EXECUTION COPY
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ENERGY PARTNERS, LTD.,
Issuer
8 3/4% Senior Notes Due 2010
INDENTURE
Dated as of August 5, 2003
WELLS FARGO BANK, N.A.,
Trustee
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- -------
310(a)(1)..................................................................7.10
(a)(2)................................................................7.10
(a)(3)................................................................N.A.
(a)(4)................................................................N.A.
(a)(5)................................................................7.10
(b).............................................................7.08; 7.10
(c)...................................................................N.A.
311(a).....................................................................7.11
(b)...................................................................7.11
(c)...................................................................N.A.
312(a).....................................................................2.05
(b)..................................................................11.03
(c)..................................................................11.03
313(a).....................................................................7.06
(b)(1)................................................................7.06
(b)(2)................................................................7.06
(c)..................................................................11.02
(d)...................................................................7.06
314(a)........................................................4.02; 4.12; 11.02
(b)...................................................................N.A.
(c)(1)................................................................2.02
(c)(2)................................................................2.02
(c)(3)................................................................N.A.
(d)...................................................................N.A.
(e)..................................................................11.05
(f)...................................................................N.A.
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
(c)...................................................................N.A.
317(a)(1)..................................................................6.08
(a)(2)................................................................6.09
(b)...................................................................2.04
318(a)....................................................................11.01
(b)...................................................................N.A.
(c)...................................................................N.A.
N.A. means Not Applicable.
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of the Indenture.
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE..........................5
SECTION 1.01 Definitions..............................................5
SECTION 1.02 Other Definitions.......................................34
SECTION 1.03 Incorporation by Reference of Trust Indenture Act.......34
SECTION 1.04 Rules of Construction...................................35
ARTICLE II THE SECURITIES....................................................35
SECTION 2.01 Form and Dating.........................................35
SECTION 2.02 Execution and Authentication............................36
SECTION 2.03 Registrar and Paying Agent..............................36
SECTION 2.04 Paying Agent To Hold Money in Trust.....................37
SECTION 2.05 Securityholder Lists....................................37
SECTION 2.06 Transfer and Exchange...................................37
SECTION 2.07 Replacement Securities..................................38
SECTION 2.08 Outstanding Securities..................................38
SECTION 2.09 Temporary Securities....................................38
SECTION 2.10 Cancellation............................................38
SECTION 2.11 Defaulted Interest......................................39
SECTION 2.12 CUSIP Numbers...........................................39
SECTION 2.13 Issuance of Additional Securities.......................39
ARTICLE III REDEMPTION.......................................................40
SECTION 3.01 Notices to Trustee......................................40
SECTION 3.02 Selection of Securities To Be Redeemed..................40
SECTION 3.03 Notice of Redemption....................................40
SECTION 3.04 Effect of Notice of Redemption..........................41
SECTION 3.05 Deposit of Redemption Price.............................41
SECTION 3.06 Securities Redeemed in Part.............................42
ARTICLE IV COVENANTS.........................................................42
SECTION 4.01 Payment of Securities...................................42
SECTION 4.02 SEC Reports.............................................42
SECTION 4.03 Limitation on Indebtedness..............................42
SECTION 4.04 [Reserved]..............................................45
SECTION 4.05 Limitation on Restricted Payments.......................45
SECTION 4.06 Limitation on Restrictions on Distributions from
Restricted Subsidiaries...............................48
SECTION 4.07 Limitation on Sales of Assets and Subsidiary Stock......50
SECTION 4.08 Limitation on Affiliate Transactions....................52
SECTION 4.09 Change of Control.......................................54
SECTION 4.10 Restricted and Unrestricted Subsidiaries................55
SECTION 4.11 Limitation on Liens.....................................56
SECTION 4.12 Compliance Certificate..................................56
SECTION 4.13 Further Instruments and Acts............................56
SECTION 4.14 Future Subsidiary Guarantors............................57
SECTION 4.15 Limitation on Line of Business..........................57
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SECTION 4.16 Covenant Suspension.....................................57
ARTICLE V SUCCESSOR COMPANY..................................................58
SECTION 5.01 When Company May Merge or Transfer Assets...............58
SECTION 5.02 When Subsidiary Guarantors May Merge or Transfer
Assets................................................59
ARTICLE VI DEFAULTS AND REMEDIES.............................................59
SECTION 6.01 Events of Default.......................................59
SECTION 6.02 Acceleration............................................61
SECTION 6.03 Other Remedies..........................................62
SECTION 6.04 Waiver of Past Defaults.................................62
SECTION 6.05 Control by Majority.....................................62
SECTION 6.06 Limitation on Suits.....................................62
SECTION 6.07 Rights of Holders To Receive Payment....................63
SECTION 6.08 Collection Suit by Trustee..............................63
SECTION 6.09 Trustee May File Proofs of Claim........................63
SECTION 6.10 Priorities..............................................64
SECTION 6.11 Undertaking for Costs...................................64
SECTION 6.12 Waiver of Stay or Extension Laws........................64
ARTICLE VII TRUSTEE..........................................................64
SECTION 7.01 Duties of Trustee.......................................64
SECTION 7.02 Rights of Trustee.......................................66
SECTION 7.03 Individual Rights of Trustee............................66
SECTION 7.04 Trustee's Disclaimer....................................67
SECTION 7.05 Notice of Defaults......................................67
SECTION 7.06 Reports by Trustee to Holders...........................67
SECTION 7.07 Compensation and Indemnity..............................67
SECTION 7.08 Replacement of Trustee..................................68
SECTION 7.09 Successor Trustee by Merger.............................69
SECTION 7.10 Eligibility; Disqualification...........................69
SECTION 7.11 Preferential Collection of Claims Against Company.......69
ARTICLE VIII DISCHARGE OF INDENTURE; DEFEASANCE..............................70
SECTION 8.01 Discharge of Liability on Securities; Defeasance........70
SECTION 8.02 Conditions to Defeasance................................71
SECTION 8.03 Application of Trust Money..............................72
SECTION 8.04 Repayment to Company....................................72
SECTION 8.05 Indemnity for Government Obligations....................72
SECTION 8.06 Reinstatement...........................................72
ARTICLE IX AMENDMENTS........................................................73
SECTION 9.01 Without Consent of Holders..............................73
SECTION 9.02 With Consent of Holders.................................73
SECTION 9.03 Compliance with Trust Indenture Act.....................74
SECTION 9.04 Revocation and Effect of Consents and Waivers...........74
SECTION 9.05 Notation on or Exchange of Securities...................75
SECTION 9.06 Trustee To Sign Amendments..............................75
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ARTICLE X SUBSIDIARY GUARANTEES..............................................75
SECTION 10.01 Subsidiary Guarantees...................................75
SECTION 10.02 Limitation on Liability.................................77
SECTION 10.03 Successors and Assigns..................................77
SECTION 10.04 No Waiver...............................................77
SECTION 10.05 Modification............................................77
SECTION 10.06 Release of Subsidiary Guarantor.........................77
SECTION 10.07 Contribution among Subsidiaries.........................78
ARTICLE XI MISCELLANEOUS.....................................................78
SECTION 11.01 Trust Indenture Act Controls............................78
SECTION 11.02 Notices.................................................78
SECTION 11.03 Communication by Holders with Other Holders.............79
SECTION 11.04 Certificate and Opinion as to Conditions Precedent......79
SECTION 11.05 Statements Required in Certificate or Opinion...........79
SECTION 11.06 When Securities Disregarded.............................80
SECTION 11.07 Rules by Trustee, Paying Agent and Registrar............80
SECTION 11.08 Legal Holidays..........................................80
SECTION 11.09 Governing Law...........................................80
SECTION 11.10 No Recourse Against Others..............................80
SECTION 11.11 Successors..............................................81
SECTION 11.12 Multiple Originals......................................81
SECTION 11.13 Table of Contents; Headings.............................81
SECTION 11.14 Severability............................................81
APPENDICES
APPENDIX A Provisions Relating to Initial Securities, Exchange
Securities, Private Exchange Securities and Other Securities...A-1
APPENDIX B Form of Supplemental Indenture.................................B-1
APPENDIX C Form of Certificate from Acquiring Institutional Accredited
Investor.......................................................C-1
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INDENTURE dated as of August 5, 2003 among Energy Partners, Ltd., a
Delaware corporation (the "Company"), the Company's subsidiaries signatory
hereto (each, a "Subsidiary Guarantor" and, collectively, the "Subsidiary
Guarantors") and Wells Fargo Bank, N.A. (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 (each as defined
herein and, collectively, the "Securities"):
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01 Definitions.
"Additional Assets" means
(a) any property or assets (other than Indebtedness and Capital Stock) in
the Oil and Gas Business;
(b) 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
(c) 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
(b) or (c) above is engaged in the Oil and Gas Business.
"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 Company's most recently completed
fiscal year, which reserve report is prepared or reviewed by independent
petroleum engineers, as increased by, as of the date of determination, the
discounted future net revenue of
(A) estimated proved crude oil and natural gas reserves of the Company and
its Restricted Subsidiaries attributable to acquisitions consummated since the
date of such year-end reserve report, and
(B) estimated crude oil and natural gas reserves of the Company and its
Restricted Subsidiaries attributable to extensions, discoveries and other
additions and upward determinations of estimates of proved crude oil and natural
gas reserves
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(including previously estimated development costs incurred during the period and
the accretion of discount since the prior year end) due to exploration,
development or exploitation, production or other activities, which reserves were
not reflected in such year-end reserve report, that would, in the case of
determinations made under clauses (A) and (B), in accordance with standard
industry practice, result in such determinations, in each case calculated in
accordance with SEC guidelines (utilizing the prices utilized in such year-end
reserve report),
and decreased by, as of the date of determination, the discounted future
net revenue attributable to
(C) estimated proved crude oil and natural gas reserves of the Company and
its Restricted Subsidiaries reflected in such year-end reserve report produced
or disposed of since the date of such year-end reserve report and
(D) reductions in the estimated crude oil and natural gas reserves of the
Company and its Restricted Subsidiaries reflected in such year-end reserve
report since the date of such year-end reserve report attributable to downward
determinations of estimates of proved crude oil and natural gas reserves due to
exploration, development or exploitation, production or other activities
conducted or otherwise occurring since the date of such year-end reserve report
that would, in the case of determinations made under clauses (C) and (D), in
accordance with standard industry practice, result in such determinations, in
each case calculated in accordance with SEC guidelines (utilizing the prices
utilized in such year-end reserve report);
provided, however, that, in the case of each of the determinations made under
clauses (A) through (D), such increases and decreases will be as estimated by
the Company's engineers, except that if as a result of such acquisitions,
dispositions, discoveries, extensions or revisions, there is a Material Change
that is an increase, then such increases and decreases in the discounted future
net revenue will 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 date of the Company's latest annual
or quarterly financial statements;
(3) the Net Working Capital on a date no earlier than the date of the
Company's latest annual or quarterly financial statements; and
(4) the greater of (I) the net book value on a date no earlier than the
date of the Company's latest annual or quarterly financial statements and (II)
the appraised value, as estimated by independent appraisers, of other tangible
assets of the Company and its Restricted Subsidiaries as of a date no earlier
than the date of the Company's latest audited financial statements (provided
that the Company will not be required to obtain such an appraisal of such assets
if no such appraisal has been performed);
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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, under 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 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 4.05 [Limitation on Restricted Payments], 4.07 [Limitation
on Sales of Assets and Subsidiary Stock] and 4.08 [Limitation on Affiliate
Transactions] only, "Affiliate" will also mean any beneficial owner of Capital
Stock representing 10% or more of the total voting power of the Voting Stock (on
a fully diluted basis) of the Company or of rights or warrants to purchase such
Capital Stock (whether or not currently exercisable) and any Person who would be
an Affiliate of any such beneficial owner under the first sentence hereof.
4
"Asset Disposition" means any sale, lease, transfer or other disposition
(or series of related sales, leases, transfers or dispositions) by the Company
or any Restricted Subsidiary, including any disposition by means of a merger,
consolidation or similar transaction (each referred to for the purposes of this
definition as a "disposition"), of:
(a) 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);
(b) all or substantially all the assets of any division or line of business
of the Company or any Restricted Subsidiary; or
(c) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted Subsidiary.
Notwithstanding the foregoing, none of the following will be deemed to be
an Asset Disposition:
(a) a disposition by a Restricted Subsidiary to the Company or by the
Company or a Restricted Subsidiary to a Wholly Owned Subsidiary;
(b) for purposes of Section 4.07 [Limitation on Sales of Assets and
Subsidiary Stock] only, a disposition that constitutes a Restricted Payment
permitted by Section 4.05 [Limitation on Restricted Payments], a disposition of
all or substantially all the assets of the Company in compliance with Section
5.01 [When Company May Merge or Transfer Assets] or a disposition that
constitutes a Change of Control under clause (c) [stockholder-approved plan of
liquidation or dissolution of the Company] of the definition thereof;
(c) the sale or transfer (whether or not in the ordinary course of
business) of crude oil and natural gas properties or direct or indirect
interests in real property; provided, however, that at the time of such sale or
transfer such properties do not have associated with them any proved reserves;
(d) the abandonment, farm-out, lease or sublease of developed or
undeveloped crude oil and natural gas properties in the ordinary course of
business;
(e) the trade or exchange by the Company or any Restricted Subsidiary of
any crude oil and natural gas property owned or held by the Company or such
Restricted Subsidiary for (1) any crude oil and natural gas property owned or
held by another Person or (2) the Capital Stock of another Person that becomes a
Restricted Subsidiary as a result of such trade or exchange and all or
substantially all of whose assets consist of crude oil and natural gas
properties, in either case including any cash or cash equivalents necessary in
order to achieve an exchange of equivalent value; provided, however, that the
value of the property or Capital Stock 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 or an Officer of the Company with responsibility for such
transaction) of the property (including any cash or cash equivalents) so traded
or exchanged;
5
(f) the sale or transfer of hydrocarbons or other mineral products or
surplus or obsolete equipment in the ordinary course of business;
(g) any sale, lease or other disposition of any individual assets or series
of related sales, leases or other dispositions where the cash proceeds and fair
market value of non-cash proceeds do not exceed $750,000; or
(h) Production Payments and Reserve Sales in connection with the
acquisition of any crude oil and natural gas property after the Issue Date;
provided that any such Production Payment and Reserve Sale is created, incurred,
issued or assumed in connection with the financing of, and within 90 days after
the acquisition of, such oil and natural gas property.
"Attributable Debt" in respect of a Sale/Leaseback Transaction means, as at
the time of determination, the present value (discounted at the interest rate
implicit in the Sale/Leaseback Transaction, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction, including any period for
which such lease has been extended; provided, however, that if such
Sale/Leaseback Transaction results in a Capital Lease Obligation, the amount of
Indebtedness represented by such Sale/Leaseback Transaction 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 or Preferred Stock, the quotient obtained by dividing
(a) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment, by
(b) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or any
committee thereof duly authorized to act on behalf of such Board. "Business Day"
means each day other than a Legal Holiday as defined in Section 11.08 [Legal
Holidays].
"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 will be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof will be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests, rights
to purchase, warrants, options, participations or other equivalents of or
interests in, however designated, equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
6
"Change of Control" means the occurrence of any of the following events:
(a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act), other than a Permitted Holder, is or becomes the beneficial owner
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that for
purposes of this clause (a) such person will be deemed to have "beneficial
ownership" of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 35% of the total voting power of the Voting Stock of
the Company (for the purposes of this clause (a), such person will be deemed to
beneficially own any Voting Stock of a specified corporation held by a parent
corporation, if such person is the beneficial owner (as defined in this clause
(a)), directly or indirectly, of more than 35% of the voting power of the Voting
Stock of such parent corporation);
(b) during any period of two consecutive years, individuals who at the
beginning of such period constituted the Board of Directors of the Company
(together with any new directors whose election by such Board of Directors or
whose nomination for election by the stockholders of the Company was approved by
a vote of a majority of the directors of the Company then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office;
(c) the stockholders of the Company have approved any plan of liquidation
or dissolution of the Company; or
(d) the merger or consolidation of the Company with or into another Person
or the merger of another Person with or into the Company, or the sale, lease,
conveyance or transfer of all or substantially all the assets of the Company and
its Restricted Subsidiaries, taken as a whole, to another Person or group of
related Persons (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act) other than the Permitted Holders, and, in the case of any such
merger or consolidation, the securities of the Company that are outstanding
immediately prior to such transaction and that represent 100% of the aggregate
voting power of the Voting Stock of the Company are changed into or exchanged
for cash, securities or property, unless pursuant to such transaction such
securities are changed into or exchanged for, in addition to any other
consideration, securities of the surviving corporation that represent
immediately after such transaction, at least a majority of the aggregate voting
power of the Voting Stock of the surviving corporation.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in the preamble to this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Consolidated Coverage Ratio" as of any date of determination means the
ratio of
(a) 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
7
(b) Consolidated Interest Expense for such four fiscal quarters; provided,
however, that:
(1) if the Company or any Restricted Subsidiary has Incurred any
Indebtedness since the beginning of such period that remains outstanding or if
the transaction giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, or both, EBITDA and Consolidated
Interest Expense for such period will be calculated after giving effect on a pro
forma basis to such Indebtedness as if such Indebtedness had been Incurred on
the first day of such period and the discharge of any other Indebtedness repaid,
repurchased, defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day of such period;
(2) if the Company or any Restricted Subsidiary has repaid, repurchased,
defeased or otherwise discharged any Indebtedness since the beginning of such
period or if any Indebtedness is to be repaid, repurchased, defeased or
otherwise discharged on the date of the transaction giving rise to the need to
calculate the Consolidated Coverage Ratio, EBITDA and Consolidated Interest
Expense for such period will 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 has not earned the interest income actually earned
during such period in respect of cash or Temporary Cash Investments used to
repay, repurchase, defease or otherwise discharge such Indebtedness;
(3) if since the beginning of such period the Company or any Restricted
Subsidiary has made any Asset Disposition, then EBITDA for such period will be
reduced by an amount equal to EBITDA (if positive) directly attributable to the
assets that are the subject of such Asset Disposition for such period, or
increased by an amount equal to EBITDA (if negative), directly attributable
thereto for such period and Consolidated Interest Expense for such period will
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) has made an Investment in any Restricted
Subsidiary (or any Person that becomes a Restricted Subsidiary) or an
acquisition (including by way of lease) of assets, including any acquisition of
assets occurring in connection with a transaction requiring a calculation to be
made hereunder, EBITDA and Consolidated Interest Expense for such period will be
calculated after giving pro forma effect thereto (including the Incurrence of
any Indebtedness) as if such Investment or acquisition occurred on the first day
of such period; and
(5) if since the beginning of such period any Person (that subsequently
became a Restricted Subsidiary or was merged with or into the Company or any
Restricted
8
Subsidiary since the beginning of such period) has made any Asset Disposition,
any Investment or acquisition of assets that would have required an adjustment
under clause (3) or (4) above if made by the Company or a Restricted Subsidiary
during such period, EBITDA and Consolidated Interest Expense for such period
will be calculated after giving pro forma effect thereto as if such Asset
Disposition, Investment or acquisition occurred on the first day of such period.
For purposes of this definition, whenever pro forma effect is to be given
to an acquisition of assets, the amount of income or earnings relating thereto
and the amount of Consolidated Interest Expense associated with any Indebtedness
Incurred in connection therewith, the pro forma calculations will be determined
in good faith by a responsible financial or accounting Officer of the Company.
If any Indebtedness bears a floating rate of interest and is being given pro
forma effect, the interest on such Indebtedness will 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 will only be taken into
account for that portion of the period equal to the remaining term of such
agreement).
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, will be computed based on the average daily balance of such
Indebtedness during the applicable period, provided, that such average daily
balance will 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 Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, plus, to the extent
not included in such total interest expense, and to the extent incurred by the
Company or its Restricted Subsidiaries, without duplication:
(a) interest expense attributable to Capital Lease Obligations and imputed
interest with respect to Attributable Debt;
(b) amortization of debt discount and debt issuance cost;
(c) capitalized interest;
(d) non-cash interest expense;
(e) commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing;
(f) net costs (including amortization of fees and up-front payments)
associated with Interest Rate Agreements that, at the time entered into,
resulted in the Company and its Restricted Subsidiaries being net payees as to
future payouts under such agreements, and Interest Rate Agreements for which the
Company or any of its Restricted Subsidiaries has paid a premium;
9
(g) dividends paid (excluding dividends paid in shares of Capital Stock
that is not Disqualified Stock) in respect of all Preferred Stock held by
Persons other than the Company or a Wholly Owned Subsidiary;
(h) interest accruing on any Indebtedness of any other Person to the extent
such Indebtedness is Guaranteed by, or secured by a Lien on Property of, the
Company or any Restricted Subsidiary (whether or not such Guarantee or Lien is
called upon);
(i) interest incurred in connection with Investments in discontinued
operations; and
(j) 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 Subsidiaries determined on a consolidated basis in accordance
with GAAP; provided, however, that there will not be included in such
Consolidated Net Income:
(a) any net income of any Person (other than the Company) if such Person is
not a Restricted Subsidiary, except that:
(1) subject to the exclusion contained in clause (c) below, the Company's
equity in the net income of any such Person for such period will be included in
such Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a Restricted
Subsidiary as a dividend, 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 (b) below); and
(2) the Company's equity in a net loss of any such Person for such period
will 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;
(b) 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:
(1) subject to the exclusion contained in clause (c) below, the equity in
the net income of any such Restricted Subsidiary for such period will be
included in such Consolidated Net Income up to the amount of cash permitted to
be distributed by such Restricted Subsidiary during such period to the Company
or another Restricted Subsidiary as a dividend or other distribution (subject,
in the case of a dividend or other distribution paid to another Restricted
Subsidiary, to the limitation contained in this clause); and
10
(2) the Company's equity in a net loss of any such Restricted Subsidiary
for such period will be included in determining such Consolidated Net Income;
(c) any gain or loss realized upon the sale or other disposition of any
assets of the Company or its consolidated Subsidiaries (including any sale or
disposition under any sale-and-leaseback arrangement) that is not sold or
otherwise disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any Person;
(d) extraordinary gains or losses, together with any related provision for
taxes on such gains or losses and all related fees and expenses;
(e) any non-cash compensation expense realized for grants of performance
shares, stock options or stock awards to officers, directors and employees of
the Company or any of its Restricted Subsidiaries;
(f) any impairment losses on oil and natural gas properties; (g) the
cumulative effect of a change in accounting principles; and
(h) any unrealized non-cash gains or losses or charges in respect of
Hedging Obligations.
Notwithstanding the foregoing, for the purposes of Section 4.05 [Limitation
on Restricted Payments] only, there will be excluded from Consolidated Net
Income any dividends, interest payments, repayments of loans or advances or
other transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, interest payments,
repayments or transfers increase the amount of Restricted Payments permitted
under Section 4.05(a)(3)(E).
