EXHIBIT 4(c)
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DENBURY RESOURCES INC.,
Issuer
9% Series B Senior Subordinated Notes Due 2008
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INDENTURE
Dated as of August 15, 2001
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THE CHASE MANHATTAN BANK,
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) ..................................................... 13.03
(c) ..................................................... 13.03
313(a) ..................................................... 7.06
(b)(1) ..................................................... 7.06
(b)(2) ..................................................... 7.06
(c) ..................................................... 13.02
(d) ..................................................... 7.06
314(a) ..................................................... 4.02; 4.12;
13.02
(b) ..................................................... N.A.
(c)(1) ..................................................... 2.02; 13.04
(c)(2) ..................................................... 2.02; 13.04
(c)(3) ..................................................... N.A.
(d) ..................................................... N.A.
(e) ..................................................... 13.05
(f) ..................................................... N.A.
315(a) ..................................................... 7.01
(b) ..................................................... 7.05; 13.02
(c) ..................................................... 7.01
(d) ..................................................... 7.01
(e) ..................................................... 6.11
316(a)(last sentence) ..................................................... 13.06
(a)(1)(A) ..................................................... 6.05
(a)(1)(B) ..................................................... 6.04
(a)(2) ..................................................... N.A.
(b) ..................................................... 6.07
(c) ..................................................... N.A.
317(a)(1) ..................................................... 6.08
(a)(2) ..................................................... 6.09
(b) ..................................................... 2.04
318(a) ..................................................... 13.01
(b) ..................................................... N.A.
(c) ..................................................... N.A.
N.A. means Not Applicable.
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Note: This Cross-Reference Table shall not, for any
purpose, be deemed to be part of the
Indenture.
TABLE OF CONTENTS
Page
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ARTICLE 1
Definitions and Incorporation by Reference
SECTION 1.01. Definitions...................................... 1
SECTION 1.02. Other Definitions................................ 33
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act.................................. 33
SECTION 1.04. Rules of Construction............................ 34
ARTICLE 2
The Securities
SECTION 2.01. Form and Dating.................................. 35
SECTION 2.02. Execution and Authentication..................... 35
SECTION 2.03. Registrar and Paying Agent....................... 36
SECTION 2.04. Paying Agent To Hold Money in Trust.............. 37
SECTION 2.05. Securityholder Lists............................. 37
SECTION 2.06. Transfer and Exchange............................ 37
SECTION 2.07. Replacement Securities........................... 37
SECTION 2.08. Outstanding Securities........................... 38
SECTION 2.09. Temporary Securities............................. 38
SECTION 2.10. Cancelation...................................... 39
SECTION 2.11. Defaulted Interest............................... 39
SECTION 2.12. CUSIP Numbers.................................... 39
SECTION 2.13. Issuance of Additional Securities................ 39
ARTICLE 3
Redemption
SECTION 3.01. Notices to Trustee............................... 40
SECTION 3.02. Selection of Securities To Be
Redeemed....................................... 40
SECTION 3.03. Notice of Redemption............................. 41
SECTION 3.04. Effect of Notice of Redemption................... 41
SECTION 3.05. Deposit of Redemption Price...................... 42
SECTION 3.06. Securities Redeemed in Part...................... 42
ARTICLE 4
Covenants
SECTION 4.01. Payment of Securities............................ 42
SECTION 4.02. SEC Reports...................................... 42
SECTION 4.03. Limitation on Indebtedness....................... 43
SECTION 4.04. Incurrence of Layered Indebtedness............... 46
SECTION 4.05. Limitation on Restricted Payments................ 46
SECTION 4.06. Limitation on Restrictions on
Distributions from Restricted
Subsidiaries................................... 48
SECTION 4.07. Limitation on Sales of Assets and
Subsidiary Stock............................... 49
SECTION 4.08. Limitation on Affiliate Transactions............. 52
SECTION 4.09. Change of Control................................ 54
SECTION 4.10. Limitation on the Sale or Issuance
of Capital Stock of Restricted
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..................... 56
ARTICLE 5
Successor Company
SECTION 5.01. When Company May Merge or Transfer
Assets......................................... 57
SECTION 5.02. When Subsidiary Guarantors May Merge or
Transfer Assets................................ 58
ARTICLE 6
Defaults and Remedies
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.............................. 63
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................. 64
SECTION 6.10. Priorities....................................... 64
SECTION 6.11. Undertaking for Costs............................ 64
SECTION 6.12. Waiver of Stay or Extension Laws................. 65
ii
ARTICLE 7
Trustee
SECTION 7.01. Duties of Trustee................................ 65
SECTION 7.02. Rights of Trustee................................ 67
SECTION 7.03. Individual Rights of Trustee..................... 67
SECTION 7.04. Trustee's Disclaimer............................. 68
SECTION 7.05. Notice of Defaults............................... 68
SECTION 7.06. Reports by Trustee to Holders.................... 68
SECTION 7.07. Compensation and Indemnity....................... 68
SECTION 7.08. Replacement of Trustee........................... 69
SECTION 7.09. Successor Trustee by Merger...................... 70
SECTION 7.10. Eligibility; Disqualification.................... 71
SECTION 7.11. Preferential Collection of Claims
Against Company................................ 71
ARTICLE 8
Discharge of
Indenture; Defeasance
SECTION 8.01. Discharge of Liability on Securities;
Defeasance..................................... 71
SECTION 8.02. Conditions to Defeasance......................... 72
SECTION 8.03. Application of Trust Money....................... 74
SECTION 8.04. Repayment to Company............................. 74
SECTION 8.05. Indemnity for Government
Obligations.................................... 74
SECTION 8.06. Reinstatement.................................... 74
ARTICLE 9
Amendments
SECTION 9.01. Without Consent of Holders....................... 75
SECTION 9.02. With Consent of Holders.......................... 76
SECTION 9.03. Compliance with Trust
Indenture Act.............. 77
SECTION 9.04. Revocation and Effect of Consents
and Waivers.................................... 77
SECTION 9.05. Notation on or Exchange of
Securities..................................... 78
SECTION 9.06. Trustee To Sign Amendments....................... 78
SECTION 9.07. Payment for Consent.............................. 78
iii
ARTICLE 10
Subordination of the Securities
SECTION 10.01. Agreement To Subordinate......................... 78
SECTION 10.02. Liquidation, Dissolution,
Bankruptcy..................................... 79
SECTION 10.03. Default on Designated Senior
Indebtedness................................... 79
SECTION 10.04. Acceleration of Payment of
Securities..................................... 81
SECTION 10.05. When Distribution Must Be Paid Over.............. 81
SECTION 10.06. Subrogation...................................... 81
SECTION 10.07. Relative Rights.................................. 81
SECTION 10.08. Subordination May Not Be Impaired by
Company........................................ 82
SECTION 10.09. Rights of Trustee and Paying Agent............... 82
SECTION 10.10. Distribution or Notice to
Representative................................. 82
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To
Accelerate..................................... 82
SECTION 10.12. Trust Moneys Not Subordinated.................... 82
SECTION 10.13. Trustee Entitled To Rely......................... 83
SECTION 10.14. Trustee To Effectuate Subordination.............. 83
SECTION 10.15. Trustee Not Fiduciary for Holders
of Senior Indebtedness of the
Company........................................ 84
SECTION 10.16. Reliance by Holders of Senior
Indebtedness of the Company on
Subordination Provisions....................... 84
ARTICLE 11
Subsidiary Guarantees
SECTION 11.01. Subsidiary Guarantees............................ 84
SECTION 11.02. Limitation on Liability.......................... 87
SECTION 11.03. Successors and Assigns........................... 87
SECTION 11.04. No Waiver........................................ 87
SECTION 11.05. Modification..................................... 87
SECTION 11.06. Release of Subsidiary Guarantor.................. 88
iv
ARTICLE 12
Subordination of Subsidiary Guarantees
SECTION 12.01. Agreement To Subordinate........................ 88
SECTION 12.02. Liquidation, Dissolution,
Bankruptcy.................................... 88
SECTION 12.03. Default on Designated Senior
Indebtedness of Subsidiary Guarantor.......... 89
SECTION 12.04. Demand for Payment.............................. 90
SECTION 12.05. When Distribution Must Be Paid Over............. 91
SECTION 12.06. Subrogation..................................... 91
SECTION 12.07. Relative Rights................................. 91
SECTION 12.08. Subordination May Not Be Impaired
by Subsidiary Guarantor....................... 91
SECTION 12.09. Rights of Trustee and Paying Agent.............. 91
SECTION 12.10. Distribution or Notice to
Representative................................ 92
SECTION 12.11. Article 12 Not To Prevent Defaults
Under the Subsidiary Guarantee or Limit
Right to Demand Payment....................... 92
SECTION 12.12. Trustee Entitled To Rely........................ 92
SECTION 12.13. Trustee To Effectuate Subordination............. 93
SECTION 12.14. Trustee Not Fiduciary for Holders of
Senior Indebtedness of Subsidiary
Guarantor..................................... 93
SECTION 12.15. Reliance by Holders of Senior
Indebtedness on Subordination
Provisions.................................... 93
ARTICLE 13
Miscellaneous
SECTION 13.01. Trust
Indenture Act Controls.................... 94
SECTION 13.02. Notices......................................... 94
SECTION 13.03. Communication by Holders with Other
Holders....................................... 95
SECTION 13.04. Certificate and Opinion as to
Conditions Precedent.......................... 95
SECTION 13.05. Statements Required in Certificate
or Opinion.................................... 95
SECTION 13.06. When Securities Disregarded..................... 96
SECTION 13.07. Rules by Trustee, Paying Agent and
Registrar..................................... 96
SECTION 13.08. Legal Holidays.................................. 96
SECTION 13.09. Governing Law................................... 96
SECTION 13.10. No Recourse Against Others...................... 96
SECTION 13.11. Successors...................................... 97
v
SECTION 13.12. Multiple Originals.............................. 97
SECTION 13.13. Table of Contents; Headings..................... 97
SECTION 13.14. Severability.................................... 97
Appendix A Provisions Relating to Initial
Securities, Exchange Securities and Private
Exchange Securities
Exhibit 1 to Form of Initial Security
Appendix A
Exhibit A Form of Face of Exchange Security or Private
Exchange Security
Exhibit B Form of Supplemental
Indenture
vi
INDENTURE dated as of August 15, 2001, among
DENBURY RESOURCES INC., a Delaware corporation (the
"Company"), certain of the Company's subsidiaries
signatory hereto (each, a "Subsidiary Guarantor" and,
collectively, the "Subsidiary Guarantors") and THE
CHASE MANHATTAN BANK (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders of the Company's
Initial Securities, Exchange Securities and Private Exchange Securities
(collectively, the "Securities"):
ARTICLE 1
Definitions and Incorporation by Reference
Section 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other than
Indebtedness and Capital Stock) in the Oil and Gas Business; (ii) the Capital
Stock of a Person that becomes a Restricted Subsidiary as a result of the
acquisition of such Capital Stock by the Company or another Restricted
Subsidiary; or (iii) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary; provided, however, that any
such Restricted Subsidiary described in clauses (ii) or (iii) above is primarily
engaged in the Oil and Gas Business.
"Additional Securities" means, subject to the Company's compliance
with Section 4.03, 9% Series B Senior Subordinated Notes Due 2008 issued from
time to time after the Issue Date under the terms of this
Indenture (other than
pursuant to Section 2.06, 2.07, 2.09, 3.06 or 9.05 of this Indenture and other
than Exchange Securities or Private Exchange Securities issued pursuant to an
exchange offer for other Securities outstanding under this Indenture)
"Adjusted Consolidated Net Tangible Assets" or "ACNTA" means (without
duplication), as of the date of determination, (a) the sum of (i) the discounted
future net revenue from proved crude oil and natural gas reserves of the Company
and its Restricted Subsidiaries calculated in accordance with SEC guidelines
before any state or federal income taxes, as estimated in a reserve report
prepared as of the end of the Company's most recently completed fiscal
2
year, which reserve report is prepared or reviewed by independent petroleum
engineers, as increased by, as of the date of determination, the discounted
future net revenue of (A) estimated proved crude oil and natural gas reserves of
the Company and its Restricted Subsidiaries attributable to acquisitions
consummated since the date of such year-end reserve report, and (B) estimated
crude oil and natural gas reserves of the Company and its Restricted
Subsidiaries attributable to extensions, discoveries and other additions and
upward determinations of estimates of proved crude oil and natural gas reserves
(including previously estimated development costs incurred during the period and
the accretion of discount since the prior year end) due to exploration,
development or exploitation, production or other activities which reserves were
not reflected in such year-end reserve report which would, in the case of
determinations made pursuant to clauses (A) and (B), in accordance with standard
industry practice, result in such determinations, in each case calculated in
accordance with SEC guidelines (utilizing the prices utilized in such year- end
reserve report), and decreased by, as of the date of determination, the
discounted future net revenue attributable to (C) estimated proved oil and gas
reserves of the Company and its Restricted Subsidiaries reflected in such
year-end reserve report produced or disposed of since the date of such year-end
reserve report and (D) reductions in the estimated crude oil and natural gas
reserves of the Company and its Restricted Subsidiaries reflected in such
year-end reserve report since the date of such year-end reserve report
attributable to downward determinations of estimates of proved crude oil and
natural gas reserves due to exploration, development or exploitation, production
or other activities conducted or otherwise occurring since the date of such
year-end reserve report which would, in the case of determinations made pursuant
to clauses (C) and (D), in accordance with standard industry practice, result in
such determinations, in each case calculated in accordance with SEC guidelines
(utilizing the prices utilized in such year-end reserve report); provided,
however, that, in the case of each of the determinations made pursuant to
clauses (A) through (D), such increases and decreases shall be as estimated by
the Company's engineers, except that if as a result of such acquisitions,
dispositions, discoveries, extensions or revisions, there is a Material Change
which is an increase, then such increases and decreases in the discounted future
net revenue shall be confirmed in writing by an independent petroleum engineer,
(ii) the capitalized costs that are attributable to crude oil and natural gas
properties of the Company and its Restricted Subsidiaries to which no proved
crude oil and natural gas reserves are attributed, based on the Company's books
and records as of a
3
date no earlier than the date of the Company's latest annual or quarterly
financial statements, (iii) the Net Working Capital on a date no earlier than
the date of the Company's latest annual or quarterly financial statements and
(iv) the greater of (I) the net book value on a date no earlier than the date of
the Company's latest annual or quarterly financial statements and (II) the
appraised value, as estimated by independent appraisers, of other tangible
assets of the Company and its Restricted Subsidiaries as of a date no earlier
than the date of the Company's latest audited financial statements (provided
that the Company shall not be required to obtain such an appraisal of such
assets if no such appraisal has been performed), minus (b) to the extent not
otherwise taken into account in the immediately preceding clause (a), the sum of
(i) minority interests, (ii) any natural gas balancing liabilities of the
Company and its Restricted Subsidiaries reflected in the Company's latest
audited financial statements, (iii) the discounted future net revenue,
calculated in accordance with SEC guidelines (utilizing the same prices utilized
in the Company's year-end reserve report), attributable to reserves subject to
participation interests, overriding royalty interests or other interests of
third parties, pursuant to participation, partnership, vendor financing or other
agreements then in effect, or which otherwise are required to be delivered to
third parties, (iv) the discounted future net revenue, calculated in accordance
with SEC guidelines (utilizing the same prices utilized in the Company's year-
end reserve report), attributable to reserves that are required to be delivered
to third parties to fully satisfy the obligations of the Company and its
Restricted Subsidiaries with respect to Volumetric Production Payments on the
schedules specified with respect thereto and (v) the discounted future net
revenue, calculated in accordance with SEC guidelines, attributable to reserves
subject to Dollar- Denominated Production Payments that, based on the estimates
of production included in determining the discounted future net revenue
specified in the immediately preceding clause (a)(i) (utilizing the same prices
utilized in the Company's year-end reserve report), would be necessary to
satisfy fully the obligations of the Company and its Restricted Subsidiaries
with respect to Dollar-Denominated Production Payments on the schedules
specified with respect thereto.
"Affiliate" of any specified Person means any other Person, directly
or indirectly, controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of
4
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, 4.07 and 4.08 only, "Affiliate" shall also mean any beneficial
owner of Capital Stock representing 10% or more of the total voting power of the
Voting Stock (on a fully diluted basis) of the Company or of rights or warrants
to purchase such Capital Stock (whether or not currently exercisable) and any
Person who would be an Affiliate of any such beneficial owner pursuant to the
first sentence hereof.
"Asset Disposition" means any sale, lease, transfer or other
disposition (or series of related sales, leases, transfers or dispositions) by
the Company or any Restricted Subsidiary, including any disposition by means of
a merger, consolidation or similar transaction (each referred to for the
purposes of this definition as a "disposition"), of (i) any shares of Capital
Stock of a Restricted Subsidiary (other than directors' qualifying shares or
shares required by applicable law to be held by a Person other than the Company
or a Restricted Subsidiary), (ii) all or substantially all the assets of any
division or line of business of the Company or any Restricted Subsidiary or
(iii) any other assets of the Company or any Restricted Subsidiary outside of
the ordinary course of business of the Company or such Restricted Subsidiary.
Notwithstanding the foregoing, none of the following shall be deemed to be an
Asset Disposition: (1) a disposition by a Restricted Subsidiary to the Company
or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (2)
for purposes of Section 4.07 only, a disposition that constitutes a Restricted
Payment permitted by Section 4.05, a disposition of all or substantially all the
assets of the Company in compliance with Section 5.01 or a disposition that
constitutes a Change of Control pursuant to clause (iii) of the definition
thereof, (3) the sale or transfer (whether or not in the ordinary course of
business) of crude oil and natural gas properties or direct or indirect
interests in real property; provided, however, that at the time of such sale or
transfer such properties do not have associated with them any proved reserves,
(4) the abandonment, farm-out, lease or sublease of developed or undeveloped
crude oil and natural gas properties in the ordinary course of business, (5) the
trade or exchange by the Company or any Restricted Subsidiary of any crude oil
and natural gas property owned or held by the Company or such Restricted
Subsidiary for any crude oil and natural gas property owned or held by another
Person or (6) the sale or transfer of hydrocarbons or other mineral products or
surplus or obsolete equipment, in each case in the ordinary course of business.
5
"Attributable Debt" in respect of a Sale/Leaseback Transaction means,
as at the time of determination, the present value (discounted at the interest
rate implicit in the Sale/Leaseback Transaction, compounded annually) of the
total obligations of the lessee for rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with respect to
any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the
sum of the products of the numbers of years from the date of determination to
the dates of each successive scheduled principal payment of such Indebtedness or
redemption or similar payment with respect to such Preferred Stock multiplied by
the amount of such payment by (ii) the sum of all such payments.
"Board of Directors" means the Board of Directors of the Company or
any committee thereof duly authorized to act on behalf of such Board.
"Business Day" means each day which is not a Legal Holiday.
"Capital Lease Obligation" means an obligation that is required to be
classified and accounted for as a capital lease for financial reporting purposes
in accordance with GAAP, and the amount of Indebtedness represented by such
obligation shall be the capitalized amount of such obligation determined in
accordance with GAAP; and the Stated Maturity thereof shall be the date of the
last payment of rent or any other amount due under such lease prior to the first
date upon which such lease may be terminated by the lessee without payment of a
penalty.
"Capital Stock" of any Person means any and all shares, interests,
rights to purchase, warrants, options, participations or other equivalents of or
interests in (however designated) equity of such Person, including any Preferred
Stock, but excluding any debt securities convertible into such equity.
6
"Change of Control" means the occurrence of any of the following
events:
(i) any "person" (as such term is used in Sections 13(d) and 14(d) of
the Exchange Act), other than a Permitted Holder, is or becomes the
beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
Act, except that for purposes of this clause (i) such person shall be
deemed to have "beneficial ownership" of all shares that such person has
the right to acquire, whether such right is exercisable immediately or only
after the passage of time), directly or indirectly, of more than 40% of the
total voting power of the Voting Stock of the Company (for the purposes of
this clause (i), such person shall be deemed to beneficially own any Voting
Stock of a specified corporation held by a parent corporation, if such
person is the beneficial owner (as defined in this clause (i)), directly or
indirectly, of more than 40% of the voting power of the Voting Stock of
such parent corporation);
(ii) during any period of two consecutive years from and after the
Issue Date, individuals who at the beginning of such period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors of the Company then still in office who were either directors at
the beginning of such period or whose election or nomination for election
was previously so approved) cease for any reason to constitute a majority
of the Board of Directors then in office;
(iii) the shareholders of the Company shall have approved any plan of
liquidation or dissolution of the Company; or
(iv) the merger or consolidation of the Company with or into another
Person or the merger of another Person with or into the Company, or the
sale, lease, conveyance or transfer of all or substantially all the assets
of the Company and its Restricted Subsidiaries, taken as a whole, to
another Person (other than a Person that is controlled (as defined in the
definition of "Affiliate") by the Permitted Holders), and, in the case of
any such merger or consolidation, the securities of the Company that are
outstanding immediately prior to such transaction and which
7
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 (i) the aggregate amount of EBITDA for the period of the most
recent four consecutive fiscal quarters ending at least 45 days prior to the
date of such determination to (ii) Consolidated Interest Expense for such four
fiscal quarters; provided, however, that (1) if the Company or any Restricted
Subsidiary has Incurred any Indebtedness since the beginning of such period that
remains outstanding or if the transaction giving rise to the need to calculate
the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both,
EBITDA and Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period and the discharge
of any other Indebtedness repaid, repurchased, defeased or otherwise discharged
with the proceeds of such new Indebtedness as if such discharge had occurred on
the first day of such period, (2) if the Company or any Restricted Subsidiary
has repaid, repurchased, defeased or otherwise discharged any Indebtedness since
the beginning of such period or if any Indebtedness is to be repaid,
repurchased, defeased or otherwise discharged on the date of the transaction
giving rise to the need to calculate the Consolidated Coverage Ratio, EBITDA and
Consolidated Interest Expense for such period shall be calculated on a pro forma
basis as if such discharge had occurred on the first day of such period and as
if the Company or such Restricted Subsidiary had not earned the interest income
actually earned during such period in respect of cash or Temporary Cash
Investments used to repay, repurchase, defease or otherwise discharge such
Indebtedness, (3) if since the beginning of such period the Company or any
8
Restricted Subsidiary shall have made any Asset Disposition (other than an Asset
Disposition involving assets having a fair market value of less than the greater
of two and one-half percent (2.5%) of Adjusted Consolidated Net Tangible Assets
as of the end of the Company's then most recently completed fiscal year and $3.0
million), then EBITDA for such period shall be reduced by an amount equal to
EBITDA (if positive) directly attributable to the assets which are the subject
of such Asset Disposition for such period, or increased by an amount equal to
EBITDA (if negative) directly attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced by an amount
equal to the Consolidated Interest Expense directly attributable to any
Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased,
defeased or otherwise discharged with respect to the Company and its continuing
Restricted Subsidiaries in connection with such Asset Disposition for such
period (or, if the Capital Stock of any Restricted Subsidiary is sold, the
Consolidated Interest Expense for such period directly attributable to the
Indebtedness of such Restricted Subsidiary to the extent the Company and its
continuing Restricted Subsidiaries are no longer liable for such Indebtedness
after such sale), (4) if since the beginning of such period the Company or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment in
any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary)
or an acquisition (including by way of lease) of assets, including any
acquisition of assets occurring in connection with a transaction requiring a
calculation to be made hereunder, EBITDA and Consolidated Interest Expense for
such period shall be calculated after giving pro forma effect thereto (including
the Incurrence of any Indebtedness) as if such Investment or acquisition
occurred on the first day of such period and (5) if since the beginning of such
period any Person (that subsequently became a Restricted Subsidiary or was
merged with or into the Company or any Restricted Subsidiary since the beginning
of such period) shall have made any Asset Disposition, any Investment or
acquisition of assets that would have required an adjustment pursuant to clause
(3) or (4) above if made by the Company or a Restricted Subsidiary during such
period, EBITDA and Consolidated Interest Expense for such period shall be
calculated after giving pro forma effect thereto as if such Asset Disposition,
Investment or acquisition occurred on the first day of such period. For purposes
of this definition, whenever pro forma effect is to be given to an acquisition
of assets, the amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be
9
determined in good faith by a responsible financial or accounting Officer of the
Company. If any Indebtedness bears a floating rate of interest and is being
given pro forma effect, the interest of such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the applicable rate
for the entire period (taking into account any Interest Rate Agreement
applicable to such Indebtedness if such Interest Rate Agreement has a remaining
term in excess of 12 months).
