (ii) any default or noncompliance with any provision may be waived with the
written consent of the Holders of a majority in principal amount outstanding of
the Securities. Subject to certain exceptions set forth in the Indenture,
without the consent of any Securityholder, the Company, the Subsidiary
Guarantors and the Trustee shall be entitled to amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the
10
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to eliminate Section 4.03(e) and Article 10
and 12 of the Indenture and add covenants relating to Sale/Leaseback
Transactions and amend covenants relating to Liens and effect other
consequential changes to the Indenture and the Securities, as outlined in
Appendix B to the Indenture, or to add guarantees with respect to the
Securities, including Subsidiary Guaranties, or to secure the Securities, or to
add additional covenants or surrender rights and powers conferred on the Company
or the Subsidiary Guarantors, or to comply with any request of the SEC in
connection with qualifying the Indenture under the TIA, or to make certain
changes in the subordination provisions, or to make any change that does not
adversely affect the rights of any Securityholder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon optional redemption pursuant to
paragraph 5 of the Securities, upon declaration of acceleration or otherwise, or
failure by the Company to redeem or purchase Securities when required; (iii)
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; (iv) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Indebtedness of the Company if the amount accelerated (or so
unpaid) exceeds $10 million; (v) certain events of bankruptcy or insolvency with
respect to the Company and the Significant Subsidiaries; and (vi) certain
judgments or decrees for the payment of money in excess of $10 million; and
(vii) certain defaults with respect to Subsidiary Guaranties. If an Event of
Default occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the Securities may declare all the Securities to be due and
payable immediately. Certain events of bankruptcy or insolvency are Events of
Default which will result in the Securities being due and payable immediately
upon the occurrence of such Events of Default.
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 indemnity or
security
11
satisfactory to it. 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.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, 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 or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities 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
12
survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A
(=Uniform Gift to Minors Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
and corresponding ISINs to be printed on the Securities and has directed the
Trustee to use CUSIP numbers and corresponding ISINs 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 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 SECURITY HOLDER A COPY OF THE INDENTURE WHICH
HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO:
WESTPORT RESOURCES CORPORATION
410 SEVENTEENTH STREET, SUITE 2300
DENVER, COLORADO 80202-4436
ATTENTION: INVESTOR RELATIONS
13
- --------------------------------------------------------------------------------
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 Securities Exchange Act of 1934, as amended.