"Consolidated Net Worth" means the total of the amounts shown on the
balance sheet of the Company and its Subsidiaries, determined on a consolidated
basis in accordance with GAAP, as of the end of the most recent fiscal quarter
of the Company ending 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 (a) the par or
stated value of all outstanding Capital Stock of the Company plus (b) paid-in
capital or capital surplus relating to such Capital Stock plus (c) any retained
earnings or earned surplus less (x) any accumulated deficit and (y) any amounts
attributable to Disqualified Stock.
"Credit Agreement" means that certain Third Amended and Restated Credit
Agreement, dated November 1, 2002, as amended by the First Amendment thereto
dated effective as of July 28, 2003, by and among the Company, certain of the
Subsidiary Guarantors and Bank One, NA (or any successor thereto or replacement
thereof), as administrative agent, letter of credit issuer and a bank, and
certain other financial institutions, as banks, including any related notes,
guarantees, collateral documents, instruments and agreements executed in
connection therewith, and in each case as amended, restated, modified, renewed,
refunded, replaced, refinanced or increased in whole or in part from time to
time.
11
"Credit Facilities" means, with respect to the Company or any Restricted
Subsidiary, one or more debt facilities (including the Credit Agreement) or
commercial paper facilities with banks or other institutional lenders providing
for revolving credit loans, term loans, receivables financing (including through
the sale of receivables to such lenders or to special purpose entities formed to
borrow from such lenders against such receivables) or letters of credit, in each
case, as amended, restated, modified, renewed, refunded, replaced or refinanced
in whole or in part from time to time.
"Currency Agreement" means, in respect of a Person, any foreign exchange
contract, currency swap agreement or other similar agreement 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.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
that by its terms, or by the terms of any security into which it is convertible
or for which it is exchangeable, or upon the happening of any event: (a) matures
or is mandatorily redeemable under a sinking fund obligation or otherwise; (b)
is convertible or exchangeable at the option of the holder thereof for
Indebtedness or Disqualified Stock; or (c) is redeemable or repurchasable, in
whole or in part, at the option of the holder thereof; in each case on or prior
to the first anniversary of the Stated Maturity of the Securities; provided,
however, that any Capital Stock that would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require such Person
to purchase or redeem such Capital Stock upon the occurrence of an "asset sale"
or "change of control" occurring prior to the Stated Maturity of the Securities
will not constitute Disqualified Stock if: (x) 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 such purchase or redemption obligation to the
holders of such Capital Stock than the provisions of Sections 4.07 [Limitation
on Sales of Assets and Subsidiary Stock] and 4.09 [Change of Control] and (y)
any such requirement only becomes operative after compliance with such
corresponding terms applicable to the Securities, including the purchase of any
Securities tendered pursuant thereto.
The amount of any Disqualified Stock that does not have a fixed redemption,
repayment or repurchase price will be calculated in accordance with the terms of
such Disqualified Stock as if such Disqualified Stock were redeemed, repaid or
repurchased on any date on which the amount of such Disqualified Stock is to be
determined under the Indenture; provided, however, that if such Disqualified
Stock could not be required to be redeemed, repaid or repurchased at the time of
such determination, the redemption, repayment or repurchase price will be the
book value of such Disqualified Stock as reflected in the most recent financial
statements of such Person.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
12
"Earnout Agreement" means the Earnout Agreement, dated January 15, 2002, as
amended on July 1, 2002, by and among the Company and Hall-Houston Oil Company,
with Hall-Houston Oil Company executing on behalf of the Participants (as
defined therein).
"EBITDA" means, with respect to any period, the Consolidated Net Income for
such period:
(a) plus the sum of, to the extent reflected in the consolidated income
statement of the Company and its Restricted Subsidiaries for such period from
which Consolidated Net Income is determined and deducted in the determination of
such Consolidated Net Income, without duplication:
(1) Consolidated Interest Expense;
(2) income tax expense;
(3) depreciation, depletion and amortization expense (excluding
amortization expense attributable to a prepaid operating activity item that
was paid in cash in the prior period);
(4) exploration expense; and
(5) all other non-cash charges including non-cash charges taken under
FAS 133 (excluding any such non-cash charge to the extent that it
represents an accrual of or reserve for cash charges in any future period
or amortization of a prepaid cash expense that was paid in a prior period
except such amounts as the Company determines in good faith are
nonrecurring);
(b) less, to the extent included in the determination of such Consolidated
Net Income and in excess of any costs or expenses attributable thereto and
deducted in the determination of such Consolidated Net Income, the sum of:
(1) the amount of deferred revenues that are amortized during such
period and are attributable to reserves that are subject to Volumetric
Production Payments; and
(2) amounts recorded in accordance with GAAP as repayments of
principal and interest under Dollar-Denominated Production Payments.
Notwithstanding the foregoing, the provision for taxes based on the income or
profits of, and the depletion, depreciation, amortization and exploration and
other non-cash charges of, a Restricted Subsidiary will be added to Consolidated
Net Income to compute EBITDA only:
(1) to the extent (and in the same proportion) that the net income of
such Restricted Subsidiary was included in the determination of
Consolidated Net Income; and
13
(2) if a corresponding amount would be permitted at the date of
determination to be paid as a dividend to the Company by such Restricted
Subsidiary without prior approval (that has not been obtained), under 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.
"Equity Offering" means:
(a) a primary offering of shares of common stock of the Company pursuant to
an underwritten offering registered under the Securities Act; or
(b) a private offering of shares of common stock of the Company so long as,
at the time of consummation of the sale pursuant to such offering, the Company's
common stock continues to be registered pursuant to Section 12(b) or Section
12(g) under the Exchange Act,
in each case, other than public offerings with respect to such common stock
or options, warrants or rights to acquire same, registered on Form S-4 or Form
S-8.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing Preferred Stock" means the Series D Exchangeable Convertible
Preferred Stock, par value $1.00 per share and stated value of $100 per share,
of the Company.
"Fair Market Value" means, with respect to any non-cash consideration or
property transferred or received by any Person, the fair market value of such
consideration or property as determined by the Board of Directors of the
Company.
"FAS 133" means Financial Accounting Standards Board Statement No. 133, as
amended, "Accounting for Derivative Instruments and Hedging Activities."
"GAAP" means generally accepted accounting principles in the United States
of America as in effect on the Issue Date, including those set forth in: (a) the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants; (b) statements and pronouncements of
the Financial Accounting Standards Board; (c) such other statements by such
other entity as approved by a significant segment of the accounting profession;
and (d) 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 under Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the SEC.
"Guarantee" means, without duplication, any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of
any Person and any obligation, direct or indirect, contingent or otherwise, of
such Person: (a) 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 (b) 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
14
respect thereof (in whole or in part); provided, however, that the term
"Guarantee" will 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" will mean any Person Guaranteeing
any obligation.
"Guarantee Agreement" means a supplemental indenture, in a form
satisfactory to the Trustee, by which a Subsidiary Guarantor or any other Person
becomes subject to the applicable terms and conditions of this Indenture.
"Hedging Obligations" of any Person means the obligations of such Person
under any Oil and Gas Hedging Contract, Interest Rate Agreement or Currency
Agreement.
"Holder" or "Securityholder" or "Noteholder" means the Person in whose name
a Security is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become liable
for; provided, however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) will be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun will have a correlative meaning. The accretion of principal of a
non-interest bearing or other discount security will not be deemed the
Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination, without duplication:
(a) the principal of and premium, if any, in respect of
(1) indebtedness of such Person for money borrowed and
(2) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which such Person is responsible or
liable;
(b) all Capital Lease Obligations of such Person and all Attributable Debt
in respect of Sale/Leaseback Transactions entered into by such Person;
(c) all obligations of such Person issued or assumed as the deferred
purchase price of property, which purchase price is due more than six months
after the date of taking delivery of title to such property, including all
obligations of such Person for the deferred purchase price of property under any
title retention agreement, but excluding trade accounts payable arising in the
ordinary course of business;
(d) 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 (a) through (c) 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
15
reimbursed no later than the tenth Business Day following receipt by such Person
of a demand for reimbursement following payment on the letter of credit);
(e) the amount of all obligations of such Person with respect to the
redemption, repayment or other repurchase of any Disqualified Stock, but
excluding any accrued dividends; (f) any Preferred Stock of any Restricted
Subsidiary;
(g) all obligations of the type referred to in clauses (a) through (f)
above of other Persons and all dividends of other Persons for the payment of
which, in either case, such Person is responsible or liable, directly or
indirectly, as obligor, guarantor or otherwise, including by means of any
Guarantee;
(h) all obligations of the type referred to in clauses (a) through (g)
above of other Persons secured by any Lien on any Property of such
first-mentioned Person, whether or not such obligation is assumed by such
first-mentioned Person, the amount of such obligation being deemed to be the
lesser of the value of such Property or the amount of the obligation so secured;
(i) to the extent not otherwise included in this definition, Hedging
Obligations of such Person; and
(j) any Guarantee by such Person of production or payment with respect to a
Production Payment and Reserve Sale.
The amount of Indebtedness of any Person at any date will be the
outstanding balance at such date of all unconditional obligations as described
above and the maximum liability, assuming the occurrence on such date of the
contingency giving rise to the obligation, of any contingent obligations
outstanding at such date.
None of the following will constitute Indebtedness:
(a) obligations for indemnification or adjustment of purchase price or
arising from guarantees securing any obligations of the Company or any of its
Subsidiaries incurred or assumed in connection with the disposition of any
business, assets or Subsidiary of the Company, other than guarantees or similar
credit support by the Company or any of its Subsidiaries of Indebtedness
incurred by any Person acquiring all or any portion of such business, assets or
Subsidiary for the purpose of financing such acquisition;
(b) any trade payables or other similar liabilities to trade creditors and
other accrued current liabilities incurred in the ordinary course of business as
the deferred purchase price of property;
(c) any liability for Federal, state, local or other taxes owed or owing by
such Person;
16
(d) amounts due in the ordinary course of business to other royalty and
working interest owners;
(e) obligations arising from guarantees to suppliers, lessors, licensees,
contractors, franchisees or customers incurred in the ordinary course of
business;
(f) obligations (other than express Guarantees of indebtedness for borrowed
money) in respect of Indebtedness of other Persons arising in connection with
(A) the sale or discount of accounts receivable, (B) trade acceptances and (C)
endorsements of instruments for deposit in the ordinary course of business;
(g) obligations in respect of performance bonds provided by the Company or
any of its Subsidiaries in the ordinary course of business and refinancing
thereof;
(h) obligations arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds in the ordinary course of business, provided, however, that such
obligation is extinguished within two Business Days of its incurrence;
(i) any obligations under workers' compensation laws and similar
legislation; and
(j) except as expressly provided in clause (j) above [guarantee of
production or payment with respect to a Production Payment and Reserve Sale],
obligations relating to Production Payments and Reserve Sales.
"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.
"Indenture" means this Indenture as amended or supplemented from time to
time, including the provisions of the TIA that are deemed to be a part of and
govern this Indenture and any supplemental indenture, respectively.
"Interest Rate Agreement" means any interest rate swap agreement, interest
rate cap agreement or other financial agreement or arrangement designed to
protect the Company or any Restricted Subsidiary against fluctuations in
interest rates.
"Investment" in any Person means any direct or indirect advance, loan
(other than advances to customers or joint interest partners or drilling
partnerships sponsored by the Company or any Restricted Subsidiary in the
ordinary course of business that are recorded as accounts receivable on the
balance sheet of the lender) or other extensions of credit (including by way of
Guarantee or similar arrangement) or capital contribution to (by means of any
transfer of cash or other property to others or any payment for property or
services for the account or use of others), or any purchase or acquisition of
Capital Stock, Indebtedness or other similar instruments issued by such Person.
Except as otherwise provided for herein, the amount of an Investment will be its
fair value at the time the Investment is made and without giving effect to
subsequent changes in value.
17
For purposes of the definition of "Unrestricted Subsidiary," the definition
of "Restricted Payment" and Section 4.05 [Limitation on Restricted Payments]:
(a) "Investment" will include the portion (proportionate to the Company's
equity interest in such Subsidiary) of the Fair Market Value of the net assets
of any Subsidiary of the Company at the time that such Subsidiary is designated
an Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company will be deemed to continue to
have a permanent "Investment" in an Unrestricted Subsidiary equal to an amount
(if positive) equal to (1) the Company's "Investment" in such Subsidiary at the
time of such redesignation less (2) the portion (proportionate to the Company's
equity interest in such Subsidiary) of the Fair Market Value of the net assets
of such Subsidiary at the time of such redesignation; and
(b) any property transferred to or from an Unrestricted Subsidiary will be
valued at its Fair Market Value at the time of such transfer, in each case as
determined in good faith by the Board of Directors.
"Issue Date" means the date on which the Securities are originally issued.
"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 future development costs) of more than 25% during a
fiscal quarter in the discounted future net revenues from proved crude oil and
natural gas reserves of the Company and its Restricted Subsidiaries, calculated
in accordance with clause (a)(1) of the definition of Adjusted Consolidated Net
Tangible Assets; provided, however, that the following will be excluded from the
calculation of Material Change:
(a) any acquisitions during the fiscal quarter of oil and gas reserves that
have been estimated by independent petroleum engineers and with respect to which
a report or reports of such engineers exist; and
(b) any disposition of properties existing at the beginning of such fiscal
quarter that have been disposed of in compliance with Section 4.07 [Limitation
on Sales of Assets and Subsidiary Stock].
"Moody's" means Moody's Investor's Service, Inc. and its successors.
"Net Available Cash" from an Asset Disposition means cash payments received
therefrom (including any cash payments received by way of deferred payment of
principal under a note or installment receivable or otherwise, but only as and
when received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to such properties or assets or received in any other noncash form), in each
case net of:
18
(a) all legal, title and recording tax expenses, commissions and other fees
(including financial and other advisory fees) and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to be accrued as a
liability under GAAP, as a consequence of such Asset Disposition;
(b) all payments made on any Indebtedness that 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 that
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;
(c) all distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Disposition; and
(d) the deduction of appropriate amounts provided by the seller as a
reserve, in accordance with GAAP, against any liabilities associated with the
property or other assets disposed of in such Asset Disposition and retained by
the Company or any Restricted Subsidiary after such Asset Disposition.
"Net Cash Proceeds," with respect to any issuance or sale of Capital Stock,
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, discounts or
commissions and brokerage, consultant and other fees actually incurred in
connection with such issuance or sale and net of taxes paid or payable as a
result thereof.
"Net Present Value" means, with respect to any proved hydrocarbon reserves,
the discounted future net cash flows associated with such reserves, determined
in accordance with the rules and regulations (including interpretations thereof)
of the SEC in effect on July 29, 2003.
"Net Working Capital" means (a) all current assets of the Company and its
Restricted Subsidiaries; minus (b) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness; in each case determined in accordance with GAAP.
"Non-recourse Purchase Money Indebtedness" means Indebtedness (other than
Capital Lease Obligations) of the Company or any Subsidiary Guarantor incurred
in connection with the acquisition by the Company or such Subsidiary Guarantor
in the ordinary course of business of fixed assets used in the Oil and Gas
Business (including office buildings and other real property used by the Company
or such Subsidiary Guarantor in conducting its operations) with respect to
which:
(a) the holders of such Indebtedness agree that they will look solely to
the fixed assets so acquired that secure such Indebtedness, and neither the
Company nor any Restricted Subsidiary (1) is directly or indirectly liable for
such Indebtedness or (2) provides credit support, including any undertaking,
Guarantee, agreement or instrument that would constitute Indebtedness (other
than the grant of a Lien on such acquired fixed assets); and
19
(b) no default or event of default with respect to such Indebtedness would
cause, or permit (after notice or passage of time or otherwise), any holder of
any other Indebtedness of the Company or a Subsidiary Guarantor to declare a
default or event of default on such other Indebtedness or cause the payment,
repurchase, redemption, defeasance or other acquisition or retirement for value
thereof to be accelerated or payable prior to any scheduled principal payment,
scheduled sinking fund payment or maturity.
"Obligations" means, with respect to any Indebtedness, all obligations for
principal, premium, interest, penalties, fees, indemnifications, reimbursements
and other amounts payable pursuant to the documentation governing such
Indebtedness.
"Officer" means the Chairman of the Board, the President, any Vice
President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary of the Company.
"Officers' Certificate" means a certificate of the Company signed by two
Officers.
"Oil and Gas Business" means (a) the acquisition, exploration,
exploitation, development, operation or disposition of interests in, or
obtaining production from, oil, natural gas or other hydrocarbon properties; (b)
the gathering, marketing, treating, processing (but not refining), storage,
selling or transporting of any production from such interests or properties; or
(c) any activity that is ancillary, necessary or appropriate to facilitate, or
that is incidental to, the activities described in clauses (a) and (b) of this
definition.
"Oil and Gas Hedging Contract" means any oil and gas purchase or hedging
agreement, and other agreement or arrangement, in each case, that is designed to
provide protection against oil and gas price fluctuations.
"Oil and Gas Liens" means:
(a) Liens on any specific property or any interest therein, construction
thereon or improvement thereto to secure all or any part of the costs incurred
for surveying, exploration, drilling, extraction, development, operation,
production, construction, alteration, repair or improvement of, in, under or on
such property and the plugging and abandonment of wells located thereon (it
being understood that, in the case of oil and gas producing properties, or any
interest therein, costs incurred for "development" will include costs incurred
for all facilities relating to such properties or to projects, ventures or other
arrangements of which such properties form a part or that relate to such
properties or interests);
(b) Liens on an oil or gas producing property to secure obligations
incurred or guarantees of obligations incurred in connection with or necessarily
incidental to commitments for the purchase or sale of, or the transportation or
distribution of, the products derived from such property;
(c) Liens arising under partnership agreements, oil and gas leases,
overriding royalty agreements, net profits agreements, production payment
agreements, royalty trust agreements, incentive compensation programs on terms
that are reasonably customary in the Oil and Gas Business for geologists,
geophysicists and other providers of technical services to the
20
Company or a Restricted Subsidiary, farm-out agreements, farm-in agreements,
division orders, contracts for the sale, purchase, exchange, transportation,
gathering or processing of oil, gas or other hydrocarbons, unitizations and
pooling designations, declarations, orders and agreements, development
agreements, operating agreements, production sales contracts, area of mutual
interest agreements, gas balancing or deferred production agreements, injection,
repressuring and recycling agreements, salt water or other disposal agreements,
seismic or geophysical permits or agreements, and other agreements that are
customary in the Oil and Gas Business; provided, however, that in all instances
such Liens are limited to the assets that are the subject of the relevant
agreement, program, order or contract;
(d) Liens arising in connection with Production Payments and Reserve Sales;
and
(e) Liens on pipelines or pipeline facilities that arise by operation of
law.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Business Investment" means any investment or expenditure made in
the ordinary course of, and of a nature that is or has become customary in, the
Oil and Gas Business including investments or expenditures arising through
agreements, transactions, interests or arrangements that permit one to share
risks or costs, comply with regulatory requirements regarding local ownership or
satisfy other objectives customarily achieved through the conduct of Oil and Gas
Business jointly with third parties, including:
(a) ownership interests in oil and gas properties, processing facilities,
gathering systems, pipelines or ancillary real property interests; and
(b) Investments in the form of or under operating agreements, processing
agreements, farm-in agreements, farm-out agreements, development agreements,
area of mutual interest agreements, unitization agreements, pooling agreements,
joint bidding agreements, service contracts, joint venture agreements,
partnership agreements (whether general or limited), subscription agreements,
stock purchase agreements and other similar agreements (including for limited
liability companies) with third parties, excluding, however, Investments in any
corporation, partnership, limited liability company or any other entity that is
not a Restricted Subsidiary.
"Permitted Holders" means
(a) Richard A. Bachmann;
(b) Evercore Capital Partners L.P., Evercore Capital Offshore Partners
L.P., Evercore Capital Partners (NQ) L.P. and Evercore Co-Investment Partnership
L.P.;
(c) trusts, the sole beneficiary and trustee of which is the individual who
would be a Permitted Holder under clause (a) above or his immediate family
members; and
21
(d) corporations, partnerships and other entities (1) of which the
individual who would be a Permitted Holder under clause (a) above or his
immediate family members is or are the beneficial owners of all Capital Stock
and other equity or voting interests and (2) that are controlled by such
individual and his immediate family members.
"Permitted Investment" means an Investment by the Company or any Restricted
Subsidiary in:
(a) a Restricted Subsidiary or a Person that will, upon the making of such
Investment, become a Restricted Subsidiary; provided, however, that the primary
business of such Restricted Subsidiary is the Oil and Gas Business;
(b) another Person if as a result of such Investment such other Person is
merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is the Oil and Gas
Business;
(c) Temporary Cash Investments;
(d) 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;
(e) payroll, travel and similar advances to cover matters that are expected
at the time of such advances ultimately to be treated as expenses for accounting
purposes and that are made in the ordinary course of business;
(f) loans or advances to employees made in the ordinary course of business;
(g) 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;
(h) any Person to the extent such Investment represents the noncash portion
of the consideration received for an Asset Disposition as permitted under
Section 4.07 [Limitation on Sales of Assets and Subsidiary Stock];
(i) Permitted Business Investments;
(j) Investments made pursuant to Hedging Obligations of the Company and the
Restricted Subsidiaries;
(k) any Person where such Investment was acquired by the Company or any of
its Restricted Subsidiaries (1) 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
22
accounts receivable or (2) 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; and
(l) any Person, not otherwise permitted to be made under clause (a) through
(k) above, in an aggregate amount, which when taken together with all other
Investments made on or after the Issue Date under this clause, does not exceed
$20 million at any one time outstanding.