"Consolidated Current Liabilities" as of the date of determination
means the aggregate amount of liabilities of the Company and its consolidated
Restricted Subsidiaries which would properly be classified as current
liabilities (including taxes accrued as estimated) on a consolidated balance
sheet of the Company and its Restricted Subsidiaries at such date, after
eliminating (i) all intercompany items between the Company and any Restricted
Subsidiary and (ii) all current maturities of long-term Indebtedness, all as
determined in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any period, the total
interest expense of the Company and its Restricted Subsidiaries for such period,
determined on a consolidated basis in accordance with GAAP, plus, to the extent
not included in such total interest expense, and to the extent incurred by the
Company or its Restricted Subsidiaries, without duplication, (i) interest
expense attributable to Capital Lease Obligations and imputed interest with
respect to Attributable Debt, (ii) capitalized interest, (iii) non-cash interest
expense, (iv) commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing, (v) net costs
(including amortization of fees and up-front payments) associated with interest
rate caps and other interest rate and currency options that, at the time entered
into, resulted in the Company and its Restricted Subsidiaries being net payees
as to future payouts under such caps or options, and interest rate and currency
swaps and forwards for which the Company or any of its Restricted Subsidiaries
has paid a premium, (vi) dividends (excluding dividends paid in shares of
Capital Stock which is not Disqualified Stock) in respect of all Disqualified
Stock held by Persons other than the Company or a Wholly Owned Subsidiary, (vii)
interest accruing on any Indebtedness of any other Person to the extent such
Indebtedness is Guaranteed by the Company or any Restricted Subsidiary or
secured by a Lien on assets of the Company or any Restricted Subsidiary to the
extent such Indebtedness constitutes Indebtedness of the Company or any
Restricted Subsidiary (whether or not such Guarantee or Lien is called upon);
provided, however,
10
"Consolidated Interest Expense" shall not include any (x) amortization of costs
relating to original debt issuances other than the amortization of debt discount
related to the issuance of zero coupon securities or other securities with an
original issue price of not more than 90% of the principal thereof, (y)
Consolidated Interest Expense with respect to any Indebtedness Incurred pursuant
to Section 4.03(b)(8) and (z) noncash interest expense Incurred in connection
with interest rate caps and other interest rate and currency options that, at
the time entered into, resulted in the Company and its Restricted Subsidiaries
being either neutral or net payors as to future payouts under such caps or
options.
"Consolidated Net Income" means, for any period, the net income of the
Company and its Subsidiaries determined on a consolidated basis in accordance
with GAAP; provided, however, that there shall not be included in such
Consolidated Net Income: (i) any net income of any Person (other than the
Company) if such Person is not a Restricted Subsidiary, except that (A) subject
to the exclusion contained in clause (iv) below, the Company's equity in the net
income of any such Person for such period shall be included in such Consolidated
Net Income up to the aggregate amount of cash actually distributed by such
Person during such period to the Company or a Restricted Subsidiary as a
dividend or other distribution (subject, in the case of a dividend or other
distribution paid to a Restricted Subsidiary, to the limitations contained in
clause (iii) below) and (B) the Company's equity in a net loss of any such
Person for such period shall be included in determining such Consolidated Net
Income; (ii) any net income (or loss) of any Person acquired by the Company or a
Subsidiary in a pooling of interests transaction for any period prior to the
date of such acquisition; (iii) any net income of any Restricted Subsidiary
(other than a Subsidiary Guarantor) if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of dividends or the making
of distributions by such Restricted Subsidiary, directly or indirectly, to the
Company, except that (A) subject to the exclusion contained in clause (iv)
below, the Company's equity in the net income of any such Restricted Subsidiary
for such period shall be included in such Consolidated Net Income up to the
aggregate amount of cash actually distributed by such Restricted Subsidiary
during such period to the Company or another Restricted Subsidiary as a dividend
or other distribution (subject, in the case of a dividend or other distribution
paid to another Restricted Subsidiary, to the limitation contained in this
clause) and (B) the Company's equity in a net loss of any such Restricted
Subsidiary for such period shall be included
11
in determining such Consolidated Net Income; (iv) any gain or loss realized upon
the sale or other disposition of any assets of the Company or its Subsidiaries
(including pursuant to any sale-and-leaseback arrangement) which is not sold or
otherwise disposed of in the ordinary course of business and any gain or loss
realized upon the sale or other disposition of any Capital Stock of any Person;
(v) extraordinary gains or losses; (vi) any non-cash compensation expense
realized for grants of performance shares, stock options or stock awards to
officers, directors and employees of the Company or any of its Restricted
Subsidiaries; (vii) any write-downs of non-current assets; provided, however,
that any ceiling limitation write-downs under SEC guidelines shall be treated as
capitalized costs, as if such write-downs had not occurred; and (viii) the
cumulative effect of a change in accounting principles. Notwithstanding the
foregoing, for the purposes of Section 4.05 only, there shall be excluded from
Consolidated Net Income any dividends, repayments of loans or advances or other
transfers of assets from Unrestricted Subsidiaries to the Company or a
Restricted Subsidiary to the extent such dividends, repayments or transfers
increase the amount of Restricted Payments permitted under Section
4.05(a)(3)(E).
"Consolidated Net Tangible Assets", as of any date of determination,
means the total amount of assets (less accumulated depreciation and
amortization, allowances for doubtful receivables, other applicable reserves and
other properly deductible items) which would appear on a balance sheet of the
Company and its Restricted Subsidiaries, determined on a consolidated basis in
accordance with GAAP, and after giving effect to purchase accounting and after
deducting therefrom Consolidated Current Liabilities and, to the extent
otherwise included, the amounts of: (i) minority interests in Restricted
Subsidiaries held by Persons other than the Company or a Restricted Subsidiary;
(ii) excess of cost over fair value of assets of businesses acquired, as
determined in good faith by the Board of Directors; (iii) any revaluation or
other write-up in book value of assets subsequent to February 26, 1998 as a
result of a change in the method of valuation in accordance with GAAP
consistently applied; (iv) unamortized debt discount and expenses and other
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights, licenses, organization or developmental expenses and
other intangible items; (v) treasury stock; (vi) cash set apart and held in a
sinking or other analogous fund established for the purpose of redemption or
other retirement of Capital Stock to the extent such obligation is not reflected
in Consolidated Current Liabilities; and (vii) Investments in and assets of
Unrestricted Subsidiaries.
12
"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 (i) the par or stated value
of all outstanding Capital Stock of the Company plus (ii) paid-in capital or
capital surplus relating to such Capital Stock plus (iii) any retained earnings
or earned surplus less (A) any accumulated deficit and (B) any amounts
attributable to Disqualified Stock.
"Credit Agreement" means that certain Second Amended and Restated
Credit Agreement, dated October 13, 2000, as amended, by and among the Company
and Bank of America, N.A. (or any successor thereto or replacement thereof), as
administrative agent and as a lender, and certain other institutions, as
lenders, including any related notes, guarantees, collateral documents,
instruments and agreements executed in connection therewith, and in each case as
amended, restated, modified, renewed, refunded, replaced, refinanced or
increased in whole or in part, from time to time.
"Credit Facilities" means, with respect to the Company or any
Restricted Subsidiary, one or more debt facilities (including the Credit
Agreement) or commercial paper facilities with banks or other institutional
lenders providing for revolving credit loans, term loans, production payments,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time.
"Currency Agreement" means in respect of a Person any foreign exchange
contract, currency swap agreement or other similar agreement to which such
Person is a party or a beneficiary.
"Default" means any event which is, or after notice or passage of time
or both would be, an Event of Default.
"Designated Senior Indebtedness" in respect of a Person means (i) all
the obligations of such Person under any Credit Facility (including the Credit
Agreement) and (ii) any other Senior Indebtedness of such Person which, at the
date of determination, has an aggregate principal amount
13
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $20 million and is specifically
designated by such Person in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture.
"Disqualified Stock" means, with respect any Person, any Capital Stock
that by its terms (or by the terms of any security into which it is convertible
or for which it is exchangeable) or upon the happening of any event, (i) matures
or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or Disqualified Stock or
(iii) is redeemable, in whole or in part, at the option of the holder thereof,
in each case described in the immediately preceding clauses (i), (ii) or (iii),
on or prior to the Stated Maturity of the Securities; provided, however, that
any Capital Stock that would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require such Person to
purchase or redeem such Capital Stock upon the occurrence of an "asset sale" or
"change of control" occurring prior to the Stated Maturity of the Securities
shall not constitute Disqualified Stock if (x) the "asset sale" or "change of
control" provisions applicable to such Capital Stock are not more favorable to
the holders of such Capital Stock than the provisions of Sections 4.07 and 4.09
and (y) any such requirement only becomes operative after compliance with such
corresponding terms applicable to the Securities, including the purchase of any
Securities tendered pursuant thereto. The amount of any Disqualified Stock that
does not have a fixed redemption, repayment or repurchase price will be
calculated in accordance with the terms of such Disqualified Stock as if such
Disqualified Stock were redeemed, repaid or repurchased on any date on which the
amount of such Disqualified Stock is to be determined pursuant to the Indenture;
provided, however, that if such Disqualified Stock could not be required to be
redeemed, repaid or repurchased at the time of such determination, the
redemption, repayment or repurchase price will be the book value of such
Disqualified Stock as reflected in the most recent financial statements of such
Person.
"Dollar-Denominated Production Payments" means production payment
obligations recorded as liabilities in accordance with GAAP, together with all
undertakings and obligations in connection therewith.
"EBITDA" for any period means the sum of Consolidated Net Income, plus
Consolidated Interest Expense
14
plus the following to the extent deducted in calculating such Consolidated Net
Income: (a) provision for taxes based on income or profits, (b) depletion and
depreciation expense, (c) amortization expense, (d) exploration expense (if
applicable to the Company after February 26, 1998), (e) unrealized foreign
exchange losses and (f) all other non-cash charges (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), and less, to the extent included in calculating such
Consolidated Net Income and in excess of any costs or expenses attributable
thereto and deducted in calculating such Consolidated Net Income, the sum of (x)
the amount of deferred revenues that are amortized during such period and are
attributable to reserves that are subject to Volumetric Production Payments, (y)
amounts recorded in accordance with GAAP as repayments of principal and interest
pursuant to Dollar-Denominated Production Payments and (z) unrealized foreign
exchange gains. Notwithstanding the foregoing, the provision for taxes based on
the income or profits of, and the depletion, depreciation, amortization,
exploration and other non-cash charges of, a Restricted Subsidiary shall be
added to Consolidated Net Income to compute EBITDA only to the extent (and in
the same proportion) that the net income of such Restricted Subsidiary was
included in calculating Consolidated Net Income and only if a corresponding
amount would be permitted at the date of determination to be dividended to the
Company by such Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all agreements, instruments,
judgments, decrees, orders, statutes, rules and governmental regulations
applicable to such Restricted Subsidiary or its stockholders.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Existing 9% Senior Subordinated Notes" means the Company's 9% Senior
Subordinated Notes due 2008 issued under an indenture dated as of February 26,
1998, as amended and supplemented by a supplemental indenture dated as of April
21, 1999.
"GAAP" means generally accepted accounting principles in the United
States of America as in effect on February 26, 1998, including those set forth
in (i) the opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the
15
Financial Accounting Standards Board, (iii) such other statements by such other
entity as approved by a significant segment of the accounting profession, and
(iv) the rules and regulations of the SEC governing the inclusion of financial
statements (including pro forma financial statements) in periodic reports
required to be filed pursuant to Section 13 of the Exchange Act, including
opinions and pronouncements in staff accounting bulletins and similar written
statements from the accounting staff of the SEC.
"Guarantee" means, without duplication, any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of
any Person and any obligation, direct or indirect, contingent or otherwise, of
such Person (i) to purchase or pay (or advance or supply funds for the purchase
or payment of) such Indebtedness of such Person (whether arising by virtue of
partnership arrangements, or by agreements to keep-well, to purchase assets,
goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided, however, that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.
"Guarantee Agreement" means a supplemental indenture, substantially in
the form attached hereto as Exhibit B, pursuant to which a Subsidiary Guarantor
or any other Person becomes subject to the applicable terms and conditions of
this Indenture.
"Hedging Obligations" of any Person means the obligations of such
Person pursuant to any Oil and Gas Hedging Contract, Interest Rate Agreement or
Currency Agreement.
"Holder" or "Securityholder" means the Person in whose name a Security
is registered on the Registrar's books.
"Incur" means issue, assume, Guarantee, incur or otherwise become
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Subsidiary (whether by merger,
consolidation, acquisition or otherwise) shall be deemed to be Incurred by such
Subsidiary at the time it becomes a Subsidiary. The term "Incurrence" when used
as a noun shall
16
have a correlative meaning. The accretion of principal of a non-interest bearing
or other discount security shall not be deemed the Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person on any date of
determination (without duplication), (i) the principal of and premium (if any)
in respect of (A) indebtedness of such Person for money borrowed and (B)
indebtedness evidenced by notes, debentures, bonds or other similar instruments
for the payment of which such Person is responsible or liable; (ii) all Capital
Lease Obligations of such Person and all Attributable Debt in respect of
Sale/Leaseback Transactions entered into by such Person; (iii) all obligations
of such Person issued or assumed as the deferred purchase price of property
(which purchase price is due more than six months after the date of taking
delivery of title to such property), including all obligations of such Person
for the deferred purchase price of property under any title retention agreement
(but excluding trade accounts payable arising in the ordinary course of
business); (iv) all obligations of such Person for the reimbursement of any
obligor on any letter of credit, banker's acceptance or similar credit
transaction (other than obligations with respect to letters of credit securing
obligations (other than obligations described in (i) through (iii) above)
entered into in the ordinary course of business of such Person to the extent
such letters of credit are not drawn upon or, if and to the extent drawn upon,
such drawing is reimbursed no later than the tenth Business Day following
receipt by such Person of a demand for reimbursement following payment on the
letter of credit); (v) the amount of all obligations of such Person with respect
to the redemption, repayment or other repurchase of any Disqualified Stock (but
excluding any accrued dividends); (vi) all obligations of such Person relating
to any Production Payments; (vii) all obligations of the type referred to in
clauses (i) through (vi) of other Persons and all dividends of other Persons for
the payment of which, in either case, such Person is responsible or liable,
directly or indirectly, as obligor, guarantor or otherwise, including by means
of any Guarantee (including, with respect to any Production Payment, any
warranties or guarantees of production or payment by such Person with respect to
such Production Payment but excluding other contractual obligations of such
Person with respect to such Production Payment); (viii) all obligations of the
type referred to in clauses (i) through (vii) of other Persons secured by any
Lien on any property or asset of such first- mentioned Person (whether or not
such obligation is assumed by such first-mentioned Person), the amount of such
obligation being deemed to be the lesser of the value of such property or assets
or the amount of the obligation so
17
secured and (ix) to the extent not otherwise included in this definition,
Hedging Obligations of such Person. The amount of Indebtedness of any Person at
any date shall be the outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, assuming the
contingency giving rise to the obligation was to have occurred on such date, of
any Guarantees outstanding at such date.
None of the following shall constitute Indebtedness: (i) indebtedness
arising from agreements providing for indemnification or adjustment of purchase
price or from guarantees securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, incurred or assumed in connection with
the disposition of any business, assets or Subsidiary of the Company, other than
guarantees or similar credit support by the Company or any of its Subsidiaries
of Indebtedness incurred by any Person acquiring all or any portion of such
business, assets or Subsidiary for the purpose of financing such acquisition;
(ii) any trade payables or other similar liabilities to trade creditors and
other accrued current liabilities incurred in the ordinary course of business as
the deferred purchase price of property; (iii) any liability for Federal, state,
local or other taxes owed or owing by such Person; (iv) amounts due in the
ordinary course of business to other royalty and working interest owners; (v)
obligations arising from guarantees to suppliers, lessors, licensees,
contractors, franchisees or customers incurred in the ordinary course of
business; (vi) obligations (other than express Guarantees of indebtedness for
borrowed money) in respect of Indebtedness of other Persons arising in
connection with (A) the sale or discount of accounts receivable, (B) trade
acceptances and (C) endorsements of instruments for deposit in the ordinary
course of business; (vii) obligations in respect of performance bonds provided
by the Company or its Subsidiaries in the ordinary course of business and
refinancing thereof; (viii) obligations arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument drawn
against insufficient funds in the ordinary course of business, provided,
however, that such obligation is extinguished within two Business Days of its
Incurrence; and (ix) obligations in respect of any obligations under workers'
compensation laws and similar legislation.
"Indenture" means this Indenture as amended or supplemented from time
to time, including the provisions of the TIA that are deemed to be a part of and
govern this Indenture and any supplemental indenture, respectively.
18
"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 shall be
its fair value at the time the Investment is made and without giving effect to
subsequent changes in value. For purposes of the definition of "Unrestricted
Subsidiary", the definition of "Restricted Payment" and Section 4.05, (i)
"Investment" shall include the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is designated an
Unrestricted Subsidiary; provided, however, that upon a redesignation of such
Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue
to have a permanent "Investment" in an Unrestricted Subsidiary equal to an
amount (if positive) equal to (x) the Company's "Investment" in such Subsidiary
at the time of such redesignation less (y) the portion (proportionate to the
Company's equity interest in such Subsidiary) of the fair market value of the
net assets of such Subsidiary at the time of such redesignation; and (ii) any
property transferred to or from an Unrestricted Subsidiary shall be valued at
its fair market value at the time of such transfer, in each case as determined
in good faith by the Board of Directors.
"Issue Date" means August 15, 2001.
"Lien" means any mortgage, pledge, security interest, encumbrance,
lien or charge of any kind (including any conditional sale or other title
retention agreement or lease in the nature thereof).
"Limited Recourse Production Payments" means, with respect to any
Production Payments, Indebtedness, the terms
19
of which limit the liability of the Company and its Restricted Subsidiaries
solely to the hydrocarbons covered by such Production Payments; provided,
however, that no default with respect to such Indebtedness would permit any
holder of any other Indebtedness of the Company or any Restricted Subsidiary to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity.
"Material Change" means an increase or decrease (excluding changes
that result solely from changes in prices and changes resulting from the
Incurrence of previously estimated future development costs) of more than 25%
during a fiscal quarter in the discounted future net revenues from proved crude
oil and natural gas reserves of the Company and its Restricted Subsidiaries,
calculated in accordance with clause (a)(i) of the definition of Adjusted
Consolidated Net Tangible Assets; provided, however, that the following will be
excluded from the calculation of Material Change: (i) any acquisitions during
the fiscal quarter of oil and gas reserves that have been estimated by
independent petroleum engineers and with respect to which a report or reports of
such engineers exist and (ii) any disposition of properties existing at the
beginning of such fiscal quarter that have been disposed of in compliance with
Section 4.07.
"▇▇▇▇▇'▇" means ▇▇▇▇▇'▇ 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 pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received in
the form of assumption by the acquiring Person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form) in each case net of (i) all legal, title and recording tax
expenses, commissions and other fees (including financial and other advisory
fees) and expenses incurred, and all Federal, state, provincial, foreign and
local taxes required to be accrued as a liability under GAAP, as a consequence
of such Asset Disposition, (ii) all payments made on any Indebtedness which is
secured by any assets subject to such Asset Disposition, in accordance with the
terms of any Lien upon or other security agreement of any kind with respect to
such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such Asset Disposition, (iii) all distributions and other payments
required to be made to
20
minority interest holders in Subsidiaries or joint ventures as a result of such
Asset Disposition and (iv) the deduction of appropriate amounts provided by the
seller as a reserve, in accordance with GAAP, against any liabilities associated
with the property or other assets disposed in such Asset Disposition and
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 February 26, 1998.
"Net Working Capital" means (a) all current assets of the Company and
its Restricted Subsidiaries minus (b) all current liabilities of the Company and
its Restricted Subsidiaries, except current liabilities included in
Indebtedness, determined in accordance with GAAP.
"Non-recourse Purchase Money Indebtedness" means Indebtedness (other
than Capital Lease Obligations) of the Company or any Subsidiary Guarantor
incurred in connection with the acquisition by the Company or such Subsidiary
Guarantor in the ordinary course of business of fixed assets used in the Oil and
Gas Business (including office buildings and other real property used by the
Company or such Subsidiary Guarantor in conducting its operations) with respect
to which (i) the holders of such Indebtedness agree that they will look solely
to the fixed assets so acquired which secure such Indebtedness, and neither the
Company nor any Restricted Subsidiary (a) is directly or indirectly liable for
such Indebtedness or (b) provides credit support, including any undertaking,
Guarantee, agreement or instrument that would constitute Indebtedness (other
than the grant of a Lien on such acquired fixed assets), and (ii) no default or
event of default with respect to such Indebtedness would cause, or permit (after
notice or passage of time or otherwise), any holder of any other Indebtedness of
the Company or a Subsidiary Guarantor to declare a default or event of default
on such other Indebtedness or cause the payment, repurchase, redemption,
defeasance or
21
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 signed by two Officers.
"Oil and Gas Business" means the business of the exploration for, and
exploitation, development, acquisition, production, processing (but not
refining), marketing, storage and transportation of, hydrocarbons, and other
related energy and natural resource businesses (including oil and gas services
businesses related to the foregoing).