"Permitted Liens" means, with respect to any Person:
(a) Liens existing as of the Issue Date;
(b) Liens securing the Securities, any Subsidiary Guarantee and other
obligations arising under this Indenture;
(c) any Lien existing on any Property of a Person at the time such Person
is merged or consolidated with or into the Company or a Restricted Subsidiary or
becomes a Restricted Subsidiary (and not incurred in anticipation of or in
connection with such transaction), provided that such Liens are not extended to
other Property of the Company or the Restricted Subsidiaries;
(d) any Lien existing on any Property at the time of the acquisition
thereof (and not incurred in anticipation of or in connection with such
transaction), provided that such Liens are not extended to other Property of the
Company or the Restricted Subsidiaries;
(e) any Lien incurred in the ordinary course of business incidental to the
conduct of the business of the Company or the Restricted Subsidiaries or the
ownership of their property including
(1) easements, rights of way and similar encumbrances,
(2) rights or title of lessors under leases (other than Capital Lease
Obligations),
(3) rights of collecting banks having rights of setoff, revocation,
refund or chargeback with respect to money or instruments of the Company or
the Restricted Subsidiaries on deposit with or in the possession of such
banks,
(4) Liens imposed by law, including Liens under workers' compensation
or similar legislation and mechanics', carriers', warehousemen's,
materialmen's, suppliers' and vendors' Liens,
(5) Liens incurred to secure performance of obligations with respect
to statutory or regulatory requirements, performance or return-of-money
bonds, surety bonds or other obligations of a like nature and incurred in a
manner consistent with industry practice, and
23
(6) Oil and Gas Liens, in each case which are not incurred in
connection with the borrowing of money, the obtaining of advances or credit
or the payment of the deferred purchase price of property (other than trade
accounts payable arising in the ordinary course of business);
(f) Liens for taxes, assessments and governmental charges not yet due or
the validity of which are being contested in good faith by appropriate
proceedings, promptly instituted and diligently conducted, and for which
adequate reserves have been established to the extent required by GAAP as in
effect at such time;
(g) Liens incurred to secure appeal bonds and judgment and attachment
Liens, in each case in connection with litigation or legal proceedings that are
being contested in good faith by appropriate proceedings, so long as reserves
have been established to the extent required by GAAP as in effect at such time
and so long as such Liens do not encumber assets by an aggregate amount
(together with the amount of any unstayed judgments against the Company or any
Restricted Subsidiary but excluding any such Liens to the extent securing
insured or indemnified judgments or orders) in excess of $5 million;
(h) Liens securing Hedging Obligations of the Company and its Restricted
Subsidiaries;
(i) Liens securing Purchase Money Indebtedness or Capital Lease Obligations
Incurred in accordance with this Indenture, provided that such Liens attach only
to the property acquired (or if such property is Capital Stock, to the assets of
such Person as well as such Capital Stock) with the proceeds of such Purchase
Money Indebtedness or the property that is the subject of such Capital Lease
Obligations;
(j) Liens securing Non-recourse Purchase Money Indebtedness granted in
connection with the acquisition by the Company or any Restricted Subsidiary in
the ordinary course of business of fixed assets used in the Oil and Gas Business
(including the office buildings and other real property used by the Company or
such Restricted Subsidiary in conducting its operations), provided that
(1) such Liens attach only to the fixed assets acquired with the
proceeds of such Non-recourse Purchase Money Indebtedness and
(2) such Non-recourse Purchase Money Indebtedness is not in excess of
the purchase price of such fixed assets;
(k) Liens resulting from the deposit of funds or evidences of Indebtedness
in trust for the purpose of decreasing or legally defeasing Indebtedness of the
Company or any Restricted Subsidiary so long as such deposit of funds is
permitted under Section 4.05 [Limitation on Restricted Payments];
(l) Liens resulting from a pledge of Capital Stock of a Person that is not
a Restricted Subsidiary to secure obligations of such Person and any
refinancings thereof;
(m) Liens securing Obligations under the Credit Agreement;
24
(n) Liens to secure any permitted extension, renewal, refinancing,
refunding or exchange (or successive extensions, renewals, refinancings,
refundings or exchanges), in whole or in part, of or for any Indebtedness
secured by Liens referred to in clauses (a), (b), (c), (d), (i), (j) and (m)
above; provided, however, that
(1) such new Lien must be limited to all or part of the same property
(including future improvements thereon and accessions thereto) subject to the
original Lien, and
(2) the Indebtedness secured by such Lien at such time is not increased to
any amount greater than the sum of
(A) the outstanding principal amount or, if greater, the committed amount
of the Indebtedness secured by such original Lien immediately prior to such
extension, renewal, refinancing, refunding or exchange and
(B) an amount necessary to pay any fees and expenses, including premiums,
related to such refinancing, refunding, extension, renewal or replacement; and
(o) Liens in favor of the Company or a Restricted Subsidiary.
Notwithstanding anything in this definition to the contrary, the term
"Permitted Liens" will not include Liens resulting from the creation,
incurrence, issuance or assumption of any Production Payments and Reserved Sales
other than
(1) any such Liens existing as of the Issue Date;
(2) Production Payments and Reserve Sales in connection with the
acquisition of any Property after the Issue Date; provided that any such
Lien created in connection therewith is created, incurred, issued, or
assumed in connection with the financing of, and within 90 days after the
acquisition of, such Property; and
(3) Production Payments and Reserve Sales other than those described
in clauses (1) and (2) above, to the extent such Production Payments and
Reserve Sales constitute Asset Dispositions made pursuant to and in
compliance with Section 4.07 [Limitation on Sales of Assets and Subsidiary
Stock];
provided, however, that, in the case of the immediately foregoing clauses (1),
(2) and (3), any Lien created in connection with any such Production Payments
and Reserve Sales must be limited to the Property that is the subject of such
Production Payments and Reserve Sales.
"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, that ranks prior, as
to the payment of dividends or distributions, or as to the distribution of
assets upon any voluntary or involuntary
25
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
The term "principal" of a Security means the principal of the Security plus
the premium, if any, payable on the Security that is due or overdue or is to
become due at the relevant time.
"Production Payments and Reserve Sales" means the grant or transfer by the
Company or a Restricted Subsidiary to any Person of a royalty, overriding
royalty, net profits interest or production payment (whether volumetric or
dollar denominated) 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 where the holder of such interest has
recourse solely to such production or proceeds of production, subject to the
obligation of the grantor or transferor to operate and maintain, or cause the
subject interests to be operated and maintained, in a reasonably prudent manner
or other customary standard or subject to the obligation of the grantor or
transferor to indemnify for environmental, title or other matters customary in
the Oil and Gas Business.
"Property" means, for any Person, any interest of such Person in any kind
of property or asset, whether real, personal or mixed, or tangible or
intangible, including Capital Stock and other securities issued by any other
Person (but excluding Capital Stock or other securities issued by such first
mentioned Person).
"Purchase Money Indebtedness" means any Indebtedness Incurred in connection
with the acquisition, construction or improvement of property (real or personal)
or assets, and whether acquired through the direct acquisition of such property
or assets or the acquisition of the Capital Stock or other equity interests of
any Person owning such property or assets, or otherwise.
"Refinance" means, in respect of any Indebtedness, to refinance, extend,
renew, refund, repay, prepay, redeem, defease or retire, or to issue other
Indebtedness in exchange or replacement for, such Indebtedness. "Refinanced" and
"Refinancing" will have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on the Issue
Date or Incurred in compliance with the Indenture, including Indebtedness that
Refinances Refinancing Indebtedness; provided, however, that
(a) such Refinancing Indebtedness has a Stated Maturity no earlier than the
Stated Maturity of the Indebtedness being Refinanced,
(b) 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,
(c) 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
26
aggregate principal amount (or if Incurred with original issue discount, the
aggregate accreted value) then outstanding or committed (plus fees and expenses,
including any premium and defeasance costs) under the Indebtedness being
Refinanced and
(d) if the Indebtedness being Refinanced is Non-recourse Purchase Money
Indebtedness, such Refinancing Indebtedness satisfies clauses (a) and (b) of the
definition of "Non-recourse Purchase Money Indebtedness";
provided further, however, that Refinancing Indebtedness will not include
(x) Indebtedness of a Subsidiary that Refinances Indebtedness of the Company or
(y) Indebtedness of the Company or a Restricted Subsidiary that Refinances
Indebtedness of an Unrestricted Subsidiary.
"Restricted Payment" with respect to any Person means:
(a) the declaration or payment of any dividends or any other distributions
of any sort in respect of its Capital Stock (including any payment in connection
with any merger or consolidation involving such Person) or similar payment to
the direct or indirect holders of its Capital Stock (other than (1) dividends or
distributions payable solely in its Capital Stock (other than Disqualified
Stock), (2) dividends or distributions payable solely to the Company or a
Restricted Subsidiary, and (3) pro rata dividends or other distributions made by
a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation));
(b) the purchase, redemption or other acquisition or retirement for value
of any Capital Stock of the Company held by any Person or of any Capital Stock
of a Restricted Subsidiary held by any Affiliate of the Company (other than a
Restricted Subsidiary), including the exercise of any option to exchange any
Capital Stock (other than into Capital Stock of the Company that is not
Disqualified Stock);
(c) the purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value, prior to scheduled maturity, scheduled repayment or
scheduled sinking fund payment of any Subordinated Obligations of such Person
(other than the purchase, repurchase or other acquisition of Subordinated
Obligations purchased in anticipation of satisfying a sinking fund obligation,
principal installment or final maturity, in each case due within one year of the
date of acquisition); or
(d) the making of any Investment (other than a Permitted Investment) in any
Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is not an
Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Company, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to property
owned on the Issue Date or thereafter acquired whereby the Company or a
Restricted Subsidiary
27
transfers such property to a Person and the Company or a Restricted Subsidiary
leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company or of any
Subsidiary secured by a Lien.
"Senior Indebtedness" means with respect to any Person:
(a) Indebtedness of such Person, whether outstanding on the Issue Date or
thereafter Incurred; and
(b) all other Obligations of such Person, including interest accruing on or
after the filing of any petition in bankruptcy or for reorganization relating
such Person to the extent post-filing interest is allowed in such proceeding, in
respect of Indebtedness described in clause (a) above;
unless, with respect to obligations described in the immediately preceding
clause (a) or (b), in the instrument creating or evidencing the same or under
which the same is outstanding, it is provided that such Indebtedness or other
Obligations are subordinate in right of payment to the Securities or the
applicable Subsidiary Guarantee; provided, however, that Senior Indebtedness
will not include:
(a) any obligation of such Person to any Subsidiary of such Person;
(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;
(d) any Indebtedness or other Obligations of such Person, and any accrued
and unpaid interest in respect thereof, that is subordinate or junior in any
respect to any other Indebtedness or other Obligation of such Person;
(e) Subordinated Obligations;
(f) that portion of any Indebtedness that at the time of Incurrence is
Incurred in violation of this Indenture (other than, in the case of the Company
or any Subsidiary Guarantor that Guarantees or is an obligor under any Credit
Facility, Indebtedness under any Credit Facility that is Incurred on the basis
of a representation by the Company or the applicable Subsidiary Guarantor to the
applicable lenders that such Person is permitted to Incur such Indebtedness
under this Indenture); or
(g) any Disqualified Stock or obligations with respect to any Capital
Stock.
28
"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 or obligation, the
date specified in such security or obligation as the fixed date on which the
final payment of principal of such security or payment on such obligation is due
and payable, including under any mandatory redemption provision (but excluding
any provision providing for the repurchase of such security or obligation, at
the option of the holder thereof upon the happening of any contingency unless
such contingency has occurred).
"Subordinated Obligation" means any Indebtedness of the Company or any
Subsidiary Guarantor, whether outstanding on the Issue Date or thereafter
Incurred, that is subordinate or junior in right of payment to, in the case of
the Company, the Securities or, in the case of a Subsidiary Guarantor, its
Subsidiary Guarantee under a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation, association,
partnership or other business entity of which more than 50% of the total voting
power of shares of Capital Stock or other interests (including partnership
interests) entitled (without regard to the occurrence of any contingency) to
vote in the election of directors, managers or trustees thereof is at the time
owned or controlled, directly or indirectly, by (a) such Person, (b) such Person
and one or more Subsidiaries of such Person or (c) one or more Subsidiaries of
such Person.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of the
Company's obligations with respect to the Securities.
"Subsidiary Guarantor" means each Subsidiary of the Company that executes
this Indenture as a guarantor and each other Subsidiary of the Company that
thereafter Guarantees the Securities under the terms of this Indenture, in each
case unless and until such Subsidiary is released from its obligations under its
Subsidiary Guarantee in accordance with the terms of this Indenture. Initially,
the Subsidiary Guarantors will be EPL Pipeline, L.L.C., Nighthawk, L.L.C., EPL
of Louisiana, L.L.C., Delaware EPL of Texas, LLC, and EPL Pioneer Houston, Inc.
"Temporary Cash Investments" means any of the following:
(a) Investments in U. S. Government Obligations maturing within one year of
the date of the acquisition thereof;
(b) Investments in (1) time deposit accounts, certificates of deposit and
money market deposits maturing within one year of the date of acquisition
thereof issued by a bank or trust company that is organized under the laws of
the United States of America or any state thereof or the District of Columbia
that is a member of the Federal Reserve System and which bank or trust company
has capital, surplus and undivided profits aggregating in excess of $250 million
and whose long-term debt is rated "A" (or such similar equivalent rating) or
higher by Moody's or S&P or (2) any money-market fund having assets in excess of
$500 million all of which consist of obligations of the types described in
clauses (a), (b), (c), (d) and (e) hereof;
29
(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered into
with a bank meeting the qualifications described in clause (b) above;
(d) Investments in commercial paper, maturing not more than one year after
the date of acquisition, issued by a Person (other than an Affiliate of the
Company) organized and in existence under the laws of the United States of
America 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
(e) 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.
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C. Sections
77aaa-77bbbb), as in effect on the date of this Indenture except as provided in
Section 9.03; provided, however, that, in the event the Trust Indenture Act of
1939 is amended after such date, "TIA" means, to the extent required by any such
amendments, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the party named as such in the preamble to this Indenture
until a successor replaces it and, thereafter, means the successor.
"Trust Officer" means the Chairman of the Board, the President or any other
officer or assistant officer of the Trustee assigned by the Trustee to
administer this Indenture.
"Uniform Commercial Code" means the New York Uniform Commercial Code as in
effect from time to time. "Unrestricted Subsidiary" means:
(a) any Subsidiary of the Company that at the time of determination will be
designated an Unrestricted Subsidiary by the Board of Directors in the manner
provided below; and
(b) any Subsidiary of an Unrestricted Subsidiary.
The Board of Directors may designate any Subsidiary of the Company,
including any newly acquired or newly formed Subsidiary, to be an Unrestricted
Subsidiary in the manner and subject to the conditions set forth in Section 4.10
[Restricted and Unrestricted Subsidiaries].
"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
that are not callable at the issuer's option.
30
"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) is owned by the Company
or one or more Wholly Owned Subsidiaries.
SECTION 1.02 Other Definitions.
Term Defined in Section
"Additional Securities"........................................2.13
"Affiliate Transaction".....................................4.08(a)
"Bankruptcy Law"...............................................6.01
"covenant defeasance option"................................8.01(b)
"Custodian"....................................................6.01
"Event of Default".............................................6.01
"Guaranteed Obligations"......................................10.01
"Investment Grade Rating"...................................4.16(a)
"legal defeasance option"...................................8.01(b)
"Legal Holiday"...............................................11.08
"Notice of Default"............................................6.01
"Paying Agent".................................................2.03
"Registrar"....................................................2.03
"Securities"...............................................Preamble
"Successor Company".........................................5.01(a)
"Suspended Covenants".......................................4.16(a)
Terms not defined herein but defined in Appendix A shall have the meaning
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.
31
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
SECTION 1.04 Rules of Construction.
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(c) "or" is not exclusive unless the context otherwise requires;
(d) "including" means including without limitation;
(e) words in the singular include the plural and words in the plural
include the singular;
(f) unsecured Indebtedness shall not be deemed to be subordinate or junior
to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(g) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be shown
on a balance sheet of the Company dated such date prepared in accordance with
GAAP; and
(h) the principal amount of any Preferred Stock shall be (1) the maximum
liquidation value of such Preferred Stock or (2) the maximum mandatory
redemption or mandatory repurchase price with respect to such Preferred Stock,
whichever is greater.
ARTICLE II
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 Appendix A 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 A which is hereby
incorporated in and expressly made a part of this Indenture. The Private
Exchange Securities and the Exchange Securities and the Trustee's certificate of
authentication shall be substantially in
32
the form of Exhibit A, which is hereby incorporated in and expressly made a part
of this Indenture. The Securities may have notations, legends or endorsements
required by law, stock exchange rule, agreements to which the Company is
subject, if any, or 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
Appendix A and Exhibit A are part of the terms of this Indenture.
SECTION 2.02 Execution and Authentication.
Two Officers shall sign the Securities for the Company by manual or
facsimile signature.
If an Officer whose signature is on a Security no longer holds that office
at the time the Trustee authenticates the Security, the Security shall be valid
nevertheless.
A Security shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Security. The signature
shall be conclusive evidence that the Security has been authenticated under this
Indenture.
On the Issue Date, the Trustee shall authenticate and deliver $150 million
of 8 3/4% Senior Notes Due 2010 and, at any time and from time to time
thereafter, the Trustee shall authenticate and deliver Securities for original
issue in an aggregate principal amount specified in such order, in each case
upon receipt of a written order of the Company signed by two Officers of the
Company; provided that the Trustee shall be entitled to receive an Officers'
Certificate and an Opinion of Counsel of the Company that it may reasonably
request in connection with such authentication of Securities. Such order shall
specify the amount of Securities to be authenticated, the date on which the
original issue of Securities is to be authenticated and the aggregate principal
amount of Securities then authorized and, in the case of an issuance of
Additional Securities pursuant to Section 2.13 [Issuance of Additional
Securities] after the Issue Date, shall certify that such issuance is in
compliance with Section 4.03 [Limitation on Indebtedness].
The Trustee may appoint an authenticating agent reasonably acceptable to
the Company to authenticate the Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
SECTION 2.03 Registrar and Paying Agent.
The Company shall maintain an office or agency where Securities may be
presented for registration of transfer or for exchange, which office shall
maintain the names and addresses of Securityholders (the "Registrar"), and an
office or agency where Securities may be presented for payment (the "Paying
Agent"). The Registrar shall keep a register of the Securities and of their
transfer and exchange. The Company may have one or more co-registrars and one or
more additional paying agents. The term "Paying Agent" includes any additional
paying agent.
33
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
[Compensation and Indemnity]. The Company or any of its domestically
incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar,
co-registrar or transfer agent.
The Company initially appoints the Trustee as Registrar and Paying Agent in
connection with the Securities.
SECTION 2.04 Paying Agent To Hold Money in Trust.
Prior to 11:30 a.m., New York City time, on 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 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 Section 8-401(a) of the Uniform Commercial Code and the
transfer restriction provisions set forth in Annex A to this Indenture 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.
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SECTION 2.07 Replacement Securities.
If a mutilated Security is surrendered to the Registrar or if the Holder of
a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate and deliver a
replacement Security if the requirements of Section 8-405 of the Uniform
Commercial Code are met and the Holder satisfies any other reasonable
requirements of the Trustee. If required by the Trustee or the Company, such
Holder shall furnish an indemnity bond sufficient in the judgment of the Company
and the Trustee to protect the Company, the Trustee, the Paying Agent, the
Registrar and any co-registrar from any loss which any of them may suffer if a
Security is replaced. The Company and the Trustee may charge the Holder for
their expenses in replacing a Security.
Every replacement Security is an additional obligation of the Company.
SECTION 2.08 Outstanding Securities.
Securities outstanding at any time are all Securities authenticated by the
Trustee except for those canceled by it, those delivered to it for cancellation
and those described in this Section as not outstanding. A Security does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Security.
If a Security is replaced pursuant to Section 2.07 [Replacement
Securities], it ceases to be outstanding unless the Trustee and the Company
receive proof satisfactory to them that the replaced Security is held by a bona
fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with this
Indenture, on a redemption date or maturity date money sufficient to pay all
principal and interest payable on that date with respect to the Securities (or
portions thereof) to be redeemed or maturing, as the case may be, and the Paying
Agent is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture, then on and after that date such
Securities (or portions thereof) cease to be outstanding and interest on them
ceases to accrue.
SECTION 2.09 Temporary Securities.
Until definitive Securities are ready for delivery, the Company may prepare
and the Trustee shall authenticate and deliver temporary Securities. Temporary
Securities shall be substantially in the form of definitive Securities but may
have variations that the Company considers appropriate for temporary Securities.
Without unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities.
SECTION 2.10 Cancellation.
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee and no one else shall cancel and destroy (subject to the
record retention requirements of the Exchange Act) all Securities
35
surrendered for registration of transfer, exchange, payment or cancellation and
deliver a certificate of such destruction to the Company unless the Company
directs the Trustee to deliver canceled Securities to the Company. The Company
may not issue new Securities to replace Securities it has redeemed, paid or
delivered to the Trustee for cancellation.
SECTION 2.11 Defaulted Interest.
If the Company defaults in a payment of interest on the Securities, the
Company shall pay defaulted interest (plus interest on such defaulted interest
to the extent lawful) in any lawful manner. The Company may pay the defaulted
interest to the Persons who are Securityholders on a subsequent special record
date. 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 mail
promptly to each Securityholder a notice that states the special record date,
the payment date and the amount of defaulted interest to be paid.
SECTION 2.12 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" numbers (if then
generally in use) and, if so, the Trustee shall use "CUSIP" numbers in notices
of redemption as a convenience to Holders; provided, however, that any such
notice may state that no representation 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.
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 ("Additional Securities"). 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 deliver to the
Trustee the following:
(a) a resolution of the Board of Directors setting forth the aggregate
principal amount of such Additional Securities to be authenticated and delivered
pursuant to this Indenture and authorizing the appropriate Officers of the
Company to furnish to the Trustee the certificates identified in (b) and (c) of
this Section 2.13;
(b) an Officer's Certificate setting forth the issue price, the issue date
and the CUSIP number of such Additional Securities; provided, however, that no
Additional Securities may be issued unless such Additional Securities are
fungible in all respects for federal income tax purposes with the Securities
then outstanding; and
36
(c) an Officer's Certificate setting forth whether such Additional
Securities shall be Transfer Restricted Securities and issued in the form of
Initial Securities as set forth in Appendix A to this Indenture or shall be
issued in the form of Exchange Securities as set forth in Exhibit A.
ARTICLE III
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 30 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
SECTION 3.02 Selection of Securities To Be Redeemed.
If fewer than all the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed pro rata or by lot or by a method that
complies with applicable legal and securities exchange requirements, if any, and
that the Trustee in its sole discretion considers fair and appropriate. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000 or, in the case of a selected Security of $1,000 in
original principal amount or less, such security must be redeemed in full.
Provisions of this Indenture that apply to Securities called for redemption also
apply to portions of Securities called for redemption. The Trustee shall notify
the Company, the Registrar and each Paying Agent promptly of the Securities or
portions of Securities to be redeemed.
SECTION 3.03 Notice of Redemption.
At least 30 days but not more than 60 days before a date for redemption of
Securities, the Company shall mail a notice of redemption by first-class mail to
each Holder of Securities to be redeemed.
The notice shall identify the Securities to be redeemed and shall state:
(a) the redemption date;
(b) the redemption price;
(c) the name and address of the Paying Agent;
37
(d) that Securities called for redemption must be surrendered to the Paying
Agent to collect the redemption price;
(e) if fewer than all the outstanding Securities are to be redeemed, the
identification and principal amounts of the particular Securities to be
redeemed;
(f) that, unless the Company defaults in making such redemption payment or
the Paying Agent is prohibited from making such payment pursuant to the terms of
this Indenture, interest on Securities (or portions thereof) called for
redemption ceases to accrue on and after the redemption date; and
(g) that no representation is made as to the correctness or accuracy of the
CUSIP number, if any, listed in such notice or printed on the Securities.
At the Company's request, the Trustee shall give the notice of redemption
in the Company's name and at the Company's expense. In such event, the Company
shall provide the Trustee with the information required by this Section.
SECTION 3.04 Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the redemption date and at the redemption price stated
in the notice, subject to any condition or contingency stated therein. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price stated in the notice, plus accrued interest to the redemption date.
Failure to give notice or any defect in the notice to any Holder shall not
affect the validity of the notice to any other Holder.
SECTION 3.05 Deposit of Redemption Price.
On or prior to 11:30 a.m. New York City time 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.
If the Company complies with the provisions of the preceding paragraph, on
and after the redemption date, interest will cease to accrue on the Securities
or the portions of Securities called for redemption, whether or not such
Securities are presented for payment, and the Holders of such Securities shall
have no further rights with respect to such Securities except for the right to
receive the redemption price, accrued interest and additional interest, if any,
upon surrender of such Securities. If a Security is redeemed on or after an
interest record date but on or prior to the related interest payment date, then
any accrued and unpaid interest to the redemption date shall be paid to the
Person in whose name such Security was registered at the close of business on
such record date. If any Security called for redemption is not so paid upon
surrender for redemption because of the failure of the Company to comply with
the preceding paragraph, interest shall be paid on the unpaid principal from the
redemption or purchase date
38
until such principal is paid, and to the extent lawful, on any interest not paid
on such unpaid principal, in each case at the rate provided in the Securities
and in Section 4.01 hereof.
SECTION 3.06 Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder (at the
Company's expense) a new Security equal in principal amount to the unredeemed
portion of the Security surrendered.
ARTICLE IV
COVENANTS
SECTION 4.01 Payment of Securities.
The Company shall promptly pay the principal of and interest on the
Securities on the dates and in the manner provided in the Securities and in this
Indenture. Principal and interest shall be considered paid on the date due if on
such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Securityholders on that date pursuant to the terms of this
Indenture.
The Company shall pay interest on overdue principal at the rate specified
therefor in the Securities, and it shall pay interest on overdue installments of
interest at the same rate to the extent lawful.
SECTION 4.02 SEC Reports.
Notwithstanding that the Company may not at any time be subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall file with the SEC (to the extent the SEC will accept such filing) and
provide the Trustee and Securityholders with such annual reports and such
information, documents and other reports as are specified in Sections 13 and
15(d) of the Exchange Act and applicable to a U.S. corporation subject to such
Sections (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 Securityholders and to
prospective investors, upon the request of such Securityholders, any information
required to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so
long as any Securities are not freely transferable under the Securities Act.
The Company also shall comply with the other provisions of TIA Section
314(a).
SECTION 4.03 Limitation on Indebtedness.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, Incur, directly or indirectly, any Indebtedness; provided, however, that the
Company or a Restricted Subsidiary may Incur Indebtedness if, on the date of
such Incurrence and after giving
39
effect thereto, no Default has occurred and is continuing and the Consolidated
Coverage Ratio exceeds 2.5 to 1.0.
(b) Notwithstanding Section 4.03(a), the Company and any Restricted
Subsidiary may Incur the following Indebtedness:
(1) Indebtedness Incurred under any Credit Facility, so long as the
aggregate amount of all Indebtedness outstanding under all Credit Facilities
pursuant to this Section 4.03(b)(1) does not exceed the greater of (A) $100
million less the sum of all principal payments since the Issue Date with respect
to such Indebtedness under Section 4.07(a)(3)(A) and (B) 25% of ACNTA as of the
date of such Incurrence;
(2) Indebtedness owed to and held by the Company or any Restricted
Subsidiary; provided, however, that (A) any subsequent issuance or transfer of
any Capital Stock that results in any such Restricted Subsidiary ceasing to be a
Restricted Subsidiary or any subsequent transfer of such Indebtedness (other
than to the Company or a Restricted Subsidiary) will 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
owed 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 (other than any Additional Securities);
(4) Indebtedness outstanding on the Issue Date (other than Indebtedness
described in paragraph (b) (1), (2) or (3) of this Section 4.03);
(5) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or
prior to the date on which such Restricted 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 by
which such Restricted Subsidiary became a Restricted Subsidiary or was acquired
by the Company); provided, however, that on the date of such Incurrence and
after giving pro forma effect thereto, the Company would have been entitled to
Incur at least $1.00 of additional Indebtedness under Section 4.03(a);
(6) Refinancing Indebtedness in respect of Indebtedness Incurred under
Section 4.03(a) or Section 4.03(b)(3), (4), (5), this clause (6) or clause (7)
below; provided, however, that to the extent such Refinancing Indebtedness
directly or indirectly Refinances Indebtedness of a Restricted Subsidiary
described in Section 4.03(b)(5), such Refinancing Indebtedness will be Incurred
only by such Restricted Subsidiary or the Company;
(7) Non-recourse Purchase Money Indebtedness;
(8) 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 and
Indebtedness under the Earnout Agreement;
40
(9) Indebtedness consisting of the Subsidiary Guarantees and any Guarantee
by the Company or a Subsidiary Guarantor of Indebtedness permitted by this
Indenture to be Incurred by the Company or a Subsidiary other than Non-recourse
Purchase Money Indebtedness;
(10) Hedging Obligations consisting of Interest Rate Agreements directly
related to Indebtedness outstanding on the Issue Date or permitted to be
Incurred by the Company and its Restricted Subsidiaries under this Indenture;
(11) Hedging Obligations consisting of Oil and Gas Hedging Contracts and
Currency Agreements entered into in the ordinary course of business for the
purpose of limiting risks that arise in the ordinary course of business of the
Company and its Restricted Subsidiaries;
(12) obligations in respect of bid, performance or surety bonds including
Guarantees and letters of credit functioning as or supporting such bid,
performance or 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);
(13) in-kind obligations relating to oil and gas balancing positions
arising in the ordinary course of business; and
(14) Indebtedness in an aggregate amount that, together with the amount of
all other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the date of such Incurrence (other than Indebtedness permitted by
Section 4.03(a) or Section 4.03(b)(1) through (13)) above does not exceed $35
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 under Section 4.03(b)
if the proceeds thereof are used, directly or indirectly, to Refinance any
Subordinated Obligations unless such Indebtedness shall be subordinated to the
Securities or the relevant Subsidiary Guarantee, as the case may be, to at least
the same extent as such Subordinated Obligations.
The Company shall not, and shall not permit any Subsidiary Guarantor to,
directly or indirectly, incur any Indebtedness that by its terms (or by the
terms of any agreement governing such Indebtedness) is subordinated to any other
Indebtedness of the Company or of such Guarantor, as the case may be, unless
such Indebtedness is also by its terms (or by the terms of any agreement
governing such Indebtedness) made expressly subordinate to the Notes or the
Subsidiary Guarantee of such Subsidiary Guarantor, as the case may be, pursuant
to terms no less favorable to the Holders of the Securities.
(d) For purposes of determining compliance with this Section 4.03:
(1) if an item of Indebtedness meets the criteria of more than one of the
types of Indebtedness described in this Section 4.03, or is entitled to be
incurred in compliance with Section 4.03(a), then the Company, in its sole
discretion, may classify such item
41
of Indebtedness (or any portion thereof) at the time of Incurrence in any manner
that complies with this Section and will only be required to include the amount
and type of such Indebtedness in one of the above clauses of this Section 4.03;
and
(2) an item of Indebtedness may be divided and classified in more than one
of the types of Indebtedness described in this Section 4.03 or treated as having
been incurred in compliance with Section 4.03(a).
SECTION 4.04 [Reserved]
SECTION 4.05 Limitation on Restricted Payments.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, directly or indirectly, make a Restricted Payment if at the time the Company
or such Restricted Subsidiary makes such Restricted Payment:
(1) a Default or an Event of Default has occurred and is continuing (or
would result therefrom);
(2) the Company is not entitled to Incur an additional $1.00 of
Indebtedness under Section 4.03(a); or
(3) the aggregate amount of such Restricted Payment and all other
Restricted Payments since the Issue Date would exceed the sum of, without
duplication:
(A) 50% of the aggregate Consolidated Net Income of the Company
accrued during the period (treated as one accounting period)
commencing on the first day of the fiscal quarter during which the
Issue Date occurs and ending on the last day of the most recent fiscal
quarter for which financial statements of the Company are publicly
available prior to the date of such proposed Restricted Payment (or,
if such aggregate Consolidated Net Income is a deficit, minus 100% of
such deficit); plus
(B) 100% of (i) the aggregate Net Cash Proceeds, and (ii) the
Fair Market Value of (a) Capital Stock (other than Capital Stock of
the Company) of a Person (other than an Affiliate of the Company)
engaged primarily in the Oil and Gas Business, provided that Person
becomes a Restricted Subsidiary of the Company, and (b) other assets
used in the Oil and Gas Business, in the case of clauses (i) and (ii)
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); plus
(C) the aggregate Net Cash Proceeds received by the Company
subsequent to the Issue Date from the issue 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;
42
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 will 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 by such employee stock ownership plan
or trust with respect to such Indebtedness; plus
(D) the amount by which the Company's Indebtedness is reduced on
its balance sheet upon the conversion or exchange (other than by a
Subsidiary of the Company) subsequent to the Issue Date of any of the
Company's Indebtedness that is convertible or exchangeable for its
Capital Stock (other than Disqualified Stock) (less the amount of any
cash, or the fair value of any other Property, distributed by the
Company upon such conversion or exchange); provided, however, that the
foregoing will not exceed the Net Cash Proceeds received by the
Company or any Restricted Subsidiary from the sale of such
Indebtedness (excluding Net Cash Proceeds from sales to a Subsidiary
of the Company or 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); plus
(E) an amount equal to the sum of (i) the net reduction in
Investments (other than Permitted Investments) made by the Company or
any Restricted Subsidiary in any Person resulting from repurchases,
repayments or redemption of such Investments by such Person, proceeds
realized on the sale of such Investment and proceeds representing the
return of capital, in each case received by the Company or any
Restricted Subsidiary, and (ii) 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 will
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
the foregoing clauses (A) through (D); plus
(F) $5 million.
(b) The provisions of Section 4.05(a) will not prohibit:
(1) dividends paid within 60 days after the date of declaration thereof if
at such date of declaration such dividend would have complied with this Section
4.05; provided, however, that such dividend will be included in the calculation
of the amount of Restricted Payments at the time of payment;
43
(2) any purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value of Capital Stock or Subordinated Obligations of the
Company made by exchange for, or out of the proceeds of the substantially
concurrent sale of, Capital Stock of the Company (other than Disqualified Stock
and other than Capital Stock issued or sold to a Subsidiary of the Company or an
employee stock ownership plan or to a trust established by the Company or any of
its Subsidiaries for the benefit of their employees); provided, however, that
(A) such purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value will be excluded in the calculation of the amount of
Restricted Payments and (B) the Net Cash Proceeds from such sale will be
excluded from the calculation of amounts under Section 4.05(a)(3)(B) (but only
to the extent that such Net Cash Proceeds were used to purchase, repurchase,
redeem, defease or otherwise acquire or retire for value such Capital Stock or
Subordinated Obligations as provided in this clause (2));
(3) any purchase, repurchase, redemption, defeasance or other acquisition
or retirement for value of Subordinated Obligations of the Company made by
exchange for, or out of the proceeds of the substantially concurrent sale of,
Indebtedness that is permitted to be Incurred under Section 4.03 [Limitation on
Indebtedness]; provided, however, that such purchase, repurchase, redemption,
defeasance or other acquisition or retirement for value will be excluded in the
calculation of the amount of Restricted Payments;
(4) so long as no Default or Event of Default has occurred and is
continuing, 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 former directors), under 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) will not exceed $2 million in any calendar year; provided further,
however, that such purchases, redemptions and other acquisitions and retirements
will be excluded in the calculation of the amount of Restricted Payments;
(5) so long as no Default or Event of Default has occurred and is
continuing, any declaration or payment of dividends and other distributions in
respect of, but excluding any purchase, redemption or other acquisition or
retirement for value of, the Existing Preferred Stock; provided, however, that
such dividends and distributions will be included in the calculation of the
amount of Restricted Payments for purposes of determining whether any subsequent
Restricted Payment may be made under Section 4.05(a);
(6) repurchases, acquisitions or retirements of shares of Company common
stock deemed to occur upon the exercise of stock options or similar rights
issued under employee benefit plans or warrants when shares are surrendered to
pay all or a portion of the exercise price or to satisfy any federal income tax
obligations; provided, however, that the aggregate amount of such repurchases,
acquisitions or retirements (A) effected to satisfy any federal income tax
obligations shall not exceed $2 million in any twelve-month period and (B) will
be excluded in the calculation of the amount of Restricted Payments;
44
(7) the payment of cash in lieu of fractional shares of Capital Stock in
connection with any transaction otherwise permitted under this Section 4.05;
provided, however, that such payment will be excluded in the calculation of the
amount of Restricted Payments;
(8) 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
under Section 4.09 [Change of Control] or Section 4.07 [Limitation on Sales of
Assets and Subsidiary Stock] (including the purchase of all Securities
tendered), any purchase, repurchase, redemption, defeasance, acquisition or
other retirement for value of Subordinated Obligations required under 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 or Event of Default has
occurred and is continuing (or would result therefrom), and (B) such purchase,
repurchase, redemption, defeasance or other acquisition or retirement for value
will be excluded in the calculation of the amount of Restricted Payments; or
(9) the redemption, repurchase or repayment of the Company's 11% Senior
Subordinated Notes due 2009 with the proceeds from the issuance of the
Securities; provided, however, that such redemption, repurchase or repayment
will be excluded in the calculation of the amount of Restricted Payments.
The amount of all Restricted Payments (other than cash) will 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 4.05, if 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 4.05.
SECTION 4.06 Limitation on Restrictions on Distributions from Restricted
Subsidiaries.
The Company shall not, and shall not permit any Restricted Subsidiary to,
create or otherwise cause or permit to exist or become effective any consensual
encumbrance or restriction on the ability of any Restricted Subsidiary:
(a) to pay dividends or make any other distributions on its Capital Stock
or pay any Indebtedness owed to the Company or a Restricted Subsidiary,
(b) to make any loans or advances to the Company or a Restricted Subsidiary
or
(c) to transfer any of its Property to the Company or a Restricted
Subsidiary, except:
(1) with respect to clauses (a), (b) and (c),
45
(A) any encumbrance or restriction in the Credit Agreement on the
Issue Date or under any other agreement governing Indebtedness or
Capital Stock in effect at or entered into on the Issue Date;
(B) any encumbrance or restriction relating to Indebtedness of a
Restricted Subsidiary and existing at the time it became a
Restricted Subsidiary, provided that such encumbrance or
restriction relates solely to such Restricted Subsidiary and was
not created in anticipation of or in connection with the
transactions by which such Restricted Subsidiary became a
Restricted Subsidiary;
(C) any encumbrance or restriction under an agreement effecting a
Refinancing of Indebtedness Incurred under an agreement referred
to in clause (A) or (B) of clause (1) of this Section 4.06 or
this clause (C) or contained in any amendment to, or
modification, restatement, renewal, increase, supplement,
replacement or extension of, an agreement referred to in clause
(A) or (B) of clause (1) of this Section 4.06 or this clause (C);
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 are not
materially more restrictive, taken as a whole, to the
Securityholders than encumbrances and restrictions with respect
to such Restricted Subsidiary contained in such predecessor
agreements;
(D) customary restrictions with respect to a Restricted Subsidiary
imposed under an agreement entered into for the sale or
disposition of all or substantially all the Capital Stock or
assets of such Restricted Subsidiary pending the closing of such
sale or disposition;
(E) customary restrictions contained in agreements entered into in
the ordinary course of business of the types described in the
definition of the term "Permitted Business Investments"; and
(2) with respect to clause (c) only,
(A) 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;
46
(B) any encumbrance or restriction under Liens permitted to be in effect
without also securing the Securities as described under Section 4.11 [Limitation
on Liens] that limit the right of the debtor to dispose of the Property subject
to such Lien;
(C) any encumbrance or restriction with respect to Property at the time it
is acquired by the Company or a Restricted Subsidiary, provided that such
encumbrance or restriction relates solely to the Property so acquired and was
not created in anticipation of or in connection with such acquisition;
(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 4.07 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 receives or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the fair
market value (including as to the value of all non-cash consideration) (as
determined in good faith by the Board of Directors or an Officer with
responsibility for such transaction), of the shares and assets subject to such
Asset Disposition;
(2) at least 75% of the consideration thereof received by the Company or
such Restricted Subsidiary is in the form of (A) cash or cash equivalents, (B)
oil and natural gas properties, (C) Capital Stock of a Person that becomes a
Restricted Subsidiary as a result of such acquisition and all or substantially
all of whose assets consist of oil and natural gas properties or (D) 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) to the extent the Company elects (or is required by the terms
of any Indebtedness), to prepay, repay, redeem or purchase 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
a Subsidiary of the Company) within
47
one year from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash;
(B) to the extent the Company elects, to acquire Additional
Assets or to 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) to the extent of the balance of such Net Available Cash after
application in accordance with clauses (A) and/or (B), to make an
offer to the Holders of the Securities (and to holders of other Senior
Indebtedness of the Company designated by the Company) to purchase
Securities (and such other Senior Indebtedness of the Company)
pursuant to and subject to the conditions contained in Sections
4.07(b) and 4.07(c);
provided, however, that in connection with any prepayment, repayment,
purchase, repurchase, redemption, defeasance or other acquisition or
retirement for value of Indebtedness under clause (A) or (C) above, the
Company or such Restricted Subsidiary must permanently retire such
Indebtedness and 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 will 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 that is not applied in
accordance with this Section 4.07 exceeds $10 million.
For the purposes of this Section 4.07, the following shall be deemed to be
cash or cash equivalents:
(1) the assumption of Indebtedness of the Company or any Restricted
Subsidiary and the release of the Company or such Restricted Subsidiary from all
liability on such Indebtedness in connection with such Asset Disposition; and
(2) securities received by the Company or any Restricted Subsidiary from
the transferee that are converted by the Company or such Restricted Subsidiary
into cash within 120 days of receipt.
Notwithstanding the foregoing, the 75% limitation referred to in clause
(a)(2) above 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 such 75% limitation.
The requirement of clause (a)(3)(B) above shall be deemed to be 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 a Restricted Subsidiary within the time period
specified in such clause and such Net Available
48
Cash is subsequently applied in accordance with such agreement within six months
following such agreement.
(b) If an Asset Disposition occurs that requires the purchase of Securities
(and other Senior Indebtedness of the Company) under clause (a)(3)(C) above, the
Company shall
(1) make such offer to purchase Securities 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
(2) purchase Securities tendered under an offer by the Company for the
Securities (and such other Senior Indebtedness of the Company) at a purchase
price of 100% of their principal amount (or, in the event such other Senior
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 Indebtedness of the Company, such
lesser price, if any, as may be provided for by the terms of such Senior
Indebtedness of the Company) in accordance with the procedures (including
prorating in the event of oversubscription) set forth in this Section 4.07.
If the aggregate purchase price of the securities tendered exceeds the Net
Available Cash allotted to their purchase, the Company shall select the
securities to be purchased on a pro rata basis but in round denominations, which
in the case of the Securities will be denominations of $1,000 principal amount
or multiples thereof. The Company will not be required to make such an offer to
purchase Securities (and other Senior Indebtedness of the Company) under this
Section 4.07 if the Net Available Cash available therefor is less than $10
million (which lesser amount will 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). Upon completion of such an offer to purchase,
Net Available Cash will be deemed to be reduced by the aggregate amount of such
offer.
(c) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities under this
Section 4.07. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.07, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.07 by virtue
thereof.
SECTION 4.08 Limitation on Affiliate Transactions.
(a) The Company shall not, and shall not permit any Restricted Subsidiary
to, enter into or permit to exist any transaction (including the purchase, sale,
lease or exchange of any Property or the rendering of any service) with any
Affiliate of the Company (an "Affiliate Transaction") unless:
(1) the terms thereof are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an Affiliate;
49
(2) if such Affiliate Transaction involves an amount in excess of $5
million, the terms of the Affiliate Transaction are set forth in writing and a
majority of the non-employee directors of the Company who are disinterested with
respect to such Affiliate Transaction have determined in good faith that the
criteria set forth in clause (1) are satisfied and 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 $20
million, the Board of Directors has also 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.
(b) The provisions of the Section 4.08(a) will not prohibit:
(1) the sale to an Affiliate of the Company of Capital Stock of the Company
that does not constitute Disqualified Stock, and the sale to an Affiliate of the
Company of Indebtedness (including Disqualified Stock) of the Company in
connection with an offering of such Indebtedness in a market transaction and on
terms substantially identical to those of other purchasers in such market
transaction;
(2) transactions contemplated by any employment agreement or other
compensation plan or arrangement existing on the Issue Date or thereafter
entered into by the Company or any of its Restricted Subsidiaries in the
ordinary course of business;
(3) the payment of reasonable fees to directors of the Company or any of
its Restricted Subsidiaries who are not employees of the Company or any
Restricted Subsidiary;
(4) indemnities of officers and directors of the Company or any Restricted
Subsidiary consistent with such Person's charter, bylaws and applicable
statutory provisions;
(5) the payment of reasonable compensation to officers of the Company or
any Restricted Subsidiary as determined in good faith by the Board of Directors;
(6) Restricted Payments that are permitted by Section 4.05 [Limitation on
Restricted Payments];
(7) any transaction between or among the Company and a Restricted
Subsidiary or joint venture or similar entity 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
similar entity; provided that no more than 10% of the total voting power of the
Voting Stock of any such Restricted Subsidiary, joint venture or similar entity
is owned by an Affiliate of the Company (other than a Restricted Subsidiary);
and
50
(8) transactions or obligations provided for under the Stockholder
Agreement, dated as of November 17, 1999 and amended and restated as of March
17, 2003 by and among the Company and the stockholders parties thereto, as in
effect on the Issue Date.
SECTION 4.09 Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder shall have the
right to require that the Company purchase such Holder's Securities at a
purchase price in cash equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on the relevant record date to receive interest on
the relevant interest payment date), in accordance with the terms contemplated
in Section 4.09(b).
If at the time a Change of Control occurs the terms of the Indebtedness
under the Credit Agreement restrict or prohibit the repurchase of Securities
pursuant to this Section 4.09, then prior to the mailing of the notice to
Holders provided for in Section 4.09(b) below, but in any event within 30 days
following any Change of Control, the Company shall:
(1) repay in full the Indebtedness under the Credit Agreement; or
(2) obtain the requisite consent under the agreements governing the
Indebtedness under the Credit Agreement to permit the repurchase of the
Securities as provided for in Section 4.09(b).