"Oil and Gas Hedging Contract" means any oil and gas purchase or
hedging agreement, and other agreement or arrangement, in each case, that is
designed to provide protection against oil and gas price fluctuations.
"Oil and Gas Liens" means (i) Liens on any specific property or any
interest therein, construction thereon or improvement thereto to secure all or
any part of the costs incurred for surveying, exploration, drilling, extraction,
development, operation, production, construction, alteration, repair or
improvement of, in, under or on such property and the plugging and abandonment
of ▇▇▇▇▇ located thereon (it being understood that, in the case of oil and gas
producing properties, or any interest therein, costs incurred for "development"
shall include costs incurred for all facilities relating to such properties or
to projects, ventures or other arrangements of which such properties form a part
or which relate to such properties or interests); (ii) Liens on an oil or gas
producing property to secure obligations Incurred or guarantees of obligations
Incurred in connection with or necessarily incidental to commitments for the
purchase or sale of, or the transportation or distribution of, the products
derived from such property; (iii) Liens arising under partnership agreements,
oil and gas leases, overriding royalty agreements, net profits agreements,
production
22
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 Company or a
Restricted Subsidiary, master limited partnership agreements, farm-out
agreements, farm-in agreements, division orders, contracts for the sale,
purchase, exchange, transportation, gathering or processing of oil, gas or other
hydrocarbons, unitizations and pooling designations, declarations, orders and
agreements, development agreements, operating agreements, production sales
contracts, area of mutual interest agreements, gas balancing or deferred
production agreements, injection, repressuring and recycling agreements, salt
water or other disposal agreements, seismic or geophysical permits or
agreements, and other agreements which are customary in the Oil and Gas
Business; provided, however, that in all instances such Liens are limited to the
assets that are the subject of the relevant agreement, program, order or
contract; (iv) Liens arising in connection with Production Payments; and (v)
Liens on pipelines or pipeline facilities that arise by operation of law.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee. The counsel may be an employee of or counsel to the
Company or the Trustee.
"Permitted Business Investment" means any investment made in the
ordinary course of, and of a nature that is or shall have become customary in,
the Oil and Gas Business, including investments or expenditures for actively
exploiting, exploring for, acquiring, developing, producing, processing,
gathering, marketing or transporting oil and gas through agreements,
transactions, interests or arrangements which permit one to share risks or
costs, comply with regulatory requirements regarding local ownership or satisfy
other objectives customarily achieved through the conduct of Oil and Gas
Business jointly with third parties, including (i) ownership interests in oil
and gas properties, processing facilities, gathering systems, pipelines or
ancillary real property interests and (ii) Investments in the form of or
pursuant to operating agreements, processing agreements, farm-in agreements,
farm-out agreements, development agreements, area of mutual interest agreements,
unitization agreements, pooling agreements, joint bidding agreements, service
contracts, joint venture agreements, partnership agreements (whether general or
limited), subscription agreements, stock purchase agreements and other similar
agreements (including for limited liability Companies) with third parties,
excluding, however, Investments in corporations other than Restricted
Subsidiaries.
23
"Permitted Holders" means TPG Advisors, Inc. or any Person who on
February 26, 1998 was an Affiliate thereof or any Person controlled by TPG
Advisors, Inc.
"Permitted Investment" means an Investment by the Company or any
Restricted Subsidiary in (i) a Restricted Subsidiary or a Person that will, upon
the making of such Investment, become a Restricted Subsidiary; provided,
however, that the primary business of such Restricted Subsidiary is an Oil and
Gas Business; (ii) another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or conveys all or
substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is an Oil and Gas
Business; (iii) Temporary Cash Investments; (iv) receivables owing to the
Company or any Restricted Subsidiary if created or acquired in the ordinary
course of business and payable or dischargeable in accordance with customary
trade terms; provided, however, that such trade terms may include such
concessionary trade terms as the Company or any such Restricted Subsidiary deems
reasonable under the circumstances; (v) payroll, travel and similar advances to
cover matters that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in the ordinary
course of business; (vi) loans or advances to employees made in the ordinary
course of business; (vii) stock, obligations or securities received in
settlement of debts created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary or in satisfaction of judgments; (viii) any
Person to the extent such Investment represents the non-cash portion of the
consideration received for an Asset Disposition as permitted pursuant to Section
4.07; (ix) Permitted Business Investments; (x) Investments intended to promote
the Company's strategic objectives in the Oil and Gas Business in an aggregate
amount not to exceed 5.0% of ACNTA (determined as of the date of the making of
any such Investment) at any one time outstanding (which Investments shall be
deemed to be no longer outstanding only upon and to the extent of the return of
capital thereof); and (xi) Investments made pursuant to Hedging Obligations of
the Company and the Restricted Subsidiaries.
"Permitted Liens" means, with respect to any Person, (a) Liens
existing as of the Issue Date; (b) Liens securing the Securities, any Subsidiary
Guarantee and other obligations arising under the Indenture; (c) any Lien
24
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 (i) easements, rights
of way and similar encumbrances, (ii) rights or title of lessors under leases
(other than Capital Lease Obligations), (iii) rights of collecting banks having
rights of setoff, revocation, refund or chargeback with respect to money or
instruments of the Company or the Restricted Subsidiaries on deposit with or in
the possession of such banks, (iv) Liens imposed by law, including Liens under
workers' compensation or similar legislation and mechanics', carriers',
warehousemen's, materialmen's, suppliers' and vendors' Liens, (v) Liens incurred
to secure performance of obligations with respect to statutory or regulatory
requirements, performance or return-of-money bonds, surety bonds or other
obligations of a like nature and incurred in a manner consistent with industry
practice and (vi) Oil and Gas Liens, in each case which are not incurred in
connection with the borrowing of money, the obtaining of advances or credit or
the payment of the deferred purchase price of property (other than trade
accounts payable arising in the ordinary course of business); (f) Liens for
taxes, assessments and governmental charges not yet due or the validity of which
are being contested in good faith by appropriate proceedings, promptly
instituted and diligently conducted, and for which adequate reserves have been
established to the extent required by GAAP as in effect at such time; (g) Liens
incurred to secure appeal bonds and judgment and attachment Liens, in each case
in connection with litigation or legal proceedings that are being contested in
good faith by appropriate proceedings, so long as reserves have been established
to the extent required by GAAP as in effect at such time and so long as such
Liens do not encumber assets by an aggregate amount (together with the amount of
any unstayed judgments against the Company or any Restricted Subsidiary but
excluding any such Liens to the extent securing insured or indemnified judgments
or orders) in excess of $10.0 million; (h) Liens securing Hedging Obligations of
the Company and its Restricted Subsidiaries; (i) Liens securing purchase money
25
Indebtedness or Capital Lease Obligations, provided that such Liens attach only
to the property acquired with the proceeds of such purchase money Indebtedness
or the property which is the subject of such Capital Lease Obligations; (j)
Liens securing Non-recourse Purchase Money Indebtedness granted in connection
with the acquisition by the Company or any Restricted Subsidiary in the ordinary
course of business of fixed assets used in the Oil and Gas Business (including
the office buildings and other real property used by the Company or such
Restricted Subsidiary in conducting its operations), provided that (i) such
Liens attach only to the fixed assets acquired with the proceeds of such
Non-recourse Purchase Money Indebtedness and (ii) such Non-recourse Purchase
Money Indebtedness is not in excess of the purchase price of such fixed assets;
(k) Liens resulting from the deposit of funds or evidences of Indebtedness in
trust for the purpose of decreasing or legally defeasing Indebtedness of the
Company or any Restricted Subsidiary so long as such deposit of funds is
permitted under Section 4.05; (l) Liens resulting from a pledge of Capital Stock
of a Person that is not a Restricted Subsidiary to secure obligations of such
Person and any refinancings thereof; (m) Liens to secure any permitted
extension, renewal, refinancing, refunding or exchange (or successive
extensions, renewals, refinancings, refundings or exchanges), in whole or in
part, of or for any Indebtedness secured by Liens referred to in clauses (a),
(b), (c), (d), (i) and (j) above; provided, however, that (i) such new Lien
shall be limited to all or part of the same property (including future
improvements thereon and accessions thereto) subject to the original Lien and
(ii) the Indebtedness secured by such Lien at such time is not increased to any
amount greater than the sum of (A) the outstanding principal amount or, if
greater, the committed amount of the Indebtedness secured by such original Lien
immediately prior to such extension, renewal, refinancing, refunding or exchange
and (B) an amount necessary to pay any fees and expenses, including premiums,
related to such refinancing, refunding, extension, renewal or replacement; and
(n) Liens in favor of the Company or a Restricted Subsidiary. Notwithstanding
anything in this definition to the contrary, the term "Permitted Liens" shall
not include Liens resulting from the creation, Incurrence, issuance, assumption
or Guarantee of any Production Payments other than (i) any such Liens existing
as of the Issue Date, (ii) Production Payments in connection with the
acquisition of any property after the Issue Date, provided that any such Lien
created in connection therewith is created, incurred, issued, assumed or
Guaranteed in connection with the financing of, and within 60 days after the
acquisition of, such property and (iii) Production Payments other than those
described in clauses (i) and (ii) of this sentence, to the
26
extent such Production Payments constitute Asset Dispositions made pursuant to
and in compliance with Section 4.07 and (iv) incentive compensation programs for
geologists, geophysicists and other providers of technical services to the
Company and any Restricted Subsidiary; provided, however, that, in the case of
the immediately foregoing clauses (i), (ii), (iii) and (iv), any Lien created in
connection with any such Production Payments shall be limited to the property
that is the subject of such Production Payments.
"Permitted Marketing Obligations" means Indebtedness of the Company or
any Restricted Subsidiary under letter of credit or borrowed money obligations,
or in lieu of or in addition to such letters of credit or borrowed money,
guarantees of such Indebtedness or other obligations of the Company or any
Restricted Subsidiary by any other Restricted Subsidiary, as applicable, related
to the purchase by the Company or any Restricted Subsidiary of hydrocarbons for
which the Company or such Restricted Subsidiary has contracts to sell; provided,
however, that in the event that such Indebtedness or obligations are guaranteed
by the Company or any Restricted Subsidiary, then either (i) the Person with
which the Company or such Restricted Subsidiary has contracts to sell has an
investment grade credit rating from S&P or ▇▇▇▇▇'▇, or in lieu thereof, a Person
guaranteeing the payment of such obligated Person has an investment grade credit
rating from S&P or ▇▇▇▇▇'▇, or (ii) such Person posts, or has posted for it, a
letter of credit in favor of the Company or such Restricted Subsidiary with
respect to all such Person's obligations to the Company or such Restricted
Subsidiary under such contracts.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any Person,
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends or distributions, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of such Person, over shares of Capital Stock of any other class of
such Person.
The term "principal" of a Security means the principal of the Security
plus the premium, if any, payable
27
on the Security which is due or overdue or is to become due at the relevant
time.
"Production Payments" means, collectively, Dollar-Denominated
Production Payments and Volumetric Production Payments.
"Refinance" means, in respect of any Indebtedness, to refinance,
extend, renew, refund, repay, prepay, redeem, defease or retire, or to issue
other Indebtedness in exchange or replacement for, such Indebtedness.
"Refinanced" and "Refinancing" shall have correlative meanings.
"Refinancing Indebtedness" means Indebtedness that Refinances any
Indebtedness of the Company or any Restricted Subsidiary existing on February
26, 1998 or Incurred in compliance with the Indenture including Indebtedness
that Refinances Refinancing Indebtedness; provided, however, that (i) such
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being Refinanced, (ii) such Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being Refinanced, (iii) such Refinancing Indebtedness has an aggregate principal
amount (or if Incurred with original issue discount, an aggregate issue price)
that is equal to or less than the aggregate principal amount (or if Incurred
with original issue discount, the aggregate accreted value) then outstanding or
committed (plus fees and expenses, including any premium and defeasance costs)
under the Indebtedness being Refinanced and (iv) if the Indebtedness being
Refinanced is Non-recourse Purchase Money Indebtedness, such Refinancing
Indebtedness satisfies clauses (i) and (ii) of the definition of "Non-recourse
Purchase Money Indebtedness"; provided further, however, that Refinancing
Indebtedness shall not include (x) Indebtedness of a Subsidiary that Refinances
Indebtedness of the Company or (y) Indebtedness of the Company or a Restricted
Subsidiary that Refinances Indebtedness of an Unrestricted Subsidiary.
"Representative" means any trustee, agent or representative (if any)
for an issue of Senior Indebtedness of the Company or of any Subsidiary
Guarantor.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of its Capital Stock (including any payment in connection with any
merger or consolidation involving such Person) or similar payment
28
to the direct or indirect holders of its Capital Stock (other than (x) dividends
or distributions payable solely in its Capital Stock (other than Disqualified
Stock), (y) dividends or distributions payable solely to the Company or a
Restricted Subsidiary, and (z) pro rata dividends or other distributions made by
a Subsidiary that is not a Wholly Owned Subsidiary to minority stockholders (or
owners of an equivalent interest in the case of a Subsidiary that is an entity
other than a corporation)), (ii) the purchase, redemption or other acquisition
or retirement for value of any Capital Stock of the Company held by any Person
or of any Capital Stock of a Restricted Subsidiary held by any Affiliate of the
Company (other than a Restricted Subsidiary), including the exercise of any
option to exchange any Capital Stock (other than into Capital Stock of the
Company that is not Disqualified Stock), (iii) the purchase, repurchase,
redemption, defeasance or other acquisition or retirement for value, prior to
scheduled maturity, scheduled repayment or scheduled sinking fund payment of any
Subordinated Obligations of such Person (other than the purchase, repurchase or
other acquisition of Subordinated Obligations of such Person purchased in
anticipation of satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of acquisition) or
(iv) the making of any Investment (other than a Permitted Investment) in any
Person.
"Restricted Subsidiary" means any Subsidiary of the Company that is
not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Company, Inc., and its successors.
"Sale/Leaseback Transaction" means an arrangement relating to property
owned on February 26, 1998 or thereafter acquired whereby the Company or a
Restricted Subsidiary transfers such property to a Person and the Company or a
Restricted Subsidiary leases it from such Person, provided that the fair market
value of such property (as reasonably determined by the Board of Directors
acting in good faith) is $10 million or more.
"SEC" means the Securities and Exchange Commission.
"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
29
"Senior Indebtedness" means with respect to any Person (i)
Indebtedness of such Person, and all obligations of such Person under any Credit
Facility, whether outstanding on the Issue Date or thereafter Incurred and (ii)
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating such Person to the
extent post-filing interest is allowed in such proceeding) in respect of (A)
indebtedness of such Person for money borrowed and (B) indebtedness evidenced by
notes, debentures, bonds or other similar instruments for the payment of which
such Person is responsible or liable unless, with respect to obligations
described in the immediately preceding clause (i) or (ii), in the instrument
creating or evidencing the same or pursuant to which the same is outstanding, it
is provided that such obligations are not superior in right of payment to the
Securities or the applicable Subsidiary Guarantee; provided, however, that
Senior Indebtedness shall not include (1) any obligation of such Person to any
Subsidiary of such Person, (2) any liability for Federal, state, local or other
taxes owed or owing by such Person, (3) any accounts payable or other liability
to trade creditors arising in the ordinary course of business (including
guarantees thereof or instruments evidencing such liabilities), (4) any
Indebtedness of such Person (and any accrued and unpaid interest in respect
thereof) which is subordinate or junior in any respect to any other Indebtedness
or other obligation of such Person or (5) that portion of any Indebtedness which
at the time of Incurrence is Incurred in violation of this Indenture (other
than, in the case of the Company or any Subsidiary Guarantor that Guarantees any
Credit Facility, Indebtedness under any Credit Facility that is Incurred on the
basis of a representation by the Company or the applicable Subsidiary Guarantor
to the applicable lenders that such Person is permitted to Incur such
Indebtedness under this Indenture).
"Senior Subordinated Indebtedness" means (i) with respect to the
Company, the Securities, the Existing 9% Senior Subordinated Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Securities in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness of the Company and
(ii) with respect to each Subsidiary Guarantor, its Guarantee of the Securities
and the Existing 9% Senior Subordinated Notes and any other Indebtedness of such
Person that specifically provides that such Indebtedness rank pari passu with
its applicable Subsidiary Guarantee in right of payment and is not subordinated
by its terms in right of payment to any
30
Indebtedness or other obligation of such Person which is not Senior Indebtedness
of such Person.
"Significant Subsidiary" means any Restricted Subsidiary that would be
a "Significant Subsidiary" of the Company within the meaning of Rule 1-02 under
Regulation S-X promulgated by the SEC.
"Stated Maturity" means, with respect to any security, the date
specified in such security as the fixed date on which the final payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security 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) which is subordinate or junior in right of payment to, in the case of
the Company, the Securities or, in the case of a Subsidiary Guarantor, its
Subsidiary Guarantee pursuant to a written agreement to that effect.
"Subsidiary" means, in respect of any Person, any corporation,
association, partnership or other business entity of which more than 50% of the
total voting power of shares of Capital Stock or other interests (including
partnership interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by (i) such Person,
(ii) such Person and one or more Subsidiaries of such Person or (iii) one or
more Subsidiaries of such Person.
"Subsidiary Guarantor" means each Subsidiary designated as such on the
signature pages hereto and any other Subsidiary that has issued a Subsidiary
Guarantee.
"Subsidiary Guarantee" means a Guarantee by a Subsidiary Guarantor of
the Company's obligations with respect to the Securities.
"Temporary Cash Investments" means any of the following: (i) any
investment in direct obligations of the United States of America or any agency
thereof or obligations guaranteed by the United States of America or any agency
thereof, (ii) investments in time deposit accounts, certificates of deposit and
money market deposits maturing within one year of the date of acquisition
thereof
31
issued by a bank or trust company which is organized under the laws of the
United States of America, any state thereof or any foreign country recognized by
the United States of America, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $200.0 million (or the
foreign currency equivalent thereof) and has outstanding debt which is rated "A"
(or such similar equivalent rating) or higher by at least one nationally
recognized credit rating organization (as defined in Rule 436 under the
Securities Act) or any money-market fund sponsored by a registered broker dealer
or mutual fund distributor whose assets consist of obligations of the types
described in clauses (i), (ii), (iii), (iv) and (v) hereof, (iii) repurchase
obligations with a term of not more than 30 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, (iv) investments in commercial
paper, maturing not more than 180 days after the date of acquisition, issued by
a Person (other than an Affiliate of the Company) organized and in existence
under the laws of the United States of America or any foreign country recognized
by the United States of America with a rating at the time as of which any
investment therein is made of "P-2" (or higher) according to Moody's or "A-2"
(or higher) according to S&P or "R-1" (or higher) by Dominion Bond Rating
Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian
issuer), (v) investments in securities with maturities of six months or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least "A" by S&P or "A" by
Moody's and (vi) Investments in asset-backed securities maturing within one year
of the date of acquisition thereof with a long-term rating at the time as of
which any investment therein is made of "A3" (or higher) by Dominion Bond Rating
Service Limited or Canadian Bond Rating Service, Inc. (in the case of a Canadian
issuer).
"TIA" means the Trust Indenture Act of 1939, as amended (15 U.S.C.
Sections 77aaa-77bbbb), as in effect on the date of this Indenture except as
provided in Section 9.03; provided, however, that, in the event the Trust
Indenture Act of 1939 is amended after such date, "TIA" means, to the extent
required by any such amendments, the Trust Indenture Act of 1939 as so amended.
"Trustee" means the party named as such in the preamble to this
Indenture until a successor replaces it and, thereafter, means the successor.
32
"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 (i) Denbury Carbonics, L.L.C. and
Tallahatchie Resources, Inc., (ii) any Subsidiary of the Company that at the
time of determination shall be designated an Unrestricted Subsidiary by the
Board of Directors in the manner provided below and (iii) any Subsidiary of an
Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of
the Company (including any newly acquired or newly formed Subsidiary) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its Subsidiaries owns
any Capital Stock or Indebtedness of, or holds any Lien on any property of, the
Company or any other Subsidiary of the Company that is not a Subsidiary of the
Subsidiary to be so designated; provided, however, that either (A) the
Subsidiary to be so designated has total assets of $1,000 or less or (B) if such
Subsidiary has assets greater than $1,000, such designation would be permitted
under Section 4.05. The Board of Directors may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided, however, that immediately
after giving effect to such designation (x) the Company could Incur $1.00 of
additional Indebtedness under Section 4.03(a) and (y) no Default shall have
occurred and be continuing. Any such designation by the Board of Directors shall
be evidenced by the Company to the Trustee by promptly filing with the Trustee a
copy of the board resolution giving effect to such designation and an Officers'
Certificate certifying that such designation complied with the foregoing
provisions. The Company represents and warrants that Denbury Carbonics, L.L.C.
and Tallahatchie Resources, Inc. each have total assets of $1,000 or less.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable at the issuer's option.
"Volumetric Production Payments" means production payment obligations
recorded as deferred revenue in accordance with GAAP, together with all
undertakings and
33
obligations in connection therewith.
"Voting Stock" of a Person means all classes of Capital Stock or other
interests (including partnership interests) of such Person then outstanding and
normally entitled (without regard to the occurrence of any contingency) to vote
in the election of directors, managers or trustees thereof.
"Wholly Owned Subsidiary" means a Restricted Subsidiary all the
Capital Stock of which (other than directors' qualifying shares and shares held
by other Persons to the extent such shares are required by applicable law to be
held by a Person other than the Company or a Restricted Subsidiary) is owned by
the Company or one or more Wholly Owned Subsidiaries.
Section 1.02. Other Definitions.
Defined in
Term Section
---- ----------
"Affiliate Transaction"............... 4.08(a)
"Bankruptcy Law"...................... 6.01
"Blockage Notice"..................... 10.03
"covenant defeasance option".......... 8.01(b)
"Custodian" .......................... 6.01
"Subsidiary Guarantor Blockage
Notice"........................... 12.03
"Subsidiary Guarantor Payment
Blockage Period................... 12.03
"Event of Default".................... 6.01
"Excess Proceeds"..................... 4.07(a)
"Excess Proceeds Offer"............... 4.07(b)(i)
"Excess Proceeds Payment"............. 4.07(b)(i)
"Excess Proceeds Payment Date"........ 4.07(b)(ii)
"Guaranteed Obligations".............. 11.01
"legal defeasance option"............. 8.01(b)
"Legal Holiday"....................... 13.08
"pay the Securities".................. 10.03
"Paying Agent"........................ 2.03
"Payment Blockage Period"............. 10.03
"Registrar"........................... 2.03
"Successor Company"................... 5.01
"Unrestricted Affiliate".............. 4.08(b)
Section 1.03. Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in
34
and made a part of this Indenture. The following TIA terms have the following
meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Company and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule have the
meanings assigned to them by such definitions.
Section 1.04. Rules of Construction. Unless the context otherwise
requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the plural
include the singular;
(6) unsecured Indebtedness shall not be deemed to be subordinate or
junior to Secured Indebtedness merely by virtue of its nature as unsecured
Indebtedness;
(7) the principal amount of any noninterest bearing or other discount
security at any date shall be the principal amount thereof that would be
shown on a balance sheet of the Company dated such date prepared in
accordance with GAAP; and
(8) the principal amount of any Preferred Stock shall be (i) the
maximum liquidation value of such
35
Preferred Stock or (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Stock, whichever is
greater.
ARTICLE 2
The Securities
Section 2.01. Form and Dating. Provisions relating to the Initial
Securities, the Private Exchange Securities and the Exchange Securities are set
forth in 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 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 $75.0
million of 9% Series B Senior Subordinated Notes Due 2008 and, at any time and
from time to time thereafter, the Trustee shall authenticate and deliver
Securities for original issue in an aggregate principal
36
amount specified in such order, in each case upon receipt of a written order of
the Company signed by two Officers or by an Officer and either an Assistant
Secretary or an Assistant Treasurer 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 after the Issue Date, shall certify that such issuance is in compliance
with Section 4.03.
The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate the Securities. Unless limited by the terms of
such appointment, an authenticating agent may authenticate Securities whenever
the Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent has the
same rights as any Registrar, Paying Agent or agent for service of notices and
demands.
Section 2.03. Registrar and Paying Agent. The Company shall maintain
an office or agency where Securities may be presented for registration of
transfer or for exchange, which office shall maintain the names and addresses of
Securityholders (the "Registrar"), and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent.
The Company shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Company shall notify
the Trustee of the name and address of any such agent. If the Company fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
entitled to appropriate compensation therefor pursuant to Section 7.07. The
Company or any 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.
37
Section 2.04. Paying Agent To Hold Money in Trust. Prior to 11:00
a.m.,
New York City time, on each due date of the 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(1) of the Uniform
Commercial Code are met. When Securities are presented to the Registrar or a
co-registrar with a request to exchange them for an equal principal amount of
Securities of other denominations, the Registrar shall make the exchange as
requested if the same requirements are met.
Section 2.07. Replacement Securities. If a mutilated Security is
surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and
38
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 cancelation and those described in this Section
as not outstanding. A Security does not cease to be out standing because the
Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.07, it ceases to be
outstanding unless the Trustee and the Company receive proof satisfactory to
them that the replaced Security is held by a bona fide purchaser.
If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.
Section 2.09. Temporary Securities. Until definitive Securities are
ready for delivery, the Company may prepare and the Trustee shall authenticate
and deliver temporary Securities. Temporary Securities shall be substantially in
the form of definitive Securities but may have variations that the Company
considers appropriate for temporary Securities. Without unreasonable delay, the
Company shall prepare and the Trustee shall authenticate definitive Securities
and deliver them in exchange for temporary Securities.
39
Section 2.10. Cancelation. The Company at any time may deliver
Securities to the Trustee for cancelation. 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 surrendered for registration of transfer, exchange, payment or
cancelation 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 cancelation.
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. The Initial Securities issued on the Issue Date, any
Additional Securities and all Exchange Securities or Private Exchange Securities
issued in exchange therefor shall be treated as a single class for all purposes
under this Indenture.
With respect to any Additional Securities, the Company shall set forth
in a resolution of the Board of
40
Directors and an Officers' Certificate, a copy of each which shall be delivered
to the Trustee, the following information:
(1) the aggregate principal amount of such Additional Securities to be
authenticated and delivered pursuant to this Indenture;
(2) the issue price, the issue date and the CUSIP number of such
Additional Securities; provided, however, that no Additional Securities may
be issued unless such Additional Securities are fungible in all respects
for federal income tax purposes with the Securities then outstanding; and
(3) 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 3
Redemption
Section 3.01. Notices to Trustee. If the Company elects to redeem
Securities pursuant to paragraph 5 of the Securities, it shall notify the
Trustee in writing of the redemption date, the principal amount of Securities to
be redeemed and the paragraph of the Securities pursuant to which the redemption
will occur.
The Company shall give each notice to the Trustee provided for in this
Section at least 45 days before the redemption date unless the Trustee consents
to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of Counsel from the Company to the effect that such
redemption will comply with the conditions herein.
Section 3.02. Selection of Securities To Be Redeemed. If fewer than
all the Securities are to be redeemed, the Trustee shall select the Securities
to be redeemed pro rata or by lot or by a method that complies with applicable
legal and securities exchange requirements, if any, and that the Trustee in its
sole discretion considers fair and appropriate. The Trustee shall make the
selection from outstanding Securities not previously called for redemption. The
Trustee may select for redemption portions of the principal of Securities that
have
41
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. Provisions
of this Indenture that apply to Securities called for redemption also apply to
portions of Securities called for redemption. The Trustee shall notify the
Company, the Registrar and each Paying Agent promptly of the Securities or
portions of Securities to be redeemed.
Section 3.03. Notice of Redemption. At least 30 days but not more than
60 days before a date for redemption of Securities, the Company shall mail a
notice of redemption by first-class mail to each Holder of Securities to be
redeemed.
The notice shall identify the Securities to be redeemed and shall
state:
(1) the redemption date;
(2) the redemption price;
(3) the name and address of the Paying Agent;
(4) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price;
(5) if fewer than all the outstanding Securities are to be redeemed,
the identification and principal amounts of the particular Securities to be
redeemed;
(6) that, unless the Company defaults in making such redemption
payment or the Paying Agent is prohibited from making such payment pursuant
to the terms of this Indenture, interest on Securities (or portions
thereof) called for redemption ceases to accrue on and after the redemption
date; and
(7) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the
Securities.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense. In such event,
the Company shall provide the Trustee with the information required by this
Section.
Section 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable on
the redemption date and
42
at the redemption price stated in the notice, subject to any condition or
contingency stated therein. Upon surrender to the Paying Agent, such Securities
shall be paid at the redemption price stated in the notice, plus accrued
interest to the redemption date. Failure to give notice or any defect in the
notice to any Holder shall not affect the validity of the notice to any other
Holder.
Section 3.05. Deposit of Redemption Price. Prior to the redemption
date, the Company shall deposit with the Paying Agent (or, if the Company or a
Subsidiary is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of and accrued interest on all Securities
to be redeemed on that date other than Securities or portions of Securities
called for redemption which have been delivered by the Company to the Trustee
for cancelation.
Section 3.06. Securities Redeemed in Part. Upon surrender of a
Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate and deliver to the Holder (at the Company's expense) a new
Security equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4
Covenants
Section 4.01. Payment of Securities. The Company shall promptly pay
the principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
Section 4.02. SEC Reports. Notwithstanding that the Company may not at
any time be subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, the Company shall file with the SEC and provide the Trustee and
43
Securityholders with such annual reports and such information, documents and
other reports as are specified in Sections 13 and 15(d) of the Exchange Act and
applicable to a U.S. corporation subject to such Sections, such information,
documents and other reports to be so filed and provided at the times specified
for the filing of such information, documents and reports under such Sections.
In addition, the Company shall furnish to the Securityholders and to prospective
investors, upon the requests of such Securityholders, any information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act so long as
any Securities are not freely transferable under the Securities Act. The Company
also shall comply with the other provisions of TIA Section 314(a).
Section 4.03. Limitation on Indebtedness. (a) The Company shall not,
and shall not permit any Restricted Subsidiary to, Incur, directly or
indirectly, any Indebtedness; provided, however, that the Company or a
Restricted Subsidiary may Incur Indebtedness if, on the date of such Incurrence
and after giving effect thereto, the Consolidated Coverage Ratio equals or
exceeds 2.25 to 1.0.
(b) Notwithstanding Section 4.03(a), the Company and any Restricted
Subsidiary may Incur the following Indebtedness:
(1) Indebtedness Incurred pursuant to any Credit Facility, so long as the
aggregate amount of all Indebtedness outstanding under all Credit
Facilities does not, at any one time, exceed the aggregate amount of
borrowing availability as of such date under all Credit Facilities that
determine availability on the basis of a borrowing base or other
asset-based calculation; provided, however, that in no event shall such
amount exceed the greater of (x) $300 million and (y) 75% of ACNTA as of
the date of such Incurrence;
(2) Indebtedness owed to and held by the Company or a Wholly Owned
Subsidiary; provided, however, that any subsequent issuance or transfer of
any Capital Stock which results in any such Wholly Owned Subsidiary ceasing
to be a Wholly Owned Subsidiary or any subsequent transfer of such
Indebtedness (other than to the Company or another Wholly Owned Subsidiary)
shall be deemed, in each case, to constitute the Incurrence of such
Indebtedness by the issuer thereof;
(3) Indebtedness of the Company represented by the Securities (other than
any Additional Securities);
44
(4) Indebtedness outstanding on February 26, 1998 (other than Indebtedness
described in paragraph (b) (1), (2) or (3) of this Section 4.03);
(5) Indebtedness of (A) a Restricted Subsidiary Incurred and outstanding on
or prior to the date on which such Restricted Subsidiary was acquired by
the Company (other than Indebtedness Incurred in connection with, or to
provide all or any portion of the funds or credit support utilized to
consummate, the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted Subsidiary or was
acquired by the Company) and (B) the Company or a Restricted Subsidiary
Incurred for the purpose of financing all or any part of the cost of
acquiring oil and gas properties, another Person (other than a Person that
was, immediately prior to such acquisition, a Subsidiary of the Company)
engaged in the Oil and Gas Business or all or substantially all the assets
of such a Person; provided, however, that in the case of each of clause (A)
and clause (B) above, on the date of such Incurrence and after giving
effect thereto, the Consolidated Coverage Ratio equals or exceeds 2.0 to
1.0;
(6) Refinancing Indebtedness in respect of Indebtedness Incurred pursuant
to Section 4.03(a) or Section 4.03(b)(3), (4), (5), this clause (6) or
clause (7) below; provided, however, that to the extent such Refinancing
Indebtedness directly or indirectly Refinances Indebtedness or Preferred
Stock of a Restricted Subsidiary described in Section 4.03(b)(5), such
Refinancing Indebtedness shall be Incurred only by such Restricted
Subsidiary or the Company;
(7) Non-recourse Purchase Money Indebtedness;
(8) Indebtedness with respect to Production Payments; provided, however,
that any such Indebtedness shall be Limited Recourse Production Payments;
provided further, however, that the Net Present Value of the reserves
related to such Production Payments shall not exceed 30% of ACNTA at the
time of Incurrence;
(9) Indebtedness consisting of the Subsidiary Guarantees and any Guarantee
by a Subsidiary Guarantor of Indebtedness Incurred by the Company pursuant
to paragraphs (b)(1) and (3) of this Section 4.03;
(10) Indebtedness consisting of Interest Rate Agreements directly related
to Indebtedness permitted
45
to be Incurred by the Company and its Restricted Subsidiaries pursuant to
the Indenture;
(11) Indebtedness under Oil and Gas Hedging Contracts and Currency
Agreements entered into in the ordinary course of business for the purpose
of limiting risks that arise in the ordinary course of business of the
Company and its Restricted Subsidiaries;
(12) Indebtedness in respect of bid, performance or surety obligations
issued by or for the account of the Company or any Restricted Subsidiary in
the ordinary course of business, including Guarantees and letters of credit
functioning as or supporting such bid, performance or surety obligations
(in each case other than for an obligation for money borrowed);
(13) Indebtedness of the Company or a Restricted Subsidiary Incurred to
finance capital expenditures and Refinancing Indebtedness Incurred in
respect thereof in an aggregate amount which, when taken together with the
amount of all other Indebtedness Incurred pursuant to this clause (13)
since February 26, 1998 and then outstanding, does not exceed $20 million;
(14) Permitted Marketing Obligations;
(15) In-kind obligations relating to oil and gas balancing positions
arising in the ordinary course of business; and
(16) Indebtedness in an aggregate amount which, together with the amount of
all other Indebtedness of the Company and its Restricted Subsidiaries
outstanding on the date of such Incurrence (other than Indebtedness
permitted by Section 4.03(a) or Section 4.03(b)(1)- (15)) does not exceed
$30 million.
(c) Notwithstanding the foregoing, the Company shall not, and shall
not permit any Subsidiary Guarantor to, Incur any Indebtedness pursuant to
Section 4.03(b) if the proceeds thereof are used, directly or indirectly, to
Refinance any Subordinated Obligations unless such Indebtedness shall be
subordinated to the Securities or the relevant Subsidiary Guarantee, as the case
may be, to at least the same extent as such Subordinated Obligations.
(d) For purposes of determining compliance with this Section 4.03, (i)
in the event that an item of Indebtedness meets the criteria of more than one of
the types of Indebtedness described in this Section 4.03, the
46
Company, in its sole discretion, will classify such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
the above clauses of this Section 4.03; provided that items of Indebtedness
Incurred since February 26, 1998 and prior to the Issue Date shall be deemed to
have been Incurred under the clause of this Section 4.03 corresponding to the
provision in the indenture governing the Existing 9% Senior Subordinated Notes
under which such items were incurred; and (ii) an item of Indebtedness may be
divided and classified in more than one of the types of Indebtedness described
in this Section 4.03.
Section 4.04. Incurrence of Layered Indebtedness. Notwithstanding
paragraphs (a) and (b) of Section 4.03 above, the Company shall not, and the
Company shall not permit any Subsidiary Guarantor to, Incur any Indebtedness if
such Indebtedness is subordinate or junior in ranking in any respect to any
Senior Indebtedness of the Company or such Subsidiary Guarantor, as applicable,
unless such Indebtedness is Senior Subordinated Indebtedness or is expressly
subordinated in right of payment to Senior Subordinated Indebtedness of such
Person.
Section 4.05. Limitation on Restricted Payments. (a) The Company shall
not, and shall not permit any Restricted Subsidiary, directly or indirectly, to
make a Restricted Payment if at the time the Company or such Restricted
Subsidiary makes such Restricted Payment: (1) a Default shall have occurred and
be continuing (or would result therefrom); (2) the Company is not able to Incur
an additional $1.00 of Indebtedness pursuant to Section 4.03(a); or (3) the
aggregate amount of such Restricted Payment and all other Restricted Payments
since February 26, 1998 would exceed the sum of (without duplication): (A) 50%
of the aggregate Consolidated Net Income of the Company accrued on a cumulative
basis commencing on the last day of the fiscal quarter immediately preceding
February 26, 1998, and ending on the last day of the fiscal quarter ending on or
immediately preceding the date of such proposed Restricted Payment (or, if such
aggregate Consolidated Net Income shall be a deficit, minus 100% of such
deficit); (B) the aggregate Net Cash Proceeds received by the Company from the
issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent
to February 26, 1998 (other than an issuance or sale to a Subsidiary of the
Company and other than an issuance or sale to an employee stock ownership plan
or to a trust established by the Company or any of its Subsidiaries for the
benefit of their employees); (C) the aggregate Net Cash Proceeds received by the
Company from the issue or sale
47
subsequent to February 26, 1998 of its Capital Stock (other than Disqualified
Stock) to an employee stock ownership plan; provided, however, that if such
employee stock ownership plan incurs any Indebtedness with respect thereto, such
aggregate amount shall be limited to an amount equal to any increase in the
Consolidated Net Worth of the Company resulting from principal repayments made
by such employee stock ownership plan with respect to such Indebtedness; (D) the
amount by which Indebtedness of the Company is reduced on the Company's balance
sheet upon the conversion or exchange (other than by a Subsidiary of the
Company) subsequent to February 26, 1998, of any Indebtedness of the Company
convertible or exchangeable for Capital Stock (other than Disqualified Stock) of
the Company (less the amount of any cash, or the fair value of any other
property, distributed by the Company upon such conversion or exchange); and (E)
an amount equal to the sum of (i) the net reduction in Investments made by the
Company or any Restricted Subsidiary in any Person resulting from dividends,
repayments of loans or advances or other transfers of assets, in each case to
the Company or any Restricted Subsidiary from such Person, and (ii) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of an Unrestricted Subsidiary at the time such
Unrestricted Subsidiary is designated a Restricted Subsidiary; provided,
however, that the foregoing sum shall not exceed, in the case of any such Person
or Unrestricted Subsidiary, the amount of Investments previously made (and
treated as a Restricted Payment) by the Company or any Restricted Subsidiary in
such Person or Unrestricted Subsidiary.
(b) The provisions of Section 4.05(a) shall not prohibit: (i)
dividends paid within 60 days after the date of declaration thereof if at such
date of declaration such dividend would have complied with this Section 4.05;
provided, however, that at the time of payment of such dividend, no other
Default shall have occurred and be continuing (or result therefrom); provided
further, however, that such dividend shall be included in the calculation of the
amount of Restricted Payments; (ii) any purchase or redemption of Capital Stock
or Subordinated Obligations of the Company made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Capital Stock of the Company
(other than Disqualified Stock and other than Capital Stock issued or sold to a
Subsidiary of the Company or an employee stock ownership plan or to a trust
established by the Company or any of its Subsidiaries for the benefit of their
employees); provided, however, that (A) such purchase or redemption shall be
excluded in the calculation of the amount of Restricted Payments and (B) the
48
Net Cash Proceeds from such sale shall 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 or redeem such Capital Stock as provided in this
clause (ii)); (iii) any purchase, repurchase, redemption, defeasance or other
acquisition or retirement for value of Subordinated Obligations of the Company
made by exchange for, or out of the proceeds of the substantially concurrent
sale of, Subordinated Obligations of the Company; provided, however, that such
purchase, repurchase, redemption, defeasance or other acquisition or retirement
for value shall be excluded in the calculation of the amount of Restricted
Payments; (iv) the repurchase of shares of, or options to purchase shares of,
common stock of the Company or any of its Subsidiaries from employees, former
employees, directors or former directors of the Company or any of its
Subsidiaries (or permitted transferees of such employees, former employees,
directors or former directors), pursuant to the terms of the agreements
(including employment agreements) or plans (or amendments thereto) approved by
the Board of Directors under which such individuals purchase or sell or are
granted the option to purchase or sell, shares of such common stock; provided,
however, that the aggregate amount of such repurchases shall not exceed $2.0
million in any calendar year; provided further, however, that such repurchases
shall be excluded in the calculation of the amount of Restricted Payments; (v)
loans made to officers, directors or employees of the Company or any Restricted
Subsidiary approved by the Board of Directors (or a duly authorized officer),
the net cash proceeds of which are used solely (A) to purchase common stock of
the Company in connection with a restricted stock or employee stock purchase
plan, or to exercise stock options received pursuant to an employee or director
stock option plan or other incentive plan, in a principal amount not to exceed
the exercise price of such stock options or (B) to refinance loans, together
with accrued interest thereon, made pursuant to item (A) of this clause (v);
provided, however, that such loans shall be excluded in the calculation of the
amount of Restricted Payments; or (vi) other Restricted Payments in an aggregate
amount not to exceed $20.0 million; provided, however, that such Restricted
Payments shall be excluded in the calculation of the amount of Restricted
Payments.
Section 4.06. Limitation on Restrictions on Distributions from
Restricted Subsidiaries. The Company shall not, and shall not permit any
Restricted Subsidiary to, create or otherwise cause or permit to exist or become
effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary (a) to pay dividends or make any other distributions on
its Capital Stock or pay any
49
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 or assets to the Company or a Restricted Subsidiary, except:
(i) any encumbrance or restriction in the Credit Agreement on the Issue Date or
pursuant to any other agreement in effect on the Issue Date; (ii) any
encumbrance or restriction with respect to a Restricted Subsidiary pursuant to
an agreement relating to any Indebtedness Incurred by such Restricted Subsidiary
on or prior to the date on which such Restricted Subsidiary was acquired by the
Company (other than Indebtedness Incurred as consideration in, or to provide all
or any portion of the funds or credit support utilized to consummate, the
transaction or series of related transactions pursuant to which such Restricted
Subsidiary became a Restricted Subsidiary or was acquired by the Company) and
outstanding on such date; (iii) any encumbrance or restriction pursuant to an
agreement effecting a Refinancing of Indebtedness Incurred pursuant to an
agreement referred to in clause (i) or (ii) of this covenant or this clause
(iii) or contained in any amendment to an agreement referred to in clause (i) or
(ii) of this covenant or this clause (iii); provided, however, that the
encumbrances and restrictions with respect to such Restricted Subsidiary
contained in any such refinancing agreement or amendment are no less favorable
to the Securityholders than encumbrances and restrictions with respect to such
Restricted Subsidiary contained in such agreements; (iv) any such encumbrance or
restriction consisting of customary nonassignment provisions in leases governing
leasehold interests to the extent such provisions restrict the transfer of the
lease or the property leased thereunder; (v) in the case of clause (c) above,
restrictions contained in security agreements or mortgages securing Indebtedness
of a Restricted Subsidiary to the extent such restrictions restrict the transfer
of the property subject to such security agreements or mortgages; and (vi) any
restriction with respect to a Restricted Subsidiary imposed pursuant to an
agreement entered into for the sale or disposition of all or substantially all
the Capital Stock or assets of such Restricted Subsidiary pending the closing of
such sale or disposition.
Section 4.07. Limitation on Sales of Assets and Subsidiary Stock. (a)
In the event and to the extent that the Net Available Cash received by the
Company or any Restricted Subsidiary from one or more Asset Dispositions (other
than an Asset Disposition referred to in Section 4.07(d)) occurring on or after
the Issue Date in any period of 12 consecutive months exceeds 15% of Adjusted
Consolidated Net Tangible Assets as of the beginning of such
50
12-month period, then the Company shall (i) within 180 days (in the case of (A)
below) or 18 months (in the case of (B) below) after the date such Net Available
Cash so received exceeds such 15% of Adjusted Consolidated Net Tangible Assets
(A) apply an amount equal to such excess Net Available Cash to repay Senior
Indebtedness of the Company or a Subsidiary Guarantor or Indebtedness of a
Restricted Subsidiary that is not a Subsidiary Guarantor, in each case owing to
a Person other than the Company or any Affiliate of the Company or (B) invest an
equal amount, or the amount not so applied pursuant to clause (A), in Additional
Assets or Permitted Business Investments or (ii) apply such excess Net Available
Cash (to the extent not applied pursuant to clause (i)) as provided in Section
4.07(b). The amount of such excess Net Available Cash required to be applied
during the applicable period and not applied as so required by the end of such
period shall constitute "Excess Proceeds."
(b)(i) If, as of the first day of any calendar month, the aggregate
amount of Excess Proceeds not theretofore subject to an Excess Proceeds Offer
(as defined below) totals at least $10 million, the Company must, not later than
the fifteenth Business Day of such month, make an offer (an "Excess Proceeds
Offer") to purchase from the Holders on a pro rata basis an aggregate principal
amount of Securities equal to the Excess Proceeds (rounded down to the nearest
multiple of $1,000) on such date, at a purchase price equal to 100% of the
principal amount of such Securities, plus, in each case, accrued interest (if
any) to the date of purchase (the "Excess Proceeds Payment"), but, if the terms
of any other Senior Subordinated Indebtedness require that an offer be made for
such Senior Subordinated Indebtedness contemporaneously with the Excess Proceeds
Offer, then the Excess Proceeds shall be prorated between the Excess Proceeds
Offer and the offer for such other Senior Subordinated Indebtedness in
accordance with the aggregate outstanding principal amounts (or, in the case of
other Senior Subordinated Indebtedness issued with significant original issue
discount, accreted value) of the Securities and such other Senior Subordinated
Indebtedness, and the aggregate principal amount of Securities for which the
Excess Proceeds Offer is made shall be reduced accordingly.