(b) Within 30 days following a Change of Control, the Company shall mail a
notice to each Holder with a copy to the Trustee stating:
(1) that a Change of Control has occurred and that such Holder has the
right to require the Company to purchase such Holder's Securities at a purchase
price in cash equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of purchase (subject to the right of
Holders of record on the relevant record date to receive interest on the
relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of Control
(including reasonably available information with respect to pro forma historical
income, cash flow and capitalization, in each case after giving effect to such
Change of Control);
(3) the purchase date, which shall be no earlier than 30 days nor later
than 60 days from the date such notice is mailed; and
(4) the instructions determined by the Company, consistent with this
Section 4.09, that a Holder must follow in order to have its Securities
purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days prior to the
purchase date. Holders will be entitled to withdraw their election if the
Trustee or the Company receives not later than three Business Days prior to the
purchase date, a telegram, facsimile transmission or letter setting forth the
name of
51
the Holder, the principal amount of the Security that was delivered for purchase
by the Holder and a statement that such Holder is withdrawing his election to
have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company under
this Section 4.09 shall be delivered 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) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the purchase of Securities pursuant to this
Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.09, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.09 by virtue
thereof.
(f) The Company will not be required to make an offer to purchase
Securities as a result of a Change of Control pursuant to this Section 4.09 if a
third party (1) makes such offer in the manner, at the times and otherwise in
compliance with the requirements set forth in Section 4.09(b) and (2) purchases
all Securities validly tendered and not withdrawn under such an offer.
SECTION 4.10 Restricted and Unrestricted Subsidiaries.
Unless defined or designated as an Unrestricted Subsidiary, any Person that
becomes a Subsidiary of the Company or any of its Restricted Subsidiaries will
be classified as a Restricted Subsidiary subject to the provisions of the next
paragraph. The Company may designate a Subsidiary, including a newly formed or
newly acquired Subsidiary, or any of its Restricted Subsidiaries as an
Unrestricted Subsidiary if:
(a) such Subsidiary does not at such time own any Capital Stock or
Indebtedness of, or own or hold any Lien on any Property of, the Company or any
other Restricted Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated:
(b) such Subsidiary does not at such time have any Indebtedness or other
obligations that, if in default, would permit any holder of any Indebtedness or
other obligations of the Company or any Restricted Subsidiary to declare a
default on such Indebtedness or obligations or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity; and
(c) (1) such designation is effective immediately upon such Subsidiary
becoming a Subsidiary of the Company or of a Restricted Subsidiary.
(2) the Subsidiary to be so designated has total assets of $1,000 or less,
or
(3) if such Subsidiary has assets greater than $1,000, then such
redesignation as an Unrestricted Subsidiary will be deemed to constitute a
Restricted Payment in an amount equal to the Fair Market Value of the Company's
direct and indirect ownership
52
interest in such Subsidiary, and such Restricted Payment would be permitted to
be made at the time of such designation under Section 4.05 [Limitation on
Restricted Payments].
Except as provided in the immediately preceding sentence, no Restricted
Subsidiary may be redesignated as an Unrestricted Subsidiary. The designation of
an Unrestricted Subsidiary or removal of such designation shall be made by the
Board of Directors or a committee thereof under a certified resolution delivered
to the Trustee and will be effective as of the date specified in the applicable
certified resolution, which will not be prior to the date such certified
resolution is delivered to the Trustee.
The Company shall not, and shall not permit any Unrestricted Subsidiaries
to, take any action or enter into any transaction or series of transactions that
would result in a Person becoming a Restricted Subsidiary (whether through an
acquisition or otherwise) unless, after giving effect to such action,
transaction or series of transactions, on a pro forma basis:
(a) the Company could Incur at least $1.00 of additional Indebtedness under
clause (a) of the first paragraph under Section 4.03 [Limitation on
Indebtedness]; and
(b) no Default or Event of Default would occur or be continuing.
SECTION 4.11 Limitation on Liens.
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, enter into, create, incur, assume or suffer to exist or
become effective any Lien securing Indebtedness, except for Permitted Liens, on
or with respect to any Property of the Company or such Restricted Subsidiary,
whether owned on the Issue Date or acquired after the Issue Date, or any
interest therein or any income or profits therefrom, unless the Securities or
any Subsidiary Guarantee of such Restricted Subsidiary, as applicable, are
secured equally and ratably with such Indebtedness.
SECTION 4.12 Compliance Certificate.
The Company shall deliver to the Trustee within 120 days after the end of
each fiscal year of the Company an Officers' Certificate stating that in the
course of the performance by the signers of their duties as Officers of the
Company they would normally have knowledge of any Default and whether or not the
signers know of any Default that occurred during such fiscal year. If they do,
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 4.13 Further Instruments and Acts.
Upon reasonable request of the Trustee, the Company shall execute and
deliver such further instruments and do such further acts as may be reasonably
necessary or proper to carry out more effectively the purpose of this Indenture.
53
SECTION 4.14 Future Subsidiary Guarantors.
The Company shall cause each Restricted Subsidiary that: (a) incurs
Indebtedness or issues Preferred Stock following the Issue Date; or (b) has
Indebtedness or Preferred Stock outstanding on the date on which such Restricted
Subsidiary becomes a Restricted Subsidiary, to execute and deliver to the
Trustee a Subsidiary Guarantee pursuant to a Supplemental Indenture
substantially in the form of Appendix B at the time such Restricted Subsidiary
Incurs such Indebtedness, issues such Preferred Stock or becomes a Restricted
Subsidiary; provided, however, that such Restricted Subsidiary will not be
required to deliver a supplemental indenture providing for a Subsidiary
Guarantee if the aggregate amount of such Indebtedness or Preferred Stock,
together with all other Indebtedness and Preferred Stock then outstanding among
Restricted Subsidiaries that are not Subsidiary Guarantors, does not exceed $10
million.
SECTION 4.15 Limitation on Line of Business.
The Company shall not engage in any business other than the Oil and Gas
Business; provided, however, that this restriction will not prevent the Company
from acquiring an entity that is primarily engaged in the Oil and Gas Business
if that entity does not have either (a) a Significant Subsidiary that is not in
the Oil and Gas Business or (b) an amount of assets or operations not used in
the Oil and Gas Business such that, if such assets or operations were held in or
conducted through a single Subsidiary, they would represent a Significant
Subsidiary of that entity.
SECTION 4.16 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 [Limitation on Indebtedness],
4.05 [Limitation on Restricted Payments], 4.06 [Limitation on Restrictions on
Distributions from Restricted Subsidiaries], 4.07 [Limitation on Sales of Assets
and Subsidiary Stock], 4.08 [Limitation on Affiliate Transactions], 4.14 [Future
Subsidiary Guarantors] and 5.01(c) (collectively, the "Suspended Covenants").
(b) In the event that the Company and the Restricted Subsidiaries are not
subject to the Suspended Covenants for any period of time as a result of the
operation of clause (a) of this Section 4.16, 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
(subject to subsequent suspension if the Securities again receive Investment
Grade Ratings from both S&P and Moody's). With respect to Restricted Payments
proposed to be made after the time of such a downgrade, the permissibility of
proposed Restricted Payments will be calculated in accordance with the terms of
Section 4.05 [Limitation on Restricted Payments] as though such Section 4.05 had
been in effect since the Issue Date.
54
ARTICLE V
SUCCESSOR COMPANY
SECTION 5.01 When Company May Merge or Transfer Assets.
The Company shall not consolidate with or merge with or into, or convey,
transfer, lease or otherwise dispose of, in one transaction or a series of
transactions, all or substantially all the assets of the Company and its
Restricted Subsidiaries, taken as a whole, to, any Person, unless:
(a) (1) the resulting, surviving or transferee Person (the "Successor
Company") is a Person organized and existing under the laws of the United States
of America, any State thereof or the District of Columbia and (2) the Successor
Company (if not the Company) expressly assumes, 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;
(b) immediately after giving pro forma effect to such transaction (and
treating any Indebtedness that becomes an obligation of the Successor Company or
such Subsidiary as a result of the transaction as having been Incurred by such
Successor Company or such Subsidiary at the time of such transaction), no
Default shall have occurred and be continuing;
(c) 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);
(d) immediately after giving pro forma effect to such transaction, the
Successor Company shall have Adjusted Consolidated Net Tangible Assets that are
not less than the Adjusted Consolidated Net Tangible Assets of the Company
immediately prior to such transaction;
(e) in the case of a conveyance, transfer or lease of all or substantially
all the assets of the Company and its Restricted Subsidiaries, taken as a whole,
such assets shall have been so conveyed, transferred or leased as an entirety or
virtually as an entirety to one Person; and
(f) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such consolidation,
merger or transfer and such supplemental indenture (if any) comply with this
Indenture;
provided, however, that clauses (c) and (d) shall not be applicable to any such
transaction solely between the Company and any Restricted Subsidiary.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, and the predecessor company, except in the
case of a lease, shall be released from the obligation to pay the principal of
and interest on the Securities.
55
SECTION 5.02 When Subsidiary Guarantors May Merge or Transfer Assets.
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:
(a) the resulting, surviving or transferee Person (if not such Subsidiary)
is a Person organized and existing under the laws of the jurisdiction under
which such Subsidiary was organized or under the laws of the United States of
America, or any State thereof or the District of Columbia, and, if such Person
is not the Company, such Person shall expressly assume, by executing a Guarantee
Agreement, all the obligations of such Subsidiary, if any, under its Subsidiary
Guarantee;
(b) immediately after giving effect to such transaction or transactions on
a pro forma basis (and treating any Indebtedness that 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;
(c) in the case of a conveyance, transfer or lease of all or substantially
all the assets of a Subsidiary Guarantor, such assets shall have been so
conveyed, transferred or leased as an entirety or virtually as an entirety to
one Person; and
(d) the Company delivers to the Trustee an Officers' Certificate and an
Opinion of Counsel, each stating that such consolidation, merger or transfer and
such Guarantee Agreement, if any, complies with this Indenture.
The provisions of the preceding paragraph shall not apply to any one or
more transactions that constitute an Asset Disposition if the Company has
complied with the applicable provisions of Section 4.07 [Limitation on Sales of
Assets and Subsidiary Stock].
ARTICLE VI
DEFAULTS AND REMEDIES
SECTION 6.01 Events of Default.
An "Event of Default" occurs if:
(a) the Company defaults in the payment of interest on the Securities when
due and such default continues for a period of 30 days;
(b) the Company defaults in the payment of the principal of any Security
when the same becomes due at its Stated Maturity, upon optional redemption, upon
required purchase, upon declaration of acceleration or otherwise;
(c) the Company fails to comply with Section 5.01 [When Company May Merge
or Transfer Assets];
56
(d) the Company fails to comply with Section 4.02, 4.03, 4.05, 4.06, 4.07
(other than a failure to purchase Securities when required under Section 4.07),
4.08, 4.09 (other than a failure to purchase Securities when required under
Section 4.09), 4.11 or 4.14 and such failure continues for 30 days after the
notice specified below;
(e) the Company or any Subsidiary Guarantor fails to comply with any of its
agreements contained in the Securities or in this Indenture (other than those
referred to in clause (a), (b), (c) or (d) above) and such failure continues for
60 days after the notice specified below;
(f) Indebtedness of the Company, any Subsidiary Guarantor or any
Significant Subsidiary (other than Production Payments and Reserve Sales and
Non-recourse Purchase Money Indebtedness) is not paid within any applicable
grace period after final maturity or the maturity of such Indebtedness is
accelerated by the holders thereof because of a default (and such acceleration
is not rescinded or annulled) and the total amount of such Indebtedness unpaid
or accelerated exceeds $5 million;
(g) the Company, a Subsidiary Guarantor or a Significant Subsidiary
pursuant to or within the meaning of any Bankruptcy Law:
(1) commences a voluntary case;
(2) consents to the entry of an order for relief against it in an
involuntary case;
(3) consents to the appointment of a Custodian of it or for any substantial
part of its property; or
(4) makes a general assignment for the benefit of its creditors; or takes
any comparable action under any foreign laws relating to insolvency;
(h) a court of competent jurisdiction enters an order or decree under any
Bankruptcy Law that:
(1) is for relief against the Company, a Subsidiary Guarantor or any
Significant Subsidiary in an involuntary case;
(2) appoints a Custodian of the Company, a Subsidiary Guarantor or any
Significant Subsidiary or for any substantial part of its property; or
(3) orders the winding up or liquidation of the Company, a Subsidiary
Guarantor 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;
(i) any judgment or decree for the payment of money in an uninsured or
unindemnified amount in excess of $5 million or its foreign currency equivalent
at the time is rendered against the Company, a Subsidiary Guarantor or a
Significant Subsidiary, remains
57
outstanding for a period of 60 days following the entry of such judgment or
decree and such judgment or decree is not discharged, waived, bonded or the
execution thereof stayed within 10 days after the notice from the Company to the
Trustee specified below; or
(j) any Subsidiary Guarantee ceases to be in full force and effect (other
than in accordance with the terms of such Subsidiary Guarantee) for a period of
five days after the notice specified below or any Subsidiary Guarantor denies or
disaffirms its obligations under its Subsidiary Guarantee.
The foregoing will constitute "Events of Default" whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (d), (e) or (j) is not an Event of Default until the
Trustee or the Holders of at least 25% in principal amount of the Securities
notify the Company of the Default and the Company does not cure such Default
within the time specified after receipt of such notice. Such notice must specify
the Default, demand that it be remedied and state that such notice is a "Notice
of Default."
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice, in the form of an Officers' Certificate, of
any Event of Default under clause (c) or (f) and any event which with the giving
of notice or the lapse of time would become an Event of Default under clause
(d), (e) or (i), describing its status and what action the Company is taking or
proposes to take with respect thereto. The Trustee shall not be deemed to have
knowledge of any Default or Event of Default unless one of its Trust Officers
receives written notice thereof from the Company or any of the Holders.
SECTION 6.02 Acceleration.
If an Event of Default (other than an Event of Default specified in Section
6.01(g) or (h) with respect to the Company) occurs and is continuing, the
Trustee by written notice to the Company, or the Holders of at least 25% in
principal amount of the outstanding Securities by written notice to the Company
and the Trustee, may declare the principal of and accrued but unpaid interest on
all the Securities to be due and payable. Upon such a declaration, such
principal and interest shall be due and payable immediately. If an Event of
Default specified in Section 6.01(g) or (h) with respect to the Company occurs
and is continuing, the principal of and interest on all the Securities shall
ipso facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any Securityholders. The Holders of a
majority in principal amount of the outstanding Securities by written notice to
the Trustee may rescind any such acceleration and its consequences if the
rescission would not conflict with any judgment or decree and if all existing
Events of Default have been cured or waived except
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nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
SECTION 6.03 Other Remedies.
If an Event of Default occurs and is continuing, the Trustee may pursue any
available remedy to collect the payment of principal of or interest on the
Securities or to enforce the performance of any provision of the Securities or
this Indenture.
The Trustee may maintain a proceeding even if it does not possess any of
the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
SECTION 6.04 Waiver of Past Defaults.
The Holders of a majority in principal amount of the Securities by written
notice to the Trustee may waive an existing or past Default and its consequences
except (a) a Default in the payment of the principal of or interest on a
Security or (b) a Default in respect of a provision that under Section 9.02
[Amendments With Consent of Holders] cannot be amended without the consent of
each Securityholder affected. When a Default is waived, it is deemed cured, but
no such waiver shall extend to any subsequent or other Default or impair any
consequent right.
SECTION 6.05 Control by Majority.
The Holders of a majority in principal amount of the outstanding Securities
may direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee or of exercising any trust or power conferred on
the Trustee. The Trustee, however, may refuse to follow any direction that
conflicts with law or this Indenture or, subject to Section 7.01 [Duties of
Trustee], that the Trustee determines is unduly prejudicial to the rights of
other Securityholders or would involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee that is not inconsistent with such direction. Prior to taking or not
taking any action hereunder, the Trustee shall have been offered by the
Securityholders reasonable indemnification or security against all losses,
liabilities or expenses caused by taking or not taking such action.
SECTION 6.06 Limitation on Suits.
A Securityholder may not pursue any remedy with respect to this Indenture
or the Securities unless:
(a) the Holder gives to the Trustee written notice stating that an Event of
Default is continuing;
(b) the Holders of at least 25% in principal amount of the outstanding
Securities make a written request to the Trustee to pursue the remedy;
59
(c) such Holder or Holders furnish, if required by the Trustee, to the
Trustee reasonable security or indemnity against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer of the required security or indemnity; and
(e) the Holders of a majority in principal amount of the outstanding
Securities do not give the Trustee a direction inconsistent with the request
within such 60-day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
SECTION 6.07 Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any
Holder to receive payment of principal of, premium (if any) or interest on the
Securities held by such Holder, on or after the respective due dates expressed
in the Securities, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08 Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(a) or (b) 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 [Compensation and Indemnity].
SECTION 6.09 Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other papers or documents as
may be necessary or advisable in order to have the claims of the Trustee and the
Securityholders allowed in any judicial proceedings relative to the Company or
any Subsidiary Guarantor or their respective creditors or their respective
properties 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
[Compensation and Indemnity].
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SECTION 6.10 Priorities.
If the Trustee collects any money or property pursuant to this Article VI,
it shall pay out the money or property in the following order:
FIRST: to the Trustee for amounts due under Section 7.07 [Compensation and
Indemnity];
SECOND: 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
THIRD: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section 6.10. At least 15 days before such
record date, the Company shall mail to each Securityholder and the Trustee a
notice that states the record date, the payment date and amount to be paid.
SECTION 6.11 Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this Indenture
or in any suit against the Trustee for any action taken or omitted by it as
Trustee, a court in its discretion may require the filing by any party litigant
in the suit of an undertaking to pay the costs of the suit, and the court in its
discretion may assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in the suit, having due regard to the merits and good
faith of the claims or defenses made by the party litigant. This Section 6.11
does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section
6.07 [Rights of Holders to Receive Payment] or a suit by Holders of more than an
aggregate of 10% in principal amount of the Securities.
SECTION 6.12 Waiver of Stay or Extension Laws.
The Company (to the extent it may lawfully do so) shall not at any time
insist upon, or plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, which may affect the covenants or the performance of this
Indenture; and the Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and shall not hinder,
delay or impede the execution of any power herein granted to the Trustee, but
shall suffer and permit the execution of every such power as though no such law
had been enacted.
ARTICLE VII
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
61
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; the
permissive rights of the Trustee enumerated in this Indenture shall not be
construed as duties; and
(2) in the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture. However, the Trustee shall
examine such certificates and opinions to determine whether or not they conform
to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct, except
that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section 7.01;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Trust Officer unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts; 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 [Control by Majority].
(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 7.01.
(e) The Trustee shall not be liable for interest on any money received by
it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from other
funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to advance,
expend or risk its own funds or otherwise incur financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers. The Trustee, however, may so advance or expend its own funds
if, in its own reasonable judgment, the Trustee believes that repayment of such
funds or adequate indemnity against such risk or liability has been reasonably
assured to it.
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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 7.01 and to the provisions of the TIA.
(i) Notwithstanding anything to the contrary herein, the Trustee shall have
no duty to review the reports and information documents required to be provided
by Section 4.02 [SEC Reports] for the purposes of determining compliance with
any provisions of this Indenture.
SECTION 7.02 Rights of Trustee.
(a) The Trustee may rely on any document believed by it to be genuine and
to have been signed or presented by the proper person. The Trustee need not
investigate any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible for the
misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits to
take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute
willful misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be charged with knowledge of any Default or Event
of Default unless either (1) a Trust Officer shall have actual knowledge of such
Default or Event of Default or (2) written notice of such Default or Event of
Default shall have been given to the Trustee by the Company or any other obligor
on such Securities or by any Holder of the Securities.
SECTION 7.03 Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Securities and may otherwise deal with the Company or its Affiliates
with the same rights it would have if it were not Trustee. Any Paying Agent,
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Trustee must comply with Sections 7.10 [Eligibility;
Disqualification] and 7.11 [Preferential Collection of Claims against Company].
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SECTION 7.04 Trustee's Disclaimer.
The Trustee shall not be responsible for and makes no representation as to
the validity or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the Securities, and it
shall not be responsible for any statement of the Company in the Indenture or in
any document issued in connection with the sale of the Securities or in the
Securities other than the Trustee's certificate of authentication.
SECTION 7.05 Notice of Defaults.
If a Default occurs and is continuing and if it is known to the Trustee,
the Trustee shall mail to each Securityholder notice of the Default within 90
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Security (including payments pursuant to the mandatory
redemption provisions of such Security, if any), the Trustee may withhold the
notice if and so long as a Committee of its trust officers determines that
withholding notice is not opposed to the interests of Securityholders. The
Trustee shall not be required to take notice or be deemed to have notice of any
Event of Default, except failure of the obligor to cause to be made any of the
payments to the Trustee required to be made, unless the Trustee shall be
specifically notified by a writing of such default by the Company or by the
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes delivered to the Corporate Trust Office of the Trustee and, in the absence
of such notice so delivered the Trustee may conclusively assume no Default
exists.
SECTION 7.06 Reports by Trustee to Holders.
Within 60 days after May 15 of each year, beginning with May 15, 2004, the
Trustee shall mail to each Securityholder a brief report dated as of May 15 of
such year, that complies with TIA Section 313(a). The Trustee also shall comply
with TIA Section 313(b).
A copy of each report at the time of its mailing to Securityholders shall
be filed with the SEC and each stock exchange (if any) on which the Securities
are listed. The Company agrees to notify promptly the Trustee whenever the
Securities become listed on any stock exchange and of any delisting thereof.
SECTION 7.07 Compensation and Indemnity.
The Company shall pay to the Trustee from time to time reasonable
compensation for its services, including extraordinary services such as default
administration. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse the
Trustee upon request for all reasonable out-of-pocket expenses incurred or made
by it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Trustee's agents, counsel, accountants and
experts. The Company shall indemnify the Trustee against any and all loss,
liability or expense (including attorneys' fees) arising out of its acceptance
of this trust or incurred by it in connection with the administration of this
trust and the performance of its duties hereunder, including the costs and
expenses of enforcing this Indenture against the Company (including under this
Section 7.07). The Trustee shall notify the Company promptly of any claim
(whether asserted by any Securityholder or the
64
Company) for which it may seek indemnity. Failure by the Trustee to so notify
the Company shall not relieve the Company of its obligations hereunder. The
Company shall defend the claim and the Trustee may have separate counsel and the
Company shall pay the fees and expenses of such counsel. The Company need not
reimburse any expense or indemnify against any loss, liability or expense
incurred by the Trustee through the Trustee's own willful misconduct, negligence
or bad faith.
To secure the Company's payment obligations in this Section 7.07, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall survive
the resignation or removal of the Trustee and the discharge of this Indenture.
When the Trustee incurs expenses after the occurrence of a Default specified in
Section 6.01(g) or (h) with respect to the Company, the expenses are intended to
constitute expenses of administration under the Bankruptcy Law.
SECTION 7.08 Replacement of Trustee.
The Trustee may resign at any time by so notifying the Company. The Holders
of a majority in principal amount outstanding of the Securities may remove the
Trustee by so notifying the Trustee and may appoint a successor Trustee. A
holder may petition a court of competent jurisdiction to remove the Trustee in
the manner and under the circumstances contemplated by TIA Section 310(b)(iii).
The Company shall remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 [Eligibility;
Disqualification];
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver or other public officer takes charge of the Trustee or its
property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the Holders of a
majority in principal amount outstanding of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Thereupon the resignation or removal
of the retiring Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this Indenture. The
successor Trustee shall mail a notice of its succession to Securityholders. The
retiring Trustee shall promptly transfer all property held by it
65
as Trustee to the successor Trustee, subject to the lien provided for in Section
7.07 [Compensation and Indemnity].
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 [Eligibility;
Disqualification], 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 [Compensation and Indemnity] shall
continue for the benefit of the retiring Trustee.
SECTION 7.09 Successor Trustee by Merger.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion or
consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time any of the Securities shall not have been authenticated, any
successor to the Trustee may authenticate such Securities either in the name of
any predecessor hereunder or in the name of the successor to the Trustee; and in
all such cases such certificates shall have the full force which it is anywhere
in the Securities or in this Indenture provided that the certificate of the
Trustee shall have.
SECTION 7.10 Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA Section
310(a). The Trustee shall have a combined capital and surplus of at least $50.0
million as set forth in its most recent annual report of condition. The Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities or certificates of interest or participation in
other securities of the Company are outstanding if the requirements for such
exclusion set forth in TIA Section 310(b)(1) are met.
SECTION 7.11 Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). A Trustee who has resigned or been
removed shall be subject to TIA Section 311(a) to the extent indicated.
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ARTICLE VIII
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 [Replacement
Securities]) for cancellation or (2) all outstanding Securities have become due
and payable, whether at maturity or as a result of the mailing of a notice of
redemption pursuant to Article III hereof and the Company irrevocably deposits
with the Trustee funds sufficient to pay at maturity or upon redemption all
outstanding Securities, including interest thereon to maturity or such
redemption date (other than Securities replaced pursuant to Section 2.07
[Replacement Securities]), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.05, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12 and 4.14 and the operation of Sections
6.01(f), 6.01(g) (but only with respect to Subsidiary Guarantors and Significant
Subsidiaries), 6.01(h) (but only with respect to Subsidiary Guarantors and
Significant Subsidiaries), 6.01(i) and 6.01(j) and its obligations under
Sections 5.01(c) and (d) ("covenant defeasance option"). The Company may
exercise its legal defeasance option notwithstanding its prior exercise of its
covenant defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(d),
6.01(e), 6.01(f), 6.01(g) (but only with respect to Subsidiary Guarantors and
Significant Subsidiaries), 6.01(h) (but only with respect to Subsidiary
Guarantors and Significant Subsidiaries), 6.01(i) (but only with respect to
Subsidiary Guarantors and Significant Subsidiaries) or 6.01(j) or because of the
failure of the Company to comply with Section 5.01(c) or (d). If the Company
exercises its legal defeasance option or its covenant defeasance option, each
Subsidiary Guarantor will be released from all its obligations with respect to
its Subsidiary Guarantee.
Upon satisfaction of the conditions set forth herein and upon request of
the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's obligations in
Sections 2.03, 2.04, 2.05, 2.07, 7.07, 7.08 and this Article VIII 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.
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SECTION 8.02 Conditions to Defeasance.
The Company may exercise its legal defeasance option or its covenant
defeasance option only if:
(a) the Company irrevocably deposits in trust with the Trustee money or
U.S. Government Obligations for the payment of principal and interest on the
Securities to maturity or redemption, as the case may be;
(b) the Company delivers to the Trustee a certificate from a nationally
recognized firm of independent accountants expressing its opinion that the
payments of principal of and interest when due and without reinvestment on the
deposited U.S. Government Obligations plus any deposited money without
investment will provide cash at such times and in such amounts as will be
sufficient to pay principal and interest when due on all the Securities to
maturity or redemption, as the case may be;
(c) 123 days pass after the deposit is made and during the 123-day period
no Default specified in Section 6.01(g) or (h) with respect to the Company
occurs which is continuing at the end of the period;
(d) the deposit does not constitute a default under any other agreement
binding on the Company;
(e) 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;
(f) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (1) the Company has
received from, or there has been published by, the Internal Revenue Service a
ruling, or (2) since the date of this Indenture there has been a change in the
applicable Federal income tax law, in either case to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Securityholders will not
recognize income, gain or loss for Federal income tax purposes as a result of
such defeasance and will be subject to Federal income tax on the same amounts,
in the same manner and at the same times as would have been the case if such
legal defeasance had not occurred;
(g) in the case of the covenant defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel to the effect that the
Securityholders will not recognize income, gain or loss for Federal income tax
purposes as a result of such covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had not occurred; and
(h) 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 VIII have been
complied with.
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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 III.
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 VIII. It shall apply the deposited
money and the money from U.S. Government Obligations through the Paying Agent
and in accordance with this Indenture to the payment of principal of and
interest on the Securities. Money and securities so held in trust are not
subject to Article X.
SECTION 8.04 Repayment to Company.
The Trustee and the Paying Agent shall promptly turn over to the Company
upon request any money or securities held by them at any time which, in the
opinion of a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof that would then be required for the Company to
exercise its legal defeasance option or its covenant defeasance option pursuant
to this Article VIII.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
SECTION 8.05 Indemnity for Government Obligations.
The Company shall pay and shall indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against deposited U.S. Government
Obligations or the principal and interest received on such U.S. Government
Obligations.
SECTION 8.06 Reinstatement.
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Article VIII by reason of any
legal proceeding or by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, the Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred pursuant to
this Article VIII 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 VIII; 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.
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ARTICLE IX
AMENDMENTS
SECTION 9.01 Without Consent of Holders.
The Company, the Subsidiary Guarantors and the Trustee may amend this
Indenture or the Securities without notice to or consent of any Securityholder:
(a) to cure any ambiguity, omission, defect or inconsistency;
(b) to comply with Article V;
(c) 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;
(d) to add guarantees with respect to the Securities (including any
Subsidiary Guarantee) or to secure the Securities;
(e) 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 any Subsidiary Guarantor;
(f) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA; or
(g) to make any change that does not adversely affect the rights of any
Securityholder.
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. Without the consent of each Securityholder
affected, however, an amendment may not:
(a) reduce the amount of Securities whose Holders must consent to an
amendment;
(b) reduce the rate of or extend the time for payment of interest on any
Security;
70
(c) reduce the principal of or extend the Stated Maturity of any Security;
(d) 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 III
hereof and paragraph 5 of the Securities;
(e) make any Security payable in money other than that stated in the
Security;
(f) make any change in Section 6.04 [Waiver of Past Defaults] or 6.07
[Rights of Holders to Receive Payment] or the second sentence of this Section
9.02;
(g) make any change in the ranking or priority of any Security that would
adversely affect the Securityholders; or
(h) make any change in any Subsidiary Guarantee that would adversely affect
the Securityholders.
It shall not be necessary for the consent of the Holders under this Section
to approve the particular form of any proposed amendment, but it shall be
sufficient if such consent approves the substance thereof.
After an amendment under this Section 9.02 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 9.02.
SECTION 9.03 Compliance with Trust Indenture Act.
Every amendment to this Indenture or the Securities shall comply with the
TIA as then in effect.
SECTION 9.04 Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Security shall bind
the Holder and every subsequent Holder of that Security or portion of the
Security that evidences the same debt as the consenting Holder's Security, even
if notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any
71
such action, whether or not such Persons continue to be Holders after such
record date. No such consent shall be valid or effective for more than 120 days
after such record date.
SECTION 9.05 Notation on or Exchange of Securities.
If an amendment changes the terms of a Security, the Trustee may require
the Holder of the Security to deliver it to the Trustee. The Trustee may place
an appropriate notation on the Security regarding the changed terms and return
it to the Holder. Alternatively, if the Company or the Trustee so determines,
the Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make the
appropriate notation or to issue a new Security shall not affect the validity of
such amendment.
SECTION 9.06 Trustee To Sign Amendments.
The Trustee shall sign any amendment authorized pursuant to this Article IX
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
[Duties of Trustee]) 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.
ARTICLE X
SUBSIDIARY GUARANTEES
SECTION 10.01 Subsidiary Guarantees.
Each Subsidiary Guarantor, jointly and severally, as primary obligor and
not merely as surety, hereby irrevocably, fully and unconditionally Guarantees
on a senior unsecured basis to each Holder and to the Trustee and its successors
and assigns the full and punctual payment of principal of and interest on the
Securities when due, whether at Stated Maturity, by acceleration, by redemption
or otherwise, and all other monetary obligations of the Company under this
Indenture and the Securities (all the foregoing obligations hereinafter
collectively called the "Guaranteed Obligations"). Each Subsidiary Guarantor
further agrees that the Guaranteed Obligations may be extended or renewed, in
whole or in part, without notice or further assent from such Subsidiary
Guarantor, and that such Subsidiary Guarantor shall remain bound under this
Article X notwithstanding any extension or renewal of any such Guaranteed
Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment from
and protest to the Company of any of the Guaranteed Obligations and also waives
notice of protest for nonpayment. Each Subsidiary Guarantor waives notice of any
default under the Securities or the Guaranteed Obligations. The obligations of
each Subsidiary Guarantor hereunder shall not be affected by (a) the failure of
any Holder or the Trustee to assert any claim or demand or to enforce any right
or remedy against the Company or any other Person under this Indenture, the
Securities or any other agreement or otherwise; (b) any extension or renewal of
any thereof; (c) any rescission, waiver, amendment or modification of any of the
terms or provisions of this Indenture, the Securities or any other agreement;
(d) the release of any
72
security held by any Holder or the Trustee for the Guaranteed Obligations or any
of them; (e) the failure of any Holder or Trustee to exercise any right or
remedy against any other guarantor of the Guaranteed Obligations; or (f) except
as provided in Section 10.06 [Release of Subsidiary Guarantor], any change in
the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein constitutes a Guarantee of payment, performance and compliance when due
(and not a Guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Guaranteed Obligations.
Except as expressly set forth in Sections 8.01(b), 10.02 [Limitation on
Liability] and 10.06 [Release of Subsidiary Guarantor], the obligations of each
Subsidiary Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any reason, including any claim of
waiver, release, surrender, alteration or compromise, and shall not be subject
to any defense of setoff, counterclaim, recoupment or termination whatsoever or
by reason of the invalidity, illegality or unenforceability of the Guaranteed
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of each Subsidiary Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any Holder or the Trustee to
assert any claim or demand or to enforce any remedy under this Indenture, the
Securities or any other agreement, by any waiver or modification of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the Guaranteed Obligations, or by any other act or thing or omission or delay to
do any other act or thing that may or might in any manner or to any extent vary
the risk of such Subsidiary Guarantor or would otherwise operate as a discharge
of such Subsidiary Guarantor as a matter of law or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal of or interest on any Guaranteed
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other right
that any Holder or the Trustee has at law or in equity against any Subsidiary
Guarantor by virtue hereof, upon the failure of the Company to pay the principal
of or interest on any Guaranteed Obligation when and as the same shall become
due, whether at maturity, by acceleration, by redemption or otherwise, each
Subsidiary Guarantor 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 (a) the unpaid principal amount of such Guaranteed
Obligations, (b) accrued and unpaid interest on such Guaranteed Obligations (but
only to the extent not prohibited by law) and (c) all other monetary Guaranteed
Obligations of the Company to the Holders and the Trustee.
Each Subsidiary Guarantor agrees that, as between it, on the one hand, and
the Holders and the Trustee, on the other hand, (a) the maturity of the
Guaranteed Obligations Guaranteed hereby may be accelerated as provided in
Article VI for the purposes of such Subsidiary Guarantor's Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guaranteed Obligations Guaranteed hereby, and (b)
in the event of any declaration of acceleration of such Guaranteed Obligations
as
73
provided in Article VI, such Guaranteed Obligations (whether or not due and
payable) shall forthwith become due and payable by such Subsidiary Guarantor for
the purposes of this Section 10.01.
Each Subsidiary Guarantor also agrees to pay any and all costs and expenses
(including reasonable attorneys' fees) incurred by the Trustee or any Holder in
enforcing any rights under this Section 10.01.
SECTION 10.02 Limitation on Liability.
Any term or provision of this Indenture to the contrary notwithstanding,
the maximum, aggregate amount of the obligations guaranteed hereunder by any
Subsidiary Guarantor shall not exceed the maximum amount that can be hereby
guaranteed without rendering this Indenture, as it relates to such Subsidiary
Guarantor, voidable under applicable law relating to fraudulent conveyance or
fraudulent transfer or similar laws affecting the rights of creditors generally.
SECTION 10.03 Successors and Assigns.
This Article X shall be binding upon each Subsidiary Guarantor and its
successors and assigns and shall inure 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 10.04 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 X 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 X at law, in equity, by
statute or otherwise.
SECTION 10.05 Modification.
No modification, amendment or waiver of any provision of this Article X,
nor the consent to any departure by any Subsidiary Guarantor therefrom, shall in
any event be effective unless the same shall be in writing and signed by the
Trustee, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. No notice to or demand on any
Subsidiary Guarantor in any case shall entitle such Subsidiary Guarantor to any
other or further notice or demand in the same, similar or other circumstances.
SECTION 10.06 Release of Subsidiary Guarantor.
This Subsidiary Guarantee as to any Subsidiary Guarantor shall terminate
and be of no further force or effect upon the sale or other disposition
(including by way of consolidation
74
or merger) of all or substantially all of the assets or all of the Capital Stock
of such Subsidiary Guarantor, in each case other than to the Company or a
Subsidiary of the Company; provided, however, that such sale or transfer is
permitted by, and the proceeds from any such disposition are applied in
accordance with, Section 4.07 [Limitation on Sales of Assets and Subsidiary
Stock] . In addition, if the Board of Directors designates a Subsidiary
Guarantor to be an Unrestricted Subsidiary in accordance with the applicable
provisions of this Indenture, then such Subsidiary Guarantor will be released
and relieved of any obligations under its Subsidiary Guarantee.
SECTION 10.07 Contribution among Subsidiaries.
Each Subsidiary Guarantor that makes a payment under its Subsidiary
Guarantee will be entitled 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, determined in accordance with GAAP, at the time of such payment.
ARTICLE XI
MISCELLANEOUS
SECTION 11.01 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 11.02 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:
Energy Partners, Ltd.
201 St. Charles Avenue
Suite 3400
New Orleans, Louisiana 70170
Attention: Corporate Secretary
if to the Trustee:
Wells Fargo Bank, N.A.
505 Main Street, Suite 301
Fort Worth, Texas 76102
Attention: Corporate Trust Services
The Company or the Trustee by notice to the other may designate additional
or different addresses for subsequent notices or communications.
75
Any notice or communication mailed to a Securityholder shall be mailed to
the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any defect
in it shall not affect its sufficiency with respect to other Securityholders. If
a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 11.03 Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
SECTION 11.04 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:
(a) 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
(b) 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 11.05 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:
(a) a statement that the individual making such certificate or opinion has
read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such individual,
such covenant or condition has been complied with.
Any Officers' Certificate may be based, insofar as it relates to legal
matters, upon an Opinion of Counsel, unless any such Officer knows or in the
exercise of reasonable care
76
should have known that such Opinion of Counsel is erroneous. Any Opinion of
Counsel may be based, insofar as it relates to factual matters, information with
respect to which is in possession of the Company, upon an Officers' Certificate,
unless such counsel knows or in the exercise of reasonable care should have
known that such Officers' Certificate is erroneous.
SECTION 11.06 When Securities Disregarded.
In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company or by any Person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company shall be
disregarded and deemed not to be outstanding, except that, for the purpose of
determining whether the Trustee shall be protected in relying on any such
direction, waiver or consent, only Securities which the Trustee actually knows
are so owned shall be so disregarded. Also, subject to the foregoing, only
Securities outstanding at the time shall be considered in any such
determination.
SECTION 11.07 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 11.08 Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions are not required to be open in the State of New York or in the
State of Texas. If a payment date is a Legal Holiday, payment shall be made on
the next succeeding day that is not a Legal Holiday, and no interest shall
accrue with respect to such payment for the intervening period. If a regular
record date is a Legal Holiday, the record date shall not be affected.
SECTION 11.09 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 11.10 No Recourse Against Others.
No director, officer, employee, incorporator or stockholder, as such, of
the Company or any Subsidiary Guarantor shall have any liability for any
obligations of the Company or any Subsidiary Guarantor under the Securities, the
Subsidiary Guarantees or this Indenture or for any claim based on, in respect
of, or by reason of such obligations or their creation. By accepting a Security,
each Securityholder shall waive and release all such liability. The waiver and
release shall be part of the consideration for the issue of the Securities.
77
SECTION 11.11 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 11.12 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 11.13 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.
SECTION 11.14 Severability.
If any one or more of the provisions contained herein, or the application
thereof in any circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be affected
or impaired thereby.
78
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
ENERGY PARTNERS, LTD.
By:
-----------------------------------------
Name:
Title:
SUBSIDIARY GUARANTORS:
EPL PIPELINE, L.L.C.,
a Delaware Limited Liability Company
By:
-----------------------------------------
Name:
Title:
NIGHTHAWK, L.L.C.,
a Louisiana Limited Liability Company
By:
-----------------------------------------
Name:
Title:
EPL OF LOUISIANA, L.L.C.,
a Louisiana Limited Liability Company
By:
-----------------------------------------
Name:
Title:
79
DELAWARE EPL OF TEXAS, LLC,
a Delaware Limited Liability Company
By:
-----------------------------------------
Name:
Title:
EPL PIONEER HOUSTON, INC.,
a Texas Corporation
By:
-----------------------------------------
Name:
Title:
Trustee:
WELLS FARGO BANK, N.A., as Trustee
By:
-----------------------------------------
Name:
Title:
80
Appendix A
PROVISIONS RELATING TO INITIAL SECURITIES,
EXCHANGE SECURITIES, PRIVATE EXCHANGE SECURITIES
AND OTHER SECURITIES
1. Definitions
1.1 Definitions. For the purposes of this Appendix A the following terms
shall have the meanings indicated below:
"Applicable Procedures" means, with respect to any transfer or transaction
involving a Temporary Regulation S Global Security or beneficial interest
therein, the rules and procedures of the Depository, Euroclear and Clearstream
for such a Temporary Regulation S Global Security, in each case to the extent
applicable to such transaction and as in effect from time to time.
"Clearstream" means Clearstream Banking, societe anonyme, or any successor
securities clearing agency.
"Definitive Security" means a certificated Initial Security or Exchange
Security or Private Exchange Security bearing, if required, the restricted
securities legend set forth in Section 2.3(e).
"Depository" means The Depository Trust Company, its nominees and their
respective successors.
"Distribution Compliance Period", with respect to any Securities, means the
period of 40 consecutive days beginning on and including the later of (i) the
day on which such Securities are first offered to persons other than
distributors (as defined in Regulation S under the Securities Act) in reliance
on Regulation S and (ii) the date on which such Securities are issued.
"Euroclear" means the Euroclear Clearance System or any successor
securities clearing agency.
"Exchange Securities" means (1) the 8 3/4% Senior Notes Due 2010 to be
issued pursuant to this Indenture in connection with a Registered Exchange Offer
pursuant to the Registration Agreement and (2) Additional Securities, if any,
issued pursuant to a registration statement filed with the SEC under the
Securities Act.
"Initial Purchasers" means (1) with respect to the Initial Securities
issued on the Issue Date, Credit Suisse First Boston LLC, Banc One Capital
Markets, Inc., BNP Paribas Securities Corp., J.P. Morgan Securities Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Dominion Securities
Corporation, and Wells Fargo Securities, LLC and (2) with respect to each
issuance of Additional Securities, the Persons purchasing such Additional
Securities under the related Purchase Agreement.
"Initial Securities" means (1) $150,000,000 aggregate principal amount of 8
3/4% Senior Notes Due 2010 issued under this Indenture on the Issue Date and (2)
Additional
Appendix A-1
Appendix A
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 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 3/4% Senior Notes Due 2010 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 July 29, 2003, 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 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 Agreement" means (1) with respect to the Initial Securities
issued on the Issue Date, the Registration Rights Agreement dated August 5,
2003, 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, as amended.
"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 Agreement.
"Transfer Restricted Securities" means Definitive Securities and any other
Securities that bear or are required to bear the legend set forth in Section
2.3(e) hereto.
Appendix A-2
Appendix A
1.2 Other Definitions.
Defined
in
Term Section
"Agent Members"......................................... 2.1(b)
"Global Security"....................................... 2.1(a)
"Institutional Accredited Investors..................... 2.1(a)
"Other Global Security.................................. 2.1(a)
"Other 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)
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, purchasers in reliance on Regulation S and
institutional "accredited investors" within the meaning of Rule 501(a)(1), (2),
(3) or (7) of Regulation D under the Securities Act ("Institutional Accredited
Investors") in transactions exempt from registration under the Securities Act
not made in reliance on Rule 144A or Regulation S (as so transferred to
Institutional Accredited Investors, "Other Securities"), 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
temporary 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 Other Securities will
initially be represented by one or more global securities in registered form
without interest coupons (collectively, the "Other Global Securities"). The
Other Global Securities (and any securities issued in exchange
Appendix A-3
Appendix A
therefor), including beneficial interests in the Other Global Securities, will
be subject to certain restrictions on transfer set forth herein and will bear
the global securities legend and the restrictive securities legend set forth in
Exhibit 1 hereto. The Rule 144A Global Security, the Temporary Regulation S
Global Security, the Permanent Regulation S Global Security and the Other 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.
(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) Definitive Securities. Except as provided in 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 $150,000,000 8 3/4% Senior Notes
Due 2010, (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 Private Exchange,
respectively, pursuant to a Registration Agreement, for a like principal amount
of Initial Securities, 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, the date on which the original issue of Securities is to be
authenticated and whether the Securities are to be Initial Securities, Exchange
Securities or Private Exchange Securities. In the case of any issuance of
Additional Securities pursuant to Section 2.13 of the Indenture, such order
shall certify that such issuance is in compliance with Section 4.03 of the
Indenture.