(ii) The Company shall commence any Excess Proceeds Offer with respect
to the Securities by mailing a notice to the Trustee and each Holder stating:
(A) that the Excess Proceeds Offer is being made pursuant to this Section 4.07
and that all Securities validly tendered will be accepted for payment on a pro
rata basis; (B) the purchase price and the date of purchase (which shall be a
51
Business Day no earlier than 30 days nor later than 60 days from the date such
notice is mailed) (the "Excess Proceeds Payment Date"); (C) that any Security
not tendered will continue to accrue interest pursuant to its terms; (D) that,
unless the Company defaults in the payment of the Excess Proceeds Payment, any
Security accepted for payment pursuant to the Excess Proceeds Offer shall cease
to accrue interest on and after the Excess Proceeds Payment Date; (E) that
Holders electing to have a Security purchased pursuant to the Excess Proceeds
Offer will be required to surrender the Security, together with the form
entitled "Option of Holder to Elect Purchase" on the reverse side of the
Security completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the Business Day immediately preceding the
Excess Proceeds Payment Date; (F) that Holders will be entitled to withdraw
their election if the Paying Agent receives, not later than the close of
business on the third Business Day immediately preceding the Excess Proceeds
Payment Date, a telegram, facsimile trans mission or letter setting forth the
name of such Holder, the principal amount of Securities delivered for purchase
and a statement that such Holder is withdrawing his election to have such
Securities purchased; and (G) that Holders whose Securities are being purchased
only in part will be issued new Securities equal in principal amount to the
unpurchased portion of the Securities surrendered; provided, however, that each
Security purchased and each new Security issued shall be in a principal amount
of $1,000 or integral multiples thereof.
(iii) On the Excess Proceeds Payment Date, the Company shall (A)
accept for payment on a pro rata basis Securities or portions thereof tendered
pursuant to the Excess Proceeds Offer, (B) deposit with the Paying Agent money
sufficient to pay the purchase price of all Securities or portions thereof so
accepted, and (C) deliver, or cause to be delivered, to the Trustee all
Securities or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof so accepted for
payment by the Company. The Paying Agent shall promptly mail to the Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail to such Holders a new Security
equal in principal amount to any unpurchased portion of the Security
surrendered; provided, however, that each Security purchased and each new
Security issued shall be in a principal amount of $1,000 or integral multiples
thereof. The Company will publicly announce the results of the Excess Proceeds
Offer as soon as practicable after the Excess Proceeds Payment Date. For
purposes of this Section 4.07, the Trustee shall act as the Paying Agent.
52
(c) In the event of the transfer of substantially all (but not all)
the property and assets of the Company as an entirety to a Person in a
transaction permitted by Section 5.01, the Successor Company shall be deemed to
have sold the properties and assets of the Company not so transferred for
purposes of this Section 4.07, and shall comply with the provisions of this
Section 4.07 with respect to such deemed sale as if it were an Asset Disposition
and the Successor Company shall be deemed to have received Net Available Cash in
an amount equal to the fair market value (as determined in good faith by the
Board of Directors) of the properties and assets not so transferred or sold.
(d) In the event of an Asset Disposition by the Company or any
Restricted Subsidiary that consists of a sale of hydrocarbons and results in
Production Payments, the Company or such Restricted Subsidiary shall apply an
amount equal to the Net Available Cash received by the Company or such
Restricted Subsidiary to (i) reduce Senior Indebtedness of the Company or a
Subsidiary Guarantor or Indebtedness of a Restricted Subsidiary that is not a
Subsidiary Guarantor, in each case owing to a Person other than the Company or
any Affiliate of the Company, within 180 days after the date such Net Available
Cash is so received, or (ii) invest in Additional Assets or Permitted Business
Investments within 18 months after the date such Net Available Cash is so
received.
(e) The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations thereunder in the event that such Excess Proceeds are received by
the Company under this Section 4.07 and the Company is required to repurchase
Securities as described above. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of this Section
4.07, the Company shall comply with the applicable securities laws and
regulations and shall not be deemed to have breached its obligations under this
Section 4.07 by virtue thereof.
(e) The amounts of "Net Available Cash" and "Excess Proceeds"
outstanding as of the Issue Date under the indenture governing the Existing 9%
Senior Subordinated Notes shall be deemed to be Net Available Cash or Excess
Proceeds, as applicable, for purposes of this Section 4.07.
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
53
or exchange of any property, employee compensation arrangements or the rendering
of any service) with any Affiliate of the Company (an "Affiliate Transaction")
unless the terms thereof (1) are no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained at the time of such
transaction in arm's-length dealings with a Person who is not such an Affiliate,
(2) if such Affiliate Transaction involves an amount in excess of $10.0 million,
are set forth in writing and have been approved by the Board of Directors,
including a majority of the members of the Board of Directors having no personal
stake in such Affiliate Transaction, and (3) if such Affiliate Transaction
involves an amount in excess of $20.0 million, have been determined by a
nationally recognized investment banking firm or other qualified independent
appraiser to be fair, from a financial standpoint, to the Company and its
Restricted Subsidiaries.
(b) The provisions of Section 4.08(a) shall not prohibit (i) any sale
of hydrocarbons or other mineral products to an Affiliate of the Company or the
entering into or performance of Oil and Gas Hedging Contracts, gas gathering,
transportation or processing contracts or oil or natural gas marketing or
exchange contracts with an Affiliate of the Company, in each case, in the
ordinary course of business, so long as the terms of any such transaction are
approved by a majority of the members of the Board of Directors who are
disinterested with respect to such transaction, (ii) the sale to an Affiliate of
the Company of Capital Stock of the Company that does not constitute
Disqualified Stock, and the sale to an Affiliate of the Company of Indebtedness
(including Disqualified Stock) of the Company in connection with an offering of
such Indebtedness in a market transaction and on terms substantially identical
to those of other purchasers in such market transaction, (iii) transactions
contemplated by any employment agreement or other compensation plan or
arrangement existing on the Issue Date or thereafter entered into by the Company
or any of its Restricted Subsidiaries in the ordinary course of business, (iv)
the payment of reasonable fees to directors of the Company and its Restricted
Subsidiaries who are not employees of the Company or any Restricted Subsidiary,
(v) transactions between or among the Company and its Restricted Subsidiaries,
(vi) transactions between the Company or any of its Restricted Subsidiaries and
Persons that are controlled (as defined in the definition of "Affiliate") by the
Company (an "Unrestricted Affiliate"); provided that no other Person that
controls (as so defined) or is under common control (as so defined) with the
Company holds any Investments in such Unrestricted Affiliate; (vii) Restricted
Payments that are
54
permitted by the provisions of Section 4.05 and (viii) loans or advances to
employees in the ordinary course of business and approved by the Company's Board
of Directors in an aggregate principal amount not to exceed $2.5 million
outstanding at any one time.
Section 4.09. Change of Control. (a) Upon the occurrence of a Change
of Control, each Holder shall have the right to require that the Company
purchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on the relevant
record date to receive interest on the relevant interest payment date), in
accordance with the terms contemplated in Section 4.09(b). In the event that at
the time of such Change of Control the terms of the Indebtedness under the
Credit Agreement restrict or prohibit the purchase of Securities pursuant to
this Section, then prior to the mailing of the notice to Holders provided for in
Section 4.09(b) below, but in any event within 30 days following any Change of
Control, the Company shall (i) repay in full the Indebtedness under the Credit
Agreement or (ii) obtain the requisite consent under the agreements governing
the Indebtedness under the Credit Agreement to permit the purchase of the
Securities as provided for in Section 4.09(b).
(b) Within 30 days following a Change of Control, the Company shall
mail a notice to each Holder with a copy to the Trustee stating: (1) that a
Change of Control has occurred and that such Holder has the right to require the
Company to purchase such Holder's Securities at a purchase price in cash equal
to 101% of the principal amount thereof plus accrued and unpaid interest, if
any, to the date of purchase (subject to the right of Holders of record on the
relevant record date to receive interest on the relevant interest payment date);
(2) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income, cash flow
and capitalization, in each case after giving effect to such Change of Control);
(3) the purchase date (which shall be no earlier than 30 days nor later than 60
days from the date such notice is mailed); and (4) the instructions determined
by the Company, consistent with this Section 4.09, that a Holder must follow in
order to have its Securities purchased.
(c) Holders electing to have a Security purchased will be required to
surrender the Security, with an appropriate form duly completed, to the Company
at the address specified in the notice at least three Business Days
55
prior to the purchase date. Holders will be entitled to withdraw their election
if the Trustee or the Company receives not later than one Business Day prior to
the purchase date, a telegram, telex, facsimile transmission or letter setting
forth the name of the Holder, the principal amount of the Security which was
delivered for purchase by the Holder and a statement that such Holder is
withdrawing his election to have such Security purchased.
(d) On the purchase date, all Securities purchased by the Company
under this Section shall be delivered to the Trustee for cancelation, and the
Company shall pay the purchase price plus accrued and unpaid interest, if any,
to the Holders entitled thereto.
(e) The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the purchase of Securities pursuant to this
Section 4.09. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this Section 4.09, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.09 by virtue
thereof.
(f) The Company will not be required to make an offer to purchase
Securities as a result of a Change of Control pursuant to this Section 4.09 if a
third party (i) makes such offer in the manner, at the times and otherwise in
compliance with the requirements set forth in Section 4.09(b) and (ii) purchases
all Securities validly tendered and not withdrawn under such an offer.
Section 4.10. Limitation on the Sale or Issuance of Capital Stock of
Restricted Subsidiaries. The Company shall not sell or otherwise dispose of any
shares of Capital Stock of a Restricted Subsidiary, and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell or otherwise
dispose of any shares of its Capital Stock except (i) to the Company or a Wholly
Owned Subsidiary, (ii) if, immediately after giving effect to such issuance,
sale or other disposition, neither the Company nor any of its Subsidiaries own
any Capital Stock of such Restricted Subsidiary, (iii) if, immediately after
giving effect to such issuance, sale or other disposition, such Restricted
Subsidiary would no longer constitute a Restricted Subsidiary and any Investment
in such Person remaining after giving effect thereto is treated as a new
Investment by the Company and such Investment would be permitted to be made
under Section 4.05 if made on the date of such issuance,
56
sale or other disposition or (iv) to the extent such shares represent directors'
qualifying shares or shares required by applicable law to be held by a Person
other than the Company or a Restricted Subsidiary.
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 any Lien on or with respect to any
property of the Company or such Restricted Subsidiary, whether owned on the
Issue Date or acquired after the Issue Date, or any interest therein or any
income or profits therefrom, unless the Securities or any Subsidiary Guarantee
of such Restricted Subsidiary, as applicable, are secured equally and ratably
with (or prior to) any and all other obligations secured by such Lien, except
that the Company and its Restricted Subsidiaries may enter into, create, incur,
assume or suffer to exist Permitted Liens and Liens securing Senior
Indebtedness.
Section 4.12. 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 request of the
Trustee, the Company will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 4.14. Future Subsidiary Guarantors. The Company shall cause
each Restricted Subsidiary that represents at least 10% of the book assets of,
or 10% of the ACNTA of the Company and its Restricted Subsidiaries, taken as a
whole, and that has an aggregate of $15.0 million or more of Indebtedness and
Preferred Stock outstanding at any time to promptly Guarantee the Securities
pursuant to a Supplemental Indenture substantially in the form attached hereto
as Exhibit B.
57
ARTICLE 5
Successor Company
Section 5.01. When Company May Merge or Transfer Assets. The Company
shall not consolidate with or merge with or into, or convey, transfer or lease,
in one trans action or a series of related transactions, all or substantially
all the assets of the Company and its Restricted Subsidiaries, taken as a whole,
to, any Person, unless:
(i) (A) the resulting, surviving or transferee Person (the "Successor
Company") shall be a Person organized and existing under the laws of the
United States of America, any State thereof or the District of Columbia and
(B) the Successor Company (if not the Company) shall expressly assume, by
an indenture supplemental hereto, executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of the Company under
the Securities and this Indenture;
(ii) immediately after giving effect to such transaction (and treating
any Indebtedness which becomes an obligation of the Successor Company or
any Restricted Subsidiary as a result of such transaction as having been
Incurred by the Successor Company or any Subsidiary as a result of such
transaction as having been Incurred by such Successor Company or such
Subsidiary at the time of such transaction), no Default shall have occurred
and be continuing;
(iii) immediately after giving effect to such transaction, the
Successor Company would be able to incur an additional $1.00 of
Indebtedness pursuant to Section 4.03(a);
(iv) immediately after giving effect to such transaction, the
Successor Company shall have Adjusted Consolidated Net Tangible Assets that
are not less than the Adjusted Consolidated Net Tangible Assets prior to
such transaction;
(v) in the case of a conveyance, transfer or lease of all or
substantially all the assets of the Company and its Restricted
Subsidiaries, taken as a whole, such assets shall have been so conveyed,
transferred or leased as an entirety or virtually as an entirety to one
Person; and
58
(vi) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture;
provided, however, that clauses (iii) and (iv) shall not be applicable to any
such transaction solely between the Company and any Restricted Subsidiary.
The Successor Company shall be the successor to the Company and shall
succeed to, and be substituted for, and may exercise every right and power of,
the Company under this Indenture, and the predecessor Company, except in the
case of a lease, shall be released from the obligation to pay the principal of
and interest on the Securities.
Section 5.02. When Subsidiary Guarantors May Merge or Transfer Assets.
The Company will not permit any Subsidiary Guarantor to consolidate with or
merge with or into, or convey, transfer or lease, in one transaction or a series
of transactions, all or substantially all of its assets to any Person unless:
(i) the resulting, surviving or transferee Person (if not such Subsidiary) shall
be a Person organized and existing under the laws of the jurisdiction under
which such Subsidiary was organized or under the laws of the United States of
America, or any State thereof or the District of Columbia, and, if such Person
is not the Company, such Person shall expressly assume, by executing a Guarantee
Agreement, all the obligations of such Subsidiary, if any, under its Subsidiary
Guarantee; (ii) immediately after giving effect to such transaction or
transactions on a pro forma basis (and treating any Indebtedness which becomes
an obligation of the resulting, surviving or transferee Person as a result of
such transaction as having been issued by such Person at the time of such
transaction), no Default shall have occurred and be continuing; (iii) in the
case of a conveyance, transfer or lease of all or substantially all the assets
of a Subsidiary Guarantor, such assets shall have been so conveyed, transferred
or leased as an entirety or virtually as an entirety to one Person; and (iv) the
Company delivers to the Trustee an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer and such
Guarantee Agreement, if any, complies with this Indenture. The provisions of
clauses (i) and (ii) above shall not apply to any one or more transactions which
constitute an Asset Disposition if the Company has complied with the applicable
provisions of Section 4.07.
59
ARTICLE 6
Defaults and Remedies
Section 6.01. Events of Default. An "Event of Default" occurs if:
(1) the Company defaults in any payment of interest on any Security
when the same becomes due and payable, whether or not such payment shall be
prohibited by Article 10, and such default continues for a period of 30
consecutive days;
(2) the Company (i) defaults in the payment of the principal of any
Security when the same becomes due and payable at its Stated Maturity, upon
optional redemption, upon required purchase, upon declaration of
acceleration or otherwise, whether or not such payment shall be prohibited
by Article 10 or (ii) fails to redeem or purchase Securities when required
pursuant to this Indenture or the Securities, whether or not such
redemption or purchase shall be prohibited by Article 10;
(3) the Company fails to comply with Section 5.01;
(4) the Company fails to comply with Section 4.02, 4.03, 4.04, 4.05,
4.06, 4.07 (other than a failure to purchase Securities when required under
Section 4.07), 4.08, 4.09 (other than a failure to purchase Securities when
required under Section 4.09), 4.10, 4.11, 4.12 or 4.14 and such failure
continues for 30 consecutive days after the notice specified below;
(5) the Company fails to comply with any of its agreements contained
in the Securities or in this Indenture (other than those referred to in
(1), (2), (3) or (4) above) and such failure continues for 60 consecutive
days after the notice specified below;
(6) Indebtedness of the Company (other than Limited Recourse
Production Payments and Non-recourse Purchase Money Indebtedness) is not
paid within any applicable grace period after final maturity or the
maturity of such Indebtedness is accelerated by the holders thereof because
of a default (and such acceleration is not rescinded or annulled) and the
total amount of such Indebtedness unpaid or accelerated exceeds $10.0
million;
(7) the Company or any Significant Subsidiary
60
pursuant to or within the meaning of any Bankruptcy
Law:
(A) commences a voluntary case;
(B) consents to the entry of an order for relief against it in an
involuntary case;
(C) consents to the appointment of a Custodian of it or for any
substantial part of its property; or
(D) makes a general assignment for the benefit of its creditors;
or takes any comparable action under any foreign laws relating to
insolvency;
(8) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:
(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case;
(B) appoints a Custodian of the Company or any Significant
Subsidiary or for any substantial part of its property; or
(C) orders the winding up or liquidation of the Company or any
Significant Subsidiary;
or any similar relief is granted under any foreign laws and the order
or decree remains unstayed and in effect for 60 days;
(9) any judgment or decree for the payment of money in an uninsured or
unindemnified amount in excess of $10.0 million or its foreign currency
equivalent at the time is rendered against the Company or a Significant
Subsidiary and is not discharged and either (A) an enforcement proceeding
has been commenced by any creditor upon such judgment or decree or (B)
there is a period of 60 days following the entry of such judgment or decree
during which such judgment or decree is not discharged, waived, bonded or
the execution thereof stayed, in either case 10 days after the notice
specified below; or
(10) any Subsidiary Guarantee ceases or otherwise fails to be in full
force and effect (other than in accordance with the terms of such
Subsidiary Guarantee)
61
or any Subsidiary Guarantor denies or disaffirms its obligations under its
Subsidiary Guarantee if such default continues for a period of 10 days
after the notice specified below.
The foregoing will constitute "Events of Default" whatever the reason
for any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.
The term "Bankruptcy Law" means ▇▇▇▇▇ ▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.
A Default under clause (4), (5), (9) or (10) is not an Event of
Default until the Trustee or the Holders of at least 25% in principal amount of
the Securities notify the Company of the Default and the Company does not cure
such Default within the time specified after receipt of such notice. Such notice
must specify the Default, demand that it be remedied and state that such notice
is a "Notice of Default".
The Company shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice, in the form of an Officers' Certificate, of
any Event of Default under clause (3) or (6) and any event which with the giving
of notice or the lapse of time would become an Event of Default under clause
(4), (5), (9) or (10), describing its status and what action the Company is
taking or proposes to take with respect thereto. The Trustee shall not be deemed
to have knowledge of any Default or Event of Default unless one of its Trust
Officers receives written notice thereof from the Company or any of the Holders.
Section 6.02. Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.01(7) or (8) with respect to the
Company) occurs and is continuing, the Trustee by written notice to the Company,
or the Holders of at least 25% in principal amount of the outstanding Securities
by written notice to the Company and the Trustee, may declare the principal of
and accrued but unpaid interest on all the Securities to be due and payable.
Upon such a declaration, such principal and interest shall be due and payable
immediately. If an Event of Default specified in Section 6.01(7) or (8) with
respect to the Company occurs and is continuing, the principal of
62
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 Security holders. The Holders of a majority in principal amount of the
outstanding Securities by written notice to the Trustee may rescind any such
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of acceleration. No such rescission shall affect any subsequent Default
or impair any right consequent thereto.
Section 6.03. Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of or interest on the Securities or to enforce the performance of
any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
Section 6.04. Waiver of Past Defaults. The Holders of a majority in
principal amount of the Securities by written notice to the Trustee may waive an
existing or past Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Securityholder affected. When a Default is waived, it is deemed
cured, but no such waiver shall extend to any subsequent or other Default or
impair any consequent right.
Section 6.05. Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The Trustee, however,
may refuse to follow any direction that conflicts with law or this Indenture or,
subject to Section 7.01, that the Trustee determines is unduly prejudicial to
the rights of other Securityholders or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
63
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to be furnished with
indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.
Section 6.06. Limitation on Suits. A Securityholder may not pursue any
remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of the outstanding
Securities make a written request to the Trustee to pursue the remedy;
(3) such Holder or Holders furnish, if required by the Trustee, to the
Trustee reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee does not comply with the request within 60 days after
receipt of the request and the furnishing of the required security or
indemnity; and
(5) the Holders of a majority in principal amount of the outstanding
Securities do not give the Trustee a direction inconsistent with the
request during such 60- day period.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.
Section 6.07. Rights of Holders To Receive Payment. Notwithstanding
any other provision of this Indenture, the right of any Holder to receive
payment of principal of, premium (if any) or interest on the Securities held by
such Holder, on or after the respective due dates expressed in the Securities,
or to bring suit for the enforcement of any such payment on or after such
respective dates, shall not be impaired or affected without the consent of such
Holder.
Section 6.08. Collection Suit by Trustee. If an Event of Default
specified in Section 6.01(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Company for the whole amount then due and owing (together
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with interest on any unpaid interest to the extent lawful) and the amounts
provided for in Section 7.07.
Section 6.09. Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Company or any Subsidiary
Guarantor their respective creditors or their respective property and, unless
prohibited by law or applicable regulations, may vote on behalf of the Holders
in any election of a trustee in bankruptcy or other Person performing similar
functions, and any Custodian in any such judicial proceeding is hereby
authorized by each Holder to make payments to the Trustee and, in the event that
the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.07.
Section 6.10. Priorities. If the Trustee collects any money or
property pursuant to this Article 6, it shall pay out the money or property in
the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent required by
Article 10 or 12;
THIRD: to Securityholders for amounts due and unpaid on the Securities
for principal and interest, ratably, without preference or priority of any
kind, according to the amounts due and payable on the Securities for
principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Company shall mail to each Securityholder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
Section 6.11. Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this
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Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.07 or a suit by Holders of more than an aggregate of 10%
in principal amount of the Securities.
Section 6.12. Waiver of Stay or Extension Laws. The Company (to the
extent it may lawfully do so) shall not at any time insist upon, or plead, or in
any manner whatsoever claim or take the benefit or advantage of, any stay or
extension law wherever enacted, now or at any time hereafter in force, which may
affect the covenants or the performance of this Indenture; and the Company (to
the extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and shall not hinder, delay or impede the execution
of any power herein granted to the Trustee, but shall suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE 7
Trustee
Section 7.01. Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs.
(b) Except during the continuance of an Event of Default:
(1) the Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Indenture and no implied covenants or
obligations shall be read into this Indenture against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions
66
expressed therein, upon certificates or opinions furnished to the Trustee
and conforming to the requirements of this Indenture. However, the Trustee
shall examine such certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own wilful misconduct,
except that:
(1) this paragraph does not limit the effect of paragraph (b) of this
Section;
(2) the Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and
(3) the Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.05.
(d) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company.
(f) Money held in trust by the Trustee need not be segregated from
other funds except to the extent required by law.
(g) No provision of this Indenture shall require the Trustee to
advance, expend or risk its own funds or otherwise incur financial liability in
the performance of any of its duties hereunder or in the exercise of any of its
rights or powers. The Trustee, however, may so advance or expend its own funds
if, in its own reasonable judgment, the Trustee believes that repayment of such
funds or adequate indemnity against such risk or liability has been reasonably
assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Trustee shall be
subject to the provisions of this Section and to the provisions of the TIA.
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(i) Notwithstanding anything to the contrary herein, the Trustee shall
have no duty to review the reports and information documents required to be
provided by Section 4.02 for the purposes of determining compliance with any
provisions of this Indenture.
Section 7.02. Rights of Trustee. (a) The Trustee may rely on any
document believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee need not investigate any fact or matter stated in
the document.
(b) Before the Trustee acts or refrains from acting, it may require an
Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on the
Officers' Certificate or Opinion of Counsel.
(c) The Trustee may act through agents and shall not be responsible
for the misconduct or negligence of any agent appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it believes to be authorized or within its rights or
powers; provided, however, that the Trustee's conduct does not constitute wilful
misconduct or negligence.
(e) The Trustee may consult with counsel, and the advice or opinion of
counsel with respect to legal matters relating to this Indenture and the
Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Trustee shall not be charged with knowledge of any Default or
Event of Default unless either (1) a Trust Officer shall have actual knowledge
of such Default or Event of Default or (2) written notice of such Default or
Event of Default shall have been given to the Trustee by the Company or any
other obligor on such Securities or by any Holder of the Securities.
Section 7.03. Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Company or its Affiliates with the same rights
it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar
or co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.
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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 the
Trust Officer responsible for administering this Indenture and the Securities in
good faith determines that withholding notice is not opposed to the interests of
Securityholders.
Section 7.06. Reports by Trustee to Holders. Within sixty (60) days
after May 15 of each year, beginning with May 15, 2002, 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
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Company shall indemnify the Trustee against any and all loss, liability or
expense (including attorneys' fees) arising out of its acceptance of this trust
or incurred by it in connection with the administration of this trust and the
performance of its duties hereunder, including the costs and expenses of
enforcing this Indenture against the Company (including under Section 7.07). The
Trustee shall notify the Company promptly of any claim (whether asserted by any
Securityholder or the Company) for which it may seek indemnity. Failure by the
Trustee to so notify the Company shall not relieve the Company of its
obligations hereunder. The Company shall defend the claim and the Trustee may
have separate counsel and the Company shall pay the fees and expenses of such
counsel. The Company need not reimburse any expense or indemnify against any
loss, liability or expense incurred by the Trustee through the Trustee's own
wilful misconduct, negligence or bad faith.
To secure the Company's payment obligations in this Section, the
Trustee shall have a lien prior to the Securities on all money or property held
or collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section shall
survive the resignation or removal of the Trustee and the discharge of this
Indenture. When the Trustee incurs expenses after the occurrence of a Default
specified in Section 6.01(7) or (8) with respect to the Company, the expenses
are intended to constitute expenses of administration under the Bankruptcy Law.
Section 7.08. Replacement of Trustee. The Trustee may resign at any
time by so notifying the Company. The Holders of a majority in principal amount
outstanding of the Securities may remove the Trustee by so notifying the Trustee
and may appoint a successor Trustee. A holder may petition a court of competent
jurisdiction to remove the Trustee in the manner and under the circumstances
contemplated by TIA Section 310(b)(iii). The Company shall remove the Trustee
if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of the Trustee or
its property; or
(4) the Trustee otherwise becomes incapable of acting.
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If the Trustee resigns, is removed by the Company or by the Holders of
a majority in principal amount outstanding of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a notice of its
succession to Securityholders. The retiring Trustee shall promptly transfer all
property held by it as Trustee to the successor Trustee, subject to the lien
provided for in Section 7.07.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to this
Section, the Company's obligations under Section 7.07 shall continue for the
benefit of the retiring Trustee.
Section 7.09. Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.
In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture any of the Securities shall have been authenticated but not delivered,
any such successor to the Trustee may adopt the certificate of authentication of
any predecessor trustee, and deliver such Securities so authenticated; and in
case at that time
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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.
ARTICLE 8
Discharge of Indenture; Defeasance
Section 8.01. Discharge of Liability on Securities; Defeasance. (a)
When (i) the Company delivers to the Trustee all outstanding Securities (other
than Securities replaced pursuant to Section 2.07) for cancelation or (ii) all
outstanding Securities have become due and payable, whether at maturity or as a
result of the mailing of a notice of redemption pursuant to Article 3 hereof and
the Company irrevocably deposits with the Trustee funds sufficient to pay at
maturity or upon redemption all outstanding Securities, including interest
thereon to maturity or such redemption date (other than Securities replaced
pursuant to Section 2.07), and if in either case the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to Section
8.01(c), cease to be of further effect. The Trustee shall acknowledge
satisfaction and discharge of this Indenture on demand of the Company
accompanied by an Officers' Certificate and an Opinion of Counsel and at the
cost and expense of the Company.
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(b) Subject to Sections 8.01(c) and 8.02, the Company at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option") or (ii) its obligations under Sections 4.02, 4.03,
4.05, 4.06, 4.07, 4.08, 4.09, 4.10, 4.11, 4.12 and 4.14 and the operation of
Sections 6.01(4), 6.01(6), 6.01(7) (but only with respect to Significant
Subsidiaries), 6.01(8) (but only with respect to Significant Subsidiaries),
6.01(9) and 6.01(10) and its obligations under Sections 5.01(iii), (iv) and (v)
and under Section 5.02 ("covenant defeasance option"). The Company may exercise
its legal defeasance option notwithstanding its prior exercise of its covenant
defeasance option.
If the Company exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default. If the Company
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.01(4),
6.01(6), 6.01(7) (but only with respect to Significant Subsidiaries), 6.01(8)
(but only with respect to Significant Subsidiaries), 6.01(9) or 6.01(10) or
because of the failure of the Company to comply with Section 5.01(iii), (iv) or
(v) or with Section 5.02. If the Company exercises its legal defeasance option
or its covenant defeasance option, each Subsidiary Guarantor will be released
from all its obligations with respect to its Subsidiary Guarantee.
Upon satisfaction of the conditions set forth herein and upon request
of the Company, the Trustee shall acknowledge in writing the discharge of those
obligations that the Company terminates.
(c) Notwithstanding clauses (a) and (b) above, the Company's
obligations in Sections 2.03, 2.04, 2.05, 2.07, 7.07, 7.08 and this Article 8
shall survive until the Securities have been paid in full. Thereafter, the
Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive.
Section 8.02. Conditions to Defeasance. The Company may exercise its
legal defeasance option or its covenant defeasance option only if:
(1) the Company irrevocably deposits in trust with the Trustee money
or U.S. Government Obligations for the payment of principal and interest on
the Securities to maturity or redemption, as the case may be;
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(2) the Company delivers to the Trustee a certificate from a
nationally recognized firm of independent accountants expressing its
opinion that the payments of principal of and interest when due and without
reinvestment on the deposited U.S. Government Obligations plus any
deposited money without investment will provide cash at such times and in
such amounts as will be sufficient to pay principal and interest when due
on all the Securities to maturity or redemption, as the case may be;
(3) 123 days pass after the deposit is made and during the 123-day
period no Default specified in Section 6.01(7) or (8) with respect to the
Company occurs which is continuing at the end of the period;
(4) the deposit does not constitute a default under any other
agreement binding on the Company and is not prohibited by Article 10;
(5) the Company delivers to the Trustee an Opinion of Counsel to the
effect that the trust resulting from the deposit does not constitute, or is
qualified as, a regulated investment company under the Investment Company
Act of 1940;
(6) in the case of the legal defeasance option, the Company shall have
delivered to the Trustee an Opinion of Counsel stating that (i) the Company
has received from, or there has been published by, the Internal Revenue
Service a ruling, or (ii) since the date of this Indenture there has been a
change in the applicable Federal income tax law, in either case to the
effect that, and based thereon such Opinion of Counsel shall confirm that,
the Securityholders will not recognize income, gain or loss for Federal
income tax purposes as a result of such defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such legal defeasance had not
occurred;
(7) in the case of the covenant defeasance option, the Company shall
have delivered to the Trustee an Opinion of Counsel to the effect that the
Security holders will not recognize income, gain or loss for Federal income
tax purposes as a result of such covenant defeasance and will be subject to
Federal income tax on the same amounts, in the same manner and at the same
times as would have been the case if such covenant defeasance had not
occurred; and
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(8) the Company delivers to the Trustee an Officers' Certificate and
an Opinion of Counsel, each stating that all conditions precedent to the
defeasance and discharge of the Securities as contemplated by this Article
8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date in
accordance with Article 3.
Section 8.03. Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article 8. It shall apply the deposited money and the money from U.S. Government
Obligations through the Paying Agent and in accordance with this Indenture to
the payment of principal of and interest on the Securities. Money and securities
so held in trust are not subject to Article 10.
Section 8.04. Repayment to Company. The Trustee and the Paying Agent
shall promptly turn over to the Company upon request any money or securities
held by them at any time which, in the opinion of a nationally recognized firm
of independent public accountants expressed in a written certification thereof
delivered to the Trustee, are in excess of the amount thereof that would then be
required for the Company to exercise its legal defeasance option or its covenant
defeasance option pursuant to this Article 8.
Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Company upon written request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Securityholders entitled to the money must look to the
Company for payment as general creditors.
Section 8.05. Indemnity for Government Obligations. The Company shall
pay and shall indemnify the Trustee against any tax, fee or other charge imposed
on or assessed against deposited U.S. Government Obligations or the principal
and interest received on such U.S. Government Obligations.
Section 8.06. Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the
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Company's obligations under this Indenture and the Securities shall be revived
and reinstated as though no deposit had occurred pursuant to this Article 8
until such time as the Trustee or Paying Agent is permitted to apply all such
money or U.S. Government Obligations in accordance with this Article 8;
provided, however, that, if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE 9
Amendments
Section 9.01. Without Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
(1) to cure any ambiguity, omission, defect or inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition to or in
place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes of
Section 163(f) of the Code or in a manner such that the uncertificated
Securities are described in Section 163(f)(2)(B) of the Code;
(4) to make any change in Article 10 or 12 that would limit or
terminate the benefits available to any holder of Senior Indebtedness of
the Company or any Subsidiary Guarantor (or Representatives therefor) under
Article 10 or 12;
(5) to add guarantees with respect to the Securities (including any
Subsidiary Guarantee) or to secure the Securities;
(6) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the
Company or the Subsidiary Guarantors;
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(7) to comply with any requirements of the SEC in connection with
qualifying this Indenture under the TIA; or
(8) to make any change that does not adversely affect the rights of
any Securityholder.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 or 12 of any holder of Senior Indebtedness
of the Company or of a Subsidiary Guarantor then outstanding unless the holders
of such Senior Indebtedness (or any group or representative thereof authorized
to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
Section 9.02. With Consent of Holders. The Company, the Subsidiary
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Holders of at
least a majority in principal amount of the Securities. Without the consent of
each Securityholder affected, however, an amendment may not:
(1) reduce the amount of Securities whose Holders must consent to an
amendment;
(2) reduce the rate of or extend the time for payment of interest on
any Security;
(3) reduce the principal of or extend the Stated Maturity of any
Security;
(4) reduce the premium payable upon a required purchase (to the extent
the Company has at the time become obligated by the terms of the Indenture
to effect a required purchase) or the redemption of any Security or change
the time at which any Security may be redeemed in accordance with Article 3
and paragraph 5 of the Securities;
(5) make any Security payable in money other than that stated in the
Security;
77
(6) make any change in Article 10 or 12 or that adversely affects the
rights of any Securityholder under Article 10 or 12;
(7) make any change in Section 6.04 or 6.07 or the second sentence of
this Section; or
(8) make any change in any Subsidiary Guarantee that would adversely
affect the Securityholders.
It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that adversely
affects the rights under Article 10 or 12 of any holder of Senior Indebtedness
then outstanding unless the holders of such Senior Indebtedness (or any group or
representative thereof authorized to give a consent) consent to such change.
After an amendment under this Section becomes effective, the Company
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.
Section 9.03. Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.
Section 9.04. Revocation and Effect of Consents and Waivers. A consent
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Securityholder.
The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be
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taken pursuant to this Indenture. If a record date is fixed, then
notwithstanding the immediately preceding paragraph, those Persons who were
Securityholders at such record date (or their duly designated proxies), and only
those Persons, shall be entitled to give such consent or to revoke any consent
previously given or to take any such action, whether or not such Persons
continue to be Holders after such record date. No such consent shall be valid or
effective for more than 120 days after such record date.
Section 9.05. Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Company or the Trustee so determines, the Company
in exchange for the Security shall issue and the Trustee shall authenticate a
new Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.
Section 9.06. Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article 9 if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that such
amendment is authorized or permitted by this Indenture.
Section 9.07. Payment for Consent. Neither the Company nor any
Affiliate of the Company shall, directly or indirectly, pay or cause to be paid
any consideration, whether by way of interest, fee or otherwise, to any Holder
for or as an inducement to any consent, waiver or amendment of any of the terms
or provisions of this Indenture or the Securities unless such consideration is
offered to be paid or agreed to be paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating to
such consent, waiver or agreement.
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ARTICLE 10
Subordination of the Securities
Section 10.01. Agreement To Subordinate. The Company agrees, and each
Securityholder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities are senior unsecured, general obligations of the Company,
subordinated in right of payment, to the extent and in the manner provided in
this Article 10, to the prior payment of all Senior Indebtedness of the Company,
whether outstanding on the Issue Date or thereafter incurred, including the
Company's obligations under the Credit Agreement, and that the subordination is
for the benefit of and enforceable by the holders of such Senior Indebtedness.
The Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company, and only Indebtedness of the Company
which is Senior Indebtedness shall rank senior to the Securities in accordance
with the provisions set forth herein. All provisions of this Article 10 shall be
subject to Section 10.12.
Section 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of the Company upon a total or partial liquidation
or a total or partial dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(1) subject to the provisions of Section 10.12, holders of Senior
Indebtedness of the Company shall be entitled to receive payment in full of
such Senior Indebtedness before Securityholders shall be entitled to
receive any payment of principal of or interest on the Securities; and
(2) until the Senior Indebtedness of the Company is paid in full, any
payment or distribution to which Securityholders would be entitled but for
this Article 10 shall be made to holders of such Senior Indebtedness as
their interests may appear, except that Securityholders may receive shares
of stock and any debt securities that are subordinated to such Senior
Indebtedness to at least the same extent as the Securities.
Section 10.03. Default on Designated Senior Indebtedness. The Company
may not pay the principal of, premium (if any) or interest on the Securities or
make any deposit pursuant to Section 8.01 and may not repurchase,
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redeem or otherwise retire any Securities (collectively, "pay the Securities")
if (i) any Designated Senior Indebtedness of the Company is not paid when due or
(ii) any other default on Designated Senior Indebtedness of the Company occurs
and the maturity of such Designated Senior Indebtedness is accelerated in
accordance with its terms unless, in either case, (x) the default has been cured
or waived and any such acceleration has been rescinded or (y) such Designated
Senior Indebtedness has been paid in full; provided, however, that the Company
may pay the Securities without regard to the foregoing if the Company and the
Trustee receive written notice approving such payment from the Representative of
the Designated Senior Indebtedness with respect to which either of the events
set forth in clause (i) or (ii) of this sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness of the Company pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the Securities for a period (a "Payment
Blockage Period") commencing upon the receipt by the Trustee (with a copy to the
Company) of written notice (a "Blockage Notice") of such default from the
Representative of the holders of such Designated Senior Indebtedness specifying
an election to effect a Payment Blockage Period and ending 179 days thereafter
(or earlier if such Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the Person or Persons who gave such Blockage
Notice, (ii) because the default giving rise to such Blockage Notice is no
longer continuing or (iii) because such Designated Senior Indebtedness has been
repaid in full). Notwithstanding the provisions described in the immediately
preceding sentence, unless the holders of such Designated Senior Indebtedness
giving such Blockage Notice or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, the Company
shall resume payments on the Securities after the end of such Payment Blockage
Period. The Securities shall not be subject to more than one Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness of the Company during such
period. For purposes of this Section, no default or event of default which
existed or was continuing on the date of the commencement of any Payment
Blockage Period with respect to the Designated Senior Indebtedness initiating
such Payment Blockage Period shall be, or be made, the basis of the commencement
of a subsequent Payment Blockage Period by
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the Representative of such Designated Senior Indebtedness, whether or not within
a period of 360 consecutive days, unless such default or event of default shall
have been cured or waived for a period of not less than 90 consecutive days.
Section 10.04. Acceleration of Payment of Securities. If payment of
the Securities is accelerated because of an Event of Default, the Company or the
Trustee (upon receipt of the requisite information from the Company) shall
promptly notify the holders of Designated Senior Indebtedness (or their
Representatives) of the Company of the acceleration.
Section 10.05. When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that because of this Article 10 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness of the Company and pay it over to them
as their interests may appear.
Section 10.06. Subrogation. After all Senior Indebtedness of the
Company is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to such Senior Indebtedness. A
distribution made under this Article 10 to holders of Senior Indebtedness of the
Company which otherwise would have been made to Securityholders is not, as
between the Company and Securityholders, a payment by the Company on such Senior
Indebtedness.
Section 10.07. Relative Rights. This Article 10 defines the relative
rights of Securityholders and holders of Senior Indebtedness of the Company.
Nothing in this Indenture shall:
(1) impair, as between the Company and Security holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms;
or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of the Company to receive distributions otherwise
payable to Securityholders.
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Section 10.08. Subordination May Not Be Impaired by Company. No right
of any holder of Senior Indebtedness of the Company to enforce the subordination
of the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
Section 10.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 10.03, the Trustee or Paying Agent may continue to make payments on the
Securities and shall not be charged with knowledge of the existence of facts
that would prohibit the making of any such payments unless, not less than two
Business Days prior to the date of such payment, a Trust Officer of the Trustee
receives notice satisfactory to it that payments may not be made under this
Article 10. The Company, the Registrar or co-registrar, the Paying Agent, a
Representative or a holder of Senior Indebtedness may give the notice; provided,
however, that, if an issue of Senior Indebtedness of the Company has a
Representative, only the Representative may give the notice.
The Trustee in its individual or any other capa city may hold Senior
Indebtedness of the Company with the same rights it would have if it were not
Trustee. The Registrar and co-registrar and the Paying Agent may do the same
with like rights. The Trustee shall be entitled to all the rights set forth in
this Article 10 with respect to any such Senior Indebtedness which may at any
time be held by it, to the same extent as any other holder of such Senior
Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its
rights as such holder. Nothing in this Article 10 shall apply to claims of, or
payments to, the Trustee under or pursuant to Section 7.07.
Section 10.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of the Company, the distribution may be made and the notice given to their
Representative (if any).
Section 10.11. Article 10 Not To Prevent Events of Default or Limit
Right To Accelerate. The failure to make a payment pursuant to the Securities by
reason of any provision in this Article 10 shall not be construed as preventing
the occurrence of a Default. Nothing in this Article 10 shall have any effect on
the right of the Securityholders or the Trustee to accelerate the maturity of
the Securities.
Section 10.12. Trust Moneys Not Subordinated. Notwithstanding anything
contained herein to the contrary,
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payment from the money or the proceeds of U.S. Government Obligations deposited
in trust with the Trustee in accordance with the provisions of Article 8 for the
payment of principal of and interest on the Securities shall not be subordinated
to the prior payment of any Senior Indebtedness of the Company or subject to the
restrictions set forth in this Article 10, and none of the Securityholders shall
be obligated to pay over any such amount to the Company or any holder of such
Senior Indebtedness of the Company or any other creditor of the Company.
Section 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section 10.02
are pending, (ii) upon a certificate of the liquidating trustee or agent or
other Person making such payment or distribution to the Trustee or to the
Security holders or (iii) upon the Representatives for the holders of Senior
Indebtedness of the Company for the purpose of ascertaining the Persons entitled
to participate in such payment or distribution, the holders of such Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Article 10. In the event that the Trustee
determines, in good faith, that evidence is required with respect to the right
of any Person as a holder of Senior Indebtedness of the Company to participate
in any payment or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article 10,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.01 and 7.02 shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
Section 10.14. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on his
behalf to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of
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the Company as provided in this Article 10 and appoints the Trustee as
attorney-in-fact for any and all such purposes.
Section 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness of the Company. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of the Company. The Trustee
undertakes to perform or to observe only such of the covenants and obligations
as are specifically set forth in this Article 10, and no implied covenants or
obligations with respect to such holders of such Senior Indebtedness shall be
implied in this Indenture against the Trustee.
Section 10.16. Reliance by Holders of Senior Indebtedness of the
Company on Subordination Provisions. Each Securityholder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of the Company, whether such Senior Indebtedness was created or
acquired before or after the issuance of the Securities, to acquire and continue
to hold, or to continue to hold, such Senior Indebtedness and such holder of
such Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 11
Subsidiary Guarantees
Section 11.01. Subsidiary Guarantees. Each Subsidiary Guarantor,
jointly and severally, as primary obligor and not merely as surety, hereby
irrevocably, fully and unconditionally Guarantees on a senior subordinated basis
to each Holder and to the Trustee and its successors and assigns (a) the full
and punctual payment of principal of and interest on the Securities when due,
whether at Stated Maturity, by acceleration, by redemption or otherwise, and all
other monetary obligations of the Company under this Indenture and the
Securities and (b) the full and punctual performance within applicable grace
periods of all other obligations of the Company under this Indenture and the
Securities (all the foregoing obligations hereinafter collectively called the
"Guaranteed Obligations"). Each Subsidiary Guarantor further agrees that the
Guaranteed Obligations may be extended or renewed, in whole or in part, without
notice or further assent from such Subsidiary Guarantor, and that such
Subsidiary Guarantor shall remain
85
bound under this Article 11 notwithstanding any extension or renewal of any such
Guaranteed Obligation.