Appendix A-4
Appendix A
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 his attorney duly
authorized in writing; and
(ii) if such Definitive Securities are required to bear a restricted
securities legend, they are being transferred or exchanged pursuant to an
effective registration statement under the Securities Act, pursuant to
Section 2.3(b) or pursuant to clause (A), (B) or (C) below, and are
accompanied by the following additional information and documents, as
applicable:
(A) if such Definitive Securities are being delivered to the
Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
(B) if such Definitive Securities are being transferred to the
Company, a certification to that effect; or
(C) if such Definitive Securities are being transferred (x)
pursuant to an exemption from 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 or, in the case of Other
Securities, in the form set forth in Appendix C to the Indenture) and
(ii) in the case of a transfer pursuant to an exemption from
registration under the Securities Act provided by Rule 144 thereunder
(if available), an opinion of counsel 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, Permanent Regulation S
Global Security or Other 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 (A) in the form set forth on the reverse of the
Security, that such Definitive Security is either (1) being transferred to
a QIB in accordance with Rule
Appendix A-5
Appendix A
144A or (2) is being transferred after expiration of the "distribution
compliance period" of Regulation S 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 Security, or (B) in the form set forth in Appendix C
to the Indenture, that such Definitive Security is being transferred to an
Institutional Accredited Investor pursuant to an exemption from
registration under the Securities Act; 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)(1)), Permanent Regulation S Security (in the
case of a transfer pursuant to clause (b)(i)(A)(2)), or Other Global
Security (in the case of a transfer pursuant to clause (b)(i)(B)) to
reflect an increase in the aggregate principal amount of the Securities
represented by the Rule 144A Global Security, Permanent Regulation S
Security or Other 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, Permanent Regulation S Security or Other 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, Permanent Regulation S Security or Other Global Security,
as applicable, equal to the principal amount of the Definitive Security so
canceled. If no Rule 144A Global Securities, Permanent Regulation S Securities
or Other 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, Permanent Regulation S Security or Other 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.
Appendix A-6
Appendix A
(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 A (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 prior to the consummation of a
Registered Exchange Offer or the effectiveness of a Shelf Registration
Statement with respect to such Securities, such Securities may be exchanged
only in accordance with such procedures as are substantially consistent
with the provisions of this Section 2.3 (including the certification
requirements set forth on the reverse of the Initial Securities intended to
ensure that such transfers comply with Rule 144A or Regulation S, as the
case may be) and such other procedures as may from time to time be adopted
by the Company.
(d) Restrictions on Transfer of Temporary Regulation S Global Securities.
During the Distribution Compliance Period, beneficial ownership interests in
Temporary Regulation S Global Securities may only be sold, pledged or
transferred through Euroclear or Clearstream in accordance with the Applicable
Procedures and only (i) to the Company, (ii) so long as such Security is
eligible for resale pursuant to Rule 144A, to a person whom the selling holder
reasonably believes is a QIB that purchases for its own account or for the
account of a QIB to whom notice is given that the resale, pledge or transfer is
being made in reliance on Rule 144A, (iii) in the United States to an
Institutional Accredited Investor that is acquiring the securities for its own
account or for the account of another Institutional Accredited Investor for
investment purposes and not with a view to, or for offer or sale in connection
with, any distribution thereof in violation of the Securities Act and that,
prior to such transfer, furnishes (or has furnished on its behalf by a U.S.
broker-dealer) to the Trustee a certificate containing certain representations
and agreements relating to restrictions on transfer of the securities (the form
of which certificate can be found in Appendix C to the Indenture), (iv) in an
offshore transaction in accordance with Regulation S, (v) pursuant to an
exemption from registration provided by Rule 144 under the Securities Act (if
applicable) or (vi) 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
Appendix A-7
Appendix A
Securities issued in exchange therefor or in substitution thereof) shall
bear a legend in substantially the following form:
THIS NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS
NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE
OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM. EACH
PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF THIS NOTE
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 NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS NOTE 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), (V) IN
THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS
DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT)
THAT IS ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF
ANOTHER INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION THEREOF IN VIOLATION OF THE SECURITIES ACT AND THAT,
PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON ITS BEHALF BY A
U.S. BROKER-DEALER) TO THE TRUSTEE A CERTIFICATE IN THE FORM
PRESCRIBED BY THE INDENTURE CONTAINING CERTAIN REPRESENTATIONS AND
AGREEMENTS RELATING TO RESTRICTIONS ON TRANSFER OF THIS NOTE, (VI)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT, IN EACH OF CASES (I) THROUGH (VI) 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 NOTE FROM IT OF THE RESALE RESTRICTIONS REFERRED TO
IN (A) ABOVE.
Appendix A-8
Appendix A
Each Definitive Security will also bear the following additional legend:
IN ADDITION WITH RESPECT TO ANY TRANSFER OF THIS NOTE (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE (A)(VI) ABOVE), THE HOLDER WILL DELIVER TO
THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION
AND, IN THE CASE OF A TRANSFER PURSUANT TO CLAUSE (A)(IV) ABOVE, A
LEGAL OPINION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER BY IT 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 Securities or
such Private Exchange Securities will cease to apply, the requirements
that Initial Securities or Private Exchange Securities issued to
certain Holders be issued in global form will cease to apply to such
Initial Securities or Private Exchange Securities, and certificated
Initial Securities or Private Exchange Securities or Initial
Securities or Private Exchange Securities in global form, in each case
without restrictive transfer legends, will be available to the
transferee of the Holder of such Initial Securities or Private
Exchange Securities upon exchange of such transferring Holder's
certificated Initial Securities or Private Exchange Securities or
directions to transfer such Holder's interest in the Global Security,
as applicable.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Initial Securities, all requirements pertaining to such
Initial Securities that Initial Securities issued to certain Holders
be issued in global form will still apply with respect to Holders of
such Initial Securities that do not exchange their Initial Securities,
and Exchange Securities in certificated or global form will be
available to Holders that exchange such Initial Securities in such
Registered Exchange Offer.
2 (v) Upon the consummation of a Private Exchange with respect to
the Initial Securities pursuant to which Holders of such Initial
Securities are offered Private Exchange Securities in exchange for
their 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
Appendix A-9
Appendix A
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, repurchased 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,
repurchased or canceled, the principal amount of Securities represented by such
Global Security shall be reduced and an adjustment shall be made on the books
and records of the Trustee (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Trustee or the
Securities Custodian, to reflect such reduction.
(g) Obligations with Respect to Transfers and Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee shall authenticate certificated 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 Business Days before
the mailing of a notice of an offer to repurchase or redeem Securities or
15 Business Days before an interest payment date.
(iv) Prior to the due presentation for registration of transfer of any
Security, the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for all
other purposes whatsoever, whether or not such Security is overdue, and
none of the Company, the Trustee, the Paying Agent, the Registrar or any
co-registrar shall be affected by notice to the contrary.
(v) All Securities issued upon any transfer or exchange pursuant to
the terms of this Indenture shall evidence the same debt and shall be
entitled to the same benefits under this Indenture as the Securities
surrendered upon such transfer or exchange.
(h) No Obligation of the Trustee.
(i) The Trustee shall have no responsibility or obligation to any
beneficial owner of a Global Security, a member of, or a participant in the
Depository or other
Appendix A-10
Appendix A
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 (a) notifies the
Company that it is unwilling or unable to continue as Depository for such Global
Security and the Depository fails to appoint a successor depository within 90
day of such notice or (b) ceases to be a "clearing agency" registered under the
Exchange Act, or (ii) the Company, in its sole discretion, notifies the Trustee
in writing that it elects to cause the issuance of Definitive Securities under
this Indenture, or (iii) an Event of Default has occurred and is continuing.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depository to the
Trustee located at its corporate trust office in the Borough of Manhattan, The
City of New York, or in Minneapolis, Minnesota, to be so transferred, in whole
or from time to time in part, without charge, and the Trustee shall authenticate
and deliver, upon such transfer of each portion of such Global Security, an
equal aggregate principal amount of Definitive Securities of authorized
denominations. Any portion of a Global Security transferred pursuant to this
Section shall be executed, authenticated and delivered only in denominations of
$1,000 principal amount and any integral multiple thereof and registered in such
names as the Depository shall direct. Any Definitive Security delivered in
exchange for an interest in the Global Security shall, except as
Appendix A-11
Appendix A
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 either 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.
Appendix A-12
Exhibit 1 to Appendix A
[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 NOTE (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF 1933, (THE
"SECURITIES ACT"), AND THIS NOTE MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS NOTE IS HEREBY NOTIFIED THAT THE SELLER OF
THIS NOTE 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 NOTE AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) THIS
NOTE 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), (V) IN THE
UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE
501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT IS ACQUIRING THIS NOTE
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER INSTITUTIONAL
Exhibit 1-1
Exhibit 1 to Appendix A
ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER
OR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF IN VIOLATION OF THE
SECURITIES ACT AND THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A CERTIFICATE IN THE FORM
PRESCRIBED BY THE INDENTURE CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO RESTRICTIONS ON TRANSFER OF THIS NOTE, (VI) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH
(VI) 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 NOTE 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 NOTE
WILL NOT BE EXCHANGEABLE FOR INTERESTS IN THE RULE 144A GLOBAL NOTE OR THE
PERMANENT REGULATION S GLOBAL NOTE OR ANY OTHER NOTE REPRESENTING AN INTEREST IN
THE NOTES REPRESENTED HEREBY WHICH DO NOT CONTAIN A LEGEND CONTAINING
RESTRICTIONS ON TRANSFER, UNTIL THE EXPIRATION OF THE "40-DAY DISTRIBUTION
COMPLIANCE PERIOD" (WITHIN THE MEANING OF RULE 903(b)(2) OF REGULATION S UNDER
THE SECURITIES ACT) AND THEN ONLY UPON CERTIFICATION IN FORM REASONABLY
SATISFACTORY TO THE TRUSTEE THAT SUCH BENEFICIAL INTERESTS ARE OWNED EITHER BY
NON-U.S. PERSONS OR U.S. PERSONS WHO PURCHASED SUCH INTERESTS IN A TRANSACTION
THAT DID NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT. DURING SUCH 40-DAY
DISTRIBUTION COMPLIANCE PERIOD, BENEFICIAL OWNERSHIP INTERESTS IN THIS TEMPORARY
REGULATION S GLOBAL NOTE MAY ONLY BE SOLD, PLEDGED OR TRANSFERRED THROUGH THE
EUROCLEAR SYSTEM OR CLEARSTREAM AND ONLY (I) TO THE COMPANY, (II) INSIDE THE
UNITED STATES TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (III) OUTSIDE THE UNITED
STATES IN A TRANSACTION IN ACCORDANCE WITH RULE 904 UNDER THE SECURITIES ACT,
OTHER THAN IN CANADA, OR TO OR FOR THE BENEFIT OF A RESIDENT OF CANADA PURSUANT
TO A PROSPECTUS QUALIFYING THE NOTES FOR SALE UNDER THE SECURITIES LAW IN ANY
PROVINCE OR TERRITORY OF CANADA IN WHICH THE PURCHASER RESIDES OR AN EXEMPTION
FROM THE PROSPECTUS REQUIREMENTS OF SUCH LAWS, (IV) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), (V) IN THE UNITED STATES TO AN INSTITUTIONAL "ACCREDITED INVESTOR"
(AS DEFINED IN RULE 501(A)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT) THAT IS
ACQUIRING THIS NOTE FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF ANOTHER
INSTITUTIONAL ACCREDITED INVESTOR FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION THEREOF IN
VIOLATION OF THE
Exhibit 1-2
Exhibit 1 to Appendix A
SECURITIES ACT AND THAT, PRIOR TO SUCH TRANSFER, FURNISHES (OR HAS FURNISHED ON
ITS BEHALF BY A U.S. BROKER-DEALER) TO THE TRUSTEE A CERTIFICATE IN THE FORM
PRESCRIBED BY THE INDENTURE CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS
RELATING TO RESTRICTIONS ON TRANSFER OF THIS NOTE OR (VI) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT. HOLDERS OF INTERESTS
IN THIS TEMPORARY REGULATION S GLOBAL NOTE WILL NOTIFY ANY PURCHASER OF SUCH
RESALE RESTRICTIONS, IF THEN APPLICABLE.]
[Definitive Securities Legend]
[IF CERTIFICATED: IN ADDITION WITH RESPECT TO ANY TRANSFER OF THIS NOTE
(OTHER THAN A TRANSFER PURSUANT TO CLAUSE A(VI) ABOVE), THE HOLDER WILL DELIVER
TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AN, IN
THE CASE OF A TRANSFER PURSUANT TO CLAUSE (A)(IV) ABOVE, A LEGAL OPINION AS THEY
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER BY IT COMPLIES WITH THE
FOREGOING RESTRICTIONS.]
[OID Legend]
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS
AMENDED (THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR PURPOSES OF
SECTION 1273 OF THE CODE, THE ISSUE PRICE IS $[ ] AND THE AMOUNT OF ORIGINAL
ISSUE DISCOUNT IS $[ ], IN EACH CASE PER $1000 PRINCIPAL AMOUNT OF THIS
SECURITY. FOR PURPOSES OF SECTION 1275 OF THE CODE, THE ISSUE DATE OF THIS
SECURITY IS [ ]. FOR PURPOSES OF SECTION 1272 OF THE CODE, THE YIELD TO MATURITY
(COMPOUNDED SEMI-ANNUALLY) IS [ ]%.
Exhibit 1-3
Exhibit 1 to Appendix A
CUSIP No. ______________
ISIN No. ______________
$ ______________
No. ____________
8 3/4% Senior Notes Due 2010
ENERGY PARTNERS, LTD., a Delaware corporation, for value received, promises
to pay to CEDE & CO., or registered assigns, the principal sum of [ ] Dollars or
such greater or lesser amount as indicated on the Schedule of Increases or
Decreases in Global Security hereto, on August 1, 2010.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Additional provisions of this Security are set forth on the other side of this
Security.
Dated:
ENERGY PARTNERS, LTD.
By:
--------------------------------
Name:
Title
By:
------------------------------
Name:
Title
Exhibit 1-4
Exhibit 1 to Appendix A
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK, N.A., as Trustee,
certifies that this is one of the Securities
referred to in the Indenture.
By:
------------------------------------
Authorized Signatory
Exhibit 1-5
Exhibit 1 to Appendix A
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
8 3/4% Senior Notes Due 2010
1. Interest
Energy Partners, Ltd., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above; provided, however, that if a
Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Security at a rate of 0.50% per annum
(increasing by an additional 0.50% per annum after each consecutive 90-day
period that occurs after the date on which such Registration Default occurs up
to a maximum additional interest rate of 2.00%) 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 February 1 and August 1 of each year. 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 August 5, 2003. Interest will be computed on the
basis of a 360-day year of twelve 30-day months. The Company shall pay interest
on overdue principal at the rate borne by the Securities plus 1% per annum, and
it shall pay interest on overdue installments of interest at the same rate to
the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on the January 15 or July 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of Securities (including principal,
premium and interest) will be made by wire transfer of immediately available
funds to the accounts specified by the holders thereof or, if no U.S. dollar
account maintained by the payee with a bank in the United States is designated
by any holder to the Trustee or the Paying Agent at least 30 days prior to the
relevant due date for payment (or such other date as the Trustee may accept in
its discretion), by mailing a check to the registered address of such holder.
3. Paying Agent and Registrar
Initially, Wells Fargo Bank, N.A. (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.
Exhibit 1-6
Exhibit 1 to Appendix A
4. Indenture
The Company issued the Securities under an Indenture dated as of August 5,
2003 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, as amended (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured, senior obligations of the Company.
The Company may, subject to Article 4 of the Indenture, issue additional
Securities under 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 imposes certain limitations on the
Incurrence of Indebtedness by the Company and certain of its Subsidiaries, the
payment of dividends and other distributions on the Capital Stock of the Company
and certain of its Subsidiaries, the purchase or redemption of Capital Stock of
the Company and of certain Capital Stock of such Subsidiaries, the sale or
transfer of assets and Subsidiary stock, the creation of Liens and transactions
with Affiliates. In addition, the Indenture limits the ability of the Company
and certain of its Subsidiaries to restrict distributions and dividends from
Subsidiaries. The Indenture also restricts the ability of the Company and the
Subsidiary Guarantors to consolidate or merge with or into, or to transfer all
or substantially all their assets to, another Person.
The Indenture also provides that the Subsidiary Guarantors will Guarantee
the Securities pursuant to the Subsidiary Guarantees. The Subsidiary Guarantees
will secure the due and punctual payment of the principal of and interest, if
any, on the Securities and all other amounts payable by the Company under the
Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise. The Subsidiary Guarantees
will unconditionally guarantee the Guaranteed Obligations on a senior basis
pursuant to the terms of the Indenture.
5. Optional Redemption
The Securities will not be redeemable at the option of the Company prior to
August 1, 2007. On and after August 1, 2007, the Securities shall be redeemable,
at the Company's option, in whole or in part, at any time or from time to time
at the following redemption prices (expressed in percentages of principal
amount), plus accrued and unpaid interest to the redemption date (subject to the
right of Holders of record on the relevant record date to receive interest due
on the relevant interest payment date), if redeemed during the 12-month period
commencing on August 1 of the years set forth below:
Period Percentage
2007.......................... 104.375%
2008.......................... 102.188%
Exhibit 1-7
Exhibit 1 to Appendix A
2009 and thereafter........... 100.000%
Prior to August 1, 2006, the Company may at its option on one or more
occasions redeem Securities (which includes Additional Securities, if any) in an
aggregate principal amount not to exceed 35% of the aggregate principal amount
of the Securities (which includes Additional Securities, if any) originally
issued at a redemption price (expressed as a percentage of principal amount) of
108.75%, plus accrued and unpaid interest to the redemption date, with the net
cash proceeds from one or more Equity Offerings; provided 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
consummation of the related Equity Offering.
In the case of any partial redemption, the Trustee will select the
Securities for redemption on a pro rata basis, by lot or by such other method as
the Trustee in its sole discretion deems to be fair and appropriate, although no
Security of $1,000 in original principal amount or less will be redeemed in
part. If any Security is to be redeemed in part only, the notice of redemption
relating to such Note will state the portion of the principal amount thereof to
be redeemed. A new Security in principal amount equal to the unredeemed portion
thereto will be issued in the name of the Holder thereof upon cancellation of
the original Security. Securities called for redemption become due on the date
fixed for redemption. On and after the redemption date, interest will cease to
accrue on the Securities or portions thereof called for redemption.
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
his registered address. Securities in denominations larger than $1,000 may be
redeemed in part but only in whole multiples of $1,000. If money sufficient to
pay the redemption price of and accrued interest on all Securities (or portions
thereof) to be redeemed on the redemption date is deposited with the Paying
Agent on or before the redemption date and certain other conditions are
satisfied, on and after such date interest ceases to accrue on such Securities
(or such portions thereof) called for redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions, to cause the Company to purchase all or any part
of the Securities of such Holder at a purchase price equal to 101% of the
principal amount of the Securities to be purchased plus accrued interest 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.
Exhibit 1-8
Exhibit 1 to Appendix A
8. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may register the transfer of or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
9. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner of it
for all purposes.
10. 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.
11. Discharge and Defeasance
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture, including the
Subsidiary Guarantees, if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
12. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding and (ii)
any default or noncompliance with any provisions may be waived with the written
consent of the Holders of at least a majority in principal amount of the
Securities then outstanding. Subject to certain exceptions set forth in the
Indenture, without notice to or the consent of any Securityholder, the Company,
the Subsidiary Guarantors and the Trustee may amend the Indenture or the
Securities to cure any ambiguity, omission, defect or inconsistency, or to
comply with Article 5 of the Indenture, or to provide for uncertificated
Securities in addition to or in place of certificated Securities (provided that
the uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code, or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code), or to add
guarantees (including Subsidiary Guarantees) with respect to the Securities, or
to secure the Securities, or to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power conferred on the
Company or any Subsidiary Guarantor, or to make any change that does not
adversely affect the rights of any Securityholder, or to comply with any
requirement of the SEC in connection with qualifying the Indenture under the
Act.
Exhibit 1-9
Exhibit 1 to Appendix A
13. Defaults and Remedies
Under the Indenture, Events of Default include
(i) default for 30 days in the payment of interest on the Securities
when due and such default continues for a period of 30 days;
(ii) default in payment of principal on the Securities at Stated
Maturity, upon redemption pursuant to paragraph 5 of the Securities, upon
required purchase, upon declaration of acceleration or otherwise;
(iii) failure by the Company to comply with its obligations under
certain covenants;
(iv) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse
of time;
(v) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company, a
Subsidiary Guarantor or a Significant Subsidiary (other than Production
Payments and Reserve Sales and Non-recourse Purchase Money Indebtedness) if
the amount accelerated (or so unpaid) exceeds $5 million;
(vi) certain events of bankruptcy, insolvency or reorganization with
respect to the Company, a Subsidiary Guarantor or a Significant Subsidiary;
(vii) any judgment or decree for the payment of money in excess of $5
million is rendered against the Company, any Subsidiary Guarantor or a
Significant Subsidiary, remains outstanding for a period of 60 days
following such judgment or decree and is not discharged, waived or stayed
within 10 days after notice; or
(viii) any Subsidiary Guarantee ceases to be in full force and effect
(other than in accordance with the terms of such Subsidiary Guarantee) if
such default continues for a period of 5 days after notice thereof to the
Company or any Subsidiary Guarantor denies or disaffirms its obligations
under its Subsidiary Guarantee.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be due and
payable immediately. Certain events of bankruptcy, insolvency or reorganization
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default. A default under
clauses (iii), (iv) or (viii) will not constitute an Event of Default until the
Trustee or the Holders of 25% in principal amount of the outstanding Securities
notifies the Company of the default and the Company does not cure such default
within the time specified after receipt of such notice.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities
Exhibit 1-10
Exhibit 1 to Appendix A
unless it receives reasonable indemnity or security. Subject to certain
limitations, Holders of a majority in principal amount of the Securities may
direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
14. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others
No director, officer, employee, incorporator or stockholder, as such, of
the Company or any Subsidiary Guarantor or the Trustee shall have any liability
for any obligations of the Company or any Subsidiary Guarantor under the
Securities, the Subsidiary Guarantees 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.
16. 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.
17. 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).
18. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
Exhibit 1-11
Exhibit 1 to Appendix A
19. 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.
20. Governing Law.
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture. Requests may be
made to:
Energy Partners, Ltd.
201 St. Charles Avenue
Suite 3400
New Orleans, Louisiana 70170
Attention of Corporate Secretary
Exhibit 1-12
Exhibit 1 to Appendix A
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
(2) [ ] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [ ] inside 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;
(4) [ ] in the United States to an institutional "accredited investor"
within the meaning of Rule 501(a)(1), (2), (3) or (7) under the
Securities Act that is acquiring the securities for its own account or
for the account of another institutional accredited investor for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the
Securities Act and that, prior to such transfer, furnishes (or has
furnished on its behalf by a U.S. broker-dealer) to the trustee a
certificate containing certain
Exhibit 1-13
Exhibit 1 to Appendix A
representations and agreements relating to restrictions on transfer of
the securities (the form of which certificate can be found in Appendix
C to the Indenture);
(5) [ ] 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
(6) [ ] pursuant to the exemption from registration provided by Rule 144
under the Securities Act of 1933.
If such transfer is being made pursuant to an offshore transaction in
accordance with Rule 904 under the Securities Act, the undersigned further
certifies that:
(i) the offer of the Securities was not made to a person in the United
States;
(ii) either (a) at the time the buy offer was originated, the
transferee was outside the United States or we and any person acting on our
behalf reasonably believed that the transferee was outside the United
States, or (b) the transaction was executed in, on or through the
facilities of a designated off-shore securities market and neither we nor
any person acting on our behalf knows that the transaction has been
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;
(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 only
in accordance with the provisions of Regulation S; pursuant to registration
of the Securities under the Securities Act; or pursuant to an available
exemption from the registration requirements under the Securities Act.
Exhibit 1-14
Exhibit 1 to Appendix A
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4) or (5) is
checked, the Trustee may 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 of 1933, such as the exemption
provided by Rule 144 under such Act.
Signature:______________________________________
Signature Guarantee:
___________________________________ ______________________________________
Signature must be guaranteed Signature
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Exhibit 1-15
Exhibit 1 to Appendix A
TO BE COMPLETED BY PURCHASER IF (3) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing this Security
for its own account or an account with respect to which it exercises sole
investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, and is aware that the sale to it is being made in reliance on Rule 144A
and acknowledges that it has received such information regarding the Company as
the undersigned has requested pursuant to Rule 144A or has determined not to
request such information and that it is aware that the transferor is relying
upon the undersigned's foregoing representations in order to claim the exemption
from registration provided by Rule 144A.
Dated:____________________________ ___________________________________________
NOTICE: To be executed by an executive
officer
Exhibit 1-16
Exhibit 1 to Appendix A
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been
made:
Principal amount of Signature of
Amount of decrease in Amount of increase in this Global Security authorized signatory
Principal Amount of Principal Amount of following such of Trustee or
Date of Exchange this Global Security this Global Security decrease or increase Securities Custodian
- ---------------- -------------------- -------------------- -------------------- --------------------
Exhibit 1-17
Exhibit 1 to Appendix A
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or Section 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 4.06 or Section 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 1-18
Exhibit 1 to Appendix A
[FORM OF FACE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
[OID Legend]
FOR PURPOSES OF SECTION 1273 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED
(THE "CODE"), THIS SECURITY HAS ORIGINAL ISSUE DISCOUNT. FOR PURPOSES OF SECTION
1273 OF THE CODE, THE ISSUE PRICE IS $[ ] AND THE AMOUNT OF ORIGINAL ISSUE
DISCOUNT IS $[ ], IN EACH CASE PER $1000 PRINCIPAL AMOUNT OF THIS SECURITY. FOR
PURPOSES OF SECTION 1275 OF THE CODE, THE ISSUE DATE OF THIS SECURITY IS [ ].
FOR PURPOSES OF SECTION 1272 OF THE CODE, THE YIELD TO MATURITY (COMPOUNDED
SEMI-ANNUALLY) IS [ ]%.(1)(2)
- ----------
1 If the Security is to be issued in global form add the Global Securities
Legend from Exhibit 1 to Appendix A and the attachment from such Exhibit 1
captioned "[TO BE ATTACHED TO GLOBAL SECURITIES] - SCHEDULE OF INCREASES OR
DECREASES IN GLOBAL SECURITY."
2 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 I to Appendix A and replace the
Assignment Form included in this Exhibit A with the Assignment Form included in
such Exhibit 1.
Exhibit 1-19
Exhibit 1 to Appendix A
CUSIP No. ______________
ISIN No. ______________
$______________
No. ____________
8 3/4% Senior Notes Due 2010
ENERGY PARTNERS, LTD., a Delaware corporation, for value received, promises
to pay to CEDE & CO., or registered assigns, the principal sum of [ ] Dollars or
such greater or lesser amount as indicated on the Schedule of Increases or
Decreases in Global Security hereto, on August 1, 2010.
Interest Payment Dates: February 1 and August 1.
Record Dates: January 15 and July 15.
Additional provisions of this Security are set forth on the other side of this
Security.
Dated: [ ]
ENERGY PARTNERS, LTD.
By:
-------------------------------------
Name:
Title
By:
-------------------------------------
Name:
Title
Exhibit 1-20
Exhibit 1 to Appendix A
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
WELLS FARGO BANK, N.A., as Trustee,
certifies that this is one of the Securities
referred to in the Indenture.
By:
------------------------------------------
Authorized Signatory
Exhibit 1-21
Exhibit 1 to Appendix A
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
8 3/4% Senior Notes Due 2010
1. Interest
Energy Partners, Ltd., a Delaware corporation (such corporation, and its
successors and assigns under the Indenture hereinafter referred to, being herein
called the "Company"), promises to pay interest on the principal amount of this
Security at the rate per annum shown above[; provided, however, that if a
Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Security at a rate of 0.50% per annum
(increasing by an additional 0.50% per annum after each consecutive 90-day
period that occurs after the date on which such Registration Default occurs up
to a maximum additional interest rate of 2.00%) 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.](3) The Company will pay
interest semiannually on February 1 and August 1 of each year. 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 August 5, 2003. Interest will be computed
on the basis of a 360-day year of twelve 30-day months. The Company shall pay
interest on overdue principal at the rate borne by the Securities plus 1% per
annum, and it shall pay interest on overdue installments of interest at the same
rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted interest)
to the Persons who are registered holders of Securities at the close of business
on the January 15 or July 15 next preceding the interest payment date even if
Securities are canceled after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts.
Payments in respect of Securities (including principal, premium and
interest) will be made by wire transfer of immediately available funds to the
accounts specified by the holders thereof or, if no U.S. dollar account
maintained by the payee with a bank in the United States is designated by any
holder to the Trustee or the Paying Agent at least 30 days prior to the relevant
due date for payment (or such other date as the Trustee may accept in its
discretion), by mailing a check to the registered address of such holder.
- ----------
3 Insert if at the date of issuance of the Exchange Security or Private Exchange
Security (as the case may be) any Registration Default has occurred with respect
to the related Initial Securities during the interest period in which such date
of issuance occurs.
Exhibit 1-22
Exhibit 1 to Appendix A
3. Paying Agent and Registrar.
Initially, Wells Fargo Bank, N.A. (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 August 5,
2003 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, as amended (15 U.S.C.
Sections 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act").
Terms defined in the Indenture and not defined herein have the meanings ascribed
thereto in the Indenture. The Securities are subject to all such terms, and
Securityholders are referred to the Indenture and the Act for a statement of
those terms.
The Securities are general unsecured, senior subordinated obligations of
the Company. The Company may, subject to Article 4 of the Indenture, issue
additional Securities under 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 imposes certain
limitations on the Incurrence of Indebtedness by the Company and certain of its
Subsidiaries, the payment of dividends and other distributions on the Capital
Stock of the Company and certain of its Subsidiaries, the purchase or redemption
of Capital Stock of the Company and of certain Capital Stock of such
Subsidiaries, the sale or transfer of assets and Subsidiary stock, the creation
of Liens and transactions with Affiliates. In addition, the Indenture limits the
ability of the Company and certain of its Subsidiaries to restrict distributions
and dividends from Subsidiaries. The Indenture also restricts the ability of the
Company and the Subsidiary Guarantors to consolidate or merge with or into, or
to transfer all or substantially all their assets to, another Person.
The Indenture also provides that the Subsidiary Guarantors will Guarantee
the Securities pursuant to the Subsidiary Guarantees. The Subsidiary Guarantees
will secure the due and punctual payment of the principal of and interest, if
any, on the Securities and all other amounts payable by the Company under the
Indenture and the Securities when and as the same shall be due and payable,
whether at maturity, by acceleration or otherwise. The Subsidiary Guarantees
will unconditionally guarantee the Guaranteed Obligations on a senior basis
pursuant to the terms of the Indenture.
5. Optional Redemption.
The Securities will not be redeemable at the option of the Company prior to
August 1, 2007. On and after August 1, 2007, the Securities shall be redeemable,
at the Company's option, in whole or in part, at any time or from time to time
at the following redemption prices (expressed in percentages of principal
amount), plus accrued and unpaid interest to the redemption date (subject to the
right of Holders of record on the relevant record
Exhibit 1-23
Exhibit 1 to Appendix A
date to receive interest due on the relevant interest payment date), if redeemed
during the 12-month period commencing on August 1 of the years set forth below:
Period Percentage
------ ----------
2007.......................... 104.375%
2008.......................... 102.188
2009 and thereafter........... 100.00
Prior to August 1, 2006, the Company may at its option on one or more
occasions redeem Securities (which includes Additional Securities, if any) in an
aggregate principal amount not to exceed 35% of the aggregate principal amount
of the Securities (which includes Additional Securities, if any) originally
issued at a redemption price (expressed as a percentage of principal amount) of
108.75%, plus accrued and unpaid interest to the redemption date, with the net
cash proceeds from one or more Equity Offerings; provided 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
consummation of the related Equity Offering.
In the case of any partial redemption, the Trustee will select the
Securities for redemption on a pro rata basis, by lot or by such other method as
the Trustee in its sole discretion deems to be fair and appropriate, although no
Security of $1,000 in original principal amount or less will be redeemed in
part. If any Security is to be redeemed in part only, the notice of redemption
relating to such Note will state the portion of the principal amount thereof to
be redeemed. A new Security in principal amount equal to the unredeemed portion
thereto will be issued in the name of the Holder thereof upon cancellation of
the original Security. Securities called for redemption become due on the date
fixed for redemption. On and after the redemption date, interest will cease to
accrue on the Securities or portions thereof called for redemption.
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
his registered address. Securities in denominations larger than $1,000 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.
Exhibit 1-24
Exhibit 1 to Appendix A
7. Put Provisions.
Upon a Change of Control, any Holder of Securities will have the right,
subject to certain conditions, to cause the Company to purchase all or any part
of the Securities of such Holder at a purchase price equal to 101% of the
principal amount of the Securities to be purchased plus accrued interest 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.
8. Denominations; Transfer; Exchange.
The Securities are in registered form without coupons in denominations of
$1,000 and whole multiples of $1,000. A Holder may register the transfer of or
exchange Securities in accordance with the Indenture. The Registrar may require
a Holder, among other things, to furnish appropriate endorsements or transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any
Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
9. Persons Deemed Owners.
The registered Holder of this Security shall be treated as the owner of it
for all purposes.
10. 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.
11. Discharge and Defeasance.
Subject to certain conditions, the Company at any time may terminate some
or all of its obligations under the Securities and the Indenture, including the
Subsidiary Guarantees, if the Company deposits with the Trustee money or U.S.
Government Obligations for the payment of principal and interest on the
Securities to redemption or maturity, as the case may be.
12. Amendment, Waiver.
Subject to certain exceptions set forth in the Indenture, (i) the Indenture
or the Securities may be amended with the written consent of the Holders of at
least a majority in principal amount of the Securities then outstanding and (ii)
any default or noncompliance with any provisions may be waived with the written
consent of the Holders of at least a majority in principal amount of the
Securities then outstanding. Subject to certain exceptions set forth in the
Indenture, without notice to or the consent of any Securityholder, the Company,
the Subsidiary Guarantors and the Trustee may amend the Indenture or the
Securities to cure any ambiguity,
Exhibit 1-25
Exhibit 1 to Appendix A
omission, defect or inconsistency, or to comply with Article 5 of the Indenture,
or to provide for uncertificated Securities in addition to or in place of
certificated Securities (provided that the uncertificated Securities are issued
in registered form for purposes of Section 163(f) of the Code, or in a manner
such that the uncertificated Securities are described in Section 163(f)(2)(B) of
the Code), or to make any change to the subordination provisions of the
Indenture that would limit or terminate the benefits available to any holder of
Senior Indebtedness (or its Representative) of the Company or any Subsidiary
Guarantor, or to add guarantees (including Subsidiary Guarantees) with respect
to the Securities, or to secure the Securities, or to add to the covenants of
the Company for the benefit of the Holders, or to surrender any right or power
conferred on the Company or any Subsidiary Guarantor, or to make any change that
does not adversely affect the rights of any Securityholder, or to comply with
any requirement of the SEC in connection with qualifying the Indenture under the
Act. No amendment may be made to the subordination provisions of the Indenture
that adversely affects the rights of any holder of Senior Indebtedness of the
Company or of any Subsidiary Guarantor then outstanding unless the holders of
such Senior Indebtedness (or their Representative) consent to such change.
13. Defaults and Remedies.
Under the Indenture, Events of Default include
(i) default for 30 days in the payment of interest on the Securities
when due and such default continues for a period of 30 days;
(ii) default in payment of principal on the Securities at Stated
Maturity, upon redemption pursuant to paragraph 5 of the Securities, upon
required purchase, upon declaration of acceleration or otherwise;
(iii) failure by the Company to comply with its obligations under
certain covenants;
(iv) failure by the Company to comply with other agreements in the
Indenture or the Securities, in certain cases subject to notice and lapse
of time;
(v) certain accelerations (including failure to pay within any grace
period after final maturity) of other Indebtedness of the Company, any
Subsidiary Guarantor or a Significant Subsidiary (other than Production
Payments and Reserve Sales and Non-recourse Purchase Money Indebtedness) if
the amount accelerated (or so unpaid) exceeds $5 million;
(vi) certain events of bankruptcy, insolvency or reorganization with
respect to the Company, a Subsidiary Guarantor or a Significant Subsidiary;
(vii) any judgment or decree for the payment of money in excess of $5
million is rendered against the Company, any Subsidiary Guarantor or a
Significant Subsidiary, remains outstanding for a period of 60 days
following such judgment or decree and is not discharged, waived or stayed
within 10 days after notice; or
Exhibit 1-26
Exhibit 1 to Appendix A
(viii) any Subsidiary Guarantee ceases to be in full force and effect
(other than in accordance with the terms of such Subsidiary Guarantee) if
such default continues for a period of 5 days after notice thereof to the
Company or any Subsidiary Guarantor denies or disaffirms its obligations
under its Subsidiary Guarantee.
If an Event of Default occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount of the outstanding Securities may declare the
principal of and accrued but unpaid interest on all the Securities to be due and
payable immediately. Certain events of bankruptcy, insolvency or reorganization
are Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default. A default under
clauses (iii), (iv) or (viii) will not constitute an Event of Default until the
Trustee or the Holders of 25% in principal amount of the outstanding Securities
notifies the Company of the default and the Company does not cure such default
within the time specified after receipt of such notice.
Securityholders may not enforce the Indenture or the Securities except as
provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default (except a Default
in payment of principal or interest) if it determines that withholding notice is
in the interest of the Holders.
14. Trustee Dealings with the Company.
Subject to certain limitations imposed by the Act, the Trustee under the
Indenture, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
15. No Recourse Against Others.
No director, officer, employee, incorporator or stockholder, as such, of
the Company or any Subsidiary Guarantor or the Trustee shall have any liability
for any obligations of the Company or any Subsidiary Guarantor under the
Securities, the Subsidiary Guarantees 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.
16. 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.
Exhibit 1-27
Exhibit 1 to Appendix A
17. 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).
18. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Company has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.
19. 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.(4)
20. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES
OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture. Requests may be
made to:
Energy Partners, Ltd.
201 St. Charles Avenue
Suite 3400
New Orleans, Louisiana 70170
Attention of Corporate Secretary
- ----------
4 Delete if this Security is not being issued in exchange for an Initial
Security.
Exhibit 1-28
Exhibit 1 to Appendix A
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.
Exhibit 1-29
Exhibit 1 to Appendix A
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the Company
pursuant to Section 4.06 or Section 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 4.06 or Section 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 1-30
Appendix B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"), dated as of , 20 ,
among [SUBSIDIARY GUARANTOR] (the "New Subsidiary Guarantor"), a subsidiary of
Energy Partners, Ltd. (or its successor) (the "Company"), ENERGY PARTNERS, LTD.,
a Delaware corporation, on behalf of itself and the Subsidiary Guarantors (the
"Existing Subsidiary Guarantors") under the Indenture referred to below, and
Wells Fargo Bank, N.A., as trustee under the indenture referred to below (the
"Trustee").
WITNESSETH:
WHEREAS the Company has heretofore executed and delivered to the Trustee an
Indenture (the "Indenture"), dated as of August 5, 2003, providing for the
issuance of 8 3/4% Senior Notes Due 2010 (the "Securities");
WHEREAS Section 4.14 of the Indenture provides that under certain
circumstances the Company is required to cause the New Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture pursuant to which
the New Subsidiary Guarantor shall unconditionally guarantee all of the
Company's obligations under the Securities pursuant to a Subsidiary Guarantee on
the terms and conditions set forth herein; and
WHEREAS pursuant to Section 9.01 of the Indenture, the Trustee, the Company
and Existing Subsidiary Guarantors are authorized to execute and deliver this
Supplemental Indenture;
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the New
Subsidiary Guarantor, the Company, the Existing Subsidiary Guarantors and the
Trustee mutually covenant and agree for the equal and ratable benefit of the
holders of the Securities as follows:
1. Definitions.
(a) Capitalized terms used herein without definition shall have the
meanings assigned to them in the Indenture.
(b) For all purposes of this Supplement, except as otherwise herein
expressly provided or unless the context otherwise requires: (i) the terms and
expressions used herein shall have the same meanings as corresponding terms and
expressions used in the Indenture; and (ii) the words "herein," "hereof" and
"hereby" and other words of similar import used in this Supplement refer to this
Supplement as a whole and not to any particular section hereof.
2. Agreement to Guarantee. The New Subsidiary Guarantor hereby agrees,
jointly and severally with all other Subsidiary Guarantors, to guarantee the
Company's obligations under the Securities on the term and subject to the
conditions set forth in Article 11 of the Indenture and to be bound by all other
applicable provisions of the Indenture.
3. Ratification of Indenture; Supplemental Indentures Part of Indenture.
Except as expressly amended hereby, the Indenture is in all respects ratified
and confirmed and
Appendix B-1
Appendix B
all the terms, conditions and provisions thereof shall remain in full force and
effect. This Supplemental Indenture shall form a part of the Indenture for all
purposes, and every holder of Securities heretofore or hereafter authenticated
and delivered shall be bound hereby.
4. Governing Law. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT
GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT
THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
5. Trustee Makes No Representation. The Trustee makes no representation as
to the validity or sufficiency of this Supplemental Indenture.
6. Counterparts. The parties may sign any number of copies of this
Supplemental Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement.
7. Effect of Headings. The Section headings herein are for convenience only
and shall not effect the construction thereof.
Appendix B-2
Appendix B-3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed as of the date first above written.
[NEW SUBSIDIARY GUARANTOR]
By:
------------------------------------
Name:
Title:
ENERGY PARTNERS, LTD., on behalf
of itself and the Existing Subsidiary
Guarantors
By:
------------------------------------
Name:
Title:
WELLS FARGO BANK, N.A.,
as Trustee
By:
------------------------------------
Name:
Title:
Appendix B-3
APPENDIX C
FORM OF CERTIFICATE FROM
ACQUIRING INSTITUTIONAL ACCREDITED INVESTOR
Energy Partners, Ltd.
201 St. Charles Avenue, Suite 3400
New Orleans, LA 70170
Wells Fargo Bank, N.A.
505 Main Street, Suite 301
Fort Worth, Texas 76201
Attention: Corporate Trust Services
Re: 8 3/4% Senior Notes due 2010
Reference is hereby made to the Indenture, dated as of August 5, 2003 (the
"Indenture"), among Energy Partners, Ltd., as issuer (the "Company"), the
Guarantors named on the signature pages thereto and Wells Fargo Bank, N.A., as
trustee. Capitalized terms used but not defined herein shall have the meanings
given to them in the Indenture and the Company's Confidential Offering Circular
dated as of July 29, 2003.
In connection with our proposed purchase of $____________ aggregate principal
amount of:
(a) / / a beneficial interest in a Global Note, or
(b) / / a Certificated Note,
we confirm that:
1. We understand that any subsequent transfer of the Notes or any interest
therein is subject to certain restrictions and conditions set forth in the
Indenture and the undersigned agrees to be bound by, and not to resell, pledge
or otherwise transfer the Notes or any interest therein except in compliance
with, such restrictions and conditions and the Securities Act of 1933, as
amended (the "Securities Act").
2. We understand that the offer and sale of the Notes have not been registered
under the Securities Act, and that the Notes and any interest therein may not be
offered, resold, pledged or otherwise transferred in the absence of such
registration or an applicable exemption therefrom.
3. We understand that for the benefit of the Company that the Notes may be
offered, sold, or otherwise transferred only (i) to the Company, (ii) in the
United States to a person whom we reasonably believe 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
Appendix C-1
Securities Act provided by Rule 144 (if available), (v) in the United States to
an institutional "accredited investor" (as defined in Rule 501(a)(1), (2), (3)
or (7) of Regulation D under the Securities Act) that is acquiring the Notes for
its own account or for the account of another institutional accredited investor
for investment purposes and not with a view to, or for offer or sale in
connection with, any distribution thereof in violation of the Securities Act and
that, prior to such transfer, furnishes (or has furnished on its behalf by a
U.S. broker-dealer) to the trustee an executed certificate substantially in the
form of this certificate or (vi) pursuant to an effective registration statement
under the Securities Act, in each of cases (i) through (vi) in accordance with
any applicable securities laws of any state of the United States.
4. We understand that we will notify any purchaser of the Notes of the resale
restrictions referred to in (3) above.
5. We understand that, on any proposed resale of the Notes or beneficial
interest therein, we will be required to furnish to you and the Company such
certificates, legal opinions and other information as you and the Company may
reasonably require to confirm that the proposed sale complies with the foregoing
restrictions. We further understand that the Notes purchased by us will bear a
legend to the foregoing effect.
6. We are an institutional "accredited investor" (as defined in Rule 501(a)(1),
(2), (3) or (7) of Regulation D under the Securities Act) and have such
knowledge and experience in financial and business matters as to be capable of
evaluating the merits and risks of our investment in the Notes, and we and any
accounts for which we are acting are each able to bear the economic risk of our
or its investment.
7. We are acquiring the Notes or beneficial interest therein purchased by us for
our own account or for one or more accounts (each of which is an institutional
"accredited investor" as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) as to each of which we exercise sole
investment discretion.
You and the Company are entitled to rely upon this certificate and are
irrevocably authorized to produce this certificate or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby.
___________________________________________
[Insert Name of Accredited Investor]
By:
------------------------------------
Name:
Title:
Dated: _______________________
Appendix C-2