Each Subsidiary Guarantor waives presentation to, demand of, payment
from and protest to the Company of any of the Guaranteed Obligations and also
waives notice of protest for nonpayment. Each Subsidiary Guarantor waives notice
of any default under the Securities or the Guaranteed Obligations. The
obligations of each Subsidiary Guarantor hereunder shall not be affected by (a)
the failure of any Holder or the Trustee to assert any claim or demand or to
enforce any right or remedy against the Company or any other Person under this
Indenture, the Securities or any other agreement or otherwise; (b) any extension
or renewal of any thereof; (c) any rescission, waiver, amendment or modification
of any of the terms or provisions of this Indenture, the Securities or any other
agreement; (d) the release of any security held by any Holder or the Trustee for
the Guaranteed Obligations or any of them; (e) the failure of any Holder or
Trustee to exercise any right or remedy against any other guarantor of the
Guaranteed Obligations; or (f) except as provided in Section 11.06, any change
in the ownership of such Subsidiary Guarantor.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
herein constitutes a Guarantee of payment, performance and compliance when due
(and not a Guarantee of collection) and waives any right to require that any
resort be had by any Holder or the Trustee to any security held for payment of
the Guaranteed Obligations.
Each Subsidiary Guarantee is, to the extent and manner set forth in
Article 12, subordinated and subject in right of payment to the prior payment in
full in cash or cash equivalents of all Senior Indebtedness of the Subsidiary
Guarantor giving such Subsidiary Guarantee and each Subsidiary Guarantee is
hereby made subject to such provisions of this Indenture.
Except as expressly set forth in Sections 8.01(b), 11.02 and 11.06,
the obligations of each Subsidiary Guarantor hereunder shall not be subject to
any reduction, limitation, impairment or termination for any reason, including
any claim of waiver, release, surrender, alteration or compromise, and shall not
be subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of the
Guaranteed Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Subsidiary Guarantor herein shall not be
discharged or impaired or otherwise affected by the failure
86
of any Holder or the Trustee to assert any claim or demand or to enforce any
remedy under this Indenture, the Securities or any other agreement, by any
waiver or modification of any thereof, by any default, failure or delay, wilful
or otherwise, in the performance of the Guaranteed Obligations, or by any other
act or thing or omission or delay to do any other act or thing which may or
might in any manner or to any extent vary the risk of such Subsidiary Guarantor
or would otherwise operate as a discharge of such Subsidiary Guarantor as a
matter of law or equity.
Each Subsidiary Guarantor further agrees that its Subsidiary Guarantee
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of principal of or interest on any Guaranteed
Obligation is rescinded or must otherwise be restored by any Holder or the
Trustee upon the bankruptcy or reorganization of the Company or otherwise.
In furtherance of the foregoing and not in limitation of any other
right which any Holder or the Trustee has at law or in equity against any
Subsidiary Guarantor by virtue hereof, upon the failure of the Company to pay
the principal of or interest on any Guaranteed Obligation when and as the same
shall become due, whether at maturity, by acceleration, by redemption or
otherwise, or to perform or comply with any other Guaranteed Obligation, each
Subsidiary Guarantor shall, upon receipt of written demand by the Trustee,
forthwith pay, or cause to be paid, in cash, to the Holders or the Trustee an
amount equal to the sum of (i) the unpaid principal amount of such Guaranteed
Obligations, (ii) accrued and unpaid interest on such Guaranteed Obligations
(but only to the extent not prohibited by law) and (iii) all other monetary
Guaranteed Obligations of the Company to the Holders and the Trustee.
Each Subsidiary Guarantor agrees that it shall not be entitled to any
right of subrogation in respect of any Guaranteed Obligations guaranteed hereby
until payment in full of all Guaranteed Obligations and all obligations to which
the Guaranteed Obligations are subordinated as provided in Article 12. Each
Subsidiary Guarantor further agrees that, as between it, on the one hand, and
the Holders and the Trustee, on the other hand, (x) the maturity of the
Guaranteed Obligations Guaranteed hereby may be accelerated as provided in
Article 6 for the purposes of such Subsidiary Guarantor's Subsidiary Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the Guaranteed Obligations Guaranteed hereby, and (y)
in the event of any declaration of acceleration of
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such Guaranteed Obligations as provided in Article 6, such Guaranteed
Obligations (whether or not due and payable) shall forthwith become due and
payable by such Subsidiary Guarantor for the purposes of this Section.
Each Subsidiary Guarantor also agrees to pay any and all costs and
expenses (including reasonable attorneys' fees) incurred by the Trustee or any
Holder in enforcing any rights under this Section.
SECTION 11.02. Limitation on Liability. Any term or provision of this
Indenture to the contrary notwithstanding, the maximum, aggregate amount of the
obligations guaranteed hereunder by any Subsidiary Guarantor shall not exceed
the maximum amount that can be hereby guaranteed without rendering this
Indenture, as it relates to such Subsidiary Guarantor, voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally.
Section 11.03. Successors and Assigns. This Article 11 shall be
binding upon each Subsidiary Guarantor and its successors and assigns and shall
enure to the benefit of the successors and assigns of the Trustee and the
Holders and, in the event of any transfer or assignment of rights by any Holder
or the Trustee, the rights and privileges conferred upon that party in this
Indenture and in the Securities shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions of this
Indenture.
Section 11.04. No Waiver. Neither a failure nor a delay on the part of
either the Trustee or the Holders in exercising any right, power or privilege
under this Article 11 shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise of any right,
power or privilege. The rights, remedies and benefits of the Trustee and the
Holders herein expressly specified are cumulative and not exclusive of any other
rights, remedies or benefits which either may have under this Article 11 at law,
in equity, by statute or otherwise.
Section 11.05. Modification. No modification, amendment or waiver of
any provision of this Article 11, nor the consent to any departure by any
Subsidiary Guarantor therefrom, shall in any event be effective unless the same
shall be in writing and signed by the Trustee, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand on any Subsidiary Guarantor in any case shall
88
entitle such Subsidiary Guarantor to any other or further notice or demand in
the same, similar or other circumstances.
SECTION 11.06. Release of Subsidiary Guarantor. This Subsidiary
Guarantee as to any Subsidiary Guarantor shall terminate and be of no further
force or effect (i) upon the sale (including any sale pursuant to any exercise
of remedies by a holder of Senior Indebtedness of such Subsidiary Guarantor) or
other disposition (including by way of consolidation or merger) of such
Subsidiary Guarantor or (ii) upon the sale or disposition of all or
substantially all of the assets of such Subsidiary Guarantor, in each case other
than to the Company or an Affiliate of the Company; provided, however, that such
sale or transfer shall be deemed to constitute an Asset Disposition and the
Company shall comply with all applicable provisions of Section 4.06 with respect
to such Asset Disposition.
ARTICLE 12
Subordination of Subsidiary Guarantees
Section 12.01. Agreement To Subordinate. Each Subsidiary Guarantor
agrees, and each Securityholder by accepting a Security agrees, that the
Obligations of such Subsidiary Guarantor under its Subsidiary Guarantee are
subordinated in right of payment, to the extent and in the manner provided in
this Article 12, to the prior payment in full in cash or cash equivalents of all
Senior Indebtedness of such Subsidiary Guarantor and that the subordination is
for the benefit of and enforceable by the holders of such Senior Indebtedness.
The Obligations of each Subsidiary Guarantor under its Subsidiary Guarantee
shall in all respects rank pari passu with all other Senior Subordinated
Indebtedness of such Subsidiary Guarantor and only Senior Indebtedness of such
Subsidiary Guarantor (including such Subsidiary Guarantor's Guarantees of Senior
Indebtedness of the Company) shall rank senior to the Subsidiary Guarantee of
such Subsidiary Guarantor in accordance with the provisions set forth herein.
Section 12.02. Liquidation, Dissolution, Bankruptcy. Upon any payment
or distribution of the assets of any Subsidiary Guarantor to creditors upon a
total or partial liquidation or a total or partial dissolution of such
Subsidiary Guarantor or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to such Subsidiary Guarantor or its
property:
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(1) holders of Senior Indebtedness of such Subsidiary Guarantor shall
be entitled to receive payment in full of such Senior Indebtedness in cash
or cash equivalents before Securityholders shall be entitled to receive any
payment pursuant to the Subsidiary Guarantee of such Subsidiary Guarantor;
and
(2) until the Senior Indebtedness of such Subsidiary Guarantor is paid
in full in cash or cash equivalents, any distribution to which
Securityholders would be entitled but for this Article 12 shall be made to
holders of such Senior Indebtedness as their interests may appear, except
that Securityholders may receive shares of stock and any debt securities of
such Subsidiary Guarantor that are subordinated to Senior Indebtedness, and
to any debt securities received by holders of Senior Indebtedness, of such
Subsidiary Guarantor to at least the same extent as the Subsidiary
Guarantee of such Subsidiary Guarantor are subordinated to Senior
Indebtedness of such Subsidiary Guarantor.
Section 12.03. Default on Designated Senior Indebtedness of Subsidiary
Guarantor. No Subsidiary Guarantor may make any payment pursuant to its
Subsidiary Guarantee or repurchase, redeem or otherwise retire or defease any
Securities or other Obligations (collectively, "pay its Subsidiary Guarantee")
if (i) any Designated Senior Indebtedness of such Subsidiary Guarantor is not
paid when due or (ii) any other default on Designated Senior Indebtedness of
such Subsidiary Guarantor occurs and the maturity of such Designated Senior
Indebtedness is accelerated in accordance with its terms unless, in either case,
(x) the default has been cured or waived and any such acceleration has been
rescinded or (y) such Designated Senior Indebtedness has been paid in full;
provided, however, that such Subsidiary Guarantor may pay its Subsidiary
Guarantee without regard to the foregoing if such Subsidiary Guarantor and the
Trustee receive written notice approving such payment from the Representative of
the Designated Senior Indebtedness with respect to which either of the events
set forth in clause (i) or (ii) of this sentence has occurred and is continuing.
During the continuance of any default (other than a default described in clause
(i) or (ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness of such Subsidiary Guarantor pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as may
be required to effect such
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acceleration) or the expiration of any applicable grace periods, such Subsidiary
Guarantor may not pay its Guarantee for a period (a "Subsidiary Guarantor
Payment Blockage Period") commencing upon the receipt by the Trustee (with a
copy to such Subsidiary Guarantor) of written notice (a "Subsidiary Guarantor
Blockage Notice") of such default from the Representative of the holders of such
Designated Senior Indebtedness specifying an election to effect a Subsidiary
Guarantor Payment Blockage Period and ending 179 days thereafter (or earlier if
such Subsidiary Guarantor Payment Blockage Period is terminated (i) by written
notice to the Trustee and such Subsidiary Guarantor from the Person or Persons
who gave such Subsidiary Guarantor Blockage Notice, (ii) because the default
giving rise to such Subsidiary Guarantor Blockage Notice is no longer continuing
or (iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section),
unless the holders of Designated Senior Indebtedness giving such Subsidiary
Guarantor Blockage Notice or the Representative of such holders shall have
accelerated the maturity of such Designated Senior Indebtedness, such Subsidiary
Guarantor shall resume payments pursuant to its Subsidiary Guarantee after the
end of such Subsidiary Guarantor Payment Blockage Period. A Subsidiary Guarantee
shall not be subject to more than one Subsidiary Guarantor Payment Blockage
Period in any consecutive 360-day period, irrespective of the number of defaults
with respect to Designated Senior Indebtedness of such Subsidiary Guarantor
during such period. For purposes of this Section, no default or event of default
which existed or was continuing on the date of the commencement of any
Subsidiary Guarantor Payment Blockage Period with respect to the Designated
Senior Indebtedness initiating such Subsidiary Guarantor Payment Blockage Period
shall be, or be made, the basis of the commencement of a subsequent Subsidiary
Guarantor Payment Blockage Period by the Representative of such Designated
Senior Indebtedness, whether or not within a period of 360 consecutive days,
unless such default or event of default shall have been cured or waived for a
period of not less than 90 consecutive days.
Section 12.04. Demand for Payment. If a demand for payment is made on
a Subsidiary Guarantor pursuant to Article 11, the Trustee shall promptly notify
the holders of the Designated Senior Indebtedness (or their Representatives) of
such Subsidiary Guarantor of such demand.
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Section 12.05. When Distribution Must Be Paid Over. If a distribution
is made to Securityholders that because of this Article 12 should not have been
made to them, the Securityholders who receive the distribution shall hold it in
trust for holders of the relevant Senior Indebtedness and pay it over to them or
their Representative as their interests may appear.
Section 12.06. Subrogation. After all Senior Indebtedness of a
Subsidiary Guarantor is paid in full and until the Securities are paid in full,
Securityholders shall be subrogated to the rights of holders of such Senior
Indebtedness to receive distributions applicable to Senior Indebtedness. A
distribution made under this Article 12 to holders of such Senior Indebtedness
which otherwise would have been made to Securityholders is not, as between the
relevant Subsidiary Guarantor and Securityholders, a payment by such Subsidiary
Guarantor on such Senior Indebtedness.
Section 12.07. Relative Rights. This Article 12 defines the relative
rights of Securityholders and holders of Senior Indebtedness of a Subsidiary
Guarantor. Nothing in this Indenture shall:
(1) impair, as between such Subsidiary Guarantor and Securityholders,
the obligation of such Subsidiary Guarantor, which is absolute and
unconditional, to pay the Obligations to the extent set forth in Article
11; or
(2) prevent the Trustee or any Securityholder from exercising its
available remedies upon a default by such Subsidiary Guarantor under its
Subsidiary Guarantee, subject to the rights of holders of Senior
Indebtedness of such Subsidiary Guarantor to receive distributions
otherwise payable to Securityholders.
Section 12.08. Subordination May Not Be Impaired by Subsidiary
Guarantor. No right of any holder of Senior Indebtedness of any Subsidiary
Guarantor to enforce the subordination of the Obligations of such Subsidiary
Guarantor shall be impaired by any act or failure to act by such Subsidiary
Guarantor or by its failure to comply with this Indenture.
Section 12.09. Rights of Trustee and Paying Agent. Notwithstanding
Section 12.03, the Trustee or Paying Agent may continue to make payments
pursuant to any Subsidiary Guarantee and shall not be charged with knowledge of
the existence of facts that would prohibit the making of any such payments
unless, not less than two Business Days
92
prior to the date of such payment, a Trust Officer of the Trustee receives
written notice satisfactory to it that payments may not be made under this
Article 12. The Company, such Subsidiary Guarantor, the Registrar or co-
registrar, the Paying Agent, a Representative or a holder of Senior Indebtedness
of such Subsidiary Guarantor may give the notice; provided, however, that, if an
issue of Senior Indebtedness of such Subsidiary Guarantor has a Representative,
only the Representative may give the notice.
The Trustee in its individual or any other capa city may hold Senior
Indebtedness of any Subsidiary Guarantor with the same rights it would have if
it were not Trustee. The Registrar and co-registrar and the Paying Agent may do
the same with like rights. The Trustee shall be entitled to all the rights set
forth in this Article 12 with respect to any Senior Indebtedness of any
Subsidiary Guarantor which may at any time be held by it, to the same extent as
any other holder of such Senior Indebtedness of such Subsidiary Guarantor; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 12 shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 7.07.
Section 12.10. Distribution or Notice to Representative. Whenever a
distribution is to be made or a notice given to holders of Senior Indebtedness
of any Subsidiary Guarantor, the distribution may be made and the notice given
to their Representative (if any).
Section 12.11. Article 12 Not To Prevent Defaults Under a Subsidiary
Guarantee or Limit Right To Demand Payment. The failure to make a payment
pursuant to a Subsidiary Guarantee by reason of any provision in this Article 12
shall not be construed as preventing the occurrence of a default under such
Subsidiary Guarantee. Nothing in this Article 12 shall have any effect on the
right of the Securityholders or the Trustee to make a demand for payment on any
Subsidiary Guarantor pursuant to its Subsidiary Guarantee.
Section 12.12. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 12, the Trustee and the Securityholders
shall be entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
12.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Security holders or (iii) upon the Representative for the holders of Senior
Indebtedness of any Subsidiary Guarantor for the
93
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of such Senior Indebtedness and other Indebtedness of
such Subsidiary Guarantor, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article 12. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of such Subsidiary Guarantor to participate in any payment
or distribution pursuant to this Article 12, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness of such Subsidiary Guarantor held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 12, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 12.
Section 12.13. Trustee To Effectuate Subordination. Each
Securityholder by accepting a Security authorizes and directs the Trustee on
his behalf to take such action as may be necessary or appropriate to acknowledge
or effectuate the subordination between the Securityholders and the holders of
Senior Indebtedness of any Subsidiary Guarantor as provided in this Article 12
and appoints the Trustee as attorney-in-fact for any and all such purposes.
Section 12.14. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Subsidiary Guarantor. The Trustee shall not be deemed to owe any
fiduciary duty to the holders of Senior Indebtedness of any Subsidiary Guarantor
and shall not be liable to any such holders if it shall mistakenly pay over or
distribute to Securityholders or the Company or any other Person, money or
assets to which any holders of such Senior Indebtedness shall be entitled by
virtue of this Article 12 or otherwise.
Section 12.15. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Security holder by accepting a Security
acknowledges and agrees that the foregoing subordination provisions are, and are
intended to be, an inducement and a consideration to each holder of any Senior
Indebtedness of any Subsidiary Guarantor, whether such Senior Indebtedness was
created or acquired before or after the issuance of the Securities, to acquire
and
94
continue to hold, or to continue to hold, such Senior Indebtedness and such
holder of Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Senior Indebtedness.
ARTICLE 13
Miscellaneous
Section 13.01. Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the required provision
shall control.
Section 13.02. Notices. Any notice or communication shall be in
writing and delivered in person or mailed by first-class mail addressed as
follows:
if to the Company or any Subsidiary Guarantor:
Denbury Resources Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Attention of Corporate Secretary
if to the Trustee:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention of Global Trust Services
The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.
Any notice or communication mailed to a Securityholder shall be mailed
to the Securityholder at the Securityholder's address as it appears on the
registration books of the Registrar and shall be sufficiently given if so mailed
within the time prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
95
above, it is duly given, whether or not the addressee receives it.
Section 13.03. Communication by Holders with Other Holders.
Securityholders may communicate pursuant to TIA Section 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the Registrar and anyone else shall have
the protection of TIA Section 312(c).
Section 13.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee to take or refrain
from taking any action under this Indenture, the Company shall furnish to the
Trustee:
(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such counsel,
all such conditions precedent have been complied with.
Section 13.05. Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:
(1) a statement that the individual making such certificate or opinion
has read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he has made
such examination or investigation as is necessary to enable him to express
an informed opinion as to whether or not such covenant or condition has
been complied with; and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with.
96
Any Officers' Certificate may be based, insofar as it relates to legal matters,
upon an Opinion of Counsel, unless any such Officer knows or in the exercise of
reasonable care should have known that such Opinion of Counsel is erroneous. Any
Opinion of Counsel may be based, insofar as it relates to factual matters,
information with respect to which is in possession of the Company, upon an
Officers' Certificate, unless such counsel knows or in the exercise of
reasonable care should have known that such Officers' Certificate is erroneous.
Section 13.06. When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Company or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Company shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Also, subject to the foregoing, only Securities outstanding at the
time shall be considered in any such determination.
Section 13.07. Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by or a meeting of Securityholders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
Section 13.08. Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or a day on which banking institutions are not required to be open in the
State of
New York or in the State of Texas. If a payment date is a Legal
Holiday, payment shall be made on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue with respect to such payment for the
intervening period. If a regular record date is a Legal Holiday, the record date
shall not be affected.
Section 13.09. Governing Law. This Indenture and the Securities shall
be governed by, and construed in accordance with, the laws of the State of
New
York but without giving effect to applicable principles of conflicts of law to
the extent that the application of the laws of another jurisdiction would be
required thereby.
Section 13.10. No Recourse Against Others. A director, officer,
employee or stockholder, as such, of the Company shall not have any liability
for any obligations of the Company under the Securities or this Indenture or for
97
any claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.
Section 13.11. Successors. All agreements of the Company in this
Indenture and the Securities shall bind its successors. All agreements of the
Trustee in this Indenture shall bind its successors.
Section 13.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.
Section 13.13. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.
Section 13.14. Severability. If any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
98
IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.
DENBURY RESOURCES INC.,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial
Officer and Secretary
SUBSIDIARY GUARANTORS:
DENBURY ENERGY SERVICES, INC.,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial
Officer and Secretary
DENBURY MARINE, L.L.C.,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial
Officer and Secretary
DENBURY OFFSHORE, INC.,
by /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial
Officer and Secretary
TRUSTEE:
THE CHASE MANHATTAN BANK,
as Trustee
by /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President and
Trust Officer
APPENDIX A
PROVISIONS RELATING TO INITIAL SECURITIES,
EXCHANGE SECURITIES
AND PRIVATE EXCHANGE 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,
Clearstream and Cedel 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.
"Cedel" means Cedel Bank, S.A., or any successor securities clearing
agency.
"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 9% Series B Senior Subordinated
Notes Due 2008 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
2
First Boston Corporation, Banc of America Securities LLC and ▇▇▇▇▇▇ Brothers
Inc. and (2) with respect to each issuance of Additional Securities, the Persons
purchasing such Additional Securities under the related Purchase Agreement.
"Initial Securities" means (1) $75,000,000 aggregate principal amount
of 9% Series B Senior Subordinated Notes Due 2008 issued under this Indenture on
the Issue Date and (2) Additional Securities, if any, issued in a transaction
exempt from the registration requirements of the Securities Act.
"Private Exchange" means the offer by the Company, pursuant to a
Registration 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 9% Series B Senior
Subordinated Notes Due 2008 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 August 8, 2001, among the
Company, the Subsidiary Guarantors and the Initial Purchasers and (2) with
respect to each issuance of Additional Securities, the purchase agreement or
underwriting agreement among the Company and the Persons purchasing such
Additional Securities.
"QIB" means a "qualified institutional buyer" as defined in Rule 144A.
"Registered Exchange Offer" means the offer by the Company, pursuant
to a Registration 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 8, 2001, among the Company, the Subsidiary Guarantors and the Initial
Purchasers and (2) with respect to each issuance of Additional Securities issued
in a transaction exempt from the registration requirements of the Securities
Act, the registration rights agreement, if any, among the Company and the
Persons purchasing such Additional Securities under the related Purchase
Agreement.
3
"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.
1.2 Other Definitions
Defined in
Term Section:
---- ----------
"Agent Members"..........................................2.1(b)
"Global Security"........................................2.1(a)
"Permanent Regulation S Global Security".................2.1(a)
"Regulation S"...........................................2.1(a)
"Rule 144A"..............................................2.1(a)
"Rule 144A Global Security"..............................2.1(a)
"Temporary Regulation S Global Security".................2.1(a)
2. The Securities
2.1 (a) Form and Dating. The Initial Securities will be offered and sold by
the Company, from time to time, pursuant to one or more Purchase Agreements. The
Initial Securities will be resold initially only to QIBs in reliance on Rule
144A under the Securities Act ("Rule 144A") and in reliance on Regulation S
under the Securities Act ("Regulation S"). Initial Securities may thereafter be
transferred to, among others, QIBs and purchasers in reliance
4
on Regulation S, subject to the restrictions on transfer set forth herein.
Initial Securities initially resold pursuant to Rule 144A shall be issued
initially in the form of one or more permanent global Securities in definitive,
fully registered form (collectively, the "Rule 144A Global Security") and
Initial Securities initially resold pursuant to Regulation S shall be issued
initially in the form of one or more temporary global securities in definitive,
fully registered form (collectively, the "Temporary Regulation S Global
Security"), in each case without interest coupons and with the global securities
legend and restricted securities legend set forth in Exhibit 1 hereto, which
shall be deposited on behalf of the purchasers of the Initial Securities
represented thereby with the Securities Custodian, and registered in the name of
the Depository or a nominee of the Depository, duly executed by the Company and
authenticated by the Trustee as provided in this Indenture. Beneficial ownership
interests in the Temporary Regulation S Global Security will not be exchangeable
for interests in the Rule 144A Global Security, a permanent global security (the
"Permanent Regulation S Global Security"), or any other Security without a
legend containing restrictions on transfer of such Security prior to the
expiration of the Distribution Compliance Period and then only upon
certification in form reasonably satisfactory to the Trustee that beneficial
ownership interests in such Temporary Regulation S Global Security are owned
either by non-U.S. persons or U.S. persons who purchased such interests in a
transaction that did not require registration under the Securities Act. The Rule
144A Global Security, the Temporary Regulation S Global Security and the
Permanent Regulation S Global Security are collectively referred to herein as
"Global Securities." The aggregate principal amount of the Global Securities may
from time to time be increased or decreased by adjustments made on the records
of the Trustee and the Depository or its nominee as hereinafter provided.
(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.
5
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 $75,000,000 9% Series B Senior
Subordinated Notes Due 2008, (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.
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
6
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) and (ii) if the Company so
requests, an opinion of counsel or other evidence reasonably
satisfactory to it as to the compliance with the restrictions set
forth in the legend set forth in Section 2.3(e)(i).
(b) Restrictions on Transfer of a Definitive Security for a Beneficial
Interest in a Global Security. A Definitive Security may not be exchanged for a
beneficial interest in a Rule 144A Global Security or a Permanent Regulation S
Global Security except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive
7
Security, duly endorsed or accompanied by appropriate instruments of transfer,
in form satisfactory to the Trustee, together with:
(i) certification, in the form set forth on the reverse of the
Security, that such Definitive Security is either (A) being transferred to
a QIB in accordance with Rule 144A or (B) is being transferred after
expiration of the "distribution compliance period" 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; and
(ii) written instructions directing the Trustee to make, or to direct
the Securities Custodian to make, an adjustment on its books and records
with respect to such Rule 144A Global Security (in the case of a transfer
pursuant to clause (b)(i)(A)) or Permanent Regulation S Security (in the
case of a transfer pursuant to clause (b)(i)(B)) to reflect an increase in
the aggregate principal amount of the Securities represented by the Rule
144A Global Security or Permanent Regulation S Security, as applicable,
such instructions to contain information regarding the Depository account
to be credited with such increase,
then the Trustee shall cancel such Definitive Security and cause, or direct the
Securities Custodian to cause, in accordance with the standing instructions and
procedures existing between the Depository and the Securities Custodian, the
aggregate principal amount of Securities represented by the Rule 144A Global
Security or Permanent Regulation S Security, as applicable, to be increased by
the aggregate principal amount of the Definitive Security to be exchanged and
shall credit or cause to be credited to the account of the Person specified in
such instructions a beneficial interest in the Rule 144A Global Security or
Permanent Regulation S Security, as applicable, equal to the principal amount of
the Definitive Security so canceled. If no Rule 144A Global Securities or
Permanent Regulation S Securities, as applicable, are then outstanding, the
Company shall issue and the Trustee shall authenticate, upon written order of
the Company in the form of an Officers' Certificate, a new Rule 144A Global
Security or Permanent Regulation S Security, as applicable, in the appropriate
principal amount.
(c) Transfer and Exchange of Global Securities.
8
(i) The transfer and exchange of Global Securities or beneficial
interests therein shall be effected through the Depository, in accordance
with this Indenture (including applicable restrictions on transfer set
forth herein, if any) and the procedures of the Depository therefor. A
transferor of a beneficial interest in a Global Security shall deliver to
the Registrar a written order given in accordance with the Depository's
procedures containing information regarding the participant account of the
Depository to be credited with a beneficial interest in the Global
Security. The Registrar shall, in accordance with such instructions
instruct the Depository to credit to the account of the Person specified in
such instructions a beneficial interest in the Global Security and to debit
the account of the Person making the transfer the beneficial interest in
the Global Security being transferred.
(ii) If the proposed transfer is a transfer of a beneficial interest
in one Global Security to a beneficial interest in another Global Security,
the Registrar shall reflect on its books and records the date and an
increase in the principal amount of the Global Security to which such
interest is being transferred in an amount equal to the principal amount of
the interest to be so transferred, and the Registrar shall reflect on its
books and records the date and a corresponding decrease in the principal
amount of the Global Security from which such interest is being
transferred.
(iii) Notwithstanding any other provisions of this Appendix 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.
9
(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, Clearstream or Cedel in accordance with the
Applicable Procedures and only (i) to the Company, (ii) so long as such Security
is eligible for resale pursuant to Rule 144A, to a person whom the selling
holder reasonably believes is a QIB that purchases for its own account or for
the account of a QIB to whom notice is given that the resale, pledge or transfer
is being made in reliance on Rule 144A, (iii) in an offshore transaction in
accordance with Regulation S or (iv) pursuant to an exemption from registration
under the Securities Act provided by Rule 144 (if applicable) under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States.
(e) Legend.
(i) Except as permitted by the following paragraphs (ii), (iii) and
(iv), each Security certificate evidencing the Global Securities and the
Definitive Securities (and all Securities issued in exchange therefor or in
substitution thereof) shall bear a legend in substantially the following
form:
THIS SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS
SECURITY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION THEREFROM.
EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER OF
THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF
SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, 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, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144
10
THEREUNDER (IF AVAILABLE) OR (V) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT, IN EACH OF CASES (I) THROUGH (V)
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES, AND (B) THE 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.
Each Definitive Security will also bear the following additional legend:
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION
AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE
TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global
Security) pursuant to Rule 144 under the Securities Act, the Registrar
shall permit the transferee thereof to exchange such Transfer Restricted
Security for a certificated Security that does not bear the legend set
forth above and rescind any restriction on the transfer of such Transfer
Restricted Security, if the transferor thereof certifies in writing to the
Registrar that such sale or transfer was made in reliance on Rule 144 (such
certification to be in the form set forth on the reverse of the Security).
(iii) After a transfer of any Initial Securities or Private Exchange
Securities pursuant to and during the period of the effectiveness of a
Shelf Registration Statement with respect to such Initial Securities or
Private Exchange Securities, as the case may be, all requirements
pertaining to legends on such Initial 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.
11
(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.
(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 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.
12
(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 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
13
payments to be made to Holders under the Securities shall be given or made
only to or upon the order of the registered Holders (which shall be the
Depository or its nominee in the case of a Global Security). The rights of
beneficial owners in any Global Security shall be exercised only through
the Depository subject to the applicable rules and procedures of the
Depository. The Trustee may rely and shall be fully protected in relying
upon information furnished by the Depository with respect to its members,
participants and any beneficial owners.
(ii) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Security (including any transfers between
or among Depository participants, members or beneficial owners in any
Global Security) other than to require delivery of such certificates and
other documentation or evidence as are expressly required by, and to do so
if and when expressly required by, the terms of this Indenture, and to
examine the same to determine substantial compliance as to form with the
express requirements hereof.
2.4 Definitive Securities.
(a) A Global Security deposited with the Depository or with the
Trustee as Securities Custodian for the Depository pursuant to Section 2.1 shall
be transferred to the beneficial owners thereof in the form of Definitive
Securities in an aggregate principal amount equal to the principal amount of
such Global Security, in exchange for such Global Security, only if such
transfer complies with Section 2.3 and (i) the Depository notifies the Company
that it is unwilling or unable to continue as Depository for such Global
Security or if at any time such Depository ceases to be a "clearing agency"
registered under the Exchange Act and a successor Depository is not appointed by
the Company within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing or (iii) the Company, in its sole discretion,
notifies the Trustee in writing that it elects to cause the issuance of
Definitive Securities under this Indenture.
(b) Any Global Security that is transferable to the beneficial owners
thereof pursuant to this Section shall be surrendered by the Depository to the
Trustee located at its corporate trust office in the Borough of Manhattan, The
City of
New York, or in Dallas, Texas, to be so transferred, in whole or from
time to time in part, without charge, and the Trustee shall authenticate and
deliver, upon such transfer of
14
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 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.
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 SECURITY (OR ITS PREDECESSOR) WAS ORIGINALLY ISSUED IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS SECURITY MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY
NOTIFIED THAT THE SELLER OF THIS SECURITY MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER.
THE HOLDER OF THIS SECURITY AGREES FOR THE BENEFIT OF THE COMPANY THAT
(A) THIS NOTE MAY BE OFFERED, RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, 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, (IV) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE) OR (V)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN
EACH OF CASES (I) THROUGH (V) IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES, AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER OF THIS NOTE FROM IT OF THE
2
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, CLEARSTREAM OR CEDEL S.A. 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) OR (V) 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]
[IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH TRANSFER AGENT
MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS.]
3
[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 [ ]%.
4
CUSIP No. $
ISIN No.
No.
9% Series B Senior Subordinated Notes Due 2008
DENBURY RESOURCES INC., a Delaware corporation, promises to pay to
CEDE & CO., or registered assigns, the principal sum of [ ] Dollars on
March 1, 2008.
Interest Payment Dates: March 1 and September 1.
Record Dates: February 15 and August 15.
Additional provisions of this Security are set forth on the other side of this
Security.
Dated: [ ]
DENBURY RESOURCES INC.
by
-------------------------------
Name:
Title:
-------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE CHASE MANHATTAN BANK,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
5
[FORM OF REVERSE SIDE OF INITIAL SECURITY]
9% Series B Senior Subordinated Notes Due 2008
1. Interest
Denbury Resources Inc., a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above; provided, however, that if a
Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Security at a rate of 0.50% per annum
(increasing by an additional 0.50% per annum after each consecutive 90-day
period that occurs after the date on which such Registration Default occurs up
to a maximum additional interest rate of 2.00%) 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 March 1 and September 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 [ ]. 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 February 15 or August 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.
6
3. Paying Agent and Registrar
Initially, The Chase Manhattan Bank (the "Trustee"), will act as
Paying Agent and Registrar. The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any 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 15, 2001 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.
7
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
subordinated 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 March 1, 2003. On and after March 1, 2003, 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 March 1 of the years set forth below:
Period Percentage
------ ----------
2003...................................................... 104.500%
2004...................................................... 103.000
2005...................................................... 101.500
2006 and thereafter....................................... 100.000
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.
8
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. Subordination
The Securities and each Subsidiary Guarantee are subordinated to
Senior Indebtedness, as defined in the Indenture, of the Company or the
applicable Subsidiary Guarantor, as the case may be. To the extent provided in
the Indenture, such Senior Indebtedness must be paid before the Securities or
the applicable Subsidiary Guarantee may be paid. The Company and each Subsidiary
Guarantor agree, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorize the Trustee to
give it effect and appoints the Trustee as attorney-in-fact for such purpose.
9. 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.
10. Persons Deemed Owners
The registered Holder of this Security shall be treated as the owner
of it for all purposes.
9
11. 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.
12. 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.
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the Securities then
outstanding and (ii) any default or noncompliance with any provisions may be
waived with the written consent of the Holders of at least a majority in
principal amount of the Securities then outstanding. Subject to certain
exceptions set forth in the Indenture, without notice to or the consent of any
Securityholder, the Company, the Subsidiary Guarantors and the Trustee may amend
the Indenture or the Securities to cure any ambiguity, omission, defect or
inconsistency, or to comply with Article 5 of the Indenture, or to provide for
uncertificated Securities in addition to or in place of certificated Securities
(provided that the uncertificated Securities are issued in registered form for
purposes of Section 163(f) of the Code, or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the Code), or
to make any change to the subordination provisions of the Indenture that would
limit or terminate the benefits available to any holder of Senior Indebtedness
(or its Representative) of the Company or any Subsidiary Guarantor, or to add
guarantees (including Subsidiary Guarantees) with respect to the Securities, or
to secure the Securities, or to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power conferred on the
Company or any Subsidiary Guarantor, or to make any change that does not
adversely
10
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.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest on the Securities when due; (ii) default in payment of
principal on the Securities at maturity, upon redemption pursuant to paragraph
5 of the Securities, upon declaration or otherwise, or failure by the Company to
redeem or purchase Securities when required; (iii) failure by the Company to
comply with its obligations under certain covenants; (iv) failure by the Company
to comply with other agreements in the Indenture or the Securities, in certain
cases subject to notice and lapse of time; (v) certain accelerations (including
failure to pay within any grace period after final maturity) of other
Indebtedness of the Company or any Significant Subsidiary (other than Limited
Recourse Indebtedness) if the amount accelerated (or so unpaid) exceeds $10.0
million; (vi) certain events of bankruptcy, insolvency or reorganization with
respect to the Company or a Significant Subsidiary; (vii) any judgment or decree
for the payment of money in excess of $10.0 million is rendered against the
Company or a Significant Subsidiary, remains outstanding for a period of 60 days
following such judgment or decree and is not discharged, waived or stayed within
10 days after notice; or (viii) any Subsidiary Guarantee ceases or otherwise
fails to be in full force and effect (other than in accordance with the terms of
such Subsidiary Guarantee) or any Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guarantee if such default continues for a
period of 10 days after notice thereof to the Company. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
principal amount of the outstanding Securities may declare the principal of and
accrued but unpaid interest on all the Securities to be due and payable
immediately. Certain events of bankruptcy, insolvency or reorganization are
Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default. A default under
clauses (iv), (v), (vii) or (viii) will not constitute an Event of Default until
the Trustee or the Holders of 25% in principal amount of the outstanding
Securities notifies the Company of the default and the Company
11
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.
15. 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.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the Company
or the Trustee shall not have any liability for any obligations of the Company
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Securityholder waives and releases all such liability. The waiver and
release are part of the consideration for the issue of the Securities.
17. 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.
18. 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
12
tenants with rights of survivorship and not as tenants in common), CUST
(=custodian), and U/G/M/A (=Uniform Gift to Minors Act).
19. 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.
20. 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.
21. Governing Law
THIS SECURITY SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF
NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE
PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Requests may
be made to:
Denbury Resources Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Attention of Chief Financial Officer
13
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
--------------------------------------------------------------------------------
Date: Your Signature:
------------------------ ---------------------------------
--------------------------------------------------------------------------------
Sign exactly as your name appears on the other side of this Security.
In connection with any transfer of any of the Securities evidenced by this
certificate occurring prior to the expiration of the period referred to in Rule
144(k) under the Securities Act after the later of the date of original issuance
of such Securities and the last date, if any, on which such Securities were
owned by the Company or any Affiliate of the Company, the undersigned confirms
that such Securities are being transferred in accordance with its terms:
CHECK ONE BOX BELOW
(1) [ ] to the Company; or
(2) [ ] pursuant to an effective registration statement under the
Securities Act of 1933; or
(3) [ ] inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of
1933) that purchases for its own account or for the account
of a qualified institutional buyer to whom notice is
14
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 of 1933; or
(4) [ ] 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 of
1933; or
(5) [ ] 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
15
provisions of Regulation S; pursuant to registration of the Securities
under the Securities Act; or pursuant to an available exemption from the
registration requirements under the Securities Act.
Unless one of the boxes is checked, the Trustee will refuse to register any
of the Securities evidenced by this certificate in the name of any person other
than the registered holder thereof; provided, however, that if box (4) or (5) is
checked, the Trustee 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.
--------------------------------------------------------------------------------
16
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
17
[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:
Signature of
Principal amount authorized
Amount of decrease Amount of increase of this Global signatory of
in Principal in Principal Security following Trustee or
Date of Amount of this Amount of this such decrease or Securities
Exchange Global Security Global Security increase Custodian
-------- ------------------ ------------------ ------------------ ------------
18
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 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 1 to Appendix
A and replace the Assignment Form included in this Exhibit A with the
Assignment Form included in such Exhibit 1.
2
CUSIP No. $
ISIN No.
No.
9% Series B Senior Subordinated Notes Due 2008
DENBURY RESOURCES INC., a Delaware corporation, promises to pay to
CEDE & CO., or registered assigns, the principal sum of [ ] Dollars on
March 1, 2008.
Interest Payment Dates: March 1 and September 1.
Record Dates: February 15 and August 15.
Additional provisions of this Security are set forth on the other side of this
Security.
Dated: [ ]
DENBURY RESOURCES INC.
by
-------------------------------
Name:
Title:
-------------------------------
Name:
Title:
TRUSTEE'S CERTIFICATE OF
AUTHENTICATION
THE CHASE MANHATTAN BANK,
that this is one of
the Securities referred
to in the Indenture.
by
-----------------------------
Authorized Signatory
3
[FORM OF REVERSE SIDE OF EXCHANGE SECURITY
OR PRIVATE EXCHANGE SECURITY]
9% Series B Senior Subordinated Notes Due 2008
1. Interest
Denbury Resources Inc., a Delaware corporation (such corporation, and
its successors and assigns under the Indenture hereinafter referred to, being
herein called the "Company"), promises to pay interest on the principal amount
of this Security at the rate per annum shown above[; provided, however, that if
a Registration Default (as defined in the Registration Rights Agreement) occurs,
additional interest will accrue on this Security at a rate of 0.50% per annum
(increasing by an additional 0.50% per annum after each consecutive 90-day
period that occurs after the date on which such Registration Default occurs up
to a maximum additional interest rate of 2.00%) 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 March 1 and September 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 [ ]. 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 February 15 or August 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.
--------
(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.
4
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, The Chase Manhattan Bank (the "Trustee"), will act
as Paying Agent and Registrar. The Company may appoint and change any Paying
Agent, Registrar or co-registrar without notice. The Company or any 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 15, 2001 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
5
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
subordinated 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 March 1, 2003. On and after March 1, 2003, 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 March 1 of the years set forth below:
Period Percentage
------ ----------
2003............................................ 104.500%
2004............................................ 103.000
2005............................................ 101.500
2006 and thereafter............................. 100.000
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
6
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.
8. Subordination
The Securities and each Subsidiary Guarantee are subordinated
to Senior Indebtedness, as defined in the Indenture, of the Company or the
applicable Subsidiary Guarantor, as the case may be. To the extent provided in
the Indenture, such Senior Indebtedness must be paid before the Securities or
the applicable Subsidiary Guarantee may be paid. The Company and each Subsidiary
Guarantor agree, and each Securityholder by accepting a Security agrees, to the
subordination provisions contained in the Indenture and authorize the Trustee to
give it effect and appoints the Trustee as attorney-in-fact for such purpose.
9. 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
7
before a selection of Securities to be redeemed or 15 days before an interest
payment date.
10. Persons Deemed Owners
The registered Holder of this Security shall be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for 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.
12. 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.
13. 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
8
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.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities when due; (ii) default in
payment of principal on the Securities at maturity, upon redemption pursuant to
paragraph 5 of the Securities, upon declaration or otherwise, or failure by the
Company to redeem or purchase Securities when required; (iii) failure by the
Company to comply with its obligations under certain covenants; (iv) failure by
the Company to comply with other agreements in the Indenture or the Securities,
in certain cases subject to notice and lapse of time; (v) certain accelerations
(including failure to pay within any grace period after final maturity) of other
Indebtedness of the Company or any Significant Subsidiary (other than Limited
Recourse Indebtedness) if the amount accelerated (or so unpaid) exceeds $10.0
million; (vi) certain events of bankruptcy, insolvency or reorganization with
respect to the Company or a Significant Subsidiary; (vii) any judgment or decree
for the payment of money in excess of $10.0 million is rendered against the
Company or a Significant Subsidiary, remains outstanding for a period of 60 days
following such judgment or decree and is not discharged, waived or stayed within
10 days after notice; or (viii) any Subsidiary Guarantee ceases or otherwise
fails to be in full force and effect (other than in accordance with the terms of
such Subsidiary Guarantee) or any Subsidiary Guarantor denies or disaffirms its
obligations under its Subsidiary Guarantee if such default continues for a
period of 10 days after notice thereof to the Company. If an Event of Default
occurs and is continuing, the Trustee or the Holders of at least 25% in
9
principal amount of the outstanding Securities may declare the principal of and
accrued but unpaid interest on all the Securities to be due and payable
immediately. Certain events of bankruptcy, insolvency or reorganization are
Events of Default which will result in the Securities being due and payable
immediately upon the occurrence of such Events of Default. A default under
clauses (iv), (v), (vii) or (viii) will not constitute an Event of Default until
the Trustee or the Holders of 25% in principal amount of the outstanding
Securities notifies the Company of the default and the Company does not cure
such default within the time specified after receipt of such notice.
Securityholders may not enforce the Indenture or the
Securities except as provided in the Indenture. The Trustee may refuse to
enforce the Indenture or the Securities unless it receives reasonable indemnity
or security. Subject to certain limitations, Holders of a majority in principal
amount of the Securities may direct the Trustee in its exercise of any trust or
power. The Trustee may withhold from Securityholders notice of any continuing
Default (except a Default in payment of principal or interest) if it determines
that withholding notice is in the interest of the Holders.
15. 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.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company or the Trustee shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. By accepting a
Security, each Securityholder waives and releases all such liability. The waiver
and release are part of the consideration for the issue of the Securities.
10
17. 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.
18. 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).
19. 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.
[20. 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)
21. 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.
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(4) Delete if this Security is not being issued in exchange for an Initial
Security.
11
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Requests may
be made to:
Denbury Resources Inc.
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▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Attention of Chief Financial Officer
12
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
(Print or type assignee's name, address and zip code)
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
--------------------------------------------------------------------------------
Date: Your Signature:
----------------- ---------------------------------------
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Sign exactly as your name appears on the other side of this Security.
13
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 B
FORM OF SUPPLEMENTAL INDENTURE
SUPPLEMENTAL INDENTURE (this "Supplemental Indenture"),
dated as of , among [SUBSIDIARY GUARANTOR] (the "New
Subsidiary Guarantor"), a subsidiary of Denbury Resources Inc.
(or its successor) (the "Company"), DENBURY RESOURCES INC., a
Delaware corporation, on behalf of itself and the Subsidiary
Guarantors (the "Existing Subsidiary Guarantors") under the
Indenture referred to below, and THE CHASE MANHATTAN BANK, 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 15, 2001, providing
for the issuance of 9% Series B Senior Subordinated Notes Due 2008 (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.
2
(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 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.
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:
DENBURY RESOURCES INC., on behalf
of itself and the Existing
Subsidiary Guarantors,
by
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK,
as Trustee,
by
-------------------------------------
Name:
Title:
